Sunday, September 21, 2008

CRASH TALK

Alexander Cockburn, Counterpunch - By all rights, this last crisis has brought us to the crossroads where neoliberalism should be buried with a stake through its heart. We’ve had thirty years worth of deregulation - the loosening of government supervision. This has been the neoliberal mantra preached by both major parties, the whole of the establishment press and almost every university economics department in the country. It is central to the current disasters. And if you want to identify symbolic figures in the legislated career of deregulation, there are no more resplendent culprits than the man at McCain’s elbow, Phil Gramm, and the man standing at Obama’s elbow at his press conference, Robert Rubin. . .

If Obama becomes president what advisors will he recruit? Will he keep Rubin at his side along with his passel of Chicago School economists? His left supporters hope that he has a secret plan under wraps, that a populist T-shirt lies under the decorous mask of bipartisanship. I doubt it. Caution and respectability seem integral to Obama’s political persona. His core political task has been to assure the big-money funders of his campaign that as concerns maintenance of the present system his are a safe pair of hands. "Secret plan" theorists have some notion of "the real Obama" ripping off his mask on Inauguration Day. It doesn’t work like that. The political system is designed to ensure that the mask becomes the man. . .

Over the past quarter century the US manufacturing economy went offshore. Lately the so-called New Economy of the "Information Age" has been moving offshore too. Free trade has left millions without decent jobs or prospects of ever getting one above the $15 an hour tier.

Below a thin upper crust of the richest people in the history of the planet there’s the rest of America which in varying degrees of desperation, can barely get by. Millions are so close to the edge an extra 25 cents a gallon of fuel is a household budget-breaker.

Wages have stagnated. Decade after decade the bargaining power of workers has dwindled. We’ve had the macabre spectacle of American=based workers ordered to train their overseas replacements before being fired.

Bipartisan ruses like the Clinton-inspired exclusion of energy and food costs from the measures of "core inflation" ensure that social security payments don’t keep up with real inflation, which - if you take in the soaring costs of groceries and fuel for heat and transport - is double the official rate, the same way real employment - now officially just above 6 per cent - is actually around 12 per cent. . .

But then, as the cranky German in the British Museum liked to point out, the capitalist system is always in crisis. Crisis is integral to the system. In too many ways, over the past twenty years, brooding on its own crises, the left has forgotten that and in the low contour of radical ideas and of radical political organization in this electoral cycle we are suffering the consequences.

Paul Krugman - Historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system - that is, convince creditors of troubled institutions that everything’s OK - simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem - which seems doubtful - or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here - nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work - not try to panic Congress into giving it a blank check. Otherwise, no deal.

Ann Woolner, Bloomberg - The real kick in the teeth is that the executives who inflicted all this financial pain, who forced unprecedented government takeovers, walk away with hundreds of millions of dollars. It's up to us -- innocent little us -- to dig into our pockets, into our futures and into our children's futures to fix their spectacular errors.

Stanley O'Neal took a $161 million package last year when he left Merrill Lynch & Co. (remember Merrill Lynch?), even without a severance package in the mix. Angelo Mozilo, founder and top executive at Countrywide Financial Corp., reaped almost $122 million during 2007 in stock options alone.

For a mere three months at the helm of American International Group Inc., Chief Executive Officer Robert Willumstad gets a $7 million package.

And while the value of Richard Fuld's shares in Lehman Brothers Holdings Inc. plunged roughly $1 billion, he still pulled in almost $490 million by selling options and share grants in the 14 years that the company's been public, according to Fortune magazine.

We now know those shares were grossly overpriced, resting as they did on subprime mortgages. Shouldn't he give back most of it? All of it?

At least the government is blocking the $24 million given to the fired top guns at Fannie Mae and Freddie Mac, both taken over earlier this month.

As a rule, it isn't easy to take back money or benefits awarded as part of an employment contract, unless you can figure out some way the executive violated the contract's terms.

But it's worth a try. Consider these options.

Toss the rascals in jail. Criminal prosecution allows the government to seize ill-gotten gains. Snip the straps off those golden parachutes and grab them. Take over bank accounts, investment accounts, mansions, private planes and yachts.

