Tuesday, February 28, 2017

ANS -- Top Heavy

This is a short article on wealth inequality. 
If we want to have a big middle class -- and a  democracy -- we will have to figure out a way to redistribute our wealth to make it more equal.  A way everyone can live with.  Is that possible?  How would we ever get the very wealthy to agree to anything that redistributes wealth? Can we do it peacefully?
 There is a mistake in the chart of wealth: the first number box (average wealth of top 10%) should be $2,560,000.  The number that's in there ($600,000) is the minimum wealth to get into the category.  Correction by one of the commenters. 

Top Heavy

Wealth Inequality Is Worse than Income Inequality
Donald Trump signing executive orders

Income inequality was a hot-button issue in the run-up to the November election, but it was swept under the carpet when the working classes opted for an apparently strong leader in the Putin and Mussolini mold of demagoguery. It remains to be seen how that choice will play out across a broad range of policy issues, but the tax proposals that President Donald Trump and the Republicans are offering are heavily weighted toward increasing after-tax incomes for the very wealthiest people. Those windfalls will almost certainly be financed by cuts in health care, tuition aid, and income support for the lower half of earners.

Wealth inequality, or a household's net assets, is even more skewed toward the upper crust than income inequality is, and is arguably the more important index. It is a household's assets that provide the fallback for episodes of unemployment, serious illnesses, and other life crises. In today's United States, the wealth share of the richest has been growing by leaps and bounds, to the point where the top tenth of one percent of households holds a substantially larger share of wealth than the bottom 90 percent. Virtually all the wealth of the bottom 90 percent is held by those in the 50 to 90 percentile groups, so the bottom half of the population has essentially no wealth at all.

The inequality debate has usually been framed in terms of incomes, due to the work of two economists, Emmanuel Saez and Thomas Piketty. They have developed complete datasets on the pretax incomes of the country's top earners from 1913 to the present that highlight the shockingly large share of the national income that goes to very small slices of the population.

Statistics on wealth are much more difficult to collect. Tax returns show taxable interest, dividends, and capital gains, but not the underlying accumulated assets. But Saez and a colleague, Gabriel Zucman, have recently produced an impressively complete set of wealth statistics primarily by applying "capitalization ratios" to the capital income in the tax data. For example, if a household listed $1,000 in interest income, and the average interest paid in that class of asset was 5 percent, then that suggests that the household has $50,000 in interest-bearing securities. The true virtuoso work, however, is the assemblage of non-tax data to capture the value of assets that do not pay current income, like a house or a pension. All of the methodologies have been laid out in the literature, and while there are still gaps in the data, like overseas tax shelters, there is good agreement with high-quality but narrower data collections, like the Census Bureau's Survey of Consumer Finance and the Federal Reserve's U.S. Financial Accounts.

The wealth dataset gives a fine hawk-eye view of shifting wealth patterns. The 1920s were a time of spectacular manufacturing productivity—Ford-style mass production was spreading throughout the economy—but the gains in both wealth and income were disproportionally captured by the upper classes. That changed with Franklin Roosevelt's New Deal. Minimum wage laws, organizing rights, collective bargaining, Social Security, unemployment compensation, and steeply graduated taxes on the very rich pushed the wealth holdings of the bottom 90 percent of households—Saez and Zucman call them the "middle classes"—from about 20 percent of all the wealth to 35 percent by the mid-1980s. With the accession of Ronald Reagan, and the Republican moralizing of "free market values," the wealth share of the middle classes plummeted, to the point where it is now (2012 data) only 23 percent, and still falling as a consequence of growing debt and collapsing home prices.

The concentration of wealth at the very top—the one-hundredth of one percent richest households—is something new. Even the wealthy folks just under the top 1 percent are seeing their fortunes slip on a relative basis, as more and more money is funneled to America's new royalty. That process is now self-reinforcing, for the simple reason that the mega-rich save much more of their incomes than the merely very rich do.

