Friday, April 18, 2014

The super rich get the best welfare

By the way, I urge everybody to watch Robert Reich's film Inequality for All that puts the problem in historical perspective, and explains why extreme wealth and income inequality is not just bad for our economy, but for the fundamentals of our democracy.

Pop quiz, hotshots: what was the top marginal tax rate under Eisenhower?  Kennedy?  Nixon? Find the answers and then ponder what you think people mean when they talk about the "good ole' days."  

By Hamilton Nolan
April 18, 2014 | Gawker

It's great to be rich. It's extra double great to be super rich. And not just because you have all that extra money—because being super rich actually lets you pay lower taxes.

As Floyd Norris points out today, our wonderful and democratic tax system, in which investment income is taxed at a far lower rate than regular income, means that the super mega ultra rich—who almost always derive a larger portion of their income from investments than any other group—actually end up paying a lower overall tax rate than the merely normal rich, who derive a higher portion of their income from salaries. (The same goes for the non-rich, but more so!) Specifically, "The superrich ($10 million+ income) paid 20.4 percent of their income in federal income taxes in 2011, while the very rich ($500K-$10 million) paid 24.5 percent."

That is dumb as hell.

Even leaving aside any issues of basic economic justice or fairness, here is a bit of worthwhile context: the latest research shows that although the wealth of America has risen by $25 trillion since the depths of the recession, that wealth is not helping us as much as it should, because it's not being churned back into the economy as much as we would expect. From Bloomberg:

His calculations show that since the recession ended in 2009, households have spent 1.7 cents of every extra $1 earned in wealth. That's less than half the 3.8-cent average implied by data between 1952 and 2009.

One reason for the adjustment may be that those enjoying gains in wealth are already rich, so have less propensity to increase spending incrementally.

Hmm if only we could somehow rectify this vexing situation oh yes TAX THE RICH MORE AND THE PROBLEM IS SOLVED.

Bloomberg is taking on the NRA

Ninety percent of Americans and more than 80 percent of gun owners believe in universal background checks to buy a gun, says Bloomberg... yet so far, that's still not enough to persuade Republican legislators.

That's why Bloomberg is willing to spend at least $50 million to take on the NRA and change lawmakers' minds.

Tuesday, April 15, 2014

Russian politics is about preserving the 'myth of Putin'

I translated this op-ed (HT: AK) about Russian President Vladimir Putin because this Russian insight is not something my Western friends will often see in the media.  

Piontkovsky does not agree with some analysts that we are entering a second Cold War with Russia. In fact he believes we are entering a phase much more dangerous for Russia's near neighbors and global security.

Read on!

UPDATE (16.04.2014): For my Russian-speaking readers, here is a long conversation with Piontkovsky on Radio Liberty, where he repeats many of these themes and touches on other points. Bottom line: he doesn't believe Putin can stop with annexing Crimea; then Putin would be "caught in a mousetrap" of gaining Crimea only to lose Ukraine to the EU. Furthermore, he argues that Russia's foreign minister Sergei Lavrov always out maneuvers SecState John Kerry, and the upcoming negotiations with the US, EU, Russia and Ukraine won't bring any results. Finally, Piontkovsky still believes the West is not willing to use force to stop Russia's interference in Ukraine, only economic sanctions.

Piontkovsky's last words: "In the case of very tough economic sanctions the only opportunity to stop this catastrophic development is the discontent of the upper layer [of Russia] and the establishment of the dictator's [Putin's] inner circle."

Must Putin re-unify the old Russian Empire to survive as the anointed Leader?

By Andrey Piontkovsky
April 15, 2014 | Echo Moskvy

"The mind cannot understand Russia; it cannot be measured by a common yardstick." -- has been the standard excuse of Russian and Western experts for a century and a half. But today it is not necessary to understand it. The problem is greatly simplified. For practical purposes in the medium term it is enough to understand the motives of one person. All citizens of Russia from the last bum to leaders of Forbes' global list with delight and awe gave him their fealty. And this man's actions are determined by only one criterion -- preserving his lifetime in power.

And it is not pathological lust for power, as it is sometimes criticized, but rather a quite natural concern for his personal security. He understands the laws how the system, built with his participation, function. At the end of this tunnel is the same place from which people with crowbars pulled the condemned Gaddafi.

Consider in this context Putin's policy towards Ukraine. It has been fairly consistent and logical at all its stages. Even the timid attempt of his fellow Ukrainian oligarchs to launder their criminal past, having turned into civilized European entrepreneurs, elicited his fierce rejection. In the Association Agreement with the EU, he rightly saw some chance for Ukraine to fall out of the chain of post-communist thieving regimes, and go to the European model of economic and political competition.

Such a development could in the future be contagious and an attractive example for his subjects and therefore must be nipped in the bud. Having by way of threats and bribery won Yanukovych's refusal to sign the Agreement with the EU, he found his tactical mission accomplished and did not think about Crimea . Why would he need Crimea when he controlled the whole Ukraine.

Maidan was a surprise to him as it was for so many. The victory of the February Ukrainian anti-criminal Revolution turned a theoretical threat to his lifelong rule into a real political problem today.

