Wednesday, March 6, 2013

The Growth Stealers

The wages of most workers have barely risen since 1980 because the vast majority of the gains from growth have gone to those at the top of the income distribution.


The Wall Street crew has been in high gear trying to convince the public that our children’s well-being is going to be threatened by their parents’ and grandparents’ Social Security. This story would be laughable except that it is endlessly repeated by people in positions of power and responsibility. For this reason it is worth going over the basic numbers yet again so that everyone knows that the people making these assertions are either ignorant or dishonest.

The basic point is that the economy gets more productive through time. This has been true for hundreds of years and no one has any good stories as to why it should not continue to be true long into the future.

Our measures of productivity growth are not very good for the years prior to World War II, but according to the Bureau of Labor Statistics in the 65 years since 1947 productivity growth has averaged 2.2 percent annually. There have been periods of more and less rapid growth.

The strongest growth was in the quarter century after the war when productivity growth averaged 2.9 percent annually. We then had a slowdown in the years from 1973 to 1995 when growth averaged just 1.3 percent annually. Since 1995 productivity growth has averaged 2.3 percent.

These numbers should be well known to everyone involved in economic policy and budget debates. Productivity is the measure of the value of the goods and services that workers produce in an hour of work. When productivity rises through time it means that workers are producing more value through time. If workers get their share of the gains of productivity growth then they will be getting richer through time.

These gains would have a dramatic effect on living standards over time. Suppose that we continued to see productivity grow at a 2.3 percent annual rate over the next quarter century, the same pace that we have seen over the last 15 years. If workers got their share of this growth, wages would be on average more than 75 percent higher than they are today. Just to be clear, this adjusts for any inflation over this period; in 2038 a typical worker would be able to buy 75 percent more goods and services than a typical worker today.

Even in a more pessimistic productivity story there would still be room for large improvements in living standards. If productivity growth fell to the 1.3 percent rate of the slowdown years, a typical worker in 2038 would still have a wage that is 38 percent higher than the average wage today. In short, even in a worst-case scenario, where productivity falls back to the slowest pace we have seen in the last 70 years, workers will on average be much wealthier than workers are today.

Now let’s bring in the deficit hawks who are screaming about demographics and the burdens of Social Security and Medicare. Imagine the case where we raise the Social Security and Medicare taxes by a total of 5 percentage points over the next quarter century. This is highly unlikely since there are many other ways to deal with the projected shortfalls in these programs, but since the Wall Street folks have put up so much money to push their agenda, let’s give them an extreme case.

In the case where productivity growth continues at its recent 2.3 percent annual rate, in a quarter century after-tax wages would still be more than 65 percent higher than they are today. Even if productivity growth falls back to the rate of the slowdown years, after-tax wages would still be 30 percent higher in 2038 than today.

It is also important to remember that after 2038 the demographics barely change but productivity keeps growing. This means that our children and grandchildren will continue to grow richer through time without any negative impact from an increasing population of retirees.

In reality there are some complications in converting productivity growth to wage growth, so the rise in wages would be somewhat less than these calculations imply; but the basic story is not debatable. All plausible projections of productivity growth show that average wage growth will swamp any negative impact on workers’ living standards from a growing burden of retirees.

At this point everyone should be screaming that workers have not been seeing the gains of productivity growth in the last three decades. This is exactly right. The wages of most workers have barely risen since 1980 because the vast majority of the gains from growth have gone to those at the top of the income distribution.

This is worth repeating a few hundred million times. Most workers have seen little benefit from growth because the gains have gone to those at the top.

This is why the yapping about the burden of Social Security and Medicare is so pernicious. If workers share in the gains of economic growth then there is no way that the cost of these programs will impose a serious burden on their living standards. In fact, workers’ living standards rose rapidly in the past in spite of large increases in the payroll taxes used to support these programs.

It will matter far more to our children and grandchildren whether they share in the gains of economic growth than if they have to pay higher tax rates for Social Security and Medicare. The rich, with the full complicity of the media, are doing their best to keep national policy focused on the cost of Social Security and Medicare. But the arithmetic says that the upward redistribution to the wealthy is the far more important issue for future living standards.

The Dawn of Austerity in America

Distinctions of Little Difference


Since the rosy fingered dawn of austerity in America, the liberal media have consistently proclaimed that the Republicans are a deluded gang of filibustering rejectionists. By contrast, they make the rather more strident claim that, for all their faults, Democrats at least believe, as The New York Times columnist Paul Krugman puts it, “in letting its policy views be shaped by facts; the other believes in suppressing the facts if they contradict its fixed beliefs.” But is this true? Are Democrats a clear-eyed party of well-meaning centrists, and are conservatives a frothing admixture of venal Congressional lifers and mob-backed junior legislators, both taking their talking points from a dim confection of scripture and grainy clips of “Free to Choose”?

The Right—Delusional and Demented?

First, liberals seem to believe that the Republicans who push for austerity are ignorant knaves, a seething clan of badly misguided ideologues who whitewash their realities with the worst theoretical models to emerge from the Chicago School of Economics. For his part, Krugman has nobly piled fact upon fact in his columns and blogs, outlining the harshly regressive outcomes associated with spending cuts during economic downturns. Exhaustively argued, scrupulously referenced, Krugman is an economic champion of the liberal class. Even so, in articles like, “The Ignorance Caucus,” “Sequester of Fools,” and “Friends of Fraud,” Krugman asks, in a state of jaded disbelief, how could it be that, “Republicans are deep in denial about what actually happened to our financial system and economy.”

He’s not alone in this regard. Leslie Savan in The Nation also chalks up the deficit obsessions to the pitfalls of “groupthink,” a kind of innocent self-delusion that encourages “the punditocracy to repeat, despite incontrovertible evidence to the contrary, that austerity will pave toward economic growth.” Robert Reich, who regularly and expertly denounces austerity, also seems baffled by the apparent inability of Congress to look facts in the eye. Columnist Ezra Klein touts studies that confirm the myopia of GOP legislators.