The chart above shows the distribution of wealth shares and average household holdings in 2012. Note the pattern of the distribution. The top tenth in each bracket commands about half of the total wealth in the bracket. Time for a revolution?


Monday, February 27, 2017

ANS -- It's Time to Move Forward from the Democratic Party's 2016 Mess

Here's an article with a different, and cheerier, attitude toward Perez as head of the DNC.  It's short.  

It's Time to Move Forward from the Democratic Party's 2016 Mess

And time to focus on what matters.

ATLANTA—Back last June, when hopes were high and Hillary Rodham Clinton had the presidency in the satchel, she was exploring her options as to a vice presidential candidate, who surely would have become vice president because HRC had the presidency in the satchel. There was one candidate on the list that got corporate America particularly nervous, and several of their intellectual mouthpieces were sent out to tell scary ghost stories about the guy. A dude from the Competitive Enterprise Institute rolled out the ol' roogie-roogie. Per NRO:

"His rewriting of U.S. labor law is probably the most fundamental attack on the free-enterprise system going on at present…If he has his way, we won't just revert to the 1930s. We'll do things that even Franklin Roosevelt couldn't do, like eliminate vast numbers of independent-contractor jobs and unionize those that remain."

And a guy from the Cato Institute held up the disembodied head of Lady Liberty.

"He essentially operationalized Eric Holder's radicalization of the Department of Justice. No civil-rights theory too crazy to pursue, no litigants too awkward to pay off."

Mitch McConnell didn't much like the guy.

"[He is] a committed ideologue who appears willing, quite frankly, to say or do anything to achieve his ideological end."

And what would a good, gory conservative slasher flick be without a contribution from Judicial Watch.

"[He] has shown a glaring inability to tell the truth and dispassionately apply the basic constitutional tenet of 'equal justice under law."

So, who was this Bakuninte mole-in-waiting, anyway? I'm glad you asked. It was Tom Perez, then the Secretary of Labor under Barack Obama who on Saturday afternoon was elected the next chairman of the Democratic Party despite being a Wall Street toady, a tool of the money power, and a neolib plant—at least in the minds of many of the people who opposed him. Sometimes, I imagine that being a Democrat can be very confusing.

"We're ready to hit the ground running," Perez said. "Our party succeeds when our party has a president in all the states and territories. The mission of this committee is to elect people from the school committee to the Senate."

"I think Tom was quite clear," said Congressman Keith Ellison of Minnesota, whom Perez named Deputy Chair of the committee immediately after the vote. "Anybody who supported me in this race, I thank you. But I want you to support Tom Perez. If you care about people who have their loved ones' cemeteries being desecrated, you got to support Tom Perez. This is not a small thing. The very fate of our nation is in the balance right now. I trust Tom Perez. If they trust me, they have to trust Tom Perez. There's a lot of action but it has to be channeled into the Democratic party. "

On the day's second ballot, Perez defeated Ellison, who'd jumped into the race early and had managed the not-inconsiderable parlay of being the favored candidate of both the Bernie Sanders element within the party and of Senate Minority Leader Chuck Schumer. Perez got in late, not announcing his candidacy until December, long after Ellison had declared his. To be honest, this gave Perez's candidacy a slightly piscatorial aroma.

For all his progressive bona fides, which are considerable, Perez was plainly convinced to run by people in the party who were unsure they wanted to be led by a progressive Muslim from Minnesota. (There also was some unpleasant and truthless whispering that Ellison might be an anti-Semite.) These included folks from the vestiges of the HRC campaign as well as, reportedly, a number of people who worked for the previous president. All of which immediately set up within the DNC chairmanship race an extended re-litigation of the Democratic primary fight that was best left forgotten. I didn't think it was possible for me to hate that campaign more than I did when it ended last spring. I was wrong.


