U.S. Congress 2nd District A monumental election for Humboldt County

Dear fellow Humboldters and residents of California's Redwood Coast,

It has been twelve years since the last time we were given a choice as to who would represent us in the United States Congress. As Mike Thompson is now running in the new "inland" 5th District, we here on the Redwood Coast are being given the all too rare opportunity to once again choose who will be our Representative. For this reason I feel that the election of 2012 is monumental and while there are several interesting choices, it is my belief that the person who can best represent our interest in Humboldt County is Susan Adams, a woman who spent most of her life as a nurse and later as a professor of nursing, and the candidate with the closest ties to the Northcoast.

I hope that you will find an opportunity to meet this woman, listen to what she has to say and ask her the tough questions. I believe you will find that she is "the real deal".

Thank you,
Richard

For more information about Susan Adams or to donate to her campaign, please visit www.susanadamsforcongress.com

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Candidate for Congress Susan Adams, chair of the Marin County Board of Supervisors is focused on four key issues affecting the Redwood Coast: rebuilding thriving economies, protecting access to quality healthcare, applying innovative solutions to public safety and implementing clean renewable energy.

As a maternity clinical specialist and a women’s health nurse practitioner Adams has dedicated her life to healthy families. As a public servant she has earned a reputation for innovative solutions to local problems -- including her work on green energy jobs, therapeutic, justice programs, and a comprehensive Health & Wellness Campus, built with tobacco settlement money.

Susan also has a brother who served seven tours of active duty overseas compelling her to work even harder to bring our men and women home safely. She has made veterans’ affairs a top priority especially their post-war after care.

Adams is a mother and grandmother and has deep ties to the North Coast. Her extended family has worked their ranch in Mendocino County for four generations now and she has a brother who's raised his family in Carlotta.


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Susan Adams for Congress
PO Box 4429 San Rafael, CA 94913
HQ:707.376.8683
Fax 707.825.6600
info@SusanAdamsForCongress.com

OCCUPY CAL VOTES FOR NOVEMBER 15th HIGHER EDUCATION GENERAL STRIKE!

Following brutal attacks by riot police against unarmed non-violent student protesters at Occupy Cal, Berkeley Chancellor Robert J. Birgeneau had this to say:

"It is unfortunate that some protesters chose to obstruct the police by linking arms and forming a human chain to prevent the police from gaining access to the tents. This is not non-violent civil disobedience..."

"...We regret that, given the instruction to take down tents and prevent encampment, THE POLICE WERE FORCED TO USE THEIR BATONS to enforce the policy."

Full text below See video of attacks here: berkeleycuts.org

To call for Chancellor Birgeneau's immediate dismissal, email the UC Regents at regentsoffice@ucop.edu or go to universityofcalifornia.edu/regents/contact.html

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OCCUPY CAL VOTES FOR NOVEMBER 15th HIGHER EDUCATION GENERAL STRIKE!

After a mass rally and march of over 3,000 people, and repeated police assaults on the encampment, the Occupy Cal general assembly decided — with over 500 votes, 95% of the assembly — to organize and call for a strike and day of action on Tuesday, November 15 in all sectors of higher education. We will strike in opposition to the cuts to public education, university privatization, and the indebting of our generation.

We also call for simultaneous solidarity actions in workplaces and K-12 schools. We will organize through daily, 5pm strike planning meetings at our encampments, followed by general assemblies.

——

On Wednesday, November 16 there will be a mass convergence starting at 7am at the UC Regents meeting at the UCSF Mission Bay campus to protest cuts to all levels of public education and to call to refund California by making the banks and super rich pay.
More info: reclaimuc.blogspot.com/2011/11/update-on-strike-endorsements-and.html

Sign up for buses here

Invite your friends to the Facebook event

Folks at other schools: organize your own spaces, general assemblies, etc. and strike, occupy, take over your campuses!

Solidarity!

-berkeleycuts.org

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[full text from 11.10.11]
UC Berkeley Chancellor Robert J. Birgeneau:
To the Extended UC Berkeley Community:

As you know, yesterday an effort was made to establish an encampment on Sproul Plaza, by the “Occupy Cal” movement. This followed and marred the aftermath of an impressive, peaceful noontime rally on Sproul on behalf of public education, which was attended by some 3,000 participants and observers, including many campus leaders. We compliment the organizers and speakers for setting an example of peaceful protest and mobilization. As we informed the campus community earlier this week, we understand and share the concern of the Occupy movement about the extreme concentration of wealth in US society and the steady disinvestment in public higher education by California and other States.

We want to clarify our position on “no encampments” so you better understand why we do not allow this to occur on our campus. When the no-encampment policy was enacted, it was born out of past experiences that grew beyond our control and ability to manage safely. Past experiences at UC Berkeley, along with the present struggles with entrenched encampments in Oakland, San Francisco, and New York City, led us to conclude that we must uphold our policy.

This decision is largely governed by practical, not philosophical, considerations. We are not equipped to manage the hygiene, safety, space, and conflict issues that emerge when an encampment takes hold and the more intransigent individuals gain control. Our intention in sending out our message early was to alert everyone that these activities would not be permitted. We regret that, in spite of forewarnings, we encountered a situation where, to uphold our policy, we were required to forcibly remove tents and arrest people.

We want to thank our student leaders, faculty, and community members who worked hard to maintain a peaceful context last night. We have been in discussions with the ASUC, Graduate Assembly, and other student leaders who have provided a number of alternative proposals for working with the student protesters. One such discussion led last night to our offering protesters the opportunity to use Sproul Plaza 24/7 for one week, as a venue for gathering and discussing the issues. However, we stipulated that no tents, stoves, and sleeping bags would be allowed. They could gather in Sproul for discussion, but not for sleeping. This was rejected by a vote of the mass of the protesters.

