How Trump Makes Us More Like Russia (Poor Us)

Why are we focused on Russia? "Trump won, shut up." "Why does it matter if Russians helped him?” It matters because Trump’s financial and business history is deeply entangled with Russian criminality, and the criminals who have helped him preserve an appearance of wealth for three decades will demand something in return. Like anyone who gets in bed with mobsters, Trump is being forced to pay them back (to borrow his word) “hugely." He may be paying them with our money, or he may be paying them back by dismantling America's global superiority, enabling Russia to fill that vacuum. Or he may be paying them back by grafting the kleptocratic Russian model onto our economy. Putin the kleptocrat has plenty of admirers here, rich people who see our economy as something to be looted rather than run properly and fairly. Investigators are following the money.

This Bloomberg article follows the rubles down the years through Trump Inc.

"The Post noted that the investigation also includes "suspicious financial activity" involving "Russian operatives." The New York Times was more specific in its account, saying that Mueller is looking at whether Trump associates laundered financial payoffs from Russian officials by channeling them through offshore accounts."

Trump promises everything, but how much does he deliver? Ask the people who enrolled their futures in Trump University. Now he's taken that con game to new heights via the White House, where his promises affect Americans' trust in their democratic system and institutions. Money Magazine reports on the Trump jobs promises that were hollow.

"Since his election, Trump has frequently used broad claims to take credit for jobs, especially those for blue collar workers, that the numbers don't bear out."

The massive advantages of people at the top of the economy used to be tempered somewhat by our democratic traditions and norms. But what if those norms and regulations were removed? What if the whole point of the economy was to enrich the very rich and bugger the rest of us? What if working people were the only ones paying for the roads and the bridges and the systems that keep our economy running, leaving the 1% off the hook? The money managers for the rich do a very good job of helping their clients avoid obligations the rest of us have to shoulder. Like those Russian oligarchs who operate as global free agents with no obligations and no restrictions.

The Nation reports on how this scam is operated.

" Part of the inequality problem, however, is that trillions of dollars are being shifted off the ledger, hidden from measurement and taxation. Some of this “hidden wealth of nations,” as Gabriel Zucman calls it, is kept in offshore tax havens like the Cayman Islands and Panama that function as secrecy jurisdictions with minimal transparency or reporting requirements. Trillions more has been hidden in trusts and other complex financial arrangements available only to the very wealthy. New research suggests that households in the top 0.01 percent, those with wealth over $40 million, evade 25 to 30 percent of person income and wealth taxes—about 10 times more than the general population.

"This process is aided and abetted by professional wealth managers who facilitate and lubricate the process of hiding wealth. Many of them work in private family offices that serve wealthy families. These are not mom-and-pop financial planners who help protect families from running out of money. We’re talking about the well-compensated professionals that serve the richest one-tenth of one percent of Americans."

But getting back to Trump and Russia––who has been floating Trump while he runs his grift on Americans? Fortune magazine reports.

"Trump said in the deposition that Bayrock’s Tevfik Arif “brought the people up from Moscow to meet with me,” and that he was teaming with Bayrock on other planned ventures in Moscow. The only Russians who likely had the resources and political connections to sponsor such ambitious international deals were the corrupt “oligarchs.” Although Trump claimed that negative publicity about him from O’Brien killed the deals, he still insisted that “we are actually going to be [in Russia] fairly soon.” When asked if he had “concerns about investing in Russia,” Trump answered “No.”

“...The plaintiffs in a 2015 racketeering case against Bayrock, Sater, and Arif, among others, alleged in the civil lawsuit that: “for most of its existence it [Bayrock] was substantially and covertly mob-owned and operated,” engaging “in a pattern of continuous, related crimes, including mail, wire, and bank fraud; tax evasion; money laundering; conspiracy; bribery; extortion; and embezzlement.” Although the lawsuit does not allege complicity by Trump, it claims that Bayrock exploited its joint ventures with Trump as a conduit for laundering money and evading taxes. The lawsuit cites as a “Concrete example of their crime, Trump SoHo, [which] stands 454 feet tall at Spring and Varick, where it also stands monument to spectacularly corrupt money-laundering and tax evasion.””

How has Trump gotten away with this? It's complicated and complication makes criminals harder to jail. Complex schemes are likelier to keep the money they've stolen. Look at how the financiers who collapsed our economy evaded jail. Trump's genius is in deception and evasion and big talk. He took the schtick on TV and got big ratings. We loved Trump like we loved Tony Soprano, because he wasn't hurting us personally... so we thought. Enough Americans loved that and bought it to make him a viable candidate in the Republican Party where that kind of scheme is accepted and admired. Where successful criminals are Winners and victims are Losers. Millions of Americans love throwing their money away at casinos and investing in bogus schemes and this scheme was bogus and entertaining. It's not new. What's new is the elevation of flim-flam and racketeering into the White House. If he hasn't yet fully criminalized the White House he has left enough of a criminal trail for investigators to follow. Trump fired Comey and Preet Bharara for investigating him. Will he fire Mueller? Can he? Will we let him? Maybe the Republican Congress will give him time to finish the job.

