Summary: Lot’s of hot news, the world changes . Ask any question about these articles. We — and others reading the FM website — will attempt to answer it in the comments. All answers welcomed!
- Please use the REPLY button when replying to a previous comment, to keep threads together.
(1) Quote of the day: about the Tea Party and the Constitution
“Fanaticism consists in redoubling your efforts when you have forgotten your aim.”
— George Santayana, The Life of Reason (volume one)
(2) Quote of the year, as we see history taking place in our daily newspapers
“There are decades when nothing happens; and there are weeks when decades happen.”
– attributed to Lenin
(3) To start the discussion: articles of interest this week
- Sucking up to the rich and powerful: “The Establishment Lives!“, David Brooks, op-ed in The New York Times, 23 September 2008 — Have a small bag handy when reading.
- Welcome to 21st century America: “Feds Falsely Censor Popular Blog For Over A Year, Deny All Due Process, Hide All Details“, Mike Masnick, Tech Dirt, 8 December 2011
- Everybody knows about the banks’ crimes, but the government does nothing: “Treasury’s promise, one year on“, Felix Salmon, Reuters, 8 December 2011
- Everybody knows about the banks’ crimes, but the government does nothing: “Court Cases Revealing Massive Fraud in Mortgage Business“, FireDogLake, 9 December 2011
- Inequality made tangible: “The Walmart Heirs Have The Same Net Worth As The Bottom 30% Of Americans“, Pat Garofalo, ThinkProgress, 9 December 2011
- Death throes of the Constitution: “Indefinite Detention of American Citizens: Coming Soon to Battlefield USA“, Matt Taibbi, Rolling Stone, 9 December 2011
- Disturbing business-as-usual: “Nuclear Agencies Are Wholly Controlled By (and Serve) the Nuclear Industry – Just Like the Fed Is Owned By (and Serves) Its Member Banks“, Washington’s Blog, 11 December 2011
- A snapshot of America: “In the Wake of Protest: One Woman’s Attempt to Unionize Amazon“, Vanessa Veselka, The Atlantic, 12 December 2011 — “Inspired by the WTO protests, a demonstrator took a job in an Amazon warehouse to try and unionize the workers there.” It starts slow, but gets more interesting in the middle.
- “Rethinking Debt“, Jared Bernstein (economist at the Center on Budget and Policy Priorities), Democracy (A Journal of Ideas), Winter 2011 — “Washington refuses to understand that debt can be an essential tool for economic growth. Can we overcome this irrational and destructive fear?”
Re: The Walmart Heirs Have The Same Net Worth As The Bottom 30% Of Americans“, Pat Garofalo, ThinkProgress, 9 December 2011
This certainly is a shocking statistic. But why? I’m being honest, why is it bad? I mean, off the cuff it sounds wrong, but I don’t know a political/economic reason why it’s bad.
At what point does it become bad?
The Walton kids have the same amount of money as 100 million other people combined. Should it be only 1 million?
It is not about right and wrong. Frankly no one can dictate what is right and wrong. The discourse is about American or un-American. Is all that wealth in the hands of 400 families nationwide, or in this case 1 family proper? Yes they earned it, one way or another within the framework of our capitalist driven society, which we all loved so much up until 3 years ago.
In 2004 GWB ran against Kerry. The campaign was a train wreck, perhaps the worst I have ever seen, but he won, at all costs. One of his economic principles was to sell the idea to voters, the 99% that many of them could become homeowners in his economic platform. People ate it up, he lied, the banks lied and the people got screwed by an economic conspiracy that was so vast, even today, no arrests, no charges and no fix.
The fact that America can do this to Americans is what hurts so bad. If it was possible, and within the laws of the United States, is it wrong? Is it morally wrong to push the limits of capitalism? Hasn’t our country always done this? Haven’t we, the Prosperity Generation been defined by this pure capitalism? Haven’t we taken the reins from our parents, the Baby Boomers and just tugged a little harder on them left to right, right to left and whipped the horse harder?
We do not know how to walk the miles our grandparents did, we know only to ride in style on that horse. The soles of our feet dare not touch the blighted earth beneath us. We are the prosperous few. The ones who believe our ego is always right. Consume all that is offered, compete with our brothers. Curse the melting pot our grandfathers built. Seek out instant gratification, rewrite and redefine history, then bury under a mountain of near history iced with social discourse.