It is unfortunate that some protesters chose to obstruct the police by linking arms and forming a human chain to prevent the police from gaining access to the tents. This is not non-violent civil disobedience. By contrast, some of the protesters chose to be arrested peacefully; they were told to leave their tents, informed that they would be arrested if they did not, and indicated their intention to be arrested. They did not resist arrest or try physically to obstruct the police officers’ efforts to remove the tent. These protesters were acting in the tradition of peaceful civil disobedience, and we honor them.

We regret that, given the instruction to take down tents and prevent encampment, the police were forced to use their batons to enforce the policy. We regret all injuries, to protesters and police, that resulted from this effort. The campus’s Police Review Board will ultimately determine whether police used excessive force under the circumstances.

We call on the protesters to observe campus policy or, if they choose to defy the policy, to engage in truly non-violent civil disobedience and to accept the consequences of their decisions.

We ask supporters of the Occupy movement to consider the interests of the broader community—the tens of thousands who elected not to participate in yesterday’s events. We urge you to consider the fact that there are so many time-tested ways to have your voices heard without violating the one condition we have asked you to abide by.

Robert J. Birgeneau, Chancellor
George Breslauer, Executive Vice Chancellor and Provost
Harry LeGrande, Vice Chancellor for Studies Affairs

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To call for Chancellor Birgeneau's immediate dismissal, email the UC Regents at regentsoffice@ucop.edu or go to universityofcalifornia.edu/regents/contact.html

Honor Vets at Occupy 11.11.11

From Wall Street to Oakland, from Minneapolis to Chicago, Veterans around the country are standing with the Occupy movement:
www.thenation.com/article/164553/veterans-occupy-wall-street

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To the people of Humboldt County

Pat Kanzler/For the Times-Standard
11/11/2011

The Occupy Eureka site at the county courthouse on the corner of I and Fifth streets is being told to immediately take down our tents and cease camping. The fear we are attracting criminal activity and unsanitary conditions.

I would like to address the first viewpoint. Occupy Eureka intends to stand in solidarity with Occupy Wall Street and all the thousands in America and the world. We have a right to demonstrate and protest peacefully as stated in the first amendment. The tents are part and parcel of where we stand vigil for 24 hours and contain many of the items we need to pronounce our intentions, sign material, markers, sheets, cardboard, blankets, tarps, duct tape, rain gear, clothing, etc.

We have zero tolerance toward any drug or alcohol use in the area and signs to that effect.

We have zero tolerance for abuse of public property.

Chanting and yelling will be kept to a minimum during the hours of 8 a.m. to 5 p.m. although we cannot stop the noise of traffic.
We encourage all participants of Occupy Eureka to respect health and sanitary conditions and will direct all participants to utilize appropriate off-site sanitary facilities as the country has locked its doors to us.

We will continue to keep a dialog with country and city, although the city locked its doors last night to us during its normal hours for meeting.

We will have a community relations speaker on site at all times to answer questions by community or organizations.

Note: we are trying to establish sanitary facilities off-site as the county has locked their doors to us, and we have made compost and recycling bins ourselves. There are people who will donate portable toilets and other large items we need. We always need donations and we encourage the people in Eureka to Occupy Wall Street together.

Occupy Wall Street is a grassroots, people-powered movement financed by no political affiliations. We have had liberals, conservatives and Tea Partyers in solidarity with us besides many others Occupy Wall Street began on Sept. 17, 2011; many cities around the globe followed, and Occupy Eureka began Oct. 8, 2011. We are fighting back against the corrosive power of major banks and large corporations over the democratic process and the role in Wall Street in creating an economic collapse that has caused the greatest recession in generations. The movement is inspired by popular uprisings in early America and aims to expose the rules of an unfair global economy that is foreclosing on our future.

We use a tool called a people's assembly to facilitate collective decision-making in an open manner. We welcome all to join us!
The consensus of Occupy Eureka is here to stay.

Pat Kanzler resides in Eureka.

Arrest Occupiers

“it will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more.”
-William Simon, A Time for Truth


Support Occupy Wall St. here

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How Wall Street Occupied America

by Bill Moyers
The Nation
November 2, 2011


During the prairie revolt that swept the Great Plains in 1890, populist orator Mary Elizabeth Lease exclaimed, “Wall Street owns the country…. Money rules…. Our laws are the output of a system which clothes rascals in robes and honesty in rags. The parties lie to us and the political speakers mislead us.”

She should see us now. John Boehner calls on the bankers, holds out his cup and offers them total obeisance from the House majority if only they fill it. Barack Obama criticizes bankers as “fat cats,” then invites them to dine at a pricey New York restaurant where the tasting menu runs to $195 a person.

That’s now the norm, and they get away with it. The president has raised more money from employees of banks, hedge funds and private equity managers than any Republican candidate, including Mitt Romney. Inch by inch he has conceded ground to them while espousing populist rhetoric that his very actions betray.

Let’s name this for what it is: hypocrisy made worse, the further perversion of democracy. Our politicians are little more than money launderers in the trafficking of power and policy—fewer than six degrees of separation from the spirit and tactics of Tony Soprano.

Why New York’s Zuccotti Park is filled with people is no mystery. Reporters keep scratching their heads and asking, “Why are you here?” But it’s clear they are occupying Wall Street because Wall Street has occupied the country. And that’s why in public places across the nation workaday Americans are standing up in solidarity. Did you see the sign a woman was carrying at a fraternal march in Iowa the other day? It read, I Can’t Afford to Buy a Politician So I Bought This Sign. Americans have learned the hard way that when rich organizations and wealthy individuals shower Washington with millions in campaign contributions, they get what they want.

In his Pulitzer Prize–winning book The Radicalism of the American Revolution, historian Gordon Wood says that our nation discovered its greatness “by creating a prosperous free society belonging to obscure people with their workaday concerns and pecuniary pursuits of happiness.” This democracy, he said, changed the lives of “hitherto neglected and despised masses of common laboring people.”

