Saturday, July 14, 2012

Romney's Bain Problem

It doesn't matter to me whether Romney's SEC filings were a fraud and a felony or just a legal fiction. What matters is that this reveals that Romney's claim that he made money by "working hard" is a big fat lie. He is now demonstrated that a guy like him makes money by doing so little that could be called "work" that it's hard to tell when he did or didn't stop "working."

Compare that to the life of a real worker. A strawberry picker, a janitor, a bus driver--those guys know damn well whether or not they are working and why they get a pay check.

A nurse, a doctor, a teacher--they do work that makes them tired at the end of the day. A college professor who has a part-time gig writing for the Times and who bangs out books and goes on tour to promote them--not as much sweat as the strawberry picker, or even the nurse, but nevertheless, real, time-consuming work that can be seen and measured.

Big shots like Romney, however, who pull in the real big money? Their work is so ethereal, so subtle and sublime, that ordinary people can't actually perceive whether or not they are still doing that "work" or whether they are just collecting money that falls from the sky into their bank accounts. They themselves might be a little unclear about whether they still "work" or whether they are, as Romney claimed, now "unemployed."

Jeez, even multi-million dollar basketball players and movie stars have to at least show up and do something to collect those enormous paychecks. But a guy like Mitt? It is all a matter of metaphysics whether or not he still "works."

Sunday, November 20, 2011

This week I received an email from my brother explaining his view of our economic situation. My brother has a good high-school education, and is a pretty smart guy. He has always worked at blue-collar-type jobs, basically as a delivery guy. He lives a modest lower-middle class life, and he is a thoughtful and intelligent person. My guess is that he listens to a lot of Fox News and/or talk radio, but I don't know that for sure, since we live a continent apart.

Here are a couple of points he makes:
I see the economy as being based on manufacturing and tangible goods. What's made here anymore other than cheesburgers? And I see labor unions having a big part of the problem. If I ran a business and had the choice of paying an employee $50 an hour or $5 an hour to do the EXACT same thing, which do you think I'd choose ? All unions do is make "demands". The company isn't supposed to make a profit. To quote (a former employer who ran a small neighborhood grocery store), "Profit is not a dirty word ." Without the union , the company would just screw everyone.....without the company......there'd be no JOB!!
Let's begin by thinking about why one person owns a company and another person works for him, and where the profits come from. So to take the case of this particular small-business owner, he took over the business from his father, who probably started it from scratch and built it up to a nice little business. (Or to take a similar but larger-scale business, take Hood Milk as an example.) The guy who starts a business saves up his own hard-earned money, and at some point invests it in starting a business, at considerable risk to himself. If the business fails, he will lose everything. He may be the main worker at the beginning, and he probably works long hard nerve-wracking days. Of course he deserves to earn a profit on his money. Otherwise, why would he take such a risk?

But as time goes on, and the business grows, he begins to hire other people to do some of the work. Those people have less risk, so all they are being paid for is their labor, not the chance to earn or lose money on their investment. So of course they make less money than the owner.

In some cases, however, it is the workers who are doing all the work, creating all the wealth (profits) and they may even be risking their lives to do so, but a very small part of that wealth accrues to them, and a vast amount goes to the owner(s). If a man owns a coal mine, how much of the profits are generated by the labor of the coalminers, and how much by the guy who owns the land that happens to have coal under it, and who invests in the machinery? Sure, the owner or the company has made a huge investment in order to get that coal out of the ground, but so have the miners, who actually produce the coal on a day to day basis. How is that profit to be divided up?

A generation ago, the top people in a company might make 20, 30, or 40 times what the average worker made. Meaning that one guy at the top was believed to be producing something of value that was equal to what 40 of his employees did. Today, in big companies, the top guys make on average 344 times what the average worker makes. One guy is worth as much as 344 "little people."

Now of course in a company like Snell's Market, or even Hood's Milk, that might not be the case. But in the Fortune 500 companies, that is the amount of wealth that the CEOs skim off, and claim as their "fair share" of the profits that are created by the company.

I think it is legitimate to ask whether the people in suits making the decisions are actually the ones who are "earning" the money, or whether something is out of whack here.

So what would be the point of a union? It's the only way that the people doing the actual work can apply any pressure and retain a fairer share of the profits that they contribute to. As you say, as an owner, sure, you'd rather keep the $50 and pay the worker just $5. Unless there is some counter-pressure, wages will go lower and lower, until we're all living like medieval peasants or sharecroppers. Why not? If the employer controls all the jobs, and can get the workers to compete against each other for the lowest possible wage, it pushes everyone lower.

Did you ever see the movie They Shoot Horses, Don't They? When people are desperate, they can be taken advantage of and made to compete against each other. And who wins? Well, for a while, the rich guys win. Until they have all the money and no customers! Then lack of demand will cut into their profits, and in the end, everyone is worse off. (for details, see The Great Depression.)

And from where does ANYONE get the brass gonads to speak about "Re-distribution of Wealth ?" I can't understand the concept. Because someone works hard & gets rich, it not only makes them an ogre, but they should be "compelled" to hand it over to No-account jerks ? Not in my book. The only reasons I can find for my OWN lack of wealth are that I ain't smart ( or lucky) [or hard-working] enough.

So the same point prevails here. Where did this wealth come from? Did the rich person earn it all by herself, with no help from society at all? And no help from her employees? Then she can keep it all. J. K. Rowling, for example, who created the Harry Potter series. She deserves to get rich, since she created something of value all by herself. But in most cases, wealth is not created single-handedly. It is created by many people, including the street-sweepers who keep the city clean enough that people will go shopping. So they also deserve a share.







Saturday, October 8, 2011

Creating Jobs

The United States needs to create more jobs, and it needs to cut the deficit. These two objectives would seem to be in harmony, not in opposition, since people with jobs pay taxes, and people without jobs not only do not pay taxes, they cost the government money. So there must be a way to cut the deficit by creating jobs, jobs that pay enough that they workers can eat and also pay taxes.

To go about cutting the deficit by cutting government spending and laying people off is like trying to fill a bucket with a hole in the bottom. The more the government cuts spending, the more the people who did the things that the money was spent on will lose their jobs. (Even the federal government can't spend money without buying things, and when we buy things, we generate the need for someone to make those things and sell those things to us. And most of what the government spends money on is services, provided by people who get paid for providing those services.)


So it seems obvious to me that the government needs to keep spending money and employing people both directly and indirectly. Cutting spending can not make us prosperous. Unlike a family, when the government cuts spending, it doesn't maintain the same level of income. It cuts income at the same time, so now it's just operating at a lower level all around. (I understand that to some people, that is the actual goal. These are people who are motivated by a political philosophy that is opposed to government as an article of faith.)

So let's compare two methods of trying to create a more balanced budget while increasing jobs. One approach is to cut government spending, cut taxes, especially on high-income entities such as wealthy people and corporations, and look for this to work its way through the economy until it reaches the point that private businesses start hiring more workers.

Another way is to raise taxes on high-income entities, thus increasing the government's revenues, and then spending that money to do useful things, or even useless things, but things that require manpower (and womanpower).

Basically, the Republican approach vs. the Democratic approach, or the free-market approach vs. the Keynes approach.

We have basically run an experiment over the past 12 years as to what happens when tax rates are low and corporations have excess money and wealthy individuals and entrepreneurs have a large share of the nation's wealth in their portfolios. The results are in: they do not use that money to create jobs.

Not too surprising since "creating jobs" is not what anyone wants to do. A business person is not in the business of creating jobs. Not at all. Quite the contrary. A business person's goal is to create profits. Income. Wealth. Money. Not jobs. Jobs are an expense. Workers cost money. A business owner no more wants to create jobs than she wants to create taxes or inventory. Jobs, employees, are a cost of doing business. The more an employer can produce with fewer workers, the more money she makes. (Sure, she might want to create a job for herself, or her nephew, but in general, she does not want more employees, she wants fewer.)

If a company could make all its products or services with robots, and if the robots could design and create more robots, that would be the ideal. Products and services would flow out of the company, bringing in income, and no tiresome workers with their needs for health care and incentives would be needed. Nirvana. Perfection.

So is there anyone, other than unemployed people who want to see jobs created? Well the president and his party have a motive to increase jobs. People who get a job on his watch might vote for him. People who lose theirs will almost certainly not. (Note to Mr. Obama: even if they are African-American, their sense of pride in you will only go so far. A black person who lost his job in the past 3 years is a person whose vote is on the line.)

So what does this tell us? Businesses will create jobs only as a last resort, when they can't produce enough goods and services to meet demand any other way. Given a choice between money in the bank or another employee to manage, they will take the money in the bank every time. As they are doing this very moment.

