Ms. Jones took a break from reviewing movies to totally read my mind.
She has written one of the best lines ever, IMHO: "I hate [Facebook] without understanding it, like a dog barking at a vacuum cleaner."
Admittedly, I'm on Facebook because I succumbed to peer pressure, too. I look at it maybe once every two months, and I still don't get it. Just like I get Twitter even less. Call me old fashioned, but back in my day, we used to write e-mails and blog. You youngin's with your Walls and thousands of friends just can't understand.
To Jones's credit, she didn't say anything about our increasingly atomized, bowling-alone society which beckons pseudo-social networks like Facebook to step in and fill the yawning void of our lonliness and disconnectedness. Thankfully she left that for me to point out and feel smart.
Maybe somebody could explain Facebook to me. I'm on it and I still don't get it. I hate it without understanding it, like a dog barking at a vacuum cleaner.
Facebook's in the news for violating people's privacy and selling off their information, for general malfeasance and sleaze, the usual stuff. Boycotts are called for. It's made me wonder: is something as apparently rotten as Facebook worth the trouble of boycotting? If you're misguided enough to join Facebook in the first place, don't you deserve everything you get?
[By the way, there have been gobs of articles lately about how Facebook founder, wunderkind, and CEO Mark Zuckerberg is a total prick who cares nothing about our privacy, or people in general. - J]
Let me just say in my own defense, I never intended to be on it. As soon as I heard about it, I sensed it was sinister. "What's it good for?" I'd ask, and the eager Facebook shill would say, "It lets people find you, people you used to know."
"Holy God," I'd say. "I'd pay to make that not happen."
For years, I maintained a semblance of human dignity. But the nagging got so intense, I finally succumbed to peer pressure about six months ago. I set up my Facebook "profile," which was no sweat. Nothing but name, rank, and serial number, that's all you ever give up. As for a photo of me, well, I laughed at the very idea. A photo of somebody could go up there, as long as it wasn't me. Morticia Addams, maybe?
Lots of people hailed me right away, wanting to be "friends." Some of them I actually knew, and didn't hate, so there was a brief interlude that was practically heartwarming. Jolly greetings ("Eileen!! How ARE you?!") and all that. So that was okay.
But I was immediately disturbed about the whole "wall" phenomenon. See, people who are your "friends" write short messages, and any replies from their "friends" also show up, and pretty soon you've got streams of communiqués, many from "friends of friends," aka total strangers, messing up your "wall." For sheer randomness, it's like reading the graffiti in a public toilet, only minus all the interest, because public-toilet-writing generally involves the thrill of anonymous venting, heavy on the obscenities.
On Facebook, nobody vents at all. Nobody even swears. They used to, apparently. During its first phase, as millions of tiresome gasbags will tell you, Facebook was the site for stupid college kids to revile their professors and employers and describe their embarrassing sex lives and post pictures of themselves drunk. Then professors and employers starting reading Facebook, and the feds went after the Einsteins who posted their "Should Obama Be Killed?" poll, and the party was over.
Which meant Facebook was safe for the oldsters. Oldsters are more cagy but still fundamentally stupid. They persist in providing absurdly generous "profile" information about themselves, throwing their identities open to the world, but they're all carefully pretending to be nice and upbeat and not-crazy. Look, I'm all for strangers being nice in public; hell, I'm in favor of bringing back dueling, just to guarantee that everybody thinks twice before being impolite to others on the street. But I don't want to go to a special site for blasts of can-do perkiness ("I had a great day today yodeling in the Swiss Alps!") or random endorsements ("Evelyn is a fan of STP Motor Oil").
The whole point of having friends, as opposed to "friends," is that you don't have to relentlessly keep up appearances and strike poses. You can get out of the public eye and relax and curse and rant and glower and generally express yourself. So I didn't understand the point of Facebook. Pretty soon I was only using it to send private messages to actual friends, and what's the point of that? I already knew e-mail was a great invention.
The queasy blend of friends and "friends" is central to the Facebook experience. People who might get some sane use out of Facebook are advertising something, a business or a service or something. Facebook might have originated as a means of personal connection, but now it seems like strictly business disguised as personal connection, and the rhetoric of it is just as horrible as that sounds. Everybody writes in ad-sized bits, everybody "likes" a million products and services, everybody affirms things and exclaims over things like TV pitchmen. It's as if everyone you know is turning into those horrible shills who blog about things they pretend to like for company kickbacks.
(You might say that's nothing, so what—pretending to like something for cash is no big deal. But if so, you're already a goner. What you like and dislike is fundamental, and if you've lost touch with that, you're a pod-person. Ask Ralph Waldo Emerson, who said the pressure to conform in America is so intense that most adults can't even articulate to themselves what their true preferences are, and that almost no one lives as a free human being but the occasional small boy, who will fearlessly declare the desires of his soul and body, and damn the consequence.)
After a few tentative attempts at posting on Facebook, I retreated into horrified silence. I couldn't do the lingo. Then I decided not to try to do the lingo. It's kind of like advertising for yourself, if your self was a plastic novelty toy: lots of cute photos and "hurray for everything" patter. I can only stand to look at it once a week. But I can't seem to cut ties, no matter how obviously I should. I mean, many friends are on there, posting like mad, poor sods! Plus there's a terrible fascination about Facebook: it's so godawful, but so generally embraced. It made me start to believe there really is such a thing as "postmodernity," and that most people have cheerfully given up the idea of having an authentic self. Happy artificial constructs! Meanwhile I'm a leftover modern type, still hanging back in the era of alienation, clinging to my likes and dislikes, occasionally fretting about the death of God.
Speaking of the death of God, I went to a graduation ceremony the other day, where the keynote speaker was a celebrated sound editor on many famous films. He did a PowerPoint presentation, heavy on the cornball humor that plays so well at graduations, showing the students that they are all "iGrad" units who need to upload the "experience app" and prepare for the world by self-branding, getting a logo, marketing themselves as product. "Because you ARE all products," he said encouragingly. "Universities are in the business of PRODUCING graduates, in the hopes that you will all become PRODUCTIVE in the world." The kids ate it up, and the profs smiled, and the parents applauded enthusiastically.
I know that conservatives will blame welfare for increasing black poverty. Anyway, I humbly submit the following awful statistics.
"The gap between Black and white household wealth quadrupled from 1984 to 2007."
"Viewed another way, the median white family was 11 times richer than the median Black family in 1984 ($2,000 vs. $22,000). By 2007, the white household had become 20 times richer than its Black counterpart($5,000 vs. $100,000)."