Those words moved me when I read them. They moved me because Henry and Ruby Moyers were “common laboring people.” My father dropped out of the fourth grade and never returned to school because his family needed him to pick cotton to help make ends meet. Mother managed to finish the eighth grade before she followed him into the fields. They were tenant farmers when the Great Depression knocked them down and almost out. The year I was born my father was making $2 a day working on the highway to Oklahoma City. He never took home more than $100 a week in his working life, and he made that only when he joined the union in the last job he held. I was one of the poorest white kids in town, but in many respects I was the equal of my friend who was the daughter of the richest man in town. I went to good public schools, had the use of a good public library, played sandlot baseball in a good public park and traveled far on good public roads with good public facilities to a good public u
niversity. Because these public goods were there for us, I never thought of myself as poor. When I began to piece the story together years later, I came to realize that people like the Moyerses had been included in the American deal. “We, the People” included us.

* * *

It’s heartbreaking to see what has become of that bargain. Nowadays it’s every man for himself. How did this happen? The rise of the money power in our time goes back forty years. We can pinpoint the date. On August 23, 1971, a corporate lawyer named Lewis Powell—a board member of the death-dealing tobacco giant Philip Morris and a future justice of the Supreme Court—released a confidential memorandum for his friends at the US Chamber of Commerce. We look back on it now as a call to arms for class war waged from the top down.

Recall the context of Powell’s memo. Big business was being forced to clean up its act. Even Republicans had signed on. In 1970 President Nixon put his signature on the National Environmental Policy Act and named a White House Council to promote environmental quality. A few months later millions of Americans turned out for Earth Day. Nixon then agreed to create the Environmental Protection Agency. Congress acted swiftly to pass tough amendments to the Clean Air Act, and the EPA announced the first air pollution standards. There were new regulations directed at lead paint and pesticides. Corporations were no longer getting away with murder.

Powell was shocked by what he called an “attack on the American free enterprise system.” Not just from a few “extremists of the left” but also from “perfectly respectable elements of society,” including the media, politicians and leading intellectuals. Fight back and fight back hard, he urged his compatriots. Build a movement. Set speakers loose across the country. Take on prominent institutions of public opinion—especially the universities, the media and the courts. Keep television programs “monitored the same way textbooks should be kept under constant surveillance.” And above all, recognize that political power must be “assiduously cultivated; and that when necessary, it must be used aggressively and with determination” and “without embarrassment.”

Powell imagined the Chamber of Commerce as a council of war. Since business executives had “little stomach for hard-nosed contest with their critics” and “little skill in effective intellectual and philosophical debate,” they should create think tanks, legal foundations and front groups of every stripe. These groups could, he said, be aligned into a united front through “careful long-range planning and implementation…consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and united organizations.”

The public wouldn’t learn of the memo until after Nixon appointed Powell to the Supreme Court that same year, 1971. By then his document had circulated widely in corporate suites. Within two years the board of the Chamber of Commerce had formed a task force of forty business executives—from US Steel, GE, GM, Phillips Petroleum, 3M, Amway, and ABC and CBS (two media companies, we should note). Their assignment was to coordinate the crusade, put Powell’s recommendations into effect and push the corporate agenda. Powell had set in motion a revolt of the rich. As historian Kim Phillips-Fein subsequently wrote, “Many who read the memo cited it afterward as inspiration for their political choices.”

They chose swiftly. The National Association of Manufacturers announced that it was moving its main offices to Washington. In 1971 only 175 firms had registered lobbyists in the capital; by 1982 nearly 2,500 did. Corporate PACs increased from fewer than 300 in 1976 to more than 1,200 by the mid-’80s. From Powell’s impetus came the Business Roundtable, the American Legislative Exchange Council (ALEC), the Heritage Foundation, the Cato Institute, the Manhattan Institute, Citizens for a Sound Economy (precursor to what we now know as Americans for Prosperity) and other organizations united in pushing back against political equality and shared prosperity. They triggered an economic transformation that would in time touch every aspect of our lives.

The Chamber of Commerce, in response to the memo, doubled its membership, tripled its budget and stepped up its lobbying efforts. It’s going stronger than ever. Most recently, it called in its agents in Congress to kill a bill to provide healthcare to 9/11 first responders for illnesses linked to their duty on that day. The bill would have paid for their medical care by ending a special tax loophole exploited by foreign corporations with business interests in America. The Chamber, along with nearly 1,300 business and trade groups, urged Congress to pass the new tax bill, signed into law just before this past Christmas and filled with all kinds of stocking stuffers, including about fifty tax breaks for businesses. The bill gave some of our biggest banks, financial companies and insurance firms another year’s exemption to shield their foreign profits from being taxed here in the United States; among the beneficiaries were giants Citigroup, Bank of America, Goldman Sachs and Mor
gan Stanley, all of which survived the financial debacle of their own making because taxpayers bailed them out in 2008.

The coalition got another powerful jolt of adrenaline in the late ’70s from the wealthy right-winger who had served as Nixon’s treasury secretary, William Simon. His book A Time for Truth argued that “funds generated by business” must “rush by multimillions” into conservative causes to uproot the institutions and the “heretical strategy” of the New Deal. He called on “men of action in the capitalist world” to mount “a veritable crusade” against progressive America. BusinessWeek(October 12, 1974) somberly explained that “it will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more.”

Those “men of action in the capitalist world” were not content with their wealth just to buy more homes, more cars, more planes, more vacations and more gizmos than anyone else. They were determined to buy more democracy than anyone else. And they succeeded beyond their expectations. After their forty-year “veritable crusade” against our institutions, laws and regulations—against the ideas, norms and beliefs that helped to create America’s iconic middle class—the Gilded Age is back with a vengeance.

If you want to see the story pulled together in one compelling narrative, read Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class, by political scientists Jacob Hacker and Paul Pierson. They wanted to know how America had turned into a society starkly divided into winners and losers. They found the culprit: the revolt triggered by Lewis Powell, fired up by William Simon and fueled by rich corporations and wealthy individuals. “Step by step,” they write, “and debate by debate America’s public officials have rewritten the rules of American politics and the American economy in ways that have benefited the few at the expense of the many.”

