Category Archives: economy

Laboratories Of Democracy

If the states are, as Justice Louis Brandeis famously once said, “laboratories of democracy,” then Kansas has just proven that “trickle down economics” doesn’t work. Like other forms of snake oil and quackery, it should be banished from any serious discussion about the economic remedies we need to fix whatever ails us.

In case you missed it, Kansas’ Republican-dominated legislature has just handed Gov. Sam Brownnback a huge defeat, overriding his veto of a bill that would finally raise taxes after years of starvation budgets that resulted in Kansas schools running on shortened schedules and crumbling infrastructure going unfixed. (Let me add: Tennessee just did a similar thing with the official passage of Gov. Haslam’s IMPROVE Act, our first gas tax increase in almost 30 years. It appears Republicans have finally gotten the message that stuff needs to be paid for, and cutting taxes isn’t the way to raise money. I know, weird, right?)

Unlike Tennessee, however, Kansas’ governor remained stubbornly attached to the idea that cutting taxes has some miraculous stimulus effect on a state’s economy. Kansas citizens were willing to give Brownback the benefit of the doubt until they had finally had enough, and let their frustrations be known in the last election. Now, moderate Republicans could join forces with their Democratic colleagues to make a veto override happen:

The legislation undoes the essential components of Brownback’s reforms, which he famously described as part of a “real-live experiment” in conservative governance.

Brownback had reduced the number of brackets for the state’s marginal rates on income from three to two. The legislature will restore the third bracket, increasing taxes on the state’s wealthiest residents from 4.6 percent to 5.2 percent this year and 5.7 percent next year.

Marginal rates on less affluent Kansan households will increase as well, from 4.6 percent to 5.25 percent by next year for married taxpayers making between $30,000 and $60,000 a year and from 2.7 percent to 3.1 percent for those earning less than that.

The legislation also scraps a plan to bring those rates down even further in future years, one of Brownback’s promises to conservative supporters.

Finally, the legislature eliminated a cut Brownback had put in place to help small businesses. Analysts said that the provision had become a loophole, as many Kansans were able to avoid paying taxes entirely by pretending to be small businesses.

Initially, the state forecast that about 200,000 small businesses would take advantage of the break. As it turned out, about 330,000 entities would use Kansas’s new rule. That discrepancy suggests that tens of thousands of workers claimed that their incomes were from businesses they owned rather than from salaries.

“What we were able to do in the last 24 hours can allow us to start down that road, to begin repairing all the damage done after living with Gov. Brownback’s failed tax experiment for five years,” said Annie McKay, who is the president of Kansas Action for Children, an advocacy group in Topeka.

Tuesday’s vote was a rebuke not only for Brownback, but also for Republicans in Washington who have advocated similar cuts in taxes at the national level — including President Trump.

This should forever end the discussion about tax cuts being some magical tonic to lure businesses and increase revenue. Trickle down economics is a fairy tale. Or, for people like our president who prefer a visual representation, let me offer this:

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Filed under budget, economy, taxes

Inherent Bias

The Atlantic has an amazing story about the entrenched biases that affect peoples’ perceptions of the world, and how they are affected by political allegiance. Aptly titled “It’s Not About the Economy,” author Alana Semuels uses the northern Indiana town of Elkhart to illustrate how in this post-truth era, political tribalism affects our views more than economic realities:

Elkhart’s unemployment rate, which had reached a high of 22 percent in March of 2009, is now at 3.9 percent. Hiring signs dot the doors of the Wal-Mart, the McDonald’s, and the Long John Silver’s. The RV industry makes 65 percent of its vehicles in Elkhart, and the industry is producing a record number of vehicles, which is creating a lot of jobs in this frosty town in northern Indiana.

Despite this good economic and jobs news, Elkhart voters don’t credit President Obama or the Democrats. Not only do they think the economy improved in spite of, not because of, Obama, they also blame Obama for things he didn’t do, or don’t give him credit for things that he did. It basically boils down to this: people in Elkhart, IN don’t like Democrats, period, and nothing will change that:

These biases are only increasing as the country becomes increasingly polarized. As people become increasingly loyal to their parties, they are unlikely to give leaders from the other party credit for much of anything positive. Both sides are instead more likely to believe narratives that suggest that the other party has only made things worse.