The feds did bring charges against a couple of Bear Stearns Cos. hedge fund managers in June, and Federal Bureau of Investigation Director Robert Mueller told Congress this week his agency is pursuing possible suspects "as far up the corporate chain as necessary.''

The hitch is that proving executives lied in criminal ways is easier said than done, Enron and WorldCom convictions notwithstanding. . .

OK, so file civil suits.

WorldCom shareholders sued and wrangled $18 million from the pockets of directors, who agreed to pay more than 20 percent of their combined net worth. Another $36 million came from the directors' insurance carriers. These days, collecting from an insurer might not be the best idea. If AIG is doing the insuring, it would be the taxpayers paying out.

William McGuire, former CEO of UnitedHealth Group Inc., agreed this month to personally cough up $30 million to resolve a lawsuit over stock-option backdating. That's on top of the $600 million in benefits -- mostly in stock options -- he said he will turn in to resolve another shareholder suit.

The problem is that it normally takes something akin to criminal conduct, such as options backdating or accounting fraud, for civil suits to take money out of the hands of the accused. And, as previously noted, it isn't clear we will have that here.

2 Comments:

At September 22, 2008 12:15 AM, Anonymous Mother of God said...

Happiness is in reality, you humans are in unreality.

There are legal thefts. (There are also the successful illegal thefts.) See examples below. It is vital to the welfare (happiness, quality of life) and to the very survival of each and every person to know that legal thefts exist.

The legal thefts have a devastating effect on quality of life. They diminish quality of life enormously. Legal thefts have destroyed 99% of human natural birthright happiness. People can be enormously happier by understanding legal theft, and taking appropriate action. Legal theft threatens the very existence of the human race.

What is a legal theft? What are the implications of legal theft? Why are the legal thefts so important?

Legal theft is theft, theft is injury, injury produces violence. Theft is money for no work, money for others' work, overpay, pay injustice, financial inequality, taking out from the social pool of wealth more than the person has put in by his work. Only work creates work-products (goods and services), which are substantial wealth.

All the money represents all the work-products. Money is a license to take substantial wealth out of the social pool of work-products. The amount of money one gets is supposed to equal the work-value of the work-products one produces, and to equal the work-value of the work-products one takes out.

Humans have division of labour, job specialization, so one works mostly in production for others, so you put your work-products in the social pool for others to buy, and one is supposed to be compensated correctly so that the money one gets, enables one to take out of the social pool of wealth (shops) a quantity of the workproducts one needs and desires equal in work-input to the work one did.

A person spends all day making shoes for others, and should get out the amount of money that enables the person to buy an amount of things that have a work input content equal to the person's work. Theft is when this doesn't happen. And human economic systems are full of legal forms of this theft.

What are the implications of the presence of legal theft in societies?

One, legal theft means that the amount of money a person has is not a correct indicator of the amount of work the person has done. It means the amount of money a person has is not a measure of the amount of wealth production a person has done.

Two, it means that pay injustice will ever grow in society, and produce ever-increasing violence. Theft, legal and illegal, gradually and continuously separates work and money. Some (now 99%) have more and more work and less and less money, and others have more and more money and less and less work. Pay per unit of work endlessly declines for some and endlessly increases for some. Since money is the license to take work-products out of the social pool of wealth, and work-products include all necessities and desired things that cost, loss of money is extremely significant for people.

Money is virtually everything. Money is the joker good, good for millions of things, most things, including necessities and social power. Theft of money is theft of virtually everything, including necessities for life. Ever growing pay injustice means ever growing anger, resentment, violence.

James Madison: "The purpose of government is justice". So in democracy it is the prime purpose of the people to achieve and maintain justice. And pay justice is the most important justice. The state built on injustice cannot stand. The state, and the globe, built on injustice is torn apart by the violence (war and crime) it causes. Every state has been built on injustice and has fallen.

Violence gets to everyone. Violence is localised at any one time, but can pop up anywhere anytime. It gets to the most overpaid and the most underpaid and to everyone in between, in hundreds of ways.