The New Yorker reports on the deliberate complexity of this kind of crime.

"Donald Trump has long deployed what might be called the chaff approach to evading legal scrutiny in his business dealings. Parts of his labyrinthine business holdings seem to be likely targets of investigation. He was sued for civil fraud over promises made to students of Trump University (a case that was settled after Trump became President). He talked on CNBC about the need to pay bribes when doing business overseas. His Atlantic City casino, the Taj Mahal, was in violation of anti-money-laundering laws when Trump owned it. He has had ties to New York Mafia figures. Yet he has never been indicted nor, for all we know, did any prosecutor consider pursuing a criminal case. Perhaps this is because the structure of Trump’s business has been, like chaff tossed out of a bomber, a remarkably effective defense. There is no one thing to look at when investigating Donald Trump. There’s not one company, there are hundreds, possibly thousands. Every deal he does has its own legal structure, its unique set of participants and business model. Rarely—and less often in the past decade—is Trump the primary owner and visionary of a project. More typically, he has sold a license to put his name on someone else’s project.”

What we are witnessing is a massive criminal takeover of our country, including the public sector––the government––and the economy. While they make us look over there (sparkly object: tweets, empty promises, rallies, boasts, showbiz) they quietly pick our pockets. The GOP Congress is fully engaged: promising Bigger and Better and Cheaper while quietly removing healthcare benefits and guarantees for pre-existing conditions and removing the systems that keep the poor covered and regulations that protect average people from being preyed upon and poisoned and impoverished. And they are doing this to deliver trillions in tax cuts to the top 1%. They are looting America the way Putin has looted Russia.

PBS's Frontline reports on how Putin has looted the Russian economy.

Russian mobsters have been looting the Russian economy since the 1990s when Putin took over. The ones doing it are licensed to loot by Putin himself, who gets a cut of everything. The looted trillions need a place to hide and some of that cash has been hidden in and laundered through Donald Trump’s many failing and dicy enterprises. Because nobody else would finance Trump. The banks refused. When the banks won’t help you, you turn to the Mob. Trump appears to be fully mobbed up.

But the larger pattern is more disturbing: the entire Republican financial scheme, including the healthcare “reform” and tax “reform” and deregulation and reinventing government itself, all seem to be modeled on the old scenario of mobsters taking over your business and looting it. Where is there money? Find it, take it, leave the system that money was operating in as a dysfunctional shell. They are operating on our national economy the way diners work on crab legs at Red Lobster: cracking the shell and sucking out the meat. What’s left is garbage.

They look at an economy full of hard working people and they see the workers as a liability not an asset. Dump them. But fleece them first. Ditch all the promises made to them. Suck out all the benefits and loot their retirement funds. Then replace them with robots, as Carrier is doing in Indiana with the money Trump gave them to save jobs.

Trump and his Republican friends in Congress are hollowing America out, using the Russian model. Like rodents looking for food supplies or missiles seeking targets, they are finding all the pockets of money being used to keep the system running and putting it into the pockets of their richest friends. Because they and their rich friends don’t need that system, they are rich, they are neatly invested offshore. They, like Putin and any of his Russian mobster/international gangster friends, don’t need America except as a source of loot. The America they do need is one with a pliant, obedient, cheap and desperate workforce, eager to mow their vast lawns and do their laundry and clean their homes and wait silently at table. To do the work and expect very little. Who cares if they die younger? Let them die the moment they can’t do the work. The way they do in Russia.

So it really is about Russia. Very much so.

To Shore Up The 1% They Were Willing To Destroy Democracy

They hate the government for taxing them and regulating them, so they decided to destroy it, which means they decided to destroy our democracy because that’s the kind of government we have here.

It began in the 70s with a memo Lewis Powell wrote to the US Chamber of Commerce. Workers had rights, polluters were being regulated, corporations didn’t like being taxed and regulated by a public sector that inhibited them from predatory practices.

You can read up on Lewis Powell at Bill Moyers' website, and learn more about Powell's influential memo that stole the economy back for the plutocrats. Powell went on to sit on the Supreme Court and help convert it into a law firm for the wealthy.

In the 70s the super-rich decided enough was enough and decided to fight back.