However, if you tax that money away from them and put it back into circulation, you can use the money directly to create jobs.

Is this socialism?

No, this is reality.

If taxes went up on those people who have money they aren't using in any productive way, that money could be given to the state and local governments who are currently laying off teachers and police officers . Those teachers and police officers would spend that money, creating jobs for food servers and hair cutters. The food servers and hair cutters and police officers and teachers would not go on unemployment. Instead they would pay taxes. Oh look, more revenue to the federal government from both directions-- at the top and at the bottom. And thus the deficit could also be cut.

Is it fair to tax money away from people who have earned it, in order to create jobs for people who are not smart enough to find a job on their own? Well, only if the goal is a lower federal deficit, lower unemployment, more widespread prosperity, and ultimately, a better overall climate for people to create wealth.

Look at the way sports are managed in this country. A team that is rich and successful could buy up all the best players and dominate the game. Other teams wouldn't have a chance, and ultimately, the sport would not be interesting enough to watch, thus destroying not only the poor teams, but the rich successful one as well.

So mechanisms are put in place that function much like taxes on the rich. The team with the worst record (or almost the worst, to avoid incentives to lose) is allowed to pick first, in order to keep the sport balanced enough that it works for all the teams. Yes, there will always be winners and losers, but if the winners over-dominate, it hurts the entire game.

The same is true in the economy. Unless wealth is redistributed, it will tend to accumulate at the top so much that it will eventually destroy the whole system.

Smart rich people, like Warren Buffet and Bill Gates understand this. Thus they actually support higher taxes, and they re-distribute their wealth on their own.

It's too bad President Obama doesn't see what they see, shake off his fear of being called a socialist, and do what he can to save capitalism, as FDR did.

Sunday, September 11, 2011

10 Years Later

It is 10 years since the day that will always be known just as a date--September 11th. That also happens to be my parents' wedding anniversary, and this is the 62nd anniversary of their marriage.

I remember the fear that followed after that day in 2001--Was another attack imminent? Was anthrax part of the plot? I remember the strange combination of pride and humiliation, fear and faith. I lived 3000 miles away, yet it colored my life like it colored every American life.

I also remember the growing doubts about what really happened. Was there more to the story that we weren't being told? Gradually, I came to accept that most of what the government said happened on September 11th was more or less the truth. I still have some doubts about WTC 7, the 47-story building that collapsed from *not* being hit by an airplane. I still have some questions about why all the planes had so few passengers on board, and why a person I know got a "gut feeling" to pull all his money out of the stock market on September 10th. But I am willing to accept that strange things just happen to happen.

The one story that I still believe is a manufactured lie, however, is the story of the heroic passengers on Flight 93 in Shanksville, PA. This flight was scheduled to travel from Newark, NJ to San Francisco. It was taken over by hijackers some 45 minutes into the flight. After that, passengers supposedly made cellphone calls in which they learned that their hijacking was part of a pattern of hijackings, and that 2 planes had already hit in New York City.

Although there are some unlikely aspects to the story so far, up to this point, the story may well be true. But the rest of the story seems like pure propaganda to me. One passenger leaves his cellphone open and says, Let's Roll! A group of passengers rush the cockpit to try to eject the hijackers. And then, what next?

Well, either the passengers take the controls, or they don't. If they take the controls, if they disable the terrorist-pilot and fight off the other 3 terrorists, what would they do? They would contact the ground (with the help, perhaps, of the flight attendants, who must have some idea of how the radio operates) and air traffic controllers would do their best to enable them to land the plane somehow.

On the other hand, perhaps they are not able to overpower the 4 terrorists (though it's something like 35 to 4). The terrorist-pilot remains at the controls of the plane, but he hears the mob of angry passengers outside the door. This is the final and official story of what happened:

"The 9/11 Commission Report concluded that "the hijackers remained at the controls but must have judged that the passengers were only seconds from overcoming them" so the hijackers deliberately crashed the plane into the ground.

Now why would they do that? The hijackers intended to die by crashing the plane into the White House or the Capitol, presumably. Why would they panic and crash it into an empty field? What did they have to lose by doing their best to fight off the mob of passengers and continuing with the flight?

When the heroic story was first told, the narrative was that the passengers had made the noble decision to crash the plane, sacrificing themselves for their country. That didn't make any sense at all, so the story was revised to say that the heroic passengers so rattled a group of suicidal killers that the terrorists themselves made the choice to crash the plane rather than...what? Rather than fly it into the White House? Rather than get into a fistfight with the passengers?

