Saturday, January 8, 2011

Is free will simply a myth? The uncomfortable truth about mind control

In the Sixties, a groundbreaking series of experiments found that 65 per cent of us would kill if ordered to do so.
By Michael Mosley - Thursday, 6 January 2011

We have vain brains; we see ourselves as better than we really are. We like to think that we exercise free will, that put into a situation where we were challenged to do something we thought unacceptable then we'd refuse. But, if you believe that, then you are probably deluded.

I make this claim, based partly on the work of psychologist Stanley Milgram. Milgram devised and carried out ingenious experiments that exposed the frailty and self-delusion that are central to our lives. He showed how easy it is to make ordinary people do terrible things, that "evil" often happens for the most mundane of reasons.

I first read about Milgram's work when I was a banker in the Seventies, working in the City. I was so fascinated by his ideas that I re-trained as a doctor, with the intention of becoming a psychiatrist. Instead I became a science journalist. Recently I got the chance to make The Brain: A Secret History, a television series which reveals how much we have learnt about ourselves through the work of some of the 20th century's most influential, and deeply flawed, psychologists.

In the course of making the series we found rare archive and first-hand accounts of the many inventive and sometimes sinister ways in which experimental psychology has been used to probe, tease, control and manipulate human behaviour. High on the list of psychologists I wanted to learn more about was Stanley Milgram.

The son of Jewish immigrants from Eastern Europe, Milgram struggled to understand how it was that German soldiers in the Second World War were persuaded to take part in barbaric acts, such as the Holocaust. As he once wrote: "How is possible, I ask myself, that ordinary people who are courteous and decent in everyday life could act callously, inhumanely, without any limitations of conscience."

Milgram was working as an assistant professor at Yale University in 1960 when he dreamt up an experiment that would try to answer that question. It was beautifully designed to reveal uncomfortable truths about human nature. Milgram described the moment he had the idea as "incandescent".

Some claim that what Milgram did was ethically and scientifically dubious. I have always thought it was justified and hugely important, but I had never had the chance to interview any of the "volunteers" who had unwittingly taken part in his notorious experiment, to get their perspective.

Last summer, nearly 50 years after the original experiment, I finally met one of the few remaining survivors, Bill Menold. I talked to Bill in his kitchen, surrounded by his grandchildren, who were eager to hear his account.

In 1961 Bill Menold was 23 and had recently left the army. "I happened to see an ad in The New Haven Register and it said 'memory and learning experiment' and they were going to pay $4, and I thought. I'm going to be in New Haven that day, why not?"

He went along to a building where he met an earnest young man in a white lab coat – The Experimenter - and a middle-aged volunteer. The Experimenter told Bill that he would be the Teacher and the other volunteer would be the Learner. The Teacher's task was to give the Learner a simple set of memory tasks, which he would then be tested on. If the Learner got an answer wrong, the Teacher had to give him an electric shock. If he continued to give wrong answers, the shocks would steadily increase.

Bill was left in a room with a microphone and a set of electrical controls. The Learner was put in another room, where Bill could hear but not see him. Then the experiment began. The Learner was a slow learner.

"Wrong – 150 volts."

Bill sat at the desk, carrying out the task he had been asked to do. Despite the screams coming from the next room, he continued to ask questions and administer electric shocks when the Learner failed to answer correctly.

"Wrong – 195 volts."

Even now he finds it hard to explain what went on inside him that day. "You are sitting in that chair with this stuff going on and that pressure that you were under, it's very hard to think clearly. I've never had anything before or since that was like that. Where you were literally out of your mind."

"Wrong – 350 volts."

"I just said to myself, I'm just gonna play this out and pretty soon we'll be out of here. I'm finishing this thing. I don't care what happens. Once you make the decision, you've made your decision. I want to go home. I want to get out of here, go and get a beer somewhere and go home. You know?

"Wrong – 450 volts."

When I asked him if he thought he had killed the Learner, Bill replied, "Yeah. When he stopped responding."

What Bill and the other volunteers who took part weren't told was that the electric shocks were fake – and that both the Experimenter and the Learner were actors. The real purpose of the experiment was to see how far the volunteers would go. Stanley Milgram had asked colleagues how many people they thought would go all the way and administer a lethal 450-volt shock. Most said less than 1 per cent – and those would probably be psychopaths.

Yet Bill, like 65 per cent of the volunteers, gave an apparently lethal electric shock when told to do so.

I remember thinking, when I first read this, that such a figure was completely unbelievable. I was absolutely certain, and I'm sure everyone who read about Milgram's work was equally certain, that I would never give a fatal electric shock to someone simply because I had been asked to do so by someone in authority. It is inconceivable that I could be manipulated in this way.

Perhaps, I thought, the volunteers had deep-down realised that this was a fake experiment, that they were just playing along. When critics put this point to Milgram he scathingly responded, "the suggestion that the subjects only feigned sweating, trembling, and stuttering to please the Experimenter is pathetically detached from reality, equivalent to the statement that haemophiliacs bleed to keep their physicians busy".

Milgram argued that far from being in any way fake, his experiment demonstrated in a very stark way something that we all know happens, but which we can't bring ourselves to believe. It is more comfortable to imagine that there was something uniquely evil or weak about German prison guards than to believe that most of us would behave the same way when faced by the same set of circumstances. "One of the illusions about human behaviour is that it stems from personality or character, but social psychology shows us that often human behaviour is dominated by the roles that we are asked to play."

Bill was surprisingly sanguine about having been deceived, and very honest, particularly when he was talking about that moment when he abandoned his moral compass and handed over responsibility for his actions to the Experimenter. With the wisdom of hindsight he was able to admire the thoroughness of the experiment and the skill with which the actors had played their parts.

I think that a more legitimate criticism than, "they were faking it," was the relevance of Milgram's experiment to the real world. Perhaps people had behaved the way they did largely because of the artificiality of the situation? In 1966, inspired by Milgram's findings, a psychiatrist called Charles Hofling created a more realistic scenario.

He arranged for 22 nurses working in a large hospital to be rung, separately, by a man simply calling himself, "Dr Smith". Dr Smith told each of the nurses that he wanted them to give 20mg of a drug called Astroten to a patient, who he named. Dr Smith also told the nurses that he was on his way to the hospital and would sign the necessary paperwork when he arrived.

The drug, an invention of the experimenters, had been placed in the drug cabinet several days before the telephone call with a prominent warning on its side that 10mg was the maximum safe dose. Despite this, and despite the fact that hospital protocol specifically stated that no drug should ever be administered based solely on a phone call, 21 out of the 22 nurses were preparing to give the 20mg dose when they were stopped. The nurses had bowed to the imagined authority of the "doctor".

People obviously knew, long before Milgram and Hofling did their experiments, that humans have a tendency to blindly follow orders, if they are presented in a plausible fashion by someone who is apparently in authority. What these experiments revealed was just how strong this "tendency" really is. Psychology, which is often criticised for discovering the bleeding obvious, had shown that it was capable of making surprising, original, disturbing contributions to our understanding of ourselves.

Some professional bodies,such as the US army, responded to these findings by incorporating it into their training, making sure that would-be officers were aware of the pressures they might come under to follow orders they felt were unethical. Medical and nursing students are also now taught of the dangers of blindly following orders.

Others,such as the American Psychological Society, responded to criticisms of Milgram's methods by adopting new guidelines for the treatment of volunteers in psychological experiments. In a more nebulous way, I also think Milgram contributed to the widespread questioning and suspicion of authority that was characteristic of his era, the 1960s.

Milgram's own motivation for doing experiments was not mistrust of authority, but the desire to understand why authority has such a hold over us. To find out more, he then took to the streets to see how people would behave in a situation where there was no obvious authority.

Milgram went with his students on to the New York subway. Their task was to approach passengers on the train and say, pleasantly: "I'd like your seat, please". As Milgram pointed out beforehand, "if you ask a New Yorker if he would give up his seat to a man who gives no reason for asking, he would say 'never'. But what would he really do?" The answer was that in just over half of all cases people gave up their seats when asked.

Recently I decided to repeat this experiment in a busy London shopping centre, with similar results. I was surprised by how many people complied with my completely unreasonable request, but even more surprised by how uncomfortable I found asking them to do it, something Milgram also discovered.

"I was about to say the words 'excuse me, sir, may I have your seat,' but I found something very interesting, there was an enormous inhibition, the words wouldn't come out, I simply couldn't utter them, there was this terrible restraint against saying this phrase."

Although it was unexpected, Milgram thought that this was a hugely significant finding. He had found through his own personal experience just how important feeling socially awkward is when it comes to modifying behaviour. We don't like breaking the social rules – whether it's asking for somebody's seat, or disobeying the instructions of somebody whose authority we have accepted.

