Sunday, February 8, 2015

Weekend Roundup

If I was much younger and had ambitions in journalism, I'd go up to Topeka and hang out with Republican legislators, trying to draw them out on the logic behind a plethora of bills being bandied about. In some ways, it seems inconceivable that in an age of ubiquitous information technology we could ever forgo and forget knowledge and understanding on the level of the Dark Ages of medieval Europe, yet that's what is on display strive to build their utopian society upon near-absolute power at the state level. The big headlines, of course, still belong to the governor and his disastrously failed experiment in Lafferism -- see David Atkins: More Kansas Fallout: Brownback Doubles Down on His Failed Policies, or just take a look at Richard Crowson's editorial cartoon in the Eagle today:

Brownback, you may recall, created a huge deficit hole by pushing a major state income tax reduction (including complete exemption from income taxes for "small businessmen" like Charles Koch), at a time when the state was losing a lawsuit for unconstitutionally underfunding public schools. (Ironically, when the state legislature increased state funding before the 2014 elections, Brownback's ads touted that as proof of his support for education.) This year, Brownback's fix for the fiscal hole has been to propose increasing taxes on cigarettes, slashing school funding, and a variety of schemes to raid a long list of dedicated funds (like highway maintenance and pensions -- even some federal money related to Obamacare). In other words, the idea is to cover up a big hole with lots of little holes, each hoping to kick the problem a bit further into the future: cheat workers out of their pensions and they may not realize the effect for many years, until they retire; stop maintaining roads and it may be years before they're eaten up with potholes; cheap out on educating children and it may be decades before it fully dawns on employers how few people are prepared for work. And so on, as these decisions add up, as political interests forget that they could ever be solved, the future grows ever dimmer: dark ages ahead.

Brownback's folly is the straightforward result of a right-wing propaganda coup that you can trace back to the 1970s, when a few disgruntled businessmen decided to wage a war of attrition against the very idea of government. What they objected to was the idea that a democratic government might work for the benefit of the vast majority of the people, as opposed to merely protecting the property and prerogatives of the rich. (Right-wingers never had a problem with authoritarian states they controlled; the state only became a problem when it might be used to reduce the influence and control of the rich.) Of course, they had good reason to fear that, because it had in fact been working that way for forty years, from the New Deal through the Great Society.

The key point here is how successful they've been at characterizing government as a vicious cycle of "tax and spend" -- with the corrolary that tax money would have been spent more wisely by those who originally earned it than by the government bureaucrats who merely took it. A good example of this mindset appeared in a letter to the Eagle today (Delores Jennison: Let rich invest):

"Robbing the rich to feed the idle" does not work very well. It does not produce any food. Better let the rich invest with those who do produce things we want, so we can all share.

Most propaganda is dressed up more plausibly than this. By "robbing" she probably means taxing, since most real robbers don't feed anyone but themselves, and by "the idle" she most likely means "the disadvantaged" -- most of whom work harder at underpaid jobs than many rentiers (I'm much more familiar with the phrase "the idle rich" than any alternative). To figure out what "works" you need some criteria. For "feeding" you might think something like "reduce the number of people who are malnourished," in which case you can collect and test data. Food stamps is one government program that comes to mind, and by that standard it works very well. Even the sort of rationing that the US practiced during WWII "worked" by most conceivable criteria.

Jennison's last sentence is even more problematical. Even if the rich invest wisely, absent taxation how is it that "we can all share" in their returns? The notion that we somehow all benefit by basking in the light reflected by the rich hard to imagine, let alone quantify. Even if some might draw inspiration and enjoy enough good fortune to become rich themselves, the numbers must surely be very limited. And how does one become rich? Very few such people do so by investing in the production of food or anything else broadly usable. It's not inconceivable that some entrepreneur might found a business and produce something that makes our lives better, but it's certainly not the rule.

What's so odd about this mindset isn't that disgruntled businessmen -- the Kochs being prime examples both in the 1970s (my first encounter with them was typesetting Murray Rothbard books in the mid-1970s) and now -- would underwrite this sort of propaganda. After all, they've used it to make and sheltered billions of dollars, and capitalism is nothing if not a cult of self-interest. But it's pure hubris to insist that their greed is a blessing for everyone else -- a propaganda line that is the greatest con of the era.

In the past, Republicans were more cynical about their shit. For instance, it's well established that increased government spending stimulates the economy -- and that the American economy depends on such stimulation. Republicans are dependable deficit scolds whenever a Democrat is president, but Reagan and the Bushes were happy to run huge deficits -- they just preferred to build them from tax cuts and war spending. However, it was only a matter of time before the rank and file started believing the GOP party line, and thanks largely to Thomas Frank, Kansas learned that lesson harder than most. Frank's What's the Matter With Kansas? made a big point about how the single-issue fringe groups Republicans depended on for votes rarely got any satisfaction: Republicans may campaign against abortion and for guns but in office all they seemed to do was to further line the pockets of the already rich.

