Right-to-Work and The New Gilded Age

(Credit: AP Photo/Dave Kolpack)

Here's a byproduct of the so called Right-To-Work laws I never knew: besides being a masterful bit of marketing in terms of its labeling, these laws have helped to move jobs from Northern states to Southern states and eventually to cheaper overseas markets.

In fact, the more I learn about them, the more I come to understand that they are anything but a vehicle to ensure anyone's "rights" or that there's work created by them for anyone. At least not work normally associated with what we fancifully recall as a middle class lifestyle.

As the New York Times op-ed piece entitled, "Workers' Paradise Lost" points out, union and non-union workers both benefit when unions are more powerful and influential. Corporations once literally had to compete for labor by offering good wages and benefits.

Anyone happen to notice, recall, or learn in their rapidly-disappearing civics classes about the wealth and prosperity the middle class in America enjoyed after World War II and up to about the late 70s and early 80s? (Bonus points will be awarded for naming the B-movie-actor-turned-president who launched the decline in earnest back then by firing federal union workers and being the willing mouthpiece and marionette at the end of Alan Greenspan's fingertips.)

Here's another new fact I learned from the Times op-ed.

The Taft-Hartley Act was pushed through in 1947 by "pro-business Republicans and Southern Democrats" in the immediate wake of the UAW's rise to prominence. This Act was how states in the South and out West were able to pass right-to-work laws and attract businesses away from their neighbors in northern markets with cheaper labor. I didn't know how it had gotten started and that it went back that far.

And what happened next and when corporations felt that the labor wasn't cheap enough in the South and West? What has been happening since the early 80s and as unions have continued to lose their influence over elected officials, corporations, and thanks to years of vilifying by corporations and the GOP, even the influence unions and their members had with their neighbors? Where did business look for even cheaper labor? It wasn't on these shores. Labor is and was increasingly powerless to fight the flight of manufacturing overseas. It's sad when you consider that they couldn't even get their neighbors to stand with them to defend those jobs, and that those neighbors all too often are still jealous of what they perceive to be the largess of being a union worker.

(To be sure, we as consumers also have ourselves to blame, too, for demanding the Walmartification of America with cheaper and cheaper goods, but that's fodder for its own post.)

All of us owe a debt of gratitude to organized labor for basically forcing corporations to share the wealth. That's not a dirty or even Socialist expression. Labor is what brings into being and delivers to market the creativity and genius of the entrepreneur. One cannot exist without the other. It must be understood, however, that only one side has the "accounts receivables" and, hence, control over how revenues are distributed. CEOs didn't always make hundreds and even thousands of times what they pay their workers, and corporate profits overall in America are at historic highs.

We also owe a debt to unions for things we take for granted today. Things like child labor laws, workplace safety, the 8-hour workday, the 5-day week, and so much more. When examined purely from the economic and business perspective, these changes would probably never have come into being without workers literally dying as part of the labor movement to win them.

These are all things worth thinking about the next time we're tempted to side with trickle down theorists and defenders of capital - as if they needed us to stick up for them.

Actually and come to think of it, maybe they do.

So long as they - and let's be candid, "they" are big money, corporations, and most assuredly the Republican party - are successful at duping so many of the middle class into believing the "us versus them" of non-union versus union, we're likely to see the scales continue to tip away from the middle class and even more toward the wealthy. It's like something I saw recently on Facebook that said (and I'm paraphrasing), "Don't be jealous of my union benefits. Demand your own." I agree with that sentiment.

The scales of labor-management are out of balance. I think it's important to understand whose thumbs are on it and how the scales continue to tip toward the 1-percenters and big business. If we don't bring the scales back to the middle then my advice is that we might want to start thinking up names for this new Gilded Age.

Right To Work... for Less

For the record, I've spent most of my career in management. I have never belonged to a union.

I have, however, become a stronger and stronger supporter of organized labor the more I read and understand the facts about them and how the once mighty American middle class came into being, grew, and prospered primarily and almost exclusively because of organized labor.

We must be clear on facts.

The rise and prosperity of the American middle class had precisely nothing to do with any generosity or leadership principles of management. Without the labor movement, there would have been no middle class because there would have been nothing in it for management and the shareholders to pay workers decent wages, provide for safe working conditions, and for companies to have to negotiate some portion of the wealth generated to be shared back with the workers that made goods and delivered services.

The worker-management relationship is symbiotic, but the movement in this country was been away from organized labor for decades. Many would trace it back to Reagan and his treatment of the air traffic controllers.

Regardless of when it began, the so-called "righ to work" laws are nothing more than well-crafted marketing by Big Money and their puppets in state legislations. It is designed to dupe Americans into believing that such laws - presumably to give workers the "freedom" or "right to work" without paying union dues in unionized shops - is what's best for both companies and workers.

That's absurd. Why should on employee be allowed to benefit from collective bargaining done by his/her co-workers and yet not have to be required to pay their dues to fund the organization that handles the collective bargaining on behalf of all workers. How is that fair?

Right-to-work laws are terrible for the middle class. The only jobs they are likely to create will be those that are lower paying with fewer hours and fewer benefits. They will not be the kind of middle class jobs on which anyone can live or raise a family.

Ask any Walmart worker.

Class Warfare and John Galt; Both are Fiction

A recent Facebook post by The Christian Left (image courtesy of that post), sparked some interesting discussion. Some people apparently saw this as a metaphor for Obama acting as a messiah while simultaneously dividing the country with his "class warfare" against the rich.


This whole idea of "class warfare" strikes me as being mostly an issue for wealthy conservatives. Even more curious is that it's become a rallying cry for middle class conservatives who feel compelled to rise to the defense of the wealthy and the threat they face from onerous government intervention and taxation.

Why is that?