“People’s predispositions affect their factual beliefs about the world,” said Brendan Nyhan, a professor of government at Dartmouth College who has researched why people believe what they do about politics. “What we want to be true influences what we believe to be true.”

Indeed, as the economy began improving, Elkhart voters grew less likely to support Democratic candidates for president. Obama won 44 percent of the vote in Elkhart County in 2008, 36 percent in 2012, and Clinton received just 31 percent in 2016.

Thanks, hate radio and Fox News! Really, this has to be the Fox Effect, more than anything. (And yes, it works the other way, too. Democrats generally won’t credit Republicans with doing anything right, either. Although we do embrace conservative policies, and hullo, who ever thought Democrats would fight to the death to support a Republican healthcare plan?)

Check out these reasons why people in Elkhart don’t like President Obama:

Ed Neufeldt, whose daughter and two son-in-laws now work in the RV industry after losing their jobs in it during the recession, told me he thought Obama was responsible for improving the economy in Elkhart, but that he still didn’t like the president because of his stance on abortion.

Okay, I can buy that. I don’t agree with it, but at least it’s an actual policy disagreement. For the record, Ed Neufelt was the only person Semuels spoke with who credited Obama with improving the economy. But he found another reason not to like him. Funny how that works.

And then there’s this:

Brandon Stanley owns a bar in Elkhart. He says he’s optimistic that the economy is improving now that Republicans have regained power, but emphasizes that there are still a host of economic problems that haven’t been solved in Elkhart. As for the shrinking unemployment rate in Elkhart, “they changed how they report unemployment numbers,” he told me, so they’re not believable.

Ah, the “damn lies” contingent. When the facts are in opposition to your preconceived political bias, the facts must be wrong. For the record, I remember a version of this among liberals during the Bush years: yes, unemployment numbers were at a certain rate, the popular talking point went, but it didn’t reflect those who had “given up looking for a job.” I’m quite certain I repeated that line myself, and it may or may not have been true at the time. I now hear that same line repeated by Republicans in regards to current unemployment numbers. And thanks to the internet, it’s really easy to find links bolstering whatever argument you want to make.

Now let’s meet another Elkhart resident with some really good reasons for hating Obama:

Andi Ermes, 39, offered a number of reasons for disliking Obama. She said Obama didn’t attend the Army-Navy football game, even though other presidents had. Obama has actually attended more Army-Navy games than George H.W. Bush. She said that he had taken too many vacations. He has taken fewer vacation days than George W. Bush. She also said that he refused to wear a flag pin on his lapel. While it is true that Obama did not wear a flag on his lapel at points during the 2007 campaign, it was back on his suit by 2008. Ermes told me the news sources she consumes most are Fox News, Rush Limbaugh, and a local conservative radio show hosted by Casey Hendrickson.

What did I say about hate radio and Fox News? This is particularly stupid because, really, who gives a shit if someone wears a flag pin or not? And it just goes to show, there’s nothing a Democrat can do to earn the votes of the brainwashed. Just as there was literally nothing Donald Trump could do that would lose the allegiance of these same brainwashed folks. As long as you have that “R” behind your name and spout the same stupid approved points, you are golden with these folks.

I’m not sure what the solution to this is. It all seems part of a larger social and demographic unraveling. I also wonder how uniquely American this is. Other countries have the internet, fake news, partisan news media and biased columnists. Has the poison of hyperpartisanship affected Canada, Australia and the UK? Do people blindly not accept facts that challenge their preconceived worldviews in France and India and China?

If living in a cocoon of ignorance is more palatable than moving one’s biases one inch to the right or left, we are all truly doomed.

6 Comments

Filed under 2016 Election, 2016 Presidential Election, economy, unemployment

An Update On The Obama Economy

In October 2012, bajillionaire David Siegel of Westgate Resorts/“Queen of Versailles” fame had some voting advice for his employees, specifically, that hard-working makers like him might not be able to afford to employ the lazy schlubs of Taker America any longer if Obummer were to be re-elected.

At the time I told him to “… just Go Galt and leave us the fuck alone.” Ah yes, that was a righteous, cathartic rant. I feel good all over again just re-reading it.