Of course, Brownback's income tax cuts (and, by the way, sales tax increases) and budget hole is mostly a sop to the rich, but the Kansas legislature has been dilligent about passing new anti-abortion and pro-gun legislation every year. There's a bill pending this year to allowed "concealed carry" without a permit or any training -- among other things that makes it much more difficult to apprehend gun-toting felons. That's just one example of this year's legislative fever. One proposal is to move non-partisan municipal elections and make them partisan -- the sponsor is worried that school teacher unions might take advantage of low turnout to dominate school boards, and there's always the risk that a closet Democrat might slip through a nonpartisan election. Another bill seeks to give police special rights to avoid prosecution for misdeeds. Another will let teachers be prosecuted for providing any "harmful information" to students (evidently, accurate information about sex counts). I've lost the links to these things, and the Eagle website isn't much help. Like I said, this would make a good journalism project. On the other hand, there's this -- Texas Republican wants fetuses to have lawyers and "a voice in court" -- so Kansas isn't the only place to observe this insanity.

Also, some scattered links this week (briefly, because I'm running so late):

  • Nick Hanauer: Stock Buybacks Are Killing the American Economy:

    As economic power has shifted from workers to owners over the past 40 years, corporate profit's take of the U.S. economy has doubled -- from an average of 6 percent of GDP during America's post-war economic heyday to more than 12 percent today. Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic, wages are flat, and our nation can no longer seem to afford even its most basic needs. A $3.6 trillion budget shortfall has left many roads, bridges, dams, and other public infrastructure in disrepair. Federal spending on economically crucial research and development has plummeted 40 percent, from 1.25 percent of GDP in 1977 to only 0.75 percent today. Adjusted for inflation, public university tuition -- once mostly covered by the states -- has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt. Many public schools and our police and fire departments are dangerously underfunded.

    Where did all this money go?

    The answer is as simple as it is surprising: Much of it went to stock buybacks -- more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinc of The Academic-Industry Research Network. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. [ . . . ]

    In the past, this money flowed through the broader economy in the form of higher wages or increased investments in plants and equipment. But today, these buybacks drain trillions of dollars of windfall profits out of the real economy and into a paper-asset bubble, inflating share prices while producing nothing of tangible value.

    Hanauer cites a paper, James Montier: The World's Dumbest Idea, critiquing the dogma of "shareholder value maximuzation" -- the main rationalization (when greed won't quite cut it) behind stock buybacks. Sample quote:

    From a theoretical perspective, SVM may well have its roots in the work of Arrow-Debreu (in the late 1950s/early 1960s). These authors demonstrated that in the presence of ubiquitous perfect competition and fully complete markets (neither of which assumption bears any resemblance to the real world, of course) a Pareto optimal outcome will result from situations where producers and all other economic actors pursue their own interests. Adam Smith's invisible hand in mathematically obtuse fashion.

    However, more often the SVM movement is traced to an editorial by Milton Friedman in 1970. Given Friedman's loathing of all things Keynesian, there is a certain delicious irony that the corporate world is so perfectly illustrating Keynes' warning of being a slave of a defunct economist! In the article Friedman argues that "There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits . . ."

    Friedman argues that corporates are not "persons," but the law would disagree: firms may not be people but they are "persons" in as much as they have a separate legal status (a point made forcefully by Lynn Stout in her book, The Shareholder Value Myth). He also assumes that shareholders want to maximize profits, and considers any act of corporate social responsibility an act of taxation without representation -- these assumptions may or may not be true, but Friedman simply asserts them, and comes dangerously close to making his argument tautological.

  • Paul Krugman: The Fraud Years: As with my Kansas intro, sometimes it's hard to stop writing, to merely suggest the whole horror of the subject:

    As the Bush II administration fades in the rear view mirror, there's a tendency -- indeed, an avid desire on the part of many people in the media -- to blur the reality of what happened, to make it seem as if were just an ordinary time when a Republican happened to be president.

    But it wasn't. We were lied into war; torture became routine; raw dishonesty about everything from national security to the distributional effects of tax cuts became the norm.

    And then there were the people. I had almost forgotten, but Bush nominated Bernie Kerik to run Homeland Security. Let me repeat that: he nominated Bernie Kerik to head Homeland Security.

    One can, and probably should, go on (and on and on) -- the list of bad things the Bush II presidency did to us is very long and very dirty (much like Brownback in Kansas but more slippery, in part because Bush's deficit hole was easily papered over with debt while the conservative debt scolds held their tongue -- or in Cheney's case, muttered "deficits don't matter"). Being less familiar with Kerik (not that I don't get the point), I might have ended off with Bush's "Healthy Forests Initiative" -- a program to increase logging on public lands, not that they could very well market that.

    By the way, also see Krugman's Greece: The Tie That Doesn't Bind, both for its sanity and the suggestion that Syriza's leaders won't be as easily bought off as, say, "center-leftists" like Tony Blair.