We want to glorify our own thoughts, project our likeness across the digital domain. Drink Kool-aid mixed by our affiliate groups, hate the world, hate our spouses and hate our fat bellies we believe we so richly deserve. We seek to challenge everything, yet act on nothing. We wish to proudly publish our ego-centric worldview for all to read – as I am doing now. Then we dare to critique each other based on our trumped up credentials.
Life is now a contest in America, how can we do our best financially and hate rich people at the same time. We seek to become rich? That is a question. We seek to envy the rich and devise methods to take from them without earning. The fact is the Walton family is so rich because they have earned that money from the rest of us. It is right and fair that they have it, we gave it to them freely. Check your own bank statements, how much money did you spend at Wal-Mart this year. Multiply by 50,000,000 or more than there you go!
Thank you for the reply, Drake.
What I was asking though is whether there is an implicit instability caused by extreme income inequality. At what amount of disparity does the country tear apart, if that is one of the consequences?
It’s a shocking statistic, but not quite what it seems. The bottom quarter of US households have an aggregate net wealth of zero. The top 10% own (net) almost everything.
As for its effects, it’s a sad question. This was clear to generations of Americans — it’s clear in our literature, let alone the political literature — but years of intense propaganda have obscrured it. There is a large body of social science research showing the ill effects. For details see the “for more information” section in these posts. Or use Google Scholar, or the links at Wikipedia.
We should rename FM to Eeyore, because you’re always so mopey.
You ask for questions, I give you one. You answer by saying it’s obvious, and that my understanding is obscured by intense propaganda.
I didn’t grow in the magical time where people of all stripes knew the answer to my question and I haven’t read the apparently “large body of social science research”… That’s what you’re for.
I am asking a technical question: what, if any, is the nominal breaking point?
(1) “I didn’t grow in the magical time where people of all stripes knew the answer to my question”
No. But you live in the magical time of Google. It’s a hot topic. There are thousands (more) of articles discussing the ill effects of high inequality. Most notabily, slower economic growth (the rich save more, depressing aggregate growth) and increased social stress. Equally certain but much more difficult to quantify is its effect on democracy. At what point does increased inequality force a democracy to become an oligarchy?
(2) “What is the nominal breaking point?”
Such things are beyond the ability of current social science theory to predict. We’ll know it when we pass it. It would be wise to turn back before we walk off that cliff.
Also — You are quite right. I did ask for question, hence my answer was inappropriate. Pretty dumb on my part to ask for questions then refer you to Google. I apologize.
The reason it’s a problem is because wealth is a form of power, and there is no point to having power or wealth unless you intend to take advantage of it. When you’re talking so much power and wealth, there’s virtually no controls on the individual, at all – they can exert a disproportionate effect on the political system. In that sense, if you’re a believer in democracy, you would need to recognize that extreme wealth is inherently anti-democratic – even if the wealth is spent in the service of society, it’s done so disproportionately under the will of a small number of individuals as opposed to the collective. As we have seen recently there are members of the wealthy elite (Bloomberg, the Koch bros, Perot, the Bush family) that have no qualms about using their wealth as a vehicle to gain political power. The wealth, unfortuately, does not translate into being qualified for office, or sharing a political agenda with the majority of the people.
Thus, wealth is a problem because it tends to act to create a stratified society, and to preserve that stratification; it tends to create a de facto aristocracy based on accident of birth rather than qualifications or merit.
As Voltaire pointed out: none of this is a problem if you’re one of the aristocracy.
Another point that could be made regarding the WAL-MART heirs is that the company’s vast success is due largely to cleverly taking advantage of cheap wage-slave labor around the world. While WAL-MART’s heirs doubtless feel their hands are clean, they have helped kill off a part of the US economy (that would probably have died off anyway, eventually) while encouraging what amounts to legal slavery in many countries. Perhaps, like other great robber baron families in the american past, they will eventually decide to spend some of that wealth for the benefit of US society, as Carnegie, Mellon, Rockefeller, Hopkins, etc, did. Otherwise – what? There are only so many Ferraris, bimbos, lines of cocaine, and vacation homes one can practically consume during a lifetime.
