Class Warfare Blog

November 21, 2017

We’re No. 1 … We’re No. 21! Wait … WTF?

The new 2017 Credit Suisse Global Wealth Report helpfully calculates median net worths of countries. Switzerland and Australia top the global list. (Reminder: a median is the value in the middle, not an arithmetic average.) The median Swiss adult has a net worth of $229,000. The typical Australian, $195,400. And the typical American? A mere $55,876. Twenty nations in all have higher median adult net worths than the United States. So, we are No. 21.

Wait, we’re the richest country in the world, how come we are 21st in median wealth?

The really rich, those with at least $50 million in net worth, have multiplied five-fold since the year 2000 globally. About half of these, 49 percent, reside today in the United States. Credit Suisse counts 72,000 of these ultra-rich Americans. In context: China, the host to the world’s second-highest collection of $50 million-and-up personal fortunes, has only 18,100. The United States hosts more ultra-rich individual fortunes than the nations with next nine highest ultra-rich totals combined.

So, here in the U.S. the rich are getting richer, but the rest of us are falling very far behind.

Let’s consider the Australians, as we have a bit in common.

Australians used to see their nation as a relatively equal society. They don’t anymore. Rising inequality has become a major Australian political issue. But Australia remains far more equal a society than the United States. The top 1 percent in Australia only holds an estimated 15 percent of the nation’s wealth. (In the US, it is 38.6%.) So we are the wealthiest country in the world but we don’t have the wealthiest citizens as most of the wealth has flown into the pockets of a very few people.

And this is not a matter of that they are wealthy, it is what they do with the wealth they have accumulated. Basically, they don’t spend it. Poor people spend all of their money. Middle class people spend almost all of their money. That money goes to buying things from companies who provide jobs for people. The rich don’t spend anywhere near as much of their income. If they buy anything, it is investments which increase their wealth even more. None of that activity positively affects the economy.

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Teachers Unions? Bah, Who Needs Them?

Six years ago, the state of Wisconsin passed the highly controversial 2011 Wisconsin Act 10, which virtually eliminated collective bargaining rights for most public-sector workers, as well as slashed those workers’ benefits, among other changes.

As Gov. Scott Walker (R-WI) argued, “We no longer have seniority or tenure. That means we can hire and fire based on merit, we can pay based on performance. That means we can put the best and the brightest in our classrooms and we can pay them to be there.”

Well, did they?

What do you think will happen to an employer who slashes wages and benefits? People will leave their employ. Who leaves first? The people who have the most confidence they can find another job, that is the best workers. Who stays. The sluggards, the unimaginative, the fearful … not all, of course, but a higher concentration of these stay. (Studies have shown this to be the case.)

Action Reaction
An analysis of the effect of Act 10 has found:

  • In the year immediately following the law’s passage, median compensation for Wisconsin teachers decreased by 8.2 percent in inflation-adjusted terms, with median benefits being cut by 18.6 percent and the median salary falling by 2.6 percent. Median salaries and benefits continued to fall during the next four years so that median compensation in the 2015-16 school year was 12.6 percent—or $10,843 dollars—lower than it was before the passage of Act 10.

  • The percentage of teachers who left the profession spiked to 10.5 percent after the 2010-11 school year, up from 6.4 percent in the year before Act 10 was implemented. Exit rates have remained higher than before, with 8.8 percent of teachers leaving after the 2015-16 school year— the most recent school year for which data are available.
  • The percentage of teachers with less than five years of experience increased from 19.6 percent in the 2010-11 school year to 24.1 percent in the 2015-16 school year.
  • Average teaching experience decreased from 14.6 years in the 2010-11 school year to 13.9 in the 2011-12 school year, which is where it remained in the 2015-16 school year.
  • Interdistrict moves—when a teacher leaves one Wisconsin district to teach at another the next school year—has increased from 1.3 percent before the passage of Act 10 to 3.4 percent at the end of the 2014-15 school year.

Are you surprised?

