Dave Weigel’s Racist Apologetics

Dave WeigelI promise that this is the last time I’m going to write about David Weigel’s apologetics on behalf of Paul Ryan. Understand: I wouldn’t even care if Weigel were some conservative loon, but he’s an excellent reporter. And his defense of Paul Ryan’s racist comments are really worrying.

As you may recall, Wednesday morning, Paul Ryan ranted about the real poverty problem being the fact that inner city men just didn’t want to work. This isn’t even close and many of us called it at the time, Paul Ryan’s Racist Dog Whistle. As I discussed briefly, Weigel has been trying to whitewash Ryan’s comments.

But yesterday, he wrote another article, Paul Ryan and Charles Murray. During that same interview, Ryan mentioned Charles Murray, the racist writer who brought us such delights as The Bell Curve. Weigel defends Ryan’s comment:

Not being able to read Ryan’s mind, I assumed he was thinking of Murray for his Losing Ground/Coming Apart work, and not for Chapter 14 of his book about how some races just ain’t got what it takes.

When I heard what Ryan said, I didn’t think for a minute that Ryan was talking about The Bell Curve. I assumed that he was talking about Coming Apart. Ryan is a sophisticated politician. He knows that The Bell Curve is toxic. And so does Charles Murray. That’s why Murray’s been writing more palatable books since The Bell Curve. But the conclusions are the same: screw the poor! In Murray’s case, however, we have a history of his writing. Remember what the thesis of The Bell Curve is: minority groups are more likely to be poor because they are stupid; thus we should have no affirmative action.

Coming Apart is about the white middle class and arguing that the problems it is having are not due to policies that funnel wealth from poor to rich and allow for unions to be destroyed. No, it is the culture of the white middle class. But once again, let’s quote our friend Lee Atwater, “You’re getting so abstract now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is: blacks get hurt worse than whites.” So the point of Coming Apart, and for that matter Murray’s whole career, is to push policies that just so happen to result in blacks getting hurt worse than whites. What Murray is doing is only unclear to those who are determined not to see it.

Meanwhile, Dave Weigel wrote, “I’m not trying to apologize for Ryan as much as I’m explaining why he might have said this.” Notice the word “might.” Ryan might have mentioned Murray because the two of them are secretly related. Who knows? What we do know is that Paul Ryan is a sophisticated politician who is using racist dog whistles. He is also committed to policies that have the byproduct that “blacks get hurt worse than whites.” That is racism in modern America. And Weigel does the nation no favor by putting the best gloss possible on every racist thing Paul Ryan says.

Update (15 March 2014 11:31 am)

Given all the attention that this article is getting (Thanks for the retweets!) I want to note for those interested, I’ve written about Dave Weigel a lot: Dave Weigel Articles. Now, as always, he is essential reading and a great reporter. He just ought to stop apologizing for Paul Ryan.

We Are No Better Than the Sumerians

Legacy: A Search for the Origins of CivilizationI have a long running obsession with the Sumerians. They were, after all, the people who invented writing. Of course, we aren’t talking great works of art like The Iliad, Don Quixote, and SpongeBob SquarePants. The purpose they put that writing to was just what you would think. “Larsa owes Sippar one goat”! Still goat accounting is important. Actually, the writing of numbers goes back even further, but you can see the accounting problems with an entry like, “One.” Obviously, it means one goat, but beyond that, one can’t say. I’m just kidding about the goats, but there is no doubt that the Sumerians domesticated goats and other animals. These are the kinds of things you can do when you settle down and create that other great Sumerian invention: cities.

The first city we know about is Eridu, which is located in what is now southern Iraq. It first became a village around 7,000 years ago, but it was not at that time what we would call a city. That took another 1,500 years. It and the many city states in the region that followed it is why Iraq is called the cradle of civilization. For good and for bad, this is where it all started. And in my search for more information, I came upon Michael Wood’s 1992 documentary series Legacy: A Search for the Origins of Civilization. Here is the first episode, which is about the Sumerians:

I had no problem watching all six hours of the series over the past couple of days. But Legacy doesn’t seem to have been one of Wood’s more popular series. And I can see why. It’s kind of a downer. It seems to have been Wood’s response to the Persian Gulf War, which took place almost exactly on the ruins of Eridu. The whole point of the series seems to be, “Look how far we have not come!”

