War on Poverty

This Guest Post prompted by media pieces is chiefly comments on them by friends.  I’m posting it because it is so relevant to my post earlier today about our federal jobs program.

LarryN started the discussion by posting this is important, an article about the correlation between income and life expectancy.  Nationwide, men in the upper income half who reach 65 live six years longer than in the late 1970s: men in the lower half live one year longer.  The article uses a pair of have and have-not counties 350 miles apart to dramatize the issue.  Women’s life expectancy grew by five years since 1985 in the wealthy community: in the have-not county it fell by two years.

AngeloC replied [edited for length]:  “this article tells us your quality of life across a variety of categories including life expectancy is worse if you are poor.  What the author does not comprehend are the circumstances and choices that cause people to become poor and keep them that way.  If you are born out of wedlock, or grow up in a chaotic family situation, or use drugs, or drop out of high school, then your chances of being poor are quite high.  Conversely, the poverty rate for families comprised of a married couple is miniscule, as is the case for those who have finished college.  We’ve been “at war” with poverty for 50 years now, and we are currently spending one Trillion dollars annually to battle poverty.  So if money alone is the answer, then how much more would we need to spend to make poverty go away? George Will makes some good points here.”

Will’s main points are: “Nearly 48 million people receive food stamps — this dependency is inimical to upward mobility”, “the government’s [near-zero interest rate] monetary policy breeds inequality” and “the federal government’s fiscal and regulatory policies discourage businesses from growing the economy with the mountain of money the Fed has created.”

JohnK responded [edited for length]:  “regulatory policies have something to do with discouraging business expansion, but the primary cause for lack of business expansion is lack of an expanding market.  As a result of off-shoring in search of cheap wages to reduce production costs, and increasing use of automation, jobs in the U.S. and therefore the wherewithal to purchase goods is rapidly diminishing.  Food stamps and short-term subsidies help a bit by injecting some purchasing wherewithal into the economy, but at best, it’s a Band-Aid on a serious hemorrhage.  The Fed is injecting money into the banks to increase borrowing to expand business, but again, why borrow to expand your business if your market is shrinking?  The money is being injected where it isn’t used to expand the economy. The Fed is limited in what it can do.

“What might help is for the President and the Congress to set up a long-term, well-planned 20-30 year program to rebuild and expand our infrastructure.  Our roads, railroads, bridges need re-building and ongoing maintenance.  If we are to meet the electricity needs of a more dynamic economy and the millions of electric vehicles hitting the roads, we should be enhancing and expanding our electric grid.  With the ever increasing costs of extracting fossil energy, we should be expanding our renewable energy sources and reducing fossil fuel use by providing a modern efficient railway system.  Investing in rebuilding and enhancing our infrastructure over a long period of time will provide for a huge number of jobs in the construction, steel and cement manufacture, and ancillary industries and will give a boost to the whole economy as workers spend their wages on buying goods. 

“Why a 20-30 year plan?  This will give businesses the confidence to expand, knowing that federal spending on infrastructure enhancement will continue for a long time.  The Fed can’t initiate this.  Only the President and Congress can do it, but once the program is in place, the Treasury can issue bonds to pay for it and the Fed can buy them.   That will pay for a useful enhancement of infrastructure that will support our economic needs for decades to come.”

The discussion continues.  We all agree with the initial statement — this is important.  Although at first we saw implications that appeared to be in conflict, signs emerged that we may reach agreement on the underlying issue.  That means, if we get to that point, we could potentially also agree on an action program.

My proposed program would include revamping our electric grid to facilitate generation from renewable energy sources and make it less vulnerable to attack.  We could spend dramatically less on our military if we were not dependent on Middle East oil.

While cutting our military spend I would, however, continue to fund the Defense Research Projects Agency (DARPA) sponsoring of revolutionary technologies.  That is where transformational breakthroughs in power generation and storage technology are most likely to originate.

But the primary point of this post is it illustrates how politicians also have at times debated so as to govern well.  They could work that way again.

Our Sacrosanct Jobs Program

A news article this week brought to mind something British politician Tony Benn said, “I remember setting sail to South Africa for training [as a WW2 RAF pilot] and being part of a war aims meeting.  It was the most brilliant political meeting I ever attended.  One man spoke of the mass unemployment of the 1930s and said that if we could attain full employment by killing Germans, we could have full employment by building houses, schools and hospitals.”

The article is about a $643M contract with Bath Iron Works (BIW) for which Maine Senators Collins, a Republican, and King, an independent, got funding.  They say it will “allow the Navy to send another DDG-51 to sea when the Navy’s fleet needs to preserve important combat capabilities in support of our national defense.”  Democratic Representative Pingree said, “this is excellent news for the families who earn their living at BIW.”  A shop steward who represents BIW workers said, “the contract brings more stability to the company, which employs about 5,400 people.”

So, my representatives in Washington, the BIW workers and their families, local business owners, everyone around here is happy we’re going to build more of these ships that were “originally designed to defend against Soviet aircraft, cruise missiles and nuclear attack submarines.”

What struck me is, although we don’t think of Defense that way, it has grown into an enormous jobs program.  What’s more it’s a program whose rationale and scope we do not question.

President Reagan’s budget director David Stockman has points to make, however.  In The Ukraine, The War Party and the Pentagon’s Swamp of Waste he writes, “the $625 billion allocated to DOD this year amounts to a colossal destruction of economic resources for no benefit whatsoever to the safety and security of the American people.”