The False Narrative
The core of the false narrative is in plain sight; it is “That means we can hire and fire based on merit, we can pay based on performance.” This is a business model. The problem is that in a business, the “boss” owns the company (or the boss’s boss or the …). The owner has the right to hire and fire inherent in his ownership. In a public school, the “owner” is the public, the taxpayers of the school district. There is no mechanism by which those owners can fire anyone (by state law). Prior to Act 10, the “owner” of each school district elected a school board which carried out negotiations with the employees to determine wages and working conditions. In no school district of which I am aware are teachers getting rich. When you think of employees getting rich, you think of doctors, lawyers, stock brokers, high level executives, but teachers … not so much. Having high educational attainment did not result in abnormally high wages for teachers, but there were tradeoffs: instead of higher salaries, better benefits and working conditions were offered and accepted, through negotiation. Act 10 chopped the head off of local control and took it over at the state level. (Republicans in favor of local control? Not so much.)

So, how did the minions of the schools (principals?) do in hiring the best and the brightest? How did they do in paying for performance? How did they do with getting the bums out of the racket? Aren’t these business types always talking about how important good management is? Was there any effort to improve the quality of the people in charge? No? (No.)

As usual, the actual motives for Act 10 was not in the bullshit offered by proponents. The Koch Brothers-fueled politician, Scott Walker, was executing a typical anti-union action for the billionaire class. Unions are the only organization with enough power to resist the oppression of workers by employers, hence they have to go. (Plus they tend to vote Democrat.)

But actions have reactions. Too bad Scott Walker doesn’t feel any of the reaction … just the teachers and the students and the “owners” of the school district. The Koch Brothers, in reaction, kept pouring money into Scott Walker’s presidential candidacy and into his gubernatorial re-election campaign coffers. If you want quality workers, you gotta pay them!

November 7, 2017

Shocking News! White House NRA Spokesman Lies

White House NRA spokesman Donald J. Trump added that if “Good Samaritan” Stephen Willeford had not had a gun, “instead of having 26 dead, you would have had hundreds more dead” in reference to the latest mass shooting in Texas.

Uh, this doesn’t quite add up. At the scene and in the perpetrator’s vehicle, authorities found at least 15 empty 30-round ammunition magazines along with two handguns, a Glock 9mm and a Ruger 22, found in his car.

I do not want to diminish the bravery of the two gentlemen who distracted the shooter, but if he still had enough ammo to shoot “hundreds more” why did he run from two guys, one of whom was unarmed? No mention has been made of any full ammo clips fitting into his AR-15 clone being found, so was he going to shoot down “hundreds” with the Glock and Ruger .22?

As usual the NRA spokesman told these lies in a easy, comforting, reassuring manner, as all NRA spokesmen do. Later he added, “There’s nothing to see here. Move along” and “In lieu of actual legislation, people are urged to send hopes and prayers that this won’t happen to them. In God we trust! he can protects us! Except, well, in schools, and churches, and music concerns, and movie theaters, and … well, you know.”

November 3, 2017

Conservative A-hole Tanks Own Company Because Union

According to the California Today column in today’s NY Times:

“… popular news sites went dark on Thursday after its parent company DNAinfo shut down the entire Gothamist network of city-centric websites.
“The move came a week after reporters and editors at the New York newsrooms of Gothamist and DNAinfo voted to join a union.
“On Thursday, visitors to the websites were greeted by a post from Joe Ricketts, the company’s billionaire owner and founder of TD Ameritrade. He praised journalists who ‘reported tens of thousands of stories that have informed, impacted, and inspired millions of people.’
“But he added, ‘DNAinfo is, at the end of the day, a business, and businesses need to be economically successful if they are to endure.’“Mr. Ricketts, who started DNAinfo in 2009 and bought Gothamist last spring, had been outspoken in his dislike of unions.“As the company’s New York employees moved to unionize last spring, management warned that DNAinfo had been losing money for years. Mr. Ricketts later wrote, ‘I believe unions promote a corrosive us-against-them dynamic that destroys the esprit de corps businesses need to succeed.’”

Conservatives have poisoned their own minds about unions so much that this, er, gentlemen, couldn’t see a major opportunity right in front of himself.

If it were true that the company had been losing money for years (one has to ask why one expands a company by buying another one when one is losing money, but we understand one has to spend money to make money), but I digress, if the company has been losing money for years, open the books to your new union and ask them to be part of the solution rather than part of the problem. Closing the company is still an option, in fact it is a big hammer to use if conventional negotiations were to occur. (I’d rather avoid conventional negotiations and instead prefer interest-based negotiations, but one doesn’t always control how things will go.)

