RWNorman's Beer, Food and Politics

Wealth Is Inequality

Over the long range of earnings some truths become evident.  If one starts a vastly expanded earning capability they will likely continue on that trend simply because money attracts money.  After a certain point in obtaining wealth, the value of the wealth is far greater than the value of the person attracting that wealth, particularly when that wealth becomes a generational inheritance.

Yes, there are people who fail to maintain the same earning curve, therefore perhaps only being rich or even end up as a government pensioner, but once a certain level of wealth is achieved, just having the money in the bank is like having money in the bank.

The extremes of our society are self-continuing, the poor maintaining a pretty much accepted equal level of being poor (how can you tell just HOW poor a person is?), whilst the wealthiest of our countrymen really cannot be stupid enough to actually lose their wealth.

And yes, there are certainly individuals that break the mold, but the numbers of those doing so in either direction are so few that the concept itself is almost an abomination.  New money only means new rich people, but they aren't let into the same clubs as the wealthy.  And the people who have lost their riches are people that were not generally looked upon as individuals worthy of gaining wealth.

So while government isn't supposed to pick winners and losers in business, capitalists do it all the time.  Unfortunately the wealthy also pick winners and losers in government by their vast support of particular candidates, and this is where the dividing line lies. 

This ability to have all the cards in one's hands is the basis of capitalism.  The wealthy cannot become wealthy if there are no poor, because that means that there is not as much money in the system for them to draw from.

This is the reason that Republicans do not like social programs that give money to people whom are needy, or why they don't want Medicare or Medicaid when their own supporters cannot garner more dollars to supply those same services.

Sort of a reverse Google Test, as Tim Pawlenty suggested, in that the people doing the searches aren't ones that will ever be using the services they are looking up.  They don't need social engineering because they are the ones doing the social engineering.

And this is one of the reasons I spoke about "new" money riches, and the inability to necessarily become a part of the wealthy.

In today's environment, if Warren Buffett were to be just starting in accumulating his money, he would be viewed as an outsider, and his options would certainly be limited.

I recall a documentary where Jamie Johnson's (of Johnson and Johnson wealth) film (The One Percent/HBO 2006) where the wealthy simply don't want to discuss the ramifications of their tremendous wealth.  As I've said in previous articles, they don't drive in the same neighborhoods as we do and, in fact, they don't drive at all, so they are insulated from the views of the poor and the downtrodden.

To them, if they capture a glimpse of such people, it is those people's fault that they lie at the bottom of the totem pole, and they have no idea that their vast wealth and holdings are actually keeping money out of these people's pockets.

The concept of wealth doesn't mean a thing to them because they not only have it, but because they have always had it.  To them the fault lies with others who obviously don't want to work for their chance, when, in fact, these people didn't work for their chance.

We're talking about such disconnect that most people don't understand.  The wealthy simply do not live in the same world in which the rest of us exist, and they do not understand the concept of existence as we do.  They assume that they are the ones that will exist regardless of circumstances and predictions, and with their money, they can and will survive most of civilization's calamities.  But they won't survive the financial failure of the country when the money they have on paper goes up in smoke.

Remember, there is not enough cash to pay every American citizen $500 on demand, and also remember that cash doesn't make any difference in the collapse of society.  That will require items of real value, and that value will be defined by the type of collapse.

Canned food and fresh water won't be bought with money, although a lot of ignorant people will think that money still means something.  And the likelihood is that they will be people with weapons or a cadre of like-minded people.  Force would prevail in that circumstance, not wealth.

The point being that if the wealthy can be wrong about how they can survive most any type of failure of the American system, they can be wrong about many more avenues of thought they bring to the party.  After all, the top 1% of our people don't necessarily represent the best thinkers of our citizenship.  They just represent the wealthiest.

But it brings to mind the concept that the Republicans have been talking about in terms of "means testing" which is another way to cut Social Security benefits to the middle wage earners.  I don't mind means testing, but the testing needs to be applied to the rich, who don't need social security, and they don't pay more than anyone else making less than $120,000 per year.  However, they would like to see Social Security go away so they don't pay even the small 6.2% that Social Security requires from payroll taxes (4.2% for self-employed and employees in 2011).  And the point is that they don't get paid, they get returns on investment, so they don't pay Social Security taxes anyway. 