In everyday situations there is an implicit set of rules of who is in charge and if we violate these rules it leads to feelings of embarrassment and awkwardness so intense we prefer to accept the submissive role the occasion requires. It is a terrible critique of human behaviour that we would rather let something terrible happen than act in a socially embarrassing manner. Yet it helps explain some of the chilling crimes you read about when someone is attacked, even murdered, in a public place and no one intervenes.

Now I'd like to believe that we have, as a society and because of what psychologists like Milgram have taught us, become less blind to the demands of authority. I'd like to believe that, but I don't.

Dr Thomas Blass, Milgram's biographer, recently asked himself that question."Would Milgram find less obedience if he conducted his experiments today? I doubt it. To go beyond speculation on this question, I gathered all of Milgram's standard obedience experiments and the replications conducted by other researchers. The experiments spanned a 25-year period from 1961 to 1985.

"I did a correlational analysis relating each study's year of publication and the amount of obedience it found. I found a zero-correlation – that is, no relationship whatsoever. In other words, on the average, the later studies found no more or less obedience than the ones conducted earlier."

There was a recent example of the continuing tendency towards blind obedience in the USA when a con man, dubbed "the modern Milgram", made the staff of dozens of fast-food restaurants behave in an appalling fashion simply by ringing up and pretending to be a policeman.

He persuaded managers to strip-search their staff in search of stolen goods, to make them jog naked, even to strip off and appear naked in front of startled customers. One manager, who strip-searched an employee and was subsequently jailed, said, "I didn't want to do it, but it was like he was making me".

Milgram once wrote that we are "puppets controlled by the strings of society". Yet what is also true is that not all puppets jump when their strings are pulled. Many of the fast-food managers who were rung up the "policeman" refused to follow his orders. In Milgram's own experiment, although 65 per cent of the volunteers were prepared to give apparently lethal electric shocks, that still left 35 per cent who would not.

What no experimenter has yet been able to predict are the characteristics that mark out those who will rebel from the rest. The only way you will ever know how you measure up is when you find yourself tested. You have a one in three chance of passing.

Travis County TX gay divorce stands under appellate ruling

(So Texas recognizes same-sex marriages now? Go Texas! for now...--jef)


Travis County gay divorce stands under appellate ruling

By Steven Kreytak | Friday, January 7, 2011

[This story has been updated since originally published with comments from lawyer Jody Scheske and a spokeswoman for Texas Attorney General Greg Abbott.]

An appellate court ruled today that Texas Attorney General Greg Abbott may not intervene in a Travis County same-sex divorce case, a finding that lets stand for now the divorce of two women who were married out of state but does not affect Texas’ ban on gay marriage.

A three-judge panel of the Austin-based 3rd Court of Appeals found that Abbott has no jurisdiction to appeal the case because his assistants did not file a motion to intervene until after state District Judge Scott Jenkins orally granted the divorce in February 2009.

There are certain circumstances where the state could enter a case after a judgment has been entered, including when state statutes are under attack, the court ruled.

“This case, on the other hand, is not a suit to declare a statute unconstitutional or enjoin its enforcement, but a private divorce proceeding involving issues of property division and child custody,” said the court’s opinion, written by Justice Diane Henson.

Henson is a Democrat. Justice Woodie Jones, a Democrat, and David Puryear, a Republican, joined her in the opinion.

Abbott’s lawyers could ask the entire 3rd Court of Appeals to hear the case or appeal the ruling to the Texas Supreme Court.

In a statement, Abbott spokeswoman Lauren Bean said: “The Texas Constitution and statutes are clear: only the union of a man and a woman can be treated as a marriage in Texas. The court’s decision undermines unambiguous Texas law.

“The Office of the Attorney General will weigh all options to ensure that the will of Texas voters and their elected representatives is upheld.”

Because the judges dismissed the appeal for Abbott’s lack of jurisdiction, the opinion did not rule on his lawyers’ arguments that because same-sex marriage is illegal in Texas, Jenkins lacked the authority to grant the divorce.

Henson wrote in the opinion, however, that there are “interpretations” of the law banning the validation or recognition of gay marriage “that would allow the trial court to grant the divorce without finding the statute unconstitutional.”

For example, she wrote, someone could argue that “the trial court is only prohibited from taking actions that create, recognize, or give effect to same-sex marriages on a ‘going forward’ basis, so that the granting of divorce would be permissible.”

Jody Scheske, who represents Angelique Naylor, one of women who obtained a divorce in Jenkins’ court, said: ““The most important thing for my client is she remains divorced and the agreement that she worked out with her ex spouse for the best interests of their child remains in place.”

Scheske said unless the Texas Supreme Court decides that Abbott has a right to intervene, the case will not result in broad legal test of Texas’ same sex marriage law or whether same sex couples may divorce in Texas.

“It’s unlikely to have an affect on anybody else’s case,” Scheske said.

The case involves the divorce of Naylor and Sabina Daly, who were married in 2004 in Massachusetts, one of five states where gay marriage is legal. They moved to Austin and adopted a son.

Naylor filed a divorce petition last year and in February Jenkins held a two-day hearing over the division of property and shared custody of their son. After Jenkins repeatedly encouraged the women to consider the best interests of their child and to settle the case, the women agreed to a divorce.

Jenkins made an oral ruling granting the divorce and told the women to return to his court in one month with final papers for him to sign.

The next day, Abbott moved to intervene in the case, arguing that Jenkins lacked authority to grant a same-sex divorce. Texas law not only limits marriage to opposite-sex couples, it forbids any action — including divorce — that recognizes or validates a same-sex marriage obtained out of state, an Abbott lawyer argued.

Jenkins refused Abbott’s request, chided the attorney general for failing to take the child’s well-being into account and issued a final divorce decree on March 31. Abbott appealed.

During oral argument at the 3rd Court of Appeals in December, Assistant Solicitor General James Blacklock argued that Texas law allows same-sex couples to legally dissolve their union through “voidance,” which divides property and is recognized nationwide.

Abbott also intervened when a district judge in Dallas, hearing a divorce petition of two men who were married in Massachusetts, found the state’s ban on gay marriage violated the U.S. Constitution’s equal-protection guarantee. The Dallas appeals court overturned the ruling in August, finding that gay couples cannot divorce in Texas. That decision is not binding on the Austin appeals court.

MetroPCS mobile data plans violate net neutrality, group claims

MetroPCS mobile data plans violate net neutrality, group claims
By Eric W. Dolan
Friday, January 7th, 2011

A plan by the the fifth largest mobile carrier in the United States to block access to certain web content based on its customers' data plan could be a violation of new "net neutrality" regulations.

MetroPCS has announced it will be offering three different pay-as-you-go mobile data plans that will make different parts of the web available depending on how much the customer pays.

The lowest plan, starting at $40 per month, offers unlimited talk, texting, web browsing, and access to YouTube, but blocks other streaming video sites, like Vimeo. The use of internet phone calling apps like Skype and the internet radio Pandora are also expected to be blocked.

For an extra $10, MetroPCS customers will be able to have access to an additional 1 GB of data as well as the ability to download music when connected to a Wi-Fi network. The company's $60 per month plan provides customers with unlimited data access and MetroSTUDIO premium content such as video-on-demand channels and audio downloads.

The three tiered data plan may violate FCC "net neutrality" rules passed in December because it restricts what services and sites are available to its users. The media advocacy organization Free Press is urging the FCC to investigate the mobile carrier for building a "walled garden for the mobile web."

"In December, the FCC chose to disregard wireless protections in its Net Neutrality order, and MetroPCS’s new scheme is a preview of the wireless future in a world without protections on the mobile Web," Free Press Policy Counsel M. Chris Riley said. "Such blocking of websites, services or applications would clearly be prohibited and deemed unreasonable on a cable or DSL network. Are these the kinds of restrictions the FCC really wants to promote on wireless networks?"

The new "net neutrality" regulations do not prevent companies from selling bandwidth in capped tiers, with overage charges for users who download more than their permitted share of information, but the regulations do restrict "unreasonable discrimination" against web content, such as the outright blocking of certain sites or software services.

It is unclear what the FCC considers "reasonable" discrimination and it is likely to make such decisions on a case-by-case basis.

Tiered pricing structures are already in place for many communications providers like AT&T and Cricket, which offer wireless broadband services. Verizon said it would implement similar pricing structures in the coming months.

"The open Internet order approved in December stated that the FCC was not implicitly approving practices on the mobile Web that violate its rule against unreasonable discrimination – and now we’ll see whether the agency is willing to do anything about such practices," Riley continued. "Silence in the face of ongoing violations is no different from outright approval."

Roger D. Linquist, president, CEO and chairman of MetroPCS claims the three tiered data plan allows for "more video, more sharing of their content and more Web browsing capabilities" and lets consumers decide how much additional data access they want to pay for.

