Impeachment Is Not Enough

The problem with impeachment is it doesn’t really solve our problem. The problem we have goes so far beyond just Trump and into flaws in the the design of our system.

George Washington established rule by “norms” when he declined to run again for President, saying we are not a nation of kings. So it became a norm that presidents hand over power. In the years since we developed a system of democratic norms instead of laws that can be enforced, with systemic mechanisms to ensure enforcement.

So now we have a president who has no interest in norms or rule of law, and we have no laws and no systemic mechanisms to do anything about it. He and his cronies are destroying our system of democracy and rule of law.

These clowns got into office illegitimately and we have no mechanisms to stop the destruction of all the “public structures” We the People own and treasure, from our public land to our public schools to our public infrastructure to our system of checks and balances to our democracy itself.

They got into office illegitimately using a corporate-and-billionaire-financed propaganda machine (and possibly non-US “dark money” funding sources) spewing lies at us 24/7/365 for decades, massive voter suppression, possible election-rigging, the electoral college designed around maintaining slave states, lies (“I will drain the swamp”) and all the other things they have done.

And beyond the presidency we have the gerrymandering lock, states populated by cows but with two senators, and other ways they maintain a grip on power when they can’t get the votes.

All impeachment does is move the incompetent, loathsome Trump out of the way, after he signs the things they want and they are through with his usefulness. But the entire fraudulent crowd will still maintain illegitimate power.

What we need is a Truth and Reconciliation Commission that can sweep away all the corruption, illegitimacy and lies and find ways to restore democracy and return Power To The People.

An Innovative Solution To Corporate Taxation

While we’re talking about taxes…

Over the weekend The Zero Hour with RJ Eskow interviewed economist Dean Baker, co-director of the Center for Economic and Policy Research, to talk about “A New Way to Make Corporations Pay Their Fair Share.”

The idea is, as Baker wrote last week in the LA Times, Instead of taxes, make corporations give the government stock,

If the tax reformers are serious, and I hope they are, here’s one simple way to largely eliminate the gaming opportunities that have made these people rich.

Instead of traditional taxes, the government could require corporations to turn over a portion of their stock, say 25%, in the form of non-voting shares. The government would benefit from any dividends or share buybacks but would have no voice in running the company.

This system would eliminate almost all opportunities for gaming since a company would not be able to deny the government its share of profits unless it also withheld profits from its other shareholders. And we would not call that “tax avoidance” but outright theft – the sort of thing that gets people sent to jail.

This government (We the People) share of corporations would replace taxation, because the government would collect dividends or the value of the share would increase along with the profits (formerly taxable) of the corporation. The government and corporate tax-accounting bureaucracies would be unnecessary. Our democracy would receive revenue so it can do things to make our economy and lives better.

Why should the government (We the People) have a share of corporations? People generally do not understand what a corporation really is, and this common misunderstanding works to be benefit of those who make money off of them.

Corporations are entirely creations of government. They don’t exist without government. A corporation is a package of laws designed to accomplish a public purpose.

Individuals do not generally have the kind of capital available to accomplish large-scale projects like building a series of factories to make cars or airplanes. It’s also risky to sink so much of one person’t holdings into something like that so those with sufficient resources might not do it.

So government (We the people) created corporations to enable pooling of capital and reduction of individual risk. We (through our government) grant these entities the right to enter into contracts, write checks, hire people, borrow money, file lawsuits, etc. as if they were a “person.”

A common misconception is that shareholders “own” corporations. They do not, but shareholders do elect the Board of Directors, which hires people to manage the corporation according to the Board’s instructions.

People tend to think of and talk about corporations as sentient entities. But corporations do not think or decide or act or anything else. The managers of the corporation do that. For example, “Wells Fargo” did not “decide” to commit fraud against their customers, the corporation’s executives — people — did that.

Another common misconception is that corporations are required by law to do whatever they can to make profits for the shareholders. In fact this is a relatively recent concept that flourished as people’s understanding of the purpose of corporations diminished. In fact government does much to limit what corporations can do while seeking profits. They cannot (aren’t supposed to) kill or injure people to increase profits, cannot poison the air and water, cannot commit fraud, etc.

