Tuesday, December 24, 2024
An Ugly Boil On Our Collective Butt
From former Labor Secretary Robert Reich:
You have every reason to be worried about what happens after January 20. Many people could be harmed.
Yet I continue to have an abiding faith in the common sense and good-heartedness of most Americans, despite the outcome of the election.
Many traditional Democratic voters did not vote — either because they were upset about the Biden administration’s support for Benjamin Netanyahu or they were unmoved by Kamala Harris. Others chose Trump because their incomes have gone nowhere for years and they thought the system needed to be “shaken up.”
An explanation is not a justification.
There have been times when I doubted America. I think the worst was 1968, with the assassinations of Martin Luther King Jr. and then Bobby Kennedy, the riots and fires that consumed our cities, the horrific Democratic convention in Chicago along with protests and violent police response, the election of the dreadful Nixon, and the escalating carnage of Vietnam.
It seemed to me then that we had utterly lost our moral compass and purpose.
But the Watergate hearings demonstrated to me that we had not lost it. Democrats and Republicans worked together to discover what Nixon had done.
I had much the same feeling about the brilliant work done by the House’s special committee to investigate January 6, 2021 including the work of chair Bennie Thompson and vice chair Liz Cheney.
I think it important not to overlook the many good things that happened under the Biden-Harris administration — the most aggressive use of antitrust and most pro-union labor board I remember, along with extraordinary legislative accomplishments.
When I think about what’s good about America, I also think about the jurors, prosecutors, and the judge in Trump’s trial in Manhattan, who took extraordinary abuse. Their lives and the lives of their families were threatened. But they didn’t flinch. They did their duty.
I think about our armed services men and women. Our firefighters and police officers. Our teachers and social workers. Our nurses who acted with such courage and dedication during the pandemic. I think about all the other people who are putting in countless hours in our cities and towns and states to make our lives better.
A few days ago, I ran into an old friend who’s spending the holidays running a food kitchen for the unhoused.
“How are you?” she asked, with a big smile.
“Been better,” I said.
“Oh, you’re still in a funk over the election,” she said. “Don’t worry! We’ll do fine. There’s so much work to do.”
“Yes, but Trump is …”
She stopped me, her face turning into a frown. “Nothing we can do about him now, except get ready for his regime. Protect the people who’ll be hurt.”
“You’re right.”
After a pause she said, “we had to come to this point, you know.”
“What do you mean?”
“Biden couldn’t get done nearly enough. The reactionary forces have been building for years. They’re like the puss in an ugly boil.”
“That’s the worst metaphor I’ve heard!” I laughed.
“The boil is on our collective ass,” she continued, laughing along with me. “And the only way we get up enough courage to lance the boil it is for it to get so big and so ugly and so mean that no one can sit down!”
“I don’t know whether you’re an optimist or a pessimist,” I said, still laughing.
“Neither,” she explained, turning serious. “A realist. I’ve had it with wishy-washy Democratic ‘centrists.’ A few years of the miserable Trump administration and we can get back to the real work of the country.”
“I hope you’re right.”
“And now I have to get back to work. Lots of people to feed! Merry Christmas, Happy Hanukah, Happy New Year!”
With that, she was gone.
Monday, December 23, 2024
Poll Shows Texans Worried About Much In Their State
The charts above are from the Texas Voter Poll -- done between November 16th and 20th of a statewide sample of 1,001 Texas voters, with a 3.1 point margin of error.
Trump Wants To Abolish The FDIC And Weaken Bank Regulations
Economist Paul Krugman explains why Trump's desire to abolish the FDIC and deregulate banks is a very bad idea:
The incoming Trump administration reportedly wants to abolish the FDIC and weaken bank regulation in general. And that could eventually lead to very bad things. . . .
We know that Donald Trump has a thing about the 1890s, when men were men, tariffs were high, businesses were free to pollute the air and water, and nobody knew what went on in meatpacking plants. But you can bet your Bitcoin that he’s never heard of the Panic of 1893, a huge wave of contagious bank runs that was catastrophic for industrial production and employment.
Economists actually understand bank runs pretty well.
Normally the illiquidity of most bank assets isn’t a problem, because on any given day only some of a bank’s customers want cash, while others are making deposits, so it’s OK to hold limited amounts of ready cash.