This last weekend, I had dinner with my father and I brought up a dangerous topic: human progress. My father, like most Americans, is absolutely certain that civilization will just get better and better. But I was in such a mood as to push back a little on that. I make no claims about the future. But looking at the past, I don’t see any real progress. The Sumerians were pretty much constantly at war. And we are pretty much constantly at war. I’m willing to admit that we may have a tad more empathy than the difficult lives of ancient people allowed them. But it is just a tad and humans seem quite willing to let their emotions carry them away. For example, I doubt if many Americans would have complained had we decided to burn Osama bin Laden to death. And we are far more cruel to our farm animals than the Sumerians were to theirs.

The biggest problem with Legacy is that Wood seems reluctant to come right out and say what he thinks. But it is pretty clear if you are paying attention. Every civilization has aspects that are great. But they are countered by aspects that are bad. Here in America, we are very good at innovating and producing. But we are sadly deficient in long-range thinking and we have no spiritual life to speak of. The problem is that we are so powerful that we have managed to foist our civilization—for good and bad—on the rest of the world.

Wood focuses on medieval Baghdad, when the Muslim rulers (distinct from their modern counterparts) embraced multiculturalism. He quotes an unnamed Muslim scholar who said, “If one could combine Arabic faith and Jewish intelligence, with an Iraqi education, Christian conduct, Greek knowledge, Indian mysticism, and a Sufi way of life, this would be the perfection of humanity.” Of course, here in the west, we give lip service to multiculturalism. But what we really mean is that we want the traditional dress for parades, and we want there to be billionaires of all races and creeds. In the end, the west wants what the west wants: the rape of the earth and each other for the sake of ever higher profits.

I am extremely skeptical that a truly diverse civilization that takes the best of all cultures can exist. And I know that there is no apatite for such in modern America. Look what’s happened to religion in this country: Christianity has been so distorted that I now see Christ described less as the Prince of Peace and more like Rambo on the Cross. I hear damned little of “blessed are the meek” and more “Jesus wants you to be rich!” Just as some Muslim’s use their religion to justify murder, mainstream American Christian uses their religion to justify the worship of Money and Power.

In the end, I suppose we will muddle on. We aren’t any better than the Sumerians, but we’re also no worse. There is no Star Trek in our future, but their may be Mad Max. Or nothing at all.

The Binary Worldview of Conservatives

Paul WaldmanPaul Waldman wrote a great article over at The American Prospect, Let Them Eat Dignity. He used Paul Ryan’s CPAC speech where he wept for kids getting school lunches to compare conservative attitudes toward rich and poor. When it comes to the poor, conservatives care very much about their souls and not so much about their comfort, defined in that case as having enough to eat. When it comes to the rich, conservatives aren’t at all concerned about souls; conservative do everything they can to make the lives of the rich as good as possible with special tax treatment for investment income, the mortgage interest deduction, and cuts to upper-income tax rates.

Go ahead and read the whole article, because I want to focus on just one thing that Waldman mentioned, “I suspect conservatives talk this way as much for their own benefit—for the maintenance of their souls, if you will—as for the poor people they’re ostensibly addressing.” That is broadly true. They couldn’t live with themselves otherwise. It reminds me of an old Saturday Night Live routine where Ronald Reagan was just being manipulated into thinking he was playing the part of the president. In between takes, he would say things like, “But I just don’t understand. Why would a president want to take food away from poor kids?” In reality, I’m sure that Reagan always thought that he was helping poor kids, just like Paul Ryan does today.

A month and a half ago, I wrote, Libertarian Theory and Practice. It was about how libertarian theory only worked as long as it is theoretical. As soon as people start applying it, it falls apart. And this is the reason that libertarians sound like such idiots when they call up Sam Seder. But combining this with what Waldman says, makes me realize something: conservatives (libertarian and other) couldn’t live with themselves if their political philosophy had the practical effect of doing harm.

So Paul Ryan thinks that while Ayn Rand’s philosophy may sound harsh, it will create a great society in which the hungry children are happier. And he’s not the only one. As I discussed in my article on Jamie Johnson’s documentary The One Percent, Milton Friedman makes this same claim. When presented with the fact that the rich have gotten excessively more wealthy the past several decades, Friedman counters that the poor have gotten somewhat wealthier too. Johnson, like one expects from a rich idiot, doesn’t counter him on this point. But now we know: that hasn’t happened. Had Friedman been countered on it, he would likely have admitted the truth: he doesn’t care. But Paul Ryan, as a politician, could never do that.

But the disconnect remains: conservatives think that the souls of the poor must be saved and the souls of the rich are just fine. This is a question of faith that has gone back centuries. It is also, lest we forget, and idea that no American would ever explicitly admit to harboring. It is the idea that God loves the rich more than the poor; that’s why he made them rich! This is the thinking that brought us royalty and the aristocracy. But that is what Paul Ryan believes in, regardless of what he says.