So the idea that government should keep their hands off of corporations and not hold some percent of them for the benefit of We the People is really preposterous. This thinking misunderstands what a corporation is, how and why it exists and what its purpose is.

The goal of Baker’s idea is to create a system where corporations are paying their share to We the People, without all of the incentives to come up with schemes to avoid taxes. Baker’s idea accomplishes that goal. Baker suggests that government hold 25% of corporate shares, but the tax rate has already dropped from 52% to 46% under Reagan to 35% today, and the corporate share of the overall tax burden has fallen from 32% to only 10%. SO perhaps a higher share would be appropriate for restoring revenue and democracy.

(See Lynn Stout’s The Shareholder Value Myth for a deeper dive into what and why a corporation is.)

This Isn’t Just Trump. This Is Who the Republicans Are.

So far President Trump has signed very few bills. One lets coal companies dump waste into streams. The other lets oil companies bribe foreign dictators in secret. And he is moving to block a Labor Department “fiduciary rule” that requires financial advisors to act in the best interests of their clients when advising on retirement accounts.

Here’s the thing: this isn’t just Trump doing this. The Republican House and Senate passed those two bills, and the Republicans have been fighting that fiduciary rule tooth and nail.

It’s not just Trump, Republicans as a party are using Trump to engage in a general assault on protections from corruption, pollution, corporate fraud and financial scams.

This is who they are.

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Trump’s Absurd Plan To Dismantle Government’s Protections

Donald Trump released a video announcing his agenda for his “first day in office.” One of the things he said is, “I will formulate a rule which says that for every one new regulation, two old regulations must be eliminated.” Can we count the number of ways this is absurd and dangerous?

Under Trump’s 2-for-1 idea, if we want to have a regulation that a company can’t store explosives next to an elementary school, we have to eliminate a regulation that protects us from food poisoning AND a regulation that stops companies from taking money out of your bank account for no reason? (Or how about creating fake accounts and charging them fees?)

Or how about we eliminate the regulations requiring seat belts in cars? Or requiring cars to have headlights? There’s two more! And think of all the money this would save the car companies! (Ignore the pain and suffering and loss this would cause regular Americans — that’s not money.)

Here’s one that can go: eliminate the regulations against defrauding students using high-pressure sales techniques to get them to enroll at scam universities. Or against “financial elder abuse“.

Government Is We The People

In the United States government was once supposed to be about We the People organizing to accomplish things that make our lives better. We vote, our representatives impose taxes and spend and make laws and regulations toward that end.

The ongoing corporate/conservative attack on the legitimacy of government and democracy have eroded public understanding of these concepts. Education. Firefighting. Scientific research. Health care. Parks. Transportation. All are core things a government of, by and FOR the people does to make our lives better — and all are under attack, “privatized” or “eliminated” by representatives who have been “captured” by corporate/conservative money.

Government of, by and for the people by definition stops some people from doing things that hurt others. In particular for this discussion, it stops people who have businesses from defrauding others, harming others, polluting our air and water, selling dangerous products, and other destructive practices. But this means that these people make less money, so they complain, and sometimes they use their money to influence those who would regulate to stop them.

“Burdensome government regulations” all cost companies money: food inspection, clean water, fire codes, zoning rules and drug safety rules. They all “get in the way” of a company scamming, hurting, polluting or whatever makes them more money.

Regulations too often come about as a reaction to something terrible happening. Fire codes came from times when entire towns burned down. Drug-safety rules came from “snake oil” scammers selling poison and leaving town before the damage is done. Seat belt regulations came from terrible traffic injuries and deaths.

Regulations are about “how can We the People do this better?”

The Underlying Assumptions Behind Trump’s Absurd Plan

Underlying Trump’s plan to “eliminate” government regulations is the premise that “government regulation” is itself a bad thing. And underlying that is the premise that government of by and for the people itself is illegitimate. It gets in the way of business. We the People making decisions interferes with efficient decision-making done for the narrow purpose of making money.