The Republicans continue to muddy the waters by introducing facts not in evidence. And why not, one might ask?  Many of them are worth well more than $100 million and don't earn money the way the people make a living.

So why should the rich bemoan a social service for the middle wage earners and the poor?  Because such programs, in the end, actually stop these wealthy people from bringing more money to the top of the totem pole. 

Every dollar spent on Medicare is collected from the people for the benefit of the people, but it represents a HUGE sum of money that capitalism says should be spent on the open market. 

The sum is on the order of about $2.7 Trillion in Social Security right now, but I believe there is about $1.3 Trillion in congressional IOUs.  Four Trillion dollars is a lot of money.

Had we actually taken George W. Bush up on his concept to privatize Social Security, everyone would have lost his or her money.  Any level of privatization of Medicare will equally lead to the loss of quality health care and infuse the Health Care industry with vast new sums of money.

Paul Ryan's budget plan, passed by the House Republicans not long ago, would fully make the Trillions involved with Medicare available to the marketplace by 2020 because it wouldn't be Medicare anymore.  It would be a voucher system for seniors to buy Health Care insurance.  In other words, the government would subsidize the Health Care industry to the tune of $8,000 per qualifying individual.  In terms of the 33 million new people who would get Health Care under the Affordable Health Care Act, this translates into $264 Billion per year.  Just for the new people.

Without having a payroll tax for Medicare, which wouldn't exist, this would equate to a $2.7 Trillion deficit over every 10 years.  Where are the savings?

Since the Paul Ryan budget doesn't address savings in health care costs, it moves those increases in expenses to the seniors we are supposed to be protecting.

Of course, if the mechanism under the Ryan budget plan is to continue to use Medicare taxes to pay these subsidies, then it is obvious that money from the middle goes directly into the coffers of the rich via their taxes, and via the out of pocket expense they will ultimately be required to pay.
 
And these, the wealthiest of the country, want those dollars back into the marketplace so that they might draw some of it their way.

Of course this says nothing to the problem that privatization has no real mechanism to guarantee cost containment other than the old worn saw about the marketplace spurring efficiencies, which, as we've seen in the last decade, doesn't hold water.  The argument is specious, the history says unfettered capitalism does not promote the growth of the middle wage earner, and it says that with 30 full years of such policies, has seen most American's dreams dashed by the ever assaulting waves of tax cuts moving money to the rich.

We have to be very careful.  With our ability to look at documents we'll need to spend more time doing our own assessments of what is being presented to us by our politicians.  They do not seem to have our best interests at heart.

And I think it is, by any means of judgement, obvious to most that this manipulation of vast sums of money to the wealthy is not healthy for our country, our democracy, nor our citizens.

And the Problem is...

I'm sitting here watching a C-Span broadcast of a 6/10/2011 symposium on the US Economy & Job Creation.

These people do have some ideas, but they have no basis in history.

They discuss skills mismatch, they discuss corporate creation and destruction of jobs, and they don't see the one thing that makes a job a viable part of a corporation, which is the human element.

Now don't get me wrong, this is a distinguished panel sitting there in the National Press Club, but they simply are coming up with best guess situations and ignoring the tried and true methodology of creating jobs that hold meaning for the people holding those jobs.

We have created a job environment so wildly out of control that no one can see that our jobs situation is the failure of these corporations to supply jobs of meaning.

What we have is a failure to place the worker into the proper perspective.  We look at jobs as if the employee should be thankful they have a job, when in fact they don't have a job, they have a particular mission and once that mission is accomplished they are summarily relieved of their responsibilities, often at the end of a security officers hand on your elbow as you are walked out of the facility.

Now this hasn't happened to me in that particular respect, but I do know about the changes of corporate hiring and firing over the past 40 years, and I have to say that we've moved in the wrong direction.

We have a number of problems that are cast as one problem when in fact they encompass a number of larger issues.  One is pay.  Older people make more money as they have been with the company longer, but that only makes them vulnerable, not valuable.

Younger men and women can be trained to do the same job for less money, although they won't have the judgement in the job that maturity suggests exists.  This is a major loss for corporations and causes new dynamics to be prevalent because of the misstep of the corporation in letting a highly qualified worker go.

