Friday, September 23, 2011

Millionaires get richer, hiring drops. Where are the jobs being created?

Here is an excellent short video giving the facts of job creation in America that is (NOT)being created by giving tax breaks to millionaires and billionaires. The video then goes into the political implications - with a quick dig at the inside the beltway inhabitants of America's version of Versailles.

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Wednesday, September 21, 2011

Two interesting comments from Greg Sargent

Here are two interesting comments from Greg Sargent's Plum Line.
  • GOP leaders to Fed: Don’t act on economy: GOP leaders send a letter to the Fed chairman, urging him not to adopt any further stimulus to help the economy — on the grounds that more action could hurt it by weakening the dollar, even though many economists think a weakened dollar would be good for the country.

    Ezra Klein sense a threat in the public pressure. Steve Benen suggests we’re seeing the latest sign of active GOP sabotage of the economy. And Matthew Yglesias says this should be the story of the day.

  • Obama is tanking among independents: All that said, there’s no sugar-coating the fact that Obama’s overall numbers are terrible with indys. A new McClatchy-Marist poll finds that indys plan to vote against him by a whopping 53 to 28.

    This could be a referendum on the current economy, and Obama’s challenge is to change this by somehow leveraging the fact that indys approve of the actual fiscal policies he’s currently championing. Hence the newly aggressive approach.

So the Republicans, with nothing else to run on for 2012, are in the process of sabotaging the economy. Is there any doubt? They are doing it in public now. They aren't even trying to hide their efforts.

Well, apparently there is doubt among the independent voters. Remember that a major characteristic of "independent" voters is that they do not follow politics and have little in-depth information. They are probably reacting to the poor economy and blaming the President. Will they even hear of the letter from the Republican leadership to the Fed? If they do, will they understand what it means?

That reaction by the independent voters is exactly the one the Republican leadership is depending on.

Here's why Elizabeth Warren should be Senator

Elizabeth Warren explains why society matters.

This partial transcript comes from Steve Benen.

Warren, after explaining some of the reasons for the nation’s deep fiscal hole, pointed to a more sensible approach to economic policy in general. “I hear all this, you know, ‘Well, this is class warfare, this is whatever,’” she said. “No. There is nobody in this country who got rich on his own. Nobody.

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

“Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

Saturday, September 17, 2011

Another Rogue trader damages his bank.

Swiss Bank UBS has lost an estimated $2 billion because one of their traders in London, Kweku Adoboli, "went rogue." Julia Felsenthal at Slate Magazine explains what a rogue trader is. But first, who is Kweku Adoboli?

Kweku Adoboli is a 31 year-old british trader for the Swiss bank UBS. He was born in Ghana 15 Sept. 1980 and attended Ackworth School, a highly regarded Quaker school located in the village of High Ackworth near Pontefract, West Yorkshire, England. After that he was accepted to the extremely competitive University of Nottingham where he studied computer science and management. He graduated from there in 2003. From his educational history is it clear that Adoboli is a very capable individual.

According to the Wall Street Journal:
Adoboli started at UBS in London as a trainee in March 2006, according to the Telegraph newspaper. On the LinkedIn profile, his title is listed as “Director ETF and Delta1 Trading at UBS Investment Bank.”

