Wall St Says Economic Inequality Is Bad

Michael HiltzikAs you should know, Michael Hiltzik is one of the best political columnists around. But he works on the west coast, so he is largely ignored by the New York punditocracy. But he’s great. That’s why he’s listed on the right under “Daily” (Economy Hub). What Jonathan Bernstein is to political science reporting, Hiltzik is to economics reporting. Except that Hiltzik is actually a whole lot more fun. Anyway, yesterday he wrote a very interesting and maybe even hopeful article, Dire Warning from Wall Street: Income Inequality Hurts US Growth.

The article refers to a report out of Standard & Poor’s. I know what you’re thinking, “Weren’t they one of the companies that were giving high ratings to all that subprime garbage?” Yes they were! But you have to understand: they were paid to do that; this isn’t a paid gig. The point is that Standard & Poor’s is corrupt, not incompetent. So you should pay attention when Chief US Economist Beth Ann Bovino writes, How Increasing Income Inequality Is Dampening US Economic Growth, And Possible Ways To Change The Tide.

Beth Ann BovinoOh. My. God. I know what you’re thinking, “Thomas Piketty must have gotten to her!” But no. That’s not it at all. This has all been pretty clear for a long time. Think about cell phones. First, if only one or two people had them, no one would care. We would call them walkie-talkies and move one. What’s more, they would be really expensive. You’d have to have cell phone towers all over the world just in case one of the two people who had a phone happened to be there. So it is nice to have a lot of people who make enough money to make things like cell phones and the internet cheap and interesting.

What’s more, there is the issue of having people to sell stuff to. I walked through our local JC Penney this afternoon and it was like a ghost town. Retailers like that are really hurting because there is less and less of a middle class. It seems like we are headed to a country where there are a couple of Tiffany & Co stores and thousands of Dollar Trees. That’s not stable, but our economy is getting more and more like that. Even Kmart, considered really low market when I was a kid, is having problems. The thing is that rich people own stores like JC Penney and Kmart and they can’t keep making money if no one has the cash to shop at those places.

This is one of the reasons I don’t understand why the rich have become so focused on the short term. Their obsession with short-term profits is bad for them long-term. I would think that they would be the most vocal supporters of things like welfare (Food stamps!) and unemployment and education and all those things that allow the middle class to thrive. But in general, they aren’t. Maybe it isn’t that surprising, though. In my experience, people in business are often clueless about how the macroeconomy works.

Regardless of this, I’ve also made the argument that the rich should be worried about social breakdown, The Revolution Will Be Televised. Well, Bovino makes the same argument. Michael Hiltzik explains:

Sounding a broader alarm, they observe that inequality “may also spur political instability… The affluent may exercise disproportionate influence on the political process, or the needs of the less affluent may grow so severe as to make additional cuts to fiscal stabilizers [eg Unemployment; SNAP] that operate automatically in a downturn politically unviable.”

Bovino even offers some suggestions for changing things. She says that we ought to increase access to education. While I agree with that, it isn’t the core of what is wrong in America. And I would really like people to decouple education from “earning potential.” A democracy needs educated people just to survive. We here in America take our democracy for granted. It isn’t. And we are seeing the results of that.

She recommends things like spending on healthcare, but not (I suppose it is too radical) a guaranteed minimum income. But she does suggest increasing taxes on the rich. That is, I’m afraid, the key to the matter. But I fear that the rich will only allow that after things get much worse.

But there is no doubt, it is nice to hear stuff like this coming out of Wall Street. It is a good start.

Vote ID Is Not About Voter Fraud

Justin LevittJonathan Bernstein just wrote yet another in what has become of political reporting genre that I hate, How to Target Nonexistent Fraud. It follows on Justin Levitt’s Wonk Blog article, A Comprehensive Investigation of Voter Impersonation Finds 31 Credible Incidents Out of One Billion Ballots Cast. Hooray! There is no in-person voter fraud! Or, to be more exact, this kind of voter fraud occurs at a rate of 0.000003%. The effect of miscounting—even in recounts—is undoubtedly larger. So voter ID laws don’t make any sense.

