Tfgray’s Weblog

I’m a day late with my continuation, with apologies. Got caught up in the Barry ‘n Dickie duelling national security banjos. Interesting stuff. Rachel Maddow was ahead of the pack, as usual, in picking out the fact that, while Obama eleoquently explained what’s wrong with the Bush/Cheney national security strategy, he’s proposing one that is even more illegal: indefinite preventive detention.
It’s an interesting conundrum. Cheney’s willingness to use extralegal means of getting information (apparently in his quest to prove things that weren’t true, but that he desperately wanted to be) have now created a situation in which the evidence, accurate or not, is inadmissable under law. Heck of a job, Dickie. Of course, seeing as the very thought of incarcerating terrorists in Super Max prisons [cue scary music] scares the beejeesus out of nine-tenths of the Senate, one can only imagine how popular letting them out on a technicality (a la Ted Stevens) would be. Obama’s got a real flaming bag of dog mess on his front porch. Neither stomping out the flames nor letting it burn is an option.

Bush/Cheney, the gift that keeps on giving. Evil geniuses who planned this out in advance in order to further totalitarian control of the increasingly restive populace or paranoid opportunists lurching from one crisis to the next? We report, you decide.

The other “best of” coverage was CNN’s word cloud, demonstrating visually that Obama spoke of Americans, detainees, and people, while Dick Cheney’s vocabulary is remarkably similar to Rudi Guiliani’s–a noun, a verb, terrorists, and 9/11. Without the dress. But I digress…

So, back to the issue of  wealth distribution. I mean, what’s fair? I just read a NYT article about Vietnamese hot sauce. The guy started making the stuff decades ago in Vietnam, ground the peppers by hand, sold it in hand- packed baby food jars, saved his money, moved to America and is now selling $10 million a year worth of hot sauce, you know, the stuff with the green cap and the rooster on the bottle that is starting to show up everywhere. This is great! I have no problem with a good product making it’s inventor wealthy.

But down the road, here’s where a problem can develop. The issue is power. And face it, in our “money talks, bullshit walks” culture, Money = Power.

For example, when Ben & Jerry developed a dee-licious array of ice cream flavors and started to expand beyond their parlor and into supermarkets, Pillsbury, maker of Haagen Daz, bribed supermarkets to keep B&J off the shelves. The Vermont boys, being geniuses, triumphed, by making an end run around the massive Pillsbury legal department and taking it directly to the press and public with their “What’s the Doughboy afraid of?” campaign.

Not everyone is that clever. Or lucky.  Watch Matewan, if you’d like a pretty accurate look at early union organizing. If you’re in a hurry, you can skip to the last 10 minutes or so.

The Boston Tea party is another example. No, they were not protesting “government” or even taxation per se. They were protesting Big Business abusing the British taxation system. Nobody died that night, but it set off a series of events that included numerous fatalties, AKA “The American Revolution.”

You could also look at Central and South America in the Eighties, where thousands of people “disappeared,” if you’d like to see what happens when 1% of the population controls 90% of the wealth.

The issue, as I see it, is not the size of Government, but who controls it and whose interests it serves. (That’s where that “eternal vigilance” part comes in.) You can read McMafia, if you’d like to see how a small, weak government is no defense of Liberty, unless you define “Liberty” as the right of gangsters to take over your country and run its economy. (As the late Gary Webb wrote, “Unlike many legitimate industries that merely pay lip service to the concept, the cocaine industry is a fervent believer in the get-government-off-our-backs philosophy of commerce.”)

This problem is not new. It is, in fact the problem that the Founders addressed. 

“’Great wealth has never made a man happy. Rather than fill a vacuum, it creates one.”

–Ben Franklin

Or, if Ben’s not good enough for you, here is Justice Louis Brandeis’ take:

We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.