Investment banks’ Delta One operations trade securities that attempt to track an asset closely. Our Journal colleague Paul Sonne reported Adoboli has worked since 2006 in the European equities division of UBS, focusing on exchange-trading funds, or baskets of securities that aim to track a specific stock index or commodities.
The Slate Article describes how traders are supposed to deal with risk.
Every trader is allowed to take on a certain amount of risk, and if he wants to exceed that value he must get the permission of his supervisors. ("Risk" refers not to the amount of money invested but rather the amount one might expect to lose on a particular gamble given the best available estimate of the odds.) Traders are said to have gone rogue when they've either made investments that are too risky, or invested much more money than they're supposed to.
What did Adoboli do that went so wrong? It looks like he made some losing trades, then attempted to take riskier trades or larger trades that would cover his losses if he succeeded, but they also failed. Somehow UBS risk management system failed to identify the risks and their size, either because Adoboli concealed them or because the risk management system was inadequate. Here's more from Slate.
A starting employee at a bank like UBS might be allowed to take on risk measuring in the thousands, not millions, of dollars. As a trader gains experience—and demonstrates an ability to make a profit—his authorized risk would increase; a very senior person at a bank might even be permitted a billion dollars' worth of exposure. Nobody has reported just how much Adoboli had been trusted with, but the Wall Street Journal did report that he worked for an equities desk called Delta One that conducted relatively safe trades. Charges against Adoboli allege that he falsified accounting records going back to October 2008. That suggests he was hiding unauthorized losing investments for a long time, as opposed to making one gigantic, really bad bet.
It has been reported that UBS' internal controls did not recognize that Adoboli was conducting unauthorized trades. He handed himself into UBS and told them what he had done, and only then did they realize that UBS had lost approximately $2 billion on his trades.

Two earlier rogue traders were Nick Leeson and Jérôme Kerviel. These were traders who were conducting large numbers of trades, made losing trades and learned how to conceal those losing trades from their supervisors while they took increasing risks attempting to achieve an overall winning situation. Nick Leeson's trades bankrupted and destroyed the Barings Bank. Jérôme Kerviel was similar to Adoboli in that Kerveil was a junior trader in the Delta One financial products department of the French bank, Société Générale. Kerviel lost approximately €4.9 billion for the bank through his trading actions.

Kerviel has always claimed that his supervisors were aware of his trades and that he simply became the fall guy when the trades failed. Did the risk management systems really fail in all three of these cases? How much did managers really know about the trades before they were exposed?

The massive power of these big banks to damage the lives and livelihoods of billions of people has be been clear since they initiated the Great Depression, and again has been exposed by their disastrous actions which caused the mortgage fraud that led to the financial collapse of Wall Street in 2008. The unrestrained management of these massive institutions cannot be trusted. This is the message that the Wall Street protesters are highlighting this weekend.

This story begins with one more banking "rogue trader", but it highlights the real problem of rogue financial institutions themselves.

Addendum 9/20/11 @ 1:43 AM CDT
Here is One view on why Bank Reform has not stopped rogue traders.

Thursday, September 15, 2011

The end of outsourcing for cheap labor

Outsourcing to find cheap labor is becoming too expensive to survive as an economically viable business process. In the very near future businesses are going to be instead eliminating the costs of maintaining and controlling inventory, while managing distribution and long distance transportation. A major advantage will be sharply improved quality control. How is this going to happen? Products are going to be manufactured at or very close to the point of sale as they are sold.

A recent article in Forbes points out that the major advantage of long production lines of nearly identical products has been that the long production lines lower the cost of production per unit and allow the product to be sold more cheaply per unit. Lower labor costs have for a relatively short time been one way to get lower unit cost. In recent years, however, the transportation, distribution and inventory costs have climbed to where they more than eliminated the advantage of cheap labor for a great many products.

The recent history of mass production manufacturing has been largely about big companies which outsourced manufacturing to third world countries in order to exploit cheap labor and to escape the limitations of high-priced unionized labor in most industrial nations. This only works for companies which sell a uniformly identical product to large groups of people. The more each unit is changed, the less likely that the product can be made cheaply enough to be made a long distance from the customer and shipped in.