This should not be surprising. Traditionally, it is the conservatives who have protected the aristocracy: from Edmund Burke to John Adams to Milton Friedman, although certainly Adams and Friedman had a different idea of who the aristocracy ought to be. This is conservatism, folks! Don’t get caught up in the specifics of their beliefs. Dig down a little and you will see that they all believe the world is divided into two kinds of people: the right kind and the wrong kind. And the right kind are always the same: the powerful. If they weren’t powerful, they wouldn’t be the right kind of people. And you know what that makes conservatives: boot lickers.

Inequality Trumps Productivity

There is nothing natural about our income distribution

This morning, Paul Krugman looked at the difference between France and the United States as a way of determining if governmental redistribution of wealth had an effect on economic growth. Interestingly, even though France had much more redistributive policies, which have only become more so (pdf) over the years, it hasn’t paid much of a price in terms of economic growth. From 1979 to 2007, the per capita French economy has grown by 52% and the United States economy has grown by 68%.

This doesn’t mean that the French are less productive, however. For much of the last 30 years, France’s per capital productivity was higher than the United States’. The bigger issue is that the French don’t work as many hours. This is an issue that Dean Baker dives into a little deeper. It’s all about the policies. For example, until right now, US government policies have forced many people who didn’t want to do so to work full time so that they could get health insurance. The French, however, have policies that encourage people to retire early.

But look at the reaction of conservatives in this country recently. They went crazy over the CBO report that indicated that a lot of people would choose to work less. It’s a surprising result from a group that claims to care about freedom. I think it would be better to now assume that what the Republican Party really stands for is making the lower classes work as much as possible.

Think about that for a second. The Republicans are against the minimum wage. They are against unions. They are against food stamps. These are not about freedom except in the limited case of the freedom of the rich to pay no taxes. But there are lots of programs one could cut to allow taxes to be cut. The Republicans are always focused on cutting programs that provide the poor with more choices. A higher minimum wage would allow a person who now works two or three jobs to work just one. Policies like this allow poor people to be more free—less tied down. Conservatives see this as a bad thing.

But what do we get for our policies that push people to work more than they wish? We get 16 percentage points more of growth—30% higher growth. But the United States has a Gini Coefficient (a measure of income inequality) that is almost 50% higher. So it seems that the extra gross productivity we’ve gained from all the extra working has primarily gone to those at the top. Indeed, if the minimum wage had risen along with productivity growth from 1968, the minimum wage would now be $22 per hour. Instead, it is $7.25 per hour—less than one-third this value. Today, most workers would be thrilled to get a job that paid $22 per hour.

The fact that the French work fewer hours ought to make us wonder about ourselves. The truth is that most Americans do not “live to work.” Most people take Social Security early even though they get less money, because they don’t like their jobs. The problem is that policy is mostly determined by people who do love their jobs, which are both well paying and physically easy. Most backhoe operators don’t feel the same.

Too much in the United States, we assume that the way things are is just natural. But we choose the society we live in. Even the 40-hour work week, in as much as it means anything to people now forced to work multiple jobs, is an artificial construct. At one time people worked far more than that. But our society is far more wealthy now. We have options. Unfortunately, our political class is dominated by representatives of the rich and so everything is seen through that lens. The truth is that more Americans should work. And most Americans should work less. And all the rewards of society should be more equitably shared. If we did that, the vast majority of Americans would have a better life, even if per capita productivity went down.

Afterword

Dean Baker also discussed global warming:

However there is another factor worth mentioning in this context. The United States is the world champion in greenhouse emissions per capita. While we have a bit less than five times the population of France we have over 16 times the carbon emissions. In effect we are imposing a cost on the rest of the world to maintain our standard of living.

“Our standard of living” meaning primarily the excessively high standard of living of our society’s “Winners!”

Culpability in Accidental Shootings

Crime Scene

I just read an incredibly sad story via Fark, Gun in Donated Clothes Kills Woman in Chicago. Carmen Dominguez was working at the Unique Thrift Store. It’s a small chain of stores, mostly in Chicago. Dominguez and a co-worker were going through donated clothes. Some things were in a sock. The co-worker poured the contents out. Inside was a 22-caliber gun that accidentally went off, shooting Dominguez in the chest. She was pronounced death a half hour later. She was 54 years old.

Thus far, the police believe it was simply a tragic accident. And certainly this seems to be the case regarding the workers at the store. But how exactly does a loaded gun get stuffed into a sock and donated to a thrift shop? Not just a gun, but a loaded gun! I really don’t understand how people can be so careless.