Again, more problems because that worker needs to have a certain level of stability in both his job choice and his retirement options, but the fact that a skilled worker is actually far more advantageous to a corporation than one that has simply learned the functions of a particular job.  The skilled worker knows WHY things work the way they do, and the new hire only knows you put this piece of paper there.

Our level of understanding on what a job means to the employee is so far behind that we have made 30 years of corporate mistakes in the way we treat our employees.

And I am specifically going to point to upper management's continuing rise in compensation as the major factor in turning qualified and knowledgeable employees into jobless people.

Now one might imagine that these highly qualified workers have vast numbers of opportunities, but if the last company let them go, then why would another company take up the same payroll burden for a new employee that only knows the job he did at the previous company?

It is not a reasonable assumption that the employee let go by company A will be employed by company B.  It is a reasonable assumption that an employee with experience in how the company works could indeed move that knowledge into a management position, particularly in manufacturing if the age of the employee might be a determining factor in his ability to function on the manufacturing floor.

And there are numerous examples of the failure of companies to maintain the knowledge of operation and the qualified employee beyond what a new, inexperienced person could do the job for.  This has been going on, like I said, for at least the past 30 years, and what has happened is that wages have stagnated, inexperienced people get hired to do the jobs that require knowledge of operational requirements, and the quality of the company goes downhill requiring new methods to rectify the loss of productivity.

So we've moved on to systems that require a highly touted, but overrated, avenues of increasing productivity by instituting buzzword compatibility and long term solutions to short term problems already created by the company in the first place.

To make a point, modernization and computerization wasn't the best idea for corporate America in the early 80s, but it went on without much of a standardization in what was required to provide maximum optimization of these systems.  When a person could immediately answer virtually any question about what they do and how and when they the do it, a modernization effort always takes a period of testing and redesign in order to answer the same question.

And in my experience, virtually no system developed to work the way an employee works will really work because it does not have the experience of the person, the knowledge of the changes in the way the company operates, and for all practical purposes, won't be upgraded to provide answers for new questions.

This is an important part of the equation here.  A company is, whether one likes to admit it or not, a growing entity that changes as the times change, as the interests of their investors change, and as the people involved with the functioning of that company cope with new challenges.

But automation of a system based on the knowledge and experience of a person who did the job originally will never actually be able to be nimble enough to provide that extra ummmph necessary for a corporation to immediately understand the ramifications of changes in the market or whatever problem becomes apparent.  Only a person can make that type of intuitive leap, and so by eliminating our jobs by depending on automation, one needs to understand that said automation is, at best, only operationally acceptable on the day the system was put into operation.  From there on it is a failure.

I'm not against automation and incorporating computer systems in the effort to increase productivity, but I'm saying that some might presume that automation is the end all and be all of the next step in corporate profitability and after 30 years of experience, I am saying these corporations are wrong.

It is not the level to which you computerize, the level to which you place your data and have the ability to draw data from, but the knowledge your own employees have in the way their job is done and how the corporation works.  It is not so pristine as data in, data out.  It is the interpretation of valued employees who give any particular corporation an advantage in the business world, and without these knowledgeable people the only options are to move jobs to countries where their new methodologies might work.

Usually they don't.   They make do, but they have already written their obituaries once they settle for just getting by.

The human resource is the one brain that can think on multiple levels most of the time, and that is what makes a corporation an entity unto itself, as specified by the US Supreme Court in 1886 when corporations were granted the rights of people.

If that is so, and it is, then obviously people are the corporation.

You can't disassociate one from the other and computers and automation will never understand the relationship.

Can Tim Pawlenty Actually Do The Job?

I'd have to say no, but it is going to take a little bit of explanation about why I say no.

First, he's a lightweight, but also he not very much of a thinker.  Yes, he's come up with another proposal for dealing with taxes and limiting deficit spending, but his ideas are only a re-hash of previous suggestions going back as far as 30 years ago.

I'm tired of Republicans trying to tell me that the best I can do is go backwards.  To me it represents a real lapse in the ability to do the hard thinking.  I'm talking about headache time just by trying to exercise your brain cells and create new synapses.