"Beyond a broken immigration system, U.S. policies make U.S. farm products cheap, open borders so we can dump them on Mexico, promote an economic development model that fails to create jobs, and make it easy for companies to use undocumented workers to drive down wages and prevent unionization."
Future historians tracing the crackup of the Republican Party may well look to May 8, 2010, as an inflection point.
That was the day, as is now well known, that Sen. Robert Bennett, who took the conservative position 84 percent of the time over his career, was deemed not conservative enough by fellow Utah Republicans and booted out of the primary.
Less well known, but equally ominous, is what happened that same day, 2,500 miles east in Maine. There, the state Republican Party chucked its platform -- a sensible New England mix of free-market economics and conservation -- and adopted a manifesto of insanity: abolishing the Federal Reserve, calling global warming a "myth," sealing the border, and, as a final plank, fighting "efforts to create a one world government."
One world government? Do our friends Down East fear an invasion from the Canadian maritime provinces? A Viking flotilla coming from Iceland under cover of volcanic ash?
I was pondering this mystery while on the elliptical machine this week and watching Glenn Beck (I find he increases my heart rate), when I heard him inform his viewers that "they" -- President Obama and friends -- "are creating a global governance structure."
Not once did Beck refer to the big news events of the day, such as Afghan President Hamid Karzai's visit to the White House or the Gulf of Mexico oil spill. It was as if he had created a parallel universe for his 2-million-plus viewers. Similarly, on Monday, when Obama nominated Elena Kagan to the Supreme Court, Beck omitted that news in favor of a fanciful administration attempt to restore the broadcast Fairness Doctrine. On Tuesday, USA Today had the headline "Tax bills in 2009 at lowest level since 1950" (the nonpartisan Tax Foundation put it at 1959); Beck skipped that, instead saying he doesn't want changes to the Internet "at least until people aren't worshipping Satan, you know, in office." (Beck maintained later that he really wasn't "saying that Obama was a Satan worshipper.")
Beck justifiably credited his viewers for "what happened to Bob Bennett in Utah." He warned: "People in Washington, you should be terrified."
We should be terrified -- particularly the Republicans, whose party is turning into this One-World-Government, Obama-worships-Satan, Jesus-opposes-climate-bill mélange. And Beck is only part of the trouble. Consider these GOP milestones of recent days:
In the Alabama gubernatorial race, a conservative attack ad charged that a Republican gubernatorial candidate "recently said the Bible is only partially true." The outraged candidate reaffirmed his "belief that this world and everything in it is a masterpiece created by the hands of God."
In Arizona, Sen. John McCain, who once said a fence is the "least effective" way to secure the border, continued his fight against a conservative primary challenge by releasing an ad demanding, "Complete the danged fence."
Democrats are having purity putsches, too, in Arkansas, Pennsylvania and Colorado. But these are mild compared with the sort of uprising Republicans are experiencing in places such as Maine, tranquil land of Henry Wadsworth Longfellow.
The Maine Republicans a week ago rejected a platform proclaiming that "we believe that the proper role of government is to help provide for those who can not help themselves"; that "we believe in ensuring that our children have access to the best educational opportunities"; and that "every person's dignity, freedom, liberty, ability and responsibility must be honored."
In its place, they approved a document invoking the Tea Party movement and Ron Paul and insisting that "health care is not a right." The new platform demands: "Eliminate motor voter"; "Reject the UN Treaty on Rights of the Child"; "Eliminate the Department of Education"; "Arrest and detain . . . anyone here illegally, and then deport, period."
[I can actually agree with that last part, assuming we don't start kicking down doors on flimsy or zero evidence, Gestapo-style. Also let's just remember that enforcement, legal processing, and deportation of illegals all entail significant Big Guvmint costs. Freedom from illegals isn't free. - J]
It was a swap they will come to rue -- assuming they survive the Viking invasion.
Domestic policy debates of late have degenerated into an absurd argument about whether government can do anything right. Even Democrats can be heard mouthing the false premise that private markets are always the answer to the nation's public problems. But government does do things right; indeed, it does something right every day on a massive scale. The oldest of America's major public services--established by decree of the Continental Congress, brought into being by Benjamin Franklin and enumerated in the first article of the Constitution as a vital tool for binding together the new Republic--carries on in the twenty-first century as an essential and possibly transformative arm of the federal government, a service that has only begun to tap this agency's potential.
This is the proper starting point for progressives to enter the great debate about the future of the US Postal Service--and enter they must if there is to be any hope for maintaining it at a time when public services are under overwhelming political and economic assault. Because of declining mail volume and Congressional reforms that transformed the Postal Service from a taxpayer-supported institution into a "revenue neutral" agency that is expected to pay for itself, the Postal Service recorded a $3.8 billion loss in 2009 and is, according to an extreme but oft-quoted estimate, on track to accumulate a $238 billion deficit by 2020. The service has also been harmed by poor political and managerial choices--not to mention accounting errors that have socked it with pension liabilities that are as unsustainable as they are unreasonable.
The Postal Service's economic turbulence has fostered the fantasy that it is no longer necessary in an age when "warp-speed Internet" is constantly juxtaposed against "snail mail." Yet the USPS is anything but "an anachronism" on "a slow march into oblivion." It is a national treasure that provides an immense and irreplaceable public service. The scope and character of that service will change in the twenty-first century--ideally to provide a broader range of information, vote-by-mail systems, community services and even banking options to hundreds of millions of Americans who continue to rely on their local post office as the nerve center of their neighborhood or small town. But before any of this can happen, we must recognize that the Postal Service can and must remain public if we are to maintain the essential infrastructures of democracy.
Americans do not often talk about the Postal Service as a crucial underpinning of the democratic infrastructure, but we should. At a time when 35 percent of all Americans and 50 percent of rural residents have no broadband Internet access at home, the Postal Service is universal. Its 596,000 career employees travel more than 4 million miles to deliver more than a half-billion pieces of mail each day. It goes to extraordinary ends to assure that no citizen or community is neglected; it contracts commercial planes to move parcels across the country in a matter of hours, yet it still sends bush planes into Idaho's River of No Return Wilderness Area and organizes mule trains to deliver mail, food and supplies to the Havasupai Indians on the floor of the Grand Canyon.
The Postal Service maintains a network of more than 35,000 retail outlets--the largest in the world, with more locations than McDonald's, Starbucks and Wal-Mart combined--which are visited by more than 7 million Americans each day. The postal workers they encounter in these offices and on their doorsteps are reflective of their communities, as the service has historically been and remains one of the surest sources of employment for African-Americans, Asian-Americans, Latinos, women and the poor. In short, the USPS forms a vital network of service, connection and community that provides the steadiest link between Americans and their government. As Postal Regulatory Commission (PRC) chair Ruth Goldway puts it, the service is "part of the fabric of the nation."
