Tuesday, October 21, 2008

Just one rogue socialist's take on what's wrong with the country

In 21st Century Democracy class this morning, we had a rousing argument about Barack Obama's proposed tax plan. It boiled down to me advocating progressive taxes (with occasional backup from two people) and pressing the need for the wealthy to give back to the community, while several others argued that such measures would punish people who have worked for their wealth and that "the American dream is not a government program." One person even said that those whom the tax increase would affect (with personal incomes of $250,000 or more) would wind up living "bill-to-bill."

First: The proposed tax increases aren't enough to make that much of an income tight to live on. If the people with said incomes are living beyond their means already, that was bad judgment on their parts, and they ought to scale down a bit. Overspending got the entire economy into this mess in the first place.

Second: There's a difference between being paid to live by the government, and being treated by the government in such a way that getting out of poverty or bettering oneself isn't impossible.

Third: Those who have gotten much from the system and can afford to give back should. It's what taxes and tax brackets are all about. Today's richest citizens have it better, tax-wise, than those in any other era. In 1955, the top 400 earners made an average of $12 million and paid over 51% income tax on it. In 2005, the average income of the top 400 was $213 million (that's covering a wide range because the top 5 hedge fund managers each earn about $5 billion) and income tax paid on it was just 18.2%. See The Nation's article "Plutocracy Reborn" for charts, graphs, and lovely data-like things. The upshot is that, basically, today's ultra-wealthy are spoiled rotten.

I think that there's a disease in this country. We fundamentally lack a sense of community responsibility. That is what socialism, true socialism, is all about: taking care of society as a whole, and not just taking as much as possible for any one individual. Yes, success should be rewarded. But if you've gotten so much from the community, you have a basic human responsibility to give back. Somebody's got to pay taxes! Otherwise we'd have no infrastructure, no public utilities, no garbage collection! It makes no sense whatsoever to place the majority of the burden on those who barely have enough to scrape by as it is. Those who can afford to pay more ought to. It's that simple. Otherwise we'll wind up with this ever-widening wealth gap becoming insurmountable. The majority of the population won't have any chance at all at the American dream. That's not a future this country can face.

Tuesday, September 30, 2008

Out of the mouths of babes

The following is an email I sent to Senator Chris Dodd of Connecticut regarding the massive bailout plan currently festering in Congress.


Dear Senator Dodd,
I desperately wish to propose a solution to the current financial maelstrom. Rather than buying packages based on bad debt, as the bill which just failed in the House allowed, why can the government not pay off the bad mortgages that caused the failure? The mortgage-backed securities will be secure again, because all will be paid off; thousands if not millions of Americans will be able to stay in their homes; and if my calculations are anywhere near the mark it will cost several hundred billion dollars less than the current bailout plan. As a final provision, rather than making taxpayers foot the bill, the CEOs who made these corporations fail should be made to pay for at least part of it. I understand that the FBI is investigating, among others, Lehman Brothers and AIG. Should those investigations find any scurrilous behavior, the executives should be made to pay even more to stabilize the companies they drove into the ground.

I believe that burning golden parachutes and increased financial regulations are essential for keeping this sort of thing from recurring, as well. Reinstatement of usury laws would help prevent fraudulent lending. Perhaps certain members of Congress will complain that such measures would "stunt growth" or "encourage socialism," but what we have is not growth, it is a cancer. It must be removed so that real, measured, healthy growth may resume.

Thank you very much for your time, and please consider sharing these ideas with your fellow Congresspeople.


Monday, September 01, 2008


So, to begin, I repeat my disclaimer from my first ever post in saying that the following is MY OPINION and MY OPINION ONLY. I am a raging liberal and if you disagree with any of this that's fine, although I wonder what you'd be doing reading my blog in the first place.

Sarah Palin.
Aside from the fact that I disagree with her on basically every front, this business with her daughter is, quite frankly, horrifying and repulsive. Kudos to Obama for refusing to touch the issue---for a man of his standing, that is good and proper. But that doesn't mean I can't rant about it.