Corporate-financed conservatives will always tell you that government and its regulations are always bad. Government just “interferes” in things it knows nothing about. They will say that government regulations hold back businesses from expanding and hiring and generally getting things done that make money. But these are self-interested complaints from people who make their money scamming or hurting or polluting. People like Donald Trump.

We should see Trump’s proposal for what it is. This is not an approach to governing, it is about dismantling what government is for so that an already-wealthy few are free to fleece, scam, harm and and pollute in the name of greed.

“Underbanked” Report Shows Need For Postal Banking

Millions of Americans can’t get bank accounts, so they can’t even cash a check. Many millions more might have an account but can’t get even a small loan. The numbers (below) are just outrageous.

These millions are forced to turn to predators like the payday loan and check cashing industry. Even those who can get full-service accounts are scammed by the likes of Wells Fargo.

Meanwhile We the people are prevented by our captured-by-Wall-Street Congress from setting up the obvious solution that would solve so many problems: Postal Banking.

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Clinton Should Tell Obama To Withdraw TPP To Save Her Presidency

Democratic presidential candidate Hillary Clinton says she opposes the Trans-Pacific Partnership (TPP) but is having trouble convincing people to believe her. Imagine the trouble Hillary Clinton will have trying to build support for her effort to govern the country if TPP is ratified before her inauguration.

According to Politico’s Wednesday Morning Trade, the Obama administration is launching a “TPP blitz” push to pass the Trans-Pacific Partnership (TPP),

Commerce Secretary Penny Pritzker last week said the administration is planning at least 30 trade events by the end of the month. That effort, similar to last year’s “all of Cabinet” push for trade promotion authority, is expected to shift to Capitol Hill in September when lawmakers return from their summer break.

In spite of the opposition of much of the public, both presidential candidates, all of labor, almost all Democrats, all progressive-aligned consumer, human rights, environmental and other organizations and even the Tea Party right, what is happening here is that Wall Street, the multinational corporations, most Republicans and unfortunately President Obama are preparing to insult democracy by pushing to ratify TPP. This undermine’s Clinton’s credibility while campaigning for election, and if it passes it harms her ability to govern if she is elected.

There is something Clinton can do to bolster her credibility on the TPP. Clinton on Thursday is giving an economic speech near Detroit. This speech is an opportunity for Clinton to put this behind her for good. She should loudly call on President Obama to withdraw TPP now, and call on Democrats to vote against the TPP if he does not do that.

Progressive groups are asking her to do just that, calling people to sign a petition telling Clinton: “Lead against lame-duck vote on TPP.”

Clinton Opposes TPP, But …

Clinton has stated her opposition to TPP, but has not asked Democrats to join her in opposition, particularly during the “lame-duck” session of Congress that follows the election. This is one reason that Clinton continues to have a credibility problem on TPP.

Donald Trump repeatedly tells audiences that Clinton isn’t really against TPP; she is just saying it for votes. He says she will “betray” us. This is Trump in his Monday “economy” speech in Detroit:

The next betrayal will be the Trans-Pacific Partnership. Hillary Clinton’s closest friend, Terry McAuliffe, confirmed what I have said on this from the beginning: If sent to the Oval Office, Hillary Clinton will enact the TPP. Guaranteed. Her donors will make sure of it.

Along with McAuliffe, who is the governor of Virginia, Chamber of Commerce President Tom Donohue has said she will reverse herself. And it was Clinton delegates who blocked putting specific TPP opposition in the Democratic platform. So yes, there is a credibility problem.

Dan Balz, writes about her problem at The Washington Post, in “Clinton has yet to respond to Trump’s attack on globalism“:

Clinton came out against the agreement last year to put herself in alignment with Sen. Bernie Sanders … But in doing so, she put herself at odds with the views enunciated by her husband, Bill Clinton, when he was president, and raised questions about whether her change of heart was mere political expedience.

Which is why her position on trade and global economics has remained suspect to those on the left…

Balz asks:

What does Clinton really think about this aspect of economic policy? How do her views today square with what she has thought and advocated during her public career? …

Those are issues about which she has so far been relatively silent. … Trump has presented her with a challenge; is she is prepared to take it up?