Unfortunately, the Postal Service is not profitable. That's a problem because, under the absurd constraints placed on it by successive legislative "reforms," the service must be "run like a business." And the businesspeople who run the USPS these days, though they may want to save the service, are so fixated on the bottom line that they cannot see the public good. So they have proposed a process of downsizing that could lead to the dismemberment of what should be understood as a core civic institution.
If the wrecking crews are not stopped, they will tear a hole in the fabric of the nation, further isolating Americans from one another, deepening the decay of urban neighborhoods and remote villages, hiking unemployment in our hardest-pressed communities and accelerating the decline of newspapers and magazines, drying up content for the Internet and curtailing civic and political discourse. "We need the Postal Service," says Illinois Congressman Danny Davis, a member of the House subcommittee that oversees the nation's post offices. Of course the Postal Service is going to change, Davis acknowledges. But Americans should start with the understanding that the Postal Service is "indispensable"--not with a debate about how much will be cut.
Regrettably, the latter approach is the one being taken by Postmaster General John Potter and members of the Postal Board of Governors, who are floating proposals to eliminate six-day mail delivery, close thousands of post offices and cut 26,000 full-time and 13,000 part-time jobs through attrition and layoffs. Overreacting to changes in the way Americans communicate while underestimating ideas that could reposition post offices as touchstones for the information revolution and a more consumer-friendly financial-services landscape, Potter and his compatriots imagine that the only response to a rough stretch is to slash the USPS. The madness of the cuts is summed up by Senator Susan Collins, a Maine Republican, who says, "The Postal Service cannot expect to gain more business, which it desperately needs, if it is reducing service."
Even the service's most determined defenders say that if the restructuring proposed by Potter goes through, the end result will not be the "leaner, more market responsive Postal Service" the postmaster general imagines. Rather, as American Postal Workers Union president William Burrus says, "It would be the beginning of the demise of the Postal Service."
But, of course, Americans will still need to communicate using paper and printed materials, and they will still need to ship all those parcels ordered over the Internet. The Postal Service's demise would not mean the end of those enterprises, just the end of postal workers' jobs and the service's commitment to communities that might not be the priorities of private companies like FedEx. Indeed, the downsizing of the Postal Service has often been discussed as the first step toward a huge bartering off of its responsibilities. Burrus has been saying for years that the service "has begun to travel resolutely down the road of privatization." And the Washington Post is editorializing, "Given the state of technology, privatization is probably the only long-term solution for the USPS."
Thankfully, privatization has a powerful critic. In response to a question posed in February about selling the Postal Service to the highest bidder, President Obama said that privatization is a "bad idea most of the time" because "oftentimes what you see is companies want to buy those parts of a government-run op that are profitable, and they don't want to do anything else. So, for example, the US Postal Service; everybody would love to have that high-end part of the business that FedEx and UPS are already in--business to business, you make a lot of money. But do they want to deliver that postcard to a remote area somewhere in rural America that is a money loser? Well, the US post office provides universal service. Those companies would not want to provide universal service."
Like many members of Congress, the president has sent signals suggesting a discomfort with cutting mail delivery down to five days. But he's been less engaged with the equally serious threat posed by proposals to increase stamp prices and rates for weekly newspapers and magazines, two moves that threaten to drive more paying customers away from a service that has seen annual mail deliveries drop from 208 billion pieces in 2000 to 177 billion pieces last year.
That drop in mail volume is often blamed for the Postal Service's fiscal troubles, but as economist Dean Baker notes, the service "has been scaling back its workforce more than proportionately to the decline in mail volume, increasing the productivity of its workforce. This is exactly how we would expect a private business to respond to the decrease in demand for its services." According to Baker, "The cause of the [current] shortfall has been the requirement put in place by Congress in 2006 that the Postal Service pre-fund 80 percent (up from 50 percent at present) of retiree healthcare benefits. The rule required that they reach this funding level in ten years. The Postal Service spent $12.4 billion to reach this pre-funding target over the last three years, an amount considerably larger than its $11.7 billion shortfall over this period."
In addition, argues USPS inspector general David Williams, the service was overcharged $75 billion by the government for pension liabilities when the Office of Personnel Management miscalculated its obligations. And, notes Baker, the Postal Service was "prevented by the Bush administration from applying for the employer subsidies available under Medicare Part D to businesses that provide drug coverage to retired workers." What it all adds up to, according to Williams, is a pattern of "inequitable...financial entanglements between the Postal Service and the federal government" that are "generally at the expense of the Postal Service."
With encouragement from the postmaster general, the House has taken steps to address some of these concerns, and Baker suggests that Congress should order an independent assessment of the key accounting issues. These moves, if approved by the Senate and the White House, would considerably ease the service's economic uncertainty. That does not mean, however, that postal unions and defenders of the public interest should breathe a sigh of relief. Rather, the current focus on the circumstances and prospects of the agency creates an opening for a radical rethink of those "entanglements."
Today the Postal Service exists in a netherworld where it must provide universal service--a classic public good--and at the same time break even; it must "compete" with private parcel services while providing them with platforms to expand their nonunionized and nonuniversal businesses; it must meet the demands of Congress while getting by without tax dollars.
Instead of entertaining ill-thought-out discussions about how to squeeze the Postal Service even more than it has already been squeezed, Congress needs a precise picture of what is threatened when we talk of going to five-day delivery, shuttering post offices, laying off experienced postal workers, hiking rates for newspapers and magazines (including, it should be noted, publications such as The Nation) and privatizing pieces of what is supposed to be a ubiquitous public service.
These "efficiencies" threaten more than just the Postal Service. They pose direct and indirect threats to democracy. Oregon Senators Ron Wyden and Jeff Merkley noted as much when they asked Congress and the USPS to avoid taking steps that would damage their state's mail-in balloting. "While we admire and encourage examination of avenues to modernize the postal service, the implementation of this proposal would pose a direct threat to democracy in Oregon," wrote the senators, whose concerns have been echoed by election officials from around the country, which increasingly relies on the Postal Service to carry regular and absentee ballots.
The PRC's Goldway has been at the forefront of arguments for taking state-based "Vote by Mail" experiments national. "Voters would not need to take time off from work, find transportation, find the right polling station, get babysitters or rush through reading complicated ballot initiatives," she explains. "The country's 35,000 post offices could provide information, distribute and collect voting materials and issue inexpensive residency and address identifications for voting purposes. Perhaps most important, given the concerns about voting machine security, mail ballots cannot be hacked. Tampering or interfering with mail is a federal crime, and the United States Postal Service has its own law enforcement arm, which works closely with a variety of enforcement authorities including the F.B.I. Trained election clerks can take the time to check signatures without delaying or discouraging voters. And the advantages of a paper trail outshine the glitter of black box electronic gadgetry."
