The GAO released its report on the Federal Reserve Wednesday: Yves Smith has a nice summary.
And, just as many have long known: Those at the top build networks to ensure they remain at the top regardless of how they perform - the meritocracy breaks down under their myriad conflicts of interest. Everyone screams about individual accountability when its some poor individual who cannot afford to repay their bank loan, but no-one seems to care that none (as in zero!) of the major bank executives were held accountable for their roles in undermining the worth of their banks, counterfeiting the nation's currency through liar's loans, and their ultimate thievery of the production of a nation. Now we have it a little clearer: Literally, the fox is guarding the hen house!
We need leaders (are you listening, candidates?) who will make it a priority to wind-down the financial sector back to a size that is beneficial to society, rather than a cancer that sucks more and more of the life-blood of a nation in its greed. Candidates that will vow to staff the regulatory agencies (the Fed, the SEC) with people of diverse backgrounds and affiliations who will regulate, rather than remunerate, those under regulation.
Anyone? Anyone?
Thursday, October 20, 2011
Wednesday, October 19, 2011
Taxing Capital
With the election season beginning, I think there is a question that needs to be clearly answered:
Is there any legitimate reason why the tax schedules for capital (investment return) should be any different than the tax schedules for labor (wages)?
When the marginal tax rate for labor rises above 15%, shouldn't the marginal rate for capital income do the same? And shouldn't the total tax rate for an individual begin with the simple sum of labor and capital income, without distinction between them?
If one individual were to earn $75,000 from labor, and another $75,000 from investment return, is there any good argument that they should not pay the same taxes? Ditto if the amounts were $100k, $200k, etc?
Playing with the tax codes appears to be the most prominent campaign rhetoric of our candidates, a favorite tactic to gain acceptance from voters. So, it's only fair if we, the voters, really start having a conversation and determine beforehand what a good, fair tax code would look like, then we lessen the chance that we'll be hoodwinked into voting for a design that is unfair, and worse, damages our society.
Is there any legitimate reason why the tax schedules for capital (investment return) should be any different than the tax schedules for labor (wages)?
When the marginal tax rate for labor rises above 15%, shouldn't the marginal rate for capital income do the same? And shouldn't the total tax rate for an individual begin with the simple sum of labor and capital income, without distinction between them?
If one individual were to earn $75,000 from labor, and another $75,000 from investment return, is there any good argument that they should not pay the same taxes? Ditto if the amounts were $100k, $200k, etc?
Playing with the tax codes appears to be the most prominent campaign rhetoric of our candidates, a favorite tactic to gain acceptance from voters. So, it's only fair if we, the voters, really start having a conversation and determine beforehand what a good, fair tax code would look like, then we lessen the chance that we'll be hoodwinked into voting for a design that is unfair, and worse, damages our society.
Wednesday, October 12, 2011
Logical Fallacies and Occupy Wall Street
You've seen the picture: Protesters of Occupy Wall Street, with call-outs to each mass-produced (corporation) item they are carrying: Their cell-phones, their cameras, their music devices, their clothing, etc. The obvious point is that the protesters are somehow hypocrites for protesting the institutions that have produced so much that they carry and use.
The more insidious point is that it is somehow wrong to criticize anything that has any beneficial aspects. Ironically, however, adopting that point of view is just has destructive: If we must be silent about anything that has a benefit, no matter how egregious the violations committed on its behalf, we have lost our ability to challenge anything in our society, lost our ability to move society forward.
True, the creation of the corporation has allowed for the allocation of money to advance our manufacturing of the items that bring greater leisure, greater connectivity, and greater productivity to our society. But that's not what Occupy Wall Street is about. They are protesting the outsized influence corporations have on our political lives, and the resulting outsized influence they have on our daily lives; by their ability to constrain the uses to which we put our money (preventing taxation to support beneficial government services), our ideas (through the support of strong forms of patent and copyright law), and our land and water (through pollution).
Corporations have also become anti-democratic forces - rigid hierarchies that exploit many to move money to the few in outsized compensation for their 'work'. As such, there is a strong tension between those who view autonomy and participation as a right (democracy) versus those who believe that submission to the will of the 'elite' is not only better, but proper (oligarchy).
So, the protesters' position is that there are aspects of corporations that don't fit with our conception of freedom and equality, and that society would become better if those aspects were changed or eliminated.
The job for corporate supporters is to address the issues head on: to contend and offer proof that corporations don't pollute more per-capita or leave behind their private messes for social clean-up; that strong, 99-year copyright laws don't constrain innovation and advancement; that immense rewards to the few don't undermine our ability as a society to advance and prosper as a whole.
And so we see the logical fallacy committed by supporters of the picture: That somehow the fact that the protesters have also benefited refutes that there is anything to protest. It's a cop-out by corporate apologists and their tools. (I saw Elisabeth Hasselback on the View talking about this picture like she was making some great point; the only point she was cementing is that she is a doofus, incapable of logical thought, a perfect tool of the corporation that employs her.)
Criticizing the bad in an institution or an individual is not logically inconsistent with recognizing the good brought about by the institution or individual - the two are mutually supportive: For without criticizing the bad (and working to overcome or improve), we can't increase the good that is possible or that we can realize.
The more insidious point is that it is somehow wrong to criticize anything that has any beneficial aspects. Ironically, however, adopting that point of view is just has destructive: If we must be silent about anything that has a benefit, no matter how egregious the violations committed on its behalf, we have lost our ability to challenge anything in our society, lost our ability to move society forward.
True, the creation of the corporation has allowed for the allocation of money to advance our manufacturing of the items that bring greater leisure, greater connectivity, and greater productivity to our society. But that's not what Occupy Wall Street is about. They are protesting the outsized influence corporations have on our political lives, and the resulting outsized influence they have on our daily lives; by their ability to constrain the uses to which we put our money (preventing taxation to support beneficial government services), our ideas (through the support of strong forms of patent and copyright law), and our land and water (through pollution).
Corporations have also become anti-democratic forces - rigid hierarchies that exploit many to move money to the few in outsized compensation for their 'work'. As such, there is a strong tension between those who view autonomy and participation as a right (democracy) versus those who believe that submission to the will of the 'elite' is not only better, but proper (oligarchy).
So, the protesters' position is that there are aspects of corporations that don't fit with our conception of freedom and equality, and that society would become better if those aspects were changed or eliminated.
The job for corporate supporters is to address the issues head on: to contend and offer proof that corporations don't pollute more per-capita or leave behind their private messes for social clean-up; that strong, 99-year copyright laws don't constrain innovation and advancement; that immense rewards to the few don't undermine our ability as a society to advance and prosper as a whole.
And so we see the logical fallacy committed by supporters of the picture: That somehow the fact that the protesters have also benefited refutes that there is anything to protest. It's a cop-out by corporate apologists and their tools. (I saw Elisabeth Hasselback on the View talking about this picture like she was making some great point; the only point she was cementing is that she is a doofus, incapable of logical thought, a perfect tool of the corporation that employs her.)
Criticizing the bad in an institution or an individual is not logically inconsistent with recognizing the good brought about by the institution or individual - the two are mutually supportive: For without criticizing the bad (and working to overcome or improve), we can't increase the good that is possible or that we can realize.
Sunday, October 9, 2011
Occupying History
As I listened to the news this evening I couldn't help but be struck by the hyperbole in the segments about the Occupy Wallstreet movement. The newscasters were beside themselves, looking for anger, reason, demands, clearly attempting to understand Occupy Wallstreet on their (the newscasters') terms, rather than on the terms of the people in the movement. And, just as clearly, the fear, anger, and confusion was on the part of those reporting, not the participants.
We live, theoretically, in a democracy. Each individual their voice, each understanding of the world to be brought to the decisions that affect us.
But we've watched as the financial sector has ballooned, feeding like a parasite on the remainder of the economy and the populace (for the financial industry makes nothing but money, and their charge is to make that in accordance with the general growth of the nation: True, they are to facilitate that growth where possible, to ensure money moves where it is most needed, but nothing gives them leeway to overproduce, indeed, the efficient market's hypothesis proposes that they can't produce more, since the resulting inflation and busting would bring them to heel in short order.), creating an enormous asset bubble in the housing market, and fooling investors worldwide into purchasing their fancy derivatives. When the bubble burst, these incapable gamblers came to us, hat in hand, and asked for a bailout, which we, although not willingly, gave.
With that money they've rebuilt, and turned on us: Blaming us for the ills of the country, and demanding that we make concessions, reduce our standards, move towards austerity. They've asked for cuts to Social Security and Medicare, they fight against any meaningful Health Care reform for all, and why? Because our willingness to share and hedge against the unknown is inefficient? No, of course not. It's because in so doing we reduce the amount of money they could potentially pillage, and having gotten a taste of kingly amounts, they thirst for more.
The Tea Party got it (mostly) wrong. They blamed the government, the employees, perhaps even the form that we have, but their unwillingness to give up their medicare showed them to be confused. They know that something is wrong, that something is not as it should be, but they can't identify it. (And, they were quickly co-opted by the wealthy to become a tool to use against 'us' – even though there are many of 'us' in the Tea Party itself!)
Occupy Wallstreet has identified the true source of the problem: The outsized influence, even outright control that is exercised now by a moneyed minority of the population that is no longer willing to even pretend that the good of society is the purpose of a government. They accurately point their fingers at the undemocratic nature of corporations – rigid hierarchies that resemble feudal monarchies in all but name. If that minority manage their wish of repealing the Estate Tax once and for all, we will see the reestablishment of the heredity aristocracy, and the Nation of Opportunity will become a moment in history. (Evidence indicates that it is already passing, that social mobility in America is far less than most European countries, that children of the bottom 20% are much more likely to stay there. See fn1.)
Having identified the problem, what is the correct solution? Ideas have been proposed: Re-enactment of Glass-Steagall (admittedly, it must be put on steroids to have a positive effect this time around). Establish the Tobin Tax (a tax on each financial transaction, not large, but enough to put some “sand in the gears” - remember that Efficient Market Hypothesis mentioned above? Debunked. Doesn't hold.) How about a Consumer Protection Agency with a strong, knowledgeable, no-nonsense leader (yep, they kicked Elizabeth Warren out because she possessed precisely those qualities!) Changes to the Federal Reserve so that it can manage the money supply in favor of the nation, not the wealthy few.
But each idea is likely stillborn or bound to be so diluted that it will effectively become trivial, and the looting will continue. So, the pressing question becomes: How does a movement grow that will motivate those currently in power to pay attention, to not talk out of one side of their mouths while accepting money from Wall Street?
Sure, editorials and letter writing are a start, but what's a stack of letters in a congressman's office compared to a face-to-face with the likes of Peter Peterson or Edward Koch and the promise of money and a high paying lobbying job after retirement? We need a presence, a means of showing the size and strength of population that doesn't want their well being suborned by the prima-donnas of Wall Street. And, we know the wrong way to go about it: Violence. There need be no torches, pitchforks, knives, guns or guillotines – We are still a democracy, and, has been shown time and again around the world, a peaceful but forceful democratic assembly gets attention, and over time, can move a cause forward.
They need our support, not our ridicule. Those who would attempt to undermine or cast aspersion upon them show themselves to be either a tool of the wealthy or unsupportive of the notion of democracy. Sure, those present will largely be the youthful and the unemployed: Those of us with corporate overlords must keep our masters happy. Sure, they may seem disorganized, but that is the nature of true democracy. (We are so accustomed to the faux democracy of a presidential election or corporate life that we have a hard time recognizing, let alone accepting, something that closely approaches true, free, democratic association and decision making.) They don't have a media machine hammering the message (fn2), but listen to the interviews: They (individually), know what they want, and are exploring a means to bring it about.True, too: Some of their ideas are much more than just bringing Wall Street to heel: They are about re-imagining society. But, it takes grand ideas to sometimes make small or medium improvements.
The moment is ripe with possibility. Possibility that the population of America is approaching its tipping point – the point where the 95% make themselves heard, where they take the country for themselves. Sure, the 5% will fight – just as they did in Philadelphia when the Constitution was being written, just has they did (via proxy) during the Civil War, just as they have since the setbacks (to them) of the 14th and 15th amendments, since the setback of the New Deal. Just possibly these occupiers will start something that will culminate in the reduction of the outsized presence and influence of the financial sector, and a movement towards a land of greater democracy, opportunity, and equality.
Fn1: See the study done by Haskins and Sawhill of the Brookings Institute (2009) – I ran across the information in John Quiggin's “Zombie Economics”. See especially pages 159-161. In summary, Haskins and Sawhill looked at the male children of men in the bottom quintile (20%) - in a mobile society, one would expect only about 20% to remain. In America, it is 42%, Denmark 25%, Sweden 26%, Britain 30%.
fn2. Of course, after I write this I see that Occupy Wall Street has published the Occupy Wall Street Journal, Issue #2!
We live, theoretically, in a democracy. Each individual their voice, each understanding of the world to be brought to the decisions that affect us.
But we've watched as the financial sector has ballooned, feeding like a parasite on the remainder of the economy and the populace (for the financial industry makes nothing but money, and their charge is to make that in accordance with the general growth of the nation: True, they are to facilitate that growth where possible, to ensure money moves where it is most needed, but nothing gives them leeway to overproduce, indeed, the efficient market's hypothesis proposes that they can't produce more, since the resulting inflation and busting would bring them to heel in short order.), creating an enormous asset bubble in the housing market, and fooling investors worldwide into purchasing their fancy derivatives. When the bubble burst, these incapable gamblers came to us, hat in hand, and asked for a bailout, which we, although not willingly, gave.
