Why Did the Unemployment Rate Drop So Much?

by Phil Izzo, Wall Street Journal

The U.S. unemployment rate tumbled to 6.3% in April as the overall labor force posted its biggest decline since October. The question for the health of the labor market: Why did all those people drop out?

The jobless rate is calculated by taking the total number of unemployed people and dividing it by everyone in the U.S. who is working or looking for work — what the Labor Department calls the labor force. When both of those numbers decline, even if fewer people got jobs in the month, the unemployment rate falls. Both of those numbers can fall for many reasons, and they’re worrisome to different degrees.

The one that raises the biggest concern is when unemployed people get discouraged with the job market and give up looking for work. Once someone leaves the labor force, it’s much harder for them to eventually find work. Many never return. That was at least part of the reason for the decline in April. The number of workers who said they weren’t looking for work because they were discouraged over job prospects ticked higher. But the number remained below the average for all of last year, and doesn’t come close to accounting for the big drop in the labor force. Meanwhile, the total number of people who moved from unemployed out of the labor force also ticked up last month, but it was very close to the average for 2013, indicating no acceleration.

Another way to look to see if people are giving up is by looking at a broader measure of unemployment, known as the “U-6″ for its data classification by the Labor Department. That rate includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find. The rate was 12.3% in April, falling the same 0.4 percentage point that the headline rate declined. When the U-6 is steady and the main rate is falling, it can suggest an underlying weak labor market. But when both are dropping together, it suggests that there might be other broader trends.

So if the labor force didn’t drop this month because of people giving up, what’s going on? One trend weighing on the labor force is people with jobs retiring, and last month there was an increase in the number of employed people who were no longer working or looking for work. That flow was at its highest level since October and the third highest since before the recession.

But that doesn’t explain why there are fewer unemployed people. The number of unemployed can fall because people got jobs, because they dropped out of the labor force, or it can fall just because fewer people decided to start looking for work. In April, one of the reasons the number of unemployed fell is because fewer people came off the sidelines to look for work. The number of people flowing from out of the labor force to unemployed was at its lowest level since 2008. Lots more people than usual decided to stay on the sidelines.

That isn’t a hopeful sign for the economy, as people who otherwise might want work aren’t encouraged enough to come off the sidelines. But it’s also less worrying than people giving up looking for work. Many new entrants to the labor force are younger people who will eventually come in, and are on the sidelines because they can be.

No one should read too much into one month’s moves in the labor force. Much of this month’s changes could be recalibrating after a couple of months of increases in the labor force participation rate, and some of it could be reversed next month. Meanwhile, while the details suggest the trend is worth watching, it’s not likely that this month represents a return to discouraged workers giving up and dropping out of the labor market.

Our irrational, harmful bias against the unemployed

By Peter Cappelli, Washingon Post

The persistent high level of unemployment in the six years since the Great Recession began is fast becoming the defining theme of this generation — and a leadership imperative that can no longer be ignored.

Friday’s news on job growth is good: an increase of 288,000 jobs this past month, bringing the unemployment rate to 6.3 percent, well down from its 30-year peak of 10 percent. The number of discouraged workers who want a job but have given up trying to find one is unchanged, however. When we include those in the mix, we’re still left with about three available candidates for every job vacancy out there.

The three and a half million people who remain “long-term unemployed” — that is, who have been out of work for more than six months — represent more than a third of unemployed workers. This is the highest it’s been since the Great Depression. Being out of work that long creates many problems, such as a loss of housing or health care, that not only cause hardship for individuals and their families, but also place even more burdens on public and private support systems.

Yet the tools for addressing the long-term unemployment problem are within our grasp. And chief among them is for employers to move past the stigma that the unemployed are somehow less qualified to hold a job. That bias persists in corporate human resources departments, but it is unsupported by evidence.

It’s maddening to see such imaginary fears become real barriers to solving our employment crisis. A field study by Northeastern University economics Ph.D. candidate Rand Ghayad and another led by Kory Kroft at University of Toronto sent out fake resumes to employers. The studies found strong evidence that employers’ willingness to consider applicants dropped like a stone after the candidates had been unemployed for six months. The companies actually preferred candidates with no relevant experience to those with a background in the field but who’d been out of work for a stretch.

Corporate leaders haven’t always viewed unemployment this way. Traditionally when the economy improved and created new jobs, businesses would look to the ranks of the unemployed to fill them. Until the mid-1980s, the term “layoff” actually referred to a temporary job loss — and employers were expected to rehire these workers as soon as the economy turned up again.

But by the 1990s, that stopped happening, and the term became a euphemism for permanent job losses instead. This coincided with the “jobless recoveries” that have accompanied every recession since then.

So if employers are not rehiring from the ranks of the unemployed now, how do they fill new jobs? By hiring from each other. This nonsensical game of musical chairs (I hire your workers, you hire someone else’s, and then they try to hire mine) would seem to be unsustainable. Sooner or later, one might think, employers will start to see the unemployed as a valuable alternative.

But in fact, they haven’t. Vacancies are simply staying open longer as employers wait to find individuals who are willing to move from other companies. And it has become so prevalent for employers to reject unemployed job candidates outright that last year the Equal Employment Opportunities Commission threatened to start investigating these cases.

Why won’t employers take long-term unemployed candidates more seriously? The reason has much to do with simple bias, and little to do with hard evidence.

One myth about the unemployed is that something must be wrong with a person who lost his or her job. The economists Bob Gibbons and Larry Katz found evidence of this when they studied how people who were laid off because their plant closed — an event that clearly wasn’t their fault. They had an easier time getting rehired than those who were laid-off for other reasons.

Meanwhile, the most intense bias against the long-term unemployed seems to be the result of yet another myth: If they were good, someone else would have hired them by now. All it takes is for enough hiring managers to think this same way, and no one would ever get a job.

The final reason for bias against the long-term unemployed is the notion that their skills must have gotten out of date by not working. That might be true for surgeons, whose manual dexterity can decline quickly, or maybe in tech fields where software has advanced to a new generation.

But few jobs are like that. Studies have found that the performance of new hires who had been unemployed for a long time was no different than that of new hires who came directly from jobs elsewhere. In fact, most jobs are so routine that taking a break from them — a sabbatical — is actually a good thing for improving work performance. Ironically, so few employees learn new skills on the job these days that it's much more likely that an unemployed person might have expanded his or her skill set, either by taking classes, mastering new software or learning new marketing techniques in the course of extended unemployment.

Ruling out job candidates because they have been unemployed imposes big costs on both citizens, who remain without jobs and income, and on the economy — not to mention on employers who are losing out on an entire population of talented candidates. There is no justification for doing it. In fact, it’s a form of discrimination.

Responsible business leaders should, at the very minimum, tell their human resource departments to update their hiring policies so they don’t filter applicants based on current employment status. The biggest problem is likely to be overcoming the prejudices of hiring managers, who often have little information about the real predictors of job performance and so rely on these false assumptions that unemployed candidates probably aren't good performers. A simple statement from leadership that this is not the case is often enough to change their approach.

Moreover, corporate leaders should support policy changes that provide tax credits for hiring the long-term unemployed. The credits would incentivize employers to look past their own biases, and would cost the government nothing unless an eligible candidate is hired. I reviewed the research for a group called the National Employer Opportunities Network, and we found that such tax credits are a cheap and ultimately beneficial way to move people off government programs.

Plus, in the process, it may actually increase total employment — and help stop the pointless game of musical chairs that hurts rather than helps everyone.

An overview of the April 2014 jobs report

May 2, 2014


The Bureau of Labor Statistics reported on May 2, 2014 that the official seasonally adjusted unemployment rate for April 2014 was 6.3 percent, down from 6.7 percent in March and February, and from 7.5 percent in April 2013.

Total non-farm employment increased by 288,000 during the month of April with seasonal adjustment, but increased by 1,152,000 during the month of April without seasonal adjustment.

The seasonally adjusted total non-farm job creation figure for March 2014 was revised upward to 203,000 from 192,000, and the seasonally adjusted total non-farm job creation figure for February 2014 was revised upward to 222,000 from 197,000. The unadjusted total non-farm job creation figure for March 2014 was revised upward to 944,000 from 941,000, and the unadjusted total non-farm job creation figure for February 2014 was revised downward to 741,000 from 743,000.

