Dear Mr. Reich

I read you op-ed piece in the New York Times with great interest. As an economist, I have often struggleed with the anti-corporation advocates (as well as the anti-capitalists). However, I feel your editorial does a grave injustice to the ideals which Democrats believe in. Your piece demonstrated a fundamental disregard for the (as you rightly call it) Faustian bargain all people engage in on a daily basis. However, I believe that Faustian bargain is rooted in a degree of exploitation on tfhe behalf of companies like Wal-Mart. In the mid-20th century, labor unions were a large(r) part of the economy. During the days in which General Motors was the largest employer in the U.S., labor unions flourished alongside significant economic growth and were indeed among the core contributors to the growing prosperity. Under a Wal-Mart economy, so much is demanded of the government by corporations like (and led by) Wal-Mart. To have a corporation who is the largest private employer in the U.S. economy engage in such anti-labor practices is unwise for the workers of the U.S. and the boon they recieve is more than offset by the banes of healthcare costs and other afflictions associated with low-wage jobs. They also are hit, as you must know, by the indirect cost of a Wal-Mart economy in the extra tax burden they assume by supporting Wal-Mart. Wal-Mart causes (and also encourages) more people (their employees) to ask for government support in order to survive. In the end, Wal-Mart places a tax upon the entire American population for the "right" to have super-low prices. Regardless of the costs of their low-wage policies overseas, a higher price is passed onto the American consumer than what appears next to their yellow smiley face at their stores.

Wal-Mart: Union Bust

Recently, Wal-Mart has moved one step beyond what would seem reasonable. After a store in Canada was recognized as a union store, Wal-Mart closed it. It is criminal how much Wal-Mart can get away with in the U.S. compared to Canada. In the U.S., it has become common practice for Wal-Mart to aggressively intimidate workers with threats of retaliation prior to a union vote. In Canada, labor laws are stricter and unionization is easier so Wal-Mart has to resort to more ridiculous and blatant options to supress union activity. It would be interesting to see how much different the U.S. would be if Wal-Mart was unionized (and had been for some time). There is a stark contrast between the era when General Motors was the largest private employer in the U.S. and now when Wal-Mart is the largest private employer. General Motors was unionized and therefore workers could negotiate a living wage and it became easier for people to sustain themselves. The atmosphere was closer to the idea that "what is good for GM is good for America". In the Wal-Mart world it is false to make the same claim. In fact, it might be the truth that "what is good for Wal-Mart is bad for America". As the largest private employer in the U.S., whether Wal-Mart allows unions provides direction for many other companies. If one of the largest firms in the country can pay low wages and therefore be more profitable than other firms that are not anti-union, it provides a huge incentive for other firms to eliminate or discourage the formation of unions. The direction in which this incentive moves labor policy in the country is unambiguously negative.

The New York Times Catches On (Finally)

On January 26th I found and reported that the idea of Social Security going bust and therefore private accounts are necessary was not a new idea for George W. Bush, but one he first advanced in his 1978 House campaign where he predicted that Social Security would by bankrupt by 1988 and the only solution was private accounts. Well, finally the Paper of Record has caught up to this fact. Good for them, but next time they need to more closely scrutinize "new" plans to see whether they are in fact new or whether they are just recycled ideas that the Right, Neocons and Bush have been pushing for a while. It was a similar overlooking of the Project for a New American Century's policy paper from the late 90s in the run-up for war in Iraq that, while not showing the flimsyness of the rationale for invading , could have provided a hint that Iraq was not in the neocons' sights because of 9/11 or WMD (neither which were even true), but were part of an ideological agenda to remake the world along their principles of U.S. hegemony and pre-emptive war.

I've Been Busy with The TNA

Well, the lack of posts recently is due to me being out of town and having friends in town. Also, I've been gearing up for the first show of my band, The Tragic Naked Accident (The TNA) at the Tonic Lounge (31st & NE Sandy Blvd in Portland, OR) at 9pm on March 7th. If you miss the blog, come to the show.

The Real USA Next Agenda

The agency that produced the Swiftboat Veterans for Lies during the 2004 presidential campaign is now being hired by the right-wingers to enter into the propaganda war over Social Security privatization. They produced an internet ad that has a heading of the American Association of Retired Persons (AARP) shows a soldier with a red X over it and a picture of two men kissing at their wedding. Although the group sponsoring the ad has already pulled it after lots of complaints, it does illustrate the lack of allegiance right-wingers feel for the truth (no Bill O’Reilly, I didn’t say troops). In order to bash the AARP and promote the privatization of Social Security, they suggest that the AARP works hard to promote gay marriage and hates the troops, all totally without merit or supporting evidence. It would be nice if this could be attributed to a few wackos in the far right wing but the neither the head of the Republican National Committee (RNC) nor the White House have come out and opposed the tactics or allegations made in this ad. Thus they are either actively connected to this ad or they are complicit in the spreading of irrelevant lies about the AARP.

