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Is Democracy Sick?

14 Oct

 

With the Russians continuing to mess with us, it might be time to consider an alternative system of government. Perhaps Plato can guide us.

 

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The Trump-man Show puts an end to the Sounds of Silence

5 Feb

The Black Death, a killer of 20 million, had its good points

7 Feb

black-death

Being the progeny of immigrants, I’m sympathetic to their cause. Still, I’m convinced large-scale, legal immigration has hastened the withering of the middle class.

There have been other causes, including changes in tax policy and the global economy. But I was surprised to learn recently how significant an impact immigration had on the downward spiral of wages.

With thousands and thousands of Baby Boomers leaving the work force for retirement, wages should be going up. That’s the simple law of supply and demand. Immigration, however, has provided a counter balance and prevented this. Indeed, opening the borders sometimes seems like a purposeful antidote designed to help labor-intensive corporations. This is mostly likely why the U.S. Chamber of Commerce is a strong advocate of robust immigration.

Congress, perhaps responding to appeals by business, has frequently and consistently raised the level of legal immigration. In 1965 it was at 290,000 annually. Today it is about 1.1 million. This is legal immigration, and it is four times higher than any other country.

how-many-is-too-manyPhilip Cafaro, author of “How Many Is Too Many? The Progressive Argument for Reducing Immigration Into the United States,” gives a thorough accounting of all this in a recent edition of the Chronicle of Higher Education.

Cafaro sites studies by Harvard University economist George J. Borjas, a leading authority on the economic impact of immigration. Borjas found that in the 70s and 80s, a 10 percent increase in the number of workers in a given field decreased wages there by 3.5 percent. A more recent study showed that such an increase reduced wages of African-Americans by 4 percent, lowered their employment rate by 3.5 percent and increased their incarceration rate by almost one percent.

It’s good at least that today there is a great deal of talk about the withering middle class. Even Republicans now recognize it will be a critical issue in the 2016 presidential race. In an attempt to get in front of the issue, candidates like Jeb Bush are already saying they want to reverse the trend, although they provide few details.

If politics were not a factor, a solution could be easily found.

The strong post-war middle class in the U.S. was created primarily by tax policy. This policy was heavily graduated, meaning you paid a lot more if you made more a lot more. That policy no longer exists. Returning to it would easily restore the middle class, but it is unlikely the Republican Congress will choose this route.

Jeb-bushThere is, however, a consensus that a middle class, if one is desired, must be created, otherwise there will only be rich and poor. One was created in Europe during the 14th and 15th centuries. Unfortunately, the creative force was the Black Death — the bubonic plague that may have killed one out of every three Europeans (about 20 million). With the labor force devastated, there was upward pressure on wages and the ability of farmers to earn a much better living. Some reports say farm income increased by 50 percent.

In addition to creating the middle class, the plague often is credited with spawning the cultural rebirth known as the Renaissance.

The Black Death is a high price to pay for a middle class, even if it is accompanied by a renaissance. Changes in the tax and immigration policies might be a better way. But because government move in micro increments, this is unlikely. Any significant change probably will have to come through some unseen, forced hand.

If this is true, let’s hope it’s a kind one.

By Lanny Morgnanesi

Goldman Sachs: Altruism for a profit

27 May

goldman-sachs,jpg

Investment powerhouse Goldman Sachs has made money with schemes that were ingenious, inventive, complex, arcane, morally vacant and, some might say, criminal. Now it hopes to make money by exploiting the dysfunctions of government.

 

Goldman has long mastered the art of generating cash without actually producing a product. Its techniques include:

 

  • Using influence to rig a trading system in its favor.
  • Finding a market where it can buy low and then finding a second market where it can sell high.
  • Identifying gross inefficiencies that are costing someone or something money and offering to fix them.

 

Goldman’s new plan is along the lines of the third. The firm is financing crime reduction measures in Massachusetts in exchange for a percent of what is saved by not having to incarcerate thugs.

 

Ingenious, inventive, complex.

 

New profit center for investors

New profit center for investors

This type of investment carries an extra dividend: It makes Goldman Sachs – a villain in the eyes of the Occupy movement – look like a Good Guy. Indeed, the investment vehicle designed to reduce crime is called a social impact bond, or in Wall Street parlance, an SIB.

 

Some view these investments as a marriage between capitalism and charity, but capitalism is the strong, dominant partner.

 

Bloomberg Businessweek reported on Goldman and the SIBs in early May. Writer Esme E. Deprez cites a prediction by the Rockefeller Foundation that the market for SIBs is growing and by 2015 will reach $500 million.

 

That’s a lot of social impact, enough to give government the idea that it no longer is responsible for maintaining order and structure in society. Or has it already decided that?

 

According to the Businessweek article, Goldman is investing $9 million and betting that crime will go down – or more accurately that young men will spend fewer days in jail.

 

The bonds help fund a program called the Massachusetts Juvenile Justice Pay for Success Initiative. In that program, a non-profit agency called Roca works with young adult males on probation. The agency provides outreach, therapy and training. After two years, participants are supposed to leave, take a steady job and lead a crime-free life.

 

If a graduate stays out of jail for a year, Massachusetts saves $12,400. If the state is able to reduce crime enough to close a 300-person prison, it saves $47,500 per inmate.

 

This is how the SIBs and Goldman get paid off.

 

In this particular case, Goldman has partnered with other investors who financed an additional $12 million in bonds, making the total $21 million.

 

The bonds earn 5 percent no matter what, but pay nothing else until the men in the program manage to spend 22 percent fewer days in jail. There’s a sliding scale for payment, with a maximum of $27 million being paid to bond holders if jail time is reduced by 70 percent.

 

It’s a risk, like a junk bond, but $27 million for a $21 million investment is pretty good money (28 percent profit) and worthy of the risk.

 

Roca had been working with 375 men. With the SIB money, it can handle 550.

 

A skeptic might look at all this and ask:

 

  • Why doesn’t Massachusetts put up the $21 million itself and forego the $6 million payout to investors?

 

  • Why doesn’t society as a whole recognize that employed people from stable families commit fewer crimes?

 

  • Why does the nation exclude million of people from an otherwise viable system of commerce, education and opportunity and allow the existence of acres and acres of urban decay that breed crime and insanity?

 

There are clear answers to these questions. I won’t go into them because our preference is to ignore them, deny them and maintain a monstrous blind spot in spite of religious teachings, well-intended laws and glorious, inclusive rhetoric.

 

But as a culture, we have reached an all-time low when we allow things to get so bad

that Goldman Sachs can make money off our failures. The promise of money, more so than altruism or mere brotherhood, does seem to get things done. Perhaps we can turn the VA hospitals over to Goldman. With all those returning vets, there’s got to be a profit in there somewhere.

 

By Lanny Morgnanesi

 

On the Coming Middle Class Revolution

29 Sep

inequality

The problems of poverty and inequality have always bothered me. This is so even though I’ve not been poor nor have I ever lived among the poor.

Why then, I ask myself, do I have this strong sense that it is morally wrong to allow the sad side of civilization to exist?

Others are free of this burden, why not me?

The great religions speak against poverty and urge attention and compassion. Yet legislators who profess these faiths will happily cut  $40 billion from the food stamp program.

While my empathy for the poor and the marginal working class is hard to shake, so, too, is my view that the rich and everyone else would benefit financially, spiritually and culturally from a more egalitarian society. They key to this society is the easy ability to get and hold a job that ensures freedom from want.

In such a society, billion-dollar food stamp programs are unnecessary.

You don’t need public housing or a bloated Medicaid system.

And because people would have more pride and self-respect, society would need fewer courts, cops, prisons and mental health facilities.

There would be great savings.

People would have money in their pockets and the business community would thrive.

There is little downside, except perhaps that the very rich would have slightly less money and corporations would not be able to amass huge cash surpluses.

By contrast to this semi-utopia, I find the present oligarchical society unpleasant and dangerous. And let’s face it, Thomas Jefferson aside, that’s what it is – an oligarchy.

The decline of the Great American Cities is but one example of the damage caused by too few people holding too much money, which is unfairly channeled to them through favorable tax policy and special interest legislation. Let them keep what they earn, what they deserve, what they spent a lifetime building, just check their greed when it denies others.

Prior to the great transfer of wealth upward, average people helped keep the cities vibrant by living and working in them. It doesn’t take an archeologist to figure out what went wrong. Go there and see the shells of empty factories right next to abandoned neighborhoods.

There are complex reasons for this, but most damaging has been the systematic dismantling of the middle class.

No nation can be strong without a fully functioning, accessible middle class.

With globalization and the extreme growth of markets in developing countries, this reality has been ignored. It is ignored because the American middle class is needed less and less as consumers of goods and services. Jobs  can be eliminated and wages kept low because support can be found abroad.

A Sept. 17 report by the U.S. Census Bureau says American men who worked full-time in 2012 earned less in real dollars than men in 1973. Yet the GDP in the U.S. has tripled. Where did all that wealth go?

To the top.

fast food strikeAmericans speak well of their one revolution but don’t expect another. Even so, revolution is more common today than ever, and the oligarchy should be cautious not to push too far. For the first time in a very long time, average people are noticing that class warfare is being waged against them. Those who work in the exploitive fast food industry are slowly standing up. They are not asking for $1 more, or $2 more; they basically want their salary doubled to $15 an hour.

That’s bold.

Those fighting for a more equal society have adopted a new name for what they seek: social justice.

That’s convincing and unthreatening. Who could be against that? As a result, their influence is growing.

More than people, however, it is raw statistics – overwhelming and indisputable — that are leading the charge. These figures are so dramatic that a director named Jacob Kornbluth, working with former Labor Secretary Robert Reich, has made a movie out of them.

It’s called “Inequality for All” and is getting wide notice in the media. It won at Sundance. The people seem ready for it.

In such times, even Forbes magazine feels comfortable pointing out that in 35 states welfare payments are higher than minimum wage.

Tim Cook, Apple CEO

Tim Cook, Apple CEO

that the $378 million compensation for Apple CEO Tim Cook is equal to the combined salaries of 6,258 Apple employees.

And for the quaint people who still read books, Sasha Abramsky has written, “The American Way of Poverty: How the Other Half Still Lives.” It suggests that inequality is designed for social control and that poverty is a key component of the American system that, ultimately, will destroy democracy.

Meanwhile, in higher education – once a critical component of upward mobility — there is a great deal of hand wringing over declining enrollment. The concern is that colleges and universities are doing something wrong, and that the traditional model no longer works. In truth, there is nothing wrong with the model. What’s wrong is that without a middle class there isn’t much need for colleges.

Many will close.

Unless … the middle class fights back.

Amazingly, the democratic system allows it to do that. Even though the system is rigged with sophisticated gerrymandering and unrealistic requirements for campaign funding, there is still a way to change government.

The normally passive middle class could rise up. They would do so after watching, reading, fuming, sharing horror stories and trying to support children who can’t find jobs.

If they can begin to organize and act with conviction, they won’t even have to work up a sweat. Real revolution is unnecessary. The attentive members of Congress don’t need a weatherman to know which way the wind blows. They sway easily. They took care of the middle class and built up the economy after World War II.

They can do it again.

The golden years in America – for the middle class and nearly everyone else – were from about 1945 to 1980. Let’s bring them back. All it takes is for several hundred thousand Twitter fanatics to take to the streets, maybe even with assistance from the very poor (the saddest of all). It will be a movement the media will surely glorify as “The American Spring.”

It need not be messy.

We can call it a revolution without it really being one.

We can get people working again and get the economy moving again. Optimism will flourish again. We can reach out and reach up. We can do it all together.

The wonderful thing is the uncompassionate can do this for purely selfish reasons.

As the king said, what you do to the least of my brothers …

By Lanny Morgnanesi

The dreaded Star Chamber returns in 21st Century garb

7 Jul

tahrir_square_001

Some people have been wishing me a happy birthday, but it is not my birthday. They were being kind and polite, but they were wrong.

They had been advised by a large, rich, influential corporation to send the greeting, and they did. Prior to this, the large, rich, influential corporation had asked me for my birth date and I gave the wrong one.

On purpose.

It was not to confuse friends. It was to confuse the large, rich, influential corporation and those who acquire its data. I sought to foul the digital path toward me.

I maintain a fantasy that if and when powerful forces decide to come get me, they will go somewhere else as a result of my deliberate misdirection.

In truth, my silly little protests are minor and of no consequence. They are done more for spite than protection.

I’m not afraid of the large, rich, influential corporation known as Facebook (although I probably should be). What I’m afraid of are the people who have easy access to its data and much more; mainly the United States government.

Without evoking too much laughter, one could say the U.S. government today is fairly benign when it comes to privacy violations.  In other words, don’t expect it to come get me or you any time soon. But governments evolve toward darkness rather than light, and ours is rapidly headed toward the shadows.

The progression starts with good intentions. Since the 9-11 attacks, and even before, Washington has worked hard to protect us from terrorists. It has done an exemplary job.

The problem comes as government experiences a gradual desensitization, thinking less and less of our constitutional rights, and an increased boldness, sense of mission and sense of self-importance. Those at the top come to feed on power, like a drug, and need higher doses. It’s a common pattern. Without suggesting in any way that our present government resembles the Third Reich – for it does not — that historical example is perhaps the most explanatory of this tendency toward the gradual erosion of rights.

The good citizen can become monster. It is wholly within our nature.

Well before the digital revolution, I read the novel “1984” by George Orwell. It induced the appropriate amount of fear, but also inspired the idea for a whimsical story. The story takes place in the setting of “1984,” when all actions are monitored by TV cameras. The main character is someone who watches what the cameras record. He does not like his job and does it poorly, leaving a large security breach. In order to break his boredom, he uses the TV cameras mainly to find women.

The story was never written, but it was to have ended with the realization that many people working as monitors were apolitical, lazy and uninterested in advancing the state’s cause. The reality was that people actually were much freer than they thought because no one really was watching them. An underground resistance group learns of this weakness (it is headed by a woman contacted by the main character) and exploits it to lead a successful revolution.

In the digital age, no one needs to spend endless hours watching TV monitors. With minimal human involvement, massive amounts of data are sucked up and quickly analyzed. If you are the type of person the government wants, or if you have done or said something it finds objectionable, a computer spits out your name and the government comes and gets you.

If you live in Pakistan it sends a drone.

How does all this happen in a constitutional republic like the U.S.?

Who approved it? Who rules on its legality?

Star ChamberIn 17th Century England there was the hated Star Chamber.  In 21st Century America we have the FISA. They are similar.

FISA stands for Foreign Intelligence Surveillance Court. The New York Times wrote about it today. Like the Star Chamber, it operates in secret.

Its origins were in approving case-by-case wiretapping orders. Now its 11 members serve as a parallel Supreme Court. The Times says it is “the ultimate arbiter on surveillance issues and delivering opinions that will most likely shape intelligence practices for years to come.”

It let’s the NSA be the NSA.

Edward J. Snowden, the former National Security Agency contractor the government is desperately trying to get its hands on, last month leaked a classified order from the FISA permitting the collection of all phone-tracing data from Verizon business customers.

The Times quotes a source saying the court’s “still-secret decisions go far beyond any single surveillance order,” and that it is establishing a growing body of law.

Which leads back to my fake birthday.

If government spooks, acting in secret, insist on scooping up all data from emails, cell phone calls, Facebook posts, “likes,” Tweets, Instagram photos (software will recognize your face), and God knows what else, try to make it at least slightly less useful for them.

Try simple things at first. If you go to the supermarket and aren’t buying anything on sale, don’t give the Bonus Card to the cashier. If you download a new app, don’t let it track you, and don’t sign on using Facebook, which gives Facebook new data in addition to everything else it has. Be careful with “likes.” They paint a profile of you, as do your contacts if you let others have them (guilt by association is part of data analysis).

And please, don’t write email thinking it is private. Try putting the words “Nikon 3200” into an email. It is very possible that shortly after you will be served an ad by a camera store.

These small bits of advice won’t protect you. They are equivalent to a few hundred people in Tahrir Square. Those few hundred, however, can become a few thousand, then tens of thousand, then a million. Then an authoritarian government is brought down.

And that is why I may love you, but I won’t ever “like” you.

Be vigilant, and don’t give it all away.

By Lanny Morgnanesi

Communist is jealous of former Communist

3 Jul

Putin-Xi Jinping

Xi Jinping, the president of China, visited Moscow in March for talks with Vladimir Putin, the president of Russia. Xi is a Communist. Putin used to be one. Still, the non-Communist impressed the still-Communist with all the things his country is doing for its people.

Back home, Xi told the Chinese how impressed he was with Russia’s ability to care for its citizens. In the U.S. we call this welfare, food stamps, handouts and the dole. Those who don’t get it resent government for giving it. But Xi thought it was noble and Putin said any government that denies its people the basic components of life has no heart. Worse, he said, doing so creates stress, anxiety, dissatisfaction, crime and turns people into animals.

Xi seemed concerned that China has not done quite as well as Russia. He told his people that Russia provides five guarantees:

  1. Free housing.
  2. Free medical care (but not medicine).
  3. Free education (including one meal a day).
  4. Free public water.
  5. Government review and approval before any company can layoff off a worker.

Putin, a tough old bastard who was a lieutenant colonel in the KGB, sees this as civilized and helpful in building the economy and keeping people happy and productive.

Would you be happier and more productive with these things? Or would you hate yourself and your government?

I always thought we didn’t have these things because the rich people had taken all the money. But in post-Communist Russia the rich people also have taken all the money.

So how do they do it?

Maybe by using what they saved from pulling out of Afghanistan.

I’ll end with a joke – a true story.

A former United States secretary of defense during the Cold War visited new Russia and was amazed.

“Everyone is rich,” he said. “They drive big cars, smoke big cigars, have money bulging out of their pockets. On their arms are beautiful women. It is just like Beverly Hills, except there are fewer Communists.”

By Lanny Morgnanesi

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