Class Warfare Blog

December 28, 2016

If You Think The System is Not Rigged … Read This

We will have Mr. Trump as our next president precisely because voters thought that the economic and political systems are rigged against them. That this “feeling” is based in fact should give pause to those currently excoriating Trump voters for voting against their own financial interests.

A Financial Times (London) report on a Lancaster University Management School study, said in part:

The correlation between high executive pay and good performance is “negligible”, a new academic study has found, providing reformers with fresh evidence that a shake-up of Britain’s corporate remuneration systems is overdue.

Although big company bosses enjoyed pay rises of more than 80 per cent in a decade, performance as measured by economic returns on invested capital was less than 1 per cent over the period, the paper by Lancaster University Management School says.

Our findings suggest a material disconnect between pay and fundamental value generation for, and returns to, capital providers,” the authors of the report said.

In a study of more than a decade of data on the pay and performance of Britain’s 350 biggest listed companies, Weijia Li and Steven Young found that remuneration had increased 82 per cent in real terms over the 11 years to 2014.

Much of the increase was the result of performance-based pay. But, the report’s authors say, the metrics used to assess performance — such as total shareholder return and earnings per share growth — are unsophisticated and short-termist, acting against the interests of long-term investors. The research found that the median economic return on invested capital, a preferable measure, was less than 1 per cent over the same period.

What is true in the UK is more than true in the U.S. as we are the leaders of this “the CEO is King/Emperor” movement. Like all of the other propaganda, black is white (and vice-versa). CEOs claim their compensation is “performance-based,” which it clearly is not as they have rigged the system by defining “performance” in a way that results in raises for themselves but no one else. When people hear that CEO salaries are “performance-based,” they assume the huge salaries and retirement programs CEOs “earn” are warranted because they don’t think to ask for the details. Well, the details are now out in the open and “the King/Emperor has no clothes” or any other kind of protective cover.

I am declaring that it is not open season on CEOs (no, not the Second amendment kind), but let’s see how many we can take down.

Since the CEO’s aren’t doing much for those gaudy salaries, one approach would be to fire them and ask the First Vice-CEO if he would like the job at half of the current CEO’s salary. I suggest no one will hear the word “no” to these offers. If the performance of that CEO is as abysmal as the one’s now, then fire that replacement and ask his second in command if he would like the job at half of his superior’s salary. If this doesn’t result in superior performance, it will certainly reduce overpayment of the CEO.

And, this is just a manifestation of the “disruption” all of the business experts say is so good for the growth of companies, just applied to top management … for once.

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September 12, 2016

Essential Bill Moyers

In a cogent essay, Bill Moyers proves again why he is the Dean of American Journalists. He is able to frame our current situation better than anyone else. Please read “We, the Plutocrats vs. We, the People: Saving the Soul of Democracy.”

As you will see it has nothing to do with conservatives v. liberals, or Republicans v. Democrats, or any of the other things we focus on. It is simply the case of too much money in the hands of too few people who claim that “they earned it” when that is not really the case.

 

July 30, 2016

Why the Inequality?

Well, bubbie, it wasn’t by accident!

From How ‘Competitiveness’ Became One of the Great Unquestioned Virtues of Contemporary Culture by William Davies, a Senior Lecturer at Goldsmiths, University of London (Posted on July 30, 2016 by Yves Smith)

“I suggest that we need to understand how competition, competitiveness and, ultimately, inequality are rendered justifiable and acceptable – otherwise their sustained presence in public and private life appears simply inexplicable.

“And yet, this approach also helps us to understand what exactly has broken down over recent years, which I would argue is the following: At a key moment in the history of neoliberal thought, its advocates shifted from defending markets as competitive arenas amongst many, to viewing society-as-a-whole as one big competitive arena. Under the latter model, there is no distinction between arenas of politics, economics and society. To convert money into political power, or into legal muscle, or into media influence, or into educational advantage, is justifiable, within this more brutal, capitalist model of neoliberalism. The problem that we now know as the ‘1%’ is, as has been argued of America recently, a problem of oligarchy.

“Underlying it is the problem that there are no longer any external, separate or higher principles to appeal to, through which oligarchs might be challenged. Legitimate powers need other powers through which their legitimacy can be tested; this is the basic principle on which the separation of executive, legislature and judiciary is based. The same thing holds true with respect to economic power, but this is what has been lost.

