AlterNet.org: Les Leopold http://personal.alternet.org/authors/les-leopold en Bernie's Next Big Task: Build a Large-Scale, National Progressive Movement http://personal.alternet.org/election-2016/bernies-next-big-task-build-large-scale-national-progressive-movement <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Sanders should concentrate on launching a new movement organization right now — one that would mobilize for his democratic socialist agenda</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/bernie_sanders_-_caricature.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>The Sanders campaign compiled an email list with 130 million names, a donor list that produced over $200 million in contributions, and a volunteer army of millions of enthusiastic supporters. The Democratic Party wants these lists, that money and those supporters. Good luck.</p><p>The establishment Democrats still don’t get it. Bernie’s passionate supporters actually believe in his agenda, and they view the Democrat Party as deeply entangled with Wall Street and the top 1 percent. They are not going to volunteer for Hillary no matter what Sanders says.</p><p>Rather than parsing words in the party platform (that Hillary and the rest of the establishment Democrats can and will ignore at will) Sanders should concentrate on launching a new movement organization right now — one that would mobilize for his democratic socialist agenda. We need an organization dedicated to reversing runaway inequality that can serve as a home for the incredible energy and idealism of his supporters. </p><p>Immediately, this new organization would have two goals: 1) defeat Trump; and 2) organize a million people to come to the Washington mall shortly after the inauguration to press for free higher education and a Wall Street speculation tax.<br /><br /><strong>Why a new organization? </strong><br />This is the perfect time to launch a large-scale progressive alliance with an organizational presence in every state. We need organization not just spontaneous eruptions that flower and wilt. We can’t just tweet an end to runaway inequality. We’ll need to systematically fight for it over a long period of time. We need an organizational structure that brings us together and connects our many issue and organizational silos. We should be able to go to Patterson, Pensacola or Pasadena to attend a meeting of a common organization that fights to reverse runaway inequality.</p><p>Bernie’s army of volunteers and small donors would likely support such a formation in large numbers if they thought it would really carry on the fight for the Sanders agenda. </p><p><strong>Defeating Trump</strong><br />The first task of this new movement would be to dump Trump. Instead of making a “lesser-of-two-evils” argument, we should make a positive claim that the “political revolution” Bernie has ignited would flourish more if Trump were not president.</p><p>Not only would Trump be a colossal disaster for this country, but his victory would make it much harder to fight for a progressive agenda. Instead of pressing for free higher education and single-payer health care, we would be fighting rear-guard actions against Muslim profiling and the building of the wall. </p><p>We don’t need to develop amnesia about Hillary’s Wall Street ties to understand that her election would provide a better organizing terrain on which to build a more powerful progressive movement. This is our positive reason to defeat Trump. </p><p><strong>Bring a Million to the Mall</strong><br />Defeating Trump is not enough. We need to plan right now for bold actions to prove to Congress that the Sanders agenda has massive grassroots support. Can we bring a million people to Washington right after the inauguration to demand that Congress pass a financial speculation tax to fund free higher education? Could a Bernie-led progressive alliance raise the money for outreach and transportation? It’s doable but only if we plan for it starting now. </p><p>Imagine the signal this would send to Bernie’s young supporters. Here would be an opportunity to attack the debt shackles that enslave millions of students and their families. Young people are likely to come running from all directions.</p><p><strong>But, wouldn’t this be a white movement?</strong><br />Pundits like <a data-beacon="0}}" href="http://www.nytimes.com/2016/06/10/opinion/hillary-and-the-horizontals.html?_r=0" target="_hplink">Paul Krugman still claim</a> that Sanders cares only about individual inequality and fails to address inequality between ethnic and racial groups. Krugman asserts that Hillary gets racism and Bernie, with his universal programs, does not, and that’s why Hillary got so many more votes from people of color.</p><p>It’s time to put this canard to rest. The Sanders campaign overwhelmingly won the votes of those under-thirty including the majority of black, Latino and Asian young voters. Hillary received strong support from older voters of color. What does this say about race and voting? It says that race doesn’t explain very much. Age, not race, created the major differences in these voting patterns. There is every reason to expect that an ongoing Bernie-led movement would draw young people of all shades and ethnicities. </p><p><strong>Can we really build a mass movement for economic and social justice? </strong><br />Before the Sanders campaign, that question was not even on the table. But who would have predicted that Sanders, an avowed socialist, would nearly bring the Clinton machine to a grinding halt? Who would ever have predicted twenty plus primary victories and the raising of more money than any other candidate? It tells us something important: This is not the time to think small.. </p><p>Runaway inequality will not fix itself. Reversing it requires a mass movement with staying power to bring the political revolution to fruition. </p><p>Bernie has field tested a new social democratic agenda. We now have a mass constituency for a financial transaction tax, free higher education, Medicare for All and an end to a corrupt campaign finance system. Americans are ready to break up the big banks and undermine the power of Wall Street.</p><p>But none of this will happen without resources, organization, and structured activities. It requires money, messaging and the ironclad will to build for the long run. </p><p>Of all these activities, the most difficult challenge may lie within ourselves. We cannot build if we don’t believe. Occupy Wall Street believed and it changed the dialogue of this country from austerity to inequality. Bernie believed and he put democratic socialism on the American agenda. But Occupy faded because it lacked sustainable organizational structures. And the Bernie moment could be just that if no organization follows.</p><p>This is the time. </p><p>(<a data-beacon="1}}" href="https://www.facebook.com/runawayinequality/" target="_hplink">Like Runaway Inequality </a>on Facebook.)</p><p> </p> Fri, 24 Jun 2016 10:26:00 -0700 Les Leopold, AlterNet 1058957 at http://personal.alternet.org Election 2016 Election 2016 bernie sanders democrats hillary clinton income inequality Is Hillary's Personal Story About Student Loans a Fabrication? http://personal.alternet.org/election-2016/hillarys-personal-story-about-student-loans-fabrication <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">There&#039;s a slippery slope from pragmatism to pure self interest.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2016-04-10_at_12.01.58_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr" id="docs-internal-guid-a39f4e0b-00e5-a5b8-bf41-62ccdee7fca2">"I know [student loan forgiveness] works because Bill and I did that. We both borrowed money when we went to law school and we paid it back as a percentage of our income, so I could go to work at the Children's Defense Fund, not some big law firm that would pay me more. I wanted to do the work I loved...I want everyone to have that chance."  </p><p dir="ltr">Hillary Clinton tells this story to struggling students. She told it to minority students in Mississippi in November 2015,  and she recently <a href="https://www.youtube.com/watch?v=ywZPw_DppCE">told it again</a> to minority students in Brooklyn.</p><p dir="ltr">Her story makes several important points to attract young people who are flocking to Sanders.</p><p dir="ltr">First it offers hope that something practical can be done about crushing student loans. Wouldn't it be great if all student debt payments could be reduced to a percentage of income? She argues that is much more realistic than the Sanders free tuition plan.</p><p dir="ltr">Second, it suggests humble origins, and therefore combats the troublesome fact that she recently earned as much from one Wall Street speech as the average worker earns in five years. In this story, Hillary, too, had to amass debt just like other financially struggling students. And only by the good fortune of the Yale Law School debt forgiveness program was she able to work her way out of debt with little difficulty. "Everyone should have that chance."</p><p dir="ltr">Third, the story allows Hillary to project an image of selfless public service. The forgiveness program spared her from being forced by her loans to work at "some big law firm that would pay me more."</p><p dir="ltr">It's a politically potent story that fits neatly together. Too neatly, I think.</p><p dir="ltr"><strong>Fact or Fiction?</strong></p><p dir="ltr">To me, the odds seem high that Hillary's story is just that, an utter fabrication. In all likelihood, her family had enough income to afford Yale Law School in the early 1970s. At that time, the tuition was well in reach for an upper-middle-class family. (I know several of Hillary's law school classmates from similar backgrounds who accumulated no debt.)</p><p dir="ltr">But there's a bigger problem with Hillary's story: The loan forgiveness program she refers to didn't even exist in the early 1970s. <a href="https://www.law.yale.edu/admissions/cost-financial-aid/post-graduate-loan-repayment">Yale Law School literature</a> is quite clear on this:</p><p dir="ltr">"Some students dream of jobs in smaller firms, nonprofit organizations, public interest, government service or academia. These are jobs that typically pay less than those at large firms. Yale Law School has pioneered a loan repayment assistance program to allow these students to take their dream jobs without worrying about their student loans. </p><p dir="ltr">Established in 1989, the Career Options Assistance Program (COAP) was one of the first loan forgiveness programs of its kind."</p><p dir="ltr">1989 is not 1973. Yet doesn't this description sounds similar to the story Hillary tells? </p><p dir="ltr">Obviously, Hillary wants to strengthen her appeal to young people of color, and for good reason. Internal polling shows that not only is she badly losing the youth vote overall,  but also, young people of color are flocking to Sanders. Here are some numbers obtained from reliable sources within the Sanders campaign:</p><p dir="ltr">Overall Sanders is winning the following groups of young voters (18 years old to 29).</p><p dir="ltr"><strong>White: 66% to 28%</strong></p><p dir="ltr"><strong>Asian Americans: 72% to 24%</strong></p><p dir="ltr"><strong>Blacks: 51% to 43%</strong></p><p dir="ltr"><strong>Latinos: 65% to 30%</strong></p><p dir="ltr">If you take out the Southern states, all of which have already voted, the Sanders lead is even more lopsided:</p><p dir="ltr"><strong>White 70% to 24%</strong></p><p dir="ltr"><strong>Blacks 59% to 34%</strong></p><p dir="ltr"><strong>Latinos 65% to 30%</strong></p><p dir="ltr">Team Hillary has access to the very same data. It is worrisome.</p><p dir="ltr"><strong>So what?</strong></p><p dir="ltr">Don't we all embellish? Aren't all memories somewhat faulty by their very nature? Isn't it natural to airbrush our histories a bit?</p><p dir="ltr">Yes, and we expect most politicians do so as a matter of course.</p><p dir="ltr">But as much as we expect the tall tales, we don't like it when our candidates make up stories to pander to us. There's also a fear that one lie can lead to another -- that expediency can cause a continual twisting of the truth.</p><p dir="ltr">Hillary now claims her vote for the Iraq war was a mistake -- that she was misled by the Bush administration. She also says that she would not send ground troops into the Middle East. Clearly, that's what the American people want to hear, but is it true?</p><p dir="ltr">There are reasons to worry. Hillary advocates the use of special ops and a no-fly zone in Syria, for example. One could easily imagine a scenario in which ground troops would be needed if these operations went sour, and pilots and special ops were captured or in danger. The bottom line is whether or not Hillary is an interventionist, a nation-builder, a potential president who will sacrifice American lives and resources to project military power around the globe. She admires Henry Kissinger for a reason. She's not likely to surround herself with Sanders-type doves.</p><p dir="ltr">This suggests that she is likely to do and say what she believes to be in her self-interest.</p><p dir="ltr">And isn't that precisely why young people are flocking to Sanders? They see and sense that Hillary's campaign is all about Hillary. </p><p dir="ltr"><strong>Pragmatism as Cover</strong></p><p dir="ltr">Hillary wraps it all together with the idea of pragmatism -- that she is the one who can get things done. Sanders rarely mentions himself. Rather he is asking us to join together so that we can build a political revolution. Big difference.</p><p dir="ltr">This very difference is why Hillary may be more appealing to many older voters. They know it's not easy to make change. It requires careful policies and practices. It's hard work. Youthful ideals (even when embodied by Sanders, the senior citizen) are not enough. We need to engage in the hard pragmatic work, step by step. That's just what we all learn as we grow older, isn't it?</p><p dir="ltr">To paraphrase an old saying: If you're not an idealist when you're young, you have no heart. If you're not pragmatic when you're old, you have no head.</p><p dir="ltr"><strong>The Slide from Pragmatism to Opportunism?</strong></p><p dir="ltr">There's a slippery slope from pragmatism to pure self interest. The call for practicality  easily fits with doing whatever you think best serves your interests at the time. It also can seamlessly fit into a wider range of questionable policies like ending welfare as we know it, destroying Glass-Steagall, supporting NAFTA, voting for the Iraq war, and toppling Qaddafi with little or no planning for the aftermath.</p><p dir="ltr">In the end, the problem of pragmatism is really a problem of  accountability. By stressing  the process of pragmatism, the focus is on the person who drives it forward. But there's nothing within pragmatism that tells us anything about vision and goals. If we don't have a clear idea of where Hillary is headed, pragmatically or not, how do we hold her accountable? And why do we think she will resist the pull of political opportunism? </p><p dir="ltr">This election is not about pragmatism versus idealism. Everyone is forced to be pragmatic when trying to get things done and everyone has ideals. Rather, it's about holding leaders accountable to their vision and having confidence that they will remain true to it. Pragmatism is not a vision and embellishments do not fill us with confidence.</p><p dir="ltr">Young people have figured this out. Sanders must hope that their parents will as well.</p> Sun, 10 Apr 2016 08:58:00 -0700 Les Leopold, AlterNet 1054302 at http://personal.alternet.org Election 2016 Election 2016 hillary clinton election Satire: NY Newspaper That Attacked Sanders' Economic Agenda Also Claimed FDR Had No 'Concrete Plans' http://personal.alternet.org/election-2016/satire-ny-newspaper-attacked-sanders-economic-agenda-also-claimed-fdr-had-no-concrete <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The New York Daily News has a long history. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/5693446374_6597cb4c22_z_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p><em>The following is an imagined 1932 New York Daily News editorial board interview with Franklin D. Roosevelt during his presidential campaign. The Daily News comments below derive from the editorial board’s </em><em><a data-beacon="0}}" href="http://www.nydailynews.com/opinion/transcript-bernie-sanders-meets-news-editorial-board-article-1.2588306" target="_hplink">interview </a>with Bernie Sanders on April 1, 2016. The Roosevelt statements are taken primarily from his <a data-beacon="1}}" href="http://www.presidency.ucsb.edu/ws/?pid=14473" target="_hplink">1933 inaugural address</a> and his 1936 campaign <a data-beacon="2}}" href="http://millercenter.org/president/speeches/speech-3307" target="_hplink">speech</a> </em><em>at Madison Square Garden.</em></p><p><strong>Daily News</strong>: Speaking broadly, you said you expect to break up the big banks within the first year of your administration. What authority do you have to do that? And how would that work? How would you break up JPMorgan Chase?</p><p><strong>FDR</strong>: We must get the money changers to flee from their high seats in the temple of our civilization. We must restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.</p><p><strong>Daily News</strong>: I get that point. I’m just looking at the method because, actions have reactions, right? There are pluses and minuses. So, if you push here, you may get an unintended consequence that you don’t understand. So, what I’m asking is, how can we understand? If you look at JPMorgan just as an example, or you can do Citibank, or Bank of America. What would it be? What would that institution be? Would there be a consumer bank? Where would the investing go?</p><p><strong>FDR</strong>: I’m not running those banks. </p><p><strong>Daily News</strong>: No. But you’d be breaking them up.</p><p><strong>FDR</strong>: Primarily this is because rulers of the exchange of mankind’s goods [the biggest banks] have failed through their own stubbornness and their own incompetence. They should admit their failure, and abdicate. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. </p><p><strong>Daily News</strong>: Yes, we’ve heard all your campaign generalizations. I’m only pressing because you’ve made it such a central part of your campaign. And I wanted to know what the mechanism would be to accomplish it.</p><p><strong>FDR</strong>: There must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. There must be an end to speculation with other people’s money;</p><p><strong>Daily News</strong>: But how? What are your concrete policies? How do you get it done? What authority do you have? Can you break them up? Can the Federal Reserve do it? How is it going to happen?</p><p><strong>FDR</strong>:  Senator Glass and Congressman Steagall are formulating legislation. They’ll provide all the details. That’s their function in our democracy.</p><p>My task is very different. I have to set the broad vision for our nation — to help us understand that happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits.</p><p><strong>Daily News</strong>: So if you look forward, a year, maybe two years, right now you have...JPMorgan has 241,000 employees. About 20,000 of them in New York. $192 billion in net assets. What happens? What do you foresee? What is JPMorgan in year two?</p><p>Aren’t you stirring up hatred of one group of Americans against the other with all your campaign rhetoric? Wouldn’t it be much better to share with the public concrete plans instead of pie-in-the-sky platitudes?</p><p><strong>FDR</strong>: Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.</p><p><strong>Daily News</strong>: But all you provide are generalities, no specifics. You have no plans, only vague promises. And what you do say sounds much more like dictatorial socialism than democratic capitalism. With all due respect, unless you can answer specific questions with something other than generalities and platitudes, you are unfit to be the president of the United States.</p><p><strong>FDR</strong>: The disagreements with you are not about policy specifics or legislative details. We disagree about the fundamental direction of our great nation should take, and my vision for getting there. </p><p>You have not committed yourselves to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. </p><p>The billionaire class considers the government of the United States as a mere appendage to their own affairs. We know now that government by organized money is just as dangerous as government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.</p><p><strong>Author’s Editorial</strong></p><p>The Daily News' attacks on Bernie Sanders purposely confuse bold vision with policy minutiae. Rather than discuss and debate the fundamental premises of the Sanders assault on the billionaire class, Wall Street, runaway inequality and our corrupt campaign finance system, they want to switch the conversation to the details of implementation. It’s as if to say, well, we might agree with your visionary proposals if only you could show us the fine print and explain to us how it works. </p><p>This tactical maneuver has one and only one aim; to undermine the Sanders campaign regardless of how he responds to their demands for more detail. Why the subterfuge? </p><p>The Daily News and Team Hillary have no interest in taking on the established order, because they are part and parcel of it. However, they also are fearful that the American people are rejecting the Team Hillary vision and are flocking to Sanders. So they pick at details they care nothing about. </p><p>That’s the old establishment politics, the cynical politics, the kind of politics that tries to undermine the hopes and dreams of the American people. Bernie Sanders, like FDR, expands our sense of the possible. He asks us to join together to recapture our country from the billionaire class and build a better life for our families and communities. That idealistic message is why so many young people support him. Young people are shouting out to us the most critical fact of this election: that Bernie Sanders has a vision worth fighting for. </p><p> </p> Fri, 08 Apr 2016 09:24:00 -0700 Les Leopold, AlterNet 1054219 at http://personal.alternet.org Election 2016 Election 2016 fdr bernie sanders 2016 elections NY Daily news hillary clinton Hillary's Inability to Grapple With Inequality Is Making Her Vulnerable to Bernie in New York http://personal.alternet.org/election-2016/hillarys-inability-grapple-inequality-making-her-vulnerable-bernie-new-york <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Clinton is tone deaf on education debt and young voters are wary. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_329730683.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">Establishment politicians running for high office live and breathe elaborate focus group-tested lines. In time, they become those lines. But every now and then, extreme political pressures can force a few unscripted words to slip through. And when that happens, we gain a rare glimpse of the candidate's deeper understanding of their world and our world, and the gap between the two.  </p><p>Hillary Clinton suffered such a moment on Tuesday afternoon while speaking at Medgar Evers College in Brooklyn. Before taking the podium she already knew from internal polling that Sanders was going to win handily in Wisconsin. That meant she would be a loser in six of the last seven states, and by landslides, no less. Her staff is telling her not to worry; all the math on her side. Her delegate lead is so large Sanders can't possibly overtake her.</p><p>But Hillary is not stupid. She saw Sanders draw 18,000 people in the Bronx, virtually all people of color, and that was before his latest Wisconsin victory. She knows that nothing is set in stone if your opponent is clobbering you in primary after primary. Political momentum is something to fear and could infect the big states like New York and California.</p><p>On top of that, young people are giving Bernie more than 80% of their votes. Even large majorities of young black and Latino voters are flocking to Sanders. How can that be?</p><p><strong>Cracks Under Pressure?</strong></p><p dir="ltr">That kind of tension focuses the mind, but also can penetrate the mental armor. One can imagine her wanting, ever so badly, to appeal to college students, to show them how much she empathizes with all the loans they are shouldering. Maybe she'd love to tell them that all student debts should be forgiven, and that college should become tuition-free, just like K-12.  </p><p>But no, she can't go there. She has to distinguish herself from Sanders by saying his plan won't work, because among other things, it will depend on Republican governors to put up one-third of the money, which they won't do. So instead she must focus on proposing new complex policies to limit student loan repayments to a certain percentage of income, and for a limited number of years. That's her bumpy road to empathy and maybe toward eating into Bernie's youth vote.</p><p>More importantly, that's how Hillary can show how practical and realistic she is compared to pie-in-sky Sanders. It's a smooth and satisfying pivot for a skilled politician until...until she says something so revealing, and so out of touch, it could cost her the New York primary and beyond. In an unguarded moment, she showed us how out of touch she is with income inequality: "I went to work for the Children's Defense Fund, making about $14,000 a year, so I couldn't afford some big [student loan] payment every month."</p><p><object height="360" width="630"><param name="quality" value="high" /><param name="movie" value="http://swf.tubechop.com/tubechop.swf?vurl=ywZPw_DppCE&amp;start=1289&amp;end=1302&amp;cid=7863139" /><embed height="360" quality="high" src="http://swf.tubechop.com/tubechop.swf?vurl=ywZPw_DppCE&amp;start=1289&amp;end=1302&amp;cid=7863139" type="application/x-shockwave-flash" width="630"></embed></object></p><p>Hillary thinks $14,000 a year, back then, makes her a young struggling post-grad? Maybe we need to jar her memory a bit: $14,000 a year was a very good income in 1973. Hillary then earned more 65 percent more than the median male worker ($8,453) and nearly 500 percent more than the median female worker ($2,823) according to <a href="http://www2.census.gov/prod2/popscan/p60-097.pdf" target="_blank">census reports</a>.  Rather than struggling to get by, she had a very comfortable upper-middle class income.</p><p>Today, that $14,000 translates into $74,464 according to the Bureau of Labor Statistic's <a href="http://www.bls.gov/data/inflation_calculator.htm" target="_blank">inflation calculator</a>. That would place her in the top 8% of <a href="https://www.census.gov/hhes/www/cpstables/032015/perinc/pinc11_000.htm" target="_blank">today's income distribution</a>. </p><p>Perhaps she was doing the usual political exaggeration in order to feel our pain; the flip side of coming under sniper fire in Bosnia when you weren't. Or maybe she misremembered her actual income. It might have been much lower than she recalled on Tuesday. But the more likely explanation forms a line from 1973 to today. Back then Hillary really did feel she was living on a limited income compared to her peers; those she went to school with at Wellesley and Yale.  </p><p>In those schools you're surrounded by real money. You're hanging out with the richest of the rich, people who can go anywhere and do anything they want, whenever they want. Hillary, a child of the upper-middle-class, was a striver, a do-gooder, an up-and-coming star. But relative to her peers, she was of modest income. Her $14,000 a year in 1973, while a very comfortable income compared to the average American, must have seemed like a great sacrifice for an elite Yale Law school graduate.</p><p>As runaway inequality took off in the 1980s, Hillary's political ambitions took off as well, first for Bill in Arkansas, then for Bill as president, and then, at long last, for herself. Her peer group always included these Ivy League elites. Many of her former classmates moved up into elite law firms and into the highest financial circles. Her peers were making millions, tens of millions and some even billions of dollars.</p><p>These wealthy elites became the financial glue of Bill's campaigns. That's why we'll never see the transcripts of her $225,000 Wall Street speeches. Those talks would show the side Hillary has trained herself to hide from the public. These elites are her friends, her supporters, her funders. Turning on them would be like turning on herself and all she's become and wants to become.</p><p>Those speeches would show the real Hillary who became the senator from Wall Street, who made $9.1 million from speaking fees in 2013, and who along with her husband raked in over $130 million over the last decade.</p><p>Little wonder she rejects all proposals that would redistribute financial wealth to the rest of society. No financial speculation tax to fund free higher education. No break-up of the big banks. No new Glass-Steagall.  </p><p>Instead, she makes a passionate plea for a world built on the kind of meritocracy that shot her to top. "Break all barriers" so that each of us can live up to "our god-given talents." She wants rich and poor alike to join the race to riches. But she has trouble admitting the obvious; we never can start equally in a world run wild with runaway inequality.</p><p>She is incapable of understanding that wealth must be redistributed from her Wall Street friends, from her daughter, from her son-in-law, from Bill and from herself to the rest of America, if we are to reverse runaway inequality. That's the barrier we must break.</p><p>Hillary Clinton was never a financially struggling college graduate, and she'll never understand what struggling students are going through now. </p><p> </p> Thu, 07 Apr 2016 10:47:00 -0700 Les Leopold, AlterNet 1054146 at http://personal.alternet.org Election 2016 Election 2016 hillary clinton bernie sanders new york primary election 2016 inequality economy Is Hillary Clinton Running Away From Political Reality? http://personal.alternet.org/election-2016/hillary-clinton-running-away-political-reality <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Runaway inequality is the key issue that connects so many of our problems.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/97ed2358afdc0ac53df60cbb31736f4f18ed0789.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Team Hillary should be worried about the lopsided vote Sanders is receiving from young people of all colors. Not only is the vote one-sided, but so is the enthusiasm. Hillary's vulnerabilities with young people includes her perceived untrustworthiness, her vote for the Iraq war and her establishment politics. But it all gets wrapped up into what she calls Bernie's "single issue"—Wall Street.</p><p>Bernie and his supporters see Wall Street as synonymous with runaway inequality, which is the key issue that connects so many of our problems. As a result, young people are convinced we need a massive political revolution to do something about it. As Robert Reich <a href="http://readersupportednews.org/opinion2/277-75/35938-why-bernie-is-generating-such-an-enormous-amount-of-enthusiasm-from-young-people" target="_blank">recently put it</a>, "Such a political revolution is the prerequisite for everything else – reversing climate change, overcoming structural racism, rebuilding the middle class, achieving equal opportunity and upward mobility for the poor, and avoiding cataclysmic war."</p><p>Hillary can't abide this revolution because it requires a full-scale assault on Wall Street, which has funded her and her campaigns. So she tries to denigrate Sanders' stance <a href="http://www.nytimes.com/2016/02/14/us/politics/hillary-clinton-shifting-line-of-attack-paints-bernie-sanders-as-a-one-issue-candidate.html" target="_blank">by suggesting</a> his focus on Wall Street-driven runaway inequality is merely a single issue. She asks, "If we broke up the big banks tomorrow would that end racism? Would that end sexism? Would that end discrimination against the LGBT community? Would that make people feel more welcoming to immigrants overnight?"</p><p>Her line of attack not only is failing, it reveals why young people are so unenthusiastic about her: she's far too tied to Wall Street and the super-rich ever to break from them.</p><p><strong>Why the Political Revolution Is So threatening to Hillary</strong></p><p>Her single issue attack is quite revealing. First of all, she claims that Bernie's critique of runaway inequality amounts only to breaking up the big banks, as if that was the sum total of Bernie's "single issue."</p><p>To buttress her argument she further fractures the progressive community into a series of single-issue groups, each facing a different form of discrimination as if there were no connections among them, or between those issues and the rise of concentrated economic and political power. How are we to end institutional racism, for example? Hillary has no answer other than "elect me and I'll break all barriers."  </p><p><strong>Bait and Switch</strong></p><p>Hillary's next move is to switch the conversation away from the concentration of wealth and power on Wall Street. Instead she wants us to believe that the real Wall Street issue is only about preventing another crash. She argues that her proposals are tougher than Bernie's on "shadow banking"—hedge funds, private equity companies and the like. Therefore she claims she's the most effective anti-Wall Street candidate.  </p><p>Does she really believe this ridiculous sleight of hand?</p><p>But Sanders and his young followers are not just worried about how to prevent another financial meltdown. They are much more worried about the ongoing meltdown that siphons more and more of our income and wealth into the hands of the few.</p><p>We are being financially strip-mined every day, from student loans to pension rip-offs to outrageous Wall Street fees to finance state and local infrastructure products to hollowed-out corporations that ship jobs abroad and slash wages and benefits. Hillary's policy pirouettes won't alter the fact that since the 2007 crash, 95% of all the new income generated in the economy has gone to the top 1%.  That's the financial meltdown many people feel each and every day. </p><p><strong>Why Hillary Must View Wall Street as a Narrow Single Issue</strong></p><p>When you receive over $9 million in one year for speaking fees from Wall Street and other corporate groups, you can't say runaway inequality is the key issue that's ruining our lives. If we ever gain access to the contents of her speeches, we would see how deeply she shares Wall Street's world view: They are good people. They are doing their jobs. Yes, they have a few excesses that can be controlled with smart regulations. No, we should not tax their speculative activities. No, we should not break them up. No, we should not set up public banks.</p><p>But as much as she may want to, she can't ignore Wall Street. So she tries to transform the most powerful economic and political force in the world into a mere single issue. And then she implicitly places that issue on a lower moral plane than racism or sexism. She thinks she is capturing the high ground by lecturing Bernie about his single-issue focus.</p><p><strong>The Dreaded Financial Speculation Tax to fund Free Higher Education</strong></p><p>This is where the rubber meets the road.  Hillary has to attack both ends of this very popular proposal. First she has to protect Wall Street by opposing the tax. Then she must attack free higher education (which can only be paid for by taxing elite financiers) by claiming we shouldn't be funding rich kids to go to college.</p><p>But isn't that exactly what we do in K through 12? Shouldn't a tax on Wall Street and progressive taxation in general make her rich-kid problem go away? Not for Hillary and her Wall Street patrons.</p><p>No wonder young people are flocking to Bernie. Hillary can't stop being the senator from Wall Street. These are her constituents, her donors. That's why she has to do policy contortions to keep from hitting Wall Street too hard. That's why she has no program at all to halt, let alone reverse runaway inequality. </p><p><strong>Enthusiasm Drives Elections</strong></p><p>Team Hillary believes Trump and Cruz are so bad she can't lose. People will come out in droves to defeat the bad guys. Call it negative enthusiasm. The kids will come out for her too, they reason. What choice do they have?</p><p>Well, young folks just might do all the stuff older folks say is totally irresponsible: stay home, write in Bernie, vote for minor third-party candidates. What really drives elections, especially now, is enthusiasm. </p><p>The sad fact for Team Hillary is that Bernie has it and she doesn't. As that spirit comes pouring out from our kids, it becomes infectious. It's political gold. Without it, anything can happen: including Hillary losing to a Republican.</p><p>As Hillary continues to baby Wall Street with her single-issue nonsense, she moves closer to defeat. She was crushed recently in Utah, Idaho, Washington, Alaska and Hawaii. It would be far better for the country if her losing streak gathered steam. It might save us from a President Trump or Cruz. </p><p>Here are the hard, cold facts driving this election. The vast majority of Americans detest Wall Street and runaway inequality. Bernie has earned the right to lead that charge, and young people know it.</p> Sun, 27 Mar 2016 10:52:00 -0700 Les Leopold, AlterNet 1053389 at http://personal.alternet.org Election 2016 Election 2016 hillary sanders clinton election 10 Reasons Why Hillary Isn't a Lock to Win the Presidency in a General Election http://personal.alternet.org/election-2016/10-reasons-why-hillary-isnt-lock-win-presidency-general-election <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Her major policy and character flaws could leave us with a Republican president this fall. Here’s why.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_378987952-2.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>The media tells us that Hillary has a lock on the nomination. That news should make her supporters extremely nervous, and not because the prognosticators have been wrong so many times already. All Democrats should worry because her major policy and character flaws could leave us with a Republican president this fall. Here’s why.</p><p><strong>1. The Senator from Wall Street</strong>: This is not 1972 when the country was so deeply divided over the Vietnam War. That upheaval wrecked the Democratic Party and led to the Nixon landslide over George McGovern. Now the country is united against Wall Street. Hillary will have a great deal of difficulty triangulating her way to safety. She will never be able to explain away why she received over $11 million in corporate speaking fees, much of it from Wall Street, and why she still is accepting millions from Wall Street for her campaign. </p><p>The defensive lines she is using are weak — Obama did it too. <em>I have a proven record against Wall Street. I can’t be bought. My proposals are even tougher than my opponent’s.</em></p><p>Do you really think that will sell in the fall?</p><p><strong>2. Free Trade Cheerleader</strong>: The neo-liberal consensus on corporate-managed trade has collapsed. The American people know they’ve been had. They see that the average worker and thousands of communities have been screwed by trade agreements that put Americans in direct competition with low-wage workers around the world. Hillary, during her husband’s administration, pressed hard for NAFTA. And until very recently, she was proud of her work to develop the TPP — “the gold standard” of all trade agreements, she said — until Bernie forced her to retreat. She has no credible defense.</p><p><strong>3. Global Warrior</strong>: The American people are also turning away from regime change. Hillary’s record is consistently hawkish. She voted for the Iraq War. She pushed for the takedown of Gaddafi and Assad. Now she wants a dangerous no-fly zone in Syria, and she encourages the use of special ops troops all over the world. The Libya and Middle East are her quagmire. </p><p><strong>4. Enthusiasm Gap</strong>: While a Trump or a Cruz will draw many to the polls just to defeat them, there is no substitute for positive enthusiasm. We should be worried about the fact that Hillary is having difficulty breaking into double digits with young voters. That’s where the real energy is this year. Maybe she can make up for this with older voters, especially women. But it’s a gamble — a big one. Those Sanders kids may stay home. And guilt-tripping them into voting is not likely to work.</p><p><strong>5. Trust</strong>: Hillary does not generate trust. Nearly 55 percent of voters think it’s a quality she lacks. Sure, it’s a wash if Trump is the nominee, given his high unfavorables. But what if it’s a Cruz-Kasich ticket or Ryan? Hillary will be hobbled. And it’s not just a bum rap. She has shape-shifted too many times, on too many issues. Yes, you can always explain away any one instance or another, by saying how she has changed, learned or made a mistake. But doing so only reinforces the image that she’s not being straight — that she’ll say whatever needs to be said to get elected.</p><p><strong>6.</strong>“<strong>I” not “We”</strong>: Hillary seems to say “I” more than any other candidate. The election is so clearly about her — her record, her skills, her experience, her ability to get things done. <em>I’ve been in the situation room. I’ve had to make the tough choices. I will work hard for you.</em> “I” is her sense of public service. She wants to do for others, she says again and again. In normal times that might be enough, assuming it was believable. But these are not normal times. There are movements afoot. Bernie has made “we” the mantra of his political revolution. Trump talks about his movement. Cruz talks about the conservative movement. But voters want to be included, to be part of something important. Hillary doesn’t have a feel for how to rally people to a cause. That’s not her. She’s an insider, a player, a person who commands $225,000 speaking fees. And that spells “I.”</p><p><strong>7. Working-Class Blues</strong>: A lot has changed in the public’s perception of Hillary since 2008 when she ran against Obama. Then, she captured the lion’s share of the white working-class vote. Much, but not all, had to do with race. It also had to do with the perception that she and Bill were public servants, not rich people. <em>I feel your pain.</em> Today, Hillary casts a different image. She and Bill are very, very rich. They hang out with other very rich people. Together, the Clintons have <a data-beacon="0}}" href="http://www.wsj.com/articles/clintons-received-more-than-25-million-from-speeches-since-january-2014-1431730968" target="_hplink">made over $130,000,000</a> during the last eight years. They threw a <a data-beacon="1}}" href="http://www.nydailynews.com/new-york/chelsea-clinton-3-million-wedding-budget-article-1.200176" target="_hplink">multimillion-dollar wedding</a> for their daughter. That lifestyle creates a growing chasm that separates them from the average working family. </p><p>Trump is much richer but doesn’t talk that way. In comparison, Hillary sounds more like Jeb Bush — the policy nerd. Not a good year for that.</p><p><strong>8. Unmotivated African American Voters</strong>: Hillary is beating Bernie because of her lopsided support among black voters. Clearly the Clinton machine’s many years of engagement with the black political and social infrastructures have made a difference. But will that translate into a massive turnout in November without Obama on the ticket? It’s possible that her support for Wall Street and trade bills will temper the turnout among some black working-class voters. And she doesn’t seem to have any proposals that will generate real enthusiasm. Just saying “breaking all barriers” is not enough. Are we counting on Obama to do it for her?</p><p><strong>9. The Typical Politician</strong>: Hillary sounds incredibly scripted — like every line was carefully tested in a focus group. It’s not just that she repeats herself again and again. By this point, every candidate is a broken record. It’s that she seems less than sincere. It’s hard to fathom what she really believes. But that is not her biggest problem. Her real political character comes out when she goes on the attack. For example, her claim that Bernie didn’t support the auto bailout was a monumental distortion, if not an outright fabrication. The fact that she doubled down and repeated accusations showed a political character that is not about trust. It’s the opposite, in fact. It showed that we could trust her to lie, when necessary, to get what she wants — what she feels is her due. </p><p><strong>10. Weaker Polling</strong>: Hillary supporters should be worried that Bernie polls better against the Republicans. Yes, there are many ways to explain that away too. The argument most repeated is that the Republicans haven’t done a number on him yet. Wait until they red-bait him ...</p><p>But Hillary’s poll numbers show weakness right now. Yes, she beats the Republicans in most polls. But why is Bernie doing better? Think about that for a bit. He’s a self-declared socialist in the most capitalist country in the world, and he’s doing better than Hillary Rodham Clinton, a capitalist to the core. How can that be? </p><p>The answer is simple. Bernie is everything Hillary is not. He’s a straight shooter who is willing to fight Wall Street and to stop fighting useless wars. He offers bold proposals that would really make a tangible difference in people’s lives, like free higher education. And he doesn’t need to test his lines in a focus group. As a result, he has the enthusiastic support of young people of all hues. He’s also a big hit with independents. Everyone knows he’s completely committed to fighting runaway inequality. And this year, that’s what voters really want. </p><p>What they don’t want is what we’re hearing from so many Hillary supporters — defensiveness, complex explanations about why her positions have changed, why she’s being treated unfairly, why her more centrist positions are really more progressive, why she’s really telling the truth even when she isn’t. It’s spin after spin after spin. It doesn’t sit well with voters. </p><p>Plain and simple, Hillary is a much bigger risk this fall than Bernie. It’s not too late to do something about it.</p> Fri, 18 Mar 2016 12:48:00 -0700 Les Leopold, AlterNet 1052844 at http://personal.alternet.org Election 2016 Election 2016 2016 elections hillary clinton 2016 Election Michigan Voters Roundly Rejected Hillary's Wall St-Friendly Agenda http://personal.alternet.org/election-2016/michigan-voters-roundly-rejected-hillarys-wall-st-friendly-agenda <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Hillary is trapped until she shifts positions. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_328825145.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Hillary lost Michigan because she truly believes Wall Street, trade and runaway inequality are separate, single issues. She really has no choice. If she admitted the connections, her entire neo-liberal Wall Street-friendly edifice comes crumbling down. </p><p>She's trapped. Bernie's job is to keep her there as she tries to change the subject to gun control or breaking all barriers.</p><p>In Michigan, she proudly put forth her economic plan to use public funds and policies to promote private sector gain. Michigan voters heard her call for tax incentives to urge large and small corporations to create more jobs in the U.S. Tax breaks to encourage corporations to provide more training and profit sharing plans. And tax breaks to promote long-term investment instead of short-term gains. </p><p>Michigan voters rejected her most fundamental request of corporate America: if you do right to the American people, we'll do right by you. </p><p>Michigan has heard all that before. They heard it when the Clintons championed NAFTA. They heard it when Wall Street got bailed out. They hear it every day when they are asked to provide tax breaks to keep companies from fleeing to low-wage areas. Enough already.</p><p><strong>Hillary Sends a Signal to Wall Street and Michigan Voters heard it</strong></p><p>She often critiques Bernie's broadsides against Wall Street by saying, “I’m not interested in condemning whole categories of businesses or the entire private sector.” But Michigan is hungry for someone who finally is willing to take on financial elites as a whole. In fact, there are very few in America besides Team Hillary who will come to the defense of Wall Street</p><p>Her dogwhistle was further amplified by her inability to face up to the trade policies she and her husband, along with the rest of the neoliberal Democrats including Obama, have championed for decades. Instead she thinks that she can get cover by placing the blame on China. </p><p>It was laughable to watch Hillary try to duck away from NAFTA by saying all such debates are ancient history. It's unproductive, she claims, to be "refighting battles from 20 years ago."  </p><p>But Michigan workers are still being wounded in those battles as NAFTA continues to destroy jobs and incomes as they are placed in direct competition with low-wage workers in Latin America.</p><p><strong>Blind to Wall Street's Financial Strip-mining</strong></p><p>Hillary just doesn't have the will to attack Wall Street. She really doesn't believe the entire sector is financially stripmining the rest of us. But millions of Michigan voters and homeowners know better.</p><p>It shows up clearly when she pretends she will crack the whip on Wall Street excesses. But her whip is just another tax break. She wants to reward corporations and investors with tax incentives to encourage long-term investment, worker training and profit sharing with employees.</p><p>But she runs away from two big proposals that really could make a difference. She doesn't want to ban stock buybacks. And heaven forbid, she won't go near a financial speculation tax.</p><p>It is relatively easy for a president to stop stock buybacks. All it takes is a rule change at the SEC. Until 1982, it was considered stock manipulation for a company to boost its price by buying back its own shares en mass. Reagan's SEC appointee legalized it.