That's one of many visions for giving the Postal Service new and necessary responsibilities that are in sync with its historic mission. Another would be to dramatically reduce the rates charged the weekly newspapers and journals of opinion that sustain our civic and democratic discourse in their traditional print form and online. A new Columbia Journalism Review survey of more than 600 websites of print magazines suggests that magazines that do not make a profit on the web are nonetheless providing immense amounts of web content. Roughly half the magazines surveyed provide all significant content from their print editions free on the web, although many of their websites are losing money. In other words, print publications are subsidizing the web even as they struggle to survive in an age of declining circulation rates and dipping advertising revenues.
CJR presented its survey as "the beginning of a long-overdue conversation" about the relationship of magazines to the web. That conversation, the editors suggest, should focus on the role print publications and their websites play in the "flow of information on which our democratic society is predicated." Before postal rates are raised for journals of opinion and other content-rich print publications, researchers should determine the extent to which these publications are powering serious discourse in the digital age. Logic suggests this research will conclude that reducing postal rates for small magazines and newspapers will strengthen the scope and quality of the debate, not only in print but online. This is a public service investment that would seem to make particular sense when everyone is worried about how we're going to sustain journalism during the difficult transition to the digital age; and, again, it is entirely in keeping with the mission of the Postal Service, which at its founding fostered the development of robust newspapers and journals of opinion with massive postal subsidies.
In the transition to a digital future, the Postal Service is neither at odds with nor resistant to new technologies. Indeed, just as the service was the driving force behind the expansion of a younger nation's roads, railways and air transportation systems, it is now at the forefront of developing and implementing digital advances. The Postal Service maintains the world's third-largest computing infrastructure--including more than 5,000 remote locations that receive Internet service via satellite. It operates the world's largest intranet system and is the world's leader in optical character recognition technology. Its ZIP code system serves as the structural underpinning for the nation's 911 emergency system.
Now the Postal Service should begin to consider the potential its network of physical facilities has to play in closing the digital divide. Thousands of neighborhoods and rural communities that do not have libraries or other easily accessible public facilities have post offices; shouldn't every post office have a hot spot with high-speed broadband? And shouldn't the Postal Service be reimagining itself, in the way that highly innovative postal services in other countries have, as a media and technology innovator and service provider--think digital mail, to start with. "We believe we are in the communication business, not just in the physical letter-mail business," explained Swiss Post executive vice president Frank Marthaler, in a recent interview with the magazine Monocle, which portrayed Marthaler and his colleagues as occupying "unique turf at the intersection of data networks and the old-fashioned letter routes, with the ability to carve out an unrivalled position in the digital age."
When the conversation about the Postal Service's future is turned on its head, it becomes evident that this public utility does not need to be ever on the defensive. It could remain a government-owned entity with a core public-service mission and the flexibility to achieve that mission, as has Swiss Post, which was radically restructured in order to adjust to the new communications landscape. Indeed, the post office is precisely where the federal government should be making smart infrastructure and job-creation investments, as part of a new approach that seeks to maintain a public asset and maximize its potential.
Such an approach might even renew one of the greatest of all postal services. From 1910 to 1967, the agency maintained a postal banking system that allowed citizens to open small savings accounts at local post offices. The system was so successful that after World War II, it had a balance of $3 billion--roughly $30 billion in today's dollars. Congress did away with postal banking in the late 1960s, but other countries--notably Japan--have maintained such systems. Today, Japan Post is, according to the Wall Street Journal, "the world's largest financial institution by assets, with $3.3 trillion on its balance sheet."
In the midst of the 2008 financial panic, Michael Lind, policy director of the Economic Growth Program of the New America Foundation, proposed that "a new postal savings system should be part of America's post-meltdown financial architecture." "When Congress created the postal savings system nearly a century ago, one of its goals was to encourage savings among the large number of low-income immigrants," Lind wrote. "A new system would help today's immigrants as well as the native poor. Banks are not interested in people with so little money, many of whom are preyed upon by payday lenders and credit card companies." The National League of Postmasters has started talking up the idea, and even Postmaster General Potter has hinted at openness to what Lind describes as a "simple" notion: "use the one government institution that can be found in most neighborhoods and rural areas--the post office--to encourage small savings and a habit of thrift." From that simple idea could, he suggests, come financial security for millions of Americans, an alternative to growing indebtedness of the country to foreign governments and financial institutions, and a vehicle to fund investment in public assets like sewer systems and bridges.
That's quite a payback for believing in the promise of the Postal Service. But, just as it did in Ben Franklin's day, the post office can still deliver for America in the twenty-first century.
On Feb. 18, Joe Stack, a 53-year-old computer engineer, crashed his small plane into a building in Austin, Texas, hitting an IRS office, committing suicide, killing one other person and injuring others.
Stack left an anti-government manifesto explaining his actions. The story begins when he was a teenager living on a pittance in Harrisburg, Pa., near the heart of what was once a great industrial center.
His neighbor, in her '80s and surviving on cat food, was the "widowed wife of a retired steel worker. Her husband had worked all his life in the steel mills of central Pennsylvania with promises from big business and the union that, for his 30 years of service, he would have a pension and medical care to look forward to in his retirement.
"Instead he was one of the thousands who got nothing because the incompetent mill management and corrupt union (not to mention the government) raided their pension funds and stole their retirement. All she had was Social Security to live on."
He could have added that the super-rich and their political allies continue to try to take away Social Security, too.
Stack decided that he couldn't trust big business and would strike out on his own, only to discover that he also couldn't trust a government that cared nothing about people like him but only about the rich and privileged; or a legal system in which "there are two `interpretations' for every law, one for the very rich, and one for the rest of us."
The government leaves us with "the joke we call the American medical system, including the drug and insurance companies (that) are murdering tens of thousands of people a year," with care rationed largely by wealth, not need.
Stack traces these ills to a social order in which "a handful of thugs and plunderers can commit unthinkable atrocities—and when it's time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours."
Stack's manifesto ends with two evocative sentences: "The communist creed: from each according to his ability, to each according to his need. The capitalist creed: from each according to his gullibility, to each according to his greed."
Poignant studies of the U.S. rustbelt reveal comparable outrage among individuals who have been cast aside as state-corporate programs close plants and destroy families and communities.
An acute sense of betrayal comes readily to people who believed they had fulfilled their duty to society in a moral compact with business and government, only to discover they had been only instruments of profit and power.