Slowly, over the past 3 or 4 decades, workers’ incomes have flatlined and infrastructure, schools, and trusted institutions have been deliberately degraded.

The Right knew that the only way to destroy democratic government was to defund it, degrade it, discredit it, make it not work, make people distrust and dislike it.

Now the Congress is owned by the people who own for a living. The Court works for the people who own for a living. And the president is one of the people who own for a living.

The Citizens United court ruling turned democracy into a proxy operation by which ordinary people voted for their government but wealthy corporate clubs owned and operated one major party and dominated the Supreme Court through the Heritage Foundation and the Club for Growth and a whole zoo of upliftingly and patriotically and vaguely named non-profits devoted to free market absolutism.

Bill Moyers has some very good analysis of the powerful octopus of tax-free lobbying operations led by Heritage.

They had a single goal: the total levitation of the owning classes above the bothersome social responsibilities that constitute citizenship, the stuff contained in the social contract by which you contribute of yourself and expect decency and fair play in return. The corporate absolutists who drove this Big Idea felt no obligations beyond themselves and felt the average citizen and his or her government owed them absolute freedom of action and total obedience. When you’re very very big and powerful your dreams are big too. The 1% now own the world.

Cognitive Dissonance

Many Americans drive around and see prosperity. Nice shops, nice houses, nice communities. It’s a pleasant sight––but it’s not their life. If you are prosperous and feel your prosperity is secure this is nice and reassuring. Life is good! If you are financially insecure or you have friends or family who are struggling it isn’t reassuring at all. How many of those you see walking and driving amid all the visible prosperity see it as an insult or a threat: “These people are fine and I am not.” Narrow prosperity is all show, and the system––the economy, the justice system, money-based politics, even the larger churches––only serves and protects the few. The economy is increasingly excluding working people from prosperity; for them these visible riches are an insult. We watch the affluent on TV and read about them in glossy magazines. Is this entertainment? They are not us and we will never be invited to their party. We have become the pathetic figures in old movies, the ones pressing their noses hungrily to the window of the restaurant watching others eat. This set piece from old movies is the one that comes just before the hungry individual throws a brick, or a bomb. Vast inequalities are a recipe for violence. But before the violence erupts where we live we spend years ignoring how dysfunctional and impractical and inefficient these disparities are.

After a few decades of Kiss Up, Kick Down economics, the kicked may begin to hit back. Here are some relevant stories from the NC News Observer, The Guardian, The Washington Post and Salon.

In NC black voters are required to take a spelling test to vote; whites aren’t.

In FL the anti birth control crowd think that elementary schools and dentists and podiatrists can fill the gap created by their shutting down reproductive health centers.

The burden of taxes removed from the lucky people who own for a living is shifted onto the people who work for a living in the shape of penalties and fees, which are compounded if they haven’t got the ability to pay.

Want to start a new business? Better be rich.

Before you eat that shrimp cocktail realize that it’s probably the product of slave laborers.

Goodbye Middle Class Life

A milestone was passed this month: America’s middle class is now a minority of the population.

The story on NPR.

How much income have American workers lost? The details from MarketWatch.

Reaganomics has divided the population into haves and have-nots, and has done so with a vengeance. Initeconomics has that story here.

Joseph Stiglitz on the politics of inequality.

The revolving door between our lawmaking branch and the corporate lobbying industry is part of a vast engine of inequality.

Robert Reich discusses the problem of income and wealth inequality.

From that bastion of communist orthodoxy, MONEY magazine: an examination of the cockeyed economics of the Republican candidates.

Power once lost is hard to regain. Workers’ rights and the prosperity that came after were won after a century of sacrifice and outright battle with corporations’ strong-arm tactics. This is the kind of history they don’t like our kids to learn in school. If we turn the dial back they won’t have to worry; we are on the way back toward child labor instead of universal free education. Get a quick review of labor history here.

Young workers are going to experience their work lives as one long slump. This is exactly how the 1% want it and Republicans have made it happen. This important story in the Atlantic.

Of course not all rich people are against working Americans. (Some Republicans actually like Bernie Sanders.) Working Americans are the consumers who make the economy hum. Can it still hum?

One of the things forcing incomes down is what’s called The Gig Economy. In place of full employment (with benefits) workers learn to come when an employer whistles. The Gig Economy explained by MarketWatch.

And those safeguards and benefits? A relic of past times. ProPublica describes how Tyson Foods has carved up its employees' workers' compensation. And their workers suffer a lot of injuries.

The safety net? The 1% succeeded in persuading the other 99% that Welfare protections made people lazy. Actually it doesn’t. The story about the welfare laziness myth from VOX.