Possibly, if the company were losing money, the union could be a source of ideas as to how to reverse that trend. Certainly it would damper a unions lust after better wages and working conditions for its members.

Companies of European origin who set up shop in the U.S. actively encourage the formation of unions as being effective partners in the running of a profitable company. European countries include union officers on their boards of governors, often by law as well as custom. Of course, in the U.S. they run into conservative state and federal government representatives who put the kibosh on such efforts when they occur. We can’t have examples of working, cooperative unions to be able to point to now, can we?

We would like to know whether Mr. Ricketts has ever been a member of a union, or worked in a union environment, or managed a union-based company. I suspect not. I assume he got his information from other rich assholes like himself, who have no idea what they are talking about and would rather put out their eyes than see what is right in front of them.

In this case the creator of the “corrosive us-against-them dynamic” is certainly not the newly created labor union, it never had a chance to act one way or the other. Gosh, I wonder then, what the source of that “corrosive dynamic” was? Hmm.

October 26, 2017

Capitalism—Good, Socialism—Bad … But Why?

In this country capitalism is the best economic system of them all! Capitalism and Free markets, rule, baby! Capitalism is No. 1. It is an essential element of democracy. Socialism (Boo, hiss.) is evil, the spawn of Satan and is a threat to democracy and all it stands for. (Q: “What do you think Mr. Spock?” A: Fascinating. “Yeah, me too.”)

I ask you to read the following before continuing:

The Mathematics of Inequality

“Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity, according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires.

“Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small number of people.

“’Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,’ he said. ‘Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called “market fundamentalists” would have us believe.’

“While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts ‘don’t try to engineer a supply-demand equilibrium, and we don’t find one,’ he said. […] ‘The model tracks the data with remarkable accuracy,’ he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

“‘We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,’ he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably.

“’Without redistribution of wealth, our market economy would not be stable,’ said Boghosian. ‘One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.’ And even if a society does redistribute wealth, if it’s too small an amount, ‘a partial oligarchy will result,’ Boghosian said.”

Now, of course, that is just the opinion of a few, but does that mesh with your current view of the world?

If so, I ask that you entertain a rephrasing of the title of this post into “Capitalism Good for the Elites, Socialism Bad for the Elites” and that is the truth behind our false beliefs.

So, why would we buy into propaganda fomented by the wealthy so that we believed the exact opposite? Maybe for the same reason we bought into propaganda fomented by rapacious corporations against labor unions, which we created to protect us from rapacious corporations? Maybe for the same reason we believe that people who are anti-abortion and pro-death penalty are pro life? Maybe for the reason we believe it is a good idea to deport parents of children born here because we are “pro family.” Maybe for the reason we still believe that if we give the wealthy even more money, it will trickle down” to us, some how, some way, maybe. (Who knew it could be so complicated?)

October 7, 2017

Want to Know Why You Are Getting Poorer?

Can you imagine borrowing $1000 and then paying back $591,753 and you must still continue paying? This is how our stock market works. Consider the Apple corporation:

“If you buy shares in Apple, for example, you can get a dividend for holding shares and, possibly, a capital gain when you sell the shares. Since 2012, when Apple made its first dividend payment since 1996, the company has shelled out $57.4 billion as dividends, equivalent to over 22 percent of net income. That’s fine. But the company has also spent $157.9 billion on stock buybacks, equal to 62 percent of net income.
“Yet the only time in its history that Apple ever raised funds on the public stock market was in 1980, when it collected $97 million in its initial public offering. How can a corporation return capital to parties that never supplied it with capital? It’s a very misleading concept.
“The vast majority of people who hold Apple’s publicly-listed shares have simply bought outstanding shares on the stock market. They have contributed nothing to Apple’s value-creating capabilities. That includes veteran corporate raider Carl Icahn, who raked in $2 billion by holding $3.6 billion in Apple shares for about 32 months, while using his influence to encourage Apple to do $80.3 billion in buybacks in 2014-2015, the largest repurchases ever. Over this period, Apple, the most cash-rich company in history, increased its debt by $47.6 billion to do buybacks so that it would not have to repatriate its offshore profits, sheltered from U.S. corporate taxes.
“There are many ways in which the company could have returned its profits to employees and taxpayers — the real value creators — that are consistent with an innovative business model. Instead, in doing massive buybacks, Apple’s board (which includes former Vice President Al Gore) has endorsed legalized looting. The SEC bears a lot of blame. It’s supposed to protect investors and make sure financial markets are free of manipulation. But back in 1982, the SEC bought into agency theory under Reagan and came up with a rule that gives corporate executives a “safe harbor” against charges of stock-price manipulation when they do billions of dollars of buybacks for the sole purpose of manipulating their company’s stock price.”