First: I feel awful for the poor kids. Especially the father! I can't imagine what he will be going through. It's not his choice to marry little miss Palin, I'll bet. And I doubt that the situation is his fault, either. Here's why.

Governor Palin is, by all accounts, a violent opponent of abortion and birth control. Abstinence only! She also had no intentions to change the laws about sex-ed in Alaskan schools. As it stands, it's not required or even funded! So this mother of five (yep, she sure doesn't like birth control) expects her children to go through adolescence as completely chaste little angels. ...Yeah. That always works. Do these abstinence proponents even remember their own childhood? When kids aren't taught about this sort of thing, they usually find a way to learn about it themselves, and don't go about it safely either. Then, as evidence of "family values," there's going to be a shotgun wedding as soon as these kids turn eighteen. The fact that they're keeping the baby is being held up as a shining example of Compassionate Conservatism, but given Sen. Palin's record, there's no chance in hell that her daughter would be allowed an abortion. And the whole mess would have been prevented by a little pill, a scrap of rubber, or a bit more attention from mommy.

Here, then, we have three ruined lives: two too young to have experienced much of it yet, and one not even begun. And the cause of it all is nominated to be Vice President, who, if elected, is more likely to have to assume the primary role than any other VP in history. The McCain campaign is trying to use the issue to show that its choice is going through the same difficulties as normal Americans. Well, you know what? I don't want a "normal" American in the White House. The "have-a-beer-with-him" argument got the current schmuck where he is (that and some rigged machines), and I'll be damned if that works again. We need somebody special, somebody who can understand but not be mired in the hardships we face.

You'd think that the Republicans would wise up a little, really. Were I the type to believe such things, I'd say that it's pretty obvious that God doesn't want McCain elected. He's been badly upstaged at every turn: the South America tour while Obama was in Berlin; Hurricane Gustav resulting in his convention being postponed (to what end is unclear, because the attendees are partying like crazy); and now this. There are other examples but I can't recall them because he wasn't as important. Take a hint, seriously.

I shall conclude this with a cry heard more and more often around my house.


Thursday, July 31, 2008

The only word is WTF

Exxon-Mobil earned almost TWELVE BILLION DOLLARS in THREE FARKING MONTHS???? And its stock goes DOWN???? Because expected profits were HIGHER?!?!?!? Can you hear my voice rising as I say this??

No single major oil producer profited less than $4 billion in the last quarter. Exxon now holds all top ten places for biggest corporate quarterly profits in HISTORY.

Okay, so, there's a disconnect here. If the big companies are low on supply, and "passing on the cost to consumers," then where the hell is all this profit coming from? Profit by definition means income that wasn't used in the process of doing business. Extra left over after breaking even. That means that gas companies are, plain and simple, overcharging. Who the hell could even SPEND fifteen hundred dollars every second? Something's rotten in the state of Texas. Either use that cash to improve energy efficiency and increase production or don't charge so farking much!

Monday, July 28, 2008

My Term Paper: Black Days Coming (How the New Elite are Recreating the Great Depression)

Sooooo this is what I wrote for my history class. It's not as good or as long as I'd been aiming for, because my files and backup got corrupted so I had to rewrite all but 2 pages from scratch in two days. Please note that because of formatting issues I can't put my actual footnotes in, but they cited everything from the Associated Press to the United States Treasury to Howard Zinn's People's History of the United States and I left the little markers in. Rest assured, I did not make this stuff up. The Nation magazine was particularly invaluable and I encourage you all to go take a look at it.

This is dedicated to my incredible boyfriend Jack, without whom I would have had a complete breakdown and never re-written it.


