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Javier E

Romney's Former Bain Partner Makes a Case for Inequality - NYTimes.com - 0 views

www.nytimes.com/...kes-a-case-for-inequality.html

economics wealth innovation incentives inequality

shared by Javier E on 09 May 12 - Cached
  • He has spent the last four years writing a book that he hopes will forever change the way we view the superrich’s role in our society. “Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong,” to be published in hardcover next month by Portfolio, aggressively argues that the enormous and growing income inequality in the United States is not a sign that the system is rigged. On the contrary, Conard writes, it is a sign that our economy is working. And if we had a little more of it, then everyone, particularly the 99 percent, would be better off.
  • most Americans don’t know how the economy really works — that the superrich spend only a small portion of their wealth on personal comforts; most of their money is invested in productive businesses that make life better for everyone. “Most citizens are consumers, not investors,” he told me during one of our long, occasionally contentious conversations. “They don’t recognize the benefits to consumers that come from investment.”
  • Dean Baker, a prominent progressive economist with the Center for Economic and Policy Research, says that most economists believe society often benefits from investments by the wealthy. Baker estimates the ratio is 5 to 1, meaning that for every dollar an investor earns, the public receives the equivalent of $5 of value
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  • Conard said Baker was undercounting the social benefits of investment. He looks, in particular, at agriculture, where, since the 1940s, the cost of food has steadily fallen because of a constant stream of innovations. While the businesses that profit from that innovation — like seed companies and fast-food restaurants — have made their owners rich, the average U.S. consumer has benefited far more. Conard concludes that for every dollar an investor gets, the public reaps up to $20 in value. This is crucial to his argument: he thinks it proves that we should all appreciate the vast wealth of others more, because we’re benefiting, proportionally, from it.
  • What about investment banks, with their complicated financial derivatives and overleveraged balance sheets? Conard argues that they make the economy more efficient, too. The financial crisis, he writes, was not the result of corrupt bankers selling dodgy financial products. It was a simple, old-fashioned run on the banks, which, he says, were just doing their job
  • He argues that collateralized-debt obligations, credit-default swaps, mortgage-backed securities and other (now deemed toxic) financial products were fundamentally sound. They were new tools that served a market need for the world’s most sophisticated investors,
  • “A lot of people don’t realize that what happened in 2008 was nearly identical to what happened in 1929,” he says. “Depositors ran to the bank to withdraw their money only to discover, like the citizens of Bedford Falls” — referring to the movie “It’s a Wonderful Life” — “that there was no money in the vault. All that money had been lent.”
  • In 2008 it was large pension funds, insurance companies and other huge institutional investors that withdrew in panic. Conard argues in retrospect that it was these withdrawals that led to the crisis — not, as so many others have argued, an orgy of irresponsible lending
  • Conard concedes that the banks made some mistakes, but the important thing now, he says, is to provide them even stronger government support. He advocates creating a new government program that guarantees to bail out the banks if they ever face another run.
  • the central role of banks, Conard says, is to turn the short-term assets of nervous savers into risky long-term loans that help the economy grow.
  • A central problem with the U.S. economy, he told me, is finding a way to get more people to look for solutions despite these terrible odds of success. Conard’s solution is simple. Society benefits if the successful risk takers get a lot of money
  • As Conard told me, one of the crucial lessons he learned at Bain is that it makes no sense to look for easy solutions. In a competitive market, all that’s left are the truly hard puzzles. And they require extraordinary resources. While we often hear about the greatest successes — penicillin, the iPhone — we rarely hear about the countless failures and the people and companies who financed them.
  • we live longer, healthier and richer lives because of countless microimprovements like that one. The people looking for them, Conard likes to point out, are not only computer programmers, engineers and scientists. They are also wealthy investors like him
  • He said the only way to persuade these “art-history majors” to join the fiercely competitive economic mechanism is to tempt them with extraordinary payoffs.
  • When I look around, I see a world of unrealized opportunities for improvements, an abundance of talented people able to take the risks necessary to make improvements but a shortage of people and investors willing to take those risks. That doesn’t indicate to me that risk takers, as a whole, are overpaid. Quite the opposite.” The wealth concentrated at the top should be twice as large, he said. That way, the art-history majors would feel compelled to try to join them.
  • Rather than simply serving as an invitation for everybody to engage in potentially beneficial risk-taking, inequality can allow those with wealth to crush new ideas.
  • Unlike Romney, Conard rejects the notion that America has “some monopoly on hard work or entrepreneurship.” “I think it’s simple economics,” he said. “If the payoff for risk-taking is better, people will take more risks
  • Conard sees the success of the U.S. economy as, in part, the result of a series of historic accidents. Most recently, the coincidence of Roe v. Wade and the late 1970s economic malaise allowed Ronald Reagan to unify social conservatives and free-market advocates and set the country on a pro-investment path for decades. Europeans, he says, made all the wrong decisions. Concern about promoting equality and protecting favored industries have led to onerous work rules, higher taxes and all sorts of social programs that keep them poorer than Americans.
  • Now we’re at a particularly crucial moment, he writes. Technology and global competition have made it more important than ever that the United States remain the world’s most productive, risk-taking, success-rewarding society. Obama, Conard says, is “going to dampen the incentives.” Even worse, Conard says, “he’s slowing the accumulation of equity” by fighting income inequality.
  • Conard’s book addresses what is perhaps the most important question in economics, the one Adam Smith set out to answer in “The Wealth of Nations”: Why do some countries grow so rich and others stay poor? Where you come down on the answer has as much to do with your politics as your economic worldview (two things that can often be the same)
  • Nearly every economist I spoke with said that Conard has too much faith in the market’s ability to reward only those who create real value. Conard, for instance, insists that even the dodgiest financial products must have been beneficial or else nobody would have bought them in the first place. If a Wall Street trader or a corporate chief executive is filthy rich, Conard says that the merciless process of economic selection has assured that they have somehow benefited society. Even pro-market Romney supporters take issue with this. “Ed ought to be more concerned about crony capitalism,” Hubbard told me.
  • “Unintended Consequences” ignores some of the most important economic work of the past few decades, about how power and politics influence economic growth. In technical language, this field is the study of “rent seeking,” in which people or companies get rich because of their power, not because of their ideas.
  • wealthy individuals and corporations are able to influence politicians and regulators to make seemingly insignificant changes to regulations that benefit themselves. In other words, to rig the game
  • Conard’s version of the financial crisis ignores much reporting and analysis — including work I’ve done with NPR’s “Planet Money” team — that shows that some of the nation’s largest banks actively manipulated customers and regulators and, sometimes, their own stockholders to profit from dangerous risk
  • he expressed anger over the praise that Warren Buffett has received for pledging billions of his fortune to charity. It was no sacrifice, Conard argued; Buffett still has plenty left over to lead his normal quality of life. By taking billions out of productive investment, he was depriving the middle class of the potential of its 20-to-1 benefits. If anyone was sacrificing, it was those people. “Quit taking a victory lap,” he said, referring to Buffett. “That money was for the middle class.”
  • Perhaps concentrated wealth will inspire a nation of innovative problem-solvers. But if the view of many economists is right — that it sometimes discourages innovation — then we should worry
  • on this one he resorted to anecdotes and gut feelings. During his work at Bain, he said, he saw that successful companies had to battle against one another. Nobody was just given a free ride because of their power. “Was a person, like me, excluded from opportunity?” he asked rhetorically. “If so, I wasn’t aware!”
  • both could be true. The rich could earn a great deal of wealth through their own hard work, skill and luck. They could also use their subsequent influence to make themselves even richer
  • One of the great political and economic challenges of our time is figuring out the balance between wealth that benefits society and wealth that distorts.
  • Glenn Hubbard said only that at a broad level, Romney and Conard share “beliefs about innovation and growth and responsible risk-taking.”
  • Conard and Romney certainly share views on numerous policy matters. Like many Republicans, they promote lower taxes and less regulation for those who achieve financial succes
Javier E