Striking similarities exist in China, the world's second largest economy, investigated by UCLA scholar Ching Kwan Lee.
Lee has compared working-class outrage and desperation in the discarded industrial sectors of the U.S. and in what she calls China's rustbelt—the state socialist industrial center in the Northeast, now abandoned for state capitalist development of the southeast sunbelt.
In both regions Lee found massive labor protests, but different in character. In the rustbelt, workers express the same sense of betrayal as their U.S. counterparts—in their case, the betrayal of the Maoist principles of solidarity and dedication to development of the society that they thought had been a moral compact, only to discover that whatever it was, it is now bitter fraud.
Around the country, scores of millions of workers dropped from work units "are plagued by a profound sense of insecurity," arousing "rage and desperation," Lee writes.
Lee's work and studies of the U.S. rustbelt make clear that we should not underestimate the depth of moral indignation that lies behind the furious, often self-destructive bitterness about government and business power.
In the U.S., the Tea Party movement—and even more so the broader circles it reaches—reflect the spirit of disenchantment. The Tea Party's anti-tax extremism is not as immediately suicidal as Joe Stack's protest, but it is suicidal nonetheless.
California today is a dramatic illustration. The world's greatest public system of higher education is being dismantled.
Gov. Arnold Schwarzenegger says he'll have to eliminate state health and welfare programs unless the federal government forks over some $7 billion. Other governors are joining in.
Meanwhile a newly powerful states' rights movement is demanding that the federal government not intrude into our affairs—a nice illustration of what Orwell called "doublethink": the ability to hold two contradictory ideas in mind while believing both of them, practically a motto for our times.
California's plight results in large part from anti-tax fanaticism. It's much the same elsewhere, even in affluent suburbs.
Encouraging anti-tax sentiment has long been a staple of business propaganda. People must be indoctrinated to hate and fear the government, for good reasons: Of the existing power systems, the government is the one that in principle, and sometimes in fact, answers to the public and can constrain the depredations of private power.
However, anti-government propaganda must be nuanced. Business of course favors a powerful state that works for multinationals and financial institutions—and even bails them out when they destroy the economy.
But in a brilliant exercise in doublethink, people are led to hate and fear the deficit. That way, business's cohorts in Washington may agree to cut benefits and entitlements like Social Security (but not bailouts).
At the same time, people should not oppose what is largely creating the deficit—the growing military budget and the hopelessly inefficient privatized healthcare system.
It is easy to ridicule how Joe Stack and others like him articulate their concerns, but it's far more appropriate to understand what lies behind their perceptions and actions at a time when people with real grievances are being mobilized in ways that pose no slight danger to themselves and to others.
If any of this is news to you, it's probably because you only read The Economist. I've distilled the relevant parts:
In a new poll for The Economist by YouGov, 36% of respondents said they had less opportunity than their parents did, compared with 39% who thought they had more. Half thought the next generation would have a lower standard of living, double the share that thought living standards would rise.
Between 1947 and 1973, the typical American family's income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age.
Compared with people in other rich countries, Americans tend to accept relatively high levels of income inequality because they believe they may move up over time. The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.
Parental income is a better predictor of a child's future in America than in much of Europe, implying that social mobility is less powerful.
More than 40% of those Americans born in the bottom quintile remain stuck there as adults.
Ms Sawhill and Mr Haskins argue for a drastic shift in federal priorities: rather than pay for the consumption of the old, America should invest in the productivity of the young.
Recent testimony from Jamie Galbraith before the Subcommittee on Crime on the role that fraud played in the financial crisis:
Statement by James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Government/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, before the Subcommittee on Crime, Senate Judiciary Committee, May 4, 2010: Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.
I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including "rational expectations," "market discipline," and the "efficient markets hypothesis" led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.
Thus the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft- pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now. At a conference sponsored by the Levy Economics Institute in New York on April 17, the closest a former Under Secretary of the Treasury, Peter Fisher, got to this question was to use the word "naughtiness." This was on the day that the SEC charged Goldman Sachs with fraud.
There are exceptions. A famous 1993 article entitled "Looting: Bankruptcy for Profit," by George Akerlof and Paul Romer, drew exceptionally on the experience of regulators who understood fraud. The criminologist-economist William K. Black of the University of Missouri-Kansas City is our leading systematic analyst of the relationship between financial crime and financial crisis. Black points out that accounting fraud is a sure thing when you can control the institution engaging in it: "the best way to rob a bank is to own one." The experience of the Savings and Loan crisis was of businesses taken over for the explicit purpose of stripping them, of bleeding them dry. This was established in court: there were over one thousand felony convictions in the wake of that debacle. Other useful chronicles of modern financial fraud include James Stewart's Den of Thieves on the Boesky-Milken era and Kurt Eichenwald's Conspiracy of Fools, on the Enron scandal. Yet a large gap between this history and formal analysis remains.
Formal analysis tells us that control frauds follow certain patterns. They grow rapidly, reporting high profitability, certified by top accounting firms. They pay exceedingly well. At the same time, they radically lower standards, building new businesses in markets previously considered too risky for honest business. In the financial sector, this takes the form of relaxed – no, gutted – underwriting, combined with the capacity to pass the bad penny to the greater fool. In California in the 1980s, Charles Keating realized that an S&L charter was a "license to steal." In the 2000s, sub-prime mortgage origination was much the same thing. Given a license to steal, thieves get busy. And because their performance seems so good, they quickly come to dominate their markets; the bad players driving out the good.
The complexity of the mortgage finance sector before the crisis highlights another characteristic marker of fraud. In the system that developed, the original mortgage documents lay buried – where they remain – in the records of the loan originators, many of them since defunct or taken over. Those records, if examined, would reveal the extent of missing documentation, of abusive practices, and of fraud. So far, we have only very limited evidence on this, notably a 2007 Fitch Ratings study of a very small sample of highly-rated RMBS, which found "fraud, abuse or missing documentation in virtually every file." An efforts a year ago by Representative Doggett to persuade Secretary Geithner to examine and report thoroughly on the extent of fraud in the underlying mortgage records received an epic run-around.
When sub-prime mortgages were bundled and securitized, the ratings agencies failed to examine the underlying loan quality. Instead they substituted statistical models, in order to generate ratings that would make the resulting RMBS acceptable to investors. When one assumes that prices will always rise, it follows that a loan secured by the asset can always be refinanced; therefore the actual condition of the borrower does not matter. That projection is, of course, only as good as the underlying assumption, but in this perversely-designed marketplace those who paid for ratings had no reason to care about the quality of assumptions. Meanwhile, mortgage originators now had a formula for extending loans to the worst borrowers they could find, secure that in this reverse Lake Wobegon no child would be deemed below average even though they all were. Credit quality collapsed because the system was designed for it to collapse.