Let me give you an idea of where I’m coming from. I spend most of my life worrying about accidents. When I do dishes, I make sure that all the knives and forks are facing down in the dish drainer. Otherwise, people could be cut. I come from a long line of people who talk with their hands. One could easily stab oneself in that way. But it could be even worse: someone could fall and stab themselves. I don’t mean to press too much on this point, and I know this is partially indicative of my advanced age, but why can’t people take just a little care?

The most basic kind of care is to always assume that a gun is loaded. Yet there was this story from last week, “A 36-year-old man from Independence Township apparently shot and killed himself by accident while trying to demonstrate gun safety to his girlfriend after he had been drinking, authorities said.” Apparently, he put a gun to his head and pulled the trigger. His point was that it is completely safe when the gun is not loaded. Unfortunately, one of the guns he used was loaded.

I understand: standard gun safety procedures are to always assume the gun is loaded. You don’t go around pointing a gun at another person, even if you “know” it is unloaded. But it seems to me that we see this kind of nonsense more and more. And I think this is partly because of the hysteria that is generated in the gun owning community. Guns have stopped being what they were for hundreds of years: tools for doing things like hunting. Now they are critical pieces of hardware that must always be loaded, because if someone wakes you up in the middle of the night, you don’t want to have to wait to be clear headed enough to load the gun. You want—no, need—to be able to start shooting without a thought.

I know that there are any number of reasons how that gun got into that sock. But I still think the fact that the gun was loaded is an outrage that cannot be defended. I have no problem with people storing dozens of guns with hundreds of bullets. But there is no need to keep a loaded gun around the house so it can accidentally kill someone. And I use the word “accidentally” in the most limited way. The person who left that gun loaded is culpable.

Yglesias Called Mike Lee Tax Plan

Matt YglesiasMatt Yglesias is gone—having moved on to work for Ezra Klein’s Project X. I’m sure he will be back soon with his usual interesting take on politics and economics. But I was reminded of something he wrote back in September, Mike Lee’s Tax Plan Looks Like Smoke and Mirrors to Me. Senator Lee had come out with a revenue neutral tax plan that cut taxes on the middle class by raising them on the wealthy. Or so it seemed.

As Jonathan Chait reminds us, “Conservative reformers swooned—here, finally, yet again, was the policy seriousness the party had been waiting for. Reihan Salam praised the plan as ‘genuinely new thinking.’ Ross Douthat called it a ‘noteworthy breakthrough’ and hailed it in two other columns.” You have to wonder if these intelligent conservatives get tired of constantly having to pretend that the conservatives they champion are somehow really trying to do what they claim instead of what they are really trying to do: take from the poor, give to the rich, and obscure the fact that they are doing so.

Even Josh Barro wrote, FINALLY: A Republican Tax Plan That Doesn’t Suck. I really wonder about Barro. Just the other day he was out apologizing for Ryan’s poverty report, pointing out the three decent things that are in it, because no one else will. It has to be exhausting. And it is plain that he knows what’s going on. He knows what Ryan is actually doing. I just hope Barro is being well paid. (It’s doubtful.)

But at that time when Barro and Salam and Douthat were wanking off to the cause, Matt Yglesias called it:

So all in all the Lee plan would reduce taxes on middle-class parents, and raise taxes on upper-middle-class people who own expensive homes in high-tax states.

People like me, in other words. Except Josh Barro, in the course of gushing over the plan, confessed that despite being an affluent childless person his taxes would fall under Lee’s plan. So I ran it with my numbers and found the same thing. If I weren’t married, Lee would saddle me with a small tax hike thanks to the reduced value of the mortgage tax deduction. But I am married, so my wife and I—the very picture of Blue America decadence in Logan Circle with no kids—are in line for a tax cut.

Now if it’s actually true that you can meet all of Mike Lee’s goals consistent with giving me a small tax cut, then good for him. But I’m suspicious that what we’ve got here is simply a tax plan that doesn’t add up.

Well, it doesn’t.

The Tax Policy Center is out with a report on Mike Lee’s tax plan, Preliminary Analysis of The Family Fairness and Opportunity Tax Reform Act. “TPC estimates that the plan would reduce tax revenues by $2.4 trillion over the ten-year budget period, 2014-2023…” So it isn’t revenue neutral. And while it lowers taxes on people in pretty much all income groups, it reduces taxes on the wealthy the most. So it’s basically just the Bush tax cuts again. Of course it is! The Republican plan is always the same: cut taxes on the rich and throw a few crumbs to the rest so they don’t squawk.

But don’t worry. I’m sure Josh Barro can come up with three things that are good about Lee’s tax plan, just in case MSNBC wants to do a segment on it.

Meanwhile, I await Matt Yglesias’ return.

Same Sex Marriage Becoming Non-Issue

Same Sex Marriage - Homer - SimpsonsEd Kilgore wrote an interesting article this morning, Self-Isolation of White Evangelicals on LGBT Issues. It is based upon the WaPo/ABC poll about attitudes toward same sex marriage. As you may have heard, 59% of Americans believe that same sex couples should be allowed to marry. This is not much less than double the 34% who don’t.

I used to think there is a natural evolution on the issue: an increasing number of people just don’t care. I thought that anyone who honestly considered the issue outside political hysteria would quickly come to the conclusion that other people’s marriages really have no effect on their lives. But it is hard to come to that conclusion now because the number of people who think gay couples ought to be able to adopt children is actually higher, with 61% support. Those against are the same: 34%. The only conclusion I can come up with is that people now know enough gay people that they realize that they are just like everyone else.

But what about that 34% of the nation who still think that gays and lesbians are some kind of social disease? It would be easy to assume that they are just the religious troglodytes. This is true and not true. And because I still largely think of myself as culturally Catholic, I was very pleased to see that Catholics are even more evolved on the issue of same sex marriage than Americans generally. White (that is, most) Catholics support same sex marriage by 70%-26%. The people who really don’t support marriage equality are white evangelicals, who opposite it by 28%-66%.

Obviously, this is a huge problem for the Republican Party. Just look at this trend:

Same Sex Marriage Support Trend

Normally, a political party would have reversed course on an issue like this. But normally, an issue wouldn’t be so concentrated. It seems that overwhelmingly, it is the Republican base that is committed to opposition to same sex marriage. This stops the Republican Party from moderating on this issue. This is hardly surprising, of course. The Todd Akins of the party didn’t come out of a vacuum.

What’s more interesting is what this says about the future of the Democratic Party. As I’ve discussed a lot around here, increasingly the Democratic Party is only liberal in terms of social issues. And same sex marriage has been the number one signaling issue the Democrats have that allows them to say, “We are the liberal party!” But let’s say that reproductive and same sex rights went away tomorrow. What would the Democratic brand be? Sadly, it would be: 4.6%. That’s the difference between the top marginal tax rate the Republicans want (35%) and the Democrats want (39.6%). In other words, the Democratic brand is, “We’re not quite as bad on economic issues as the Republicans.”

As a result of this, I’m glad that the same sex marriage issue is going away. It will put more pressure on the Democratic Party to think about economic issues from a liberal perspective. But I’m not fooled. We have long, long, long way to go.

Ukraine Is Putin’s Problem

Michael CohenFinally we are getting some decent reporting on Ukraine! I’m not talking about reporting on what’s going on there. The reporting on that has been reasonable. And it’s been sad. But I try not to be focused on whatever tragedy the mainstream news is focused on. The world is full of tragedies: you can have your pick. My interest is what the Russian invasion of Crimea means to the United States. And despite all the yammering from conservatives, what Russia’s actions mean is: very little.

Yesterday at The Guardian, Michael Cohen wrote a great article, Don’t Listen to Obama’s Ukraine Critics: He’s Not “Losing”—and It’s Not His Fight. Now, he could focus on John McCain and Lindsey Graham, the latter of which said, “We have a weak and indecisive president that invites aggression. President Obama needs to do something.” I do love these proclamations. They are very American: doing anything is far more important than doing the right thing. But the fact that the entire Republican Party is rising up in unison to call for “something” to be done is not a surprise. It is a gambit. They will criticize whatever Obama does.

Cohen, however, is interested in actual reporters and pundits. He goes through the various ridiculous ways that the conflict is being framed: from some kind of personality battle where Putin is invading just to thumb his nose at Obama, to inappropriate historical analogies like Leonid Bershidsky who compared “seizing Crimea to the Nazi annexation of Austria in 1938.” Fun stuff! But his focus is on how the analysis is making the Ukraine crisis all about us. “As in practically every international crisis, the pundit class seems able to view events solely through the prism of US actions…” Indeed. If a country other than Russia had invaded Ukraine, the mainstream press probably wouldn’t even notice.

This is old Cold War thinking. But it isn’t the Cold War and Russia isn’t the Soviet Union. In 2012, the United States spent $682 billion on its military. That same year, Russia spent $91 billion. Our friend Mr Arithmetic tell us that the big bad Russian military is 13% the size of our hopelessly fragile military. I don’t know how Americans sleep at night! The ex-communist hordes are coming for us!