There you have it. They bought off the gatekeeper, got inside and gamed the system. As the rich and powerful got richer and more powerful, they owned and operated the government, “saddling Americans with greater debt, tearing new holes in the safety net, and imposing broad financial risks on Americans as workers, investors, and taxpayers.” Now, write Hacker and Pierson, the United States is looking more and more like “the capitalist oligarchies, like Brazil, Mexico, and Russia,” where most of the wealth is concentrated at the top while the bottom grows larger and larger with everyone in between just barely getting by.

The revolt of the plutocrats was ratified by the Supreme Court in its notorious Citizens United decision last year. Rarely have so few imposed such damage on so many. When five pro-corporate conservative justices gave “artificial legal entities” the same rights of “free speech” as humans, they told our corporate sovereigns that the sky’s the limit when it comes to their pouring money into political campaigns.

The ink was hardly dry on the Citizens United decision when the Chamber of Commerce organized a covertly funded front and rained cash into the 2010 campaigns. According to the Sunlight Foundation, corporate front groups spent
$126 million in the fall of 2010 while hiding the identities of the donors. Another corporate cover group—the American Action Network—spent more than $26 million of undisclosed corporate money in just six Senate races and twenty-six House elections. And Karl Rove’s groups, American Crossroads and Crossroads GPS, seized on Citizens United to raise and spend at least $38 million, which NBC News said came from “a small circle of extremely wealthy Wall Street hedge fund and private equity moguls”—all determined to water down financial reforms that might prevent another collapse of the financial system. Jim Hightower has said it well: today’s proponents of corporate plutocracy “have simply elevated money itself above votes, establishing cold, hard cash
as the real coin of political power.”

No wonder so many Americans have felt that sense of political impotence that historian Lawrence Goodwyn described as “the mass resignation” of people who believe in the “dogma of democracy” on a superficial public level but whose hearts no longer burn with the conviction that they are part of the deal. Against such odds, discouragement comes easily. But if the generations before us had given up, slaves would still be waiting on their masters, women would still be turned away from the voting booths on election day and workers would still be committing a crime if they organized.

* * *

So take heart from the past, and don’t ever count the people out. During the last quarter of the nineteenth century, the Industrial Revolution created extraordinary wealth at the top and excruciating misery at the bottom. Embattled citizens rose up. Into their hearts, wrote the progressive Kansas journalist William Allen White, “had come a sense that their civilization needed recasting, that their government had fallen into the hands of self-seekers, that a new relation should be established between the haves and have-nots.” Not content to wring their hands and cry “Woe is us,” everyday citizens researched the issues, organized to educate their neighbors, held rallies, made speeches, petitioned and canvassed, marched and marched again. They plowed the fields and planted the seeds—sometimes on bloody ground—that twentieth-century leaders used to restore “the general welfare” as a pillar of American democracy. They laid down the now-endangered markers of a civilized society: le
gally ordained minimum wages, child labor laws, workers’ safety and compensation laws, pure foods and safe drugs, Social Security, Medicare and rules that promote competitive markets over monopolies and cartels.

The lesson is clear: Democracy doesn’t begin at the top; it begins at the bottom, when flesh-and-blood human beings fight to rekindle what Arlo Guthrie calls “The Patriot’s Dream.”

Living now here but for fortune
Placed by fate’s mysterious schemes
Who’d believe that we’re the ones asked
To try to rekindle the patriot’s dreams

Arise sweet destiny, time runs short
All of your patience has heard their retort
Hear us now for alone we can’t seem
To try to rekindle the patriot’s dreams

Can you hear the words being whispered
All along the American stream
Tyrants freed, the just are imprisoned
Try to rekindle the patriot’s dreams

Ah but perhaps too much is being asked of too few
You and your children with nothing to do
Hear us now for alone we can’t seem
To try to rekindle the patriot’s dreams

Who, in these cynical times, with democracy on the ropes and America’s body politic pounded again and again by the blows of organized money—who would dream such a radical thing? Look around.


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Support OCCUPY WALL ST. here: http://www.nycga.net/how-to-help/

Time to consider a municipal bank

The Eureka Times-Standard
Richard Salzman
10/19/2011

Ten days into the Occupy Wall Street protests, I wrote a letter to the editor complaining about the lack of mainstream media coverage. By the time that letter was printed, they finally got to the story, to their credit.

There are now “Occupy” actions taking place in 1,482 cities across the country (as tracked at OccupyTogether.org), including in my own town of Arcata in Humboldt County, California.

Surprisingly, even as the media has covered the story, many in the mainstream press seem mystified by the motives and/or lack of cohesive message. Does “people's needs, not corporate greed” explain it?

San Francisco Supervisor John Avalos, a mayoral candidate, wants his City Hall to pull its money out of corporate financial institutions and start a municipal bank “so we can control how we are investing in local businesses.” I hope Humboldt County will also consider that option.

Long ago, I pulled my money from a big bank and put it into a local credit union. Then, it was recently publicized that the CEO of my small “nonprofit” credit union was taking home just shy of $1 million a year in compensation (making the $160K that our county administrative officer earns seem pretty reasonable). I'm sure people would love to put their money in a county-owned bank whose CEO doesn't get $1 million (see publicbankinginstitute.org for more on this subject).

Here are six more excellent ideas taken from Sens. Bernie Sanders and Matt Taibbi, writing in Rolling Stone magazine:

1. Break'em up. If a financial institution is too big to fail, it's too big to exist. Start with repeal of the Gramm-Leach-Bliley Act and mandate the separation of insurance, investment and commercial banks.

2. Pay for bailouts. A Wall Street speculation fee on credit default swaps, derivatives, stock options and futures would both pay for the bailouts and do plenty to fight the deficits.

3. Cap credit card interest rates, end usury. Citigroup, Bank of America, and JP Chase should not be permitted to charge 25 to 30 percent interest when they received over $4 trillion in loans from us.

4. Tax hedge-fund gamblers. Repeal the carried-interest tax break, which taxes hedge-fund titans only 15 percent on their income.

5. The Federal Reserve needs to provide small businesses in America with the same low-interest loans it gave to foreign banks.