A third element in the toxic brew was a simulacrum of "insurance," provided by the market in credit default swaps. These are doomsday instruments in a precise sense: they generate cash-flow for the issuer until the credit event occurs. If the event is large enough, the issuer then fails, at which point the government faces blackmail: it must either step in or the system will collapse. CDS spread the consequences of a housing-price downturn through the entire financial sector, across the globe. They also provided the means to short the market in residential mortgage-backed securities, so that the largest players could turn tail and bet against the instruments they had previously been selling, just before the house of cards crashed.
Latter-day financial economics is blind to all of this. It necessarily treats stocks, bonds, options, derivatives and so forth as securities whose properties can be accepted largely at face value, and quantified in terms of return and risk. That quantification permits the calculation of price, using standard formulae. But everything in the formulae depends on the instruments being as they are represented to be. For if they are not, then what formula could possibly apply?
An older strand of institutional economics understood that a security is a contract in law. It can only be as good as the legal system that stands behind it. Some fraud is inevitable, but in a functioning system it must be rare. It must be considered – and rightly – a minor problem. If fraud – or even the perception of fraud – comes to dominate the system, then there is no foundation for a market in the securities. They become trash. And more deeply, so do the institutions responsible for creating, rating and selling them. Including, so long as it fails to respond with appropriate force, the legal system itself.
Control frauds always fail in the end. But the failure of the firm does not mean the fraud fails: the perpetrators often walk away rich. At some point, this requires subverting, suborning or defeating the law. This is where crime and politics intersect. At its heart, therefore, the financial crisis was a breakdown in the rule of law in America.
Ask yourselves: is it possible for mortgage originators, ratings agencies, underwriters, insurers and supervising agencies NOT to have known that the system of housing finance had become infested with fraud? Every statistical indicator of fraudulent practice – growth and profitability – suggests otherwise. Every examination of the record so far suggests otherwise. The very language in use: "liars' loans," "ninja loans," "neutron loans," and "toxic waste," tells you that people knew. I have also heard the expression, "IBG,YBG;" the meaning of that bit of code was: "I'll be gone, you'll be gone."
If doubt remains, investigation into the internal communications of the firms and agencies in question can clear it up. Emails are revealing. The government already possesses critical documentary trails -- those of AIG, Fannie Mae and Freddie Mac, the Treasury Department and the Federal Reserve. Those documents should be investigated, in full, by competent authority and also released, as appropriate, to the public. For instance, did AIG knowingly issue CDS against instruments that Goldman had designed on behalf of Mr. John Paulson to fail? If so, why? Or again: Did Fannie Mae and Freddie Mac appreciate the poor quality of the RMBS they were acquiring? Did they do so under pressure from Mr. Henry Paulson? If so, did Secretary Paulson know? And if he did, why did he act as he did? In a recent paper, Thomas Ferguson and Robert Johnson argue that the "Paulson Put" was intended to delay an inevitable crisis past the election. Does the internal record support this view?
Let us suppose that the investigation that you are about to begin confirms the existence of pervasive fraud, involving millions of mortgages, thousands of appraisers, underwriters, analysts, and the executives of the companies in which they worked, as well as public officials who assisted by turning a Nelson's Eye. What is the appropriate response?
Some appear to believe that "confidence in the banks" can be rebuilt by a new round of good economic news, by rising stock prices, by the reassurances of high officials – and by not looking too closely at the underlying evidence of fraud, abuse, deception and deceit. As you pursue your investigations, you will undermine, and I believe you may destroy, that illusion.
But you have to act. The true alternative is a failure extending over time from the economic to the political system. Just as too few predicted the financial crisis, it may be that too few are today speaking frankly about where a failure to deal with the aftermath may lead.
In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case. Thank you.
This is obviously Obama's fault. If he hadn't spent so much money on the stimulus then, well... Anyway, it's Obama's fault. He's the president.
America's becoming a nation of free-lunchers. Why can't these people proudly starve, or at least depend on private soup kitchens and Christian charities which are ready to feed them and their families because charity works and gov't handouts don't? Why can't these deadbeats rely on their fellow man instead of asking all us taxpayers for a handout? They just don't get it!
Nearly 40 million Americans received food stamps -- the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update.
Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday.
The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday.
"This is the highest share of the U.S. population on SNAP/food stamps," said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). "Research suggests that one in three eligible people are not receiving ... benefits."
Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.
What we have now is a group of politicians with shifting alliances on a case-by-case basis to thespecial interests who fund them. And currently, the most damaging one to our nation is the rise of the Bankster Party. Thankfully, we can now better identify its members.
Anyone who voted for the Kaufman-Brown SAFE amendment deserves to be considered a member of the "People's Party", at least for today. And while I may not agree, I am also OK with someone voting no on Kaufman-Brown if they voted no on the bailout in the first place. That at least shows a consistent ideology and we wouldn't need to break up the banks into smaller parts if our leaders had the will to let them fail.
BANKSTER PARTY Daniel Akaka (B-HI) Lamar Alexander (B-TN) Max Baucus (B-MT) Evan Bayh (B-IN) Michael F. Bennet (B-CO) Christopher S. Bond (B-MO) Richard Burr (B-NC) Thomas R. Carper (B-DE) Saxby Chambliss (B-GA) Susan M. Collins (B-ME) Kent Conrad (B-ND) Bob Corker (B-TN) John Cornyn (B-TX) Christopher J. Dodd (B-CT) Dianne Feinstein (B-CA) Lindsey Graham (B-SC) Chuck Grassley (B-IA) Judd Gregg (B-NH) Orrin G. Hatch (B-UT) Kay Bailey Hutchinson (B-TX) Daniel K. Inouye (B-HI) Johnny Isakson (B-GA) John F. Kerry (B-MA) Amy Klobuchar (B-MN) Herb Kohl (B-WI) Jon Kyl (B-AZ) Frank R. Lautenberg (B-NJ) Joseph Lieberman (B-CT) John McCain (B-AZ) Claire McCaskill (B-MO) Mitch McConnell (B-KY) Robert Menendez (B-NJ) Lisa Murkowski (B-AK) Bill Nelson (B-FL) Jack Reed (B-RI) Charles Schumer (B-NY) Olympia Snowe (B-ME) John Thune (B-SD) Mark Udall (B-CO) George Voinovich (B-OH) Mark Warner (B-VA)
PEOPLE'S PARTY Mark Begich (P-AK) Jeff Bingaman (P-NM) Barbara Boxer (P-CA) Sherrod Brown (P-OH) Roland Burris (P-IL) Maria Cantwell (P-WA) Bejamin Cardin (P-MD) Robert Casey Jr. (P-PA) Tom Coburn (P-OK) Byron Dorgan (P-ND) Richard Durbin (P-IL) John Ensign (P-NV) Russell Feingold (P-WI) Al Franken (P-MN) Tom Harkin (P-IA) Edward Kaufman (P-DE) Patrick Leahy (P-VT) Carl Levin (P-MI) Blanche Lincoln (P-AR) Jeff Merkley (P-OR) Barbara Mikulski (P-MD) Patty Murray (P-WA) Mark Pryor (P-AR) Harry Reid (P-NV) John D. Rockefeller IV (P-WV) Bernard Sanders (P-VT) Richard Shelby (P-AL) Arlen Specter (P-PA) Debbie Stabenow (P-MI) Tom Udall (P-NM) Jim Webb (P-VA) Sheldon Whitehouse (P-RI) Ron Wyden (P-OR)
If you're reading this article sitting down—the position we all hold more than any other, for an average of 8.9 hours a day—stop and take stock of how your body feels. Is there an ache in your lower back? A light numbness in your rear and lower thigh? Are you feeling a little down?