How does the 1% get the rest of us all worked up? They own the media for one thing. And a worried, fearful public is easier for them to hustle. Panic is good for the 1%. Krugman explains why the rich love generalized panic.


Workers used to have certain rights. An expectation they weren’t being spied on being one of them. No longer. Who's behind this? Walmart, of course.

Income inequality tends to show up in key areas: how inequality is perpetuated by housing.

And while the 1% is scooping up money that used to trickle down to working people, they are sharing one thing. They are letting working people have all the tax obligations. Another in a very thick file of similar stories, from the Guardian.

"Citigroup College" has a vulgar ring to it

It doesn't sound any better to name the college after Mr. and Mrs. Sandy Weill, the Citigroup billionaires. NPR reported this story. Sandy and Joan Weill wanted to give $20 million to a struggling small college in upstate New York. The one condition was that the college be renamed after them. How modest the rich are!

How did we get here? Colleges are starved for a reason: the college age population is poorer than ever after three decades of declining middle class incomes. Colleges rely more and more on part time professors who are very poorly paid. Many need public assistance to make ends meet. That is poor advertising for the idea of college, and putting a billionaire's name on the college's football jerseys won't erase it.

The tax deduction given for a donation should be less if your “gift” demands naming rights, or if something is named after you. Maybe the naming should cancel the deduction altogether. There are ways of placing a dollar value on the publicity value of naming an institution after oneself. How much do corporate brands pay to put their name on major league venues? They don’t do it out of public spiritedness. They do it for crass reasons of value. If thousands of college football fans wear your name on their chest and more thousands of graduates put your name in the back window of their car, each iteration of this publicity should subtract from your tax deduction. At some point the institution should be able to demand you pony up more money or be free to remove your name. Maybe cash-starved public institutions should publish the petty-minded negotiations the “donors” engaged in over the size of their name and it’s prominence. It would be good to know exactly how starved for attention rich people can be.

The rich people who give generously because they believe in it far outnumber the ones who are greedy for praise. Most who give to their alma mater do so with a sense of humility, recognizing that the names of the people they learned from are far more important than the names of the rich people who paid their salaries. Better still, name the college after a philosopher who influenced centuries of humanity. He or she never got rich from the search for knowledge. Naming a college after a billionaire suggests that wealth accumulation is the best measure of a civilization. That is a bad message to send young people who are going to school. Why worship the few who become rich by keeping the rest of us poor

CEOs Buying Their Way Out Of Jail

David Cay Johnston reports on GM executives' ability to buy their freedom with corporate funds.

It should be illegal to barter cash for an executive's free ride. It's like permanent bail offered to criminals with infinite cash.

How is bartering company cash to avoid executive jail time not unlike bribing officials?

How is an executive in such a leverage position not essentially bargaining with employees or the wider economy as a hostage?

I realize the complexities of the case and the odds of a conviction play into these bargains, but the amount of money a CEO has to bargain with distorts the justice system and enables the distortion of the economy.

Another example of the Rule of Accumulated Advantage.

At the other end of the justice system, the low end where people have very little money, justice is distorted by the mechanisms prosecutors use to extort fines and penalties. In an inverse fashion, the leverage of money works against the person charged. At the low end of the economy lack of money leverages a person’s other disadvantages.

There should be an algorithm to calculate how money buys freedom at the high end of the wealth spectrum and how lack of money is used against defendants at the low end. There is a key difference between how it works. At the upper end these CEOs buy freedom with their company's money; at the low end the people prosecuted for the various crimes associated with being poor are invariably paying their fines and bail bonds by mortgaging all they have.

This is not a new phenomenon. During the Middle Ages the extortion racket was conducted by the Church. It was the selling of indulgences and got people shorter terms in Purgatory.

This disparity between rich man's justice and poor man's justice does make you wonder. Do CEOs and others in the so-called "leadership class" (those who own for a living), do they possess sovereign status? Are they immune from the laws and hazards that govern the rest of us? Are they above the law? Does Might, after all, make you Right? This was a belief that democracy was supposed to make obsolete, but our society has delegated so many moral decisions to our money. We've let our money take the place of our conscience, and our courts of law and our politics have been corrupted by this.

The Unfair Economy

Amazon CEO Jeff Bezos has been in the news recently for enforcing inhumane work conditions not seen since the days of the Spanish galley slave.

The LATimes has an excellent write up about it.

The 1% tell us how to live and how hard to work. They create the economy the rest of us endure. They evade taxes like billy-o and we get to pay for them, or learn to live without good roads and decent schools.

Gyrations in the stock markets terrify the rest of us, but the 1% go shopping (as the NYTimes reported recently). Market instability that worries us they see as opportunity to buy up bargain shares. They profit from volatility. It is their environment of choice, they create it, it profits them enormously (as Naomi Klein’s Shock Doctrine has explained) but they don’t have to experience it. Their lives are serene and insulated.