Well, it seems to me that there's no denying that conservative (and GOP) media spokespersons like O'Reilly, Beck, Hannity, Coulter, and that whole crowd are intent on convincing us of the evils of government. Their rhetoric seems focused on protecting their benefactors while simultaneously serving their own greedy self interests by attracting as many eyeballs (and devotees) as possible. Nothing seems to work like some good old hyperbole (devoid to the degree possible of any facts) for riling up the uninformed and for driving wedges between all kinds of people. If it's not the fake (and worn out) War on Christmas, it's the new (and just as fake) Battle Royale between Takers and Makers.

(And before conservatives accuse me of bias, let me at least come clean and admit to mine. I am proud to call myself a progressive and a liberal. Yes, similar accusations can be made about the hyperbole from left wing personalities, too. However, and to my experience, at least they seem to be defending us little guys with their rhetoric. They don't try to scare us into siding with the wealthy in the hopes that someday the wealthy will shower us with generosity in the form of....what?....jobs at Walmart? Oh, and the so-called "liberal media" actually seem to care about and cite real science and actual facts. Bonus points in my book for that sort of behavior.)

Conservative spokespeople from Boehner and McConnell on down through Faux (sorry, Fox) News, The Drudge Report, and tea partiers everywhere would have us all believe that if we don't stop hating the wealthy and don't start supporting even more and more concessions - Boehner is actually proposing lowering the tax rates?!? - we're doomed. They seem to actually think - or more likely, want us to believe - that we in the middle class will actually witness a physical manifestation of the disappearance of "job creators" a la John Galt if the middle class comes out on top in this so-called war of the classes.

In other words, if the middle class triumphs and taxes go up on the wealthy, the wealthy will retreat to points unknown while the rest of us are left standing around wondering from where our next hand out will appear.

For the record, just because I favor raising taxes on all corporate profits, closing all corporate tax loopholes (especially of the offshore variety), and doing away with subsidies to last century's industries like oil, coal, and natural gas doesn't mean I hate the wealthy. Oh, and I'm not a socialist. (Ok, I admit it. I am a little on issues such as universal health care and higher education, but that's for another post.)

And, just because I think the Bush Tax cuts for individuals earning over $250K ought to expire and, frankly, those rates ought to go up a little more, also doesn't mean that I hate the wealthy. Hell, I've spent my entire adult life working pretty hard and taking risks with start-ups - including my own; twice! - to try to be among them. Never once has my tax rate come into the thought process that went into those decisions. Never once have I met a true entrepreneur who said that taxes - especially of the personal income variety - were part of their decision making process for starting a business.

There is no class warfare. It's imaginary, just like that fictional character in that novel written by a Russian atheist who didn't know you-know-what from Shinola when it came to economics. There's nothing to be afraid about. The wealthy are not going to take their marbles and go home if their taxes go up. They aren't going to curl into fetal positions on beach chairs somewhere and wallow in their hatred of government. They'll do what they do best; find ways to create more wealth for themselves.

As for those CEOs and business owners who want to make a statement by laying people off or closing up operations because their taxes are too high, I say this. Either they aren't very bright, they aren't really entrepreneurs, or they are liars. Only a foolish business person would take such actions if the business was doing well. Business people don't just walk away from their business. At the very least, they sell it so they can go someplace sunny the rest of their lives and enjoy their prosperity. I hope to join them one day, so long as it's not as the old guy bringing them fresh towels and cold drinks.

It takes a thriving and prospering middle class to be a thriving and prosperous economy. This is why I'm so absolutely astounded by anyone who isn't making $250K or more who identifies themselves with the GOP and supports the likes of Boehner, Ryan, Cantor, McConnell and that crowd. Here's why I say that.

Businesses cannot survive and thrive without customers. Without a strong and consuming middle class, there is no market, businesses won't prosper, and business people can't make as much money. Smart politicians and business people understand this, and history has proven that the middle class needs more than some "trickle" coming down from on high in order to grow. Ask the medieval kings how that whole serfdom thing worked for them.

Today, it's not class warfare. It's not warfare of any kind. It's ethics and arithmetic. The wealthy are not paying their fair share. That's the arithmetic. More than that are the ethics. The wealthy are not paying enough back to society. It's our society and how economics within it operates, after all, that gives them the environment in which to create, function, and prosper. (No, conservatives, business did not build that.) The wealthy owe a debt back to our society paid in the form of taxes in order to keep our society functioning for this generation of all people and for the next generation of entrepreneurs.

I think that it's childish, silly, and dangerous for us to believe that Big Money isn't pulling the strings in DC. Let's not kid ourselves about which strings they have more of and pull more often. It's the self-appointed defenders of business. It's the GOP.

That said, this "war" being waged over taxes on the wealthy and the possibility that they will therefore refuse to magically create jobs if their taxes go up is even sillier and more dangerous. We need to be more mature in our thinking when it comes to politics, policies, regulations, laws, and tax codes that are more progressive and which move to ensure the majority of Americans are not back in the conditions that most average people endured in the Gilded Age.

My grandparents came to America in the great immigration of the early 20th century. My parents were born in America in 1915 and 1925. They told vivid and disturbing stories of what it was like to live under the boot heal of unregulated, under taxed, and wildly powerful Big Money corporations back then. Why today's middle class thinks we need to return to tax policies and regulatory environments that even come close to those days is beyond my comprehension.

So, I wonder what it will take to get the dwindling middle class in the GOP to stop voting against their own economic self interest?

I wonder if the GOP will ever stop trying to sell us on the fallacy of trickle down economics, and I wonder how many more times we will need to see that economic theory proven wrong before we shunt politicians who espouse it to the sidelines where they belong?