Stockman is angry, perhaps because “About three decades ago I called the Pentagon a “swamp of waste” during an off-the-record interview that ended-up on the evening news. Presently I ended-up in President Reagan’s woodshed–explaining that, well, yes, I did say that because it was in fact true.”   His article is excellent background reading.

I don’t feel emotional about this but I am equally determined to do what I can so we do question how we want to spend that $625B of tax revenue.  The current program does have some benefit — it provides a lot of jobs — but as Tony Benn realized, some of them could be different jobs.  Some could be jobs without the risk of being killed or maimed.

Defense spending has huge support.  There was a bi-partisan agreement to cut (sequester) federal spending this year.  Stockman notes that “Had every dime of the $55 billion sequester been implemented, this year’s DOD budget would have been roughly $600 billion … in 1989, the DOD budget was about $475 billion in today’s inflation-adjusted dollars.”   Even though DOD spending would have been up 25% from 25 years earlier, when the time came to make the cuts, Congressman Paul Ryan and others said making them would be tantamount to surrender.  So the cuts were not made.

What provoked Stockman’s article is, “Contrary to the bombast, jingoism, and shrill moralizing flowing from Washington and the mainstream media, America has no interest in the current spat between Putin and the mobs of Kiev.”

Echoing President Eisenhower’s famous warning when he left office sixty years ago, he says,  “The source of the current calamity-howling about Russia is the Warfare State–that is, the existence of vast machinery of military, diplomatic and economic maneuver that is ever on the prowl for missions and mandates and that can mobilize a massive propaganda campaign on the slightest excitement.”

Stockman is outraged that we believe the propaganda and by our hypocrisy: “We have invaded every country to our South–from the Dominican Republic to Guatemala and Panama and assassinated or overthrown dozens of  their leaders–all within the 60 year span since Nikita Khrushchev gifted Crimea to his minions in Kiev. So precisely which nearby borders are so sacrosanct and exactly who has done the more egregious violating?”

I’ve written before about our defense spending and military strategy over which “we the people” have no control.  President Reagan greatly accelerated spending on what was in fact a spurious rationale, it dropped and stabilized in the next decade, then it was driven to extraordinary new heights by President Bush based on a new spurious rationale.  The numbers below show our total defense spending, not just what is presented in the US budget defense line item but also the spending on “overseas contingency operations” i.e., the wars President Bush started in Iraq and Afghanistan.

Trends in US Military Spending

We might be encouraged by Congress’ refusal to approve President Obama’s recent desire to take military action in Syria except that (A) Congress is currently of a mind to refuse everything he proposes and (B) everyone in Congress always wants more military spending in their district.

Important as it is to make rational changes to our defense spending and decide what kind and size jobs program we want to fund, however, we first need a government that functions, one that could debate such questions, arrive at decisions and take action.

I’m still absorbing research about how we could get such a government and, following a break where I’m hoping for sun and heat, I will report back next month.

American Creationism

Astounded by those who believe the antichrist now reigns in the White House, I knew I must learn more about American fundamentalists.  I’ve been looking into creationism.  How many of us believe humans were created in the recent past, and why does that belief matter?

The first people came to North America about 14,000 years ago.  They came over the habitable zone that connected Siberia and Alaska in the exceptionally cold period 30,000 to 15,000 years ago.  In 2008 a linguist showed that languages spoken in Siberia, Alaska, western Canada and by the Navajo and Apache are related.  Now, from a just-published paper, we know those languages stem from an earlier one whose speakers lived for maybe 15,000 years in that now-disappeared habitable zone.  As the world warmed some of them migrated east to North America.  Others went west, back into Siberia.  I could not know any of that if I believed in creationism.  But would that matter?

The main categories of creationism, “young Earth” and Old Earth”, agree that mankind was created long after we know mankind came to North America, but young Earthers believe the universe was created at the same time as mankind while old Earthers agree with the scientifically accepted age of the Earth.

Asking when the universe began actually leads to no conclusion because the question presupposes there was a beginning.  Everything we see seems to have had a beginning but when we look closely we see that really, everything is changing and is made up of other things that are also changing.  We can’t actually identify beginnings.  I’ll say more about that another time .

For now, I just want to add that belief in a beginning can be dangerous.  Why?  Because it implies an end which many fundamentalists imagine will be a cataclysmic sorting out of “people like me” into eternal bliss and “people like them” into eternal torture.  That reinforces our delusion that we and they are different, and encourages our hatred of “them.”

There is enough geological, genetic and other evidence to tell us approximately how long ago categories of things such as the North American continent and humans manifested.  Creationists discount that evidence.  Unlike scientists who are never more than confident about their conclusions, creationists are certain about what happened.  On what do they base their certainty?

Creationists calculate the origin of mankind from the Bible’s line of descent from Adam to Abraham cross-referenced with events such as the Temple of Solomon being built 480 years after the Exodus.  The genealogies may be incomplete and there is no certainty about dates of the cross-referenced events, so creationists differ about the exact creation date.  All place it between 6,000 and 10,000 years ago, each group being certain their date is correct.

Creationists are answering both when and how humans were created.  How many Americans believe both answers?  According to this Gallup Poll, four in ten Americans (40%) believe God created humans in their present form about 10,000 years ago.  An almost equal number (38%) believe we developed over millions of years in a process guided by God.  Another 16% believe we developed over millions of years without the involvement of a God.

In much the same way there is nothing definite to say about the ultimate origin of the universe, we also cannot know if the world was created by a God.  And unlike the origin of the universe, which scientists can at least investigate as far back as the Big Bang 14 billion years ago, we can only have beliefs about the existence of a creator deity.