Desirable places to live like London, Paris and New York are the setting for a vast new wave of social cleansing, quietly deporting the poor and inviting the rich in.

Reported in the Guardian.

And in a Guardian opinion piece.

Curbed reports how social cleansing is being carried out in New York.

The New York Daily News reports how, in many cases, the new multimillion dollar pieds a terre are seldom inhabited, so the poor and the working classes are being pushed out just in case some rich people would like to spend a weekend in the city.

Pulitzer Prize winning economics reporter David Cay Johnston has this explanation of how the 1% play the American economy and tax system like a violin.

The rich are not like you and me. Why do we cater to them? Why do we walk in the street so they can enjoy the sidewalk? Why do we vacate our cities for their convenience? Why do we pay their taxes for them? Why do we do what they tell us at work and in the voting booth? Are we their slaves? Possibly. By choice, apparently.

Re Too Much Investment Class Wealth Chasing Too Few Plausible Investments

Paul Krugman writes about it this morning.

Two observations I've been making for a while––and the financial press has been ignoring.

1. You don't have as many plausible investments when workers'/consumers' incomes are flat for 35 years. (This, combined with a concentration of investment wealth = bubble)

2. Now that the Boomers are living on their portfolios they don't want working incomes to rise either.

I wrote about this fragile combination in 2011

I believe Paul Krugman was there before I was.

Question: why has economic orthodoxy moved so far to the right that it cannot see this dynamic and its dangers?

One explanation I’ve been suggesting more recently is that we have allowed our money to think for us. Money is impatient, greedy and has no human factor in its calculations.

(I think letting our money make its own rapid decisions is similar but more dangerous than this new chimera the press is worried about: AI, artificial intelligence, HAL the computer.)

Far from being coldly rational, the money brain is easily panicked, as we’ve seen over the last four days.

When wealth is distributed more broadly with a framework of practical safeguards, the brain in the economy isn’t as skittish or irrational. Look at how it behaved from 1945-1980. But we were too impatient and greedy to tolerate that kind of economy. Or some of us were: The 1% who now make all the financial decisions.

David Brooks, the Explainer of the Working Class

Today’s Fun Facts. How deeply unfair has the American system become? Read on.

Libertarianism is an invention of a mischievous corporate cabal. It’s about their liberty not yours. Read and Learn Here.

David Brooks: “Bernie Sanders doesn’t get the working class…” Priceless omniscience from Brooks can be enjoyed here.

And David Brooks understands the working class completely. Like God. Underneath that smooth expensively suited Brooksian facade is a true working man, complete with sweat, weariness, worry about paying the mortgage, fears about some venture capitalist looting his pension, concern about his kids’ lives being poorer than his own. Yeah, Brooks is the working man personified. He knows that the triumph of the working man will only come when he realizes his interests are best served by following instructions. People who work for a living are meant to serve the people who own for a living.

Here ends the Gospel.

Why democracy isn’t working has something to do with the antidemocratic unAmerican concentration of wealth and power. Learn more here.

Kiss Up. Kick Down.

The massive shift of wealth upward is being engineered as if it’s a war on debt. Make the working class feel pinched, get them in debt, and use that fear of debt as a rationale for paying them less and less, and cutting public efforts to ease the unfairness and relieve distress.

Paul Krugman wrote an excellent piece about The Austerity Delusion for the Guardian.

Another Nobel economist, Joseph Stiglitz, has been warning about the same things. But concentrated wealth can create its own reality.

The class who own for a living use large amounts of cash (they have trillions) to create ads warning about the debt being placed on the children of the people who work for a living.

But this is a bogus warning. They are placing the debt on working people by shifting their tax burden onto working people.

They say public debt will burden our children, but they only want to stop the spending that helps working people.

They are gung-ho about corporate military contractor spending and private prison spending. They oppose education funding and infrastructure funding, calling it wasteful. They oppose fairer taxation that would place the tax burden where it was when we actually had a prosperous working class and functioning infrastructure.

They oppose public spending, calling it a burden on our children. This is as insane as saying we should starve our children to protect their inheritance. It carries enormous social costs. This kind of narrow, self-serving greed is what erodes civilizations. It ultimately leads to collapse. Of course, the wealthy will have offloaded their wealth to remote islands by then.

Even in Kansas, working people are talking back. One waitress has caused quite a stir.

Would you like to see a picture of vast wealth on parade? They always gather to watch two persons of color beat each other up. Now they come in luxury jets instead of limousines. Who paid for that airport? The working taxpayer.