Cohen focuses on what a mess Putin has put himself in, calling Ukraine “Putin’s Waterloo.” That’s almost certainly true. When the Soviets invaded Afghanistan, it too was characterized as Carter’s problem when it really wasn’t—at least until Carter made it his problem. Cohen sees Putin’s situation as similar to Brezhnev’s:

Putin has initiated a conflict that will, quite obviously, result in greater diplomatic and political isolation as well as the potential for economic sanction. He’s compounded his loss of a key ally in Kiev by further enflaming Ukrainian nationalism, and his provocations could have a cascading effect in Europe by pushing countries that rely on Russia’s natural gas exports to look elsewhere for their energy needs. Putin is the leader of a country with a weak military, an under-performing economy and a host of social, environmental and health-related challenges. Seizing the Crimea will only make the problems facing Russia that much greater.

And sure enough, as Jason Karaian (via Ed Kilgore) noted:

But the markets are punishing Russia much more swiftly than the diplomats. A wide range of Russian assets—stocks, bonds, and the ruble—plunged in value today. To shore up the ruble, which is plumbing record depths, Russia’s central bank unexpectedly hiked interest rates today. It ratcheted up the benchmark one-week rate from 5.5% to 7%, and traders report that the central bank has also been spending billions of dollars in currency markets to stem the fall in the value of the ruble…

For most people in the Political-Entertainment Complex, we have to act and that requires military hardware. But they are just dusting off their old arguments from 11 and 12 years ago, as Cohen explains:

You don’t have to listen to the “do something” crowd. These are the same people who brought you the wars in Iraq and Afghanistan, among other greatest hits. These are armchair “experts” convinced that every international problem is a vital interest of the US; that the maintenance of “credibility” and “strength” is essential, and that any demonstration of “weakness” is a slippery slope to global anarchy and American obsolescence; and that being wrong and/or needlessly alarmist never loses one a seat at the table.

That’s right, because inflicting pain on other people—be it the poor in this country or the civilians in others countries we claim to be helping—is what makes one Serious.

EITC Doesn’t Replace Minimum Wage

Raise the Minimum Wage?

Jonathan Chait has a good article about Obama’s new budget plan, Obama To Republicans: You’re Right, Let’s Expand The Earned Income Tax Credit. After Obama started talking about raising the minimum wage, the whole Republican movement went around crying, “Raising the minimum wage is a bad idea; let’s increase the Earned Income Tax Credit (EITC) instead!” Chait notes that this is just Obama’s way of calling their bluff.

What Chait doesn’t mention is that the whole Republican EITC offer is just their usual bait and switch. It reminds me very much of the whole individual mandate. When the Republicans were afraid of single payer healthcare reform or even HillaryCare, the Republicans were all for the “free market healthcare reform” that was Obamacare. But the moment that Obamacare became the Democratic plan, it was, “Socialism! Socialism I tell you!”

The same thing is going on with the EITC. As long as the Republicans are afraid that the Democrats might raise the minimum wage, then the EITC is a great talking point. It implies that they actually care about the poor, but just disagree about tactics. But the moment that the Democrats start talking about the EITC, the Republicans will turn against it. Many of them will go back to their usual “moochers” narrative that far from getting money from the government, low wage workers should be paying. Otherwise, they will support the welfare state. Blah blah blah.

But the more common response will be, “Yes, let’s raise the EITC! How are we going to pay for it?” Because that’s a requirement whenever a Democrat is in the White House. (A requirement that the Democrats have been very compliant about.) So now that Obama has agreed to the EITC discussion, the Republicans will have new demands about how it will be paid for. Obviously, there can’t be any taxes. And it can’t come out of any spending that the Republicans support. How about this: we cut food stamps to increase support for the EITC!

The point of all this, however, is not to actually increase funding for EITC. The point is to have a plausible position to avoid doing anything for the poor. So moving around some money so that how the poor are helped would be fine, although even that would likely get push back from many conservatives. Ultimately, what the Republicans want is to make the poor even more desperate. That is effectively what Paul Ryan is pushing in his poverty report, The War on Poverty: 50 Years Later.

Think for a moment about what raising the minimum wage does. As I write about all the time around here: raising the minimum wage (or the corporate income tax or whatever) does not cause prices to go up. That’s not how markets work and its not what business owners do. So raising the minimum wage is effectively a tax on businesses that employ minimum wage workers. That’s why Republicans hate it: it takes money from the wealthy and gives it to the poor; conservatives think the flow should go the other way. And it usually does!