Breaking these figures down further, with seasonal adjustment, private sector employment increased by 273,000 during the month of April while government employment increased by 15,000. Without seasonal adjustment, private sector employment increased by 1,109,000 during the month of April while government employment increased by 43,000.

The seasonally adjusted private sector job creation figure for March 2014 was revised upward to 202,000 from 192,000, and the seasonally adjusted private sector job creation figure for February 2014 was revised upward to 201,000 from 188,000. The unadjusted private sector job creation figure for March 2014 was revised upward to 834,000 from 831,000, and the unadjusted private sector job creation figure for February 2014 was revised downward to 307,000 from 315,000.

The seasonally adjusted government job creation figure for March 2014 was revised upward to 1,000 from 0, and the seasonally adjusted government job creation figure for February 2014 was revised upward to 21,000 from 9,000. The unadjusted government job creation figure for March 2014 was not revised from 110,000, and the unadjusted government job creation figure for February 2014 was revised upward to 434,000 from 428,000.

The BLS keeps track of six unemployment rates, which are defined as follows and given without seasonal adjustments:

• U1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force. This rate is 3.3 percent for April 2014, down from 3.7 percent for March, 3.6 percent for February, and 4.3 percent for April 2013.
• U2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. This rate is 3.2 percent for April 2014, down from 3.7 percent for March, 3.9 percent for February, and 3.9 percent for April 2013.
• U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate). This rate is 5.9 percent for April 2014, down from 6.8 percent for March, 7.0 percent for February, and 7.1 percent for April 2013.
• U4: U3 plus discouraged workers, as a percent of the civilian labor force plus discouraged workers. “Discouraged workers” are those who have stopped looking for work because current economic conditions make them believe that no jobs are available. This rate is 6.3 percent for April 2014, down from 7.2 percent for March, 7.5 percent for February, and 7.6 percent for April 2013.
• U5: U4 plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force. “Marginally attached” workers are those who would like and are able to work, but have not looked for a job recently. This rate is 7.2 percent for April 2014, down from 8.1 percent for March, 8.4 percent for February, and 8.5 percent for April 2013.
• U6: U5 plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. This rate is 11.8 percent for April 2014, down from 12.8 percent for March, 13.1 percent for February, and 13.4 percent for April 2013.

As people who are employed part-time typically work about half as much as people who work full-time, it is useful to consider a "U5½," defined as the arithmetic mean of the U5 and U6 numbers. This measure would thus count people who work part-time but wish to work full-time as "half-employed." This rate is 9.5 percent for April 2014, down from 10.45 percent for March, 10.75 percent for February, and 10.95 percent for April 2013.

The BLS revised the Current Population Survey, which gathers the data needed to determine these rates, in 1994. Among the changes made, the U3 rate was named the new "official" unemployment rate, instead of the U5 rate. This revision also defined "long-term discouraged workers" out of official existence. With the inclusion of long-term discouraged workers, the SGS Alternate Unemployment Rate, which might be considered a "U7" rate, exceeds 23 percent.

The use of the U3 as the official definition exposes some holes in the BLS's thinking, because according to them, the following are true:

• A person who loses a full-time job but spends one hour each week mowing a lawn for pay is considered employed.
• A person who simply expresses interest in having a job is classified as unemployed.
• "Discouraged workers" are not classified as unemployed or even as part of the labor force.
• A sharp decrease in a worker's wages when forced to change jobs is not accounted for.

What this means is that the official unemployment rate can fluctuate because discouraged workers (who are not considered to be part of the labor force in the U3 measurement) who re-enter the labor force will cause the U3 rate to spike. The U3 rate can also dip temporarily when such people find temporary jobs and then lose them a month or two later. It also means that the U3 rate will go down when people give up looking for jobs, as 806,000 people did in April 2014. The labor force participation rate was 62.8 percent for April 2014, down from 63.2 percent for March, 63.0 percent for February, and 63.3 percent for April 2013.

Given the problems with the BLS unemployment rates, are they a useful measurement of how well the economy is performing, a wild guess that cannot be accurate despite the BLS's best efforts, or a deliberate fraud by the government? I report, you decide.

Discouraged Worker Dropouts Rise 783k, 80% Higher Than Nonfarm Payroll Jobs Added

Anthony B. Sanders – George Mason University

 

I was at Cornell University in Ithaca New York giving a presentation on mortgages on Friday when the jobs report was released, so I had to wait to read the report in its entirety. Here is my after-seminar report from Friday while waiting to go to dinner.

According to the Bureau of Labor Statistics, there are 9.75 million Americans that are “unemployed” and there are 92.02 million Americans that are “not in the labor force” for a grand total of 101.77 million working age Americans that do not have a job. Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were “not in the labor force” for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000.
 
However, the banner headline in the media was “288,000 Jobs Added!!” What was NOT in the headlines was that the number of people in the labor force fell by 806,000. In other words, 518,000 more workers LEFT the labor force than joined it in April.

In addition, the Number Of Workers Discouraged Not in Labor Force Searched For Work rose by 783,000 in April. That figure is back to the alleged “end” of the recession (according to the NBER). So, does this mean that the U.S. can announced that the Labor Market’s recession has ended?

No. The following economic indicators have declined since the end of 2008: real median household income, hourly wage growth (YoY), labor force participation rate, and M2 Money Velocity.

The Federal Reserve has attempted to depress interest rates with quantitative easing (balance sheet purchases and zero-interest rate policy), but the labor market is only back to end of recession levels.

According to the Taylor Rule, The Fed should be raising the Fed Funds Rate Target (should be 1.52%, but Fed Funds Target still at 0.25%). The point is for mortgage lenders is that the number of qualified borrowers have been reduced because of the recession and bubble burst and small increases in interest rates are unlikely to have an effect.

And lastly, of course, mortgage purchase applications remain lower than at the “end” of the recession in June 2009. Mortgage borrowers are as discouraged as unemployed workers.

Note: My colleague at University of South Carolina, Jean Helwege, wrote me and said “Maybe it is because of the run-up in the stock market and people can now stop looking for work.” Possibly, but BLS doesn’t ask those questions. What we do know if the mortgage purchase applications and originations remain depressed after the housing and credit bubble burst, and that is correlated with declining wages, real income and the number of discouraged workers.

Anecdotal evidence? I know two kids from Columbus OH whose grandfather gave them both large Trust Funds. They are in their 20s and one doesn’t work and the other dabbles in low paying jobs (part-time). But we don’t know how pervasive that is across the country.

Real jobless rate hits 12.4%, 800,000 leave labor force

Jerome R. Corsi , WND

 

NEW YORK – The Bureau of Labor Statistics announcement that unemployment has dropped from 6.7 percent in March to 6.3 percent in April was partly attributed to some 800,000 workers dropping out of the labor force last month, reducing the labor participation rate to 62.8 percent, a new low for the Obama administration.

After adjusting the BLS unemployment number to what is known as “U-6” – a measure that includes total unemployed, plus all persons marginally attached to the labor force, plus total part-time employed for economic reasons – unemployment in April was 12.3 percent.

The amount (not seasonally adjusted) of Americans not in the labor force in April rose to 92,594,000, almost 1 million more than the previous month. In March, 91,630,000 Americans were not in the labor force, which includes an aging population that is continuing to head into retirement.

According to John Williams, an economist known for arguing the government reports manipulate “shadow statistics” of economic data for political purposes, drops in the unemployment rate as reported by the BLS have become virtually meaningless.

“The broad economic outlook has not changed, despite the heavily-distorted numbers that continue to be published by the BLS,” Williams writes in his subscription newsletter on ShadowStats.com. “The unemployment rates have not dropped from peak levels due to a surge in hiring; instead, they generally have dropped because of discouraged workers being eliminated from headline labor-force accounting.”

Williams recreates a ShadowStats alternative unemployment rate reflecting methodology that includes “long-term discouraged workers.” In 1994 under the Clinton administration, the Bureau of Labor Statistics removed that category from those considered “unemployed” in any of the government’s unemployment measures.