But the facts suggest that conservatives foresee austerity’s aftermath quite clearly, but are simply disinterested. To put it bluntly, Republicans and their backers know precisely what they’re doing. They aren’t mathematically-challenged stooges fumbling away the American dream. They’re conniving dogmatists bent on real social change—for the worse. A recent joint investigation by Democracy Now! and the Center for Media and Democracy is rapidly exposing the fraudulent claims of the "Fix the Debt" gang, a group of at least 127 corporate CEOs led by billionaire Pete Peterson. Like their Congressional shills, the Fix the Debt thugs claim they want to salvage America’s economy from being wrecked by debt. But what lies just beneath the surface of this thinly veiled publicity campaign is a desire by corporate interests to decimate the New Deal and Great Society initiatives.

Why? For a couple of reasons.

First, because this faction of plutocrats and their confederates genuinely believe in the radical individualism they espouse: tax is theft, welfare is the path to dependency, and poverty is the rightful destiny of the dilatory and thriftless. And here’s the crucial verdict: if preserving the sanctity of individualism means America becomes a sea of indigence, so be it. If each of us controls our fate, and if our fate has led us to ruin, who’s to blame but ourselves? In this sense, we are witnessing the rise of a kind of secular Calvinism in which our destinies reveal our character.

Second, eviscerating the safety net is a good bottom-line bargain. A dramatically enervated and sickly state, bereft of its capacity to regulate, stripped of its assets, and shorn of its social mandate, is a state deterred from taxation for want of cause, and too enfeebled to counter the rapacity of monopoly capital. Capital is thus freed to cannibalize labor. Like a mining colony in a jungle with natives swept aside, the drills won’t cease until every fluid drop and mineral grain of profit is safely nestled on a northbound container vessel. Anything to stave off a declining rate of profit.

The related claim that our half-sighted multinationals needs to recognize that if American incomes continue to slide, the populace will no longer be able to purchase the products they peddle, is neither important nor novel for elite interests. Renewed lending and debt accumulation can falsely inflate another housing market, generating a freshet of new derivative plunder. But the larger point is that America is no longer corporate America’s primary growth market. China is. India is. Latin America is. The United States already looms large in the rear view mirror, diminishing by the day.

The Left—Decency Denied?

If conservatives are Machiavellis incarnate, what about those malleable Democrats? That glum tribe forever beset by weak temperaments, constitutionally incapable of taking a hard line, handicapped, perhaps, by their bottomless empathy. Along these lines, liberals are happy to claim that President Obama is simply being stonewalled by his Republican colleagues, who have capitalized on his naïve faith in human decency to press their savage austerity agenda on the population.

The President, exhausted by ceaseless good-faith attempts to reason with pathologically irrational extremists, finally capitulates. “Alas,” writes Krugman, fawning with forgiveness, “Mr. Obama did not stand firm.” The intimation is that the President is a paragon of progressive values, an emblem of liberalism clad in multi-cultural cloth. In fact, the multi-cultural is running interference for the multi-national.

But looking past Obama’s hypnotic rhetoric, one finds a political graph marked by one artificial crisis after another, perpetrated by Democrats and Republicans alike. The debt ceiling, the fiscal cliff, sequestration. Afghanistan, Iraq, Iran. Every one a politically manufactured, fear-mongered crisis. Every one carrying a trillion-dollar price tag. Every one a bipartisan swindle. It’s Disaster Capitalism par excellence, as Naomi Klein laid out in her bestseller The Shock Doctrine, which popularized how crises are manipulated to justify the introduction of fiscal austerity.

While Republican intransigence—cemented by record filibusters in the last two years—has muddled the president’s efforts to add some progressive sops to legislation, an obsession with conservative obstructionism obscures the bipartisan foundation of the deficit debate. From the earliest days of his presidency, Obama signaled that “entitlement reform” was a central plank in his agenda, offering up these sacrificial lambs marinated in talk of “bitter pills” and “reasonable” spending cuts. Not only did Obama appoint Alan Simpson and Erskine Bowles to head his deficit commission, knowing they were deficit hawks of the highest order, but Peterson’s Fix the Debt gang grandly supported Simpson-Bowles precisely because it advocated the dramatic spending cuts both parties favor. Yet former New York Times editor Bill Keller recently claimed that Obama has not embraced the commission’s wisdom.

Obama’s own 2011 plan—different from the commission’s version in that its tax revenues were at least mildly progressive—also aimed at $4 trillion in deficit reduction, with all three social programs included for euphemistic “reforms.” Sequestration itself was hatched in the White House, a trigger mechanism that creates the illusion that Congress is at the mercy of a higher law and, of course, conservative hordes brandishing wildly underlined copies of Atlas Shrugged. Likewise, the notion that the Senate can only pass a bill with a super-majority of sixty is a technicality that can be dispatched by a simple Democratic majority. But the decorum of tradition trumps the exigencies of an anonymous populace. In the end, the policy prescriptions of both parties are overwhelmingly austere.

When the administration does differ from its conservative counterparts, largely in the desire to impose a degree of taxation to polish its progressive credentials, the onus falls largely on the working class. Obama’s much-celebrated tax on the wealthy is a clever sleight of hand: the tax hits a couple of million Americans whose incomes exceed $450,000, but the tax only applies to income over $450,000 and only by the smallest of marginal increases. Cobbled together with slight increases in capital gains taxes, new Obamacare taxes, and fewer deductions for the wealthy, the 1 percent will cede an extra $62 billion a year. By contrast, the media-slighted payroll tax will sift $95 billion in 2013 alone from the pockets of the working class. Although initially and intelligently proposed by Democrats as a stimulative measure in 2010, the payroll tax was allowed to expire with the consent of both parties. Treasury Secretary Timothy Geithner said he saw no reason to extend it. (Granted, it is hard to discern the smoking ruin through the cloud bank.) Nor did Obama bother to include it in his 2013 budget. Yet the tax penalizes 160 million working class Americans with a 50 percent increase in what amounts to a nationwide wage cut, wiping out the wage gains of 2012.