"MetroPCS’s plan will restrict consumer choice and innovation in a developing mobile market, all for the sake of further padding its bottom line," Riley added. "The FCC must not stand idly by while carriers are engaging in anti-consumer and anti-competitive behavior, and we urge the agency to investigate."

Bernanke fears slow, jobless US recovery

Federal Reserve chairman Ben Bernanke defends the Fed's quantitative easing programme

The US economy is showing signs of a "self-sustaining recovery", but is not growing fast enough to reduce high jobless levels, Federal Reserve chairman Ben Bernanke has said.

Mr Bernanke told the Senate Budget Committee it could take four to five years for the job market to normalise.

As well as unemployment, he said low inflation was also a concern.

"Very low inflation increases the risk that new adverse shocks could push the economy into deflation," he said.

Mr Bernanke was speaking shortly after the release of Labor Department figures showing that the US unemployment rate dropped to 9.4% in December from 9.8% in November, the biggest one-month drop since April 1998.

His comments and the more positive jobs data initially caused share prices to rise.

However, the lower rate came not only because more people found jobs, but also because 260,000 had given up looking and had therefore disappeared from the jobless total.

In later trading on Wall Street shares fell below their opening level.

'Modest' job growth

"We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold," Mr Bernanke told the committee.

If the financial markets start questioning the creditworthiness of the US government - or the long-term value of the US currency - things in the global financial system could get quite ugly, quite fast. ”

However, the labour market had improved "only modestly at best", he added.

"Persistently high unemployment, by damping household income and confidence, could threaten the strength and sustainability of the recovery," he continued.

At the same time, inflation was likely to remain "subdued" for some time.

Federal Reserve Governor, Elizabeth Duke, said there was a "lot of slack" in the US economy and the government still needed to support recovery.

"My view would be that we need to have a credible plan for reducing the debt and the deficits over the long run, but not in the immediate time frame. In the immediate time frame, we still need to support a recovery that's just getting started."
'Critical threat'

Mr Bernanke said continuing high unemployment and low inflation had prompted the Fed's decision to purchase another $600bn (£385bn) of US government debt in a bid to stimulate the US economy.

He said the asset purchase scheme was "not comparable to ordinary government spending" and warned that the federal government's huge budget deficit put it on "an unsustainable fiscal path".

He called on Congress to address "this critical threat to our economy".

"Doing nothing will not be an option indefinitely," he said. "The longer we wait to act, the greater the risks and the more wrenching the inevitable changes to the budget will be."

However, Mr Bernanke gave no indication whether there would be further buying beyond this scheme.

Lena Komileva, economist at Tullett Prebon, said: "The Fed will not rush for the exit. The potential for further (easing) remains if weak labour and housing activity continue to depress inflation trends."

AT&T, Verizon and the Telecom Giants Have Captured the Regulator Supposed to Control Them

Our telecom industry's overseer doesn't seem to have any control to stop the greed. That's because it's a puppet of the industry giants.
By David Rosen and Bruce Kushnick, AlterNet
Posted on January 8, 2011

In a recent article, it was detailed how the Federal Communications Commission (FCC) helped increase the “FCC Line Charge” (SLC), now capped at $6.50 per line, that is imposed on every residential and business phone line. It is a charge that is usually hidden among the “taxes and surcharges” section of the phone bill. It does not go to fund the FCC, but is a direct subsidy to phone companies.

However, the full story of the role AT&T, Verizon and others played in the FCC’s deliberations establishing the SLC has yet to be told. It is a model of what is known as “regulatory capture,” the process by which a federal or state regulatory or other government agency becomes too cozy with those it is charged to oversee.

In 2000, the phone companies created a campaign known as CALLS (Coalition for Affordable Local and Long Distance Service) to raise fees. It is the model of how these companies, their astroturf shills, co-opted consumer groups, corporate-funded research firms, federal bureaucrats and politicians worked together to effectively take control of the FCC’s agenda and create a massive marketing campaign to fool the public.

A report on the program was issued on September 19, 2000, and mysteriously disappeared from the FCC Web site. It has surfaced and details how the campaign was implemented. It also offers insight into the mystery of regulatory capture that shadows the FCC. A copy of the suppressed report can be found at

Efforts at regulatory capture pioneered by the CALLS program live on. The FCC’s December 21 order on Internet access illustrates how its policies bend to corporate interests. Tim Wu, a Columbia University law professor and the person who coined the term “net neutrality,” reported on how, in a conversation with FCC chairman Julius Genachowski, the chairman insisted the order could only be accepted if AT&T’s interests were met. (And the only commissioners who voted for it were the Democrats.)

Capture is not limited to the FCC. The Department of Interior’s former agency, Minerals Management Service (MMS), served oil and gas industry interests. Exposed in a series of financial and sex scandals, MMS also resisted Congressional officials efforts to investigate safety concerns relating to a second BP platform and other installations setting the stage for the great Gulf oil spill of 2010.

And capture influences American foreign policy as well. A recent WikiLeaks revelation documents how former United States ambassador to France, Craig Stapleton, proposed to "retaliate" against France and the European Union (EU) because of their opposition to Monsanto’s genetically modified seeds.

Today, regulatory capture is business as usual.

* * *

The CALLS initiative was created by the phone companies to raise rates, increase the universal service fund and, thus, ostensibly benefit customers. Its purported purpose was to “educate” telephone consumers about changes in local and long-distance billing. Such education would supposedly empower consumers to make better purchasing decisions about which telephone company to subscribe to, thus doing away with the need for regulatory oversight.

The goal of this educational campaign was to save consumers money in their long-distance phone bills. The FCC argued that the campaign would cut long-distance rates by $5.6 billion over five years. Unfortunately, it played down the real purpose of the campaign: to shift long-distance access charges to the local phone bill.

To accomplish the CALLS program, the phone companies retained Issue Dynamics, Inc. (IDI), a Washington, DC, PR firm. The coalition brought together those who had the most to gain, including Bell Atlantic and GTE (now Verizon) and SBC and BellSouth (now AT&T), among others, with those it was suppose to benefit represented by non-profit groups.

IDI built the “coalition” by drawing upon some of its front or astroturf groups, including the Alliance for Public Technology (APT) and Telecommunications and Research Action Center (TRAC). It also recruited some non-profits that have been effectively co-opted by receiving money from the phone companies through their foundations. These groups included the American Association of Persons with Disabilities (AAPD), Consumer Action (CA), National Association for the Advancement of Colored People (NAACP), National Grange (NG), United Homeowners Association (UHA), United Seniors Health Cooperative (USHC), the U.S. Hispanic Chamber of Commerce (USHCC) and the National Consumer League (NCL).

The phone companies took a strong hand in the program. They created the education brochure, “Smart Consumer’s Guide to Telephone Service,” that was distributed through the U.S. government’s Federal Consumer Information Center. They also directed the program’s extensive marketing campaign, with company representatives giving speeches, presentations and discussions at meetings of civic and neighborhood associations, local United Way chapters, Chambers of Commerce, Rotary and Kiwanis clubs, Telephone Pioneers, employee gatherings, senior centers and high school associations, among others.

As part of the CALLS program, NCL, America’s oldest consumer advocacy organization, received a grant from Verizon and SBC, to develop a Web site, “Understanding your Phone Bill.” Gone unnoticed, the phone companies’ point man on CALLS, ICI’s director, Sam Simon, became NCL chairman and continues to serve on the board

Corporate shills also lined up to endorse the plan. The Economic Strategy Institute, a Washington think-tank run by former Reagan salesman Clyde Prestowitz, came out uncritically in support of the CALLS plan. It insisted “that it will serve the national interest by promoting greater economic efficiency while stimulating competition in the marketplace and encouraging investment and innovation.”

A few raised questions about the CALLS effort. “The only one who comes out behind in this is the consumer,'' warned Gene Kimmelman, of Consumers Union. “You only get a savings when you make a high volume of calls.'' A similar warning was raised by the National Association of State Utility Consumer Advocates (NASUCA), which insisted that the CALLS plan undercut competition and the universal service goals of the 1996 Telecommunications Act.

Most alarming, the public never knew what was happening. The extensive behind-the-scenes planning is documented in the letters of endorsement from the various consumer groups. (These are available at

* * *

According to Open Secrets, the “telephone utilities” spent $43.2 million on lobbying in 2009. Of this, AT&T and Verizon accounted for two-thirds of the total; AT&T spent $14.7 and Verizon spent $13.1 million.

Equally illuminating, these “utilities” reported 362 lobbyists and 268 “revolvers,” who Open Secrets identify as participating in the “revolving door that shuffles former federal employees into jobs as lobbyists, consultants and strategists just as the door pulls former hired guns into government careers.” Open Secrets identifies 148 former FCC staff personnel among the revolvers, including former chairman, William Kennard, now with the Carlyle Group.