… In her responses to Trump’s Detroit speech, Clinton did not address what the GOP nominee said about trade. It’s difficult to believe that was an oversight.

… Does Clinton not owe the public a fuller explanation of her views on a topic that her rival has made central to his candidacy?

Passing TPP Would Destroy Clinton Presidency Before It Starts

Polling shows that Clinton continues to have a problem with “unfavorables” and credibility with the electorate. As of now it appears Clinton will almost certainly win the election – maybe even in a blowout. But this will not necessarily be due to overwhelming support of Clinton. Instead it will be at least partly because of the ugly words and actions of her reprehensible opponent. After the election, much of the public will likely remain divided, looking for signs that things will be OK after all under a Clinton presidency.

Imagine if TPP does come up for a vote in the lame-duck session and passes. The public, particularly progressives, will certainly feel betrayed. It will also bolster the opposition, who will say, “I told you so” because of Trump’s predictions of a betrayal on TPP. If that happens, it won’t matter that Clinton has said she opposes TPP. People will feel she just said it to get votes, and now that the election is over…

This is a terrible recipe for beginning a presidency of a divided country.

Progressive Groups Asking Clinton To Lead Opposition To Lame Duck TPP Vote

The Hill has the story on how progressives intend to “pressure Clinton on TPP ahead of economic speech“:

Progressive groups are urging Hillary Clinton to publicly announce that she opposes a lame-duck session vote on the Obama administration’s Pacific Rim trade deal.

After initially supporting the Trans-Pacific Partnership (TPP), Clinton reversed after Bernie Sanders made his opposition to the deal one of the cornerstones of his insurgent campaign for the presidency.

On Wednesday, the grassroots liberal groups Democracy for America and CREDO will begin circulating petitions urging Clinton to go further by making a public statement “urging the White House and Democratic congressional leadership to oppose any vote on the TPP, especially during the post-election lame duck session of Congress.”
The groups would like Clinton to make that declaration in her policy address on the economy this Thursday outside of Detroit.

Buzzfeed rounded up some statements from progressive leaders, beginning with Democracy for America’s Robert Cruickshank:

“Right now, Donald Trump is running around the country using the specter of a lame-duck vote on the job-killing Trans-Pacific Partnership to divide Secretary Clinton from the millions of voters who agree with her that this disastrous trade deal has to be stopped,” Robert Cruickshank, a senior campaign manger at Democracy for America, told BuzzFeed News in a statement.

CREDO’s Murshed Zahee also weighs in:

“Now we need her help to stop it from being jammed through Congress in a lame duck session. A personal and public statement from Secretary Clinton in opposition to a lame duck vote would provide huge momentum in the fight to stop the TPP once and for all,” CREDO’s political director Murshed Zaheed said in a statement to BuzzFeed News.

Sign The Petition

You can add your own voice to this effort to get Clinton’s help stamping out TPP by adding your name to this CREDO petition:” Tell Sec. Clinton: Lead against lame-duck vote on TPP“: “Make a public statement urging the White House and Democratic congressional leadership to oppose any vote on the TPP, especially during the post-election lame-duck session of Congress.”

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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 and/or for the Progressive Breakfast.

Latest Senate Food Workers Victory Highlights Perils of Privatization

The long-abused cafeteria workers of the U.S. Senate, who risked their jobs to fight to earn a living wage only to have the private contractor that runs the cafeteria renege on an order to increase their pay, won a key victory this week.

The Labor Department declared that the contractor had engaged in wage theft from 674 of its workers, deliberately misclassifying them so that they would earn less than their actual work entitled them to earn. The contractor also forced employees to do unpaid work “off the clock.” As a result, the multinational conglomerate Restaurant Associates and a subsidiary will have to give the workers back pay totaling $1,008,302.

Roll Call has more details, in “Senate Food Service Vendor Ordered to Pay $1 Million in Back Wages“:

Senate food service vendor Restaurant Associates and its subcontractor, Personnel Plus, improperly classified workers in order to pay them for lower-wage positions and required them to work overtime without compensation in violation of federal and local labor laws, the agency said in a news release. The contractors also failed to pay required health and other benefits.

“Workers in the restaurant industry are among the lowest-paid workers in our economy,” said the department’s Wage and Hour Division Administrator David Weil . “Most struggle to afford life’s basic expenses and pay their bills; they shouldn’t have to deal with paychecks that don’t accurately reflect their hard work and the wages to which they are legally entitled.”

The Privatization Scam

“Privatization” transfers something that We the People publicly own for OUR benefit, and hands it over to private interests so a few can make a profit for THEIR benefit. The scheme is sold with claims that privatization “saves money” because the private contracting company is “run like a business.” The bet is that no one will think through just how a private company might “save money” when they have to “run like a business” and make a profit that government doesn’t have to make.

Of course what happens is the private company “saves money” by laying off the government employees and hiring them back or replacing them at minimum wage with no benefits, then transferring the wage and benefit differential into a few pockets at the top of the company. But guess what? Now those workers make so little they qualify for government benefits, other poverty programs are strained, local stores are selling less, homes are foreclosed so local property values drop, the tax base is reduced … so the government didn’t “save money” at all, it just cut its own revenue and shifted spending from one part of the government to another – all at the expense of working people. And the money that was “saved” went into a few private pockets.

Beyond impoverishing workers with low wages, there are even worse ways private corporate contractors “save money,” such as cutting service, cutting quality, cutting corners, fighting unionization – all of which hurt the public that is supposed to be served. Plus, because it is “run like a business,” contracting corporations cut some of those corners by doing things like committing outright wage theft.

The Privatized Senate Cafeteria

In 2008 the U.S. Senate “saved money” by privatizing its food services. At the time California Democratic Sen. Dianne Feinstein said, “There are parts of government that can be run like a business and should be run like businesses.”

The Senate cafeteria was, indeed, “run like a business.” The company paid low wages, fought against unionization efforts and engaged in various schemes to keep the workers down. After a while things got so bad that workers had to work two, even three jobs just to get by. Some of the workers were even homeless. In April 2015, the Washington Post reported on that:

For a week’s work at the Senate cafeteria — sweeping floors, mopping bathrooms, cleaning dishes, composting leftovers, transporting laundry — he says his take-home pay is about $360. And while he takes enormous pride in serving the country’s public servants, he is not sure these public servants are returning the favor.

“Our lawmakers, they don’t even realize what’s going on right beneath their feet,” he says. “They don’t have a clue.”

The usual ways to “run like a business” were not enough for the Senate cafeteria contractors. SO they added another way to “run like a business”: wage theft. When after months of protests the Senate cafeteria workers secured a wage agreement from Restaurant Associates, with the help of Good Jobs Nation and members of the Senate who voiced support for the workers, Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, the company immediately worked to undermine the agreement by reclassifying Senate cafeteria jobs so that the workers ended up not getting the wage increases the agreement called for. The jobs themselves did not change; Restaurant Associates changed what the jobs were called in order to justify not increasing the workers’ pay.

If This Is Happening Literally Right Under The Senate’s Nose …

The Huffington Post has a great quote from Joseph Geevarghese, director of Good Jobs Nation. “This is symptomatic of a larger problem,” Geevarghese is quoted as saying. “If federal contractors believe they can get away with breaking federal laws right under the nose of lawmakers, imagine what they’re doing all across the U.S., where workers don’t have access to power and access to the media. I would argue that what we’re seeing in Washington is just the tip of the iceberg.”

The Washington Post report, “Senate workers will get $1 million in back pay after Labor Department probe,” highlights a wider need this wage theft ruling points to: a “Model Employer” policy of contracting with employers that pay good wages and recognize workers’ right to form a union. In the Post, Geevarghese notes that “the truth is the Labor Department cannot investigate every federal contractor in the U.S. – we need a systemic solution, not just case-by-case fixes.”

Democratic Platform Demands “Model Employer”

The 2016 Democratic Party Platform calls for an executive order “or some other vehicle” directing the U.S. Government to spend taxpayer dollars on “Model Employers” and not on corporations that violate workers’ rights. From the platform:

Democrats support a model employer executive order or some other vehicle to leverage federal dollars to support employers who provide their workers with a living wage, good benefits, and the opportunity to form a union without reprisal. The one trillion dollars spent annually by the government on contracts, loans, and grants should be used to support good jobs that rebuild the middle class.