Pay justice is fundamental to everything, to freedom, to democracy, to peace, to survival, to safety, to enjoyment, to happiness, to order, to sanity, to meaningfulness, to fulfilment, to existence. Unless there is action to minimize pay injustice, there is ever-increasing danger, grief, worry, suffering, pain, destruction, disorder, shock, crisis, corruption, disinformation, lying, disaster, war, crime, riot, revolution, chaos, terror, horror, weaponry, injury, damage, brutality, evil, confusion, warmongering, cannon-foddering, spying, fraud, embezzlement, lynching, hijacking, massacre, murder, mugging, drug-running, strikes, demonstrations, assassination.

You humans have all those things, not in small quantity, but in great quantity. You have 1% with 98% of the money and 99% with 99.9% of the work. You have torture, genocide, massacre, riot, revolution, war, crime, corruption, weaponry capable of killing every person, warmongering, cannon-foddering of millions. If democracy and freedom are 1 with pay justice (equal pay for equal work, a ratio of highest to lowest pay per unit of work of 1), you currently have freedom and democracy of 0.000000001, because you have a ratio of highest to lowest pay per unit of work of one billion.

Pay injustice, legal theft, has been growing for 1000s of years, and so has violence (war, crime, weaponry). Money is power, so 1% have 98% of social power, and 99% have 2% of social power.

Is the situation hopeless? There are some reasons to believe it is not. In the first place, violence gets to everyone. It ruins everyone's quality of life. Money is only the second greatest power. Every plutocracy has fallen, and every plutocracy has been extremely arduous and dangerous. Every heap of wealth, individual and national, is weaker than the rest of the world. The costs of self-defense inevitably exhaust the greatest wealth. One person with the property of 1000 has 1000 enemies. Everyone is climbing the ladder of 'success' (more money) and yet the overpaid are few, so more are falling than rising. You all face nuclear extinction. Therefore it is in everyone's interests to stop it. Where there is a universal will, there is a way. To create this will, you only need to learn the reality, by reading with honesty within yourselves. Happiness is wholly within reality, so realism is always in your self-interest.

Secondly, it is easy to reduce pay injustice. It requires only electronic transmission to every person of an equal share of a 1% per month increase in the money supply. This gently lowers overpay and lifts underpay. Inflation is not bad when the underpaid are over-compensated for it by the equal share. The equal share is paid to both overpaid and underpaid only to save the enormous bureaucratic cost of distinguishing the two. This requires only a tiny bureaucracy, a computer can do it. It disturbs the overpaid hardly at all. The overpaid maintain their relative position to each other, so there is no power disturbance. The underpaid lose their righteous drive to be climbing up to the overpaid, as the equal share lifts them up towards pay justice, towards getting out as much as they put in by their work. This eases the stress and danger of the overpaid, lifts their quality of life.

Legal thefts, examples:

1. Conquering, plundering, enslaving, economic plunder. This is still legal. If Bill Gates gave his entire fortune away tomorrow, it would be back in the first world in 3 months. Interest payments exceed 'aid' by $200 billion a year. (Read Lords of Poverty, Confessions of an Economic Hitman.)

2. Legal theft is built into transaction itself. The work in the two things transacted cannot be exactly equal. The work in the two things has to be x and x+y. Every transaction has to be a fair-trade-no-robbery, the x's, plus a robbery, the y. Just statistically, this will result in a bell curve of net gains and losses from extreme gain to extreme loss. Every transaction widens this curve, and of course there are trillions of transactions every day. Add in everyone trying to maximize y, shave costs and puff up price. Add in the fact that money is power to rake money, to oppress. Further, a company is a centre of transactions, with many customers and relatively few owners, so that the y's accumulate wealth endlessly.

Everyone loves profits and the interest that arises from profits, but 100% of people make 99% happiness losses from the extreme violence generated by the extreme pay injustice generated by 1000s of years of accumulated legal theft, and 99% make net financial losses from having profits and interest, through the goods they buy at prices that include the little, undetectable but real, and ever-accumulating y.

It would be impossible to stop profits legal theft at the micro level, because no one knows exactly how much work is in each product, and it would take a bureaucracy larger than the world. But you can compensate at the macro level, with a minute bureaucracy, by the equal shares of a 1%-a-month money supply increase.