The consequences of the CALLS efforts are still with us. It is most evidently in what is known as the FCC Subscriber Line Charge or SLC which has never been investigated. More important, this charge is likely to be continued and expanded under the proposed National Broadband Plan now being developed by the FCC. This charge will likely be increased to $10 a month. In addition, four additional charges are likely to be added, including a “mobility tax,” increased local rates and even the creation of a broadband tax.

Speaking before Congress before the Dec. 21 FCC order on net neutrality, Senator Al Franken offered a invaluable warning:

“I rise today to talk about the growing threat of corporate control on the flow of information in this country,” he stated. And added the following caution: “… while we debate these issues [of jobs] in front of the public, behind the scenes -- away from public scrutiny -- the Federal Communications Commission is about to decide two distinct, but closely related issues, that have the potential to change dramatically the way we get our entertainment; the way we communicate with one another; and most importantly, the way we use the Internet.”

Regulatory capture is clearly playing a role in the FCC’s deliberations and approval of the proposed Comcast-NBCU merger. The head of NCL, which played a key role in the original CALLS program, services as chair of the FCC Consumer Advisory Committee. And Sam Simon, of ICI and himself a former NCL chair, now serves as NCL’s Treasurer.

Time passes, but nothing changes.

Center Moves to the Center, Courting the Middle

by Peter Hart 

Obama's selection of conservative Democrat William Daley as his new chief of staff didn't surprise anyone. So reporters were left to explain the political shift behind the move. Some saw little movement at all, since Daley's political views would seem more or less in line with his predecessor Rahm Emanuel. The Washington Post (1/7/11) offered this somewhat confused explanation:
His moderate views and Wall Street credentials make him an unexpected choice for a president who has railed against corporate irresponsibility and tried, with limited success, to appease restive liberals who think he has not been tough enough on bankers.

Actually, the opposite would seem more accurate; the choice of a right-leaning banker with deep ties to corporate America would suggest that Obama doesn't really "rail" against corporations, and certainly has done little to "appease restive liberals." Daley's selection is more evidence of this general trend. Tell that to USA Today, which headlines its piece "Daley Choice Puts a Moderate in Play"--as if there weren't many "moderates" around to begin with. The piece leads with this:
President Obama's choice of Chicago business executive William Daley to run his White House operation is the clearest sign yet that he intends to move toward the political center as he approaches a likely 2012 re-election campaign, members of both parties say.
And over at the L.A. Times, "Obama Chooses Former Clinton Staffers in a Move to the Center" is the headline; readers are told that these moves are "a signal to business leaders and independent voters that he is resolved to steer a more centrist course after two years of intense partisan clashes."

The obvious point here is that Obama "intends to move" towards the center--meaning that he's not there already. The media preference for a Democrat is one who continuously moves to the right. In order to convince readers that Obama isn't already there, reporters magnify certain political disputes in order to prove this point. Today's Wall Street Journal headline, "President Revs Up Campaign to Make Peace With Business," is a perfect example: Obama's been too tough on corporate America, and now he's moving the other direction by hiring a businessman to run the White House.

The Money Paradox

Friday, January 7, 2011 by
The Money Paradox

by David Sirota

If there's one thing you can still count on from today's increasingly erratic politics, it is pure unadulterated paradox. In a Washington circus that features as many morons as oxymorons, we have self-described deficit hawks who promote tax cuts, alleged war opponents who back war escalations, and supposed anti-government conservatives who press to expand the national security state. Heck, we even have senators who famously brag of voting for things before voting against them.

That said, for sheer Ringling Brothers-grade flamboyance, none of those contradictions matches the one relating to money. With spectacular regularity, cash is now simultaneously billed as both all-powerful and completely powerless, depending on whom the particular definition serves.

Exhibit A is the December fight on Capitol Hill over spending and tax cuts. A standard back and forth over macroeconomics, the debate saw politicians of both parties assert that different ways of deploying taxpayer resources would guarantee different results from economic actors. Pass more tax cuts, said Republicans, and profit-seeking small-business owners will be motivated to hire more workers. Provide more unemployment benefits, said Democrats, and the jobless will be moved to spend more on consumer goods.

These messages, unflinchingly transcribed by a servile press corps, all echoed the basic assumption that money is the prime motivator of human action. The underlying theory is simple: Cash goes in, actions automatically come out. It makes basic mechanical sense ... until you listen to what else is being said at the same time.

A week after the tax cut bill passed, the Washington Post reported that Montana Sen. Max Baucus, a Democrat, had held a big fundraiser on the day the Senate was voting on the legislation. Since the measure disproportionately benefited Baucus' rich donors, the question was simple: Did the campaign cash influence his "yes" vote in the same decisive way that his Senate colleagues said tax-cut cash would affirmatively influence employer hiring?

"Money has no influence on how Sen. Baucus makes his decisions," said the senator's spokesperson.

The refrain epitomizes how Washington regularly writes cash out of the political narrative. But it's merely one of many examples, and not just from politicians either. The whitewashing pervades much of the political press, too.

Last week, for instance, The New York Times' Matt Bai penned a slobbering paean to Rahm Emanuel that simultaneously omitted the Chicago mayoral candidate's investment banking career and aggressive corporate fundraising, while definitively declaring that Emanuel has "spent most of his adult life doing the people's work."

This week, most of the political press touted two prospective White House staffers, Bill Daley and Gene Sperling, primarily as "former Clinton officials" rather than as a JPMorgan executive and a Goldman Sachs contractor, respectively. Next week, you can bet it will be more of the same.

"The political and media class says money never motivates anyone in politics at the same time they insist we live in a free market whose only motivating factor is money," says MSNBC's Cenk Uygur, summing up the paradox.

Which is reality? Does money play a major role in human behavior – and specifically in both economic and political decision-making? Or does money play no role at all? It simply cannot be both at the same time. So which is it?

The answer should be obvious in this golden age of political corruption. As alien and bizarre as Washington, D.C.'s culture has become, money is still money – even in the nation's capital. It buys, incentivizes and persuades, no matter if the transaction is documented on a grocery-store receipt or a campaign finance report. The paradox may distract us from that axiom, but it is, indeed, an axiom – and it holds true regardless of whether a widget or a congressman is up for sale.

The Chemistry of Empire

The Birds and the Bees?

In the beginning, chemicals collided and catalyzed, evolving a system of development from non-living to living things, proteins and nucleic acids interacting--greeting and meeting, dating and mating—in a metaphorical dance of romance. The recipe to make more was born. Now, chemicals portend the end. So much tells us so. An eye for an eye doesn't just blind the world; it annihilates. The blueprint for reproduction becomes one of destruction.

I'm not relaxed.

Sen. Lindsay Graham advocates permanent military presence in Afghanistan, despite an objection from Afghan President Hamid Karzai's government.

And despite the deaths of thousands of military men and women during Bush's war—the War OF Terror that passed seamlessly to Commander Obama. Last week, two US troops died in Iraq where combat ENDED months ago. Because the president told us so, even announcing the improved name of the non-war: Operation New Dawn.

And despite the more than 100,000 Americans wounded.

And despite the three hundred and twenty thousand troops who suffer brain injuries.

Despite a suicide epidemic among veterans.

Despite the more than a million Iraqi and Afghan civilians killed and maimed. And Pakistanis.

Despite that most of the above numbers, probably, will change before this article is published.

Despite the use of weapons banned by international law. The attack on Fallujah in 2004 is an example. Barbarism, courtesy of the USA, incinerated a civilian population, including children. Studies reveal war's horror—survivors of the carnage have an increased risk of chemically induced illness. The cancer rate has soared. Unimaginable birth defects (a child born with two heads) have increased.

And, now, a WikiLeaks cable reveals that Israel is preparing for a "major" war against Hamas in Gaza and/or Hezbollah in Lebanon. Will their forces use another banned weapon, also, courtesy of the USA, Dense Inert Metal Explosives (DIME), classified as genotoxic, damaging DNA and causing cancer?

Here at home, the Gulf Coast, like Fallujah, is a wasteland. It's not just the millions of gallons of crude from the catastrophic rupture of the ocean floor but, also, the dispersant Corexit used to clear the disaster, a chemical banned in Europe because of its toxicity (and linked to the health problems of the Exxon Valdez cleanup crew). So, again, courtesy of a US leadership that conspired with oil industry giants, there will be increased illness and birth defects as well as premature deaths. But Gulf seafood is safe to eat. Because the Obama Administration tells us so.

Man-made climate change is bringing severe weather swings, blizzards and heat waves. In June, Pakistanis suffered US drone strikes during temperatures that reached 128 degrees.





Dead fish.

Bees dying.

Blackbirds falling from the sky.