The BLS publishes six levels of unemployment, but only the headline U3 unemployment rate gets the press. The headline number does not count as unemployed the “discouraged” workers who have not looked for work in the past four weeks because they believed no jobs were available.

Discouraged workers

Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics.

The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed” – those who have accepted part-time jobs though they are looking for full-time employment. Also included are short-term discouraged workers who have not looked for work in the last year because there are no jobs to be found.

Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.

Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers.

He argues that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.

“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams told WND.

The headline BLS unemployment rate has stayed relatively low because it excludes all discouraged workers, Williams argues.

As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers, however, are ready to take a job if one becomes available. They are unemployed and consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.

Below is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate, comparing April 2013 for March and April 2014.

Economy of part-time jobs

In August 2013, the House Ways and Means Committee documented that seven out of every eight new employees under Obama have been part-time employees.

“The headlines citing last week’s jobs report as the lowest unemployment rate in years may have been technically accurate, but they are also reminders that looks can be deceiving,” the House Ways and Means report noted at the time.

“The reality, as you dig into the latest jobs data, reveals that few are finding the full-time work they want and need, and many are forced to accept part-time employment.”

To support the argument, the House Ways and Means Committee produced the following table drawn from Bureau of Labor Statistics.

The House Ways and Means Committee linked to an article Associated Press published Aug. 4, 2013, that stated: “So far this year, low-paying industries have provided 61 percent of he nation’s job growth, even though these industries represent just 39 percent of overall U.S. jobs, according to Labor Department numbers analyzed by Moody’s Analytics.”

AP economics writer Paul Wiseman noted part-time work had made up more than 77 percent of the job growth so far that year, with part-time work defined as being less than 25 hours a week.

Appearing on PBS’s “McLaughlin Group” in October 2013, real estate mogul Mort Zuckerman said that “88 percent of the jobs that have been created this year (2013) are part-time jobs.”

Jobs increase by 288,000 in April. Unemployment rate falls to 6.3%. But labor force falls sharply

by Meteor Blades for Daily Kos Labor

Calculated Risk

The Bureau of Labor Statistics reported the economy created a seasonally adjusted 273,000 new private jobs in April, and 15,000 new jobs in the public sector, the best overall gain since January 2012. The consensus of experts surveyed by Bloomberg earlier in the week had put expected new job creation at 215,000. Both full-time and part-time jobs are included in the total. The official unemployment rate fell to 6.3 percent, the lowest level since September 2008.

There were a couple of clouds over these significantly improved figures, however. The civilian labor force shed 806,000 people in April, a massive drop after rises in the three-month January-March period of 1.26 million. The employment-population ratio remained steady 58.9 percent. But the labor force participation rate fell to 62.8 percent, a 0.4 percent drop that returned it to its lowest level in 37 years.

The bureau's report always includes an alternative measure, U6. This calculation covers not just Americans with no job, but also those working part time who want full-time positions—the underemployed who are called "part time for economic reasons"—and workers who have looked for jobs in the past 12 months but not in the past four weeks. U6 fell from 12.7 percent in March to 12.3 percent in April. U6 does not include people who have not looked for work in the past 12 months.

Revisions changed the job numbers for February from 197,000 to 222,000 and for March from 192,000 to 203,000. That produced a three-month average of 238,000. At that rate, according to the Hamilton Project's Job Gap calculator, it would take until December 2017 to return to pre-recession employment levels at the same time as absorbing the people who enter the labor force each month.

The number of long-term unemployed who have been jobless for 27 weeks or more, fell to 3.5 million, 35.3 percent of all those accounted for who have no work.

The number of officially unemployed Americans fell sharply to 9.8 million. But there are the millions of discouraged workers not included in that count because they have left the workforce.

The payroll services company Automatic Data Processing had reported on Wednesday a seasonally adjusted gain of 220,000 private-sector jobs for April. ADP does not report on public-sector jobs and its estimated growth figures, despite a change in methodology in 2012, frequently aren't a close match with the BLS private-job figures.

Among other news in the April job report:

Demographic breakdown of official (U3) seasonally adjusted jobless rate:

• African American: 11.6 percent
• Latino: 7.3 percent
• Asian (not seasonally adjusted): 5.7 percent
• American Indian (data not collected on monthly basis)
• White: 5.3 percent
• Adult women (20 and older): 5.7 percent
• Adult Men (20 and older): 5.9 percent
• Teenagers (16-19): 19.1 percent

Duration of unemployment:

• Less than five weeks: 2.45 million
• 5 to 14 weeks: 2.35 million
• 15 to 26 weeks: 1.53 million
• 27 weeks and more:  3.45 million

Job gains and losses in selected categories:

• Professional services: + 75,000
• Transportation and warehousing : + 11,300
• Leisure & hospitality: + 28,000
• Information: - 3,000
• Health care: + 27,900
• Retail trade: + 34,500
• Construction: + 32,000
• Manufacturing: + 12,000
• Average weekly manufacturing hours fell 0.2 hours to 40.8 hours.
• Average work week for all employees on non-farm payrolls remained at 34.5 hours.
• Average hourly earnings for all employees on private nonfarm payrolls was unchanged at $24.31.

Here's what the seasonally adjusted job growth numbers have looked like in March for the previous 10 years.

April 2004: + 249,000
April 2005: + 363,000
April 2006: + 182,000
April 2007: +   78,000
April 2008: -  214,000
April 2009: -  684,000
April 2010: + 251,000
April 2011: + 322,000
April 2012: +   96,000
April 2013: + 203,000
April 2014: + 288,000

For some time now, the Economic Policy Institute has been keeping track of "missing workers." These people "who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these “missing workers” are not reflected in the unemployment rate."

EPI says there are currently 6.2 million of these missing workers. Here are two charts showing its findings:

The BLS jobs report is the product of a pair of surveys, one of more than 410,000 business establishments called Current Employment Statistics, and one called the Current Population Survey, which questions 60,000 householders each month. The establishment survey determines how many new jobs were added. It is always calculated on a seasonally adjusted basis determined by a frequently tweaked formula. The BLS report only provides a snapshot of what's happening at a single point in time.

It's important to understand that the jobs-created-last-month-numbers that it reports are not "real." Not because of a conspiracy, but because statisticians apply formulas to the raw data, estimate the number of jobs created by the "birth" and "death" of businesses, and use other filters to fine-tune the numbers. And, always good to remember, in the fine print, they tell us that the actual number of newly created jobs reported is actually plus or minus 100,000.

Privatization Is A Ramp For Corruption and Insouciance Is a Ramp for War

Privatization Is A Ramp For Corruption and Insouciance Is a Ramp for War 
The New York Times has acquired a new Judith Miller

Paul Craig Roberts

Libertarian ideology favors privatization. However, in practice privatization is usually very different in result than libertarian ideology postulates. Almost always, privatization becomes a way for well-connected private interests to loot both the public purse and the general welfare.

Most privatizations, such as those that have occurred in France and UK during the neoliberal era, and in Greece today and Ukraine tomorrow, are lootings of public assets by politically-connected private interests.
Another form of privatization is to turn traditional government functions, such as prison operation and many supply functions of the armed services, such as feeding the troops, over to private companies at a large increase in cost to the public. Essentially, the libertarian ideology is used to provide lucrative public contracts to a few favored persons who then reward the politicians. This is called “free enterprise.”

The privatization of prisons in the US is an example of the extraordinary cost and injustice of privatization. Privatization of prisons requires ever higher rates of incarceration in order to build profitability. The US, supposedly “a land of liberty” has by far the highest incarceration rates of all countries. The “free” US has not only the highest percentage of its population in prison but also the highest absolute number. “Authoritarian” China with four times the US population has fewer citizens in prison.

This article shows how well prison privatization works for well-connected private interests: http://www.globalresearch.ca/privatization-of-the-us-prison-system/5377824

It also shows the extraordinary shame, corruption, and discredit that prison privatization has brought to the US.

A few years ago I wrote about the conviction of two judges who were paid by privatized juvenile detention facilities to sentence kids to their facilities.

As Alain of Lille and later Karl Marx said, “Money is all.” In America money is all that is
important to the political system and to the bulk of the population. Essentially, America has no other values.