My advice is simple. Let's do the math, do what's right, and put ourselves back on a track toward recovery for the vast majority, not the privileged few. Let's stop pretending that there's a war between the classes, and let's stop believing in fiction as a basis for an economy.

When 1% is Bigger than 99%

What I love most about stats and math is that they are apolitical (or at least they used to be). They care not for party affiliation, for whom you vote, or where you get your news.

To wit.....
....If your household income isn't at least $386,000 a year you're in the 99%, not the 1%
....14,000 American families make up the top 0.01% and AVERAGE $31million a year

0.01% is 1 out of every 10,000 families. They earn 5%, or 5 out of every 100 dollars, of all income earned in America. That leaves the other 95 to be split up among the remaining 131,986,000 American households(1).

Is it any wonder poverty in America is now at 14.3%(2)? That's 14 out of every 100 people. 14% is just over 2 out of the 17 people listed in the To: field of the original email from which this post was created. Think about that. 2 people out of every group this size in America lives in poverty. Not working poor. Not middle class. Not having to sacrifice that European vacation or third car in the driveway this year. Not cutting back on eating out or trading in filet mignon for ground chuck at the grocery store.

Poverty.

What is poverty? Poverty defined for a family of 4 is earning $22,314/year(3). That's $10.72/hour if it's full-time work; 40 hours a week, 2080 hours a year, at $10.72 per hour.

The second largest single employer in the U.S. (behind the federal government which, btw, includes everyone in the military before anyone starts ranting about the size of government) is, you guessed it, Wal-Mart. Average employee take home pay at Wal-Mart is $250 a week, or $13,000 a year if they actually work all 52 weeks. Wal-Mart's "full-time" employees average $6 - $7.50 an hour for working 28 - 40 hour weeks(4)

The federal minimum wage is $7.25/hour(5).

Am I the only one who thinks it's madness for companies to be required by law to pay $3.50 an hour LESS than the poverty rate?

I'm not against wealth or the wealthy. I am not a communist.

I'm all for a strong, vibrant, and sustainably-consuming middle class because we are the true engine of the economy. Without us, there are no markets to whom corporations can sell their goods and services, make a profit, and create more wealth for themselves and their shareholders. I am perfectly fine with that.

Something has gone terribly wrong, though, over the last 30 years or so and we need to get back to what we know works.

I'm no big devotee, but for all his faults and his anti-union stance Henry Ford seemed to understand how things could work for himself, his company, and his workers. He knew that in order to build a big, successful company he had to:
a) build a product people would want,
b) price that product (based on cost and a reasonable profit) so enough people could actually afford to buy it and,
c) create a big enough and sustainable market to buy his cars, partly by paying his workers enough to actually buy the damned things.

Like I said, there's a lot about Ford's business methods I don't like, but what confuses me now is how we seem to be living in an age when some of us in the middle class have forgotten this "symbiotic" reality between producing goods and services that markets want and can afford versus how much the people at the top want to earn from that buying and selling.

In other words, without all of us in the 99% underneath the 1% from where is their wealth supposed to come?

Oh, yeah. Wait. That's right.

Their wealth can still come from record-level profits derived at least in part from continuing to outsource what we used to call middle class jobs to the absolute cheapest overseas labor markets. The government isn't forcing them to do that. In fact, "free trade agreements" help to facilitate that. It's a P&L decision made easier by government removing regulation.

If that's not enough, their wealth can still come from duping some of us into believing that what we need to do is elect people who will bring "certainty" to their business, as if that's ever supposed to be a component of a free market and capitalism. Exactly how does government provide certainty to those poor, abused, and fearful titans of industry and commerce? I thought government was supposed to get out of their way, not do things for them?

From what we're being told by one party in particular (and only to a lesser degree by the other), certainty would come if only the following could be realized:

1) Deregulation
If corporations - and especially the financial services sector - were utterly and completely deregulated, the economy would just grow like crazy because who needs a watchdog when you have the "invisible hand" to guide you? We've seen - and even Greenspan has admitted - that hasn't worked out all that well, but what does he know?

2) Lower - even zero - taxes
If only the wealthy "job creators" and corporations - which, when it comes to corporations, we are now told by the Supreme Court and certain GOP candidates are people just like us - could just pay even less - better yet, no - taxes they could hoard even more cash until "certainty" finally arrived. Then they would have the confidence they need to create all those wonderful minimum wage and non-union jobs, and everyone could stop all their occupying and whining about not being able to find a job and get back to work.

3) Fear-driven cuts and bailouts
And if all else fails? Well, the powerful elite will still have their bought-and-paid for minions in Big Government in both parties who will be more than happy to cut social programs for the poor (who have no power anyway) while they take that money - our tax dollars - and distribute what's left to banks and private companies as tax breaks and bailouts for the mistakes they made because, as we all know, a free market based on libertarian principles and pure capitalism cannot afford to fail.


Sources:
(1) Where the One Percent Fit in the Hierarchy of Income, New York Times, 10/28/2011.
http://www.nytimes.com/interactive/2011/10/30/nyregion/where-the-one-percent-fit-in-the-hierarchy-of-income.html?nl=todaysheadlines&emc=thab1

(2) U.S. Census Bureau Quick Facts.
http://quickfacts.census.gov/qfd/states/00000.html

(3) U.S. Census Bureau Poverty Data.
http://www.census.gov/hhes/www/poverty/data/threshld/

(4) Store Wars: When Wal-Mart Comes to Town, PBS.
http://www.pbs.org/itvs/storewars/stores3.html

(5) U.S. Department of Labor; Wages.
http://www.dol.gov/dol/topic/wages/minimumwage.htm

The Inconvenient Truths About the Economy and the GOP

First Trust chief economist Brian Wesbury's 2nd Quarter GDP research reports...

"Corporate profits were also revised up slightly, to a new all-time record high. Profits were up at a 13.7% annual rate in Q2 and are up 8.5% versus a year ago."


How's that for an inconvenient truth for the GOP, for their big business puppet masters, and for the inexplicable non-two-percenters who defend them both?

So where are the jobs?
Where's the recovery?
Anyone? Anyone?

Greta? Gretchen? Shawn? O'Reilly? Anyone?

Herman? Michele? Rick? Mitt? Sarah? Anyone?

How come none of them talk about this?

Corporate profits are at historic levels, as is the wealth gap. Taxes are already at historically low levels, as are interest rates on credit for those rich corporations and individuals who have access to it and the neo-cons, Randians, tea baggers and the GOP want to blame all of our problems in our economy on, what, overpaid civil servants, the 11% of American workers still in a union, illegal immigrants, and the poor and working poor?

Isn't that just a little bit ridiculous?

Will We in the Middle Class Never Learn?

Joe Nocera's New York Times op-ed of June 17, 2011, "The Banking Miracle", makes me wonder why it's so hard for some people to accept what history has to tell us?

America's economic greatness is measured by its middle class, not the wealthy. We seem to be doomed without a vibrant, optimistic, and prospering middle class that has the money to spend on the goods and services that the economy produces. An irony in all of this is that we in the middle class are partly to blame. We are so caught up in striving to be wealthy - or at least occasionally feel like we can live a little of our lives as if we were - that we can be our own worst enemies when it comes to racking up personal debt. The difference between us and the bankers, however, is that our debts are our own and, as we should have learned from history and are so painfully learning again, so are Wall Street's.

We also become our own worst enemies when we start believing and supporting the fallacy of trickle down economics. History proves that model doesn't work. Correction. That model works perfectly well for the very wealthy. It's a superb model for widening the wealth gap and concentrating wealth in fewer and fewer hands.

So I continuously wonder how many more times will it take before intelligent individuals look at history, do the math, and accept that the rich consider the rest of us to be little more than economic chattel; property, as it were, to be bought and sold for the benefit of the uber-rich and powerful? By supporting failed economic models and legislative policies that benefit the wealthy over the middle class, we are doing little more than engaging in wishful thinking while clinging to a blind faith that by prostrating ourselves at the feet of the wealthy we might some day be invited to a seat at their table. Even without such an invitation, some of us cling to an even more dangerous and failed belief that what's needed now is to remove any last bit of regulation and to put our full faith and trust in the hands of wealthy capitalists and bankers. These are the very people who not only have caused the last two great economic collapses, they have mastered the art of duping an uninformed and blissfully ignorant portion of the population into believing that without them we will have even fewer opportunities to live a life that has any hope, dignity, or comfort at all.

IMHO, those of us in the middle class who believe these fairy tales do ourselves and our fellow citizens a grave injustice by thinking that the best a free market system has to offer is whatever scraps the richest among us care to share from their plates.

Economic collapses aren't and never have been caused by unions, the middle class, the poor, or illegal immigrants. Men from places like Goldman Sachs, JP Morgan, and other big houses on Wall Street have been at the root of our economic collapses. They've never really been the catalyst of economic growth and prosperity, either. They've never built a single car, computer, or line of software code. They don't build buildings and they don't grow food. They don't mine minerals and they don't teach our kids in schools or deliver health care. To be sure, they play a role as middle men in making the financing possible to do those things. They ostensibly provide the supposed financial expertise to evaluate the risk-reward equation. They have the contacts to be able to put monied interests together with those who need the investment capital. So at the end of the day, what are they? They are the hosts of a multi-trillion dollar Match Game for which they are paid astronomical sums and for which we are supposed to be grateful for their parts in the "jobs creation" equation.

Here's the rub. When their bets win, they reap the rewards in terms of massive personal wealth which never really trickles down very far, if at all. Good for them. Our system is supposed to reward intelligence and achievement, and I'm all for that. But what happens when there are no rules in place and their gambles go south? Who suffers? Who has to pay for those bad bets?

History cannot be denied. We know by looking back that when there are either too few or no borders, boundaries, or rules by which people - including capitalists - must play, bad things tend to happen. Call it a sad reality of human nature. Call it whatever you like. The reality cannot be denied. The concentration of wealth - and the unregulated power that goes with it - is what was at the root of the Great Depression and the Great Recession. And while the post-WWII prosperity this country enjoyed for the latter half of the 20th century is not completely the result of Glass-Steagall, the undeniable truths are that the bill existed until Reagan and Greenspan successfully vilified government and financial regulation, and Clinton signed a GOP piece of legislation into law that the Republicans had wanted since the 30s to reverse Glass-Steagall known as Gramm-Leach-Bliley.

And where do we find ourselves again and as a result? In an economy that widens the wealth gap, divides us on ideologies to the point where people stop talking to each other, and where, saddest of all, facts no longer matter.

Know what else cannot be denied? It's who pays for the *unregulated* bets that Wall Street makes and loses. Bets that we're now learning that Wall Street was making both ways by continuing to sell unregulated securities like mortgage backed securities and collateralized debt obligations even while they bet against them with credit default swaps? I can tell who didn't pay for those bad bets; the Wall Streeters who made them and who, despite the collapse, continue to make historic bonuses instead of being fired or going to jail. Whatever happened to accountability? Whatever happened to paying for one's mistakes? Whatever happened to business ethics?

So I have to ask, "Is the desire to regulate really socialism, and what is it called when an economic system privatizes all the gains and socializes all the losses?"

Are we witnessing a perversion of capitalism? Is the erosion of the middle class and vilification of the poor what happens when a wealthy and powerful oligarchy wields ever more unchecked and unregulated power, reaps all the rewards, and passes all of their losses onto us?