If I were a Christian End Timer, I'd be maxing out a credit card right now. You know, like there's no tomorrow, or few of them. I'd order the last dinner, course after course, with a decadent slice of cake as the finale—maybe Death by Chocolate.

Since I'm not, I'll continue to rant against Wall Street, the Military/Security Complex, and Congressmen and women responsible for our planet's end time. Oh, yes, and against those who remain silent, apathetic to suffering.

Finally, if we who speak in opposition to what's being done in our names, suddenly, fall, dead to the ground, or are found dead, floating in water, please, do not believe that the loud noise of fireworks or cold weather is responsible. Look, instead, to US Empire.

Welcome to the 2011 American Dream

Bedtime for the Poor and the Middle Class

"What’s good for General Motors is good for the country,” was a statement attributed to former GM CEO Charles Wilson in 1953, during hearings before the Senate Armed Services Committee. Could he, as Defense Secretary, make a decision adverse to the interests of General Motors? Wilson assured the Committee such a situation was inconceivable "because for years I thought what was good for the country was good for General Motors and vice versa". Later this statement got reduced.

But the words resonated because, GM employed more workers than the US government – second only to the number on payroll for Soviet state industries. In 1955, General Motors became the first American corporation to pay taxes of over $1 billion. (Wikipedia)

Behind Wilson’s apparent gaffe, however, GM had its gigantic reality base. It did create many millions of jobs, not only in the direct manufacture , shipping and sale of cars, trucks, and other products, but in its peripheral stimulus for rubber, glass, and all the other components required to make a car.

In the 1950s, the United States was the producing mammoth of the world. Banks made loans to companies that then produced goods. That America has evolved into a center for exporting jobs and playing with (gambling) money not investing it in US production.

General Motors executives could claim today “what’s good for their company is good for the country” if they referred to China where it manufactures more autos than in the United States. GM now earns more from foreign sales than it does from US car sales. A skilled welder for GE in Michigan in the 1980s earned $35 an hour; his equivalent in today’s Mexico doesn’t earn that much in a day.

The much heralded – by Bill Clinton, for example – “globalization process” stimulated General Electric, once the company who hired Ronald Reagan as a TV host to represent their “Americanism,” has repeatedly reduced its US staff. Recently, however, it announced plans to hire more than 1,000 Brazilian workers for a new plant it will initiative down there for a cost of over half a billion dollars. GE also plans to invest $2 billion in its Chinese operations.

Corporate headquarters can remain in the United States, but the guts of the old companies – remember “as American as Mom, apple pie and Chevrolet”? – reside in greener pastures for production and sales. US workers became simply too costly, even as the corporations cut their wages and benefits steadily from 1973 on.

When the credit bubble burst along with the inflated housing bubble, the companies looked to India, China, Brazil and Indonesia where economies were growing and wages remained “reasonable.” They could produce and sell their goods more easily there and slice higher US payrolls. That equals profit – or capitalism.

Corporate profits rise, meaning good news for the stock market, and wages drop or stagnate (more productivity per worker). In addition, the large pool of long-term unemployed tends to keep wages down. Without full employment, credit and housing US sales will not make robust comebacks and poor people will not return to their consumer habits quite so easily.

After a decade of depression in the 1930s, US entry into World War II brought a monster-sized surge in government spending, which also translated into massive job creation – and economic boom. As corporate profits rose in manufacturing, the companies hired more workers and expanded, because paid workers bought stuff – even before some genius thought of developing shopping malls.

In 2011 consumers in the consumer society don’t have the money or credit to do what they’ve been conditioned for. They owe money and struggle to pay their rent or mortgage payments and worry about not having a pension; and the now seemingly uncertain future of social security.

The media duly reports the condition of the Dow Jones Industrial Average although most of those who say those words – like their listeners – don’t understand what they mean. Wall Street has risen. The GM that needed our bail-out money makes its products elsewhere; its executives shudder at the notion they had to take money from the hated government.

Investors and traders celebrated the new year, thinking the market will boom in 2011. The tens of millions unemployed, foreclosed or already homeless went to sleep early – to escape the pessimism that has descended on the middle and lower middle classes in much of the country. Their home prices, the basis of their future, have slipped, their jobs if they still have them have grown insecure and their grown kids have moved back in.

The Republicans who control the House will try to cut Social Security and Medicare – they don’t dare tinker with the useless defense budget. Some Democrats will get bought by the usual buyers. Members of both Houses will demand more tax cuts – from which banks, corporations and the disgustingly rich will benefit – on the grounds that this will create jobs; not. The energy lobbies will successfully deter moves to make serious inroads in emissions and our leaders will continue to talk of the American dream – which will still be there for the poor and much of the middle class, when they’re sleeping.

Boehner's Ominous Beginning

(and it's ALL about that big ol' gavel...--jef)


Ashes to Ashes

John Boehner’s brief opening remarks as the new Speaker of the House were ominous in their religious insensitivity. In the first minute of his speech, after some thank-you’s and applause, he referred to his Catholic Church’s practice of the imposition of ashes on the first day of Lent, which signifies human mortality. (It is also a ritual observed by Anglicans, Episcopalians and others, which Boehner did not mention. Lent, incidentally, begins on March 9 this year.)

On the face of it the reference is quite impressive. Here a powerful political figure declares openly an awareness of his mortality. Who cannot applaud such humility? On the other hand, the reference exhibits a tin ear. Boehner’s Catholic religion is after all a powerful religious minority in the context of simmering religious wars both at home and abroad.

Leaders of Boehner’s own church, including popes, have publicly castigated Islam. Our own troops in the Middle East have been supplied rifles whose scopes are inscribed with Bible verses, which is suggestive of killing Muslims for Jesus. Both the country and the world are a tinderbox ready for religious war, and the new Speaker of the House signals in his first minutes of office that he is a devout Catholic, one of the parties in that strife.

This is not to criticize Boehner for his personal religious devotion, but it is to criticize him for calling specific attention to it in his first few minutes of his term of office.

Now suppose the new Speaker were a Muslim, and suppose his first remarks referenced the edifying character of the Hajj to Mecca. Would this not be considered offensive to non-Muslims, if not alarming?

Or suppose the next Speaker of the House were an Evangelical Christian, and he or she made reference to the edifying nature of having been saved at an Evangelical revival meeting. Would this not sound a note of alarm among all those who are not Evangelicals?

If the Speaker of the House were a Jew, would it not be divisive - at least - to make reference to the daily study of the Torah?

There are some important points of agreement that all the major religions of the world share. They can and do speak generally with one voice on such matters as the requirements of justice and equity in human society. If leaders of the nation opt to cite religion publicly, they would do well to emphasize these points of common ground. This might help defuse some of the current urge to religious competition and strife.

The American revolutionaries who founded this country were virtually all escapees or children of escapees from religious persecution and religious wars in Europe. With one voice they sought to keep organized religion out of the political and governmental arena. While our founding fathers espoused important religious values such as justice and equity, and even publicly acknowledged their belief that God commanded that such values be sustained, they assiduously kept religious organizations and movements out of the political and governmental arena. They were wise to do so. They knew what we seem to have forgotten, that religious organizations almost invariably dream of universal domination and control.

Speaker Boehner sounded a sour note in his first few minutes of office in signaling that he is a faithful member of a minority religious group, and one that is currently picking a fight with Islam. The innuendo is ominous.

The Myth of American Primacy

Just How Exceptional is the US?

The New Year season is a good time to reflect on the U.S.'s true standing in the world.

Politicians of every stripe ceaselessly repeat the well-worn clichés about America's uniqueness and prowess at 4th of July, Memorial Day, election campaign and other patriotic celebrations.

But how exceptional are we?

The following list of some 35 categories compares our standing to other nations.

Sadly, the five categories in which America ranks #1 are Military Expenditure, Incarceration, Marriage, Cosmetic Procedures and Obesity.

Read on …

U.S. Ranked #1

Military Expenditures (2008)

#1 — U.S. = $663.2 billion (4% of GDP)
#2 — China = $98.8 billion (2% of GDP)

Source: Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database (2009)

Military Expenditure per GDP (2005)

#1 — Omar = 11.4%
#25 — U.S. = 4.2%

Source: CIA Factbook

Incarceration Rate

#1 — U.S. = 756 per 100,000 (1,613,740 in 2009)
#2 — Russia = 629 per 100,000 (86,9814 in 2006)

Source: King's College London International Centre for Prison Studies: U.S. Bureau of Justice Statistics

Marriage Rate ("crude," 2007)

#1 — U.S. = 7.4 per 1,000
#7 — Denmark = 6.7 per 1,000

Source: National Healthy Marriage Resource Center

Cosmetic Surgical Procedures (2009)

#1 — U.S. = 1.5 mil
#2 — Brazil = 1.0 million

Source: ISAPS

Obesity Rate

#1 — U.S. = 34% (2008)
#2 — Mexico = 30% (2006)

Source: OECD


#1 — Costa Rica = 76.1
#114 — U.S. = 30.7

Source: Happy Planet Index 2.0

Satisfaction with Life Index (2006)

#1 — Denmark = 273.4
#23 — U.S. = 246.7

Source: Adrian White, "A Global Projection of Subjective Well-being: A Challenge To Positive Psychology?"