What we’re left with that we can be confident about, based on an enormous body of evidence, is that humans were on this planet more than 10,000 years ago.  The creationist belief about that is simply incorrect.

What are the implications?  Most Christians around the world do not take a literal view of the Genesis creation narrative but as we’ve seen, many in the US do.  This matters because, unlike, for example, in Europe, political partisanship in the USA is highly correlated with fundamentalist thinking.

Views_on_Evolution

A high incidence of belief in creationism in the USA matters because unquestioning belief in religious ideas that are either unprovable or which require ignoring the facts is highly correlated with political partisanship.  Fundamentalist religion accustoms people to believe things that their reason would reject and ignore facts that would make their beliefs untenable.

The US media portrays a world “out there” where Islamic fundamentalists either rule or are striving to gain control.  What we do not see is that our own situation is not so very different.

This means we may, by democratic vote, choose to be governed by people who promise to lead us to a better future but who may in fact greatly harm us by acting on deluded beliefs.

What to do?  I’m now exploring where our fundamentalists live, why they believe as they do and why they reject science.  We must understand what their beliefs respond to, the root causes.  We can’t just bludgeon them into “the correct view.”

Surprised by the Antichrist

If you’re ever on I-84 near where it meets the Mass Pike, stop in at the Traveler Restaurant, be served a good diner-style meal by friendly waitresses and choose three free books.  I’ve been going there every chance I get since 1985.

What I found there most recently is Kevin Phillips’ 2006 American Theocracy.  In his 1967 book The Emerging Republican Majority Phillips showed how gaining Southern voters could propel the Republican Party’s revival.  He is now horrified by the result.

American Theocracy has three sections.  Phillips starts by reviewing how our dependence on oil led to our foreign policy and wars in the Middle East and ends by showing how our financial and business leaders got the Republican Party’s traditional principles of sound finance abandoned.  What surprised me is the middle section.  There he examines the rise of fundamentalist Christianity and apocalyptic expectations and shows how they shape our policies.

Phillips cites the statistics on Americans with a religious preference.  From 17% in 1776 it rose to 34% in 1850, 45% in 1890, 56% in 1926, 62% in 1980 and 63% in 2000.  We were established as a secular republic when fewer than one in five Americans had any religious preference.  More than three in five of us now has a religious belief.

Almost half (46%) of Americans now identify themselves as “born again” Christians.  And more than half (55%) in a 2004 Newsweek poll believe the Bible is literally accurate.

In the 2000 elections 87% of the “frequent-attending white religious right” voted for George W. Bush (GWB).  Only 27% of secular voters favored him.  I had no idea religious belief had such an impact.  I did recognize that when GWB characterized his invasion of Iraq as a “crusade”, that really was his view.  I should have realized, too, that a significant percentage of those who supported him also imagine we are now engaged in a holy war in the Abrahamic end time.

But I was entirely unprepared for this on page 260 “Some 40 percent of Americans believe that the antichrist is alive and already on the earth” even though I knew that under GWB, Saddam Hussein was identified as the antichrist.   Who, I wondered, is the antichrist now Saddam Hussein is no more?

In this 2013 Public Policy Poll Report I discovered that 13% of voters in the 2012 election believed President Obama is the antichrist and a further 13% was “not sure.”  Among voters for Romney 22% believed Obama is the antichrist while fewer than 3 in 5 believed he is not.  It may be yet more alarming that 5% of voters for Obama believed him to be the antichrist.

In that report we also see 58% of Republican voters believed “global warming is a hoax”, 33% believed “Saddam Hussein was involved in 9/11″  and 73% did not believe “Bush misled on Iraq WMDs.”

What to make of all this?  My assumption about the widespread lack of respect for facts and skeptical inquiry in America was mistaken.  The great problem is not the mechanics of our educational system but the purpose many want it to serve – certainty in the literal truth of the Bible.

I’ve written before about fundamentalism.  Our media tells us it’s a problem among Muslims, especially in the Middle East, where terrorists hope to kill us all.  But some American fundamentalists are also eager for war, perhaps because they fear our nation is in decline.

Fundamentalism results from fear when social, economic or political trends look like a threat to existence.  The desire for certainty in a way out grows overwhelming.  Everyone else must then embrace the same faith because belief in something that cannot be proved is a lot easier to maintain if nobody is expressing doubts.

But we will inevitably do harm if we imagine we are fundamentally different and have mortal enemies.  Only misery can result.

What to do?  We must calm and clear away the fears.

Everything we do, say and think boosts or shrinks fear in the world.  A butterfly could alter the path of a hurricane or prevent its occurrence — the flapping of wings is one of so many tiny forces on the atmosphere.  It’s the same with human moments of love or hate.

Protecting Against the Opulent Minority

The first post in this series noted our Constitution’s intent to “protect the minority of the opulent against the majority.”  The economy then was subsistence farming in many areas, commercial agriculture in others, especially the South.  The opulent minority were great landowners and most everyone else was poor.  There was no middle class.

If we were drafting a Constitution now we would also seek to protect the minority in the middle from excessive influence based on great wealth.  The distribution of incomes throughout society would be an important indicator of whether that influence had grown excessive.