So now, let’s check in with David Siegel. Is he, as he threatened,

“… in the Caribbean sitting on the beach, under a palm tree, retired, and with no employees to worry about.”

???

Why no, he’s not. In fact, instead of the promised layoffs, he just gave his employees a raise:

“We’re experiencing the best year in our history and I wanted to do something to show my gratitude for the employees who make that possible,” Siegel said in the release, which also said the company would be awarding merit-pay raises for “all eligible team members.”

Well, isn’t that special. Their best year ever! I’m sure it’s all due to David Siegel’s hard work and not one ounce of credit goes to the president’s economic policies.

(h/t, Zandar @ Balloon Juice)

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Filed under economy, Republican Party

First Draft Tuesday

Another rich asshole threatens to Go Galt and the butthurt rains down on the hoi polloi. Check it out here.

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Filed under 2012 presidential election, economy

Blame Game

This week I checked in with that dark underbelly of Nashville’s soul, or as everyone else calls it: the Ticked Off column. Ticked Off is basically an anonymous rant ‘n’ rave forum in the free community weekly which lands in everyone’s driveway each Wednesday. This is old-school stuff: until really recently, the only way you could leave your comment was via snail-mail or a message on a telephone answering machine. So in other words, this is basically blog comments for people who haven’t figured out the internet, i.e., cranky old people.

And we’re off to the races:

I want to comment on illegal immigrants. We need to wake up and look around our neighborhoods that are, one by one, getting destroyed. Look at Madison and Antioch in the last 10 to 15 years. Now look at Hermitage and how they’re starting to have these tacky taco stands.

The immigrants who came in the ‘50s were clean, took pride in their neighborhoods and kept it American.

I don’t even eat at Mexican restaurants. Sorry, but I want Americans to have jobs and I don’t want them running down my country with all of that trash.

Yeah those immigrants who came in the ’50s were so much better than the low-lifes we have entering the country now! And they had the decency to open real American restaurants, not those roach-coach taco trucks you see around these days! Hell, wasn’t everything better in the ’50s? Forget Jim Crow and the Cold War: “Leave It To Beaver” and “Father Knows Best” were documentaries, right?

It’s so easy to blame immigrants for the country’s problems. The people who mow your lawn and wash your dishes and change the adult diapers at the nursing home are easy targets, but they’re not what’s wrong. It’s hard to blame immigrants when you read stories like this and this. No, I think the problem lies a little higher up the food chain. And I have to wonder how Mitt Romney would handle issues like this. Judging by the way Wall Street whines over the smallest efforts to restrain its congenital corruption, I think we know: absolutely nothing.

The Obama campaign has released its latest ad, and I think it’s a winner. It might not sway people like our friend who refuses to eat at Mexican restaurants, but people like that aren’t going to be convinced to vote for a black POTUS with a funny name anyway. And I fully expect the whining and moaning over Obama’s “attacks” to begin in 5… 4… 3…

15 Comments

Filed under 2012 presidential election, economy, Nashville

Chauncey Gardner For President

Democrats, please learn how to message.

I know. I am repeating myself, but it’s just not sinking in:

What we require now is a new framework for thinking and talking about the economy, grounded in modern understandings of how things actually work. Economies, as social scientists now understand, aren’t simple, linear and predictable, but complex, nonlinear and ecosystemic. An economy isn’t a machine; it’s a garden. It can be fruitful if well tended, but will be overrun by noxious weeds if not.

In this new framework, which we call Gardenbrain, markets are not perfectly efficient but can be effective if well managed. Where Machinebrain posits that it’s every man for himself, Gardenbrain recognizes that we’re all better off when we’re all better off. Where Machinebrain treats radical inequality as purely the predictable result of unequally distributed talent and work ethic, Gardenbrain reveals it as equally the self-reinforcing and compounding result of unequally distributed opportunity.

Ah, terrific. A new way of looking at the economy, using metaphors the average American can understand. Such as:

Consider regulation. Under the prevailing assumption, regulation is an unfortunate interruption of a frictionless process of wealth creation in a self-correcting market. But Gardenbrain allows us to see that an economy cannot self-correct any more than a garden can self-tend. And regulation — the creation of standards to raise the quality of economic life — is the work of seeding useful activity and weeding harmful activity.