The Republican solution is to give the small class of people who own for a living (whose irresponsible behavior caused the Great Recession) a big fat bonus. A bonus that will perpetuate their wealth and eliminate their obligations to the society that made them rich.

Their hubris is breathtaking. Perhaps because their billions will buy ads to persuade the public to do what they want the public to do. They have only contempt for those who dislike concentrated wealth. People like Pope Francis. In this political climate Jesus wouldn’t have been let near a microphone.

The Systematic Looting of the American Dream

Who owns the shining new residential towers going up in New York and other major cities? Don't answer; you wouldn't know them. The dream home used to be a widely shared American Dream, but this is no longer the case. (Because of Citizens United our political system is now owned the same way by secretive billionaires, many of them foreign, using piles of hoarded cash to buy residency and public policy.)

Increasingly the American Dream of homeownership is reserved for billionaires. They have extremely expensive pieds a terre in places all over the world, where they may only live a few days a year thereby evading the usual obligations to pay for local infrastructure and public services. What do you want to bet their real estate fees and taxes, if any, are paid by their companies and deducted from their income taxes, again, if any. The top 1% have learned to levitate above ordinary concerns and obligations of citizenship. What they want, they buy. What they don't want to do, they buy out of.

And what has happened to middle class homeownership? The opposite. Going, going, gone. Homeownership has become a privilege of the few who own for a living and those who work for a living are increasingly excluded.

The daily sermon fed to us for years by the banking industry and by the Republican Party was that homeownership was next to godliness. It was a measure of how responsible and hardworking you were. Now they seem to be saying that working class homeowners are to blame for the recent financial collapse. Not true, in fact. Middle class homeowners are the playthings of the 1%. The investment schemes that benefit people who own for a living are devised to skim fees and penalties and ownership from people who work for a living.

With incomes down we see more working people looking for ways to make ends meet. Reverse mortgages are advertised as a simple way to balance the family budget. By looting the family’s wealth. What choice do some families have? Looting of this kind happens when there is an exploitable advantage. Incomes have lowered for most Americans since 1980, a gift of Reaganomics. That has made most Americans exploitable.

Where have we seen this systematic looting of value before? We used to read about mobsters who took over small companies and looted their value at the point of a gun. It was a crime back then.

But more recently we’ve seen this same model used by the great heroic Venture Capitalist. The gun isn’t necessary because the middle and working class household is already being made insecure and exploitable by the decline of working incomes.

The Venture Capitalist looks for decent companies who pay their employees decently and maybe have a fully funded retirement plan for them––companies that have been untouched by Reaganomics. What does this Venture Capitalist do? He charms the company’s owner, offers him a nice check, and then he buys the company. Before the check clears he sucks all the money out of the pension fund and uses it to pay the former owner. Then he lays off employees and pockets those savings. Then he has a balance sheet that shows all of this “profit” which he uses to sell the company at an inflated price.

I realize the Nazi analogy is completely forbidden today. But the Nazi miracle was financed in a similar way, by confiscation from Jews and liberals. Someday we may be able to see the criminality of what is going on, or at least its unfairness and dishonesty. But right now it is legal. And it is also sanctified by the sacred memory of Ronald Reagan who set this middle class decline in motion.

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.

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.

Kiss Up, Kick Down

What does it say about our modern values that we always give the benefit of the doubt to the wealthy and assume the worst about the poor? Here's an article from the Guardian about how we punish the poor for being poor.

Everybody agrees it’s wasteful to throw money at the poor. A lazy way of thinking. But the rich? So much is given to them you couldn’t begin to throw it, it has to be delivered in semi trucks, in supertankers. Everybody’s giving money to them, so it must be a good thing. That’s lazy too, and wasteful in much larger amounts. The rich get so much it seems to justify giving them everything. Rich people pass us in the street and without thinking we hand them the contents of our wallets. We buy them drinks and lunch, pay their parking meters, polish their cars, kiss their feet. Here's an article from Vox describing how the rich get richer no matter how lousy they are at their jobs, assuming they have one.

Poor people, though? Ugh. Let’s criminalize poverty. Let’s fine them for being poor and charge them a fee for being unable to pay the fine and imprison them when they cannot pay the fee for nonpayment of fines. This accomplishes two things: it teaches the poor a lesson––not to to be poor––and it adds to the enormous profits we pay to the for-profit prison industry and its wealthy shareholders.

Our society is so clever though. Always innovating. Inventing new ways to kiss up and kick down. Devising new methods for discouraging and penalizing the poor who are already discouraged and penalized and new rituals for worshipping the rich.

Our urban landscape has a new feature: spikes to prevent the homeless from lying down to sleep.

