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Monday, August 24, 2009
 Reaping what Reagan Sewed...

Topic: Commentary

So much of what is happening in the economy and the healthcare debate in America right now can be traced directly back to the agenda that was set in motion with the presidency of Ronald Reagan during the 1980s.

In demonstrations against the healthcare reform ideas of President Obama around the country we hear the familiar refrain that "government is not the solution to our problem; government is the problem," as famously voiced by Ronald Reagan during his First Inaugural Address, and conservatives also decry any potential that healthcare reform could add to the national debt by increasing the federal budget deficit.

Here is the situation. The federal government is currently massively in debt. The reason that the federal government is massively in debt is because the Republicans have intentionally put the federal government into debt.

When Reagan came into office in 1981, he brought with him a team of economists and political ideologues who had up to that point been outside the reins of power. The presidency of Reagan was truly a revolution in this country. Radical new agendas and policies were put into effect during the Reagan years and a new ruling class of ideologues came to power that would influence the highest levels of politics in this country for generations.

One of the major policy agendas that was put into place during the Reagan presidency was the use of massive deficit spending as a political weapon.

You see, Reagan and his cabinet were ideologically opposed to government domestic spending programs. Reagan and his allies believed that so-called social spending was actually counter productive, i.e. that a dollar spent by the government to help the poor or provide services to the public actually had a counter effect, making the poor poorer and the needy needier.

Their view was that they had to put a stop to social spending. They also knew that many of these programs were popular and hard for politicians to vote against. So their belief was that in order to put a stop to social spending they first had to effectively bankrupt the government. So, what they did was they massively cut taxes on the wealthy, raised taxes on the poor, and gave tiny token tax cuts to the middle class, resulting in an overall reduction of tax income to the government when adjusted for inflation (many Reaganophiles claim that the cuts increased revenues by 80% (or more), but this is only true in pure dollar terms, not inflation adjusted terms. Tax revenues grew at the lowest rate under Reagan compared to those that came before and after him). The next part of the agenda was to massively increase military spending. The only thing harder to vote against than popular domestic programs is military funding. So what Reagan did was he cut government revenue and increased government spending, but with almost all of those increases going to the military.

The result was the largest budget deficits since the presidencies of FDR and Truman during World War II. The big difference, however, is that taxes were very high during their presidencies and the debt was paid back down quickly after the war. There was no plan on paying back the debt racked up by Reagan however.

Indeed the bleeding incurred by Reagan was so dramatic that his successor, Republican George Bush Sr., was forced to raise taxes even after he promised not to. There was nothing else he could do, as Reagan had set the govenrment on a path to bankruptcy had something not been done.

 

 

What happened during the Reagan years is basically that the government pulled out a massive credit card and charged everything. Its like you had a grandpa that as he was getting old he started buying lots of nice things for the family: a new car, new furniture, and of course just giving family members cash. Then grandpa died and you found out that all of that stuff that grandpa bought you was on credit cards and that grandpa had racked up hundreds of thousands of dollars in debt, and today what we find out is that we are still legally obligated to pay the debt. So while it seemed like fun and games and a great time when grandpa was alive buying you stuff, now you see that it was all an illusion and that the fun during those times was bought with a lie and that now you have to pay for the careless finances of your grandpa - that what seemed like a nice thing at the time is now wrecking your finances.

That is the presidency of Ronald Reagan, but its even worse, because Reagan didn't even invest in the country so we don't even have anything to show for it. You see, Reagan was fundamentally against domestic spending - he and his cronies thought it was wrong. They reduced spending on everything from education to welfare to highway and bridge construction and maintenance. So, if they reduced spending on so many things, then how did they rack up this massive debt?

 

 (Note: Income Assistance includes Unemployment Insurance)

Military spending. Its all been military spending for the past 30 years that's been driving up the debt.

By 2008 military spending accounted for roughly 30% of the total federal budget, not counting entitlements (Social Security, Medicare, Medicaid), which are paid for with their own separate taxes. It is the single largest expenditure of the federal government. As of 2008 combined military spending and payment on the debt accounted for almost half of the entire federal budget, leaving only 53% of all the revenues collected for domestic spending.

Since Reagan, conservatives and Republican administrations have followed the agenda set in place during the Reagan years: to drive up the deficit in order to use it as an anchor around the necks of anyone who would seek to engage in domestic spending. This is one of the things that Bill Clinton got right. During this first year in office, when he still had a Democratic majority in Congress, Bill Clinton passed balanced budget legislation that set his administration on the path to paying down the debt. Once George Bush Jr., came into office however, with Republican control of Congress, they quickly set about engaging in massive deficit spending again, driving the national debt up to record breaking heights.

This is what people need to realize, the Republicans have been using the debt as a weapon against domestic spending ever since Reagan came into office, and you can't understand national politics unless you understand that. The Republicans would basically rather burn taxpayer money than allow it to go to domestic programs. The Reagan brought to power a whole generation of conservatives who fundamentally believe that government is indeed bad, and their belief is that its better to bankrupt the government than it is to have the government help its people. They have been engaged in a war on the federal government for decades now, and deficit spending is the weapon they have used to try an bring the government to its knees. They engage in deficit spending by ensuring that a larger and larger portion of the federal budget each year goes toward military spending and payment on the ever growing debt, which consumes more and more federal money the larger it gets, which is exactly what the Republicans want because they would rather just burn the money on debt payment than see any of it go toward so-called "social spending".

And they know that any time anyone comes into office and tries to engage in any kind of domestic spending, that the national debt which they have racked up will act as an anchor around their neck dragging them down to the bottom of the sea and making any domestic reform programs highly unlikely to succeed.

What enables the Republicans to get away with massive deficit spending, while still being able to use it as a weapon against their opponents, is that they spend the money on the military, which is effectively politically unchallengeable in this country. You can spend a thousand dollars on the military without question in America, but if you spend one dollar on any domestic program, from education to healthcare reform, the conservatives will jump all over it as fiscally irresponsible. The military is seen as patriotic and essential, while everything else is portrayed as unnecessary.

Quite literally, the American military is destroying America. Very literally the American military is killing Americans. Out of the top industrialized countries, America stands at the top of the list in countries where preventable deaths occur, i.e. deaths that could have been prevented had proper medical treatment been given. Those deaths, some 18,000 a year in America, could be prevented with money that is instead going to absurd military programs that build fantastically overpriced and unneeded weapons that sit in warehouses doing nothing. Today the United States spends more on its military than almost all other nations in the world combined.

That military isn't making us safer, it is killing us.

If we can't afford healthcare reform, the reason that we can't is because of out of control military spending for the past 30 years and the Republican's intentional running up of the national debt.

References and additional info:

Reagan and Revenue

The Only Good Option For Health Care is a Public Opiton

WASHINGTON TALK: THE DEFICIT; Reagan Debt Legacy: His Trap for Democrats? (1988)

Budget of United States Government

World Military Spending


Posted by rationalrevolution.net at 10:26 PM EDT | Post Comment | View Comments (6) | Permalink
Updated: Monday, August 24, 2009 10:38 PM EDT
Sunday, March 15, 2009
 Missing the Economic Fundamentals

Topic: Commentary

The more that I listen to discussions on the American economy in the media the more it becomes clear that no one within range of a microphone has any fundamental understanding of economics. This is partly the fault of news organizations and partly the fault of how economics is understood in American in general.

One example is the on-going truism that gets heard even on NPR and PBS programs, much less channels like FOX, CNBC, and CNN, that one of the problems with the American economy right now is "psychological", that the problem is that "consumers" don't have confidence so they aren't out spending their money like they need to be, and that if we can just "restore confidence" then people will spend more money and the recovery can begin.

Sadly, this passes for "economic wisdom" in America, yet its completely untrue and displays a fundamental lack of economic understanding on multiple levels. It shows a lack of understanding of both economic theory and of the cold hard economic data, which anyone commenting on the American economy should be well versed in, but apparently isn't.

First of all, Americans aren't "not spending" because of "lack of confidence", they are not spending because of lack of money. Secondly, "spending", contrary to popular misconception, is not the basis of economic growth (nor is job creation the goal of an economy). Thirdly, the American economy of the past 30 years has been an illusion built on debt, something which has been pointed out by several people over the past 20 years, though often ignored.

Most economists, at least ones that get into the media, and certainly most pundits, still haven't gotten their heads around the fact that the "normal" economic conditions of the past 30 years were always unsustainable. The American economy has been a house of cards and lies for decades, which is also why the economic predictions of most economists who talk about the recession "bottoming out" this year and the recovery starting in 2009 or early 2010 are baseless.

A lot of this goes back to the state of American economics in general, as it is taught in universities and certainly has it is discussed in the media, even in more serious economic publications like The Wall Street Journal, The Economist, and Forbes, etc.

American economics has become completely devoid of any kind of science, and I believe that this is the case in large part because people don't like the facts that are made clear if you truly understand real economics. The level of delusion in American economics is really astounding, perhaps the greatest academic failure in recent times.

In America economics has become a tool for justification of the status quo, not a means of understanding relationships of productivity and consumption. In America most economics has become completely based on observations of correlation, NOT causation.

Even top economic professionals, some of which currently testify before Congress on matters of the economy, talk about the economy in terms of trends and historical events. These economists have no real predictive ability, which is what science is all about. Their only means of "prediction" is assuming that the future will be like the past, but they have no idea why the past was even like the past. They don't address fundamentals, they just look at graphs and numbers and supply/demand curves, etc.

What is an "economy"? An economy is the production, exchange, and consumption, of goods and services in a population. What is the basis of an economy? Production. Production, production, production.

Historically, from thousands of years ago until the modern industrialized era, production has been the only or primary limiting factor to economic growth. The prosperity of a society was governed by its ability to produce goods and services. What set one standard of living apart from another was the ability of the workers in that society to effectively produce material goods that could be used to improve quality of life.

With industrialization that changed. With industrialization it became possible to produce more material wealth than people could legally acquire. The reason for this was economic disparity. The reason for the economic disparity was that the workers who produced the goods and services were not paid the full value of their contribution in producing those goods and services, with the "surplus value" being siphoned off by executives and stock holders, i.e. capitalists.

When we look at the world economies today we see that there are two things that distinguish one economy from another: the productive capacity of a society and the consumptive capacity of a society.

Today, places like China and India are in the process of building productive capacity. Poverty in India at least is largely due to India not having enough productive capacity to meet the needs of all of the people in India. In China, however, that is largely untrue, there they have tremendous excess productive capacity, but most of that productive capacity has been used to supply goods and services to the West, not their own people. This is somewhat puzzling considering that China is ruled by a so-called Communist regime, but clearly they aren't real Communists, or else this situation wouldn't exist. It remains to be seen what they will do. They should be able to actually increase wages in China and start a transition from being an exporter to becoming an nation of domestic consumption of their vast productive capacity. If that does indeed happen it may be considered one of the first successful transitions to real Socialism, but that remains to be seen and given that they were investing in the US and moving towards more market driven labor markets that may not happen.

The US is a totally different story however. In the US our productive capacity currently far exceeds our legal ability to consume the potential products of production, hence this current "economic crisis". Here is the thing to understand: Our society has the ability to create vastly more wealth, i.e. goods and services, than what we are currently doing, and the only reason that we aren't working at creating this wealth right now is that the workers who create the wealth are not legally allowed access to it.