The new technologies which will eliminate most outsourcing for cheap labor are:
  • programmable subtractive tools, which carve shapes from raw materials. These include laser cutters (which cut flat sheets of wood, acrylic, metal, cardboard, and other light materials), computer numerical control (CNC) routers and milling machines (which use drills to produce three-dimensional shapes), and cutters that use plasma or water jets to shape material.
  • additive tools, which are primarily computer-controlled 3-D printers that build objects layer by layer, in a process known as fused deposition modeling. They work with a wide variety of materials: thermoplastics, ceramics, resins, glass, and powdered metals. Technically known as “additive rapid manufacturing” devices, 3-D printers also use lasers or electron beams to selectively shape the source material into its final form. Because additive devices require little setup time, they make possible the production of any quantity at the same cost per unit, and also allow easy, rapid switching between products. In some cases, a 3-D printer can fabricate in a single piece an object that would otherwise have to be manufactured in several parts and then assembled. And because it composes objects bit by bit, instead of carving them from larger blocks, additive manufacturing considerably reduces the waste of materials.
The article goes on to point out that this technology is in its infancy, but that it is developing rapidly. The author provides good advice on how businesses should prepare to take advantage of it. He does not consider the implications for the declining American middle class but those should be very important. A well-trained well-paid middle class labor force is going to be needed very near the point of sale. Not in Mexico and not in China, but right in America where the products are being bought and used.

If I were suggesting strategy for firms competing with Walmart, I would be looking at this set of technologies very closely. Walmart's big competitive advantage has been it's superior computer technology and the lower distribution costs that technology has permitted. But if the competitors can produce goods at the point of sale with no significant costs of distribution, greater variation in the products and greater control over quality ....

Tuesday, September 13, 2011

Remember the Republican hissy fit when Alan Grayson said their health care plan was "Let them die!"?

Alan Grayson famously said on the floor of Congress that the Republican health care plan was to simply let the sick die. The quote is:
The Republican health care plan for America: “don’t get sick.” If you have insurance don’t get sick, if you don’t have insurance, don’t get sick; if you’re sick, don’t get sick. Just don’t get sick. … If you do get sick America, the Republican health care plan is this: “die quickly.”

The Republican response was "He can't say that about us!!"

Now we have both Ron Paul and the studio audience of conservative Republicans confirming Grayson's statement.

Here is a transcript of the question and of Ron Paul's full response.
An interesting exchange in tonight's CNN Republican debate was prompted by the question to Rep. Ron Paul, R-Tex., about who should pay for medical care of the uninsured.

"A healthy 30-year-old young man has a good job, makes a good living, but decides, you know what? I'm not going to spend $200 or $300 a month for health insurance because I'm healthy, I don't need it. But something terrible happens, all of a sudden he needs it. Who's going to pay if he goes into a coma, for example? Who pays for that?" asked host Wolf Blitzer.

Paul, a medical doctor, first responded by saying American society is primed to believe government would pay for it.

"Well, in a society that you accept welfarism and socialism, he expects the government to take care of him,' he said.

When pressed on the question, Paul responded: "That's what freedom is all about, taking your own risks," to applause from many tea party backers in the audience.

"But Congressman, are you saying that society should just let him die?" asked Blitzer, to which several voices in the audience cried out, "Yes!"

"No. I practiced medicine before we had Medicaid, in the early 1960s, when I got out of medical school. I practiced at Santa Rosa Hospital in San Antonio, and the churches took care of them. We never turned anybody away from the hospitals," said Paul to additional applause. "And we've given up on this whole concept that we might take care of ourselves and assume responsibility for ourselves. Our neighbors, our friends, our churches would do it. This whole idea, that's the reason the cost is so high. The cost is so high because they dump it on the government, it becomes a bureaucracy," he added.

This small exchange is the key to a major debate going on with regards to health care, both President Obama's health reform law and former Massachusetts Governor Mitt Romney's own health reform law that is under attack by his Republican opponents.
Congressman Paul is wrong to assume that "they" simply decided to dump indigent health care on the government and as a result the cost of health care shot up. The fact is that the cost of health care shot up so high that individual hospitals could not continue to bear the burden without help. The result of the increase in health care cost was that the government had to step in and save the hospitals from bankruptcy. Who should fund the costs of someone in a coma kept alive for years? Who should provide the funds to give someone chemotherapy for follicular lymphoma? That costs $50,000 to $60,000 per month for six or seven months, and if successful can provide a person with many years of productive life after that.

