Friday, October 17, 2014

Killer Business Model

Excellent article in the Washington Post about how furniture rental companies gouge three times the value of the furniture from people who can't afford to buy. This is called the Genius of Capitalism.

Faced with a need or a shortage, do you set about filling that need, that shortage, or is your first question how to exploit the shortage to the fullest advantage?

Is human vulnerability something to take advantage of?

Is poverty a profit opportunity for your company, the deeper the poverty the greater the profit?

Is someone else's helplessness part of your business model? When you see helplessness do you feel sympathy or greed?

Is helpfulness a naïve and foolish custom? Is it unbusinesslike to include generosity or humane consideration in your business plan?

Let’s imagine you manufacture flotation devices, lifesavers they’re called. It costs money to make them, so you sell them for a price. Naturally.

But here’s a business model: you provide flotation devices to lifeguards. Call these lifeguards sales agents and pay them a small commission. Then when someone is drowning don’t have your agent throw them a buoy free of charge, let the market set a price. Dicker with the floundering. Or rent the device to the person fighting for his life, loan the use of the buoy at so much per second. They’re really eager to rent, so set that rate as high as you can. Plus interest, compounding every second.

This is what’s known as a killer business model.

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Thursday, October 09, 2014

The Fear Card

Freedom of speech now protects the sacred right to yell fire in a crowded theatre as long as it is for political purposes. We’re that crowded theatre.

This is what Republicans and the Republican news network are doing these last few weeks before the election. Ginning up irrational fears that Islamic extremists and ebola are on the verge of killing thousands of Americans. These fears are irrational. The danger is remote. Of course we only have scientists and national security professionals to trust on that. Why believe experts when there are attractive blondes on Fox telling us ebola is just outside the door and Islamic terrorists hiding under the bed? Pretending these threats are imminent here in America is shrewd politics. Never mind the ethics or the dishonesty problem.

“Be afraid. Vote Republican!"

Fear is persuasive and the FoxNews strategy is making us into a nation of cowards. Working towards that goal would once have been called unpatriotic, unAmerican, but we mustn’t speak ill of a major network, particularly one that is so obviously losing its mind. It would be impolite.

Neither problem is made any easier to handle when Republicans slash CDC budgets and the budgets of other key government agencies.

Isis is emboldened by Republicans’ persistent and dangerous efforts to undermine and handicap the president and our federal government at home and abroad.

Fear is the GOP’s stock in trade. They have an entire network devoted to creating fear and suspicion and hatred and anger in American viewers.

News media are so intimidated by Republicans they are afraid to call a lie a lie or an extremist and extremist lest they appear “partisan.” Genuine science is diminished when our public conversation has to give equal respect to irrational, unscientific garbage. Honesty used to be considered the best measure of fairness. But money now does our talking for us.

Money is now speech, as surely as corporations are now people. Which has the effect of diminishing the freedoms of the rest of us who are not corporations and are strapped for money. Love money? Want money? Help sell the right wing agenda; money will pour in. Money is the ultimate validation in the new Republican value system. If you own for a living, you are holy. But if you work for a living, be prepared to show your papers. Be prepared to prove you’re a legitimate member of society.

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Sunday, September 07, 2014

Control Fraud and the Sexiness of Bribed Executives

I learned a new term today: Control Fraud. (Thomas Frank writes about it at Salon.) It’s where the top executives in a company ignore warnings because heeding them would limit their huge pay packages. It’s why Bank CEOs ignored the flood of liar’s loans that would collapse the bank because they were making huge bonuses based on the volume of loans, and they would keep those bonuses even if the bank failed.

Control fraud has appeared in other key areas of our economy. I’ve been asking for some time why the insurance industry has been so silent about the huge risks of climate change. Their companies would quickly collapse if and when the claims came in on submerged port facilities, flooded coastal cities, croplands flooded or desertified, and the many other catastrophes that climate scientists have warned about. Another kind of control fraud might explain this.

The thing is, during the Reagan era (which we’re still in) insurance companies stopped thinking of themselves as insurers. Such a gloomy, pessimistic role. Not fun at all. Sexier to be in high finance. So they transformed into financial giants. Now they weren’t in the business of insuring things, they were in the business of investing insurance premiums, and one of the best investments of all in recent decades has been fossil fuel companies. They earned bigger returns from fossil fuels and from investments that benefited from plentiful oil and gas than they did from insurance. Because the high finance guys were making the big returns they outshouted the doleful insurance worriers.