The 1 Percent Club's Misguided Protectors - NYTimes.com - 0 views

www.nytimes.com/...lubs-misguided-protectors.html

income economics politics US inequality growth research

shared by Javier E on 12 Dec 11 - No Cached
  • Newt Gingrich, who led the field of Republican presidential candidates last week, argued that the concept of the 99 percent versus the 1 percent is “un-American.” His rival Rick Perry, who led the Republican pack in September, answered a question about taxes and inequality by saying “I don’t care about that.”
  • This indifference is grounded in a proposition that has for decades dominated American debate over redistributive policies like steeper taxes for the rich: that inequality is an expected outcome of economic growth, and that efforts to tamp down inequality would slow growth down
  • As Mr. Gingrich put it, “You are not going to get job creation when you engage in class warfare because you have to attack the very people you hope will create jobs.”
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  • as recent research shows, intense inequality actually stunts growth, making it more difficult for countries to sustain the sort of long economic expansions that have characterized the more prosperous nations of the world.
  • They found that in high-inequality nations spurts of growth ended more quickly, and often in painful contractions.
  • regions with high inequality, like sub-Saharan Africa and Latin America, have recorded shorter periods of sustained economic growth since 1950 than regions with lower inequality like East Asia. The average stretch of robust growth among relatively equitable industrial countries lasted more than 24 years. In Africa the average was less than 14 years.
  • income distribution contributes more to the sustainability of economic growth than does the quality of a country’s political institutions, its foreign debt and openness to trade, the level of foreign investment in the economy and whether its exchange rate is competitive.
  • Extreme inequality blocks opportunity for the poor. It can breed resentment and political instability — discouraging investment — and lead to political polarization and gridlock, splitting the political system into haves and have-nots. And it can make it harder for governments to address economic imbalances and brewing crises.
  • inequality in America has soared over the last 30 years, approaching and even surpassing that in many poor countries. Today, America is an outlier among industrial nations. Its distribution of income looks closer to that of Argentina than, say, Germany.
  • So it is perhaps unsurprising that our recent economic crisis had some characteristics of boom-and-busts in less developed nations. It was triggered, in part, by 1 percenters on Wall Street persuading regulators to remove restrictions on their casino. It led workers to pile on debt to supplement falling incomes. It ended with a vast deployment of tax dollars to bail out fallen plutocrats. And our political system seems unable to deal with the aftermath. 
Javier E

Worldly Philosophers Wanted - NYTimes.com - 1 views

www.nytimes.com/...rldly-philosophers-wanted.html

economics paradigm model crisis

shared by Javier E on 07 Nov 11 - No Cached
  • Keynes himself was driven by a powerful vision of capitalism. He believed it was the only system that could create prosperity, but it was also inherently unstable and so in need of constant reform. This vision caught the imagination of a generation that had experienced the Great Depression and World War II and helped drive policy for nearly half a century.
  • Friedrich Hayek and Milton Friedman, who envisioned an ideal economy involving isolated individuals bargaining with one another in free markets. Government, they contended, usually messes things up. Overtaking a Keynesianism that many found inadequate to the task of tackling the stagflation of the 1970s, this vision fueled neoliberal and free-market conservative agendas of governments around the world.
  • It took extensive government action to prevent another Great Depression, while the enormous rewards received by bankers at the heart of the meltdown have led many to ask whether unfettered capitalism produced an equitable distribution of wealth. We clearly need a new, alternative vision of capitalism. But thanks to decades of academic training in the “dentistry” approach to economics, today’s Keynes or Friedman is nowhere to be found.
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  • To refuse to discuss ideas such as types of capitalism deprives us of language with which to think about these problems. It makes it easier to stop thinking about what the economic system is for and in whose interests it is working.
  • Perhaps the protesters occupying Wall Street are not so misguided after all. The questions they raise — how do we deal with the local costs of global downturns? Is it fair that those who suffer the most from such downturns have their safety net cut, while those who generate the volatility are bailed out by the government? — are the same ones that a big-picture economic vision should address. If economists want to help create a better world, they first have to ask, and try to answer, the hard questions that can shape a new vision of capitalism’s potential.
Javier E

'The Half Has Never Been Told,' by Edward E. Baptist - NYTimes.com - 0 views

www.nytimes.com/...-told-by-edward-e-baptist.html

slavery capitalism us history exceptionalism

shared by Javier E on 04 Oct 14 - No Cached
  • the history of American capitalism has emerged as a thriving cottage industry. This new work portrays capitalism not as a given (something that “came in the first ships,” as the historian Carl Degler once wrote) but as a system that developed over time, has been constantly evolving and penetrates all aspects of society.
  • Slavery plays a crucial role in this literature. For decades, historians depicted the institution as unprofitable and on its way to extinction before the Civil War (a conflict that was therefore unnecessary).
  • cotton, the raw material of the early Industrial Revolution, was by far the most important commodity in 19th-century international trade and that capital accumulated through slave labor flowed into the coffers of Northern and British bankers, merchants and manufacturers. And far from being economically backward, slave owners pioneered advances in modern accounting and finance.
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  • The sellers of slaves, Baptist insists, were not generally paternalistic owners who fell on hard times and parted reluctantly with members of their metaphorical plantation “families,” but entrepreneurs who knew an opportunity for gain when they saw one. As for the slave traders — the middlemen — they excelled at maximizing profits. They not only emphasized the labor abilities of those for sale (reinforced by humiliating public inspections of their bodies), but appealed to buyers’ salacious fantasies. In the 1830s, the term “fancy girl” began to appear in slave-trade notices to describe young women who fetched high prices because of their physical attractiveness. “Slavery’s frontier,” Baptist writes, “was a white man’s sexual playground.”
  • After the legal importation of slaves from outside the country ended in 1808, the spread of slavery into the states bordering the Gulf of Mexico would not have been possible without the enormous uprooting of people from Maryland and Virginia. Almost one million slaves, Baptist estimates, were transported to the cotton fields from the Upper South in the decades before the Civil War.The domestic slave trade was highly organized and economically efficient, relying on such modern technologies as the steamboat, railroad and telegraph. For African-Americans, its results were devastating. Since buyers preferred young workers “with no attachments,” the separation of husbands from wives and parents from children was intrinsic to its operation, not, as many historians have claimed, a regrettable side effect.
  • The cotton kingdom that arose in the Deep South was incredibly brutal. Violence against Native Americans who originally owned the land, competing imperial powers like Spain and Britain and slave rebels solidified American control of the Gulf states. Violence, Baptist contends, explains the remarkable increase of labor productivity on cotton plantations. Without any technological innovations in cotton picking, output per hand rose dramatically between 1800 and 1860. Some economic historians have attributed this to incentives like money payments for good work and the opportunity to rise to skilled positions. Baptist rejects this explanation.
  • Slavery was essential to American development and, indeed, to the violent construction of the capitalist world in which we live.
  • Planters called their method of labor control the “pushing system.” Each slave was assigned a daily picking quota, which increased steadily over time. Baptist, who feels that historians too often employ circumlocutions that obscure the horrors of slavery, prefers to call it “the ‘whipping-machine’ system.” In fact, the word we should really use, he insists, is “torture.” To make slaves work harder and harder, planters utilized not only incessant beating but forms of discipline familiar in our own time — sexual humiliation, bodily mutilation, even waterboarding. In the cotton kingdom, “white people inflicted torture far more often than in almost any human society that ever existed.”
  • in the 1830s Southern banks developed new financial instruments, bonds with slaves as collateral, that enabled planters to borrow enormous amounts of money to acquire new land, and how lawmakers backed these bonds with the state’s credit. A speculative bubble ensued, and when it collapsed, taxpayers were left to foot the bill. But rather than bailing out Northern and European bondholders, several states simply defaulted on their debts. Many planters fled with their slaves to Texas, until 1845 an independent republic, to avoid creditors. “Honor,” a key element in Southern notions of masculinity, went only so far.
  • As the railroad opened new areas to cultivation and cotton output soared, slave owners saw themselves as a modern, successful part of the world capitalist economy. They claimed the right to bring their slaves into all the nation’s territories, and indeed into free states. These demands aroused intense opposition in the North, leading to Lincoln’s election, secession and civil war.
  • It is hardly a secret that slavery is deeply embedded in our nation’s history. But many Americans still see it as essentially a footnote, an exception to a dominant narrative of the expansion of liberty on this continent.
  • Where Baptist breaks new ground is in his emphasis on the centrality of the interstate trade in slaves to the regional and national economies and his treatment of the role of extreme violence in the workings of the slave system.
  • ArtsBeat Book Review Podcast: Walter Isaacson’s ‘The Innovators’
Javier E

The New York Times > Magazine > In the Magazine: Faith, Certainty and the Presidency of... - 1 views

www.nytimes.com/...17BUSH.html

Bush presidency faith certainty openness crisis culture policy

shared by Javier E on 11 May 14 - No Cached
  • The Delaware senator was, in fact, hearing what Bush's top deputies -- from cabinet members like Paul O'Neill, Christine Todd Whitman and Colin Powell to generals fighting in Iraq -- have been told for years when they requested explanations for many of the president's decisions, policies that often seemed to collide with accepted facts. The president would say that he relied on his ''gut'' or his ''instinct'' to guide the ship of state, and then he ''prayed over it.''
  • What underlies Bush's certainty? And can it be assessed in the temporal realm of informed consent?
  • That a deep Christian faith illuminated the personal journey of George W. Bush is common knowledge. But faith has also shaped his presidency in profound, nonreligious ways. The president has demanded unquestioning faith from his followers, his staff, his senior aides and his kindred in the Republican Party. Once he makes a decision -- often swiftly, based on a creed or moral position -- he expects complete faith in its rightness.
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  • This is one key feature of the faith-based presidency: open dialogue, based on facts, is not seen as something of inherent value. It may, in fact, create doubt, which undercuts faith. It could result in a loss of confidence in the decision-maker and, just as important, by the decision-maker.
  • has spent a lot of time trying to size up the president. ''Most successful people are good at identifying, very early, their strengths and weaknesses, at knowing themselves,'' he told me not long ago. ''For most of us average Joes, that meant we've relied on strengths but had to work on our weakness -- to lift them to adequacy -- otherwise they might bring us down. I don't think the president really had to do that, because he always had someone there -- his family or friends -- to bail him out. I don't think, on balance, that has served him well for the moment he's in now as president. He never seems to have worked on his weaknesses.''
  • Details vary, but here's the gist of what I understand took place. George W., drunk at a party, crudely insulted a friend of his mother's. George senior and Barbara blew up. Words were exchanged along the lines of something having to be done. George senior, then the vice president, dialed up his friend, Billy Graham, who came to the compound and spent several days with George W. in probing exchanges and walks on the beach. George W. was soon born again. He stopped drinking, attended Bible study and wrestled with issues of fervent faith. A man who was lost was saved.
  • Rubenstein described that time to a convention of pension managers in Los Angeles last year, recalling that Malek approached him and said: ''There is a guy who would like to be on the board. He's kind of down on his luck a bit. Needs a job. . . . Needs some board positions.'' Though Rubenstein didn't think George W. Bush, then in his mid-40's, ''added much value,'' he put him on the Caterair board. ''Came to all the meetings,'' Rubenstein told the conventioneers. ''Told a lot of jokes. Not that many clean ones. And after a while I kind of said to him, after about three years: 'You know, I'm not sure this is really for you. Maybe you should do something else. Because I don't think you're adding that much value to the board. You don't know that much about the company.' He said: 'Well, I think I'm getting out of this business anyway. And I don't really like it that much. So I'm probably going to resign from the board.' And I said thanks. Didn't think I'd ever see him again.''
  • challenges -- from either Powell or his opposite number as the top official in domestic policy, Paul O'Neill -- were trials that Bush had less and less patience for as the months passed. He made that clear to his top lieutenants. Gradually, Bush lost what Richard Perle, who would later head a largely private-sector group under Bush called the Defense Policy Board Advisory Committee, had described as his open posture during foreign-policy tutorials prior to the 2000 campaign. (''He had the confidence to ask questions that revealed he didn't know very much,'' Perle said.) By midyear 2001, a stand-and-deliver rhythm was established. Meetings, large and small, started to take on a scripted quality.
  • By summer's end that first year, Vice President Dick Cheney had stopped talking in meetings he attended with Bush. They would talk privately, or at their weekly lunch. The president was spending a lot of time outside the White House, often at the ranch, in the presence of only the most trustworthy confidants.
  • A cluster of particularly vivid qualities was shaping George W. Bush's White House through the summer of 2001: a disdain for contemplation or deliberation, an embrace of decisiveness, a retreat from empiricism, a sometimes bullying impatience with doubters and even friendly questioners.
  • Top officials, from cabinet members on down, were often told when they would speak in Bush's presence, for how long and on what topic. The president would listen without betraying any reaction. Sometimes there would be cross-discussions -- Powell and Rumsfeld, for instance, briefly parrying on an issue -- but the president would rarely prod anyone with direct, informed questions.
  • ''When I was first with Bush in Austin, what I saw was a self-help Methodist, very open, seeking,'' Wallis says now. ''What I started to see at this point was the man that would emerge over the next year -- a messianic American Calvinist. He doesn't want to hear from anyone who doubts him.''
  • , I had a meeting with a senior adviser to Bush. He expressed the White House's displeasure, and then he told me something that at the time I didn't fully comprehend -- but which I now believe gets to the very heart of the Bush presidency.
  • The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''
  • ''If you operate in a certain way -- by saying this is how I want to justify what I've already decided to do, and I don't care how you pull it off -- you guarantee that you'll get faulty, one-sided information,'' Paul O'Neill, who was asked to resign his post of treasury secretary in December 2002, said when we had dinner a few weeks ago. ''You don't have to issue an edict, or twist arms, or be overt.''
  • George W. Bush and his team have constructed a high-performance electoral engine. The soul of this new machine is the support of millions of likely voters, who judge his worth based on intangibles -- character, certainty, fortitude and godliness -- rather than on what he says or does.
jordancart33

Yves Bouvier charged over 'concealed theft' of Picasso paintings - Telegraph - 0 views

www.telegraph.co.uk/...heft-of-Picasso-paintings.html

theft picasso

shared by jordancart33 on 16 Sep 15 - No Cached
  • The bail sum of €27m was the amount that Russian billionaire Dmitri Rybolovlev, who owns Monaco football club, paid for the two paintings, judicial sources told AFP. He also owns the 58 drawings, though it is not known where the third painting is. There has been no suggestion that Mr Rybolovlev, who bought his art through a family trust, knew that any of the works might have been stolen.
Javier E

Why the Rich Are So Much Richer by James Surowiecki | The New York Review of Books - 0 views