We have car manufacturing plants all over the country that easily could continue pumping out cars. There is nothing stopping us from making cars as fast or faster than we were 2 years go (maybe its best for the environment that we aren't though). The only thing that is preventing this from happening is that, despite the fact that there is a demand for these goods in terms of need, the people who need those goods aren't allowed to have them. The reason that those people aren't allowed to have them is because they don't have enough money to pay for them. The reason that they don't have enough money to pay for them is not because they haven't been working to create comparable wealth themselves in order to exchange that wealth for a car, rather it is because a significant portion of the wealth that most people in America have created over the past 30 years was never given to them, it was instead siphoned off from the pool of collective value that they shared in producing under the legal entity of a corporation and used to give executives millions of dollars a year in unearned income and used to return profits to share holders.

Those shareholder profits and that executive pay was all the product of the value created by the workers. We are talking about trillions of dollars of redistribution over the decades from workers to the wealthiest 1%. Since the workers were never given that value, which they created, a disparity grew in the economy between the productive capacity of the society and the "consumptive capacity".

Over the past 30 years 90% of Americans have been producing more value than what they have been getting paid for. Likewise, the top 1% have been receiving more value than they have been creating.

The reason that this current economic situation is so bad, and why it has manifested itself so rapidly, is not just because of lack of regulatory oversight or the bad lending practices that led to the housing bubble, etc., those thing are symptoms and manifestations of the underlying problem. The reason why we have had this collapse is that this disparity between value creation by workers and compensation for workers has built up over the 30 years, like the swelling of water behind a dam. During those 30 years various "tricks" were used to mask the problem. These "tricks" included more people per household going into the workforce to maintain the same household income, the growing use of debt to make up the gap between value creation and compensation, and the mass importation of goods from developing economies where workers are paid even less .

The housing crisis was just the crack in the dam of tricks which was the catalyst for the collapse of the existing unsustainable situation.

So why was that unsustainable and unfair situation allowed to exist and build up in the first place? Well, largely through right-wing economic propaganda disseminated via the mainstream media, lack of any serious scrutiny of our economic system by the media, lack of tolerance for dissenting and critical voices on economics in the media and in our society, and lack of real economic education in American universities.

Even today, even while the effects of American economic policies are demonstrating clear failure, the mentality of Americans, especially as it is on display in the mainstream media, is still largely that of right-wing delusion.

Republicans and others still act as though the expansion of government spending over the past 30 years has not been a product of Republican policy, yet it is directly a product of the Republican policy of privatization. Basic economic theory says that privatization will lead to higher costs in government, not lower, and indeed the real data from the last 30 years shows this to be a fact.

Private entities work to maximize profits. If government is the source of revenue then maximizing profits is going to mean what? Its going to mean that private industry now has a greater inceptive to manipulate the government, a greater incentive to lobby for contracts and to spread corruption. Government now has to pay the cost of doing the work plus the profits on top of it. The Military Industrial Complex is the perfect example, a very high profit margin industry that makes millionaires and billionaires of some people, all of which comes from tax payer dollars.

As privatization increased the government budget ballooned. The Republicans claimed the privatization was going to be the key to reducing government spending, but in fact it has predictably had the opposite effect. Indeed what privatization did was provide a profit motive for wasteful government spending.In the past wasteful government spending happened due to incompetence, but now with privatization it happens by design and the Republicans are the leaders of agenda that created such a system.

People still talk about all income as having been "earned" or "made" even when it clearly wasn't. A case in point is the reported 20 million dollar income of the Washington Mutual CEO who was officially on the job for 17 days and received $20 million in compensation. Even the stories bemoaning this fact talked about how he "made $20 million" in 17 days, or how he "earned $20 million" in 17 days. That's the point, he DIDN'T make it, he DIDN'T earn it, it was given to him by taking it from other people, it WAS redistribution of wealth.

The money had to come from somewhere, and he obviously didn't create $20 million in value in 17 days on the job as the bank imploded into failure, so where did that money come from? It had to have come from the workers, investors, and customers of WaMu. It was stolen from them and given to him. He never created any value, but was handed $20 million. The only way to describe that is redistribution. That is just an extreme example, but that has been the status quo for execute pay in America for the past 20 years.

Every multi-millionaire and billionaire in the world today is a recipient of collectively created wealth. There isn't a single individual in the world who has single handedly created billions of dollars worth of value. Every single billionaire and multi-millionaire has received their income by being part of a system of collectively created wealth, whereby collectively created wealth is transfered to them.

And yet, here in the midst of this economic collapse brought on by the wealthy, the dominant narrative in the mainstream media is that any form of tax increase on the wealthy is "punishment of success and hard work".

A recent segment on the Colbert Report that showed news pundits bemoaning a so-called "war on success". You can view the segment via this link: The Word - Rand Illusion

That people could even get on television and make these claims at all shows a deep level of delusion in American society, where even the majority of the people who are getting ripped off by the wealthy believe that they are the ones dragging the wealthy down.

Yes, there are people who don't work and receive welfare. These can be called freeloaders, that's fine, whether it is or isn't their fault, the fact is that they are receiving value that they didn't create. True. But do these people really think that a hedge fund manager with an income of $3 billion in 2008 really worked that much harder and contributed that much more to the economy and society than a school teacher with an income of $30 thousands? To believe that you have to be delusional. You have to have no grasp of reality, no concept at all of what an economy even is or what value creation is. Do these pundits really think that Rush Limbaugh spouting hot air on a radio every day is creating more value than an engineer developing medical technology devices? Do they really think that a basketball player is creating more value than a construction worker who builds homes every day? Do they really think that an executive at a large corporation is personally creating $30 million a year in value for the economy and that the workers doing the actual work to produce the products that the corporation sells are really only creating $30 thousand worth of value a year? Do they really not understand that the executive pay is a redistribution of the value produced by each of the workers to the executives? Do these people really not understand that all capital gains are a tax on worker compensation? Do they really not understand the implications of an economy where over the past 30 years an increasing portion of national income has gone to capital gains, where the the portion of capital gains income going to the top 1% has increased dramatically, and worker pay hasn't beaten inflation in three decades (aside from one brief period where it barely beat it)? Do these people really and truly believe that 95% of the population is holding back the top 1%? Do they really think that the top 1% would be better off without everyone else? I can tell you, the fact of the matter is, is that they would be much, much, much worse off. Their wealth and lifestyles are only made possible by the work of millions of people. It takes millions of people to create the wealth that they personally own. They haven't created it by themselves.

These issues are not addressed in the American mainstream media because when you start to get into them it leads to very challenging questions for the core principles of our entire economic model. The entire economic narrative in America is based on a completely flawed assumption, which is that all income in America is completely fair and exactly compensates the recipient for value that they created. But that fundamental assumption is not true, which is why there can be no meaningful discussion of taxes or redistribution, or anything else. Until you acknowledge that the 30 million dollar incomes of executives for the past few decades have been unearned income that was a redistribution of wealth from the workers to the executives then you can't discuss taxation. Until you acknowledge that capital gains are a tax on labor then you can't discuss taxation. Until you acknowledge that the incomes of rock stars and basketball players and actors and news pundits are a luxury provided by redistributing value created by productive workers to entertainers then you can't discuss taxes. All of those tertiary professions depend upon a base foundation of core productivity. All of those incomes are a tax on the base production of essential goods and services. All of those incomes are only made possible by the work of other people, other people who have less income, not because they don't work as hard and not because they aren't contributing, but because of an unfair economic system that allows technology and the legal system to redistribute wealth from the productive working majority of the poor, middle class, and modestly wealthy to an undeserving super rich. Yes some of the rich have made contributions and do deserve high levels of wealth, but even they have received more than their fair share, more than they themselves have contributed. A part of their wealth is earned, but an even greater part is unearned, it comes for redistribution.

Until that fact is confronted in America no meaningful economic discussion can take place, and likely no real resultion to America's economic problems will occure.


Posted by rationalrevolution.net at 1:13 PM EDT | Post Comment | View Comments (8) | Permalink
Updated: Sunday, March 15, 2009 1:16 PM EDT
Tuesday, February 3, 2009
 The State and Future of the Economy

Topic: Commentary
I haven't posted much here lately because my personal life has been very busy, but there are a few things I would like to say about the current state of the economy.

If you have read much of the economic material on this website then you should have some idea that the warning signs for the current economic condition were visible long before this so called "down turn" happened.

Despite this, I still have yet to hear a single news story or analyst address the real root causes of the economic crisis in America, and around the world. The root cause is growing economic disparity.

Economic disparity has been growing in developed and developing countries around the world over the past 30 years, but in no developed economy has the growth in disparity been as great as it has been in the United States, which now has economic disparity on par with Mexico.

I have presented plenty of data addressing this issue on this website, so I'm not going to present it here again, but the data is clear that ever since the "Reagan Revolution" economic disparity has been growing in America, and in fact it grew at its fastest pace under the presidency of Bill Clinton, despite the fact that the Clinton years were the only time in the past 30 years in America when median income barely beat out the rate of inflation. While the incomes of average Americans did rise slightly under Clinton, the incomes of the top 1% grew more rapidly than any time in American history, far out pacing the rate of increase for average Americans.

Along with this growing economic disparity there has been a direct correlation of growing personal and public debt as average Americans have been encouraged by corporations to live beyond their means.

Over the past 30 years, up until 2008, as America has operated on the basic economic foundation put in place by the Reagan administration, average Americans have spent more money on their own educations, they have worked longer hours, family incomes have grown slightly because more wives have entered the workforce to try to maintain the family standard of living, the personal savings rate has gone down dramatically, the level of personal debt has risen dramatically, incomes for the bottom 90% of income earners have been stagnant, productivity has risen dramatically, incomes for the top 1% have risen dramatically, corporate profits have risen dramatically, taxes have consistently been reduced (primarily on the wealthy and corporations), corporations have directed the largest off-shoring of American production in the nation's history, and, very importantly, the percentage of capital gains income going to the top 1% of income receivers has risen dramatically, while the portion of capital gains income going to the bottom 90% has gone down.

So, what is the root cause of all of this? Well, quite simply is it "capitalism", i.e. the core structure of an economy where the rights to all newly created value are owned by capital owners. The root cause of America's economic problem is that capital ownership has been both strengthened over the past 30 years by the "Reaganomic" agenda, and capital ownership has been increasingly consolidated into fewer hands.

Now this last part may seem a bit odd, because what about all of these retirement programs setup under the Reagan administration and pursed by following administrations, such as the move from pensions to 401K programs and IRAs? These were claimed by market advocates to be better types of saving systems that would "empower individuals" to make their own decisions and personally own their own retirement accounts, which was supposed to be so much better than pensions and which was supposed to broaden capital ownership. (the rate of return on pensions is higher than most 401Ks or IRAs).

Well it didn't exactly work out that way, and it's not certain that it was ever really intended to. On the one hand yes, the number of Americans who own some stock grew over the past 30 years. More Americans own stock, either directly or indirectly, than at any time in America's history, BUT, and this is a big but, the portion of capital ownership BY VALUE held by the bottom 90% of the American population has gone down!

Why is this?

Well, two things. The first thing is that while more Americans own stocks, either directly or via mutual funds, etc., fewer Americans directly own their own capital than in the past. By this I mean that over the past 30 years there has been a massive loss of small businesses. Now if you only look at the numbers this may not appear to be the case because there are a lot of registered small businesses today and that number has grown over the years, but most of those businesses are not significant. Much of that growth has more to do with paperwork and accounting than anything else, with many of those businesses reporting incomes of under $5,000 a year. These are mostly side businesses and not primary means of income.

So, while the number of Americans owning stock has gone up over the past 30 years, the portion of Americans personally owning their own private, meaningful, capital has gone down. The percentage of Americans working for large corporations has increased over the last 30 years, with now more than 50% of Americans working for a company of 500 employees or more.

So the first thing is that the percentage of Americans owning paper certificates has gone up, but the percentage of Americans owning capital that they personally control, such as their own store or their own farm or their own production facility, has gone down. This loss of personal capital ownership has exceeded the gain of stock ownership, and this is exactly what one would predict would happen in a "free-market" or "free-marketish" capitalist system.

Secondly, while the number of people owning at least some stock has increased in America, the majority of that stock is locked up in retirement accounts. What has actually happened is that the percentage of capital gains income going to the top 1% in America has gone up over the past 30 years while the percentage of capital gains income going to the bottom 90% has gone down. So despite more people owning stock, the percentage of value owned by the bottom 90% has gone down, while the percentage of capital value owned by the top 1% has gone up, and on top of that, the value that is owned by the bottom 90% is mostly locked up in retirement account where it goes unused until after age 65, whereas the top 1% receive on-going income from capital all the time.

So, where does this capital gains income come from? Well, it comes from workers. Workers are the ones who create the value that is owned by capital owners and which is received by executives and share holders. So, as worker productivity has increased over the past 30 years, and as the cost of obtaining an education has gone up, those gains have not been realized by the workers who are responsible for those gains, instead those gains have been taken by executives and share holders.

And that is why we are in the situation that we are in today, despite the fact that over the past 30 years there have been major advances in technology and major increases in worker productivity and major improvements in workforce education. The average American has not benefited from these advances because the average American in a wage earner and does not own a significant amount of capital.

Given that this is the issue, it can be safely said that none of the proposals on how to "fix the economy" being put forward by politicians or even leading economists are going to truly solve the problem. What Barack Obama is proposing is a standard old school approach to fixing an economic down turn, and it probably will have a beneficial effect, but it won't solve the root causes of the problem.

Every time this happens what American leaders do is they implement some policies that temporarily reduce income and wealth disparity, which temporarily masks the issues and lets the economy keep working for a while, but the core problem, as has been understood by economists for over 100 years, is that ownership of capital is not evenly distributed in a "free-marketish" capitalist system, and thus capital owners are always exploiting and stealing value from workers.

The old school socialist approach to solving this problem, by making capital publicly owned, has been shown not to work. Marxist Socialists have correctly identified the problems with capitalism - they have just failed to identify the solutions.

The solution has to be relatively equal, but private, distribution of capital ownership. Instead of having the state own the capital, what the state needs to do is distribute the capital to the individuals, so that individuals directly own the capital and directly receive income from capital ownership.

I've already made several proposals for how to do this on this website, but there are other steps that could be taken as well. What is important to understand is that the spending and taxation proposals of either the Republicans or the Obama administration aren't going to solve this issue. In order to solve this issue a radical change to our economic system has to be made.

Something needs to be done along the lines of the federal government setting up a national investment program where everyone with a Social Security number gets a federal investment account into which shares of full-market index funds are deposited quarterly, and with which everyone can do with as they please. They can sell the shares or save them and collect the dividends, etc. Every citizen in the country, no matter what their  age or status, would receive the exact same number of shares every month.

Everyone would still have their normal job from which everyone would receive the same types of income that they do now, but everyone would also accumulate capital ownership and capital income. This would, initially at least, need to be paid for by a progressive tax that is heavily weighted toward the wealthy, because after all, the currently wealthy in this country (I'm taking here about those with incomes in excess of a million dollars a year and net worths in the tens of millions of dollars plus) have gotten that wealth by taking it from the American, and indeed global, working class. It is an absolute fact that their wealth is the product of other people's work, and the economy will never be fixed and will never be stabilized until the small minority stop draining off the value created by the working majority.

The solution here is not to increase wages or to just increase taxes on the rich, the solution here has to be a fundamental shift in capital ownership from 1% of the population owning and controlling most of the capital to broad based capital ownership, where capital gains income is relatively equal across the board. The financial schemes of the Republicans over the past 30 years have clearly failed to do this.

And this is all the more interesting because the claims of the Republicans and so-called market advocates has been all along that "a rising tide lifts all boats" and that the "ownership society" would bring benefits to everyone. Clearly the evidence shows that over the past 30 years income disparity has grown in America. The only thing that we can conclude from this is that either A) this was by design all along, or B) the policies of the Republicans and "market advocates" have failed to achieve their goals and have indeed backfired. I tend to think that the issue is option A, because every time I listen to what these people say, on the one hand they make the case for their policies by saying things like "a rising tide lifts all boats", or that the goal or effect of market economies is to allow the market to create benefits for everyone, that everyone benefits from market systems, etc., but then as soon as you question these claims and start to point at the data they change their tune and begin to justify inequality. It is as if they really know that these systems are unfair and create inequality, they just lie on the outset to try and advocate policies that they know are actually going to help the rich and hurt everyone else, under the guise of claiming that its going to be good for everyone.

People have to understand the role of capital in a capitalist system. Capitalism isn't about "free markets", its not about trade, its not about small businesses, its not about entrepreneurship, it is not about rewarding hard work. What defines capitalism is the role that capital plays in the economy. Capital is "productive property", by definition. In a capitalist system the owner of the productive property retains 100% of the rights to all of the value that is created with that property. Capital ownership in a "free-marketish" capitalist system will always naturally tend towards consolidation where fewer and fewer people own more and more of the capital, and by their ownership of capital the capital owners will receive a larger and larger portion of the value created by society, not value created by them, value created by everyone else. This is how a small number of people in capitalist economies become extremely wealthy, not by working millions or billions of times harder than everyone else, but by owning the rights to the value created by millions or billions of people.

The corporate executives and hedge fund managers and large investors over the past 30 years have not worked millions of times harder than everyone else, they have just received value that was created by everyone else. The only way to fix the economy long term is to stop that process of redistribution of wealth from the working poor and middle class to the capital owning wealthy. Make no mistake about, the American economy today has been demolished by the wealthy, both directly and indirectly. The wealthy have both siphoned off trillions of dollars of value from workers to their own private incomes, and they have directly made the decisions that have further devastated the American economy, such as off-shoring American production to China and other countries in order to take advantage of cheap labor. This loss of productive capacity was very much a short-sighted profit driven move that transferred trillions of dollars from American workers to into the bank accounts of a relatively small wealthy elite in America, at the expense of long-term national economic viability. Not only was this a stupid move for the long-term in general, but it was even more obviously stupid given the obvious implications of the inevitable rise in the cost of fuel. Inevitably the cost of fuel was going to go up, so constructing a manufacturing system where parts and materials are shipped all over the world so they can be assembled by the cheapest labor possible is an obviously bad move when the cost of shipping was inevitably going to go up with both an increasing demand for fuel and decreasing supply of it. And the decisions to do all of this were made by the "captions of industry", by both the heads of corporations and leaders in government who cooperated with them. These people made large one-time gains from selling America out, and there is no doubt that the fingers of blame for our current economic situation must be pointed squarely at many of the wealthiest people in America today, whose gains came at the expense of everyone else and the nation's future.


Posted by rationalrevolution.net at 5:13 PM EST | Post Comment | View Comments (6) | Permalink
Friday, September 5, 2008
 Alaska, Taxes, and Oil Revenues

Topic: Commentary

Barack Obama's plan for a windfall profit tax on oil companies, with the revenue to be used to send every American family a check for $1,000, or $500 to individuals, has been greatly disparaged by John McCain, the Republicans, and the oil companies themselves.

Yet, John McCain chose a running mate whose state has been doing essentially the same thing that Barack Obama is proposing since 1977. Indeed, Sarah Palin bragged in her RNC speech that due to the dramatic rise in oil prices she was able to double the size of the check that the state of Alaska will send to everyone this year to $3,200 per man woman and child. Yes, instead of Obama's $1,000 per family, what that means is that a family of four (husband, wife, and 2 kids) will get $12,800 from the state this year.

When oil and gas prices went up dramatically, and filled up the state treasury, I sent a large share of that revenue back where it belonged — directly to the people of Alaska.
- Sarah Palin, RNC speech, September 3, 2008

If this policy is such a good idea for Alaska then why not do it for the whole country? The program is very popular in Alaska, and Republican Sarah Palin is obviously a strong supporter of it, so does that mean that the Republicans favor this type of program for the country?

No, when you discuss doing this same type of program for the country the Republicans and the oil companies of course, call it socialism, they say it will hurt the industry, they call it un-American, etc.

But here are some facts. The program is overwhelmingly supported in one of the most conservative states in America and economists overwhelmingly agree that it benefits the Alaskan economy. It is also clear, due to the fact that the same payments are made to everyone, that it benefits the poor the most and the wealthy the least. And for the oil companies it buys loyalty for oil drilling from Alaskans. There is a reason that most Alaskans want to open up A.N.W.A.R., because they will get bigger checks if it happens.

This gets to other issues as well though. There is a reason that Sarah Palin was able to reach a peak approval rating of 80% in Alaska (its down into the 60s now), and that's because of the increased size of the checks going to everyone in Alaska, which are made possible due to the increasing oil prices.

So, why does John McCain say its good when Sarah Palin cuts oil money checks to everyone in Alaska, but when Barack Obama suggests doing the same thing for the rest of the country John McCain says its a horrible idea?

But there is more. Alaska is unlike any other state in the nation. While almost every state in the lower 48 is facing major budget problems, and while states like New York and California send more money to the federal government than they receive back in payments, Alaska is the king of subsidies. Alaska's coffers are running over, despite the fact that, as Sarah Palin notes, she cut and eliminated basically all state taxes. Indeed Alaskans pay almost no local taxes at all due to the fact that the state gets almost all of its revenue from taxes on oil companies, which Sarah Palin raised during her time as governor.

Palin was sworn in as governor on Dec. 4, 2006. Over the course of 2007, she fought to raise taxes on oil companies. Alaska gets about 85 percent of its state revenue from oil taxes, and as fuel prices skyrocketed, Palin complained the state wasn't getting its share of the windfall. She successfully pushed for a law that raised taxes on oil profits to 25 percent from 22.5, winning passage in the State Legislature in November 2007. The increase amounted to an estimated $1.6-billion annually more for the state.
- Politifact

But guess what, despite the fact that the Alaskan state treasury is benefiting from high oil prices, what Sarah Palin has also done while governor is increase the amount of money that Alaska gets form the federal government. Yes, that's right, that means that everyone in the lower 48, plus Hawaii, are the ones paying the taxes for Alaskans. Indeed Alaska is the most freeloading state in the nation; the entire state is, essentially, a "welfare queen".

Our state budget is under control.

We have a surplus.

And I have protected the taxpayers by vetoing wasteful spending: nearly half a billion dollars in vetoes.

I suspended the state fuel tax and championed reform to end the abuses of earmark spending by Congress.

I told the Congress "thanks, but no thanks," for that Bridge to Nowhere. [By the way Alaska kept 100% of the "Bridge to Nowhere" money]
- Sarah Palin, RNC speech, September 3, 2008

How did Sarah Palin reduce taxes in Alaska? By taxing oil companies and shifting the burden to the rest of the nation. While she cut taxes in Alaska she also created the largest state budget in Alaskan history, getting all of the money from the federal government and oil revenue. Guess what, that doesn't work at the national level! And also guess what, its easy to become popular in your state when you give people checks from oil companies and you eliminate their taxes by robbing from the federal government!