No hospital can handle those costs today without assistance, and employers cannot continue to bear the costs of the employer insurance and remain competitive in the international market against foreign employers who have a workforce ensured by their governments. One or two very expensive cases can bankrupt a hospital and shut it down, and there are no health insurers with a large enough risk pool to handle such cases on their own. If hospitals are to be reliably funded and not risk being closed down by one or a few very expensive cases they are going to have to go to the government for financial assistance. There is no other organization large enough to bear the costs of some modern health care treatments.

Apparently Dr. Paul's medical training did not include understanding of insurance principles.

Congressman Paul and the teabaggers live in the fantasy that America is still in the 1950's. Everything that has changed since then has been a mistake and should be erased. But in those days sulfa drugs were a brand new miracle, the only treatment for depression was psychotherapy or electroconvulsive shock treatment and a diagnosis of cancer was a death sentence. Yeah, I guess that hospitals could deal with telling most of their patients there was no cure for their illness and sending them home to die at low cost to the hospital. Medicine has changed. Apparently, though, Dr. Ron Paul's medicine has not changed.

No wonder Congressman Dr. Paul had to change careers and get into politics. There are no malpractice lawsuits for incompetence against Congressmen.

Friday, September 09, 2011

A short summary of the economy that ended the Bush administration

Americans are ahistorical. They can't even remember what happened three years ago. [The failure of the so-called news media to honestly and accurately cover it doesn't help.] Here's an exception.

Rachel Maddow very clearly lays out the utter collapse of the American economy in the last two quarters of 2008 (the Bush administration) and shows the effects of the stimulus spending from Washington, D.C. in 2009. It's clear and it's short.

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The Republicans claim that the stimulus didn't work. It was not big enough to eliminate the Great Recession, but it stopped the collapse into Depression. Even as soon as December 2009 it was clear that more stimulus was needed - and Congress refused. Largely this was through the Republican use of the filibuster and threat of the filibuster in the Senate.

So remember, Obama knew in 2009 that more stimulus was needed and requested it in December 2009. The Republicans were already blocking it and the Republicans were guaranteeing that America would have more and worse recession. This is intentional. The Republicans are the party that is against any government action, and their calculation is that if they can cause the government to fail in dealing with the Great Recession, the Republicans will gain power and replace the Democrats.

Notice the end of the Maddow segment, though. The statistics from the Bush administration showed a half percent GDP decline in the third quarter of 2008 and a 3.8% decline in the fourth quarter. But those were preliminary statistics. When the final numbers came in it became clear that America had been headed for the Second Great Depression. [This starts at minute 4.0 in the clip] Instead of a 1/2 % shrinkage of the economy in the third quarter of 2008 it was actually 3.7% shrinkage. Instead of 3.7% shrinkage in the fourth quarter of 2008 the shrinkage was actually 8.9%. America was headed into the Second Great Depression very rapidly. Only the stimulus (which the lame duck Congress of 2008 failed to act on - no leadership from the vacationing George Bush) passed within a month of Obama's inauguration kept America in the world from falling into the most massive economic Depression the world had ever seen.

One other thing to remember is that both the Great Depression of the 1930's and the almost Second Great Depression which started in 2007 with the mortgage crisis were caused primarily by unregulated, ignorant, and corrupt self-dealing by the massive banks in Wall Street. By 2008 America's GDP consisted of 40% the economically unproductive banking activities. The banks were creating markets with massive risk in them and then selling insurance to investors and borrowers to protect them against that risk the banks had created. Only the unregulated insurance the banks were selling were not capable of protecting the overall banking system from the extreme risk the bankers were creating and taking on.

Banks, through their lending, create the money supply the productive economy requires in order to function. They had by 2008 slipped into what is called the Shadow Banking System (unregulated and unmeasured private banking) which dominated the world financial economy. No one in banking itself knew what was going on overall, and the bankers successfully forced the federal government to remove itself from the regulation business, allowing the creation of the Shadow Banking System.

That unregulated banking system created the economic collapse that everyone became suddenly aware of in September 2008.

America and the world are now struggling to recover from the financial collapse of 2008. Only the conservatives world-wide are using the methods of Herbert Hoover, methods clearly shown in the 1930's to make the economic problems worse.

In the 1930's the bankers did not understand what they were doing when they passed the Smoot-Hawley Tarrif Act. Today the Republican Party knows exactly what it is doing. It is exacerbating the set of American economic problems based on Republican political calculation that the public will blame Obama and the Democrats for the failure to get us out of the economic problems.

Wednesday, September 07, 2011

Republican Whoppers last night.

Republicans simply cannot be trusted to tell the truth. Alex Wagner from the Huffington Post explains.

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Here's some more of the same:

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Rick Perry is lying about Social Security being a Ponzi scheme. At it's core Social Security Retirement is a term insurance plan in which the money paid in during the current year pays the benefits paid out the same year. That is exactly the same plan as term life insurance, and it is a financial model of the reality. The working people this year much provide sufficient goods and services to support all workers and all non-workers together. Remember, non-workers include non-working spouses, children, retired individuals and wealthy investors who don't do anything real for the economy.

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Monday, September 05, 2011

"The evolution controversy today is, I think, a Galileo moment," says Karl Giberson

Some evangelicals are questioning whether it was ever possible that there was actually an Adam and an Eve who together were the ancestors of all humans.
...some conservative scholars are saying publicly that they can no longer believe the Genesis account. Asked how likely it is that we all descended from Adam and Eve, Dennis Venema, a biologist at Trinity Western University, replies: "That would be against all the genomic evidence that we've assembled over the last 20 years, so not likely at all."

Researching The Human Genome

Venema says there is no way we can be traced back to a single couple. He says with the mapping of the human genome, it's clear that modern humans emerged from other primates as a large population — long before the Genesis time frame of a few thousand years ago. And given the genetic variation of people today, he says scientists can't get that population size below 10,000 people at any time in our evolutionary history.

To get down to just two ancestors, Venema says, "You would have to postulate that there's been this absolutely astronomical mutation rate that has produced all these new variants in an incredibly short period of time. Those types of mutation rates are just not possible. It would mutate us out of existence."

Venema is a senior fellow at BioLogos Foundation, a Christian group that tries to reconcile faith and science. The group was founded by Francis Collins, an evangelical and the current head of the National Institutes of Health, who, because of his position, declined an interview.

And Venema is part of a growing cadre of Christian scholars who say they want their faith to come into the 21st century. Another one is John Schneider, who taught theology at Calvin College in Michigan until recently. He says it's time to face facts: There was no historical Adam and Eve, no serpent, no apple, no fall that toppled man from a state of innocence.

"Evolution makes it pretty clear that in nature, and in the moral experience of human beings, there never was any such paradise to be lost," Schneider says. "So Christians, I think, have a challenge, have a job on their hands to reformulate some of their tradition about human beginnings."
Has anyone mentioned this to Michelle Bachman or to "The Family?"

Sunday, September 04, 2011

The best description of modern American politics yet written

"As Hannah Arendt observed, a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." This is quoted by Steve Benen this morning. He also adds:
There is one great overwhelming dilemma that dominates American politics in this early part of the 21st century. It is not the extent to which President Obama has failed to meet the expectations of the progressive base, though this matters. It is not the lazy, negligent, and incompetent establishment media, though this matters, too. The issue that should dominate the landscape is the radicalization of the modern Republican Party and the effects of having one of two major political parties descend into madness.
What brought Steve to write this? It is an article entitled "Goodbye to All That: Reflections of a GOP Operative Who Left the Cult" by long-time Republican Congressional staffer Mike Lofgren. Lofgreen recently retired after 28 years of working with Republicans on the Hill. Here are some excerpts:
Both parties are rotten - how could they not be, given the complete infestation of the political system by corporate money on a scale that now requires a presidential candidate to raise upwards of a billion dollars to be competitive in the general election? Both parties are captives to corporate loot. The main reason the Democrats' health care bill will be a budget buster once it fully phases in is the Democrats' rank capitulation to corporate interests - no single-payer system, in order to mollify the insurers; and no negotiation of drug prices, a craven surrender to Big Pharma.