Sign This “Model Employer” Petition

Good Jobs Nation is calling next president to adopt a “Model Employer” policy of contracting with employers that pay good wages and recognize workers’ right to form a union. The organization is asking people to “Sign the Petition: the U.S. Must Stop Doing Business With Corporate Cheaters.

From the petition web page:

“Currently, the federal government is America’s leading low-wage job creator, funding more poverty jobs than McDonald’s and Wal-Mart combined. 60% of federal contract workers are women and 88% are women of color working contracted jobs in areas like food service, janitorial work, or landscaping.

A Model Employer Executive Order would begin to reverse the federal government’s low-wage contracting policies by providing as many as 21 million people– 8 million workers and their families who rely on low-wage jobs in the federally supported economy – with good jobs that provide a path into the middle class.”

Click here to sign the petition.


Isaiah J. Poole contributed to this article.

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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 and/or for the Progressive Breakfast.

Paul Ryan Says Poor Are Victims, But Blames Them For Being Poor

House Speaker Paul Ryan in an NPR interview Monday acknowledged that the poor are victims of our economic system. The interview sounds reasonable, almost soothing, until you examine what Ryan is really saying.

After acknowledging that poverty is systemic, he turns around and blames the poor themselves as being personally – even morally – responsible for being poor. He implies the poor are just lazy. He cited addiction, lack of skills, and, of course, government handouts as the real causes of poverty. He said raising the minimum wage would not help. His soothing-sounding words are actually quite radical and extreme.

The Interview

Ryan was interviewed on Monday’s NPR’s Morning Edition by Steve Inskeep about his ideas on helping people get out of poverty.

When asked about people born into poverty who can’t get out of poverty, Ryan responds “That’s right … you go look at the country and the conditions, you’re just as likely to stay poor today as you were if you were born into poverty 50 years ago. … There are people out there fighting poverty … that do well, succeed but for government I think in many cases they could do more.”

Q: You’ve argued that welfare “is keeping people away from work, it disincentives work.”

Ryan: “Right. Yeah.”

Q: Do you want to cut welfare?

Ryan: “The smarter thing to do is to customize a benefit to a person’s particular needs. … Maybe this person needs addiction counseling, or maybe she needs a GED or transportation or something. You customize the benefits for her particular needs with the proper accountability.”

Asked about low minimum wages keeping people in poverty, Ryan rejects raising the minimum wage as a “one-size-fits-all solution.” Inskeep asks, “Why not do something that raises wages?”

Ryan: “Well, skills. I think when you raise the minimum wage … you’ll lose over a million jobs … So you don’t want to take away those entry-level jobs that give people hard and soft skills they need just to learn how to do work. Every person has a different problem, sometimes a person has an even deeper problem like addiction or something like that.”

What Ryan Is Saying

Ryan begins by acknowledging that the “country and the conditions” are what is keeping people poor. He says if you “look at the country and the conditions, you’re just as likely to stay poor today as you were if you were born into poverty 50 years ago.” But then he says there are people who are fighting poverty whose efforts would succeed “but for the government”

Ryan then contradicts what he said about “the country and the conditions,” and blames the poor themselves for being poor. They don’t have skills, they don’t have an education, they are addicted, and they are so lazy that a little bit of “welfare” keeps them from looking for work. He says they need to “learn how to do work.”

Several states have bought in to this “blame-the-poor” mentality to the point where they require drug testing before a person can get assistance. Earlier this year Think Progress surveyed these programs and found that despite the cost of this drug testing, several states did not find even one person testing positive. The national total was 321 positive tests, out of the millions in circumstances where they need help.

So why does Ryan bring up “addiction” when talking about poverty? For the same reason he talks about government and “welfare” causing people to not bother to look for work or even “learn how to do work.” These kinds of words point the finger at people for personal, moral failings, and contribute to a story that the poor are really just bad people who do not deserve our assistance.

Minimum Wage

Ryan also implies that people in poverty are lazy, saying “welfare” is “keeping people away from work.” But because of the decrease in the purchasing power of the minimum wage, many working people, even those working in full-time jobs, make so little that they qualify for “food stamps” and other government aid.

This chart, “Share of workers receiving public assistance for the poor, by industry” from The Washington Post Wonkblog report, “When work isn’t enough to keep you off welfare and food stamps,” tells the story:


“Share of workers in each field who rely on at least one program among Medicaid/CHIP, TANF, the EITC or food stamps. UC Berkeley Center for Labor Research and Education”

According to the Wonkblog report, “The problem, according to this picture, isn’t that poor people won’t work — it’s that the work they do can’t sustain them.”

Ryan also says “when you raise the minimum wage … you’ll lose over a million jobs.” But a National Employment Law Project (NELP) report from May, titled “Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels,” found that,

The results were clear: these basic economic indicators show no correlation between federal minimum-wage increases and lower employment levels, even in the industries that are most impacted by higher minimum wages. To the contrary, in the substantial majority of instances (68 percent) overall employment increased after a federal minimum-wage increase.

So raising the minimum wage, giving working people more money to spend in local stores, not only doesn’t kill jobs but increases demand in the economy enough that it might actually cause those stores to hire people. Who could have predicted?

Plus, never mind that increasing the minimum wage to a “living wage” level would end the need for public assistance for millions of people.

Note that “welfare” as Ryan and Republicans describe it – giving cash to people who don’t work – ended with the 1996 “welfare reform”. Today people – overwhelmingly single mothers with children – can get minimal temporary cash assistance, minimal food assistance and health care. Some can get housing subsidies and a few other forms of aid.

The results of the 1996 experiment of ending “welfare” have not been good. Studies show it has “failed,” had a “negative impact,” has “shortened lives,” led to “less education,” and “created a system rife with racial biases.”

Personal Responsibility

Ryan is repeating the old “personal responsibility” language conservatives have developed to shift people’s thinking about government and democracy away from the idea that We the People are in this together, toward a selfish idea that we should all be on our own. Of course, this leaves individuals defenseless against the powerful forces of aggregated wealth and power.

Paul Ryan, like many Republicans, is an admirer of Ayn Rand, who taught that society consists of a few “producers” and lots of “looters” and “parasites.” Rand taught that democracy is a “statist” “collectivism” of those parasitic looters, that it is wrong for people to help other people, altruism is evil and government is “monstrously evil,” “the political expression of altruism.”

Ryan’s words on “welfare” fit right into this radical, extreme framework, but in a more soothing-sounding way.


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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 and/or for the Progressive Breakfast.

Larry Summers Gets This Right: We Really Need An Infrastructure Decade

Here we are in “Infrastructure Week” and here we are with a new argument for a massive infrastructure investment project – worldwide.

Last week Peter Coy wrote at Bloomberg, in “How to Pull the World Economy Out of Its Rut,” about economist Larry Summers’ argument that we need massive public investment. Coy writes that Summers has been “jetting around the world” trying to convince central bankers “to reach out to the governments they work for … and insist on strong fiscal stimulus in the form of infrastructure spending and the like.” (i.e. “Public investment”.)

The case for this is very, very strong. Never mind that around the world infrastructure is crumbling. Just doing the basic job of government and making sure that things like infrastructure are up to par has fallen out of favor among the world’s elites, because “government spending.” Summers makes a different argument about why public investment – government spending on things countries and people and economies need – is essential to keep the world’s economy going.

Coy writes, “Summers’s deeper argument is that world growth is stuck in a rut because there’s a chronic shortage of demand for goods and services and a concomitant excess of desired savings.”

This Is Extremely Important And Summers Is Exactly Right

This is extremely important and Summers is exactly right on this. Too many people don’t have enough income, while a few people have lots of savings. But the few with lots of savings don’t have safe places to invest it because too many people don’t have enough income. In other words, the world faces a “chronic shortage of demand” and a “concomitant excess of desired savings.”

