Brad DeLong: America’s Financial Leviathan: Project Syndicate discusses ways the financial sector can help the economy, and mentions the sector’s justification for its growth: “not, by and large, been a bad thing….Deploying capital to the places where it can be best used helps the economy grow…”
But if the financial sector was helping the economy grow, then the sector’s share of the economy would not be increasing so much, because the economy would be increasing.
You may have heard that Verizon is going to charge customers a $2 “convenience fee” to pay their bills online. You may not have heard that Verizon is asking its workers to take cuts in their pensions, sick pay, health insurance, even disability for employees injured on the job. These examples of corporate greed are cut from the same cloth. This is about big corporations using their power to drain and ultimately destroy the middle class so the 1% can have even more.
NY Times, An Uproar on the Web Over $2 Fee by Verizon,
The $2 monthly fee, which takes effect Jan. 15, will apply to people who make one-time credit or debit card payments on the phone or online. …
The outsize reaction in many ways reflects the year that is now concluding. The economy has not improved much, consumers are fresh off their victory in getting Bank of America to rescind its own move to levy a small new monthly fee and airlines and other companies continue to ask customers to pay à la carte for goods and services that were once part of the standard price.
Then there was Verizon, making the announcement in the dead week between Christmas and New Year’s and calling its new charge a “convenience” fee.
The giant telecom company Verizon, currently raking in the billions ($6 billion in profits and a $10 billion dividend on $108 billion in revenue last year), while paying no taxes, is putting the squeeze on its workers, and they are fighting back. With all those profits, the company has been consumed by greed: Now Verizon is asking for $1 billion in concessions from its workers.
This giant company is extremely profitable, yet manages to pay not taxes: (click through for full story)
This year, the Social Security system projects that it will pay out $46 billion more in benefits than it will collect in cash. It made up for the shortfall by redeeming Treasury bonds bought in years when there were cash surpluses.
This is not true. The Social Security trust fund is projected to earn $114.9 billion in interest on the bonds it holds. It will use a portion of these earnings to pay current benefits. It will not be redeeming its bonds.
Social Security has a huge trust fund — if you think $2.6 trillion is huge. That trust fund is invested in US Treasury Bonds, and earns interest.
When you hear that Social Security is “in trouble’ or “going broke” you are hearing from people who ignore this huge, huge trust fund and the interest it earns. This trust fund, along with the money people pay in, means that Social Security has enough to pay full benefits until 2037. Even then it will still be able to pay everyone more than they receive today. (Yes, more, because of cost-of-living adjustments.)
One of the problems with Social Security is that the “cap” — the top income that is taxed to pay into the fund — was calculated in the 80’s, and they didn’t foresee that all income gains after the 80s would only go to those at the top, where the income isn’t taxed to pay into the fund. So, since the 80s, as more and more of the income gains went to the top few, the Social Security fund started to not have quite enough to go on forever. So now it it projected to only last until 2037. This is, of course, easily fixed — as are so many of our country’s problems — by asking those at the top to pay in a little more.
So … will I be attacked with pepper spray and batons for suggesting that the rich should pay back a bit more?
See also, Jan 2010, Washington Post Joins Wall Street Sneak Attack On Social Security. This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary.
I used to be a Silicon Valley entrepreneur.
Back in the day, you made a product, put it in a box, put the box through distribution, helped retailers sell it, got back a little money, paid your employees, and hoped there would be enough to make some more product, boxes, etc.
If you weren’t one of the BigCo’s the distributors would play games with your money. Eventually the games got so sophisticated, they had it worked out so you owed them more money than you made, so there was no way to get ahead. Unless you were one of the Big Ones. But even they hit the wall, and the software-in-a-box business went by the wayside.
A few people got rich from that. Yes, it was a bubble. What you got paid for was not your ability to make money. But, rather the ability of the VCs to sell Wall Street on whatever it is they sold them on back then. We were part of the whole system that eventually hit the wall with Credit Default Swaps and huge bailouts and unrepentant bankers. There was a trickle-down. The closer you were to someone who actually made something, the less you got paid. You read that right, the less you got paid. I’ll repeat it. If you made something you got paid less.
A lot of people are missing that Newt was never in the primaries to actually win. He entered the primaries to raise his name recognition so he could make more with his various scams that he runs. Remember, he made more than $50 million just from health care lobbying in the last decade. And that was just one of his schemes.