“Regulators, accountants, tax collectors, lawyers, public institutions, have been drawn into the economic contest, and become available to buy. To use the sort of sporting metaphor much-loved by business leaders; it’s as if the top football team has bought not only the best coaches, physios and facilities, but also bought the referee and the journalists as well. The bodies responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ (crucial ideals within the neoliberal imaginary) in tatters. Politically speaking, this is as much a failure of legitimation as it is a problem of spiralling material inequality.

“The result is a condition that I term ‘contingent neoliberalism’, contingent in the sense that it no longer operates with any spirit of fairness or inclusiveness. The priority is simply to prop it up at all costs. If people are irrational, then nudge them. If banks don’t lend money, then inflate their balance sheets through artificial means. If a currency is no longer taken seriously, political leaders must repeatedly guarantee it as a sovereign priority. If people protest, buy a water canon. This is a system whose own conditions are constantly falling apart, and which governments must do constant repair work on.”

June 27, 2016

Giving the Lie to GOP Desires for “Original Intent” Constitution Interpretations

The GOP has a desire, embodied previously in the person of Supreme Court Justice Antonin Scalia, for the U.S. Constitution to be interpreted only on the basis of what the Framers intended when they drafted the document. This, of course, ignores the numerous times the Framers mentioned that they didn’t want to tie the hands of future generations, even providing the mechanism to amend the document and which they availed themselves of immediately with ten, count ‘em, ten amendments right off of the bat!

The Southern Baptist Convention has supplied a recent form of this desire for original intent in the form of a resolution:

RESOLVED, That we strongly urge the President to nominate strict constructionist judges who seek to make decisions based on the original intent of the United States Constitution and, therefore, faithfully interpret rather than make law or impose their political views on the nation . . .

This desire is just a smokescreen or, worse, it indicates the ignorance of the speakers. Too often, people in politics are perfectly happy to let others do their thinking for them and this yearning for a country defined by the “original intent of the Framers” may be one of them.

Ironically, the actions of this age’s neoliberal conservatives is acting in direct opposition to the intent of the Framers of the Constitution. Note I said “neoliberal,” not liberal. Neoliberals are acolytes of the “Free Market” who favor privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy. This is clearly a philosophy in service to oligarchs and the already wealthy.

The game plan of the neoliberals is to diminish collective actions and thinking on the part of U.S. citizens by convincing us that we are the sole determinant of our future, that we are individual actors, not groups or a society as a whole. Margaret Thatcher, former Prime Minister of the U.K. and Robin to Ronald Reagan’s Batman (The roles might have been reversed in the U.K.), had the grace to state that idea in a straightforward manner when she said: “… there is no such thing as society. There are individual men and women, and there are families.”

Clear enough?

Does the phrase “divide and conquer” ring a bell?

Now, contrast this approach with that of the Framers of the Constitution. The Framers educated themselves on the life cycles of republics because it was clear to them from the beginning that we would be some form of self-governing republic. They were very focused on the death throes of those republics (“Half our learning is their epitaph.” Thomas Dawes, Jr.) All of the examples of republics available to them to study were, of course, failed republics (Greece, Rome, etc.). Most of the countries around the globe in the later 18th century were monarchies with kings and queens having some form of divine right to rule. There were no grand republics to model the U.S. on, all had failed at that point. So, they studied the source of the failures and tried to protect their creation from that. The lifeblood of a republic was, in their estimation, public virtue. By public virtue, they did not mean religious virtue (which may be the source of the Southern Baptist’s confusion) by public virtue they meant this:

“Public Virtue entailed firmness, courage, endurance, industry, frugal living, strength and above all, unremitting devotion to the weal of the public’s corporate self, the community of virtuous men.”
(Novus Ordo Seculorum, p. 70, my emphasis)

If I may quote John Adams (from a letter to Mercy Warren), “The must be a positive Passion for the public good, the public Interest, Honour, Power and Glory, established in the Minds of the people, or there can be no Republican Government, nor any real liberty.” The public passion, he wrote, “must be superior to all private Passions. Men must … be happy to sacrifice … their private Friendships and dearest Connections, when they stand in Competition with the Rights of Society.”

