We Need A New Measure Of Economic Health––A Misery Industrial Average

The DowJones is at record levels, likely because of mouthwatering promises to remove regulations on pollution and regulations against gouging consumers and other antisocial corporate behaviors, as well as further tax cuts and forgiveness on the 1% and large corporations that Trump has outlined or suggested or promised.

But a lot of Americans are not enjoying robust economic health or feeling economically secure. As pollution regulations are relaxed we can expect cancer rates and deaths to rise and deaths and illness from various mysterious causes downwind and downstream from industries to rise also. These ills will not be reflected in the Dow. As consumer safeguards go away lots of large companies will breathe easier and have a healthier bottom line because they will be able to get away with things they used to be prevented from doing. This will not elevate average Americans' feelings of well-being.

We need a different metric, another gauge of our economic health at the level working people feel it, not just at the level where the stock portfolios of workers lucky enough to have stock portfolios feel it. Regardless of what SCOTUS says, corporations are not people.

I am recommending what I call

The Misery Industrial Average

(compare DowJones and Standard&Poors averages)

Private prisons

Collections companies

Pawn companies

Private security firms

Predatory lenders

Polluters

Payday lenders

Day labor companies

Weapons manufacturers

Gambling and casino companies

Porn companies (like Manwin)

(Plus other categories of publicly traded corporations who create or profit from the misery and vulnerability of working people.)

When these firms flourish it likely means that American workers are not flourishing. Their robust health comes at the expense of working people. Corporate lobbyists like to refer to working people in need as parasites, as unproductive, but these kinds of companies are the parasites because their profits subtract from working people’s standard of living.

This idea has been broached in various ways before, but not as a daily metric that people could follow the way they follow the Dow. They watch the Dow and figure its happiness and security is their happiness and security. Even when it isn’t. Even when the Dow might very well reflect the opposite of their own economic position.

This, from Upworthy, calls the private prison industry the Misery Industry

The right wing UK tabloid The Daily Mail equates the “misery industry” with the professionals who try to treat human misery and depression, because it is a “conservative” belief that nothing is wrong if we ignore what is wrong. Shut up and stress and fear and anxiety and depression will go away without costing the fortunate happy people anything.

But the pharmaceutical companies that provide the medication to treat depression and anxiety should also go on the Misery Industrial Average.

Something called the “misery index” was invented during the Johnson administration. It reflects the unemployment rate plus the inflation rate. President Carter called it "malaise" which described it pretty well. This malaise peaked during the Carter administration because the Arab oil monopolies tightened supplies which dramatically raised prices and depressed the global economy, which made people uneasy and threw people out of work.

Because the unemployment rate and the inflation rates are low right now, we’re fine, right?

But what if inflation is low and has become low and remains low because wages have been suppressed. We all know higher education and the cost of medical care and food and housing have risen more every year than the inflation rate shows, so how can inflation be low and how are depressed incomes among working people causing them to be less miserable instead of more miserable?

An actual index measuring the value and the profits and the scale of misery-related industries would be a better measure. When a town loses its local merchants because a Walmart goes in just outside the city’s tax boundary and begins paying low wages requiring its employees to obtain public assistance to live––that is misery. When the small town main street loses its local druggist and its local hardware store and those local taxpaying businesses are replaced by a Pawn America and Dollar Store and Payday Lenders, that is misery. When more of those businesses show up on main street those companies are flourishing, and that industrial average in share prices would be a useful, even a vital, measure of how hard American life is getting. When private prisons are supplying a captive and obedient labor force competing with workers not in prison that is a reflection of negative economic growth. But it seems likely that many of the business categories buoying the Dow Jones right now may be helped by the robust health of the misery industrial complex.

One more key driver of American misery is the right wing media, which provides a steady 24/7 diet of fear mongering and hate mongering and dark descriptions of where America is at that don't have anything to do with reality but serve to drive reality in that direction. People who watch FoxNews have a weaker hold on fact and reality and tend to be whipsawed by the indoctrination they receive from their preferred news media. They tend to be driven by fear rather than hope, by hate rather than love, by suspicion rather than trust.