So there he was, suddenly in the lead. Not the plan! He can’t pull in that kind of cash if he is the actual nominee — and he knows he can’t win the election. So he needs to milk the lead but make sure he doesn’t actually win the nomination. Did you notice that he slowed way down on campaigning in Iowa after taking the lead. That’s the tip-off.
Newt running for President is just one more Republican con game.
Who is our economy for, anyway? In the United States We, the People are supposedly in charge and our country and economy are supposed to be managed for the public good. But that isn’t how things have been working out, is it?
Let’s take a quick look at America over the last few decades.
We used to have a social contract. We invested in top-notch infrastructure (like the interstate highway system) and education (the best universities and research), and then tax the resulting gains at very high rates, to recirculate those gains for the benefit of all of us. Broken Social Contract
Then the contract was broken. Starting in the 1970s a cabal of wealthy businessmen and conservative ideologues organized and funded an attack on We, the People government, manipulating public opinion and our political system, gutting the regulations and trade rules that protected us and our way of life, privatizing — selling off things We, the People own — and killing the tax-and-invest cycleso they could keep the gains from all of that prior investment for themselves. Blanket Of Propaganda
To provide cover for the operation these agents of the 1% spread a thick blanket of propaganda, using every technique in the modern marketing book. They divided us by race, religion, gender, sexual preference, even pitting people who like quiche and lattes against those who like beer and sausage. To cripple potential opposition they infiltrated and fractured key institutions, and turned the public against the news media. They developed a professional career-path system that rewards those who play along with the corruption and destruction and punishes those who do not. To cripple dissent they used ridicule, shame and intimidation. Destructive Choices Come Home To Roost Since then things have steadily fallen apart. The infrastructure is crumbling. Unemployment is extreme. The country has very high debt. The trade deficit is extreme. Half of us are poor or nearly poor. Inequality is at the highest levels. Bailouts For The 1%, Sell-Outs For The 99%
When things hit the fan it became clear that our country is no longer run for the good of We, the People. When it came down to it, a few got special treatment, the rest of us got … uh, less-than-special-treatment. (And weren’t even kissed.)
When the financial crisis occurred Congress was told they literally had only hours to come up with hundreds of billions to bail out the too-big-to-fail banks, and they did – with almost no conditions. We know now that the Federal Reserve also stepped up, providing trillions to the big banks, even hundreds of millions to bankers’ spouses! State and local governments, institutions and smaller businesses? The unemployed and millions facing foreclosure? Not so much. Plutocracy Not Democracy
They provided assistance for the giant financial institutions of the 1%. Instead of providing assistance to the 99& — We, the People — our government instead cut the things We, the People do for each other. It was made clear that this country is now a plutocracy, not a democracy. System Of Control Breaking Down
It is clear where we are. But it is also clear that the system of control is breaking down. The elections of 2006 and 2008 shook the foundations. Democracy tried to reassert control. The behind-the-scenes system of lobbyists writing legislation that passes under cover of “studies” from corporate-front think tanks, telling us this is for our own good, propelled by a flurry of corporate-funded op-eds, stopped working. After the bailouts for banks / sell out for the rest of us, people started figuring things out. In response the 5-4 Supreme Court handed down the Citizens United decision, flooding the system with corporate money.
Instead of stealth takeover masked by propaganda we now see blatant grabs of wealth and raw power poorly disguised. Now the control is in our faces every day. Even constant filibusters of acts that might help We, the People were no longer enough to keep a lid on. So now it is shutdowns, hostage-taking, refusal to follow laws, refusal to prosecute, threats to take down the government and/or the economy. Now more visible methods of suppression are in use — batons, tasers and pepper spray. Waking Up
Everyone has been frustrated, discouraged, betrayed, scared and angry but without a focus for action. Then came the Occupy movement, people actually showing up and showing how! It resonated. People responded, and the conversation of the country was pulled out of the propaganda fog, at least for a while. Stephen Lerner, interviewed by Sarah Jaffe for AlterNet, discusses where we go from here, saying, “[I]t’s an exciting feeling to see something a lot of people spent a lifetime hoping for –this kind of dramatic increase in activity that targets financial capital, those who really control the country.” On Occupy Wall Street, Lerner says,
Everybody knows they’re getting zapped by banks, and what’s so good about Occupy is that it’s put that front and center. The fact that they were in Wall Street, I think everybody forgets. It was not Occupy a park somewhere, it was the fact that it was in the middle of the financial district. And I think on an intuitive level, people all over the political spectrum understand that those guys are at the center of how the economy is organized in a way that doesn’t work for most people.