They “borrowed” $97 million and have paid back $57.4 billion (a ratio of 591.753 : 1) and are still paying? Why? Because the stock market is a con game set up by the rich, for the rich. When stock is traded, money changes hands between shareholders, the corporation itself gets no further support. The money extracted from the corporation just keeps flowing (dividends paid to people who didn’t lend the money in the first place).

This excerpt is from How Economists Turned Corporations into Predators by Lynn Parramore on the exquisite web site Naked Capitalism. Follow the link to read more.

Note Naked Capitalism is currently doing a fund raiser. If you want to support high quality economic reporting, toss them a bone; I do.

 

October 3, 2017

GOP Gets What It Wants: Guns and Prayers

As we go through the usual fruitless discussions on the gun regulations we need but won’t get after yet one more mass killing using readily available guns, it is clear that the GOP is getting what it wants. In thrall to the NRA, a lobbying organization with fewer than five million members, the GOP wants no new gun regulations and has even moved to eliminate some of the ones we have. (It is puzzling to me that a lobby like the NRA, which has maybe one eighth as many members as, say, does AARP, has such power over a political party. Heck, it also wields great power over the Dems, too. It is puzzling.)

It is clear that Americans want sensible gun regulations in contrast with the NRA, which wants none. The motivation for the NRA is, of course, sales for its supporting corporations, the gun and ammunition manufacturers. So, Americans are dying in numbers greater than most other advanced nations combined, to support the corporate profits of those companies. And Congresspeople don’t care where their money comes from, apparently.

So, the GOP will triumph, again, as they will continue to receive money and votes for not passing gun legislation.

Which leaves people with nothing but their prayers, which have not been effective as is the case with all prayers, but if they are all you have, they are worth a try. These prayers further another GOP goal, that of moving us toward becoming a theocracy, a deep desire of the evangelical base of the GOP.

More guns, more prayers: the GOP agenda in action!

 

September 27, 2017

Failing to Ax Your Health Insurance the GOP Turns Its Gaze Onto Tax Cuts … for the Wealthy

Not only do they want to cut the individual rates for rich people, they want to cut corporate taxes that will result in those corporations funneling the tax savings to their executives and shareholders, yep, the rich again.

This is must reading! http://reclaimtheamericandream.org/2017/09/inside-tax-cut-job-growth-myth/

They will claim this will create jobs … all evidence to the contrary including according a Republican Congressional study in 2012.

September 25, 2017

The Problem with Averages in Education

A recent article on state and local government funding says: “With a GDP of $19 trillion, America is the richest country in the world. However, the IMD World Competitiveness Center recently ranked our education system as 24th out of 61 countries, and the American Society of Civil Engineers recently rated our infrastructure – the roads, bridges, and water systems that were once the envy of the world—as a D+.

Leaving aside the infrastructure issue, let’s look at the education issue. If one uses “business thinking,” and likens the education complex of this country to a factory, clearly that factory needs an overhaul. It is not functioning as we would wish. This is what the current crop of self-proclaimed education reformers claim: “Our public education system is broken, we need to reform it!”

But this is an incorrect analogy. The education system isn’t a single factory, it is a conglomerate of factories. Some of these factories are at the very highest level of performance seen in the world. So, the problem is not one of “we don’t know how to do this task,” we know how to do public education, we are just not doing it consistently and the low performers are “dragging the average down.” This can be seen in the simple expedient of breaking out scores on international tests by state. Massachusetts regular scores at the very top of the list when compared to the highest scoring countries. If our schools are “broken,” how come Massachusetts can perform so well?

So, the question to start with isn’t “how should we remake all of our schools?” but “why are some of our schools way below average and some way above average?” Having schools be “above average” and “below average” would be normal, but our problem is the spread in performances is much too broad.