But both parties are not rotten in quite the same way. The Democrats have their share of machine politicians, careerists, corporate bagmen, egomaniacs and kooks. Nothing, however, quite matches the modern GOP.

To those millions of Americans who have finally begun paying attention to politics and watched with exasperation the tragicomedy of the debt ceiling extension, it may have come as a shock that the Republican Party is so full of lunatics. To be sure, the party, like any political party on earth, has always had its share of crackpots, like Robert K. Dornan or William E. Dannemeyer. But the crackpot outliers of two decades ago have become the vital center today: Steve King, Michele Bachman (now a leading presidential candidate as well), Paul Broun, Patrick McHenry, Virginia Foxx, Louie Gohmert, Allen West. The Congressional directory now reads like a casebook of lunacy.


A couple of months ago, I retired; but I could see as early as last November that the Republican Party would use the debt limit vote, an otherwise routine legislative procedure that has been used 87 times since the end of World War II, in order to concoct an entirely artificial fiscal crisis. Then, they would use that fiscal crisis to get what they wanted, by literally holding the US and global economies as hostages.


Everyone knows that in a hostage situation, the reckless and amoral actor has the negotiating upper hand over the cautious and responsible actor because the latter is actually concerned about the life of the hostage, while the former does not care. This fact, which ought to be obvious, has nevertheless caused confusion among the professional pundit class, which is mostly still stuck in the Bob Dole era in terms of its orientation.


It should have been evident to clear-eyed observers that the Republican Party is becoming less and less like a traditional political party in a representative democracy and becoming more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe. This trend has several implications, none of them pleasant.

In his "Manual of Parliamentary Practice," Thomas Jefferson wrote that it is less important that every rule and custom of a legislature be absolutely justifiable in a theoretical sense, than that they should be generally acknowledged and honored by all parties. These include unwritten rules, customs and courtesies that lubricate the legislative machinery and keep governance a relatively civilized procedure. The US Senate has more complex procedural rules than any other legislative body in the world; many of these rules are contradictory, and on any given day, the Senate parliamentarian may issue a ruling that contradicts earlier rulings on analogous cases.

The only thing that can keep the Senate functioning is collegiality and good faith. During periods of political consensus, for instance, the World War II and early post-war eras, the Senate was a "high functioning" institution: filibusters were rare and the body was legislatively productive. Now, one can no more picture the current Senate producing the original Medicare Act than the old Supreme Soviet having legislated the Bill of Rights.

Far from being a rarity, virtually every bill, every nominee for Senate confirmation and every routine procedural motion is now subject to a Republican filibuster. Under the circumstances, it is no wonder that Washington is gridlocked: legislating has now become war minus the shooting, something one could have observed 80 years ago in the Reichstag of the Weimar Republic. As Hannah Arendt observed, a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself.

John P. Judis sums up the modern GOP this way:
"Over the last four decades, the Republican Party has transformed from a loyal opposition into an insurrectionary party that flouts the law when it is in the majority and threatens disorder when it is the minority. It is the party of Watergate and Iran-Contra, but also of the government shutdown in 1995 and the impeachment trial of 1999. If there is an earlier American precedent for today's Republican Party, it is the antebellum Southern Democrats of John Calhoun who threatened to nullify, or disregard, federal legislation they objected to and who later led the fight to secede from the union over slavery."
A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress's generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.