New apartment buildings are being built with separate doors for the rich and the poor. (This way the developers get a tax break for housing us poor folks without forcing the rich to tolerate our company in the elevator.)

Our society used to dish out indignity to one easily identified segment of the population, people with darker skin. The system was called Jim Crow. What will we call this new system?

Sadly, our vocabulary is deficient. We aren’t innovating there. We don’t have words that adequately describe this galloping unfairness. Why? Because in our kissing up we are careful not to cause offense to our betters. We don’t want to hurt the feelings of the rich by explaining how monstrous their privileges are. We don’t want to understand the ways they are robbing us all blind.

Let’s get to work on a fairer vocabulary. Terms like “wage theft” are just coming into use. Let’s see it used more often. Until it was labelled as theft, it seemed perfectly legal for rich employers to do what they were doing. We need to use our language. It’s the only weapon we have left.

“The salient fact of American politics is that there are fifty to seventy million voters each of who will volunteer to live, with his family, in a cardboard box under an overpass, and cook sparrows on an old curtain rod, if someone would only guarantee that the black, gay, Hispanic, liberal, whatever, in the next box over doesn’t even have a curtain rod, or a sparrow to put on it.” ~Davis X. Machina

The West Virginia mining country is our ugly past and our ugly future

Poverty hasn’t come back in West Virginia because the War on Poverty failed. It’s back because the Republican Party worked for the past 30 years to repeal everything FDR, Truman, Eisenhower, JFK, LBJ, and yes even Nixon put in place to make lives better for working people in America. The Republican Party decided their sole clients were the very rich. Oh they paid lip service to the white racist vote, but most of the Republican policies were directed at depriving and disempowering all working people, white, black, Hispanic, everyone who worked for a paycheck. The Republican Party has diminished the lives and reduced the power of everyone who works for a living and enhanced and protected the wealth and the power of people who own for a living.

Here's an article from today's New York Times that discusses how hopeless lives are in West Virginia.

This is what the bad old days looked like before the progressives (Republicans and Democrats both) wrote workers’ rights into law. An ugly violent world of private corporate armies that prevented workers from organizing or demanding their rights. Few Americans have ever heard of the Ludlow massacre.

Why? Mostly because textbook companies don't dare offend the wealthy who perpetrated this horrible crime. Life was awful for working people a hundred years ago.

The mining companies owned not only the jobs but the houses miners lived in and the stores they were forced to shop in. When miners in Colorado tried to unionize the mining billionaire John D. Rockefeller Jr. sent in hired thugs who burned the miners out of their camp and then mowed them down with machine guns when they tried to escape the flames. It changed how Americans saw the working poor.

This is the future the 1% want. This is the future that the Republican Party is determined to give us. Rich and poor divided, with very few living a middle class life.

The Rich Live Larger And Longer Than You And Me

I read an interesting article at the Atlantic and it got me thinking...

The core philosophy of the Republican Party these days is that a problem only exists if you spend money on it, meaning tax dollars, meaning THEIR tax dollars.

If you stop spending money trying to solve poverty (or the healthcare crisis) the problem ceases to exist.

In the mind of the Republican Party, poverty is only a problem because solving it costs rich people money they’d rather spend on another home in another tropical tax haven or on another corporate takeover.

If you stop spending money to alleviate poverty or the ill health of poor people the poor will go away and die and solve the problem more cheaply and therefore more efficiently.

As Scrooge said “Let them die then and decrease the surplus population.”

Why the American public doesn’t find this repugnant is a mystery until you realize that vast wealth also buys a lot of PR, a lot of network time, or, in the case of FoxNews, a whole network. (The Koch Brothers now hold a partial veto power over programming on PBS because they help fund it.) The .1% own most of the media.

The rich are not necessarily fascists, but they benefit from fascist policies so they often aren’t inclined to oppose them. It takes time out of their leisurely existence. Those who donate to liberal and progressive causes are to be applauded. They are acting against their own financial interests, just as the rural poor are voting against theirs, but what use are so few in the face of so many?

There is a meme going around that suggests that poverty is caused by the poor. You hear this on right wing talk radio.

Oddly enough, it’s true. In a way not quite captured by the right wing meme.

The poor who listen to right wing radio and watch FoxNews and nod obediently are helping deepen their own poverty and ignorance and ill health, by cooperating with the rejection of ObamaCare and by disbelieving science, by obeying their masters, by voting for Republican candidates who perpetuate their powerlessness. They are not stupid people, even though they are behaving stupidly. They are ignorant, not stupid. They may not even be ignorant, just ignorant of their predicament. They have been conned and are now invested in that con game, too embarrassed to admit it, because admitting you were tricked is harder than losing what was stolen from you in the process.