I’m guessing cheap gas was the bribe the giant food companies were taking. Food supplies are the most at risk from climate change. If the climate moves away from your thousands of grain farms or from your elaborate grid of grain depots and rail lines, you are out of business. (Business always matters more than famine.)

But it was only in the past year that Lloyds of London and a few other insurance giants began pushing warnings and insurance rates based on climate science warnings that have been growing louder for the past two decades. General Mills finally made a clear statement warning about climate change.

Why this long delay? Why do huge companies run by intelligent men and women choose to ignore the best information? Why do they ignore science? Because the money they get now is more persuasive than the ruin they might experience later. And it will kill a lot of other people before it hurts them.

In the area of financial collapse the warnings were muted because our financial intelligence is corrupted by this same Control Fraud. Economists are paid by the financial giants. They are flattered by the friendship of the top people taking these Control Fraud bonuses (or should we call them bribes?). University economists and professors are sitting in chairs endowed by the same finance CEOS who sit the top of the corruption. Financial writers are their priesthood, they worship these big shots.

Why doesn’t President Obama’s Justice Department go after these people? He is. But the cases are brought slowly and in parts. Complex cases are more often settled and the settlements are growing larger. The larger the target the harder the prosecution. I hope I am seeing the unfolding of a longer game.

Still, there ought to be long term criminal jeopardy for Control Frauds of this kind. No statute of limitations. If there's no end to college debt collection, there should be no limit to this kind of prosecution and recovery. These cases should also be very class actionable––lots of victims, and those victims have descendants. This legal reach would also need to be global, because these billionaires keep their fortunes overseas. The irony is that trillions of their ill-gotten gains are held in banks on islands that will be underwater when the oceans rise.

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Thursday, August 28, 2014

How The Confederacy Hopes to Win the Civil War. Finally.

In this taped speech Senate Minority Leader Mitch McConnell outlines how it will unfold if they win in November. How he will shut down the government, something Obama has been able to prevent them from doing thus far. EPA, gone. Affordable Care Act, gone. SEC? Gone. All regulations of corporations and banks and industries and trade fairness? Gone. Workers' rights? Gone. Consumer protections? Gone. Wind the clock back to 1860, to that halcyon period before working people had weekends off and paid vacations and health insurance and retirement, back to a time when children worked six or seven days a week.

Think of it this way…

Lincoln faced a determined, well armed, intractable enemy who wanted to bring down our national government once and for all. The government shaped by the U. S. Constitution. This enemy was called The Confederacy.

Today that Confederacy controls one house of Congress and the Supreme Court.

If they win in November they will control both houses of Congress and the Confederacy will finally have won the Civil War.

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Tuesday, August 26, 2014

How We Think About The Dead

The New York Times described Michael Brown as “no angel.” An unfortunate choice of words on the day of his funeral. Especially if you consider (as Vox does here) the carefully worded descriptions they had published about some well-known mass killers. Timothy McVeigh, John Wayne Gacy, Ted Bundy, the Columbine shooter, and others were described as "just like you and me." Was Michael Brown unlike you and me?

There is a very subtle mechanism we all insert into our judgments, to rationalize what has happened, to explain why it happened, to excuse it, to justify it. In the case of the white murderers it was a “who could have known?” rationalization. In the case of the young black man wrongly killed a week away from freshman year in college it is a reassurance that “Hell, he wasn’t really innocent at all.” A mechanism to help us not feel so bad about it, or at least not guilty ourselves.

Vox's Matthew Yglesias turns this on its head and asks the necessary question: what might happen to any of us in our own youthful brushes with the law if we were the color of Michael Brown?

We have a long and persistent habit of racism in this country. As William Faulkner said “The past is never dead. It’s not even past.” In his poem Let America Be America Again, Langston Hughes describes how different our inheritance of liberty and freedom and opportunity is depending on our skin color. It resonates especially loudly this month in Ferguson, Missouri.


Langston Hughes, 1902 - 1967

Let America be America again.
Let it be the dream it used to be.
Let it be the pioneer on the plain
Seeking a home where he himself is free.

(America never was America to me.)

Let America be the dream the dreamers dreamed—
Let it be that great strong land of love
Where never kings connive nor tyrants scheme
That any man be crushed by one above.

(It never was America to me.)

O, let my land be a land where Liberty
Is crowned with no false patriotic wreath,
But opportunity is real, and life is free,
Equality is in the air we breathe.

(There’s never been equality for me,
Nor freedom in this “homeland of the free.”)

Say, who are you that mumbles in the dark?
And who are you that draws your veil across the stars?