www.nybooks.com/...tz-why-rich-are-so-much-richer

inequality redistribution rent politics economics economic policy

shared by Javier E on 21 Sep 15 - No Cached
  • Historically, inequality was not something that academic economists, at least in the dominant neoclassical tradition, worried much about. Economics was about production and allocation, and the efficient use of scarce resources. It was about increasing the size of the pie, not figuring out how it should be divided.
  • “Of the tendencies that are harmful to sound economics, the most seductive, and…the most poisonous, is to focus on questions of distribution.”
  • Stiglitz argues, what we’re stuck with isn’t really capitalism at all, but rather an “ersatz” version of the system.
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  • Stiglitz has made the case that the rise in inequality in the US, far from being the natural outcome of market forces, has been profoundly shaped by “our policies and our politics,” with disastrous effects on society and the economy as a whole. In a recent report for the Roosevelt Institute called Rewriting the Rules, Stiglitz has laid out a detailed list of reforms that he argues will make it possible to create “an economy that works for everyone.”
  • his entire career in academia has been devoted to showing how markets cannot always be counted on to produce ideal results. In a series of enormously important papers, for which he would eventually win the Nobel Prize, Stiglitz showed how imperfections and asymmetries of information regularly lead markets to results that do not maximize welfare.
  • He also argued that this meant, at least in theory, that well-placed government interventions could help correct these market failures
  • in books like Globalization and Its Discontents (2002) he offered up a stinging critique of the way the US has tried to manage globalization, a critique that made him a cult hero in much of the developing world
  • Stiglitz has been one of the fiercest critics of the way the Eurozone has handled the Greek debt crisis, arguing that the so-called troika’s ideological commitment to austerity and its opposition to serious debt relief have deepened Greece’s economic woes and raised the prospect that that country could face “depression without end.”
  • For Stiglitz, the fight over Greece’s future isn’t just about the right policy. It’s also about “ideology and power.
  • there’s a good case to be made that the sheer amount of rent-seeking in the US economy has expanded over the years. The number of patents is vastly greater than it once was. Copyright terms have gotten longer. Occupational licensing rules (which protect professionals from competition) are far more common. Tepid antitrust enforcement has led to reduced competition in many industries
  • The Great Divide is somewhat fragmented and repetitive, but it has a clear thesis, namely that inequality in the US is not an unfortunate by-product of a well-functioning economy. Instead, the enormous riches at the top of the income ladder are largely the result of the ability of the one percent to manipulate markets and the political process to their own benefit.
  • Inequality obviously has no single definition. As Stiglitz writes:There are so many different parts to America’s inequality: the extremes of income and wealth at the top, the hollowing out of the middle, the increase of poverty at the bottom. Each has its own causes, and needs its own remedies.
  • his preoccupation here is primarily with why the rich today are so much richer than they used to be.
  • the main reason people at the top are so much richer these days than they once were (and so much richer than everyone else) is not that they own so much more capital: it’s that they get paid much more for their work than they once did, while everyone else gets paid about the same, or less
  • while incomes at the top have risen in countries around the world, nowhere have they risen faster than in the US.
  • One oft-heard justification of this phenomenon is that the rich get paid so much more because they are creating so much more value than they once did
  • as companies have gotten bigger, the potential value that CEOs can add has increased as well, driving their pay higher.
  • Stiglitz will have none of this. He sees the boom in the incomes of the one percent as largely the result of what economists call “rent-seeking.”
  • from the perspective of the economy as a whole, rent-seeking is a waste of time and energy. As Stiglitz puts it, the economy suffers when “more efforts go into ‘rent seeking’—getting a larger slice of the country’s economic pie—than into enlarging the size of the pie.”
  • The work of Piketty and his colleague Emmanuel Saez has been instrumental in documenting the rise of income inequality, not just in the US but around the world. Major economic institutions, like the IMF and the OECD, have published studies arguing that inequality, far from enhancing economic growth, actually damages it. And it’s now easy to find discussions of the subject in academic journals.
  • . After all, while pretax inequality is a problem in its own right, what’s most destructive is soaring posttax inequality. And it’s posttax inequality that most distinguishes the US from other developed countries
  • All this rent-seeking, Stiglitz argues, leaves certain industries, like finance and pharmaceuticals, and certain companies within those industries, with an outsized share of the rewards
  • within those companies, the rewards tend to be concentrated as well, thanks to what Stiglitz calls “abuses of corporate governance that lead CEOs to take a disproportionate share of corporate profits” (another form of rent-seeking)
  • This isn’t just bad in some abstract sense, Stiglitz suggests. It also hurts society and the economy
  • It alienates people from the system. And it makes the rich, who are obviously politically influential, less likely to support government investment in public goods (like education and infrastructure) because those goods have little impact on their lives.
  • More interestingly (and more contentiously), Stiglitz argues that inequality does serious damage to economic growth: the more unequal a country becomes, the slower it’s likely to grow. He argues that inequality hurts demand, because rich people consume less of their incomes. It leads to excessive debt, because people feel the need to borrow to make up for their stagnant incomes and keep up with the Joneses. And it promotes financial instability, as central banks try to make up for stagnant incomes by inflating bubbles, which eventually burst
  • exactly why inequality is bad for growth turns out to be hard to pin down—different studies often point to different culprits. And when you look at cross-country comparisons, it turns out to be difficult to prove that there’s a direct connection between inequality and the particular negative factors that Stiglitz cites
  • This doesn’t mean that, as conservative economists once insisted, inequality is good for economic growth. In fact, it’s clear that US-style inequality does not help economies grow faster, and that moving toward more equality will not do any damage
  • Similarly, Stiglitz’s relentless focus on rent-seeking as an explanation of just why the rich have gotten so much richer makes a messy, complicated problem simpler than it is
  • When we talk about the one percent, we’re talking about two groups of people above all: corporate executives and what are called “financial professionals” (these include people who work for banks and the like, but also money managers, financial advisers, and so on)
  • The emblematic figures here are corporate CEOs, whose pay rose 876 percent between 1978 and 2012, and hedge fund managers, some of whom now routinely earn billions of dollars a year
  • Shareholders, meanwhile, had fewer rights and were less active. Since then, we’ve seen a host of reforms that have given shareholders more power and made boards more diverse and independent. If CEO compensation were primarily the result of bad corporate governance, these changes should have had at least some effect. They haven’t. In fact, CEO pay has continued to rise at a brisk rate
  • So what’s really going on? Something much simpler: asset managers are just managing much more money than they used to, because there’s much more capital in the markets than there once was
  • that means that an asset manager today can get paid far better than an asset manager was twenty years ago, even without doing a better job.
  • there’s no convincing evidence that CEOs are any better, in relative terms, than they once were, and plenty of evidence that they are paid more than they need to be, in view of their performance. Similarly, asset managers haven’t gotten better at beating the market.
  • More important, probably, has been the rise of ideological assumptions about the indispensability of CEOs, and changes in social norms that made it seem like executives should take whatever they could get.
  • It actually has important consequences for thinking about how we can best deal with inequality. Strategies for reducing inequality can be generally put into two categories: those that try to improve the pretax distribution of income (this is sometimes called, clunkily, predistribution) and those that use taxes and transfers to change the post-tax distribution of income
  • he has high hopes that better rules, designed to curb rent-seeking, will have a meaningful impact on the pretax distribution of income. Among other things, he wants much tighter regulation of the financial sector
  • t it would be surprising if these rules did all that much to shrink the income of much of the one percent, precisely because improvements in corporate governance and asset managers’ transparency are likely to have a limited effect on CEO salaries and money managers’ compensation.
  • Most importantly, the financial industry is now a much bigger part of the US economy than it was in the 1970s, and for Stiglitz, finance profits are, in large part, the result of what he calls “predatory rent-seeking activities,” including the exploitation of uninformed borrowers and investors, the gaming of regulatory schemes, and the taking of risks for which financial institutions don’t bear the full cost (because the government will bail them out if things go wrong).
  • The redistributive policies Stiglitz advocates look pretty much like what you’d expect. On the tax front, he wants to raise taxes on the highest earners and on capital gains, institute a carbon tax and a financial transactions tax, and cut corporate subsidies
  • It’s also about investing. As he puts it, “If we spent more on education, health, and infrastructure, we would strengthen our economy, now and in the future.” So he wants more investment in schools, infrastructure, and basic research.
  • The core insight of Stiglitz’s research has been that, left on their own, markets are not perfect, and that smart policy can nudge them in better directions.
  • Of course, the political challenge in doing any of this (let alone all of it) is immense, in part because inequality makes it harder to fix inequality. And even for progressives, the very familiarity of the tax-and-transfer agenda may make it seem less appealing.
  • the policies that Stiglitz is calling for are, in their essence, not much different from the policies that shaped the US in the postwar era: high marginal tax rates on the rich and meaningful investment in public infrastructure, education, and technology. Yet there’s a reason people have never stopped pushing for those policies: they worked
Javier E

Inequality And The Right - The Daily Dish | By Andrew Sullivan - 0 views

andrewsullivan.theatlantic.com/...inequality-and-the-right.html

income inequality social economic stability justice

shared by Javier E on 08 Mar 11 - No Cached
  • The Atlantic Home todaysDate();Monday, March 7, 2011Monday, March 7, 2011 Go Follow the Atlantic » Politics Presented by The Rise and Fall of John Ensign Chris Good Sarah Palin Feud Watch Tina Dupuy In Wisconsin, the Mood Turns Against Compromise Natasha Vargas-Cooper Business Presented by Credit Card Balances Resume Their Decline Daniel Indiviglio 5 Ways the Value of College Is Growing Derek Thompson America's 401(k)'s Are a Mess, Are Its Pensions? Megan McArdle Culture Presented By 'Spy' Magazine's Digital Afterlife Bill Wyman http://as
  • To many on the right, this inequality is a non-issue, and in an abstract sense, I agree. Penalizing people for their success does not help the less successful. But at a time of real sacrifice, it does seem to me important for conservatives not to ignore the dangers of growing and vast inequality - for political, not economic, reasons. And by political, I don't mean partisan. I mean a genuine concern for the effects of an increasingly unequal society.
  • it increasingly seems wrong to me to exempt the very wealthy from sacrifice, in the context of their gains in the last three decades, if we are to ask it of everyone else. It's not about fairness. It isn't even really about redistribution, as we once understood that from the hard left. It's about political stability and cohesion and coherence. Without a large and strong middle class, we can easily become more divided, more bitter and more unstable. Concern about that is a legitimate conservative issue. And if someone on the right does not find a way to address it, someone on the left may well be empowered to over-reach.
qkirkpatrick

BBC News - Jason Rezaian: Iran to try Washington Post reporter - 0 views

www.bbc.com/...world-middle-east-30828984

Iran reporter politics

shared by qkirkpatrick on 15 Jan 15 - No Cached
  • A Washington Post journalist detained for almost six months in Iran is to stand trial on unspecified charges.
  • Mr Rezaian, who holds dual US-Iranian citizenship, was arrested with his wife and two associates in July.
  • In December, Mr Rezaian was brought before a judge in the Iranian capital to hear charges officially levelled against him and was denied a request for bail.
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  • The US state department has repeatedly raised the subject of Mr Rezaian's detention during negotiations with Iranian officials over the country's nuclear programme.
  • qkirkpatrick on 15 Jan 15
     
    A dual US-Iranian citizen and reporter for the Washington Post was arrested 6 months ago in Iran is facing trial
Javier E