With that money they've rebuilt, and turned on us: Blaming us for the ills of the country, and demanding that we make concessions, reduce our standards, move towards austerity. They've asked for cuts to Social Security and Medicare, they fight against any meaningful Health Care reform for all, and why? Because our willingness to share and hedge against the unknown is inefficient? No, of course not. It's because in so doing we reduce the amount of money they could potentially pillage, and having gotten a taste of kingly amounts, they thirst for more.
The Tea Party got it (mostly) wrong. They blamed the government, the employees, perhaps even the form that we have, but their unwillingness to give up their medicare showed them to be confused. They know that something is wrong, that something is not as it should be, but they can't identify it. (And, they were quickly co-opted by the wealthy to become a tool to use against 'us' – even though there are many of 'us' in the Tea Party itself!)
Occupy Wallstreet has identified the true source of the problem: The outsized influence, even outright control that is exercised now by a moneyed minority of the population that is no longer willing to even pretend that the good of society is the purpose of a government. They accurately point their fingers at the undemocratic nature of corporations – rigid hierarchies that resemble feudal monarchies in all but name. If that minority manage their wish of repealing the Estate Tax once and for all, we will see the reestablishment of the heredity aristocracy, and the Nation of Opportunity will become a moment in history. (Evidence indicates that it is already passing, that social mobility in America is far less than most European countries, that children of the bottom 20% are much more likely to stay there. See fn1.)
Having identified the problem, what is the correct solution? Ideas have been proposed: Re-enactment of Glass-Steagall (admittedly, it must be put on steroids to have a positive effect this time around). Establish the Tobin Tax (a tax on each financial transaction, not large, but enough to put some “sand in the gears” - remember that Efficient Market Hypothesis mentioned above? Debunked. Doesn't hold.) How about a Consumer Protection Agency with a strong, knowledgeable, no-nonsense leader (yep, they kicked Elizabeth Warren out because she possessed precisely those qualities!) Changes to the Federal Reserve so that it can manage the money supply in favor of the nation, not the wealthy few.
But each idea is likely stillborn or bound to be so diluted that it will effectively become trivial, and the looting will continue. So, the pressing question becomes: How does a movement grow that will motivate those currently in power to pay attention, to not talk out of one side of their mouths while accepting money from Wall Street?
Sure, editorials and letter writing are a start, but what's a stack of letters in a congressman's office compared to a face-to-face with the likes of Peter Peterson or Edward Koch and the promise of money and a high paying lobbying job after retirement? We need a presence, a means of showing the size and strength of population that doesn't want their well being suborned by the prima-donnas of Wall Street. And, we know the wrong way to go about it: Violence. There need be no torches, pitchforks, knives, guns or guillotines – We are still a democracy, and, has been shown time and again around the world, a peaceful but forceful democratic assembly gets attention, and over time, can move a cause forward.
They need our support, not our ridicule. Those who would attempt to undermine or cast aspersion upon them show themselves to be either a tool of the wealthy or unsupportive of the notion of democracy. Sure, those present will largely be the youthful and the unemployed: Those of us with corporate overlords must keep our masters happy. Sure, they may seem disorganized, but that is the nature of true democracy. (We are so accustomed to the faux democracy of a presidential election or corporate life that we have a hard time recognizing, let alone accepting, something that closely approaches true, free, democratic association and decision making.) They don't have a media machine hammering the message (fn2), but listen to the interviews: They (individually), know what they want, and are exploring a means to bring it about.True, too: Some of their ideas are much more than just bringing Wall Street to heel: They are about re-imagining society. But, it takes grand ideas to sometimes make small or medium improvements.
The moment is ripe with possibility. Possibility that the population of America is approaching its tipping point – the point where the 95% make themselves heard, where they take the country for themselves. Sure, the 5% will fight – just as they did in Philadelphia when the Constitution was being written, just has they did (via proxy) during the Civil War, just as they have since the setbacks (to them) of the 14th and 15th amendments, since the setback of the New Deal. Just possibly these occupiers will start something that will culminate in the reduction of the outsized presence and influence of the financial sector, and a movement towards a land of greater democracy, opportunity, and equality.
Fn1: See the study done by Haskins and Sawhill of the Brookings Institute (2009) – I ran across the information in John Quiggin's “Zombie Economics”. See especially pages 159-161. In summary, Haskins and Sawhill looked at the male children of men in the bottom quintile (20%) - in a mobile society, one would expect only about 20% to remain. In America, it is 42%, Denmark 25%, Sweden 26%, Britain 30%.
fn2. Of course, after I write this I see that Occupy Wall Street has published the Occupy Wall Street Journal, Issue #2!
Wednesday, October 5, 2011
If Only...
We all could constantly raise our salaries above the median for our peer group -- think what we would earn in a few short years!
A Nice Racket...
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