Subjective Well-Being (2007)

#1 — Denmark = 4.24
#16 — U.S. = 3.55

Source: World Values Surveys

National Economy
Gross Domestic Product (2009)

#1 — European Union = $14.4 trillion
#2 — U.S. = $14.1 trillion

Source: CIA Factbook

Per Capita GDP

#1 — Lichtenstein = $122,100 (2007)
#11 — U.S. = $46,000 (2009)

Source: CIA Factbook

Human Poverty Index (2007-2008, lowest)

#1 — Sweden = 6.3
#17 — U.S. = 15.4

Source: Human Development Index

Current Account Balance (2009)

#1 — China = $297.1 billion
#190 — U.S. = ($378.4 billion)

Source: CIA Factbook

Competitive Economy

#1 — Switzerland
#4 — U.S.

Source: World Economic Forum

Digital Economy

#1 — Sweden
#3 — U.S.

Source: Economist Intelligence Group's "e-readiness"

Information Technology

#1 — Sweden
#4 — U.S.

Source: World Economic Forum
Environmental Impact
Renewable Electricity Production (2009)

#1 — China = 682.1
#3 — U.S. = 413.2

Source: BP Statistical Review of World Energy, June 2009

Environmental Impact (worst to best)

#1 — Brazil
#2 — U.S.

Source: University of Adelaide's Environment Institute in Australia

CO-2 Emissions (Climate Change Performance Index, of 56 countries, 2008, best to worst)

#2 — Germany = 3.0% share
#55 — U.S. = 21.4% share

Source: Germanwatch
Life Expectancy

#1 — Japan = 82.6 years
#38 — U.S. = 78.2 years

Source: United Nations (2005-2010)

Infant mortality (to 1,000 live births, 2009)

#1 — Iceland = 2.9
#33 — U.S. = 6.3

Source: UN Population Division

National Health Systems

#1 — France
#37 — U.S.

Source: World Health Organization

Health Care Expenditures (% of GDP, 2006)

#1 — France = 11.0%
#37 — U.S. = 15.8%

Source: OECD

Overweight Rate

#1 — Mexico = 70% (2006)
#2 — U.S. = 68% (2008)

Source: OECD
Domestic Life
Divorce Rate (of marriages, 2002)

#1 — Sweden = 54.9%
#7 — U.S. = 45.7%

Source: Americans for Divorce Reform

Cohabitation Rate (20 year-old plus, 2007)

#1 — France = 14.4%
#6 — U.S. = 5.5%

Source: National Healthy Marriage Resource Center

Non-Married Childbirths (2007, US and Europe)

#1 — Sweden = 54.7%
#6 — U.S. Denmark = 38.5%

Source: National Healthy Marriage Resource Center

Motherhood Ranking (best to worst)

#1 — Norway
#28 — U.S.

Source: Save the Children "Mothers Index"

Gender Gap (narrowest to widest)

#1 — Iceland
#19 — U.S.

Source: World Economic Forum
Secondary School Graduates (2008)

#1 — S. Korea = 93%
#18 — U.S.= 73%

Source: OECD

College Graduates (25-34) (2007)

#1 — Canada = 55.8%
#12 — U.S. = 40.3%

Source: the College Board


#1 — Korea = 539
#15 — U.S. = 500

China was divided into three regions (Shanghai, Hong Kong and Macao) and Shanghai and Hong Kong out-performed the U.S).


Science Education

#1 — Finland = 554
#20 — U.S. = 502

China was divided into three regions (Shanghai, Hong Kong and Macao) and each out-performed the U.S.


Math Education

#1 — Singapore = 562
#28— U.S. = 487

China was divided into three regions (Shanghai, Hong Kong and Macao) and each out-performed the U.S.

Telecommunications Services
Internet Users (2008)

#1 — China = 298 million
#2 — U.S. = 231 million

Source: CIA Factbook

Wired Broadband (2010)

#1 — Netherlands = 37.8 per 100 (6.2 mil subscribers)
#14 — U.S. = 27.1 per 100 (183.3 mil subscribers)

Source: OCED

Wireless Broadband (2010)

#1 — Korea = 95.0 per 100 (146.3 mil subscribers)
#9 — U.S. = 44.4 per 100 (136.3 mil subscribers)

Source: OCED

Broadband Data Rate (downsteam)

#1 — Korea = 36.9 Mb/s
#31 — U.S. = 9.9 Mb/s

Source: Speedtest

Broadband Data Rate (upsteam)

#1 — Korea = 20.3 Mb/s
#33 — U.S. = 2.5 Mb/s

Source: Speedtest

Please add you own categories and circulate.

Friday, January 7, 2011

France fears ‘economic war’ over Renault leaks

France fears economic war over Renault leaks
By Agence France-Presse
Thursday, January 6th, 2011

France's industry minister warned on Thursday that the country faces "economic war" after revelations that industrial espionage at Renault had targeted the automaker's key electric cars division.

"The expression 'economic war', while sometimes outrageous, for once is appropriate," said Minister Eric Besson. "It (the Renault case) appears to concern the electric car, but I do not want to go further."

Renault, which has suspended three managers for leaking company secrets, was also giving little away about what happened but said on Thursday that its "strategic, intellectual and technological assets" had been targeted.

The company and its partner Nissan have staked their future on electric cars and plan to launch several models between them by 2014 to meet the rapidly rising demand for more environmentally friendly methods of transport.

"For Renault, this is a very serious incident concerning persons in a particularly strategic position in the company," senior vice president Christian Husson told AFP, a day after the firm suspended the three managers.

A months-long probe had established a "body of evidence which shows that the actions of these three colleagues were contrary to the ethics of Renault and knowingly and deliberately placed at risk the company's assets," Husson said.

The suspensions were the latest in a series of industrial espionage shocks to hit France's huge and strategically important auto industry. French tyre maker Michelin and auto parts maker Valeo have also been the targets of spying.

The industry minister said on Thursday that he wanted firms which receive state aid for research and development to boost efforts to protect themselves against espionage.

The car industry, along with aerospace, defence and pharmaceutics are the sectors most affected by espionage, experts say.

"When you need 10 years to bring out a vehicle, 12 years to get a pharmaceutical molecule to the market, 20 years for a plane... the temptation to plunder is obviously strong," said Bernard Carayon, a French member of parliament and economic intelligence expert.

France itself is the top offender when it comes to industrial espionage, and is even worse than China and Russia, according to a leaked US diplomatic cable that quoted the head of a German company.

"France is the evil empire (in) stealing technology, and Germany knows this," Berry Smutny, the head of German satellite company OHB Technology, was quoted as saying in the diplomatic note obtained by WikiLeaks.

Electric car technology is a particularly prized asset at Renault.

It plans to launch electric versions of its Fluence model priced at about ?25,000 ($34,000) and its Kangoo Express for about ?20,000 in mid-2011, and its smaller Twizy and Zoe models in late 2011 and 2012.

It forecasts that electric cars will make up 10 percent of the market by 2020. Along with its Japanese partner Nissan, it is investing ?200 million a year in the programme.

Nissan has already launched an all-electric car for the mass market, the Leaf, in Japan and the United States, where it sold out on pre-orders. The Leaf is set to be launched in select European markets in early 2011.

Other top car makers are in on the act, preparing to launch electric cars. Among Renault's French competitors, Citroen is making the C-Zero and Peugeot the iON. Tata of India is preparing to launch the Vista EV.

Mercedes-Benz of Germany has an electric smart car, the Fortwo ED, while in Japan Mitsubishi has the iMiEV and Toyota the Prius Plug-in.

The Rich Can Already Call It a Year

Cross-posted from the “Arguing the World” blog at Dissent magazine.
by Mark Engler

Well, 2011, it’s been nice. But I think we’ve worked enough already. In any case, we’ve already made enough money. Time to call it a year.

This is a ridiculous idea, right? Yet, as the Canadian Financial Post reported at the beginning of the week, “Top CEOs will have earned average workers’ full annual pay by 2:30 p.m. today.” The “today” in question was Monday, January 3, the first business day of the year. Here’s their explanation:

Canada’s best-paid chief executives earned 155 times the average income earner during the darkest days of the recession, the Canadian Centre for Policy Alternatives said in a report Monday.