I did the math on the latter, once, and it’s a surprisingly small number. At 50 years old (my current age) I could kill myself in 20 years of cocaine-fuelled alcohol and hooker binge living in fine hotels renting sports cars and wrecking one a week, and I’d only be able to work my way through about what some CEOs make in a year. (About $50m) My advice to them is to quit, now, and get with the programme and enjoy life before it’s too late.
From Marriner Eccles testimony before the Congress 1933. Posted at London Banker blog.
If they were devout Muslims they should give generously to the poor and lend money only where they share a business risk . If they were devout Christians they should take heed of camels and eyes of needles , numbers of coats in their wardrobes , etc.
If they were feudal barons in 1000 AD in Britain , soaking up the profit from the unpaid labour of their serfs , still they were expected to provide serfs with housing , and food in times of famine .
I’m sure there are lots more models we could consider to make the rich more serene .
Seeing as how Obama has turned out to be effectively a moderate Republican, in addition to the economy and his approval rating, I’m a little surprised there hasn’t been any serious challenge for the Democratic nomination. Frankly, I’m disappointed that we will not have different foreign policy options to choose between come November. Do you think that’s due primarily to partisanship trumping liberal ideology?
I guess I’m really looking for reasons to feel hopeful about the future, past 2012.
There has been no substantial to challenge to Obama for the same reason his moderate Republican agenda has done so well in Congress — despite the Republican’s “the worse, the better” opposition: Obama’s moderate-Right positions are those of the Democratic Party’s establishment.
Hopeful? Disappointed? Come on, this stuff is not new and the current version/trends are 40 years and counting, in the making. Do not worry about either of the “above”.
Find the place of action and do so on a personal and social level. There are opttions in the USA, they just do not resemble the current visible and dominant paradigms.
Walmart Heirs? “Earned it”??? Please. That company has morphed into a classic predatory business model in all facets from Land Acqusition to supply chains. Sam’s business model literally killed Rural American retail. …and the citizen’s assisted that and some now even wonder Imagine!
Some speak of the Curse for Countries of possessing Oil in abundance. Well, is there a curse that accompanies Capiitalistic Success? A case could be made, America.
Re: Bank crimes. I wish I had something clever or profound to say about this, but it just makes me sad. Who would have thought we’d look back fondly to all those prosecutions during the Reagan era S&L crisis?
“a case that was actually dismissed by both parties due to a settlement, because of the implications for foreclosures throughout the state”
We have a 2 tier legal system. This should not complicated, the banks forged signatures. If we do this, we go to prison. And, yes, we have another one just now with MF Global. That company loses billions gambling on European bonds, and then steals customer funds to make margin calls? This is Owning Mahoney on steroids.
For more about this see “FDR explains one dimension of our problem: bankers own the government“.
Yeah, nice article. I’d known about Andrew Jackson and fighting banks, but the quote from FDR is new to me.
Remember that moment, I think it was 2007 or so when everyone knew the housing market was a crazy bubble. I think the ‘Flip this House’ TV show was the indication that the housing bubble had peaked. The defaults had just started and the Financial wacko-shere was warning about the collapse, but the Fed was talking about how the problem was contained and should just blow over again. I think if you were just watching the mainstream news, you might think it wouldn’t be so bad.
Is this the situation with the European sovereign bond markets right now? Could right now be the moment just before the point where the exponential power of compound interest,forces something bad to happen? The convulsions seem to be getting a little more violent and a little more frequent. The efforts just a little more desperate. In a few years we’re all going to talk about how we all knew that the European sovereign bonds were going to explode?
“European sovereign bond markets”
That’s not quite accurate. In aggregate Europe is in fine shape. High but tolerable debt levels; running a current account surplus. But the condition of the individual narions vary,w hich matters if Europe breaks up. Bunds (German government bonds) are in fine shape, and might get even better if the EMU breaks up). The PIIGS are in horrific shape. Some, like the UK and France, are between the two groups.
liked the link to the article about amazon… I guess here’s the question. Will american workers ever realize that workers in western europe have it much, much better?
That’s a good question. Only intensive propaganda keeps Americans ignornant about conditions in Northern Europe, much like about America that the Soviet Union fed its people during the Cold War. Their health care system is horrific; they’re poor, living in socialist hell.