Scientific American summarized the differences between the right wing mindset and the liberal mindset

There is a tendency toward fear and anxiety among conservatives. There is also a tendency for Red States, Republican run states, to be less successful and less happy by a whole range of measures, and yet those citizens held captive by those beliefs and by their Republican leaders continue to elect them and perpetuate their misery. In a recent study, discussed in USAToday, the ten most miserable states to live in all fall into the Republican column.

This NPR interview addresses the odd paradox of how Red States where "family values" are a core issue are failing in those areas

Red states hate the federal government yet they need it more than blue states do because their systems are failing in so many key categories, in the education rate, the domestic violence rate, in family stability and income stability

This NPR story discusses how the Red States who distrust and despise the federal government the most also need it the most

So in the Red States where Republicans rule and right wing media promotes its mixture of fear and anger, we find a vicious cycle: negative policies create negative results.

Newsmen Selling Bogus News, Foxes Guarding Henhouses, Non-Profits Rigged For Profit

How the public is brainwashed:

This story is from AutoStraddle.

How the criminals who corrupted the economy and the markets also managed to corrupt the regulatory system put in place to keep them in check:

This story is from Reuters.

How “business think” corrupted one great non-profit, the American Red Cross:

This story is from ProPublica.

Since when are news organizations supposed to disinform the public?

Since when are regulators supposed to cover up crimes?

Since when are aid organizations supposed to keep their money by avoiding their mission?

We live in a far different America than we had 30 or 40 years ago. Both sides say they want to restore America, but it’s clear that the party now led by the guy with orange hair is more intent on driving it further into the ditch.

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.

Why LIBOR Matters

“Fraud is a crime in ordinary business — why shouldn’t it be so in banking?” ~George Osborne, British Chancellor of the Exchequer

An enormous fraud has come to light in London, affecting trillions of dollars quietly stolen from bank accounts and loan accounts worldwide. Money stolen from you. It involves a rate formula called LIBOR. The L stands for London, but the London rate sets bank to bank lending worldwide, and bankers have been rigging that rate, fiddling it, manipulating it to earn themselves trillions of illegal gains over the past decade. It helped trigger the financial collapse of 2007-2008 by phonying the numbers and hiding the weaknesses in large banks. This is the kind of corruption enabled by the relaxing of financial regulation ushered in by George W. Bush and by Republican power brokers like Senator Phil Gramm.

From The Economist:

"[Referring to LIBOR, the rating system that establishes interest rates for everyone who uses credit] "In reality, the system is rotten. First, it is based on banks’ estimates, rather than the actual prices at which banks have lent to or borrowed from one another. “There is no reporting of transactions, no one really knows what’s going on in the market,” says a former senior trader closely involved in setting LIBOR at a large bank. “You have this vast overhang of financial instruments that hang their own fixes off a rate that doesn’t actually exist.”

"A second problem is that those involved in setting the rates have often had every incentive to lie, since their banks stood to profit or lose money depending on the level at which LIBOR was set each day. Worse still, transparency in the mechanism of setting rates may well have exacerbated the tendency to lie, rather than suppressed it. Banks that were weak would not have wanted to signal that fact widely in markets by submitting honest estimates of the high price they would have to pay to borrow, if they could borrow at all."

In other words, only oversight and regulation (which Wall Street and the banks say they don't need) will keep them from stealing trillions from us.

Gretchen Morgensen of the New York Times: "Manipulating the Libor is a big deal because it affects the cost of money for almost everyone. The Libor is used to set rates on mortgages, credit cards and all manner of loans, personal and commercial. The amount of money affected by the phony rates is at least $500 trillion, British regulators have estimated."

Five hundred TRILLION.

"“We’re clean but we’re dirty-clean, rather than clean-clean,” an executive said in a phone conversation. Talk about defining deviancy down.