Yes, that’s all very well and good. It’s perfectly logical, wonderful in fact. But it will go nowhere because while I agree a new way of discussing these issues is needed, it would help if you didn’t crib from a 1979 Jerzy Kosinski classic. Then again, the Tea Party is nothing but a rip-off of a 1992 Tim Robbins movie.

Is this what the American discourse has become? As much as I agree wholeheartedly with these sentiments, it’s hard not to laugh when I read stuff like this:

Or take taxes. Under the efficient-market hypothesis, taxes are an extraction of resources from the jobs machine, or more literally, taking money out of the economy. It is not just separate from economic activity, but hostile to it. This is why most Americans believe that lower taxes will automatically lead to more prosperity. Yet if there were a shred of truth to this, then given our historically low tax rates we would today be drowning in jobs and general prosperity.

Gardenbrain, in contrast, allows us to recognize taxes as basic nutrients that sustain the garden. A well-designed tax system — in which everyone contributes and benefits — ensures that nutrients are circulated widely to fertilize and foster growth. Reducing taxes on the very wealthiest on the idea that they are “job creators” is folly. Jobs are the consequence of an organic feedback loop between consumers and businesses, and it’s the demand from a thriving middle class that truly creates jobs. The problem with today’s severe concentration of wealth, then, isn’t that it’s unfair, though it might be; it’s that it kills middle-class demand. Lasting growth doesn’t trickle down; it emerges from the middle out

I mean yes, the garden is a lovely metaphor but I just can’t take this shit seriously. Here’s an idea: instead of all the convoluted “the garden needs nutrients” blather, how about just asking a simple question: We’ve had 12 years of the Bush tax cuts. Where are the fucking jobs?

Now, was that so hard?

14 Comments

Filed under economic stimulus, economy, Media, taxes

American Dream Is Officially Dead

Today’s New York Times has a front page story confirming what we DFH’s have been saying for years, which is that the American dream is over, and if you’re “born a poor black kid” in America today (or poor white kid or poor Latino kid) … chances are pretty good that you’re going to stay poor when you become an adult:

But many researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage.

Former Senator Rick Santorum of Pennsylvania, a Republican candidate for president, warned this fall that movement “up into the middle income is actually greater, the mobility in Europe, than it is in America.” National Review, a conservative thought leader, wrote that “most Western European and English-speaking nations have higher rates of mobility.” Even Representative Paul D. Ryan, a Wisconsin Republican who argues that overall mobility remains high, recently wrote that “mobility from the very bottom up” is “where the United States lags behind.”

Liberal commentators have long emphasized class, but the attention on the right is largely new.

I have written about this a lot but it’s always good to get validation from The Paper Of Record. Just one thing, though: why is the news for the New York Times that Republicans are talking about this issue? Not, you know, that this thing has happened in America to begin with? That the American myth of a classless society and mobility up the ladder is dead? I mean, really, talk about burying the lead? Hello?

And another thing: You have to be pretty brain-dead (or drunk on conservative Kool-Aid) to think folks like Rick Santorum, Paul Ryan and the National Review give a shit about American mobility — because correct me if I’m wrong, but didn’t we just have Newt Gingrich telling us that poor kids in the projects only do illegal jobs like selling drugs, and Herman Cain telling us that if you’re poor it’s your own fault, and every Republican from Tennessee’s own Ron Ramsey to Eric Cantor telling us that unemployed people are just getting fat and lazy off their unemployment checks? That the social safety net is “a lifestyle”?

So now that some Republicans are pretending to notice inequality and lack of opportunity in America, why do we think their answers will be anything other than the usual “tax cuts, deregulation and shred the social safety net” which led us here to begin with?

Le Sigh. But I digress. Back to the issue at hand, which is that people in evul-Socialist-librul-Commie countries with free education and socialized medicine actually have more social mobility than the supposed land of opportunity, the good ol’ USA:

At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths.

By emphasizing the influence of family background, the studies not only challenge American identity but speak to the debate about inequality. While liberals often complain that the United States has unusually large income gaps, many conservatives have argued that the system is fair because mobility is especially high, too: everyone can climb the ladder. Now the evidence suggests that America is not only less equal, but also less mobile.