When Americans need a reference for the worst of times, they choose the Great Depression. The crash of 1929 and the destitution of the ‘30s represent perhaps the lowest point in American history with respect to living conditions, lack of prosperity, and hopelessness. Iconic images have survived to remind us all of the poverty of the era, but very few people recall anything else. Its origins are most noticeably forgotten, if in fact they were known by ordinary citizens at all. The majority of people, completely trusting of the economy's stability, were caught entirely off-guard when the Stock Market crashed in the last days of October, 1929. Then again, these people did not actually work on Wall Street or in the great financial firms, and did not have access to knowledge of what was actually happening behind the scenes. While most of America saw huge growth and prosperity, much of that was actually a bubble, soaring affluence borne up by excitement over nothing at all. When the bubble burst, and it was revealed that a lot of the money that had kept the economy going was nonexistent, millions of people lost everything they had invested. Some of the reasons for the rampant, unstable growth were valid, like the introduction of affordable motor cars that opened a whole new branch of production. However, the key reasons for the crash were bad policy decisions, lack of regulations, and pure greed. This will sound familiar to anybody who pays attention to economics in the modern age, particularly in America. The conservative administrations in power since Franklin Delano Roosevelt have rebuilt the corporate monster responsible for the Great Depression. In a terrifying revival of the Gilded Age of robber barons, Reagan and the Bushes have brought the country to the brink of a second economic catastrophe, and this time, it will be much, much harder to repair.

In the wake of Black Tuesday, politicians wrangled over whom to blame. Calvin Coolidge balked at taking responsibility, claiming that most causes “had their origin outside of the United States” where the administration could not reach.1 The International Chamber of Commerce cited a host of causes including the fall of silver, Soviet treatment of goods, and a decline in commodity prices.2 Republican congressman Fiorello LaGuardia of New York believed usurious banking practices were the problem,3 but the Democratic Party's official statement tore into failed post-war policies and business monopolies. In a 1932 statement, the party blamed the Coolidge administration for “encouraging the indefensible expansion and contraction of credit for private profit at the expense of the public.”4 Part of the problem was, in fact, poor administration on the federal level; during most of the '20s, a man named Daniel Crissinger was in charge of the Federal Reserve Board as chairman. He had no true credentials for the post, having been General Counsel of an Ohio-based steam shovel company in the past, without any other economic experience whatsoever.5 The director of the Federal Reserve Bank of New York, Charles E. Mitchell, was appointed in January of 1929 and had a personal stake in the booming market which left him disinclined to suppress the violent growth with regulation.6

The principal underlying causes of the unsafe boom, though, were touched upon by President Herbert Hoover, United Mine Workers president John H. Lewis, St. Lewis Post-Dispatch correspondent Charles G. Ross, and state representative William Randolph Hearst.7 Hoover brought attention to the problem of speculation,8 the practice of buying the rights to a certain product in expectation of an increase in price, then selling with no intention of using the product in question for its own sake. Buying and selling stocks for profit is one kind of financial speculation. A more dangerous form, however, evolves when the product is something tangible. Commodities speculation can and does drive the price of that commodity up at incredible rates, making the product unavailable to those who would like to buy it for use. This type of speculation ran rampant in Florida during the mid-1920s in the real estate market. The concept of owning beachfront property in Florida was so appealing to the newly affluent middle class that lots in the state began selling like hotcakes. Speculators bought land, even if it was not on the beach, because it would sell again for twice or three times what they had paid for it, sometimes only days later. People accepted down payments as small as 10% on lots because the buyers would want to sell in “a fortnight.”9 As prices spiraled higher, actually buying the properties to live on became untenable, and even those who had made huge profits by repeatedly buying and selling could not afford to purchase or hold the land. The disillusionment was helped along by hurricanes during 1928. By that year, bank clearings on loans and transactions had fallen to $143 million from over $1 billion in 1925.10

This sort of cycle caused the huge collapse of the market. Buying stocks on margin, a form of trading in which each holder receives the sale profit without any costs of ownership, meant that prices could spiral ever higher without anybody actually having the money to back it. The banks which originally supplied the capital were being loaned to from all around the country because rates of return were so high. The origin of all the capital became lost in the tangle of lending and trading.11 Then, “When prices stopped risingwhen [people capable of buying ran out]then ownership on margin would become meaningless and everyone would want to sell. The market wouldn't level out, it would drop precipitately.”12 And drop it did; lack of consumer confidence in the values of everything from housing to hats resulted in the enormous crash. The process had, in fact, caused numerous small recessions and depressions before 1929, yet nothing was ever done to curb the practice.13