I am the poor white, fooled and pushed apart,
I am the Negro bearing slavery’s scars.
I am the red man driven from the land,
I am the immigrant clutching the hope I seek—
And finding only the same old stupid plan
Of dog eat dog, of mighty crush the weak.

I am the young man, full of strength and hope,
Tangled in that ancient endless chain
Of profit, power, gain, of grab the land!
Of grab the gold! Of grab the ways of satisfying need!
Of work the men! Of take the pay!
Of owning everything for one’s own greed!

I am the farmer, bondsman to the soil.
I am the worker sold to the machine.
I am the Negro, servant to you all.
I am the people, humble, hungry, mean—
Hungry yet today despite the dream.
Beaten yet today—O, Pioneers!
I am the man who never got ahead,
The poorest worker bartered through the years.

Yet I’m the one who dreamt our basic dream
In the Old World while still a serf of kings,
Who dreamt a dream so strong, so brave, so true,
That even yet its mighty daring sings
In every brick and stone, in every furrow turned
That’s made America the land it has become.
O, I’m the man who sailed those early seas
In search of what I meant to be my home—
For I’m the one who left dark Ireland’s shore,
And Poland’s plain, and England’s grassy lea,
And torn from Black Africa’s strand I came
To build a “homeland of the free.”

The free?

Who said the free? Not me?
Surely not me? The millions on relief today?
The millions shot down when we strike?
The millions who have nothing for our pay?
For all the dreams we’ve dreamed
And all the songs we’ve sung
And all the hopes we’ve held
And all the flags we’ve hung,
The millions who have nothing for our pay—
Except the dream that’s almost dead today.

O, let America be America again—
The land that never has been yet—
And yet must be—the land where every man is free.
The land that’s mine—the poor man’s, Indian’s, Negro’s, ME—
Who made America,
Whose sweat and blood, whose faith and pain,
Whose hand at the foundry, whose plow in the rain,
Must bring back our mighty dream again.

Sure, call me any ugly name you choose—
The steel of freedom does not stain.
From those who live like leeches on the people’s lives,
We must take back our land again,

American newspaper archives are full of photographs from the last century and before of happy laughing crowds of white people gathered around the tortured, burned, disfigured, hung corpses of black men. The atmosphere is that of a town picnic. Who are those people? They are our ancestors. How should they be described in the New York Times? We know how the men they murdered were described.

A bit of history. A lynching in Omaha in 1919. Our ancestors were there and took part. We can't rationalize that away.

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Saturday, August 23, 2014

Lincoln Was Hated Too

...Until they killed him.

On the day Obama was inaugurated Republican leaders met in private and swore to oppose everything, EVERYTHING, the new president tried to accomplish. This article in Tikkun summarizes it well. So do these articles: Washington Post, the Guardian, and DailyKos.

In at least one press interview these Republican conspirators compared their opposition to the Taliban. An interesting choice, considering they spent a lot of the first year screaming that Obama wasn’t killing enough Taliban in Afghanistan.

For two years the blockade leaked. Democrats got bills passed. The economy began to recover. The Affordable Care Act passed against a fierce fire from Republicans, never mind that the plan was designed around mandates and a healthcare marketplace first proposed by the Heritage Foundation. When Democrats found Republican points they could agree on Republicans hated them for it. They didn’t want compromise. They wanted dysfunction. They wanted war.

In 2010, corporations (whom the Supreme Court had reclassified as people) poured hundreds of millions of dollars (which the Supreme Court had reclassified as protected speech) to Republican candidates. Most of these candidates didn’t hide their anarchist fervor on the stump, and the wave of Republicans who retook the House of Representatives were the most radical the institution had ever seen. Radicals who scorned the rules and traditions of the House itself. They were anarchists. Their sole wish was to make the Congress cease to function. Their goal being to make Obama’s presidency a failure.

Now the opposition was total because they had the numbers. They refused to compromise on anything and could block everything. They used procedural maneuvers to prevent majority measures from passing. They used procedure to slow up ordinary congressional business. Routine stuff like departmental appointments which the opposition party generally allowed because departments needed people doing the work.

Not this time. No judges. No heads of various departments. Bush appointees were therefore left in place, which pleased the Republicans. Understaffed government agencies began to function less efficiently. Brilliant! This was exactly what the Republicans wanted. They wanted the government that did things to cease doing things like helping the unemployed, like treating veterans, like helping veterans of their wars find jobs. Maximum pain was the goal.