These symptoms are all normal, and they're not good. They may well be caused by doing precisely what you're doing—sitting. New research in the diverse fields of epidemiology, molecular biology, biomechanics, and physiology is converging toward a startling conclusion: Sitting is a public-health risk. And exercising doesn't offset it. "People need to understand that the qualitative mechanisms of sitting are completely different from walking or exercising," says University of Missouri microbiologist Marc Hamilton. "Sitting too much is not the same as exercising too little. They do completely different things to the body."
In a 2005 article in Science magazine, James A. Levine, an obesity specialist at the Mayo Clinic, pinpointed why, despite similar diets, some people are fat and others aren't. "We found that people with obesity have a natural predisposition to be attracted to the chair, and that's true even after obese people lose weight," he says. "What fascinates me is that humans evolved over 1.5 million years entirely on the ability to walk and move. And literally 150 years ago, 90% of human endeavor was still agricultural. In a tiny speck of time we've become chair-sentenced," Levine says.
Hamilton, like many sitting researchers, doesn't own an office chair. "If you're standing around and puttering, you recruit specialized muscles designed for postural support that never tire," he says. "They're unique in that the nervous system recruits them for low-intensity activity and they're very rich in enzymes." One enzyme, lipoprotein lipase, grabs fat and cholesterol from the blood, burning the fat into energy while shifting the cholesterol from LDL (the bad kind) to HDL (the healthy kind). When you sit, the muscles are relaxed, and enzyme activity drops by 90% to 95%, leaving fat to camp out in the bloodstream. Within a couple hours of sitting, healthy cholesterol plummets by 20%.
The data back him up. Older people who move around have half the mortality rate of their peers. Frequent TV and Web surfers (sitters) have higher rates of hypertension, obesity, high blood triglycerides, low HDL cholesterol, and high blood sugar, regardless of weight. Lean people, on average, stand for two hours longer than their counterparts.
The chair you're sitting in now is likely contributing to the problem. "Short of sitting on a spike, you can't do much worse than a standard office chair," says Galen Cranz, a professor at the University of California at Berkeley. She explains that the spine wasn't meant to stay for long periods in a seated position. Generally speaking, the slight S shape of the spine serves us well. "If you think about a heavy weight on a C or S, which is going to collapse more easily? The C," she says. But when you sit, the lower lumbar curve collapses, turning the spine's natural S-shape into a C, hampering the abdominal and back musculature that support the body. The body is left to slouch, and the lateral and oblique muscles grow weak and unable to support it.
This, in turn, causes problems with other parts of the body. "When you're standing, you're bearing weight through the hips, knees, and ankles," says Dr. Andrew C, Hecht, co-chief of spinal surgery at Mount Sinai Medical Center. "When you're sitting, you're bearing all that weight through the pelvis and spine, and it puts the highest pressure on your back discs. Looking at MRIs, even sitting with perfect posture causes serious pressure on your back."
Much of the perception about what makes for healthy and comfortable sitting has come from the chair industry, which in the 1960s and '70s started to address widespread complaints of back pain from workers. A chief cause of the problem, companies publicized, was a lack of lumbar support. But lumbar support doesn't actually help your spine. "You cannot design your way around this problem," says Cranz. "But the idea of lumbar support has become so embedded in people's conception of comfort, not their actual experience on chairs. We are, in a sense, locked into it."
In the past three decades the U.S. swivel chair has tripled into a more than $3 billion market served by more than 100 companies. Unsurprisingly, America's best-selling chair has made a fetish of lumbar support. The basic Aeron, by Herman Miller, costs around $700, and many office workers swear by them. There are also researchers who doubt them. "The Aeron is far too low," says Dr. A.C. Mandal, a Danish doctor who was among the first to raise flags about sitting 50 years ago. "I visited Herman Miller a few years ago, and they did understand. It should have much more height adjustment, and you should be able to move more. But as long as they sell enormous numbers, they don't want to change it." Don Chadwick, the co-designer of the Aeron, says he wasn't hired to design the ideal product for an eight-hour-workday; he was hired to update Herman Miller's previous best-seller. "We were given a brief and basically told to design the next-generation office chair," he says.
The best sitting alternative is perching—a half-standing position at barstool height that keeps weight on the legs and leaves the S-curve intact. Chair alternatives include the Swopper, a hybrid stool seat and the funky, high HAG Capisco chair. Standing desks and chaise longues are good options. Ball chairs, which bounce your spine into a C-shape, are not. The biggest obstacle to healthy sitting may be ourselves. Says Jackie Maze, the vice-president for marketing at Keilhauer: "Most customers still want chairs that look like chairs."
Recently Levine talked to Best Buy (BBY), Wal-Mart (WMT), and Salo accounting about letting him design their offices and keep people walking and working as much as possible. Levine jerry-rigged an old 1- to 2-mph treadmill to stand under a desk and put a handful of them in conference rooms. Those who wanted could have walking desks in their offices, and he partnered with Steelcase to manufacture a $4,500 version of the machine. "Within two weeks, people basically get addicted to walking and working," says Levine. "You just need to give them the chance."
I wouldn't call Reagan-Admin guy Bruce Bartlett's op-ed the "final nail in the coffin" of the already discredited "starve the beast" theory; I'd say it's more like chopping off its head and stuffing its mouth with garlic. Anyhow, the point is: it's dead. Only hysterical twits like Michele Bachmann and Sarah Palin still sell this theory's stinking corpse, as the decay and rot it has spread is evident throughout America.