Is what we are witnessing really the truest expression of capitalism? Is the ultimate manifestation of our system really the plutocracy we are seeing now; a system where the rich few tell all the rest of us what to think and what's good for us and, out of shear fear and panic, we believe them?

Are we really going to become a society in which social programs are seen as wasteful and frivolous; where the availability of medical science and technology that can improve and save lives is reduced to an economic ROI calculation; where average people who have played by the rules and worked hard all their lives become indigent in their old age; and where we gladly pursue and support economic and political policies that produce short term gains for a few with no regard for long term pains for the many?

Are we that blind? Are we that cold? Have we really lost our intelligence and our humanity at the same time?

What happens next? Do we continue to allow our system to devolve into a kleptocracy where government is replaced by capitalism, ruled completely by and for the exclusive and sole benefit of the richest among us, and where we finally and completely see them steal any lingering shreds of dignity and paltry wealth we have left?

It just seems to me that we are hurtling toward a doom that comes only from a completely unregulated capitalist system - at least as capitalism is being practiced today in America. IMHO, we have some people within the middle class who support the idea of less regulation, who refuse to learn from history, and who won't face reality to partially thank for it.

If we were united in the middle class and in our demands for fairness, equality, and sensible rules to protect the economy as a whole, I could see us creating the environment for real recovery and prosperity just as was the case during that period in the 20th century when the wealth gap wasn't so wide and legislation like Glass-Steagall kept people from making fortunes by knowingly making bets that only paid the dividends and never saddled them with the losses.


Related Sources
Rampell, Catherine. (June 17, 2011). For Want of a Word, Arizona’s Jobless Lose Checks. New York Times. Retrieved from http://www.nytimes.com/2011/06/18/business/18benefits.html

Howard, John. (June 2, 2011). Goldman Hit With Subpoena Over MBS Antics. Law360.com Retrieved from http://www.law360.com/topnews/articles/248863

The Daily Show: Exclusive - William Cohan Interview Parts 1 and 2 (April 28, 2011). Retrieved from
http://www.thedailyshow.com/watch/thu-april-28-2011/exclusive---william-cohan-extended-interview-pt--1
http://www.thedailyshow.com/watch/thu-april-28-2011/exclusive---william-cohan-extended-interview-pt--2


----- Original Message -----

Sent: Saturday, June 18, 2011 7:15:29 AM
Subject: The Banking Miracle

The president of the American Bankers Association was railing against excessive regulation in a speech at the Waldorf Astoria. The banking reform bill, he complained, “would destroy a substantial part of our bond-distributing machinery.” He added, “Can anyone expect that a step of this kind will improve the quality of our long-term investments?”

Modern echoes, for sure. But I read about the speech in a Jan. 27, 1933, article culled from the wonderful archives of The American Banker, the bankers’ bible now celebrating its 175th birthday. The speaker, one Francis H. Sisson, was complaining about an early version of the Glass-Steagall Act, the most famous of all Depression-era bank laws, and the one that, in retrospect, probably did the most good. Less than six months after Sisson’s speech, President Franklin Roosevelt signed it into law.

From my vantage point here in 2011, Glass-Steagall seems miraculous. It was amazingly radical, not just for its time, but for any time; it didn’t so much reform banking as upend it. Most notably, it ordered banks to get out of the securities business. As Sisson complained: “The effect of the proposed banking reform is to renounce investment banking rather than regulate it.” Because investment banking was then the chief activity of the big banks, this was a very big deal.

Glass-Steagall also created the Federal Deposit Insurance Corporation, which insured customer deposits for the first time, and outlawed branch banking by national banks, among other things. It is impossible to imagine anything like it passing today; although the modern reform bill, Dodd-Frank, surely does some good, it’s not even comparable.

I’d long wondered how Senator Carter Glass, the powerful Virginia Democrat, and his House counterpart, the Alabama congressman Henry Steagall, managed to get it passed. What were the politics like? What did they fight over? Why didn’t people like Sisson have better luck pushing back against it, the way bank lobbyists do today? So I asked the editors at American Banker if they would send me some articles from the era that would shed some light on the question. Happily, they obliged.

The first thing I realized is that all the horse-trading over the bill’s provision was done by Democrats. The Republicans, having been badly defeated in the 1932 election, had no ability to block it or even amend it. For instance, Republicans tended to view the creation of deposit insurance as “socialism.” (Sound familiar?) But it didn’t matter: Steagall cared deeply about deposit insurance. Many community bankers — as strong a force back then as today — also supported the idea because they believed it would renew customers’ faith in the banks, and bring back deposits. (This turned out to be true.) Glass, though skeptical, went along so he could get things he cared about, mainly a stronger Federal Reserve with more power over the banks.

The second thing I realized was that, the Sisson speech notwithstanding, there was surprisingly little controversy over what we now think of as the law’s primary achievement: splitting commercial and investment banking. The fights were all over issues that seem inconsequential by today’s lights. It’s as if the notion of breaking the banking business into two was always a foregone conclusion.

And, for the most part, it was. Partly, this was because, unlike today, bank failures in the 1930s were often ruinous to customers. So reform was more pressing. But it was also because, for the entire time the legislation was under consideration, the Pecora hearings were going on — in which Ferdinand Pecora, the flamboyant chief counsel of the Senate Banking Committee, dragged one well-known banker after another before the committee and grilled them mercilessly, exposing how they had abused their investment banking roles, sometimes to the point of criminality. The Pecora hearings serve as a steady drumbeat in the American Banker articles.