6. Stop Wall Street oil speculators from artificially increasing gasoline and heating oil prices.
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Richard Salzman, who lives in Arcata, works as an illustrators' rep and political consultant.

http://www.times-standard.com/guest_opinion/ci_19145550

Krugman on Wall St.: Losing Their Immunity

Losing Their Immunity

by Paul Krugman
N.Y. Times
10/17/11

As the Occupy Wall Street movement continues to grow, the response
from the movement's targets has gradually changed: contemptuous
dismissal has been replaced by whining. (A reader of my blog suggests
that we start calling our ruling class the "kvetchocracy.") The
modern lords of finance look at the protesters and ask, Don't they
understand what we've done for the U.S. economy?

The answer is: yes, many of the protesters do understand what Wall
Street and more generally the nation's economic elite have done for
us. And that's why they're protesting.

On Saturday The Times reported what people in the financial industry
are saying privately about the protests. My favorite quote came from
an unnamed money manager who declared, "Financial services are one of
the last things we do in this country and do it well. Let's embrace
it."

This is deeply unfair to American workers, who are good at lots of
things, and could be even better if we made adequate investments in
education and infrastructure. But to the extent that America has
lagged in everything except financial services, shouldn't the
question be why, and whether it's a trend we want to continue?

For the financialization of America wasn't dictated by the invisible
hand of the market. What caused the financial industry to grow much
faster than the rest of the economy starting around 1980 was a series
of deliberate policy choices, in particular a process of deregulation
that continued right up to the eve of the 2008 crisis.

Not coincidentally, the era of an ever-growing financial industry was
also an era of ever-growing inequality of income and wealth. Wall
Street made a large direct contribution to economic polarization,
because soaring incomes in finance accounted for a significant
fraction of the rising share of the top 1 percent (and the top 0.1
percent, which accounts for most of the top 1 percent's gains) in the
nation's income. More broadly, the same political forces that
promoted financial deregulation fostered overall inequality in a
variety of ways, undermining organized labor, doing away with the
"outrage constraint" that used to limit executive paychecks, and more.

Oh, and taxes on the wealthy were, of course, sharply reduced.

All of this was supposed to be justified by results: the paychecks of
the wizards of Wall Street were appropriate, we were told, because of
the wonderful things they did. Somehow, however, that wonderfulness
failed to trickle down to the rest of the nation - and that was true
even before the crisis. Median family income, adjusted for inflation,
grew only about a fifth as much between 1980 and 2007 as it did in
the generation following World War II, even though the postwar
economy was marked both by strict financial regulation and by much
higher tax rates on the wealthy than anything currently under
political discussion.

Then came the crisis, which proved that all those claims about how
modern finance had reduced risk and made the system more stable were
utter nonsense. Government bailouts were all that saved us from a
financial meltdown as bad as or worse than the one that caused the
Great Depression.

And what about the current situation? Wall Street pay has rebounded
even as ordinary workers continue to suffer from high unemployment
and falling real wages. Yet it's harder than ever to see what, if
anything, financiers are doing to earn that money.

Why, then, does Wall Street expect anyone to take its whining
seriously? That money manager claiming that finance is the only thing
America does well also complained that New York's two Democratic
senators aren't on his side, declaring that "They need to understand
who their constituency is." Actually, they surely know very well who
their constituency is - and even in New York, 16 out of 17 workers
are employed by nonfinancial industries.

But he wasn't really talking about voters, of course. He was talking
about the one thing Wall Street still has plenty of thanks to those
bailouts, despite its total loss of credibility: money.

Money talks in American politics, and what the financial industry's
money has been saying lately is that it will punish any politician
who dares to criticize that industry's behavior, no matter how gently
- as evidenced by the way Wall Street money has now abandoned
President Obama in favor of Mitt Romney. And this explains the
industry's shock over recent events.

You see, until a few weeks ago it seemed as if Wall Street had
effectively bribed and bullied our political system into forgetting
about that whole drawing lavish paychecks while destroying the world
economy thing. Then, all of a sudden, some people insisted on
bringing the subject up again.

And their outrage has found resonance with millions of Americans. No
wonder Wall Street is whining.



http://www.nytimes.com/2011/10/17/opinion/krugman-wall-street-loses-its-immunity.html

Breakthrough Journal: Liberalism and the New Inequality

From: Michael Shellenberger
Date: October 17, 2011

If Occupy Wall Street protesters have struggled to articulate their demands beyond taxing the rich, part of their challenge is the changed nature of the economy. In a new article for The Breakthrough Journal, NYU sociologist Dalton Conley notes that while the 1929 stock market crash reduced inequality by wiping out fortunes, the 2008 crash provoked measures that sustained it. "But greater equality after the crash came at a very high price: the Great Depression. So while the response to the 2008 crisis sustained the top-heavy structure of the American economy, it also averted the free fall that threw tens of millions of Americans into unemployment and breadlines throughout the 1930s."

Moreover, even as the gap between the "99%" and the richest one percent has grown, "the interests of workers are increasingly yoked to those of their bosses," Conley notes. "Half of Americans today have direct or indirect investments in the stock market, largely thanks to the shift to defined contribution pension plans and the ease of Internet investing... So if the rest of us want to save our 401ks, we have to save the status quo for the robber barons of Wall Street in the process."

Couldn't the problem have been solved by nationalizing the banks and redistributing wealth? Such a strategy "might have distributed the costs and benefits of the bailouts more fairly," writes Conley, and "higher income taxes on the rich, along with more strongly redistributive social programs might succeed in mitigating some degree of inequality. But there are also powerful socioeconomic forces driving inequality." Conley points to growing global demand for elite knowledge workers (such as by the financial sector) and the widening skills gap.

How should liberalism evolve to deal with the new inequality? By shifting its focus from absolute to relative poverty. When Americans were poor, liberalism's priorities were food and shelter. Now most Americans are overweight and own their own homes. At the same time, poor and working-class Americans, living in districts with low-performing schools, are at serious risk of being left behind. Liberalism must thus focus on to new ways to expand opportunity, and Conley lays out several.

