Yearly Archives: 2014


The Great Wage Slowdown, Looming Over Politics

The New York Times has the article The Great Wage Slowdown, Looming Over Politics.

Since I know that very few if any of you will click through to read the article, I am forced to copy the graph, and show it here.  My appologies to the copyright police who may be lurking, but I claim it is  fair use.

wage stagnation graph

Now that the proof of the premise is in front of you, I can go on to comment on the article itself.  This is an interesting article because it goes from solid identification of the problem, to crazy solution, to sanity rescuing detail.

Here is the solid identification of the problem.

A quiz: How does the Democratic Party plan to lift stagnant middle-class incomes?

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The fact remains that incomes for most Americans aren’t growing very fast and haven’t been for years. Median inflation-adjusted income last year was still $2,100 lower than when President Obama took office in 2009 — and $3,600 lower than when President George W. Bush took office in 2001. That’s not just because of the financial crisis, either: Last month was another solid one for job growth and another weak one for average wage growth, the latest jobs report showed.

We’re living through the great wage slowdown of the 21st century, and nothing presents a larger threat to the Democrats’ electoral fortunes than that slowdown.

Here is the seemingly insane proposal for a solution.

The best hope for doing so, in the immediate future, is probably the oldest and most obvious play in the book: a tax cut.

Here is a sanity rescuing detail.

Because the long-term budget deficit remains a problem, any such tax cut could be paired with a tax increase for top earners, who — even after the expiration of some Bush-era tax cuts — still face lower rates than they have for most of recent history. “Taxes for high-earning Americans are too low,” argues Roger Altman, the Wall Street executive and Democratic adviser. Most Americans favor tax increases on the well-off, polls show.

A sane solution is not nearly the same as a good solution.  Cutting the taxes on a too meager income is not enough.  Sure you get to keep a little more, but the income for many would still be too meager.

What about the people who are working multiple jobs, and long hours at minimum wage, and still don’t make enough money to owe any income taxes?  A huge boost on the earned income tax credit would help those people.

Yes, huge marginal rates of income tax for the wealthy with very constrained loopholes would reduce the incentives for the ultra-wealthy to grab all the income there is.  Using the money collected to invest in all the needed public services that we have been deferring would employ people, boost wages, and make the economy run better.

Eliminating tuition and fees for higher education would lift a huge strain on many in the middle and lower classes.

Increasing the Social Security benefit would diminish the need for people to have so much private savings to cover their retirement.

I leave it up to your imagination to think of other parts of a plan that would answer the initial question, “How does the Democratic Party plan to lift stagnant middle-class incomes?”


Let me explain that one about Social Security.  Supposing that you could find a safe investment that would pay you a 5% rate of return above inflation.  (For the sake of simplicity, let us assume the inflation rate is zero.)

If you were getting $28,000 per year in Social Security today (that is an actual example), you would need a $560,000 nest egg to produce that income stream a 5% rate of return.  ($560,000 * 5% = $28,000).

Suppose that you could only get a 3% rate of return such as in the current environment.  That would require a nest egg of over $933,000. ($933,000 * 3% = $27,990)

Depending on how much income you think you need in retirement, you can scale up or down the amount of nest egg that is needed to back your retirement.  One way or another, through a combination of private savings and publicly funded pensions, this is the amount that is needed.

If this were wholly publicly funded, the government would need a nest egg large enough to fund the current (and expected maximum) of retired people at any one time.  Since the public nest egg is left behind when a person dies, that nest egg could fund the retirement of the next person to come into the retirement pool.  Contrast this with private savings backed retirements.  Unless you had relatives that you knew would pass on their nest egg to you at the moment of your retirement, you would have to be saving up for your retirement throughout your whole working life.

The private savings for investment would be less onerous if your retired people would die, or be dead when you were ready to retire.  These people could not have used up their nest egg to live the really good life during retirement.

In any case, the private system seems to require savings for retired people and for non-retired people.  The public pension plan would only need savings for the retired people (and enough to support expected population growth).


Country on Wrong Track, Say People Who Did Not Vote

The New Yorker has the article Country on Wrong Track, Say People Who Did Not Vote by Andy Borowitz.