Other serious financial issues, raised by Lewis, Ross, and Hearst, concerned the disproportion between corporate profits and the rest of the people in the country. These were what caused widespread poverty after the initial collapse of the stock market. Lewis blamed the owners of corporations, saying that “a horde of small-time leaders in industry and finance looted the purse of the population,”14 referring to the astounding gap between the top 0.01% of Americans and the bottom 90%. In 1928, the top hundredth earned 892 times as much as the rest of the country.15 Ross commented in a Pulitzer-Prize-winning article in 1932 that “the wealth created by the machine has gone, in appalling proportion, to the owners of the machine.”16 Hearst took the analysis a step further when he declared that “if profits had been distributed in wages, prosperity would have been maintained and increased.”17

This entire situation has been remade in the context of the 20th and 21st centuries. For about twenty-five years, largely conservative administrations have worked away the underpinnings of Roosevelt's New Deal and the regulations that helped the American economy stabilize. Rather than increasing power to supervising bodies, policy has favored market discipline, which has failed to keep the country running smoothly.18 While regulation does raise the question of who is to regulate the regulators,19 lack of oversight causes worse problems. Calvin Coolidge, whose administration set up the environment that spawned the Depression, based his economic policy on noninterference and tax cuts.20 In the 1980s, Ronald Reagan's “Reaganomics” were based on the same ideas. The regulations on businesses were halved during his term, and the government lost $750 billion to tax cuts while increasing defense spending, a move that sent national debt through the roof even as corporate profits soared.21 Reagan's successor George Bush increased that debt, his Democratic successor Bill Clinton created a budget surplus―and then George W. Bush came along. In his eight years in office the nation has gone from a surplus to over nine and a half trillion dollars in the hole.22

Terrifyingly enough, the government is still spending more than what it gains in taxes, and not just on wars that traditionally were funded by increased tax rates.23 The regulations Reagan did away with have not been restored. Bush has continued to follow the “trickle-down” hypothesis, increasing regulation in the wrong sectors that put the majority of burden on small businesses, promoting speculation in the oil market, and increasing corporate income exponentially.24 CEOs make hundreds of millions of dollars per year, and oil giant Exxon-Mobil earns $1,300 per second in profits.25 The mess made of the economy is now becoming visible in the skyrocketing costs of all goods because of the outlandish price of fuel. In a domino effect, gasoline's record highs have sent shock waves through every corner of America because “almost everything is made out of petroleum” and everything that isn't is transported by it.26 Car companies that had previously focused on building sport utility vehicles and trucks, like General Motors and Ford Motors, have lost billions and are struggling to change their production lines.27 At the other end of the spectrum, household products as benign as diapers are getting more expensive because they are made from petroleum,28 and dairy products cost anywhere from 6.5% to 40% more than previously because the corn used to feed animals is being diverted to make ethanol.29

As if paying more for everyday necessities was not bad enough, thousands of families are losing their homes as well. Around the country, foreclosure rates have risen incredibly—one in every 43 homes were foreclosed on in Nevada in the second quarter of 200830—and defaulting on loans and mortgages is nearly commonplace. Predatory lending practices, which had gone unnoticed due to lack of oversight, are taking their toll. Although certain banks made huge initial profits by giving loans to those who could not keep up with post-teaser-rate interest, the obvious problem struck and those loans became worthless.