She did the same thing while she was the mayor of Wasilla (1996-2002). She cut property taxes by 40% but dramatically increased the town revenue by hiring a lobbyist to go to Washington to get federal dollars, mostly earmarks. She ended up securing tens of millions of dollars from the federal government for tiny Wasilla while cutting taxes for its residents.

But even that is not all. You see, Alaskan oil companies pay taxes to the state of Alaska, which is where Alaska get a lot of its revenue, but the oil companies get to write-off their state taxes against their federal taxes, so, you guessed it, the tax payers of the lower 48 + Hawaii get a double whammy.

Alaska receives back $1.87 for every $1 paid in federal taxes by Alaskans. By contrast, California only gets back $0.78 on the dollar. Effectively, Alaskans are stealing from California (and about a dozen of other states that pay more than they get back) in order to give themselves tax breaks.

In the video below Sarah Palin talks to her church about how Alaska is the richest state in the nation in terms of natural resources and how they have all of this wealth, yet Alaska is still the most subsidized state in the nation!

This was one of Sarah Palin's big selling points in Alaska. What made her popular, just like what made Ted Stevens popular, was her ability to get more money from Washington than Alaska contributed.

In the video below Sarah Palin says "God bless" the folks who are able to bestow such a "largess" on Alaska from the federal government.

How can John McCain campaign against raising taxes on oil companies and using a windfall profits tax to send checks to American families when that is exactly what his running mate did in Alaska to gain her popularity? 

Does Sarah Palin's experience for a year and a half in the biggest welfare state in the nation, a state with a budget unlike any other state in the nation, really provide her with knowledge of how to cut taxes for the rest of the country? No it doesn't, because she cut taxes in Alaska by taking from the rest of the country, even though the state is already getting a huge bonus from rising oil prices. Yes, keep in mind, that a portion of the cost of fuel at the pump is going to pay for the big welfare checks that Sarah Palin is giving to the people of Alaska, but is campaigning against giving to the rest of the country.

References:
http://en.wikipedia.org/wiki/Alaska#Taxes

http://www.npr.org/blogs/secretmoney/2008/09/palins_record_on_earmarks.html

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/03/EDAR12MTTR.DTL

http://thinkprogress.org/wonkroom/2008/09/03/palin-earmarks/ 


Posted by rationalrevolution.net at 1:52 PM EDT | Post Comment | View Comments (3) | Permalink
Updated: Saturday, September 6, 2008 11:17 AM EDT
Thursday, September 4, 2008
 The Experience Canard

Topic: Commentary
Anyone who thinks that this campaign is about experience has no clue as to what this campaign is about. The Republicans, aside from outright lying in every speech given during the RNC and in all of the attack ads that they run, are trying to make this campaign about "experience" because they know they will lose on the issues.

At first the claim was made that Barack Obama simply lacked experience. Then the claim was made that John McCain has more experience than Obama because he has served in the military and has served 2 terms in the House of Representatives and 4 terms as a US Senator compared to Obama's 7 years as an Illinois state Senator and 1 term as a US Senator.

Then, however, when they added Sarah Palin to the ticket, they now claim that Sarah Palin has not only more experience than Obama, but more "experience" than Obama and Biden combined, because neither of them have been a governor or mayor.
"Gov. Palin represents a new generation. She's already one of the most successful governors in America and the most popular.

And she's already had more executive experience than the entire Democratic ticket combined.
...
Well -- well, the first day -- as far as I'm concerned, the first day she was mayor, she had more experience as an executive than -- than Obama and Biden combined."

- Rudy Guliani, September 3, 2008 at RNC
Well, for that matter, neither has John McCain, so by this logic Sarah Palin has more experience than John McCain.

Speaking of Barack Obama, Guliani stated:
"he's never run a city. He's never run a state. He's never run a business. He's never run a military unit. He's never had to lead people in crisis.

He is the least experienced candidate for president of the United States in at least the last 100 years."

- Rudy Gulani, September 3, 2008 at RNC
Guliani said the same thing about John McCain during the primaries.
"Guliani, who never served in the military, said McCain 'has never run a city, never run a state, never run a government. He has never been responsible as a mayor for the safety and security of millions of people, and he has never run a law enforcement agency, which I have done.'"
- Rudy Guliani, November 4, 2007
So, apparently Sarah Palin is now one of the most experienced people in politics, after being mayor of a town of 5,000 people for 6 years (it was 5,000 when she was mayor, though some sources cite its current population of 8,000-9,000), during most of which she had hired an administrator to actually run the office, and governor of a state with a population less than 700,000 people for a year and a half.

She's even more experienced than John McCain!

Surely they would be claiming that she has more experience than Hilary Clinton as well, after all, Hillary has only been a Senator for 2 terms. Her only "experience" prior to that was as a first lady of a president and first lady of a governor.

Twenty three out of America's forty three presidents had never been a governor prior to becoming president, that's over half. By Guliani's standard none of these people were as experienced as Sarah Palin the day they stepped into office.

When Abraham Lincoln, the last president from Illinois, became president, he had served just 8 years in the state legislature and 2 years in the US House of Representatives. By all accounts he was "less experienced" than Barack Obama. He is now recognized as one of the greatest presidents in the nation's history.

What really is Barack Obama's experience though? Its not just his time in elected office.
  • Lived in Indonesia from 1967 to 1971
  • B.A in political science from Columbia University, with a specialization in international relations
  • Worked for the Business International Corporation and New York Public Interest Research Group
  • Director of the Developing Communities Project in Chicago (1985-1988)
  • J.D. in Law from Harvard, graduated magna cum laude
  • First African-American president of the Harvard Law Review (1990-1991)
  • Taught constitutional law at the University of Chicago for 12 years (1992-2004)
  • State Senator in Illinois for 7 years: sponsored more than 800 bills (1997-2004)
  • US Senator for Illinois for almost 4 years (2004-2008)
  • Additionally he has:
  • Traveled to Pakistan in college for 3 weeks
  • Traveled to Indonesia multiple times since he lived there
  • Traveled to Europe for 3 weeks in the 1980s
  • Traveled to Kenya for 5 weeks to meet family
  • Has traveled to Europe, the Middle East, Central Asia, and Africa with the Senate Foreign Relation Committee
Now, to claim that Barack Obama A) lacks "experience" in general is nonsense and B) that he lacks "foreign policy experience" is nonsense. John McCain's big claim is that he has more experience in foreign affairs because he has served in the military and has had some dealings with international leaders while in the Senate. I have been unable to find any details on his actual experience in foreign countries. He has traveled to several countries, including Canada, South American countries, European countries and Iraq on government business, but most of these trips are straight to a meeting place with a foreign leader with no time in the country itself. Then, of course, there are his 5 years in Vietnam.

Oh, and by the way John McCain graduated bottom of his class from the Naval academy of Annapolis. So, what exactly is John McCain's foreign policy experience? He actually has very little and makes repeated mistakes about foreign affairs, naming countries that no longer exist, mixing up geography, and having claimed that the Iraq war would be over and done with in months and that we would be greeted as liberators.

Sarah Palin just got her passport and traveled out of the country for the first time in 2007.

This doesn't even get into Joe Biden's extensive foreign policy experience.

By the way, to get back to Obama's time at Business International Corporation, while he was there he was a researcher in financial services and editor of Financial Foreign Operations and a writer for the Business International Money Report.

By all accounts, Barack Obama is actually one of the most accomplished people to run for office, one of the most intelligent candidates this country has ever seen, with one of the deepest backgrounds in matters of critical importance. He has more experience in Constitutional law, something that George Bush and John McCain obviously have no experience in, than almost anyone in the country. He has international business experience, he has on-the-ground organizing experience, he has economic experience, he has real world foreign experience, he has legislative experience, and yes, he does have executive experience. Not as a mayor or governor but certainly he has been a director or manager of multiple different organizations.

And all of this experience shows in the fact that he has been able to mount one of the most well organized, expansive, and effective presidential campaigns in American history. He ran circles around Hillary Clinton who began her campaign with all of the advantages in the world. Obama's campaign makes John McCain's look like a high school project. If Hillary Clinton and John McCain have so much experience, then why is it that they were unable to put together and run organized and effective campaigns? And what exactly are John McCain's accomplishments?

He sponsored the McCain/Feingold Campaign Finance Reform Act in 2002, which was successfully passed, but has been largely deemed already obsolete and full of holes. He advocated for the surge in Iraq, which has arguably been effective. Other than that, with his 2 terms in the House and 4 terms in the Senate, none of his measures have been passed and he has the poorest attendance record in the Senate.

So, the idea that Barack Obama "lacks experience" is nothing but a canard. Obama has lots of experience, in fact he has a lot more relevant experience than John McCain, and certainly more experience than Sarah Palin. But all of this is really beside the point anyway. If selecting a president were about "experience" then we would just choose the guy who has had the most time in elected office. If being a governor were really so important then we would just pick the governor of the largest state who has been governor the longest. But that's not what picking a president is about. In addition to experience, it is about ability, vision, charisma, capability, ideas, and policies.

On all of these measures McCain fails miserably to Obama and that is why the McCain campaign tries so hard to stay on the bogus "experience" message.

This election is really about policies, and the fact is that the Republicans know that their policies are unpopular.

Who will cut lower middle class taxes the most? Barack Obama.
Who will give even more tax cuts to the richest 1%? John McCain.
Who will reduce the national deficit? Barack Obama.
Who will increase the national deficit? John McCain.
Who will end the war in Iraq sooner rather than later? Barack Obama.
Who will setup a permanent presence in Iraq? John McCain.
Who will do more to reduce the cost of healthcare? Barack Obama.
Who will reduce healthcare coverage? John McCain.
Who will protect a woman's right to chose? Barack Obama.
Who will do everything they can to outlaw abortion? John McCain.
Who will protect science education and make college more affordable? Barack Obama.
Who will do nothing to make college more affordable? John McCain.
Who will improve America's image abroad and work with partners? Barack Obama.
Who will continue the cowboy foreign policy of George W. Bush? John McCain.
Who will negotiate with foreign leaders to prevent conflict? Barack Obama.
Who will instigate conflict with careless tough talk? John McCain.

That's what this election is about, its not about bogus claims that a woman who has been mayor of a 5,000 person town and governor of the second least populous state for a year and a half has more experience than Barack Obama and Joe Biden combined. It's not even about the bogus claims that John McCain has more foreign policy experience than Barack Obama. Its about the issues, the more that the Republicans can talk about anything other than the issues the better it is for them.


Posted by rationalrevolution.net at 8:53 PM EDT | Post Comment | View Comments (1) | Permalink
Updated: Saturday, September 6, 2008 4:51 AM EDT
Saturday, August 30, 2008
 The Reality about Media Coverage of McCain vs Obama

Topic: Commentary

The media narrative during both the primaries and now the general has been that the media has been biased in favor of Barack Obama. The irony of this claim is that it is so clearly and plainly false. It was false during the primaries and its false now. Why does the media keep saying that the media is biased in favor of Obama?