The top priority for Putin's judo-ism as a necessary condition for its survival became the defeat of the Ukrainian revolution, its maximum discrediting in the eyes of Russian public opinion and either the establishment in Kyiv of an obedient Kremlin power, or the dismemberment of the Ukrainian state while retaining control over most of it.

Here became useful plans that were already drawn up for the annexation of Crimea by the Special Security Forces. They were swiftly carried out as a natural first step in an ambitious, but quite ad hoc, and not long-term program of restraining Ukraine.

His Crimean speech on March 18th  was conceived as a propagandistic presentation  urbi et orbi of the annexation of Crimea in the most favorable light for the Kremlin. Unexpectedly, it seems to me, it became something much larger, even for the orator himself. The speech decided for him a personal problem that was much more important than even the strangulation of the Ukrainian revolution.

Let me remind you what I see as the nerve of the dictator's existential problem, which I have repeatedly said in recent years. Even the most brutal dictatorship cannot rely solely on violence. The genetic matrix of every authoritarian regime is a kind of systemic myth that deceives for a time a significant part of society.

The life cycle of the regime is the same as the life expectancy of this myth that takes shape in a period of storm and stress, reaches its acme, and finally fades away, taking with it the regime that it generated.

Similarly the Soviet communist system, generated by the myth of the Tsardom of justice and freedom, reached its tragic peak in the Soviet victory in World War II and died out in the late '80s , when not even members of the Politburo any longer believed the communist myth.

His little TV myth about a young vigorous intelligence officer sending Russian troops deep into the Caucasus, carrying terror and death blasting us in our own homes to terrorists and all enemies of Russia rising from their knees, created cynical Kremlin spin doctors in the bloody autumn of 1999. A key theme was the famous "toilet" phrase. [Putin famously declared that he would root out and destroy all Chechen-Islamist separatists, even in their toilets. -- J].   "He is ours," sighed contentedly Russia's feminine soul.

The entire political structure of the state has since then hung since then on a thin thread of the Putin myth. Consciously conceived as a simulacrum of a more ideological style, Putinism has, in its short biography, run through all the classic stages of Soviet history, becoming a vulgar parody of each of them. In 2008 it passed its pathetic acme (the victorious war with Georgia), and since then the growing nausea of the elite testifies to the death of the Putin myth.

He then moved to his zombie stage whose time has long exceeded the normal range. By all the laws of evolution of authoritarian regimes, Putin's judo-ism should have fallen already as a result of two interacting factors: mass protests by an active minority, and an elite schism.

This Russian anomaly -- the unusually long duration of the zombie stage -- is due to the unique nature of our elite/nouveau riche that rose up not by their creating something new, but by their banal digestion of the former superpower's remains.

Elites' aversion to the dictator, and their awareness of how disastrous for the country and for themselves the continuation of his reign must be, lives together with their fear of being left without him, left one on one with a sullen people who are infinitely alien and wild to them.

The flood of mass protests in 2011-12 that was not backed by the "elite" that proclaimed "we must influence the government, not blame it," convincingly demonstrated this.

However, to continue their zombie existence in the absence of a positive mobilizing myth, weakly defending in political discourse the meme, "Putin is a thief," is becoming increasingly uncomfortable and dangerous, especially given the irreversible collapse of the thieving economy.

And here became apparent the genius of Putin's speechwriter. He intuitively grasped that in the course of 15 years of TV's defilement, the people were ready for debauchery, and had become ripe, finally, for the idea of ​​reunification of the Russian World / The Fifth Empire.

The Leader's risky appeal to Germany's experience of a disunited people in his Crimea speech at the Federal Assembly was related on the surface to the early '90s, but more deeply, it was about creating myths related to the 1930s.  

Taking place before our eyes is the successful reloading of the rotten "toilet" myth of 1999. A new, radiant, uplifting myth is being born of Vladimir Tauride, Uniter of Russian Lands.  [Tavria is an older name for southern Ukrainian lands including Crimea - J.]  It is the last Russian myth, senseless and merciless.

Until March 18, Kyiv was the goal; the annexation of Crimea was a means to get it.

After March 18, the unification of Russian lands and the criminalization of the entire post-Soviet space or even the Russian Empire has become the plan of Kremlin myth-makers and bandits; it has become their mystical super-goal and higher meaning of existence, having finally risen from their knees and gained a worthy ethnic Russian national idea.

And at the same time it has given legitimacy to the lifelong rule of the anointed one.

And Kyiv? It is a milestone, one of the necessary stages of a long journey. Seventy-five percent of those surveyed in the Russian Federation support a military solution to the Ukrainian question. This is the final diagnosis of a society subjected to the most brutal radiation by television porn-propaganda.

The reloading of a system-creating myth, and the anointing of Putin's rule for life in the robes of Russia's Messiah, will lead to fundamental changes in domestic policy and relations with the outside world, especially regarding the Russian Federation's military and nuclear strategy. Each of these areas deserves more consideration that I will give in the near future. In the meantime, I'll stick to general comments.