John Bridgeland, a former aide to President George W. Bush who helped start Opportunity Nation, an effort to seek policy solutions, said he was “shocked” by the international comparisons. “Republicans will not feel compelled to talk about income inequality,” Mr. Bridgeland said. “But they will feel a need to talk about a lack of mobility — a lack of access to the American Dream.”

Yes well surely the answer is to abolish the estate tax, make sure every student graduating from college is saddled with crushing debt, and maintain the costliest, least efficient healthcare delivery system in the Western world. That’s the ticket!

C’mon, New York Times. We’ve all seen this movie before. It’s an election year, which means this is the year Republicans pretend to care about the little guy and trot out their same tired ideas which have failed from the get-go. Meanwhile, Democrats will let another opportunity to seize the national conversation slide by because they’re too scared of looking liberal. Pfft.

10 Comments

Filed under American trends, economy, Media, New York Times

After The Fairy Tale Dies

Stephen Marche writes in this month’s Esquire about the death of America’s most cherished fairy tale: that we are a land of opportunity, where “anyone can make it” if they just work hard enough.

That fairy tale hasn’t been true in a long, long time — such as it was ever true, which was barely. We all know this. But it’s gotten even worse in the past 10 years.

I remember telling My Conservative Friend™ that if you have money, it’s really hard to get rid of it, short of placing it all on the ponies, because the system is stacked in favor of the wealthy (and for a taste of what I’m talking about, go over to WhatMittPays.com and calculate your family’s tax rate at Mitt Romney’s special Vulture Capitalists’ rate.)

But I’ve come to realize that even this simplistic assessment is no longer true. If you have a little money, saved it up and bought a home or put it in an IRA or 401(k), these days it is easily wiped out by Wall Street shenanigans, like traders betting on Twitter trends and crooked brokers playing with supposedly secure customer funds. Your home can be taken away by a robo-signed foreclosure letter, then bulldozed by the bank.

No, the only people who are truly secure are the super-rich. Simple savings is no longer enough to prepare for the future and fund your kids’ college education, not in this modern era of the Wall Street roller coaster ride. If you want to feel a sense of security, you need to have the cushion enjoyed by the uber-wealthy, the kind of people who are so insulated and tone-deaf they can make a cavalier $10,000 bet on national television while their campaign staff cringes in the green room.

It’s nearly impossible to achieve this kind of wealth with old-fashioned bootstrap-pulling, the fairy tale of hard work and a good education. It’s the kind of money that is inherited. No one wants to admit it, but it’s the truth.

Because the truth of the matter is, while evidence to the contrary is all around us, we are so firmly attached to this “land of opportunity” fairy tale that people remain in deep denial about how truly fucked we are. Which is why, as Marche notes, we seek refuge in cultural indulgences like “Mad Men,” feel-good pleasures that remind us of the “good ol’ days” when the middle class really was expanding at a rate that made the fairy tale closer to reality.

Nostalgia: the last refuge of a dying empire.

Marche writes:

The Great Outcry that has filled the country with inchoate rage is the bloody mess of this fundamental belief in the justice of American outcomes crashing headfirst into the new reality. The majority of new college grads in the United States today are either unemployed or working jobs that don’t require a degree. Roughly 85 percent of them moved back home in 2011, where they sit on an average debt of $27,200. The youth unemployment rate in general is 18.1 percent. Are these all bad people? None of us — not Generation Y, not Generation X, and certainly not the Boomers — have ever faced anything like it. The Tea Partiers blame the government. The Occupiers blame the financial industry. Both are really mourning the arrival of a new social order, one not defined by opportunity but by preexisting structures of wealth. At least the ranters are mourning. Those who are not screaming or in drum circles mostly pretend that the change isn’t happening.

Post-hope, it is hard to imagine even any temporary regression back to the days of the swelling American middle class. The forces of inequality are simply too powerful and the forces against inequality too weak. But at least we can end the hypocrisy. In ten years, the next generation will no longer have the faintest illusion that the United States is a country with equality of opportunity. The least they’re entitled to is some honesty about why.