An Insight Into Social Security Theft

Well another aspect of the Bush Social Security plan (which he still has yet to unvail despite his constant promotion) is that the so-called voluntary ability of people to participate in the "private accounts" really is not very voluntary under any reasonable economic analysis. If you look closer into the incentives the "plan" creates, there is really no way that a mixed private accounts-current Social Security system could ever exist except in a transitory phase. What would happen if people are allowed to invest part of their Social Security taxes in private accounts over the long term is that the system would either stay the way it is or move totally towards "private accounts". If the plan would exist, it would require that the government cut benefits as time passes. the people who invested in "private accounts" would see no effect of this (that is, unless the stock market tanked) and neither would payers to the system. However, if people are looking to what happens to current retirees as the benefits are cut (or looking ahead before this happens), they would come to the completely reasonable observation that once they retire, there will be no funds to pay for their benefits. Upon seeing this, they would decide that, despite the downside risks of investing in the stock market, it makes more sense (in terms of expected benefits) to switch over to the "private accounts" system rather than remain in the convential Social Security. As more and more people realize this, there would be fewer and fewer people in the convential system, which would increase the costs associated with paying benefits to the current retirees. This would lead to a situation in which it made it more and more likely that people would not receive much, if any, benefits upon their retirement from the Social Security they are paying and make it more llikely that they would move into the "private accounts" system. In the long run, there would be no one in the conventional system. The only other option would be that some people move to the "private accounts" system, see the returns on their accounts not meet their expectations and return to the conventional system. Over time, this would lead to the phase out of "private accounts" and a return to the conventional Social Security system. In the long term, these are really the only alternatives. The promise under the Bush Adminstration's plan of a mixed system are a pipe dream.

Negroponte Counter-ponte

Today, Bush nomated John Negroponte for the new position of National Intelligence Director. This is a terrible idea. The historical events to which Negroponte is associated are not what would be expected for any political appointment. Yet, the Bush has repeatedly re-employed criminals like Negroponte (i.e., Oliver North, Pointdexter). In fact, this is the third position Negroponte has held within the Bush Administration. First, he was appointed as the U.S. ambassador to the U.N. Once the U.S. invaded Iraq, Negroponte was moved from the U.N. to be the new ambassador to Iraq. Now, to the National Intelligence Director (aka the Intelligence tsar). Negroponte has an abysmal human rights record in his prior career working for the Reagan Adminstration. While ambassador to Hondouras, he turned a blind eye to the human rights abuses of the Houndouran government including death squads that were in force across Central America (I have a particular interest in this because I have met people who were forced to flee El Salvador and someone tortured by U.S. supported Salvadoran Army, whom I met on my trip to rural El Salvador). In addition, Negroponte was intimately involved in the Iran-Contra scandal (as many other current Bush Administration officials were). The shamefulness of appointing Negroponte to any position is immediately apparent to anyone willing to remember the past, lest it happen again. It demonstrates the callous disregard of international law and the U.S. constitution (which gives the power of allocating funding to Congress which was so disregarded by the Reagan administration in Iran-Contra whereby the Administration funded the Contras in Nicaragua in violation of an act of Congress specifically prohibiting this).

Outsourcing Torture

In a policy whose name is in no way indicative of what it condones, the Bush Administration's use of "extraordinary rendition" has serious ramifications for the U.S. and particularly American citizens abroad and the prospects for pursuing the "war on terrorism". First, when the U.S. has a policy that essentially condones and authorizes torture (see the Bybee memo for the legal rationale given by Alberto Gonzalez and the Assistant Attorney General Jay Bybee), it degrades the voice of the U.S. as a promoter of human rights and emboldens countries that use torture (if not officially using these facilities, as was done under "extraordinary rendition"). Second, it emboldens those fighting against the U.S. to torture captive Americans, whether civilian or military, while leaving no real sound footing on which the U.S. can condemn these acts without being hypocritical. Finally, it is a very pooor way of extracting information from captured suspects. While being tortured it is safe to assume that any confessions are of very suspect quality. In addition, the use of torture precludes any information gained from being used to prosecute suspected terrorists because any information extracted by using torture cannot be used in legal proceedings in the U.S. and many other countries. Finally, and probably most importantly, there is no reason that torture is ever the right policy and its use should be condemned universally. It destroys the tortured and the torturer.