The United States of America is on the wrong track and no one is taking action to fix it, says a broad majority of registered voters who did not vote last Tuesday.

According to a new survey, anger, frustration, and a pervasive view that the nation is moving in a fatal direction dominated the mood of those who were doing something other than voting on Election Day.

This is so close to not being the satire that is customary for Andy Borowitz, that I cannot tell if this is satire or a satire on satire.  Does Andy Borowitz not understand the problem, or does he understand it so well that it is a satire of the people who believe this is a “straight” satire?  Is this what they invented the phrase “kidding on the square” for?


Maybe this will clarify what I am trying to say.

Is Andy Borowitz satirizing the people who are too stupid to vote to change the system they claim to dislike? Or is he satirizing the people who think the people who don’t vote are too stupid to vote to change the system they claim to dislike?


The Hidden History of Prosperity

Reader BillM brought The American Prospect article The Hidden History of Prosperity to my attention. The following excerpts are from the article.

In the crisis of World War II, the nation made the political choices that created the robust egalitarian economy of the next 30 years. Can we respond to the climate crisis with similar policies to rebuild the middle class?

This article by Robert Kuttner debunks many of the myths that some leading economists and pundits try to use to explain the increasing inequality of wealth and the shrinking middle class.

Tinkering with education and training or even a higher minimum wage will not restore good earnings for the working and middle class. But the wartime experience demonstrates that a different structure of a capitalist economy, rooted in public investment and full employment, is possible. The current failure to spread productivity gains has little to do with technology, skills, or even globalization—and everything to do with our failure to constrain great private wealth, empower labor, and creatively use democratic government for national purposes.

The article then has a great discussion of the changes that the two Roosevelt presidents brought about.

Several aspects of TR’s presidency illuminate our current situation. Significantly, there was no deep economic crisis, and no war. There was, however, a set of robber barons with unprecedented concentrations of wealth. With indignation and passion, Teddy rallied his countrymen to right the imbalance. He did not fully succeed—that was left to his cousin. But he made a good start.

The significance of this description is that Theodore Roosevelt was able to bring about great change without the need for a deep economic crisis or a war.

With that lesson in mind, it seems like the article’s search for a deep crisis to trigger reform is not the most important part of the article.

First, because there is something else other than a crisis that is needed to get us started down the path of reform.  If the collapse of the world financial system weren’t a big enough crisis, one has  to wonder what would be. Timid leadership from Obama was enough to get us over the crisis stage without getting us to the  reform stage.  During the great depression, the timid leadership of Herbert Hoover similarly did not produce great reform.

Second, I am not sure that global climate change will reach, any time soon, an obviously enough crisis level to spur people to action in the face of the crisis deniers.

What it may boil down to is for the public to find the bold leader that they can get behind and support the changes that we need.  Any such bold leader on the horizon?  Hillary Clinton? Elizabeth Warren? Bernie Sanders?  Alan Grayson?  Which one does not belong in the above list?

Presented for your consideration, the video from the Politicus USA article Bernie Sanders Delivers A Gut Punch To the Republican Agenda To Screw Ordinary Americans.



26-Year Old Founder of U.S. UnCut Sends Open Letter To Democrats On Young Voter Disillusion

The Daily Kos has the article 26-Year Old Founder of U.S. UnCut Sends Open Letter To Democrats On Young Voter Disillusion.

Contrast the unified Republican message with the profound silence from you Democrats on addressing the trillion-dollar student debt crisis, rampant inequality and underemployment, and your collective fear of openly embracing economic populism, and you cook up what we saw on Tuesday night. Older people showed up, highly motivated to elect war hawks. Younger people mostly stayed home, disillusioned with the only alternative on the ballot who didn’t even talk about the issues affecting our lives every day.
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You Democrats, on the other hand, looked pitiful in the year leading up to the midterms. You didn’t seem to stand for anything in particular, you just pointed the finger at the other guy, told us they were bad, and that you weren’t like them. That’s not enough. Take a risk, be bold. Get behind Elizabeth Warren’s 0.75 percent interest rate for student loans. Allow student debt to be abolished with bankruptcy. Push for single-payer healthcare, or at the very least a public health insurance option. Need some catchy buzzwords? Try “affordable education,” “good jobs,” and “healthy families.”