Another great libertarian fantasy is Wall Street. In the libertarian mythology Wall Street is the mother of entrepreneurs and of the start-up companies that blossom into industrial, manufacturing, and commercial giants. In actual fact, Wall Street is the mother of enormous corruption. As Nomi Prins shows in All The President’s Bankers, it has always been the case.

Recently, there has been a spate of Wall Street whistleblowers. Many are reported by Pam Martens on her site, Wall Street On Parade, http://wallstreetonparade.com/2014/04/insiders-tell-all-both-the-stock-market-and-the-sec-are-rigged/

Unlike libertarian ideologues, Prins and Martens are former Wall Street insiders and know what they are talking about.

All US financial markets are rigged for the benefit of a few. We have had the exposure of high frequency trading front-running buy and sell orders. We have had the exposure of the big banks rigging the LIBOR interest rate and the London gold price fix. We have had the exposure of the Federal Reserve rigging via its dependent bullion banks the price of gold in the futures market. We have had the exposure in Congressional hearings of the rigging of metal and commodity prices. The dollar’s exchange value is rigged. And so forth. Yet no heads have rolled. Recently a SEC prosecuting attorney, James Kidney, retired. Upon his retirement, he proclaimed that his cases against the criminal big banks have been suppressed by SEC higher ups who have their eyes fixed on big jobs with the banks they are protecting while in government service.

So there you have it. The United States government is so overwhelmingly corrupt that even the financial regulatory agencies have been corrupted by the money of the private capitalists they are supposed to regulate.

America the corrupted. That is what we have become.

Not even Vladimir Putin understands how totally corrupt and insensitive to humanity Washington is.

Putin’s response to the Ukraine crisis created by Washington’s coup in Kiev is to rely on
“Russia’s Western partners,” the UN, the Obama regime, John Kerry, etc., to work out a reasonable solution to the crisis.

Putin’s hope for a diplomatic solution is unrealistic. The NATO governments are bought-and-paid-for by Washington. For example, Germany is not a country. Germany is a mere piece of Washington’s empire. The German government will do as Washington says.The German government represents Washington’s agenda. The European governments to whom Putin is speaking are not listening.

Paul Wolfowitz, the neoconservative who as Deputy Secretary of Defense presided over the orchestration of the false evidence used by the Bush regime to launch Washington’s wars in the Middle East, declared the minimization of Russian power as the “first objective” of US foreign and military policy:

“Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.”

What Wolfowitz means by “hostile power” is any power independent of Washington’s hegemony.

Washington overthrew the elected Ukraine government in order to orchestrate a crisis that would distract Russia from Washington’s adventures in Syria and Iran and in order to demonize Russia as an invader rebuilding an empire that is a danger to Europe. Washington will use this demonization in order to break-up growing economic relationships between Russia and Europe. The purpose of sanctions is not to punish Russia, but to break up economic relationships.

Washington’s strategy is audacious and brings risk of war. If the West had an independent media, Washington’s plan would fail. But instead of a media, the West has a Ministry of Propaganda. The New York Times has even found a replacement for Judith Miller. As you might have forgot or never known, Judith Miller was the New York Times reporter who filled the Times with Bush regime neoconservative lies about Iraqi weapons of mass destruction. Instead of examining and exposing the Bush regime’s false claims, the New York Times bolstered the regime’s case for war by using the newspaper’s credibility to advance the neoconservative war agenda.

The new Judith Miller is David M. Herszenhorn, with accomplices Andrew Roth, Noah Sneider, and Andrew Higgins. Herszenhorn dismisses the totality of Russian media accounts of events in Ukraine as “an extraordinary propaganda campaign” designed to hide the fact from the Russian population that the entire Ukraine crisis is the fault of the Russian government: “And so began another day of bluster and hyperbole, of the misinformation, exaggerations, conspiracy theories, overheated rhetoric and, occasionally, outright lies about the political crisis in Ukraine that have emanated from the highest echelons of the Kremlin and reverberated on state-controlled Russian television, hour after hour, day after day, week after week.” http://www.nytimes.com/2014/04/16/world/europe/russia-is-quick-to-bend-truth-about-ukraine.html?ref=davidmherszenhorn&_r=0

I have never read a more blatant piece of propaganda than Herszenhorn’s. He bases his report on two “authorities,” Lilia Shevtsova of the American-funded Carnegie Moscow Center, and Mark Galeotti, a NYU professor.

According to Herszenhorn, the widespread protests in eastern Ukraine are entirely the fault of the protesters who are putting on a show for propaganda purposes. The protests are not a response to words and deeds of the Washington-installed stooge government in Kiev. Herszenhorn dismisses reports of extreme nationalist neo-nazi Russophobia as “sinister claims” and regards the Washington-imposed unelected government in Kiev as legal. However, Herszenhorn regards governments formed as a result of referendums to be illegal unless approved by Washington.

If you place your faith in Herszenhorn, you will dismiss all reports such as those below as lies and propaganda:

http://rt.com/news/eu-no-russian-interference-ukraine-844/
http://news.antiwar.com/2014/04/15/poland-nato-must-ignore-russia-send-ground-troops/print/
http://news.antiwar.com/2014/04/15/eastern-offensive-ukraine-pounds-kramatorsk-killing-four/print/
http://news.antiwar.com/2014/04/15/white-house-endorses-ukraine-crackdown-on-protesters/
http://rt.com/news/ukrainian-tanks-kramatorsk-civilians-840/
http://www.globalresearch.ca/natos-pet-nazis-savage-ukrainian-presidential-candidate/5377948
http://rt.com/news/ukraine-troops-withdraw-slavyansk-940/

The Western World is the World of the Matrix protected by the Ministry of Propaganda. Western populations are removed from reality. They live in a world of propaganda and disinformation. The actual situation is far worse than the “Big Brother” reality described by George Orwell in his book, 1984.

The ideology known as neoconservatism, which has controlled US governments since Clinton’s second term, has the world set on a path to war and destruction. Instead of raising questions about this path, the Western media hurries the world down the path. Read what medical doctors report will be the result of the neoconservative Obama regime’s belief that nuclear war can be won: http://original.antiwar.com/lawrence-wittner/2014/04/14/your-doctors-are-worried/

The Chinese government has called for “de-americanizing the world.” The Russian legislature understands that being part of the dollar payments system is a Russian subsidy to American Imperialism. The Russian legislator, Mikhail Degtyaryov told Izvestia that “The dollar is evil. It is a dirty green paper stained with blood of hundreds of thousands of civilian citizens of Japan, Serbia, Afghanistan, Iraq, Syria, Libya, Korea and Vietnam.” http://rt.com/politics/russian-dollar-abandon-parliament-085/

However, Russian industry spokesmen, possibly on Washington’s payroll but likely just people without a clue, said that Russia was bound by contracts to the dollar system and that perhaps in 10 or 15 years Russia could take a more intelligent approach. That is assuming that Russia would still be capable of acting in its own interests after suffering 10 or 15 years more of US financial imperialism.


Every country that wishes to have an independent existence without living under Washington’s thumb should immediately depart the dollar payment system, which is a form of US control over other countries. That is the only purpose that the dollar system serves.

Many countries are afflicted by economists trained in the US in the neoliberal tradition. Their US education is a form of brainwashing that ensures that their advice renders their governments impotent against Washington’s imperialism.

Despite the obvious threats that Washington poses, many do not recognize the threats because of Washington’s pose as “the greatest democracy.” However, scholars looking for this democracy cannot find it in the US. The evidence is that the US is an oligarchy, not a democracy. http://www.globalresearch.ca/the-u-s-is-not-a-democracy-it-is-an-oligarchy/5377765

An oligarchy is a country that is run for private interests. These private interests–Wall Street, the military/security complex, oil and natural gas, and agribusiness–seek domination, a goal well served by the neoconservative ideology of US hegemony.

The American Oligarchs win even when they lose. Finally, Washington’s notorious torture prison, Abu Ghraib, has been closed. But not by Washington. The Iraqi city fell last week to “defeated” al-Qaeda. Remember, we won the war in Iraq. $3 trillion wasted, but that’s not the way the military/security complex sees it. The war was a great victory for profits. http://news.antiwar.com/2014/04/15/after-al-qaeda-expansion-iraqs-infamous-abu-ghraib-finally-closes/

How much longer will dumbshit americans fall for the flag-waving deception?

The Republicans used the wars in order to create huge budget deficits and national debt that are now being used to dismantle the social safety net, including Social Security and Medicare. There’s talk of privatizing Social Security and Medicare. More profits for Oligarchs in the offering. The gullibility of the American population is really without compare.

The gullibility of the American public will doom the world to extinction.

US Economy Is A House Of Cards

Paul Craig Roberts

The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.

American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.

Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman. As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes. http://michael-hudson.com/2014/04/pikettys-wealth-gap-wake-up/

Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets.

The Federal Reserve and the US Treasury’s “Plunge Protection Team” aid the looting by supporting the stock market with purchases of stock futures, and protect the dollar from the extraordinary money-printing by selling naked shorts into the Comex gold futures market.

The US economy no longer is based on education, hard work, free market prices and the accountability that real free markets impose. Instead, the US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, propaganda from the financial media, and inertia by countries, such as Russia and China, who are directly harmed, both economically and politically, by the dollar payments system.

As the governments in most of the rest of the world are incompetent, Washington’s incompetence doesn’t stand out, and this is Washington’s salvation.

But it is not a salvation for Americans who live under Washington’s rule. As all statistical evidence makes completely clear, the share of income and wealth going to the bulk of the US population is declining. This decline means the end of the consumer market that has been the mainstay of the US economy. Now that the mega-rich have even more disproportionate shares of the income and wealth, what happens to an economy based on selling imports and off-shored production of goods and services to a domestic consumer market? How do the vast majority of Americans purchase more when their incomes have not grown for years and have even declined and they are too impoverished to borrow more from banks that won’t lend?

The America in which I grew up was self-sufficient. Foreign trade was a small part of the economy. When I was Assistant Secretary of the Treasury, the US still had a trade surplus except for oil. Offshoring of America’s jobs had not begun, and US earnings on its foreign investments exceeded foreign earnings on US investments. Therefore, America’s earnings abroad covered its energy deficit in its balance of trade.

The economic stability achieved during the Reagan administration was shattered by Wall Street greed. Wall Street threatened corporations with takeovers if the corporations did not produce higher profits by relocating their production of goods and services for American markets abroad. The lower labor costs boosted earnings and stock prices and satisfied Wall Street’s cravings for ever more earnings, but brought an end to the rise in US living standards except for the mega-rich. Financial deregulation loaded the economy with the risks of asset bubbles.

Americans are an amazingly insouciant people. By now any other people would have burnt Wall Street to the ground.

Washington has unique subjects. Americans will take endless abuse and blame some outside government for their predicament–Iraq, Afghanistan, Libya, China, Russia. Such an insouciant and passive people are ideal targets for looting, and their economy, hollowed-out by looting, is a house of cards.

Plutocrats v. Oligarchs

America’s Superrich & the Influence They Wield
by DAVID ROSEN


The Supreme Court’s recent decision, McCutcheon v FEC, granted further political influence to the 1 percent, enabling them to spend as much as they wish influencing political campaigns. It followed the Court’s 2010 ruling, Citizens United v. FEC, allowing the rich to spend unlimited sums on political advertising. Some wonder if this is not a 21st century form of buying an election?

Senator Bernie Sanders (I-VT) lamented the toll these decisions will likely have on American popular democracy. “If present trends continue, elections will not be decided by one-person, one-vote,” he warned. He added, “this process — a handful of the wealthiest people in our country controlling the political process — is called ‘oligarchy.’”

Sanders acknowledged the potential consequences of the Court’s decisions: “The great political struggle we now face is whether the United States retains its democratic heritage or whether we move toward an oligarchic form of society where the real political power rests with a handful of billionaires, not ordinary Americans.”

The contemporary concept of oligarchy was popularized by the Russian experience. Following the collapse of the Soviet Union, innumerable state companies were privatized. The country was in disarray and, in an effort to stabilize the economy, the Yeltsin government “redistributed” state-owned enterprises to trusted cronies. They came to wield unprecedented power over the economy, the state apparatus and the mass media.

The term “oligarchs” is gaining currency in the U.S. Sanders defined them as “a small number of very wealthy families who spend huge amounts of money supporting right-wing candidates who protect their interests.” He means to differentiate this “small number” from the larger world of the rich and superrich, the plutocrats, who – as a class – have long exercised considerable influence on the U.S. political system. Who are these oligarchs and how do they different from today’s plutocrats? And how does this generation of oligarchs differ from previous generations of the superrich who, over the last century, have dominated American politics?

* * *

Oligarchy is defined as “government by the few” and came into English use around 1570. The term derives from two Greek words: oligos meaning “few” and arch for “rule”; similar English-language terms include monarch or hierarchy. Plutocracy is derived from the Greek ploutos meaning “wealth” and kratos for “govern.”

Today, both concepts — plutocrats and oligarchs — refer to the growing influence the rich – and especially the superrich – have on the national (and international) political economy. Oligarchs are plutocrats who use their enormous wealth to further a particularly conservative, if not rightwing, agenda.

Thomas Piketty’s study, Capital in the Twenty-First Century, reveals that the U.S. – along with much of the advanced capitalist world — is returning to what economist Paul Krugman calls the “new Gilded Age.” Piketty finds that that in 2010, the top 1 percent controlled 20 percent of U.S. income and, together with the next 9 percent, the superrich controlled 50 percent of all income. The IRS recently noted that in 2011, 11,445 U.S. taxpayers declared incomes of more than $10 million.

According to Forbes, the three richest Americans in 2013 were: Bill Gates ($72 bil net worth), Warren Buffet ($58.5 bil) and Larry Ellison ($41 bil). They may well be plutocrats in the old-fashioned sense of Vanderbilt, Rockefeller, Carnegie and Ford. But are they oligarchs?

Michael Bloomberg was New York’s mayor for 12 long years and is ranked 10th on Fortune’s list of wealthiest Americans with a net worth of $31 billion. He leveraged his public position and private wealth vigorously promoting two pet projects, gun control and obesity? Both initiatives stalled in the political marketplace. Is he an oligarch?

Today’s grand plutocrats include the Walton family, the Koch brothers and Sheldon Adelson. They makeup seven of the top 11 wealthiest Americans: Charles Koch ($36 bil), David Koch ($36 bil), Christy Walton ($35.4 bil), Jim Walton ($33.8 bil), Alice Walton ($33.5 bil), Samuel Robson Walton ($33.3 bil) and Adelson ($28.5 bil). This is real money.

These plutocrats become oligarchs by employing their vast wealth in an apparently more aggressive – and conservative – way then, for example, Gates, Buffet or Bloomberg. The Koch brothers are major backers of the Tea Party and Americans for Prosperity; they are reported to have donated an estimated $196 millions to fight the Affordable Care Act (Obamacare). The Waltons have led the charge against public education, committing an estimated $1 billion promoting privatization – no teachers’ union or community accountability — through charter schools. Adelson famously holds court for Republican presidential hopefuls who visit his Las Vegas castle to kiss his ring and proclaim their undying support for Israel.

* * *

America is stuck. The “American Century” is over and globalization is restructuring capitalism. The rich are getting phenomenally richer while the income of the rest of Americans stagnates or falls. Both American plutocrats and oligarchs are fighting to hold on to — and increase! — their wealth and influence during this restructuring. And they are succeeding.

Over the last quarter-century, globalization has spawned a new class of superrich who wield historically unprecedented power. This elite truly enjoys the privileges of its social status, operating on its own economic, political and moral terms. It’s a value system shared by plutocrats around the globe. They endow cultural institutions, their names shameful promoted; they are delivered anywhere on the globe via private jets; they are escorted in chauffeured limousines through busy city streets; and they are celebrated at exclusive get-togethers like the Davos World Economic Forum. Like nobility of old, the obsequies media present them – like other celebrities – in the most favorable light.

In the U.S., pay-to-play payoffs — whether in cash or kind — define everyday politics. Local Chambers of Commerce, real-estate interests, financial players, large retailers, trade associations, unions and other special interests lubricate the wheels of government. Lobbyists facilitate, legislators dutifully legislate, deals are cut, someone wins and – in most cases – the vast majority of ordinary Americans loose. It’s the way the game is played.

However, the U.S. is not Russia, let alone Greece or Afghanistan or almost anywhere else around the globe. Most U.S. officials don’t take cheap bribes. Corruption takes place, but low-level scammers, whether from the private or public sector, are regularly busted. However, when it comes to real money, that’s another story.

American plutocrats are at the top of the political foodchain. Their wealth buys influence. They use their financial power to determine public policy, involving laws, court decisions, tax codes, zoning ordinances, corporate subsidies, outsourcing and purchasing contracts. Their wealth enables them to promulgate their self-serving vision at the local, state and federal levels, benefiting every step of the way. They link economic policy to social programs, seeking to dictate civic values — public morality — with regard to abortion rights, teen sex and gay rights.

This is nothing new. For more then a century, plutocrats have used their wealth to influence public policy. In the fin de siècle era, modern, industrial capitalists like Rockefeller and Carnegie remade America, promoting not only free-market capitalism but eugenics as well. These grand oligarchs garnered their wealth the old-fashioned way, by brutally exploiting their wage-labor workers. And in those good-old-days, politicians were really for sale, no questions asked. And then came the Progressives.

Ford — and the Fordist manufacturing process — defined the modern era. He introduced the assembly line and the $5-per-day salary – ostensibly so his workers could buy the cars they made. The collapse of the Great Depression stalled economic growth. The enormous expansion of the national economy during World War II and the post-war recovery made Ford # 1. Ford symbolizes the highpoint of consumer capitalism. And then came globalizations and a new generation of plutocrats and oligarchs.

In 1937, amidst the Great Depression, Ferdinand Lundberg published an influential book, America’s 60 Families. It revealed the financial and political power of the nation’s great fortunes. Nearly three-quarters of a century ago he warned:


The United States is owned and dominated today by a hierarchy of its sixty richest families, buttressed by no more than ninety families of lesser wealth… These families are the living center of the modern industrial oligarchy which dominates the United States, functioning discreetly under a de jure democratic form of government behind which a de facto government, absolutist and plutocratic in its lineaments …. It is the government of money in a dollar democracy.

Its more important then every to wonder just how much has changed.

A century ago the Progressive movement, led by Lincoln Steffens, Ida Tarbell, W.E.B. DuBois and Teddy Roosevelt, focused national attention on the robber barons. The Occupy Movement focused popular attention on the 1 percent. Inequality – and the growing power of the oligarchs – is becoming a national political issue, most evident in the election of Bill de Blasio as New York’s mayor.

Today’s plutocrats and oligarchs, backing both Democrats and Republicans, have failed to deliver. They’ve backed two expensive — in dollars and blood – failed foreign military interventions. They championed financial and economic policies contributing to the great recession of 2008-2010 from which the nation has yet to fully recover. And they’ve made the lives of ordinary Americans harder, materially worse. Their policies have failed, yet they remain in power.

For many Americans, Obama was the great black hope who realized far less then hoped for. He did move (however slowly) to end the military misadventures in Afghanistan and Iraq. And he did secure the passage of Obamacare, a possible stepping-stone to a national, single-payer program. Yet, he dutifully bailed out the banks and let walk the perpetrators of the financial crisis. And he’s backed the most reactionary immigration and intelligence policies as well as promoted the worst trade pact (the Trans-Pacific Partnership) since Nafta.

In the U.S. ready for four, if not eight, more years of another centrist Democrat? Hilary Clinton will likely only be Obama-heavy. If elected, Clinton will have much to prove, especially that she’s tough. The plutocratic ruling class has no national answer, a workable program, to address the changes the nation faces amidst capitalism’s global restructuring. Their goal is to maximize private gain at the expense of the vast majority of ordinary Americans. And Clinton, like her husband before her, will help facilitate the further distribution of wealth to the top 1 percent.

Given this possibility, could a Republican victory in the 2016 presidential election be a good thing for “progressives”? If both the presidency and the Congress fell under Republican control, life in the U.S. for middle-income, working-class and poor would get really worse. But at least no one will have any illusions that it could be different.

FCC Wants to Give Corporations Their Own Internet

And now the rights of corporate ownership officially supercede those of individual citizens. this isn't new, but the courts and the bureaucracy are going ahead and getting the big govt sellout locked in so we won't be able to repeal these inane conflicts of interest for a very long time or without extreme difficulty. Fuck corporate rule! Corporations aren't people. They should be dismantled every 20 years with the remaining holdings distributed among their workers, who may then apply for a brand new corporate charter, starting over from scratch every 20 years. It would help to prohibit the ridiculous amount of control a few corporate CEOs  and their executive boards have over our joke of a political process. Lobbying needs to be redefined with stricter limits, as well. And when you are interviewing for jobs in the public and private sector, you need to choose which one you'll stay in for 7 years. No more of this revolving door between regulating agencies and the industries/companies they regulate. It's all a huge shitsoaked conflict of interest that has destroyed a whole generation of workers, at least, and cannot provide any kind of future for the next generations of US citizens. The oligarchy must be destroyed by any means possible. Corporate leadership is far from patriotic: they hold the bulk of their fortunes in tax haven banks overseas to keep from paying taxes, drastically undercutting the federal budget during a crucial period in a failing economy 6 years deep in a "small d" depression, AND these traitors get to dictate policy and handpick their own candidates to do their bidding while holding office? Bullshit! Hang them all high! They betray everything sacred about this country and her consitution, all to make themselves richer at the expense of the nation and her people.

EAT THE RICH! and pile their bones up so high they reach the moon.--jef

++++++++++++++

The New Proposal Mocks Net Neutrality
by ALFREDO LOPEZ


When a federal court trashed its “net neutrality” compromise policy in January, the Federal Communications Commission assured us that the Internet we knew and depended on was safe. Most activists didn’t believe federal officials and this past week the FCC demonstrated how realistic our cynicism was.

The Commission announced last week that among its proposals on the Internet, due for full discussion on May 15, was one which would give access providers the right to sign special deals with content producers for connections that are faster and cleaner than the connections most websites use. It’s precisely the nightmare that court decision threatened.

In the predictable outcry and immediate debate over the FCC’s announcement, however, two major issues seemed to be lost.

To deliver this faster connection, the Internet giants will have to change the Net’s protocols, establishing a fast lane that completely destroys the technological basis of Internet neutrality. They will, effectively, be allowed to set up an alternate Internet.
At the same time, the announcements raise a question about the FCC’s role. To develop this proposal, it has obviously been talking to the very companies it is supposed to regulate and has written regulations based primarily on a concern about their ability to make lots of money.

Isn’t this the opposite of what federal regulation is supposed to do?

When the debate dust settles, it appears that not only may we lose the Internet as we know but we have no agency in government looking out for our interests.

The background has been covered on this website but, to recap:

Access (or service) providers offer connections to put you on the Internet and give you several speeds to choose from. They are mainly cable companies like Comcast and telecommunications companies like Verizon. Content providers use those connections to deliver what you want to see and read. Every website owner is a content provider, including biggies like Netflix.

Net Neutrality is the principle that service providers — like Verizon and Comcast — can’t discriminate in the delivery of content or provision of access based on user, content, site, platform, application, type of attached equipment, and modes of communication. If you go on-line, you can reach everything anyone else can. It was the law until this past January.

That was when a federal court struck down the provision finding that cable companies like Comcast weren’t subject to the neutrality rules that govern telephone companies and so net neutrality, based on the telecom industry’s practices, didn’t apply to high-speed providers. They are, after all, cable companies and anyone who subscribes to cable television with its multiple “programming packages” that give you a monthly dose of sticker shock knows there’s nothing “neutral” about cable.

In short, service provider companies can now charge content providers money to speed up their content delivery and the content providers can limit access to that faster content to people paying a higher price for it.

While the decision was based on cable company practice, it obviously benefits telecoms like Verizon who also offer high-speed service.

Apparently, the FCC wasn’t too unhappy either. Chairman Tom Wheeler (a former telecom industry lobbyist) reacted in stunningly triumphant terms, assuring us all that our access to the Internet will be completely protected. In fact, he said the ruling actually gives the FCC more regulatory power. This new proposal, carving out a slice of the Internet for rich corporations to operate more quickly and cleanly, was apparently what he meant.

In his defense of the current FCC plan, Wheeler explains that we would all still have access to everything on the Internet. The proposal, he explains, “will restore the concepts of net neutrality consistent with the court’s ruling in January.” But that January ruling threw Net Neutrality out the window and it’s clear that with this new proposal our access to certain content will be slower, more prone to start and stop “buffering” and less crisp than the faster connection unless we pay more for it.

It’s like the locksmith assuring us that our broken door lock will remain broken.

If that spasm of regulatory double-speak doesn’t provoke a groan, the argument by decision defenders will: they say that, while the companies will pay for the faster connection, no access provider will charge the consumer more for it.

But the content provider will. Obviously an outfit like Netflix is not going to offer this higher speed service that it is paying the access providers handsomely for to customers without charging them more for it. In fact, if past practice is any indication, even those of us who don’t or can’t pay for faster internet service we will all see our fees for watching this kind of on-line content rise, whether we’re watching it on the faster connection or not. Netflix pays Comcast more and charges the pass-along costs (with some profit mixed in): just the kind of hustle Net Neutrality was invented to prevent.

If the proposal is approved, as is expected, Net Neutrality will be buried. But the true threat to the Internet’s existence isn’t only the “pay for speed” proposal. To make this happen, providing companies will have to restructure their technology to allow for a faster “lane” on the Internet. There already are, of course, various speeds of “high-speed” service and that is maintained by the company’s determining which connecting server the customer is going to access. When you enter the Internet you are immediately connected to a server that handles outgoing and incoming traffic at a specific speed. If you pay for higher speeds, you get the higher-speed systems with their servers.

All of this, however, has up to now been handled at the user or customer level. The Internet itself remains the same. What the FCC is proposing is a new way of regulating speed. Now it is the content provider who is assigned a specific speed lane and any user who pays can access that high-speed content. To make this possible, the access provider will have to establish not a higher speed connection server but a completely separate connection to the Internet. This isn’t a faster lane on the highway; it’s a completely separate highway.

With that “alternate Internet” established, and with a small empire of developers continuously improving it, the power of providers to control all Internet content is now in place. They can start with Netflix, but they legally have power to channel any Internet content over that super-highway, leaving most content providers in the dust. That will certain include most websites your visit, including this one. As speed over the Internet improves with new technological development, guess where most of the development investment is going? As new streaming technology improves, content developers will have to pay to take advantage of it and most of us just don’t have that kind of money.

The impact is also international because the Internet has no national boundaries and the rules governing any U.S. based company apply to all its activities world-wide unless the government of a specific country objects. That objection will rarely happen because most governments won’t care or will take a pay-off (in the form of a tax payment or licensing fee) to shut up. In fact, governments all over the world can now treat this as another form of revenue.

This kind of corporate control over the Internet and our communications is frightening and control is what the corporations are seeking. It’s been the goal of every major company to control as much access as they can, growing their “user-base” and profits in the process. In fact, the prospect of a wide open internet has now attracted a couple of “data giants”: Google and Facebook. Each company is now developing technology to provide access to everyone on earth using signal bouncing balloons (in Google’s case) and drones and satellites (in Facebook’s). While both companies protest that their intentions are altruistic (providing Internet to all humans), the timing of their plans in light of this decision seem like the good old pursuit of profit.

Rhe main question isn’t whether these people will try to do this because that’s answered by their history: Of course they will. The question then is: What is the FCC doing about it?

This week, coalitions of Internet freedom activists were making plans to make their presentations before the FCC and to lobby Congress and to do letter-writing campaigns to just about any concerned person in government. All of this has proven to be important and useful work and it has ended in some successes in the past.

But why should any of us have to do this? Isn’t the very role of the FCC to protect and represent the public? While neo-con steroids that have been driving it for the last two decades, the FCC’s legal responsibilities remain the same: not to protect the interests of corporations but to protect our interests against corporations.

Clearly, with a proposal that represents corporate interests, the FCC isn’t doing any such thing. Some of us aren’t surprised; none of us should be.

Princeton Concludes What Kind of Government America Really Has, and It's Not a Democracy

By Tom McKay April 16, 2014 


The news: A new scientific study from Princeton researchers Martin Gilens and Benjamin I. Page has finally put some science behind the recently popular argument that the United States isn't a democracy any more. And they've found that in fact, America is basically an oligarchy.

An oligarchy is a system where power is effectively wielded by a small number of individuals defined by their status called oligarchs. Members of the oligarchy are the rich, the well connected and the politically powerful, as well as particularly well placed individuals in institutions like banking and finance or the military.
For their study, Gilens and Page compiled data from roughly 1,800 different policy initiatives in the years between 1981 and 2002. They then compared those policy changes with the expressed opinion of the United State public. Comparing the preferences of the average American at the 50th percentile of income to what those Americans at the 90th percentile preferred, as well as the opinions of major lobbying or business groups, the researchers found out that the government followed the directives set forth by the latter two much more often.

It's beyond alarming. As Gilens and Page write, "the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy." In other words, their statistics say your opinion literally does not matter.

That might explain why mandatory background checks on gun sales supported by 83% to 91% of Americans aren't in place, or why Congress has taken no action on greenhouse gas emissions even when such legislation is supported by the vast majority of citizens.

This problem has been steadily escalating for four decades. While there are some limitations to their data set, economists Thomas Piketty and Emmanuel Saez constructed income statistics based on IRS data that go back to 1913. They found that the gap between the ultra-wealthy and the rest of us is much bigger than you would think, as mapped by these graphs from the Center On Budget and Policy Priorities:

Piketty and Saez also calculated that as of September 2013 the top 1% of earners had captured 95% of all income gains since the Great Recession ended. The other 99% saw a net 12% drop to their income. So not only is oligarchy making the rich richer, it's driving policy that's made everyone else poorer.

What kind of oligarchy? As Gawker's Hamilton Nolan explains, Gilens and Page's findings provide support for two theories of governance: economic elite domination and biased pluralism. The first is pretty straightforward and states that the ultra-wealthy wield all the power in a given system, though some argue that this system still allows elites in corporations and the government to become powerful as well. Here, power does not necessarily derive from wealth, but those in power almost invariably come from the upper class. Biased pluralism on the other hand argues that the entire system is a mess and interest groups ruled by elites are fighting for dominance of the political process. Also, because of their vast wealth of resources, interest groups of large business tend to dominate a lot of the discourse. America, the findings indicate, tends towards either of these much more than anything close to what we call "democracy."

In either case, the result is the same: Big corporations, the ultra-wealthy and special interests with a lot of money and power essentially make all of the decisions. Citizens wield little to no political power. America, the findings indicate, tends towards either of these much more than anything close to what we call "democracy" — systems such as majoritarian electoral democracy or majoritarian pluralism, under which the policy choices pursued by the government would reflect the opinions of the governed.

Nothing new: And no, this isn't a problem that's the result of any recent Supreme Court cases — at least certainly not the likes FEC v. Citizens United or FEC v. McCutcheon. The data is pretty clear that America has been sliding steadily into oligarchy for decades, mirrored in both the substantive effect on policy and in the distribution of wealth throughout the U.S. But cases like those might indicate the process is accelerating.

"Perhaps economic elites and interest group leaders enjoy greater policy expertise than the average citizen does," Gilens and Page write. "Perhaps they know better which policies will benefit everyone, and perhaps they seek the common good, rather than selfish ends, when deciding which policies to support.

"But we tend to doubt it."

Rigging the Electoral System for the Rich

Wednesday, April 9, 2014 by OtherWords
Either through electoral channels or a constitutional amendment, the American people must fight back against Supreme Court rulings like Citizens United and McCutcheon.
by Marge Baker


A poll conducted late last year found that more than seven in ten voters think our election system is “biased in favor of the candidate with the most money.

While nothing about this number is surprising — except, perhaps, that it’s not even higher — it does reveal the depth of cynicism characterizing Americans’ perceptions of our political system. We believe, correctly, that the system is rigged for the rich.
Especially in the wake of this month’s McCutcheon v. FEC Supreme Court decision that allowed our country’s wealthiest to dump even more money directly into our elections, it’s easy to feel overwhelmed by the enormity of America’s money in politics problem.

But as always, the biggest dangers create the biggest opportunities for change. With the McCutcheon ruling, the Supreme Court added fuel to an already awakened giant — a nationwide movement to reclaim our democracy that’s gaining steam like never before.

More than 150 events took place in 41 states and the District of Columbia the day the ruling came out, with activists pushing for a full range of long and short-term solutions.

A stream of rally photos showed thousands of committed citizens who are rejecting cynicism and pushing for change.

Of course, one avenue toward reducing the extent to which money is distorting politics is the courts themselves. When we cast our ballots in the last presidential elections, some of us were thinking about the connection between who we elect as president and the outcomes of campaign finance cases decided by the Supreme Court.

But not everyone recognizes that there’s a direct link. When you vote for a president, or for a senator, you’re not only electing those people for their term of office; in many ways, their most lasting legacy is who they will nominate and who gets confirmed to sit on our nation’s judiciary.

A change in the composition of the Supreme Court could have massive implications for our democracy. Both Citizens United v. FEC, the infamous case that opened the door to unlimited corporate political spending, and this month’s McCutcheon v. FEC were decided 5-4 with strong dissents. Some sitting justices have spoken out against Citizens United since it was decided.

It’s important for voters to know that our democracy was upended by a single vote. Justices Breyer and Ginsburg went out of their way to issue a separate statement in a 2012 Montana corporate spending case calling into question whether “in light of the huge sums currently deployed to buy candidates’ allegiance, Citizens United should continue to hold sway.”

As we elect new presidents who appoint new justices – and elect new senators who confirm or reject them – we can help turn the tide back toward restoring the constitutional power of the American people to impose reasonable limits on money in politics, a power demolished by the arch-conservatives on the Roberts Court.

Another equally important and parallel change effort we should be supporting is the push for a constitutional amendment to overturn Supreme Court decisions like Citizens United and McCutcheon. Constitutional amendments are, and should be rare — reserved for the direst circumstances.

But with the power of regulating our elections and protecting our democracy stripped away from “We the People,” this is one of those moments. Everyday Americans and elected officials across the country agree: More than 16 states and 500 towns and cities have already gone on record in support of an amendment that would overturn these cases.

And 149 Members of the House and Senate are now on record in support of constitutional remedies. Such an amendment would establish an important bulwark against future right-wing Supreme Courts.

Whether by changing the court or changing the Constitution, the decisions that have gutted our campaign finance laws have got to go. Our democracy is too valuable to be undermined by a court interested in protecting wealthy special interests at the expense of the rest of us.

New American Reality: An Empire beyond Salvation

Thursday, April 10, 2014 by Common Dreams
by Ramzy Baroud

US Secretary of State John Kerry couldn’t hide his frustration anymore as the US-sponsored peace process continued to falter. After 8 months of wrangling to push talks between Israel and the Palestinian Authority forward, he admitted while in a visit to Morocco on April 04 that the latest setback had served as a ‘reality check’ for the peace process. But confining that reality check to the peace process is hardly representative of the painful reality through which the United States has been forced to subsist in during the last few years.

The state of US foreign policy in the Middle East, but also around the world, cannot be described with any buoyant language. In some instances, as in Syria, Libya, Egypt, the Ukraine, and most recently in Palestine and Israel, too many calamitous scenarios have exposed the fault lines of US foreign policy. The succession of crises is not allowing the US to cut its losses in the Middle East and stage a calculated ‘pivot’ to Asia following its disastrous Iraq war.

US foreign policy is almost entirely crippled.

For the Obama administration, it has been a continuous firefighting mission since George W. Bush left office. In fact, there have been too many ‘reality checks’ to count.

Per the logic of the once powerful pro-Israel Washington-based neoconservatives, the invasion of Iraq was a belated attempt at regaining initiative in the Middle East, and controlling a greater share of the energy supplies worldwide. Sure, the US media had then made much noise about fighting terror, restoring democracies and heralding freedoms, but the neo-cons were hardly secretive about the real objectives. They tirelessly warned about the decline of their country’s fortunes. They labored to redraw the map of the Middle East in a way that they imagined would slow down the rise of China, and the other giants that are slowly, but surely, standing on their feet to face up to the post-Cold War superpower.

But all such efforts were bound to fail. The US escaped Iraq, but only after altering the balance of power and creating new classes of winners and losers. The violence of the invasion and occupation scarred Iraq, but also destabilized neighboring countries by overwhelming their economies, augmenting militancy and creating more pressure cookers in political spaces that were, until then, somewhat ‘stable’.

The war left America fatigued, and set the course for a transition in the Middle East, although not the kind of transition that the likes of former Secretary of State Condoleezza Rice had championed. There was no ‘New Middle East’ per se, but rather an old one that is in much worse shape than ever before. When the last US soldier scheduled to leave Iraq had crossed the border into Kuwait in Dec 2011, the US was exposed in more ways than one. The limits of US military power was revealed – by not winning, it had lost. Its economy proved fragile – as it continues to teeter between collapse and ‘recovery.’ It was left with zero confidence among its friends. As for its enemies, the US was no longer a daunting menace, but a toothless tiger.

There was a short period in US foreign policy strategy in which Washington needed to count its losses, regroup and regain initiative, but not in the Middle East. The Asia pacific region, especially the South China Sea, seemed to be the most rational restarting point, and for a good reason.

Writing in Forbes magazine in Washington, Robert D. Kaplan described the convergence underway in the Asia pacific region. He wrote, “Russia is increasingly shifting its focus of energy exports to East Asia. China is on track to perhaps become Russia’s biggest export market for oil before the end of the decade.”

The Middle East is itself changing directions, as the region’s hydrocarbon production is increasingly being exported there; Russia is covering the East Asia realm, according to Kaplan, as “North America will soon be looking more and more to the Indo-Pacific region to export its own energy, especially natural gas.”

But the US is still being pulled into too many different directions. It has attempted to police the world exclusively for its own interests for the last 25 years. It failed. ‘Cut and run’ is essentially an American foreign policy staple, and that too is a botched approach. Even after the piecemeal US withdrawal from Iraq, the US is too deeply entrenched in the Middle East region to achieve a clean break.

The US took part in the Libya war, but attempted to do so while masking its action as part of a larger NATO drive, so that it shoulders only part of the blame when things went awry, as they predictably have. Since the January 25 revolution, its position on Egypt was perhaps the most inconsistent of all Western powers, unmistakably demonstrating its lack of clarity and relevance to a country with a massive size and influence. However, it was in Syria that US weaknesses were truly exposed. Military intervention was not possible – and for reasons none of which were moralistic. Its political influence proved immaterial. And most importantly, its own legions of allies throughout the Middle East are walking away from beneath the American leadership banner. The new destinations are Russia for arms and China for economic alternatives.

President Barack Obama’s visit to Saudi Arabia in late March might’ve been a step too little too late to repair its weakening alliances in the region. Even if the US was ready to mend fences, it neither has the political will, the economic potency or the military prowess to be effective. True, the US still possesses massive military capabilities and remains the world’s largest economy. But the commitment that the Middle East would require from the US at this time of multiple wars and revolutions is by no means the kind of commitment the US is ready to impart. In a way, the US has ‘lost’ the Middle East.

Even the ‘pivot’ to Asia is likely to end in shambles. On the one hand, the US opponents, Russia notwithstanding, have grown much more assertive in recent years. They too have their own agendas, which will keep the US and its willing European allies busy for years. The Russian move against Crimea had once more exposed the limits of US and NATO in regions outside the conventional parameters of western influence.

If the US proved resourceful enough to stage a fight in the South China Sea and the East China Sea, the battle – over energy supplies, potential reserves, markets and routes – is likely to be the most grueling yet. China is not Iraq before the US invasion –broken by decades of war, siege and sanctions. Its geography is too vast to besiege, and its military too massive to destroy with a single ‘shock and awe’.

The US has truly lost the initiative, in the Middle East region and beyond it. The neo-cons’ drunkenness with military power led to costly wars that have overwhelmed the empire beyond salvation. And now, the US foreign policy makers are mere diplomatic firefighters, from Palestine, to Syria to the Ukraine. For the Americans, the last few years have been more than a ‘reality check’, but the new reality itself.