But if for whatever reason depositors fear that a bank may be about to fail, they will rush to pull out their money — and their fears can turn into a self-fulfilling prophecy, because a bank trying to raise money in a hurry can go bankrupt even if it would have been solvent if it had had time to sell at a more deliberate pace. And since the collapse of one bank can cause fears about other banks, bank runs can be contagious.
Deposit insurance made old-fashioned bank runs a thing of the past. But from the beginning it was obvious that protection for depositors had to come with strings. Otherwise banks could play heads I win, tails taxpayers lose: attract funds by offering attractive interest rates, then invest in potentially high-yielding ventures that could also easily go bad. Depositors wouldn’t worry, because they were protected; bank owners would get rich if they were lucky, just walk away if they weren’t.
So deposit insurance had to be accompanied by things like capital requirements that forced bank owners to put their own money at risk and restrictions on the kinds of investments they were allowed to make.
Concerns that unregulated banks would gamble with depositors’ funds weren’t purely hypothetical. The interaction between deposit insurance and deregulation of savings banks in the 1980s turned a modest-sized problem into a huge mess that eventually cost taxpayers around $130 billion — adjusting for inflation and economic growth since then, that’s the equivalent of around $650 billion today.
Now the incoming Trump administration seems eager to deregulate the financial industry. We’re hearing about the possibility of abolishing the FDIC. Deposit insurance would supposedly remain, although it would be absorbed into the Treasury Department. But the FDIC has a lot of institutional experience in bank regulation, which would presumably be lost. And this comes amid a general push to loosen financial regulation, indeed regulation of all types.
I have no idea how far this stuff will go, although Wall Street types are clearly eager to start taking dangerous risks again.
But it does seem like a reasonable guess that panics, along with pollution and polio, are well-positioned to make a comeback.
Sunday, December 22, 2024
Trump Is Poised To Benefit Financially From The Presidency
In his first term, Donald Trump did something other presidents have not done. He used the office to make himself much richer. Now, in his second term, he is poised to do that on even a grander scale. Here is how Nicole Narea describes it at Vox.com:
“Victory” cologne and perfume. “Crypto President” watches. Limited-edition “American Eagle” guitars. T-branded golf shoes and “Fight Fight Fight” high-top sneakers.
These are just a sample of the many products licensed to bear President-elect Donald Trump’s brand, including some that he has promoted on his social media site Truth Social just weeks before his inauguration. If he continues to hawk his merchandise after returning to the White House, that could raise ethical concerns.
Consumer goods may be the least of Trump’s issues, however. He has a number of business ventures — including his social media platform, a nascent crypto firm, and the Trump Organization’s partnerships in the Middle East — that could present conflicts of interest, make the presidency vulnerable to foreign influence, and violate federal law. . . .
Trump made an ethics pledge for a second term, but it doesn’t make any commitments in terms of how he might resolve his persistent conflicts of interest stemming from his now even more sprawling businesses. This time, there are many more ways that he could use the presidency for his own personal gain — and potentially be vulnerable to the influence of foreign actors.
“He’s essentially flouting ethics rules and conflicts of interest laws much more blatantly, much more obviously than last time,” Scherb said. “He’s not even trying to hide what he’s doing at all this time.”
Chief among these conflicts of interest is his stake in the publicly traded parent company of Truth Social, the president-elect’s social media platform. Just after he won the election, that stake was worth $3.5 billion. The value of the company’s stock has oscillated in the month since, but Trump’s stake still makes up a large portion of his estimated $6.8 billionnet worth.
Never before has a president had such a significant stake in a publicly traded company, and for good reason: Foreign actors could easily and entirely legally buy up its stock, inflating its value and Trump’s net worth. Not only that, they could also “threaten to just dump all their shares at once, which would crater his net worth,” giving them potentially a “huge amount of leverage over the president,” said Jordan Libowitz, a spokesperson for CREW.
The Trump Organization has also recently struck a series of deals worth hundreds of millions of dollars to construct luxury hotels and properties in Saudi Arabia, Oman, and the United Arab Emirates, as well as established a partnership with the Saudi-funded LIV Golf. That has drawn Trump into an even closer relationship with the Saudis, which dates back to 2017 when he made the country stop number one on his first overseas trip as president.
“That’s an easy way for the Saudis to pump money into the Trump org,” Libowitz said.