What Hillary Clinton plan are they clamoring for? Oh, that’s right, they didn’t say diddly about any kind of Clinton.  Apparently they do get excited about Elizabeth Warren’s plans for student debt relief.

I wonder how the Democrats will ever figure out what the millenials want?  Do you suppose they would think of reading the open letters written to them?  Nah, too easy.  Let’s survey how well the things we want to emphasize do with this generation.  What words can we use to sell them on our ideas?

One of the millenials I speak to tells me that what his age group really wants is bipartisanship and centrism.  Funny that the letter didn’t mention any of that.


Interstellar: The Movie

We saw the movie Interstellar last night.

We thought it was a great movie, but I had forgotten how much effort has been put into having real science in the movie.

NBC News has an article,  After ‘Cosmos,’ Neil deGrasse Tyson Dives Into Science of ‘Interstellar’, that goes into Neil DeGrasse Tyson’s comments about the movie.  There are numerous web links in the article that I am still following.

Here is a little featurette that I found from following the links. Supposedly not full of spoilers. INTERSTELLAR Featurette – The Science Of Interstellar (2014) Matthew McConaughey Sci-Fi Movie HD.


I’ll let you follow your own trail through the links whenever you are ready. Some of them have spoilers in them, so you might want to see the movie first. Just remember that the science is pretty real given that this is a movie and by necessity it has to go beyond what we already know.


Here is a question that perhaps someone out there can answer. What role did Topher Grace play in the movie? We think we have figured it out, but we cannot find anything on the web that definitely confirms what we think. We can find the name of the character he plays, but that does not help us be certain of who that character was. If you have the answer, leave a link to the answer rather than an explanation. we don’t want any spoilers for the people who have not seen the movie yet.


Lot’s of spoilers in the following link

‘Interstellar’ Ending & Space Travel Explained.

You might be interested in the real definition of tesseract after you read the above article.

This article does not answer the question about Topher Grace, but it does explain some things we weren’t sure about. The table of contents links to other pages seem to be broken, but if you read the first page to the end, you will be able to navigate to succeeding pages.


Matt Stoller: Why the Democratic Party Acts The Way It Does

Naked Capitalism has the article Matt Stoller: Why the Democratic Party Acts The Way It Does.  This is another in a series of my posts that drive a few people (at least one) into a tizzy.  The article itself is too long for anybody to read except for maybe one or fewer people reading this post.  Here is the excerpt talking about the recriminations in the Democratic party over the recent electoral loss:

Everything is put on the table, except the main course — policy. Did the Democrats run the government well? Are the lives of voters better? Are you as a political party credible when you say you’ll do something?

This question is never asked, because Democratic elites — ensconced in the law firms, foundations, banks, and media executive suites where the real decisions are made — basically agree with each other about organizing governance around the needs of high technology and high finance. The only time the question even comes up now is in an inverted corroded form, when a liberal activist gnashes his or her teeth and wonders — why can’t Democrats run elections around populist themes and policies? This is still the wrong question, because it assumes the wrong causality. Parties don’t poll for good ideas, run races on them, and then govern. They have ideas, poll to find out how to sell those ideas, and run races and recruit candidates based on the polling. It’s ideas first, then the sales pitch. If the sales pitch is bad, it’s often the best of what can be made of an unpopular stew of ideas.

Still, you’d think that someone, somewhere would have populist ideas. And a few — like Zephyr Teachout and Elizabeth Warren — do. But why does every other candidate not? I don’t actually know, but a book just came out that might answer this question. The theory in this book is simple. The current generation of Democratic policymakers were organized and put in power by people that don’t think that a renewed populist agenda centered on antagonism towards centralized economic power is a good idea.

I am proud to say my blog, here, has persistently put policy on the table as the culprit, much to the annoyance of a few (at least one).  This article reviews a book about how the policy of the Democratic party was turned into what it is today.  This shift started before Bill Clinton became President.  Though Bill Clinton is the most famous person for pushing these changes forward, the man of ideas behind this shift is the author of the book being reviewed.