Those hearings infuriated the country, and made it unthinkable that banks would continue to be allowed to sell securities. In fact, some banks, seeing which way the wind was blowing, applauded: “The spirit of speculation should be eradicated from the management of commercial banks,” declared Winthrop Aldrich, the chairman of Chase National Bank, according to Michael Perino, Pecora’s biographer. Ironically, Glass loathed the Pecora hearings, deriding them as “a circus, and the only thing lacking now are peanuts and colored lemonade.” But the hearings made his bill — which had been filibustered by Huey Long just 18 months earlier — not just possible but inevitable.

How inevitable? Charles Geisst, a finance professor at Manhattan College and an expert on the law, says that the House and Senate didn’t even bother with a roll-call vote for final passage. This seminal piece of legislation, which helped keep the banks out of trouble for the next 70-plus years, flew through on a voice vote. On Friday, June 16, 1933, when Roosevelt signed it into law, The American Banker gave the news all of three paragraphs. There was nothing left to say.



Joe Nocera

The Economist: Network Neutrality Problems In The U.S.

http://www.economist.com/node/17800141


Isn't the question of what is fair and reasonable for both the corporation and the citizen simply a question of "fair and balanced" regulation of those markets by elected officials?

If Communism's complete control of an economy is a bad thing, isn't it possible that a purely free and unregulated capitalist economy can be bad at some level, too?

Isn't our political system some evidence of the benefits and righteousness of "checks and balances", and that those checks and balances ought to extend to citizens and corporations alike?

So why this love affair by some with complete and total deregulation?

To expect "benevolent" corporations driven purely by profit, shareholder value, and led by people we don't elect and can't control to regulate themselves is, IMHO, dangerously naive. Where's the proof that they have the proper incentive to put society's collective long-term interests ahead of their own immediate personal gain?

History has proven to me that we can't trust the people who run corporations to regulate themselves properly. (For an interesting treatment of incentives, I would recommend a book I've just started reading, Freakonomics. Pretty interesting and not what I was expecting.)

What confounds me so completely is how so many in the middle class appear so blindingly naive to the reality of unregulated corporations and the people who benefit from them. They seem blissful in their intentional ignorance and dismissal of the facts that insufficient regulation has proven again and again to be disastrous to our economy, our environment, and our safety. They cling to the false promises of trickle down economics and tax breaks for the wealthy, neither of which has ever worked and which still don't, while the economic malaise of the last 10 years continues, unemployment remains high, and Wall Street bonuses are at record levels.

I don't understand why some people warn against FCC regulations while, in the same breath, profess to completely and utterly trust these same companies to benevolently use their near-monopoly positions to do the right thing as they control not just *how* but even *what* we access. It's crazy.

Monopolies are never good except for those who control them. Keeping monopolies from forming, and controlling companies who would gladly be a monopoly if they could, needs to be a function of government officials we elect and the people they then appoint to manage regulatory agencies. I trust those I can "fire" through frequent and regular elections - as badly corrupted as that process can and will continue to be without meaningful campaign finance reform and the repeal of the travesty that is the Supreme Court's Citizens United ruling - much more so than the people running corporations whom I can't fire and who see me only as a potential revenue source to be squeezed for maximum value on a financial quarter-by-quarter basis.

Those of us old enough to remember the break up of AT&T know what it meant for competition. Speaking only for myself, I believe I have that break up to thank for a career that includes working for companies who trace their very existence to the government stepping in and breaking up AT&T. Innovation comes from competition, not from monopoly. Competition is supposedly a cornerstone of free markets. I vigorously support that principle. I have spent the better part of my career helping companies to compete and win business, and hope to do so again soon.

However, the price we pay and the risk to us as citizens for that innovation needs to be part of the discussion. I really don't think we can trust corporations to do anything more than what is best for their shareholders. That is, after all, the mission of a for-profit corporation. I have no problem or issue with that. I simply have been around enough CxOs, boards of directors, and a few angel investors and VCs to know that when it comes to choosing between money and people, money wins every time.

That's not to say that these are bad people. It *is* to say that given free rein, the incentives built into our capitalist system drives these John Galts to thinking only about their own short-term personal gain and wealth even if it has to come at the expense of and to the detriment of everyone else.

All of today's belly-aching by big corporations and their paid-for (mostly) GOP mouthpieces about needing to control their networks without government interference while they simultaneously don't open those networks to competition is all the evidence I need to support greater and not less regulatory oversight of network access providers (some of whom I'd like to be working for right now).

What's lacking, especially in the Democratic party, is political will. It takes political will to stand up to these corporations and to their terribly misguided, misinformed, and naive supporters in the middle class.

I'm more than a little surprised and happy to see The Economist essentially conclude the same thing when it comes to political will.

Charley Reese's 545 People

I have no argument with the general sentiments of the email copied in below. It is, however, the victim of present-day and all too typical sets of changes without citations which then appear to belong to the original article.

I admit that I haven't spent a ton of time researching this, but this is what I was able to discover.

The original article was written by Charley, not Charlie, Reese in 1985. You'd think people would at least get the guy's name right.

Ronny-boy was resident at 1600 Pennsylvania Ave in 85. He was, with the same level of intellect and with the same kind of help a kindergartner gets when finger painting, the one proposing federal budgets in 85.

In 85, Dems controlled the House. (The GOP held the Senate.) Dems were clearly responsible for having the balls to tell President Chimp to go f*** himself budgetary-wise. (Any-reason-wise would have been good with me.) True to form, the spineless cowards didn't.

Notwithstanding all the editorial changes and additions too numerous to mention here, the original Reese article ends with the phrase "...have the gumption to manage their own employees." It's our fault for whom we vote into office. Granted, the pickings have never been very good. IMHO, they have degenerated into something almost completely unrecognizable and bordering on inhuman in the GOP. I submit Sharron Angle as Exhibit A.