Is Syria Next?

Today, in response to the assassination of former Prime Minister of Lebanon, Rafik Hariri, the U.S. recalled its ambassador to Syria, reportedly for "consultation". It is clear from the rhetoric used by the Bush Administration in the past that this is not a matter relating to the assassination, or even to the presence of Syrian troops in Lebanon. If the U.S. really opposed the presence of 15,000 Syrian troops in Lebanon, and wanted to do something about it, it could have done something (even war, if the example of Iraq is any indication of the preferred tactics of the Adminsitration) because Syria was defying a push by many Lebanese and the United Nations that Syria pull its troops out of Lebanon. It is more likely that the reason for the recall is that the U.S. is getting ready for a much broader diplomatic push against Syria and may comprise the opening of a strategy towards expanding the war in Iraq into Syria and possibly Iran. On the latter country, it has become a clear focus of the Administration starting with the testimony in front of the Senate Foreign Relations Committee by Condoleeza Rice in which she lumped Iran and North Korea together as threats due to their pursuing nuclear weapons programs (remember the Axis of Evil?) and also naming Iran as a member of the "Outposts of Tyranny" and probably came in second in references only to Venuzuela as countries this Administration doesn't like and we have already tried unsuccessfully to support a coup in the latter country.

Freedom of Press and the Outing of Valerie Plame

Today, a Washington Post article was released saying that reporters who knew the leaker of Valerie Plame's identity as a covert CIA agent from within the White House. It raises an interesting dilemmna between freedom of the press and national security. Strangely, on this one I come down on the side of national security on this one. It is pretty clear that the outing of Plame was detrimental to national security in that it takes away a lot of training and could compromise sources associated with her. However, I don't believe that subpoenaing other reporters (besides Bob Novak) is the best way to handle the problem. It would seem best to subpoena Novak directly or the people who knew within the White House (there are only about half a dozen).

National Common Sense Defence

It was reported today that the Bush Administration's missile defence system test failed for the third straight time in almost the same way. It is evidence of the waste of money this program represents at a time of soaring deficits. It is also nearly useless to counter the types of threats the U.S. faces in the coming decades. It is another story of how the Bush Administration chooses to follow the Reagan neo-con agenda over what is best for the country.

Office of Faith-Based Cuts

The Bush Administration’s budget for FY2006 has many troubling provisions like the Faith Based Initiaves (through the Office of Faith- and Community-based Programs) that promotes marriage and abstinence at the expense of programs that have a track record of reducing unwanted pregnancies and reducing the amount the government spends on supporting the poorest families in the U.S. Specifically, the President’s budget cuts funding for the Temporary Assistance for Needy Families (TANF) High Performance Bonus, which rewards states with extra funding that reduce the number of families living in poverty in order to fund faith- and “community”-based programs that support marriage and abstinence to reduce the number of families living in poverty, essentially privatizing the role of government to religious organizations of social support. The really disturbing part of this idea is that abstinence education doesn’t work (it leads to higher teen pregnancy rates than promoting the use of condoms and other methods of birth control) and it attaches a method of “if you accept Jesus, we’ll help you but otherwise you are screwed (i.e., you go to hell)”. In a secular state like the U.S. this type of policy is completely unacceptable.

Gannonization of the News

Recently, it has come to light that Jeff Gannon (a pseudonym), a former (as of today) reporter for a GOP organization (a quasi-news group called Talon News) has been invited into White House press conferences despite the lack of legitimacy as a press organization. Gannon was allowed to question the President directly with softball and misleading questions that are an insult to the idea of an inquisitive press that is necessary for democracy. This is another example of the tragic media accident the Bush Administration is becoming with the recent disclosures of their experiments in propoganda (e.g., Armstrong Williams, Maggie Gallagher, Michael McManus, and their fake news casts). The freedom and impartiality of the news media is becoming more and more of a problem. Using the idea of “liberal bias” in news, the Right, led by Fox “News” has created a culture of ignorance where Bill O’Reilly and Sean Hannity can pass for news, while Paul Krugman is derided as a “left-winger”. It is unconscionable that so much of this country can have Fox “News” as their source of information about world events and American politics. Clearly they exhibit a right-wing bias serve as the propoganda arm (apart from the corrupt journalists and Gannon) for the Bush Adminstration. It is a shameful development and one that indicates the need for greater regulation of media outlets in terms of what is news and what is opinion.

Veto Virginity

In an article in today's NY Times, there was the suggestion that Bush might threaten to use his veto power (which, by the way, is on his agenda to expand into a line-item veto that was ruled unconstitutional in 1996) to ram his overly stingy, greedy budget through a hesitant Congress. This would be his first veto of his entire presidency. For a president who claims to be committed to fighting the deficit, it is revealing that he never vetoed a spending bill all throughout his first term. Of course, back in term one, the Congressional Republicans were unthinkingly committed to making sure Bush's agenda was pushed through Congress. Now that Bush doesn't have to worry about re-election while members of Congress do, it will be harder for him to ram these bills through and he might have a bill cross his desk that wasn't written by Karl Rove. Now is the time for the Democrats to use these divisions in the Republican party to block as much of the Republicans uncaring policies that hurt everyone except the rich. Democrats of the Congress Unite!

Budget Follies, Part 1

In the president’s recently released FY2006 budget, he grossly mismanages the country’s finances by ensuring the tax cuts for the wealthy stay in place (and in fact, get extended), even at the expense of the poor, the elderly and our veterans. It is very characteristic of the Administration’s priorities, regardless of what it may publicly state. It is also evidence of the fantasy world in which the Administration lives about the economy and the fiscal state of the U.S. For example, in the Overview of the President’s 2006 budget, it asserts that “With a growing economy, tax receipts are rising, which is helping to bring down the deficit as a percentage of GDP” (GPO, p. 3). This statement is misleading for several reasons. First off, the deficit is only shrinking in relation to the over-inflated estimates from a year ago that the Administration continues to use as a baseline. They even admit as much in a table a page later that shows the projection from February 2004 for the fiscal year 2004 deficit of 4.5% of GDP when it turned out to be 3.6% when all was said and done for. Additionally, the deficit that the Administration uses in the budget proposal does not include many of the most expensive programs on their adgenda: the wars in Iraq and Afghanistan and their privatization of Social Security. Moreover, the true effect of the tax cuts of 2001, 2002, 2003 and their extension in 2004 are not adequately included in deficit projections that take current policy as the baseline. This assumes quite unrealistically that all provisions will expire once they reach the sunset deadline in the laws. From another angle, the statement is misleading by asserting that the economy is growing as are tax revenues. While on a base level this is true, it is to be expected given that we are still in recovery from the 2001 recession. Furthermore, the rebound is coming at a slower pace than in previous recoveries. The gains in tax revenue are gradually being shifted from the very wealthy to the lower and middle classes by the may Bush tax cuts. Also, although the economy is growing (in terms of GDP), the benefits are largely contained to profits. The pace of recovery in employment growth is lackluster at best and wages have remained stagnant in real terms over the entire first Bush Administration. More on the inaccuracies of the budget later, when I have a chance to read more of it.

Atomic Playboys

The NY Times has reported that the U.S. government has funded projects which would increase the budget for developing new nuclear weapons. The process of "updating" the current stock of nuclear weapons is a highly risky project, politically and in terms of U.S. national security for it would legitimize the aims of such countries as Iran and North Korea to pursue their nuclear weapons programs and could set off a new round of nuclear arms races, especially if the U.S. decides to re-commence nuclear tests, in violation of the nuclear test ban treaty (with also detrimental health effects for Americans). If the U.S. begins to re-start its nuclear program, the global ramifications could be devastating. What did we learn from the Cold War? The presence of nuclear weapons in two powers was enough to lead to a number of proxy wars and other countries pursuing the flag of atomic presence. In a uni-power world, even the hint that the U.S. might be developing new nuclear weapons is enough to signal the possibility of their use in the coming years. In terms of national security, this is an awful idea. It makes the U.S. significantly more unsafe and sends a signal to currently unfavorable countries that they are in our sights and if they make one wrong move, BOOM and there goes the beginning of a nuclear war. What a frightening and disturbing prospect.

Purchasing Policies

An alarming change is gradually taking place that is increasing the influence of a minority of special interests in the shaping of policy and the relationship between business and politicians. As the Washington Post reports, the U.S. Chamber of Commerce (U.S. CoC), a large business lobby in Washington has been consolidating its power and has increased its financial might significantly over the past ten years. The result of this is that there is more and more cooperation between business and politicians in the drafting of legislation and less and less of a chance for the people who bear the brunt of these policies to get a word in edgewise, that is to say, the majority of Americans. Furthermore, rather than engaging in limited lobbying to benefit the narrow interests of its members, the U.S. CoC has been supporting a broad array of Republican policies. This has lead to a situation in which the CoC is afraid to break with the Republican agenda in the fear that in the future, their narrow interests to help their industries will be de-funded as retaliation. This has lead to a partisan business lobby that has tremendous sway in terms of funding and leads to questionable policies being enacted simply because of the financial backing behind them. It gives businessmen disproportionate influence and voice in the political process which endangers the basic philosophy of democracy: one person, one vote. Yikes!

Social Security Privatization Considered

The privatization program for Social Security proposed (not really, there are very few details about the plan available) would be tantamount to the destruction of Social Security with a huge payoff to those companies providing the financial consulting on the accounts and for those people who already hold stocks (mostly the very wealthy). First, the plan to “save” Social Security would not do anything to improve its financial position. Even an anonymous White House official has said that the proposed changes to Social Security would have a neutral effect upon the finances of it. Thus, the first rationale is debunked. Secondly, the benefactors of Social Security would get a raw deal from the private accounts. In order to earn much of anything, they would need to get high returns, which would entail high risk. In a group as large as the group of Americans who receive Social Security, there would be a large number of people who lose their entire retirement savings under the plan. The Administration’s solution would be to only allow investment in a few conservative low-risk mutual funds. The low risk would translate into low returns. Thus retirees would get little out of the plan above what they get under the current Social Security program and there would be higher risk; even low-risk mutual funds are more riskier than Treasury bills, which is what drives the returns in Social Security today. Furthermore, in a private accounts plan, there would be significantly higher administrative fees (currently, the administrative costs are less that 0.5%), which would cut further into the returns. Finally, the Administration’s plan calls for cutting benefits, which would make the plan little more than a loan. Even under this analysis (which ignores the $2 trillion dollars of extra government borrowing just in the next 10 years; over the next 40 years it would be closer to $10 or $15 trillion), the benefits of private accounts are scant and the extra risk probably negates any expected monetary gain under the plan.
However, not everyone would lose. The large Wall Street financial firms would make a killing in the administrative fees they would charge on millions of new accounts. Additionally, those already holding stocks (as I said before, mostly the wealthy) would get an instant benefit in terms of appreciation of their holdings due solely to the huge inflow of money into the stock market. It seems totally inappropriate and dangerous to privatize Social Security. Another way that would actually help Social Security’s financial position would be to increase the cap on income that is taxed for Social Security from roughly $80,000 to $120,000 or $140,000 and raise the low end from $0 to $20,000 or $30,000 to make the collection of payroll taxes more progressive. This would be a far safer and more effective way of extending the life of Social Security than privatization and would also increase the equity of the program.

Asbestos buddies

In his State of the Union address, Bush made an unusually specific remark on class action lawsuits. He states that “Justice is distorted, and our economy is held back, by irresponsible class actions and frivolous asbestos claims”. It is interesting that Bush should single out asbestos because while CEO of Halliburton, Dick Cheney oversaw the acquisition of Dresser Industries, which was forced to pay huge sums to settle a class action lawsuit about asbestos. Now, if these class action lawsuits were totally frivolous, surely there would be no scientific evidence of the harm asbestos causes workers and even more certainly there would be no suggestions by corporate executives that asbestos is harmful to workers. However, this is not the case. For example, in an internal memorandum of the National Gypsum Company dated September 22, 1958, the author notes that “We know that you will never lose sight of the fact that perhaps the greatest hazard in your plant is with men handling asbestos. Because just as certain as death and taxes is the fact that if you inhale asbestos dust you get asbestosis [a pulmonary disease that is often fatal]. This means adequate dust control systems properly maintained to assure concentration within your state maximum allowable limits”. Yet again Bush has come out to pander to the industries close to the administration’s heart (which of course runs through its wallet)!

The Torture Tsar

Although it is all but certain that Alberto Gonzales will be confirmed as the next attorney general after Harry Reid stated that Democrats would not use the fillibuster, it is heartening to note that approximately 30-35 Democratic senators would oppose his confirmation. However, this is not enough. Firstly, it would be a nice sign if some Republican senators could show some testicular fortitude (along the lines of Barbara Boxer when she opposed the certification of the Ohio electoral votes) and stand for their conscience and the values and laws of the U.S. that say torture is wrong in every case and not only in cases that result in death, organ failure or the loss of use of bodily functions. It is a sign of the moral bankruptcy of the neo-conservatives who have convinced the entire Republican party to serve as a rubber stamp for the Adminstratiion position. Secondly, it should be accepted that any Democrat who votes for Gonzales' confirmation is no longer worthy of being called a Democrat for they have abandoned the compassionate, caring values that the Democrats cling onto as the moral basis for thier policies. They should, at the next election they face, be taken out of office and replaced with a more consciencious liberal Democrat. Gonzales' demonstrated in his torture memos (pdf) that he is unfit to be in a position of the responsibility of the attorney general. It should be a high priority for the Democrats on principle that his confirmation fails. Anything less is a betrayal of Democratic ideals.