The afternoon began with the Sandersite wing in full cry. The DNC defeated a motion to revive an Obama-era ban on corporate and/or lobbyist contributions to the DNC itself. The most plaintive appeal against reviving the band came from a national committeeman from Utah who said, essentially, "Hey, I'm a Democrat from freaking Utah here. Somebody cut me some slack before I have to go sell apples on the sidewalk in Temple Square." (The renewed impact of the money power in politics again, touched off by the Citizens United decision has settled in as a hard and fast fait accompli. As noted Trumpite Bill Belichick has observed, "You play the game by the rules that are, not the ones you wish were there.") The fact that the ban was defeated—and on a very clear voice vote, too—probably was the first indication that there was just enough daylight between Perez and Ellison for the former to win.

After TV favorite Pete Buttigieg dropped out suddenly while giving his nominating speech, Perez missed being elected by one vote on the first ballot. (This left Idaho's Sally Boynton Brown, and her 12 votes, in possession of the keys to the kingdom, and it temporarily made SBB the most powerful Idaho Democrat since Frank Church.) For all his visibility, Mayor Pete had startling little support among the people in the room who actually voted. On the second ballot, Perez picked up 19 votes, while Ellison remained at exactly the same total he'd had on the first.

Perez and Ellison took questions together from the press after the balloting was done and both of them seemed to get along quite splendidly. (They both called for an independent investigation into the ties between the Trump campaign and Russia with equal fervor.) And if the whole exercise this weekend accomplishes nothing else except to lay forever the ghost of the 2016 Democratic primaries and to salt the earth so its poxy memory never rises again, then the DNC Winter Meeting will have done American politics an incalculable good.

Saturday, February 25, 2017

ANS -- Republicans suddenly realize burning down the health-care system might not be a great idea

Maybe it's going to get through to the Republicans that repealing the ACA isn't such a good idea.  Maybe.  But, more than that, Republicans love power but have no idea what to do with it.  

Republicans suddenly realize burning down the health-care system might not be a great idea

 February 22 

Ryan promises to replace Obamacare 'this year,' but implementation could take longer

Play Video1:32
House Speaker Paul Ryan (R-Wisc.) said on Feb. 7 that legislation to replace Obamacare will be legislated this year, but that it could take longer to implement. "We hope to get this done as fast as possible," he said. (Reuters)

The Republican effort to repeal the Affordable Care Act is not going well, in large part because it turns out that making sweeping changes to a system that encompasses one-sixth of the American economy turns out to be rather more complicated than they imagined. Their backtracking has an interesting character to it, in particular how they've been gobsmacked by the transition from shaking their fists at the system to being responsible for it.

Up until November, they had been pursuing a strategy they got straight from Marx and Lenin, but now that they're in power, it suddenly looks like a terrible idea. Here's the latest fascinating pirouette they're undertaking:

House Republicans and the Trump administration on Tuesday filed a joint motion seeking to delay lawsuit proceedings that threaten to undo President Barack Obama's health care law, the Affordable Care Act.

The House v. Price suit – formerly known as House v. Burwell, as it was filed when Sylvia Mathews Burwell was health and human services secretary – has presented Republicans with one of their most straightforward routes toward fulfilling their stated desire to do away with or dismantle Obamacare.

Yet in the absence of an Obamacare replacement plan, the outcome the GOP initially sought threatens to upend the insurance marketplace and jeopardize coverage for millions of people.

Just to be clear, Republicans are asking the court to delay their own lawsuit pretty much indefinitely, because they've become terrified of what would happen if they succeed. In this case, it concerns government subsidies to pay out-of-pocket costs for people with low incomes. The fact that this case is now called House v. Price (as in Tom Price, President Trump's secretary of health and human services) shows the contradiction. Now neither the GOP House nor the Trump administration wants the lawsuit to succeed, though they won't say this aloud — because that would mean billions of dollars in payments to insurers would cease, and as a consequence the insurers would either hike premiums or pull out of the individual market.