“Dirty clean” versus “clean clean” pretty much sums up Wall Street’s view of cheating. If everybody does it, nobody should be held accountable if caught. Alas, many United States regulators and prosecutors seem to have bought into this argument."

Interviewed in The Independent, Nobel Prize economist Joseph Stiglitz puts the scandal in its proper context. Isn't this what bankers do? Aren't bankers supposed to try to make money and profits? Yes, but... Corruption destroys the strength of an economy by diverting investments and activity away from producing goods and services and infrastructure to theft, to gaming weaknesses, to rigged gambling on rigged numbers.

"It's a textbook illustration," Stiglitz said. "Where there are these asymmetries a lot of these activities are directed at rent seeking [appropriating resources from someone else rather than creating new wealth]. That was one of my original points. It wasn't about productivity, it was taking advantage."

Elliot Spitzer knows this territory well. He used to investigate and prosecute these guys.

The Financial Times is by no means a leftist newspaper, but it is reporting this scandal very aggressively.

Gary Gensler, one of Obama's regulators, is one of the Good Guys trying to clean up the financial sector: “I don’t think the public should be left at risk of a trade association, with the most sophisticated, largest banks, setting a rate that’s so critical to our credit cards, our student loans, our mortgages... These benchmarks matter; we all lose if the markets aren’t reporting accurate information.”

One Financial Times columnist calls for getting rid of the current generation of leaders in the financial industry. He also calls for breaking up the big banks, because "Too Big To Fail" is also "Too Big To Jail."

Robert Reich does a good job of explaining why this should matter to average Americans, in The Guardian (a reliably good source of information on the corruption in markets. They also broke the story about how Rupert Murdoch's papers hacked into thousands of phones and corrupted Scotland Yard and the British government.)

"The typical saver or borrower on both sides of the Atlantic trusts that the banking system is setting today's rate based on its best guess about the future worth of the money. And we assume that the banks' guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for money.

"But if that assumption is wrong – if the bankers are manipulating the interest rate so they can place bets with the money we lend or repay them, bets that will pay off big for them because they have inside information on what the market is really predicting which they're not sharing with the rest of us – it's a different story altogether.

"It would amount to a rip-off of almost cosmic proportions – trillions of dollars that average people would otherwise have received or saved on their lending and borrowing that have been going to the bankers instead."

"It would make the other abuses of trust Americans have witnessed in recent years – predatory lending, fraud, excessively risky derivative trading with commercial deposits, and cozy relationships with credit-rating agencies – look like child's play by comparison."

Every honest economist, every honest banker, every honest politician, every honest journalist and reporter is taking this rigging of the financial markets, this enormous fraud, very seriously. The ones who are brushing it off or minimizing it or defending it or ignoring it are probably owned by the corrupt financiers themselves.

This fraud isn't confined to the London market. It affected trillions of transactions and resulted in many trillions of dollars defrauded from average households worldwide. It helped cause the financial collapse of 2007-2008, and has continued after that. The wizards of Wall Street continue to use this fraud to pay themselves billions in bonuses to this day.

“It is clear that what happened in Barclays and potentially other banks was completely unacceptable, was symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees. Punish wrongdoing. Right the wrong of the age of irresponsibility.” ~George Osborne, British Chancellor of the Exchequer

It's an age of irresponsibility Obama is trying to end, and which the Republicans are determined to protect and extend.

The Looting of America

This video is worth watching. A former Assistant Housing Secretary for George H. W. Bush explains how the American financial sector has come to resemble a criminal enterprise. How the too-big-to-fail financial giants (who taxpayers bailed out) have systematically looted the middle class, with the protection of the Republican wave of deregulation. It's an interesting cool-headed rant. How valid are the allegations? I don't have the expertise to judge. They square with the events and the trends of the past thirty years, since Reagan inaugurated Voodoo Economics and started dismantling regulations. (The regulations that had safeguarded the longest period without a financial panic or significant downturn in American history, between 1937 and 1974––and the '74 downturn was caused by the 1973 OPEC oil embargo.)