Because all that the media does 90% of the time is simply act as a megaphone for the people who write news releases.  When Hillary's campaign made a claim, all that the media did was pass it along, without any context, without any fact checking, without any analysis. If Hillary's campaign said, "the media is sexist and is giving favorable coverage to Barack Obama," all that the folks at CNN, ABC, NBC, etc., did was pass on that statement. Worse yet, instead of actually analyzing it at all to determine if it was true or not, which they easily could have done, they had pundits talk about it based on the assumption that it was true. It was even worse on FOX of course, with FOX going out of its way to exacerbate the distortions.

Never mind that while Hillary was accusing the media of giving favorable coverage to Obama the Reverend Wright issue, the Bill Ayers issue, the "terrorist fist jab" claims, the "he can't connect with 'working class whites'" mantra, the he's too inexperienced claims, etc., were all dominating the headlines for Obama. And never mind that the media, during the entire campaign, never did any critical investigation or analysis of Hillary Clinton.

The same thing has been happening in the general with the statements from the McCain  campaign. McCain saw what worked for Hillary and he has been repeating it. John McCain's campaign has claimed repeatedly that Obama is favored by the media because he was getting more press coverage than him. But the facts are that 72% of the coverage of Obama was negative in the media, whereas for McCain the coverage was about 50/50.

And yet, once again, the majority of media outlets simply ran McCain's talking points unchallenged, claiming themselves that they were biased in favor of Obama, even though they know full well that the majority of the stories they run on Obama are negative.

Interestingly enough, polls have repeatedly shown that the majority of people believe that the media gives favorable coverage to Obama, even though the media has consistently been the most critical of Obama and has given favorable coverage to Hillary and McCain. Why do people think that the media gives favorable coverage to Obama then? Well because the media claims that it gives favorable coverage to Obama because all that the mainstream sources have done is uncritically repeat the talking points of the Clinton and McCain campaigns.

Just like the lead up to the war in Iraq, the major news media is serving as a source of disinformation, not information. The media is actually making people less informed, or rather wrongly informed.

While there have been a few interviews with John McCain that are hard hitting and critical, and a few programs that air this information, none of the critical analysis of McCain becomes part of the media echo chamber, and very few articles are written that are critical of John McCain or take any strong stance against him nor are most of his frequent blunders, misstatements, and outright lies repeated in the national news.

And why does McCain get such favorable treatment in the press? Well, because he is the actual celebrity. John McCain has been the biggest self-promoter in Congress for years. He's been on more talk shows than any other Congressman in America. He's been in movies, he's had his life story turned into a movie, he hangs out with more Hollywood celebrities than any other Congressman. The irony of his whole "Obama is a celebrity" campaign is that John McCain is the real celebrity, indeed he is the very definition of a celebrity politician.

A celebrity politician is not a politician who become famous, since most of them do once they are in office. A celebrity politician is a politician who was famous prior to becoming a politician. John McCain was at the center of Richard Nixon's pro-war POW campaign, think something similar to how Jessica Lynch was used during the Iraq war.

As famous as Jessica Lynch was a few years ago while the administration was using her to build support for the war, that's how famous John McCain was when he returned from Vietnam.

McCain parleyed that celebrity status into a political career. And in fact, if you look at celebrity politicians, it is the Republican Party that is most full of celebrity politicians.

Most of the biggest celebrity politicians are Republicans, for example: Ronald Reagan (Hollywood actor), Arnold Schwarzenegger (Hollywood actor), Sonny Bono (singer and Hollywood actor), and Fred Thompson (Hollywood actor). 

But, since the mainstream media is failing to do its job, here are some other sources (some of which include mianstream media clips) that address "The Real McCain":

Why McCain would be a mediocre president

 

 

 

  

  

  


Posted by rationalrevolution.net at 9:51 AM EDT | Post Comment | View Comments (5) | Permalink
Updated: Monday, September 1, 2008 6:36 AM EDT
Thursday, July 31, 2008
 Our Economists Just Don't Get It

Topic: Commentary

There are just so many examples of economic stupidity in the news these days that its hard to know where to start. For one thing, a recent poll supposedly shows a majority of "economists" claiming that a president John McCain would be better for the stock market than a president Barack Obama. Supposedly, the primary factor that these geniuses made this decision on was that McCain pledges not to raise the capital gains tax, while Obama pledges to raise it by 5% to 8%.

A small increase in capital gains taxes isn't going to do anything to harm the stock market. What causes stock prices to go down is uncertainty, lack of faith in the system, lack of security, lack of transparency, and of course a bad economy.

We can't say for sure what impact either McCain or Obama will have on those factors, but one thing that is for sure is that John McCain is already basically pledging to do things that will undermine those factors, especially the issue of uncertainty.

Right now the continuously weakening American dollar is causing uncertainty. Right now the high levels of American privately held debt and public debt is causing more uncertainty and of course also contributing to the weakening dollar. Thus, right now balancing the budget is one of the most important things that the next president can do that would have a positive impact on stock prices and thus far it looks like Barack Obama is the candidate most likely to reduce the deficit the most. In truth neither candidate is going far enough towards balancing the budget.

The reality is that we need major tax increases in this country, probably across the board, not just on the wealthy, but certainly mostly on the wealthy. And, with those tax increases, if they are used to balance the budget, what we would see is an increase in investor confidence and thus improvements in the stock market.

Not only that, though, we also need more regulation of industry and of course we need major improvements in the health care system and more health care security in America. All of those things are things that Obama is more likely to bring to the table, and thus again he is the one more likely to be better for the stock market.

The Republicans have essentially decimated this country's economy over the past 30 years. It may not have seemed like it at the time, but essentially every aspect of Republican financial policy was gutting the economic backbone of America and driving us towards this current crisis, and this crisis will get worse before and if it gets better.

How anyone can have any faith in John McCain's economic policy proposals I have no idea. Basically everything that he says on the subject is just a repetition of the same tired old talking points that have let us to this current crisis. John McCain's economic agenda is, at its core, just more Reaganomics, the same Reaganomics that we have been following for 30 years leading us down this road, including the time under Clinton. Its the same policies of tax cuts, deficit spending, deregulation, privatization, and giving "the market" free reign.

Over just the past 10 years we have seen a series of major crisisies that have been brought about due to deregulation. In almost every case the industries that lobbied against regulations, processes, and systems of oversight were negatively impacted by the lack of those very same regulations.

Examples include the lack of improved fuel economy standards leading to the current problems faced by American automakers, the deregulation of the banking and lending sectors leading to the current credit and housing crisisies, the lack of oversight of the airline industry that led to the recent grounding of hundreds of planes due to safety problems, the lack of a food source tracking system which led to the recent salmonella problems, the lack of food safety inspections which led to recent problems with tainted beef in America and have harmed the image of American meats around the world, the lack of corporate accounting oversight which led to the accounting scandals made famous by Enron, and the list can go on.

In essentially all of these cases industry lobbied against oversight, and in the short term a few people benefited financially, but in the long run the lack of oversight hurt the industries and the American economy as a whole and certainly undermined the values of stocks. To claim that McCain's hands-off proposals (though he does acknowledge "some" need for minor regulatory increases) would "be better for the stock market" is absurd.

The fact is that proper regulations help industry and they bring security and trust to the economy. In so doing everyone benefits, but by definition the industries and share holders benefit the most, and thus it is appropriate that taxes be increased on capital gains to pay for the oversight.

John McCain likes to tout a common claim that the majority of American's own stocks, and that thus an increase on capital gains would impact most Americans. This is only somewhat true but greatly misportrays the reality. The reality is that as of 2005 56% of Americans owned some form of equity investment, however the majority of Americans own those investment inside retirement plans and thus receive no income from them. In addition, even though 56% of Americans own equity investments, most only own a very small amount.

The top 10% owns 84% of the value in the stock market. The bottom 90% own a mere 16% of the value. Yes, 56% of Americans may own some stock, at least one share, but nevertheless almost all of the capital in American is owned by the top 10%, or really the top 1%.

As of 1999 the top 1% owned almost 40% of the wealth in America. Since the 1980s the share of income from capital gains going to the top 1% of American has been increasing. Today 57.5% of capital gains income goes to the richest 1% of Americans. The graph below shows share of capital income received by the top 1% and bottom 80% of Americans from 1979 to 2003.


 source: http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Both the fairness and the appropriateness of increasing the capital gains tax in some fashion is really beyond question. I personally favor a simplification of the tax code to eliminate the distinctions between different types of income so that capital gains would become taxed in the same way as earned income. This would completely alleviate the argument that lower income stock holders would be negatively impacted and it would also stop penalizing lower income persons for owning stocks and stop making unearned income a means of paying lower taxes for the wealthy. It would also serve to effect a shift in capital ownership in America by proving forces that would result in a more equitable distribution of capital ownership. Barack Obama's plan to increase capital gains taxes by 5% to 8% is better than McCain's plan to do nothing, but its still an imperfect solution, though Obama has also mentioned the possibility of creating a capital gains tax exemption for seniors for a certain amount of income, which is also not a bad idea.

The British publication The Guardian pointed out the obvious fact, which is that the American press is giving John McCain a free ride by continuing to call his economic policies "pro-growth", when in fact all of the economic data proves that his economic policies undermine growth. The facts that prove this are the record of George W. Bush, under which we have seen the worst economic record since the Great Depression. What John McCain proposes basically is not just more of the same policies of Bush, but actually a deepening of the policies of Bush.

    President Bush has the worst record on job growth of any president since Herbert Hoover. The typical worker has seen her wages decline over the eight years of the Bush presidency, and she has seen none of the benefits of the period's productivity growth. In addition, tens of millions of homeowners are seeing the bulk of their wealth disappear in the housing crash.

    This is the record senator John McCain has embraced by making Bush's tax cuts the centrepiece of his economic agenda. Choosing an economic policy that has been a proven failure is a bold and risky strategy in a presidential campaign, but McCain is betting that the media will be so incompetent that they will not notice. He may be right.

As another example of economic stupidity, Market Watch also recently ran an article on the top 10 most overpaid jobs in America. Ignoring their actual rankings, key fundamental concepts are missing from the article. First of all, even though they state that these positions are "overpaid" they continue to use the word "earn" to talk about their income, for example "They've been long overpaid. Stock-fund managers can easily earn $500,000 to $1 million a year including bonuses -- even though only 3 in 10 beat the market in the last 10 years. Now we discover an untold number enriched themselves and favored clients with illegally timed trades of fund shares."

Well, quite clearly they aren't "earning" this income, which is the whole point. If they are "overpaid" then that means that they are receiving income that they didn't earn.

But here is the big picture that the article fails to grasp. If these positions are overpaid, and all of these positions are positions where incomes go into the hundreds of thousands to hundreds of millions of dollars, then clearly what we see here is an acknowledgement that many of today's highest income receivers are overpaid in the first place. But if these people are overpaid then where is that "overpayment" coming from? You don't get something from nothing. If some people are overpaid then by definition it means that other people have to be underpaid. You can't overpay one person without underpaying someone else.

If the people at the top are being overpaid then it means that the people at the bottom have to be getting underpaid, which is really quite obvious when you consider that median wages have been stagnant in America for the past decade even while productivity and the education of the workforce have risen.

The fact that many of the highest paid people in America are getting overpaid isn't simply some magic lottery for them that benefits them while doing no harm to anyone else, no this is a product if direct theft from the average American worker. Redistribution of wealth has been accelerating in America over the past 30 years and that is a redistribution of wealth from the working poor and middle class to the wealthy.