You have to reach a very low point before you admit you did something dumb, and, luckily for the Republican Party, most of the poor people who vote for them would rather die first.

How Is A National Economy Not Like A Household Budget?

Krugman is especially good today. He makes some crucial points, one in particular, that most Americans don't understand, and that the conservative power structure, the banks, the 1%, are determined Americans never understand:

"Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family. Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too."

The Austerity mantra tells us that nobody should spend more than they have in their pocket right now. No homeowners, no car owners, no college for you.

Unless you are a member of the 1% who have accumulated all of America's earning power over the past 30 years.

What income and savings ordinary working and formerly middle class consumers used to spend now belongs to the very rich and adds to the leverage that the 1% has to manipulate the economy.

The 1% also uses this leverage to manipulate Congress to ease their taxes and increase ours, to get our tax dollars to bail out the big banks but not help the homeowners who were wrongfully foreclosed, to get government to protect corporate earnings and CEO pay from taxes but cover any losses they might suffer through their own risky behavior.

The concentration of wealth also buys a lot of media, a lot of punditry, a lot of "expert opinion", a lot of public relations that can be used to persuade the mass of Americans that they don't deserve what they used to deserve, that austerity is good for them, that Americans should settle for less and quit grumbling.

Austerity policies take trillions out of the middle class consumer economy and put them into the well-stuffed mattresses of the 1%.

To what purpose? The rich can afford to play a long game. (Call it a long con if you like.) Their goal is to suppress working incomes to their lowest possible degree. They own for a living; they see working incomes as an evil. They have been suppressing working incomes for the past 30 years. What will eventually happen is the U.S. economy will begin to resemble a third world country, with large slums full of workers desperate enough to work for pennies and small gated enclaves of very wealthy people and their bodyguards.

Interestingly, the Austerity preachers give us Greece as an example of what happens if a country doesn't act according to the wishes of the very rich. But Greece is an example of the opposite. The Greek economy fell apart because its extremely wealthy stopped paying taxes and the consequences (unwise austerity policies) were forced upon the working population. But economies are made up of people who work and spend money, not just people who own for a living, who are rich for a living and do nothing productive. Why are the latter group made immune to taxes? What happens when trillions are taken out of a nation's economy and put tax-free in offshore banks? What happens is a Greek style collapse.

We're As Bad As Greece

While the crisis persists in Greece, rich Greeks aren't worried. It's not their problem. The rich float above the crises that impoverish and destroy working people. They benefit from the conditions that ruin the broader economy.

This article in the Guardian explains the Greek problem, and it's the same as the problem here in the U.S.: rich parasites. In both countries the rich are overpaid and immune to taxation. Meanwhile they benefit the most from the government spending they refuse to fund. Our tax financed military protects their trade. Our roads move their products. Our government funded research invents their patents. Our government cleans up their messes. Our safety net takes care of the workers they throw away. These three paragraphs from the Guardian are especially telling:

"Greek shipowners, who have gained from their profits being tax-free and who control at least 15% of the world's merchant freight, have also remained low-key. With their wealth offshore and highly secretive, the estimated 900 families who run the sector have the largest fleet in the world. As Athens' biggest foreign currency earner after tourism, the industry remitted more than $175bn (£112bn) to the country in untaxed earnings over the past decade. Greece's debt currently stands at €280bn.

"As ordinary Greeks have been thrown into ever greater poverty by wage and pension cuts and a seemingly endless array of new and higher taxes, their wealthy compatriots have been busy either whisking their money out of Greece or snapping up prime real estate abroad.

"An estimated €8bn flowed out of the Greek banking system in May as speculation over the country's possible exit from the eurozone mounted. Another €4bn was reported to have been withdrawn in the last two weeks – on top of an estimated €20bn since the start of the crisis in late 2009. Stories of rich Greeks sending their wives and best friends on "shopping missions" to remove secret hoards kept in banks in Switzerland and Cyprus are legion."

These three paragraphs might as well be about the U.S. and its lucky one percenters, the carefree rich––like the Romneys, who happily deduct twice the national median annual income every year for their horse expenses. It must be nice to have an expensive tax-deductible hobby like dressage. Why are our tax dollars subsidizing Mrs. Romney's playtime?

The Romney candidacy is all about making the rich less obligated to pay their way. It's about giving themselves and their friends a free ride while working Americans work harder and longer for less. President Romney would shift even more of the tax burden off people who live off wealth and onto people who work to survive. That is the Greek model, and it doesn't work. Rich Greeks are abandoning Greece, taking their wealth with them, just as Romney has most of his wealth in Switzerland and the Caymans.