The ensuing catastrophe — exactly what Republicans were hoping for when they filed the lawsuit and Obama was president — would now be their responsibility alone, so they're scrambling to stop if from happening.

Republicans used to say (and sometimes still do) that the ACA would "collapse under its own weight," but they weren't satisfied to simply wait for that to happen; if it didn't, they would urge judges in friendly courts to help it along. So they filed one lawsuit after another to undermine various features of the ACA. The suits shared a simple principle: If they were successful, they would increase the amount of pain and suffering Americans endured, in the hopes that the public would then turn against the law and the Obama administration.

It's a classic Marxist strategy known as "heightening the contradictions," in which you intentionally exacerbate the problems you're criticizing the ruling powers for creating, in the hopes of bringing your revolution all the closer.

The problem Republicans face now is that their essential values on health care are in contradiction with what the public actually wants. Let me refer you to a tweet the House speaker sent out yesterday, apparently after he stayed up late rereading his dog-eared copy of "Atlas Shrugged":

This is what Ryan and his Republican colleagues actually believe. Put aside that it misunderstands the very idea of "insurance," or that it's plainly ridiculous, particularly if you apply it to other areas of government regulation ("Freedom is being able to buy meat that might poison you; food safety regulations are Washington telling you what to buy regardless of your needs"). It accurately represents conservative thinking on health care, which is that the government should just butt out and let the market work its magic. We'll all have the "freedom" to get insurance or not, and if you can't afford it, too bad.

But Republicans know that putting those values too directly into action would be a political disaster, particularly now that the ACA is in force and millions of people are benefiting from it, not just the 20 million or so who are newly insured but also everyone else who has health security for the first time, knowing that they can get insurance no matter their income or their preexisting conditions. So Republicans are madly trying to come up with some way to reconcile their values and political reality, something they have yet to figure out how to do.

They say they want to give Medicaid "flexibility" when, let's be honest, they'd really prefer that Medicaid cease to exist (it's a big-government program that helps poor people, which in their book is two strikes against it). They say they want everyone to have "access" to insurance, in the hopes people will mistakenly believe they want everyone to have insurance, when in truth under their plans we'd have "access" to insurance the same way we all have "access" to BMWs. They decry increasing out-of-pocket costs, while all their plans would massively increase out-of-pocket costs, which of course some people are better able to pay than others. They want to privatize and then slash Medicare, but they say their only interest is in "strengthening" it.

You may say, don't Democrats do the same thing? Don't they hide their socialist goals behind intricate policy structures that merely claim to maintain the private nature of the American insurance market? Not really, no. I don't recall any Democrats pretending that the ACA's maintenance of the privatized nature of the American health insurance market was anything but a compromise, something they had to accept because of political reality and the policy complexity of transforming the health-care system to single payer in one fell swoop. Even Obama acknowledged that, after supporting single payer for much of his early career. "If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense," he said in 2009. "That's the kind of system that you have in most industrialized countries around the world. The only problem is that we're not starting from scratch."

Yes, most liberals consider their preferred system — perhaps single payer, or a hybrid system with guaranteed coverage, akin to what Medicare recipients currently enjoy — to be an eventual goal. But they don't see it as one worth investing too much energy into advocating right at the moment. Or at the very least they see it as something we could reach only through an incremental process involving multiple stages of reform spread out over decades. But they don't hide this fact, whereas Republicans are constantly dissembling about what their actual goals on health care really are.

And now that they actually have the chance to change the health-care system, heightening the contradictions not only doesn't work but will also hurt them. So they don't know what to do.

ANS -- Tom Perez Was the Wrong Choice for DNC Chair

Tom Perez was just voted in as chair of the DNC, the campaigning wing of the Democratic Party.  He just barely beat out Keith Ellison, the Sanders-recommended choice.  Here is one person's considered opinion about it.  
I would like to send a copy of this piece to Tom Perez for his reaction.  Any idea how I should do that?  Snail-mail? Email?  How do I figure out where to send it?