The EITC, however, works the opposite of the minimum wage. By having a program that gives low wage workers cash, the government subsidizes low wage employers. According to economist Arindrajit Dube, 27% of the money given to workers via EITC goes indirectly to their employers in the form of lower wages. So you can see why Republicans have mixed feelings about it. On the bad side, three-quarters goes to poor people, but on the good side, one-quarter goes to those heroic job creators!

So note: moving money from food stamps to the EITC would be a net loss for low wage workers. And, in fact, any pay-for that would be acceptable to the Republicans would be a net loss for low wage workers. So Democrats would be crazy to cut a deal. But I’m sure they won’t. Jonathan Chait is right, “Obama’s embrace of Republican proposals to expand the EITC will likely wind up serving the sole function of calling their bluff.”

Fed Is By, For, and Of Power Elites

Federal ReserveThis morning Paul Krugman wrote, The Inflation Obsession. It’s about the recent dump of Federal Reserve documents and how despite the economy in free fall and a long depression in process, the Very Serious Fed Members were obsessed with inflation. How obsessed? He quotes Matthew O’Brien, who took the time to count words in the transcripts. “In the meeting on Sept. 16, 2008—the day after Lehman fell!—there were 129 mentions of inflation versus 26 mentions of unemployment and only four of systemic risks or crises.”

Krugman goes on to discuss various reasons why the Fed was so obsessed with a non-problem like inflation and hardly at all with the very real problem of unemployment. He blames the cluelessness on the political philosophy of the board members. What they say is similar to what global warming deniers say: we shouldn’t do anything to fix the problem and even if we should, we couldn’t. The work of depressions must be completed. And if we did anything, it would turn us into Greece, Greece I tell you!

While all of this is true, I think the situation is simpler than Krugman makes out. The power elites who sit on the Federal Reserve board are only interested in their fellow power elites. The biggest threat to those who already have a lot of money is inflation, so the Fed is only really interested in inflation. They are interested in unemployment only in so much as it might harm the functioning of the economy. They are not at all concerned that one percentage point increase in unemployment means well over a million people lose their jobs.

What’s more, let’s not forget: high unemployment is largely good for corporations. It means they can have their pick of employees and there is no need to raise wages. In fact, it is an opportunity to lower wages. And employees become more compliant. From employers’ perspective, he only bad thing about high unemployment is that it keeps demand low. But at worst, it is a wash. So why should the Fed care about unemployment? It isn’t in the interests of their class, so they don’t care.

The Federal Reserve has a dual mandate to maintain price stability (low inflation) and full employment. This was established in 1977. But I don’t think most of those on the Fed have ever taken the employment provision of the law very seriously. Their focus has always been on inflation, and if inflation is well under control then they tinker with employment. We’ve seen this throughout our current crisis. The Fed targets 2% inflation, which I believe is too low regardless. But even with this low target, inflation has been too low. But the Fed has not shown any concern about unemployment, even at its peak of 10% in 2009.

By itself, it isn’t a problem that the Federal Reserve is the watchdog for the power elites. It actually makes sense, being a bank. The problem is that the rest of the government is also dedicated to ensuring that the rich stay rich. Given the state of things, however, it is an outrage that the Fed’s dual mandate means 99% focus on inflation and 1% focus on employment.

Republicans Support War Not Troops

Bernie SandersI haven’t given any attention to Bernie Sanders’ veterans benefits bill (S.1982), even though my Google+ account was flooded with information about it last week. I knew it wouldn’t go anywhere. But what ultimately happened says a lot about the modern Republican Party.

It was a simple bill: it allocated $21 billion over the next ten years to enhance veterans benefits, which is needed, given the huge increase in demand caused by our two recent very long wars. But it’s hard to get too excited about such things given that the Republicans are against doing anything out of principle. They wouldn’t want the president to have a “win.”

So I figured that like most widely supported bills, it would make it through the Senate and go to die in the House. After all, the Senate is filled with people like John McCain and Lindsey Graham, men who have never seen a war they didn’t like. Certainly these men who love talking about our brave heroes in uniform would be for supporting the former troops. But no. They both filibustered the bill. So it didn’t even get the chance to go to the House to die.

Of course, the Republicans who filibustered the bill would never admit to being against the bill. They claim to be all for extending these benefits. But this is always the way things work in Congress. This is one of the main points in Winner-Take-All Politics. Politicians will never admit to being against a bill in a general sense. They always come up with some minor reason why the bill is unacceptable. I lampooned this before regarding the minimum wage, “If we were raising it to $8.99 per hour, I would vote for it. But I just cannot support $9 per hour!”