In business practices, it is commonplace to study the underperformers and figure out how to make their performance greater, thus raising the average performance. Often leaders of higher performing units are tasked with raising the performance of lower performing units, for example.

Interestingly, these studies have been done and the roots of low performance have been found. In a number of experiments, students have been taken out of low performing schools and placed in higher performing schools and their performance went up. (In some cases, there was so much culture shock associated with the switch that the effect was delayed.) From this, some conclude that the problem is with the teachers. This conclusion would be wrong. A careful analysis of student performances shows that teachers account for about 14% of performance. This conclusion runs counter to the personal experience of most of us who went through public schools. There were certain teachers we felt inspired us and we liked them. But this didn’t mean we performed better in their class as compared to having another teacher, or that if we did perform better that the performance improvement was large.

Bigger than the effect of the teachers was the student’s home environment. If the student came from poverty and had an unstable home environment, there was a large negative correlation with school performance. Student’s who show up at school hungry, learn poorly. We have even learned that childhood hunger can lead to a lowered ability to learn in toto.

To explore these effects, experiments could be done to try to ameliorate these effects. Schools could provide breakfast and lunch to hungry students to see if there was an effect. This, too, has been done. While this doesn’t solve an unstable home environment, it does affect school performance in that children not thinking about food constantly do learn better.

If we want to address our problems in public education, we need to address the real problems, because addressing fictional problems rarely leads to effective solutions. Currently, with billionaires funding the research and privatization monies being lavished upon law makers, this is exactly the opposite of what needs to be done. In business terms, we are letting our competitors and know nothings manipulate our actions and that is something no business wants to have happen.

We have taken a bludgeoning approach to education reform, my whole life. I wonder when we are going to take it seriously? We have the research. We have the case studies. We know what works. Heck, high performing public schools systems in Europe are using our research to shape their systems! Why are we mired in mediocrity politically? I suspect that it is because we are getting the best government we deserve. If we can’t stand up to the monied interests attacking our schools, including the ones that work extraordinarily well, we are getting just what we deserve. And the children caught in the cross fire? Collateral damage.

September 17, 2017

Why We Do and They Don’t Want National Health Care System

We are talking here about the healthcare systems such as Canada and France have as examples, you know, all of the other advanced western nations. Names such as Medicare For All have been bandied about for such a system here in the U.S., which is just one such option.

Here in a nutshell is why we want to do this and the conservatives and their paymasters do not:

Per Capita Spending Health Care 2015
United States: $9451
Canada: $4608
France: $4407
Japan: $4150
United Kingdom: $4003
Miraculous Finland: $3984

When we see this list, we see “Gosh, we could have quality healthcare for only about half of what we are spending now!” and “We could use some of what we save to make sure that all Americans are covered.”

When they see this list, they see “Oh my gosh, look at the profits we will lose under national healthcare.”

We spend twice what most other countries spend on healthcare and only the very rich get a commensurate healthcare outcome. Most people spend more and get less than they get in other countries. For those of you who think Canada and France do not have quality healthcare systems, you might want to consider how you learned that … Fox (sic) News, maybe? We have a higher rate of infant mortality than most of those other countries. We have shorter life spans than people in those other countries. The middle class incomes in those other countries often exceed ours, especially when you include the fact that we pay so much for healthcare. We also have millions of people with no health insurance at all, who simply go to a county hospital when they are very, very ill and plead for charity care. In the meantime, those sick people spread diseases and die much younger than they could have.

Whatever your position, do realize that the opposition to “socialized medicine” comes from those making megabucks off the current system: doctors (lead by the AMA, so their faces don’t get shown), Big Pharma (surprise, surprise) and, of course, the health insurance industry.

The insurance companies are playing a game. Through accounting procedures, they are claiming big losses through Obamacare. These losses are being used to argue for large premium increases under the system. But if you look closely, these very same corporations are claiming record profits and their CEO’s are receiving big bonuses. There stocks have soared even higher than the record stock price surges under President Obama. Huge losses, record profits, skyrocketing share prices! Some companies made so much profit that they exceeded the 20% allowed under Obamacare and had to issue refunds! This can be compared to the 3% total overhead for Medicare.

Look at that list again and ask yourself, as Ian Welsh has over and over: why don’t we see those numbers on the news over and over and over again … instead of never. Who controls the news?

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