On Wall Street’s position in our economy,
I don’t think people are mad at somebody who invented a product or founded a company. It’s that people see that Wall Street is not productive. Their wealth and their riches, they do not come through any normal means — they come through cheating and gambling and ripping us off, which I think troubles us in a different kind of way.
I don’t think anybody should view a sort of holiday or winter lull in activity as a sign of anything. As people have said, movements ebb and flow, and whenever we look back, spring is the time that things take off again. It’s really important that people not say “Oh, everything was front page news and now it’s not.” People instead should be stepping back, saying, “In three months we did more than anybody imagined we could do, now it’s time to step back and figure out the next stage.”
Now comes the long slog of organizing people into focused action to take back our country from the 1%. Van Jones has been laying the groundwork, joining with MoveOn.org and other organizations to organize the Rebuild the Dream movement, and its Contract for the American Dream. Please visit and get involved.
Here is Van Jones at Netroots Nation, talking about the American Dream movement:
Organized labor is fighting, too, with new tactics and getting more people involved. They are focusing on labor’s role in creating a middle class in America. The recent Take Back the Capitol demonstrations are a case in point. In conjunction with many local and national organizations SEIU brought unemployed people to the DC to occupy the offices of 99 legislators, asking for jobs programs and extensions of unemployment benefits. They also marched on “K Street” – the symbolic center of lobbying activity.
Here is AFL-CIO President Rich Trumka, Take Back the American Dream conference in October, calling for “a massive, militant movement”:
Trumka told the audience that the right wing is “banking on an upside-down America for its path to political power.” Trumka said that now is the time for “a mighty movement for jobs and a just economy,” adding, “We won’t stop fighting, shoving and kicking until everyone is back at work.”
Here is Steelworkers President Leo Gerard, talking about labor support for Occupy Wall street, and holding Wall Street accountable:
Here is Communication Workers of America President Larry Cohen discussing the fight for the middle class on The Ed Show.
Up To Us
What happens next is up to us. Don’t be discouraged. “The people, united, will never be defeated.”
THIS is what democracy looks like. Here are Wisconsin protesters chanting: “Tell me what democracy looks like. THIS is what democracy looks like!”
For those of us who can’t get enough, here is 13 minutes of THIS is what democracy looks like!
David Brancaccio’s Marketplace story Tuesday, Decline of Kodak offers lessons for U.S. business traced the decline of Kodak and the loss of Rochester, NY’s good, middle-class jobs to Kodak’s failure to tend its “industrial commons.” This is a national problem. For 2012 let’s resolve to restore our industrial commons and bring manufacturing back to the U.S. Kodak on Marketplace
Listen to Tuesday’s Marketplace story, Decline of Kodak offers lessons for U.S. business. Click to listen.
Story summary: Kodak didn’t tend its “industrial commons,” the local concentration of expertise in making the things that go into a camera.
You make your money by selling cameras. And you now needed to make components. You needed to make lenses; you needed to make shutters — all kinds of things that the skills for which no longer existed in Rochester.
This is what we have done in our country, too. We have been dismantling our “industrial commons.” By sending manufacturing out of the country we have been taking apart the supply chains and abandoning the expertise and skills and culture that go with it. Other Warnings
Last year former Intel CEO Andy Grove sounded a warning about this problem. In How to Make an American Job Before It’s Too Late. Grove wrote that we are not just losing jobs to China, we are losing the “chain of experience” that enables new companies and industries to form and to create new jobs and argues for a national economic strategy to preserve our manufacturing and technology base. He lays out a plan: “rebuild our industrial commons,”
The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.
We Gave It Away
Many American manufacturers made a deal with China to lower their manufacturing costs. Here is how it worked: Americans (used to) have a say in how this country was run, and said they want good wages, benefits, job safety, clean air, etc. These are the fruits of democracy, but to some they are an impediment to quick profits. So executives at the big multinational companies wanted a way around the borders of democracy and its demands, and pushed for “trade” deals that would let them move manufacturing to places where people had no say, in order to force American unions to make concessions. They got their deals and packed up our factories, moved them to places like China and then brought the manufactured goods back here to sell.
We lost 50,000 factories to China just in the ‘W’ Bush years, and our trade deficit soared, and now we as a country are paying the price. Making (and growing) things is how a country earns its living. It is how we bring in the income with which to buy things others make and grow. Leo Gerard of the United Steelworkers said it clearly,
“You don’t create real wealth by flipping coupons or hamburgers, you create it by taking real things and turning them into things of value. And those things of value are turned into other things of value and all of a sudden you have a wind turbine with thousands of parts made here. You can’t have a clean economy without good jobs and can’t have good jobs without a clean economy.”