I believe that to a large extent our current budgetary problems stem from the widespread adoption of an idea by Republicans in the 1970s called "starve the beast." It says that the best, perhaps only, way of reducing government spending is by reducing taxes. While a plausible strategy at the time it was formulated, STB became a substitute for serious budget control efforts, reduced the political cost of deficits, encouraged fiscally irresponsible tax cutting and ultimately made both spending and deficits larger.
Once upon a time Republicans thought that budget deficits were bad, that it was immoral to live for the present and pass the debt onto our children. Until the 1970s they were consistent in opposing both expansions of spending and tax cuts that were not financed with tax increases or spending cuts. Republicans also thought that deficits had a cost over and above the spending that they financed and that it was possible for this cost to be so high that tax increases were justified if spending could not be cut.
Dwight Eisenhower kept in place the high Korean War tax rates throughout his presidency, which is partly why the national debt fell from 74.3% of gross domestic product to 56% on his watch. Most Republicans in the House of Representatives voted against the Kennedy tax cut in 1963. Richard Nixon supported extension of the Vietnam War surtax instituted by Lyndon Johnson, even though he campaigned against it. And Gerald Ford opposed a permanent tax cut in 1974 because he feared its long-term impact on the deficit.
By 1977, however, Jack Kemp, Dave Stockman and a few other House Republicans concluded that the economy was desperately in need of a permanent tax rate reduction. Kemp believed that such a tax cut would so expand the economy that the revenue loss would be minimal. He also thought that much spending was driven by slow economic growth--welfare, unemployment benefits and so on--that would fall automatically if growth increased.
But the Republican Party's economic gurus--Alan Greenspan and Herb Stein, in particular--were not comfortable supporting a tax cut without stronger assurances that the deficit would not increase too much. At a time when inflation was our biggest national problem their concerns were not unreasonable.
After enactment of California's Proposition 13--a big property tax cut with no offsetting spending cuts or tax increases--on June 6, 1978, there was an immediate change in attitude among Republican economists who were previously skeptical of a permanent cut in federal income tax rates. They could see that a tax revolt was in the making and that Republicans could very possibly ride it all the way back into the White House in 1980.
On July 14, 1978, a few weeks after the Prop. 13 vote, the Senate Finance Committee held a hearing on the Kemp-Roth tax bill, which would have cut all federal income tax rates by about one-third. A key witness was Greenspan, who had recently served as chairman of the Council of Economic Advisers and was undoubtedly the most respected business economist in the United States. He was the first Republican to articulate what came to be called "starve the beast" theory.
Said Greenspan to the committee, "Let us remember that the basic purpose of any tax cut program in today's environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending."
["...and trust there is a political limit to deficit spending." We're still waiting to find that limit, Alan! - J]
Citing Greenspan's testimony, conservative columnist George Will endorsed Kemp-Roth and STB in a column on July 27, 1978. "The focus of the fight to restrain government has shifted from limiting government spending to limiting government receipts," he reported.
On Aug. 7, 1978, economist Milton Friedman added his powerful voice to the discussion. Writing in Newsweek magazine, he said, "the only effective way to restrain government spending is by limiting government's explicit tax revenue--just as a limited income is the only effective restraint on any individual's or family's spending."
By 1981 STB was well-established Republican doctrine. In his first major address on the economy as president on Feb. 5, Ronald Reagan articulated the idea perfectly. As he told a nationwide audience that night, "Over the past decades we've talked of curtailing spending so that we can then lower the tax burden. ... But there were always those who told us that taxes couldn't be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance."
Unfortunately there is no evidence that the big 1981 tax cut enacted by Reagan did anything whatsoever to restrain spending. Federal outlays rose from 21.7% of GDP in 1980 to 23.5% in 1983, before falling back to 21.3% of GDP by the time he left office.
Rather than view this as refutation of starve the beast theory, however, Republicans concluded that Reagan's true mistake was acquiescing to tax increases almost every year from 1982 to 1988. By the end of his presidency, Reagan signed into law tax increases that took back half the 1981 tax cut. His hand-picked successor, George H.W. Bush, compounded the error, Republicans believe, by supporting a tax increase in 1990.
When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress--with no Republican support--a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office.
Although all of evidence of the previous 20 years clearly refuted starve the beast theory, George W. Bush was an enthusiastic supporter, using it to justify liquidation of the budget surpluses he inherited from Clinton on massive tax cuts year after year. Bush called them "a fiscal straightjacket for Congress" that would prevent an increase in spending. Of course nothing of the kind occurred. Spending rose throughout his administration to 20.7% of GDP in 2008.
Nevertheless STB remains a critical part of Republican dogma. On April 8 Rep. Michele Bachmann, R-Minn., told right-wing talk show host Sean Hannity that the Republican response to health care reform would be to "starve the beast" by refusing to fund it. On April 14 Sarah Palin begged her followers in Boston to "please starve the beast" by resisting any tax increase, no matter how large the budget deficit.
Despite its continuing popularity among Republican politicians, at least a few conservative intellectuals are starting to have misgivings about STB. In 2005 free-market economist Arnold Kling admitted he had been wrong. "Cutting taxes did not help to reduce the size of government," he conceded.
For some years Bill Niskanen of the libertarian Cato Institute has argued that STB actually increased spending and made deficits worse. His argument is that the cost of spending is ultimately the taxes that will have to be raised to pay for it. Thus fear of future tax increases was the principal brake on spending until STB came along. By eliminating tax increases as a necessary consequence of deficits, it also reduced the implicit cost of spending. Thus, ironically, STB led to higher spending rather than lower spending as the theory posits.
In the latest study of STB, political scientist Michael New of the University of Alabama confirms Niskanen's analysis. "Revenue reductions by themselves are not an effective mechanism for limiting expenditure growth," New concluded. "The evidence suggests that lower levels of federal revenue may actually lead to greater increases in spending."
In effect STB became a substitute for spending restraint among Republicans. They talked themselves into believing that cutting taxes was the only thing necessary to control the size of government. Thus, rather than being a means to an end--the end being lower spending--tax cuts became an end in themselves, completely disconnected from any meaningful effort to reduce spending or deficits.
Starve the beast was a theory that seemed plausible when it was first formulated. But more than 30 years later it must be pronounced a total failure. There is not one iota of empirical evidence that it works the way it was supposed to, and there is growing evidence that its impact has been perverse--raising spending and making deficits worse. In short, STB is a completely bankrupt notion that belongs in the museum of discredited ideas, along with things like alchemy.
Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and The New American Economy: The Failure of Reaganomics and a New Way Forward.