This isn't an easy job and I realize that.  But it is far easier for those who choose not to really do the job, and so they continue to regurgitate past failed policies as if they were successful.

Show me where Republicans have had a successful policy which actually worked for the people.  Really, show me.

Show me how Tim Pawlenty, a governor of Minnesota who left Billions of dollars in suspended debt to appear as if he had balanced the budget can take control of this historically immense debt and do something about it.

He pushed debt down the road and suggests that his policies were good for the people of his state.  But he's gone, and they still have about $5 Billion in debt that will ultimately have to be addressed.

Not only that, but his failure to support local governments in the projects for the people ended up with $5.1 Billion of personal property tax in 2002 and grew to $8 Billion in 2008.

You can move money around so that it looks like its there when its not, or you can act as if the money you have for State functions is adequate, but the amount of personal property taxes rise to ridiculous amounts.

The Republicans have been pulling these tricks on us for 30 years, moving money, cutting essential programs, supporting the growth of a military that costs us as much as any other programs for the welfare of the people, and laying down the concept that the people have to suffer in order to help the people.

You can't destroy a village or a town or a state in order to save it.  Destruction has nothing to do with growth or clear methods to do so, and it never will have such a relationship.  When you move money around to hide the facts, you are destroying the confidence the people have in your ability to do the job.

I'm sick and tired of people who get elected to do a specific job and then decide that they know what the people want more than the people who elected them.  I'd almost suggest that we throw out the bums each election and see whether the elected get better at determining what their mandate is, but if you think government is slow now (and it was designed to be so) then we'll have representatives who are just now answering questions asked 30 years ago.

I have to admit, I called it when, in 2009 the Tea Party came upon the scene.  I said there would be significant election results but that the Tea Party wasn't able to understand just how the government works, and they have indeed brought the government almost to its knees with their lack of understanding.

In fact, one could say that the Tea Party's inability to understand the function of governance is causing a lot of the stalemate in our government.  They have forced the Republicans to adopt an even stronger level of "NO", and in doing so are threatening the very America they propose to support.

And although Tim Pawlenty suggests that he isn't pointing his rhetoric to the Tea Party, it is obvious that the Republicans are still afraid of their new brethren and the continued tossing of a monkey wrench into the methods of governance.

Honestly I believe that the Republicans would be a little more likely to be working across the aisle if no Tea Party members were elected, but they have no backbone and fail to do their jobs

Just as Tim Pawlenty failed to do his job by leaving his state with Billions of dollars in debt, moved out of his budget process onto the budget process of his successor.

Just as George W. Bush did in his last budget proposal, which confined President Obama to a set of budgetary requirements as he took office.  If one remembers correctly George W. Bush left a massive $1.1 Trillion debt in 2008, and an additional $1.3 Trillion to follow into President Obama's administration.

We're talking about $2.4 Trillion of new debt left to President Obama to figure out.

Tim Pawlenty cannot figure out how to eliminate that debt because he doesn't seem to understand how the debt got there in the first place.  He blames Obama.  My understanding is that under George W Bush the debt increased $5 Trillion.

So George W. Bush inherited a budget surplus and ended up creating some $187 Billion in deficit spending in 2001.  In 2002 and 2003, almost an additional $1 Trillion in debt was created.  In 2004 and 2005 another Trillion dollars, and the same in 2006 and 2007.  Almost a Trillion dollars every two years that George W. Bush was President.  In 2008, wow, $1.1 Trillion outright in debt.  If you add his 2009 budget the sum goes up by another Trillion dollars.

If Tim Pawlenty deigns to follow the same rules created in the Reagan years and followed up by the Bush43 years, then his policies are going to continue to increase the debt directly, just as George W. Bush's policies actually added directly to the debt.

There is no Republican who is actually working towards cutting deficit spending, nor are they worried about our national debt.  They proved that by demanding that President Obama agree to extend the costly Bush tax cuts for two years in order for him to gain some advantages for the people.

I haven't heard Tim Pawlenty say anything positive about the Stimulus bill, but if one looks hard, fully 40% of that stimulus was in tax breaks, which was necessary to get the number of needed votes.  Some $350+ Billion for tax breaks when the dollars would have been better spent to put people to work on infrastructure.