In this research paper Emmanuel Saez shows how,”the top decile share [of pre-tax income] has increased dramatically over the last twenty-five years [and] in 2012 is equal to 50.4 percent, a level higher than any other year since 1917.”  But it’s not just that the top 10% gets more than half of all income, the top 1% gets close to a quarter.

saez-UStopincomes-2012-top-decile

And the very greatest gains go to the top  0.01%, i.e., one in one hundred of the one percent.  That was 16,068 folks in 2012 with annual incomes over $10,250,000.  We might imagine most of that income was stock market gains but as the chart shows, while a large and fluctuating amount was from capital gains, that tiny minority also got extraordinarily higher income from what we think of as wages.

saez-UStopincomes-2012-top-0.01

Is that OK or are we seeing excessive influence?  This report from the Pew Research Center indicates that 55% of Republicans consider our economic system fair to most people and “four-in-ten Republicans termed the gap either a small problem (22%) or not a problem at all (18%).”   Three in five Democrats said the gap is a very big problem.  Billionaire Tom Perkins, who feels he’s being treated the way Nazis treated the Jews, considers those who believe inequality has gone too far are the problem.

A growing body of research indicates that high inequality is in fact harmful to both an economy and a society.  An obvious issue is if most of society’s income goes to a small minority, economic activity slows and everyone suffers.  Less obvious is the impact of what society’s income is not used for — government ceases to serve the majority.

One example.  The ongoing study reported here shows the USA is now 33rd among nations in internet download speed, almost equal with Russia while Romania is two and a half times as fast.  We’re 43rd in upload speed while Kazakstan is half again as fast.  How did that happen?  We let cable and telecom companies merge their way to oligopoly or even monopoly.  They have little incentive to invest in better service because they have little competition.

Imagining that private businesses automatically deliver the best results, we don’t notice that government regulators have been captured by corporations and consequently provide negligible oversight.

In previous posts I explored how deregulation of our financial sector led to economic meltdown from which we have not yet recovered.  Deregulation has in recent decades been shaped throughout our economy by the opulent minority.  We should therefore expect them to get the benefits.

Several factors contributed.  Getting elected now costs so much that politicians must depend on very wealthy patrons, which means they get legislative and regulatory changes they want.  The Republican party used to be funded chiefly by upper middle-class professionals, the Democrats by labor union members.  Both are now funded increasingly by corporations, their executives, and a tiny minority like the Koch brothers whose wealth is greater than the bottom 40% of all Americans combined.

Why has the rest of society taken no action?  Partly because they haven’t noticed what is happening.  Also, as US economist and social scientist Mancur Olson explained it in his 1965 book about Public Goods and the Theory of Groups, if everyone in a group would benefit from some change, individuals in the group are better off waiting for others to do the work.  And large groups are at a disadvantage because their cost to organize is higher.  The result is that large groups are less able to act in their common interest than small ones; and the corollary is, a minority can dominate the majority.

That is how the 99% in general and the middle class in particular allowed themselves to be disenfranchised — both our major major parties are now dominated by the opulent minority.  So, does that mean those who are not among the opulent minority should form a third party?

French sociologist Maurice Duverger observed in the 1950s that third parties rarely succeed in “winner takes all” systems like ours.  Ross Perot, for example, got zero electoral votes in 1992 despite getting 19% (almost one in five) of the popular vote.  Fewer than 40% of voters wanted a pro-wealthy governor in Maine’s last gubernatorial election but two progressive candidates split the vote.  That resulted in a governor the majority does not want.

The only third party that has succeeded in the US replaced an existing major party.  The Republican Party replaced the Whig Party just before the Civil War.  How?  The Whig platform was economic reform and federally funded industrialization, but with no clear position on slavery.  Federal infrastructure and schools did not have enough appeal for Southern voters so they realigned with pro-slavery Democrats.  Northern progressives saw Whig candidates failing and switched to the increasingly vocal anti-slavery Republican Party, which became progressive.

Do we have any potentially successful third parties in the USA now?

The largest at this time is the Libertarian Party.  They got 1% of the vote in the 2012 elections.  They position themselves as more socially liberal than Democrats and more fiscally conservative than Republicans.  They favor much lower taxes, no welfare, gun ownership rights, decriminalizing drugs and so on.  Their belief, like Jefferson, is that liberty can survive only in small, homogeneous societies, a romantic fantasy at best.  Today’s world is too complex.  We and all our competitors have succeeded only with strong central governments.

Next is The Green Party, part of a worldwide movement advocating ecological wisdom, social and economic justice, grassroots democracy, and nonviolence and peace.  Their best result at the national level was 2.9M votes or 2.74% of the total in the 2000 presidential election when Ralph Nader ran against unappealing major party candidates.  That gave the election to the one he disagreed with more strongly.  The Green ideal is noble but their platform does not stimulate the passions of a majority.

How about the Modern Whig Party?  They pitch themselves as “a pragmatic, common sense, centrist-oriented party where rational solutions trump ideology and integrity trumps impunity.”   Their goal is to represent those who are “unrepresented by the current political structure, fiscally responsible yet socially tolerant” because “American Liberalism and Conservatism are exhausted ideologies.”

But it’s not that the ideologies are exhausted: the problem is they are not at this time being represented by our major parties.   What to do?  History and logic tell us no third party will succeed in the US unless we change our “winner takes all” electoral system, which our elected representatives have every incentive not to do, so we must make one of the existing major parties represent the minority in the middle, or what would be better for everyone, rational fiscally responsible progressives.

The opulent minority achieved their goal by taking over the Republican Party in opportunistic alliance with those who want their understanding of Christian teachings to govern law and public policy, and those opposed to a strong central government.  That leaves the Democratic Party which, like the pre-Reagan Republican Party, has no clear focus and is therefore a takeover candidate.

I will explore in a future post how that might be done (and the Constitutional barriers).  One possibility is via an issue that is not supported by either major party, like ending slavery in the 1860s.  Another is to act when misery is so great that dramatic change is unavoidable, like the Great Depression in the 1930s.  A mass movement with charismatic leaders is necessary in any case.  That works even in societies less democratic than ours, e.g., the 1989 Czech Velvet Revolution and “color revolutions” in the former USSR, the Balkans, North Africa and elsewhere.

We can either identify a major change that enough people passionately want, or wait for enough people to be in enough misery.  Let’s work on the first approach.

Enlightenment and Tumbleweed

I’m thinking about a question on this post, whether or not “adaptations performed by the unfixed self indicate something other than emptiness.”   I was trying in that post to convey my experience of life, not a theory.  I’ll say more about the experience, but first a bit about theory.

Philosophy and religion are how we try to explain our world.  Philosophy is “the study of reality, existence, knowledge, values, reason, mind, and language systematically and based on rational argument.”  Religion is “an organized collection of beliefs that relate humanity to existence.”  Belief is “when one feels certain that something unprovable is true.”

Somewhere in my teens I began to wonder about reality.  I was quite discouraged to realize early on that a definite answer cannot be seen from inside a human body.  We can only see what’s visible from a specific perspective with limited tools.  But the feeling returned that even so, it is worthwhile  to study and reflect.

Religion never appealed to me because it requires feeling certain about things that are unprovable.  Also, I was horrified that both British and German church leaders in WW1 had exhorted their followers to go forth and kill in the name of the same God.  Religion can be dangerous because religious establishments, like all large organizations, amplify power.

After more reflection, I realized the problem is abuse of power: organized religion can be very helpful.  But it still did not seem an effective approach to understand the world.

At last I realized what I was seeking was a training practice to help me interact in the world more helpfully and a system of studying reality based on rational argument.

Returning now to my experience of life, my Tibetan Buddhist practice is helpful in the way I hoped.  Perhaps if I continue searching I could find a still more effective practice but it’s best to use what time I have to do what works.

My practice does include study and reflection on reality, and what Buddhists term “enlightenment” does seem attainable, but it is not yet clear enough to me to articulate.  All I can say is what I tried to express before, that I have less experience of “self” and what’s masked by my apparent self does not feel like an individual.

Tumbleweed and fenceThe analogy that struck me this morning is tumbleweed, “the above-ground part of any number of plants that disengage from the root and tumble away in the wind.”  Looking at all I do, I see only echoes of my past experiences  and those I’ve been close to, habits triggered by circumstances outside my body that all arise in the same way.

It’s like watching tumbleweed, which is empty of intrinsic nature just as I seem to be.  This tumbleweed blown against a fence is also a collection of smaller pieces, each made up of still smaller pieces.  And so on.

But there’s a big difference.  The tumbleweed has no capacity to act — it can only be blown by the wind.  I can act and because my body is alive, I will keep taking action, so I must do all I can so those actions are increasingly helpful.  Study is part of the process, but the goal is better action.

So Long Half Empty Self

My self has been half empty for so long.  It’s such a relief to say, “So long, half-empty self.”

Answering “Who am I?” was my teenage mission, a puzzle since I was fascinated by so many things.  The British school system sorted more and less academic kids into different schools at age 11, then a couple of years later, the more academic ones chose a science or arts curriculum.  How to choose?

Novels made people, cultures and adventures that were beyond my experience real.  Poetry tantalized me with mysterious qualities of experience.  Particle physics and space exploration gripped me.  I loved logic and skeptical inquiry.

So I didn’t choose Chemistry/Physics/Math or English/History/French but insisted on what no other student did, Physics/English/French.  None of that helped, however, with “Who am I?”

Existentialist philosophy was in fashion, a seductive brew for anyone intellectual enough to feel alienated, and my friend whose father was a psychologist saw everyone’s experience as schizophrenia, “a challenging disorder that makes it difficult to distinguish between what is real and unreal.”

Then came revelation.  I read The Three Faces of Eve about a woman with three entirely separate personalities.  Were they all “real?”  Were none of them “real?”  When I answered “Who am I” by identifying my own nature, how could I know if that personality was real?

I wasn’t entirely convinced by the psychiatrist’s claim that he cured Eve (he didn’t) but I was now certain about one thing.  I could never know if the self I was experiencing was the “real me.”

In effect, there was no real me.  That was a big relief because it meant I need answer only an easier question, and I could change the answer.  I just had to decide what role to play.

I had discovered theater at that time, a way to adopt a series of selfs.  I wasn’t a very good actor because I couldn’t quite let go and immerse myself in a role, but I did become a good director.

What I learned from all this was what Kurt Vonnegut wrote: “We are what we pretend to be, so we must be careful about what we pretend to be.”  So, for the next forty years and more, operating on the assumption that I had no fixed self, only an empty self so to say, I pretended to be a good person.

But what I realize now is that while I did make some progress in behavior, it never occurred to me that just as I was pretending, so was everyone else.  None of us has a fixed self and that’s such good news — by behaving better, we can all grow better behaved.

Maybe there is something behind the illusory self we experience, maybe not.  It doesn’t matter.  Only behavior matters, and that matters supremely.

Living in the recognition that there are no fixed selves takes some getting used to.  That’s why I do Buddhist practice — it helps me feel the implications of every apparent “self” having no fixed properties

In our culture, we want the half-empty glass to be filled.  Maybe that makes it harder to for us to say, “So long, half-empty self.”

Nation States and Multinational Corporations

What has changed and does it matter?  I’m considering this comment on the first post in this series “Corporations need to compete on a global scale so they must have huge resources, which makes them more and more powerful.  The relationship between corporations and government is critically important.  Corporations define society in many ways while government is responsible for infrastructure, regulation, and oversight for the good of the whole society.”