</p><p>But making stock buybacks illegal again would be fiercely opposed by the very Wall Street executives and CEOs who are filling her campaign coffers. In fact, the system of runaway inequality is built upon those buybacks. Today, the goal of virtually every large corporation is to use all of its cash flow to buy back its own shares to enrich its CEOs and largest Wall Street investors.</p><p><strong>The corruption of Stock Buybacks at GM</strong></p><p>While Hillary was bobbing and weaving around trade and Wall Street, she had to ignore the rip-off of GM now underway. It's being led by ex-Obama official and all things Obama are beyond criticism.</p><p>Here's the story that is likely to put GM in real trouble once again. Harry J. Wilson, the Obama administrator who helped to negotiate the GM bailout, then left for a hedge fund job. The 43-year-old Wilson and his investors proceeded to buy up 34 million GM shares. Why not? By then he was a GM expert, trained at taxpayer expense.</p><p>He then demanded that GM use its cash reserves to buy back its own shares to make him and his investors tens of millions of dollars....for doing nothing at all.</p><p>The American people bailed out GM to save hundreds of thousands of jobs throughout the Midwest. Many of us hoped that once GM returned to financial health, it would use its reserves to build the most environmentally sound cars in the world, thereby helping retain U.S. jobs and helping our planet survive.</p><p>Instead, Wilson pressures GM to use its precious cash reserves to buy back its own shares in order to put money into his deep pockets and the pockets of his investors. Increase GM wages? Increase training? Increase R&amp;D. No way.</p><p>His wish was GM's command. On January 13, GM announced a $5 billion stock buyback plan. </p><p>Hillary couldn't talk about any of this. If she did, she would be forced to admit that her fairytale version of capitalism will never work as long as Wall Street dominates the economy.</p><p><strong>Carefully Ignoring Public Sector Jobs</strong></p><p>Hillary even ran into trouble with black voters. And that makes sense because Team Hillary's populist sounding plan is in harmony with the most pernicious neo-liberal principle; that the private sector, by definition, is more valuable than the public sector, and that all must be done to encourage private sector jobs while limiting public sector jobs.</p><p>Hillary makes no mention at all of the decades-old attack on public sector jobs and benefits. Not a word about the privatization that is wrecking Michigan's public sector. Not a word about the need for increases in public sector jobs to bring safe water to the people of Flint. Instead she blames the Republicans.</p><p>She discusses how to revitalize communities of color left behind, but her only way of doing so is through private sector investment. But the public sector is the best path toward the middle-class for low-income Americans, especially African Americans. She can't bring decent jobs and incomes to low-income communities without an expansion of the public sector.</p><p>Why not call for more public jobs for distressed cities? Because Wall Street and the super-rich would have to pay for those jobs. To have a robust public sector that would get the lead out of inner-city pipes, fix up dilapidated schools, increase the number of teachers, and provide free higher education for all requires the expansion of the public sector. To maintain a decent society requires an increase in public goods and the hiring of more public workers.</p><p>But doing so leads us directly to a financial speculation tax on Wall Street, as well as the end of offshore tax havens for the super-rich, neither of which are mentioned in her economic plan.</p><p>When you spend your life inside the Wall Street orbit, when you take their money for speeches and super PACs, when you believe the neoliberal lie that what's good for them is good for us, you're in trouble with the American people.</p><p>Voters are finally rejecting the neoliberal hoax. They're going right to Trump and left to Bernie as they clamor for an end to runaway inequality. Let's hope Bernie blocks Hillary's path before Trump does.</p> Wed, 09 Mar 2016 10:54:00 -0800 Les Leopold, AlterNet 1052229 at http://personal.alternet.org Election 2016 Economy Election 2016 hillary clinton Michigan primary bernie sanders economic policy election 2016 Decoding Hillary: The Truth Vs. What She Claims About Her Wall St. Record http://personal.alternet.org/election-2016/what-hillary-really-saying-about-wall-st-when-she-tries-talk-tough-about-reforming-it <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Even when she tries to act tough on banks, Clinton can&#039;t hide her Wall Street ties. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_155865416_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>"I went to Wall Street when I was a United States senator. I told them they were wrecking the economy. I asked for a moratorium on foreclosures. I asked that we do more to try to prevent what I worried was going to happen. I also called for closing loopholes including the carried interest loophole. I also called for changes in CEO pay. I have a record."</p><p>This was one of the most truthful and revealing responses Hillary has made during the entire campaign. It came during the Flint debate when asked when she would release her Wall Street speech transcripts. (Full debate transcript <a href="http://www.nytimes.com/2016/03/07/us/politics/transcript-democratic-presidential-debate.html?_r=0">here</a>.)</p><p>What is she really saying? <em>As a senator from New York I have a personal relationship with these guys. I can talk sense to them. They will listen to me.</em></p><p>To Hillary this is playing a strong hand. To everyone else it shows weakness and a startling naïveté about power.</p><p>For starters, they obviously blew her off. She got nothing. We got nothing.</p><ul><li>"I asked for a moratorium." They didn't do it. </li><li>"I asked that we do more to try to prevent what I worried was going to happen." It happened.</li><li>"I also called for closing loopholes including the carried interest loopholes. None were closed even when the Democrats controlled both houses and the presidency.</li><li>"I also called for changes in CEO pay." Didn't happen.</li></ul><p>Hillary is admitting that neither Wall Street nor her colleagues in the Senate listened to her. In short, she was incredibly ineffectual when it came to reining in Wall Street. And this comes from someone who claims she can get things done in the real world.</p><p><strong>"I have a record."</strong></p><p>Hillary believes her ineffectual votes and failed meetings add up to a record. They do. But not the one she would like us to see.</p><p>Hillary was the senator from New York which means she was the senator from Wall Street. Neither she nor Chuck Schumer would ever lift a finger to make life unpleasant for financial elites. Not only is Wall Street their most powerful constituency, financial elites have been major donors to the Democratic Party for decades.</p><p>Hillary and Bill have built their careers on wooing big Wall Street money. The Clinton administration destroyed Glass Steagall. It prevented the regulation of dangerous derivatives. It reappointed Alan Greenspan. During their New Democrat centrist shift, it's hard to find one Wall Street demand they didn't fulfill.</p><p>What was the excuse? Same then as now; other countries are doing it, so we need to do it too. Hillary used the same excuse during the debate when discussing the Import-Export bank which lavishes money on large corporations.  </p><p>"When I traveled around the world on your behalf as Secretary of State and went to 112 countries, one thing I saw everywhere was how European and Asian countries were supporting their companies back in their countries, to be able to make sales and contracts in a lot of the rest of the world. In fact, without the export-import bank, supporting businesses of all sizes, I believe more jobs would be lost here at home and more jobs literally would be exported. "</p><p>Hillary is admitting that these companies have us over a barrel. If we don't give them public money, then they'll export our jobs.  Similarly we need to give Wall Street what it wants so it can keep up with the big banks in Europe and Japan -- hence, sayonara, Glass-Steagall. And that's also why she doesn't want to reinstate it or add a financial speculation tax.</p><p><strong>Power Failure</strong></p><p>To Hillary there really is no power on earth that can challenge Wall Street. We have to learn to make peace with them. Talk with them. Cajole them into doing better. But don't attack them or deny them what they really want.</p><p>As a result her sense of power is derivative from theirs. If they are strong, she is strong. They pay for her speeches. They support her super PAC. And therefore, they will work with her to make sure the system doesn't collapse again. But in exchange, there will be no financial transaction tax to move billions from their casinos to the real economy. No way.</p><p>She's so close to them she can't feel the hatred the American people have for Wall Street. For Bernie to have a chance at victory, he needs to keep Hillary talking about Wall Street. She won't hide her pro-corporate worldview because she really believes in it. She really believes that Wall Street is just a single issue that only matters if they get too greedy and threaten the system again. Similarly, runaway inequality is also a single issue, and not connected to Wall Street. And the impoverishment of the middle class is also a single issue, not related to the financial strip-mining of our economy. </p><p>In Hillary's world it's a win-win with Wall Street. What's good for them is good for us. And it's been very good for her. Financial elites are among her closest friends. She really believes they will follow her lead. It would hurt too much to realize that they only pay attention when she does their bidding.  </p> Tue, 08 Mar 2016 07:19:00 -0800 Les Leopold, AlterNet 1052120 at http://personal.alternet.org Election 2016 Election 2016 wall street banking hillary clinton election 2016 economy Hillary's Economic Agenda Sure Looks Like Payback for Wall St Giving Her Huge Piles of Campaign Cash http://personal.alternet.org/election-2016/hillarys-economic-agenda-sure-looks-payback-wall-st-giving-her-huge-piles-campaign <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Her mantra is clear: if you do right to the American people, we&#039;ll do right by you. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/645fc1c8c4802307912d63e5f53a3e358497f4a9.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr" id="docs-internal-guid-a69012a9-4dcd-022d-00c2-1d6cb5ac926d">Billed as a major populist economic address, Hillary Clinton recently put forth her jobs program in Michigan.</p><p dir="ltr">Wall Street is smiling.   </p><p dir="ltr">Her program fits perfectly within the neoliberal framework as she focuses on how to use public funds and policies to promote private sector gain. There are tax incentives to urge large and small corporations to create more jobs in the U.S. There are tax breaks to encourage corporations to provide more training and profit sharing plans. And there are tax breaks to promote long term investment instead of short-term gains.  To balance this equation, she also calls for exit taxes if companies take tax breaks and then move out of the country. Her mantra is clear: if you do right to the American people, we'll do right by you.  </p><p dir="ltr">Along the way, she waxes euphoric about the buoyancy of the private sector:  "New businesses are opening. Families are moving in. The streetlights are on again. The buses and running again. There is a palpable feeling of pride and community and we have to spread economic revitalization to all of Detroit's neighborhoods." (See <a href="http://www.c-span.org/video/?405998-1/hillary-clinton-remarks-detroit-michigan">here</a> for full speech.)</p><p dir="ltr">Not a word is mentioned about public goods or public sector jobs. Clearly, the only real job is a private sector job.</p><p dir="ltr"><strong>Hillary Sends a Signal to Wall Street</strong></p><p dir="ltr">At the same time, she uses a dog whistle to let Wall Street know that she won't be coming down hard on them: “I’m not interested in condemning whole categories of businesses or the entire private sector”<a href="http://www.nytimes.com/2016/03/05/us/politics/hillary-clinton-offers-economic-plan-focused-on-jobs.html"></a>  </p><p dir="ltr">Furthermore, she dances around the perils of free-trade deals by putting the entire blame on China, and therefore not on the Clinton and Obama administrations who were/are gung-ho free traders..</p><p dir="ltr">Her silence about NAFTA, however, is deafening. And that's very good news to corporate and financial elites because NAFTA is the trade deal that has facilitated the financial strip-mining of the American worker. It has placed U.S. workers into direct daily competition with much less expensive labor south of the border.</p><p dir="ltr">In fact, Hillary argues all such debates are now ancient history. It's unproductive, she claims, to be "re-fighting battles from 20 years ago...."   </p><p dir="ltr">But those battles are not over for Michigan workers who feel the incessant pressure from NAFTA on job security and the downward pressure on incomes and benefits.  Hillary can't rebuild the middle-class, even on her own free-market terms, without undoing large parts of NAFTA.</p><p dir="ltr"><strong>Fearing to take on Financial Strip-mining</strong></p><p dir="ltr">Throughout her glowing tribute to the private sector, she also duly notes that corporations and financiers care too much about short-term stock prices instead of the long-term health of the company.  She is correct to say that they are spending 80 to 90 percent of all corporate revenues on stock buybacks and dividends: “That’s money they’re not using to train their workers or give them a raise,”</p><p dir="ltr">And then there are the usual tropes about the "casino culture on Wall Street" and the ever faithful applause line: "We need to make sure Wall Street never wrecks Main Street again." </p><p dir="ltr"><strong>Amen to all that.  </strong></p><p dir="ltr">But the whip she hopes to crack is more like a wet noodle. She wants to reward corporations and investors with tax incentives to encourage long-term investment, worker training and profit sharing with employees.</p><p dir="ltr">But, she remains silent on two real power moves that could actually change elite Wall Street and corporate behavior.  She does not talk about outlawing stock buybacks. And she does not mention the financial speculation tax.</p><p dir="ltr">It is relatively easy for a president to stop stock buybacks. All it takes is a rule change at the SEC.  Until 1982, it was considered stock manipulation for a company to boost its price by buying back its own shares en mass. Reagan's SEC appointee then legalized it.</p><p dir="ltr">But making stock buybacks illegal again would be fiercely opposed by the very Wall Street executives and CEOs who are filling her campaign coffers.  In fact, the system of runaway inequality is built upon those buybacks  Today, the goal of virtually every large corporation is to use all of its cash-flow to buy back its own shares to enrich its CEOs and largest Wall Street investors. </p><p dir="ltr"><strong>The Corruption of Stock Buybacks at GM</strong></p><p dir="ltr">While noting that the "auto industry just had its best year ever," Hillary ignores the outrageous case of financial strip-mining at GM.  She couldn't mention it because it would also show the revolving door between the Obama administration and Wall Street.</p><p dir="ltr">Harry Wilson, the Obama administrator who helped to negotiate the GM bailout, then left for a hedge fund job. The 43 year-old Wilson and his investors proceeded buy up 34 million GM shares. Why not? By then he was a GM expert, trained at taxpayer expense.</p><p dir="ltr">He then demanded GM use its cash reserves to buy back its own shares to make him and his investors tens of millions of dollars....for doing nothing at all.</p><p dir="ltr">The American people bailed out GM to save hundreds of thousands of jobs throughout the Midwest. Many of us hoped that once GM returned to financial health, it would use its reserves to build the most environmentally sound cars in the world, thereby helping retain U.S. jobs and help our planet survive.</p><p dir="ltr">Instead, Wilson pressures GM to use its precious cash reserves to buyback its own shares in order to put money into his deep pockets and the pockets of his investors.  Increase GM wages? Increase training? Increase R&amp;D. No way.</p><p dir="ltr">His wish was GM's command. On January 13, GM announced a $9 billion stock buyback plan.  </p><p dir="ltr">But Hillary couldn't talk about any of this. Because if she did, she would be forced to admit that her fairytale version of capitalism will never work as long as Wall Street dominates the economy.</p><p dir="ltr"><strong>Carefully Ignoring Public Sector Jobs</strong></p><p dir="ltr">Team Hillary's populist sounding plan is in harmony with the most pernicious neo-liberal principle -- that the private sector, by definition, is more valuable than the public sector -- that all must be done to "encourage" private sector jobs while limiting public sector jobs.</p><p dir="ltr">Hillary makes no mention at all at the decades-old attack on public sector jobs and benefits. Not a word about the privatization that is wrecking Michigan's public sector. Not a word about the need for increases in public sector jobs to bring safe water to the people of Flint. Instead she just blames the Republicans.</p><p dir="ltr">When she discusses how to revitalize communities of color left behind, her only way of doing so is through private sector investment. But the public sector is the best path towards the middle class incomes for low-income Americans especially African Americans. She can't bring decent jobs and incomes to low-income communities without an expansion of the public sector.</p><p dir="ltr"><strong>But why the knock on public sector jobs?</strong></p><p dir="ltr">Because Wall Street and the super-rich would have to pay for those jobs. To have a robust public sector that would get the lead out of inner-city pipes, fix up dilapidated schools, increase the number of teachers, and provide free higher education for all requires the expansion of the public sector. To maintain a decent society requires an increase in public goods and the hiring of more pubic workers.</p><p dir="ltr">But doing so, leads us directly to a financial speculation tax on Wall Street as well as the end of off-shore tax havens for the super-rich, neither of which are mentioned in her economic plan.</p><p dir="ltr">Instead Team Hillary wants to sound tough on corporate bad actors, while providing tax breaks to most of the private sector. She wants to rein in Wall Street's risky behavior, without damaging its financial strip-mining operation. And she wants to let market miraculously create better paying jobs for people of color, while remaining silent on the public sector and 20-year old trade deals.</p> Sun, 06 Mar 2016 13:16:00 -0800 Les Leopold, AlterNet 1052008 at http://personal.alternet.org Election 2016 Election 2016 hillary clinton economy wall street money economics sanders bernie election2016 Why Hillary Could Be a Lot More Vulnerable to Trump Than Bernie http://personal.alternet.org/election-2016/why-hillary-could-be-lot-more-vulnerable-trump-bernie <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Hillary will have enormous difficulty defending herself on three key issues: trade, war and Wall Street. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/hqdefault_1.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Cousin Jeff worries that a vote for Bernie is a vote for a Republican sweep in the fall. Iris, a veteran of peace campaigns, fears another George McGovern debacle (losing 49 states to Nixon in 1972.) And Harold, a radical artist, is certain that a self-declared socialist can't possibly become president in the most capitalist nation on earth.  </p><p>But George McGovern (or Eugene V. Debs or Ralph Nader) never received the kind of poll numbers Bernie is getting. Take a look at these head-to-head general election average of polls since February 10, 2016 (from <a href="http://www.realclearpolitics.com/epolls/2016/president/2016_presidential_race.html">Real Clear Politics</a>):</p><ul><li>Hillary loses to Cruz by 1.5 percentage points. Bernie wins by 9.7 points</li><li>Hillary loses to Rubio by 5 points. Bernie wins by 3.3 points. </li><li>Hillary does beat Trump by 3.4 points. Bernie wins 8 points.</li></ul><p><strong>Hillary's Substantive Weakness</strong></p><p>The pundits say these polls are useless because the Republicans haven't yet done their number on Bernie. By November, he'll look more like Lenin than a liberal. And besides, isn't the Clinton machine as vicious as any Republican operation? She'll fight fire with fire, while Bernie's too nice. He won't know what hit him. </p><p>This cable news palaver, however, glides over the real differences. For a moment, let's look at the Trump matchup, not Cruz or Rubio. And let's put aside Hillary's emails and the fact that some voters question her honesty. Some don't like Trump either. The much bigger problem for her is substantive. She will have enormous difficulty defending herself on three key issues: trade, war and Wall Street.   </p><p><strong>Trade: The Fast Track to Prosperity?</strong></p><p>Hillary's lead will start to slip as she runs into the Trump buzz on trade. She'll be up against years and years of union agitation against unfair foreign competition fed by anti-worker trade deals. Industrial labor unions talk about this every day as hundreds of thousands of workers in key midwestern states lose their jobs due to product lines and entire facilities shifting to low-wage areas around the world. </p><p>Both the companies and the unions involved constantly blame unfair trade with China, Mexico and other low-wage countries. It's not clear if Team Hillary realizes the full extent and intensity of this day-to-day education and agitation against unfair trade done by the very unions that will eventually support her. It's relentless and has set up the rank and file to listen, if not lean, toward Trump. </p><p>Also, these industrial unions have been the backbone of the fights against NAFTA, TPP and just about every trade bill put forth by both political parties. To them, fast-track is a swear word.</p><p>Hillary, however, believes in this fast-track to prosperity. She's been part and parcel of the Democratic Party's embrace of neo-liberalism. She and Bill, backed by an army of economists, trumpeted the wonders of deregulation and free trade. It will lower prices. It will create more jobs. (Remember the theory of comparative advantage from Econ 101?)</p><p>Instead, free trade was corporate-managed trade from the start. It was used to relentlessly drive down U.S. labor costs, while killing tens of thousands of higher paying middle-class industrial jobs.</p><p>Wait, say the Team Hillary economists, the new jobs that were created and the cheap goods flooding in from China means workers can live better. Well, the average worker just doesn't see it that way. The buying power of their wages has been stagnant since the 1970s, while financial and corporate elites have accumulated vast riches. All American industrial workers feel trade-enabled economic insecurity each day. Runaway inequality hurts. They know they've been had.</p><p>What's Hillary's response? She now opposes TPP after supporting it. Will she renounce NAFTA, the crown jewel of the Clinton years?  Not a chance. Will she go big and announce a just transition plan to guarantee good paying jobs to all displaced workers? That's Denmark, not her vision of a neo-liberal America. </p><p>Meanwhile Trump will continue to attack all trade agreements. In doing so, he will be echoing the lines used by many union leaders for the last 20 years. And of course, he will tell us, that as the supreme dealmaker, he will do better for the American worker. Industrial workers will think he can't do worse.</p><p><strong>War</strong></p><p>Hillary is an interventionist. Her support of the Iraq war was not a mistake. It wasn't even a case of poor judgment. Rather, in her judgment, the U.S. has the right and the obligation to promote regime change to rid the world of pernicious dictators and create democracies. Her real critique of such interventions is that the nation-building wasn't done well enough. She'll do it better. </p><p>She pressed Obama for more intervention in Syria. She wants an enforced no-fly zone. She has no qualms about overthrowing Kaddafi in Libya. She claims she doesn't want to put "boots on the ground" in the Middle East, but "special ops" are okay. (Their boots don't count.)   </p><p>She looks up to Kissinger because she also believes the U.S. should lead the world, even if we'll be engaged in endless interventions and wars. That's the price of being the world's only superpower. </p><p>Trump sounds like a 1960s peacenik in comparison. He'll pound away at the mess she's helped to create in the Middle East. Certainly he will sound crude and unschooled in foreign affairs. Every statement he utters will make the foreign policy establishment wince. But what he lacks in knowledge he makes up in nationalistic bombast as he claims to build a military "so big and so strong that no one will mess with us." At the same time he will rail against the trillions spent on useless Middle East interventions and the wars Hillary supported.  </p><p>Hillary certainly is tough and smart. But Trump will come across with unrestrained toughness and with more street smarts about wasting American lives and resources.</p><p><strong>Wall Street</strong></p><p>Some argue that her vulnerabilities on trade and foreign policy are not extensive. After all trade only impacts a limited number of voters, and Hillary's prodigious foreign policy skills will mask her hawkishness. However, her attachments to Wall Street are another matter. There's no way to dance around them.</p><p>What was she thinking when taking in over $11 million for speeches to Wall Street firms and other corporate elites? Here's what I've heard from her online supporters.</p><ul><li>It was her job to represent Wall Street when she was the senator for New York.</li><li>She's never changed her votes or positions because of such donations. </li><li>She's going to be really tough on them by calling for tighter financial regulations, especially on shadow banks, hedge funds and the like.</li><li>Men get those kind of speaking fees after leaving government; why shouldn't she?</li><li>It's really not that much money compared to what the Wall Streeters make.</li><li>She's entitled to earn a living.</li><li>She needs the money to do battle with the Republicans.</li></ul><p>You think these will fly? Trump will bazooka them into oblivion. He will say, <em>Nobody gives up that kind of money without expecting something in return. I know. I've done it hundreds of times. I'm self-financed. I don't need that money. I won't accept that money. I can't be bought. You're signed, sealed and delivered</em>.</p><p>No focus group testing can save her from this onslaught.</p><p>Bernie doesn't need those focus groups. He fought against the trade deals from the start. He was against the Iraq war and opposes regime change. And he's not taking a dime from Wall Street. And he's taking on the billionaire class of which Trump is a proud member. </p><p>Add to that Bernie's high marks on trustworthiness and his lack of email issues, and you have the strongest candidate to trump Trump.  </p><p>So my dearest Cousin Jeff, Iris and Howard, this is not 1972. The Cold War is over. Runaway inequality is ruining our country and the American people are now more willing to listen to an honest democratic socialist than to a finance-friendly, neo-liberal interventionist. </p> Fri, 04 Mar 2016 11:32:00 -0800 Les Leopold, AlterNet 1051935 at http://personal.alternet.org Election 2016 Election 2016 2016 elections trump hillary clinton The Biggest Difference Between Hillary and Bernie? The Real Steps They Will Take to Address America's Inequality Crisis http://personal.alternet.org/election-2016/biggest-difference-between-hillary-and-bernie-real-steps-they-will-take-address <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Hillary has no burning desire to reverse runaway inequality by fundamentally reordering the economic system.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/hillary-bank-donors.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr" id="docs-internal-guid-57f4f842-2877-ac58-6d95-6c75fd2852d2">No one can deny that economic inequality is accelerating. In 1980 the average top 100 CEOs earned $45 for every dollar earned by an average worker. Today, the gap is an astounding $844 to 1.</p><p dir="ltr">But there is significant controversy about the impact of runaway inequality on American society and what should be done about it.</p><p dir="ltr"><strong>Inequality and Equal Opportunity</strong></p><p dir="ltr">One narrative argues that inequality per se is not an essential problem as long as we have equality opportunity so that everyone has a fair chance at accumulating these riches. People of all incomes, genders and colors should be able to line up together at the starting line. Each individual should be able to fully develop his or her god-given talents. No form of discrimination should be tolerated during this run for the gold.  </p><p dir="ltr">Within this narrative, economic inequality and its connection to Wall Street are important but not paramount. There are other issues that are equally, if not more important, like racial discrimination, unequal wages for women and discrimination against gays, lesbians and transgender people.</p><p dir="ltr"><strong>Runaway Inequality as the Key Issue</strong></p><p dir="ltr">The alternative narrative argues that runaway inequality is ruining our way of life; that as the super-rich increase their wealth, the rest of us suffer. It argues that Wall Street and top CEOs are strip-mining our economy, by extracting more and more wealth from corporations, consumers, students and communities. Incomes for the wealthy are skyrocketed as real wages for the average workers stagnate.</p><p dir="ltr">As the rich grow richer and corporations grow more powerful, they move their money offshore. The tax burden is shifted to the rest of us as state and local governments lurch from one fiscal crises to the next. As a result the richest country in the history of the world, can't remove lead from its drinking water or provide healthcare for all, or move a quarter of its children above the poverty line.</p><p dir="ltr">Equal opportunity is not enough. Resources must be redistributed to eradicate poverty, which disproportionately impacts people of color. Runaway inequality must be reversed.</p><p dir="ltr"><strong>Why did Hillary take $11,000,000 in speaking fees?</strong></p><p dir="ltr">Because she believes there's nothing fundamentally wrong with the process of runaway inequality. She believes in a world where each child should have the same opportunity she did to make it to the top of the economic pyramid. There's nothing fundamentally wrong with earning $225,000 per speech. She can take money from any hedge fund or corporation because she believes her fundamental values won't be swayed at all. She will still call for tighter regulations and marginally higher taxes on the wealthy</p><p dir="ltr">In this, she is being truthful to her worldview. She does not oppose the accumulation of great wealth. She does not believe her wealthy friends are harming society. On the contrary, they are good people who are funding good causes like the Clinton Foundation. All together these wealthy liberal elites, now including the wealthy Clintons, are striving to remove barriers to equal opportunity. She calls it the Breaking Every Barrier <a href="https://www.hillaryclinton.com/briefing/h/2016-02-12-hillary-clintons-breaking-every-barrier-agenda-revitalizing-the-economy-in-communities-left-behind/">agenda</a>.</p><p dir="ltr">Hillary has no burning desire to reverse runaway inequality by fundamentally reordering the economic system that is building the fortunes of her family and peers. For Hillary it's all about values and equal opportunity, not just money.</p><p dir="ltr"><strong>Why Bernie Is Different</strong></p><p dir="ltr">For the Sanders campaign, equal opportunity is not good enough. It is not enough to run a fairer race for riches when the entire process of runaway inequality is harmful to working people and the poor. It does not matter whether the super-rich are nice people or have good values or donate to good causes.</p><p dir="ltr">It is not good enough for there to be more women and people of color in the billionaire class. That class has far too much money and that money is needed to fund free higher education, universal health care and rebuilding our infrastructure.</p><p dir="ltr">Taking money from the super-rich for political campaigns is out of the question for anyone who wants to reverse runaway inequality. There are no big speaking fees for Sanders or damaging transcripts yet to be released. Instead he must draw a clean line drawn between the billionaire class and the rest of us: between the economic predators and the prey.  </p><p dir="ltr">For Sanders, runaway inequality is not a single issue. It is the core issue that shapes our entire society. People are poor not because they don't have the skills to move up the economic ladder. They are poor because the billionaire class uses all its economic muscle  to financially strip-mine the economy by reducing wages and benefits and shipping jobs abroad. It's not about equal opportunity. It's about power and money.</p><p dir="ltr"><strong>The Class Divide</strong></p><p dir="ltr">As the results from more and more primaries come in, we are likely to see this split emerge among voters. Those who are benefiting from runaway inequality—the economic winners—will go for Clinton. This group goes far beyond the billionaire class. It also includes local real estate developers and builders, upwardly mobile politicians and staff, prosperous lobbyists and well-paid non-profit executive directors, liberal bankers and hedge fund managers, and well-paid pundits and economists. They are all doing well. Yes, they want to help the poor and the middle class, but not by upsetting the hierarchy that rewards them. These are Hillary's people.</p><p dir="ltr">Sanders is likely to do well with working people, the poor and the young, those who are far removed from the race to the top. One test of this divide is whether or not it shows up among people of color. Is there a significant class divide among black and Hispanic voters? Do lower income voters of color trend toward Bernie? If so, the movement to reverse runaway inequality is likely to grow increasingly powerful.  </p><p dir="ltr">Will it grow large enough to dethrone Hillary? We'll soon find out.  But the real question is how to help it flourish after November. It will take a mass movement, a sustainable political revolution, to reverse runaway inequality.</p><p dir="ltr"> </p><p dir="ltr"><em>For more information on Runaway Inequality go to <a href="https://www.facebook.com/runawayinequality/" target="_blank">https://www.facebook.com/runawayinequality/</a></em></p> Sun, 28 Feb 2016 07:19:00 -0800 Les Leopold, AlterNet 1051565 at http://personal.alternet.org Election 2016 Election 2016 clinton sanders election election2016 Krugman's Attack on Sanders Was Based on an Economic Study Produced by ... a Clinton Supporter http://personal.alternet.org/election-2016/krugmans-attack-sanders-was-based-economic-study-produced-clinton-supporter <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The Times columnist&#039;s favorite strawman turns out to not even back Sanders.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/clinton_krugman.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Paul Krugman, the <em>New York Times</em> columnist, Nobel laureate and defensive linebacker for Team Hillary, <a data-beacon="0}}" href="http://www.nytimes.com/2016/02/19/opinion/varieties-of-voodoo.html?_r=0" target="_hplink">is accusing </a>the Sanders campaign of voodoo economics. He attacks an independent economic analysis of the Sanders agenda produced by economist Gerald Friedman. That questionable study shows incredibly high gains in jobs, employment and income.</p><p>Krugman fails to mention that Friedman is <a data-beacon="1}}" href="https://www.washingtonpost.com/news/wonk/wp/2016/02/18/the-economist-who-validated-bernie-sanders-big-liberal-plans-is-voting-for-hillary-clinton/" target="_hplink">a declared Clinton supporter!</a></p><p>That's is either bad faith or bad journalism or both.</p><p>Good journalism and good economics requires an open debate about the key issue driving the Sanders revolt: Runaway Inequality</p><p>In 1970 a top 100 CEO earned $45 for every dollar earned by the average worker. That means if a worker could afford one car, a top 100 CEO could afford 45 cars.</p><p>Today the pay gap is an obscene $844 to $1.</p><p>The American people believe this is grossly unfair and many are flocking to the Sanders campaign because of it.</p><p>So instead of arguing about bogus studies put out by Team Hillary economists, let's debate the real issues:</p><ul><li>Should higher education be free at public colleges and universities?</li></ul><ul><li>Should we enact a financial transaction tax on Wall Street speculation?</li></ul><ul><li>Should healthcare be a right for all and delivered through a single-payer system?</li></ul><ul><li>Should we rebuild the infrastructure so that there will be no more Flint poisonings of our kids?</li></ul><ul><li>Should we reduce the prison population so that we no longer lead the entire world in the number of prisoners?</li></ul><ul><li>Should we enact a $15 an hour minimum wage so that no longer lead the developed world in childhood poverty?</li></ul><ul><li>Should we tax the $21 trillion of wealth that is hidden off shore by the super-rich and large corporations?</li></ul><ul><li>Should we break up the big banks and create public state banks like the Bank of North Dakota?</li></ul><p>We are the richest country in the history of the world. We have the resources to eliminate poverty, rebuild our infrastructure, provide decent paying jobs for all willing and able to work. But we can do so only if we take on our financial and corporate elites.</p><p>If Krugman wants to do battle with a credible economist who support the Sanders approach, he should have a go at Thomas Piketty <a data-beacon="2}}" href="http://www.theguardian.com/us-news/commentisfree/2016/feb/16/thomas-piketty-bernie-sanders-us-election-2016" target="_hplink">who recently wrote</a>:</p><blockquote><p>"Sanders' success today shows that much of America is tired of rising inequality and these so-called political changes, and intends to revive both a progressive agenda and the American tradition of egalitarianism. Hillary Clinton, who fought to the left of Barack Obama in 2008 on topics such as health insurance, appears today as if she is defending the status quo, just another heiress of the Reagan-Clinton-Obama political regime.</p><p>Sanders makes clear he wants to restore progressive taxation and a higher minimum wage ($15 an hour). To this he adds free healthcare and higher education in a country where inequality in access to education has reached unprecedented heights, highlighting a gulf standing between the lives of most Americans, and the soothing meritocratic speeches pronounced by the winners of the system."</p></blockquote> Sat, 20 Feb 2016 14:36:00 -0800 Les Leopold, AlterNet 1051064 at http://personal.alternet.org Election 2016 Election 2016 hacks The Idea That Hillary Clinton Took $200k+ Per Speech From Banks and Corporations Is Obscene http://personal.alternet.org/election-2016/idea-hillary-clinton-took-200k-speech-banks-and-corporations-obscene <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The typical American has to work five years to earn that much.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/hillary_sc.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr"><em>Anderson Cooper: </em><em>"But did you have to be paid $675,000 [for three speeches to Goldman Sachs]?"</em></p><p dir="ltr"><em>Hillary Clinton: </em><em>"Well, I don't know. That's what they offered."</em></p><p dir="ltr">Hillary is misleading us at best by saying that her $225,000-per-speech fee, paid three times by Goldman Sachs, was "what they offered." It was not what they offered, it was what Team Hillary demanded.</p><p dir="ltr">A review of her 2014 tax return, <a href="https://www.hillaryclinton.com/tax-returns/">posted on her website</a>, shows that $225,000 per speech was her minimum fee.  </p><p dir="ltr">She received $225,000 for 34 of the 41 speeches listed on her tax return. Of the remaining seven speeches, two were for 250,000 and the others for $265,000, $275,000, $285,000, $305,000 and $400,000. In total she received $9,680,000 for these speaking engagements in 2013.</p><p dir="ltr">Wall Street firms funded 14 of her 41 talks. In addition to Goldman Sachs, the list includes Morgan Stanley, Deutsche Bank, Fidelity Investments UBS and Bank of America. Her benefactors also include hedge funds and private equity firms like Apollo Management and Kohlberg, Kravis, Roberts.</p><p dir="ltr">In response to the media backlash over her Wall Street ties, Clinton has "<a href="http://www.politico.com/story/2016/02/hillary-clinton-postpones-fundraiser-financial-services-218708">postponed</a>" a number of big fundraisers with financial-sector titans like Blackrock and the Mitt Romney-cofounded Bain Capital. The events, according to Politico, will be held “sometime after the New Hampshire primary.”</p><p dir="ltr"><strong>Why did Hillary Take the Money?</strong></p><p dir="ltr">Carl Bernstein, Hillary Clinton's biographer, <a href="http://www.ooyuz.com/geturl?aid=10291482">commented on CNN</a> that the White House is "horrified that Clinton is blowing up her own campaign." He said they can't believe she took the money and didn't see the ethical problems that would dog her. It is not credible for her to argue that she took the money because she wasn't sure she was going to run for president or that she was "dead broke." She and Bill had <a href="http://www.nytimes.com/politics/first-draft/2015/07/31/hillary-clinton-releases-8-years-of-tax-returns/">raked in</a> $139,000,000 between 2007 to 2014.  </p><p dir="ltr">One possibility is that Hillary wanted to send a message to Wall Street that she would not whip up populist rage against them during her campaign and that instead she would work with Wall Street to solve financial problems for the good of the country. We will find out more when and if her transcripts are found and released.</p><p dir="ltr">But the real reason may lie in the fundamental relationship between the Clintons and the world of power and wealth. Hillary, Bill and Chelsea (whose husband is a hedge fund partner) believe Wall Street is a vital part of the economy, composed mostly of very bright, honorable and talented people, like their classmates at Yale and Stanford. Sure, every now and again there are a few bad apples, but the barrel is fundamentally sound.  </p><p dir="ltr">How could she be so politically tone deaf on this issue? Because she lives in a world surrounded by so many of the best and brightest in and around Wall Street. Attacking them would be like attacking her community of friends and financial supporters. How could receiving fees from such decent, talented and productive people be wrong?</p><p dir="ltr">Isn't getting $225,000-per-hour also a fair speaking fee, given that's more or less what the Wall Street elites get per hour? So what's wrong with taking money from Wall Street?</p><p dir="ltr">The pundits point out that she has created a "<a href="http://www.nytimes.com/2016/02/05/us/politics/hillary-clinton-wall-street-ties.html">perceived" conflict of interest</a>, whether real or imagined. In essence they are saying that there's nothing inherently wrong with taking the money. It's not really tainted. Hillary states that she never changed her vote due to campaign contributions. But <a href="http://nymag.com/daily/intelligencer/2016/02/did-wall-street-buy-this-vote-from-clinton.html">evidence is mounting</a> via previous accounts by Elizabeth Warren, that Hillary may have switched her position on bankruptcy laws to please her New York Wall Street donors after becoming the senator from New York. </p><p dir="ltr">But these attacks miss the most basic issue: Is the money tainted? Is she taking "blood" money? Sanders argues that "the business model of Wall Street is fraud." There is considerable data to support him.  </p><p dir="ltr"><strong>1. Fines and Settlements</strong></p><p dir="ltr">Since 2009, Wall Street has <a href="http://www.cnbc.com/2015/10/30/misbehaving-banks-have-now-paid-204b-in-fines.html.">paid $204,000,000,000</a> in fines and settlements. This is the equivalent to writing a $640 check to every man, woman and child in America including all undocumented residents. It's hard to imagine an industry running up such a liability unless the basic business model was deeply flawed.</p><p dir="ltr">The unlawful acts include the facilitation of money laundering for drug cartels and rogue nations, illegally evicting homeowners, selling fraudulent mortgages and mortgage backed securities, manipulating vital interest rates, insider trading, and facilitating off-shore tax evasion.</p><p dir="ltr">The damage done to homeowners and those who lost their jobs during the Great Recession is arguably far worse than the problems caused by drug trafficking. Yet millions, especially people of color, have been arrested, fined, convicted and jailed through the failed war on drugs, while not one of Wall Street's top banking executives has gone to jail or even paid a fine. (Conveniently, $204 billion has been paid by the companies, not by the top executives.)</p><p dir="ltr"><strong>2. Profits Extracted through Payday Lending</strong></p><p dir="ltr">Loan sharking is something from "The Sopranos." But payday lending, the legalized form of loan shaking, is a mainstream Wall Street activity. An estimated 120 million payday loans are issued annually worth a total value of $42 billion.</p><p dir="ltr">One <a href="http://npa-us.org/research/payday-lending">study reports</a> that, "The average effective interest rate on a payday loan is 455% (APR). For a loan of $300, a typical borrower pays on average $775, with $475 going to pay interest and fees over an average borrowing cycle."  </p><p dir="ltr">Big Wall Street banks provide funds for the 17 primary payday lenders. The list includes Wells Fargo, Bank of America, US Bank, JPMorgan Bank, and PNC Financial Services Group. (Bank of America paid $225,000 for a Hillary speaking engagement on 11/13/2013.)</p><p dir="ltr"><strong>3. Financial Stripmining</strong></p><p dir="ltr">Perhaps the most pernicious Wall Street activity involves corporate raids and stock buy-backs. Hedge funds, private equity firms and investment banks have bought up tens of thousands of corporations, loaded them up with debt and then milked them dry.  </p><p dir="ltr">They call it "unlocking value," but it is cold, hard, financial stripmining that adds no value at all to the target firms, while squeezing the livelihoods of the average employee. These Wall Street predators pressure corporation after corporation to use their revenues to buy back their own shares, thereby raising the share prices, enriching CEOs and the largest Wall Street investors.   </p><p dir="ltr">Before 1982, this was considered stock manipulation and deemed both illegal and dangerous to the financial system. However, a SEC rule change under the Reagan administration basically legalized unlimited stock buy-backs. In 1980, 2% of corporate profits went to stock buybacks. By 2007, over 70% of all corporate profits went to buy back their own shares. (For an excellent study of this financial stripmining, see <a href="https://hbr.org/2014/09/profits-without-prosperity">Profits Without Prosperity</a> by William Lazonick.)</p><p dir="ltr">So instead of reinvesting, Wall Street financially strips down the companies it targets. To pay all the debt and stock buybacks, corporations are broken up, jobs shifted overseas, wages are cut and benefits are reduced, if not eliminated. Millions of workers watch as their incomes decline and jobs disappear as money flows to Wall Street.</p><p dir="ltr">By 2006, 40% of all corporate profits went to Wall Street even though Wall Street accounts for only 5% of all employment. (For many more facts and figures on financial strip-mining see <a href="http://www.amazon.com/Runaway-Inequality-Activists-Economic-Justice/dp/0692436308/ref=tmm_pap_swatch_0?_encoding=UTF8&amp;qid=&amp;sr=">Runaway Inequality</a>.)</p><p dir="ltr">As a result of this financial stripmining, the gap between the pay of the average worker and a top 100 corporate executive rose from 45 to 1 in 1970 to an incomprehensible 844 to 1 in 2014.</p><p dir="ltr"><strong>Give It Back</strong></p><p dir="ltr">Some of the American people find it obscene for a presidential candidate to receive $250,000 for an hour's worth of speaking. Meanwhile, the typical American has to work five years to earn that much. Some are struggling with their underwater mortgages while trying to get by with jobs that pay far less than their former jobs that were shipped abroad. Many also have to contend with piles of student loans that won't go away.</p><p dir="ltr">Newer homebuyers are still suffering from years of predatory lending which stuck them with high interest mortgages even though they qualified for lower interest conventional mortgages.</p><p dir="ltr">As a result, many Americans see those $225,000 fees as an affront to their basic sense of fairness and justice.  </p><p dir="ltr">It may be extremely difficult for Hillary to overcome this gaping flaw. She's taking a pounding because she could not understand why some other Americans would detest the world Wall Street is creating. Hillary needs to do something very bold to prove to the American people that she can't be bought. Words are not enough. Although it may be far too late, there's one remaining possibility: Give the money back.</p> Mon, 08 Feb 2016 09:49:00 -0800 Les Leopold, AlterNet 1050331 at http://personal.alternet.org Election 2016 Election 2016 clinton For Clinton and Krugman, 'Hardheaded Realism' Amounts to Protecting the Interests of the Richest People in America http://personal.alternet.org/election-2016/clinton-and-krugman-hardheaded-realism-amounts-protecting-interests-richest-people <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The demeaning attacks on Bernie Sanders speak volumes about Hillary Clinton&#039;s worldview.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/clinton_krugman.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Here are three telling quotes about this year's election:</p><blockquote><p>"In theory, there are a lot of things to like about [Sanders'] ideas. But in theory isn't enough. A president has to deal in reality.  I am not interested in ideas that sound good on paper but will never make it in real life." —<a href="http://www.kansascity.com/news/local/news-columns-blogs/the-buzz/article55835215.html">Hillary Clinton</a>, Jan. 21, 2016</p><p>"The point is that while idealism is fine and essential -- you have to dream of a better world -- it's not a virtue unless it goes along with hardheaded realism about the means that might achieve your ends. ... Sorry, but there's nothing noble about seeing your values defeated because you preferred happy dreams to hard thinking about means and ends. Don't let idealism veer into destructive self-indulgence. —<a href="http://www.nytimes.com/2016/01/22/opinion/how-change-happens.html?login=email&amp;ref=todayspaper&amp;mtrref=www.nytimes.com&amp;assetType=opinion">Paul Krugman</a>, NYT, Jan. 22, 2016</p><p>"In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes..... [We] believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened." —<a href="https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf">Gilens and Page</a></p></blockquote><p>Team Hillary (which includes economist/columnist Paul Krugman) is worried about major defeats in Iowa and New Hampshire. Their counter-attack is clear—Bernie is all pie in the sky, he isn't facing up to the realities of Washington. And as Krugman puts it, Sanders and his supporters are letting "idealism veer into destructive self-indulgence."</p><p>But these demeaning attacks say much more about Clinton than they do about Sanders. In effect Clinton is admitting (as is Krugman) that we have to accept American plutocracy as a given that, at best, can be modified around the edges. Neither Clinton nor Krugman believe a progressive populist uprising (that Sanders is calling for and counting on) could possibly modify our elite-driven system. After all, if such a movement is possible, Hillary is likely to lose. Therefore it must be declared impossible, off the table, unrealistic and so on.</p><p>Clearly Clinton and Krugman accept that elite rule not only shapes our current sense of reality, it is our permanent reality.</p><p>Krugman should know that what remains of our democracy needs to be pressured from below. His Princeton colleague, Martin Gilens, along with Benjamin Page of Northwestern University, have co-authored a study that shows that the average American currently has no independent impact on public policy. They reviewed 1,779 congressional bills over the last decade and found that, "When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy." </p><p>Therefore, unless you already are an economic elite, you have no ("near zero") influence over government policy, which is the textbook definition of a plutocracy.</p><p>How do we influence such a system?</p><p>By banging away from the outside; by forming mass movements with mass demonstrations and insurgency campaigns like the one Sanders is running. He is absolutely correct to assert that we need a "political revolution" to modify and end rule by the "billionaire class." </p><p>In fact, there is no other way. All the careful policy crafting and intellectual arguments are no match for dominance of the super-rich over politics. The ties that bind Washington, Wall Street and corporate elites will not break, let alone bend, unless faced with a severe popular uprising. Occupy Wall Street did more to put runaway inequality on the political map than did either Clinton or Obama.</p><p>Hillary, however, is betting that she can win over voters by claiming she's the practical one, not the ineffectual dreamer—that she can get things done.  But she, along with the median voter, has no chance of influencing policy unless we are mobilized to pressure the political system from the outside as well. She's been an insider for so long she would rather talk quietly with her many elite contacts than threaten them with a mass mobilization. And let's face it: she is one of them. Yes, more liberal, but still a part of those elite structures.</p><p>For example, it's nearly impossible to imagine Hillary calling for a million people to march on Washington or Wall Street to demand the breakup of big banks and a financial speculation tax to pay for free higher education. This would be the case even if she had not taken $2 million in speaking fees from Wall Street firms. In short, she is asking us to let her be our representative among the plutocrats where she can make things happen "in real life."</p><p>Krugman knows better than to argue that great politicians are the key to great changes. But sometimes economists can be a little tone-deaf to social history. It was the massive labor upheaval of the 1930s coupled with countless mobilizations of the unemployed that created the space for the New Deal. It was a decades-long militant civil rights movement combined with strong labor support that pushed LBJ into his civil rights stands. It was the upheavals of the 1960s that led to passage of environmental, consumer and health and safety legislation. And it will indeed take a Sanders-inspired political revolution to budge our entrenched plutocrats.</p><p>Clinton (and Krugman) are also making an enormous tactical error. The more they stress pragmatism and acceptance of elite political control, the more they clear the field for Bernie Sanders. People already sense what Gilens and Page have so carefully researched—that America's basic political and economic structures are rigged against them. They want to send a message: We are tired of our crummy wages, our porous benefits, our lousy infrastructure, our crumbling schools and runaway inequality. Sanders expresses what they already feel to be true.</p><p>Moreover, it's factually incorrect to say that Sanders appeals to our hearts while Clinton appeals to our heads. Sanders' supporters are using their heads. The only way to change the system is to challenge it. Nothing short of a political revolution stands any chance of success. That's "hardheaded realism" of the first order.</p><p>If Sanders continues to gain support it's precisely because voters understand that the choice is clear—accept the reality of plutocracy and beg for crumbs, or fight to tear it down.</p> Wed, 27 Jan 2016 11:34:00 -0800 Les Leopold, AlterNet 1049673 at http://personal.alternet.org Election 2016 Economy Election 2016 hillary clinton paul krugman bernie sanders plutocracy 10 Shocking Economic Facts that Power the Sanders Insurgency http://personal.alternet.org/news-amp-politics/10-shocking-economic-facts-power-sanders-insurgency <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">These facts provide the glue for the Sanders message. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_259200632_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Why are so many drawn to the Sanders message?  It's not because he's a political outsider. (He's a Senator who has spent his entire adult life in politics.) It's not because he's a good Jewish boy from Brooklyn. (Jews make up only about 2% of the American population.) And it's not because he's a self-declared socialist. (Few of us have any idea what that means in today's global economy.)</p><p>Rather, it's because so many of us want to stop our entire society from crumbling beneath the destructive power of runaway inequality. </p><p>Here are 10 crucial economic facts that provide the glue for the Sanders message. (The charts are taken from <em><a href="https://www.runawayinequality.org/product/runawayinequality">Runaway Inequality: An Activist's Guide to Economic Justice</a></em>.)</p><p><strong>1. The rich are getting richer, the rest of us are not.</strong></p><p>There always has been a significant gap between the top 1 percent and the rest of America. But that gap was kept under control largely through governmental tax, banking and labor policies.</p><p>You could make a lot of money in this country, but after the New Deal, unions made sure you paid a decent wage to your workers, and government made sure the wealthy provided ample tax revenues. This allowed working people also to enjoy a rising standard of living.</p><p>But as the chart below shows the bond has been broken. After 1980, the incomes of the top 1% exploded while the wages of the bottom 90% stagnated....and not by accident.</p><p></p><div alt="" class="media-image" height="334" width="432"><img alt="" class="media-image" height="334" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/average_income_of_top_1_percent.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Average income of top 1% vs. bottom 90%</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Alvaredo Facundo, et al., The World Top Incomes Database</div></div></div> </div><p><strong>2. Wall Street/CEO Greed</strong></p><p>Most of us haven't had a real raise (after inflation) for more than a decade. Meanwhile we see our CEOs and their Wall Street partners rake in astronomical sums. The data backs up what we see and sense. As this chart shows, the gap between the pay of the top CEOs and the average worker has jumped from 45 to 1 in 1970 to an astounding 829 to one today. </p><p>The game is rigged and Sanders is calling them on it.</p><p></p><div alt="" class="media-image" height="310" width="432"><img alt="" class="media-image" height="310" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/wage_gap-top_100_ceos_vs_average_workers.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Wage gap: Top 100 CEOs vs. Average worker.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">CEO pay from CEO compensation surveys, etc.; worker earnings from US Bureau of Labor Statistics</div></div></div> </div><p><strong>3. The biggest banks are getting bigger.</strong></p><p>One of the most outrageous economics facts of life is the engorgement of too-big-to-fail banks.  We are told that they now are under control. But nothing could be further from the truth.</p><p>The top four banks have grown even larger since the Great Recession. No wonder crowds roar when Bernie says "If a bank is too big to fail, I think it's too big to exist."<br /></p><div alt="" class="media-image" height="367" width="432"><img alt="" class="media-image" height="367" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/percentage_of_all_banking_assets.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">percentage of all banking assets. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">FDIC</div></div></div> </div><p><strong>4. Students are crippled with debt.</strong></p><p>Sanders wants to tax Wall Street speculation and use the money to fund free higher education.  And for good reason. Debt peonage is hitting college students as banks load them up with onerous loans. Sanders believes it's time for us to catch up with many other developed nations that already provide free higher education.</p><p></p><div alt="" class="media-image" height="376" width="432"><img alt="" class="media-image" height="376" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/student_loans_1.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Student loans.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Federal Reserve</div></div></div> </div><p><strong>5. We lead the developed world in child poverty</strong></p><p>Nothing more clearly reflects the values of a country than how it treats its children. And nothing is more painful and inexcusable than children living in poverty.</p><p>The countries of northern Europe – Iceland, Finland, Nether­lands, Norway, Denmark and Sweden – have nearly eradicated childhood poverty. These also are the countries that have the lowest levels of inequality. They have made a conscious choice: less inequality, less child­hood poverty.</p><p>But in a country like ours so engulfed by runaway inequal­ity, child poverty becomes the responsibility of the poor. In other words, if your kids are poor it’s your fault. Don’t expect society to feed them. </p><p>Bernie does indeed expect society to feed the poor. And so should we.</p><p></p><div alt="" class="media-image" height="367" width="268"><img alt="" class="media-image" height="367" width="268" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/percentage_of_children_living_in_poverty.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">percent of children living in relative poverty.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">UNICEF</div></div></div> </div><p><strong>6. You can't live on the minimum wage</strong></p><p>America is the only country in the developed world in which you can work full time and still live in poverty.  That's because our federal minimum wage is a disgrace. As the chart below shows, the real buying power of the minimum wage, after taking into account of inflation, has been on the decline since its peak in the 1960s. That's why one of Sanders' biggest applause lines is</p><p>            "A minimum wage of $7 an hour is a starvation wage. I applaud those cities—Seattle, Los Angeles and others—that have raised the minimum wage to $15 an            hour. And that is exactly what we will do at the federal level."</p><p></p><div alt="" class="media-image" height="336" width="432"><img alt="" class="media-image" height="336" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/rise_and_fall_of_minimum_wage.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Rise and fall of the minimum wage. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Congressional Research Service</div></div></div> </div><p><strong>7. The tax system favors the rich</strong></p><p>We all know that the rich are not paying their fair share of taxes. They hire the best lawyers to help make their incomes vanish on IRS papers. They shift money abroad. They use their influence to create and abuse loopholes. And they sell us the lie that decreasing taxes on the rich make all boats rise. </p><p>The chart below shows the result on the state and local levels.  The sad truth is that the poorer you are, the more you pay as a percent of your income.</p><p></p><div alt="" class="media-image" height="273" width="432"><img alt="" class="media-image" height="273" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/rich_pay_lower_state_tax_rates.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Rich pay lower state tax rates.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Institute on Taxation and Economic Policy</div></div></div> </div><p><strong>8. The rich buy the political system</strong></p><p>As our economy fractures under the weight of runaway inequality, so does our entire democracy. Money is pouring into politics, especially since the <em>Citizens United</em> Supreme Court ruling.  As the chart below makes clear, corporations and financial institutions are taking full advantage as they flood the political process through Super PACS.</p><p>Sanders wants Super PACS outlawed and <em>Citizens United</em> overturned.<br /></p><div alt="" class="media-image" height="202" width="432"><img alt="" class="media-image" height="202" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/super_pac_contributions.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Super PAC contributions.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Center for Responsive Data</div></div></div> </div><p><strong>9. "The American Dream" is fading away</strong></p><p>Many Americans still believe in the American Dream -- the idea of genuine upward mobility. We cherish the idea that our children will do as well or better than we have done. </p><p>But we're getting a wake up call.</p><p>The chart below shows that the odds of rising above your father's economic position in the U.S. is about 50/50. In Denmark, you have about a seven to one chance of doing better.</p><p>No wonder Bernie wants us to learn a thing or two from the Danes.<br /></p><div alt="" class="media-image" height="273" width="432"><img alt="" class="media-image" height="273" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/odds_youll_be_stuck_in_same_class_as_your_parents.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Odds you'll be stuck in same class as your parents. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">CNN Money</div></div></div> </div><p><strong>10 The largest police state in the world </strong></p><p>Freedom pays the price for runaway inequality. Because we refuse to use government to provide decent paying work for all those who are willing and able to work, we leave vast tracks of our cities mired in poverty.</p><p>We allow institutional racist practices (especially in housing, education and criminal justice) to trap more people of color on the lowest rungs of the economic ladder. </p><p>Instead of using government to create jobs, we use government to fund prisons.</p><p>Instead of a War on Poverty we have declared war on the poor.</p><p>As a result, we now have more prisoners both in absolute numbers and as a percentage of the population than any country in the world. And if you compare the chart below with the first chart in this article, you'll find that the incarceration surge started with the onset of runway inequality.</p><p></p><div alt="" class="media-image" height="295" width="432"><img alt="" class="media-image" height="295" width="432" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/number_of_federal_and_state_prisoners.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Number of federal and state prisoners. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Bureau of Justice Statistics</div></div></div> </div><p><strong>Taking them on</strong></p><p>Perhaps Bernie's biggest applause line is the one that sets us on our course. His campaign cannot succeed in one election. We need to connect with our neighbors and colleagues and help organize and mobilize for change.            </p><blockquote><p>"This campaign is sending a message to the billionaire class: Yes, we have the  guts to take you on."</p></blockquote><p>Let's hope he's right.</p><p> </p>  Tue, 10 Nov 2015 13:22:00 -0800 Les Leopold, AlterNet 1045583 at http://personal.alternet.org News & Politics Election 2016 News & Politics bernie sanders election 2016 Why Does America Have More Prisoners Than Any Police State? http://personal.alternet.org/news-amp-politics/why-does-america-have-more-prisoners-any-police-state <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">America, supposedly the beacon of freedom and democracy, has become incarceration nation. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_79025953.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p><em>Our political and media elites should be ashamed of themselves. It's taken nearly 20 years for them to realize that we are the largest police state in the world — that we have more prisoners than China or Russia both in absolute numbers and as a percentage of the population.</em></p><p><em>This Rip Van Winkle awakening is now leading to handwringing calls for the release of minor "offenders" and rethinking the arrest of people for selling cigarettes on street corners or "driving while black."</em></p><p><em>Incredibly, the  </em><em><a href="http://www.npr.org/sections/thetwo-way/2015/10/26/451992173/fbi-director-doubles-down-on-linking-scrutiny-of-police-with-rise-in-violent-cri">head of the FBI frets</a></em><em>  that a new crime wave may result from being too mindful about preventing overt, racist police brutality. But of course, he has no explanation for how the "home of the free" became a gulag.</em></p><p><em>That explanation will be hard to come by until elites admit that they destroyed any and all efforts to create public jobs and expand social programs for those struggling to survive. They incarcerated the War on Poverty.</em></p><p><em>If we listen carefully to today's crop of politicians, we will find precious few (Bernie) who have the nerve to call for the creation of public jobs to bring down the 50% unemployment rate for black youths. Instead, they still sing from the old conservative hymnal about how "stimulating" the private sector will provide good jobs for all.</em></p><p><em>Sadly, that song is playing taps for America's youth, especially those of color.</em></p><p><em>This excerpt from  </em><a href="https://www.runawayinequality.org/product/runawayinequality"><em><strong>Runaway Inequality: An Activist's Guide to Economic Justice</strong></em></a><em>  provides further context and background.</em></p><p><strong>We’re number one in prisoners</strong></p><p>By every measure the U.S. leads the world in prisoners, with 2.2 million people in jail and more than 4.8 million on parole. No nation tops that – not China with 1.7 million, not Russia with 670,000. The chart below shows the dramatic rise of the state and federal prisoner population as well as local jail inmates since the Better Business Climate model [the neo-liberal philosophy of cutting taxes, government programs and regulations] took hold.</p><p><em><strong>Adult Persons in Jail or Prison</strong></em></p><p></p><div alt="" class="media-image" height="323" width="480"><img alt="" class="media-image" height="323" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/adults_in_prison_or_jail_a.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Number of adult persons in prison or jail.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">c/o Les Leopold</div></div></div> </div><p>We not only have the highest number of prisoners, we have the highest percentage of people in prison or jail. In the U.S., 702 of every 100,000 people were in prison or jail in 2013. Cuba has 510 per 100,000 people in prison, Russia has 467, and Iran has 290.</p><p>Black and Latino Americans have been especially hard hit: they form over 39 percent of the prison population. One in every three black men is expected to serve time during their lives (at least under our current criminal justice system). Approximately half of all inmates are there for violating drug prohibition laws.</p><p>How is it that America, supposedly the beacon of freedom and democracy for the rest of the world, has more prisoners than any police state?</p><p><strong>Did we suddenly become a crime-ridden country in 1980?</strong></p><p>Those who study the question say that four factors explain the dramatic rise in U.S. incarceration: 1) overt racism; 2) Nixon’s ill-fated War on Drugs; 3) punitive laws like New York State Gover­nor Nelson Rockefeller’s “three strikes” legislation; and 4) the 1984 Sentencing Reform Act, which forced judges to issue harsh mini­mum sentences.</p><p>But these explanations don’t tell the whole story. After all, racism was much more virulent earlier in American history. Until the civil rights movement, blacks were routinely denied their most basic civil rights. And yet the prison population was stable (and low, compared to now) through the 1940s, 1950s, and the turbulent 1960s.</p><p>Why are these Draconian laws so rigorously enforced? Why have we seen such a dramatic rise in criminal justice expenditures for police, courts and prisons? And why are so many people engaging in underground job activities that put them at risk of imprisonment? The four explanations above don’t answer these questions.</p><p><strong>Deja vu all over again?</strong></p><p>In this book, we have cast our eyes on many charts that suggest that something major happened around 1980. In fact, many of these charts have a similar shape: they all have a steeply rising hump on the right side, after 1980. We’ve already seen that all these things changed dramatically beginning around 1980:</p><p>• Wage increases no longer rise along with productivity.</p><p>• The CEO-worker wage gap takes off.</p><p>• Wall Street incomes shoot up while non-financial incomes stall.</p><p>• Wall Street profits skyrocket.</p><p>• The income gap between the super-rich and the rest of us widens rapidly.</p><p>• Taxes on the super-rich plunge.</p><p>• Corporate debt, consumer debt, student debt, and government debt all leap upward.</p><p>• The prison population explodes.</p><p>How do these trends fit together?</p><p><strong>Unleashing Wall Street destroys manufacturing, older urban areas and America’s standard of living</strong></p><p>As we know, at the end of the 1970s, conservative economists persuaded U.S. leaders to experiment with a new kind of shock therapy aimed at ending stagflation (the crushing combination of high unemployment and high inflation): We would simultaneously deregulate Wall Street, cut social services to the bone, and slash taxes on the wealthy. This, in theory, would spur new entrepre­neurial activity that would eventually trickle down to the rest of us.</p><p>Entrepreneurial activity did increase (on Wall Street, anyway), but with disastrous results for middle- and low-income workers. Rather than create new jobs and industries that would promote shared prosperity, the newly invigorated Wall Street instead began to financially strip-mine American manufacturing. Their main goal never was to produce tangible goods and services, but rather to make more money from money.</p><p>Wall Street’s core American product is debt. Wall Street profits depend on loading up the country with it, and then collecting fees and compound interest on their loans.</p><p>Among the big debtors: state and local governments. And these are especially important to the incarceration story.</p><p>To review the story so far: After deregulation, waves of financial corporate raiders (now politely called managers of private equity firms and activist hedge funds) swooped in to suck the cash flow from healthy manufacturing facilities. They did this by buying up companies, loading them up with debt, and then cutting expenses to pay back the loans and enrich themselves.</p><p>Under this “downsize and distribute” policy, the raiders cut R&amp;D, snatched pension funds, and slashed wages and benefits, decimating good-paying jobs in the U.S. and shipping many of them abroad. Nearly half of the raided companies failed, and in a few short years, America’s heartland turned into the Rust Belt. Better paying manufacturing jobs declined.</p><p>But Wall Street prospered like never before: Its profits rose to account for 43 percent of all domestic corporate profits by 2002 up from an average of about 12 percent from 1947 to 1980.</p><p><strong>Impact of the Better Business Climate model on lower income Americans</strong></p><p>The catastrophic collapse in manufacturing jobs was particularly tragic for African Americans. They had seen their standard of living rise during postwar years as they found higher paying, often unionized industrial jobs. But thanks to Wall Street raids, millions of these industrial jobs disappeared. There were still some jobs to be found in the service sector, but they paid about half of what manufacturing once paid.</p><p>The more fortunate Black and Latino men and women found work in the public sector, which was often unionized and paid a livable wage. But many more people had to take jobs in fast food chains, box stores, warehouses, and in the lower ranks of the health care system.</p><p>Overall, the Better Business Climate model brought soaring unemployment rates for young people, especially young people of color.</p><p>Many of the workers hit by these blows – people of all racial and ethnic backgrounds – found themselves in desperate straits, and some were forced to rely on the underground economy to survive.</p><p><strong>The Ferguson scam: Using the courts to raise revenues from the poor for local government</strong></p><p>It is a known fact that our judicial system discriminates against black and brown residents. The Sentencing Project reports that:</p><p>• Young, black and Latino males (especially if unem­ployed) are subject to particularly harsh sentencing compared to other offender populations; ·</p><p>• Black and Latino defendants are disadvantaged compared to whites with regard to legal-process related factors such as the “trial penalty,” sentence reductions for substantial assistance, criminal history, pretrial detention, and type of attorney;</p><p>• Black defendants convicted of harming white victims suffer harsher penalties than blacks who commit crimes against other blacks or white defendants who harm whites;</p><p>• Black and Latino defendants tend to be sentenced more severely than comparably situated white defend­ants for less serious crimes, especially drug and prop­erty crimes.</p><p>Similarly, the American Civil Liberties Union finds that “Black people are 3.7 times more likely to be arrested for mari­juana possession than white people despite comparable usage rates.”</p><p>Why are people of color targets for increased arrests and incarcer­ation? Normally the explanation is simply racism. But the Justice Department report on the events in Ferguson, Missouri show the invisible hand of the Better Business Climate model hard at work.</p><p>As stagnant wages and tax cuts for the rich squeeze state and local governments for funds, those jurisdictions look for new ways to raise money. One answer is to squeeze the poor through increasing the number of arrests and fines. Why? Because the poor have fewer resources with which to fight back. As the Justice Department report puts it:</p><p> </p><p>"Ferguson has allowed its focus on revenue generation to fundamentally compromise the role of Ferguson’s munic­ipal court. The municipal court does not act as a neutral arbiter of the law or a check on unlawful police conduct. Instead, the court primarily uses its judicial authority as the means to compel the payment of fines and fees that advance the City’s financial interests. This has led to court practices that violate the Fourteenth Amend­ment’s due process and equal protection requirements. The court’s practices also impose unnecessary harm, overwhelmingly on African-American individuals, and run counter to public safety."</p><p>Amazingly, Ferguson amped up its revenue collection after the Wall Street crash decimated the economy as Chart 9.2 clearly shows.</p><p> </p><p><em><strong>Percent of Ferguson, MO Revenues from Fines and Forfeitures</strong></em></p><p></p><div alt="" class="media-image" height="317" width="416"><img alt="" class="media-image" height="317" width="416" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/story_images/ferguson_revenues_a.jpg" /></div><p>And it’s not just Ferguson. We know for certain that the rest of St. Louis county is playing the same game. As the <em>Washington Post</em>reports:</p><p>"Some of the towns in St. Louis County can derive 40 percent or more of their annual revenue from the petty fines and fees collected by their municipal courts. A majority of these fines are for traffic offenses, but they can also include fines for fare-hopping on MetroLink (St. Louis’s light rail system), loud music and other noise ordinance violations, zoning violations for uncut grass or unkempt property, violations of occupancy permit restrictions, trespassing, wearing “saggy pants,” busi­ness license violations and vague infractions such as “disturbing the peace” or “affray” that give police officers a great deal of discretion to look for other violations. In a white paper released last month, the ArchCity Defenders found a large group of people outside the courthouse in Bel-Ridge who had been fined for not subscribing to the town’s only approved garbage collection service. They hadn’t been fined for having trash on their property, only for not paying for the only legal method the town had designated for disposing of trash."</p><p>We also know that Missouri’s Attorney General in 2014 sued 13 municipalities for relying too heavily on traffic fines to fund local government. Four of the municipalities received 30 percent or more of revenues from traffic fines and the rest did not provide the legal­ly-required information to determine the percentage.</p><p>The extent of this discriminatory revenue-raising across the country is currently unknown. But it is certain to extend far beyond the wide Missouri.</p><p><strong>Financialization and gentrification</strong></p><p>Financial strip-mining not only destroys middle-income manu­facturing jobs, it destroys affordable housing by encouraging gentrification.</p><p>The rise of high-income financiers (along with banks eager to loan to them) creates upward pressure on housing prices in cities that cater to elites like New York, Chicago, and San Francisco. Real estate development is lucrative in areas where land values are rising rapidly.</p><p>Inevitably, lower-income residents are squeezed out, and their homes are turned into fashionable townhouses, coops, and condos for the wealthy. (Typically, the young adult children of the well-to-do unconsciously serve as the forward troops for gentri­fication as they flock into the cheaper neighborhoods of big cities.)</p><p><strong>Gentrification and the “Broken Windows” theory of crime prevention</strong></p><p>The commingling of the affluent and those living on the margins of the underground economy in gentrifying neighborhoods is explosive. Higher-income residents call for more protection and a halt to “crime in the streets.”</p><p>Urban police departments, led by New York, began adopting the “Broken Windows” theory of crime prevention in the 1980s. The idea was that by targeting minor infractions (like drinking on the street, loitering, pan-handling, or selling loose cigarettes), police can prevent a slide to bigger crimes. The metaphor is that a neigh­borhood with no broken windows gives the community and its resi­dents a more positive image, making it safer and less conducive to crime. It’s a highly debatable theory. But it has unquestionably led to more arrests.</p><p>Inevitably, the combination of gentrification on one side, and joblessness and poverty on the other leads to more police patrols and arrests – including “stop and frisk” programs that dispropor­tionately target people of color. The prison population surges.</p><p>In short, financial interests working to transform poorer neigh­borhoods into desirable real estate for the newly minted elites have an interest in ridding the neighborhood of the troublesome poor. Jail becomes the new home for many.</p><p><strong>Downward pressure on the pubic sector</strong></p><p>The housing bubble and bust hit low-income neighborhoods hard. Regions that were already struggling, including the Rust Belt, were decimated by the Wall Street crash. Joblessness spiked (again) and business and worker tax revenues fell. This led to more cuts in the public employee jobs that so many displaced manufacturing work­ers had relied on. Public sector services also got chopped.</p><p>Detroit became the poster child for ravaged American cities everywhere: First corporate raiders and private equity firms squeezed the life out of manufacturing all over Michigan. Then the Wall Street crash destroyed more jobs and undermined the tax base. And that led to urban bankruptcy and even more public sector job loss.</p><p><strong>The Better Business Climate model’s dirty little secret: Jail is America’s jobs program</strong></p><p>What will happen to all our unemployed people, given the massive shortage of jobs?</p><p>What will happen to people trapped in neigh­borhoods crammed with foreclosed homes?</p><p>Where are the job programs for the millions who need them?</p><p>In theory, the Better Business Climate model was going to lead to a boom that would create jobs for all those willing and able to work.</p><p>In practice, financial strip-mining did just the opposite. It caused decent jobs to evaporate, forcing cash-strapped cities to lay off public employees. Policing costs rose, squeezing the budget for social services and education. You had to be blind not to notice that those on the bottom were in serious trouble.</p><p>To cover for this abject failure of the Better Business Climate model, its supporters developed a novel jobs program that is now de-facto government policy: <em>Put the dislocated, the unemployed, the “surplus” youth in jail.</em></p><p>If incarcerating the poor turned America into the biggest police state in the world (and it did), so be it.</p><p>This is a remarkable shift in America’s approach to joblessness. From the New Deal to the 1980s, the government had a strategy for dealing with enormous structural unemployment and poverty: it created jobs. Now, it puts the jobless in prison.</p><p><strong>The Prison-industrial complex</strong></p><p>The rapidly expanding prison sector warehouses millions of low-income people. But it also creates new jobs and profit opportunities.</p><p>As we know, the Better Business Climate model calls for privat­izing public services. The idea is that privatizing generates new businesses and profits and it reduces the size of government. Plus, supporters claim that privately run businesses are always more effi­cient than the government.</p><p>Clearly, the growing prison population creates enormous privati­zation profit opportunities.</p><p>The first private prison opened in Tennessee in 1984. As of 2013, U.S. Department of Justice statistics show that there were 133,000 state and federal prisoners housed in privately owned pris­ons in the U.S., constituting 8.4 percent of the overall U.S. prison population.</p><p>Correctional, police, and judicial jobs at all levels of government have also grown dramatically since the early ’80s, nearly doubling from 1.3 million in 1982 to 2.4 million in 2012.</p><p>The prison guard unions and the private prison corporations (along with their Wall Street backers) have a vested interest in expanding the private prison system. Unfortunately for poor people, this requires rounding up more prisoners.</p><p><strong>Incarceration’s color coding</strong></p><p>The prison statistics describe an America stratified by skin color, as Chart 9.3 makes painfully clear. How do we account for that?</p><p></p><div alt="" class="media-image" height="319" width="488"><img alt="" class="media-image" height="319" width="488" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/story_images/chances_of_going_to_jail.jpg" /></div><p>In this chapter we provide part of the answer: the financial strip-mining of our economy had an extremely negative impact on older urban areas where many people of color live. It also reduced the number of manufacturing jobs and then public employee jobs that minorities rely upon to move up the income ladder. In addi­tion, statistics show that people of color are more often targeted for arrest, arrested for more minor crimes, and given longer sentences.</p><p>But lurking in the background is perhaps the most difficult ques­tion that America faces, and that we turn to in the next chapter: After all these years, why are people of color still overrepresented at the bottom of the income ladder?</p> Wed, 28 Oct 2015 12:36:00 -0700 Les Leopold, AlterNet 1044870 at http://personal.alternet.org News & Politics Civil Liberties News & Politics incarceration prison jail. As Bad as You Think Inequality Is, It's Worse! http://personal.alternet.org/economy/bad-you-think-inequality-its-worse <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">How much do you think the CEO of a large corporation makes in a year, on average?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/new_rules_graphic.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr"><em>The following is an excerpt from </em><a href="https://www.runawayinequality.org/product/runawayinequality" target="_blank">Runaway Inequality: An Activist's Guide to Economic Justice</a><em>, by Les Leopold (Chelsea Green, 2015).</em></p><p dir="ltr">Please take a moment to write down the answers to two basic questions:</p><ul dir="ltr"><li>How much do you think the CEO of a large corporation makes in a year, on average?</li><li>How much do you think an entry-level factory worker earns in a year, on average?</li></ul><p dir="ltr">Your answers allow for the construction of an important statistic about inequality – the wage-gap ratio.  </p><p dir="ltr">For example, let's say your answer is that the typical CEO makes about $500,000 per year, while the factory worker earns about $25,000 per year. That gives us a wage-gap ratio of 20 to 1 – that is, for every one dollar earned by the worker, the CEO earns $20 (500,000/25,000 = 20/1).</p><p dir="ltr">If you said $1 million for the CEO and $25,000 for the factory worker, then the ratio jumps to 40 to 1.</p><p dir="ltr">What ratio did you come up with?</p><p dir="ltr"><strong>How Americans view the wage gap</strong></p><p dir="ltr">These same two questions were asked of more than 50,000 people around the world, of whom 1,581 were Americans of all stripes. (The data comes from the International Social Survey Programme: Social Inequality IV-ISSP 2009 on the website Gesis.)</p><p dir="ltr">It turns out that the median American response – that is, the response that is exactly in the middle of survey results from Americans – estimated that a CEO of a large company earned about $900,000 per year and that the average factory worker earned about $25,000. That makes for a wage-gap ratio of 36 to 1.</p><p dir="ltr">But how close are these estimates to reality? Not very.</p><p dir="ltr">The chart below gives us a pretty good estimate of the growing gap between total compensation for the top 100 CEOs and the pay of a typical worker. (The number for workers’ pay was derived by using the average wages of production or nonsupervisory workers, which includes workers in the service sector as well as other private industry sectors.)</p><p dir="ltr">In 1970, for every dollar earned by the average worker, the top 100 CEOs earned on average $45.  By 2013 the ratio had jumped to $829 to $1, which is 20 times greater that what the typical American in the survey guessed.  </p><p dir="ltr">More amazing still is that on average Americans think CEOs of large companies receive about $900,000 per year in compensation, when in reality they receive nearly $30,000,000.  </p><p dir="ltr">It's as if our perception of the income gap was frozen in 1970. We just have not caught up with the realities of runaway inequality.</p><p dir="ltr"></p><div alt="" class="media-image" height="306" width="523"><img alt="" class="media-image" height="306" width="523" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/screen_shot_2015-10-19_at_10.01.33_am_0.png" /></div><p dir="ltr"><strong>What do we think the wage gap should be?</strong></p><p dir="ltr">Let's try these two questions again. But this time, let's come up with what we think should be the fair and just compensation for CEOs of large corporations and for unskilled factory workers.</p><ul dir="ltr"><li>How much do you think the CEO of a large corporation should earn per year?</li><li>How much do you think an entry-level factory worker should earn per year?</li></ul><p dir="ltr">Please take a moment to jot down your answers.</p><p dir="ltr">Now let's go back to the survey information to see how the typical American answered these same questions.</p><p dir="ltr">This time it turns out that Americans’ median response – the one smack in the middle of all the responses – is that a CEO of a large corporation should earn about $200,000 a year and that an unskilled factory worker should earn about $30,000. This produces a wage-gap ratio of about 7 to 1.  </p><p dir="ltr">Let's pause for a moment to consider how jarring this result is. The actual wage gap between a CEO and the average unskilled worker is about 830 to 1. Yet Americans believe it should be only 7 to 1. This is an enormous difference.</p><p dir="ltr">It suggests that if the typical American knew the real numbers, they would be outraged by this glaring example of runaway inequality.</p><p dir="ltr"><strong>Do our estimates vary by political affiliation or educational level?</strong></p><p dir="ltr">The survey also asks questions about political affiliation so that we can see whether those who call themselves "Strong Democrats" have significantly different beliefs than those who call themselves "Strong Republicans." We can also see how the responses vary between people who didn't finish high school and those who have graduate degrees.</p><p dir="ltr">Remarkably, the responses hardly vary at all.  All of us, on the right and the left – high school dropouts and PhDs  – have two things in common: 1) We all grossly underestimate the size of the wage gap; and 2) We all want a much, much smaller wage gap.</p><p dir="ltr"></p><div alt="" class="media-image" height="246" width="586"><img alt="" class="media-image" height="246" width="586" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/screen_shot_2015-10-19_at_10.03.58_am.png" /></div><p dir="ltr">As the chart above shows, Strong Democrats estimate that the actual ratio between the pay of a CEO of a large corporation and an unskilled factory worker was about 36 to 1. Strong Republicans said it was 40 to 1. Not much of a difference.</p><p dir="ltr">When it comes to offering opinions about what the wage gap should be, the Strong Democrats thought 5 to 1 was about right, while the Strong Republicans thought it should be about 12 to 1. The two political extremes obviously are far closer to each other than to the current reality of 829 to 1.</p><p dir="ltr">And how much did the responses vary based on people’s educational attainment? Again, not much. Those who didn't finish high school thought the actual gap was 60 to 1, while those with graduate degrees thought it was about 40 to 1 (both compared to the reality of 829 to 1).</p><p dir="ltr">Those who didn't complete high school thought the ideal pay gap should be about 5 to 1, while those with graduate degrees thought it should be 12 to 1. These ratios are identical to those offered by the Strong Democrats and Strong Republicans.  </p><p dir="ltr"><em><strong>When it comes to our ignorance of the pay gap, there are no blue states, no red states; only misinformed states of mind.</strong></em></p><p dir="ltr"><strong>Why are we so blind to runaway economic inequality?</strong></p><p dir="ltr">Most of us have no idea that our golden land of opportunity is the runaway leader among developed nations when it comes to inequality (see chart below). Of course, this runs completely counter to the American Dream, that persistent belief that America is the fairest nation of them all– the most just and upwardly mobile country in history.</p><p dir="ltr">That core belief about America’s superiority seems to make it hard for us to take in this contradictory information. As social scientists have established, we tend to tune out information that challenges our deep-seated beliefs. In this case, absorbing this new data is just too jarring to our long-held sense of national identity.</p><p dir="ltr"></p><div alt="" class="media-image" height="371" width="517"><img alt="" class="media-image" height="371" width="517" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/screen_shot_2015-10-19_at_10.05.14_am.png" /></div><p dir="ltr">Our misreading of inequality also may be a legacy of the post-World War II economic boom. During that time, our working class had the highest global standard of living in the world, with ever increasing yearly real wages.</p><p dir="ltr">From the New Deal through  the Cold War (1933-1990), it was American policy to boost job and income levels as much as possible to make sure our workers and middle class were “the envy of the world.” That’s a half century of rising prosperity for working people. Also during this period, income taxes on the wealthy were extremely high, more than 90 percent for people at the highest income bracket during World War II and the 1950s. As a result, the top one percent, while living extremely well, saw their share of total U.S. wealth decline.</p><p dir="ltr"></p><div alt="" class="media-image" height="321" width="541"><img alt="" class="media-image" height="321" width="541" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/screen_shot_2015-10-19_at_10.06.17_am.png" /></div><p dir="ltr">So it’s little wonder that the massive baby boom generation grew up with both the ideal and the reality of relative equality – at least for Caucasians. Of course, there were wealthy people all over America even then, but life was getting better and better for the vast majority of Americans.  </p><p dir="ltr">It’s seems we’re still living with this cultural hangover, clinging to a societal self-image from yesteryear.</p><p dir="ltr"><em><strong>Although runaway inequality is our new economic reality, many of us still look in the mirror and see the fairest of them all looking back at us.</strong></em></p><p dir="ltr"><strong>Both political parties refuse to address inequality</strong></p><p dir="ltr">Perhaps the biggest reason we are so misinformed is that it is not in the interests of our political parties for us to see the truth. Neither political party has addressed rising inequality in a meaningful way. Yes, the Democrats tend to support modest rises in the minimum wage that do make a difference to those stuck in the lowest-paying jobs. But they won't go near the revolutionary idea of placing a legal limit on what the CEO/worker pay gap should be. (Might the Sanders revolt change the Democrats?)</p><p dir="ltr">Why don’t our politicians propose to limit the CEO/worker pay gap to, let’s say, 12 to 1, a ratio that that even Strong Republicans and the well-educated think would be fair and just?</p><p dir="ltr">Perhaps because they live in fear of a different revolution – a massive revolt from their elite corporate donors, who wouldn't dream of earning so little. In fact, the elite establishment – in finance, the corporate world, the higher levels of government, academia and the media – have no intention of limiting their incomes, no matter what the public believes to be just and fair.  </p><p dir="ltr"><em><strong>Here lies the very essence of class struggle between the 99 percent and 1 percent, and neither party wants any part of it.</strong></em></p><p dir="ltr"><strong>What will it take to wake us up to inequality?</strong></p><p dir="ltr">The good news is that Americans of all genders, shades, incomes, education levels and politics think on average that the wage gap should be about 7 to 1, not 829 to one. That's a pretty good place to start. Imagine if the only real economic debate was between the Strong Democrats who thought a fair wage gap should be 5 to 1 versus the Strong Republicans who thought it should be 12 to 1. A broad movement for economic justice should be able to build on this shared sense of basic fairness. It’s light years ahead of what elites expect and feel is their due.  </p><p dir="ltr">For about six months, Occupy Wall Street touched this nerve and put inequality on the agenda. "We are the 99 percent" became the national anthem for many Americans. For the first time in a generation, the country was talking about the gap between super-rich financiers and the rest of us.</p><p dir="ltr">Roughly at the same time, the Tea Party emerged with a different message. They also sensed that something was profoundly wrong. But for them the problem was (and is) big government, not inequality. They  and their political allies tend to blame inequality on low-income families themselves (the “takers”), while heaping praise on the wealthy (the "makers”).</p><p dir="ltr">Others, including some liberals, blame inequality on new technologies that require skills workers don’t have. The implication is that those on the bottom could close the wage gap if  they could just get that college degree or advanced skill. This self-help message resonates with most Americans, and access to (free, high-quality) education would certainly help.</p><p dir="ltr">But it will take a different kind of education to reduce the wage gap.  We no longer have 900 Occupy encampments around the world to remind everyone that inequality is our new way of life. But each day millions of Americans face the stark reality of trying to survive on low pay and porous benefits, and pressure for increasing wages and benefits is growing. And so is the level of anger and frustration.  </p><p dir="ltr">We need to relearn the skills of building a mass movement. That includes educating ourselves about the realities of growing economic inequality. Only then can we break through the faulty self-image of America that is crippling us.</p><p dir="ltr">S<em><strong>pread the word: We are the most unequal society in the developed world, and we can change that.</strong></em></p> Mon, 19 Oct 2015 06:51:00 -0700 Les Leopold, AlterNet 1044305 at http://personal.alternet.org Economy Books Economy economy economics books How Could Such a Rich Country as Ours Produce So Many Poor People? http://personal.alternet.org/economy/how-could-such-rich-country-ours-produce-so-many-poor-people <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">How can we be so rich and still have such poor services, so much debt and such stagnant incomes?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_268003883.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr"><em>The following is an erom <a href="https://www.runawayinequality.org/product/runawayinequality" target="_blank">Runaway Inequality: An Activist's Guide to Economic Justice</a>, by Les Leopold (Chelsea Green, 2015).</em></p><p dir="ltr">The United States is among the richest countries in all of history. But if you’re not a corporate or political elite, you’d never know it. In the world working people inhabit, our infrastructure is collapsing, our schools are laying off teachers, our drinking water is barely potable, our cities are facing bankruptcy, and our public and private pension funds are nearing collapse. We – consumers, students, and homeowners – are loaded with crushing debt, but our real wages haven’t risen since the 1970s.</p><p dir="ltr">How can we be so rich and still have such poor services, so much debt and such stagnant incomes?</p><p dir="ltr">The answer: runaway inequality – the ever-increasing gap in income and wealth between the super-rich and the rest of us.</p><p dir="ltr">This isn’t the first time that a tiny elite has gained extraordinary control over economic and political life. Ancient Egypt had the Pharaohs. Medieval Europe had feudal lords and kings. We Americans had industrial robber barons.</p><p dir="ltr">And today, we’ve got financial and corporate elites.</p><p dir="ltr">Runaway inequality is upending how we see ourselves and how we govern. It is upending the American Dream (the cherished idea that life gets better and better with each generation). And it is upending the practice of democracy and the very idea that each of us has roughly equal influence in governing our country.</p><p dir="ltr">It’s time to face up to runaway economic inequality – what causes it, what it’s doing to us, and what we can do about it.</p><p dir="ltr">This book has four aims:</p><p dir="ltr">1. Shine a light on economic inequality: It’s worse than you think</p><p dir="ltr">For all the talk about economic inequality, most of us have no idea how bad it really is. It’s as if our native sense of justice won’t let us comprehend how outrageously unequal our economy has become and how much worse it’s getting day by day. Maybe we’re just too fair-minded to wrap our minds around the level of systematic greed that now permeates society’s top echelons.</p><p dir="ltr">We’ll look at just how wide the gap is between the super-rich and the rest of us, and how rapidly it is accelerating. A very small group of economic elites is accumulating more and more of the country’s resources while the rest of us stand still or fall further behind.</p><p dir="ltr">But the problem goes beyond how many dollars we have (or don’t): Runaway inequality is tearing apart the fabric of our society. The super-rich live in a world that no longer requires mutual reliance on common public services. Elites generally don’t use our schools, our roads, our airports. They don’t really care if our infrastructure collapses. We are cracking into two separate societies.</p><p dir="ltr">At the same time, the super-rich are able to park trillions of dollars far from the reach of the tax collector. By avoiding and evading taxes, with help from an army of lawyers and bankers, the rich are undermining the government services that the rest of us need. So our roads and bridges crumble, our environment becomes contaminated, our children crowd into our rundown schools. We pay a fortune out of pocket for higher education and poor quality health care. And some of us with darker pigmentation are targeted for arrest and fines in order to help fund local government, while also facing poverty and police violence.</p><p dir="ltr">Runaway inequality undermines the practice of democracy. As the rich get richer and richer, it gets easier and easier for them to buy political favors. They can twist the media, elected officials, and government agencies to do their bidding. They vote with their money, which makes a mockery of our democratic “one vote, one person” creed. We’ll see data showing that elected officials rarely act on the agenda most Americans support. Instead they represent the wishes of the affluent.</p><p dir="ltr">Using over 100 easy to read charts and graphs as well as text, we will demonstrate that as bad as you think it is, it’s worse.</p><p dir="ltr">2. Examine the Fading American Dream</p><p dir="ltr">We’ll take an honest look at how we compare to other developed nations.</p><p dir="ltr">Most of us still view our country through the lens of the American Dream and American “exceptionalism.” We see ourselves as leading the world in just about everything that is good and just. As virtually every politician likes to say, we are the shining light of freedom and prosperity, blessed by God.</p><p dir="ltr">Most Americans believe that the U.S. has the most upward mobility and highest standard of living in the world. We think that the U.S. is the fairest nation on Earth, offering the best prospects for everyday people. (And for anyone who isn’t moving up, it’s their own fault.)</p><p dir="ltr">But the facts in this book will undermine that perspective. While America may have had the most prosperous working class from World War II to 1980, it doesn’t anymore. In fact, today the U.S. is the most unequal country in the developed world. We have the most child poverty and homelessness. We have more people in prison than China and Russia. And Americans are less upwardly mobile than most Europeans.</p><p dir="ltr">We’ll see that our public services don’t stack up either. Our health care costs more, covers fewer people and produces worse outcomes. And we are nearly last among developed nations in energy efficiency and overall infrastructure.</p><p dir="ltr">No question about it, the top 1 percent never had it so good. But the rest of us are losing sight of the American Dream as runaway inequality accelerates.</p><p dir="ltr">3. Empower ourselves with the big picture</p><p dir="ltr">From years of conducting economic workshops for adults, we’ve learned that having a clear overview of what is going on is remarkably empowering for people. When you can step back and see how it all fits together, the world makes more sense.</p><p dir="ltr">We’ll work hard at presenting that big, wide view, because most of us never have a chance to see it. You just can’t get an accurate picture of the economy as a whole through the everyday media or the jumble of internet sources. We hear snippets about stock markets, government debt, trade, unemployment and inflation. What we don’t hear about is the context, substantive explanation, or critical questioning about why any of this is happening and how it relates to our daily lives.</p><p dir="ltr">Most of all, the media turns a blind eye to the fact that we live in a capitalist system. We’re never allowed to get outside that box so we can look at it and see how it ticks. So we never hear about the fundamental conflict that capitalism creates between the needs and wishes of privately owned corporations and our health and well-being – or the well-being of the planet that sustains us. We don’t hear about how the corporate owners’ and financiers’ insatiable drive for profits is eroding our standard of living. Yet these conflicts are key to understanding our new era of runaway inequality.</p><p dir="ltr">The picture of the economy that nearly all of us share turns out to be wrong. We are told in many different ways that the economy is like a complex machine that functions beyond the reach of human control. This machine metaphor frames our view of the economic world: It makes us think that everyone is just doing their thing in the machine, and that we each get what we deserve, more or less. It obscures the reality that there is, in fact, a fundamental conflict between employees and owners, between the rich and the rest of us.</p><p dir="ltr">The big picture we’ll present makes a lot more sense than the chopped up version that bombards us each day. Yes, the economic system is complex and yes, it is very hard to control. But its fundamental direction is set by humans who serve particular interests. We will see how powerful people chose to dramatically change the economy’s direction a generation ago, and how working people have been paying the price ever since. Runaway inequality is not an act of God. It is the result of a system designed by and for wealthy elites.</p><p dir="ltr">4. Come to a common understanding so we can build a common movement</p><p dir="ltr">We offer this, our most ambitious goal, with the utmost humility: We aim to help build a broad-based movement for economic and environmental justice.</p><p dir="ltr">Right now, we lack a robust mass movement with the power to reclaim our economy and our democracy to make it work for the 99 percent.</p><p dir="ltr">Instead, we have thousands of individual groups working on every issue from fracking to a living wage. We have unions fighting for their members and worker centers fighting for immigrant rights. We have protests ranging from Occupy Wall Street to Black Lives Matter to climate justice. We have hundreds of progressive websites and journals to cover all this activity. But we do not have a coherent national movement with a clear and bold agenda that links us together.</p><p dir="ltr">We will show that runaway inequality is at the root of many of the problems we face, including the meteoric and disastrous rise of the financial sector, defunding of the public sector, environmental destruction, increased racial discrimination, the gender gap in wages and the rise of our mammoth prison population. And we will posit that if we share a clear understanding of runaway inequality – and the basic economic situation we face – we can begin to build a common, broad-based movement for fundamental economic justice that will take on America’s economic elites.</p><p dir="ltr">The political system will not move unless we organize on a mass level like the Populists did over a hundred years ago, like the trade union movement did in the 1930s and like the Civil Rights movement did in the 1950s and 1960s.</p><p dir="ltr">Some liberal economists and politicians appeal to the self-interest of the super-rich. They argue that the rich would be (even) better off if they would just allow a fairer distribution of income and wealth. We disagree. Expecting the wealthy to help us secure basic fairness is a losing proposition.</p><p dir="ltr">Economic elites will only give up power and wealth when they’re forced to do so by a powerful social movement.</p><p dir="ltr"></p><p dir="ltr">So this book has far-reaching but difficult to achieve goals. It outlines an economic analysis and economic solutions that can connect us and enable us to build a broad, common movement. Such a common economic analysis does not by itself bring us together. But it will be very hard to create a powerful mass movement without one.</p><p dir="ltr">To achieve these goals the book is divided into four parts:</p><p dir="ltr">Part 1: Causes of Runaway Inequality analyzes how wealth is extracted from all of us by Wall Street.</p><p dir="ltr">Part 2: The Decline of American Exceptionalism examines America’s ranking on key economic and social issues in comparison to other developed nations.</p><p dir="ltr">Part 3: Separate Issues, Common Cause shows the major impact of runaway inequality on a series of issues that often are viewed independently.</p><p dir="ltr">Part 4: Solutions reviews a range of policies and actions that will be needed to bring more economic and social justice to America.</p><p dir="ltr">In the end this book makes one essential point again and again. Runaway inequality comes at a steep price. The money that enriches the few is extracted from all that we hold dear – our public life, our incomes, our health and the education of our children. It is making poor the richest country on Earth. . . . Until we do something about it.</p>  Sun, 11 Oct 2015 09:56:00 -0700 Les Leopold, Chelsea Green Publishing 1043888 at http://personal.alternet.org Economy Activism Economy books book rich poor How America's Wealthy Stole the American Dream and Cashed It at an Offshore Bank http://personal.alternet.org/economy/how-americas-wealthy-stole-american-dream-and-cashed-it-offshore-bank <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Expect government services to further decline while the rich evade paying their taxes.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_175830539-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>America is the most unequal country in the developed world. We also pay the lowest taxes among all developed nations. Is there a connection?</p><p>Runaway inequality and declining taxes are linked together through a set of economic policies called the "Better Business Climate" model which came to America around 1980. (By then Margaret Thatcher had already put her version to work in England.)</p><p>After the turbulent 1970s, which featured oil boycotts, high unemployment and even higher inflation rates, the policy establishment was hungry for a new simple plan that promised renewed prosperity. The Better Business Climate model had two key components: cutting taxes on corporations and the super-rich, and reducing regulations, especially on Wall Street. This potent combination was to encourage the rich to invest, which in turn would lead to more jobs and increasing incomes for all. A massive boom would then ensue to make all boats rise. But as we painfully learned, tax cuts and the unleashing of Wall Street led to luxurious yachts for the few and leaky rowboats for the rest of us.</p><p><strong>Mind-altering tax cuts</strong></p><p>The massive tax cuts which followed changed the way we perceive government and how we think about taxes. Since everyone hates to pay taxes, a model that claimed tax cuts would actually be good for the economy was enormously seductive.</p><p>However, it is easy to forget that before the Better Business Climate model slashed taxes, there was a national consensus that the super-rich and corporations should carry a disproportionate share of the tax burden. It was generally understood that if the wealthy had too much money they might be tempted to gamble it on Wall Street, creating bubbles that would take down the economy as happened during the 1929 stockmarket crash which led to the Great Depression.</p><p>Money from the wealthy would be used to fight WWII, the Cold War and build the American Dream. Through high taxes on the largest corporations and on the wealthiest Americans, we could pay for a new national highway system, provide nearly free public higher education, build affordable housing, support full employment <em>and</em> pay for the largest military establishment in the history of the world.</p><p>The Great Depression and world war cast a sobering shadow over how we viewed economic stability and high taxes. Never again would we allow mass unemployment to take hold. Never again would we allow obscene and illegal financial speculation (or so we thought).</p><p>This tax-the-rich national mindset was so pervasive that both Democratic and Republican administrations from Roosevelt to Nixon supported enormously high taxes on the wealthy.</p><p><a href="http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets">For example,</a> during WWII all income over $2.6 million in today's dollars was taxed at a 94% rate. Think about that for a moment. Basically this rate served as a cap on elite compensation. After bankers hit $2.6 million, they received only 6 cents on the next dollar.</p><p>In 1956, during the conservative Eisenhower administration, the tax rate was still 91% of all income over $3.4 million. In 1976, 70 cents of every dollar of income over $807,000 went to federal income taxes.</p><p>In sum, here was a national consensus that such tax rates were both necessary and proper. For more than a quarter century, we shared an inner sense of justice: To promote the interests of everyone, there should be some limit on what the wealthy could earn.</p><p>The current notion that the rich should be able to manipulate the tax codes to pay lower tax rates than the rest of us would have been revolting to previous generations. Not just revolting, but downright stupid. We once understood quite clearly that runaway inequality would surely lead to calamity.</p><p>Yet, today, the top tax rate is down to 39.6 percent on income over $440,000. The chart below shows the dramatic decline in these rates.</p><p></p><div alt="" class="media-image" height="318" width="480"><img alt="" class="media-image" height="318" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/top_marginal_tax_rate.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Top marginal tax rate, 1916-2013.</div></div></div> </div><p><strong>The downward spiral of tax cuts and government services</strong></p><p>During the period of high tax rates, America reached its peak of fairness, as Thomas Piketty demonstrates in <a href="http://topincomes.parisschoolofeconomics.eu/">his excellent charts</a> on our distribution of wealth and income. Yes, there were still plenty of rich people and they still lived damn well. But nearly all of us experienced a rising standard-of-living year after year.</p><p>But as soon as tax rates on the super-rich and corporations declined, inequality took off again.</p><p></p><div alt="" class="media-image" height="388" width="480"><img alt="" class="media-image" height="388" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/top_.1_percent_wealth_share_in_u.s..jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Top 0.1 percent wealth share in the U.S., 1913-2012.</div></div></div> </div><p><strong>Runaway inequality and runaway democracy</strong></p><p>Every nation has a long and sordid history of money buying political favor. But rising inequality sets in motion a downward spiral that is so corrupt that democracy itself is in danger.</p><p>All of us have an intuitive grasp of how elites translate their increasing wealth into political power, which in turn leads to more tax breaks, more money for the few, and even more political power.</p><p>As the tax cuts associated with the Better Business Climate model set in, both political parties scrambled to raise money from those most enriched by the new economic policies. We now even refer to the "money primaries" in which newly declared political candidates scramble for financial support from the super-rich before the first vote is case. It is done so blatantly that we not accept it as normal politics.</p><p>But the consequences are not just that one politician wins over another. The rest of us pay dearly as we experience a decline in public services. And we don't even see how why it's happening.</p><p><strong>Zero sum taxation</strong></p><p>Buying political favor for the few inevitably leads to more hardship for the many. As the corporate contribution to federal taxes dropped from 32% in 1952 to only 9% in 2013, individual taxpayers had to make up the difference and to be sure, the super rich did all they could to avoid that burden. That left the broad section of American working people stuck with most of the tab.</p><p>More subversively, corporations and the wealthy discovered new ways to move money offshore in order to avoid taxes. What would have been impossible to even openly discuss in the 1960s is now common practice. Large corporations simply keep their global profits in foreign subsidiaries. (They often can do so just by switching accounts in Wall Street banks without the money ever leaving the country.) As the chart below shows, this practice is growing rapidly.</p><p></p><div alt="" class="media-image" height="365" width="480"><img alt="" class="media-image" height="365" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/us_profits_parked_abroad.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">U.S. Profits Parked Abroad.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Audit Analytics and Rolling Stone, Aug. 27, 2014</div></div></div> </div><p>Contrary to the hype of the Better Business Climate model, they less the rich pay, the more tax pressure builds on the rest of us. This, in turn, increases the pressure to reduce public services, especially for those at the bottom of the income ladder. But it hits all of us as public employment and services deteriorate.</p><ul><li><p>As we feel like we are getting less and less for our tax dollars, anti-government sentiment increases.</p></li><li><p>As we experience declining services, the pressure mounts for more tax cuts, which further erodes government services.</p></li><li><p>As we see our wages stagnate and our benefits deteriorate, we turn against public sector workers who seem to have it better.</p></li><li><p>Corporations then swoop in with privatization plans for public services which often cost us more and give us fewer services.</p></li></ul><p>The net result is ever more money for those at the top and poorer services for the rest of us.</p><p><strong>The black hole of runaway tax dollars </strong></p><p>Perhaps the biggest tax crime against American working people takes the form of individual wealth parked abroad. It is now considered normal practice to take money made in the USA and hide it offshore from the IRS. The numbers, compiled by the <a href="http://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf">Tax Justice Network</a> are staggering:</p><p>A significant fraction of global private financial wealth—by our estimates, at least $21 trillion to $32 trillion as of 2010—has been invested virtually tax-free through the world's expanding black hole of more than 80 offshore secrecy jurisdictions. We believe the range to be conservative.</p><p>We don't know precisely how much of this offshore wealth stems from American elites. But we can assume that most of it comes from the U.S. As the <a href="https://www.credit-suisse.com/upload/news-live/000000022801.pdf">chart below</a> shows, we have nearly half the world's "ultra-high net worth" individuals (UHNW)—people with more than $50 million in wealth.</p><p></p><div alt="" class="media-image" height="349" width="480"><img alt="" class="media-image" height="349" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/story_images/uhnw_individuals.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">UHNW Individuals 2014: Selected Countries.</div></div></div> </div><p><strong>How much tax money are we losing?</strong></p><p><a href="http://www.uspirg.org/news/usp/offshore-tax-havens-cost-average-taxpayer-1259-year-small-businesses-3923">U.S. Public Interest Research Group</a> (PIRG) reports that we're losing about $184 billion a year due corporate and individual offshore tax evasion. That's a big number, more than enough to eliminate tuition at every public university, college and community college in the country.</p><p><strong>"Pirate Banking" brought to you by bailed-out Wall Street</strong></p><p>The Better Business Climate model not only reduced taxes on corporations and the super-rich, but also deregulated Wall Street. By abandoning the prudent New Deal controls that prevented Wall Street from excessive gambling and outright criminal activity, the Better Business Climate advocates unleashed a new generation of financial manipulation followed by crashes and bailouts galore.</p><p>With massive financial deregulation came the rapid expansion of "wealth management" for high net worth individuals. The name of the new game was moving money into offshore facilities. Here's how the Tax Justice Network puts it:</p><p>Of the top 10 players in global private banking, all 10 received substantial injections of government loans and capital during the 2008-2012 period. In effect, ordinary taxpayers have been subsidizing the world's largest banks to keep them afloat, even as they help their wealthiest clients slash taxes.</p><p>Many of these market leaders in global pirate banking who are in the practice of hiding and managing offshore assets for the world's elites have also been identified as market leaders in many other forms of dubious activity, from the irresponsible mortgage lending and high-risk securitization that produced the 2008 financial crisis, to the latest outrageous scandals involving LIBOR rate rigging and money laundering for the Mexican cartel.</p><p><strong>No taxation without representation: revolutionary potential?</strong></p><p>We're in a whale of a tax mess. Runaway inequality will lead to even more runaway taxation. Meanwhile government will be starved for funds as the tax burden shifts from corporations and the wealthy onto the rest of us. Government services will decline while the rich evade their taxes and use their money to insulate themselves from the public services they don't need.</p><p>Normally, we would expect to rectify the situation through electoral means. However, the wealth and power of financial elites thoroughly dominate the political process. Even the Democratic Party fears eliminating outrageous tax loopholes ("carried interest") for billionaire hedge fund and private equity managers that cost the treasury billions of dollars each year.</p><p>The combination of deteriorating government services, tax avoidance by the rich, and unresponsive elected officials form a combustible mix. Nothing short of a massive movement that builds a new political organization will be needed to right these many wrongs. But it will have to be more than another Occupy Wall Street. We will need to do the painstaking work of spreading the word, and then organizing the 99 percent into a new political force to be reckoned with. It took 30 years to get us here. Expect it to take that long for us to effectively get our act together.</p> Wed, 14 Jan 2015 08:44:00 -0800 Les Leopold, AlterNet 1030256 at http://personal.alternet.org Economy Economy income inequality rich poor taxes wealthy wealth The Finance Industry Is Gorging Itself on Your Future—The Trend Lines Will Blow You Away http://personal.alternet.org/economy/finance-industry-gorging-itself-your-future-trend-lines-will-blow-you-away <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">We have to curtail the power of high finance.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/ff0588ddae5580c2ee5b6d327c4b2385c5738f99.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Increasing debt and runaway inequality are of a piece. That's because debt at compound interest rates is extremely powerful. Borrow a little today, and in time, you could be destitute. To get a feel for its power, imagine you borrowed just one nickel at 5% interest when Christ was born. You would now owe the tidy sum of $225,438,991,066,856,000,000,000,000,000,000,000,000,000—more money than ever existed in the history of the world. Which is to say, those who wield the power of debt, wields enormous economic power.</p><p>In our society we've given that power to private financial corporations, and they've done a masterful job in pushing us to the brink of debt peonage. The problem extends far beyond the much ballyhooed federal government debt. The power of debt extends to nearly every aspect of modern life. Our homes, schools, roads, bridges, highways, utilities, corporations and virtually every product and good produced and sold depend on debt. By some estimates as much as 30 cents of every dollar we spend goes to cover interest payments on the debt accrued to make all that we buy. (For example of the $6.5 trillion of <a href="https://www.bea.gov/scb/pdf/2013/09%20September/0913_summary_nipa_accounts.pdf">private enterprise income</a> in 2012, 36.8% went to interest payments.)</p><p>With our banking system in private hands, the simple truth is that as the debt levels accelerate, so does runaway inequality. Therefore key to controlling runaway inequality is to dramatically curtail the power of high finance.</p><p>But as a society we have done the opposite. For nearly a half century between the New Deal and the 1970s, Wall Street was tightly controlled. Taxes on the wealthy were high, worker wages were rising, and debt levels on consumers, companies and government were low. After finance was deregulated (circa 1980) private and public debt exploded, wages stalled, taxes on the rich fell and inequality soared.</p><p><strong>Financialism Transforms the Modern Corporation</strong></p><p>Until about 1980, corporations ran up very little debt (see chart below). Their earnings were more than sufficient to cover reinvestment in new plant and equipment, research and development and improvements in employee wages and benefits. This "retain and reinvest" corporate ethos took place in an era when high finance was strictly regulated by government. Banks were limited in size, geography and function. Speculation was kept to a minimum as was the rampant buying and selling of corporations by what we now call private equity firms and hedge funds.</p><p></p><div alt="" class="media-image" height="299" width="480"><img alt="" class="media-image" height="299" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/photo_-__2015-01-05_at_11.41.30_am.jpg" /></div><p>These controls, however, were radically upended by an unholy alliance of academics, financial elites and pro-Wall Street politicians. As finance became more and more deregulated, the massive growth of corporate debt followed.</p><p>In theory all that new borrowed money should have helped corporations and their employees prosper through more reinvestment in its workforce and product development. But those were not the goals of the new financial engineering. Instead, "retain and reinvest" was replaced by "downsize and distribute." The new debt often was used to buy up corporations. The acquired corporations were then saddled with the new debt and forced to use its revenue streams to pay it off.</p><p>The way CEOs were paid also changed. As compensation became increasingly dependent on stock options, CEOs used corporate earnings to buy up company shares in order to boost their price and enrich themselves.</p><p>To pay back these mounting loans, corporations squeezed their own workers. They downsized, moved abroad, cut wages and benefits and replaced full-time workers with temps. CEOs were transformed into financial engineers who sought more and more ways to enrich themselves through debt, while forcing their companies and workers to pay the price. So corporate capitalism morphed into what should be called financialism.</p><p><strong>The Invention of the Indebted Consumer</strong></p><p>Throughout recorded history, societies have feared instability caused by the imbalanced relationships between lenders and borrowers. Knowing how easily creditors could dominate debtors, many of the oldest legal codes focused on the mediating those relationships. (The first known written laws, <a href="https://bucks.instructure.com/courses/200544/files/2586131?module_item_id=1474297">Hammurabi Codes</a>, 1780 BCE, set maximum interest rates on various transactions.) To further promote stability, most civilizations evolved powerful customs and informal moral codes to discourage personal debt. For most of American history, for example, going into debt was associated with unwholesome gamblers, gangsters and struggling businesses.</p><p>Our righteous attitudes on avoiding debt, however, crashed into the needs of mass production. The ever-growing cornucopia of goods produced by modern capitalist production, also required the mass production of the "consumer." Through the advent of mass advertising, and later through government supported mortgages, consumers were urged to buy on credit in order to match demand to the enormous supply of goods produced.</p><p>However, just as with corporate debt, household debt was extremely modest until the last vestiges of financial control evaporated. Before 1990, the average consumer limited household debt to about 40% of disposable income (income we can spend after we pay our taxes). But after modern financial engineering invaded the housing and credit card markets (making it possible even for dead people to obtain mortgages) household debt soared to nearly 160% of household income.</p><p></p><div alt="" class="media-image" height="332" width="480"><img alt="" class="media-image" height="332" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/photo_-__2015-01-05_at_11.42.58_am.jpg" /></div><p>The more households paid to service their growing debt, the more money flowed into the financial sector. Rising inequality followed.</p><p><strong>Debt Peonage for Students</strong></p><p>Student debt became the next territory for Wall Street to occupy. Once again, this required upending successful past practices. From WWII through the mid-'70s, public higher education was virtually free, led first by the GI Bill of Rights and then by the robust California and New York tuition-free higher educational systems. As the chart below shows, until the late 1980s, there was virtually no student loan debt at all. But as money for the public sector dried up (largely due to tax breaks for the rich) public financial support for higher education lagged behind tuition costs. Wall Street filled the breach and student debt mushroomed.</p><p></p><div alt="" class="media-image" height="180" width="180"><img alt="" class="media-image" height="180" width="180" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/square_thumbnail/public/photo_-__2015-01-05_at_11.43.47_am.jpg" /></div><p><strong>Government Debt Is Bad for Whom?</strong></p><p>Finally we turn to government debt, a topic always super-charged with ideological fervor. But no matter where you stand on the role of government and how it should be financed, one basic fact should be acknowledged: Throughout the ages, the wealthy would rather loan the government money than pay taxes. The reason is simple. When the wealthy loan money to governments (historically to fight wars) they stand to make more money in return. Not so if they are taxed.</p><p>In the modern era, this is even more true since government debt instruments pay interest that often is tax deducible. The rich benefit by loaning money to government and having the rest of us pay it back through our taxes, not theirs.</p><p>It follows, therefore, as financial interests and the wealthy increase their power over the economy and politics, we should expect federal, state and local government debt also to rise. Again, this was <em>not</em> the case for most of the post-WWII period when Wall Street was tightly controlled. During that era, taxes on the rich were high and public debt levels were low. But after the deregulation of Wall Street, public debt mushroomed, just like corporate, household and student debt.</p><p></p><div alt="" class="media-image" height="180" width="180"><img alt="" class="media-image" height="180" width="180" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/square_thumbnail/public/photo_-__2015-01-05_at_11.44.35_am.jpg" /></div><p><strong>Heading Toward Debt Peonage?</strong></p><p>We are certainly beholden to Wall Street. By 2006, 40% of all US corporate profits went to Wall Street —up from 7% in 1980. And over $21 trillion is now hidden in offshore tax havens– and moves there via Wall Street. Furthermore, the top three banks dominate the entire financial system. These oligopolists have made it clear to all, they are far, far too big to fail, jail or curtail.</p><p></p><div alt="" class="media-image" height="417" width="480"><img alt="" class="media-image" height="417" width="480" typeof="foaf:Image" src="http://aspmx.l.google.com.alternet.org/files/styles/large/public/photo_-__2015-01-05_at_11.45.58_am.jpg" /></div><p>What will happen when this debt pyramid comes tumbling down again? As financial expert Ellen Brown <a href="http://ellenbrown.com/2014/03/29/banking-union-time-bomb-eurocrats-authorize-bailouts-and-bail-ins/">points out</a>, after the next crash we should expect a new kind of bailout. It's called a bail-in, and it already has become part of European planning. Instead of giving billions to the banks, the government will ask the banks to take it from their depositors—namely us.</p><p><strong>Escaping Debtors Prison?</strong></p><p>With ever-rising public and private debt, we seemed trapped. After all a cornerstone civilization is that debts must be repaid or bankruptcy declared.(Countries like ours that can print their own money, however, can never go bankrupt.) As the economy grows, it is likely that federal debt as a percent of the entire federal budget will decline. But with stalled personal incomes, households may be struggling with debt indefinitely. But there is another way out.</p><p>It's starts with recognizing that the root of the problem is not just the quantity of debt per se, but rather who really controls and profits by it. Private banks do not have to be masters of the economic universe. Instead, we could model our financial system after public banks, like the Bank of North Dakota. If we had 50 state banks, instead of just one, the income-distorting power of increasing debt could be curtailed, <em>and</em>there would be much more money in the public treasury. In North Dakota, the state bank returned record profits nine years in a row, <a href="http://greatplainsnews.com/2013/04/24/9-years-of-record-profits-bank-of-nd-makes-81-6m/">with $81.6 million flowing</a> into the state coffers in 2012. It provides support for infrastructure projects. It insists that when it loans money to businesses, jobs must be created in North Dakota. It helps ease the burdens of student loans...and it doesn't gamble in financial markets.</p><p>But, there's a catch that Wall Street detests: The CEO of the Bank of North Dakota makes per year what a top Wall Street banker makes in one hour! So, if we want to really do something about runaway inequality, we will need public bankers who are more than willing to work for about $250,000 a year, instead of $50 million.</p><p>We are learning painfully each and every day that deregulating Wall Street does not work. Reforms have been tepid at best. Banks get fined, and then fined again, for every financial sin imaginable—money laundering for gangsters and rogue states, ripping of servicemen and women by financing payday loan sharks, colluding to fix interest rates, insider trading, controlling commodity markets, and illegal financial gambling. Yet the same executives and the same institutions prevail as if these crimes are just the normal cost of doing business.</p><p>Change becomes much more possible if and when we are able to transform every discussion about debt into a debate about creating public banks to replace Wall Street's financial stranglehold.</p> Wed, 31 Dec 2014 14:24:00 -0800 Les Leopold, AlterNet 1029592 at http://personal.alternet.org Economy Economy wall street inequality Think About It: The U.S. Is the Richest Country as Well as the Most Unequal: 8 Consequences of American Greed http://personal.alternet.org/economy/consequences-american-greed <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">America is the richest country in all of history... with a whole lot of poor people. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_78856468-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>America is the richest country in all of history. We have the largest economy and the largest number of millionaires and billionaires. At the same time, we lead the developed world in economic inequality. In 1965, CEOs received $20 for every dollar earned by the average worker. Today the gap is $354 to $1.</p><p></p><div alt="" class="media-image" height="231" width="375"><img alt="" class="media-image" height="231" width="375" typeof="foaf:Image" src="/files/styles/large/public/story_images/for_every_dollar_earned_by_an_average_worker_the_ceo_gets.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">For every dollar earned by an average worker the CEO gets...</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">AFL-CIO, 2013; Hargreaves, 2014; Mishel and Sabadish, 2013</div></div></div> </div><p>These are more than cold statistics. They also tell the story of a nation in serious trouble. Runaway inequality is lacerating the fabric of our society. Here are a few of the festering  wounds.</p><p><strong>1. We are among the leaders in child poverty. </strong>In the 1960s, Lyndon Johnson declared a war on poverty. We lost the war. Today, of all the developed nations in the world, America is near the top when it comes to the percentage of our children living in poverty.</p><p></p><div alt="" class="media-image" height="405" width="358"><img alt="" class="media-image" height="405" width="358" typeof="foaf:Image" src="/files/styles/large/public/story_images/1_in_3_children_lives_in_poverty.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">1 in 3 U.S. children lives in poverty.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">washingtonpost.com/wonk blog</div></div></div> </div><p><strong>2. We lead the developed world in homelessness. </strong>One of the most crushing outcomes of runaway inequality is homelessness. According to the <a href="http://www.nationalhomeless.org/factsheets/why.html">National Coalition for the Homeless</a>, homelessness has multiple causes including foreclosures, poverty, decline of work opportunities, reductions in public assistance, lack of affordable healthcare, mental illness, addiction and domestic violence. Many of these causes are directly related to and exacerbated by rising inequality.</p><p>As the wealthy deploy tax shelters both here and abroad, the money for affordable housing, urban shelters and public assistance has declined. Gentrification of urban areas has further driven up housing costs and pushed low-income residents from single room hotels, boarding houses and shelters. The housing crash, brought to us by Wall Street, dislocated many more from their individual homes and low-income rental apartments. As inequality continues to rise, we can expect runaway homelessness as well.</p><p></p><div alt="" class="media-image" height="291" width="360"><img alt="" class="media-image" height="291" width="360" typeof="foaf:Image" src="/files/styles/large/public/story_images/percentage_of_population_experiencing_homelessness.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Percentage of population experiencing homelessness.</div></div></div> </div><p><strong>3. We lead the world in student debt. </strong>We can't find data comparing our country to others when it comes to student debt. That's because in most countries higher education is free. In fact, higher education once was virtually free here as well. After WWII, the GI Bill of Rights paid for more than 3 million veterans to return to school, tuition-free. The bill also provided stipends for living costs as well. California and then New York also developed tuition-free state wide university systems. However as runaway inequality set in, state and federal support for higher education did not keep up with tuition costs. The breach was filled by Wall Street which profits mightily from the trillion-dollar student debt market.</p><p>Our vision is so crippled by rising inequality that we consider student debt as a normal part of life. While Germany removes the few remaining tuition fees from its universities, our debate is limited to level of student loan interest rates and caps that limit repayment to a certain percentage of future student incomes. Free higher education at public institutions is considered off the charts, outside the bounds of reasonable discussion, something raised only by unrealistic radicals. Even Elizabeth Warren <a href="http://www.rollingstone.com/politics/news/the-student-loan-crusader-how-elizabeth-warren-wants-to-reduce-debt-20140820">won't go there</a>. Meanwhile student debt continues to pile up with no end in sight.</p><p></p><div alt="" class="media-image" height="306" width="356"><img alt="" class="media-image" height="306" width="356" typeof="foaf:Image" src="/files/styles/large/public/story_images/big_debt_on_campus.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Big debt on campus.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Federal Reserve Bank of NY/Mother Jones</div></div></div> </div><p><strong>4. We lead the world in prisoners.</strong> For much of American history, the incarceration rate was relatively low and steady, even during the turbulent 1960s. But as rising inequality took hold around 1980, so did the rise of our prison population.</p><p>Runaway inequality and the downward pressure on wages, especially for those at the bottom, create ideal conditions for a vast underground economy. Stiff sentencing laws and the war on drugs colluded to fill our prison's and jails. For-profit private prison companies with Wall Street financing have pressed to keep the jails full and to <a href="http://www.propublica.org/article/by-the-numbers-the-u.s.s-growing-for-profit-detention-industry">expand them</a>.  </p><p>Historically, large prison populations have always been associated with totalitarian countries. But now the land of the free and the home of brave has the world's highest incarceration rate. What does that say about American freedom?</p><p></p><div alt="" class="media-image" height="265" width="396"><img alt="" class="media-image" height="265" width="396" typeof="foaf:Image" src="/files/styles/large/public/story_images/incarcerated_americans_0.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Incarcerated Americans 1920-2013.</div></div></div> </div><p> </p><p></p><div alt="" class="media-image" height="237" width="324"><img alt="" class="media-image" height="237" width="324" typeof="foaf:Image" src="/files/styles/large/public/story_images/us_is_world_leading_jailer.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">U.S is the world's leading jailers.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Roy Walmsley, World Prison Population List, 2009, United Kingdom Home Office Research</div></div></div> </div><p><strong>5.  We lead the world in police brutality. </strong>As inequality rises so does police violence. The deaths of unarmed black and Hispanic urban residents is deeply connected to the combination of overt discrimination and the difficulties in finding decent paying work in depressed communities. When it comes to police killings, we're second to none. (Chart based on police statistics since 2012 compiled by <em><a href="http://www.businessinsider.com/why-do-us-police-kill-so-many-people-2014-8">Business Insider</a></em>.)</p><p> </p><p></p><div alt="" class="media-image" height="180" width="360"><img alt="" class="media-image" height="180" width="360" typeof="foaf:Image" src="/files/styles/large/public/story_images/civilians_shot_by_police.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Civilians shot and killed by police.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Business Insider</div></div></div> </div><p><strong>6. We lead the world in tax evasion. </strong>No one enjoys paying taxes. But we truly loathe paying taxes when corporations and wealthy individuals can buy a small army of lawyers and accountants to game the system.</p><p>For a generation we talked of corporate flight to low-wage areas abroad. The next phase well underway is shifting corporate money and official residence to low tax areas so that the biggest American corporations pay little or no taxes at all.</p><p></p><div alt="" class="media-image" height="324" width="300"><img alt="" class="media-image" height="324" width="300" typeof="foaf:Image" src="/files/styles/large/public/story_images/countries_with_largest_tax_evasion_amount.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Countries with the largest tax evasion amount.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Richard Murphy, Tax Justice Network</div></div></div> </div><p><strong>7. We have the world's most outrageous tax break for super-rich. </strong>Runaway inequality gives the richest of the rich the nerve to deploy tax loopholes to reduce their taxes. They also have the power to subvert democracy by preventing politicians from eliminating these enormous giveaways. The most egregious example, the "carried interest" loophole, allows billionaire hedge funds and private equity managers to avoid billions in taxes that the rest of us have to make up. By allowing these billionaires to declare ordinary income as capital gains, this loophole drops their top rate drops from 39.6%, to 20%. We're talking big money.</p><p>Here's how it plays out. The top 25 hedge fund managers in 2013 collectively took in $24.3 billion. For starters, that gives them an average income of $467,000 <em>an hour</em>. They make as much in one hour as the typical American makes in nine years!</p><p>Their carried interest loophole reduces their taxes about $4.8 billion a year. How much is that in human terms? It's enough to hire 175,000 pre-school teachers a year or 76,000 registered nurses. Instead, it goes into the pockets of just 25 billionaires for no reason at all, except one—they want it.</p><p>Both Democrats and Republicans refuse to touch the loophole. But they welcome with open arms the fat donations that come from the billionaires they are protecting.</p><p><strong>8. We lead the world in declining public services. </strong>A society scarred by runaway inequality will divide into two very unequal sectors. For the super-rich, the world of for-hire private services will cater to their every need. They live on patrolled estates, commute by helicopter, travel by private jet, educate their children in elite private schools, receive high-quality private healthcare, and are treated differently by politicians as well as the criminal justice system. They are hermetically sealed from homelessness and crime. Student debt is a non-issue except as a financial market to exploit. Poverty and fair taxes are far away from their day-to-day realities.</p><p>When you are the richest of the rich, America looks damn good. Your employees and servants fawn over you. Politicians and the media flock to be in your presence. You have the keys to the economic castle. You are the economic castle. You are the creator of wealth, the maker of jobs, the winner of the toughest competition on Earth. You feel you are only getting what you richly deserve.</p><p>Meanwhile the rest of us need and rely on our public spaces, our public services, and our public facilities. We use the schools and the roads. We need a vibrant public sector, but that too is slipping away. In fact, the more inequality rises, the more difficult it becomes to support a public sector, as the super rich and wealthy corporations do all they can to avoid paying their fair share.</p><p>We can see this most clearly by the decline of public sector employment. This job loss makes the delivery of every public service more difficult. It means longer lines, larger class size and fewer infrastructure repairs. This is especially pronounced since the Wall Street-created crash.</p><p></p><div alt="" class="media-image" height="288" width="378"><img alt="" class="media-image" height="288" width="378" typeof="foaf:Image" src="/files/styles/large/public/story_images/state_and_local_government_payroll.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">State and local government payroll.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">www.calculatedriskblog.com</div></div></div> </div><p><strong>You can't bribe financial elites. </strong>Liberal economists like Joseph Stieglitz, Robert Reich and Paul Krugman argue that rising inequality harms economic growth. If the economy had a less extreme distribution of income and wealth, there would more money in the hands of consumers, and therefore more profits for the corporations and the well-to-do. So even the rich would be better off if the rest of us had more.</p><p>But that wish is more like a bribe. In reality, the wealthy are running away with more and more of the nation's wealth. This is no incentive large enough to entice the captains of industry to reduce runaway inequality. It's working wonderfully for them. </p><p>The powerful will never be persuaded by intellectual arguments from even the very best economists. Instead, history shows it will take countervailing power and a virtual uprising by the rest of us. For a short time, Occupy Wall Street focused the national debate on economic inequality. It will take a massive new movement for economic justice with staying power to remove the ugly scars of runaway inequality.</p><p>In this holiday season, let's hope we gain the courage to build it. </p> Wed, 17 Dec 2014 15:23:00 -0800 Les Leopold, AlterNet 1028885 at http://personal.alternet.org Economy Economy economic inequality The 6 Economic Facts of Life in America That Allow the Rich to Run off with Our Wealth http://personal.alternet.org/economy/6-economic-facts-life-america-allow-rich-run-our-wealth-0 <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Do you ever wonder why it takes the average family 47 years to make as much as a hedge fund honcho makes in one hour?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_21114685-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Do you ever wonder why it takes the average family 47 years to make as much as a hedge fund honcho makes in one HOUR?</p><p>Does it bother you that in 2010, after the crash, the top 25 hedge fund chiefs made as much as 685,000 teachers who educate 13 million children?</p><p>Are you worried that cutting government debt means raising your social security eligibility age and cost of living adjustment, so that you have to work longer and receive lower retirement benefits?</p><p>Have no fear. The super-rich are spending hundreds of millions of dollars to sell you their economic fabrications. Why so much inequality? They say because the rich have the most important skills and you don't. Why so much unemployment? They say it's because our skimpy unemployment insurance keeps people from looking for work. Why so much government debt? They say it's because you have too many "entitlements." Why the Wall Street crash? They blame poor people for buying homes they couldn't afford.</p><p>In short, the super-rich want us to believe that any effort to tax them a bit more or control Wall Street will only kill more jobs and harm our economic well-being. And most of all they don't want us to know the six economics facts of life that explain how the super-rich are running away with our nation's wealth.</p><p><strong>1. The super-rich are stealing our fair share of productivity.</strong>The U.S. economy is enormously productive. Since 1947, the amount of goods and services we produce per hour of labor has risen by nearly 300 percent. That's because as a nation, we blend together a potent mix of effort, skills, technology and organizational capacities. Our enormous productivity is why we are the richest nation on earth.</p><p>Yet, why don't we feel that rich? Why are we told we must tighten our belts?</p><p>Until the mid-1970s, the more productivity increased, the higher the real wages of the average working person (after taking out the impact of inflation). As a result, our standard of living doubled in 25 years. But, as you can see from the chart below, after the mid-1970s, productivity (the red line) continued to boom, but the average wage stalled.</p><p></p><div alt="" class="media-image" height="393" width="480"><img alt="" class="media-image" height="393" width="480" typeof="foaf:Image" src="/files/styles/large/public/the_six_economic_facts1.jpg" /></div><p>It wasn't an accident, or market forces, or an act of God. It was a result of human polices designed by and for the rich. Tax cuts for the rich, financial deregulation, support for moving jobs overseas and union-busting combined to give the super-rich more and more of our economy's productivity gains. In 1970, the top 100 average corporate executive earned $45 for every $1 earned by the average worker. By 2006 it had jumped to a whopping $1,723 to $1. That's the very definition of greed run wild.</p><p></p><div alt="" class="media-image" height="329" width="480"><img alt="" class="media-image" height="329" width="480" typeof="foaf:Image" src="/files/styles/large/public/the_six_economic_facts2.jpg" /></div><p>Think about this: If the average wage had continued to rise along with productivity as it did after WWII, your real wage today (after inflation) would be twice as high!</p><p>We've been had.</p><p><strong>2. Americans really want a wealth distribution more like Sweden's.</strong> Here's a nightmare fact of life the super-rich don't want you to know. Two researchers recently tried to find out just how much economic inequality Americans were comfortable with. Michael Norton of Harvard Business School and Dan Ariely of Duke University conducted a nationwide poll with more than 5,000 respondents to see how Americans saw our current level of equality, and what level they wanted to see. (“<a href="http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf">Building a Better America – One Wealth Quintile at a Time</a>”)</p><p>The results were startling. First, virtually all Americans greatly underestimated the degree of inequality in our economy today. They had no idea how extreme the U.S. wealth distribution really is -- which goes to show you what a good job the super-rich have done in mis-educating us.</p><p>Second, when asked to construct an ideal distribution of income, 92 percent of Americans preferred radically more equality – on a par with the social democratic state of Sweden! What’s more, it didn’t matter whether the respondent was a Republican or Democrat, rich or poor, black or white, male or female. Everyone wanted more economic fairness.</p><p>Imagine that! Americans, even Republicans who voted for Romney and Ryan, would rather live with the Scandinavian distribution of wealth. Little wonder that the super-rich and their minions do all they can to belittle so-called "Euro-socialism." They don't want us to know that maybe we are hard-wired for fairness instead of the staggering inequality that helps no one but the super-elites.</p><p><strong>3. We are under-taxed, not over-taxed.</strong>The super-rich want us to believe that taxes are too high and that those taxes are harming job creation and economic growth. It's a fabrication. First of all, taxes for most Americans have declined, according to a <a href="http://www.nytimes.com/2012/11/30/us/most-americans-face-lower-tax-burden-than-in-the-80s.html?pagewanted=all&amp;_r=0">recent New York Times analysis</a>:</p><blockquote><p>..... most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.</p></blockquote><p>Second, we have much lower tax rates that our chief European competitors. For example, Germany, an economic powerhouse, has an average tax rate of 40.6 percent while the U.S. rate is only 26.9 percent. Germany uses that money to rebuild its infrastructure, invest in education and find creative ways to nearly eliminate unemployment.</p><p>Third, the super-rich use a sleight of hand to make middle-class taxpayers believe that lower-income people are moochers. Like Mitt Romney, they are fond of saying that 47 percent of Americans don't pay income taxes and that the rich pay most of those taxes. But income taxes are but a small portion of the tax bite on lower-income people who pay through payroll tax deductions, sales taxes and property taxes.</p><p>Finally, because our taxes are declining, it means that our public services are decaying as well. This creates a downward spiral the super-rich want to encourage: the more services decline, the less we want to pay in taxes, the more services decline. If you're really wealthy you don't care about public services since your life is entombed in private services -- private schools, private airports, private planes, private gated villas and so on.</p><p><strong>4. Government jobs are just as good as private sector jobs.</strong> Another major con job concerns the attack on public employees. The greedy rich are trying to pit public and private sector workers against each other in large part because public employees still seem to have benefits the rest of us have lost (and they have unions and vote mostly Democratic). Corporate greed demands that we snuff out those benefits so workers won't demand them in the private sector. To further denigrate government, elites want us to believe that a private sector job is somehow more righteous that a public one -- that public employment is sort of like being on the dole because government workers are immune to the rough and tumble of competitive pressures that drives the private sector.</p><p>It's another hoax.</p><p>The truth is that some jobs are better done by government on behalf of the public. We learned almost 200 years ago that it didn't make sense to have competing fire and police departments. We also learned that if we wanted the average person to go to school, we needed public school systems, and not just private ones. Most countries (but not ours) have learned that much of the healthcare system runs better when it's publicly financed and controlled -- that for-profit hospitals and clinics do not provide the best care. In short, every modern economy is a combination of private and public sector jobs that are valuable to our society.</p><p><strong>5. Wall Street needs to be shrunk (until we can drown it in a bathtub).</strong>The function of finance is simple: moving our savings into productive investments. By doing so, money supposedly moves to where it will do the most good for our economy. This function is considered so simple that most economics textbooks ignore Wall Street entirely.</p><p>However, when Wall Street is left to its own devices, it tends to create vast casinos that dramatically increase financial profits at the expense of the real economy. Worse still, as the speculative casinos grow and grow, the economy as a whole is endangered. Wall Street's grew rapidly just before the great crash of 1929 and just before the Great Recession of 2008-'09. It was stock manipulation during the 1920s and it was the housing casino over the last two decades. But in both cases it happened because Wall Street was deregulated and got too damn big. As the chart below shows, Wall Street is gobbling up more and more of our country's profits.</p><p></p><div alt="" class="media-image" height="251" width="480"><img alt="" class="media-image" height="251" width="480" typeof="foaf:Image" src="/files/styles/large/public/the_six_economic_facts3.jpg" /></div><p>We learned after 1929 that economic stability required severe financial regulation. We sat on Wall Street for nearly 50 years and it worked beautifully, especially between WWII and the 1970s. There were virtually no financial crashes anywhere in the world. But once we deregulated finance again, all hell broke loose as the world suffered through more than 150 smaller financial crashes. Finance grew and grew until it took down the entire U.S. economy. Along the way, Wall Street offered the easiest path to great riches for the few.</p><p>The simplest solution is the one hated by the super-rich: a small sales tax on each and every financial transaction involving stocks, bonds and every kind of derivative. By taxing the casino, we shrink its size and make it less dangerous to the rest of the economy. We also create new revenues for our economy, nearly all of it coming from the top fraction of the top 1 percent. No wonder they don't want us to know that.</p><p><strong>Is Knowledge Power?</strong></p><p>It's not enough for the greedy rich to buy politicians. They also need to buy our minds. That's why they pay for all this misleading economic education. But if we master the basic economic facts of life, we won't get conned. And we will have a much better chance at building a more just and healthy economy.</p> Tue, 16 Dec 2014 08:27:00 -0800 Les Leopold, AlterNet 1028781 at http://personal.alternet.org Economy economy wealthy rich poor How Runaway Economic Inequality and Racism Are Linked to Police Killings http://personal.alternet.org/economy/how-runaway-economic-inequality-and-racism-are-linked-police-killings <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">It&#039;s no accident that America is both the most unequal industrialized country, and has the largest prison population.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_36266923-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Why are white cops shooting unarmed black men?</p><p>On one level the story is simple: racism. Too many police officers fear people of color in the neighborhoods they patrol, and are likely to over-react with force during encounters. The local courts also engage in discrimination by failing to indict the killers, even when captured on video, as in the brutal police slaying of Eric Garner in Staten Island, NY. Both the policing and the court system obviously reflect the polarization of our communities, and our inability to escape the legacy of slavery, more than 150 years after emancipation.</p><p>But racism only accounts for part of the story. We also must understand how judicial racism and even police violence are deeply connected to the financialization of the economy and runaway inequality.</p><p>It is not by accident that America has become both the most unequal developed nation in the world, and the nation with the largest prison population. We're number one in police killings, incarceration and inequality—not Russia, not China. Our national self-image so steeped in the idea of freedom has not caught up with these ugly realities.</p><p>Racism is has been with us for centuries, but something very new happened in America around 1980 that set the stage for these police killings. Something very big is transforming us into the first democratic police state in human history.</p><p><strong>Incarceration Nation</strong></p><p>Please look carefully at the chart below, and consider the history of American racism, violence and protest.</p><p></p><div alt="" class="media-image" height="341" width="480"><img alt="" class="media-image" height="341" width="480" typeof="foaf:Image" src="/files/styles/large/public/screen_shot_2014-12-15_at_7.41.42_pm.png" /></div><p>From 1920 to around 1980, the American prison population held steady, even as our population grew rapidly. One could easily argue that racism was much more virulent during this period, especially in the Jim Crow South, from the hundreds of lynchings in the 1920s to violent repression of civil rights activists in the 1950s and '60s. So unless you believe that racism changed for the worse since 1980, then it alone can not possibly account for the explosive rise of the prison population.</p><p>Even during the turbulent 1960s with its many demonstrations, and violent inner-city upheavals, the prison population hardly budged. Similarly, Nixon's infamous war on drugs, launched in June 1971, also did not boost the prison population during the 1970s.</p><p>Then something major changed to send the prison population soaring. What happened?</p><p><strong>The explosive rise of the American prison population</strong></p><p>Most explanations focus on complexities of the shift to mandatory sentencing. Judges were compelled by harsh new sentencing laws to jail even those convicted of minor crimes, and to hand out sentences much longer than appropriate to the infraction. Because of urban housing segregation by race and income, lower income neighborhoods experienced higher crime rates, made even higher by the futile enforcement of drug prohibition. As the police enforcement increased, a disproportionate number of people of color were funneled into prison. Although non-Hispanic blacks form only 13.6 of the U.S. population, they are <a href="http://en.wikipedia.org/wiki/Incarceration_in_the_United_">39.4 percent of the prison population</a>. The prison population further swelled with bigger backlogs in under-funded courts, bail that cannot be met, and inadequate legal services for the poor.</p><p>But the gargantuan climb in our prison population also corresponds with the dramatic rise in inequality. (The chart below compares the incomes of the top 1 percent with the bottom 90%. Note how the gap rises virtually in lockstep with the rise in our prison population.) This uncanny correspondence suggests that we must consider other explanations that explore the links between runaway inequality and runaway incarceration.</p><p><strong>The Financialization of the Economy and the Destruction of Good-Paying Industrial Jobs</strong></p><p>America adopted draconian conservative economic policies starting in the late 1970s with the advent of the Better Business Climate model. The idea was to cut taxes on the rich and deregulate business, especially Wall Street. That combination was supposed to put money in the hands of the few, who would then heavily invest it in our economy, thereby creating an enormous economic boom. Good jobs and rising incomes for all those willing to work would soon follow. It didn't happen. Instead these Better Business Climate policies led to runaway inequality, the destruction of middle-income jobs, and wage-stagnation for the vast majority of working people.</p><p>As Wall Street broke free of its New Deal constraints, a new wave of corporate raiders, private equity firms and hedge funds bought up companies with borrowed money and the proceeded to financially strip mine their wealth...and ours as well. <a href="https://hbr.org/2014/09/profits-without-prosperity">As Professor Bill Lazonick</a> points out, this changed the corporate culture of large firms from "retain and reinvest" to "downsize and distribute." The goal of nearly every company soon became the extraction of as much wealth as possible in behalf of investors, banks and CEOs. Instead of investing in employees so they would stay and grow with the company, the workforce was downsized, plants shipped overseas, full-time workers replaced with temps, and unions busted. (Contrary to most media accounts, it is not mandated by law that boards of directors maximize short term corporate profits.)</p><p>Americans of color who had only recently found their way into the better paying industrial jobs in the 1950s and 1960s, suffered enormous job losses and were forced to find work in the low paying jobs, often in the service sector. Urban decay accelerated as inner city incomes declined and industrial tax revenues plummeted.</p><p>To make ends meet a new generation of workers found work in the underground economy —some of it legal, some not. Drug dealing, like rum running in the 1920s, became an alternative path toward the American Dream.</p><p><strong>Gentrification and Police Occupation</strong></p><p>Urban areas became a microcosm for the interplay between runaway inequality and runaway incarceration. As lower-income areas deteriorated, cities like New York, Chicago, San Francisco and Los Angeles also became magnets for the wealthy. Marginal neighborhoods were transformed by developers who bought and fixed up apartment buildings with an eye to squeezing out low-income tenants. Often, the first new wave of occupiers were young professionals and artists, many of whom were the children of the well-to-do.</p><p>At the same time, the "broken windows" theory of police enforcement took hold. It argued that by cracking down on minor offenses, like graffiti drawing and drinking booze on the street, a sense of law and order would develop in the neighborhood, which in turn would reduce the occurrence of more serious crimes.</p><p>It was a short jump from efforts to stop quality of life crimes, to "stop and frisk." In short order, the police became a true occupying force that could accost just about anyone for anything, and even use lethal force to keep the native population in check. Unprovoked police checks were so prevalent that the residents referred to the charge as "driving while black."</p><p>Take the case of Eric Garner who was selling individual cigarettes (tobacco, not joints) near the Staten Island Ferry terminal, where those lucky enough to find jobs in Manhattan commute to and fro. Garner's only crime was trying to scratch out a living in the underground economy. But to the police, he was committing a lifestyle crime that according to the broken windows theory should be addressed to prevent more serious crimes. So the police arrested a man, who in any humane and sane society should never have been confronted, let alone apprehended. (They try to justify this madness with the ludicrous claim the arrest was because he wasn't paying the cigarette tax.) He was killed while trying to earn a subsistence living, if that, in the epicenter of runaway inequality.</p><p><strong>Wall Street's New Employment Policy: Incarceration</strong></p><p>Eric Garner is just one of the 22.2 million surplus workers who now struggle to make ends meet in our financialized economy. (The number comes from the careful review of unemployment data compiled each month by Leo Hindery, and sent via email to journalists and policy analysts.) Garner was selling cigarettes on the street, because he had very few viable alternatives.</p><p>Clearly, the free-market solution promised by the Better Business Climate model is a cruel joke. It has not produced enough jobs, and most of the ones it has produced are low-paying service jobs.</p><p>During the New Deal and the Great Society, the answer was government job creation programs, free educational opportunities and massive investment in refurbishing our infrastructure.</p><p>But those days ended with runaway inequality. Large corporations and the rich simply are unwilling to foot the bill and have the political power to make sure they don't. Not only were taxes cut on the rich, but also with the avid assistance of Wall Street, large corporations and the rich found numerous ways to park their money off-shore, far away from the reach of the IRS. At the same time these tax evaders call for austerity programs. They want cuts in social programs to counter budget deficits, which were created in large part because of tax evasion by the well-to-do.</p><p>This leaves only one other option for how to deal with our massive surplus workforce: incarceration. Better to put the surplus population in jail, than to launch new government job programs. Better to arrest a man for selling individual cigarettes, than to fund programs to create good jobs. Better to have more privatized prisons, than more tax-payer funded schools. (In 2011, for the first time <a href="http://www.jsonline.com/news/statepolitics/">Wisconsin spent more on its prisons</a> than on its fabled university system.)</p><p><strong>Incarceration is Big Business</strong></p><p>The growing prison population also creates growing business opportunities in the privatized prison-industrial complex. With Wall Street money, the larger prison firms lobby hard for the government to fund new prisons, create more prisoners, and employ more prison guards. This too is part of the new financialized employment policy.</p><p><strong>A new direction for protest</strong></p><p>The vibrant public response to these police killings is heartening. We are taking to the streets, and rightly so. But where are our protests heading? What should we demand that adequately addresses this destruction of life and hope?</p><p>Yes, fairer courts, better policing, drug decriminalization, and the end of mandatory sentencing would be an excellent start. But that's not nearly enough. We need a vision that empties our prisons, and rebuilds our economy from the bottom up. To get there from here runs through Wall Street. High finance is the driver of runaway inequality. We have to end its iron grip on our lives or nothing much will change, especially for those at the bottom of the income ladder. A mass movement for economic justice is badly needed, one that calls for public banks, free higher education, free healthcare, caps on CEO incomes, and steeply progressive income taxes.</p><p>There's been a recent uptick in public demonstrations: We are in the streets protesting police brutality. We are in the streets demanding a living wage for fast food and Walmart workers. We are in the streets fighting for citizenship for recent immigrants. But we have not as yet figured out how to unite around runaway inequality, the issue that unites us all. Occupy Wall Street showed that the issue has resonance. It also showed that we were unprepared to sustain a long-term anti-Wall Street movement.</p><p>A movement that targets inequality and Wall Street is by definition multiracial. It can bring us together. And we must come together in order to stand the slightest chance of success.</p> Mon, 15 Dec 2014 08:10:00 -0800 Les Leopold, AlterNet 1028702 at http://personal.alternet.org Economy Economy racism economy inequality race police brutality You're Likely to Be a Lot Poorer Than You Were a Few Years Ago—And It's All By Design http://personal.alternet.org/labor/youre-likely-be-lot-poorer-you-were-few-years-ago-and-its-all-design <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Other developed societies have a much stronger social contract to protect themselves from the finance industry. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_221458216-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>The typical American is even poorer than his or her equivalent in Greece. The median Australian is four times wealthier. The Canadians are twice as wealthy. The U.S. continues to <a href="http://www.billionairemailinglist.com/images/Worlds%20Billionaires%20Per%20Country%202014.jpg" target="_blank">lead the world in billionaires</a> (571 in 2014, with China a distant second at 190). But after decades of financial deregulation and attacks on employee rights, Americans rank 26th in median wealth (defined as assets owned, minus debts owed for the person on the middle rung of the wealth ladder).</p><p><strong>All by Design</strong></p><p>During the Cold War, our working class was the envy of the world. We argued that our free-enterprise system, not communism, created the best conditions for a rising standard of living for all. Indeed, there was much to boast about. Real wages were increasing year after year. American workers were free to go on strike and did. Most importantly, the children of working people could climb the economic ladder—upward mobility was real.</p><p>Today, by almost every measure, none of this is true. Not only do we rank 26th in median wealth, we also are the most anti-employee country in the developed world. Actually, the two go together, because rising inequality results from our pro-Wall Street and anti-worker policies.</p><p>The <a href="http://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm#data" target="_blank">Organization for Economic Cooperation and Development</a> (OECD) ranks 43 nations by the degree of employee protection provided by government. The 21 indicators used include such items as laws and regulations governing unfair dismissals, notifications and protections during mass layoffs, the use and abuse of temporary workers, and the provision of severance based on seniority. Countries are ranked on a scale of 0 to 6 with 6 going to those who provide the most legal protections for employees and zero for those with the least. As the chart below reveals, we're second to last, meaning that we have among the fewest regulations to protect employees—union, non-union, management, full-time and temporary workers alike.</p><p></p><div alt="" class="media-image" height="437" width="438"><img alt="" class="media-image" height="437" width="438" typeof="foaf:Image" src="/files/story_images/oecd_ranking.jpg" /></div><p>During the late 1970s, pro-business policy makers, pundits and academics came up with the "Better Business Climate" model. They said we could get out of the 1970s period of high unemployment and inflation (stagflation) if we unleashed business by cutting taxes and regulations. In particular, the theory held that businesses need maximum "labor flexibility" —that there should be virtually no legal restrictions on employer-employee relations. The more flexibility, the more economic efficiency, and therefore the more economic growth. The pie would grow bigger and there would be more for everyone.   </p><p>Here's what happened instead. Virtually all the "growth" went to the top fraction of one percent. The bottom 90 percent stagnated.</p><p><strong>But What About Upward Mobility?</strong></p><p>Many argue that America has never been about income equality. Rather we're about equal opportunity so that everyone has a fighting chance to move up the income ladder. This is supposed to be the land of opportunity, not aristocracy. Surely we are still the envy of the world when it comes to upward mobility.</p><p>Not anymore.</p><p>Today, in the U.S., the odds are about 50/50 that you'll be stuck in the <a href="http://money.cnn.com/2013/12/09/news/economy/america-economic-mobility/" target="_blank">same class as your parents</a>. But in Denmark the odds are greater than 4 to 1 that you'll improve your economic position. </p><p><strong>Eliminating Unions, Eliminating Strikes</strong></p><p>The most important regulations business wants to eliminate are those that support unionization. They have done a masterful job, <a href="http://stats.oecd.org/Index.aspx?DataSetCode=UN_DEN" target="_blank">according to OECD data</a>. American has nearly the lowest union density rate (the number of union members, both public and private divided by the total number in the workforce).</p><p></p><div alt="" class="media-image" height="481" width="266"><img alt="" class="media-image" height="481" width="266" typeof="foaf:Image" src="/files/story_images/union_density_rate.jpg" /></div><p>It's amazing how many factors come together around 1980. The Better Business Climate model became public policy. Finance was deregulated. The income gap took off. Private and public debt mushroomed. And Wall Street and CEO compensation skyrocketed. Worker strikes also fit this picture, as the chart above shows. Mass strikes virtually disappeared, making it extremely hard for workers to collectively press for higher wages and set higher wage patterns for non-union workers as well.</p><p><strong>Fork in the Road</strong></p><p>Each day we try to patch together a decent existence. It's hard, even painful, to step back to examine the big picture. But when we do, it's easy to see that we've been had. The Better Business Climate model has failed the average American. We have few rights on the job and fewer unions to protect us. Upward mobility is dwindling for our families.</p><p>The Tea Party offers a path forward full of vitriol and hate. They blame the government, not Wall Street. They blame immigrants, not CEOs. They vilify the "takers," while allowing the "makers" to rob us blind. They want more war against global terrorism, not war against global warming. This general psychology has a very strong electoral appeal that is thriving politically. It exists outside the boundaries of reason, and self-interest. And there's currently no solution for rebutting this general mindset. </p><p>But we do know the solutions to the economic problems themselves: We need to take on our elite financiers and CEOs. Cut their compensation. Raise their taxes. Close their loopholes. Encourage workers rights, unions and full citizenship for the millions who live here in the shadows. And dramatically curtail CO2 emissions.</p><p>In yesteryear, we would expect the Democrats to lead the way. But except for a very few, that won't happen as the party tries to endear itself with the  rich and famous. They want Wall Street donations, not confrontations.</p><p>We're on our own. We'll need to piece together a new movement that challenges elite financial power. It took a generation to rob us of fundamental economic justice. It may take even longer to get it back.</p> Fri, 05 Dec 2014 09:06:00 -0800 Les Leopold, AlterNet 1028215 at http://personal.alternet.org Labor Economy Labor economy working class workers unions labor upward mobility What If the Greedy Rich Paid Their Share? 8 Things to Know About Wealth and Poverty in the US http://personal.alternet.org/economy/what-if-greedy-rich-paid-their-share-8-things-know-about-wealth-and-poverty-us <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">We&#039;re far from poor—we just have a wildly lopsided distribution of wealth that makes us seem poor.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_152105888_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt crisis despite what the politicians and pundits proclaim. We are not the next Greece.</p><p>Rather, we have an enormous concentration-of-wealth problem -- one that must be solved for the good of our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so concentrated in the hands of a few. This is America’s disaster.</p><p>But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way it’s always been?</p><p>Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’s all about how we choose to share our nation’s productivity.</p><p><strong>Productivity and the Wealth of Nations</strong></p><p>Our country is rich because we are enormously productive as measured by output per hour worked. The greater our collective output per hour, the more our economy produces and the wealthier we are…or should be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of organization, and productive capacity. </p><p>From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with working people. As productivity rose so did workers’ real wages. This wasn’t socialism. There were still plenty of rich people who earned a significant slice of the productivity harvest. But much of that wealth was plowed back into the economy through taxation rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s dollars).  Much of that money was used to build our physical and knowledge infrastructures, and to fight the Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting for inflation. Wall Street was tightly controlled and the middle-class grew like never before.</p><p>Then something happened.</p><p>It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy makers decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially Wall Street), investment would dramatically increase and all boats would rise. But the average worker's wage in real terms stalled and even declined after the mid-'70s. The fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by accident, but by policy design. "Greed is good" replaced the middle-class American dream.</p><p><strong>What Is Wealth and Who Has It?</strong></p><p>Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts (your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of 2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of $16.4 trillion (<a href="http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf">PDF</a>). How much is that? It comes to an average of $141,000 per household – free and clear of any debts.</p><p>But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some eye-popping numbers.</p><p>1. The number of households with a <em>million dollars or more</em> of net worth grew by 202 percent between 1983 and 2007.</p><p>2. The number of households with a net worth of <em>$5 million or more</em> grew by 494 percent.</p><p>3. The number of <em>$10 million or more</em> households grew by a whopping 598 percent!</p><p>4. There are now more than 464,000 households worth $10 million or more. (<u>PDF</u>)</p><p>5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).</p><p>6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1 percent – meaning they owe more than their assets are worth.</p><p>7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial assets (excluding homes).</p><p>8. That means that the <em>top one percent</em> has a positive net worth valued at approximately $5,700,000,000,000 (that’s $5.7 <em>trillion</em>).</p><p><strong>Why We Need a Financial Transaction Tax</strong></p><p>Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t collect a paycheck without paying taxes. The super-rich, however, receive most of their income through financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our government <em>appears</em> to be starved for income. If we want a vibrant economy and good investments in our public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-WWII period.</p><p>For starters we need a financial transaction tax which is a small sales tax on each and every financial trade – from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets, this kind of tax would directly target their excessive trading and enormous holdings. Not only would this sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.</p><p><strong>A Wealth Tax to Improve our Commonwealth</strong></p><p>Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes, and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with from $50 to $150 billion per year in income. Spare change for the super-rich.</p><p>The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for information from other countries that may be tempted to launder money for our super-rich. There’s nowhere to run unless the super-rich want to give up their citizenship.</p><p>Even Ronald McKinnon, a conservative economist writing in the <em>Wall Street Journal</em> (<a href="http://online.wsj.com/article/SB10001424052970203462304577139232881346686.html">“The Conservative Case for a Wealth Tax”</a>) is advocating a wealth tax on the super-rich:</p><p>In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.</p><p>Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit hysteria would vanish into its own hot air.</p><p>We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and how they have captured political power. We can proclaim our membership in the 99 percent for all to hear. But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of productivity.</p><p>The 1 percent didn’t get there just because they were great entrepreneurs or because they were smarter than the rest of us. They got there because they pressed for tax cuts for the super-rich and the deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of Americans.</p><p>A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class again was growing year by year. It would put Americans back to work and place our foot right back on Wall Street’s neck – where it needs to be for the good of us all.</p><p>But you know it won’t come easy. The super-rich feel entitled to all they can grab. Which means we’ll have to organize like never before and fight like hell. Let’s hope the 99 percent are ready, able and willing.</p> Mon, 24 Nov 2014 07:31:00 -0800 Les Leopold, AlterNet 1027564 at http://personal.alternet.org Economy Economy Labor wealth poverty united states inequality The Driving Force Behind America's Warp Speed Decline into an Unequal Society http://personal.alternet.org/economy/driving-force-behind-americas-warp-speed-decline-unequal-society <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Corporate power is bad, but the financial industry is behind the atrocious wealth divide.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_72505693-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Runaway inequality is destroying the American Dream. Is it too late to save it?</p><p>That depends on what is really driving inequality. In the 1960s the gap between CEOs and the average worker was 20 to 1. By the 1990s it was nearly 350 to 1. What happened?</p><p></p><div alt="" class="media-image" height="480" width="550"><img alt="" class="media-image" height="480" width="550" typeof="foaf:Image" src="/files/story_images/ceos_have_fared_far_better_than_the_average_worker.jpg" /></div><p>More than a few pundits and policy wonks imply it's our own damn fault—we're just not educated enough to compete in the global marketplace. Instead of learning more math and science, we play video games, sext and grow obese. <em>New York Times</em> columnist David Leonhardt provides a more nuanced variation of this theme when <a href="http://www.nytimes.com/2014/11/11/upshot/the-great-wage-slowdown-looming-over-politics.html?_r=0&amp;abt=0002&amp;abg=0">he writes</a> that average wages could be boosted by policies to support "stronger schools and colleges to lift the skills of the nation's workforce. Countries that have made more education progress over the last generation have experienced bigger income gains than the United State, and even here the pay gap between college graduates and everyone else has reached a record high."</p><p>Progressives, however, usually point to other factors such as our paltry minimum wage, the lack of higher taxes on the rich and the declining power of labor unions. This analysis is behind the recent successful efforts to win state and local minimum wage increases, and stronger union footholds among low-wage workers.</p><p><strong>What About Wall Street?</strong></p><p>When Occupy Wall Street exploded onto the scene, high finance was nabbed as the primary culprit for rising inequality. But as that movement waned, so did the focus on Wall Street. Even Thomas Piketty's powerful critique of rising inequality (<em>Capital In the 21st Century</em>) places little emphasis on the role of high finance.</p><p>So what is Wall Street's contribution to rising inequality?</p><p>To find answers, the International Labor Organization produced an eye-popping study of 71 countries in its <a href="http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_194843.pdf">Global Wage Report 2012/13</a>. They test the relative significance of possible causes of wage inequality such as globalization, new technology, and cutbacks in government support for workers and unions. They also add another possible explanation which they call financialization: how much of a nation's economy is devoted to Wall Street-like financial activities. Using statistical techniques they measure the degree that each causal factor contributes to wage stagnation. For example, do countries with more global trade have more or less inequality? Does having more advanced technology account for declining or increasing worker wages? Do countries with large labor movements have higher wages than those with smaller labor movements?</p><p>The chart below summarizes the ILO's startling results for developed economies. Occupy Wall Street apparently had it right: Financial activities are the dominant cause of rising inequality.</p><p></p><div alt="" class="media-image" height="425" width="556"><img alt="" class="media-image" height="425" width="556" typeof="foaf:Image" src="/files/story_images/underlying_causes_of_wage_stagnation.jpg" /></div><p><strong>The Financial Strip-Mining of America</strong></p><p>William Lazonic's excellent work (see <a href="https://archive.harvardbusiness.org/cla/web/pl/product.seam?c=34792&amp;i=34794&amp;cs=ea368ca3777a1ed5a98b709c7a8bb969">Profits Without Prosperity</a>) provides insight into how Wall Street promotes inequality. It starts with understanding that the dramatic jump in the CEO/worker pay gap coincides with an equally dramatic change in the fundamental structure of the modern corporation.</p><p>Until the 1980s, the basic philosophy of corporate America was "retain and reinvest." Corporate survival and prosperity depended on plowing back most of a corporation's profits into increased worker wages and training, research and development, and new plant and equipment. Banks provided loans for expansion and for mergers, but stringent New Deal regulations kept high finance in check. From WWII until 1980, there was no wage premium to be gained by working on Wall Street, and the wage gap between CEOs and the average worker hovered at about 20 to 1.</p><p>Then came financial deregulation, and Wall Street escaped its New Deal shackles. Almost immediately a new crop of financiers emerged who raised large sums of money to buy up companies. Instead of creating new value <em>within</em> the corporation, the fundamental goal of these corporate raiders (now called private equity and hedge fund managers) was to extract value <em>away</em>from the corporation and into their pockets.</p><p>What they did was nothing short of revolutionary What they did also should have been outlawed. They transformed the corporate ethos of "retain and reinvest" into "downsize and distribute." Here's how it works.</p><p>First they buy up firms using borrowed money and make the acquired corporation pay back the loans. For pulling off the deal, they use some of that borrowed money to pay themselves enormous fees, right off the top. They also provide fat bonuses for the CEOs who are to run the acquired corporation. Most importantly, they change the way top officers are rewarded. From this point on, most of their incomes would derive from stock options. The more the stock price rose, the more the CEOs would pocket.</p><p>As a result, the new incentive would be focused solely on making the firm's stock price climb. Nothing else mattered. How do you do that? You use as much of the profits as possible to buy up your own stocks! And when profits are slim, you borrow more money to buy even more of your own stock. The more you buy, the fewer shares are in circulation, and therefore each share is worth more. The stock price climbs. As the chart below shows, buying back your own stock became the new corporate way of life. (Many thanks to Prof. Lazonic for providing the raw data.)</p><p></p><div alt="" class="media-image" height="362" width="480"><img alt="" class="media-image" height="362" width="480" typeof="foaf:Image" src="/files/styles/large/public/story_images/stock_buy-backs.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Stock Buy Backs as % of Corporate Profits.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Bill Lazonic</div></div></div> </div><p>By 2008-'09 corporate America was, in effect, using 75% of its profits to buy back its own stock. At the same time, loan and after loan was piled onto the corporate books to buy up even more stock. So that after buying the stock and paying off the loans, there was very little profit remaining to reinvest in the company. (The loan payments and fees, of course, went to Wall Street firms.) This is how "retain and invest" devolved into "downsize and distribute."</p><p>To play this game, worker wages, R&amp;D and new plant and equipment are cut to the bone. Older plants are eliminated. Production is outsourced to low-wage areas. Temporary workers replace permanent employees. Benefits like healthcare and pensions are reduced or eliminated. Unions are undermined. And bankruptcy is sometimes used to break contracts to further reduce these costs. The fees for all this "financial engineering" go to Wall Street. The stock-option-loaded CEOs become part of Wall Street—its onsite, wealth extraction overseers. Nearly all corporations whether raided or not, soon followed this lucrative model. Strip-mining the corporation becomes its fundamental activity. Good-bye American Dream.</p><p>The financialization of the modern corporation is the driving force of runaway inequality. Therefore, building a movement to take on Wall Street is necessary even while struggling to raise the minimum wage, fighting for more progressive taxation, restoring union power and calling for free higher education for all. The fact is that runaway wage inequality will be with us indefinitely until we remove Wall Street's tentacles and ethos from the modern corporation.</p><p>To get there, we will need something like an Occupy 2.0. But instead of lasting only six months, it will endure for a generation.</p> Fri, 14 Nov 2014 12:09:00 -0800 Les Leopold, AlterNet 1027155 at http://personal.alternet.org Economy Economy inequality wall street rich poor class gap financialization economy We Are the Most Unequal Society in the Developed World http://personal.alternet.org/labor/we-are-most-unequal-society-developed-world <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">And no clear signs it&#039;s going to get better.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_168261692-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>The American people have spoken. But what did we really say about inequality?</p><p>At first glance, it seems that extreme inequality mattered little to the majority of voters who put pro-business candidates into office. After all, the Republicans, along with far too many Democrats, are certain to cater to their Wall Street/CEO donors. Do Americans really want an ever-rising gap between the super-rich and the rest of us?</p><p>An important study (<a href="http://www.hbs.edu/faculty/Publication%20Files/Kiatpongsan%20Norton%20PPS_dae93595-5382-4ab6-99f7-24329c8c0c33.pdf">"How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay"</a>) by Sorapop Kiatpongsan and Michael I. Norton provides insight on why Americans aren't more upset about rising inequality: It shows we are clueless about how bad it really is. Their analysis of a 2009 international survey of 55,187 people from 40 countries found that when it comes to understanding the severity of inequality, we're the most clueless of all.</p><p>Americans are virtually blind to the growing gap between CEO pay and the pay of the average worker. As the chart below shows that gap has increased dramatically. In 1965, for every dollar earned by the average worker, CEOs earned $20. By 2012, that gap mushroomed to 354 to one.</p><p></p><div alt="" class="media-image" height="296" width="480"><img alt="" class="media-image" height="296" width="480" typeof="foaf:Image" src="/files/styles/large/public/story_images/for_every_dollar.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">For every dollar earned by an average worker, the CEO gets..</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">Source: AFL-CIO, Hargreaves, Mishel &amp; Sabadish</div></div></div> </div><p>But, when asked in the survey, Americans grossly underestimated this gap. Instead of 354 to 1, the Americans in representative survey think it is only 30 to 1. When asked what the ideal pay gap should be, Americans say that a fair gap would be about 7 to 1.</p><p>More amazing still, the survey results, combined for all countries, show that the misperception of inequality doesn't significantly vary by age, gender, income, political leanings or education.</p><p>To see if these finding also hold for the U.S., I waded into the database: Does political affiliation and education impact how the 1,581 Americans in the survey estimated the wage gap? (The data comes from the International Social Survey Programme: Social Inequality IV - ISSP 2009 <a href="http://zacat.gesis.org/webview/index.jsp?object=http://zacat.gesis.org/obj/fStudy/ZA5400">on the website Gesis</a>. )</p><p></p><div alt="" class="media-image" height="197" width="480"><img alt="" class="media-image" height="197" width="480" typeof="foaf:Image" src="/files/styles/large/public/story_images/americans_estimate_what_the_ceo-worker_pay_gap_actually_is.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Americans estimate what the CEO/Worker pay Gap actually is, and what it should be.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">International Social Survey Programme: Social Inequality IV - ISSP 2009 </div></div></div> </div><p>As the chart above shows, "Strong Democrats" estimated that the <em>actual</em> ratio between a CEO of a large corporation and an unskilled factory worker was about 36 to 1. "Strong Republicans" said it was 40 to 1. A difference without a distinction.</p><p>When it comes to offering opinions about what the wage gap <em>should</em>be, the Strong Democrats thought 5 to 1 was about right, while the Strong Republicans thought it should be about 12 to 1. The two political extremes obviously are much closer to each other than to the current reality of 354 to 1.</p><p><strong>Does education make a difference?</strong></p><p>The data also allowed us to compare those who didn't finish high school with those with graduate degrees. Lo and behold both groups again were closer to each other, and again were wildly off the mark. Those who didn't finish school thought the <em>actual</em> gap was 60 to 1 while those with graduate degrees thought it was about 40 to 1.</p><p>Those who didn't complete high school thought the ideal pay gap should be about 5 to 1, while those with graduate degrees offered 12 to 1, ratios were identical to those offered by the Strong Democrats and Republicans.</p><p>When it comes to our ignorance of the pay gap, there are no blue states, no red states—only misinformed states of mind. We're the know-nothings of inequality.</p><p><strong>Why are we so blind to inequality?</strong></p><p>Most of us have no idea that our golden land of opportunity is the runaway leader among developed nations when it comes to inequality (<a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/25/the-pay-gap-between-ceos-and-workers-is-much-worse-than-you-realize/">see chart below</a>). This dubious distinction runs counter to American Dream we've been indoctrinated with since birth. As a result, we reflexively think that America is the epitome of democracy -- the fairest, most just and most upwardly mobile country in history. That makes it hard for us to account for why we are more unequal than all these other countries. So I suspect many of us just tune out the data. It's too jarring to the deep-seated doctrines that comprise our national identity.</p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/story_images/it_pays_to_be_a_ceo.jpg" /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --><div class="field field-name-field-caption field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">It pays to be a CEO in the U.S. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-image-source field-type-text field-label-inline clearfix"><div class="field-label">Photo Credit: </div><div class="field-items"><div class="field-item even">How Much (More) CEOs Make?</div></div></div> </div><p>Our misreading of inequality also may be a legacy of the post-WWII economic boom. During that time, our working class had the highest global standard of living with ever increasing yearly real wages. (<a href="http://www.alternet.org/labor/sneaky-ways-employers-are-stealing-our-wages?paging=off&amp;current_page=1#bookmark">Please see my last post</a>.) In the heat of the Cold War, it was American policy to boost jobs and incomes to make sure our workers and middle class were the envy of the world. If you add in the late New Deal and WWII into the mix, we're looking at more than a half century of rising prosperity for working people. Also during this period income taxes on the wealthy were extremely high, more than 90% on the highest bracket during WWII. As a result the top one percent, while living extremely well, saw their share of total U.S. wealth decline (<a href="http://aaronlayman.com/2014/03/thomas-piketty-emmanuel-saez-consequences-of-wealth-inequality-forces-of-divergence/">see chart below</a>).</p><p></p><div alt="" class="media-image" height="318" width="528"><img alt="" class="media-image" height="318" width="528" typeof="foaf:Image" src="/files/story_images/top_1_percent_wealth_share.jpg" /></div><p>Little wonder, that the massive baby boomer generation grew up both with the idea of relatively equality and the reality of it. Of course, there were wealthy people all over America, but life was getting better and better for the vast majority of Americans.</p><p>We may still be living with this cultural hangover and operating from a societal self-image from yesteryear. We are likely to cling to it for quite awhile, in part, because it's comforting as new economic insecurities take hold. As workers from other nations pass us by, we look in the mirror and still hope we are the fairest of them all.</p><p><strong>Both political parties refuse to address inequality</strong></p><p>Perhaps the biggest reason we are so misinformed stems from the failure of both parties, especially the Democrats, to address rising inequality in a meaningful way. Yes, the Democrats tend to support modest rises in the minimum wage that indeed make a difference to those stuck in the lowest-paying jobs. But they won't go near the revolutionary idea of placing a legal limit on what the CEO/worker pay gap should be -- let's say at 12 to 1 which the Strong Republicans and the well-educated favor. The reason is obvious: Politicians live in fear of a different revolution -- a massive revolt from their corporate donors, who wouldn't dream of earning so little. In fact, the entire elite establishment -- in finance, in the corporate world, in the higher levels of government, academia and the media have no intention of limiting their incomes, no matter what the public believes to be just and fair. Here lies the very essence of class struggle between the 99 percent and 1 percent, and both parties want no part of it.</p><p><strong>What will it take to wake us up to inequality?</strong></p><p>The good news is that Americans of all genders, shades, incomes, education and politics think on average that the wage gap should be about 7 to 1, not 354 to one. That's a heck of a good place to start. Imagine if the only real economic debate was between the strong Democrats who thought a fair wage gap should be 5 to 1 versus the strong Republicans who thought it should be 12 to 1. Progressives should be able to build upon this shared sense of basic fairness, one that is miles apart from what elites expect and feel is their due.</p><p>For about six months Occupy Wall Street touched this nerve and put inequality on the agenda. "We are the 99 percent" became our national anthem. For the first time in a generation the country was talking about the gap between super-rich financiers and the rest of us.</p><p>Roughly at the same time, the Tea Party emerged with a different message. They also sensed that something was profoundly wrong. For them the problem is government. They're not concerned with inequality. If they see it at all, they follow Ayn Rand and blame it on those at the bottom for not working hard enough. They, and their political allies, revel in talk about "takers and makers" to explain away the growing and glaring economic disparities.</p><p>Occupy disappeared. (Yes, they are still doing good work here and there.) We no longer have 900 encampments around the world to remind everyone that inequality is our new way of life. But something still is stirring at the bottom. Minimum wage campaigns are succeeding even in Red states. The quest for $15 per hour pay for low-wage workers is growing. And most importantly, each day millions more face the stark reality of trying to lead a decent life on low-pay and porous benefits with blatant inequality all around.</p><p>Elites and their academic acolytes will counter by blaming inequality on advanced technology and the lack of education. The poor can make it if only more elite colleges admitted them, if only charter schools replaced tenure-saddled public schools, if only the teachers unions disappeared. Only then will inequality be reduced as those at bottom get more degrees and advanced skills.</p><p>To be sure, the "help-thyself" message has resonance, and access to more education will certainly help. But it leaves in place the powerful structures of elite economic domination. It will take a different kind of education to reduce the wage gap. We will need to learn the skills of building a mass movement, that starts by providing education on the realities of growing inequality. Only then can we can break through the faulty self-image of America that is crippling us. Spreading the word can really make a real difference. It's something we all can do.</p><p>We are the most unequal society in the developed world, and it doesn't have to be that way.</p> Mon, 10 Nov 2014 07:10:00 -0800 Les Leopold, AlterNet 1026635 at http://personal.alternet.org Labor Economy Labor inequality income ceos pay gap workers wage wealthy rich poor The Sneaky Ways Employers Are Stealing Our Wages http://personal.alternet.org/labor/sneaky-ways-employers-are-stealing-our-wages <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">And much of it is legal. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_76996033-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>In Denmark, fast food workers make <a href="http://www.nytimes.com/2014/10/28/business/international/living-wages-served-in-denmark-fast-food-restaurants.html?_r=0">$20 an hour</a> plus benefits, and the corporations that employ them are still profitable. Why there and not here?</p><p>The answer is simple and painful: wage theft. In America, corporations are systematically stealing our wages. Virtually everyone in the bottom 95% of the income distribution now suffers from wage theft, including you!</p><p>It starts at the bottom. Many undocumented immigrant day labors survive by standing on street corners and selling their labor to drive-by construction and landscaping contractors. Unfortunately, far too many contractors refuse to pay after the work is done. And this is something nearly every day-laborer experiences.</p><p>What can undocumented workers do about it? For most, not much. If they report the theft, they run the <a>risk of being reported</a> to U.S. Immigrations and Customs Enforcement. Instead, most just go back to their corners hoping to find more scrupulous contractors. Or, if they are lucky enough to be affiliated with an immigrant worker center like the <a href="http://www.nytimes.com/2014/10/13/nyregion/giving-a-voice-and-fair-wages-to-an-invisible-work-force.html">Workers Justice Project</a> in Brooklyn, NY, they find jobs through its hiring hall where contractors agree to pay decent wages and provide safer working conditions.</p><p>Next come the fast-food workers who work overtime, but rarely see the time-and-a-half to which they are entitled by law. Franchise managers at McDonald, Burger King, Pizza Hut, Wendy's and the like steal those hours by fiddling with the logs. You don't like it? Leave. But if you're lucky enough to be part of the <a href="http://strikefastfood.org/">Fast Food Forward campaign</a>, the threat of protest and legal action might force the employer to pay up. Try stealing OT in Denmark and the union would shut down the entire chain.</p><p>Move up the food chain a bit and you'll find the Amazon worker who must line up for 25 minutes to pass through "egress security"—screeners to stop pilfering. Amazon says this is not "integral and indispensible" to the job, and therefore, it is lawful not to pay for the time. The Supreme Court will soon decide whether efforts to halt merchandise theft will become legalized wage theft.</p><p><strong>Grand Larceny?</strong></p><p>The research report <a href="http://www.nelp.org/page/-/brokenlaws/BrokenLawsReport2009.pdf?nocdn=1">Broken Laws, Unprotected Workers</a> estimates the scale and scope of low-wage theft in New York, Chicago and Los Angeles. The authors write:</p><blockquote><p>"The average worker lost $51, out of average weekly earnings of $339. Assuming a full-time, full-year work schedule, we estimate that these workers lost an average of $2,634 annually due to workplace violations, out of total earnings of $17,616. That translates into wage theft of 15 percent of earnings.</p><p>"The Economics Policy Institute (EPI) uses those numbers to provide a <a href="http://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/#_ref1">national estimate</a>:</p><p>"The total annual wage theft from front-line workers in low-wage industries in the three cities approached $3 billion. If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year."</p></blockquote><p>How much is $50 billion in wage theft? It's almost four times greater than the $13.6 billion <a href="http://www.fbi.gov/about-us/cjis/ucr/crime-in-the-u.s/2012/crime-in-the-u.s.-2012">reported by the FBI</a> for the total costs of all stolen cars, other larcenies, burglaries and robberies in 2012. Fifty billion a year is enough to cover the wage bill for over 1.2 million jobs that pay $20 an hour.</p><p><strong>Not me?</strong></p><p>You may be thinking "Thank god I'm not a low-wage worker. Nobody's stealing my pay." Or are they?</p><p>The only difference between the rest of us and a day-laborer is that our employers have developed ways to fleece us legally. And we're not talking about a few dollars here and there. Nearly half of our wages have been misappropriated. Enter Exhibit #1: The Productivity/Wage Gap.</p><p>This hidden larceny takes a little explaining. Productivity, a word near and dear to every manager's heart, measures how much we produce per hour of labor. For an entire economy, it gauges our total level of knowledge, skill, technology and organization. It's also the key to the wealth of nations. The more goods and services produced per hour, the higher the standard of living. Of course this crude measure has trouble accounting for a sustainable environment or health or well-being. But usually, those countries with the highest levels of productivity have the greatest ability to protect the public's health and the environment.</p><p>As the chart below shows, productivity in the U.S. economy has risen steadily since WWII, climbing in 65 of the last 70 years. For generations, as productivity increased so did real wages (how much we earn after factoring out increases is the cost of living.) From WWII until the mid-1970s, productivity and wages were virtually inseparable. As productivity increased, so did wages. When I was in graduate school in the early '70s, they taught us that entwinement was an economic law --- the two lines had to rise together because when they separated, market forces would pull them back together. By about 1980, this iron law was repealed. Wages stalled while productivity continued to climb.</p><p></p><div alt="" class="media-image" height="333" width="480"><img alt="" class="media-image" height="333" width="480" typeof="foaf:Image" src="/files/styles/large/public/screen_shot_2014-11-04_at_11.54.10_am.png" /></div><p>Let's be clear: When productivity rises, wages can increase without harming profits. For nearly a quarter of a century after WWII, about two-thirds of the productivity gains went to wages, while the rest went to profits, research and development, and the replacement of plant and equipment. Now corporate elites are squeezing revenues to reward themselves. Plant, equipment, research and workers must make do with less.</p><p>Since the late 1970s, the average real wage for most of us has stalled. Had we continued to get our fair share of productivity, our wages would be double our current pay. Think about how you'd be living with twice your current wages (like a Dane!)</p><p>What happened? Where did all that productivity money go? It all comes back to Wall Street. Financial interests were deregulated so they could better manipulate the economy. Laws and regulations were changed. Financial maneuvers that once would have landed financiers in jail, now land them in penthouses.</p><p>As the rules of the game changed, financiers began to siphon wealth away from corporations, from our pockets to theirs. This chart shows how much the average top CEO makes for every one dollar earned by the average worker. Where did our productivity money go? They took it.</p><p></p><div alt="" class="media-image" height="355" width="480"><img alt="" class="media-image" height="355" width="480" typeof="foaf:Image" src="/files/styles/large/public/screen_shot_2014-11-04_at_11.54.30_am.png" /></div><p>Here's one more chart that tells the story. It compares financial incomes to non-financial incomes. Until 1980 or so there was no premium for working on Wall Street. Now the average earnings are twice as high. That's your money.</p><p></p><div alt="" class="media-image" height="436" width="480"><img alt="" class="media-image" height="436" width="480" typeof="foaf:Image" src="/files/styles/large/public/screen_shot_2014-11-04_at_11.54.41_am.png" /></div><p><strong>Is It Really Theft?</strong></p><p>Theft is <a href="http://dictionary.reference.com/browse/theft">defined</a> as "the act of stealing; the wrongful taking and carrying away of the personal goods or property of another; larceny."</p><p>Even if it's legal, in my book, it's the very definition of "wrongful taking." Just about everything that's wrong with our economy stems from this productivity/wage theft. As economic elites siphoned away our wages, they turned the economy into a casino that crashed in 2008. The Great American Dream that so mesmerized working people around the globe, is no more. And it will never return until we realize that our new financialized economy is now constructed upon "wrongful taking."</p> Mon, 03 Nov 2014 12:14:00 -0800 Les Leopold, AlterNet 1025727 at http://personal.alternet.org Labor Corporate Accountability and WorkPlace Labor wage theft fleecing corporations employees wages Shocking Report Explodes 5 Myths About American Education http://personal.alternet.org/education/shocking-report-explodes-5-myths-about-american-education-0 <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">We&#039;re number one? Hardly. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_141409255-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>A <a>recent international report </a>demolishes several deeply held myths about our educational system. The Organization for Economic Cooperation and Development (OECD) report, which compares the educational systems of over 30 developed nations, provides data that proves that, when it comes to education, we’re so far from being number one that the entire idea of American exceptionalism should be called into question. Rather than thumping our chests, we should be going to school on how other developed nations, especially those in Europe, invest in education. However, we have little chance of learning until we break through the mythology that blinds us to our decline.</p><p><strong>Myth #1: Our educational system provides more upward mobility than any other in the world.</strong></p><p>It’s practically a sacred oath to proclaim that we lead the world in upward mobility. America, we are told ad nauseum, is the best place on Earth for a poor person to improve his or her station in life. You might struggle for one generation or so, but your kids can make it up the ladder faster here than any place else. And the reason, of course, is because we provide the best educational opportunities for all young people, rich and poor.</p><p>Not true, says the OECD report. “The odds that a young person in the U.S. will be in higher education if his or her parents do not have an upper secondary education are just 29 percent -- one of the lowest levels among OECD countries.”</p><p>Just how low is our ranking? Of the 28 countries listed, we’re third from the bottom.</p><p><strong>Myth #2:</strong> <strong>Our teachers (protected by their greedy unions) work less and get paid more.</strong></p><p>It’s open season on public employees, especially teachers and their unions. They get paid too much. Their benefits are too high. They get tenure while the rest of us fear layoffs. And they’re a bunch of lazy louts that get the entire summer off! If there’s educational decline, then teachers must be the cause. Right?</p><p>Wrong! says the OECD report, especially when it comes to hours worked: “Teachers in the U.S. spend between 1050 and 1100 hours a year teaching – much more than in almost every country.” Of the 38 countries surveyed only two countries had teachers who worked more hours – Argentina and Chile. And when it comes to the hours worked per years by our primary school teachers, we’re number one!</p><p>But surely, aren’t these unionized teachers making too much money? Not according to the OECD report: “Despite high overall levels of spending on education, teacher salaries in the U.S. compare poorly. While in most OECD countries teacher salaries tend be lower, on average, than the salaries earned by other workers with higher education, in the U.S. the difference is large, especially for teachers with minimum qualifications.”</p><p><strong>Myth #3: Big government (via our tax dollars) funds higher education.</strong></p><p>In state after state politicians are taking an ax to higher education budgets. As we plow more money into our prison system, we no longer can afford our lavish public colleges and universities, or so we are told. (See “<a href="http://www.alternet.org/education/crazy-country-6-reasons-america-spends-more-prisons-higher-education?paging=off">Crazy Country: 6 Reasons America Spends More on Prisons Than On Higher Education</a>”). But overall, don’t we still lead the world in big government support for higher education?</p><p id="bookmark">Well, we almost lead the world in overall spending on higher education, both in absolute dollars and as a percent of GDP. Unfortunately, we place more of the burden on students and their families than just about any other developed nation: “In the U.S., 38 percent of higher education expenditures come from public sources, and 62 percent are from private sources. Across all OECD countries, 70 percent of expenditures on higher education come from public sources, and 30 percent are from private sources.” Little wonder we have a trillion dollar student loan industry that serves as an ever-present lobby to make sure the debt burden remains students and their families.</p><p><strong>Myth #4: We provide excellent early childhood education.</strong></p><p>Worried about creeping socialism? Look no further than Head Start and other pre-school programs we throw money at. Isn’t this where the Nanny State begins?</p><p>Blinded by anti-government ideology, we fail to notice that the rest of the world invests much more in their young people, especially the very young: “On average across OECD countries, 84 percent of pupils in early childhood education attend programmes in public schools or government-dependent private institutions, while in the U.S., 55 percent of early childhood pupils attend programmes in public schools, and 45 percent attend independent private programmes. In the U.S. the typical starting age for early childhood education is 4 years old, while in 21 other OECD countries, it is 3 years old or younger.”</p><p>Even more telling is the fact that we tend <em>not</em>to employ professional educators for our very young. As the report delicately puts it: “In addition, education-only early childhood programmes in other countries are usually delivered by a qualified teacher and have a formal curriculum, while in the U.S., the situation can vary.” Vary indeed.</p><p>So where are we ranked?</p><ul><li>3-year-olds (in early childhood education): 25th of 36 countries</li><li>4-year-olds (in early childhood education and primary education): 28th of 38 countries</li><li>5- to 14-year-olds (all levels): 29th of 39 countries</li></ul><p><strong>Myth #5: We have the highest percentage of college grads in the world.</strong></p><p>OK, we may have some issues with early childhood education, who pays for college, upward mobility and public support for higher education. But, as the politicians tell us, we are going to win the global competition for knowledge-based industries and jobs, precisely because we have the best universities and the most college graduates.</p><p>While it’s difficult to compare global colleges and universities (and while I’m certain that we do have some of the very best elite institutions), it is possible to compare the number college graduates among developed nations. Again, we suffer by the comparison: “The U.S. ranks 14th in the world in the percentage of 25-34 year-olds with higher education (42 percent).” Those are our young people. That’s our future. And the richest country on Earth can’t even win the competition for the highest percentage of college graduates?</p><p><strong>So aren’t we number one in something?</strong></p><p>Yes, we are and it’s revealing. We’re number one in 55- to 64-year-olds who finished high school. We boomers actually went to school – 90 percent of us finished high school while the OECD average is 65 percent.</p><p>That statistic takes us right to the heart of this story – how during the post-WWII era the United States invested in its people. The GI Bill of Rights provided free higher education to more than 3 million returning GIs. Enormous investments in education helped us catch up with Sputnik and win the race to the moon. The super-rich faced high tax rates so that we could pay for education, a national highway system, and the defense budget. Unions were supported by the federal government and moved wages up across the board. And the burgeoning civil rights movement began to bring the promise of America to African Americans. The middle class was rising. We went to school. And we created the fairest income distribution in our history.</p><p>Then, we tossed it away as we forgot the lessons of the Great Depression and our collective response during WWII. We deregulated the rich and they tore our country apart.</p><p>You see, none of these myths apply to the wealthy. Their kids get plenty of early childhood education. Their kids don’t attend run-down schools. Their kids don’t run up debts in order to go to college. In fact, our elites are positioned perfectly to thrive in a global economy. They can attack public schools, teachers unions, big government and not suffer the consequences. Frankly they don’t give a damn about our international rankings. The rich are quite happy for the rest of us to swallow the myth of American exceptionalism, even when reality shows how exceptionally bad we are at providing decent education for all of our people.</p> Tue, 30 Sep 2014 06:16:00 -0700 Les Leopold, AlterNet 1021301 at http://personal.alternet.org Education Education education The Hedge Fund That Ate Chicago http://personal.alternet.org/economy/meet-hedge-fund-ate-chicago <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A political fight in Chicago could determine the future of pensions and public services.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2014-04-24_at_4.14.12_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr">There's a battle royale raging in Chicago. It pits hedge funds, the Chicago financial exchanges, real estate interests and Mayor Rahm Emanuel on the one side, against public employee unions and community groups on the other.</p><p>At issue is whether public employee pension benefits should be slashed. <a href="http://www.chicagobusiness.com/assets/interactive/otherFiles/PensionReform.pdf">Mayor Emanuel claims</a> that, "If we make no reforms at all across our pension funds, we would have to raise City property taxes by 150%.... Businesses and families would flee, not just from our city but from our state." By 2017, <a href="http://www.cityofchicago.org/city/en/depts/mayor/iframe/just_the_facts.html">he claims</a> the city will have to pay $2.4 billion a year into the pension fund.  </p><p dir="ltr">The public employee unions and community activists contend that city's fiscal problems could be solved easily through a small sales tax on financial trades on the Chicago Mercantile Exchange and the Chicago Board Options Exchange.</p><p dir="ltr">The outcome may determine the health and well-being of pension funds as well as public services all across the country.    </p><p dir="ltr"><strong>Wall Street buys a Mayor?</strong></p><p dir="ltr">When Rahm Emanuel worked as a presidential assistant in the Clinton administration, he earned $118,000 a year. After he left his White House job in 1998, he got a raise, making  over <a href="http://www.nytimes.com/2008/12/04/us/politics/04emanuel.html?pagewanted=all&amp;_r=0">$18 million</a>in the next two and a half years working for the "boutique" investment banking firm of Wasserstein Perella. Emanuel had no previous banking experience.</p><p dir="ltr">Ken Griffin, the CEO of the Chicago-based Citadel hedge fund and "his wife Anne Dias Griffin, donated more than <a href="http://www.elections.il.gov/CampaignDisclosure/ContributionsSearchByCandidates.aspx?ddlCanSearchContributionType=All+Types&amp;ddlCanSearchLastOnlyNameSearchType=Starts+with&amp;txtCanSearchLastOnlyName=Griffin&amp;ddlCanSearchFirstNameSearchType=Starts+with&amp;txtCanSearchFirstName=&amp;ddlCanSearchAddressSearchType=Starts+with&amp;txtCanSearchAddress=&amp;ddlCanSearchCitySearchType=Starts+with&amp;txtCanSearchCity=&amp;ddlState=&amp;txtCanSearchZip=&amp;txtCanSearchZipThru=&amp;ddlCanSearchOccupationSearchType=Starts+with&amp;txtCanSearchOccupation=&amp;ddlCanSearchEmployerSearchType=Starts+with&amp;txtCanSearchEmployer=&amp;txtCanSearchAmount=&amp;txtCanSearchAmountThru=&amp;txtCanSearchRcvDate=&amp;txtCanSearchRcvDateThru=&amp;ddlCanSearchOrderBy=Last+or+Only+Name+-+A+to+Z&amp;txtCanElectYear=&amp;ddlCanElectType=All+Types&amp;ddlCanLastNameSearchType=Starts+with&amp;txtCanLastName=Emanuel&amp;ddlCanFirstNameSearchType=Starts+with&amp;txtCanFirstName=&amp;ddlCanOffice=All+Offices&amp;ddlCanDistrictType=All+Types&amp;txtCanDistrict=&amp;ddlCanParty=All+Parties&amp;ddlVendorLastOnlyName=Starts+with&amp;txt">$200,000</a> to Mayor Emanuel’s campaign for Mayor in 2011," <a href="http://pando.com/2014/04/08/revealed-rahm-emanuels-top-donor-bought-stock-in-marriott-just-before-it-was-awarded-huge-chicago-contract/">report David Sirota and Ben Joravsky</a> in Pandodaily. "Griffin describes the mayor as his <a href="http://www.chicagobusiness.com/article/20130521/NEWS01/130529966/citadels-griffin-jabs-at-emanuel-democrats-over-fiscal-economic-woes">'good friend'.</a> Other Citadel employees have donated about <a href="http://www.elections.il.gov/CampaignDisclosure/ContributionsSearchByCandidates.aspx?ddlCanSearchContributionType=All+Types&amp;ddlCanSearchLastOnlyNameSearchType=Starts+with&amp;txtCanSearchLastOnlyName=&amp;ddlCanSearchFirstNameSearchType=Starts+with&amp;txtCanSearchFirstName=&amp;ddlCanSearchAddressSearchType=Starts+with&amp;txtCanSearchAddress=&amp;ddlCanSearchCitySearchType=Starts+with&amp;txtCanSearchCity=&amp;ddlState=&amp;txtCanSearchZip=&amp;txtCanSearchZipThru=&amp;ddlCanSearchOccupationSearchType=Starts+with&amp;txtCanSearchOccupation=&amp;ddlCanSearchEmployerSearchType=Starts+with&amp;txtCanSearchEmployer=Citadel&amp;txtCanSearchAmount=&amp;txtCanSearchAmountThru=&amp;txtCanSearchRcvDate=&amp;txtCanSearchRcvDateThru=&amp;ddlCanSearchOrderBy=Last+or+Only+Name+-+A+to+Z&amp;txtCanElectYear=&amp;ddlCanElectType=All+Types&amp;ddlCanLastNameSearchType=Starts+with&amp;txtCanLastName=Emanuel&amp;ddlCanFirstNameSearchType=Starts+with&amp;txtCanFirstName=&amp;ddlCanOffice=All+Offices&amp;ddlCanDistrictType=All+Types&amp;txtCanDistrict=&amp;ddlCanParty=All+Parties&amp;ddlVendorLastOnlyName=Starts+with&amp;txt">$178,000</a> to Emanuel’s campaign."</p><p>The 45-year-old Griffin's <a href="http://www.forbes.com/pictures/mdg45eejfh/7-ken-griffin/">income for 2013</a> was $900 million (or about $492,632 an hour).</p><p dir="ltr">Apparently a good deal of his income comes from high-frequency trading (see my <a href="http://www.csrwire.com/blog/posts/856-how-to-make-a-million-dollars-an-hour-step-9-bet-on-the-race-after-you-know-who-wins">summary</a>) that runs through the two Chicago financial exchanges. "His Citadel LLC returned more than 300 percent in a fund started as a high-frequency strategy," <a href="http://www.bloomberg.com/news/2014-04-11/citadel-fund-said-to-quadruple-with-high-frequency-trades.html">according to Bloomberg News.</a></p><p dir="ltr">Griffin, alone, could fund all of Chicago's pension liabilities for the current year <a href="http://www.cityofchicago.org/city/en/depts/mayor/iframe/just_the_facts.html">(estimated at $692 million</a>) and still have $208 million left to scrap by on. Yet Griffin is terribly worried that the mayor is being too soft on retirees. He "castigated Chicago and Illinois politicians for not making 'tough choices,' blaming Democrats who control city, county and state government for not fixing pension, education and crime problems," <a href="http://www.chicagobusiness.com/article/20130521/NEWS01/130529966/citadels-griffin-jabs-at-emanuel-democrats-over-fiscal-economic-woes">reports Crain's</a>.</p><p dir="ltr"><strong>Mayor's Payback?</strong></p><p dir="ltr">"On <a href="http://www.cityofchicago.org/content/dam/city/depts/mayor/Press%20Room/Press%20Releases/2014/March/03.05.14APPlanddev.pdf">March 5</a>," report Sirota and Joravsky, "Chicago’s city council overwhelmingly voted to approve Mayor Rahm Emanuel’s proposal to divert $55 million of taxpayer resources into a new privately run hotel in the city’s <a href="http://en.wikipedia.org/wiki/Chicago_Loop#South_Loop">south loop</a>." The Marriot was selected to run "one of America’s <a href="http://en.wikipedia.org/wiki/List_of_largest_hotels_in_the_world">largest</a> hotels next to America’s <a href="http://www.mccormickplace.com/facility-overview/facility.php">largest</a> convention center—and doing so with massive taxpayer subsidies, but without having to pay to construct the hotel and without having to pay property taxes."</p><p dir="ltr">As luck would have it, Griffin is likely to make a great deal of money on this deal: "In the months before the development deal was announced, Griffin’s hedge fund was buying up large blocs of Marriott stock." What a coincidence!</p><p dir="ltr"><strong>Why Does a Millionaire Mayor and a Billionaire Hedge Fund CEO Team Up to Attack Public Pensions?</strong></p><p dir="ltr">Because that's where the money is, and lots of it. Mayors and governors want to reduce pension fund contributions so that they can continue to lavish tax breaks and subsidies on their corporate patrons and still balance their budgets. In Chicago, the yearly cost of those corporate tax subsidies is already higher than the yearly costs of Chicago's pension fund outlays, <a href="http://www.goodjobsfirst.org/sites/default/files/docs/pdf/chicago_pensions_0.pdf">according to an analysis by Goods Jobs First</a>.  </p><p dir="ltr">Hedge funds and other financial firms join the attack, and perhaps instigate it in the first place, because they want the lucrative business of advising and investing all those pension dollars. In New Jersey, Governor Christie's administration <a href="http://pando.com/2014/04/18/chris-christies-300m-pension-proposal-broke-state-anti-corruption-laws-and-now-the-intended-recipient-threatens-to-sue-pando/">awarded a $300 million pension management contract to a controversial hedge fund that</a>also is major contributor to Christie's re-election campaign.</p><p dir="ltr">The Wall Street-trained treasurer of Rhode Island, Gina Raimondo, rammed through severe cuts to public pension funds, while her hedge fund allies lined up at the trough. As <a href="http://www.rollingstone.com/politics/news/looting-the-pension-funds-20130926#ixzz2zdi8fHY1">Matt Taibbi reports</a>, Rhode Island's "strategy for saving money involved handing more than $1 billion—14 percent of the state fund—to hedge funds, including a trio of well-known New York-based funds: Dan Loeb's Third Point Capital was given $66 million, Ken Garschina's Mason Capital got $64 million and $70 million went to Paul Singer's Elliott Management." </p><p dir="ltr">The amazing irony is there would be no talk of a pension "crisis" at all were it not for the fact that Wall Street crashed the economy. The hedge funds that covet pension fund reform and pension fund contracts were full partners in the reckless gambling spree that took down the economy and destroyed 8 million jobs in a matter of months. As economist <a href="http://www.cepr.net/documents/publications/pensions-2011-02.pdf">Dean Baker shows</a>  the pension shortfall is primarily the result of the 2007-'08 crash in the financial markets. "If pension funds had earned returns just equal to the interest rate on 30-year Treasury bonds in the three years since 2007, their assets would be more than $850 billion greater than they are today."</p><p dir="ltr">The lesson learned should be this: If you use hedge funds to run your pension funds, you'll get fleeced come the next crisis.</p><p dir="ltr"><strong>Why Are the Financialists Getting Away With It?</strong></p><p dir="ltr">Rahm Emanuel, Chris Christie and hundreds of other politicians are able to attack public pension funds with impunity because defined benefit pensions in the private sector are an endangered species. One demagogic question is all they need to ask and they ask it again and again:  </p><p dir="ltr">"Why should you pay taxes for public employee benefits that you don't have?"</p><p dir="ltr">Such an attack only works because Wall Street already has systematically destroyed private sector defined benefit pension funds—which are funds that provide retirees with a set payment for life (and sometimes beyond for spouses). Employers can reduce their costs by switching from defined benefit pensions to defined contribution 401ks. Better yet they might be able to eliminate the employer contributions altogether. Employees usually benefit more from defined benefit pensions and are very reluctant to see them altered. (For more about defined pension funds see <a href="http://www.ctunet.com/legislative/protect-our-pensions/questions-answers-about-the-chicago-teachers-pension-fund">here</a>.)  </p><p dir="ltr">As the chart below demonstrates less than 15 percent of private sector employees now have defined benefit pension programs, down from nearly 40% in 1979. Meanwhile, 401ks have grown from 16% to over 42%. This didn't happen by accident.</p><p dir="ltr"></p><p><strong>Wall Street Strip-Mines Private Pension Funds</strong></p><p dir="ltr">Defined pension funds are disappearing for two overlapping reasons. The first is that unions, the main driver of defined-benefit pensions, are in decline. Today, union's represent less than 7 percent of the private sector workforce, down from 35% in 1955. But that's only part of the story.</p><p dir="ltr">The most crucial cause is the deregulation of the financial sector which started in the late 1970s. Once freed from their New Deal shackles, corporate raiders (now called private equity firms, hedge funds and investment firms) strip-mined thousands of corporations using borrowed money. Those debts were (and still are) placed on the books of the target company and its cash flow is used to pay the interest on the debts as well as pay huge sums to the raiders, their investment advisors, their bankers, and the compliant top managers of the target company.</p><p dir="ltr">How does the target firm pay for all these new costs? The raiders, of course, claim that through their own entrepreneurial genius, they "unlock" hidden value. In reality, they milk the company in every way imaginable. They sell off product lines, shut down facilities, move work off-shore, slash R&amp;D, and raid the pension fund, claiming it was "overfunded." Often the target company also tries to discontinue the pensions entirely or shift to 401ks forcing the employees to kick in most of the money. Many corporations become so loaded up with debt that they go into bankruptcy, through which they can further whittle away employee benefits and reduce or discontinue pensions.</p><p dir="ltr">As the financial strip-mining proceeds through thousands upon thousands of corporations, the average worker loses his or her benefits, and the financial strip-miners become filthy rich. As the chart below shows, in 1970 the top 100 CEO earned $45 for each $1 earned by the average worker. By 2006, the ratio jumped to 1,723 to one.</p><p dir="ltr"></p><p dir="ltr"><strong>A Tax on Financial Strip Mining?</strong></p><p dir="ltr">The financial transaction tax (sometimes called a financial speculation tax or Robin Hood Tax) is designed to retrieve some of the money that is being siphoned away from our wages, benefits and tax dollars. Because the super-rich, their hedge funds and their corporations have a myriad of ways to avoid income taxes, especially by shifting money offshore, the financial transaction tax hits them where they live—buying and selling financial assets on the markets, especially on the Chicago exchanges where derivatives and futures contracts are sold.</p><p dir="ltr">It is estimated that a minuscule tax ($1 dollar on both the buyer and on the seller of future contracts, and $2 on derivatives contracts) would generate $12 billion a year for Illinois. That would be $9.6 billion more than $2.4 billion pension shortfall Mayor <a href="http://www.cityofchicago.org/city/en/depts/mayor/iframe/just_the_facts.html">Emanuel claims</a> Chicago will face in 2017. That still leaves more than enough money to dramatically improve education and even make higher education tuition free in Illinois (thereby cutting into Wall Street's predatory student loan business).</p><p>While such a tax could easily fulfill the promises made to public employees, it might also be prudent and just to use some of the financial tax to create a statewide defined benefit pension fund for private sector as well as public employees. That should put an end to the divide-and-conquer tactics opportunistic politicians and their hedge fund cronies use to enrich themselves and their political ambitions.</p><p dir="ltr">Can the financial transaction tax become reality?</p><p dir="ltr">Let's take heart from what Rahm Emanuel <a href="http://online.wsj.com/news/articles/SB122721278056345271">infamously said</a> when serving as President Obama's chief of staff at the height of the financial crisis:</p><p>"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before."</p> Wed, 23 Apr 2014 16:58:00 -0700 Les Leopold, AlterNet 985307 at http://personal.alternet.org Economy Economy hedge fund How Wall Street Is Sucking Huge Amounts of Money from Los Angeles http://personal.alternet.org/economy/new-report-reveals-how-wall-street-impoverishes-los-angeles <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Finance industry rakes it in from dubious fees.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2014-03-26_at_3.55.20_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">Los Angeles paid at least $204 million in fees to Wall Street in 2013, and probably significantly more, in addition to principle and interest payments, according to the report, <a href="http://d3n8a8pro7vhmx.cloudfront.net/seiu721/pages/1/attachments/original/1395715866/No_Small_Fees_A_Report_by_the_Fix_LA_Coalition.pdf?1395715866">"No Small Fees: LA Spends More on Wall Street than Our Streets</a>." The study, issued today by a coalition of unions and community organizations, shows that due to revenue losses from the “Great Recession,” L.A. "all but stopped repairing sidewalks, clearing alleys and installing speed bumps. It stopped inspecting sewers, resulting in twice the number of sewer overflows." L.A. spends at least $51 million more in Wall Street in fees than it allocates for its entire budget for the Bureau of Street Services.</p><p dir="ltr">The researchers caution that the $204 million figure likely underestimates the true amount, because under current disclosure rules, deals made with private equity companies and hedge funds do not have to be publically disclosed. Also, because the city does not list all these fees in one centralized report, hundreds of individual documents must be reviewed to uncover the amounts. As one of the report's researchers stated,</p><blockquote><p>"This is the first time an accounting of fees has been exposed for a specific public entity, and we don't think we have captured it all. So if you do this for every public entity, cities, counties, school districts, states, and universities, transportation agencies and other public entities we could be looking at an astounding amount of money for education and community services money sucked out of the system."</p></blockquote><p dir="ltr">Astounding indeed. My back of the envelope estimate, extrapolating the L.A. experience to the economy as a whole, suggests that the fees Wall Street extracts from public entities could total more than $50 billion a year — enough to provide free tuition at every public college and university in the country.</p><p dir="ltr">The coalition offers the following pragmatic reforms that could be implemented quickly.</p><ul><li dir="ltr"><p dir="ltr"><strong>Provide Full Transparency</strong>: Each year, Los Angeles, not this grassroots research coalition, should tally up and publish in one report all the fees it pays to financial firms.</p></li></ul><ul><li dir="ltr"><p dir="ltr"><strong>Bargain</strong>: The city has over $100 billion in cash, liquid assets and debts held with financial companies. That gives Los Angeles enormous leverage to bargain for lower fees. Unless there is illegal collusion among these private financial institutions (which is possible), competition for L.A.'s $100 billion should drive fees down.</p></li></ul><ul><li dir="ltr"><p dir="ltr"><strong>Sue Negligent Financial Firms</strong>: Los Angeles, like hundreds of other state and local governments, bought interest rate swaps (don't ask) from Wall Street before 2008 to lower its interest rate payments on public debt. But after Wall Street gambled our economy into the ground, interest rates collapsed and these swaps turned into bad bets for cities like Los Angeles, and low and behold, big winners for Wall Street. More amazing still, these same contracts were pegged to the LIBOR interest rate benchmark, which we now know was illegally manipulated by the biggest global banks. So Los Angeles also has grounds to sue financial institutions for peddling predatory swaps in the first place and for manipulating the LIBOR rates. Simple justice demands that Wall Street not be permitted to profit as a result of an economic crash it caused, and as a result of illegal rate rigging.</p></li></ul><p dir="ltr"><strong>Wall Street's Catch-22</strong></p><p dir="ltr">The report prompts us to ask why cities and states go to Wall Street for financing in the first place. The answer is circular. They need to raise private capital through Wall Street because state and local tax bases are increasingly constrained. Those constraints, however, are the direct result of the financialization of the economy. In effect, Wall Street creates the economic conditions that force cities and states to become their prey. Here are a few of the ways financialization undermines the tax base. (Unless otherwise noted, the data below comes from my research, not the report's.)</p><p><strong>1. Stagnating worker wages/de-industrialization puts downward pressure on tax revenues</strong>: Worker wages have stagnated for more than a generation (see chart below). That stagnation is the direct result of the deregulation of Wall Street starting in 1980. From that point on, financial firms found ways to extract enormous sums from the private sector through leveraged buy-outs and other devices that placed large debts on tens of thousands of American industries. To pay back all those loans, corporations switched their policies from "invest and retain" to "downsize and distribute." Worker wages, pensions and other benefits were attacked with a vengeance.</p><p dir="ltr"><strong>2. Wall Street incomes soar, but are sheltered from taxes</strong>: We all know that the super-rich have gotten richer as worker incomes have stalled. At the same time, the growing incomes of the super-rich are sheltered through tax loopholes and <a href="http://www.icij.org/offshore">offshore accounts</a>, arranged of course, through Wall Street. Hence they can avoid most state and local taxes. It is estimated that the U.S. treasury loses more than $150 billion a year in taxes due to incomes sheltered offshore.</p><p dir="ltr"><strong>3. Tax revenues shift from corporations to individuals</strong>: The more corporations are loaded up with debt, the less tax they pay because the interest payments are deductible. The net effect is that corporate taxes go down while individual taxes go up. But since the super-rich can shelter their incomes, the burden falls on the middle class and the poor.</p><br /><p><img src="https://lh6.googleusercontent.com/Psy3sYRnxwEmGfNsTPwtFPgr8v3l7wv1Fs3qcUGtxsShODFMolSCM30scBuBKzyAO_LrLfqxoX0IkCeW7ZXJ_fqcsoIjgmS1f1162sDM00by1tBbkHWs19CdxEVjHkyT3beTQ3s" /></p><p dir="ltr"><strong>4. Commercial real estate interests pay little tax</strong>: High finance and commercial real estate are intimately entwined. Over the years, they have gained special tax favors,  especially generous deprecation allowances, that shelter nearly all of their profits. As the L.A. report states, "In 1977, commercial property owners paid 46% of property taxes and residential owners paid 53%. Now, commercial property owners pay only 30% of property taxes, while residential property owners pay 70%."</p><p dir="ltr"><strong>5. Tax war between cities and states give corporations more and more tax breaks</strong>: L.A. and virtually every other major city in the country, lavishes developers and corporations with tax breaks in order to lure businesses away from each other. The net effect is that corporations and the wealthy pay less, and the pressure rises to cut state and local budgets. The chart below <a href="http://www.goodjobsfirst.org/sites/default/files/docs/pdf/statepensions_national.pdf">estimates those tax breaks</a> for 2013, and shows that tax breaks and loopholes amount to nearly twice the pension fund liabilities of these states.</p><p><img src="https://lh4.googleusercontent.com/IKa4XFndOsMQogBgfUa3UrehvxoW3WljUr_8xDemz3JdnBgWpb4nN41KsnFw0zMjSymGTllATgUTL4B7FrdvOrm8X81DEKNf_XbBWmVSghULdOK2kq3UN6fW47yknzUNZSldw40" /></p><p dir="ltr"><strong>6. The dramatic rise in the prison population crowds out other public expenditures</strong>. America has the <a href="http://www.city-data.com/forum/politics-other-controversies/1651617-america-world-leader-prisoners-21st-out.html">largest prison population in the world</a>. Since 1980 it has grown by nearly 400 percent. Why? Obviously the absurd war on drugs plays a large role. But prison also serve as the holding pen for surplus workers in the financialized economy. Because of all the downsizing, millions have turned to the underground economy for survival. As financialization continues, we can expect prisons to continue to squeeze state and local budgets. <img src="https://lh3.googleusercontent.com/t2xrE-vQlVufplamG3Qzcpu1E5y9dQdRRftl7ScHJN_0eCimb3_kYqa8fvcnql_COsuAuCPSchGuT7DZF8VwX49gB6dEwLTRZq8oRWLeyR6uDdDzksvvAMq95wMTByMoWkKYN7c" /><br /><strong>North Dakota Has a Public Bank. Why Not Los Angeles?</strong></p><p dir="ltr">Cities and states are dependent on private predatory banks and financial institutions — but less so in North Dakota which has a public bank. There, state and local government can use the Bank of North Dakota as its trustee, knowing that the bank has no incentive to rip them off by charging exorbitant fees. The bank's top executives receive neither bonuses nor stock options, and earn a small fraction of what Wall Street bankers receive.</p><p dir="ltr">Los Angeles is 10 times larger, economically, than North Dakota and could easily develop its own bank, and thereby dramatically reduce the fees extracted by Wall Street. Also, the Bank of North Dakota returns a $60 million a year profit to the state from wholesale services it provides to local banks. A Los Angeles public bank should be able to add over $600 million a year in profits to the city's coffers.</p><p dir="ltr">Another logical solution is for the Federal Reserve to directly purchase municipal bonds from cities and states just as it is doing right now with the toxic mortgage securities held by the largest banks. Not only would that save state and local public entities approximately $50 billion a year in Wall Street fees, but also it would dramatically reduce municipal interest rate costs.</p><p>Of course, none of this will come easy. But this report lights the way. It should be repeated in city after city, in state after state, so that everyone can see just how Wall Street is impoverishing the richest country on Earth.</p> Tue, 25 Mar 2014 12:47:00 -0700 Les Leopold, AlterNet 974626 at http://personal.alternet.org Economy Economy News & Politics Fix L.A. Coalition los angeles wall street tax breaks corporate welfare public banks wage stagnation tax shelters No Small Fees: LA Spends More on Wall Street than Our Streets public infrastructure great recession A Healthy Economy Requires Fewer People Working on Wall Street, Making Much Less Money http://personal.alternet.org/economy/american-economy-recover-we-need-fewer-people-working-wall-st-making-much-less-money <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The financial industry is a parasite on our society.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/inequality-by-kenworthy.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><blockquote><p dir="ltr"><em>“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence.” —Paul Volker <a href="http://www.ritholtz.com/blog/2009/12/volcker-only-financial-innovation-has-been-atm-machines/" target="_blank">(2009)</a></em></p></blockquote><p dir="ltr">All of us suspect the obvious — that Wall Street not only is too big to fail, but also just too damn big. But where's our evidence? It's one thing to direct our anger at financial elites and the top one percent. It's quite another to make a factual case that Wall Street, indeed, is much too big, and therefore should be radically reduced in size. So here's some data.</p><p dir="ltr"><strong>1. Explosion in Financial Sector Incomes But No Rise in Economic Growth</strong></p><p>Check out this chart: Between WWII and 1980, the wages of financial workers were the same as those who worked in non-financial industries. Then the two lines split apart with Wall Street extracting an enormous premium. Do the financiers deserve it? And how would we know if they do or don't? The answer should depend on how much value the financial sector, in fact, produces for our economy. Is there a correlation between the explosion in Wall Street incomes and economic growth?</p><p><br /><span><img height="340px;" src="https://lh3.googleusercontent.com/EV5CUPE86agSGgrPDRcAZYEQS45Ij4mTRn1hmN8vO-gnN0nLETCSFlCwVF94m8FMViR9_WmwMjNNejO7zT5jm706q9hs8Pxn5TwmBsStoiOe1pdFM_BB6dMwtcuzTk9erBAxEgU" style="border:none" width="372px;" /></span></p><p dir="ltr">Yes, there is, but it's negative. As Wall Street wages rise, economic growth slows down.</p><blockquote><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">1950s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (1950-1959):            <wbr></wbr>  4.17 percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">1960s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (1960-1969):            <wbr></wbr>  4.44 percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">1970s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (1970-1979):            <wbr></wbr>  3.26 percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">1980s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (1980-1989):            <wbr></wbr>  3.05 percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">1990s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (1990-1999):            <wbr></wbr>  3.2   percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">2000s</span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'"> (2000-2009):            <wbr></wbr>  1.82 percent</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">[</span><a href="http://seekingalpha.com/instablog/820862-stephen-graves/128302-the-future-of-us-gdp-growth" style="text-decoration:none" target="_blank"><span style="font-size:13px;font-family:'Times New Roman';color:rgb(0,0,255);background-color:transparent;text-decoration:underline;vertical-align:baseline;white-space:pre-wrap">Source for these unemployment numbers</span></a><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">]</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"> </p></blockquote><p dir="ltr"><strong>2: The Decline of Workers' Share of the Economy</strong></p><p dir="ltr">Wall Street apologists argue that financiers are responsible for boosting U.S. productivity and creating new, decent-paying jobs. Well, we're still waiting. In fact, in the decade following the early 1990s, labor's share of our national income actually declined by 7.2 percent. Why?</p><p dir="ltr">The usual suspects include globalization, technology and too much government spending on the social safety net. You know the arguments: we are falling behind the global competition; we are losing our jobs to new technology; government "entitlements" are crippling the economy; and so on.</p><p dir="ltr">Not quite.</p><p dir="ltr">The International Labor Organization (ILO) produced an <a href="http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_194843.pdf" target="_blank">eye-popping study</a> concluding that the biggest factor in the decline in workers' share of income is financialization — that it accounts for almost 50 percent of the decline in labor's share (from ILO, Figure 38).  </p><p><span><img height="357px;" src="https://lh5.googleusercontent.com/6ze_yXmXPQYRdmmzhQhfEthNjCWJMjqrCra33_gGkRPw8o-YCSkfpoCDPqKd9JaXXyOSI8v5prItxa2ZiU0dbN2lnFD9wsotFohkMc2hlhP1am-dqi3L_DiG-ybs7aOp_oN9f7s" style="border:none" width="504px;" /></span></p><p dir="ltr"><strong>3.  Wall Street Costs Too Much</strong></p><p dir="ltr">A compelling measure of financial bloat can be found in an <a href="http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_301-350/6.1EpsteinCrotty.pdf" target="_blank">excellent paper</a> by economists Gerald Epstein and James Crotty. They look at the "financing gap" which "measures the extent to which different sectors of the economy depend on external finance as opposed to financing with internal savings."  </p><p dir="ltr">So for every dollar consumers and businesses borrow, how much does Wall Street charge? More and more, which is the exact opposite of what is supposed to happen in capitalism. The rise of advanced technologies, global markets and more creative work organization should lead to a drop in price, not an increase. But not on Wall Street. If we compare the booming 1960s with the last decade, we see that Wall Street is now charging four times more for its services.</p><br /><div dir="ltr" style="margin-left:0pt"><table style="border:none;border-collapse:collapse"><colgroup><col width="250" /><col width="250" /></colgroup><tbody><tr style="height:45px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;background-color:rgb(0,0,0);padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:16px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">uFor Every Dollar of Financing, </span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:16px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">Wall Street Charges How Much?</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:16px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman';font-weight:bold">(average) </span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"> </td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">1946-1959</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$0.30</span></span></p></td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">1960s</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$0.47</span></span></p></td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">1970s</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$0.64</span></span></p></td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">1980s</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$1.32</span></span></p></td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">1990s</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$1.09</span></span></p></td></tr><tr style="height:15px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">2000-2010</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">$1.74</span></span></p></td></tr><tr style="height:12px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:11px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Source: Epstein and Crotty, Table 1</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"> </td></tr></tbody></table></div><p>Enrigue Diaz Alvarez, using different metrics in his article, "<a href="https://www.jacobinmag.com/2014/02/the-rent-is-too-damn-high-2/" target="_blank">The Rent is Too Damn High</a>," draws a similar conclusion:</p><blockquote><p dir="ltr">"For every dollar that our capital stock increases, FIRE [the finance, insurance and real estate sector] collects somewhere between two and four dollars! Old Soviet bureaucrats with their chauffeured Ladas and modest three-bedroom apartments never dreamed of achieving this level of parasitism."</p></blockquote><p dir="ltr"><strong>4. Financial Growths Means More Gambling</strong></p><p>Another way to measure Wall Street's obesity is to look at how much of its profits comes from playing the markets (or what is politely referred to a proprietary trading). The bigger Wall Street banks and investment firms know they can take risks and grab all the upside, and should they fail spectacularly, the government will find a way to cover the downside fearing an economic meltdown. So we would expect that large Wall Street firms are engaged more in casino activities than traditional financial functions (like helping clients invest their money in the real economy or helping corporations raise money for expansion).</p><p>The data compiled by Epstein and Crotty show how large Wall Street investment firms are making the bulk of their profits from casino activities:</p><div dir="ltr" style="margin-left:0pt"><table style="border:none;border-collapse:collapse"><colgroup><col width="250" /><col width="250" /></colgroup><tbody><tr style="height:33px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;background-color:rgb(0,0,0);padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:16px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Percent of Profits Derived from "Trading"</span></span></p><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:16px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">2006 </span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"> </td></tr><tr style="height:16px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Goldman Sachs</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">73.7</span></span></p></td></tr><tr style="height:16px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Morgan Stanley</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">60.2</span></span></p></td></tr><tr style="height:16px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Bear Stearns</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">66.7</span></span></p></td></tr><tr style="height:16px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Merrill Lynch</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt"><span><span style="vertical-align:baseline;font-size:13px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">47.7</span></span></p></td></tr><tr style="height:16px"><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"><p dir="ltr" style="line-height:1;margin-top:0pt;margin-bottom:0pt;text-align:center"><span><span style="vertical-align:baseline;font-size:11px;white-space:pre-wrap;background-color:transparent;font-family:'Times New Roman'">Source: Epstein and Crotty</span></span></p></td><td style="border:1px solid rgb(0,0,0);vertical-align:top;padding:0px 7px"> </td></tr></tbody></table></div><p dir="ltr"><strong>How Big Is Too Big?</strong></p><p dir="ltr">Given this data, a reasonable person might conclude that the financial sector is two to four time too large. Therefore, we could either dramatically reduce the financial sector to one quarter to one half its current size, or cut its profits, salaries and bonuses by 50 to 75 percent without harming the economy. </p><p dir="ltr">This also means that progressives need to be more radical in our demands if we truly wish to tame financialism.  </p><p>To paraphrase Grover Norquist, our goal should be "to shrink [Wall Street] down to the size where we can drown it in the bathtub."</p> Wed, 05 Mar 2014 10:03:00 -0800 Les Leopold, AlterNet 966344 at http://personal.alternet.org Economy Economy Labor News & Politics wall street Paul Volker income inequality corporate welfare economic growth International Labor Organization ilo financialization finance industry casinos James Crotty Gerald Epstein Are You Addicted to Making Money? http://personal.alternet.org/economy/are-you-addicted-making-money <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Curing wealth addiction won&#039;t change America&#039;s runaway inequality. We need to end Wall Street as we know it.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2014-01-21_at_4.31.15_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">Now that inequality is finally on the mainstream media's agenda, we're hearing a lot of trash theories about why the top one-tenth of one percent is grabbing the nation's wealth. Conservatives will blame the poor for being poor and claim that the rich are rich because... well, they're just smarter than the rest of us.</p><p dir="ltr">The<em>New York Times</em> has added yet another dubious dimension this week by featuring a poignant <a href="http://www.nytimes.com/2014/01/19/opinion/sunday/for-the-love-of-money.html?_r=0">piece by Sam Polk</a>, a former hedge fund trader, who claims that he, and most others on Wall Street, are addicted to money: "I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted."</p><p dir="ltr">Polk sure had quite a Jones: "I wanted a billion dollars. It’s staggering to think that in the course of five years, I’d gone from being thrilled at my first bonus — $40,000 — to being disappointed when, my second year at the hedge fund, I was paid 'only' $1.5 million."</p><p dir="ltr">Yep, we feel your pain. But after suffering a rebuke from his billionaire boss, Polk saw the light:</p><blockquote><p dir="ltr">"These traders despised anything or anyone that threatened their bonuses. Ever see what a drug addict is like when he’s used up his junk? He’ll do anything — walk 20 miles in the snow, rob a grandma — to get a fix. Wall Street was like that. In the months before bonuses were handed out, the trading floor started to feel like a neighborhood in 'The Wire' when the heroin runs out."</p></blockquote><p><span style="font-size: 12px;">Polk also began to see that he was more than an addict; he was also an economic parasite: </span></p><blockquote><p><span style="font-size: 12px;">"Not only was I not helping to fix any problems in the world, but I was profiting from them. During the market crash in 2008, I’d made a ton of money by shorting the derivatives of risky companies. As the world crumbled, I profited. I’d seen the crash coming, but instead of trying to help the people it would hurt the most — people who didn’t have a million dollars in the bank — I’d made money off it."</span></p></blockquote><p><span style="font-size: 12px;">Unlike millions of low-income addicts, Polk had both the means to get counseling and the ability to build up a healthy bank balance that made going cold turkey possible (and perhaps not all that painful). He then embarked on a career path Mother Teresa would be proud of:</span></p><blockquote><p><span style="font-size: 12px;">"In the three years since I left, I’ve married, spoken in jails and juvenile detention centers about getting sober, taught a writing class to girls in the foster system, and started a nonprofit called Groceryships to help poor families struggling with obesity and food addiction. I am much happier. I feel as if I’m making a real contribution."  </span></p></blockquote><p><span style="font-size: 12px;">Amen.</span></p><p><span style="font-size: 12px;">Unfortunately, Pope —and the editors of the <em>NYT—</em> see much more in this story than a rich guy finally doing something worthwhile with his life. No, the real moral of the story is this:</span></p><blockquote><p dir="ltr">"Wealth addicts are, more than anybody, specifically responsible for the ever widening rift that is tearing apart our once great country. Wealth addicts are responsible for the vast and toxic disparity between the rich and the poor and the annihilation of the middle class." </p></blockquote><p dir="ltr">So if only these greedy SOBs became less greedy, rampant inequality would go away. What's the solution? Wealth Addicts Anonymous. I kid you not:  </p><blockquote><p dir="ltr">"Dozens of different types of 12-step support groups — including Clutterers Anonymous and Online Gamers Anonymous — exist to help addicts of various types, yet there is no Wealth Addicts Anonymous. Why not?" </p></blockquote><p><span style="font-size: 12px;">Here's why not: curing "wealth addiction" won't change runaway inequality.</span></p><p dir="ltr">You could run every Wall Street hustler through a 12-step wealth addiction program run by the Pope, and it would do nothing to close the gap, rebuild the middle-class, provide income for the poor, stop wage theft of immigrant workers, or raise the incomes of low-wage workers.</p><p dir="ltr"><span style="font-size: 12px;">What Polk and the<em></em></span><em><span style="font-size: 12px;">New York Times</span></em><span style="font-size: 12px;"><em></em>miss entirely is why it is possible in the first place to become a wealth addict on Wall Street. Where does all that money come from that gets divided up into big fat bonuses this time of the year?</span> You can't become a wealth addict on Wall Street unless you have access to wealth. And you can't have access to wealth unless it's accumulated in vast amounts within hedge funds, banks, private equity firms and money funds. How did it get there?</p><p dir="ltr">While it's great to read uplifting stories about personal redemption, what we really need is story after story about our financialized economic system—about the structures that rip us off each and every day. It's a systemic problem with real causes in the real world, not just inside our heads.</p><p><strong>Where does Wall Street wealth come from?</strong></p><p dir="ltr">The mainstream media, NPR included, refuses to question the legitimacy of Wall Street money-making. It is assumed that its wealth, more or less, is earned. Sure, sometimes they cheat, as in insider trading, money laundering, gambling with depositor funds, colluding with drug cartels and payday loan sharks, ripping off mortgage and credit card holders, hiding profits, manipulating accounts... but those "infractions" are always treated as mere aberrations of an otherwise profitable and useful industry that our economy needs.</p><p dir="ltr">Most economists (wealth addicts and the non-addicted alike) argue that all profits, no matter their source, are productive profits. The ever omniscient markets wouldn't allow Wall Street to make so much money unless an equal amount of value was produced in exchange. It's just a high return to great acumen and value, so there's nothing wrong with it at all.</p><p dir="ltr">Well, even Polk knows firsthand that Wall Street's wealth is based on producing products that have no redeeming value at all, except to siphon off the wealth of others:</p><blockquote><p dir="ltr">"Yes, I was sharp, good with numbers. I had marketable talents. But in the end I didn’t really do anything. I was a derivatives trader, and it occurred to me the world would hardly change at all if credit derivatives ceased to exist. Not so nurse practitioners." [His mother's profession.] </p></blockquote><p dir="ltr">So how did Wall Street accumulate so much crack, heroin and meth?</p><p dir="ltr">The story starts 40 years ago when most of the economic profession made the argument that deregulated markets could solve all our problems by creating more and more wealth for society. By cutting taxes on the rich, there would be more incentive to create new enterprises and jobs, and higher incomes would then flow to all—all boats would rise. By getting government out of the economy, business would be free to innovate and grow.</p><p dir="ltr">This push for massive tax cuts and deregulation, however, unleashed Wall Street much more than it did the "real" economy —the part that produces tangible goods and services. In fact, it led to the destruction of much of American manufacturing as financiers (corporate raiders; private equity firms like Mitt Romney's) hollowed out corporation after corporation, loading each up with debt, and then squeezing its workforce as much as possible, including replacing it entirely by shifting the facility overseas.</p><p><span style="font-size: 12px;">Instead the "innovation" took the form of junk bonds, offshore accounts, high-risk mortgages, derivatives, CDOs and a myriad of financial tricks that step by step moved money away from productive industry and shoved into the pockets of Wall Street.  </span></p><p dir="ltr">This chart says it all:</p><p><br /><span id="docs-internal-guid-2e830244-b6a2-216b-a988-cf36d481ab1e"><img height="397px;" src="https://lh3.googleusercontent.com/Gubkvi4DG0hprMly4tl6JjUvamzzCfjYJw63yBHBiooVPKI3IARVOApT0j47jn6H3dSJIA8YVaMpzMK9Nd0BlgmS4wUnCk1_P3FAGr_8C3ZVn-PRdyd5eGyag0DArD7EzPw" style="border: 0px solid transparent" width="529px;" /></span></p><p dir="ltr">Before deregulation, no matter how smart you were (and no matter how addicted to money) you couldn't make more on Wall Street than you could in the rest of the economy. The crack just wasn't there. In fact, taxes on the rich were high and the income of the average worker was rising steadily (even after inflation). But after deregulation, Wall Street wages went sky-high and are still climbing because our economy's wealth was moved into the financial sector. Most working people haven't seen a real rise in income for over 30 years.</p><p dir="ltr"><strong>Put the deregulatory toothpaste back in the tube?</strong></p><p dir="ltr">Unfortunately, it can't be done. We can't turn the clock back by re-regulating Wall Street. That won't work because Wall Street is not only wealth-addicted, it is extremely powerful. Wall Street lobbyists are eating Dodd-Frank for lunch. They own Congress and the regulatory bodies. They might get their hands slapped, but it's not an accident that not one bank official has been prosecuted personally even when caught ripping off GIs or facilitating money-laundering for drug cartels. The company pays the fines, the individuals involved get to keep their ill-gotten gains.</p><p dir="ltr">There's only one long-term realistic solution. Eliminate the big banks. Turn them into public utilities. Cap their incomes by law (which is the same as take away their heroin) .Public banking. Impose a financial transaction tax. Reverse eminent domain to help underwater homeowners. Free higher education. Raise the minimum wage to $20 an hour. All this and more is needed to close the income gap and bring a modicum of fairness and justice to our economy.  </p><p dir="ltr">By all means, wealth addicts of the world, unite!  Seek treatment and do good works. But the only good deed that will halt runaway inequality is to end Wall Street as we know it.</p> Tue, 21 Jan 2014 13:00:00 -0800 Les Leopold, AlterNet 949767 at http://personal.alternet.org Economy Economy Media wall st. How Wall Street Turned America Into Incarceration Nation http://personal.alternet.org/corporate-accountability-and-workplace/how-wall-st-turned-america-incarceration-nation <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Transforming poorer neighborhoods into desirable real estate for the new elites often requires getting rid of the poor: jail becomes the new home for many. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2013-11-25_at_5.26.02_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">The U.S. leads the world in prisoners with <a href="http://www.bjs.gov/content/pub/pdf/cpus10.pdf">2.27 million in jail and more than 4.8 million on parole.</a> Minorities have been especially hard hit, forming <a href="http://www.bjs.gov/index.cfm?ty=pbdetail&amp;iid=2200">39.4% of the prison population</a>, with one in three black men expected to serve time during their lifetimes.</p><p dir="ltr">How is it that our land, supposedly the beacon of freedom and democracy for the rest of the world, puts so many of its own people into prison?</p><p dir="ltr">We usually attribute the prisoner increase to a combination of overt racism and Nixon's war on drugs, followed by Rockefeller's "three strikes" legislation in New York, and then the 1984 Sentencing Reform Act with its mandatory sentences. While racism and these laws certainly provide ample opportunity to incarcerate millions for violating senseless prohibition laws, they do not tell the whole story.</p><p dir="ltr">Racism was just as virulent, if not more so, long before the dramatic rise in prisoners set in during the 1980s and 1990s. Just because there are draconian laws on the books, it doesn't explain why they are so dutifully enforced. It also doesn't explain why so many are willing to risk prison, knowing the increasing odds of getting caught.  </p><p dir="ltr">If we dig deeper, we'll see that the rise in incarceration corresponds with the rise of financialization and the dramatic increase in Wall Street incomes. Of course, just because trend lines on charts rise and fall together doesn't mean one causes the other. But this correspondence is much more than coincidence.</p><p dir="ltr"><span style="font-size: 12px;">In fact, we could show you a dozen other trends lines about financialization, wealth and the rising incomes of America's elites that follow the same patterns over similar years as the incarceration rate. What is the connection?</span></p><p dir="ltr"><strong>'Unleashing' Wall Street destroys manufacturing, older urban areas and black America's upward mobility</strong></p><p dir="ltr"><span style="font-size: 12px;">By the end of the 1970s, our policy establishment embarked upon a new experiment to shock the nation out of stagflation (the crushing combination of high unemployment and high inflation). To do so, neo-liberal economists successfully argued that Wall Street should be deregulated and that taxes on the wealthy should be cut to spur new entrepreneurial activity that would enrich us all.</span></p><p dir="ltr">Entrepreneurial activity certainly increased, and with a vengeance. Rather than create new jobs and industries that would promote shared prosperity, a new and invigorated Wall Street set about to devastate American manufacturing. Its goal was, and still is, to make money from money, not to make money by producing tangible goods and services. Wall Street's main product for America is debt. And its profits derive from loading up the country with it, and then collecting compound interest.</p><p dir="ltr">Wave after wave of financial corporate raiders (now politely called private equity firms) swooped in to suck the cash flow out of healthy manufacturing facilities. Wall Street, freed from its New Deal shackles, loaded companies up with debt, cut R&amp;D, raided pension funds, slashed wages and benefits, and decimated well-paying jobs in the U.S. while shipping many abroad. The released cash flow was used to pay back the financiers, buy up stock to drive up its price, and pay out dividends. Nearly half the raided companies failed as America's heartland in a few short years turned into the Rust Belt.</p><p dir="ltr">But Wall Street prospered as its profits rose to account for nearly <a href="http://baselinescenario.files.wordpress.com/2009/06/global-crisis-for-wbank-abcde-korea-june-21-2009-final.pdf">40% of all corporate profits</a> by 2003, up from less than 10 percent in 1982  (It would take more space than we have here to explain why this had little to do with "unfair" foreign competition. We could also show that so called free-trade agreements were designed by financiers to promote their interests, not ours.)</p><p dir="ltr">The catastrophic collapse in manufacturing jobs was particularly tragic for black Americans who during the first two decades after WWII had seen their standard of living rise as they entered higher paying industries. As the Wall Street vultures sucked the life out of these industries, black Americans found themselves in dying urban areas where the next best jobs paid less than half what manufacturing once paid. If lucky, young minority men and women could find work in the public sector which still was unionized. More typically, scarce jobs might be found in fast-food chains, box stores, warehouses, and in the lower ranks of the healthcare system. Overall, however, unemployment rates soared, especially for minority youth. Participation in the underground economy often became the only means of survival.</p><p dir="ltr"><strong>Financialization, gentrification and the removal of low-income residents</strong></p><p dir="ltr">Not only does financialization destroy middle-income manufacturing jobs in urban areas, but the process also removes low-income neighborhoods through gentrification. The rise of high-income financiers (and the desire of banks to loan more money to them) creates upward pressure on housing prices in urban areas that cater to elites, like New York, Chicago and San Francisco. As land values rise rapidly, lower-income residents are squeezed out of their neighborhoods, which are revamped into fashionable townhouses and apartments for the wealthy. (Typically, the children of the well-to-do unconsciously serve as forward troops as they flock into lower-income areas in major cities, seeking to support themselves as artists and young professionals.)</p><p dir="ltr">As hundreds of neighborhoods are transformed, higher income residents require more protection from the alternative low-income economy, called "crime in the streets." As mayors cater to these new elites, police patrols increase and incarceration rises through "stop and frisk" programs which invariably target minorities.  </p><p dir="ltr">Simply put, for financial interests to transform poorer neighborhoods into desirable real estate for the new elites, it is necessary to get rid of the poor. Jail becomes the new home for many.</p><p dir="ltr">The housing bubble and bust further destroyed lower income neighborhoods and decent-paying public sector jobs. Not only did financial interests feast upon productive firms, but they thrived on consumer debt (yet another chart that mirrors the incarceration rate).</p><p dir="ltr">The housing bubble, which was entirely engineered by Wall Street, created enormous demand for junk mortgages to package into securities which then turned toxic. When the bubble burst, the biggest losers were lower-income homeowners who thought they had finally gotten a piece of the American dream. With declining housing prices they found themselves underwater and/or living in neighborhoods with hundreds of abandoned homes. Their debts, remained, while, as we all know, the richest of the rich were bailed out.  </p><p dir="ltr">Because of the Wall Street crash, revenue-starved urban areas in the Rust Belt were hit once again. With unemployment higher than anytime since the Great Depression, business and worker tax revenues fell, leading to cuts in public employee jobs and benefits—the very jobs middle-income minorities were fortunate to find as manufacturing declined over the previous decades.  </p><p>Detroit became the poster child for the ravages brought about by financialization. First corporate raiders and private equity firms squeezed the life out of manufacturing all over Michigan. Then the Wall Street crash destroyed more jobs and undermined the tax base, leading to urban bankruptcy and more job loss in the public sector.   </p><p dir="ltr"><strong>Wall Street's Jobs Program: Incarceration</strong></p><p dir="ltr"><span style="font-size: 12px;">What will happen to all those unemployed, given the massive shortfall in jobs? What will happen to those trapped in neighborhoods crammed with foreclosed homes? Where is the jobs program for the millions who need it?</span></p><p dir="ltr"><span style="font-size: 12px;">High finance has the answer that is now the de-facto government policy—put the dislocated, the unemployed, the "surplus" youth in jail.</span></p><p dir="ltr">That's because financial interests and their crony politicians have no interest at all in traditional jobs programs that could put millions of young people to work. Instead, they are doing all they can to bring austerity policies to America. The less government spends on public services and safety net programs, the more money it has to support Wall Street. As government services are cut, state and local governments must turn even more to Wall Street in order to finance infrastructure projects (where the total cost including interest payments is usually several times the initial costs of construction).</p><p dir="ltr">Wall Street's super-profits can only continue if public and consumer funds are transferred to high finance via interest payments on loans. So public jobs programs are out of the question, and both parties have been "convinced" (with campaign contributions) that we can't afford them.</p><p>So that leaves us with one and only one jobs program—incarceration—which is also a growth opportunity for Wall Street. As public revenues falter, pressure will mount to privatize more and more correctional facilities and law enforcement functions, opening up lucrative opportunities for more privatization and more Wall Street loans to make it happen.</p><p>So by all means, let's legalize drugs, get rid of mandatory sentencing and prohibit "stop and frisk." But until we tackle financialization and its destruction of neighborhoods and jobs, we will channel another generation into the underground economy—and into jail.</p><p><em>These four graphs tell the tale visually -- click to enlarge each:</em></p><p><strong><em>1. The soaring American prison population since 1920:</em></strong></p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/screen_shot_2013-11-26_at_12.57.26_am.png" /></div><p><strong>2. Where the money is going: financial sector vs. non-financial sector yearly compensation:</strong></p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/screen_shot_2013-11-26_at_12.59.27_am.png" /></div><p><strong>3. The total collapse of manufacturing jobs in America since 1960: </strong></p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/screen_shot_2013-11-26_at_12.59.58_am.png" /></div><p><strong>4. Unemployment levels since 2007:</strong></p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/screen_shot_2013-11-26_at_1.11.48_am.png" /></div><p><strong>5. The staggering rise of household debt -- home mortgages and credit debt:  </strong></p><p></p><div alt="" class="media-image"><img alt="" class="media-image" typeof="foaf:Image" src="/files/styles/story_image/public/screen_shot_2013-11-26_at_1.00.07_am.png" /></div><p> </p> Mon, 25 Nov 2013 14:19:00 -0800 Les Leopold, AlterNet 929038 at http://personal.alternet.org Corporate Accountability and WorkPlace Civil Liberties Corporate Accountability and WorkPlace Economy wall st. Crazy White House Proposal: Rank Colleges Based On How Much Graduates Earn http://personal.alternet.org/education/perhaps-craziest-obama-admin-proposal-yet-rank-colleges-based-how-much-their-graduates <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Team Obama wants to turn higher education into yet another financial instrument.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/photo_1374717276659-3-0_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>The Obama administration is transporting Wall Street logic into higher education by <a href="http://www.bloomberg.com/news/2013-08-22/obama-said-to-propose-tying-college-aid-to-school-ranking.html">proposing</a> to measure the value of a college by the earnings of its graduates. This conceptual coup may be the best news for Wall Street since the abolition of Glass-Steagall.</p><p>We need not repeat all that has been written about how this money-making metric misses the point of college; about how students should be studying to become good citizens and leaders, to find and know themselves, to discover which pursuits in life best suit them, to develop an inquiring mind and so on. But such musings, however admirable, miss the main point: <em>Using future earnings as a measuring stick transforms the entire notion of higher education into yet another financial instrument.</em> No doubt some Wall Street hustlers are already dreaming up how to create derivatives they can sell to insure students and their families against less than expected earning outcomes from the college investment. Wow, an entire new casino in the making, right up there with the ethanol market.</p><p>Should this pernicious metric really catch on, it will create even more pressure for colleges to suck up to high finance. Not only do colleges court their hedge fund graduates as if they were gods instead of crooks, but an earnings metric will encourage colleges to become feeder schools for Wall Street firms since that's where the highest salaries are. What a virtuous cycle: train the kids for Wall Street, get a higher earnings ranking, get more ambitious applicants, then get rich graduates to donate to your college. The next step is to sell the naming rights. How about the JPMorgan School for the Dark Arts?</p><p><strong>Obama the Community Organizer?</strong></p><p>The President's early career serves as a poster child for what colleges should avoid. As we all know, after graduating from Columbia University (tied for 54th in graduate earnings as recorded on PayScale.com) Obama began his working career as a low-paid community organizer. I assume he did this work because he wanted to serve the residents of the economically depressed areas in Chicago's south side. Luckily for Columbia's PayScale.com rating, the future president made quite a jump from community organizing to Harvard Law School, to state politics, to best-selling book author, and then to POTUS. He has not yet reached the million-an-hour hedge fund income level, but he's probably no longer hurting Columbia's ranking. However, those who worked with him as community organizers, and then continued with do-good work, would be viewed as liabilities, not assets, to the rankings of their alma maters.  </p><p><strong>Solidifying the values of the Billionaire Bailout Society</strong></p><p>This making-money metric illustrates how far we've drifted into a new era of financial hegemony, which I'm calling the billionaire bailout society. A generation or two ago, Obama's proposal would have met with derision, and not just from obstructionist Republicans. For the WWII and baby boomer generations it was honorable to serve—to help make your community and your country a better place. After so much war and destruction, and after so much poverty and discrimination, it was a badge of honor to join the Peace Corps or help build a cooperative or community organization to serve the disadvantaged. Even wealthy political elites like the Kennedys made it clear that they considered public service a much higher calling than just making money. You didn't have to be a radical or even a liberal to believe that public service was a good in itself. Going to college gave you special access to develop a deeper humanistic view of the word, to find your calling, and to sharpen the skills needed to help make the world a better place instead of making seven figures. How quaint!</p><p><strong>Financial deregulation and the selfish pursuit of profit</strong></p><p>There's a long story to be told about how our nation turned from public spiritedness to the selfish pursuit of money at all costs. Of course, we shouldn't be waxing nostalgic for the good old days that weren't there, especially for minorities, women and the LBGT community. Rather our claim is more modest: From the end of WWII at least until the mid-1960s, there was a collective hope that our system could improve and that we could make it better. In fact, it was our duty to do so.  </p><p>After the assassinations of the Kennedys, King and Malcom X, and after the needless, bloody Vietnam war, a good deal of that hope faded. Economist Milton Friedman, among others, seized upon the chaos and disillusionment to make the case that the pursuit of profits within a system of fair rules led to the most bountiful economy for all. "Greed is good" is good for us all within the bounds of decency and the law.</p><p>But Wall Streeters had other ideas. They wanted to create unbalanced rules that would allow them to siphon away our nation's wealth, while claiming to enhance it. Through neo-liberal deregulation and so called "free" trade, they did just that. Financial sector incomes rose dramatically, while the incomes of the average working person stagnated and slowly declined. Even the 2008 crash, which so clearly unveiled the venality of high finance, didn't change this trajectory. The giant banks and hedge funds that took down our economy got to keep their ill-gotten gains. After the crash, they have grown even larger and richer from the bailouts and Federal Reserve policies. The evidence is in: the billionaire bailout society is entrenched.</p><p><strong>Education: A Wall Street Profit Center</strong></p><p>There is no compelling reason why our students must be fleeced by usurious loans to finance their higher education. The rest of the developed world uses public resources to support its students either through free tuition or through low- or no-interest loans. It would cost the taxpayers absolutely nothing if the Federal Reserve provided no-interest loans to students. (After all, it already provides trillions of dollars of minimal interest loan support for our banksters.)</p><p>But that's not what happens in the new billionaire bailout society. The student loan market is just that—a trillion-dollar market that now has eclipsed credit card debt in size. Wall Street wants our kids locked into debt forever. Imagine Wall Street's delight in seeing the education debate shift away from predatory student loans, and instead focus on the failure of colleges to graduate more high-income earners. (By the way, these earning arguments are loaded with disproven supply-side notions, like if we only educated college kids better, more jobs would miraculously appear, even during the worst economic slump since the Great Depression.)</p><p><strong>If Obama had the courage of his convictions (at least those of his youth)</strong></p><p>What we don't need are more college graduates headed to the financial casinos eager to gamble away our nation's wealth. You want to rank colleges based on what their graduates do? OK, why not see how many graduates actually contribute directly to the common good? If that were the case we'd be tracking the number who went into the helping professions: How many teach in disadvantaged areas? How many provide healthcare to underserved populations? How many build businesses and cooperatives for the unemployed?  How many serve low-wage workers in their struggles for decent wages and working conditions? How many are working to protect the environment or enhance human rights here and abroad?</p><p>Sounds too complicated and contentious to compute? Here's a simpler metric. Since our billionaire bailout society places such a low premium on the helping professions, we should simply rank colleges by graduate incomes...in reverse order. The odds are the lower the income of its graduates, the more those graduates are contributing to society. (Hats off to Oberlin, my alma mater, for its PayScale ranking of 218. The lower it goes, the more our do-gooder class of '69 is likely to contribute.)</p><p>I wonder what Obama, the community organizer, would think of that.