I have some ambivalence about the book, the movement, and the review.  I had been seduced by many of the ideas for which Bill Clinton became the embodiment, although I had been repulsed by some of the other ideas.  I still struggle with the feeling that there were problems with the Democrats and the party that led to the rise of Clinton who seemed to “fix” many of those problems.  Something did need to be “fixed”, but I have become completely disenchanted with the way they were “fixed”.  I had my doubts about some of these “fixes” at the time, but it seemed hard to argue with “success”.  I supported some of the “fixes” at the time, that I now recognize have turned into disasters.  I also railed against some of the bad ideas at the time they were proposed and enacted.


Progressives Win Big On Ballot Questions

Found this poster on the Occupy Democrats’ Facebook page.

Occupy Democrats' poster

They posed an interesting thought in the remarks about the poster.

The takeaway from this election is that if we want progressive reforms, popular ballots might be the most effective electoral strategy. Let’s up and down vote on the most important social, economic, and environmental justice questions of our time. It’s time we bypass the two-party system corrupted by corporate money. Who’s ready for direct democracy? What are your thoughts?

During the civil rights era, progressives found the way to get things done was to use the Supreme Court.  Now that regressives have managed to block that avenue, we just need to find another avenue.  Perhaps this is it.


Elizabeth Warren: It’s time to work on America’s agenda

The Washington Post has the opinion piece Elizabeth Warren: It’s time to work on America’s agenda.

The American people want a fighting chance to build better lives for their families. They want a government that will stand up to the big banks when they break the law. A government that helps out students who are getting crushed by debt. A government that will protect and expand Social Security for our seniors and raise the minimum wage.

Americans understand that building a prosperous future isn’t free. They want us to invest carefully and prudently, sharply aware that Congress spends the people’s money. They want us to make investments that will pay off in their lives, investments in the roads and power grids that make it easier for businesses to create good jobs here in America, investments in medical and scientific research that spur new discoveries and economic growth, and investments in educating our children so they can build a future for themselves and their children.

Before leaders in Congress and the president get caught up in proving they can pass some new laws, everyone should take a skeptical look at whom those new laws will serve. At this very minute, lobbyists and lawyers are lining up by the thousands to push for new laws — laws that will help their rich and powerful clients get richer and more powerful. Hoping to catch a wave of dealmaking, these lobbyists and lawyers — and their well-heeled clients — are looking for the chance to rig the game just a little more.

Now you know that there is a Senator in Washington who gets the  message.  This is why I am ready for Warren.

Has the other potential female candidate for the Democratic nomination to run for President in 2016 figured it out?  If  she has, does she dare speak out about what she has learned?  When will she tell us about her assessment of last Tuesday?

You can tell Elizabeth Warren what you think about the article.  She posted the article on her Facebook page.


Obama to nominate Loretta Lynch for attorney general

The Boston Globe has the useless article Obama to nominate Loretta Lynch for attorney general.  There was a particular piece of information that I had read about before, and wanted to quote here.  The New York Times article Loretta Lynch, Federal Prosecutor, Will Be Nominated for Attorney General comes close enough.

After graduating from law school in 1984, she spent six years as an associate at the New York law firm Cahill Gordon & Reindel before becoming a federal prosecutor. She became the chief assistant United States attorney for the Eastern District of New York in 1998 and was nominated a year later to lead the office for the rest of Bill Clinton’s presidency. Before returning in 2010, she was a partner at Hogan & Hartson, now known as Hogan Lovells.

Oh, Lord no, here we go again.  From the interview in my previous post, Democrats, This Is Why You Lost, I pick up some dialog that I did not put in the previous post.

Juan Cole: How would you judge the tenure of Eric Holder and now that obviously he is going to be leaving in terms of his particular role in going after these banks and this whole idea of bankers being able to call directly to the Justice Department to negotiate their deals and stop prosecutions at the lower levels.

Matt Taibbi: Well, it’s funny.  For years now I have been covering a lot of this stuff, and I have spoken to a lot of people in law enforcement, and there are really two types of people that I talk to who are prosecutors. One is the kind of old school law enforcement type, they want to get the bad guy at all costs and the are really career civil servants who just want to do their jobs and want to see justice happen. And then there is this new kind of person who is appearing in government now who comes out of the corporate defense sector. These are people who grew up as corporate lawyers defending companies like Chase and Bank of America and that’s who Eric Holder is very pointedly. He spent a long time at a company being called Covington and Burling, and this type of lawyer, this type of law enforcement official is much more interested in coming up with the settlement that everybody feels  good about when they walk out of the room as opposed to the old school kind of justice where the bad guy gets his or her comeuppance in the end and I think his tenure was very representative of a big sea change in the way we  do white collar  crime in this country.