The fact is that it goes way beyond these "overpaid" positions outlined in the Market Watch article, the fact is that the incomes of the wealthy in America, all of the wealthy are a function of the mechanics of capital not of the contributions of the individuals.

What makes the incomes of the super rich possible, even people like Bill Gates, Warren Buffet, and Michael Dell who have taken actions to create wealth and produce results, is not just their own contributions, but also the work of millions of other people and the system of capital that enables them to reap the benefits of other people's work.

Bill Gates could not become Bill Gates by himself, his wealth is only made possible by the collective work of not only employees of Microsoft but of public and private contributions throughout the global economy.

The incomes of all executives are drawn from the value produced by the other employees. Executives create very little value directly. Their pays comes from the collective value produced by all of the employees. Furthermore, of course, all returns on investment are the product of the value created by the workers of the companies. The mechanics of capital are what make these returns, this redistribution of wealth from the workers to the capital owners and managers, possible.

What we have seen in the American economy over the past 30 years is that the mechanics of capital has increasingly been transferring value from workers to capital owners and managers. The dramatic rise in incomes of corporate executives and the growing gap between the rich and the average in America is not a product of rich people working harder or doing more, it is not a product of the average person becoming lazy or doing less, it is not a product of only 1% of Americans being well educated or intelligent, it is purely a product of the "mechanics of capital", of the financial and legal structure that grants ownership of rights to value that is produced by workers to the owners of the material and legal tools of production.

Growing economic disparity in America is not a product of growing productive disparity, it is purely a product of growing legal disparity and growing legal unfairness, whereby increasing portions of the value that workers produce is taken from them and transferred to capital owners in the form of "unearned income" and "overpayment".

This is the central economic fact that continues to go un-discussed in this country and that certainly anyone advocating the economic agenda of John McCain either fails to understand or fully understands and desires to see continue. The problem for those who desire to see this situation continue is that it cannot continue, and this is why no matter what your views are, the fact is that the economic policies of John McCain are going to be worse for the stock market, because at a certain point the system is no longer able to support itself and fundamentally that point seems to currently be upon us. The completely unjustifiable transfer of value from workers to capital owners simply cannot be sustained at this level any longer even if one wanted to do so. Either capital ownership has to be greatly equalized, which is what I would favor, or there is going to have to be a major and fundamental correction in wages, or else the system will either completely stagnate or the American economy is going to have to become an economy that caters to foreign consumers while American workers fall farther and farther behind.


Posted by rationalrevolution.net at 12:08 AM EDT | Post Comment | View Comments (5) | Permalink
Updated: Thursday, July 31, 2008 12:26 AM EDT
Sunday, June 8, 2008
 Barack Obama 2008!

Topic: Commentary

It's official now, Barack Obama is the Democratic Candidate for the 2008 presidential election! 

Despite this, it seems that there are still some Hillary Clinton supporters that claim they won't vote for Barack Obama for a variety of reasons and there still seems to be many misconceptions about the primary campaigns, most of these being misconceptions that were intentionally fostered by the Clinton campaign.

The first issue to address is the issue of Obama and women's issues. Since Obama was running against a female that many women wanted to be the first president of the United States, some of these women have taken to seeing Barack Obama as the antithesis of feminism and as now the most hated man in politics who will never get their vote. These women have often claimed that they will vote for John McCain in November either out of spite for Obama or in some cases they claim that he's "less misogynist" than Obama.

This is quite amazing because in realty Barack Obama is one of the most pro-women's issues members of the Senate, ranking right up there with women like Diane Feinstein, Barbara Boxer, and Hillary Clinton in his support for women's issues. In my examination of the voting records the only male Senator with a voting records supporting women's issues comparable to Barack Obama's was Ted Kennedy. If you look at support for women's issues in the Senate the highest ranking senators on this are all women and Ted Kennedy and Barack Obama. Arguably, Barack Obama is currently the most pro-women's agenda candidates ever to be in the final running for the office of the presidency.

Below is a review of the recent voting records on women's issues comparing the records of Hillary Clinton, Barack Obama, and John McCain.

HILLARY:

Abortion Issues:

2007 In 2007 NARAL Pro-Choice America gave Senator Clinton a grade of 100.

2006 Senator Clinton supported the interests of the NARAL Pro-Choice America 100 percent.

2006 Senator Clinton supported the interests of the Planned Parenthood 100.

2005-2006 Senator Clinton supported the interests of the National Family Planning & Reproductive Health Association 93 percent.

2005-2006 Senator Clinton supported the interests of the National Right to Life Committee 0 percent.

2005 Senator Clinton supported the interests of the NARAL Pro-Choice America 100 percent.

Women's Issues:

2005-2006 Senator Clinton supported the interests of the American Association of University Women 100 percent.

2005-2006 Senator Clinton supported the interests of the Business and Professional Women USA 83 percent.

2005-2006 Senator Clinton supported the interests of the Federally Employed Women 90 percent.

2005-2006 Senator Clinton supported the interests of the National Organization for Women 96.

2005 Senator Clinton supported the interests of the American Association of University Women 100 percent.

2005 Senator Clinton supported the interests of the National Organization for Women 100 percent.

OBAMA:

Abortion Issues:

2007 In 2007 NARAL Pro-Choice America gave Senator Obama a grade of 100.

2006 Senator Obama supported the interests of the NARAL Pro-Choice America 100 percent.

2006 Senator Obama supported the interests of the Planned Parenthood 100 percent.

2005-2006 Senator Obama supported the interests of the National Family Planning & Reproductive Health Association 100 percent.

2005-2006 Senator Obama supported the interests of the National Right to Life Committee 0 percent.

2005 Senator Obama supported the interests of the NARAL Pro-Choice America 100 percent.

Women's Issues:

2005-2006 Senator Obama supported the interests of the American Association of University Women 90 percent.

2005-2006 Senator Obama supported the interests of the Business and Professional Women USA 100 percent.

2005-2006 Senator Obama supported the interests of the Federally Employed Women 100 percent.

2005-2006 Senator Obama supported the interests of the National Organization for Women 91 percent in 2005-2006.

2005 Senator Obama supported the interests of the American Association of University Women 83 percent.

2005 Senator Obama supported the interests of the National Organization for Women 100 percent.

MCCAIN:

Abortion Issues:

2007 In 2007 NARAL Pro-Choice America gave Senator McCain a grade of 0.

2006 Senator McCain supported the interests of the NARAL Pro-Choice America 0 percent.

2006 Senator McCain supported the interests of the Planned Parenthood 0 percent.

2005-2006 Senator McCain supported the interests of the National Family Planning & Reproductive Health Association 0 percent.

2005-2006 Senator McCain supported the interests of the National Right to Life Committee 75 percent.

2005 Senator McCain supported the interests of the NARAL Pro-Choice America 0 percent.

Women's Issues:

2005-2006 Senator McCain supported the interests of the American Association of University Women 20 percent.

2005-2006 Senator McCain supported the interests of the Business and Professional Women USA 33 percent.

2005-2006 Senator McCain supported the interests of the Federally Employed Women 30 percent.

2005-2006 Senator McCain supported the interests of the National Organization for Women 13 percent.

2005 Senator McCain supported the interests of the American Association of University Women 17 percent.

2005 Senator McCain supported the interests of the National Organization for Women 0 percent.

As you can see Obama's voting record is nearly identical to that of Hillary's, and in stark contrast to that of John McCain's. How could someone who was supporting Hillary as a feminist on the basis of women's issues now vote for John McCain, quite possibly one of the most anti-feminist members of the Senate and most anti-women's agenda presidential candidates of the past 30 years. Not only is John McCain's one of the least supportive of women's issues of any member of the Senate, but John McCain divorced his disabled wife to go after Cindy Hensley after a short romance between the two while John was still married to his first wife. When John McCain met Cindy he was 43 and she was 25. She was a cheerleader and wealthy heiress, soon to be his trophy wife. This is not to mention the well known incident of him calling Cindy a "cunt" in public while they were married. John McCain is quite far from Barack Obama, who married an accomplished strong woman, both in terms of policy and character when it comes to women's issues.

What about the campaign itself? Hillary Clinton and her supporters have made repeated statements throughout the campaign that the media was against her, that she was being treated unfairly due to sexism, that Barack Obama was attacking her, that she had won the most popular votes, etc. None of these things were ever true, yet many of her supporters still repeat these same false statements today, which have only served to divide the party and unfairly damage Barack Obama.

While I have frequently heard Hillary and her supporters claim that the media was biased against her, or that sexism in the media undermined her campaign, I have not seen any person making this claim provide one single example, because none exist. I have seen examples of specific issues on the campaign trail where people shouted sexist comments or things of this nature, but that has basically no impact on the race and has nothing to do with the media.

A study of media coverage of the candidates during the election showed that the positive coverage of Hillary and Barack was nearly identical early in the campaign for both candidates, with Barack receiving 69% positive coverage and Hillary receiving 67% positive coverage, while Obama received much more negative coverage once the Reverend Wright issues began getting news.

Overall Barack Obama received far more scrutiny in the press than Hillary did, and much more race related scrutiny at that. The issues that Obama faced were the pictures given to the press of him wearing traditional Muslim garb during a visit to Africa (Hillary and Laura Bush have both also worn traditional Muslim garb on diplomatic visits, those these were not shown in the media), questions about his religious faith (whether he was a Muslim), criticism over the comments made by Reverend Wright, questions about his supposed "connections" with Bill Ayers, questions about his connections with Tony Rezko, questions about his patriotism, questions about his experience and readiness, negative coverage of his his "bitter" remarks (launched by a Clinton supporter), and absurd charges of "elitism".

On top of all of that, Hillary Clinton exploited each of these issues and in fact launched some of them, even when they weren't legitimate, such as the Bill Ayers issue.

The only really negative issue that Hillary had to deal with was her Bosnian sniper comments, which were totally self inflicted. But look at what Hillary was never questioned on. There was scant coverage of her financial dealings with Peter Paul, which were far more damning than the relationship between Rezko and Obama. While it is true the Clintons were not found guilty of any criminal wrongdoing with Paul, in terms of questions about one's "judgment" the dealings between the Clintons and Paul are quite troublesome. There was no media coverage of Hillary's "God bless the rich" comments, even though they came only a short time after the fuss made over Obama's "bitter" remarks. There was also basically no coverage questioning the complicated matter of having a former president back in the White House as the spouse of a sitting president, which is something that has obviously never happened before and hasn't really been anticipated by the laws. She was never forced to deal with this issue and to explain how she would handle the situation or what potential problems it could cause.

For the most part, when Hillary's campaign made false statements or piled on Obama her claims or lines of attack most just passed on by the press without scrutiny. Hillary repeatedly attacked Obama personally while Obama never attacked her personally. When asked if she believed that Obama was a Muslim she said that he wasn't, "as far as I know". When George Stephanopoulos, the former Clinton aid, asked Obama about his "relationship" with Bill Ayers in the ABC debate Hillary piled on, criticizing Obama for his relations to Ayers (which were basically nothing) while in fact she had far more direct relations to the Weathermen and even worked herself for a pro-Communist legal firm in the 1960s. Her campaign is the one that launched the Obama in Muslim garb picture. Hillary stated that Barack Obama didn't meet the "Commander in Chief" test, though she and Republican opponent John McCain did. Bill Clinton of course implied that Obama's win in South Carolina was not a big deal because "Jessie Jackson won there too".