Tim has a lot to answer for if he chooses to suggest that this President's efforts to contain the depression and turn it into a growth economy.  Not only Tim, but all of the Republicans.

I keep coming back to this little joke.

A Democrat and a Republican are walking down the road when they come to the end.  The Republican says "We must go back" to which the Democrat says "No, we must build more road".

It is time to build more road away from the policies of the Republicans who have put us into the environment they now suggest is your fault.  It is not your fault and don't you believe it.

They have manipulated things behind the scenes for years and the figures can no longer be hidden by moving debt down the road whilst they suggest they have done a good job.

They haven't.  Live, learn, prosper.

Rule by Rentier Comments

http://www.nytimes.com/2011/06/10/opinion/10krugman.html?_r=1

I posted this comment on the NYTImes 6/10/2011 on Paul Krugman's column, referenced above.

Since it was 200+ into the comments, I thought I would post it here.
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Yes, the policies of protecting the monied is certainly harming America's Main Street, but the question is, what do they hope to achieve?

Years ago as I was trying to follow the money, even finding it didn't make sense. People are losing their homes, their livelihoods, their sanity, and there can be no rhyme or reason for these captains of industry to sit on assets they cannot get a reasonable return on.

Foreclosed properties cost the local governments tons of money in lost tax revenues along with the fact that many of these housing tracts essentially go fallow, become flop houses, and cannot possibly return anything to the people who own the deeds to the property.

Now I know that Paul isn't talking about this specific problem, but it all falls into the same thing, and it most directly talks to the people who are directly hurt by the attitudes of both these captains of financial institutions, and by the turnstile governmental policies of private industry leaders becoming public servants.

The problem is that this has been the policy of the United States Government since the beginning, where virtually any tycoon could simply go to Washington and walk right in and talk to the President.

The majorly rich were often called to public service for a period of time due to their expertise, but normally that expertise has always worked out to the advantage of the public servant, not the American people.

Now yes, there have been times when the advantage of the rich became an advantage to the poor too, but not often, and never actually became a benefit to the poor, but rather an lucky reaction afterward.

That is until FDR came along at the right time to do something for the people directly. And even then, as his programs were working putting people back to work and rebuilding the economy, the rich people started in on pushing back in 1937-38, forcing FDR to capitulate and turn towards austerity measures. This is like making a stew, but only cooking it long enough to get it bubbling and yet not cooking it long enough to actually eat.

An earlier example is the downturn at the beginning of the 20th century when the banks were simply not doing much for the people at all, and so the major bank owners decided to create the Federal Reserve and did so by putting out stories about the Money Trust they wanted to bust. The only problem was that the major bank owners WERE that Money Trust.

And yet, in 1913 the Federal Reserve Act was signed into law, creating a private business entity that not only prints out paper money but runs this country monetary policies without direct oversight by the Congress. An example of this policy is the latest round of Quantitative Easing in buying Treasury debt, hoping to bolster the job market when no other financiers are taking part.

So who's making out on this one? The Banks, or Bank Holding Companies? Well, yes, particularly the Bank Holding Companies because they have a sliding window of a few days to borrow Billions of dollars at extremely low interest rates, and instead of putting that money into the economy, as it was originally intended, the make short term bets with vast amounts of money, earning pennies per dollar, and they throw the load back into the government with minimal interest payments, and wait until the next window opens up and do it again.

And all of these people are in that 1% of the population that hold virtually all the money, so they can afford to sit and wait out almost any situation. Sure, they may not be making as much money as they would if they truly invested, but they'll make money with the money just sitting there. They virtually cannot be hurt, even if they were just throwing money off a cliff all day long.

So why would they want to budge? There will be very few massive returns on investment in a stagnant employment market, and we are well behind the curve on new technologies, so where's the impetus for their participation in recreating an economy without exciting new avenues with which to make money?

No, it is easier to play the market with a Billion here or there, and reap the returns and yet still not offer anything towards creating the needed new economy. And there's nothing the US Government can do about it, nor the politicians, because America is not in the business of telling business what to do.

So this will last for years, because for all the sameness with the Great Depression, we can't have a war to drive a new economy. We already have two, and they are a drain, not a blessing.