At some point, the amassing of wealth turns into the defense of wealth. I suppose that some would say that the two are concurrent, at least for some people.  What happens then is that the Haves see any attempt by the Have Nots to share in prosperity as a frontal attack. There have been a few extremely wealthy individuals who understand that this is not a logical position. Henry Ford paid his workers well, understanding that every employee who could afford to buy a car was a potential customer. Warren Buffett resists the British East India Company-like demands of his peers that capital gains be untaxed. But there’s more here. As Anna Chenault said, ”Power overpowers all reason.” (I’m sure she was talking about Communists, not powerful people like herself, but I think it applies to the Right as well.)

I’m going back to my favorite Founder, Ben:

All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.

Let’s look at an example of how this works. Would Microsoft or Apple be where they are today if the military hadn’t funded the development of the Turing Machine? If the military hadn’t developed the Internet, and Al Gore pushed through the legislation that made it more than a toy for the universities and military? Would they have access to as many skilled programmers if the State University system had not evolved? Yeah,  taxpayer loot financed that, too.

Would Walmart, whose founder’s children have occupied the bottom half of the Forbes Top Ten Wealthiest individuals for as long as I’ve been paying attention, be able to function without the Interstate Highway System, another one of those ”pork barrel projects” that Conservatives and Libertarians love to rail against? Oh, they’d put their stuff on trains. Um, the railroads were kickstarted by the Civil War-era Railroad Act that gave free land to the railroad companies, who then mortgaged it to provide capital for the actual construction. And then there’s Walmart’s outsourcing their employee benefits program to the Feds by keeping their employees’ hours and pay so low that they can get on Medicaid. Sweet.  See what Franklin meant about those who benefit most from the common changepurse being obliged to kick more back in? It’s not, as Grover Norquist would have it, “theft.” It’s paying your club dues, or, in the case of Walmart, paying for services rendered.

Okay, so what’s the fairest way to do this? Set limits on how much a person can own or earn? Nah, That would just drive high-achievers nuts, although I can see where executive compensation has gotten way out of line lately. Hand out a bunch of money so every one is “equal?” Nah. As long as there’s booze, bad health, and stupidity, we’d still have rich people and poor people.

Here’s a thought: following Franklin’s principles, why not tax higher incomes more steeply? There’s a certain amount of empirical data showing that it works: the 1950’s, when the top tax rate was 90%, the nation was remarkably prosperous. Keep in mind how a progressive tax system works: the first $8000 or so of every person’s income is tax-free. The next $20K or so gets hit at 10%, and it goes up from there. No, the top tax rate does not mean that that percentage of that person’s entire income goes to the gummint, just the amount over a specified amount, or “Bracket.” (If you already understand this, my apologies for being so basic, but a lot of people talk like they don’t. If you don’t believe my numbers, click here and remember that you start counting after all your deductions and exemptions are subtracted from your income.)

Some interesting math evolves when you raise the tax rates. First off, people have more incentive to give to charity, since that way they can control what the money is spent on, as opposed to just throwing it into the Federal pot. Second, businesses have more incentive to keep the money in the business, investing it in ways that improve the business’ functioning, or even benefit workers, as opposed to pulling it out and throwing it at fancy restaurants and thousand dollar shoes, not to mention abominations like Ken Lay’s infamous $6,000 shower curtain. (Those whom the gods would destroy, they first make mad.)

When the progressive income tax was a steep slope, the nation prospered. When it flattened, there was a burst of economic activity as the nation’s wealth shifted to the top, and stagnation since. Wealth moves from the bottom to the top. It’s source lies in the earth, in the form of raw materials and food. Human labor, often ill-paid, harvests it, and each step of the way to the consumer, it’s value roughly doubles. There needs to be a way to complete the cycle, returning liquidity to the bottom of the economic system, or the well runs dry. One way to do this is Charity, but Charity is voluntary and, since Ayn Rand, looked down upon. A progressive tax system, managed honestly, with the funds going to public entities: schools, libraries, hospitals, sewer systems, parks, transit, infrastructure, that benefit all is a highly effective means of doing this.

Sorry, Libbers and Conservatives, if you object to this notion. Go live among savages, and if the bridge to your island needs repairs, pass the hat.

A note: If  you read carefully, you’ll note that I have no bone to pick with Read so far as the production end of things goes. My issue is with the distribution of the spoils, as it were, and lest you think I am against all things Republican, I’d like to say that one of the most brilliant government policies ever enacted came from Richard Nixon (bet you weren’t expecting that.) Revenue sharing. A portion of all income tax collected was divvied up and channelled to communities (with those with a lower tax base getting larger amounts) to be spent on community projects according to priorities set at the local level. I think it neatly got around the problem of low-income communities having little or nothing to spend on public works and its sister problem of some guy in an office a thousand or so miles away telling you what to spend the money on.

My son (who just graduated with his BS in Electronic Engineering Technology last weekend, Go, Jake! You rock!!) Okay, enough embarrassing my kid. Anyway, he brought this essay to my attention. Apparently, Michelle Malkin really likes it, as does Milton Friedman. You can read the whole thing here. For those of you in a hurry, it celebrates the miraculous nature of the humble pencil. (Leonard E. Read’s term, not mine.) It’s a sweet and enthusiastic essay on how millions of people must co-operate to create something as simple as a pencil: Sri Lankan graphite miners, Oregon loggers, the sailors who haul graphite from Sri Lanka, the campesinos who pick the coffee beans that keep the miners, sailors, and loggers functional, etc, etc. The part that struck me was this:

Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me. Each one wants me less, perhaps, than does a child in the first grade. Indeed, there are some among this vast multitude who never saw a pencil nor would they know how to use one. Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants.

Okay, so far so good. People cooperating to create a product because somebody needs that product. It gets better, however:

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.

In the absence of “human masterminding?” Like nobody’s managing inventory at the pencil plant and ordering cedar slabs and graphite? Has this man ever run a business?

So my question for Read (alas, he no longer available to answer it) Malkin, Friedman, et al, is this:

If, as he says, that the miner, logger, and pencil company president each only contribute a tiny bit to the production of this amazing object*, then why is it that the Sri Lankan graphite miner lives in a hovel with his hungry children, the Oregon logger lives in a trailer, and the pencil president is a millionaire?

I think people can pretty much figure out how to create goods and services and buy them and sell them to/from each other. No problem with that. The Soviet master planners pretty much showed that their way of doing things didn’t work a-tall. But why is it that the rewards of all these miniscule contributions to the humble pencil are so wildly skewed?

Oooh, the Conservatives and Libertarians are going to scream over that line. I think it’s about balance, though. I keep coming back to Ben Franklin’s observation that not only is the accumulation of wealth addictive, it, like any other uncontrolled addiction, is ultimately harmful to society. 

If I could get every person on the fact of the earth to give me a dime, I’d have $650 million dollars, but that’s not likely to happen. Half the world’s people live on less than $2 a day. They flat out can’t afford it. So, you see, that whole poverty problem, you could say, is a distribution problem.

It’s getting late. I’ll have more thoughts on distribution tomorrow.

Just asking. 

* Read Hyemeyohsts Storm’s Seven Arrows for a passage relating to “the amazing object,” particularly the sentence “The amazing object died.” Then reflect on Read’s elevation of the pencil to semi-divine status.

Well, I wondered when this would come along, and didn’t have to wait long. Rush Limbaugh wept crocodile tears for the deaths of  ”black, Muslim, teenagers” on the order of President Obama. And referred to the pirates as “Merchant marine organizers.”

Scroll down to yesterday’s post, to the link to the Foreign Policy magazine article, “The Pirate Economy.” Oh, heck, I’ll save you the trouble of scrolling.

Where to start?

Words fail me,  so I will turn the blog over to my evil right-wing twin, Rhonda Rayguns, to explain.

“Pirates are the coolest example of pure lassez fair capitalism out there! No rules! What could be better? You see, it’s the way of nature that the strong should suceed and the weak get eaten, right? I mean, it’s a business. You’ve got wealthy Somalis without jack shit to invest in, I mean Somalia’s practically a desert.  So they look at this great profit opportunity, all those big freighters and oil tankers cruising past and they see an opportunity. They finance starving fishermen , buy them guns so they can attack the ships and hold them for ransom. This is called “job creation.” How could anyone in their right mind be against creating jobs for poor fishermen? I suppose we’re just supposed to send them free food? And it gives further stimulus to the global economy by all that money moving through insurance companies, and then, of course, there will be future job creation as the merchant ships arm thenselves and hire mercenaries. See, it’s a win-win situation!”

If you don’t believe me, read Frank’s book, particularly the chapter, “The Bantustan that Roared” about Saipan, a beautiful tropical island that has become one of the sweatshop hellholes of the world. (Part sweatshop hellhole, part horny tourist mecca, actually.) Well, Somalia’s not quite up to Saipan’s level. You see, Saipan actually has a government. One controlled by the businessmen running the sweatshops, and it has a police force, which it really needs. Otherwise, who would go out and beat the snot out of those uppity guest workers when they ask for decent working conditions?

When you look at the rhetoric coming from the Right, about secession, about protesting Obama’s tax cuts, about the general hatred and loathing of all things Government, right down to public schools, you really have to wonder what their goal is.

So long as you are looking at the guys out in the street, nothing makes much sense, unless you figure that just by getting pissed off you can bring back a job for hubby that will let wifey stay home and homeschool the kids. Okay, maybe you have to click your heels together three times, or something.

Never mind that American corporations massively increased their profits by outsourcing better-paying manufacturing jobs. Never mind that $100 billion tax dollars each year sit tidily in off-shore bank accounts, running up tax bills for all those guys with tea bags decorting thier hats. Never mind that American post-WWII prosperity rested upon the bedrock of cheap oil prices and abundant domestic supplies, which increased drillling will not restore.

“We’re running out! “

“I know how to fix it! We’ll use it up faster!!”

Obviously, at least according to these guys,  the reason they’re feeling the squeeze is: Taxes!

However there’s another way to look at all this. it’s a concerted effort by the biggest of businesses and their owners to eternally and infinitely increase profit at the expense of everyone else. And the consequences of that, which history has shown over and over, (including the society contemporary to our original Revolution) is tyranny, the rule of the many by the few.

In this brave new world we live in, all this talk of destroying the rights and the very livelihoods of Americans is now called Freedom, and ripping the country into a collection of sovereign states, Patriotism. Let’s hope the dittoheads wake up to how they are beig manipulated soon, before they get what they ask for.

Go here to read essays by AIG employees:

“We Were Betrayed!”

There are 3 links to other stories at the bottom of this one. Their perspective can be summed up in the lyrics of a Bone Poets Song (Great pacific NW band, BTW.)

Deep in the dark, in the boiler room of plenty, we stoke the banker’s fire.

These are the people who work in the boiler room, talking about how those fat bonuses were a substitute for 15 years of not getting raises, of how those who relocated to London saw their rents multiply five times over while their pre-bonus paychecks remained the same. How they had their jobs put on the line by bosses who demanded they make trades they felt were unwise–and with that loss of bonus, which would put them into an economic hole if they quit hanging over their heads, they went along–and how the boss who pushed them into those unwise business practices is walking around with his more than quarter billion dollar net worth intact.

Okay, we”re talking about very well-paid wage slaves, but still, it’s interesting to see that the pattern that exists at the bottom of the socioeconomic heap permeates the entire system. As individuals, they are as subject to the “You can be replaced” threat as any busboy, and there are thousands of well-trained mathematicians and traders standing in line to take their places.

Employee Free Choice Act, anyone? What would our economic system look like if, say, the AIG Financial Products (AIGFP) employees had gone to their union rep complaining of their boss’s abusive behavior? According to them, his giant profits (built on sand) earned him carte blanche with his superiors, and life or death power over his subordinates. Were they just chicken, or was this a situation in which having the sort of countervailing force that comes from being a member of a large organization, devoted to employee interests, could have created both better working conditions, more equitable pay, and more honesty and transparency in the business itself?

When will we learn that the power of the elite Few can–and must, in a Democracy–be balanced by concerted action on the part of the Many? That it’s okay, wise, and perfectly normal to join with others in the pursuit of common dreams. That the Cult of the Individual is a sham, foisted upon us by those who would use the oldest techinique in the imperial arsenal to their advantage: Divide and Conquer.

Joe Conason, writing at Salon, brings up an interesting point. Okay, don’t be put off by the title, “Dick Cheney Was Right.”

Remember, back in the day, when Republicans insisted that “Deficits don’t matter?” I mean before they lost their shirts in the last election and decided that Deficits Will Destroy Us?

Joe makes a good point. Deficit spending got us out of the Great Depression. The humungous deficit spending package known as WWII not only stopped Fascism, (“The unification of State and Corporate power,” per Benito Mussolini) but also created the industrial base for three decades of unparalleled, widespread prosperity. To use the household metaphor that Republicans are so fond of these days, there’s a difference between borrowing to, say, build a house and borrowing to, say, go on a foreign adventure. There’s a difference between spending that hard-borrowed cash frugally on projects that will bear fruit later on, like, say, planting fruit trees or putting your kid through college, and blowing it at the casino.

It’s not the size of the deficit, it’s how you use it.

Just finished watching Obama’s speech and Jindal’s response. Even allowing for my pro-Obama bias, I think he hit a home run. By the end, even the Republicans were giving him standing ovations. He made his points clearly and addressed opposition concerns. He framed our current situation in terms of challenge and opportunity.

Bobby Jindal, not so much. The first detail I noticed, before he even made his appearance, was the Louisiana state flag on the right of the screen. It shows a pelican pulling feathers from her breast to feed her blood to her young. For those of you who did not have a Catholic upbringing, that is the symbol of Charity.  Just a bit of irony from the governor who is threatening to deny his citizens the benefits of their federal tax dollars. Ok, just those dollars that would put food on their tables while they’re hunting for their next job. Nice start.

Unlike the President, who is renowned for looking not only elegantly attired, but comfortable in his skin, Governor Jindal looked as nervous as a high school boy on his first date. He delivered his speech in a voice that reminded me of Mr. Rogers. On a Voice Thing (see previous post) scale of 1-10, I’d give it a 2.5.  He criticized statements Obama made a couple of days ago and soundly overwrote in this evening’s speech, making himself look out of the loop. He criticized FEMA’s conduct under Bush (without naming names, of course) giving it as an example of the way government must inevitably function.  After eight years of Bush secrecy (Remember Cheney’s Energy Task Force?) he slammed Obama for lack of transparency. Apparently he’s counting on a mass outbreak of Alzheimer’s.

He then went on to criticize Democrats’ refusal to include Republican proposals in the stimullus package, ignoring the concessions wrung by Specter and the good ladies from Maine, while proposing a continuation of Bush’s deregulatory policies. Oh, and he criticized the non-existent plans for that Disneyland to Vegas rail system before launching into what appeared to be his first campaign stump speech.

I’m with Annamarie Cox, appearing on Rachel Maddow’s show.

GAH!

Prediction:  Personally, I think Jindal scotched his presidential hopes in this speech, but I’m not a conservative Republican and have limited access to their thought processes. (See previous post What are Republicans Thinking? re Cantor’s braggadocio over his boys being resoundingly defeated in the stimulus package vote.) So maybe Jindal will get the 2012 nomination, unless he loses an arm-wrestling contest to Governor Palin. (Don’t bet against it).  The Republicans will allow their Right wingnuts the honor of losing to Obama in that cycle. This will have (from the country club Republican point of view) the benefit of discrediting their rightward fringe and not damaging the chances of any of their standard-bearers in 2016. Look for another ex-governor Bush tossing his topper into the ring then.

I’ve asked that question a few times in my posts recently, and thought I’d spend this one at deductive reasoning, as in “who benefits from the policies Republicans favor?” I mean, these people occupy influential positions. They can’t be stupid. Or crazy.

Then Alan Keyes gave a truly gob-smacking interview in which he asserted that “Obama must be stopped by any means,” normally short-hand for assassination. And The New York Post printed the infamous dead chimp cartoon. Rush Limbaugh compared liberals to murderers and rapists. (Remember the fellow who shot up his ex-wife’s church children’s pageant? He said he did it because he couldn’t get to the real Evil Liberals.) And, in a lighter vein, Mr. Clean Airwaves, Rep. Eric Cantor, posted not just the obscenity-laden AFSCME remix, but a YouTube vid celebrating his party’s impotence against the stimulus to the tune of an Aerosmith oldie about having sex with a hooker.

Oh, yeah, back in the saddle again.

Okay, I am still going to write this piece, even though my premise, that recent Republican antics are not the product of dopieness, delusion, or, well, dope, may not be accurate.

Cui bono? Who benefits? This question has been used in criminal investigations since the Romans. Let’s look at a few Republican policies one by one, and remember the Underpants Gnome business plan:

1. Steal underpants.
2. ????
3. Profit!

•  Savaging clean water standards = a rise in sales of bottled water and water filters. Profit!!
• Reduction in mine safety standards = digging more coal out of depleted mines, workers lives be damned. Profit!!
• “Deficits don’t matter” when they result from massive government spending to defense contractors and massive waste and mismanagement of said funds. Profit!!
• “Deficits will be the death of America!!” when funds go to average people in the form of food stamps or unemployment benefits. It’s instructive to note that the Republican governors who quibble over taking Stimulus money seem willing to take all but those funds dedicated to extending unemployment benefits. Who benefits? Employers who can watch desperate people line up for the chance to get substandard wages and non-existent benefits. It’s also interesting to note how many of those governors are already well above average when it comes to Federal funds entering their states pre-stim. You’ll note that the spokesman for those governors is Tim Pawlenty, who along with Texas Governor Rick Perry (who just bailed on his resistance) is, the only one on the list who’s below average on that score. Louisiana, Alaska, Mississippi, and South Carolina all get more from the Feds than their citizens pay out. In addition, people without a safety net will be more inclined to deplete their resources (cash in their IRAs and 401Ks, sell or be foreclosed out of their homes, sell their jewelry, etc.) this would allow prices to fall further and Rich Dad, Poor Dad practitioners to sweep up assets at pennies on the dollar. In other words, Profit!!
• Opposition to healthcare: Medicare, Medicaid, SCHIP. Okay. I will grant that this results logically from the belief that no one should get anything they can’t afford to pay for, but here’s the problem. If your goal is to cut wages and benefits to the bone to maximize profit, then, the more you succeed, the less your employees will be able to afford health care. (See previous post, Casey Jones, CEO.) And in what way does having more sick people benefit American business? I’d like to hear the other side of that argument.
• Allowing infrastructure to decay = pressure to sell public roadways to cash-heavy consortiums who can afford to make the needed repairs, and then install tollbooths. Profit!!
• Oppostion to renewable energy, global warming remediation, and environmental concerns in general = continued reliance on oil and maintenance of the global power elite, plus cost-savings on environmental controls, with the costs pushed off the corporate books in the form of increased illness in downwind and downstream populations and remediation costs, such as Superfund sites and the horrendous clean-up of the recent fly ash disasters in Tennessee pushed off on the general public. Profit!!

I’m seeing a pattern here. It’s called creating economic pressure to put public resources into private hands, where they can create profit for those wealthy enough to own them, in tandem with shunting all costs away from the corporations and their owners to the general public.

The Republican Party serves the interests of the economic elite. They may make occasional noises about the Right to Life, (until you’re born) National Defense, (as long as it’s profitable) and Public Decency, (as long as you don’t listen to the lyrics of their YouTube postings or pay attention to Rush Limbaugh’s substaance abuse) in order to get votes from those who don’t belong to their country club, but their primary, eternal, platform is, “What’s in it for me?”

Conservatives, clinging to their principles, still maintain that if everyone simply were to look after his or her own interests, the world would function perfectly; that regulations and rules are unnecessary. For those of you who haven’t been paying attention, let me explain why this hasn’t worked.

CEO example #1, let’s call him Angelo Mozillo, makes his fortune by selling mortgages. While banks lend money and patiently wait for it to trickle back to them in the form of principal and interest, drop by monthly drop, Angelo figured out that he could make his profit on closing costs and fees and sell the mortgages to those desiring  a steady income, freeing up his capital immediately to loan out for new mortgages. Brilliant!

The low hanging fruit is picked, and his employees, to meet their quotas, are forced to reach higher and higher up the tree, or deeper and deeper into the bottom of the barrel, pick whichever metaphor appeals to you. But hey, everybody wins: buyers get mortgages, employees get their bonuses, investors get their perfectly safe mortgage-backed securities, and Angelo gets rich.

Which brings us to CEO #2, let’s call him, um, Mitt Romney. He makes his fortune by buying failing companies and restoring them to profitability. The biggest tool in his drawer is reducing labor costs. Obviously, it works. He’s worth (before presidential campaign expenses and possible recent stock market losses) about half a billion dollars, or approximately $10,000 for each of the 50,000 American workers he has downsized.

But hey, his remaining employees are happy to have jobs. That has to count for something.

The lure of low mortgage rates generated record sales, and the consequent demand pushed housing prices up. Meanwhile outsourcing and layoffs increased the supply of available workers, keeping wages low.

Now, you have two formidable wealth-generating engines hurtling down the tracks. The only problem is that the tracks are not parallel. At some point the Making Mortgage Payments track will intersect with the Laying Off Workers track. That point being approximately Here, and Now.

Who could have seen this train wreck coming?

Someone, it seems, was asleep at the switch. Oh, wait. There was no switchman. What do switchmen produce? Nothing! Eliminate that money-eating, profit-destroying job, the fatty-assed bureaucrat! Switchmen just get in the way of the locomotives, telling this one to wait, while the other blazes past. No fair!

I’m not pretending that the above is some kind of brilliant insight. If I’d written it 5 years ago, maybe, but now the results are all to obvious for me to take credit for anything other than expressing it in cute metaphors. There is still a sizable group of Republicans, however, who cling to the notion that switchmen are unnecessary to the safe and continued functioning of railroads, metaphorically speaking, and I have to ask, what are they thinking? CEOs, by nature and job description, focus on the profitability of their own enterprises, and like locomotive engineers whose job is to focus on the track in front of them, they may well be unaware of the rest of their surroundings and where their train is in relation to other trains. Unlike the switchman, sitting high in his tower overlooking the train yard, they are not positioned to see the Big Picture. Few even try, although those who do, like Bill Gates and Warren Buffet, tend to be the most successful of all.

Or as the Grateful Dead so brilliantly put it,

Drivin’ that train, high on cocaine.

Casey Jones, you better watch your speed.

Pharaoh had a dream, a vivid, recurring dream of seven fat and seven skinny cows. Only Joseph could interpret it.

“There will be seven years of plenty followed by seven years of famine,” he said, and further advised that the surplus be conserved and stored to sustain the nation through the lean times. Pharaoh took his advice and Egypt prospered.

Fast forward a few millennia, and we had our seven fat years, also known as the Clinton presidency. The budget was balanced, we lived, as a nation (although not necessarily as individuals) within our means, we saved for the future, and prosperity abounded.

Then we got a new pharaoh. Despite his affinity for the Bible, he ignored the wisdom of Joseph and gave the national treasure away. Everybody got some, but those closest to him, the “Got Mines” and the “Got Mores” got most of it. He started a war and ran it badly, squandering borrowed money to pursue his dreams. He repealed or refused to enforce laws that protected investors, saying that thieves would lose and honest investors gain, simply by the natural functioning of the marketplace, apparently in the same way that closing all police precincts will protect us from crime.

In eight short years, his rule transformed us from the world’s wealthiest creditor nation to the world’s greatest debtor. Policies begun under Ronald Reagan and pushed even further by George W. Bush, caused wages for working people to stagnate. The percentage of income going to the top 1% of the US population now stands at 20%. The last time US income distribution reached that degree of concentration was 1928, and the greatest herd of Lean Cows in our history stampeded across the landscape.

The greatest herd until now.

One definition of insanity is doing the same thing repeatedly and expecting a different outcome. The conservative economics of the 1920’s returned with a vengeance under “Supply Side” Republican rule, beginning in the 1980s, and despite a respite under Clinton, ground inexorably toward the same result. In a rational economy, under a rational government, the cyclical nature of reality is acknowledged and, like Pharaoh, or any wise householder, the fat years’ surplus is retained and disbursed during the lean years as a way of maintaining social stability. (Economists, especially the Neo-conservative economists whose principles ruled until recently, just love the work rational.  Here I will cite the computer programmer’s rule: GIGO Garbage In, Garbage Out. The most perfect logical process is only as good as the data fed into it.)  Where a rational person would look to savings to get them through the lean times,  just as Pharaoh did under Joseph’s wise guidance, we find that they and their theories have squandered our sustenence. We’re like the woman who lost her job and discovered that her husband had gambled all their savings away, and run up massive credit card debt, as well. She has to buy groceries. Is it wise to use her credit card? No. Does she have a choice?

Getting back to Holy Writ, it’s interesting to see that the Communist Chinese are better at following it than we are. When times were good, and we bought everything they could manufacture, they saved, both as individuals and as a nation. Now that trade has fallen off, their government, using the surplus they conserved, has launched massive infrastructure spending to keep employment up. They did it right. We, with our emphasis on forgetting that the government is the collective arm of the people, not some free-floating entity, allowed our government and ourselves to become wastrels, and are now discovering the results of that policy.

There’s another biblical concept I’d like to bring up: Charity. People often think of it as an unpleasant thing you do for the moral brownie points, like eating spinach or flossing. Others point out that givers get at least as much of an emotional boost as recipients. I’d like to propose a third possibility. Just as the Ten Commandments provide a behavior code that reduces interpersonal conflict in society, Charity, the cycling of resources from the top of the heap to the bottom, keeps the economy revving. I will go further and suggest that the effect is the same, whether the mechanism is personal choice, minimum wage laws, or progressive taxation.

It’s no coincidence that financial jargon uses terms related to water: liquidity, frozen assets. When the well of consumer spending runs dry, when the rain of charity doesn’t fall from above, the crops fail, and the cows get skinny.

Well, it’s just come out that bank lending really hadn’t frozen up the way they said it had. And that $700 billion, at least the half that’s been distributed, hasn’t increased bank lending. And that the little sentence in the Bailout Bill that prohibited any of that taxpayer largess going to executive bonuses was revised to say it only applied to funds disbursed via auctions of toxic securities. And there were no auctions. And the executives get their bonuses. And it’s all perfectly legal.

Go ahead, go back to my first post on the bailout. I will quote from it:

It’s a scam.

Actually, go back and read up on how the first Great Depression came into being:

1. Overextension of credit, leading to an investment bubble.
2. Major investors quietly pull out their capital.
3. Credit is curtailed to ordinary folks.
4. Major deflation, unemployment, etc.
5. Asset prices decline while those with capital sit on the sidelines.
6. When asset prices have cratered, big money buys them up for 10 cents on the dollar.
7. Massive government economic stimulus (on the order of WWII) reboots the system.

Or, you could just watch South Park. Months ago, when I first blogged on this subject, my son told me it was an Underpants Gnome scheme. I just got around to googling the term. Wikipedia features a deadpan recounting of the infamous underpants gnome episode of South Park. For the uninitiated, I will sum up:’

Underpants gnomes are small, humanoid creatures that steal underwear. They are businessmen, however, and can prove it by showing you their business plan:

1. Steal underpants
2. ???
3. Profit!

The first paragraph, above, outlines at least one of the ?s. Except it’s $700 billion worth of underpants we’re talking, here, which, if logic serves, would make Hank Paulson the world’s tallest underpants gnome.