In fact, Bernstein looks at it from a cost-benefit perspective:

Generally, there probably is a trade-off in some cases between making it as easy as possible for legitimate voters to cast their ballots and making fraud difficult. But in the specific case of voter ID, given it’s dubious value, there isn’t much of a trade-off. Such measures do nothing about real election fraud, so if they keep legitimate voters away from the polls—let’s say if they keep more than 31 legitimate voters away over 15 years or so—then they are a bad idea.

Okay, sure. But this kind of analysis legitimizes racist conduct. The term “voter fraud” is the newest form of dog whistle politics. You may remember that in 2009, many conservatives were claiming that Obama only won the presidency because of voter fraud committed by ACORN. Many even made that claim in 2012, even though ACORN did not exist because of a concerted, dishonest, and highly successful attack on the group. This is the basis of the current conservative freak out over voter fraud.

Now I understand that the average voter ID enthusiast doesn’t consciously think that these laws are going to “get the darkies!” But in their mind, that is exactly the kind of voter who they see as committing fraud. This is what’s going on with Chris McDaniel and his outrage over the Mississippi Republican Senate primary. In the first draft of a press release, it referred repeatedly to “black Democrats” wrongly voting in the election. So even for the Republican base, this is a racial issue.

For the Republicans who are pushing this, it is explicitly, but strategically, racist. That is to say that they know how their arguments will play with the base, but they don’t necessarily have anything against blacks and other minorities, except so far as they tend to vote for the Democratic Party. But even if we take the racial element out of this, the point of voter ID laws is to disenfranchise Democratic leaning voters. And that is all that has to be said.

So every time someone writes a column trying to show that in-person voter fraud—the only kind of fraud that is addressed by voter ID laws—is not real, they are implying that voter ID laws are being passed because people are really worried about voter fraud. They aren’t. This is just a mercenary anti-democratic effort by Republicans to keep Democrats from voting. No amount of evidence like that produced by Justin Levitt will ever convince the Republicans that voter ID laws are not a good idea for suppressing Democratic Party voting.

Congressional Polls Show Bad Economy

That is a segment from last night’s All In with Ezra Klein sitting in for Chris Hayes. It was called Congress: Less Popular Than Head Lice? It is based upon a Washington PostABC News poll that found that not only is Congress unpopular, but for the fist time, a majority of people say that they are unhappy with the job their own representatives are doing. This is news because normally people hate Congress but love their Congress members. Now I’m going to explain why none of this matters.

Let me start with some statistics that Klein provides later in the segment. In a NBC NewsWall Street Journal poll of Americans: 71% say the country is headed in the wrong direction; 60% described the country as in a state of decline; 76% are not confident their children’s generation will be better off than their own. These statistics mean pretty much nothing. The last one isn’t quite so bad because it implies economic conditions, but even it isn’t explicit. Overall, these are the vaguest of questions.

What does it mean that the country is headed in the wrong direction? What direction is that? I agree: the country is headed in the wrong direction. By that, I mean that we are headed toward ever more inequality which is destroying our democracy. But other people think the country is headed in the wrong direction because women don’t wear dresses anymore and minorities demand things like voting rights. Similarly, is the country in decline? I say yes! But I say this because, like all empires, we are focused on our military and maintaining our power instead of just doing the work of the people and trying to make everyone’s life better. But other people think the country is in decline because same sex marriage is becoming a national right and woman can still get birth control pills.

This same dynamic is going on with the polls about Congress. I don’t like Congress because the House is controlled by the Republicans, the Senate can largely be ground to a halt by the Republicans, and many of the Democrats in both chambers are far too conservative and timid for my tastes. But your average Fox News viewer would say, “I don’t like Congress because Republicans in the House voted with Democrats to raise the Debt Ceiling.” About the only thing that historically low approval of Congress means is that the Republicans have been so good at blocking everything that low-information voters just have a vague idea that Congress isn’t doing much.

The statistic about being unhappy with our own representatives is different. But it is no more meaningful. It is a cliche, but it is true: politics is the art of the possible. The question on the ballot is never the choice between a real candidate and some idealized candidate who does everything exactly as you want. The question on the ballot is two candidates, each with their own flaws and each who will disappoint us once they are serving. Consider that Obama’s low 40% approval rating is about the same as it was going into the 2012 presidential race—which he won.

