More Bunko-Steerers in the Health Care Fight

“The television ad sponsored by the advocacy arm of the National Federation of Independent Business featured a small-business owner in Arkansas, frustrated at what he said are the higher bills he has seen since the Obama administration’s health care plan went into effect — and pointing blame at Senator Mark Pryor, a Democrat considered one of the most vulnerable incumbents facing re-election this fall.

“But the largest chunk of the money donated to the nonprofit group’s advocacy came not from small-business owners, but rather from health insurance companies trying to repeal a health care tax, the most recently available federal tax records show.

“The largely hidden role of the for-profit health insurers highlights the increasingly confusing world of campaign finance, as nonprofit groups like theNational Federation of Independent Business and its Voice of Free Enterprise program can keep their donor lists secret, and then present their carefully crafted message, financed in large part by big business, as if it is coming from, perhaps, a more sympathetic voice.

NY Times


China and Change

Eduardo Porter in the NY Times, recently focusing on climate change in his Economic Scene column, [here and here, here and here] takes a look at China, which even though it has announced steps larger than those of the US has a larger problem, and solving it will not be easy:

A coal heating plant in Beijing

A coal heating plant in Beijing

In Beijing, He Jiankun, an academic and deputy director of China’s Advisory Committee on Climate Change, told a conference that China, the world’s largest greenhouse gas polluter, would for the first time put “an absolute cap” on its emissions.

However, he soon clarified

 He was not announcing policy in Beijing. “I’m not a government official, and I don’t represent the government,” he said.

Though Porter’s article is about China, he comments on the US as well, perhaps too easily thinking it has turned some sort of corner and will, by example, bring others along.  His point, however, is that even if the US were to start sucking CO2 out of the atmosphere tomorrow, China (and India) are enormous parts of the necessary solution.

It is well known that preventing a climate catastrophe requires China’s participation: The country accounts for over a quarter of global greenhouse gas emissions. Over the next 20 years, China’s CO2 emissions will grow by an amount roughly equal to the United States’ total emissions today, according to the latest baseline forecast by the Energy Information Administration, released last year.

But the scale of China’s challenge is less well grasped. It might be best understood by slicing the growth of CO2 emissions into four driving forces: the expansion of the population, the growth in people’s incomes, the amount of energy needed to produce a dollar of income, and the amount of CO2spewed for each unit of energy used.

Even assuming that China’s population does not grow at all over the next 30 years, that the energy efficiency of its economy increases at a faster pace than most developed and developing countries and that it manages todecarbonize its energy sources faster than pretty much anybody else, China would still be emitting a lot more carbon in 2040 than it does today, according to E.I.A. calculations.

NY Times; Eduardo Porter


Myanmar Sailing on the Tourist Dollar

“Myanmar has been rejuvenating from the impact of travel sanctions imposed by European countries three years ago and is emerging as a favored travel destination in Asia.

“According to the Ministry of Hotels and Tourism of Myanmar, tourism has become a major source of the country’s fiscal income and the country is expected to receive three million travelers in 2014.

“Before 2011, only fewer than 800,000 tourists visited Myanmar every year on average.

*

“Chinese visitors have accounted for a large proportion in the total number of foreign visitors to Myanmar. In many scenic spots and souvenir markets, signboards written in Chinese are seen everywhere. In the most famous Aung San souvenir market in Rangon, the number of visitors may top 100,000 and most of them are Chinese

SolarNews

All this emphasized by the glowing report in The Wealth Scene.

And those pesky Royhinga, rioting Buddhists?  The Kachin rebellion?  Keep on moving, nothing to see….

Burma rakhine-fire-water_2245212k


GOP — Kicking the Poor, Again

WASHINGTON — A proposal to raise the federal minimum wage to $10.10, an underpinning of President Obama’s economic agenda and an issue that Democrats hope to leverage against Republicans in the midterm elections, failed in the Senate on Wednesday.

The vote was 54 to 42, with 60 votes needed to advance the measure.

All but one Republican voted to sustain a filibuster against the measure, saying that the increase would damage the fragile economy and force businesses to cut hundreds of thousands of jobs.

NYT


Buffet Blows and Opportunity

Joe Nocera has a pithy column about Warren Buffet (Saint Buffet) and a blown opportunity to do the very kind of good he has spoken about.

“The way to get big shots to change their behavior is to embarrass them.”

But when the opportunity came to join a shareholder instigated protest against enormous, and unreasonable, pay packages at Coca Cola, where he sits on the board, he passed it up.

Why?  It seems it was too embarrassing to embarrass others, his friends.

Buffett showed was how impossible it is for directors — even billionaires known for speaking their minds — to rock the boat. The need for collegiality trumped good corporate governance. As it almost always does.

How sad. If Warren Buffett won’t use his unparalleled clout to rein in excessive compensation, how can we expect anyone else to?

Uff


Economic Elites Rule

From Talking Points Memo:

Asking “[w]ho really rules?” researchers Martin Gilens and Benjamin I. Page argue that over the past few decades America’s political system has slowly transformed from a democracy into an oligarchy, where wealthy elites wield most power.