Then there was the debt limit. Bush had started two wars and kept their trillion dollar cost off the books. Obama put them back on the books, in a refreshing act of accounting honesty. But Republicans decided they didn't want to pay this debt. Just as they didn't want to pay unemployment benefits to vets. Or the upkeep of the nation's highways. Or relief to people suffering from the economic collapse. They didn't want to spend any money unless they could cut the taxes owed by their wealthy clients. International markets downgraded U.S. Treasury Bills, our sovereign debt. Republicans cheered. Something they wanted to happen couldn't possibly be their fault. It was the president's fault.

Republicans in the House voted more than 50 times to overturn the Affordable Care Act. They wanted to undo Obama’s signature achievement. Republicans who controlled red states refused to enact the ACA in their states, refusing federal money to assist their citizens who didn’t have healthcare coverage. A Scroogelike opposition.

Nice guys, these Republicans. Millions cheered them on. Why?

What was different? Was it because the president was….(black)? Perish the thought. Apparently it was because he was a foreign born Muslim, a silly falsehood Republicans raised again and again. Why did they raise it again and again? Because their constituents believed it. They believed it because their political masters told them to.

They hated Obama. They have hated him ever since he was elected. They hated him the moment he became black, which they prefer to believe was not in Hawaii.

People hated Lincoln too. People North and South, but mostly in the South. Until they killed him.

Lincoln had one advantage. He tried to solve serious problems that Americans had kicked down the road for generations, but he didn’t have to deal with a Confederacy that controlled the Congress and the Supreme Court. Today the Confederacy, the Lost Cause of sacred memory, lives in the Republican Party.

It didn’t die in 1865. The Confederacy lived on in Jim Crow all across the South where blacks could be lynched for registering to vote or for looking at a white person the wrong way, and there were a lot of wrong ways, whole etiquette books of them (the South was and is famously courteous.)

After LBJ passed civil rights and voting rights Southerners blamed the Democratic Party and became Republicans overnight. Nixon devised a whole program to welcome the racists and the anti-unionists and the male supremacists into the Republican fold. It was called the Southern Strategy. It was carefully written to enable white folks to hate and oppress black folks without calling them n*****s. So the Confederacy lives again. No white hoods required, just stubborn willingness to pour sand in the works of our democracy. Why? Racist spite seems extremely probable. You need to work very hard not to think so.

And it’s working brilliantly. Oppose everything, block everything Obama tries to do––even those proposals first made by Republicans––show willingness to make the nation default. The Republicans’ plan contained an explicit desire to make Americans suffer. They’ve laughingly admitted this. They know Americans will blame the president for all of their pain and frustration even if its caused by his enemies. Which is the purest, sickest, most unAmerican kind of cynicism. They've willed his exclusion from the public conversation, hogtied his economic recovery and carefully orchestrated hatred and blame from half of the country. They've gagged him and criticize him for not talking. When he does speak they damn him for poisoning the air––because they disagree. It is hard to be a black leader in a country with a history of racism. It's gotten so bad the news media feel compelled to minimize Obama's achievements. He has achieved a great deal, but who remembers? We've come a long way back since the previous president drove us into the ditch. How could a successful president be this unpopular? It is hard to explain.

So the harm is done. And we’ve let it be done. Our news media has hidden what has been done because to describe this kind of behavior honestly would appear partisan. So they soften it, disguise it, create phony balance. If the president’s opposition behaves in a racist fashion, well Obama must be a racist too.

It’s like that other case in Ferguson, Missouri, where the black man was wrongfully arrested, beaten, jailed and when the police discovered they’d arrested an innocent man from out of town they charged him with destruction of police property. While they’d been beating him up he’d bled on their uniforms.

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Tuesday, August 19, 2014

The Final Sorting

We are distorting the way our economy works, refashioning and refitting it to serve fewer people and thereby cutting more people out of it. The rich are behaving in a completely predictable way. The more we pay them the more they want, and every desire is quickly turned into a basic need.

(I wrote about this over a decade ago and nobody thought it was worth discussing.)

For the rest of us every basic need is redefined an expensive option, a remote "maybe", something we’re not entitled to.

It’s gotten to the point where the word “entitlement" is used as a pejorative term. We, who work for a living, are no longer entitled to anything. And the small minority of people who own for a living are entitled to everything.

We need to relearn what history taught us. We can allow people to grow rich, but being rich must bring obligations too. (Here's a good history lesson about this from the Washington Post. Anybody remember Magna Carta? We should have learned something from how England created its democracy.)

The bad old days were barely a century ago. (Does anyone remember the Ludlow Massacre?) We earned a better living standard the hard way. Our parents and grandparents got fed up and changed things. They organized, and elected a president who believed they had the right to be organized. That has been undone since.

In the past thirty years this has all been taken away and we have let it be taken away.

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