Should I have expected Obama to learn a damn thing about the Democrats’ losses last Tuesday?  I  would have been pretty naive, wouldn’t I?  These kinds of appointments and governance do not happen by accident.  These people know exactly what they are doing.  I am beginning to think that if any party is going to have this type of corrupt administration on their record, perhaps i would prefer it to be a Republican administration.  I’ll be thinking very strongly about this in 2016.


In answer to a question a little before the closing Q & A above, there are some remarks about whether or not the whistle blower case in this interview will be fully prosecuted at last.  This may reinforce what Taibbi said above.

Matt Taibbi: The is an important distinction, too. It’s often not the line investigators who are the problem. The people who actually work these cases, the career prosecutors who are doing this digging. Often times they are very talented and aggressive lawyers who really know what they are doing. The problem is the political wing of the Justice Department can take those cases and do whatever they want with them. So in Alayne’s case and in many other cases that they take these excellent investigations and they turn them into these slap on the wrist settlements, and that’s what she is worried about, I think.

So this is why we lost so big last Tuesday.


On Facebook I was warned:

Norman Hobson Better look at her record before you spout off Steve

Oh my, could I have jumped to conclusions too soon?  A Google search pointed me to the ABC News item The 5 Most Interesting Cases of Attorney General Nominee Loretta Lynch’s Career.  I can breathe a sigh of relief.  No executives of giant corporations in that list.


Democrats, This Is Why You Lost

Naked Capitalism has the article Matt Taibbi and Alayne Fleischmann Discuss JP Morgan Mortgage Fraud, Eric Holder CoverUp on Democracy Now.

The article features this video from Democracy Now:


There are so many quotes from this video that I jotted down, that I’ll probably put some of them in the addendum to this post. Here is the one, I have chosen to feature.

Juan Cole: And Matt Taibi, The reality that despite all the claims of the Obama administration that they pursued all these civil cases that they never really went after the people who practically wrecked the world economy and how that relates to this election result that we just had. We obviously, Americans across the board from Democrats to Republicans to Independents are still furious about their economic situation and the failure of holding these people accountable

Matt Taibbi: It’s hard not to make a connection between the total lack of enthusiasm we saw for the Democratic Party this past week. For instance their behavior in pushing investigations of the financial services community. We saw it with the Occupy protests. I talk to people on Wall Street all the time. All my sources come from Wall Street, and they all say the same thing taht Barack Obama had an incredible opportunity in late 2008 just after he took office with his communication skill he could have gotten in front of the American people and explained to them exactly what happened and said this is why the economy is bad, this is why you are losing your job, there was massive criminal activity, it’s not just an accident, and then he could have gone and a few people in jail, and really put some teeth behind those words. The they swept it all under the rug and people, even if they don’t completely understand what happened they sense that nothing was done. I think it is important to understand that.


If you are a Democrat searching for a reason why the Democrats suffered big losses this past Tuesday, then look no further from this discussion. If you cannot see how this behavior of the Obama administration has soured the public on Obama, then you must be unwilling to face the truth.

If you cannot see why Hillary Clinton must not be the 2016 Presidential nominee of the Democratic Party and someone like Elizabeth Warren must be the nominee, then you are doing your party and your country a terrible disservice.


Here is another quote. Amy Goodman had played a video clip of Obama’s press conference announcing Holder’s resignation. Obama offered high praise for the fines Holder extracted from the financial industry. Amy Goodman asked for Matt Taibbi’s reaction.

Matt Taibbi: The first thing I would say is, ok, they brought a bunch of settlements, collected a bunch of money, but there isn’t a single individual in this entire tableau who is actually individually paying any kind of penalty for any of these misdeeds. All of that money came out of the pockets of shareholders. No executives had to pay a fine. No executives had to do a single day in jail. There were not even charges filed against any individuals.


As I reread this quote as I place it here, I realize how much it reinforces the points I made above the line.