The question of whether orders to shoot down the plane was ever given to the military has been raised, and the obvious answer is that that would have been a reasonable choice. A female military pilot has stated that she fully intended to crash her fighter jet into the commercial airliner to take it out before it could reach the Capitol.

I think that if the government and the military did make the choice to shoot down the plane, it would have complicated the narrative considerably, and diverted attention towards arguing about whether the US government should ever attack its own civilians in such a manner.

But that's what I think happened. I think the plane was shot down by the US military.

I don't see any reason that the hijackers would have preemptively killed themselves and their passengers in order to avoid a tussle in the cockpit.

And this means that I believe the government has created an elaborate heroic story, backed up by a fictionalized movie to cement it in the public imagination, in order to avoid a lot of hard questions.

Would the government do such a thing? Ask Jessica Lynch. Ask the family of Pat Tillman.

Monday, March 14, 2011

Keeping government small and local

Tea Party types, and conservatives in general, like to rail against Big Government, and they want to keep government as small and local as possible. They claim that the Constitution was written with that expectation (it probably was) and that therefore, that is how it should always be (a questionable premise).

So my question is, How would that work out in the face of an event like what happened last week in Japan? Suppose Japan had most of its power and control vested in individual prefectures. What happens when an entire prefecture (several, in fact) are devastated all at once?

In the United States, we had the Katrina event, which brought devastation to several states. Absent a strong central government to help with recovery and to spread the cost around, how is a local government supposed to cope?

We face the possibility of destructive events on the scale of Japan's in the Pacific Northwest and from San Francisco to San Diego in California. And then there's the Yellowstone Caldera and the New Madrid Fault, if you run out of things to worry about.

The benefit of having a strong and effective national government is obvious. Any time risk is shared by a larger pool of people, it is minimized on individuals. That's how insurance works, and that's how government works. We need to stop demonizing government and think about the only thing worse than a government in control, and that is lack of a government in control.

Saturday, March 12, 2011

A loving and merciful God?

Ok, let's say that human beings were created by a direct act of a God who is omnipotent and loving. God cares about human beings, made them in His own image, and created a special place for them, which we call Planet Earth.

So what went wrong along the way? How did God overlook the fact that the planet He created for these humans was cracked and fractured and prone to generating massive earthquakes unpredictably, causing great suffering, loss of life, and laying waste the work of man's hands? Did the God not understand the basics of physics, the principles of seismology?

Did He do this deliberately, knowing that random large-scale loss of human life would be the result? Is it intended to test the faith of those humans who trust Him? Maybe make them more dependent on God (who then turns around and proves completely undependable)?

Did He just not care?

Or is the simplest answer that God did not carefully place us on this planet, and in fact God exists to the extent that human beings help and care for each other compassionately, and not to any other extent?

Where is God when the earth buckles and the sea pours over the land? The only place I can see Him (or Her) is in the brave, patient, compassionate, duty-driven actions of those who try to rescue their pets, their children, their parents grandparents, and complete strangers.

Friday, April 9, 2010

Pray for Our Miners

It is heart-breaking to see and hear the people of West Virginia, whose loved ones are almost certainly dead at the bottom a coal mine that exploded from a mixture of toxic dust and gases, say, Pray for our miners! I fully respect and empathize with their belief that they need Someone to depend on., to survive in such a difficult livelihood.

But coal-miners' families surely prayed for their miners throughout the 18th and 19th and 20th centuries, here and in Great Britain--and yet miners continued to die. Probably the families of coal miners in China also pray for their miners, and still they die in large numbers.

But over the past 50 years in the United States, the number of coal mine fatalities was drastically reduced, not by prayers, but by strong unions and strong government regulation. Maybe God never thought of that, or maybe God is the force in those union miners and those government bureaucrats who insist that the safety of working men is more important than the corporations' profits.

What those grieving families need to do, once their tears dry, is to use their churches and their union halls and their radio stations to stand up and say, Enough. We won't send our men down into unsafe mines with dozens of safety violations. We won't stand by, proud yet cowed, in fear that if we speak up, the only livelihood we have will move elsewhere.

Maybe they will recognize that God really doesn't work in such mysterious ways. He works in a very obvious way--through the actions of human beings who recognize their own worth and the worth of other people and who refuse to accept injustice and suffering as God's will.