The personal attacks levied by the Clinton campaign against Obama are numerous, while Obama never launched personal attacks against Hillary, and yet somehow Hillary and her supporters have been able to convince some people that she was the victim in this campaign.

Hillary and her supporters not only attack Barack Obama, but also major segments of the Democratic Party itself by calling supporters of Obama out of touch elitists, cult followers and people who are delusional. I mean to have major leaders in the Democratic Party basically coming out and calling half of the Democratic electorate "delusional idiots" is quite extraordinary, yet this is exactly what Hillary and her supporters did. Nothing comparable to this came out of the Obama campaign until the votes in West Virginia and Kentucky, after which some of Obama's supports called the voters of those specific states racists, however this appears to actually be supported by the real facts, with a large number of Hillary supporters in the exit polls saying that race played a major factor in their voting decision and from many interviews with people in those states making blatantly racist remarks about Obama. Not to mention that Hillary played to these voters by touting her credentials among "hard working whites".

When it all came down to the wire Hillary and her supporters blamed her loss on sexism, both in the media and in general. Yet the facts of American politics paint quite a different picture.

There have been 29 female governors in America, while there have only been four African-American governors. The first African-American to be elected governor is Douglas Wilder who was elected governor of Virginia in 1990. Incidentally, Douglas Wilder looks white. One of the four governors was P. B. S. Pinchback (also looked white), who was governor of Louisiana in 1872 but only for a period of 35 days on appointment. To date only two African-Americans have actually been elected as governors, Wilder and Deval Patrick. The first female elected governor was elected in 1925.

Today there are sixteen women in the United States Senate. There have only been five African-American Senators in all of US history. Two of the African-American senators were elected during Reconstruction, in the 1870s. Both of them were partly white and both looked white. Barack Obama himself is partly white. So, of all of the "African-Americans" elected to high offices, two governors and five senators, over half of have been of "mixed race" and have looked mostly white.

On this record, of many more women having been elected to high public offices than blacks and women having more positions of power in government than blacks, I find the argument that the American political system is more sexist than it is racist quite ridiculous. Women in America clearly have more political power than racial minorities, particularly blacks. Hillary Clinton did not lose because of sexism, she lost because she's Hillary Clinton and because people were inspired by Barack Obama. Indeed I think its safe to say that being a woman helped Hillary far more than it hurt her, and to be fair the same can possibly be said of Obama, though I think he faced much more clear cut racism than Hillary did sexism.

Finally we come to the issue of Hillary's so-called support during the final contests. If you examine the exit polls you find that a significant portion of the people who voted for Hillary Clinton during the final five or six contests intended to vote for John McCain in November. These people included both cross over Republicans and conservative Democrats. In fact the percentage of people who voted for Hillary but said in exit polls that they intended to vote for McCain in the fall was a determining factor in the Indiana election. She would have lost that election if not for people who voted for her despite intending to vote McCain in the general.

In Indiana Democratic primary exit polls, when asked if they would vote for Hillary, McCain, or No One in November, 16% of the voters in the Democratic primary said they would vote for John McCain and 41% of those voters voted for Hillary Clinton. This means that 41% of that 16% voted for Hillary with every intention of voting for John McCain in November. If you extrapolate those results out it means that 83,639 people voted for Hillary who intended to vote for John MCain in the fall. Hillary won Indiana by only 14,195 votes, so she won Indiana because of voters which intended not to vote for her in November. The situation was similar in Pennsylvania, though it wasn't quite enough to change the outcome.

In West Virgina when asked who they would vote for in November if it were between Hillary, McCain, or No One, 18% of the voters said they would vote for McCain, and of those 38% voted for Hillary. Again this means that a significant number of Hillary voters never intended to vote for her in the general. This trend was never shown among Obama voters.

So, the reality is that Hillary Clinton lost because of Hillary Clinton, not because of sexism and not because the vote was stolen from her or because the media was against her. In fact the contest was closer than it should have been due to crossover McCain voters who were voting for Hillary for whatever reason. This crossover effect was enough to have at the very least swung the Indiana contest to her that she wouldn't have otherwise won and to run up numbers in other contests.

Despite the Clinton campaign's claims, Hillary Clinton did not win the popular vote. Her claim to the popular vote rests on not counting all of the caucus states and on counting both Florida and Michigan while giving Obama zero votes from Michigan. This obviously isn't legitimate. Despite this, even after her "concession speech" today, Hillary and her supporters continue to claim that she won the popular vote. This continued deception flies in the face of her claim that she is doing all that she can to unite the party. Despite claiming to back Obama, she and her supporters are still giving credence to the idea that she should have been the winner, that it was stolen from her, and that she was treated unfairly by the media and the party, when in fact nothing is farther from the truth.


Posted by rationalrevolution.net at 10:47 PM EDT | Post Comment | View Comments (11) | Permalink
Updated: Monday, June 9, 2008 7:56 AM EDT
Friday, May 23, 2008
 Talks with the "Enemy"

Topic: Commentary
Much has been made of Barack Obama's stated willingness to have direct talks with the leaders of so-called enemy nations. When he first made a direct statement about meeting with so-called enemy leaders during a Democratic debate back in July 2007, made of the pundits called it a gaff. The audience at the debate, however gave his answer ample applause. Here is exactly what was said:
QUESTION: In 1982, Anwar Sadat traveled to Israel, a trip that resulted in a peace agreement that has lasted ever since.

In the spirit of that type of bold leadership, would you be willing to meet separately, without precondition, during the first year of your administration, in Washington or anywhere else, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea, in order to bridge the gap that divides our countries?

OBAMA: I would. And the reason is this, that the notion that somehow not talking to countries is punishment to them -- which has been the guiding diplomatic principle of this administration -- is ridiculous.

(APPLAUSE)

Now, Ronald Reagan and Democratic presidents like JFK constantly spoke to Soviet Union at a time when Ronald Reagan called them an evil empire. And the reason is because they understood that we may not trust them and they may pose an extraordinary danger to this country, but we had the obligation to find areas where we can potentially move forward.

And I think that it is a disgrace that we have not spoken to them. We've been talking about Iraq -- one of the first things that I would do in terms of moving a diplomatic effort in the region forward is to send a signal that we need to talk to Iran and Syria because they're going to have responsibilities if Iraq collapses.

They have been acting irresponsibly up until this point. But if we tell them that we are not going to be a permanent occupying force, we are in a position to say that they are going to have to carry some weight, in terms of stabilizing the region.
source: http://www.cnn.com/2007/POLITICS/07/23/debate.transcript/
Hillary Clinton disagreed with him during the debate and she has pointed to his position on dialog with these nations as a sign of weakness or naivete.

Republican candidates and spokespeople have been calling Obama naive on foreign policy and stating that his willingness to talk to "enemies" is a major problem. Recently President Bush, while in Israel, likened those who would try to talk to "enemy" nations to "appeasers" of the Nazis. John McCain has jumped on this bandwagon and called Obama's ideas on foreign policy a complete disaster.

John McCain's recent statements on this subject include the following:
"All I can say is: If Senator Obama wants to sit down across the table from the leader of a country that calls Israel a stinking corpse, and comes to New York and says they're gonna, quote, "wipe Israel off the map," what is it that he wants to talk about? What is it that he wants to talk about with him?

And the belief that somehow communications and positions and willingness to sit down and have serious negotiations need to be done in a face to face fashion as Senator Obama wants to do, which then enhances the prestige of a nation that's a sponsor of terrorists and is directly responsible for the deaths of brave young Americans, I think is an unacceptable position, and shows that Senator Obama does not have the knowledge, the experience, the background to make the kind of judgments that are necessary to preserve this nation's security."
source: http://www.huffingtonpost.com/2008/05/15/john-mccain-obama-unfit-t_n_101994.html
"He now claims that some 'fear' to 'negotiate' with the likes of Iranian President Ahmadinejad, who has called Israel a 'stinking corpse' or Ayatollah Khamenei, who called Israel a 'cancerous tumor.' I have news for Senator Obama: I have met some very bad people before in my life. It is not fear that drives my opposition to unconditional meetings with Ahmadinejad, Khamenei, Kim Jong Il, and Raul Castro; rather it is my clear understanding that such a course will fail to eliminate the threat posed by these rogue regimes. I don't fear to negotiate. Instead I have the knowledge and experience to understand the dangerous consequences of a naive approach to Presidential summits based entirely on emotion."

source: http://firstread.msnbc.msn.com/archive/2008/05/21/1050316.aspx

So, according to John McCain, President Bush, Hillary Clinton, and others, having high-level communications between nations is a completely horrible policy and it somehow bolsters the prestige of the enemy and it is a form of appeasement and surrender. This is completely absurd. As the famous quote from Sun-Tzu states, "Keep your friends close, and your enemies closer."

Leaders of "enemy" nations have a long history of having negotiations with one another. Sometimes this was able to improve relations and conditions, sometimes it wasn't, but I can't think of any situation where the talks themselves made matters worse. At the very least one is able to learn about their enemy. In the best case scenario common ground can be found, irrational fears can be mitigated, and more normal relations can ensue. There are no guarantees of course, but communication is not a problem in and of itself.

If we look at American history, have examples of American presidents engaging in direct high-level diplomacy with "enemy" nations to good effect. We also have examples where we refused to engage in direct diplomacy and the effects have been disastrous. If one goes down the line of scenarios, in cases where we engaged in high level direct diplomacy the outcomes were generally very good. In cases where we didn't engage in direct diplomacy the outcomes were usually bad, for us.

The primary examples of beneficial direct diplomacy are Richard Nixon's visits to China and the Soviet Union, both of which are now hailed today and the greatest achievements of Nixon's presidential career. There is no doubt at all that Nixon's meeting with the Chinese Communist leader Mao Zedong in 1972 was good for China, good for America, and greatly strengthened America's hand in dealing with the Soviet Union. Watch the segment below from a documentation on Richard Nixon that discusses Nixon's meeting with Mao. Not only did Nixon meet with Mao, but he did it in Beijing. That is how presidential diplomacy is done. 

 

Nixon also went to Moscow and met with the Soviet leader Brezhnev in 1972 as well, after having met with China. During that meeting Nixon signed and important nuclear weapons treaty and there is no doubt that the visit reduced tensions between America and the USSR and also strengthened America's hand. You can watch a documentary segment on that meeting below as well.

Ronald Reagan had numerous meetings with the Soviets during his presidency. In 1988 Ronald Reagan traveled to the Soviet Union, after having given his famous "Evil Empire" speech in America, to have direct talks with then Soviet leader Mikhail Gorbachev. During that visit Reagan stood in Red Square and was asked in from of national Soviet television if he still thought that the Soviet Union was an "evil empire", to which he answered "No". At one time Reagan addressed the Soviet Congress within its own halls standing under a statue of Lenin.

Red Square

Red Square

John McCain claims that we can't possibly even talk to the leaders of enemy nations because doing so would give these nations too much prestige, that talking to them is some kind of honor that will inflate their egos and strengthen their hands, as if, by us simply talking to them, even if we are telling them that we disagree with them, that this will somehow make them look better in the eyes of their nation and the world. If Richard Nixon was able to go to China and shake hands with members of the Chinese Red Army, if Ronald Reagan was able to stand in front of the Kremlin and say on national television that the Soviet Union wasn't an evil empire, and these things actually strengthened America's hand, how is it that John McCain thinks that simply talking to someone is going to undermine American interests and strengthen our "enemies" leaders?