Yet Another Attempt to Make the World a Better Place by Writing Things

Tom Perez Was the Wrong Choice for DNC Chair

by Benjamin Studebaker

Former Labor Secretary Tom Perez has defeated Keith Ellison to become the new chairman of the DNC. It took two rounds of voting, with Perez eventually prevailing, 235-200. This is a deeply concerning development–Perez has a long history of taking positions which accommodate and contribute to declining living standards for poor and working Americans. He does support minimum wage increases, but a closer look reveals an untrustworthy record.

We'll go through a few issues where Perez has been on the wrong side of things.


One of the big changes for the American worker in recent decades has been the move from defined benefit pension plans to defined contribution plans. If you're not familiar with the difference, here's a visual aid:

Defined benefit plans cost more to employers, because employers have to guarantee a fixed payout regardless of macroeconomic conditions based on a set formula. With a defined contribution plan, employers can tie their own contributions to pensions to their employees' contributions, which means that if an employee is short-sighted and doesn't contribute much to their pension, their employer can also avoid contributing.

In the 1980s, defined contribution plans took off, benefiting both from a desire by American firms to cut pension costs and by an encouraging tax loophole created by the Revenue Act of 1978, signed by President Carter. Since then they have driven defined benefit plans almost to extinction:

The result is that many people's pensions can now be wiped out by market volatility and many people don't make contributions to their pension plans in the first place. Employees, as it turns out, don't make large enough contributions to these plans and don't always make wise decisions about how to invest the money put into them. This might suggest that we ought to return to defined benefit plans, or reform defined contribution plans to make it harder for employees to make financial mistakes which leave them with little or nothing in retirement. But Perez believes the fault rests with employees for failing to change their "mentality". In 2015, he said:

The retirement landscape has shifted dramatically in recent years, adding complexity and uncertainty to what used to be a very straightforward system. It used to be you worked for the same company for decades and then you'd retire with a pension that you couldn't outlive. Times have changed dramatically. We've gone from 78% of workers with defined benefit pension plans in 1975 to only 33% in 2012. 401ks and IRAs are vulnerable to market volatility, so when the nation experienced a Great Recession and a meltdown of the financial markets, a lot of people were forced to deplete their retirement savings accounts–paying steep fees in the process–just to keep a roof over their family's head. It's clear that even though we live in a defined contribution world, all too frequently, we're clinging to a defined benefit mentality. Our habits and our outlook haven't caught up to the reality–Americans there are still behaving as if that check will automatically come in the mail when they're 65.

Perez is also wrong to say that "times have changed"–the government made substantive policy decisions which encouraged the rise of defined contribution plans rather than defined benefit plans. The government also made substantive policy decisions which deregulated the financial markets and encouraged the formation of the housing bubble which led to the crisis which forced so many people to deplete their pension savings. But for Perez, the state doesn't owe any apology or any help to the people whose retirement accounts have been victimized by the failed experiment of defined contribution plans. Today 1/3rd of Americans have no retirement savings and a further third have less than $50,000 total:

This is directly the fault of defined contribution plans–these plans did not take into account market volatility and they did not take into account human behavior. If no one makes people save for retirement, many of them won't save much, and if people who know little about the stock market are left to make investment decisions on their own, they are likely to make poor choices. Defined benefit plans protected people by having their pensions managed by expert trustees, with a guaranteed payout even if those pension accounts were indeed mismanaged. We ought to be thinking about how we can restore stability to the pension system instead of demanding that employees stop "clinging to a defined benefit mentality" which merely claims that people deserve a reliable pension when they retire, regardless of what happens with the stock market and regardless of how much they know about personal finance.