Reese's article has reportedly been updated by the author from time to time. A 1995 revision, when the GOP controlled both houses of Congress and Slick Willy was proposing budgets, includes the following passage:

"Everything on the Republican contract is a problem created by Congress. Too much bureaucracy? Blame Congress. Too many rules? Blame Congress. Unjust tax laws? Congress wrote them. Out-of-control bureaucracy? Congress authorizes everything bureaucracies do. Americans dying in Third World rat holes on stupid U.N. missions? Congress allows it. The annual deficits? Congress votes for them. The $4 trillion plus debt? Congress created it."

GOP-controlled Congresses, as the article points out, are as guilty as Dems for not acting with fiduciary responsibility.

I found the end of the email to be downright comical. Times were better 100 years ago? Really?

I'd love to see proof that "...our nation was the most prosperous in the world" in 1910. Someone must have forgotten or ignored their history. Everything I've ever read or learned in school attributes our role in WWII as the factor most responsible for our rise to global prominence. Before that, we were wannabes.

"We had absolutely no national debt"
There was national debt in 1910, too. The fact is that there has never - NEVER - been a time when the federal government didn't carry some debt, including during the budget surplus years of Clinton.

"...had the largest middle class in the world"
Really? Someone please provide proof that there was anything even remotely resembling what we would call a middle class in America in 1910 even if it wasn't the largest in the world.

I only wish that my grandparents were still alive to ask. If you have any friends or relatives left who lived through even the Depression and WWII, ask them if they considered themselves to be "middle class" back then. Then ask them to compare it to their standard of living today.

My father (1915 - 1989) and mother (1925 - 2010) grew up in the warm embrace of unregulated, capitalist-driven, middle class status.

They really had it all, those lucky children of immigrants-turned-middle-class-Americans. After all, what's not to like? They enjoyed the comforts and security that could have come only from being serfs to...I mean, the lucky employees of..... kind, benevolent, unregulated, and non-unionized coal companies.

Their lives were replete with all the middle class luxuries we would recognize, and maybe even envy, today.

Middle class luxuries such as....
....outdoor plumbing
....endless, discount-priced shopping opportunities at the company store
....threats, beatings, and sometimes even killings....wait, I mean safe and secure working and living conditions.... courtesy of company-paid private security
....and the one thing that seems to completely resemble today's middle class American - totally oppressive debt, but in their case to the company store instead of big banks and credit card companies.


Sources:
http://www.snopes.com/politics/soapbox/reese.asp
http://articles.orlandosentinel.com/1995-03-07/news/9503060362_1_blame-congress-passed-by-congress-bureaucracy/2
http://www.ustreas.gov/education/faq/markets/national-debt.shtml
http://www.cbo.gov/ftpdocs/117xx/doc11766/2010_08_05_FederalDebt.pdf
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

----
"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little"
FDR inaugural address, 1/20/37. http://historymatters.gmu.edu/d/5105/





The article below is completely neutral, ...not anti Republican or Democrat.

Charlie Reese, a retired reporter for the Orlando Sentinel has hit the nail directly on the head, defining clearly who it is that in the final analysis must assume responsibility for the judgments made that impact each one of us every day.

545 vs. 300,000,000

EVERY CITIZEN NEEDS TO READ THIS AND THINK ABOUT WHAT THIS JOURNALIST HAS SCRIPTED IN THIS MESSAGE. READ IT AND THEN REALLY THINK ABOUT OUR CURRENT POLITICAL DEBACLE.


Charley Reese has been a journalist for 49 years.


545 PEOPLE--By Charlie Reese

Politicians are the only people in the world who create problems and then campaign against them..

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget. The president does.

You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.

Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits..... The president can only propose a budget. He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House? Nancy Pelosi. She is the leader of the majority party. She and fellow House members, not the president, can approve any budget they want. If the president vetoes it, they can pass it over his veto if they agree to.

It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it's because they want it unfair.

If the budget is in the red, it's because they want it in the red ..

If the Army & Marines are in IRAQ , it's because they want them in IRAQ

If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way.

There are no insoluble government problems.

Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.

They, and they alone, have the power..

They, and they alone, should be held accountable by the people who are their bosses.

Provided the voters have the gumption to manage their own employees...

We should vote all of them out of office and clean up their mess!

Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.

What you do with this article now that you have read it......... Is up to you.
This might be funny if it weren't so darned true.
Be sure to read all the way to the end:
Tax his land,
Tax his bed,
Tax the table,
At which he's fed.

Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for peanuts
Anyway!

Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.

Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.

Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.

Tax his cigars,
Tax his beers,
If he cries
Tax his tears.

Tax his car,
Tax his gas,
Find other ways
To tax his butt.

Tax all he has
Then let him know
That you won't be done
Till he has no dough.

When he screams and hollers;
Then tax him some more,
Tax him till
He's good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he's laid...

Put these words
Upon his tomb,
Taxes drove me
to my doom...'

When he's gone,
Do not relax,
Its time to apply
The inheritance tax..
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge Tax
Social Security Tax
Road Usage Tax
Recreational Vehicle Tax
Sales Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Nonrecurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.

What in the heck happened? Can you spell 'politicians?'

American Pie....That You Shouldn't Want

Don't get me wrong. I think the American religion of capitalism has some merit. I've done ok by it, I guess. But it also seems to me to be fraught with failure; failure that is rigged into it for most of us no matter what we want to believe about unfettered and free capitalist markets that create opportunities for any of us to be rich.

Believe in tinkle-down economics and corporate benevolence if you like, but the reality is that the vast majority of us are only so much chattel in the execution of an economic model that sees people as expendable resources. That's not rain splashing on top of your head. More on that in a minute.

How else can our indifference and downright hatred and contempt from some segments of our population be explained? I'm no theologian, but I don't think it can be explained as part of any mainstream religion.