If it’s not austerity, it’s elitism. Both are now beltway consensus; the notion of handcuffed liberal do-gooders has worn thin, exposing the Janus face of progressive Washington—rhetorically populist, practically bought.
The Media—Paying the Price of Inclusion?

As crass and crude an image as it may seem, the Oval Office is little more than a luxury suite being peddled to palm-greasing plutocrats, their lobbyists, and the venal sophists whose pockets they ply with cash. The political hue is never red or blue—but always green. It is ever Spring in Washington. But this truth, that both parties are consciously visiting hardship on a defenseless populace—is unspeakable. That Obama knows he’s favoring wealth at paucity’s expense—unmentionable. That conservatives know austerity will crush vast majorities—unprintable. And to coin a lie of this magnitude and continue to employ it as ideological currency requires you to simply elide sizeable sections of reality from your worldview.

Perhaps the price of writing for a mainstream paper like the Times, then, is silence on this point and substituting for it the fallacy that our leaders have honorable intentions. That purity of motive is part of our American exceptionalism, our ahistorical singularity. But even if it were so, and by our well-intentioned deeds we were unwittingly paving a highway to hell, how would this be any more ethically commendable than the brainwashed suicide bomber who believes liked a blind Bush that his actions are pure? Both are tragedies of delusion. Yet evidence abounds as counterpoint. The powers that be know exactly what they’re doing and attempts to render their Machiavellianism more palatable by obtruding it from sight, is itself a form of complicity. As Noam Chomsky once noted, there isn’t much value in speaking truth to power; they already know it.

Obama Administration Says President Can Use Lethal Force Against Americans on US Soil

Mother Jones  By Adam Serwer  | Tue Mar. 5, 2013

Yes, the president does have the authority to use military force against American citizens on US soil—but only in "an extraordinary circumstance," Attorney General Eric Holder said in a letter to Sen. Rand Paul (R-Ky.) on Tuesday.

"The US Attorney General's refusal to rule out the possibility of drone strikes on American citizens and on American soil is more than frightening," Paul said Tuesday. "It is an affront the constitutional due process rights of all Americans."

Last month, Paul threatened to filibuster the nomination of John Brennan, Obama's pick to head the CIA, "until he answers the question of whether or not the president can kill American citizens through the drone strike program on US soil." Tuesday, Brennan told Paul that "the agency I have been nominated to lead does not conduct lethal operations inside the United States—nor does it have any authority to do so." Brennan said that the Justice Department would answer Paul's question about whether Americans could be targeted for lethal strikes on US soil.

Holder's answer was more detailed, however, stating that under certain circumstances, the president would have the authority to order lethal attacks on American citizens. The two possible examples of such "extraordinary" circumstances were the attack on Pearl Harbor and the 9/11 terrorist attacks. An American president ordering the use of lethal military force inside the United States is "entirely hypothetical, unlikely to occur, and one we hope no president will ever have to confront," Holder wrote. Here's the bulk of the letter
As members of this administration have previously indicated, the US government has not carried out drone strikes in the United States and has no intention of doing so. As a policy matter moreover, we reject the use of military force where well-established law enforcement authorities in this country provide the best means for incapacitating a terrorist threat. We have a long history of using the criminal justice system to incapacitate individuals located in our country who pose a threat to the United States and its interests abroad. Hundreds of individuals have been arrested and convicted of terrorism-related offenses in our federal courts.

The question you have posed is therefore entirely hypothetical, unlikely to occur, and one we hope no president will ever have to confront. It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the President to authorize the military to use lethal force within the territory of the United States. For example, the president could conceivably have no choice but to authorize the military to use such force if necessary to protect the homeland in the circumstances like a catastrophic attack like the ones suffered on December 7, 1941, and September 11, 2001.

The letter concludes, "were such an emergency to arise, I would examine the particular facts and circumstances before advising the president of the scope of his authority."

In a Google+ Hangout last month, President Obama refused to say directly if he had the authority to use lethal force against US citizens. As Mother Jones reported at the time, the reason the president was being so coy is that the answer was likely yes. Now we know that's exactly what was happening. "Any use of drone strikes or other premeditated lethal force inside the United States would raise grave legal and ethical concerns," says Raha Wala, an attorney with Human Rights First. "There should be equal concern about using force overseas."

Tuesday, March 5, 2013

Wealth Inequality in America

New comet's potential Mars collision in 2014 explained

Comet Siding Spring will actually be the second close shave of Mars by a passing comet within a time span of just over a year.

By Joe Rao,
Tue, Mar 05 2013

A newfound comet is apparently on course to have an exceedingly close call with the planet Mars in October 2014, and there is a chance — albeit small — that the comet may even collide with the Red Planet.

The new comet C/2013 A1 (Siding Spring) was discovered Jan. 3 by the Scottish-Australian astronomer Robert H. McNaught, a prolific observer of both comets and asteroids who has 74 comet discoveries to his name.

McNaught is a participant in the Siding Spring Survey a program that hunts down asteroids that might closely approach the Earth. He discovered the new comet using the 0.5-meter Uppsala Schmidt Telescope at Siding Spring Observatory, New South Wales, Australia.

Pre-discovery images of the comet from Dec. 8, 2012 by the Catalina Sky Survey in Arizona were quickly found. Because the comet was discovered as part of its survey for asteroids, it bears the name of the observatory, Siding Spring. Officially it is catalogued as C/2013 A1.

When it was discovered, Comet Siding Spring was 669 million miles (1.07 billion kilometers) from the sun. Based on its orbital eccentricity, it is apparently a new or "virgin" comet, traveling in a parabolic orbit and making its very first visit to the vicinity of the sun. It is expected to pass closest to the sun (called perihelion) on Oct. 25, 2014 at a distance of 130 million miles (209 million km).

But, less than a week earlier, on Oct. 19, 2014, the comet — whose nucleus is estimated to be anywhere from 5 to 30 miles (8 to 50 km) in diameter — is projected to cross the orbit of Mars and pass very close to that planet. Preliminary calculations suggest that nominally at closest approach, Comet Siding Spring will come to within 63,000 miles (101,000 km) of Mars.

However, because the comet is currently very far out in space and has been under scrutiny for less than three months, the circumstances of its orbit will likely need to be refined in the coming weeks and months. As such, the comet's approach to Mars might ultimately end up being farther or closer than what current predictions suggest. In fact, last Wednesday (Feb. 27) observations made by Leonid Elenin, a reputable Russian astronomer who works at the Keldysh Institute of Applied Mathematics,suggested that the comet could pass even closer — just 25,700 miles (41,300 km) from the center of Mars.

According to Elenin: "On the 19th October 2014, the comet might reach apparent magnitude of -8 to -8.5, as seen from Mars!” (This would make the comet 15 to 25 times brighter than Venus). "Perhaps it will be possible to acquire high-resolution images from the Mars Reconnaissance Orbiter (MRO)," he added.

Then there is also the small possibility that the comet could collide with Mars.

Moving at 35 miles (56 km) per second, such a collision could create an impact crater on Mars up to ten times the diameter of the comet's nucleus and up to 1.25 miles (2 km) deep, with an energy equivalent up to of 2 x 10^10 megatons!

Most readers will recall Comet Shoemaker-Levy's plunge into Jupiter in July 1994 which left dark telltale scars on Jupiter’s cloud tops for many months thereafter.

Collision or not, Comet Siding Spring will definitely come extremely close to Mars less than 20 months from now. Incredibly, this will actually be the second close shave of Mars by a passing comet within a time span of just over a year.

On Oct. 1 of this year, the much awaited Comet ISON is due to pass 6.5 million miles (10.5 million km) from Mars on its way toward a grazing encounter with the sun in November. That rendezvous is close enough in its own right to be categorized as exceptional and yet, Siding Spring will approach about 100 times closer.

The New Improved Republican Party

They Socialize Costs, Privatize Profits

The Great One, Two Punch

There’s a truism about the U.S. political-economy, one being shared by an increasing number of people from all walks of life and political persuasions: the game is rigged!

There are two aspects to the rigged game. One involves the privatization of public services, the outsourcing of public needs to private contractors. Parallel to privatization has been a second con, one more hidden and far more insidious, the rigged roulette – the privatization of profit — that ensures that corporations win and the public get’s stuck with the consequences, the long-term bill.

Privatization is brilliantly simple and has been working efficiently for generations. The ordinary U.S. taxpayer gives up a portion of his/her take-home pay in the form of taxes, whether at the job or at the pump. Like a great vacuum cleaner, “government” at every level of the state apparatus sucks up these dollars. In turn, it doles out the dollars to private contractors who, like pigs at the trough, never stop sucking-up the dollars.

Parallel to the privatization scam is a con that has long been hidden yet is far more insidious. Under this version of Russian roulette, corporations have easily gotten away with the consequences of their deeds. Land was cheep, air and water unlimited, minerals abundant, workers expendable, a sucker was born everyday and you always had friends in government to bail you out when the house of cards collapsed. Who cared about industrial waste, polluted groundwater, ill workers or failed banks, everything was replaceable. Someone else will foot the bill.

In Washington, DC, political insiders – along with their media consorts — are acting out assigned roles in a grand Noh theatre performance, dancing the sequester minuet. They take their positions, move in well-orchestrated patterns, give their well-rehearsed speeches and scheme how to cut the budget to best serve their corporate backers. And in the mean time, the ordinary American gets screwed.

* * *

In the 19th century, as Howard Zinn reminds us, government subsidized the building of canals, the establishment of a merchant marine and the laying of the nation’s first continental railroad system, giving away 100 million free acres — often land once belonging to the native inhabitants — to the railroad tycoons to sweeten the deal.

A generation earlier, the noted historian Charles Beard found a not dissimilar alliance of business interests and government entities in collusion to appropriate taxpayer dollars for private gain. The construction of roadways, public buildings, navy yards and army posts was outsourced to private contractors. When asked who was behind all the public-funded infrastructure construction, he replied: “Business men and farmers who want lower freight rates.” “There is not a chamber of commerce on any Buck Creek in America that will not cheer until tonsils are cracked for any proposal to make the said creek navigable.” These companies not only had infrastructure built to improve their businesses, but had the taxpayer, their customers, pay for it. The game remains rigged.

The privatization scam involves real money. PolitiFact estimates that in 2009 the combined federal and state/local governments sucked up $3.4 trillion. The fed took in the largest portion, some three-fifths ($2.1 trillion) in revenues, compared to the states/localities that collected an estimated $1.3 trillion in taxes. In 2009, the U.S. GNP was $14.1 trillion. Do the math; follow the money.

The classic example of the privatization scam involves the corporate military-industrial complex. In his legendary farewell address, President Eisenhower warned, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” In the half-century since his telling observation, it’s only gotten worse.
The Stockholm International Peace Research Institute (SIPRI) estimates that, in 2010, the U.S. spent $235 billion on arms. It identifies the top 5 contractors as:

#1 — Lockheed Martin = arms sales: $35.7 billion, profit: $2.9 billion;

#2 — Boeing = arms sales: $31.4 billion, profit: $2.9 billion;

#3 — Northrop Grumann = arms sales: $28 billion, profit: $2 billion;

#4 — General Dynamics = arms sales: $24 billion, profit: $2.6 billion;

#5 — Raytheon = arms sales: $23 billion, profit: $1.9 billion.

“Privatization” has become the new holy grail of corporate greed, promoted from prisons to schools to sports stadiums. Looking at the sports industry, Judith Grant Long, a Harvard professor of urban planning, argues “the costs of land, infrastructure, operations and lost property taxes add 25 percent to the taxpayer bill for the 121 sports facilities in use during 2010.” She estimates this to be about $10 billion more then the original forecast. Guess who picked up the tab?

The second form of privatization involves companies pursuing private gain without regard to the social consequences, often involving significant health and environmental costs. Those days are ending.

People now recognize, if only intuitively, that things have consequences. A factory or mine that pollutes or genetically-modified food products farmed will likely leave a footprint far longer then the company is in business. The management will walk away fat and happy, the workers, neighbors and consumers bearing the scars. Like Appalachian coalminers, the day-to-day tragedy of digging in a dark hole was nothing compared to the suffering they and their families faced above ground with pneumoconiosis cancer. Coal dust still hovers in Appalachia.

The classic example of the rigged roulette game of socializing costs and privatizing profits is the cigarette business. Evidence that cigarette smoking was linked to cancer was first raised in the mid-1920s and, over the next quarter century, the issue gained traction.

At a now famous meeting at New York’s Plaza Hotel on December 14, 1953, CEOs of six of the seven largest tobacco manufacturers met to orchestrate – “collude” in — a counterattacked. They crafted a well-financed, sophisticated astroturf campaign including smart advertisements, corporate-funded scientific “white papers” and influence peddling with the media and in the halls of Congress. This campaign effectively dragged out legal scrutiny for another quarter century. Profits mounted as more and more smokers got sick and died.

On April 14, 1994, seven tobacco company executives (known as the Seven Dwarves) swore before a Congressional hearing that nicotine was not addictive. In 1998, the attorney generals of 46 states finally signed the Master Settlement Agreement with four of the largest tobacco firms. The deal required the tobacco companies to pay annually a minimum of $206 billion over the first 25 years of the agreement. However, according to one estimate, between 2000 and 2004, smoking continued to cause more than $193 billion in annual health-related costs, including smoking-attributable medical costs and productivity losses.

The most recent version of the rigged-roulette privatized profit scam is the Troubled Asset Relief Program (TARP) bank bailout. Many have raised serious questions about the program, none more so then Neil Barofsky (the former TARP Inspector General and author of Bailout) and Elizabeth Warren (former chair of the TARP Congressional Oversight Panel and now Senator, MA). One estimate places the total amount of the U.S. government bailout at $16.9 trillion, including expenditures by the Treasury, Federal Reserve and other agencies.

The most egregious expression of maximizing social costs for private gain is the extraction of coal, oil and gas sectors. The associated costs of doing business in the energy industry are nearly impossible to calculate. These companies get subsidies, tax breaks and historically walked away from the messes they left behind. However, as President Obama weighs his decision regarding the Keystone pipeline and Governor Cuomo decides about fracking in New York State, one would only hope that they consider the human, environmental and economic consequences of their decisions.

A 2009 NIH report, “Mortality in Appalachian Coal Mining Regions: The Value of Statistical Life (VSL) Lost” (you have to love bureaucrat speak), found that “annual age-adjusted deaths in coal mining areas ranged from 3,975 to 10,923 … . Corresponding VSL estimates ranged from $18.563 billion to $84.544 billion … .” To this day, the human costs of coal mining, including mountaintop removal, are not included in the real cost of coal.

Another indicator of the real cost of coal is suggested in a 2011 report by the Annals of the New York Academy of Sciences, “Full Cost Accounting for the Life Cycle of Coal.” It places the environmental costs caused by what it terms “all the aspects of coal’s life cycle” at roughly $500 billion annually. In addition, it notes that environment damage adds up to $0.17/kWh to a user’s bill.

Shedding more light on the complexity involved in calculating the social costs of the extraction industries, findings from a 2008 National Academy of Sciences report, “Climate change and health costs of air emissions from biofuels and gasoline,” are alarming. “For each billion ethanol-equivalent gallons of fuel produced and combusted in the US, the combined climate-change and health costs are $469 million for gasoline, $472–952 million for corn ethanol depending on biorefinery heat source (natural gas, corn stover, or coal) and technology, but only $123–208 million for cellulosic ethanol depending on feedstock (prairie biomass, Miscanthus, corn stover, or switchgrass).” Guess who pays the costs?

In the wake of the Newtown, CT, shootings and the one-year anniversary of the killing of Trevon Martin, attention is being directed to the social costs of firearms. IBIS World, a research firm, projects that in 2012 the guns and ammunition industry will hit $11.7 billion in sales and have $993 million in profits.

The social costs resulting from gun violence are difficult to calculate. The University of Chicago Crime Lab estimates it annually at $100 billion. The Pacific Institute for Research and Evaluation (PIRE) estimated the cost of gun violence in 2010 at $174 billion in terms of work lost, medical care, insurance, criminal-justice expenses and the victim’s pain and suffering.

Still other business sectors take advantage of socialized costs to fatten their bottom line. The food industry consists of the inter-linked network of agriculture, packing, retail and fast-food companies that feed the nation. Last year Reuters ran a damning exposé on the social costs associated with obesity. It reported that 34 percent of the public was obese and 6 percent were extremely or “morbidly” obese. Further findings included: the U.S. spent $190 billion annual on medical costs associated with obesity; the Mayo Clinic spent more than four times more for health care on an obese worker ($5,530) — i.e., with a body mass index or BMI of 40 – then a smoker ($1,274); the airline industry spends $5 billion annually for additional jet fuel needed to fly heavier Americans; and drivers spend $4 billion annually more for gasoline so cars can carry heavier passengers.

Similar calculations can be developed for still other industry sectors. Product packers know little of the requirements of the waste disposal industry, yet landfills are clogged, municipalities overwhelmed by garbage and consumers swamped in a sea of non-recyclable plastics. The nuclear industry could find backing from neither private capital nor insurance companies; no wonder, it is a federal insured and subsidized private industry. Guess whose paying for it?

A final example is the telephone companies. It illustrates how social costs can hard the nation’s communications infrastructure and very economic future. They’ve pocketed an estimated $360 billion through questionable rate increases, subsidies, tax breaks and overcharges. Instead of building out the “information superhighway” promised by Al Gore two decades ago, they directed the money to building-out 2nd-rate wireless businesses, overpaying their executives and rewarding stockholders – and all at the customer’s expense. As a result, the U.S. has become a 2nd tier communications nation, ranked 15th in broadband.

* * *

The great con of modern capitalism, one dimension of what the Situationists called the spectacle, is the ability by the ruling class to expropriate social wealth for their private gain. One of the ways it artfully does this is by fleecing the state’s coffers.

The twin cons of privatization and the privatization of profit reveal the inherent crisis of capitalism. Without public subsidies through a zillion well-orchestrated scams, what would be the real costs of true free-market, predatory capitalism? Could private capitalism survive without Americans paying twice, as consumers and taxpayers, to subsidize it?

Why Outsourcing and De-Skilling are the Real Culprits (Not Technology)

A Robot Didn’t Steal Your Job

When Barack Obama first entered office the financial crisis created by Wall Street banks was at its peak and hundreds of thousands of people per week were losing their jobs. As writer Ron Suskind reported, at that time Mr. Obama presented his thesis to his economics team, such as it was, that the reason for the job losses was ‘productivity gains.’ That is, in the midst of the largest economic calamity since the 1930s, the reason for massive job losses was that technological innovation had instantaneously rendered millions of formerly employed persons ‘redundant.’

As uninformed as this view may seem, and it reportedly seemed so even to the head of Mr. Obama’s economics team, Larry Summers, the premises behind it are conventional wisdom in the economics departments of prestigious universities and amongst ‘professional’ economists occupying chairs and proffering investment advice on Wall Street.

The reason for revisiting the issue is the paradigmatic form is once again making the official rounds, most recently in an NPR (National Public Radio) piece by degree even more idiotic than their usual economics reporting. Elsewhere, Harvard’s ‘boy genius’ Greg Mankiw, now no longer a boy in the chronological sense, and even the occasionally esteemed Paul Krugman, have offered up technology ‘models’ that are the veritable duct tape of the economics profession—the multi-purpose tool with which virtually any group of items, related or not, can be bound together to form a grouping. And as with Mr. Obama’s spectacularly implausible conceit regarding ‘productivity,’ the discourse on technology, income and employment will inform real economic policies.

is today the joint explanation for high unemployment, weak job growth, highly concentrated income and wealth distribution and high corporate profits in a period of broad economic weakness. Technology in theory ties to productivity—the amount of economic output given what went into producing it, as the ‘efficient’ transfer mechanism, the machine that produces more with less. Banks formerly had large rooms filled with accountants and paper processors to do what a few people with computers can now do. And automakers now have robots that don’t need bathroom breaks and have no inclination toward collective bargaining to build cars. What ties technology, in these theories, to income and wealth concentration are the brave entrepreneurs who risk it all to build modern efficient companies and who so justly deserve the rewards. On their face, the attributes assigned to technology appear plausible.

By analogy: unbeknownst to many, there are hundreds of functional airplanes parked in the desert of the Southwestern U.S. As these unused airplanes suggest, technology is more than just machines. Many of these airplanes, those of more recent vintage that have been well maintained, could be put back into service. But a broad set of circumstances ranging from the history of aeronautics to labor relations in the airline ‘industry’ to ‘deregulation’ that changed existing institutional arrangements to the price of fuel to the financing arrangements for these specific airplanes together contributed to their current circumstance. Outside of their use value in the existing economy, the airplanes are technology in the sense of being machines, but those parked in the desert neither reduce the need for human labor nor serve to concentrate wealth.

The point here is that technology is a cog in a much larger economic wheel, not an end in itself. Economists like to imagine it is self-generated, that it comes from nowhere and nothing, appearing as Cartesian mental object dissociated from, and disinterested in, the historical struggle from whence it sprang. The airplanes themselves have imperial roots dating back several centuries for the raw materials that went into their construction. The parts were made in factories that benefited from fat contracts from governments and were carried over roads financed by citizenries. The engineers who designed them were educated at universities that receive government funding and their designs derived from aeronautical science created by the military. The price of their fuel is a function of standing militaries, past wars, threats, and alliances and comes at the cost of millions of dead, maimed and displaced persons. The American invasion, occupation and near total destruction of Iraq to secure cheap oil are but one example.

The airplanes are labor saving in the sense they can transport people and goods from New York to Los Angeles in five hours whereas driving takes a week and horseback takes months. Since air travel was developed people travel places they never would have traveled without it. Tourist economies dependent on it have developed and the rapid distribution of goods and services over long distances has been facilitated where it was previously unimagined. Business practices have developed around air travel and business people regularly travel for purposes that wouldn’t be without it. And while stagecoach drivers lost jobs with the development of automobiles and railroad conductors lost jobs with the growth of air travel, these technologies and others are broadly credited with increasing, or at least co-existing with growing, total employment. And jobs are but one aspect of the economic context of technology.

An airplane, as with computers and robotics, is in theory a productivity-enhancing device–technology. But outside a far-reaching economic context, it is a large paperweight parked in the desert. Technology is in fact social practice, ways of doing things, not inanimate machines. Antique economist Adam Smith developed his ‘division of labor’ theory of breaking complex economic production into constituent parts and having experts in each constituent come together to jointly create the whole.

There are no machines necessary to the theory—it works in the sense it does because the division of labor, where it exists, is social practice promoted with theories of economic efficiency, not a fact of nature. The division of labor is technology in the same sense the term is today being attributed to machines. To those to whom this narrow idea of economic efficiency is attractive, the division of labor is one plausible mode of social organization to achieve it. But there exist both broader concepts of economic efficiency and entirely unrelated modes of social organization. In this sense, technology in its current meaning is ideology.

Robotics, computers and other energy consuming machines are part of the broader technology of energy extraction, conversion, distribution and consumption. To the extent this energy complex produces externalities, costs of extraction, conversion, distribution and consumption not borne by energy ‘producers,’ technologies tied to it produce them as well (there would be no energy industry without customers for the energy). Add in the ancillary costs, broadly considered, of the standing armies, wars, occupations, murders, maiming and destruction that go into energy extraction and consider that parties who do not benefit from cheap energy largely pay them. Further add in the environmental destruction now aggregating to global warming. These are all part of the technology of robotics and computerization.

Wall Street economists endorse the argument technology is the sole explanation for the current malaise amongst we humans and for cheer in the plutocracy because the financing of machines is the only plausibly useful thing modern finance does. The financial system is in this sense also part of the technology of robotics and computerization. Machines bought with the ‘savings’ of capitalists, the mythology behind the ‘Ivy League’ economic models, raise the question of where these savings came from? To the extent they result from positive or negative externalities not of the capitalist’s making, the savings are social savings—benefits produced or costs borne by others that rightfully belong to these others, not the capitalist. These find themselves embodied in plants and equipment and through negative externalities from the financial system itself. One can imagine a financial system not fully existent from public welfare receipts and ongoing guarantees, but that is not the system that exists. Both the savings of capitalists deposited with banks and embodied in factories and equipment and the money created by banks by degree exist as embodied externalities, the detritus in capitalist theory that constitutes its core in capitalist fact.

The airline industry, from whence the airplanes parked in the desert arose, itself arose through historical development. The airplanes didn’t one day appear from nowhere so some capitalist could fire the railroads because airplanes were more ‘efficient.’ The business of the airlines came from social practice—travel in the context of the industrial move toward increased mechanization. As outlined above, tourist businesses dependent on air travel and the modern practice of business travel grew from its development—they didn’t exist before the creation of the air travel industry, of which the airplane—the machine, is but a constituent. And the railroads that arose from land grants backed by military force shifted from transporting people to transporting commodities, many of which were taken through imperial force and which left behind costs in terms of social and environmental destruction that are still being borne today. The point here is technology narrowly considered—the idiot object if you will, exists within historical development, not tucked inside the anti-history of Western economists.

When Mitt Romney, or any other pirate financier, buys a company to ‘harvest’ its value by replacing human labor with machines, where does the harvested value come from? Put another way, I can shoot you and your family and move all of your stuff into my house, but what then makes it ‘mine?’ Just because Mr. Romney and his compatriots have masses of social wealth in their pockets doesn’t make it theirs. The companies from which value is harvested are the product of a wide array of social inputs. Test pilots for the military gave their lives to develop the safety devices and protocols used in modern commercial aviation. How much business would an airline have if every third airplane crashed in a fiery ball? Tech and pharma likewise came into being through public, and only later and occasional ‘private,’ investment. Pirate financiers build nothing; their claim is to have made what already existed more efficient. But as with the airplanes parked in the desert, technology is part of a broad context of social relations, not inanimate machines. How efficient is a computer if there is no energy to run it and no broader set of economic relations that make it ‘useful?’– Again, it in nothing but an expensive paperweight.

The NPR story of how ‘technology’ is behind high unemployment is worth another mention. The story is based on a homebuilder who has an office that combines basic administrative functions with architectural design and that has construction workers building houses in the field. The owner of the company replaced several office personnel with computers and now outsources the building of constituent house parts to an outside company leaving only one company employee at each of the houses being built. Computerization of the office comes about twenty years later than most of the homebuilder’s competitors and modular construction of houses dates to the 1940s. (Were these explanations for high unemployment, they would have been so twenty years ago, not today). Modular construction reifies Adam Smith’s ‘division of labor’ and adds larger scale input pricing. The division of labor in this case ‘de-skills’ the construction process that typically requires skilled labor (or else what has been changed is the geographic location of production, not the number of people needed to produce it). To be clear, the ‘technology’ purported to be behind the NPR story is a web of social practices including outsourcing and de-skilling, not replacing humans with machines.

De-skilling is only efficient to the extent skilled workers find other employment for which they are compensated for their skill. By analogy, airplanes parked in the desert can, depending on context, raise incomes for airlines through the elimination of ‘unprofitable’ routes, but that depends both on the shift in the airlines’ function from utility serving the public to profit seeking corporation and on the paradox that waste is efficient. Prior to the 1970s serving unprofitable routes was a requirement for the right to fly commercial aircraft in the U.S. The change in ‘technology’ that made the airlines occasionally profitable was the elimination of the public service requirement. And to the extent waste is ‘efficient,’ this finds its breadth in the observation that the most ‘efficient’ countries on the planet are the most wasteful. De-skilling presupposes both an absence of skill when entering a job and upon leaving it, however many years later that might be. As even an investment banker or an economist could learn a bit about refrigerators by selling them for thirty years, de-skilling is the ultimate waste of human potential.

The ‘bugaboo’ in the room for mainstream economists is China with modern factories, some of which have been designed to build goods using robots. From the several advisors to the Chinese government with whom I’ve spoken, the factories are part of a financial technology that has the government providing advantageous financing to build export based factories and is part of export technology premised on cheap fuel and a particular arrangement of currency exchange rates. Put another way, were the value of the U.S. dollar to fall enough relative to the Chinese Renminbi and / or the cost of shipping these goods to rise enough the production cost advantage enjoyed by the automated Chinese factories would disappear.

The Western economists’ practice is to hold these variables—the price of fuel, currency exchange rates, industrial policy etc. ‘constant’ to assess particular effect, but particular effect will never and has never occurred outside the context of the actual world. This practice of suspending time and context leads to the bottomless pit of nonsense where economists are never wrong because they would have been right if only the world had behaved itself.

As I’ve argued above, technology in the modern mythology requires complete de-contextualization to serve as an explanation for skewed income distribution and weak labor ‘markets.’ Even within the narrow confines of economists’ models there is no definition of ‘efficiency,’ the magical attribute awarded technology, that withstands either competing definitions or the point that basing social organization on such a constrained concept is both ideologically driven and stunningly, emphatically unimaginative.

To the first, as global warming and widespread economic dislocations demonstrate, the local rationalities where technology plays a crucial role don’t necessarily aggregate to global rationalities. To the latter, all economic technologies are social in the sense they only exist socially. With ‘de-skilling’ as a defining technology of our age, there exist few such dismal views of human existence, and therefore the possibilities for social organization, possible.

And remember, if "discouraged workers" were still counted as unemployed, like they were prior to the 1990s, the unemployment rate (U3) would double (U6) or even triple (SGS) what it is reported as. It's easily higher than 18% currently. Don't ever forget that.

Monday, March 4, 2013

Mitch McConnell and Rand Paul Join Forces to Legalize Hemp

Matthew Hurtt | March 4, 2013

Supporters of industrial hemp gained a powerful ally in Washington several weeks ago when Senate Republican Leader Mitch McConnell (R-Ky.) joined fellow Kentucky Republican Senator Rand Paul and Sens. Jeff Merkley (D-Ore.) and Ron Wyden (D-Ore.) as a co-sponsor of S.359, the Industrial Hemp Farming Act of 2013. The House companion, sponsored by Rep. Thomas Massie (R-Ky.), has 28 co-sponsors. The bills would amend the Controlled Substances Act to exclude industrial hemp, the domestic production of which has been illegal since 1970.

Though manufacturing hemp is currently just as illegal as growing smokable pot, 10 states already have frameworks in place for industrial hemp production. The problem is that the Drug Enforcement Administration classifies all forms of hemp as a controlled substance, despite the fact that industrial hemp generally contains less than 0.3 percent THC, or anywhere between 1/6 to 1/66 the amount you'll find in marijuana. If you tried smoking hemp, you'd exhaust yourself before you got high.

Federal regulations do not differentiate between marijuana and its non-psychoactive cousin, which is used in the production of many useful items, including clothing, rope, biofuel, construction materials, and pulp for paper products. According to David West of the North American Industrial Hemp Council, more hemp products are exported to the United States from places like China and Canada than any other nation on earth.

The most recent victory for industrial hemp at the state level came when SB50, a bill to create a framework for licensure in Kentucky, passed unanimously out of the Senate Agriculture Committee and by 31-6 on the Senate Floor. Sen. Paul (who donned a shirt made of hemp during his testimony), Rep. Massie, Kentucky Agriculture Commissioner James Comer, and former CIA Director R. James Woolsey all testified in favor of the bill in committee.

"The specter of people getting high on industrial hemp is pretty much exactly like saying you can get drunk on O'Doul’s," Woolsey testified. But there's another angle to the anti-hemp argument. Law enforcement groups claim hemp farmers could cultivate marijuana with substantial amounts of THC among an industrial hemp crop. Woolsey debunked this notion, saying marijuana growers would “hate the idea of having industrial hemp anywhere near” their crops because cross-pollination leads to less THC in marijuana, rather than more THC in hemp. As Reason’s Jacob Sullum has noted, “In Colorado… the managers of indoor marijuana grows (currently serving the medical market) are worried about drifting pollen from hemp farms, which could make their plants go to seed instead of producing lots of lovely buds and resin.”

American policymakers have had a love-hate relationship with hemp. Despite being widely produced in colonial America and grown by some of the Founding Fathers, the U.S. government can't seem to make up its mind about the plant. The U.S. allowed domestic hemp for nearly two centuries before passing the Marihuana Tax Act of 1937, which imposed onerous licensing requirements and taxes on hemp producers. When Japan invaded the Philippines in 1941, thereby cutting off the U.S. Navy from its sole provider for rope fiber, the U.S. launched the "Hemp for Victory" campaign, which sparked Kentucky's hemp farming revival. The Feds reversed their stance yet again with the passage of the Controlled Substances Act in 1970.

Hemp is also a historically popular crop in Kentucky. In 2002, Purdue University released a study claiming that “[f]rom the end of the Civil War until 1912, virtually all hemp in the U.S. was produced in Kentucky.” Even today, industrial hemp farming would have tangible benefits for Kentucky, where tobacco has waned in recent years. Congressman Massie, who operates a family farm in Garrison, Kentucky, has taken the lead on legalizing industrial hemp in the House. In a recent press release, he said,
Industrial hemp is a sustainable crop and could be a great economic opportunity for Kentucky farmers. My wife and I are raising our children on the tobacco and cattle farm where my wife grew up. Tobacco is no longer a viable crop for many of us in Kentucky and we understand how hard it is for a family farm to turn a profit. Industrial hemp will give small farmers another opportunity to succeed.
Despite testimony from an all-star lineup in the Kentucky Senate Agriculture Committee, the measure faces a “tougher time” passing the House, according to Speaker Greg Stumbo; and it will face an even greater challenge making it past Governor Steve Beshear, who sympathizes with Kentucky's anti-hemp law enforcement community.

Nevertheless, half of Kentucky’s congressional delegation supports the Industrial Hemp Farming Act of 2013 and state Agriculture Commissioner Jim Comer said it was a “top priority” for Kentucky’s agriculture lobby. McConnell, whose increasingly amiable relationship with Rand Paul seems to be making him lean in a slightly more libertarian direction, explained in a joint statement with the junior senator from Kentucky:
I am proud to introduce legislation with my friend Rand Paul that will allow Kentucky farmers to harness the economic potential that industrial hemp can provide. During these tough economic times, this legislation has the potential to create jobs and provide a boost to Kentucky's economy and to our farmers and their families.
Relaxing restrictions on industrial hemp production would allow American farmers to successfully compete. Under the current restrictions, American consumers are sending hundreds of thousands of dollars abroad annually and creating jobs in China, Canada, and elsewhere rather than buying products made from hemp that has been grown in the U.S.A.

People Refusing to Cooperate with DHS Checkpoints

Here’s a crew of folks refusing to submit to questioning at Department of Homeland Security immigration checkpoints that aren’t actually at the border (and one case of a driver refusing to cooperate with one of California’s produce checkpoints as an employee hilariously thinks he can make him leave the state).

Graphene Supercapacitors: The End Of Batteries?

Sunday, March 3, 2013

Sample Platitudes - the Spiderlegs Singles Collection

The Spiderlegs singles collection of many years of recording (if I say how many, I will feel old) is available to you for free. All you have to do is respond to this post in the comments box below and I'll send you the link to the Spiderlegs "greatest hits" collection: Sample Platitudes. FREE. Let's see what kind of interest this generates...