The repercussions of this are similar to the crashes and failures of the Depression. Two large financial institutions were hit hard recently; Bank of America's profit dropped 41%,31 and Citigroup actually lost $2.5 billion, but their stocks rose because the hits were not as bad as expected.32 Financial giant IndyMac's failure, the fifth in 2008, prompted the first bank run in America since the Great Depression, sending people scurrying in fear to withdraw their savings.33 The seizure of major banks by the government and the bailouts like those of Bear Stearns, Fannie Mae, and Freddie Mac also draw parallels to the 1930s, and to the Reaganomics of the '80s that the Bush administration models itself after. Banks that failed during the Depression were allowed to pay off their debts with as little as ten cents on the dollar, while “hundreds of thousands of individuals” had to pay off theirs completely.34 Some government officials say that these institutions are “too big to be allowed to fail,” because they carry so many of America's mortgages. Should they go under, so would the entire real estate market, taking a large chunk of the global economy with them.35

Why were these single banks allowed to get so big to start with? Is not the cardinal sin of investing to put all of one's eggs in one basket? Yes; but the new aristocracy is rich enough to take huge risks with other people's money. Hedge funds in particular are a popular way to do so. Often they include things like mortgages and loan debts that are to be paid to the fund. They carry huge risks, but give enormous returns.36 The top five hedge fund managers in America earn over 13,000 times more than the top five American military leaders combined, about $12.5 billion per year. This, as the vast majority of people cut down on driving and try to make their budgets stretch. The top hundredth of a percent has surpassed the level of wealth it reached in 1928 and now earns over nine hundred seventy-six times what the bottom 90% does.37 There simply is no more oversight to keep the elite from taking advantage.

How, then, can the tide be stopped before the full effects of a true depression hit the nation? In the '30s, Roosevelt created dozens of programs to get the newly destitute working again, preceded by grants that gave hungry families enough money to eat until the Works Progress Administration, National Recovery Act, Civilian Conservation Corps, and other initiatives got off the ground.38 However, it was not until the enormous economic defibrillation of the Second World War that America's infrastructure could operate under its own power again. Millions of men went to war, and millions of women suddenly had factory jobs producing arms, parachutes, and planes for them.39 How would that play out in today's world? Even in Roosevelt's time legislation such as that in the New Deal was considered to be too lenient, “handouts” that gave the poor incentive to stay unemployed. The president himself was not all that happy about the unemployment relief he himself designed40—but it passed.

Today, after years of systematically taking apart the fabric of the New Deal, even Social Security is under threat from hard-line reactionaries who want to privatize it, completely defeating the purpose of a social safety net.41 Fortunately the outcry was great enough, including voices as respected as those at the Brookings Institution, that the deed has not been done. Those who desire it, however, are still in power, and the attitude required is still prevalent among many politicians who are a little too friendly with the super-wealthy. The probability of another New Deal being implemented is low. The chances of the economy being kick-started by another huge war are even lower. For one, America is in a war of sorts right now, although it is not against an established nation. Another World War is practically out of the question, given the nature of the global economy and diplomacy. If, somehow, an enormous conflict were to spring up, the draft is no longer in effect, which means that millions of men will not suddenly have jobs as soldiers. Even if the draft were to be reinstated, there are no longer enough factory jobs to bolster employment if a huge influx of weapons became necessary. Not only does the United States already have an utterly unbelievable arsenal, including an estimated 5,500 nuclear warheads,42 but the factories that produce such weapons are largely mechanized. Lockheed Martin Corporation employs only about 140,000 workers (most of these researchers and scientists rather than assembly line hands), yet it is one of the largest manufacturers of weapons technology in the world.43 And again, even if millions of new laborers were required all of a sudden, the production would not spur competition or prosperity. Only the leaders of the corporations who gain no-bid contracts with the government would benefit, like Halliburton did in 2004 because its former CEO Richard Cheney had become Vice President and got a nice share of the profits.44 Everything always comes back to the money and the “good ol' boys,” just like it did in the nineteenth century when the robber barons reigned supreme.45

Clearly the populace has not learned much from history, and the top echelons of society have chosen to ignore it in pursuit of personal wealth. This cycle cannot continue without spreading ruin across the country and the world, perhaps leaving billions destitute and repeatedly destroying multiple economies. We are well on our way to another crisis of epic proportions. Despite sporadic dips in the price of oil, despite the frenzied fuss over green alternatives, the cost of living will continue to climb until America falls again into the awful quagmire of a true Depression.