So, the GOP, whose policies are in direct contradiction to the intent of the Framers are claiming the direct opposite. The Framers wanted us to put the needs of society over individual desires, the GOP wants you to put your and your family’s needs at the top and fuck the rest, they are on their own.

It is a Brave New World indeed!

 

May 23, 2014

Cognitive Dissonance? Nope. Nothing to See Here, Move Along

The GOP insists upon a number of principles that are completely contradictory to reality for anyone to be a true believer. A the top, you must believe in the supremacy of free markets, that all government regulation of such is bad. This, of course, flies in the face of a steady stream of corporate bad/illegal/destructive/careless behavior. Think about Enron, the subprime mortgage disaster, the price of gasoline going up while demand was going down due to speculators, Monsanto, the Koch brothers trying to eliminate government support for alternative energy in Kansas, the Wall Street banks gambling with other people’s money and cheating their own customers, the fracking companies (What earthquakes? Water doesn’t burn. We don’t contaminate your water, no. All we want are laws that send people to prison for describing what we are doing.), railroad tank car fleet operators (What explosions? Our cars are perfectly safe.), General Motors (That’s not a defective ignition switch, you must have bumped the keys with your knee. Problems, there are no problems.), . . . , I forgot about the nuclear fuel company that buried its waste “out back” instead of processing it according to the law. (Okay I am done, wait, …)

So, if the free market would correct all of these things, why did they happen in the first place? Did government regulations cause all of these things? Was it too expensive to do things the right way, so they took forced shortcuts, knowing their parent corporation could “disincorporate” if things got really bad?

“The free market ideology is actually just an economic manifestation of human greed.”

Free markets are driven by greed, no matter their original attentions. Manipulation of “free” markets is the quickest path to wealth and so attracts greedy people. (Free markets are by nature based upon all parties having perfect information, free from anything manipulative, like advertising.) What aspect of free markets protects us from those greedy people? There is nothing.

Government taxes upon corporations are a way of charging those corporations for their externality costs (their use of the roads, communication networks, etc., their pollution of the air and water and land, and other things we share) but those same corporations have bribed government officials to eliminate or reduce their corporate taxes to a bare minimum, leaving their externalities to be paid for by others (us). They also make sure all of the laws benefit them and not the general citizenry. As just one example, college students cannot expunge college loan debts (to corporations) through bankruptcy, but corporations can avoid a massive toxic waste cleanup that way.

So, what is it about free markets that will “correct” for these corporate failings and manifestations of greed?

The answer is short—nothing. The free market ideology is actually just an economic manifestation of human greed. “Leave us alone to make as much money as we can and maybe you will benefit sometime down the road. Don’t interfere. Ignore that man behind the curtain.”

Is it just a coincidence that anytime we get close to their ideology that the rich getting richer and the poor getting poorer accelerate? I don’t think so.

Since these zealots claim that anything that smacks of regulation of free markets is socialism, well, then I am in favor of socialism, at least in so far as it is practiced in Scandinavia. There the reins on human greed, er, free markets, are held tightly by public interests.

May 20, 2014

Tail Trying to Wag Financial Dog . . . Again

The Anglo-Swedish drug company AstraZeneca has rejected the £69,ooo,ooo,ooo takeover bid of U.S. rival Pfizer. You would think that would be the end of things, but no. AstraZeneca shareholders are up in arms over the rejection of the deal.

Do the shareholders know the intricate details of the deal? No.

Do the shareholders know whether the deal will be good for AstraZeneca’s brand? No.

Do the shareholders know what the firm’s management’s full thinking was? No.

So, what did the shareholders know?

They knew that they would have made a major profit on the value of their shares.

So, as far as they are concerned, any deal that makes them money is a good deal? Or are they believers in the lie that the only reason for the existence of a corporation is to create value for its shareholders?

Whatever the case, it is extremely bad management on somebody’s part whenever the shareholders decide they want to run things. In this case it seems to be bad management on the part of the shareholders.

Ah, the stock market. Why do we still think this is a proper way for business to take place?

March 29, 2014

RIP—Political Parties

This weekend marks the beginning of the end of the political parties as we knew them. In the past, any potential political candidate had to solicit the help of one of the political parties to have any chance of success. The usual path for a candidate was to run for local office and make him- or herself known to the local political party officials. Then additional offices were attempted forming a ladder to higher office with closer and closer involvement with the party and more and more support from the party. Party officials introduced “up and coming,” promising new candidates to the various power brokers in the party. They arranged for fundraisers and provided funds from general accounts. They provided expertise that would have otherwise cost a candidate a great deal to purchase.