Some experts have expressed fears that this will lead to the start of a new Cold War. I strongly disagree.  It will lead to a state of Russia's relations with the West that is much worse and more dangerous than the Cold War.  During the Cold War, U.S. presidents and general secretaries of the Central Committee of the Communist Party after the dramatic experience of the Cuban missile crisis considered nuclear weapons only as way to prevent military conflict between them, as a tool to maintain strategic stability. They did not wave the nuclear club in front of each other.

The politician who has taken it upon himself to recreate the Russian World by redrawing state borders, who has a huge nuclear arsenal and relatively weak regular army is bound to proclaim (which was formally done ​​in 2008 ) a free hand in the former Soviet space, blackmailing his ​​"partners" in the erstwhile G-8 who disagree with this idea with the threat of nuclear weapons, i.e. the threat of mutual suicide.

Actually the nuclear bluff works today in the war with Ukraine. The famous remark about "radioactive ash" [recently by the Russian TV newscaster Dmitry Kiselyov, aimed at the USA --J] was undoubtedly approved at the highest level.

Characteristically, the first words of Obama and Rasmussen over Ukraine were assurances that U.S.-NATO military intervention was out of the question because Ukraine was not a member of NATO.

Well, what if the inhabitants of Narva [a city in Estonia, bordering Russia, with a large ethnic Russian population - J] tomorrow hold a referendum on accession to Russia? Will tens of millions of people in the U.S. and Europe be willing to risk war with a super-nuclear power and die for Narva?  Putin is convinced that they will not be ready. And I agree with him.

Kim Jong-un with just one bucket of nuclear slop as blackmail makes the whole world dance around him and equip the army with food. And by the way the Kim family safely ruled for 70 years and the youngest is also planning to die in his bed in his old age .

Imagine what opportunities await Putin if he finally breaks his bonds, overturns the chessboard and also plays "against the rules." That's why he was kept so long in the G-8, even when he started to frankly ***** in their eyes.

And his behavior is not madness. It really is another reality beyond the comprehension of respectable Frau Merkel and Chicago's union rouser Obama.

International relations are entering the most unstable and volatile place they have been in the past 60 years.

If we seek an analogy in Soviet-Russian history, I would compare the current Putin reboot to the last months of Stalin's life (October 1952 - March 1953). That leader, like all in his rare profession, was also concerned, and not without reason, with the problem of preserving his own power and life. And so he thought up a three-pronged reboot: the forced preparation for a Third World War, the elimination of the party leadership, and the radical solution to the Jewish question.

At that time, the Russian God intervened at the last moment in a fatal course of events for Russia...

Underpaid Walmart workers cost taxpayers $6.2 billion a year!

Meanwhile, the six Walton heirs are worth about $150 billion.  And Walmart earns $13.5 billion a year on food-stamp sales.

Yep, that's my country.

Check out the full report or the executive summary.

The Duh files: Study reveals U.S. is an oligarchy

Well knock me over with a feather!  

By Hamilton Nolan
April 15, 2014 | Gawker

new study by researchers from Princeton and Northwestern Universities finds that America's government policies reflect the wishes of the rich and of powerful interest groups, rather than the wishes of the majority of citizens.

The researchers examined close to 1,800 U.S. policy changes in the years between 1981 and 2002; then, they compared those policy changes with the expressed preferences of the median American, at the 50th percentile of income; with affluent Americans, at the 90th percentile of income; and with the position of powerful interest and lobbying groups.

The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence. Our results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism...

Recent research by Larry Bartels and by one of the present authors (Gilens), which explicitly brings the preferences of "affluent" Americans into the analysis along with the preferences of those lower in the income distribution, indicates that the apparent connection between public policy and the preferences of the average citizen may indeed be largely or entirely spurious.

The theory of Economic Elite Domination is fairly self-explanatory. The theory of Biased Pluralism holds that policy outcomes "tend to tilt towards the wishes of corporations and business and professional associations." In essence, the researchers found that government policy changes are correlated with the wishes of the wealthy and with interest groups, but not with the wishes of the average American—even though the whole idea of "Democracy" is to ensure that the wishes of the majority tend to carry the day.

The study notes that the position of the median American and the position of the affluent American are often the same; therefore, regular people tend to think that their political interests are being represented when they see the triumph of some political position that they agree with. In fact, the researchers say, this is a mere coincidence. Yes, the average American will see their interests represented—as long as their interests align with the interests of the wealthy.

Furthermore, the study found that the positions of powerful interest groups are "not substantially correlated with the preferences of average citizens," meaning that to the extent that special interests groups have political power, they are driving our government's decision making process away from the interests of the average American. Our current system of a competing thicket of special interest groups all fighting for influence is not equal to a true representation of the wishes of the citizenry. "Whatever the reasons," the study says, "all mass-based groups taken together simply do not add up, in aggregate, to good representatives of the citizenry as a whole. Business-oriented groups do even worse, with a modest negative over-all correlation."

Whether or not the majority of Americans will ever tire of being systematically marginalized remains an open question.