While watching this I had the definite feeling that this played one way, leftward, away from corporate power, toward better government regulation, better enforcement of transparency and fairness...

...but then I find a very aggressive, Tea Party, Obama-bashing website that endorses her video too. (I find no progressive sites commenting on this interview.)

Question is: does common ground exist to overcome the hatred felt by the right wing populists toward this president, toward good-government types, toward Democrats and progressives? Can the Tea Partiers agree that the financial crisis was caused by financiers and speculators, not by the homeowners they ripped off?

Probably not, as long as they are funded by Wall Street billionaires like the Koch brothers and inspired by the manipulative rhetoric of FoxNews and talk radio. The rabble needs to be roused, and they tend to conform to their learned loyalties. Call it team spirit. Or herd instinct.

How American Corporations Plundered Employee Pensions

Wall Street Journal reporter Ellen E. Schultz discusses her new book RETIREMENT HEIST in this interview with Salon.com. How did many major American corporations plunder their employees' retirement funds? It wasn't complicated. It was surprisingly easy for them to do. First they hired expert help. Legal and accounting experts. Then they went to work. Read and share this interview. RETIREMENT HEIST is an important book.

"Think of pensions as a debt. If a company can reverse a debt, it can record it as income. And that income is the same as if they got it from selling trucks or whatever it is the company sells. There were billions in promises to retirees for pensions and healthcare and death benefits and life insurance, and the companies figured out that if they cut or eliminated them altogether then they could get those billions in profit -- and even use them for executive compensation."

But what are promises? What are obligations? Why do large profitable companies steal pension funds? Because they can, and their executives instruct them to do so. They are rewarded for doing so.

Remember, a corporation is properly called a "limited liability corporation". In a legal sense, in a purely capitalistic sense, they are formed and operated to avoid obligations, to evade responsibilities, to figure out ways of delivering as little as possible for as much money as possible. "Innovation" often involves devising ways to give poorer, cheaper, delayed and/or non- service for as much as they can charge. Companies that do this are admired for "outcompeting" their competitors, and their shareholders are the envy of the shareholders whose companies have more scruples.

Not all corporations behave this way, but without regulations to keep the game fair the ones that do cheat have a competitive advantage.

This is happening more and more because consulting companies and corporate leadership pow-wows and business schools have taught business leaders to ignore two of the three loyalties corporations have, the loyalty to the customer and to the employee, and to put all effort and dedication to pleasing the third group––the owners and shareholders. Corporate executives usually belong to this group. When possible the loyalty is confined to the executives themselves, leaving shareholders holding the bag.

Feed the Rich

Where did all the tax cut money go? It went into very few pockets and from there to emerging markets where it is busy creating low-wage jobs and a future of non-American economic power. Why would those tax cuts create jobs here when the big plan was to ship the work somewhere cheaper, someplace without the nuisance safety regulations, and workers' rights and benefits? In another era this strategy would have been called UnAmerican, but it's hard to call a party unAmerican when they are wrapped in the flag.

You can read Krugman every week, or Joseph Stiglitz every once in a while, to get a sharp mature assessment of the GOP bullshit. But sometimes it's interesting to go at the b.s. one talking point at a time, like economist Brad DeLong does, and see how quickly the right wing arguments fall apart. And they do. Sadly, it takes a brain and a bit of patient thought to see how fragile the GOP material is.

The GOP arguments fall apart because they are saying one thing while carefully planning something completely different. At moments of contradiction you will usually see John Boehner burst into tears, which is a helpful distraction. The Republicans have their game plan and it doesn't do most of us any good. It wasn't meant to.

Their strategy is to make sure the economy screws most of us over and hands the fruits of that screwing over to the handful of people up top. The plan is to streamline the narrowest possible delivery of wealth. Efficiency for the very few. This is the economy they want. This is the economy they planned. An overseas economy of underpaid, eager, frightened people with no rights. A Dickensian economy, a Scrooge economy. If it makes Americans angry the Republicans are assuming that most will blame Obama. To make sure of that, there is talk radio and Fox"News".