Why Trump Now? - The New York Times - 0 views

www.nytimes.com/...why-trump-now.html

politics crisis demagogue populism 2016 economic economy

shared by Javier E on 02 Mar 16 - No Cached
  • The economic forces driving this year’s nomination contests have been at work for decades. Why did the dam break now?
  • The share of the gross national product going to labor as opposed to the share going to capital fell from 68.8 percent in 1970 to 60.7 percent by 2013
  • the number of manufacturing jobs dropped by 36 percent, from 19.3 million in 1979 to 12.3 million in 2015, while the population increased by 43 percent, from 225 million to 321 million.
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  • The postwar boom, when measured by the purchasing power of the average paycheck, continued into the early 1970s and then abruptly stoppe
  • Starting in 2000, two related developments added to worsening conditions for the middle and working classes.
  • that year marked the end of net upward mobility. Before 2000, the size of both the lower and middle classes had shrunk, while the percentage of households with inflation-adjusted incomes of $100,000 or more grew. Americans were moving up the ladder.
  • After 2000, the middle class continued to shrink, but so did the percentage of households making $100,000 or more. The only group to grow larger after 2000 was households with incomes of $35,000 or less. Americans were moving down the ladder.
  • The second adverse trend is that trade with China, which shot up after China’s entry into the World Trade Organization in December 2001, imposed far larger costs on American workers than most economists anticipated
  • If one had to project the impact of China’s momentous economic reform for the U.S. labor market with nothing to go on other than a standard undergraduate economics textbook, one would predict large movements of workers between U.S. tradable industries (say, from apparel and furniture to pharmaceuticals and jet aircraft), limited reallocation of jobs from tradables to non-tradables, and no net impacts on U.S. aggregate employment. The reality of adjustment to the China shock has been far different. Employment has certainly fallen in U.S. industries most exposed to import competition. But so too has overall employment in local labor markets in which these industries were concentrated. Offsetting employment gains either in export-oriented tradables or in non-tradables have, for the most part, failed to materialize.
  • High wage workers find it relatively easy to adjust and “do not experience an earnings loss,” argue Autor and his colleagues. Low wage workers, in contrast, “suffer large differential earnings loss, as they obtain lower earnings per year both while working at the initial firm and after relocating to new employers.”
  • The recipe for populism seems pretty clear: take a surge in manufacturing imports from China and continued automation in the US workplace and add a tepid macroeconomy. The result is a combustible stew sure to sour the stomach of party leaders nationwide.
  • The stew, to continue Hanson’s metaphor, began to boil over with the cataclysmic financial collapse in September 2008, which many people left and right felt was caused by reckless financial engineering on Wall Street. The collapse and the destruction it left in its wake was, without question, the most important economic and political event in recent years.
  • “It was the financial crisis, what it revealed about government-Wall Street links, and the fumbling of the response to it that put the nail in the coffin of trust in government,
  • , TARP insulated the very institutions and executives that caused the collapse and the disastrous recession that followed.
  • The widespread sense that all the elites in Washington and New York conspired to bail out the miscreants who caused the disaster and then gave them bonuses, while the rest of us lost our houses or saw their value, the biggest and often only asset of Americans, plummet, lost our jobs or saw them frozen and stagnant, and then saw gaping inequality grow even more, is just palpable.
  • On Jan. 10, 2010, the Supreme Court granted those in upper income brackets additional privileges in its Citizens United decision (buttressed by subsequent lower court rulings) that allowed wealthy individuals, corporations and unions to make unlimited political contributions. By opening the door to the creation of SuperPACs and giving Wall Street and other major financial sectors new ways to buy political outcomes, the courts gave the impression, to say the least, that they favored establishment interests over those of the less well off.
  • A Bloomberg poll last September found that 78 percent of voters would like to see Citizens United overturned, and this view held across a range of partisan loyalties: Republicans at 80 percent; Democrats at 83; and independents at 71.
  • . Obamacare, a program many in the white middle and working classes perceived as reducing their own medical care in order to provide health coverage to the disproportionately minority poor.
  • By the midterm elections of 2010, voter dissatisfaction among whites found expression in the Tea Party movement, which produced the sweeping defeat of Democrats in competitive congressional districts as well as of moderate and center-right Republicans in primary contests.Voter anger was directed at two targets — the “undeserving rich” and the “undeserving poor.”
  • To many of those who cast their ballots in anger in 2010 and 2014, however, it appeared that their votes had not changed anything. Obamacare stayed in place, Wall Street and corporate America grew richer, while the average worker was stuck going nowhere.
  • Already disillusioned with the Democratic Party, these white voters became convinced that the mainstream of the Republican Party had failed them, not only on economic issues, but on cultural matters as well.
  • A September 2015 Ispos survey asked voters if they agreed or disagreed with the statement “More and more, I don’t identify with what America has become.” 72 percent of surveyed Republicans concurred, compared to 58 percent of independents and 45 percent of Democrats. Two thirds of Republicans, 62 percent, agreed with the statement “These days I feel like a stranger in my own country,” compared to 53 percent of independents and 37 percent of Democrats. Here is one place where Trump’s scathing dismissal of political correctness found fertile ground.
  • If he prevails, a constituency that could force politicians to confront the problems of the working and middle class will waste its energies on a candidate incompetent to improve the lives of the credulous men and women lining up to support him.
  • the consequences of disillusionment with old guard Republicans:The intersection of inequality driven by real wage/income stagnation and the fact that the folks perceived to have blown the damn economy up not only recovered first, but got government assistance in the form of bailouts to do so. If you’re in the anxious middle and that doesn’t deeply piss you off, you’re an unusually forgiving person.
  • This election has demonstrated that there is no Republican Party organization, per se. The Republican Party exists as an array of allied groups, incumbent office holders, media organizations, and funding vehicles (e.g., SuperPACs, 501(c)(4)s, and the like). When people ask why the “establishment” or “the party” has not done anything to stop Trump, it is not exactly clear who they mean.
  • The tragedy of the 2016 campaign is that Trump has mobilized a constituency with legitimate grievances on a fool’s errand.If he is shoved out of the field somehow, his supporters will remain bitter and enraged, convinced that a self-serving and malign elite defeated their leader.
  • In these circumstances, Bernstein wrote, the logic supporting the traditional Republican Party fell apart:The core theme of Republican establishment lore has been to demonize not unregulated finance or trade or inequality, but ‘the other’ – e.g., the immigrant or minority taking your job and claiming unneeded government support. And yet, none of their trickle down, deregulatory agenda helped ameliorate the problem at all. So they lost control.
  • Missing in your narrative were 2 other factors that contributed to American anger and the turn to Mr. Trump. Those two factors are: the group of very wealthy American's who were convened by the Koch brothers to pool their resources to destroy President Obama and the Congressional Democrats and moderate Republicans, e.g. Senator Lugar.
  • were suffering from a major contraction and the drying up of credit & jobs and the President unwisely & wrongly appointed the Simpson-Bowles commission to rein in the debt. Remember Harvard's Rogoff & Reinhart who came up with that Debt to GDP ratio? And the rally of our elites & Pete Peterson et al that Deficits were the problem, when the truth, based on history, was just the opposite.
  • The 2nd factor which can also be attributed to the White House as well as Democrats in the Congress who joined Republicans in misdiagnosing the problem as deficits and debt.
maddieireland334

The stark contrast between the job market and the election, and why it matters - The Wa... - 0 views

www.washingtonpost.com/...he-election-and-why-it-matters

economy job market election US relationship

shared by maddieireland334 on 06 Mar 16 - No Cached
  • I believe I can say, without partisan challenge, that what’s going on in the Republican presidential campaign is an embarrassment to the United States.
  • Since the Great Recession, the rate fell from around 83 percent down to around 81 percent or so. Over the six-plus years of economic expansion, the best you could say is “at least it didn’t fall further.”
  • the tight job market is providing workers with a bit more bargaining power.
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  • At 2.2 percent, average hourly wage growth is beating (very low) inflation, meaning paychecks have more buying power.
  • The underemployment rate, at 9.7 percent, remains elevated by 6 million part-time workers who would rather be full-timers but still can’t find the work.
  • the underemployment rate needs to fall another point before you can call the job market really tight
  • The underlying trend of job gains is over 200,000 per month, a strong enough clip to nudge the jobless rate even lower than its current eight-year low of 4.9 percent.
  • As you can see in the recent data, the better job market is giving people a reason to come back in and see what they can find.
  • It matters a great deal who they appoint in positions that directly affect fiscal policy. They appoint governors to the Federal Reserve. They set trade policy and deal with international competitors.
  • Unless the next president is smart and persuasive enough to get Congress to apply countercyclical policy to the next downturn, whatever gains folks have seen may be short-lived.
  • Many in the electorate are mad about the inequality embedded in the economy in a way that means they’ve only recently seen some gains (and that’s an average result — there are places that are still facing depressed conditions).
  • People are justifiably angry about an economy in which reckless finance brought us the recession, got bailed out and recovered way before the rest of us.
sgardner35