Declaring that those 100 chief executives were “recession proof,” the think tank said they earned an average of $6.6 million in 2009 compared with $42,988 for the average Canadian.

That means by 2:30 p.m. Monday, the first working day of the year, those CEOs will have earned the full year’s wage of the average Canadian, said Hugh Mackenzie, the author’s study and research associate for the centre.

The discrepancy is almost 50 per cent higher than just over a decade ago, in 1998, when CEOs took home an average pay 104 times higher than the average wage earner, the centre said.

“Even that extraordinary number understates the real story,” Mackenzie wrote. “Thanks to a change in corporate reporting introduced in 2008, we only have a conservative statistical estimate of the stock options that make up about one third of CEOs’ 2009 pay. The public will never know how much these CEOs actually got paid in 2009.

I’m not sure how the Canadian Centre for Policy Alternatives, when producing this brilliant bit of PR, crunched the numbers to come up with the exact time of 2:30 p.m. on January 3. However, their general point stands. And, in fact, the situation is even worse in the United States. Here, as the AFL-CIO has tracked, the average compensation for a Fortune 500 CEO is $9.25 million per year. Even if we grant that these businesspeople are workaholics putting in seventy-hour workweeks and taking no vacation, that comes to $2,541 for every hour they labor.

Calling it quits after the first week of January, these American CEOs would each be able to take home an annual income of over $177,000.

Whether the world would be worse off if they did check out for the rest of the year is a debatable point. As CNN Money has noted, not all of the companies run by the top-twenty-earning CEOs were even profitable. For example, in 2009 Johnson & Johnson experienced its first annual sales decline in seventy-six years, yet its CEO, William Weldon, was nevertheless paid $22.8 million, in large part for making “difficult personnel decisions.” (Translation: firing as many as 8,000 workers.)

Of course, even these Fortune 500 CEOs are not making money very quickly by the standards of the financial sector. The New York Times reported that the top twenty-five hedge fund managers made $25.3 billion between them in 2009, with George Soros personally raking in $3.3 billion. That’s $8.2 million per day.

It goes without saying that, while the incomes of the rich may be “recession proof,” that is not the case for the wages of the rest of us. But a lot of people don’t realize that this is not just a result of the recession of the past couple years. Over the last several decades, as earnings at the very top have skyrocketed, incomes for those outside of the top 20 percent have been basically stagnant, with productivity gains not translating into wage increases. And we are working ever more hours just to stay afloat.

I have written a couple times before about Take Back Your Time Day, which takes place on October 24 each year. The notion behind this holiday is that if working hours in the United States were on par with those in Germany, the Netherlands, or Norway, then, come October 24, we’d be able to take the rest of the year off.

If you don’t want to use those other countries as points of comparison, that date could be adjusted. Economist Juliet Schor explains that “the average worker [in the U.S. was] putting in 204 more hours in 2006 than in 1973.” That’s a full five weeks of extra work per year. If Americans just worked the same amount they did in the early 1970s, we’d be able to finish up our working year on about November 25. This would mean turning the entire month of December into a glorious annual sabbatical. Or we could spread the free time out over the entire year. (Three Fridays off per month, anyone?) The result: a far more reasonable balance between work, family, and leisure–a standard of life that used to be widely enjoyed in this country.

Certainly, that’s not as sweet as being able to take your hard-earned week’s pay of $177,000 and clocking out from now until 2012. But it’s something the rest of us can dream of–and demand.

Commerce Department Pulled $46.3 Billion In Personal Income Out Of Thin Air To "Prevent" Double Dip (by the books)

(See, when the books can be cooked this easily to make a recession "not" a recession, or perhaps making a depression "just" a recession--then it is just too easy for our benevolent rulers to be dishonest and this is becoming an institutional regularity: keeping 'we, the people' in the dark about the iceberg the USA Titanic hit 2 years ago--you know, it's just like the unemployment rate they peg at just at 9 1/2% when it's really at 20%. What do they care? None of this affects ANY of them directly, except for re-election prospects, but when you lose, you just become a high paid corporate lobbyist sticking it to the people just like you did as a legislator. Wheeee heee heee!--jef)


by Tyler Durden on 01/06/2011

It is a good thing that America has a functioning, objective and analytical media, otherwise we might need David Rosenberg to point out that one of the key factors for the avoidance of the "technical double dip" was a completely unexpected number fudge courtesy of the Commerce Department which, at the most crucial stage in the economy's conversion into a re-recession, miraculously "found" $46.3 billion in personal income that "the consumer thought wasn't there before." In other words, the government literally pulled a number out of thin air which created a relative sequential boost to the economy, even though it was just a non-recurring accounting adjustment to continuous numbers and should have been completely ignored! By then it was too late (very much in the same way that the BLS has had 44 out of 52 adverse data revisions after the data has been reported, when it is too late for its to impact asset prices): it set off a chain of events which resulted in a jump in ISM, diffusion and various other indices (not to mention the BLS endless data adjustment) which caused a last second avoidance of the double dip becoming official. Oh and the Fed's QE2 did not hurt either...

From David Rosenberg:


It may have been partly due to QE2 and partly due to the latest round of fiscal goodies, which gave sentiment a lift even though the change doesn’t fill people’s pockets until this quarter. And there is no doubt that the Europeans have managed to convince everyone that the debt problems are behind us ? that has helped out too in terms of underpinning confidence.

The real kicker was the fact that personal income was revised up $46.3 billion in the second quarter. This was huge (?) the Commerce Department found $46.3 billion for the consumer that it thought wasn’t there before. This made the difference between income being up at nearly a 6% annual rate that quarter and 3%. The newly found income carried some important spending momentum with it into the third quarter and this was really big in terms of influencing people’s perceptions of how the economy was performing. When double-dip risks were at their peak, it was when Q3 GDP was released initially and it showed a mere 1.6% annual growth rate, which was even weaker than the 1.7% print in Q2 (which was less than half the growth rate of Q1). Then Q3 GDP was revised up to 2% and then all the way to 2.6% and that is all she wrote as far as the double dip for 2010 was concerned. And it now looks like we are going to see something closer to 3.5% for Q4. So what happened was that consumers had more income than was thought previously and while (like the payroll tax cut for Q1) this is really just a LEVEL shift in earnings, there is an initial thrust to growth rates, at least for a few months. This is essentially the reason why, along with perhaps a moderate wealth effect from the stock market runup, the holiday shopping season surprised to the upside.

This is a nice story. It explains why we were wrong on the Q3/Q4 double-dip scenario, but going forward, this income revision and its impact on spending can be considered yesterday’s story. As we said, there is the current payroll tax effect, but this will be contained to the first quarter and the one thing history teaches us is that tax cuts that are temporary in nature carry with them virtually no multiplier impact into the future. Look for Q2 of this year ? and likely Q3 as well ? to turn out to be as disappointing for the market, as was the case for these exact same quarters in 2010. In other words, look for a repeat except this time around we don’t have a Fed and a Congress that is going to pull another rabbit out of the hat during the summer and fall.

Oh yes, we would be remiss if we did not mention the fact that this overbought equity market has already priced in this “bullish” first quarter scenario. What it hasn’t yet discounted are the hurdles that lie ahead in the second and third quarters of the year.

And with that down, here is why Rosenberg rightfully anticipates that the endless data fudging will soon end, resulting in the long overdue final correction to GDP.

This is not a forecast as much as something that should be on the radar screen. Nor should this be considered a change in our fundamental view for 2011 as a whole — as a year of overall disappointment on the macro front. Be that as it may, the probability of a much stronger Q1 economic outcome has risen very recently.
Yes, you read that right. But why would that come as a surprise? We had near 4% GDP growth in the first quarter of last year (the consensus was little more than 2.5% going into that quarter) and by summer everyone was still talking about a double-dip recession and the stock market was beginning to price one in. Remember that the consumer is going to be on the receiving end of a $30 billion gift in Q1 from the payroll tax cut (the only impact on “growth” is this quarter). At the same time, we are leaving the fourth quarter with more momentum, particularly on the consumer side, than we had been expecting previously.

The points below show what it would take to get 4% GDP growth for Q1 — believe it or not, it is not a stretch to get there. With consumer spending at 3.5% (perhaps even higher), it doesn’t take much. The consensus right now is less than 3% (taken a month ago), but I would expect to see it revised up very shortly:
  •  Consumer spending 3.5% (the impact of the payroll tax cut)
  •  Residential investment 2% (the monthly construction spending numbers have risen modestly off the lows)
  •  Non-residential spending 5% (the architectural billing index is consistent with this)
  •  Capex 10% (still solid but moderating as the latest core orders data are predicting)
  •  Net exports swing from $470 billion to $460 billion (net addition of 0.4%)
  •  Inventories from $73 billion to $68 billion (drag of 0.2%)
  •  Government 1.5%
Even if government is flat, the number for Q1 would still be 3.7% seasonally adjusted annual rate.