All of that is now on the edge of being gone.

Good riddance you say? Also going with the party is any influence the parties had over candidates to form their platforms or, really, anything else.

Replacing all of that will be the private “political conventions” put on by billionaires. This weekend in Las Vegas, most of the major Republican players in the 2016 presidential sweepstakes are meeting with billionaire casino magnate Sheldon Adelson. In the 2012 election cycle Mr. Adelson spend a pittance, a mere $90 million on presidential candidates (less than 0.5% of his wealth I am told). That kind of money will take a candidate as far as they want to go in any election. So, gone is the influence of the parties to get candidates to “toe the party line” only to be replaced by whatever it is the billionaires want as a “return on their investment.” And I do not believe the American Plutocrats will be publishing their “platform,” that is the list of the things they want of their candidate gets elected.

Candidates for sale! Candidates for sale! Git yer candidate!

February 3, 2014

Gamblers, Plain and Simple

I have written a couple of times about billionaire hedge fund managers and their ilk before. The only changes I can see is that there are more of them now, so my previous comments are not in need of amendment. (They revolve around the fact that to make a billion dollars in one fiscal year is to make $532,000 per hour. These assholes have also gotten their income declared “special” by sympathetic (read: bribed) Congressmen so that they pay a maximum of the lowest possible federal tax rate (15% on their earnings). They also contribute nothing substantial, being in essence insurance companies for investors (they insure against negative financial risks).)

What needs amending is my toss off statement that Wall Street magnates don’t create anything substantial. basically I didn’t go far enough. These folks are paper pushers, with the largest amount of paper being bank notes (I know it is all done electronically now and they rarely see a bank note or a stock certificate, but “electron pushers” just doesn’t have the same sting as “paper pushers,” no?)

I realize now that there is no difference between these Titans of Finance and ordinary gamblers, except for one big difference: ordinary gamblers do not own the casino, so when ordinary gamblers decide to change the rules, by cheating or by organizing information to their benefit, the casino owners ban them from not only their casinos but everybody else’s, too. On Wall Street, on the other hand, the “gamblers” get to: (a) gamble with other people’s money, and (b) create new games as they wish, and (c) get the rules changed when they decide there is an advantage to their own prospects. And no matter how poorly they perform (Jaime Dimon), their (Jaime Dimon) hand-picked Boards of Trustees give them (Jaime Dimon) big raises.

All of this is wrapped in mumbo-jumbo (including talking about the “market” as if it were an organism), elitisms (Data, and charts, and mathematics, oh, my!), and patriotism (We are a Capitalist Nation, under God!) but the “stock market” as described in my grade school classes barely exists as the gamblers have bought the casino: they bought off the owners, the regulators, the lawmakers, the judges, anybody who could tell them “no.” This country is now being run for their benefit, not ours.

January 24, 2014

How Did We Get Into This Mess?

I have written extensively on the class war that was waged (and is still being waged) by the wealthy and their minions that resulted in the extreme wealth and income gaps we now have. Part of the problem has come from flat out misconceptions that fostered more greed than was strictly necessary. To help understand this I recommend to you this post from the author of “Econned” Yves Smith: The Myth of Maximizing Shareholder Value.

July 3, 2013

EPA Changes Name to CPA

ProPublica has reported (July 3, 2013) that “When the Environmental Protection Agency abruptly retreated on its multimillion-dollar investigation into water contamination in a central Wyoming natural gas field last month, it shocked environmentalists and energy industry supporters alike.

“In 2011, the agency had issued a blockbuster draft report saying that the controversial practice of fracking was to blame for the pollution of an aquifer deep below the town of Pavillion, Wy. – the first time such a claim had been based on a scientific analysis.

“The study drew heated criticism over its methodology and awaited a peer review that promised to settle the dispute. Now the EPA will instead hand the study over to the state of Wyoming, whose research will be funded by EnCana, the very drilling company whose wells may have caused the contamination.”

In addition, the EPA has vacated its responsibilities on a broad front regarding fracking and in so doing has decided to change its name from the Environment Protection Agency to the Corporation Protection Agency.

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