For a sense of how entrenched this new social order has become, I offer you this piece of feel-good “career advice” I spied on Yahoo News:

Earn more, work less: 8 great jobs that escape the rat race

You know what those eight jobs are? Yoga instructor. Massage therapist. Make-up Artist. Private chef. Personal trainer. Internet tutor. etc. etc. etc. I read that and thought, WTF? Who is buying these services? Oh, right. Silly me. It seems the Ownership Class is telling us to just suck it up and accept the new social order: you will be happy helping Calista Gingrich get her makeup just right. Your best hope for being a success in modern America is to help Judith Kent Dimon stay young and beautiful looking.

Wake up and smell the coffee, America. We’re now a two-class society and it doesn’t appear things will be changing any time soon.

3 Comments

Filed under economy

Diseased Capitalism

I realize I’m not walking any new intellectual ground here, but I couldn’t read today’s cover story on Bain Capital’s pillage of Dade International and not reflect that capitalism, unrestrained by some type of social conscience, is a disease on human society. It is, in fact, the exact opposite of what Ayn Rand spent her life claiming it to be.

Bain’s takeover of Dade International, a medical supply company, ended up costing 1,700 people their jobs, saddled the company with debt and bankruptcy, and earned Bain $242 million — eight times more than its $30 million original investment:

Bain and a small group of investors bought Dade in 1994 with mostly borrowed money, limiting their risk. They extracted cash from the company at almost every turn — paying themselves nearly $100 million in fees, first for buying the company and then for helping to run it. Later, just after Mr. Romney stepped down from his role, Bain took $242 million out of the business in a transaction that, according to bankruptcy documents and several former Dade officials, weakened the company.

[…]

Cost-cutting became a mantra inside the company. After his employer, DuPont, was bought by Dade, William T. Mowrey, a field engineer, said his generous pension plan was replaced by a 401(k); his salary was cut by $1 an hour, costing him $2,000 a year in income. When he filed for overtime, he said, his new bosses refused to pay it. “They were just trying to milk as much out of us as they could,” he said.

Mr. Mowrey, now 54, quit. Many workers, like Mr. Shoemaker, the Dade employee in Westwood, and his wife, a temporary employee at the same plant, did not leave on their own terms. When they lost their jobs in 1997, they had to abandon plans to buy their first home together. “It created a lot of stress,” said Mr. Shoemaker, 59, who had earned more than $80,000 a year.

They were the lucky ones:

For some, the emotional effects of the layoffs outweighed the financial repercussions. Soon after Dade bought the DuPont unit, it closed a plant in Puerto Rico; all but a few of its nearly 300 workers were laid off.

Arsenio Muñiz Rosado, a 51-year-old father who had spent 23 years at the plant, starting out as a groundskeeper, sank into a debilitating depression. Still jobless six months after he was let go, he tried to commit suicide with a bottle full of Xanax pills. It was the first of several attempts.

For all intents and purposes, he said of the plant, “I died in there.”

Cindy Hewitt, a human resources manager, had been instructed to persuade about a dozen of Mr. Rosado’s co-workers to move to Miami, where Dade had another plant.

Not long after the workers arrived, the company said it would close that factory, too. Ms. Hewitt tried to help several workers return to Puerto Rico, but she said Dade insisted that they first repay thousands of dollars of moving costs. “They were treated horribly,” she said. “There was absolutely no concern for the employees. It was truly and completely profit-focused.”

Ms. Hewitt said she was so disillusioned by the experience that she left the corporate world.

This is the raw, unfettered capitalism of the sort Mitt Romney and America’s ownership class not only practices but heralds as the standard by which we should measure all else. It’s the brand of capitalism that Gov. Bill Haslam espouses. It’s what people mean (intentionally or not) when they say “government should be run like a business.”

It’s a betrayal of the very people who are the backbone of our economy and our society: the middle class. Bain Capital and companies like them — the “fighter pilots of capitalism” — are vampires. They seek out the treasure in the business landscape, extract the wealth, and leave the corpse of whatever company they sucked dry to rot in the gutter of the American economy. Bain octupled its investment but left 1,700 people out of work, and even more with slashed salaries and pensions. These are people who can’t pay their mortgage or their kids’ college education, or can’t take that family vacation or buy their first home. Think of all that implies for the economy at large and you begin to understand why we find ourselves in our current mess today. But what does Bain Capital care? They sucked the meat from Dade’s bones, deposited it in their bank account, and moved on.