Tensions Simmer as a Small Town Seeks Answers in a Boy's Killing - The New York Times - 0 views

www.nytimes.com/...llips-in-potsdam-new-york.html

shared by sgardner35 on 07 Mar 16 - No Cached
  • Garrett Phillips, a popular and outgoing 12-year-old, was strangled in his home in fall 2011. The murder set off a mad, all-consuming pursuit for a killer in a region where such crimes are extraordinarily rare.
  • It took more than 30 months for prosecutors to charge him with second-degree murder, in May 2014 — and months more to secure a second indictment after the first was thrown out for prosecutorial misconduct. Despite the long pursuit, the case that a jury will hear this summer is far from perfect: There is a distinct lack of hard evidence, according to police testimony — no fingerprints, no witnesses, no hair or tissue samples, seemingly no conclusive forensic evidence at all connecting Mr. Hillary to the crime.In the long lead-up to the prosecution of Mr. Hillary, his supporters have highlighted not only the absence of physical evidence but the lack of any plausible motive or history that would suggest he was capable of murdering a child. They have also said that another man, a local sheriff’s deputy who once dated Garrett’s mother, was removed from suspicion too quickly.
  • “I can’t think of any other person who would want to hurt Garrett,” Ms. Cyrus said in a statement to the police after her son died.Like the Raquette River, which splits Potsdam in two, the case has divided opinion and tested residents’ patience in St. Lawrence County, a rural and job-challenged region where 94 percent of the population is white. But the emotional impact on Potsdam is raw and evident: Garrett’s former teachers and family friends cry at his memory, while the village’s elders echo one another, saying such terrible crimes simply do not happen in places like this.“It was like a meteor hitting,” said Ron Tischler, the mayor of Potsdam, home to around 9,600 residents that is about 25 miles south of Ontario.
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  • Mr. Hillary has also accused the county prosecutor, Mary Rain, of forsaking justice in the name of keeping a campaign promise: Ms. Rain was elected in 2013, in part on the strength of campaigning with Ms. Cyrus and promising to focus the energies of her small office on Garrett’s murder.
  • The suspicions and repercussions surrounding the boy’s death have rippled through time and distance. A key defense witness, for instance, suddenly discovered “Justice for Garrett” signs posted near his new workplace and home — each hundreds of miles from Potsdam. Mr. Hillary, now free on bail, found himself rearrested in September for allegedly violating an order of protection by using a drive-through A.T.M. at the bank where Ms. Cyrus worked.
  • Garrett Phillips was an ebullient child despite an early-life tragedy: When he was a toddler, his father, Robert — an amiable grounds worker at the State University of New York at Potsdam — suffered a brain aneurysm and never recovered. He died before Garrett was 3.Though Garrett never knew his father, the boy emulated him as he grew. Like his father, he hunted and fished; played any sport involving a ball; and balanced his rowdy and respectful sides, rambunctious sometimes in public but polite to family and strangers.
  • On the afternoon of Oct. 24, 2011, Garrett was playing basketball at the middle school with some friends as rain fell intermittently. A little before 5 p.m., Tandy Cyrus called his cellphone and told him to go home to do schoolwork.
  • Garrett got on his caster board — something of a cross between a skateboard and a snowboard — and headed home, his progress captured by a series of surveillance cameras and later described in a police timeline.
  • Combing the apartment for evidence, investigators found a possible clue: The screen of the bedroom window, about 20 feet off the ground, was “bent outward,” according to the incident report. A tile seemed to be broken on the roof of a lower section of the building, about 10 feet below, and there was a gash in the grass
  • His appeal, as both a coach and a person, is evident: His energy is intense, but his smile is unencumbered. He said he had always loved the North Country region’s rural mountains and summertime greenery — when it was warm it reminded him of Jamaica — though he was aware of the cultural boundaries beyond campus.“You’re a black person,” he said in an interview. “You were viewed as such.”A year after being hired by Clarkson, Mr. Hillary found that his relationship with his longtime girlfriend, Stacia Lee, the mother of his three children, was struggling. At a bar called Ton’s, he became acquainted with a bartender, Tandy Cyrus.
  • “I go, ‘Listen. Help me understand. Are you and Tandy together?’” Deputy Jones said.Ms. Cyrus, 37, declined to be interviewed for this article, but Mr. Hillary said he had been harassed because of his relationship with her. “It’s not a community with a lot of interracial relationships,” he said, adding that he had “to be mindful” when he was out. “I would go to the local restaurant,” he said, and Deputy Jones’s “friends would come up to me and like, ‘You know you’re not supposed to be dating John’s girl.’”A few months after they met, Mr. Hillary and Ms. Cyrus moved in together, forming a household of five, including his teenage daughter, Shanna-Kay, and Ms. Cyrus’s two sons.
  • Lieutenant Murray saw Mr. Duff as deeply credible.“I just can’t bring myself to fathom why a collegiate person playing on a Division III soccer team with his entire future ahead of him would lie and perjure himself on a sworn statement for no reason,” he said.On the evening after the murder, Lieutenant Murray went to watch Clarkson’s men’s soccer squad and videotaped Mr. Hillary coaching the penultimate game of a rough season. (The 2011 Clarkson squad had more losses than goals.)According to a search-warrant application, as Mr. Hillary strode along the sideline, he seemed stiff and sedate and had a “significant limp in his right leg,” something the detective inferred would have been caused by jumping from a second-story window. Last year, though, The Watertown Daily Times posted a clip from Lieutenant Murray’s video: In it, Mr. Hillary appears to walk unhindered along the sidelines.
  • As the men were being questioned, detectives searched for damning evidence. They seized Mr. Hillary’s phone and examined the contents of his pockets and his socks. Nude photographs, fingerprints and palm prints were taken. Mr. Hillary’s car was searched. (The timing of the seizures, and of the subsequent search warrants, has been a focus of Mr. Hillary’s civil suit.) The police also obtained his DNA from a coffee cup and the butt of a cigarette.
johnsonma23

FBI investigating Philadelphia cop shooting as terrorism - CBS News - 0 views

www.cbsnews.com/...d-archer-shooting-as-terrorism

shooting terrorism US

shared by johnsonma23 on 15 Jan 16 - No Cached
  • FBI investigating Philadelphia cop shooting as terrorism
  • FBI Director James Comey said on Wednesday that last week's shooting of a Philadelphia police officer was being investigated as "a terrorist attack."
  • Late last Thursday, police said Edward Archer approached Officer Jesse Hartnett's patrol car and fired a hail of bullets at close range.
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  • Hartnett, 33, was shot three times in the arm and will require multiple surgeries.
  • Archer confessed to the shooting and told investigators he was following Allah, and had pledged his allegiance to the Islamic State of Iraq and Syria, or ISIS
  • The 30-year-old is being held without bail.
  • The tip said Archer is "part of a group that consists of three others." She went on to say that Archer "is not the most radical of the four" and that "the threat to police is not over."
Javier E

The Crash That Failed | by Robert Kuttner | The New York Review of Books - 0 views