A deeply cynical tactic, to be sure, but a psychologically insightful one that plays on the weaknesses both of the voting public and the news media. There are tens of millions of low-information voters who hardly know which party controls which branch of government, let alone which party is pursuing a particular legislative tactic. These voters' confusion over who did what allows them to form the conclusion that "they are all crooks," and that "government is no good," further leading them to think, "a plague on both your houses" and "the parties are like two kids in a school yard." This ill-informed public cynicism, in its turn, further intensifies the long-term decline in public trust in government that has been taking place since the early 1960s - a distrust that has been stoked by Republican rhetoric at every turn ("Government is the problem," declared Ronald Reagan in 1980).

The media are also complicit in this phenomenon. Ever since the bifurcation of electronic media into a more or less respectable "hard news" segment and a rabidly ideological talk radio and cable TV political propaganda arm, the "respectable" media have been terrified of any criticism for perceived bias. Hence, they hew to the practice of false evenhandedness. Paul Krugman has skewered this tactic as being the "centrist cop-out." "I joked long ago," he says, "that if one party declared that the earth was flat, the headlines would read 'Views Differ on Shape of Planet.'"


This constant drizzle of "there the two parties go again!" stories out of the news bureaus, combined with the hazy confusion of low-information voters, means that the long-term Republican strategy of undermining confidence in our democratic institutions has reaped electoral dividends. The United States has nearly the lowest voter participation among Western democracies; this, again, is a consequence of the decline of trust in government institutions - if government is a racket and both parties are the same, why vote? And if the uninvolved middle declines to vote, it increases the electoral clout of a minority that is constantly being whipped into a lather by three hours daily of Rush Limbaugh or Fox News. There were only 44 million Republican voters in the 2010 mid-term elections, but they effectively canceled the political results of the election of President Obama by 69 million voters.


This tactic of inducing public distrust of government is not only cynical, it is schizophrenic. For people who profess to revere the Constitution, it is strange that they so caustically denigrate the very federal government that is the material expression of the principles embodied in that document. This is not to say that there is not some theoretical limit to the size or intrusiveness of government; I would be the first to say there are such limits, both fiscal and Constitutional. But most Republican officeholders seem strangely uninterested in the effective repeal of Fourth Amendment protections by the Patriot Act, the weakening of habeas corpus and self-incrimination protections in the public hysteria following 9/11 or the unpalatable fact that the United States has the largest incarcerated population of any country on earth. If anything, they would probably opt for more incarcerated persons, as imprisonment is a profit center for the prison privatization industry, which is itself a growth center for political contributions to these same politicians.[1] Instead, they prefer to rail against those government programs that actually help people. And when a program is too popular to attack directly, like Medicare or Social Security, they prefer to undermine it by feigning an agonized concern about the deficit. That concern, as we shall see, is largely fictitious.


I have joked in the past that the main administration policy that Republicans object to is Obama's policy of being black.[2] Among the GOP base, there is constant harping about somebody else, some "other," who is deliberately, assiduously and with malice aforethought subverting the Good, the True and the Beautiful: Subversives. Commies. Socialists. Ragheads. Secular humanists. Blacks. Fags. Feminazis. The list may change with the political needs of the moment, but they always seem to need a scapegoat to hate and fear.

It is not clear to me how many GOP officeholders believe this reactionary and paranoid claptrap. I would bet that most do not. But they cynically feed the worst instincts of their fearful and angry low-information political base with a nod and a wink.


I do not mean to place too much emphasis on racial animus in the GOP. While it surely exists, it is also a fact that Republicans think that no Democratic president could conceivably be legitimate.
Then he lets loose on the failures of the political Democrats. And he is dead right!
The reader may think that I am attributing Svengali-like powers to GOP operatives able to manipulate a zombie base to do their bidding. It is more complicated than that. Historical circumstances produced the raw material: the deindustrialization and financialization of America since about 1970 has spawned an increasingly downscale white middle class - without job security (or even without jobs), with pensions and health benefits evaporating and with their principal asset deflating in the collapse of the housing bubble. Their fears are not imaginary; their standard of living is shrinking.