We should decouple school funding from local property taxes — and/or allow school choice, so the poor can attend elite schools. "Yes," writes Conley, "fund private school attendance with vouchers, but require participating schools to enroll students from across the income spectrum, thereby increasing opportunity for education and facilitating entrance into the knowledge class."

We should "de-skill" credentialing monopolies in health care and education. "For example, health care could be provided more affordably if everyone was willing to see nurse practitioners or medical assistants in drive-through clinics and forsake the latest high-tech tests and procedures. College could be more affordable if we adopted an open courseware model and de-emphasized the need for face-to-face contact with faculty members."

Finally, we must go beyond the fantasy that America's problems can be fixed simply through higher taxes on the richest one percent. Liberals should embrace reform that could appeal to both reasonable liberals and reasonable conservatives. Tax all income, including capital gains, the same, but also implement a national, value-added (sales) tax, and restrict government revenue to 25 percent of GDP.

While Tea Partiers and Wall St. Occupiers offer ideological slogans to vexing problems, Conley's ground-breaking essay points to a set of pragmatic solutions — solutions with the potential to appeal to Americans divided by ideology but united in their view that expanding opportunity is a core national value. 

— Michael Shellenberger and Ted Nordhaus

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October 18, 2011

Liberalism and the New Inequality

by Dalton Conley

Breakthrough Journal

The 2008 financial crisis and Great Recession that followed offered a bracing rebuke to those of us who had reassured ourselves that the increasingly unequal American economy would self-correct once it reached some natural trigger point of unfairness. After the 1929 crash, which was preceded by similarly high levels of inequality, top earners saw their share of national income shrink by one-third, and then continue to shrink until 1969. Many progressives hoped something similar would occur after the collapse of 2008, but no such correction was forthcoming. American inequality is nearly as high today as it was before the crash.

One obvious difference is that, in 1929, government intervention was minimal: there were no bank bailouts, auto rescues, or stimulus efforts. The free market was left to destroy fortunes, ill-gained or not, thereby reducing gross inequalities in wealth. But greater equality after the crash came at a very high price: the Great Depression. So while the response to the 2008 crisis sustained the top-heavy structure of the American economy, it also averted the free fall that threw tens of millions of Americans into unemployment and breadlines throughout the 1930s. Nationalizing the banks, as many critics of the Troubled Asset Relief Program suggest, might have distributed the costs and benefits of the bailouts more fairly. And going forward, higher income taxes on the rich, along with more strongly redistributive social programs might succeed in mitigating some degree of inequality. But there are also powerful socioeconomic forces driving inequality. That is, the high levels of economic inequality we have witnessed over the last decade might be inescapable to some degree.
In our affluent but unequal society, poverty is a relative, not an absolute, condition. High levels of inequality coexist with rising living standards, even for those at the bottom. Meanwhile, due to rising wealth and asset ownership among all Americans, including the poor, the  fortunes of the majority are increasingly tied to those of the elite. The sooner we confront these structural forces, the sooner we can move on to constructing a new social contract befitting this new economic age.

1.


Globalization and the rising value of knowledge-based work mean that those at the top of the knowledge economy are increasingly able to charge a premium for their labor in a global marketplace -- even as that same marketplace de-skills the labor of many occupations. The rich used to derive almost all of their income from capital, rent, and business profits, and little from wages. But today, as economists Thomas Piketty and Emmanuel Saez show, the top one percent of Americans derive a significant (and growing) share of economic resources from wages.1 Meanwhile, global supply chains and new telecommunications technologies are enabling both outsourcing and global economies of scale that exert downward pressure on most workers' wages.

These trends are ominously self-reinforcing. Education -- and the skills, connections, and credentials that come with it -- is the critical determinant of success in the new knowledge economy. Due to greater social and economic inequality and segregation, poor and working-class people must cross an educational gap that is widening at precisely the moment when education has become most critical to their economic prospects.

Yet even as that gap grows, the interests of workers are increasingly yoked to those of their bosses. Half of Americans today have direct or  indirect investments in the stock market, largely thanks to the shift to defined contribution pension plans and the ease of Internet investing.2 But while most of us are in it for a penny, it's still the super wealthy who are in for a pound. A study by the St. Louis Federal Reserve Bank found that the richest 10 percent own upwards of 85 percent of stocks and other financial assets.3 So if the rest of us want to save our 401ks, we have to save the status quo for the robber barons of Wall Street in the process.

The same is true for housing. Home equity makes up an ever-greater share of household wealth the lower your rank on the income ladder. Back in 1930, less than half of Americans lived in a home they owned; by the housing market peak in the 2000s, the rate hit close to 70 percent.4 Now we all have a stake in real estate values. A sluggish housing market used to be good news for many at the bottom of the pyramid thanks to falling rents. But today, when most of us have our life savings in a home or use our house as an ATM through home equity lines of credit, price drops are devastating.

Many policy scholars, myself included, have argued that wider-spread asset ownership increases opportunity, teaches good financial habits,  orients poor children to the future, and ultimately increases the public's stake in capitalism and the rule of law. But we must be honest about the fact that an "ownership society" (to use former President George W. Bush's term) also means a country in which the economic interests of the wealthy and the non-wealthy are increasingly tied to each other. The problem is that while in absolute terms, everyone wants the same things -- rising house and stock prices -- in relative terms, those in the middle (and bottom) fall further and further behind. In an economy in which those at the top already control the lion's share of wealth, economic growth need not be disproportionate itself in order to disproportionately benefit the wealthy.

As such, today's historically high levels of inequality appear likely to remain a long-term structural feature of the American economy. The expansion of assets and ownership down the income distribution has meant that the economic interests of those at the top of the income ladder and those at the bottom are increasingly difficult to disentangle. This development, combined with America's culture of competitive  individualism, makes both class conflict and redistributive social policies increasingly unlikely.

2.