Capitalist economies necessarily move toward concentration of wealth, so over time a few people end up with lots of savings while most people get poorer. (Economist Piketty: “r > g” where ‘r’ is the rate of return on capital and ‘g’ is the rate of growth in the economy.) Since regular people participate in the economy by using money to demand goods and services, demand decreases as they get poorer.

Without something stepping in to break this cycle more and more of the resources end up in fewer and fewer hands, and after a while the entire system breaks down. Therefore in a capitalist economy government action is needed to redistribute “money” (resources and savings) away from the concentration at the top, back to more of “the people” so that they can again participate in the economy (demand).

This circle of money flowing around – demand gives savings good places to invest to meet that demand – shows why government redistribution is essential to keeping capitalist economies going. Taxing those who have a lot and using the money to build a sidewalk is redistribution because even poor people get to walk on the sidewalk. But even for those who hate the idea of redistribution, those sidewalks and roads and bridges and the rest are absolutely essential to economies. Even more essential, the jobs that are created to do the work building those things creates essential consumer demand.

The whole world is stuck in a rut because there is too much money at the top chasing insufficient demand.

Too Much Money At The Top Chasing Insufficient Demand

Wealth has concentrated. Inequality is extreme worldwide. The result is a worldwide “savings glut.” There is very little consumer demand so investment in things consumers/the private economy might buy is not bringing much of a return. This means there is too much money floating around the world looking for a safe investment that will bring a return. With few investments promising a safe return investors don’t want to risk investing.

Investment in the private sector has become too risky because of insufficient demand. So instead of finding private-sector investments, people are “parking” their money in government bonds. Governments that are safe are getting those savings to hold instead, sometimes even being paid (negative interest rates) to hold it.

Using different words, this shows there is a huge demand for government debt. That’s why the price has gotten so high (low interest rates mean there is a high price for a bond). Supply and demand: there is too much demand and too little supply of government debt.

Coy words it this way, “The interest rate, like any price, reflects supply and demand. It’s fallen because the demand for loans is weak and the supply of loans from savers, who have extra cash to deploy, is strong.”

The Things Governments Do Creates Demand In The Private Economy

The things governments do creates demand in the private economy when the private economy is not creating enough by itself. Infrastructure, investment in the people, education, job training, science and research, etc. are the underpinnings of the private economy later, but they wear out. Roads and bridges wear out, laid-off workers lose skills and well-educated people eventually get older and you need to do the next round of public investment. Our last round started drying up with the “Reagan era” ideology of “starve the beast” by killing government’s ability to spend.

When the private economy is doing well, savings finds places to invest. When savings is already thus engaged, interests rates rise. High interest rates mean government gets less when it sells its bonds. These higher rates are the market signal that government debt is not so much in demand, and governments need to borrow (and invest) less to keep the economy going. And because the private sector is going well people need fewer public services so governments don’t need to borrow to get the money to provide them…

The Markets Are Demanding That Governments Issue More Debt

Right now interest rates are extremely low – even negative in some countries. This high price for government debt means the markets are demanding that governments issue more debt. This is the law of supply and demand. Again: money markets are demanding more supply of government debt.

What should governments do with the money they get from selling more bonds? They should do what governments do with money. By definition this is “public investment.” Build roads, educate, feed people, etc. But instead of responding to the demands of markets, the anti-government ideology in control is forcing governments to do less, get smaller, need less money, issue fewer bonds.

For decades governments have been trying to follow the “less government” ideological mantra. But economics (and markets) says there is an essential role for government and public investment or economies don’t work. As governments withdraw from their role, economies stop working. Demand dries up, those with lots of money have nowhere to put it… and here we are. Secular stagnation.

So government cutbacks lead to low economy demand. The cycle is necessary, taxing the rich and using the money for government investment both creates demand at the time though spending and jobs, and the things it invests IN create demand later.

So the same thing has now been said about a dozen different and redundant ways here. People and the markets are demanding that governments around the world open up the spending spigot, invest in infrastructure and education and services other things governments do to make people’s lives better. The markets are demanding it and the proof is low interest rates on government debt. Not just here but worldwide.

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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 and/or for the Progress Breakfast.