The rise of highly mobile multinational corporations (MNCs) is the big change.  It matters because they are not subject to the laws of any one nation yet their decisions about production, working conditions and wages have global environmental and societal impact.

The world’s largest business (by revenue), Wal-Mart, did not even exist until I was 18.  It now has over 2M employees, operates in 28 countries and its $476B revenue exceeds GDP of the 25th largest country, Norway, as well as the  $375B shipping industry that carries 90% of world trade.  If Wal-Mart was a country, it would be China’s 6th largest export country.

Older MNCs tend to be resource extractors — the 2nd through 7th largest businesses and 15 of the top 30 are oil and gas companies.  It is because of them (and contention over the Holy Land claimed by Jews, Muslims and our Christians) that the US government devotes enormous resources to protecting Middle East regimes and transportation of their product.

Those oil and gas companies are successors to the Honorable East India Company (EIC) which traded opium from India for tea from China to Britain.  That trade was 3-way because China’s rulers wanted nothing Britain had to offer: they didn’t want opium either but the Chinese people did so the Brits shipped it in by force.  The EIC was more abusive than oil companies, but both depend on their government’s military superiority.

Newer MNCs require less military support because they are more mobile.  They depend more on communication technology for logistics and branding, on favorable tax and trade agreements, and on capital investment.

Capital reveals more than revenue, and comparing revenue to GDP is misleading, anyway, because GDP is value added, which is revenue minus (broadly defined) costs.  Revenues of the 100 largest corporations are about 20% of world GDP, but their value added is not 20% but 4.3% of world GDP.   The growth of MNC revenue and value added is more suggestive.  Revenue of the world’s 200 largest corporations grew 17% from 1983 to 2005 while value added for the top 100 MNCs grew 23% between 1990 and 2000.  The higher growth rate of value added hints at the profound underlying change.

Capital assets of the world’s 50 largest corporations increased by 686% between 1983 and 2001.  Meanwhile, the value of all non-residential assets in the USA increased by 77 %.  That indicates a dramatic concentration of productive assets in the world’s largest corporations.

The result of that increase in corporate investment?  Profits of the world’s 50 largest corporations were 11 times higher in 2005 than 1983 while employment was 2.3 times higher.  The increase in capital assets enabled them to increase profits over 4 times faster than employment.  What made that possible was the extremely low cost of borrowing engineered by the Federal Reserve in response to the economic recession that resulted from uncontrolled speculation following the deregulation of finance.

But does any of this matter?  The purpose of corporations, after all, is to seek profits with limited control by governments.  That view in the USA is relatively recent, however.  Until the Civil War, US corporations were accountable to serve the public good.  Their charter could be revoked for failing to serve the public interest and was valid only for a time, e.g., 20 years in Delaware.  It was only in 1886 that corporations were given legal rights similar to individuals.  They then became accountable to the public only by being subject to the law.

The first law allowing one corporation to own equity in others was in New Jersey in 1889.  New York, Delaware and others followed, removing more restrictions to attract big corporations.  New Jersey continued to lead and by 1900 had 95% of the nation’s large corporations.  Anti-trust laws later led to the break up of several large corporations and their power was also mitigated by labor unions.

Anti-trust enforcement was greatly relaxed starting in the 1970s along with other forms of deregulation.  Following the fall of the Soviet Union, a “Washington consensus” emerged that aligned the World Bank, the WTO and etc with free trade and privatization.  Trade barriers fell with international trade agreements.  Corporations then began getting preferential treatment by nations, just as US states did a century before.

Businesses traditionally grow by increasing sales volume while reducing labor costs and replacing labor with machines, which is easiest for businesses with the greatest access to capital.  They also grow by distributing additional kinds of goods via existing channels and brands.  And conglomerates grow via managerial efficiency, financing flexibility, and political power.

Newer highly mobile MNCs have the additional advantage of cheap foreign labor, increasingly by contracts, and less costly foreign environmental laws.  Short-term contracts and no large capital investments enable them to move quickly to other countries for even lower costs and to shift responsibility for labor practices and environmental standards to subcontractors.

That induces nations to set lower and lower workplace standards, minimum wages, environmental regulations and so forth to attract and keep these businesses.

Even without moving production facilities, MNCs can avoid taxation by incorporating in tax havens.  Corporate profits in tax havens rose 735% between 1983 and 1999, while profits in countries that are not tax havens grew only 130%.  And tax avoidance is not the only problem for national governments.

About a quarter of Wal-Mart’s employees in Massachusetts are enrolled in Medicaid or other publicly subsidized health insurance programs.  It is estimated that their use of food stamps, housing assistance, and other programs may cost 2 to 3 times as much more.  A recent House report estimates Wal-Mart employees require an average of about $3K a year in public assistance.  That shifts over $4B of Wal-Mart’s costs to US tax-payers and increases Wal-Mart profits by the same amount.

And environmental harm by MNCs is not just in 3rd world nations.  The NAFTA trade agreement between Canada, Mexico and the USA prohibits any “measure tantamount to nationalization or expropriation” of a foreign investor without sufficient compensation.  The U.S. Ethyl Corporation used that provision to sue Canada for its proposed ban on the gasoline additive MMT which contains a human neurotoxin banned in several U.S. states.  Canada paid Ethyl $13M, withdrew the ban, and published a letter stating there was no scientific evidence of harmful human health effects from MMT.