  • David Lightman: 2016 election campaign will debate U.S. troops to stop Islamic State: When the Eagle repeated this McClatchy piece, the title changed to "2016 election likely to focus on terrorism, use of troops" -- rather misleading because nobody on either side (evidently not even Rand Paul) seems likely to question "the war on [Islamic] terrorism" -- i.e., the implicit assumption that the US is entitled to fly drones over the Middle East, South Asia, and Africa and kill anyone we suspect of disrespecting us. As for "ground troops" that discussion will be hedged, as indeed it is in the test quotes here, with hawks merely wanting to suggest they're tougher than Obama, and no one standing up for sanity. The death of a Jordanian pilot seems to have unleashed another pro-war propaganda flurry, with the Eagle running the latest missives by Charles Krauthammer and Trudy Rubin, but nothing counter.

  • Israel links:

    • Kate: Druze IDF soldier attacked by Israeli Jews for speaking Arabic: and dozens of other stories.
    • Richard Silverstein: Israeli Journalist, Ben Caspit: "Kill IDF Refusers": I'm not sure how far back Israel's policy of "targeted assassination" goes -- the 1947 murder of UN Mediator Count Folke Bernadotte was an outlier in that the victim wasn't Palestinian and that Israel had yet to declare independence, but suggests that the notion that the way to beat your enemies is to kill them off one-by-one was baked in from the very beginning. At any rate, in recent years state-sponsored murder has been so routine that it's hardly surprising that some Israelis would want to do the same to other Israelis. But there was a day when Israelis celebrated their own integrity and diversity of opinion. That's passed.
    • Adam Horowitz: Finkelstein on Joan Peters' legacy (and Dershowitz's legal troubles): the author of From Time Immemorial: The Origins of the Arab-Israeli Conflict over Palestine died in January. Interview with Norman Finkelstein, whose book Image and Reality of the Israel-Palestine Conflict did much to expose Peters' fraudulent claims.
    • Philip Weiss: Gideon Levy's argument for Netanyahu: Quotes from Levy's Haaretz column, A Labor win will only entrench the occupation. I've never been a fan of the argument that you shouldn't differentiate between lesser evils, and I've long been soft on the soft left -- I was pleased to see François Hollande elected in France though I can't think of anything good he's done since, and I even sort of miss Tony Blair, but Israel's last Labor PM (Ehud Barak) certainly left a bitter taste. What gives Levy credence is that for much of the last 40 years Labor has been more efficient and effective at cementing "the facts on the ground" than Likud (although the latter is more responsible for the poisonous culture of racism and violence). I didn't read Levy's article as a brief for Netanyahu so much as an argument that the uglier the face of Zionism is the sooner the world will turn against it. (I've seen Richard Silverstein make the same argument, but would have to search for the link.) Still, it wasn't the ugliest Afrikaner who broke with Apartheid, nor the ugliest Stalinist who broke up the Soviet Union. The agents of change there were insider-reformers, and that rules out Netanyahu. There's no reason to trust Tzipi Livni, but when it happens it will be someone like her. (On the other hand, Labor leader Isaac Herzog launched his campaign by accusing Netanyahu of being soft on Hamas.)
    • Richard Silverstein: IDF Chief Warns of International Intervention if Israel Doesn't Solve Palestine Conflict: "Unlike any other Israeli politician, general or spy chief before him, Gantz offered a warning that if Israel didn't make progress on negotiating a peace deal with the Palestinians, it should not expect the world to remain uninvolved [ . . . ] Whether or not Israel wanted, the world sees Israel-Palestine as bound up in other dangerous regional conflicts. These are so critical to the interests of foreign powers that there's no chance Israel will be allowed to pursue its own interests unhindered." I doubt he means "intervene" in the sense Lindsey Graham is fond of, but it does imply pressure -- possibly a lot of pressure. Article also includes quotes from Mossad chief Tamir Pardo undercutting Netanyahu's Iran position. Gantz and Pardo are among the unelected people who really run Israel, and it's auspicious that they're getting nervous.
    • Jason Ditz: Netanyahu Vows to Sabotage Iran Nuclear Deal: A deal would not only eliminate Iran as a potential nuclear threat, it would preclude a preemptory Israeli war against Iran, would align Iran with US interests in Iraq, and could possibly lead to some progress in settling the civil war in Syria (if Obama wanted to go that far), so sure, you can see why Netanyahu is so up in arms.
    • Richard Silverstein: Ukrainian Oligarch Fugitives Wanted by Interpol, Pay Bribes for Israeli Citizenship: Someone named Yuri Borisov, "suspected of looting $40-million in U.S. foreign aid meant for Ukraine." Scroll through Silverstein's blog and you'll find several scandals like this, ranging from Haaretz Removes Report that Netanyahu Pressured Japanese Regulators to Approve Adelson Casino Bid to Bayit Yehudi MK, Settlement Leader Questioned in Bribery-Kickback Scandal.

Also, a few links for further study:

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