Using data drawn from over 1,800 different policy initiatives from 1981 to 2002, the two conclude that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of or even against the will of the majority of voters.

TPM

TPM does an interview with one of the authors, Professor Martin Gilens of Princeton.

If you had 30 seconds to sum up the main conclusion of your study for the average person, how would you do so?

I’d say that contrary to what decades of political science research might lead you to believe, ordinary citizens have virtually no influence over what their government does in the United States. And economic elites and interest groups, especially those representing business, have a substantial degree of influence. Government policy-making over the last few decades reflects the preferences of those groups — of economic elites and of organized interests.

You say the United States is more like a system of “Economic Elite Domination” and “Biased Pluralism” as opposed to a majoritarian democracy. What do those terms mean? Is that not just a scholarly way of saying it’s closer to oligarchy than democracy if not literally an oligarchy?

People mean different things by the term oligarchy. One reason why I shy away from it is it brings to mind this image of a very small number of very wealthy people who are pulling strings behind the scenes to determine what government does. And I think it’s more complicated than that. It’s not only Sheldon Adelson or the Koch brothers or Bill Gates or George Soros who are shaping government policy-making. So that’s my concern with what at least many people would understand oligarchy to mean. What “Economic Elite Domination” and “Biased Pluralism” mean is that rather than average citizens of moderate means having an important role in determining policy, ability to shape outcomes is restricted to people at the top of the income distribution and to organized groups that represent primarily — although not exclusively — business.

An interesting addendum to this study is a brief article by Kathleen Geier for the Washington Monthly in which she calls attention to a White House meeting with teen-age billionaire philanthropists:

Today’s New York Times — in the Fashion and Style section, but of course! — reports on a White House meeting of “100 young philanthropists and heirs to billionaire family fortunes.” Some of the people quoted in the article are as young as 19, and they are from family names you’ll recognize: Marriott, Pritzker, Rockefeller, etc.

The whole article is creepy beyond belief. Let me count a few of the ways: And, do read!

Of course it’s nice that the young want to find good ways to help others but the point of living in a democratic society is that we-the-people should be deciding the major items on the agenda.  If the wealthy want to help around the edges, fine.  But when the billionaire few call the shots what you get is what they want.

 


Free Markets, Not So Free –Again

Every few weeks we get another example of how the deified Free Markets of the Western World are not so free at all.  Free markets suppose that information about the goods being bought and sold is full, and that all interested parties have access to it, so that a ‘fair’ agreement can be reached between seller and buyer as to its value.

Full knowledge about the goods being sold is the first thing a budding entrepreneur seeks to hide.  The most recent way to do this is through complexification:  make a financial derivative so complex that no one can understand it, then pitch it hard enough and the buyer goes on hope and greed, never mind the knowing.

Books Flash BoysMichael Lewis, in his newest book, Flash Boys, shows us another cohort of free-market fanatics who sell the line and don’t believe in it at all:  high-speed traders.  Throw enough money and technology to sneak a peak and jump the line in trades, making pennies per share for multi-million share trades and a very nice profit happens — at the expense of those who, not knowing, pay a little “value-stolen” tax.

Lewis appeared on 60 Minutes Sunday, March 30, 2014 in a piece called “Is the U.S. Stock market rigged?

High-frequency traders, big Wall Street firms and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone else, along with the opportunity to act on it.

Michael Lewis: The insiders are able to move faster than you. They’re able to see your order and play it against other orders in ways that you don’t understand. They’re able to front run your order.

Steve Kroft: What do you mean front run?

Michael Lewis: Means they’re able to identify your desire to, to buy shares in Microsoft and buy ‘em in front of you and sell ‘em back to you at a higher price. It all happens in infinitesimally small periods of time. There’s speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds. But it”s enough for them to identify what you’re gonna do and do it before you do it at your expense.

Steve Kroft: So it drives the price up.

Michael Lewis: So it drives the price up, and in turn you pay a higher price.

Lewis also had a compressed version of the book in the Sunday New York Times Magazine, April 6, 2014  with much more of the technical details of how the skimming worked.

Katsuyama and his team did measure how much more cheaply they bought stock when they removed the ability of some other unknown trader to front-run them. For instance, they bought 10 million shares of Citigroup, then trading at roughly $4 per share, and saved $29,000 — or less than 0.1 percent of the total price. “That was the invisible tax,” Park says. It sounded small until you realized that the average daily volume in the U.S. stock market was $225 billion. The same tax rate applied to that sum came to nearly $160 million a day. “It was so insidious because you couldn’t see it,” Katsuyama says. “It happens on such a granular level that even if you tried to line it up and figure it out, you wouldn’t be able to do it. People are getting screwed because they can’t imagine a microsecond.”

Joe Nocera, at the Times, is impressed with the detective work of the small group who figured out what was happening and came up with a solution, of sorts, to keep the high-speed traders at the same speed as everyone else, though he thinks Lewis tells a story too perfectly at times.

William Alden at the Times’ “Deal Book” has a short precis of the book and alerts us to a live yelling match on CNBC between William O’Brien, the president of the BATS Global Markets exchange, who was clearly enraged and Lewis and Katsuyama.