Monday, July 14, 2008

In praise of Metro North

With oil prices the way they are, and ethanol production not going so well, I really have to wonder why trains aren't making a comeback. Sure, ridership (If that's actually a word?) is up considerably, but not much is being done to expand service. As airlines flounder and actually lose money on flights, spending more time on the tarmac than it would take to get to the destination some other way, public transportation becomes more and more sensible.

As a resident of the sixth borough of New York City (Connecticut; you know it's true) I take the train a lot. When I do, I ride Metro North. Unlike Amtrak, Shore Line East, and other carriers, I've never seen an MT train marked as "late." While the Connecticut line cars are a little old, there is a plan in action to replace them with new ones like the Hudson line has. I got to check out a sample car a while ago; they're shiny and comfy and very sleek. Also properly air-conditioned. If I remember correctly, the engineer said that each new car costs $1.6 million. I think it would be worth it, though, particularly if they increase the number of cars and trips as well. Since last year I've noticed that each time I go into the city, the number of people on the train increases a little bit. I'm lucky to go from end-to-end of the line, because people getting on at Stamford have to squish in. And I only ever take off-peak trains!

The only problem with the system right now is that the fares are still a little too high to make riding in cheaper than driving. For one person it's a no-brainer; $28 round-trip for an off-peak would only pay for parking once you're in the city and gas would cost much more. But for three or more, it's still more economically viable to carpool and split the cost. It's possible that with the new fleet, which is also supposed to be more efficient, ticket prices will go down a bit. This would be awesome, but it isn't guaranteed, and it will take a while to incorporate the new cars. However, I think it's a shame that public transport is still more expensive for families and groups than driving. It's far cleaner, more fuel- and space-efficient, and safer. There's also the fact that taking a train has a mystique all its own. For a lone passenger, like me, there's the feeling of being in a movie, staring out the window pensively with my iPod on. For groups, we can sit and face each other and talk without distracting the driver. Admittedly some people don't know proper train etiquette, but then you can move to another car. And sometimes you meet somebody nice! The last time I came home from the city, I spent half the ride talking with a young woman named Kate who was very nice, smart, and liked many of the same books that I do. You never get that kind of socializing on the highway.

Living in Connecticut, I'm privileged to have access to this kind of resource. Because we are, basically, a suburb of the City, reliable and regular train service is all but necessary, and it's also highly profitable; people less fortuitously placed have trouble finding train stations. But with the price of flying going up exponentially, and delays on the tarmac exceeding seven hours in some cases, rail travel is looking more attractive by the day. Even if the flight itself only takes two hours, once you spend three in the airport and five on the runway it takes just as long to get to, say, Chicago as it would to take a train there. What I'm supporting is a revival of nationwide railroads, on the scale of the 1800s, to replace or relieve both air travel and driving. It is unlikely that oil prices will fall significantly any time soon, so if an economy of scale is built back into the train system, it will become much less expensive to use the rails while still being profitable to the entity in charge of them. In fact, widespread rail use could possibly cause a fall in oil prices because of decrease in demand. Extrapolating from all this, imagine changing transport systems from trucking to train cars. The prices of goods would fall too, because the price of gas would not have to be passed on to the consumer.

Admittedly the original cost of rebuilding the tracks and manufacturing cars would be expensive; but think of all the jobs it would create! We'd need people to lay the tracks, operate the equipment, coordinate the effort, build more stations, and of course drive the trains. And this is the sort of thing that can't be outsourced! You can't lay a Colorado railway from China, and somebody in India can't check tickets in Florida. I'm actually quite shocked that nobody has thought of this. If someone has, more power to her! Reviving the railways would do wonders for the country, the environment, and the consumer. What are we waiting for?

Friday, July 11, 2008

A completely rational thought

Whilst I assemble a properly researched argument (If I can do any research not related to my term paper; ugh), I would like to voice the following opinion:


...That is all.