In addition to this, I wonder just how much this disapproval of “my own representatives” is driven by the relentless push of conservative media that everything is terrible and if the Republicans in Congress would just stand up to Obama and crash the global economy, everything would be perfect. In other words, I’d like to know if all the extra discontentment isn’t coming primarily from the right. In case you haven’t noticed, it is primarily conservatives who are always complaining that everything is going to hell—you know, the ones who love the country and are so patriotic:

There’s something else very interesting in this segment. The people overall dislike the Republicans in Congress a whole lot more than the Democrats. But they are pretty much evenly split over who they want to control Congress. Now, those stats are from two different polls, so you never know. But apparently the reason it is so different between who the people blame for the problems and who they want to be in control is that they want the Republicans to be a check on Obama’s power. (This is madness, as I explained yesterday, Republican Delusion Empowers Obama.) These are the same people who claim they are upset that nothing gets done in Washington. But when given the chance to elect a Congress that would get things done, they decide it is best to vote for a check against that Kenyan socialist in the White House.

The bottom line is that none of these polls actually mean anything other than that the economy sucks and so people are unhappy. Anything else they demonstrate (like the irrationality of people) has long been established.

George Jung Is Free

George JungHappy Hiroshima Day! On this day 69 years ago, we dropped a bomb on one of the few remaining cities in Japan. If we had been on the losing side of World War II, there would have been war crimes trials and a number of Americans would have been put to death. The truth of the matter is that at the end of the war, the Japanese army was doing pretty well. We had spent the war focused on destroying the Japanese civilian population. That is, of course, what modern war is—going back at least to Sherman’s March to the Sea. The idea is that the civilian population provides supplies to the army and is thus an appropriate target. So much for Just War theory. Anyway, I think today and Saturday (the day we bombed Nagasaki) should be national holidays so we could spend the day begging forgiveness.

The drug smuggler George Jung is 72 today. Jung is an interesting guy—clever but clueless. He was a recreational cannabis user in his native Massachusetts and like many others, he did some dealing on the side. But he thought big and so before long he was transporting large amounts of the drug from California to New England. We he maxed that out, he started flying drugs out of Mexico in stolen planes. But as usual, he was caught when one of the people in his large network was caught and rolled over on him.

He reportedly told the judge that it made no sense to send a man to prison “for crossing an imaginary line with a bunch of plants.” This is what I mean by him being clueless. He’s right, of course. It does make no sense. But if there is one thing my own clueless mind has learned over the last fifty years, it is that there is nothing the power elite care about as much as imaginary lines and imaginary crimes. Our modern drug and immigration laws are just the modern equivalent of ancient religious laws. Jung’s crime was not drug transportation; it was apostasy.

But his time in prison wasn’t wasted. Jung gained a contact, Carlos Lehder. (Interestingly, back 2008, Lehder’s lawyers had to file a habeas corpus petition because the federal prison system had “lost” him.) Lehder introduced Jung to the Medellin Cartel, for whom Jung transported cocaine. But by the late 1970s, he was back to being a freelancer. And in 1994, he was arrested for possession of almost a ton of cocaine and sentenced to 60 years in jail.

Let’s think about that for a moment. Remember Ethan Couch, the 16-year-old who got no jail time at all after killing four pedestrians because he had the made up disease “affluenza”? Jung got 60 years for crossing an imaginary line with a plant product that people were eager to buy. Of course, it is important to remember that Couch was part of the power elite and those he killed were just little people. Jung, although rich, was still an outsider. But this is why I have written many times before that in our society, doing drugs is worse than murder.

Anyway, I wouldn’t even be writing about Jung today, except that on 2 June 2014, he was released from prison after serving 20 years. He is currently living in a halfway house in California. He has been working with writers to novelize his life. He has long been something of a celebrity, especially after Johnny Depp played him in the film Blow. So I’m sure that unlike most people caught up in our criminal “justice” system, he will be fine. I wish him well.

Happy birthday George Jung!