www.nybooks.com/...financial-crash-that-failed

great recession crash financial crisis

shared by Javier E on 09 Nov 18 - No Cached
  • the financial collapse of 2008. The crash demonstrated the emptiness of the claim that markets could regulate themselves. It should have led to the disgrace of neoliberalism—the belief that unregulated markets produce and distribute goods and services more efficiently than regulated ones. Instead, the old order reasserted itself, and with calamitous consequences. Gross economic imbalances of power and wealth persisted.
  • In the United States, the bipartisan financial elite escaped largely unscathed. Barack Obama, whose campaign benefited from the timing of the collapse, hired the architects of the Clinton-era deregulation who had created the conditions that led to the crisis. Far from breaking up the big banks or removing their executives, Obama’s team bailed them out.
  • criminal prosecution took a back seat to the stability of the system.
  • ...27 more annotations...
  • the economic security of most Americans dwindled, and the legitimacy of the system was called into question. One consequence has been the rise of the far right; another is Donald Trump.
  • Germany insisted that the struggling countries had to practice austerity in order to restore the confidence of private financial markets. In a deep recession, even orthodox economists at the International Monetary Fund soon recognized that austerity was a perverse recipe for economic recovery.
  • Europe, because of Germany’s worries that these policies would lead to inflation, had no way to extend credit to struggling nations or to raise money through the sale of bonds, which would have allowed the ECB to provide debt relief or to invest in public services.
  • The political result was the same on both sides of the Atlantic—declining prospects for ordinary people, animus toward elites, and the rise of ultra-nationalism
  • Not so in Europe. Parties such as the German Social Democratic Party, the British Labour Party, and the French Socialists disgraced themselves as co-sponsors of the neoliberal formula that brought down the economy.
  • In nation after nation, the main opposition to the party of Davos is neofascism.
  • In his masterful narrative, the economic historian Adam Tooze achieves several things that no other single author has quite accomplished. Tooze has managed to explain a hugely complex global crisis in its multiple dimensions, and his book combines cogent analysis with a fascinating history of the political and economic particulars
  • when the collapse came, it was “a financial crisis triggered by the humdrum market for American real estate.”
  • the collapse reinforced the financial supremacy of Washington and New York. “Far from withering away,” he writes, “the Fed’s response gave an entirely new dimension to the global dollar.”
  • When the entire structure of borrowed money collapsed, the losses more than wiped out all the capital of the banking system—not just in the US but in Europe, because of the intimate interconnection (and contagion) of American and European banks. Had the authorities just stood by, Tooze writes, the collapse would have been far more severe than the Great Depression:
  • While insisting to Congress that the emergency response was mainly to shore up US finance, Bernanke turned the Fed into the world’s central bank. “Through so-called liquidity swap lines, the Fed licensed a hand-picked group of core central banks to issue dollar credits on demand,” Tooze writes. In other words, the Fed simply created enough dollars, running well into the trillions, to prevent the global economy from collapsing for lack of credit.
  • Bernanke instigated government action on an unimagined scale to prop up a private system that supposedly did not need the state
  • Using deposit guarantees, loans to banks, outright capital transfers, and purchases of nearly worthless securities, the Fed and the Treasury recapitalized the banking system. To camouflage what was at work, officials invented unlimited credit pipelines with disarmingly technical names.
  • The blandly named policy of quantitative easing, which drove interest rates down to almost zero, was a euphemism for Fed purchases of immense quantities of private and government securities.
  • The crisis, Tooze writes, “was a devastating blow to the complacent belief in the great moderation, a shocking overturning of the prevailing laissez-faire ideology.” And yet the ideology prevailed
  • In a reversal of New Deal priorities, most of the relief went to the biggest banks, while smaller banks and homeowners were allowed to go under
  • Banks were permitted to invent complex provisional loan “modifications” with opaque terms that favored lenders, rather than using their government subsidies to provide refinancing to reduce homeowner debts
  • How did a nominally center-left administration, elected during a financial crisis caused by right-wing economic ideology and policy, end up in this situation?
  • Turning to Europe, Tooze explores the fatal combination of Germany’s demands for austerity with the structural weakness of the ECB and the vulnerability of the euro.
  • Portugal or Greece now enjoyed interest rates that were only slightly higher than Germany’s, and markets failed to take account of the risk of default, which was more serious than that of devaluation.
  • instead of treating the Greek situation as a crisis to be contained and helping a genuinely reformist new government find its footing, Brussels and Berlin treated Greece as an object lesson in profligacy and an opportunity to insist on punitive terms for financial aid
  • A central player in this tragedy was the European Central Bank. Tooze does a fine job of explaining the delicate dance between the bank’s leaders and its real masters in Germany. Since Germany opposed continent-wide recovery spending, the bank could only pursue monetary policy. The model was the Fed. Yet while the Fed has a congressional “dual mandate” to target both price stability and high employment, the ECB’s charter allowed for price stability only
  • The ECB, with the consent of the Germans, came up with one of those bland-sounding names, Outright Monetary Transactions, for its direct purchases of government bonds. But the program, at the insistence of the Germans, was restricted to nations in compliance with Merkel’s rigid fiscal terms, which limited national deficits and debts. In other words, the money could not go to the very nations where it was needed most, since the hardest-hit countries had to borrow heavily to get themselves out of the recession
  • Reading Tooze, you realize that it’s a miracle that the EU and the euro survived at all—but they did so at terrible human cost.
  • the ideal of liberalized trade, and the use of trade treaties to promote deregulation or privatized regulation of finance, is a major element of the story of how neoliberal hegemony promoted the eventual collapse. But except for a passing reference, trade and globalized deregulation get little mention here.
  • he has almost nothing to say about Janet Yellen. Her nomination as Fed chair in 2013 to succeed Bernanke was an epochal event and an improbable defeat for the proponents of austerity, deregulation, and bank bailouts who influenced Obama’s policymaking. Yellen, a left-liberal economist specializing in labor markets, was the only left-of-center Fed chair other then FDR’s chairman Marriner Eccles. She also believed in tough regulation of banks. The extension of quantitative easing well beyond its intended end was substantially due to Yellen’s concern about wages and employment, and not just price stability, since low interest rates can also help promote recovery.
  • Tooze ends the book with a short chapter called “The Shape of Things to Come,” mainly on the ascent of China, the one nation that avoided all the shibboleths of economic and political liberalism, though it also, of course, does not have a political democracy.
Javier E

'We Cannot Afford This': Malaysia Pushes Back Against China's Vision - The New York Times - 0 views

www.nytimes.com/...china-malaysia.html

malaysia china imperialism

shared by Javier E on 21 Aug 18 - No Cached
  • From Sri Lanka and Djibouti to Myanmar and Montenegro, many recipients of cash from Chinese’s huge infrastructure financing campaign, the Belt and Road Initiative, have discovered that Chinese investment brings with it less-savory accompaniments, including closed bidding processes that result in inflated contracts and influxes of Chinese labor at the expense of local workers
  • Fears are growing that China is using its overseas spending spree to gain footholds in some of the world’s most strategic places, and perhaps even deliberately luring vulnerable nations into debt traps to increase China’s dominion as the United States’ influence fades in the developing world
  • Mr. Mahathir’s government has suspended two major Chinese-linked projects amid accusations that Mr. Najib’s government knowingly signed bad deals with China to bail out a graft-plagued state investment fund and bankroll his continuing grip on power.
  • ...5 more annotations...
  • “The Chinese must have been thinking, ‘We can pick things up for cheap here,’” said Khor Yu Leng, a Malaysian political economist who has been researching China’s investments in Southeast Asia. “They’ve got enough patient capital to play the long game, wait for the local boys to overextend and then come in and take all that equity for China.”
  • A Pentagon report released last week said “The ‘Belt and Road Initiative’ (BRI) is intended to develop strong economic ties with other countries, shape their interests to align with China’s and deter confrontation or criticism of China’s approach to sensitive issues.”
  • Malaysia’s new finance minister, Lim Guan Eng, raised the example of Sri Lanka, where a deepwater port built by a Chinese state-owned company failed to attract much business. The indebted South Asian island nation was compelled to hand over to China a 99-year lease on the port and more land near it, giving Beijing an outpost near one of its busiest shipping lanes.
  • “They know that when they lend big sums of money to a poor country, in the end they may have to take the project for themselves,” he said
  • “China knows very well that it had to deal with unequal treaties in the past imposed upon China by Western powers,” Mr. Mahathir added, referring to the concessions China had to give after its defeat in the opium wars. “So China should be sympathetic toward us. They know we cannot afford this.
Javier E

Grounding the Boeing 737 Max was a no-brainer. Trump's corporatocracy stood in the way.... - 0 views

www.washingtonpost.com/...9-90f0-0ccfeec87a61_story.html

boeing trump corporate influence corruption

shared by Javier E on 17 Mar 19 - No Cached
  • Trump’s late uncle didn’t tell him to protect Boeing. That was Boeing’s chief executive, a frequent visitor to Trump properties, phoning Trump with a plea not to ground both the 737 Max 8 and Max 9.
  • That corporations make safety decisions for Trump (himself a failed airline owner) isn’t surprising. The acting head of the Federal Aviation Administration is formerly of American Airlines and of the Aerospace Industries Association, of which Boeing is a prominent member. Trump is expected to nominate a former Delta Air Lines executive for the top FAA job. His acting defense secretary is a former Boeing executive.
  • In Trump’s broader corporatocracy, a former oil-industry lobbyist acts as interior secretary, a former pharmaceutical executive is health and human services secretary, and a former coal lobbyist runs the Environmental Protection Agency. Fully 350 former lobbyists work, have worked or have been tapped to work in the administration
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  • The 24 at the Transportation Department lag behind only the 31 at HHS and 47 in the executive office of the president.
  • The swamp has overflowed, with lobbyists employed by Trump quintupling over two years. Boeing, American Airlines and 31 other corporate entities landed at least five former lobbyists apiece. Public Citizen reported that, five months into the administration, nearly 70 percent of top nominees had corporate ties.
  • In addition, the billions of dollars that corporate executives invest in lobbying and campaign contributions have generated healthy returns: a corporate tax cut, an assault on regulations and unrelenting efforts to shrink enforcement. The president, who previously attempted to privatize 30,000 FAA jobs, again proposed slashing the FAA in his budget this week.
  • Corporate victories keep coming. The Los Angeles Times just obtained emails showing that EPA officials moved to block NASA from monitoring pollution levels. Politico recently obtained data that showed that the Interior Department gave oil drillers nearly 1,700 waivers of safety rules implemented after BP’s Deepwater Horizon disaster in the Gulf of Mexico in 2010.
  • The Union of Concerned Scientists has documented more than 70 “attacks on science,” many benefiting corporations: censoring scientific language, suppressing studies, weakening advisory panels and such. The group suspects “inappropriate corporate influence” in rolling back fuel efficiency, chemical and methane standards, repealing the Clean Power Plan, suppressing known health risks, expanding oil and gas leasing and bailing out the coal industry, among others.
malonema1