3. Person buys land, others build cities around, person gets added value from others' work. Henry George saw this. Landowners get the value of everyone's work, and very unequally, according to size of holdings. The rich are simply buying up wherever growth is fastest (eg. Dubai) and reaping billions for others' work. Pay injustice grows, violence grows, bombs grow, kaboom. You have pay/income from 100,000 times to 10,000th of average of $40 an hour, and bombs to make a triple ice-age. It is like humanity is in a burning building with an escape route still there, but, by the time humanity gets a grasp of the reality, the escape route will be gone.

4. Increase in money supply going to banks to lend at interest. Lord Keynes and Sir Josiah Stamp, President of Bank of England, saw this.

5. Land oligopoly. Ambrose Bierce, Adam Smith, J S Mill and R H Tawney saw this. Everyone has equal birthright share in nature's bounty, like the other animals, but private property gives this only to landowners, and unequally according to their holdings. Private property is otherwise good, but it has this disastrous, pan-fatal pay injustice effect.

6. Private inheritance. In nature, and in justice, every person loses all rights in property on death. In nature and in justice, there is automatic public inheritance. But you have private inheritance, a clear case of money for no work, that is, work-products for no work by self, for work by others.

7. Scarcity profits. Eg, new technology, which has high demand, low supply, as the industry gears up production. Eg, paintings by 'great' artists. Eg, rare stamps. Eg, big-farming, which is 16 times less productive than small farms. Russia moved to big farming and had to start importing grain. The Sudan and China have 30 times the agricultural efficiency (production per acre) of USA (see World book of rankings). Big-farming produces bigger profits and shrinks production. Eg, not allowing import of grain in lean times (Eg, England, early 1800s.) Eg, subsidies (at public expense) to farmers to not produce.

What has freedom to pursue unlimited fortunes given humanity? Freedom for everyone, from richest to poorest, to be embroiled in super-extreme escalating violence, rising to nuclear extinction soon. Freedom for 99% to be underpaid, freedom for 90% to be paid less than 100th of average pay per unit of work, freedom for 1% to perpetually try to fight off the 99% and the others in the 1%. Freedom for everyone to be extremely poor in enjoyment, peace, safety, leisure, relaxation, company, community, health, sanity, order, maturity, education, trust, generosity, kindness, beauty. To be extremely rich in danger, labour, war, crime, fatigue, insanity, mis and dis and un education, corruption, horror, terror. Nuclear fear fatigue will not stop nuclear extinction coming. Global extinction bombs and giga-astronomical pay injustice, increasing fast, means a boiler, relief valve stuck, pressure gauge in the red and rising. It must blow soon. Defense costs are exhausting the first world, as they exhausted every empire and plutocracy in history. You can no longer afford a war. A 60th of the bombs will create enough fires to put up enough smoke to drop the temperature 25 C, three times colder than a natural ice-age.

It is no time for closed-mindedness, immaturity or delay. It is time to get real like humans never got real before. Bite the bullet of the adamantine golden rule: don't hit people, they hit back. Pay justice - or misery and extinction. Pay justice is not a hardship, is not a loss. It is social, economic and psychological riches. It is 100-fold happiness.

Would anyone (outside a madhouse, or even in a madhouse) suggest taking 90% of wealth off 90% of people and giving it to 1%? No, not in a million years. So take to deepest heart the fact that you have pay injustice, and misery, over a million times worse. Take to heart the fact that you can be super-extremely happier.

Will humans act with wise self-interest? Will you re-activate your pursuit of happiness with realism? Will you after all these years dive into the ocean of gifts that pay justice has for you? Will you jump out of your mental grooves?

Imagine if you did institute equal shares of a 1%-a-month money supply increase. The well of humanity would start to fill. I think there would be rejoicing. I think you would begin to feel proud of yourselves. I think your spirits would lift. I think you would recognize with relief that at last you conquered that disease of pursuit of unhappiness!

 
At September 22, 2008 5:10 AM, Anonymous Anonymous said...

Pls don't set absolute fontsizes (10pt here). Google's new browser can't yet override them. Thx.

 

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