These sobering trends aside, we should not overlook the reality that Americans remain wealthy by any global or historical perspective and are getting wealthier still. Even among the poorest Americans, life expectancy has risen, infant mortality has decreased, homicides are down, and educational attainment is up. While poverty persists and the poor are still disproportionately victims of crime, incarceration, ill health, and higher mortality, their overall wealth and standard of living have risen.

Statistics showing that real wages have stagnated since 1973 are misleading. Wage statistics calculate "real dollars" over time only by adjusting for inflation, which is measured by totaling the cost of a set of common consumer goods in a basket. This makes inflation an accurate short-term measure, but it's a terrible long-term one because the average consumer's actual basket of goods changes a lot more rapidly than the theoretical basket of goods the Bureau of Labor Statistics (BLS) uses to calculate the Consumer Price Index.

Mobile phones are just one example. Though they first hit the consumer market in 1983, the BLS did not factor mobile phones into the inflation rate until 15 years later. Consequently, the BLS missed the massive price declines. Moreover, today's lower cell phone prices do not reflect the value of quality improvements. Just think of the difference between a 1995 cell phone and your iPhone today.

As a result, the focus on wages misses the point. Basic living standards have risen for virtually every American even as real wages have stagnated. Whether we pay less at Wal-Mart while earning less, or pay more while taking in higher wages, the end result is the same.

The idea that greater inequality, as opposed to greater poverty, results in worse social outcomes at a societal level is also highly questionable. Consider poor health outcomes, which have been widely linked to high levels of social inequality. Careful statistical analyses  have shown that the observed correlation between income inequality on the one hand and health outcomes on the other is really an artifact of the non-linear relationship between individual income and health.

In other words, since an additional dollar is worth more to you health-wise if you are poor than if you are rich, merely comparing countries, states, or counties with more unequal income distributions will make it appear as though those places have worse health outcomes than their more equal counterparts. But what's driving the difference is absolute income, not relative income shares. For instance, health outcomes are worse in the United States than many European countries, not because of our higher levels of inequality, but rather because of our higher levels of poverty.

3.


If living standards for those at the bottom of the income distribution have demonstrably improved over the last 40 years and research has not been able to establish a causal link between inequality and life outcomes, should we still concern ourselves with societal inequality?

We should, but not for the reasons typically given. Consider that as society becomes more affluent and basic material needs are increasingly satisfied for even the poorest Americans, more and more of our consumption takes on a relative dimension. The economic shift from absolute to relative goods can be seen in household budgets. As recently as the 1950s, the typical American family spent one-third of its income on food while low-income families spent about half of their incomes on the same.5 Today, food makes up only 17 percent of the average poor family's budget, and almost one-third of that (30 percent) is spent eating out. Meanwhile housing now represents about 40 percent of household budgets for low-income Americans.6

While we all need food and a roof over our heads, what drives the rising cost of housing for the poor are the relative dimensions of the housing market, not the absolute ones. Today even poor Americans live in substantially larger homes than they did three or four decades ago. Competition for housing in better school districts, with increasing square footage, is largely responsible for increasing the share of household budgets allocated to housing among all Americans.

In his 1976 classic, The Social Limits to Growth, Fred Hirsch called these relative goods "positional goods" due to their relative and inherently limited nature.7 While everyone can, at least theoretically, own a home and pursue an education, it is impossible for everyone to own a beachfront home or go to Harvard. And it turns out that these types of positional goods represent the greatest obstacles to economic mobility for those at the bottom of the income distribution.

In my own research into the intergenerational effects of social class on educational and occupational outcomes, I have demonstrated that the most important determinants of those outcomes are parental wealth and education. By contrast, I found that race, parental income, and parental occupation did not matter at all. It is perhaps no coincidence that the key determinants of success and social mobility in America -- education and wealth (which continues to be dominated by home equity for most American families) -- are both positional goods. Moreover, the two are linked: housing values are closely related to school performance.

In addition to the fact that more of the economy may contain this relative status nature, the provision of certain key goods and services is predicated on a need for high-skill workers. Consider three of the biggest costs to families -- education, health care, and housing -- and how they are linked to skill and status. Higher education is expensive because it presents the double whammy of being a relative status good (to the extent that degrees, prestige, and comparative advantage in the labor market matter) that is provided by high-skilled employees. Health care, however, is typically not a status good (we just want to be cured and don't begrudge others for being healthy) but still requires very highly skilled workers. Conversely, housing generally requires less-skilled workers, but has become highly relative for many American families seeking ever-larger McMansions and top-notch school districts.

This simple table (see: breakthroughjournal.org)  illustrates the interactions between the relative nature of goods and the labor skill level required to produce them. Whereas the New Deal and its offspring policies were meant to insure American households from going without basic material necessities that were absolute in nature (the upper-left quadrant), the major sources of economic anxiety today relate to high-skill services that are often relative (i.e., status) goods (the lower-right quadrant). Relative deprivation is a much trickier problem to solve and will require a fundamentally different approach to social policy.

The challenge is exacerbated by the fact that the most relative and/or high-skill quadrants appear to be linked to each other: housing becomes an intense status good by virtue of the fact that it is linked to the education system (thanks to the financing of education through local property taxes plus the desire of high-income parents to surround their kids with other wealthy peers). Wealth, meanwhile, is largely held in the form of primary residence equity for most American families. And health care expenses are the single biggest cause of bankruptcy in the United States.

4.


In some respects, the age of affluent inequality should facilitate the creation of a new social contract capable of improving social and economic mobility. In theory, high levels of inequality should make it easier to concentrate the tax burden on the shoulders of a small minority. While our national tax debate seems to belie this claim, evidence from local school districts, compiled by economists Sean Corcoran and William Evans, shows that higher inequality leads to greater investment in public schooling through higher taxes.8 Moreover, the enormous private fortunes of our new gilded age have often been invested in a variety of socially beneficial ways. We can thank the benevolent tycoons of generations past, such as Andrew Carnegie and the Rockefeller family, for the New York Public Library and the Green Revolution, respectively. Today, Bill Gates's and Warren Buffett's private funding decisions have greatly advanced the global fight against malaria.