O’Brien ought to be yelling as investigations of the practice have been begun in multiple places, one of which will certainly make changes to the legality of the peep-hole these traders have enjoyed for years.

It’s all pretty damned interesting.  Probably won’t get people to the barricades but it may be another straw in the growing bale of perception that wealth creation is more and more a rigged game, whose rules are written by the riggers and their hired politicians.


Janet Yellen: New View of Economic Health?

Don’t know if Heidi Moore at the Guardian, UK is blowing smoke, or if she’s even an economist but I thought her comments about US Federal Reserve Chair, Janet Yellen’s first presser were interesting. No others who have commented had such an interpretation.

“Wall Street is finally being forced to think for itself.

Today marked the first press conference for Janet Yellen, the first female chairman of the Federal Reserve.

… Yellen wiped away one lazy way of measuring the economy’s health. The Fed, under Bernanke, promised that when the unemployment rate hit 6.5%, the central bank would raise interest rates. This was called quantitative guidance, and it fed Wall Street’s fetish for largely made-up numbers. The 6.5% benchmark was a big hit with traders. It meant they didn’t have to think very hard: when unemployment hit 6.5%, Wall Street could start girding itself for a rise in interest rates.

Then Yellen shut down the betting parlor. In a statement, the Fed said it “will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. This is what is now called ‘qualitative guidance’”.

Translation: the Fed is looking at when the economy improves, and the economy comprises a giant number of measures and statistics. If Wall Street wants Cliffs Notes, it will have to look elsewhere.

… No longer will the Fed promise to raise interest rates at 6.5% unemployment. Instead, the Fed will raise interest rates when the economy is strong enough to justify it. Wall Street will just have to get over itself.

Yellen was clear that from now on, those market pundits are going to be forced to really think about where the economy is going, using a range of numbers, including how many people are dropping out of the workforce, how easy mortgages are to get, and whether regular people find it easy to borrow.

In her comments today, Yellen showed a sensitivity to the economy as real people experience it: mortgages that are hard to get, businesses that aren’t investing, “kids shacking up with their families”, people dropping out of the labor force because they can’t find jobs.

Read all Guardian: Moore

We won’t know for a while, of course, whether Yellen is actually setting out on a different road, or whether that road will lead to good results.  But since the human mind loves to speculate about everything from basketball tournament outcomes to where a missing airliner might be we might as well have a go at matters that actually affect us.


Race, Ryan and Lazy-Day Hammocks

Commenting on Paul Ryan’s “remarks in which he attributed persistent poverty to a “culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working,” Paul Krugman points out that it wasn’t simply Ryan being inarticulate, as he later claimed, but that since the GOP can’t face the facts about poverty in America they respond to the only dog-whistle they understand: race — “the Rosetta Stone that makes sense of many otherwise incomprehensible aspects of U.S. politics.”

NY Times: Krugman

And for more on Congressman Ryan, who likes to hearken back to his famine-Irish forebears, have a look at Timothy Eagan’s justified take-down of the Ryan rhetoric about “culture of dependency”  and “a safety net that becomes a lazy-day hammock.”  It is the same stuff the British said about the famine-Irish, exactly.

The Irish historian John Kelly, who wrote a book on the great famine, was the first to pick up on these echoes of the past during the 2012 presidential campaign. “Ryan’s high-profile economic philosophy,” he wrote then, “is the very same one that hurt, not helped, his forebears during the famine — and hurt them badly.”

Said Ryan:

“We have this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work.” In other words, these people are bred poor and lazy.

Where have I heard that before? asks Eagan.

Ah, yes — 19th-century England. The Irish national character, Trevelyan confided to a fellow aristocrat, was “defective.” The hungry millions were “a selfish, perverse, and turbulent” people, said the man in charge of relieving their plight.

And the hammock?

“We entered a cabin. Stretched in one dark corner, scarcely visible from the smoke and rags that covered them, were three children huddled together, lying there because they were too weak to rise, pale and ghastly … perfectly emaciated, eyes sunk, voice gone, and evidently in the last stage of actual starvation.”

The Irish Famine, 1845-1849, (1900). Artist: Unknown

The Irish Famine, 1845-1849, (1900). Artist: Unknown


Trading Down

Joseph Stiglitz  has a very useful short summary, with a one paragraph history, of trade agreements and why the current secret negotiations for the so called TPP are so wrong-headed.

…trade deals today are markedly different from those made in the decades following World War II, when negotiations focused on lowering tariffs. As tariffs came down on all sides, trade expanded, and each country could develop the sectors in which it had strengths and as a result, standards of living would rise. Some jobs would be lost, but new jobs would be created.

Today, the purpose of trade agreements is different. Tariffs around the world are already low. The focus has shifted to “nontariff barriers,” and the most important of these — for the corporate interests pushing agreements — are regulations. Huge multinational corporations complain that inconsistent regulations make business costly. But most of the regulations, even if they are imperfect, are there for a reason: to protect workers, consumers, the economy and the environment.

What’s more, those regulations were often put in place by governments responding to the democratic demands of their citizens. Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is a race to the bottom.

NY Times: Stiglitz