We have the same thing with Sanders’ veterans benefits bill. The government has a floating fund for foreign wars—money that goes to pay for the Afghanistan War but is currently not being used to fund the Iraq War. The bill uses some of this money. Graham and the rest of the Republicans are using this as an excuse to be against the bill. He said, “That’s an illusionary pay-for. That’s not real money.” Of course, Graham was against pulling out of Iraq. So he was all for spending that money to create new disabled veterans. But using it to take care of those disabled veterans who already exist was not acceptable.

The bill was blocked by a procedural vote that required 60 votes to proceed, with a vote of 56-41. Only two Republicans voted for it: Dean Heller of Nevada and Jerry Moran of Kansas. Neither man is anything but rigidly far right, but in the context of the modern Republican Party, they are among the more reasonable people.

The whole thing is shameful, but not surprising. There is no doubt that under a Republican president, this bill would have passed with large bipartisan support. So the Republicans don’t seem to stand for anything if they might have to share the credit. What I wonder now is if Americans (and above all, the mainstream press) will continue to treat the Republican Party as though it is the party that is most supportive of the military. I’m not at all sure it will have any effect. For a long time it has been clear that the Republican Party isn’t pro-military, it is pro-war. Republican politicians are always in favor of war and that is not at all how one would act if one were interested in supporting the troops.

Herd Mentality on Shark Tank

Shark TankI just caught the very end of this week’s episode of Shark Tank. As you may have noticed in the past, I don’t care for the show. It provides a ridiculous view of how venture capital actually works. But more important, it mythologizes the rich and pushes the idea that the rich are entrepreneurs when usually they are anything but. The people presenting are entrepreneurs, but the people in the chairs are generally not, although some of them used to be.

The bit I saw tonight was a perfect encapsulation of the show. Some doctor was producing some kind of medical device that she wanted to market to the general public. She valued her company at $5 million. The most annoying of the “sharks,” Kevin O’Leary made an offer based upon his belief that the company was worth $3 million. After this, two other “sharks” made offers that went along with the $3 million valuation. The doctor stood firm on her valuation. At that point, one of the “sharks” that was not interested in investing told her that she was crazy not to go with O’Leary’s offer because clearly her company was only worth $3 million.

And how did this “shark” know that it was only worth $3 million? Because three of the sharks all believed it. Such is the nonsense of the “sharks.” They all see themselves as equals in one way: as rich people, they all feel that the entrepreneurs who are looking for venture capital should treat them as the gods they seem themselves as. How dare this doctor question the combined wisdom of the sharks!

There are two issues here. First, the doctor understands her company and the market far better than the “sharks”—none of whom is an expert in her field. And in the discussion, she argued that the company was worth more because in that field, most products fail long before they reach the point she had with her company. Effectively, she made the same argument that I make about the entrepreneurial process: the hardest part is the idea and making it work. From that point, it is just a matter of effective management. She’s asking for venture capital, not an angel investment.

The second issue is critical to why I despise the show. When O’Leary came up with his $3 million valuation, it wasn’t based on anything. He had no reason for thinking that. If she had valued it at $7 million, he probably would have “determined” that it was worth $5 million. And when the doctor pushed back on it, the only response she got was cant about investment risk, as though investors should get a huge return on their investments without taking risk. What’s more, there are two reasons why the other “sharks” jumped on the $3 million valuation. First, it’s just herd mentality.[1] Second, it was in their best interest in terms of negotiation. By grabbing it, they put themselves in a position to get a better deal on their investment. No one was going to say, “I think Kevin is totally wrong; your company should be valued at $7; I’ll give you the money you want, but I’ll take a smaller percentage of your company!”

When I see the show, I almost always hope that the entrepreneur will walk away. It usually is a bad deal. What’s more, I can see a lot of interesting ideas being turned into quick profits rather than solid going concerns. In this case, there was a happy ending: the doctor respectfully declined the offers. And the “sharks” were amazed that anyone would question their inerrancy. I think rather than “sharks” they should be referred to as “catfish,” because they are bottom feeders who prey on the dreams and desperation of the best that humanity is.


[1] Actually, at one point, another of the “sharks,” Robert Herjavec, offered to add half as much to O’Leary’s offer. It seemed to be a way of splitting the difference. But O’Leary immediately jumped in and said something like, “I still want 20% because I think the company is only worth $3 million.” Herjavec backed him up on that, but that wasn’t what it sounded like he was proposing. So there was clear indication that their valuations did not agree and were little more than WAGs.