This is capitalism devoid of morality. And this is what Republicans and far too many Democrats have been selling us for far too long. And, if anyone wants to know, this is why the 99% movement has resonated with the average American. When profits are valued over people, over and over again, this is the result.

How ironic that Cindy Hewitt, Dade’s human resources manager, got so disillusioned by her whole experience that she left the corporate world completely. Ms. Hewitt just got a look at what value the corporate world places on this “resource” called the work force. And that would be: nil. I’ve said it here a thousand times before but it bears repeating: if our society truly valued people, if we really thought of humans as a “resource,” we wouldn’t treat people like trash. We wouldn’t devalue them at every turn.

I was musing about the need for a more realistic counterpart to Atlas Shrugged — call it Atlas Stumbled, if you will. An engaging piece of fiction where the human collateral damage of the rapacious Galts and Dagnies is revealed. But of course we don’t need this fictionalized work, the real thing is in the news every day. Or, if you must have fiction, try Harriet Arnow’s The Dollmaker or John Steinbeck’s The Grapes Of Wrath.

I’m not an anti-capitalist in toto, I’ve benefitted tremendously from capitalism in my life, and still do. But for capitalism to fully work for the benefit of the maximum number of people it needs to be tempered by some kind of social conscience, some moral rudder. And the best way to do that is by government regulation.

9 Comments

Filed under 2012 presidential election, economy, Mitt Romney

Here We Go Again

What could possibly go wrong?

Investors place big bets on Buy Here Pay Here used-car dealers

Private equity firms are investing in chains of used-car lots, and auto loans are being packaged into securities much like subprime mortgages. They’re attracted by the industry’s average profit of 38% for each car sold

[…]

Loans on decade-old clunkers are being bundled into securities, just as subprime mortgages were a few years ago. In the last two years, investors have bought more than $15 billion in subprime auto securities.

Although they’re backed mainly by installment contracts signed by people who can’t even qualify for a credit card, most of these bonds have been rated investment grade. Many have received the highest rating: AAA.

That’s because rating firms believe that with tens of thousands of loans lumped together, the securities are safe even if some of the loans prove worthless.

Some analysts worry that the rush to securitization could lead to careless lending by dealers eager to sell more loans, as happened with many mortgage-backed bonds.

No. Just, no.

Just, fucking stop it, already. Stop the greed, stop the endless need for more more MORE. I am about to lose my shit here, people. Stop coming up with these irresponsible, crazy mechanisms that profit off the misery of financially strapped people because some idiot thinks there’s a pony in that pile of horseshit. Stop the greed machine. If you want to gamble, take it to Vegas, where the only person who gets hurt is you.

And while we’re at it, stop calling those of us who see the inevitable trainwreck up the bend “socialists” already. You assholes are the “socialists” because every time you decide to fiddle around with these complicated toxic assets you privatize the gains and socialize the losses. This time it’s not just no, it’s HELL no.

This:

“It might be an attractive model to investors, but when it’s designed to ruthlessly maximize profit, there’s no way it can’t hurt the consumer,” Keest said.

Have you people learned nothing over the past few years? Nothing at all?

Credit Acceptance combines some of the loans into securities and sells them to investors. The buyers are usually insurance companies, banks, mutual funds and other institutional investors.

What they’re buying, essentially, is the right to collect borrowers’ loan payments, which are passed on by dealers and assorted intermediaries. If borrowers default, investors are stuck with the loss.

Really? You promise, this time? Taxpayers won’t be bailing out some insurance company or bank or mutual fund that decided this was the next big Ponzi scheme profit center job creator because God forbid we should keep our greed in check during the Second Great Depression? Honest?

No tightening our belts, no siree, there’s always money to be made somewhere and none of these assholes ever has to suffer the consequences of their bad decision making.

There is no way this isn’t going to blow up in y’all’s faces and when it does, do not — I repeat do not — come crying to me.

[UPDATE]:

Apparently they’re also gambling on European debt:

U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show.

Wonderful.

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