</p> Thu, 19 Sep 2013 09:23:00 -0700 Les Leopold, AlterNet 898638 at http://personal.alternet.org Education Education education We've Got a Billionaire Bailout Society—And the 99% May Never Recover From It In Our Lifetimes http://personal.alternet.org/economy/weve-got-billionaire-bailout-society-and-99-may-never-recover-it-our-lifetimes <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Our financial system is sucking up the wealth of the nation and using it to cover its losses. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/photo_1368214769124-3-0_6.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p dir="ltr">The odds are that we in the bottom 99 percent may never see a recovery in our lifetimes. That's because our nation has evolved into something entirely new: a billionaire bailout society. </p><p dir="ltr"> </p><p dir="ltr">We are entering a disastrous new era in which all the economic gains go to the top 1 percent, according to data from economists Emmanuel Saez and Thomas Piketty. <a href="http://elsa.berkeley.edu/~saez/saez-UStopincomes-2012.pdf" target="_blank">They report</a> that, "Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012. Hence, the top 1% captured 95% of the income gains in the first three years of the recovery....  In sum, top 1% incomes are close to full recovery while bottom 99% incomes have hardly started to recover." (In 2012, $394,000 is the cutoff to make it into the top 1 percent.)</p><p dir="ltr"> </p><p dir="ltr">We see in vivid detail what the new American order looks like. The top 1 percent live in another economic universe of high finance that sucks the wealth from the rest of us. In their world, banks (owned by and for the top 1%) are able to grow larger and larger so there is no chance they will be allowed to fail, even after these same banks took down the economy. (In 1965 they had assets equal to 17% percent of the U.S. economy. Today it's more than 65% percent.)</p><p><br /></p><p dir="ltr">Free from any meaningful controls, financial gambling (called proprietary trading in polite circles) is now the dominant activity within our largest banks. In fact, in these too-big-to-fail banks, more money goes to financial gambling than to loans for businesses and consumers. These are not banks—they are rigged casinos for the rich. The upside from these corrupt pursuits are kept by the top fraction of the 1 percent, while the 99 percent hold the bag when those phony bets crash the economy.</p><p dir="ltr"> </p><p dir="ltr">And who among us doesn't think that will happen again? </p><p dir="ltr"> </p><p dir="ltr">Regulation is hapless as billions of dollars slosh through the political troughs. Serious enforcement is virtually non-existent because the enforcers fear that the entire financial system will fail should these criminal banks be prosecuted. Every national policy from the bailouts to "quantitative easing" has further funneled money to the super-rich. Meanwhile, the rest of us are told to plod along until jobs miraculously appear and our incomes finally rise. Dream on. </p><p dir="ltr"> </p><p dir="ltr">In sum, our new economic era is characterized by the supremacy of financial capital which vacuums up the productive wealth of the nation, and then uses the nation's wealth as an insurance policy to pay for its inevitable losses.   </p><p dir="ltr"> </p><p dir="ltr">Entering Uncharted Territory</p><p dir="ltr"> </p><p dir="ltr">The billionaire bailout society is quite different than previous gilded ages. This can be seen clearly in comparing the aftermath of the recent Great Recession to what took place during the Great Depression. We need to remember that after the crash of 1929, America went on a crusade to rescue the economy by controlling Wall Street, supporting unions, and fundamentally rebuilding our physical and educational infrastructure. As Harvard economist Claudia Golden put it, a Great Compression took place during which the gap between the rich and the rest of us came down—not by destroying wealth but by making sure working people got their fair share. In 1929, the top 1% grabbed 23 percent of the nation's income. By the late 1960s it was below 9 percent.  </p><p dir="ltr"> </p><p dir="ltr">During the Great Compression we had our feet planted firmly on the neck of Wall Street. Financial gambling was held to a minimum. Incomes were no higher on Wall Street than in the productive economy. Finance and production more or less were in balance. But after deregulation set in the late 1970s, the income gap began to accelerate yet again, returning to the unconscionable levels of the late 1920s. </p><p dir="ltr"> </p><p dir="ltr">Here's the frightening news contained in the Saez/Piketty data: There is no Great Compression emerging this time around. We're not heading toward greater income equality. We're not building up the middle class or supporting unionization. We're not eradicating poverty and hunger. We're not expanding educational opportunity. We're not rebuilding infrastructure. Nothing we're doing looks anything like the society we built from the New Deal through the 1960s. We're not doing any of the things that would lead to a more stable and just economy. In fact, we're doing just the opposite, which means the billionaire bailout society will become even more firmly entrenched. </p><p>How do we dismantle the billionaire bailout society?</p><p dir="ltr">It starts with recognizing that the political circus in Washington has no chance at all in altering our pell-mell descent into crippling inequality. The Republicans are so blinded by nonexistent big government socialism that they fail to realize, yet alone acknowledge, that the capitalism they so love is long gone. Wall Street ate it for lunch.  </p><p dir="ltr"> </p><p dir="ltr">While we could single out a handful of decent Democrats who more or less get the picture, the party as a whole is enthralled with Wall Street, many hoping to join the world of high finance after they serve their time in public service. There is no chance whatsoever that these two parties will tame high finance or undermine the growing billionaire bailout society. </p><p dir="ltr"> </p><p dir="ltr">But much can still be done, especially on the state and local level. That's where Wall Street is vulnerable to a strong counterattack. And that attack must be aimed at building public banks that can one day replace the Wall Street behemoths. (Many thanks to Ellen Brown and her new book, <a href="http://www.amazon.com/The-Public-Bank-Solution-Prosperity/dp/0983330867/ref=sr_1_1?ie=UTF8&amp;qid=1378994526&amp;sr=8-1&amp;keywords=the+public+bank+solution" target="_blank">The Public Bank Solution</a> for opening my eyes to this possibility.)</p><p dir="ltr"> </p><p dir="ltr">Here are some key facts we all should know about banks and public banks:</p><p dir="ltr"> </p><p dir="ltr">1. There is only one public state bank in the country—the Bank of North Dakota—and it's phenomenally successful. A relic from the Populist era, the BND invests in the people of North Dakota. It doesn't play with derivatives or high-risk mortgages so it didn't get burned during the crash. It doesn't pay its executives high salaries (which are lower than what chauffeurs get on Wall Street). It just builds the state's economy and returns a profit year after year to the people of North Dakota. As a result, the state has the lowest unemployment rate in the country (even after taking into account their oil boom). And this so-called socialist bank resides in one of the most conservative states in the country.</p><p dir="ltr"> </p><p dir="ltr">2. Right now, we taxpayers funnel over $1 trillion of our money into Wall Street banks when we pay our state and local taxes and fees. That money does not go into vaults in city hall or the state capital. It goes to Wall Street banks which at the moment are the only ones large enough to provide all the services required...except in North Dakota. There state revenues run through the state bank which in turns supports 80 community banks. If that happened in the other 49 states, we could create more than 10 million additional domestic jobs. Remember, a state bank invests in its state. Wall Street has no allegiance to any state or country.  </p><p dir="ltr"> </p><p dir="ltr">3. State banks are the answer to funding infrastructure projects. Right now Wall Street preys upon state and local governments that need to borrow money to build schools, roads and other critical public projects. Those loans comes with enormous fees and interest rates that often double and triple the cost of these projects. Not so with public banks, whose job it is to build up the state rather than rip it off.</p><p dir="ltr"> </p><p dir="ltr">What will it take to win?</p><p dir="ltr"> </p><p dir="ltr">There are some positive signs popping up all over the country. Low-wage workers are organizing. The AFL-CIO is finally coming out of its defensive crouch and opening up to non-traditional worker organizations. More and more co-ops are forming. And more than 20 states are seriously considering moves toward public banks. </p><p dir="ltr"> </p><p dir="ltr">But we'll need much more to dent the billionaire bailout society. We will need nothing less than a broad movement that connects all these efforts and many more into a coherent force aimed at high finance. The money labor squanders on meaningless elections should be funding the attack on Wall Street.</p><p dir="ltr"> </p><p dir="ltr">It's time we looked more seriously at the last time Americans rose up against Wall Street. That was during the Populist Era of the late 19th century. Then, urban working people and farmers demanded an alternative financial system to the one run by Wall Street. It was a clear-cut struggle pitting private banking against public banking.</p><p dir="ltr"> </p><p dir="ltr">Then, like now, the American people were disgusted by the domination of high finance. Then, like now, the two parties were corrupted by concentrated wealth. Then, like now, the modest prosperity of the working people was collapsing. It took great courage and resilience for Americans to rise up. It took thousands of dedicated organizers and educators who believed in the justice of their cause.  </p><p dir="ltr"> </p><p dir="ltr">Even though the movement was ultimately defeated, it left its indelible mark on America. Many of its policies and programs formed the constructive politics of the New Deal that ultimately tamed Wall Street for nearly a half a century. And it gave North Dakota its public bank.</p><p dir="ltr"> </p><p dir="ltr">We will need that kind of massive upheaval again if we hope to undo the billionaire bailout society. </p> Thu, 12 Sep 2013 08:35:00 -0700 Les Leopold, AlterNet 895594 at http://personal.alternet.org Economy Economy billionaires Shocking Things Wall Street Financiers Say Off the Record About Their Bloated, Corrupt Industry http://personal.alternet.org/corporate-accountability-and-workplace/wall-st-financiers-we-are-corrupt <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A new survey shows how brazenly immoral Wall Street is.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2013-07-19_at_11.41.17_am.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">"A particularly troubling and consistent finding throughout the survey is that Wall Street’s future leaders–the young professionals who will one day assume control of the trillions of dollars that the industry manages—have lost their moral compass, accept corporate wrongdoing as a necessary evil and fear reporting this misconduct."</p><p>In a shocking <a href="http://www.secwhistlebloweradvocate.com/_blog/secwhistlebloweradvocate/post/wall-street-in-crisis-a-perfect-storm-looming?gclid=CP23itajurgCFcNcMgodwzUAxQ">new survey</a> commissioned by the Labaton Sucharow law firm, Wall Street insiders say that breaking the law, screwing your clients and covering up crimes is a way of life on Wall Street. The shock is not that cheating is going on. We all know that. The shock is that these financiers would actually admit it on a survey. This should tell us that the Wall Street culture is so brazenly corrupt, so confident of not getting caught, so certain that a passive public won't fight back that those surveyed didn't even bother to lie about the fact that they were living, breathing sociopaths.</p><p dir="ltr">Here are some of the key findings of this sample of 250 traders, portfolio managers, investment bankers, hedge fund professionals, financial analysts, investment advisors, asset managers and stock brokers.</p><p dir="ltr"><strong>Catch me if you can!</strong></p><p dir="ltr">"24% of financial services professionals likely would engage in insider trading to make $10 million… if they wouldn’t get arrested.  That figure surges to 38% for individuals with 10 years or less in the industry."</p><p dir="ltr"><strong>Screw your clients.</strong></p><p dir="ltr">"28% of financial services professionals feel that the financial services industry does not put clients’ interests first."</p><p dir="ltr">They do it, so we have to do it too.</p><p dir="ltr">"More than half of respondents–52%–felt it was likely that their competitors have engaged in unethical or illegal activity to gain an edge in the market; 24% felt employees at their own company likely have engaged in misconduct to get ahead."</p><p dir="ltr"><strong>Guess what? We still are cheating.</strong></p><p dir="ltr">"Misconduct is still widespread in the financial services industry; 23% of respondents  indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace."</p><p><strong>To rise in a criminal organization, you have to be a criminal</strong>.</p><p dir="ltr">"Looking at seniority, 36% of respondents with 10 years or less experience in the industry believed financial services professionals may have to engage in misconduct to get ahead."</p><p dir="ltr"><strong>The boss loves it when you cheat.</strong></p><p dir="ltr">"17% of respondents felt that if leaders of their organization suspected that a top performer was earning large profits from insider trading, they likely would ignore the problem. More alarming, 15% of professionals in the industry believed that if leaders of their organization learned that a top performer had engaged in insider trading, they were unlikely to report that crime to law enforcement or regulatory authorities."</p><p dir="ltr">(Bloomberg News columnist Jonathan Weil comes to Wall Street's defense by calling the survey a <a href="http://www.bloomberg.com/news/2013-07-16/worthless-survey-smears-wall-street-ethics.html">"worthless smear"</a> because it's not a scientific sample. But "scientific" or not, he has no explanation at all for why sizable percentages of these 250 respondents are so ethically challenged.)  </p><p dir="ltr">Are the big banks and hedge funds criminal enterprises?</p><p dir="ltr">Given the attitudes of our financial elites, you would expect bad things to happen. The list of high crimes and misdemeanors is mind boggling, and growing every day.</p><ul><li dir="ltr"><p dir="ltr">Design mortgage related securities so that they will fail in order to bet against them. (See <a href="http://www.powells.com/biblio/1-9781118239247-1">How to Make a Million Dollars an Hour</a> for all the gory details.)</p></li></ul><ul><li dir="ltr"><p dir="ltr"><a href="http://rt.com/usa/foreclosure-banks-military-inlawful-806/">Unlawfully foreclose</a> on 700 military families.</p></li></ul><ul><li dir="ltr"><p dir="ltr"><a href="http://www.cnbc.com/id/100303180">Money launder</a> for drug cartels.</p></li></ul><ul><li dir="ltr"><p dir="ltr"><a href="http://www.nytimes.com/2013/02/24/business/major-banks-aid-in-payday-loans-banned-by-states.html?pagewanted=all&amp;_r=0">Collude with illegal payda</a>y loan sharks.</p></li></ul><ul><li dir="ltr"><p dir="ltr"><a href="http://www.nytimes.com/2013/06/20/business/economy/monitor-finds-lenders-failing-terms-of-settlement.html?pagewanted=all">Fail to live up to settlement</a> to provide mortgage revisions.  </p></li></ul><ul><li dir="ltr"><p dir="ltr">Sell billions of dollars worth of bogus insurance policies that are supposed to provide payment protection for ill or unemployed mortgage holders, but actually provide <a href="http://www.lrb.co.uk/v35/n13/john-lanchester/are-we-having-fun-yet">no coverage at all</a>.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Let the London Whale gamble with federally insured money and then lose $6 billion, and then <a href="http://dealbook.nytimes.com/2013/03/14/jpmorgan-faulted-on-controls-and-disclosure-in-trading-loss/">refuse to provide documentation to regulators.</a></p></li></ul><ul><li dir="ltr"><p dir="ltr">Lie to your colleagues in the media in order to move markets your way. (<a href="http://antisocialmedia.net/antisocial-multimedia/jim-cramer-on-market-manipulation-in-his-own-words/">Jim Cramer's confession.)</a></p></li></ul><ul><li dir="ltr"><p dir="ltr">Illegally trade on insider information. (71 hedge fund traders plead guilty or are <a href="http://articles.latimes.com/2013/mar/29/business/la-fi-sac-arrest-20130330">convicted</a> in the last two years.)</p></li></ul><ul><li dir="ltr"><p dir="ltr">Hedge funds <a href="http://www.forbes.com/sites/afontevecchia/2011/08/11/short-selling-and-rumor-mongering-banned-in-belgium-france-italy-and-spain/">spread false rumors</a> about European banks to cause runs.</p></li></ul><ul><li dir="ltr"><p dir="ltr">High frequency traders <a href="http://www.themistrading.com/article_files/0000/0475/THEM_--_Why_Institutional_Investors_Should_Be_Concerned_About_High_Frequency_Traders_--_Final.pdf">milk investors</a>.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Collude to <a href="http://en.wikipedia.org/wiki/Libor_scandal">manipulate basic interest rates</a> (LIBOR) that effect trillions of dollars of debt.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Engage in <a href="http://ourfinancialsecurity.org/2013/04/municipal-finance-preventing-exploitation-of-taxpayers-and-the-public/">predatory lending</a> to rip off cities, towns and school systems.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Rating agencies turn tricks for cash by giving out thousands of <a href="http://www.huffingtonpost.com/2013/02/05/sp-lawsuit_n_2621561.html">bogus AAA ratings</a>.</p></li></ul><p dir="ltr"><strong>The end of finance as we know it</strong></p><p dir="ltr">What more evidence do we need before concluding that "the Street" is beyond redemption? Regulatory enforcement is weak and the new regulations are weaker still. It's a fools errand to think we can control trillion-dollar banks and billionaire hedge fund honchos. The only hope is to destroy finance as we know it.</p><p dir="ltr">It's time to think outside the box. We should be demanding what we really want, rather than begging for minor reforms that are certain to fail. Here's a plan that just might work:  </p><p dir="ltr">1. Set up 50 state banks like the one in North Dakota. Set the top salary at no higher than five times the median wage within the state. At the <a href="http://www.alternet.org/corporate-accountability-and-workplace/why-socialism-doing-so-darn-well-deep-red-north-dakota?paging=off">Bank of North Dakota</a>, the top officers average less than a chauffeur for a hedge fund mogul.)</p><p dir="ltr">2. Nationalize the 20 largest banks and set the top salary at no more than the President of the United States ($400k, $50k expenses, no stock options). "What, live on just $400,000? You must be mad." Just think of how many financiers, young and old, would flee Wall Street for other professions. Just think of how many scams would grind to a halt. After all if you can't make your $10 million on a trade by cheating, why bother?</p><p dir="ltr">3. Pass a Financial Transaction Tax—a sales tax on all stocks, bonds, derivatives etc. That would bring the high-frequency trading racket to a grinding halt and slow down the financial hustlers.</p><p dir="ltr"><strong>Dream on?</strong></p><p dir="ltr">When discussing proposals such as these during media interviews, the usual response is incredibly fatalistic -- "The genie is out of the bottle." "Global finance is here to stay and we can't do much about it." "They have the money to buy political power." "They'll always find a way to cheat."....</p><p>These are the very words bankers love to hear. These are the thoughts that will allow ever increasing inequality and ever larger financial crashes and bailouts. Sure, we're getting our butts kicked right now, and it's so much easier to ignore the incredible rip-offs than to fight. But our runaway financial system won't leave us alone. They're siphoning away the nation's wealth and they won't let up...ever.  At the very least we should by asking for what we really want, what we really think will work, and what we really think is fair and just.</p><p dir="ltr">I'll wager that 100 years from now, people will look back at this period and say, "How the hell did you let these bankers ruin the world? Why didn't you take them over when they were down on their knees begging for bailouts? Why didn't you set up a public financial system that served the country rather than the financial elites  --- just like we have now ....and it works!"</p> Fri, 19 Jul 2013 08:22:00 -0700 Les Leopold, AlterNet 871172 at http://personal.alternet.org Corporate Accountability and WorkPlace Corporate Accountability and WorkPlace Economy wall st. Why Have Student Loans At All? Let's Get the Burdens of Debt off College Students' Backs -- And Make Wall St. Pick Up the Tab http://personal.alternet.org/education/reparations-college-debt <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Higher education used to be free for millions of Americans. A transaction tax on the financial houses would make it free again.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2013-07-01_at_5.03.03_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr"><span style="font-size: 12px;">Anyone with a heartbeat knows that Wall Street took down the economy, killed millions of jobs and hasn't had to pay a penny for the damage it caused. In fact we are paying them for crashing the economy in the form of trillions in bailouts and low interest loans.</span></p><p dir="ltr"><span style="font-size: 12px;">Well, maybe it's time for Wall Street to contribute, rather than siphoning off our wealth. How about a sales tax on all transfers of stocks, bonds, and derivatives in order to fund tuition-free higher education?  </span></p><p dir="ltr"><strong>Why are high schools free but colleges aren't?</strong></p><p dir="ltr">Access to higher education is vital to our economy and to our democracy. Today a college degree or post-high school professional training are the equivalent to what a high school diploma provided and signified a generation ago. For over 150 years, our nation has recognized that tuition-free primary and secondary schools were absolutely vital to the growth and functioning of our commonwealth.  </p><p dir="ltr">By the middle of the 19th century, New York City also provided free higher education through what would become the City College of New York. Hunter and Brooklyn colleges also were tuition-free, as was California's rapidly growing post-WWII state college and university system. The GI Bill of Rights after WWII provided significant resources to over three million returning veterans to go to school tuition-free, which in no small part, helped to build American prosperity for the next generation. (Tuition was even provided if GIs attended private colleges and universities.) A further impetus to free higher education came as America fell behind the USSR during the Sputnik-era space race.  </p><p><span style="font-size: 12px;">But the spread of free higher education stalled and then retreated precisely as Wall Street began to grab more and more of the nation's wealth. As financialization transformed the economy starting in the late 1970s, average wages flattened while Wall Street incomes shot through the roof. At the same time taxes on the super-rich collapsed placing more and more of the burden on working people. Lo and behold, free higher education rapidly became "unaffordable." Wall Street then swooped in with loans as students and their families loaded up on debt in order to gain access to higher education. This is the very definition of financialization.</span></p><p><br /><img src="https://lh3.googleusercontent.com/0NwjzdPgk110Z0aJIz7yt3koTue_hFnvr8i9e8Q5bGkMjAjskwOxwmhh5ZH1vmsgMLQyaBG9nSzXJH74jFdR_jBOnj9ZzZO267Z0Vt8eDvgd1CQiAqs-adx6ODFp8ougdw" /></p><p dir="ltr"><strong>As Student Loans Rise, the Rich get Richer  </strong></p><p dir="ltr">As student loan debt climbed ever higher, the super-rich continued to rake in more and more income, especially in comparison to the rest of us.</p><p dir="ltr">Many financial elites rose to riches by packaging and selling every kind of toxic asset imaginable. They made fabulous amounts as they pumped up the housing bubble, and then made even more as it imploded. It turns out that wealth was based on hot air, as well as plain old cheating. (See <a href="http://www.amazon.com/How-Make-Million-Dollars-Hour/dp/1118239245/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1358022645&amp;sr=1-1&amp;keywords=how+to+make+a+million+dollars+an+hour">How to Make a Million Dollars an Hour</a> for a detailed account.) So far, neither Wall Street nor its super-rich patrons have been forced to pay for the damage they caused.</p><p dir="ltr"> <img src="https://lh4.googleusercontent.com/L-NGvZLaAvXlcC0HnCSBJWfspnqwk2TQdIvpjzyCOa4tHF3tKXHuA5QtB8ClMBiWcYORdnqAETkV9kPhuhcP18RG8ryJrCbQmRXn07BSkGcy6ZoPtlQB2PKjx-q0Ywagpg" /></p><p dir="ltr"><strong>How to Make Wall Street Pay</strong></p><p dir="ltr">It's not easy to tax the super-rich when they have their hooks so deeply into both political parties. However, the student debt crisis opens the door to force a provocative public debate:  <span style="font-size: 12px;"> </span></p><ul><li dir="ltr"><p dir="ltr">Are we resigned to be vassals to Wall Street elites or can we redirect resources to invest in our young people?  </p></li><li dir="ltr"><p dir="ltr">Are we going to saddle our kids with decades of debt or are we going to make the Wall Street gamblers pay the damage they caused?  </p></li></ul><p><span style="font-size: 12px;">The financial transaction tax (aka Robin Hood Tax or Speculation Tax) hits hard at Wall Street gambling. A small sales tax on all financial transactions will come almost entirely from those who are gaming the system by rapidly moving money in and out of markets. Eleven European nations are about to institute such a tax and have found excellent ways to enforce it. (If you or affiliates don't pay by using shell companies and other tricks, you don't do business in our country.) England has had one on stocks for the past 300 years and it works just fine. Clearly, a sales tax would successfully collect from the superrich.</span></p><p><span style="font-size: 12px;">Of course, you'll hear Wall Street apologist moan and grown about how such a tax will kill jobs, steal from your pension funds, and rob your kids' piggy-banks. All lies.</span></p><p dir="ltr">Unless you play with your 401k like a high frequency trader—which means you'll be fleeced by them anyway—you won't feel this tax. Neither will your pension funds, which are not supposed to churn your investments anyway.</p><p dir="ltr">As for jobs, when was that last time Wall Street produced real jobs on Main Street? They would just as soon finance a job smashing merger or the movement of jobs out of the country. The only jobs that would be hurt are a few at high frequency hedge funds that milk markets by making millions of automated trades per second. For the sake of financial stability and fairness, they should be put out of business anyway.</p><p dir="ltr">No, when it comes to hitting Wall Street elites, a financial transaction tax is just about perfect.</p><p dir="ltr"><strong>Let's encourage Elizabeth Warren to take the next step</strong></p><p dir="ltr">Senator Elizabeth Warren opened the door to this debate as she attempted to stop student loan interest rates doubling to 6.8 percent in July. On July 1, <a href="http://rochester.ynn.com/content/top_stories/671629/students-and-lawmakers-react-to-student-loan-interest-rate-hike/">they doubled</a>. She wants the Federal Reserve to loan money to students at the same rate it charges too-big-to-fail banks, which is next to nothing at 0.75 percent.</p><p dir="ltr">Of course, most politicians and pundits think she's off her rocker. How dare she try to interfere with "market forces"? But as Ellen Brown of the Public Banking Institute shows in her excellent rejoinder ("<a href="http://www.huffingtonpost.com/ellen-brown/elizabeth-warrens-qe-for-_b_3444992.html">Elizabeth Warren's QE for Students: Populist Demagoguery or Economic Breakthrough?</a>"), it makes economic as well as ethical sense to invest in our young people. In fact, it makes a whole lot more sense than propping up too-big-to fail banks that have grown even fatter since the crash.</p><p dir="ltr"><strong>But why have any student loans at all?</strong></p><p dir="ltr">Why accept the perverse idea that students should saddle themselves with decades of loan repayments in order to gain access to higher education? Even with interest rates at 0%, we're still asking students and their families to load themselves up with tons of debts in order to get access to the advanced skills and knowledge our economy and our democracy desperately need.</p><p dir="ltr">Isn't it in the national interest to invest in our young people, rather than loading them up with debt?  </p><p dir="ltr"><strong>Can we really beat the Street?</strong></p><p dir="ltr">Maybe. It starts with having the nerve to ask for what we really want, rather than compromising before we start. Do we think Wall should pay reparations for what it has done to the economy? Do we think it fair to use that money to fund free higher education in order to rid our young people of crushing debt? If the answers are yes, we can start organizing.</p><p dir="ltr">The next step is to convince those working on the Robin Hood Tax to tie it to free higher education. That would allow financial transaction tax advocates to reach out to an enormous constituency—students and their families.   </p><p dir="ltr">And yes, we also we need some organizational magic, not unlike what sparked Occupy Wall Street. Perhaps, websites like AlterNet.org can link up with like-minded media outlets and progressive groups to form a vast coalition of the pissed-off! Millions might be ready for that.</p><p dir="ltr">The anger toward Wall Street is there. The outrage over ever-rising student debt is there. Now is the time to connect the two and provide some extra organizational juice.</p><p><span style="font-size: 12px;">No one has a magic bullet and no one can guarantee success. But unless we try, we will guarantee that Wall Street and its Washington minions will continue to rip us off.</span></p><p dir="ltr">Surely we have enough creative energy to build another path.</p> Tue, 02 Jul 2013 10:24:00 -0700 Les Leopold, AlterNet 859710 at http://personal.alternet.org Education Corporate Accountability and WorkPlace Education student debt Big Lie: America Doesn't Have #1 Richest Middle-Class in the World: We're Ranked 27th! http://personal.alternet.org/economy/americas-middle-class-27th-richest <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">America is the richest country on Earth. We have the most millionaires, the most billionaires—and an increasingly poor middle-class.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2013-06-18_at_5.11.21_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">America is the richest country on Earth. We have the most millionaires, the most billionaires, and our wealthiest citizens have garnered more of the planet's riches than any other group in the world. We even have hedge fund managers who make in one hour as much as the average family makes in 21 years!  </p><p dir="ltr">This opulence is supposed to trickle down to the rest of us, improving the lives of everyday Americans. At least that's what free-market cheerleaders repeatedly promise us.</p><p dir="ltr">Unfortunately, it's a lie, one of the biggest ever perpetrated on the American people.</p><p dir="ltr">Our middle class is falling further and further behind in comparison to the rest of the world. We keep hearing that America is number one. Well, when it comes to middle-class wealth, we're number 27.  </p><p dir="ltr">The most telling comparative measurement is median wealth (per adult). It describes the amount of wealth accumulated by the person precisely in the middle of the wealth distribution—50 percent of the adult population has more wealth, while 50 percent has less. You can't get more middle than that.</p><p dir="ltr">Wealth is measured by the total sum of all our assets (homes, bank accounts, stocks, bonds etc.) minus our liabilities (outstanding loans and other debts). It the best indicator we have for individual and family prosperity. While the never-ending accumulation of wealth may be wrecking the planet, wealth also provides basic security, especially in a country like ours with such skimpy social programs. Wealth allows us to survive periods of economic turmoil. Wealth allows our children to go to college without incurring crippling debts, or to get help for the down payment on their first homes. As Billie Holiday sings, "God bless the child that's got his own."  </p><p dir="ltr">Well, it's a sad song. As the chart below shows, there are 26 other countries with a median wealth higher than ours (and the relative reduction of U.S. median wealth has done nothing to make our economy more sustainable).</p><p dir="ltr"><img src="https://lh4.googleusercontent.com/URW83lMvrneYqwWf_fDidPxc2ib6LflMAiSvwew4jY90vqa2DCXYQHnoP4_wrCVfwxEd8GjoZRUcHlFMnMtPuBMJxTcCi4-LFvELvIK12fbvXVNOABYG2uqlrbhE0dscLA" style="width: 636px; height: 358px;" /></p><p dir="ltr"><br />Why?</p><p dir="ltr">Here's a starter list:</p><ul><li dir="ltr"><p dir="ltr">We don't have real universal healthcare. We pay more and still have poorer health outcomes than all other industrialized countries. Should a serious illness strike, we also can become impoverished.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Weak labor laws undermine unions and give large corporations more power to keep wages and benefits down. Unions now represent less than 7 percent of all private sector workers, the lowest ever recorded.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Our minimum wage is pathetic, especially in <a href="http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country">comparison to other developed nations</a>. (We're # 13.) Nobody can live decently on $7.25 an hour. Our poverty-level minimum wage puts downward pressure on the wages of all working people. And while we secure important victories for a few unpaid sick days, most other developed nations provide a month of guaranteed paid vacations as well as many paid sick days.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Wall Street is out of control. Once deregulation started 30 years ago, money has gushed to the top as Wall Street was free to find more and more unethical ways to fleece us.  </p></li></ul><ul><li dir="ltr"><p dir="ltr">Higher education puts our kids into debt. In most other countries higher education is practically tuition-free. Indebted students are not likely to accumulate wealth anytime soon.  </p></li></ul><ul><li dir="ltr"><p dir="ltr">It's hard to improve your station in life if you're in prison, often due to drug-related charges that don't even exist in other developed nations. In fact, we have the largest prison population in the entire world, and we have the highest percentage of minorities imprisoned. “In major cities across the country, 80% of young African Americans now have criminal records” (from Michelle Alexander's 2010 book, <em>The New Jim Crow: Mass Incarceration in the Age of Colorblindness</em>).</p></li></ul><ul><li dir="ltr"><p dir="ltr">Our tax structures favor the rich and their corporations that no longer pay their fair share. They move money to foreign tax havens, they create and use tax loopholes, and they fight to make sure the source of most of their wealth—capital gains—is taxed at low rates. Meanwhile the rest of us are pressed to make up the difference or suffer deteriorating public services.</p></li></ul><ul><li dir="ltr"><p dir="ltr">The wealthy dominate politics. Nowhere else in the developed world are the rich and their corporations able to buy elections with such impunity.</p></li></ul><ul><li dir="ltr"><p dir="ltr">Big Money dominates the media. The real story about how we're getting ripped off is hidden in a blizzard of BS that comes from all the major media outlets...brought to you by....</p></li></ul><ul><li dir="ltr"><p dir="ltr">America encourages globalization of production so that workers here are in constant competition with the lower-wage workers all over the world as well as with highly automated techonologies.</p></li></ul><p dir="ltr">Is there one cause of the middle-class collapse that rises above all others?</p><p dir="ltr">Yes. The International Labor organization produced a remarkable study (<a href="http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_194843.pdf">Global Wage Report 2012-13)</a> that sorts out the causes of why wages have remained stagnant while elite incomes have soared. The report compares key causal explanations like declining bargaining power of unions, porous social safety nets, globalization, new technologies and financialization.  </p><p dir="ltr">Guess which one had the biggest impact on the growing split between the 1 percent and the 99 percent?</p><p dir="ltr">Financialization!   </p><p dir="ltr">What is that? Economist Gerald Epstein offers us a <a href="http://www.peri.umass.edu/fileadmin/pdf/programs/globalization/financialization/chapter1.pdf">working definition</a>:</p><blockquote><p dir="ltr">"Financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies."</p></blockquote><p dir="ltr">This includes such trends as:</p><ul><li dir="ltr"><p dir="ltr">The corporate change during the 1980s to make shareholder value the ultimate goal.</p></li><li dir="ltr"><p dir="ltr">The deregulation of Wall Street that allowed for the creation of a vast array of new financial instruments for gambling.</p></li><li dir="ltr"><p dir="ltr">Allowing private equity firm to buy companies, load them up with debt, extract enormous returns, and then kiss them goodbye.</p></li><li dir="ltr"><p dir="ltr">The growth of hedge funds that suck productive wealth out of the economy.</p></li><li dir="ltr"><p dir="ltr">The myriad of barely regulated world financial markets that finance the globalization of production, combined with so-called "free trade" agreements.</p></li><li dir="ltr"><p dir="ltr">The increased share of all corporate profits that go to the financial sector.</p></li><li dir="ltr"><p dir="ltr">The ever increasing size of too-big-to-fail banks.</p></li><li dir="ltr"><p dir="ltr">The fact that many of our best students rush to Wall Street instead of careers in science, medicine or education.</p></li></ul><p dir="ltr">In short, financialization is when making money from money becomes more important that providing real goods and services. Here's a chart that says it all. Once we unleashed Wall Street, their salaries shot up, while everyone else's stood still.</p><p dir="ltr"><img height="499px;" id="docs-internal-guid-4f43964c-5af8-c33d-9fa0-0f3c782b5c7c" src="https://lh4.googleusercontent.com/e5ckKtfA8gF2r5itS1-UtfwI3qwD3YrunjFCyCd1ddAmknpFQFK0etiN-Ga2AkPNU-IPS9sdw0cJPNuZozaRhOjizQFMeJGNdQRDD5Zwar0-XahieIugsCLde3igb_5owQ" width="564px;" /></p><p dir="ltr">Do we still know how to fight!</p><p dir="ltr">The carefully researched ILO study provides further proof that Occupy Wall Street was right on the money. OWS succeeded (temporarily), in large part, because it tapped into the deep reservoir of anger toward Wall Street felt by people all over the world. We all know the financiers are screwing us.</p><p dir="ltr">Then why didn't OWS turn into a sustained, mass movement to take on Wall Street?</p><p dir="ltr">One reason it didn't grow was that the rest of us stood back in deference to the original protestors instead of making the movement our own. As a result, we didn't build a larger movement with the structures needed to take on our financial oligarchs. And until we figure out how to do just that, our nation's wealth will continue to be siphoned away.  </p><p dir="ltr">Our hope, I believe, lies in the young people who are engaged each day in fighting for the basic human rights for all manner of working people—temp workers, immigrants, unionized, non-union, gays, lesbians, transgender—as well as those who are fighting to save the planet from environmental destruction. It's all connected.</p><p dir="ltr">At some point these deeply committed activists also will understand that financialization both here and abroad stands in the way of justice and puts our planet at risk. When they see the beast clearly, I am confident they will figure out how to slay it.  </p><p dir="ltr">The sooner, the better.</p> Tue, 18 Jun 2013 14:04:00 -0700 Les Leopold, AlterNet 857046 at http://personal.alternet.org Economy Corporate Accountability and WorkPlace Economy middle class Is the White House Open for Hedge Fund Business? http://personal.alternet.org/news-amp-politics/white-house-hedge-funds-corruption <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">How the insider trading game is played in government...and at the White House.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/insidertrade.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p dir="ltr">Knowledge is power. But insider knowledge is more lucrative than power, because it offers the surest path to vast riches. If you know something that will move markets before everyone else does, you will profit mightily.</p><p dir="ltr">Normally, we think of insider trading as a Wall Street crime of illegally obtaining corporate information before the rest of the investing public. But the same game can be played with governmental information concerning changes in health care rules or military programs. If you know in advance that an important change is about to take place in a Medicare rule, for example, you can win enormous returns on your investments in key healthcare corporations.</p><p dir="ltr">So a new game is afoot as Wall Street hedge funds, acting through "political intelligence" consulting firms, are on a crusade to gain information from congressional staff and even key White House officials.</p><p dir="ltr"><strong>Is the White House Open for Hedge Fund Business?</strong></p><p dir="ltr">The latest outrage concerns a series of private meetings between White House healthcare officials and hedge funds that are betting on the healthcare industry. As the <a href="http://www.washingtonpost.com/politics/political-intelligence-firms-set-up-investor-meetings-at-white-house/2013/05/26/73b06528-bccb-11e2-9b09-1638acc3942e_story.html" target="_blank">Washington Post reports:</a></p><blockquote><p dir="ltr">"Wall Street investors hungry for advance information on upcoming federal healthcare decisions repeatedly held private discussions with Obama administration officials, including a top White House adviser helping to implement the Affordable Care Act."</p></blockquote><p dir="ltr">This comes on the heals of similar meetings between congressional staff and hedge funds via political intelligence firms that led to enormous jumps in stock activity. The Securities and Exchange Commission issued subpoenas in early May to look into an <a href="http://www.washingtonpost.com/business/economy/sec-issues-subpoenas-to-political-intelligence-firms-connected-to-leaked-information/2013/05/01/43121794-b290-11e2-bbf2-a6f9e9d79e19_story.html" target="_blank">incident that emerged</a> on April 1, "when Height Securities, a Washington-based stock brokerage firm, alerted its clients that the government would soon make a decision favoring private health insurers who participate in a Medicare program. The alert went out 18 minutes before the end of the trading day, sparking a surge in trading in the shares of several major healthcare firms, including Humana and Aetna. The official government announcement was made after trading closed for the day."</p><p dir="ltr">Hedge funds and their never-ending lust for lucre are the driving force behind this gold rush for insider governmental information. And you can understand why: The secret to making a million dollars an hour is coming up with sure bets. Insider trading leads to the surest of sure bets.</p><p dir="ltr"><strong>There Ought To Be a Law</strong></p><p dir="ltr">There already is.</p><p>In 2012, President Obama signed a bill disallowing government insider trading of all kinds. You see, <a href="http://www.huffingtonpost.com/2011/05/24/members-of-congress-get-a_n_866387.html" target="_blank">academic studies figured out</a> that on average congressmen miraculously earned returns that were 6 percent higher than the average market returns. And senators did even better by scoring 10 percent higher returns. Either these elected officials are really, really smart investors (of course, doing all their prodigious stock research on their own time), or they are trading on insider knowledge. Then again, they also might profit handsomely by pushing legislation to feather their own investment portfolios. Either way, it's good work, if you can get it.   </p><p dir="ltr">Knowing how difficult it would be to police thousands of government officials, the new law relied on sunshine: All federal elected officials and key staff would have to put the investment portfolios online so that we could see the results of their prescient investment decisions.</p><p dir="ltr">Well, a funny thing happened as the law was about to be implemented—the sunshine provision was <a href="http://www.huffingtonpost.com/2013/04/17/stock-act-change-insider-trading_n_3100115.html" target="_blank">dropped for all staff</a>. (It's still there for elected officials.) That means thousands of government officials might be further tempted to feather their own nests through sharing insider knowledge with predatory investors.</p><p>Trading on their own accounts is risky since it leaves behind an electronic record, and beside, these staffers aren't rich enough to place the kind of bets needed to cash in big-time. But giving a tip or two to a hedge fund via a political intelligence firm might, one day, land you a fat job on Wall Street. Meanwhile, the spigot is open, meaning that hedge funds will make more money on one illicit trade than all the staffers combined can make in a lifetime of investing.</p><p dir="ltr"><strong>Is the Fox Guarding the Hen House?</strong></p><p dir="ltr">We <a href="http://www.nytimes.com/2013/05/30/us/politics/obama-to-pick-james-b-comey-to-lead-fbi.html?ref=todayspaper&amp;_r=0" target="_blank">learned this week</a> that President Obama will nominate James B. Comey, a former hedge fund attorney, to lead the FBI. Will Comey be vigilant in pursuit of hedge fund crimes? Will he provide full FBI support for Preet Bharara, the U.S attorney for the southern district of New York who has secured insider trading convictions or guilty pleas from over seventy hedge fund honchos?   </p><p dir="ltr">The jury is out.  </p><p dir="ltr">But we have some clues. It turns out that from January 2002 to December 2003, Comey had Preet Bharara's job in New York. During his time as the top Wall Street cop, he is best known for convicting Martha Stewart for trading on insider information. However, a cursory review of his prosecutorial record shows that he did not go after hedge funds, even though they were cheating their way to billions of dollars in illegal profits through insider trading and other scams.</p><p dir="ltr"><strong>The Wall Street-Washington Infection</strong></p><p dir="ltr">Let's take a cold hard look at what we've become. As a result of a generation of deregulation, Wall Street barons earn as much in one hour as the average government official earns in 20 years. Just think for a moment the amount of contempt that super-rich hedge fund mogols must have for these lowly public servants. And think for a moment about how many of these public servants might like to cash in on Wall Street's riches. After all, they see the revolving door spinning away as elected officials and government operatives move effortlessly from high finance to government and back again—Robert Rubin, Larry Summers, Hank Paulson, Peter Ortzag, Tim Geithner... and on and on they go.  </p><p>Of course, none of them would ever condone insider trading of any kind. But it's doubtful they would lose much sleep over it, or demand intense prosecution of financial crimes. After all, the group-think is powerfully clear: What's good for Wall Street is good for America...and vice versa. The idea of breaking up too-big-to-fail banks, or challenging them with a public state banks, or capping Wall Street incomes at reasonable levels, or instituting a financial transaction tax on Wall Street's casinos, or closing the special tax loopholes used by billionaire hedge fund managers—all of it is anathema to their hermetically sealed world view.  </p><p dir="ltr">As a result, they are (mis)leading us into a downward spiral of trust and cheating as public support for government erodes. The more that insider government trading and job swapping spreads, the more the public will detest the ties between Wall Street and Washington. As the trust in government declines, public employee morale and self-respect will plummet, increasing the temptation to spill the beans to hedge funds. The net winners, of course, will be the rapacious hedge funds. The net losers? All the rest of us.</p><p><strong>Where's Washington's Preet Bharara?</strong></p><p dir="ltr">What we need right now is a Washington version of the NY federal attorney Preet Bharara who is rounding up the hedge fund cheaters by the dozen. We need a Justice Department/FBI task force to put a stop to hedge fund manipulation of government sources, and we need to insist that those government sources do the people's business, instead of their own.</p><p dir="ltr">Memo to President Obama: Please think again about the signal you send by appointing a former hedge fund lawyer to run the FBI.</p> Mon, 10 Jun 2013 10:47:00 -0700 Les Leopold, AlterNet 848434 at http://personal.alternet.org News & Politics Economy News & Politics hedge fund white house health care wall street washington affordable care act Securities and Exchange Commission insider trading james b. comey fbi preet bharara obama justice department