No, IMHO, it comes from what I consider to be a terribly misguided resurgence of Randian capitalism and what seems to be a built-in contempt in conservatism for anyone not meeting their litmus tests and the definition of "success" in a capitalist sense. It all seems to me to breed an ugly culture of greed and amorality that spawns idiots like Beck, Limbaugh, and Palin who preach their sermons of lies and hatred. They make tons of money and grow their personal wealth by duping certain people in this country into thinking that things like universal health care and financial market regulations are bad ideas. In simple terms, their religion of capitalism puts greater value on money and individual wealth than it does on human life or protecting the rest of us from undue investment risks taken on by people who get all the reward and bear none of that risk.

(BTW and before anyone takes offense at my penchant for using the word 'dupe', it means to deceive. It has nothing to do with intelligence. Even the brightest people in the world can be deceived.)

Unfettered capitalism also dupes Americans into believing that we can buy our way into wealth and happiness. Who was it, after all, that made credit cheap and told us the only way to be happy was to stuff our lives with more and more stuff!?! Probably wasn't the liberal left.

Unfettered capitalism also seems to create a sense of entitlement among American consumers. Strange use of that term, entitlement, I know. What I mean is that we have allowed ourselves to be deceived - duped - into believing that we are entitled to cheaper and cheaper consumer goods so we can stuff our lives with more and more stuff without one wit of consideration for how, where, and by whom those goods are produced, distributed, and delivered to market. It was this video that got me thinking about that today.

The high priests of this capitalist religion - the "captains of industry", "Wall Streeters", and, yes, neo-Randians, so-called fiscal conservatives, even Libertarians - are more than happy to supposedly "serve the market demands", right? I mean, why not? If that's what Americans want then, dammit, we're Americans and that's what we're going to have. All that's being done is the servicing of the demands of the marketplace, right? If that's what people want, that's what we'll give them. What's wrong with that?

Fair enough. I'm ok with that....to a point.

If cheaper and cheaper is the siren song to wealth and happiness, how's that going to be possible in a country that produces fewer and fewer consumer goods? How's that possible where the middle class *is* the primary consumer marketplace and where that part of our society is under the most stress and may even be shrinking?

If everything has to get cheaper - and in the case of food, nothing could be worse, really, since the cheapest food products tend to be the least healthy for us - what's a good capitalist to do? Well, there's the always-popular answer of lowering labor costs. Turning people into chattel. It's either continue to ship middle class jobs overseas so you can pay slave wages to workers, or risk pricing your goods and services out of the market. Now that's good capitalism at work!

The very class of people capitalists need in order to have at least a domestic market - the middle class - are the very people getting hurt the most right now. Who's doing that? It's precisely and unequivocally the fault of unfettered and unregulated capitalism and capitalists.

I mean, you're not going to blame the poor are you?

And certainly you can't blame the government for over-regulation because the RRs - Randian Republicans - successfully deregulated financial markets when they passed GLB.

I suggest you think about this the next time you hear the ultra-whack-wing-right mouthpieces like Beck and O'Reilly and Limbaugh and Palin - or elected officials with "Waterloo" agendas - criticize an administration for not yet having fixed a broken economy. Are we that eff-ing stupid to think that 8 disastrous years can be remedied in one?

Think about this the next time.....
....a jobs number comes out
....someone complains that America doesn't manufacture enough and our trade balance is all out of whack
....someone claims that what's needed is less government regulation and not more
....someone points out that the middle class is shrinking and we're headed toward some banana republic state where you have only a small percentage of wealthy people living off the backs of an impoverished population.

Exactly where are jobs supposed to come from in an economy that long ago - and in the name of corporate profits and shareholder returns - shipped most of its manufacturing overseas where there's nothing close to our definition of a middle class?

And exactly how many "services" jobs can we reasonably expect companies to create and sustain in our economy? Oh wait, many of them now exist overseas, too. Why? Because labor is cheaper there. Remember that the next time you make a "language skills" complaint about the customer service agent who answers your call. It wasn't the liberal left who outsourced that job from Minneapolis to Mumbai. Thank your friendly neighborhood capitalist.

So what's the answer to our current economic mess? Is it more government bail outs to free market capitalists who want nothing to do with government involvement in their lives and their businesses? F***ing hypocrites.

Is it protectionism? Is it isolationism? Can't keep lowering operating expenses and outsourcing jobs to Asia-Pac countries and then close off our borders to the importation of those foreign-made goods. What would happen to the income statements of our benevolent corporations then?

Is it more regulation or less? History can teach us a lot if we just take the time to study it. The first Great Depression seems to have taught us very little.

I don't profess to know the answer.

What I do feel pretty confident that I know unequivocally is this.....
....it wasn't the so-called universal health care socialists who think it's time to rein in insurance companies who put money and profits ahead of humanity and humane treatment of others
....it wasn't the advocates for social equality and gay marriage rights who keep wondering why anyone else gives a f*** about them and their desire to get hitched
....it wasn't the "nut-job" environmentalists and tree-huggers who wonder why we can't see the reality that oil barons are simply protecting the last few drops of a disappearing resource from which they will wring every last penny at our expense
....it wasn't all those worrisome waves of illegal immigrants taking all those prized lawn-care and domestic housekeeping jobs from true middle class Americans
....it wasn't the inner-city poor luxuriating in lives of crime-free-front-stoop Doritos-munching and drug dealing
....it wasn't the peaceniks and war protesters who want the government officials brought to justice who dragged this once great country as low as it could go by admittedly torturing people
....and it sure as f*** wasn't the the middle class that put us into this mess.

No, no, no. It was..................................................................................nah, I don't need to say it. You know who it was. Whether or not you'll ever admit it out loud....now that's a different question. ;-)