McCain's position is an absurd joke that only proves he has been drinking too much of Bush's tainted Cool-Aid.

Today the Chinese still have political prisoners. Today there are still human-rights abuses in China. Today China has met very few of the conditions that McCain says other nations must meet before he's be willing to talk to their leaders. But you know what, today China is moving in the right direction. I don't that anyone believed that America or China would be better off had American presidents refused to talk to them. You can't wait until a foreign government meets all of your demand before you talk to them, you have to open up communication in order to influence them in order to move the country in the direction that you want. And even that may not work, but its not going to hurt to try.

The results speak for themselves. We have remained closed off from North Korea, Iran, and Cuba, and what good has come of it? Nothing. Its bad for the people of these nations and its bad for us.

But look at examples where we didn't have direct communications. There is the example of Kennedy's meeting with Kruschev, which went badly, but that ws due to Kennedy's poor performance. There was nothing inherently wrong about the idea of the meeting, its just that Kennedy was unprepared. The lesson there is, don't go in unprepared. Besides, the problems with that meeting have nothing to do with McCain's arguments about meeting or not meeting certain requirements. Many other American leaders met with them without these conditions either, and to good effect.

The Cuban missile crisis followed this meeting between Kennedy and Kruschev, but there is a great chance that if we hadn't embargoed Cuba in the first place that the Cubans wouldn't have had to cozy up to the Soviets so much to begin with and rely on them for aid. There is no doubt that a more open relationship with Cuba even right after the Revolution would have had a greater chance of moderating the regime and preventing their forming of alliances with America's other "enemies" to begin with.

The other perfect example is Ho Chi Minh, the revolutionary leader of Vietnam. Ho Chi Minh was trying desperately to communicate with American leaders, who snubbed him. Ho Chi Minh wanted to form an alliance with America and was seeking America's help to gain independence from France. However, we refused to have direct negotiations with him, in large part due to our alliances with France, and so, since we wouldn't help, he turned to the Communists for help, because what was certain was that the Vietnamese were going to fight for independence from France, which was an abusive imperialist rulers of the country. The entire Vietnam War could have been avoided if American presidents had entered into some direct talks with Ho Chi Minh, there is really very little doubt about that.

So, the fact of the matter is that John McCain's position of not talking to "enemy" leaders until they meet certain conditions is not only a foolish position, but it is a position that has been proven to fail time and time again. His position is just a continuation of the Bush policies, which we have seen are a total failure. George Bush is one of the most disliked presidents in the world in American history, he started a foolish war, no progress had been made by his administration in dealing with American "enemies", and our negotiating power and influence in the world has grown weaker under Bush. This is what McCain calls an "experienced" foreign policy, while he calls Obama's call for a return to direct engagement, which has been shown time and time again to bring meaningful results, "naive". McCain's positions would be laughable if not for the fact that some people do buy into them.


Posted by rationalrevolution.net at 10:04 AM EDT | Post Comment | Permalink
Updated: Friday, May 23, 2008 11:44 AM EDT
Wednesday, May 14, 2008
 The Credit Crisis, Free Markets, Democracy, Change...

Topic: Commentary

We live in interesting times. NPR recently aired an excellent segment on the credit crisis, which touches on a number of issues, namely the issues of what unregulated "free markets" mean at this day, what it means to be informed in a global economy, and how global economic develop affects us in America.

I highly recommend that you listen to the entire program. You can listen to a short 12 minute version of the program on the NPR website here: NPR - Global Pool of Money Got Too Hungry

You can download the entire one hour program from This American Life here however: TAL - 355: The Giant Pool of Money

Here is what I took away from this segment. Even though our government and high level financial analysts had some understanding of what was happening around 2002-2007, they never passed that information on to the public. Secondly, even though there was some concept of what was going on at high levels, due to the lack of information sharing, very few people, even the high level financial analysts, understood the big picture. Why wasn't economic information being shared? Because in a free market capitalist system information is power, thus there was, on top of everything else, information hoarding. There was also an irrational faith in the power of unregulated "markets".

But what exactly are we talking about here? What we are talking about here is that between the year 2000 and the year 2006 the total amount of liquid assets in the world doubled. As the segment states, the "global pool of money" was about $36 trillion in 2000. This "global pool of money" took hundreds of years to be amassed. This is the pool of liquid assets that accrued throughout the world during basically the entire history of civilization. Between 2000 and 2006 that pool of money doubled. Why did it double so quickly? Largely because of increased economic development in emerging economies, namely China and India. Not only did emerging economies contribute to exponential global economic growth, but people in those developing countries were also big savers, often putting as much as 50% of their incomes into savings. These savings then became a part of the global pool of assets seeking investment.

So, while the American economy was on a slight downturn and while Americans were going deeper and deeper into debt, the rest of the world was rapidly accruing assets and banking huge levels of collective savings. As American savings dipped into the red, the rest of the world was going heavily into the black. As this happened, the rest of the world looked to America as a safe place to invest their savings. For the past 100 years America has been seen as one of the safest places in the world to invest your money. In order to meet the demand for American investments, American bankers and financial organizations basically started creating very "sophisticated" investment securities, bonds, to sell to these foreign investors. What were these bonds? These bonds were created out of American debt, largely home mortgage debt, but really all kinds of debt.

So, between 2000 and 2007 interest rates went very low and credit issuers were falling all over themselves to give Americans loans because they were then packaging these loans into bonds that they sold to foreign investors, who assumed that America was a safe place to invest. So here Americans, people living in the richest country in the world, were effectively borrowing from some of the poorest people in the world. Now, the thing about all of this is that none of this was ever really explained to Americans in the first place. The credit was flowing freely, loans were going out like water, people were spending like crazy and buying houses at every higher prices, and it was never explained exactly why this credit was flowing so freely. Furthermore, Americans were brainwashed by the American myth. In America people believed that this economic explosion in the middle of poor economic fundamentals was due to "American hard work", or "the power of the American economy," etc. In reality none of this really had anything to do with America, other than our reputation as a safe place to invest. But, in fact America was not a safe place to invest. In fact, the underlying economics were bad and getting worse every day. This huge infusion of cash, all borrowed from the "global pool of money" fed the America delusion of economic superiority.

Now, how did all of this happen? Two things contributed heavily to the problems. 1) Lack of regulation and government oversight. 2) Free market competition.

It's no surprise that there was lack of government oversight during the Bush administration. A number of crisises in America have occurred during the Bush years due to lack of oversight. The airline safety problems due to lack of FAA oversight, problems in the pharmaceutical industry due to lack of FDA oversight, problems with tainted beef due to lack of FDA oversight, problems in the military due to lack of oversight, and problems in credit, finance, and banking due to lack of oversight. Let's not forget that some of this also began on Clinton's watch, with lack of corporate oversight leading to the Enron and related scandals. So, what we have a is systemic pattern of lack of oversight with real, significant, and costly consequences.

But lack of oversight isn't the whole story. The other ingredient is free-market competition. Lack of oversight wasn't enough to drive thousands of businesses to make bad decisions. No, it required free-market capitalism to do that. A one point in the segment there is a discussion of how one lending company was "forced" to make loans that it didn't want to make and that it knew made no sense.

Why were they forced to make these loans? Because of market competition. Even though the owner of the company knew that the loans were a bad idea, he had to follow the market forces. If he didn't he would have been driven out of business right then and there. The story of the credit crisis is a story of herd mentality and the forces of competition pushing firms into greater and greater risk despite them not wanting to go there. New types of loans were devised in order to try and gain an edge on the competition, and as soon as a new type of loan, no matter how risky, was developed, everyone else had to follow suit or risk losing all of their business to others.

In fact it would be safe to say that many people in the business wanted government regulation, they were looking for someone to come in and bring sanity to the process, but that didn't happen. And that is the irony of this whole situation and the whole predicament of the American economy as a whole. Irrational "free-market" ideology is a religion that has overtaken the country and indeed the problems aren't even being driven by the people at the top. The irony is that many industries want government regulation, indeed historically industries have been leaders in bringing regulation upon themselves. The irony is that most real economists know that free-markets have pitfalls and need oversight. The irony is that it's not the wealthy who are most opposed to raising taxes on the rich.

The super-rich in America only makeup less than 1% of the population. The "well-off" makeup between 5% and 10% of the population depending on how you define it. It is impossible in an even remotely democratic country to arrive at the economic policies of the United States with only the support of the wealthy. It's not the wealthy who are voting for tax cuts for the rich and industry deregulation and corporate welfare, it has been the majority of Americans who have been voting for those things for the past 30 years. Many of America's wealthiest people have been campaigning for the past 10 years for increased taxation on the wealthy. That includes people like Warren Buffet and Bill Gates. A recent survey by Bloomberg found that the majority of investors say that increasing capital gains taxes would have no impact on their investing strategies.

See: Investors Say Tax Increase Wouldn't Alter Strategy

"Upper-income investors in the poll tend to side with the Democratic view."

There is a very strange irony in America, that is actually not so strange. Many of today's wealthy educated Americans want to make the economic system more fair and more level than many of the poorest Americans. Polls show that many wealthy Americans are very concerned about growing economic disparity in America. People talk about the fact that Barack Obama has a lot of support from well educated upper-income whites. Obama's economic polices are the most favorable toward the poor of any of the candidates, yet Obama's support is weakest among poor whites. It doesn't seem to make any sense. Obama's policies will certainly tax the wealthy more than any of the other candidates, yet he has the most support among the wealthy. Why is that? It's because the majority of wealthy people are well educated, and well educated people understand that we have some major fundamental problems in the American economic system right now and that the system is unbalanced and unfair and unsustainable and that the only way to fix it is to make the system more fair and to start investing more in our society and in our economy, and the only way to do that is to tax the people who can both afford to pay for it and who by definition receive the most benefits. Educated people understand this, and ironically it is uneducated poor people who are voting in large numbers in support of self-destructive economic policies that give more tax breaks to the rich and prevent necessary government regulation of industry.

The issues are obviously much more complex than this. There are social factors to take into consideration, and certainly there are wealthy well-educated people who are free-market advocates who push for lower taxes on the wealthy. But the point is that American economic policies wouldn't be what they are if they only had the support of the wealthy, because the wealthy really only make up about 5% of the population, and in fact many of those top 5% vote Democratic and favor higher taxes on the wealthy, higher taxes on capital gains, and more spending on social programs.

The problem in America is that the ideologies of the Cold War have become completely ingrained in the population and they permeate the thinking of people of all levels of education and all classes and of course the media. It is taken for granted that "free market capitalism" is good and that government regulation is bad, and these views are widely held even by those people which are hurt the most by these views. The average American citizen simply doesn't have any meaningful understanding of economics in general, much less the complexities of the changing global dynamics and how those changes impact America.

There is an interesting presentation that gives some idea of the changing dynamics of the world called Shift Happens. You can watch it below:


The website for the creators is here: http://shifthappens.wikispaces.com/

The point of all this I guess is that we are living in a highly complicated global economy. Most Americans today really have no concept of how this all works. The Cold War rhetoric about the "triumph of capitalism" and the virtue of "free-markets" really has no place in a meaningful discussion of economics anymore, yet that is still the propaganda that permeates American thinking, to our own demise.


Posted by rationalrevolution.net at 9:05 AM EDT | Post Comment | View Comments (2) | Permalink
Updated: Thursday, May 22, 2008 9:24 AM EDT

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