What is important is what happens in the second and third quarter when we see the U.S. economy hitting an important air pocket. In Q2, there is a loss of fiscal support at the margin. Moreover, we will be deeper into this renewed leg of the downturn of home prices, with negative implications for the household wealth effect, confidence, and spending. We will be seeing the peak impact from the runup in energy prices too. The inventory cycle has pretty well run its course as well (it was responsible for half of the GDP growth in 2010). It would also likely be prudent to assume that some risk aversion will resurface from the renewal of European debt concerns in March after the Irish elections (if the opposition party wins, expect the EU deal to be renegotiated and the debt to be restructured, and if that happens, look for other countries to follow suit). Of course, we have the debt-ceiling issue to contend with in March-April and the GOP are dangling $100 billion of spending cuts in front of the White House in order to get a deal done. This is not last year’s lame duck Congress. And this doesn’t add to uncertainty and possible disappointment in the second and third quarter?

The Fed is not going to be able to embark on more balance sheet expansion unless things were to get really ugly given the new Congressional oversight and the longer list of “hawks” that are FOMC voters ? this comes to a head in June and remember what happened last year when Mr. Market hit a pothole as the Fed contemplated its elusive exit strategy. It would be irresponsible to ignore these risks.

All we know about Q4 is that we should see a decent pickup in capital spending ahead of the end of the bonus depreciation allowance, which will merely create another problem for 2012 but the story here is (i) consumer-led first quarter, followed by (ii) air pockets in both Q2 and Q3, and then (iii) a capex-led fourth quarter. Moreover, a 2012 recession cannot be ruled out. In fact, elections are great years to have recessions: 1960, 1970, 1980, 2000 and 2008! How about that Mr. Potter?

Why Are Taxpayers Subsidizing Facebook, and the Next Bubble?

Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social-networking company is now worth $50 billion. Goldman is also creating a fund that will offer its high-net-worth clients an opportunity to invest in Facebook.

On the face of it, this might seem just like what the financial sector is supposed to be doing – channeling money into productive enterprise. The Securities and Exchange Commission is reportedly looking at the way private investors will be involved, but there are more deeply unsettling factors at work here.

Remember that Goldman Sachs is now a bank-holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (see Andrew Ross Sorkin’s blow-by-blow account in “Too Big to Fail” for the details.)

This means that it has essentially unfettered access to the Federal Reserve’s discount window – that is, it can borrow against all kinds of assets in its portfolio, effectively ensuring it has government-provided liquidity at any time.

Any financial institution with such access to such government support is likely to take on excessive risk – this is the heart of what is commonly referred to as the problem of “moral hazard.” If you are fully insured against adverse events, you will be less careful.

Goldman Sachs is undoubtedly too big to fail – in the sense that if it were on the brink of failure now or in the near future, it would receive extraordinary government support and its creditors (at the very least) would be fully protected.

In all likelihood, under the current administration and its foreseeable successors, shareholders, executives, and traders would also receive generous help at the moment of duress. No one wants to experience another “Lehman moment.”

This means that Goldman Sachs’s cost of financing is cheaper than it would be otherwise – because creditors feel that they have substantial “downside protection” from the government. 

How much cheaper is a matter of some debate, but estimates by my colleague James Kwak (in a paper presented at a Fordham Law School conference last February) put this at around 50 basis points (0.5 percentage points), for banks with more than $100 billion in total assets.

In private, I have suggested to leading members of the Obama administration and Congress that the “too big to fail” subsidy be studied and measured more officially and in a transparent manner that is open to public scrutiny – for example, as a key parameter to be monitored by the newly established Financial Stability Oversight Council.

Unfortunately, so far no one has taken up this approach.

However, there is consensus that the implicit government backing afforded to Fannie Mae and Freddie Mac in recent decades allowed them to borrow at least 25 basis points (0.25 percent) below what they would otherwise have had to pay – a significant difference in modern financial markets.

In 13 Bankers, Mr. Kwak and I refuted the view that these government sponsored enterprises were the primary drivers of subprime lending and the 2007-8 financial crisis – that debacle was much more about extreme deregulation and private-sector financial institutions seeking to take on crazy risks.

Nonetheless, Fannie and Freddie were badly mismanaged – and followed the market in 2005-7 with bad bets based on excessive leverage – in large part because they had an implicit government subsidy. Those institutions should be euthanized as soon as possible.

Goldman Sachs now enjoys exactly the same kind of unfair, nontransparent and dangerous subsidy: it has effectively become a new form of government-sponsored enterprise. Goldman is not a venture capital fund or primarily an equity-financed investment fund. It is a highly leveraged bank, meaning that it borrows through the capital markets most of the money that it puts to work. 

As Anat Admati of Stanford University and her colleagues tirelessly point out, the central vulnerability in our modern financial system is excessive reliance on borrowed money, particularly by the biggest players.

Goldman Sachs is a perfect example. Most of its operations could be funded with equity – after all, it is not in the retail deposit business. But issuing debt is attractive to shareholders because of the subsidies associated with debt financing for banks and to bank executives because their compensation is based on return on equity — as measured, that increases with leverage.

If banks have more debt relative to equity, this increases the potential upside for investors. It also increases the probability that the firm could fail — unless you believe, as the market does, that Goldman is too big to fail.

Social-networking companies should be able to attract risk capital and compete intensely. They do not need subsidies in the form of cheaper financing, or in any other form.

Social networking is a bubble in the sense that e-mail was a bubble. The technology will without doubt change forever how we communicate with each other, and this may have profound effects on the nature of our society. But investors will get carried away, valuations will become too high and some people will lose a lot of money.

If those losses are entirely equity-financed, there may be negative effects, but they are likely be small – in the revised data after the 2001 dot-com crash, there isn’t even a recession (there were not two consecutive negative quarters for gross domestic product).

But if the losses follow the broader Goldman Sachs structure and are largely debt-financed, then the American taxpayer will have helped create another major financial crisis.

And if you think that sophisticated investors at the heart of our financial system can’t get carried away and lose money on Internet-related investments, remember Webvan: “During the dot-com bubble, Goldman invested about $100 million in Webvan, the online grocer that never got off the ground and eventually collapsed in bankruptcy.”

Blue Shield plans 50% rate increases in 2011

(Cuz they are all about caring...pigs! I hope they choke on their caviar!--jef)

By Eric W. Dolan
Thursday, January 6th, 2011

Health insurance costs for hundreds of thousands of individual policy holders with Blue Shield of California could go up as much 59 percent this year, according to the Los Angeles Times.

The California health insurer has announced it is seeking to raise rates an average of 30% to 35% for 193,000 policy holders due to rising health care costs, the fact that healthier people are dropping coverage during a bad economy, and other factors.

Roughly one in four of Blue Shield of California customers are expected to see increases of more than 50% over five months. Most of those who hold individual policies are self-employed, aren't covered by their employer or have been laid off.

"Rates are going to continue to rise unless the cost of medical care is brought under control," Blue Shield spokesman Tom Epstein told the LA Times. "We need to reduce what we pay to hospitals, medical groups and pharmaceutical companies."

"The rate increases reported today cover a period of more than one year and have almost nothing to do with the federal health reform law," Blue Shield of California said in a statement. "These rates reflect trends that were building long before health reform."

Despite the rate hikes, Blue Shield of California said it expects to lose tens of millions of dollars on its individual health care business in 2010 and 2011.

Last year Anthem Blue Cross proposed a 39 percent increase for its nearly 800,000 customers, but a public outcry forced the insurance company to settle for a maximum hike of 20 percent.

Anthem Blue Cross announced Wednesday that it expected to raise rates again an average of 9.8% for individual policy holders.

Health insurance premium hikes greater than 10 percent would be reviewed by state or federal regulators under new rules proposed by the United States Department of Health and Human Services in December of 2010.

The new regulations would force health insurers to publicly disclose proposed increases and the justification for them.

"The proposed regulation will help safeguard consumers from unreasonably high rate increases by providing consumers with detailed information on proposed increases," the department's website states. "Disclosing proposed increases, along with the insurer’s justification, would shed light on industry pricing practices that some experts believe have led to unnecessarily high prices."

On Wednesday, Rep. Lynn Woolsey (D-CA) introduced a measure to establish a robust public health insurance option as a supplement to the Patient Protection and Affordable Care Act. She said the public option would lower insurance costs and address deficit concerns.

Meanwhile, House Majority Leader Eric Cantor (R-VA) vowed to pass legislation to repeal the new health care reform laws in the House, despite such a repeal's inevitable death in the Senate.

The Congressional Budget Office has estimated a repeal of Obama's health reform laws would cost the US $1.2 trillion over the next 20 years.