In September, Trump also launched a crypto venture, World Liberty Financial, alongside his sons and his new Middle East envoy, billionaire real estate tycoon Steve Witkoff.
Libowitz raised concerns about a $30 million investment in the company from Chinese crypto entrepreneur Justin Sun, who is currently fighting fraud charges from the Securities and Exchange Commission. Trump and his family are expected to net roughly $20 million thanks to that deal, according to the BBC. Notably, Trump has recently nominated crypto advocate Paul Atkins to head the SEC.
Scherb said he isn’t expecting robust oversight of these conflicts of interest from the incoming Republican-controlled Congress.
Saturday, December 21, 2024
Our Democracy Has Morphed Into A New Oligarchy
The following is part of a post by Robert Reich:
Today the great divide is not between left and right. It’s between democracy and oligarchy.
The word “oligarchy” comes from the Greek words meaning rule (arche) by the few (oligos). It refers to a government of and by a few exceedingly rich people or families who control the major institutions of society — and therefore have most power over other peoples’ lives.
So far, Trump has picked 13 billionaires for his administration. It’s the wealthiest in history, including the richest person in the world. They and Trump are part of the American oligarchy, even though Trump campaigned on being the “voice” of the working class.
America’s two previous oligarchies
America has experienced oligarchy twice before. Many of the men who founded America were slaveholding white oligarchs. At that time, the new nation did not have much of a middle class. Most white people were farmers, indentured servants, farm hands, traders, day laborers, and artisans. A fifth of the American population was Black, almost all of them enslaved.
A century later a new American oligarchy emerged comprised of men who amassed fortunes through their railroad, steel, oil, and financial empires — men such as J. Pierpont Morgan, John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, and Andrew Mellon. It was called the Gilded Age.
They ushered the nation into an industrial revolution that vastly expanded economic output. But they also corrupted government, brutally suppressed wages, generated unprecedented levels of inequality and urban poverty, pillaged rivals, shut down competitors, and made out like bandits — which is why they earned the sobriquet “robber barons.”
World War I and the Great Depression of the 1930s eroded most of the robber barons’ wealth, and much of their power was eliminated with the elections of Franklin D. Roosevelt in 1932 and Democratic majorities in the House and Senate.
America demanded fundamental reforms — a progressive income tax, corporate taxes, estate taxes, limits on the political power of large corporations, antitrust laws, laws enabling workers to form unions and requiring that employers negotiate with them, Social Security, the forty-hour workweek, unemployment insurance, civil rights and voting rights, and Medicare.
For the next half-century, the gains from growth were more widely shared and democracy became more responsive to the needs and aspirations of average Americans. During these years America created the largest middle class the world had ever seen.
There was still much to do: wider economic opportunities for Black people, Latinos, and women, protection of the environment. Yet by almost every measure the nation was making progress.
America’s current oligarchy
Starting around 1980, a third American oligarchy emerged.
Since then, the median wage of the bottom 90 percent has stagnated. The share of the nation’s wealth owned by the richest 400 Americans has quadrupled (from less than 1 percent to 3.5 percent) while the share owned by the entire bottom half of America has dropped to 1.3 percent, according to an analysis by my Berkeley colleagues Emmanuel Saez and Gabriel Zucman.
The richest 1 percent of Americans now has more wealth than the bottom 90 percent combined.
The only other country with similarly high levels of wealth concentration is Russia, another oligarchy.
All this has been accompanied by a dramatic increase in the political power of the super-wealthy and an equally dramatic decline in the political influence of everyone else.
While the Biden administration sought to realign America with its ideals, it did not and could not accomplish nearly enough. Trump’s lies and demagoguery exploited the anger and frustration of much of America — creating the false impression he was a tribune of the working class and an anti-establishment hero — thereby allowing the oligarchy to triumph.
In 2022, Elon Musk spent $44 billion to buy Twitter and turn it into his own personal political megaphone. Then, in 2024, he spent $277 million to get Trump elected, also using Twitter (now X) to amplify pro-Trump, anti-Harris messages.
These were good investments for Musk. Since Election Day, Musk’s fortune has increased by $170 billion. That’s because investors in Tesla and SpaceX have pushed their value into the stratosphere.
Trump has put Musk (and another billionaire, Vivek Ramaswamy) in charge of gutting government services in the name of “efficiency.” Musk’s investors assume that Musk will eliminate the health, safety, labor, and environmental regulations that have limited the profits of Musk-owned corporations, and that Trump will put more government money into SpaceX and xAI (Musk’s artificial intelligence company).
Unlike income or wealth, power is a zero-sum game. The more of it at the top, the less of it anywhere else.
The power shift across America is related to a tsunami of big money into politics.
Corporate lobbying has soared. The voices of average people have been drowned out.
The American oligarchy is back, with a vengeance.
Not all wealthy people are culpable, of course. The abuse is occurring at the nexus of wealth and power, where those with great wealth use it to gain power and then utilize that power to accumulate more wealth. Today’s robber barons include Elon Musk, Jeff Bezos, Peter Thiel, David Sacks, Charles Koch, Jeff Yass, Ken Griffin, and Rupert Murdoch.
What the new oligarchy wants
This is how oligarchy destroys democracy. As oligarchs fill the coffers of political candidates and deploy platoons of lobbyists and public relations flaks, they buy off democracy. Oligarchs know that politicians won’t bite the hands that feed them.
As long as they control the purse strings, there will be no meaningful response to the failure of most people’s paychecks to rise, nor to climate change, nor racism, nor the soaring costs of health insurance, pharmaceuticals, college, and housing, because those are not the main concerns of the oligarchy.
The oligarchs want lower taxes, which is what Trump, Musk, and other oligarchs are planning — an extension of the 2017 Trump tax cut, with an estimated price tag of at least $5 trillion.
They want no antitrust enforcement to puncture the power of their giant corporations. Instead, their corporations will grow larger, able to charge consumers even more. Trump is replacing Lina Khan, the trustbusting chair of the Federal Trade Commission, with a Trump crony.
There will be no meaningful constraint on Wall Street’s dangerous gambling addiction. The gambling will only increase.
Wall Street is already celebrating Trump’s victory. The stock market has reached new heights. But the stock market is inconsequential for most people, because the richest 1 percent own over half of all shares of stock owned by Americans while the richest 10 percent own over 90 percent.
There will be no limits to CEO pay. Wall Street hedge fund and private equity managers will also rake in billions more. Government will dole out even more corporate subsidies, bailouts, and loan guarantees while eliminating protections for consumers, workers, and the environment.
It will become a government for, of, and by the oligarchy.
The biggest divide in America today is not between “right” and “left,” or between Republicans and Democrats. It’s between democracy and oligarchy. The old labels — “right” and “left” — prevent most people from noticing they’re being shafted.
The propagandists and demagogues who protect the oligarchy stoke racial and ethnic resentments — describing human beings as illegal aliens, fueling hatred of immigrants, and spreading fears of communists and socialists.
This strategy gives the oligarchy freer rein: It distracts Americans from how the oligarchy is looting the nation, buying off politicians, and silencing critics. It causes Americans to hate each other so we don’t look upward and see where the wealth and power have really gone.
The necessary agenda
The way to overcome oligarchy is for the rest of us to join together and win America back, as we did in response to the oligarchy that dominated America’s last Gilded Age.
This will require a multiracial, multiethnic coalition of working-class, poor, and middle-class Americans fighting for democracy and against concentrated power and privilege.
It will require that the Democratic Party, or a new third party, tell the truth to the American people: that the major reason most peoples’ wages have gone nowhere and their jobs are less secure, why most families have to live paycheck to paycheck, why CEO pay has soared to 300 times the pay of the typical worker, and why billionaires are about to run our government, is because the market has been rigged against average working people by the oligarchy.
The agenda ahead is simply stated but it will not be easy to implement: We must get big money out of our politics. End corporate welfare and crony capitalism. Bust up monopolies. Stop voter suppression.
We must strengthen labor unions, give workers a stronger voice in their workplaces, create more employee-owned corporations, encourage worker cooperatives, fund and grow more state and local public banks, and develop other institutions of economic democracy.
This agenda is neither “right” nor “left.” It is the bedrock for everything else America must do.
It may seem an odd time in our history to suggest such reforms, but this is the best time. Trump and his oligarchy will inevitably overreach. The lesson from the last Gilded Age is that when the corruption and ensuing hardship become so blatant that they offend the values of the majority of Americans, the majority will rise up and demand real, systemic change.
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