Since only individual nations can make laws, only national governments can make international trade agreements. They are the only agreements that govern the cross-border social and environmental practices of MNCs and that’s important because those practices have global impact.

Unfortunately, trade agreements are typically conducted by representatives who are appointed, not elected, which means they are not accountable for the agreements’ results.  What’s worse, meetings of the primary international trade agency, the WTO, are conducted behind closed doors.

And now, the Trans-Pacific Partnership (TPP) between the US, Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei Darussalam is being negotiated in secrecy even from Congress, the USA’s legislative body.

But in the most fundamental sense, nothing has changed.  Wal-Mart, giant electronics businesses, TBTF banks and others govern regulators now.  Giant oil and gas corporations have set foreign policies for close to a century.  Politicians have always been led by those who controlled great wealth.  So what should we do?

Add our voices to the mix.  Tell our representatives what MNC behaviors are against our interests.  Alert others to pressure their representatives.  What we must do, in other words, is continue to work so that democracy works.  How to go about that these days?  That will be the next post’s topic.

Will Politicians Doom Our Economy?

This Guest Post is a copy of comments by “Dryly 41″ about Why the Economy Isn’t Doomed, an article whose theme is, “challenges have been with us before and have preceded eras of broadly shared prosperity?”

The article starts with the positives, “slowing health-care costs, rising college graduation rates, a shrinking federal budget deficit [and] we’ve finally become aware of just how lousy the past several decades were for the average U.S. worker.”   The greatest negative, it says, is intelligent technology from checkout machines to driverless cars that “may bring about profound declines in employment.”   But that technology might instead be the greatest positive if more of our workers have “the education to take advantage of these changes.”  The conclusion:  Economic growth could turn out to be high, its benefits could be felt throughout our society, and “government could promote such growth by spending on infrastructure, education, and research and development.”

There is at this time no prospect that our government will take the indicated action.  Dryly 41 has thoughtful things to say about that.

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We had banking panic/depressions in 1819, 1837, 1857, 1873, 1884, 1893 and 1907 before The Great Depression. The prevailing approach to finance was “laissez faire”.

The New Deal under FDR put an end to “laissez faire” and adopted a “strict supervision” approach to finance. They kept the 1927 McFadden Act restrictions on interstate branch banking that President Calvin Coolidge signed into law. The purpose of that legislation was two-fold. They wanted to protect small banks form large bank competition. But equally important they wanted to curb the economic and political power of large financial institutions.

The Glass-Steagall Act introduced deposit insurance to curb bank runs that plagued otherwise healthy banks. But they recognized the “moral hazard” that bankers would have with the use of what Louis Brandeis called “other people’s money” with the government guarantee. To deal with the “moral hazard” problem they separated commercial and investment banks, and restricted speculative activities that banks could engage in. To meet the fraud in the stock market they enacted the Securities Act and enforcement legislation.

It worked. At least until Ronald Reagan started the march away from “strict supervision” back to “laissez faire” by deregulating the Savings and Loan banks. Notwithstanding the disaster of 1,000 of some 3.200 S & L banks failing, the march back to “laissez faire” continued on a bi-partisan basis. Clinton, Rubin and Summers, Greenspan with Gramm, Leach and Bliley repealed the “strict supervision” measures designed to deal with “moral hazard” in 1999. Legislation was enacted to repeal the McFadden Act and the Bank Holding Company Act of 1956 restriction on interstate branch banking in 1994, which paved the way for Too Big Too Fail banks.

The 78 years and 11 months between October 1929 and September 2008 was the longest period of financial stability in our history.

So which do you prefer: “strict supervision” or “laissez faire”?

One might be more optimistic if it were recognized that our economic problems were caused by self-inflicted policies and we corrected them.

First: In 1946, the Gross Federal Debt amounted to 121.7% of GDP. The Truman administration reduced it to 71.4%; Eisenhower to 55.2%; Kennedy/Johnson to 38.6%; Nixon/Ford to 35.8%; and Carter to 32.5%.

Then came Ronald Reagan with “supply side” tax cuts.  His Budget Director said they were a “Trojan Horse” to reduce the top rates for the wealthy. Inequality began. The class war was declared. Eight years of deficits raised the Debt to 53.1%. Four more years of deficits under Bush I increased it to 66.1%.

Clinton raised taxes, had 4% unemployment, balanced budgets, and reduced the Gross Federal Debt from 66.1% of GDP to 56.4%.

Then Bush II had two rounds of “supply side” tax cuts in 2001 and 2003. V-P Cheney explained to Treasury Secretary Paul O’Neill: “Reagan proved deficits don’t matter.” When O’Neill continued to object over the second round Cheney fired him. Eight years of deficits raised the Gross Federal Debt from 56.4% of GDP to 85.1%, and left a crippled economy.

No mention in the article of “supply side” even though since Washington in 1789 no political party has inflicted this harm on the nation. It was not for some great national purpose like the Revolutionary War, the Civil War, WW I, or, WW II. All those trillions were borrowed to fund tax cuts for the wealthy who were most able to pay their fair share of taxes.

The most mysterious thing is how members of the media call Ronald Reagan and George W. Bush “conservative”. This was the most radical departure from traditional Republican tax and fiscal party in history. There is no way Calvin Coolidge, Herbert Hoover, Andrew W. Mellon and Reagan and Bush II are “conservative”.

We should consign “supply side” to the dust bin of history. It was quite harmful to the nation.

I wish I could be as optimistic as the author. Our political system is broken and it matters.

Campaign Finance and Corrupt Politicians

How did money become so important in our political system?  How does it corrupt politicians?  What can we do?