How One Group Is Pushing Victims' Rights Laws Across The Country : NPR - 0 views

www.npr.org/...rights-laws-across-the-country

US politics culture

shared by malonema1 on 01 May 18 - No Cached
  • If it wins final approval from voters this fall, the amendment would enshrine a list of rights for crime victims into the state constitution. They include the right to be notified of when the accused is released on bail, the right to be heard at sentencing hearings, and the right to reasonable protection from the accused.
  • "After the funeral, my husband wanted me to get a loaf of bread in the market," said Leach, "and I went in and he was coming out of the market. But we weren't notified or anything." "Standing there, staring down my mother," added Nicholas. The suspect was later convicted. He died in prison while serving his sentence. That might have been the end of the story except that years later, Henry Nicholas started a tech company called Broadcom and became a billionaire.
  • But these efforts haven't been without their critics. The American Civil Liberties Union has argued Marsy's Law infringes on the presumption of innocence by granting rights to a victim before a defendant has been convicted of a crime.
  • ...3 more annotations...
  • The Marsy's Law campaign says it expects to spend millions of dollars to support the amendment. But the idea that a California billionaire could lead the charge to amend the New Hampshire Constitution is also rubbing some local lawmakers the wrong way.
  • Amanda Grady Sexton, state director for the Marsy's Law campaign, disagrees with the argument that the amendment isn't a response to a local problem. Sexton has worked with the New Hampshire Coalition Against Domestic and Sexual Violence since 2001 and says acquiring constitutional rights for crime victims has long been a goal for her organization.
  • "I've got a woman whose husband was killed in a car accident in August of last year and she can't get the crime report from [the Department of] Public Safety because they're afraid to release the information," Mickelson said. "They're not sure if there was a crime, and if there was, who the victim is."
  • malonema1 on 01 May 18
     
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oliviaodon

What Trump Got Right in Foreign Policy in 2017 - The Atlantic - 0 views

www.theatlantic.com/...549671

trump

shared by oliviaodon on 15 Jan 18 - No Cached
  • There is a temptation, when a new presidential administration comes into office, for its members to assume everything the previous administration did was idiotic, and that a wiser course of action would have been to do the precise opposite.
  • here are four things I think the Trump administration got right in 2017.
  • cast aside a lot of conservative orthodoxy to bail out banks and spend what was necessary to stabilize the markets.
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  • At the Department of Defense, the balance of power between the uniformed and civilian leaders is still heavily weighted toward those in uniform. That’s somewhat natural at the start of any administration, but it’s more pronounced in this one, where the secretary has run the Department more like a combatant command and less like a government department.
  • Another administration would have hedged its bets on Mohammed bin Salman. Not this one. This one has—with very few exceptions—largely endorsed the young crown prince’s reform agenda and claim to the throne.And I don’t think that’s unwise. I think that’s a highly defensible strategic decision.
  • Apparently Donald Trump made all of his generals and diplomats explain to him, in detail, why the hell we need all these thousands of troops and bases abroad.Good!
  • I don’t mind when senior decision-makers ask dumb questions or float dumb ideas (so long as they don’t ultimately choose them). Doing so forces everyone to review their initial assumptions—which may not have been reviewed in some time—and rearticulate why we have been doing business as usual for as long as we have been doing it. (
runlai_jiang

Carillion crisis: Creditors due to hold Whitehall talks - BBC News - 0 views

www.bbc.com/...business-42683745

shared by runlai_jiang on 15 Jan 18 - No Cached
  • Carillion's key creditors are due to meet government officials on Monday in a last ditch bid to prevent the construction giant's collapse.
  • It comes as the chairman of a key group of MPs says there may need to be an inquiry into how public contracts are awarded to companies like Carillion.Labour and unions say warnings about the firm's financial woes were ignored.Carillion is involved in major projects like the HS2 high-speed rail line, as well as managing schools and prisons.
  • Without a financial restructuring, the UK's second largest construction company, which has 43,000 staff worldwide - 20,000 in the UK - looks set to go into administration
  • ...2 more annotations...
  • Carillion's main bank creditors - including RBS, Barclays, HSBC, Lloyds and Santander UK - are owed about £900m. They have indicated an unwillingness to put more money into the company without direct intervention from the government.Talks involving government officials and company bosses were held throughout the weekend. The officials are expected to meet key creditors early on Monday, the BBC has been told.It is understood that the creditors want the government to guarantee some of Carillion's debt payments. But that would be, in effect, helping to bail out a private company.
  • The Conservative chairman of the House of Commons Public Administration select committee said he may launch in inquiry into government procurement and contracting.
brickol

'Stranded at sea': cruise ships around the world are adrift as ports turn them away | W... - 0 views

www.theguardian.com/...adrift-as-ports-turn-them-away

COVID-19 us

shared by brickol on 27 Mar 20 - No Cached
  • Ports around the globe are turning cruise ships away en mass amid the corona pandemic, leaving thousands of passengers stranded even as some make desperate pleas for help while sickness spreads aboard.
  • at least ten ships around the world – carrying nearly 10,000 passengers – are still stuck at sea after having been turned away from their destination ports in the face of the Covid-19 pandemic. Some of the ships are facing increasingly desperate medical situations, including one carrying hundreds of American, Canadian, Australian and British passengers, currently off the coast of Ecuador and seeking permission to dock in Florida.
  • Dramatic scenes of coronavirus-stricken cruises, such as the Grand Princess in California and the Diamond Princess in Japan, have become synonymous with the pandemic. The plight of those still adrift highlights how cruise ships have become a kind of pariah of the seas, as cities push back against becoming the next home for a potentially infected vessel.
  • ...8 more annotations...
  • As of Thursday, the Guardian had identified five ships in the Americas that were unable to unload nearly 6,000 passengers. At least three other ships were having trouble off the coast of Australia, including one which sought urgent medical attention for an outbreak of respiratory illness. Two more ships were trying to get passengers to ports in Italy.
  • Holland America said this week it had dispatched support in the form of another cruise ship carrying 611 extra staff, supplies and coronavirus test kits to meet up with the Zaandam, and that the cruise line is looking for other alternative locations to disembark passengers.
  • Passengers who spoke with the Guardian describe being locked down in the cabins, with three daily meals left on the floor outside their doors. Meanwhile the number of people reporting influenza-like symptoms has almost tripled this week: 56 passengers and 89 crew members, passengers say the ship’s captain has told them. Four elderly passengers reportedly required oxygen.
  • The fast-moving nature of the virus has added to the confusion – when many passengers left for vacations in early March there were no cases of Covid-19 in South America, so they thought it would be safe to travel.
  • cases of cruise ships being turned away from ports as a result of coronavirus fears began as early as January and escalated in February, with passengers being quarantined on the Emerald Princess in Japan on 3 February.
  • “There is a level of greed on the part of these companies,” he said. “They want to make every penny – and they make money when people are on the ships.”Cruise ships are drawing increasing government scrutiny for not doing enough to protect their passengers during this pandemic.
  • Despite Donald Trump’s repeated vows to bail out the cruise ship industry, money for cruise companies was not a part of the $500bn in aid for large employers included in stimulus bill passed by Congress on Wednesday.
  • Meanwhile a report from the US Centers for Disease Control this week laid the blame on cruise ships for spreading the virus in the crucial early weeks of the outbreak, linking hundreds of cases to the Diamond Princess and Grand Princess.
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