What do the Democrats offer these people? Essentially nothing.
Democratic Leadership Council-style "centrist" Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China. At the same time, the identity politics/lifestyle wing of the Democratic Party was seen as a too illegal immigrant-friendly by downscaled and outsourced whites.[3]

While Democrats temporized, or even dismissed the fears of the white working class as racist or nativist, Republicans went to work. To be sure, the business wing of the Republican Party consists of the most energetic outsourcers, wage cutters and hirers of sub-minimum wage immigrant labor to be found anywhere on the globe. But the faux-populist wing of the party, knowing the mental compartmentalization that occurs in most low-information voters, played on the fears of that same white working class to focus their anger on scapegoats that do no damage to corporations' bottom lines: instead of raising the minimum wage, let's build a wall on the Southern border (then hire a defense contractor to incompetently manage it). Instead of predatory bankers, it's evil Muslims. Or evil gays. Or evil abortionists.

How do they manage to do this? Because Democrats ceded the field. Above all, they do not understand language. Their initiatives are posed in impenetrable policy-speak: the Patient Protection and Affordable Care Act. The what? - can anyone even remember it? No wonder the pejorative "Obamacare" won out. Contrast that with the Republicans' Patriot Act. You're a patriot, aren't you? Does anyone at the GED level have a clue what a Stimulus Bill is supposed to be? Why didn't the White House call it the Jobs Bill and keep pounding on that theme?

You know that Social Security and Medicare are in jeopardy when even Democrats refer to them as entitlements. "Entitlement" has a negative sound in colloquial English: somebody who is "entitled" selfishly claims something he doesn't really deserve. Why not call them "earned benefits," which is what they are because we all contribute payroll taxes to fund them? That would never occur to the Democrats. Republicans don't make that mistake; they are relentlessly on message: it is never the "estate tax," it is the "death tax." Heaven forbid that the Walton family should give up one penny of its $86-billion fortune. All of that lucre is necessary to ensure that unions be kept out of Wal-Mart, that women employees not be promoted and that politicians be kept on a short leash.

It was not always thus. It would have been hard to find an uneducated farmer during the depression of the 1890s who did not have a very accurate idea about exactly which economic interests were shafting him. An unemployed worker in a breadline in 1932 would have felt little gratitude to the Rockefellers or the Mellons. But that is not the case in the present economic crisis. After a riot of unbridled greed such as the world has not seen since the conquistadors' looting expeditions and after an unprecedented broad and rapid transfer of wealth upward by Wall Street and its corporate satellites, where is the popular anger directed, at least as depicted in the media? At "Washington spending" - which has increased primarily to provide unemployment compensation, food stamps and Medicaid to those economically damaged by the previous decade's corporate saturnalia. Or the popular rage is harmlessly diverted against pseudo-issues: death panels, birtherism, gay marriage, abortion, and so on, none of which stands to dent the corporate bottom line in the slightest.
He then explains what really matters to the Republican Party of 2011. I list here only his three categories.
  1. The GOP cares solely and exclusively about its rich contributors.The party has built a whole catechism on the protection and further enrichment of America's plutocracy. Their caterwauling about deficit and debt is so much eyewash to con the public.
  2. They worship at the altar of Mars.While the me-too Democrats have set a horrible example of keeping up with the Joneses with respect to waging wars, they can never match GOP stalwarts such as John McCain or Lindsey Graham in their sheer, libidinous enthusiasm for invading other countries.
  3. Give me that old time religion.>Pandering to fundamentalism is a full-time vocation in the GOP.
There is a lot more in this great article. And it is written by a man who has been on the inside with the Republican leadership for nearly thirty years.

Remember "a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." This article explains how it is happening to America right now. It is a process of the Republicans attacking to destroy American democracy and the hapless Democrats simply failing to defend democracy when it is under attack.

2012 is going to be a pivotal election for America, probably one as important as the election in 1860.