I’m considering the comment, “because money has become so important in our political system far too many politicians, at all levels of government, are corrupt” on the first post in this series.

State resources seem first to have been traded in an organized way by President Andrew Jackson.  Appointees after his 1828 election had to contribute part of their pay to his political machine.  By the 1850s political operatives were getting donations by threatening corporations with hostile legislation.  In the 1860s, parties were getting donations from very wealthy individuals like the Astors as well as mandatory contributions of part of the pay of federal employees.

The first federal campaign finance law was the 1867 Naval Appropriations Bill which prohibited soliciting contributions from Navy yard workers.

After political appointments were largely replaced by a permanent civil service in 1883 and the parties lost that important source of funding, they relied more on corporate and individual donations.  Vote buying became common and some donations were big enough to imply great rewards.  One Ulysses S. Grant supporter contributed a quarter of his entire campaign expenses in 1872.

Fund-raising was systematized for the 1896 election of President McKinley.  Banks were assessed by his campaign at 0.25% of their capital, corporations on profitability.  Business owners were happy to contribute to defeat McKinley’s populist rival, William Jennings Bryan.

Public outcry prompted McKinley’s successor, Teddy Roosevelt, to oppose corporate influence but he was suspected in his 1904 campaign of promising an ambassadorial nomination to a large contributor.  He then proposed, “contributions by corporations to any political committee or for any political purpose should be forbidden by law” but with no restriction on contributions from owners of corporations.

The 1907 Tilman Act prohibited corporations and interstate banks from making direct financial contributions to federal candidates but it was not enforced.  Disclosure and spending rules for House and Senate candidates in 1910, contribution limits in the 1925 Federal Corrupt Practices Act, an annual ceiling of $3M for political party spending and $5K for contributions in the 1939 Hatch Act, and extension of the Tilman rules to unions by the 1947 Taft-Hartley Act were all easily circumvented.

The 1971 Federal Election Campaign Act required broad disclosure of campaign finance and 1974 amendments established a central enforcement agency, the Federal Election Commission, as well as limits on contributions and spending but a 1976 Supreme Court decision struck down limits on spending as violations of free speech.

Further legislation was defeated until 2002 when the Bipartisan Campaign Reform Act sought to limit spending by large enterprises and wealthy individuals.  An Act proposed in 2010 to prohibit foreign agents and government contractors from election spending and require the sponsor of all political advertising to be disclosed was defeated.

The constitutionality of limits on election financing continues to be contested.  The US Supreme court ruled in 2010 that corporations and unions can not be prohibited from promoting the election of a candidate, which a Washington Post-ABC News poll found 80% of Americans oppose (Democrats 85%, Republicans 76%, independents 81%).

Should we expect a Constitutional amendment about campaign finance since four of five Americans oppose the Supreme Court ruling?  That depends on whether big spenders have enough control over who gets elected to defeat such an amendment.

Do big spenders have enough control?  How much money are we talking about?  Total spending on the 2008 federal election was $5.3B, of which $2.4B was on the presidential race alone.  Obama spent $730M and McCain $333M.  Obama’s top contributors included Goldman-Sachs $1,034K, JPMorgan Chase $848K, Citigroup $755K and Morgan Stanley $528K.

Spending on the 2010 midterm federal election totaled $3.6B with the average winner of a seat in the House spending $1.4M and in the Senate $9.8M.

Where does the money come from?  In 2010 roughly half came from large individual contributors.  Senate Republicans got only 42% from that contingent but were 20% self-financed.  The total from candidates’ own resources and large individual contributors ranged from 50% for House Democrats and 60% House Republicans, to 65% Senate Democrats and 62% Senate Republicans.

Small Individual Contributors Large Individual Contributors Political Action Committees Self-Financing Other
House Democrats 9% 47% 38% 3% 3%
House Republicans 14% 48% 24% 12% 3%
Senate Democrats 12% 53% 15% 12% 8%
Senate Republicans 18% 42% 12% 20% 8%

That makes campaign finance regulations extremely hard to change — half to two thirds of contributions are from very wealthy individuals and the cost to get elected is so great that those contributions are essential.

But is this corruption?  Politicians no longer directly pay for votes.  They pay for advertizing which, to be successful, depends on branding.  That means positioning a candidate as the only one with a solution to issues that represent voters’ every distress.

Since branding is largely impervious to facts it encourages ignorance, which is why people may vote for candidates opposed to their interests, but disturbing as that is, the great corruption is more subtle.

President Obama’s campaign was given very large contributions by Goldman Sachs and other “too-big-to-fail” banks.  Faced by our financial system’s meltdown, he would of course listen to executives of those banks.  We need not imagine he felt any obligation nor that they recognized their counsel to be self-serving.  Their experience led to their diagnosis and recommended solution.

All whose opinions were available to Obama came from essentially the same world, the world of finance.  All therefore saw the overwhelming need to save the TBTF banks.  As a side-effect, not necessarily something front of mind, that would also happen to restore their own wealth.

Of course, some politicians are corrupt.  Moral degeneracy may not be more common among politicians than in other fields, but politicians are immersed in temptation.  They are subject to constant, insidious and great pressure from the very wealthy.

So what should those who are not wealthy do?   This is not like working to enfranchise those who could not vote because of gender, ethnicity or lack of property.  There will be no end to the excessive impact of wealth at the center because power is inherently at the center, power is the source of wealth and wealth therefore inevitably flows toward the center.

Corruption can not be ended once and for all like not having the vote.   Working to get representatives for all of society is more like breathing, something we cannot stop if we want to remain alive.