We just gave it away, and justified the loss by saying that better things will replace it. The result has been ever-increasing trade deficits that brought us a huge debt that makes us poorer. Our debt is not because of government spending, it is because we have given away our ability to make a loving! An Ideology To Justify
In the process the 1%’ers who did this to us developed an ideology around hating America and democracy. To justify outsourcing our jobs and factories they said Americans had grown lazy and wanted handouts. They said that the huge profits reaped by a few from selling off our manufacturing infrastructure meant they were “producers” and that democracy was “statism” and “collectivism” that enabled the “parasites” to “steal” from them. They declared that “taxes are theft” that “punish” the “successful” and the “job creators.” They stopped funding infrastructure and education and law enforcement, denegrating these as “government spending,” and declared that the wealthy few have a “right to rise” and saying the rest of us are “imbeciles.”
They moved our “industrial commons” out of the country, closing the factories and thereby dismantling the supply chains and the “chain of experience” that enable us to innovate and compete. They let China capture the lead in emerging green manufacturing technologies that will bring millions of jobs and trillions of dollars. They even let China extort proprietary technologies, in exchange for short-term profits.
They rode the tiger and now the tiger is coming back to bite us. Riding The Tiger Richard Eskow reminded me of an old Chinese saying, “He who rides the tiger cannot dismount.” American manufacturers rode the Chinese tiger to short-term profits, and now they cannot dismount. They “partnered” with China to get around the borders of democracy and the good wages and benefits democracy demands. But now the tiger wants more. The tiger wants to eat them up.
Riding the tiger: Forbes: Currency Manipulation is NOT the Biggest Chinese Threat,
China’s hidden threats are a multi-headed info-tech “Hydra,” the parts of which are interrelated:
Intellectual property rights violations (or lack of enforcement in China) allowing open theft of proprietary designs, etc.
Theft of private-sector technology (which has been going on for years) accelerating Chinese development cycles
Growing number of cyber-attacks, accessing highly confidential US government information, costing the US private sector billions of dollars in IT disruption.
Growing military/technology stolen secrets (e.g., stealth fighter plane designs, acquisition of downed stealth-helicopter parts from the bin Laden attack, electronic technology & software from US companies in China, etc.)
China is expected to issue regulations on Saturday requiring technology companies to disclose proprietary information like data-encryption keys and underlying software code to sell a range of security-related digital technology products to government agencies, American industry officials said on Friday.
Economic and industrial spying by China appears to be more pervasive and egregious than ever, costing America billions of dollars each year, according to a new report by a U.S. government agency. And the report raises an important question: If stolen trade and technology secrets help fuel China’s breakneck growth, then is more espionage required to feed the growing beast?
A group of hackers in China breached the computer defenses of America’s top business-lobbying group and gained access to everything stored on its systems, including information about its three million members, according to several people familiar with the matter.
The break-in at the U.S. Chamber of Commerce is one of the boldest known infiltrations in what has become a regular confrontation between U.S. companies and Chinese hackers.
They rode the tiger. But now the tiger wants more. The tiger wants to eat them up. Let’s Resolve To Rebuild American Manufacturing
Let’s resolve to rebuild American manufacturing, starting in 2012. Manufacturing is the backbone of a prosperous economy. Let’s resolve to bring back good jobs that pay good wages and unpin a middle-class lifestyle. Let’s resolve to balance trade with the rest of the world so we can fight our debt problems. Let’s resolve to start fighting to win the lead in the Green manufacturing revolution.
Don’t let the “free traders” exploit workers in countries where they do not have a say to force concessions from Americans in unions. Don’t let the oil and coal companies create false “scandals” like Solyndra to block government from investing in green alternatives. Don’t let the 1% make democracy a competitive disadvantage — democracy is the only economics that works!
Last week President Obama appointed Commerce Secretary John Bryson and National Economic Council Director Gene Sperling to co-chair a new White House Office of Manufacturing Policy. The new Office of Manufacturing Policy will have cabinet-level status, reflecting the importance of the manufacturing sector to our economy. It will coordinate the efforts of different government agencies, such as the Small Business Administration, the Department of Commerce and the Transportation Department.
This is a positive step if there ever was one. Let’s resolve to develop and execute a national manufacturing strategy. (please click through)
It is time to restore our national “industrial commons.”
Frank Sobatka explains: