Relevant and even prescient commentary on news, politics and the economy.

Wealth Inequality and Sentimental Credit

By Noni Mausa

Wealth Inequality and Sentimental Credit

I go to the store and buy a loaf of bread. But I haven’t actually harvested a loaf of bread (unless I am a shoplifter.) I have, instead, used a tiny scrap of credit to mobilize a farmer, a baker, a truck driver, and probably a score of others to exert their skill and energy to have a loaf of bread there when I arrive.

Though my credit is sliced very thin and passed around to these dozens of people, and though it travels backwards in time, so to speak, to reward them, it is merely a placeholder for an exchange of human effort.

My “credit” is not necessarily cash or even money. It is simply whatever leverage I can wield to direct human effort to my benefit. Sometimes, of course, it takes the form of cash, but just as often it can manifest as pity, fear, misdirection, beauty, hope, hatred, fun, or family feeling.

One way to increase one’s own power is to increase your ability to work one or another of these levers. Currently, people focus on only one of these – the possession of money, in the forms of cash, investments, steady incomes, etc.

When the possession or control of cash increases in a small group, we call this wealth inequality. But another way to increase inequality lies in reducing people’s access to non-cash credit, what you might call sentimental credit.

Sentimental credit is the credit the poor depend on when all else is stripped from them. This is the reason why people in the poorest countries are often described as generous, welcoming, lovely, cheerful, honourable, charitable, and keenly alive to community and family connections. It’s why these people create intricate art and music and wonderful food out of the unlikeliest poor materials, and tell long and fascinating stories. It’s why their land, however poor, is seen as their home, with loyalty, respect and family-feeling.

In deeply poor communities, sentimental credit circulate available resources, earns respect and trust, cultivates family feeling, builds pride, and basically keeps things together. People in these societies who aren’t generous, who are miserable to be around, who take but never give, who take no pride in skills, who know no stories, and yet are not actually crippled and thus deserving of assistance — these people don’t have anything to trade. They have little or no sentimental credit. Such people can get along fine if they have a good supply of cash and can live in a relatively anonymous society. Otherwise, they are, ahem, evolutionally impaired.

How does this apply to the descent of America into an unequal society?

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Michigan Lame Duck Legislature

The Republican controlled House and Senate has been largely busy passing bills in the few days left in 2016. This particular one caught my eye.

Michigan had put in place a new Unemployment System (Michigan Data Automated System or MiDAS) to help in detecting unemployment fraud. With the passage of Senate Bill 1008 by the Republican led House, $10 million is transferred from the Unemployment Contingent Fund to the General Fund to be done with in the General Fund as determined by the Republican held Legislature.

Just a little history; MiDAS was put in place (2013) by Governor Rick Snyder of Flint, Michigan fame to automate the system away from the manual process. The system sends out a series of questions, which the Unemployment Applicant has to answer picking from listed answers. There is no room for explanation. The claimants chosen answers from the list of answers are then loaded into the MiDAS data base and notification is sent to the former employer who then confirms the answers the claimant has listed in the system. If there is any discrepancy, MiDAS assumes the claimant has committed a potential fraud.

Another questionnaire is then sent to the claimant, which is also limited to listed responses. If you do not respond in 10 days, it is assumed a fraud has been committed as determined by MiDAS. A notice is “supposedly” sent out and the claimant has 30 days to answer. If no notice is sent out and the claimant does not answer, MiDAS assumes fraud and the issue goes to collections where just about anything can take place to collect the unemployment funds already given to the claimant. There is little or no human interaction throughout the process and little can be done to explain circumstance during the process.

The Michigan Unemployment Insurance Agency, partly at the request of the federal government and partly on its own, reviewed 22,427 cases in which a computer determined a claimant had committed civil fraud between October 2013 and October 2015 and found that 20,965 of those cases did not involve fraud. Unemployment Insurance Agency spokesman Dave Murray said on Wednesday. That’s an error rate of more than 93%.”

The $10 million will be transferred from the Unemployment Contingent Fund which had already grown by 400% after the MiDAS caused spike in fraud cases of which nearly all of them unfounded. Senate Bill 1008 is balancing the state budget on the backs of innocent citizens wrongfully accused of false unemployment claims.

Governor Rick Snyder spent $47 million of taxpayer funds to install MiDAS which has been shown to be correct in determining fraud < 7% of the time. Rather than give the funds to those who were unjustly denied Unemployment Compensation by MiDAS, the Republican led Michigan legislature and Republican governor Rick Snyder are keeping much of it in the Unemployment Contingent (used to train workers and for rainy days) and will also transfer $10 million of it to the General Fund to help balance the budget. This is the same as using the additional Medicaid funding received from the expansion to balance the budget rather than set it aside for later years which would have kept Michigan from having to add to Medicaid funding till 2027. It too was used to balance the budget. By doing so in both cases, the Republicans do not have to raise taxes on the rich in income.

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GOP PLANS TO GUT SOCIAL SECURITY

by Dale Coberly

GOP PLANS TO GUT SOCIAL SECURITY

The  Republicans have opened a new assault on Social Security.  At present all I know about it is what I read  in a Talking Points Memo by Tierney Sneed   Key House GOPer Introduces Bill With Major Cuts To Social Security .

The trouble with Sneed’s article is that she does not appear to know what she is talking about.  She just wrote down what some “experts” told her with no idea what the words mean.

For example, she says,

“A 65 year-old at the top of the scale, a $118,500 average earner, would see his benefits cut by 25% when he retired, compared to the current law, and that reduction would grow to 55 percent compared to current law by the time the retiree was 85 years old.”

Well, which is he, “at the top of the scale”  or an “average earner”?

The point is probably trivial but I point it out so you will be on your guard if you read her article.

Additionally she quotes Paul Van de Water,  who is someone who actually knows that Social Security can be fixed entirely and forever by simply raising the payrolll tax one tenth of one percent per year until the balance between wage growth and growth in the cost of retirement is restored.  But somehow she doesn’t bother to mention this,  or maybe Van De Water forgot to mention it because he favors a “tax the rich” solution…  without understanding that that will turn Social Security into welfare as we knew it, and lead to its ultimate destruction by those rich who would then be paying for it.

Social Security has succeeded because Roosevelt insisted it be paid for by the workers who would get the benefits, “so no damn politician can take it away from them.”

But the damn politicians keep lying and journalists keep repeating the lies without spending ten minutes thinking about them.

The basic “facts” about the Republican proposal, introduced by Texas Congressman Sam Johnson appear to be :

gradually raise the retirement age from 67 to 69. 

This amounts to a benefit cut of about 10%,  but that’s not the worst of it.  Raising the retirement age is simply a death sentence for people whose health is not up to working another two years, or won’t live to collect benefits for more than a few years after they retire.

change the cost of living adjustment to reduce real benefits as the retiree gets older.

This is called a “technical adjustment.”  They can pretend that the CPI is too generous and know that most people won’t understand the scam.

the size of initial benefits will be cut for most workers by catastrophic amounts.

This turns Social Security into a straight welfare plan.  Most people will be paying for benefits they will never get. The very poorest are promised a larger benefit for awhile…  until the bogus cost of living adjustment, and increased retirement age do their work.  Moreover it is not clear what happens to “the rich”  who lose their “side income” as they get older.  And of course there is always the fun of going to the welfare office every month  to prove that you don’t have any hidden assets.

Meanwhile, the CRFB  (Committee for a Responsible Federal Budget). an organization dedicated to the destruction of Social Security by misrepresenting the facts, is playing cute games like “use our calculator to find out how old you will be when SS runs out of funds.”

But SS will never run out of funds as long as the workers are allowed to pay… in advance…for their own benefits. With no change at all in SS, SS will pay 80% of “scheduled benefits,”  but this is 80% of scheduled benefits which meanwhile have grown 25% in real value.  So the GOP “plan to save SS” is out and out theft.

CRFB has another cute game: “use our calculator to design your own plan to save social security.”  But when I used their calculator it did  not allow “increase the payroll contribution by one tenth percent (for each the worker and the employer) per year for twenty years.

There are other ways to accomplish the same end, but this seemed to be the simplest way to fit the CRFB “calculator.”   Someone with more time and a newer browser might want to try seeing what they get.  But look at small per year increases in payroll contribution.  For example, I think a 0.4% increase (combined), about two dollars per week for each the worker and the employer,  should solve the problem in ten years,  but I haven’t done the numbers on that myself.

Meanwhile, something that calls itself “the Bipartisan Policy Center, says “Ultimately, we are going to need something that’s a little more balanced between benefits saving and revenue changes in order to get a proposal that could pass Congress and get approved by the president,” said Shai Akabas, director fiscal policy at the Bipartisan Policy Center.”

It’s hard to see how much cuts (“benefit savings”) make sense to balance a dollar a week increase in the payroll tax (revenue changes),  but that’s the kind of thinking that “Bipartisan” gets you.  “Hey folks,  we can save you a dollar a week just by gutting Social Security so it becomes meaningless as insurance so workers can retire at a reasonable age.”

I am getting too discouraged.  As long as no one is working to tell the people how this will work for them,  we are just going to stand around like sheep and watch them cut our throats.

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Alan Greenspan Forecasts Extremely Low Economic Growth for Germany, Finland, Norway, Denmark, Sweden, Holland and Canada

Alan Greenspan, the former chairman of the Federal Reserve, weighed in last week on one of the pressing issues facing the incoming Trump administration and the country — slow economic growth. Greenspan’s explanation is novel and bound to be controversial. To preview: He blames the welfare state and overall uncertainty for the slowdown. …

By scouring economic statistics, Greenspan thinks he’s discovered heretofore hidden relationships that explain weak productivity growth.

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A Particularly Poignant, and Revealing, Juxtaposition of Politico Articles Published a Day Apart

Terry Havener, 62, a retired union carpenter, pictured with Johnstown in the background. He was hoping for Bernie. He voted for Jill Stein. | Scott Goldsmith for Politico Magazine

– Photo caption in THE FRIDAY COVER: What Trump Voters Want Now The blue-collar workers who put Donald Trump in the White House are ready for him to deliver. How much time will they give him?, Politico, article by Michael Kruse, yesterday

Juxtapose that article with a Politico article by Ben White, from a day earlier, titled “Bankers celebrate dawn of Trump era: A populist candidate who railed against shady financial interests on the trail is putting together an administration that looks like an investment banker’s dream.

Yesterday’s article is mostly about lifelong Democrats in Johnstown, Penn., who voted at least once for Obama (who won the town and its county both times) but who voted for Trump, who there decisively.  So Mr. Havener is the exception in that he didn’t vote for Trump.  But neither did he vote for Clinton.

These are not Trump’s “base” voters, and they make clear that Trump will not hold them for long by trying to lie his way through his administration.  The Mad Hatter routine will not work with them.  This will be the most virulently pro-corporate, pro-already-extremely-wealthy administration since Warren Harding’s, and they will know it.

Elizabeth Warren on Thursday gave a fairly detailed speech on the Senate floor listing Trump’s many statements and explicit promises to working-class voters, juxtaposed with the express positions of the people in charge of respective relevant parts of Trump’s transition team: an aggressive proponent of privatizing Social Security in charge of selecting top people at HHS, as just one of many specific examples Warren listed.

I would love to see ads run on Rust Belt media markets showing that part of Warren’s speech.  And then warning that Trump will simply say that he’s doing exactly the opposite of what he’s actually doing.  This is the way to fight this.  It is the only way to fight this.  These are not terribly expensive media markets.

These ads also should run through social media, on Facebook as ads and in news feeds, and in Twitter feeds.  They should become a regular feature of American life.  They would be funded in the same way that the Sanders campaign was.  And they should say that.

Meanwhile, there is the upcoming Thanksgiving weekend.  People should get this information to their relatives through Facebook ahead of the holiday, if possible, and at the Thanksgiving dinner if Trump is discussed.

____

ADDENDUM: Reader EMichael, who is originally from Pennsylvania, and I just had an exchange of several comments in the Comments thread that readers of this post will be interested in, I think.

Added 11/19 at 10:40 a.m.

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It’s Clear By Now That the Second-Most Powerful Person in the Federal Government Will Be Bernie Sanders.

The Big Question Is, Who is the MOST Powerful Person: Paul Ryan or Donald Trump?

“I think my title [of head of outreach] is to be head of outreach and that’s something that I take very seriously,” he said, without explaining any more about the new role.

But Sanders did pound home his remedies for the Democratic Party.

“We need major, major reforms to the Democratic Party,” Sanders said going on to say that Trump was able to tap into discontent among Americans who felt completely ignored by the rest of the American political system.

Trump, Sanders continued, “said I hear that you are hurting and I hear and understand that you’re worried about the future, about your kids, and I alone can do something about it — and people voted for him.”

Sanders went on to tick off the promises Trump made that Democrats would hold him accountable for.

“He said we will not cut Social Security, Medicare and Medicaid. Now I think that we should expand Social Security,” Sanders continued. “That is what he said, and pay attention to see what he now does. The question that will be resolved pretty quickly is whether or not everything that he was saying to the working class of this country was hypocrisy, was dishonest or whether he was sincere — and we will find out soon enough.”

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Redefining Political Correctness to Include Criticism of Appointments of Wall Street, Banking and Fossil Fuel Insiders to Regulatory Bodies

And Extreme Pro-Corporate Lawyers and Judges to the Supreme Court and the Lower Federal Courts. Seriously.

So far, the Trump transition team does not seem particularly concerned, for instance, about a transition team staffed heavily with lobbyists from energy, agriculture, transportation, and banking.

“Frankly, one of the refreshing parts of it about the whole Trump style is that he does not care about political correctness. From a practical standpoint, I have heard lots of people say, ‘Why would we box ourselves out of the most knowledgeable policy people in the country?’” said one source close to the transition team.

Donald McGahn II, a partner at the firm Jones Day and Trump’s lawyer, is expected to play a central role in vetting nominees. So is Arthur Culvahouse, Jr., a partner at the firm O’Melveny & Myers, who helped vet vice presidential candidates and, according to a source, has been helping the campaign organize its White House picks.

Culvahouse declined a request for an interview. None of the lawyers in the political law practice at Jones Day returned POLITICO’S calls. Culvahouse has faced backlash from colleagues at his firm for working with Trump, according to people familiar with the situation, with one person saying the decision was “amazingly controversial” within the firm. Many top partners at O’Melveny, including Tom Donilon, were vocal Clinton backers.

Trump advisers steamroll Christie’s transition: The new, top-down approach is likened to how Dick Cheney ran the Bush transition., Andrew Restuccia and Nancy Cook, Politico, today

Just so you know, Culvahouse played a large role in turning the Supreme Court and lower federal courts into a proxy arm of the far-right Chamber of Commerce, including in Citizens United but also in ways most people have no idea about but would really care about.  These are not pro-union justices and judges, nor are they pro-employee, pro-consumer, pro small-business, anti-financial-industry-fraud, or ant-securities-fraud.  Nor anti-fossil-fuel-industry.  For starters.

So.  From a practical standpoint, who do you think are all those people who are saying to this source close to the transition team, “Why would we box ourselves out of the most knowledgeable policy people in the country?”  And might that source close to the transition team be Mike Pence, who is so close to the transition team that he heads it?

And how likely do you think it is that among the many people who are saying this to the source is, say, a blue-collar voter from Toledo or Youngstown?  Or any region of Michigan?  Or Erie, Pennsylvania?

Or anywhere?

We’re extremely close to down-the-rabbit-hole language of the Arbeit macht frei variety, folks—something I saw last Saturday and mentioned in the update to this post.

George Orwell and Lewis Carroll are laughing.  Really hard.

Good god.  This is the most successful Trojan Horse since the original one. And every bit as sinister.  But also funny, in that this is what’s now called a top-down approach. Always great to see a new euphemism for insider corruption.

They’re not gonna box themselves in, folks.  But massive, intensive publicity might.

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The Democratic Establishment Thinks the Lesson of This Election Is That the Way For Democrats to Win Over White Voters In the Industrial Midwest Is to Switch Sides in the Culture Wars. I Guess. [Updated.]

The race to be the next head of the Democratic National Committee has quickly turned into a proxy fight between liberals and establishment types about where the party needs to go in the wake of Hillary Clinton’s stunning loss at the hands of Donald Trump on Tuesday.

Liberals are insistent that Clinton’s defeat was the result of nominating a candidate who failed to excite the party’s base of progressives, African Americans and Hispanics. Establishment voices fret that nominating a liberal to run the party misses the point of an election in which Clinton’s loss can be directly traced to her inability to win over white voters in the industrial Midwest.

“The next DNC chair needs to understand what became painfully obvious in the election — that there are two different Americas and that Democrats are really struggling to bridge the gap between the two,” said Mo Elleithee, a longtime Democratic operative who runs the Georgetown University Institute of Politics and Public Service. “The fundamental problem is that the party stopped really communicating what it means to be a Democrat.” …

“This is suddenly a really important gig as one of the centers of opposition,” said one longtime Democratic strategist who spoke on the condition of anonymity to candidly assess the DNC race. “You can’t do it part time, and you shouldn’t do it while sitting inside one of the most despised institutions in the country.”

What the DNC chair race tells us about the fight for the Democratic Party’s future, Chris Cillizza, Washington Post, yesterday

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THE SWAMP

The chant echoed through Donald Trump’s boisterous rallies leading up to Election Day: “Drain the swamp! Drain the swamp! Drain the swamp!”

“We are fighting for every citizen that believes that government should serve the people, not the donors and not the special interests,” the billionaire real estate developer promised exuberant supporters at his last campaign rally in Manchester, N.H.

But just days later, there is little evidence that the president-elect is seeking to restrain wealthy interests from having access and influence in his administration.

It’s not just corporate lobbyists who are playing early, visible roles in the new power structure. Some of Trump’s biggest political donors are shaping the incoming administration, including Rebekah Mercer, a daughter of billionaire Robert Mercer, who is figuring prominently in behind-the-scenes discussions, according to people familiar with the transition.

Mercer is among four major donors appointed by Trump Friday to a 16-person executive committee overseeing his transition. The others are campaign finance chairman Steven Mnuchin, New York financier Anthony Scaramucci and Silicon Valley investor Peter Thiel.

Meanwhile, top campaign fundraisers and a raft of lobbyists tied to some of the country’s wealthiest industries have been put in charge of hiring and planning for specific federal agencies. They include J. Steven Hart, chairman of the law and lobbying shop Williams & Jensen; Michael McKenna, an energy company lobbyist who is overseeing planning for the Energy Department; and Dallas fundraiser Ray Washburne, was has been tapped to oversee the Commerce Department.

Billionaires who served as Trump’s policy advisers, such as Oklahoma oil executive Harold Hamm, are under consideration for Cabinet positions.

Donors and lobbyists already shaping Trump’s ‘drain the swamp’ administration, Matea Gold and Tom Hamburger, Washington Post, today

LOL. LOL.  So how about a new chant for protesters: DRAIN THE SWAP!?

Why not begin this in, say, Youngstown?  With people who display their driver’s licenses bearing their Ohio addresses?

Funny what doormats Trump & Friends think Democrats are that next election they won’t campaign on this.  On second thought, why would they care?  The damage will be done by then, and Trump will still be president anyway.

But Sanders and Warren and others still need to start telling the public about this now, since it will otherwise get no attention even if the news media does focus on this like they did on Clinton’s emails.  Which they won’t.

 

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UPDATE:

Asked about the tensions, and about Kushner’s role in the leadership change at the transition team, Trump spokesman Jason Miller said, “Anybody seeing today’s news about the appointment of Vice President-elect Mike Pence to run the Presidential Transition Team realizes that President-elect Donald J. Trump is serious about changing Washington whether the town likes it or not. This might ruffle the delicate sensitivities of the well-heeled two-martini lunch set, but President-elect Trump isn’t fighting for them, he’s fighting for the hard-working men and women outside the Beltway who don’t care for insider bickering.”

It’s not uncommon for rivalries to emerge inside campaigns and administrations as advisers jockey to place allies in key roles and advance their policy priorities. But the level of internecine conflict during Trump’s drive toward the GOP nomination was so extreme that it sometimes resulted in conflicting directives for even simple hiring and spending decisions.

Trump team rivalries spark infighting, Kenneth P. Vogel, Nancy Cook and Alex Isenstadt, Politico, late last night

This is about as Orwellian as anything I’ve ever heard.  This is profoundly sick.

I’m done posting on this.  There’s nothing more for me to say.  Other than this: Does anyone really think that the public would not have known about these people and their role in funding Trump’s campaign and their getting what they were paying for, if Sanders had been the nominee?

Anyone?

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