Nonetheless, we are unlikely to return to the 90 percent marginal tax rates of the postwar era. Nor can we reasonably depend upon the benevolence of the super wealthy to make up for the failings of our present social safety net. In the end, progressives would be well served  to focus less on soaking the rich and more on raising sufficient revenues to minimize the consequences of the positional arms race.

A good place to start would be to eliminate incentives for taxpayers to game the system by treating all income equally. We could raise dividend taxes and capital gains taxes to the same level as the top marginal tax bracket on wages, tax health and other benefits as income, and convert the estate tax to an inheritance tax that hits heirs at the same rate. This proposal might even appeal to conservatives if it were tied to provisions that established a flat tax that eliminated deductions and a national sales, or value-added, tax that held federal revenues to one-quarter of the GDP.

Taken together, these measures, combined with a raise on the payroll tax cap above the current $120,000 level, would probably end up being no less progressive than the current tax system. In addition, we might be able to shore up the Social Security trust fund and rein in health care spending, for additional budgetary savings above and beyond those that will be triggered by the Affordable Care Act.

A simpler and fairer tax system will still be hard pressed to address the ways in which social and economic inequality is self-reinforcing. Addressing these dynamics will require us to limit the importance of socioeconomic disparities by reducing the opportunity for distinctions  in the areas of housing, education, and other status goods.

We should start by challenging skill-based credentialing monopolies in areas such as health care and education. For example, health care could be provided more affordably if everyone was willing to see nurse practitioners or medical assistants in drive-through clinics and forsake the latest high-tech tests and procedures. College could be more affordable if we adopted an open courseware model and de-emphasized the need for face-to-face contact with faculty members.

We also need to reduce the relative nature of health care, housing, and education by delinking them from each other. For instance, decoupling school district funding from local property taxes, or allowing public school choice across district or municipality lines, could increase access to higher-quality education for those at the bottom of the income ladder. Health care reform may help sever the tie between health care and the housing sector, resulting in less risk of mortgage default or bankruptcy when twin calamities, job loss and negative health events, occur simultaneously.

Still, the incentives for economic segregation are likely to remain high and the challenges to overcoming them loom large, suggesting the consideration of more radical ideas. One approach would randomly assign every child to a pool of 10,000 people across the United States at birth that she would stay in until her death. Each "pod" of 10,000 people would levy taxes to be distributed among the members to cover things that welfare and education policies typically cover (e.g., K-12 schooling, health care, disability payments, food stamps). Because the  pods are relatively small in number, members could direct spending to try to maximize benefit through online budget negotiations and voting. And while siblings would end up in the same pods, parents would already have been assigned to pods long before they gave birth and would likely not end up in the same pods as their partners or children.

Such a system could re-create the social fabric of the 18th century small town in 21st century cyber-network fashion, thereby reducing segregation and halting widespread withdrawal from the public sphere. Since individuals would not be located in the same geographic area as the rest of the members of their pod, health care, education, and other social programs would need to be provided through mechanisms such as vouchers that relied on free market allocation of the actual service wherever pod members lived. This system would create better incentives for preventative care, educational investments, etc., since individuals would have an interest in keeping the lifetime costs of their risk pool down.

Less radically, if we funded private school vouchers we could sever the link between place of residence and quality of school. This approach would only succeed if we combined this free market approach to education, which should appeal to conservatives, with a commitment to economic diversity, which should appeal to progressives. Yes, fund private school attendance with vouchers, but require participating schools to enroll students from across the income spectrum, thereby increasing opportunity for education and facilitating entrance into the knowledge class.

Liberals may object to this as privatization, but there is nothing inherently egalitarian about public institutions. Unlike its public counterpart (and rival) UC Berkeley, Stanford, a highly endowed, private university, charges no tuition for families with incomes under $100,000. Of course, this is only possible because Stanford has the financial resources to dial down its sticker price to lure less wealthy families. As it stands currently, the University of California system writ large -- largely thanks to its population of community college transfer students -- is one of the success stories when it comes to income diversity. Private institutions may need to be nudged (or even required) to spend their considerable resources on admitting low-income students (such as community college transfers).

Pods? Facebook-style democracy? Harvard online? It sounds bizarre, to be sure. But what should be clear is that the basic structure of the American economy has profoundly changed, as has the nature of poverty and inequality. The old New Deal safety net was created to prevent absolute deprivation, which, thanks to rising, if unequally distributed prosperity, is largely a thing of the past. In this new age of affluent inequality, we need to find ways to turn that safety net on its side and make it into a rope lattice everyone can climb. /

1. Piketty, Thomas & Emmanuel Saez. 2003. "Income Inequality in the United States 1913-1998." The Quarterly Journal of Economics. February. (back)

2. Jacobe, Dennis. 2011. "In U.S., 54% Have Stock Market Investments, Lowest Since 1999." Gallup. April 20th. (back)

3. Guo, Hui. 2001. A Simple Model of Limited Stock Market Participation. Federal Reserve Bank of St. Louis. May/June. (back)

4. United States Census Bureau. Housing Characteristics in the US. (back)

5. US Bureau of Labor Statistics. 2006. "100 Years of Consumer Spending." BLS Report 991; Conley, Dalton. 2005. "Poverty and Life Chances: The Conceptualization and Study of the Poor." Sage Handbook of Sociology, Eds. Craig Calhoun, Chris Rojek and Bryan S. Turner. London: Sage Limited, U.K. (back)

6. US Bureau of Labor Statistics. 2010. Food for Thought. November; Holland, Laurence H. M. and David M. Ewalt. 2006. "How Americans Make and Spend Their Money. Forbes. July 19th. (back)

7. Hirsch, Fred. 1976. The Social Limits to Growth. Cambridge, Mass: Harvard University Press. (back)

8. Corcoran, Sean & William N. Evans. 2010. Income Inequality, the Median Voter, and the Support for Public Education. NBER Working Paper No. 16097. (back)