Perez would rather demand that we accommodate bad policies than reverse them or propose any bold new alternative. His biggest pension ideas are extensions of this failed system–he's talked about introducing defined contribution plans run by state governments, many of which eliminate employer contributions completely and are entirely employee-funded. There is nothing bold about this.


Perez was a supporter of TPP, the Trans-Pacific Partnership. But in most of his op-eds and remarks about the deal, Perez repeatedly claims that the deal protects workers without ever explaining how in any detail. One of the big fears with TPP is that because many countries with low wages and inferior labor laws are included, those countries will submarine the American worker, offering transnational companies cheap labor to encourage relocation.

When we look at the way the TPP is structured, we see a number of issues–for instance, while the Labor Chapter of the TPP required signatories to allow for unions to form and to pass minimum wage laws, it never specifies in any detail what level of rights those unions should have or how high that minimum wage must be. The US attempted to stiffen protection with some of the countries in the deal, forcing them into consistency plans that prevent them from joining TPP until the US agrees they've met certain minimum labor standards. But why should we trust that the US government will hold these countries to very high standards, particularly when the consistency plans were allegedly full of loopholes?

As Cathy Feingold of the AFL-CIO put it in The Atlantic:

Consistency plans are an attempt to make the labor and human rights committee feel good that we talked about this, that we're engaged in it, but a lot of it is unenforceable.

There were some major labor violators that didn't even get a consistency plan–the TPP never bound Mexico by one.

Perez was sanguine about this deal, bragging about how its protections were "the strongest in history". But this just emphasizes how much worse previous deals were for American workers and for the foreign workers who are paid exploitative garbage wages for their labor.

Donald Trump has rejected TPP, but Perez's willingness to go along with it indicates that he may be more interested in helping foreign corporations take advantage of weak foreign labor laws than in defending workers. When pressed, he retreats to the same defence President Obama made in his state of the union:

If we don't establish tough, fair rules through trade agreements, countries like China will write those rules.

This defence is snivelling appeasement–the United States has the largest consumer market in the world, and developing countries rely on American consumers to buy their goods. China itself still has a relatively weak domestic market, particularly on a per capita basis, and relies on American consumption. It is the relatively strong labor laws and worker protections of the US relative to East Asia which ensure that American workers have enough money to buy goods produced abroad. If we were braver and bolder in trade negotiations and demanded that the countries that trade with us treat their workers with dignity in exchange for access to our massive consumer market, many countries might buckle. But we have already cut tariffs so much with developing countries through toothless GATT and WTO negotiations that our leverage is limited. Again, rather than boldly rethink our strategy, Perez just sticks with policies that are not working well and are known not to work well.

Financial Regulations

Perez also has a record of being soft on the banks. In the aftermath of the financial crisis, banks foreclosed on many people's homes, including veterans who are meant to be protected under the Servicemembers Civil Relief Act (SCRA). Over 1600 violations of the SCRA were documented. Perez was Assistant Attorney General for Civil Rights at the time, and had jurisdiction over the SCRA. He pursued zero of these violations. No individuals were convicted of screwing over these veterans. One of the individuals who profited from foreclosing on veterans was Steven Mnuchin, President Trump's new Secretary of the Treasury.

Later when Perez was Labor Secretary, he granted waivers to banks which had been involved in criminal activity, allowing these banks to manage people's pensions.

In his campaign for DNC chair, Perez talked a big game about going out and engaging with ordinary, working class Americans, campaigning in the suburbs and rural areas. But how is the party meant to inspire these voters when its chairman isn't committed to inspiring policies? How can we trust Perez to change the way things are done when he himself embodies the way things have always been done–letting banks off the hook, backing sleazy trade deals, and supporting a pension system which is more about propping up the stock market than it is ensuring Americans are kept secure in retirement?

Choosing him over Keith Ellison–Bernie Sanders' preferred choice, a man who stuck up for tuition-free college and single payer healthcare–sends a clear message that the DNC wants to continue hawking the same old stuff. We know how that goes for the Democrats: