Give 'Gravity Payments' CEO Dan Price Kudos - Not Brickbats - Even If His Efforts Crashed

“Income inequality has been racing in the wrong direction,” the Seattle CEO  said, adding:

 “I want to fight for the idea that if someone is intelligent, hard-working and does a good job, then they are entitled to live a middle-class lifestyle.”

For those fighting for higher wages and an end to income inequality there is perhaps no better symbol then Dan Price- CEO for Seattle credit card processing firm, Gravity Payments.   Three months ago, Price, 31, got  ABC TV news coverage after he announced he was setting a new minimum salary of $70,000 at his company.

He intended to accomplish this by slashing his own million-dollar annual pay package . On watching the segment at the time, both wifey and I applauded this unusual guy, not just obsessed with feathering his own nest and amassing wealth off his employee's back using the usual capitalist scheme of expropriation of labor.

Incredibly, Price at the time wasn’t thinking about the current political kerfuffle over low wages (especially the value of raising the minimum  wage) or the growing gap between rich and poor, He was just thinking of the 120 people who worked for him and how at least in one company he night improve the lot of his workers.

The idea gestated and emerged into manifestation after a friend shared her worries about paying both her rent and student loans on a $40,000 salary. He realized a lot of his own employees earned that or less. At once, he grasped that the wage stagnation that has dogged this nation since the 1970s was insupportable and had to be addressed. If he could do so, why not?  And after he did act, then almost overnight a decision by one man in the northwestern corner of the country became a powerful blow against income inequality.

Needless to say, the move drew attention from around the world — including from some outspoken skeptics and conservatives like 'El Swinebo'  Limbaugh, who (as usual) smelled "a socialist agenda". God forbid any CEO or boss do one damned thing to benefit his workers, lest he be seen as the reincarnation of Karl Marx! That is how mind-fucked our nation has become since Reaganism took hold, as well as the surge of PR via elimination of the 'Fairness Doctrine' (which allows dirt bags like Limbaugh to bloviate at will without a counter check to millions.)

 Never mind. In an era where economic equity is scarce and minimum wage earners outnumber wealthy CEOs 1,000 to 1,  most people were enthusiastic beyond proportion to the small local effort. Price chose $70,000 as the eventual salary floor, and noted that he was influenced by research showing that this annual income could make an enormous difference in someone’s emotional well-being by easing nagging financial stress.

Others took note. Talk show hosts lined up to interview Price while job seekers by the thousands sent in résumés, all desperate for a chance at a better life. He was being hailed as a “thought leade.” and Harvard business professors actually flew out to Seattle to conduct a case study. Even third graders  in CA wrote him 'thank-you' notes- and he flew out to meet a class of groupies -a spot featured again on ABC.

What could possible go wrong?  How could a guy trying to do right get the flying middle finger of fate?  Well, it can happen, especially in the US of A! How does that old saying go: 'No good deed goes unpunished?'

Sadly,  few of the cheering outsiders realized  how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting.  Again, in a land and era in which economic equity is as rare as diamonds on sand bars, this is a natural response.  People desperate for even a scintilla of relief will grasp at anything.

The most incredible aspect of it all? Some customers, dismayed by what they viewed as a political statement, withdrew their business.  Process that! They construed Price's gesture as a freaking political statement, no doubt in synch with liberalism-socialism,  regarded like the bubonic plague in a nation saturated in a foolish, myopic conservatism.

One client is was consumed by worry about how to deal with Seattle’s new minimum wage, which rose to $11 an hour in April and is scheduled to reach $15 an hour for small businesses within five years. In a nation where the race to the bottom is accepted, any aberration is intolerable.

Others anticipated a fee increase — despite Price's repeated assurances to the contrary — so also left. The losses were compensated for by the entry of dozens of new clients, inspired by Mr. Price’s announcement. Sadly. those accounts won't  start paying off for at least another year. To handle the flood, Price had to hire a dozen additional employees, at a significantly higher cost. Now he's struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
 

In addition, two of Price’s most valued employees quit. They were motivated in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Adding insult to injury. friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.

"If Dan Price was boosting his people's pay, why not you?"

The worst blow of all came less than two weeks after the announcement, when Price’s older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit  threatening the company’s very existence. With legal bills quickly mounting and most of his own paycheck and last year’s $2.2 million in profits plowed into the salary increases, Dan Price said, “We don’t have a margin of error to pay those legal fees.”

 

How will Dan Price's experiment to address income inequality pan out? It's too early to say. Three months before Price's  announcement, the firm had been adding 200 clients a month. In June, 350 signed up but the new business won’t start paying off for 12 to 18 months. In the meantime, Price is contending with the lawsuit brought by his brother (who owns about 30 percent of their company)

What is the moral of the story? Probably that single CEO efforts to address income inequality are always destined to fall short. Nick Hanauer, a Seattle venture capitalist and an early promoter of the city’s $15 minimum wage law,  admitted Price’s plan is not easily replicated. At the same time he observed that no one would ever have guessed higher minimum wage laws would be catching fire in cities around the country.  It is those laws that may be the wage earner's salvation.

But for those laws to succeed, we also need new narratives to counter the employer and conservative nonsense that "jobs will be lost" if pay is increased to living wage levels.  The basis for negating the naysayers is aggregate demand, which depends on consumption:  the ability of people to purchase goods and services. The greater aggregate demand, the greater productive output and the more jobs. If people, lacking sufficient pay, can't purchase those goods and services, , then they collect in warehouses and jobs must be lost because there's inadequate work to go around.

Simple and elemental - yet most conservatives and employers don't get it. Price did,  but his plan was too localized and limited to bear adequate fruit. That must await the $15 minimum wage now set to kick in for a number of cities.

More Than Ever True: Americans Will NEVER Get Rich From Work!

 Several years ago I noted how a majority of Americans has been duped by a sustained false consciousness implanted by the elites (including the media and political elite) into believing America is a “classless” society and upward mobility still exists. They keep trying by way of work to "make it" - failing to grasp they never will. Not the way the system is currently structured.

Well, more evidence has since come to the fore, including that the U.S. middle class is no longer the world’s richest. After considering taxes and transfer payments, middle-class incomes in Canada and much of Western Europe are higher than in U.S. The poor in Western Europe earn more than do poor Americans. I can vouch for that, seeing many of these people circulating around the high reach places in Switzerland last September. Money for them was no object.  There is also no big secret to this when you ask them how they manage: Their governments impose higher taxes on the wealthy and redistribute more of it to middle and lower income households. Most of their citizens receive essentially free health care and more generous unemployment benefits than do Americans.

Let's continue with the false consciousness aspect. Here  in the US of A, there is a strongly held conviction that with hard work, anyone can make it into the middle class. This is mostly horse manure, and a merely consistent observer can show it doesn’t hold up and the majority of American workers either tread water where they are (in terms of net wealth, job security) or they go downscale after losing a long held job - to become burger flippers or Walmart greeters.

But despite the evidence, most Americans remain blinded by the work ethic and the pundits' constant yammering it is "the only route up". To fix ideas,  Pew Research  recently found that Americans are far more likely than people in other countries to believe that work determines success, as opposed to other factors beyond an individual’s control. Make no mistake that Pollyannish positivity comes with a negative side:  a tendency to pathologize those living in poverty. Indeed, 60 percent of Americans (compared with 26 percent of Europeans) say that the poor are lazy, and only 29 percent say those living in poverty are trapped in poverty by factors beyond their control (compared with 60 percent of Europeans).

Note that part of this perception also stems from the innate narcissism inherent in too many Americans which douses out their ability to feel any empathy for others. To identify with their travails and setbacks. Reality then usually doesn't rip away the bullshit veneer unless they also hit bottom - whether through layoffs, health crisis or something else. It seems it takes an external 'hammer' to awaken them! 

While a majority of Americans might think that hard work determines success and that it should be relatively simple business to climb and remain out of poverty, the reality is that the United States has a relatively entrenched upper class.  It also has precarious, ever-shifting lower and middle classes. While many Americans might hate welfare, the data suggest they are fairly likely to fall into it at one point or another. Or unemployment and often longer than 6 months.

How do the wealthy get away with sitting pretty while the lower and middle classes pound dirt? Easy! They keep us going at each other's throats, via political divisions ("liberals" vs. "conservatives") or religious divisions - secure that they will prosper so long as the rest of us are too busy fighting with each other. Assisting them in this are stations like FOX which incredibly - according to recent surveys- now sport the largest number of people who say it's the most "trust worthy" news source. This despite having consummate liars like Billo O'Reilly.

SO the hoi polloi remain nicely brainwashed and believing every other factor is responsible for their plight except the elites themselves.

But why don’t Americans get it? Why do they lack the moxie to accept that an Overclass will determine how far they get and nothing else? Several reasons:

1) Americans are obdurate and perennial optimists. Unlike Germans whose native instincts are always to perceive the economic downsides of situations – so they’re more like to detect how they’re being gamed or suckered – Americans typically put the blinkers on. No where is this more evident than in how both sexes approach the stock market. Most American males, raised in hubris and bravado, believe they can beat the market by multiple trades and end up losing most of the time (more than 70%). Women, trained to be more cautious, trade much less and in more conservative outlets and gain more consistently. This same false optimism of most males, especially white, makes them disavow how they’re getting their asses kicked by a gamed economic system. No wonder then, that 63% of white males voted against Obama in 2008. Hell if they were going to buy into a “socialist” equalizer’s “dependency”. But….they bet against their own welfare.

2) Americans are much more poorly educated and informed than their European counterparts. They not only suffer because of deficient secondary (and tertiary) education, but also because of the deficient news offered by the corporate mainstream. This is mainly piffle infused with equal parts PR and propaganda, with little substance. Hence, unless the citizen reads widely he will be susceptible to psychological manipulation and false consciousness.

3) By virtue of (2) Americans more often fall prey to the fundamental attribution error ( which reinforces inequality in society) because of their over-optimism. This error is such that (‘Maxine Baca- Zinn and D. Stanley Eitzen, In Conflict and Order, 1991):

“It tends to credit or blame individuals for their level of failure or success without considering the aspects of the social structure that impel or impede their progress. Thus, it results in praise of the system and condemnation of individuals who are defined as losers.”

Thus, the fundamental attribution error (mostly made by working class whites) works to perfect effect and in favor of the American Overclass because it causes an entire dispossessed electoral segment to screw themselves so the Overclass needn’t fret over their rage. They simply redirect that rage at minorities (immigrants, blacks, or women) while they stick with the political rascals (GOP) that did them in the first time.

This in turn leads to workers who are prepared to tolerate any amount of systematic abuse from a corrupt system, because they lay the blame on their own "lack of ambition" or some other false excuse contrived by the corporate thought controllers to deflect blame from their own greed.

This may well be at the heart and core of why so many of the working and middle classes vote against their own best economic interests.

Meanwhile, the evidence is abundantly around us – for those who have eyes to see- that we are in a society at least three times more unequal than that which existed in the 50s. Back then only one spouse needed to work, bank interest at 4-5% kept passbook savings flush and the middle class had the potential for growth. (Fully supported by Robert Putnam in his new book: 'Our Kids- The American Dream in Crisis')

Now, all of that is inverted: both spouses usually need to work, often at two jobs each, bank passbook interest is near zero percent so people either have next to nothing or chase risky yield in the stock market, and the middle class numbers are crashing as the Gini coefficient and index (the prime measure of inequality) approaches values peculiar to the Philippines and Mexico.

And hold strain because things are about to get a whole lot worse. This will transpire when  the secretive “Trans Pacific Partnership” trade deal  is unleashed.  An outrage on civil society that will show once more that American corporations don’t represent the interests of Americans. They represent the interests of their executives and elite shareholders, who are not only wealthier than most Americans but also reside all over the world.

Obama's SOTU: Defiant and Generally Good (A Few Quibbles)

Barack Obama's State of the Union speech last night was generally solid, especially with its emphasis on "middle class economics" and his proposals to halt the nation's increasing economic inequality. While many of the proposals will never see the light of day in terms of passing legislation, they are pretty much within a common sense standard of what any decent, sane nation would do -unless of course it isn't sane or decent. Those include:

-   Increasing the capital gains rate on couples making more than $500,000 annually, to 28 percent.

- Allowing all workers to have at least 7 sick days per year as all other advanced nations do

-  Increasing the minimum wage to at least living wage standards.

-  Require estates of the wealthy to pay capital gains taxes on securities at the time they're inherited


These are all eminently sensible and shouldn't require elaborate defense or justification. For example -as the Financial Times noted yesterday (p. 3):

"Americans pay a top rate of 23.8 percent on their investment income, significantly lower than the top rate of tax from employment which stands at 39.6 percent.

The gap in how different kinds of income are taxed overwhelmingly benefits the wealthiest households which are much more likely to hold investments over time."

Of course, the FT is spot on. Investment income, or "rentier income", should always be taxed a lot higher than working income since it fuels economic and income inequality. Why should some rich guy with $50 million to spare, be able to laugh his taxes off because he has his money stashed in equities, hedge funds or derivatives? It make no sense. Thus, a small increase is 28 percent is no big sacrifice to ask. But don't worry, the Reepos will believe it is as they instead go on their austerity and deficit cutting binge - despite the fact as Obama has noted, the deficit has been cut by two-thirds.

But what's reality to a party that doesn't even believe global warming is a scientific fact - as much as anything can be- and still has problems accepting evolution?

The sick days proposal is really a no-brainer and ought to have been enacted over twenty years ago. It's a bloody disgrace that all other advanced industrial nations have this provision, but Americans don't. But then, I guess the Reepos have no problem with 5 million citizens getting sick each year from food poisoning because food handlers at restaurants are ill (say with norovirus) and ought not have been at work, period.

Minimum wage increase is also an obvious need, but the Reepo maggots would clearly rather underpaid workers have to go on food stamps to survive. (Even as I write this they are prepared to cut another one million from food benefits, sending 500,000 kids into the condition of food insecurity.)

Lastly, forcing wealthy estates to pay capital gains on inherited securities is also a rational move, given how most wealth in this country is derived from daddy's riches - not work. That inherited capital then massively contributes to economic inequality as economist Thomas Piketty has shown.

Another high point was when the president vowed to use his veto pen to strike down the Republican leadership's efforts to dismantle his signature accomplishments, including his health care and financial reform laws, i.e. "unraveling the new rules on Wall Street "  (Alas, as I told wifey, that hog already escaped the farm - what with the passage of the spending bill back in December, with the rider doing away with swaps regulations.)

Obama said, defiantly - in regard to protecting Obamacare:

"We can't put the security of families at risk by taking away their health insurance"

Which is good to hear because the Affordable Care Act is the only route most people (especially with pre-existing conditions) have to get health care.

Other high points:

- Vowing to fight climate change, also noting noting 2014 was the hottest year on record (see my January 17 post)

- Vowing to veto any other laws that weaken financial regulations.

Regarding the first, the big test will be the Keystone XL pipeline, which bill is likely to come to Obama's desk in the next few weeks. If it does, it is essential he veto it, given that tar sands oil would be a catastrophe for the planet.


Not so great segments:

- Calling out Vladimir Putin and Russia in relation to the Ukraine, when it was in fact NATO and the neocons still in State Dept. positions, like Victoria Nuland, who instigated it. See e.g.

http://brane-space.blogspot.com/2014/03/putin-is-acting-rationally-col-lawrence.html

and:

http://brane-space.blogspot.com/2014/03/a-game-theory-perspective-on-ukraine.html


- Asking for a new authorization for military action against the Islamic State terror group in Iraq and Syria (ISIS)

As much as I'd like to expunge the ISIS vermin and rabble from the face of the Earth, I am not sure a new military "authorization" is what we need to do it. It sounds ominously  like the authorization,  post 9/11,  that literally sucked trillions from our Treasury via the two useless engagements in Iraq and Afghanistan.  Then too, let's bear in mind the primary goal of ISIS is to trap the U.S. and allies into a new round of military spending and incursion in the Middle East, to fan the flames of Muslim hate and gain new recruits.  See also:

http://brane-space.blogspot.com/2015/01/the-french-islamic-terrorists-is-their.html


 -  Boasting of U.S. energy independence.

While this sounded great on its face, let's bear in mind it didn't come so much from alternative energy sources (though Obama did mention wind energy developments) but from fracking - which is ruining water systems, and polluting soil and air across the nation. See my previous posts:

http://brane-space.blogspot.com/2014/05/now-fracking-pollutes-soil-as-well-as.html


http://brane-space.blogspot.com/2013/07/gasland-ii-fracking-is-worse-than-you.html


Funniest moment? As Obama neared the end of his speech, he declared, "I have no more campaigns to run."

When the goofball Republicans erupted in laughter, Obama retorted, "I know, because I won both of them."

Good on you, Barack,  for reminding the Reepo losers of your prior electoral conquests!

Now, be sure to keep that veto pen well -filled and ready to snuff out the oncoming Reepo bunkum!

We're Enmeshed in the "Spoils" Society? Think Instead of the LOW Grade Oil & Debt Society!

WaPo Neoliberal hack Robert J. Samuelson is at it again, this time condemning what he calls a "spoils society" approach ('Here Comes the Spoils Society'), which takes from the poor widdo rich 0.1 percenters  to slightly lessen some of the nation's gross inequality. According to Samuelson:

"We are, I fear, slowly moving from “the affluent society” toward a “spoils society.” In 1958, Harvard economist John Kenneth Galbraith published his bestseller, “The Affluent Society,” which profoundly influenced national thinking for decades. To the Great Depression’s survivors, post-World War II prosperity dazzled. Suburbia offered a quiet alternative to crowded and noisy cities. New technologies impressed — television, frozen foods, automatic washers and dryers. Never, it seemed, had so much been enjoyed by so many."

Unstated by Samuelson is how Galbraith deplored the excesses of a consumptive society and in particular the pernicious influence of the advertising complex which confused wants and needs. As Galbraith put it, the basis for this complex was purely to make Americans confused over what was really a need, and the luxuries (large or small) they desired. Meanwhile, the objective of Madison Avenue was to brainwash the hoi polloi into believing luxuries were really essential needs that they were obligated to satisfy via purchase. In this way, the energy depletion of resources took on a new head of steam and now, some 60 years later, we find ourselves mired in 'stuff' (55 million square feet thus far devoted to storage mods, according to a recent Denver Post piece) and having to dredge up ever more degraded forms of energy to support our unsustainable consumption.

So, let's not hesitate to note Samuelson is already off base in his adulation of 'Murica's cornucopia of goods, especially, and that Galbraith in any way extolled or endorsed it as a permanent feature. Galbreath, in fact, evinced a basic distrust of the advertising complex and its pathological ability to persuade people to spend beyond their means. As he wrote (p. 147):

"In a society where virtuosity in persuasion must keep pace with virtuosity in production, one is tempted to wonder whether the first can ever keep ahead of the second. For while production does not clearly contain within itself the seeds of its own disintegration, persuasion may."


 But, knowing Samuelson, it isn't surprising he distorts it like he did JFK's deficit spending in the early 60s. Samuelson writes:

"This explosive abundance, Galbraith argued, meant the country could afford both private wants and public needs. It could devote more to schools, roads, parks and pollution control. Economic growth became the holy grail of government policy. Production was paramount. It muted social conflict."


In fact, Galbreath implicitly questioned the excess materialism of the country in terms of producing consumer items that weren't genuinely needed and which could be projected to add to debt, if people purchased items they couldn't afford.  As he observes (p. 146):

"...we should expect that every increase in consumption will bring a further increase - possibly a more than proportional one, in consumer debt. The evidence is already impressive. ......From 1952 to 1956, total consumer debt increased from $27.4 billion to $42,5 billion or over 55%....although those were prosperous years, disposable income of individuals increased by only 21 percent."

And what, pray tell, is the consumer debt picture today? According to the site nerdwallet.com it stands at a total of $11.13 TRILLION or orders of magnitude larger than Galbreath cited by 1956. In other words, what he foresaw as the metastasizing cancer of wants converted to needs by clever advertising has come to pass. Indeed, $898.4 billion of that debt is in credit card debt while some $7.81 trillion is in home mortgages. Most of the latter owing to the American penchant to purchase way too much home, far beyond what they can afford.

Hitherto uncited, but vastly worse than the era of Galbreath's mere "21 percent increase in individual disposable income", is the fact that incomes in the U.S. have remained stagnant since 1973. This, in tandem with Americans' over-consumption (buying what they don't need), has incepted the massive debt load. It also begs the question of how any serious writer or Neoliberal hack could complain of WHY there exists a "spoils society".

Samuelson writes, on the heels of his claim that production was paramount earlier:

The “spoils society” reverses this logic. It de-emphasizes production and fuels conflict. Here’s why: There are two ways to become richer. One is to provide more goods and services; that’s economic growth. The other is to snatch someone else’s wealth or income; that’s the spoils society. In a spoils society, economic success increasingly depends on who wins countless distributional contests — not who creates wealth but who controls it. This can be contentious. Winners celebrate; losers fume.


He then complains that the country  "is losing ground to predatory behavior (grabbing existing wealth and income)" and that what was once 3% growth per year (since 1950) is now projected to be 2% or less. And this degradation of growth heralds smaller gains, so that  "more people will fight over existing income and wealth, because — as has been said — that’s where the money is. "

Samuelson, oblivious as he is to the energy factor underlying production, has no clue, not one, that the degradation of economic growth is inextricably tied to the decreasing energy return on energy invested (EROEI) of fuel sources. In other words, our energy-dependent civilization is becoming ever more impoverished as the efficiency of the energy to run it diminishes over time. As it becomes more impoverished, production becomes more costly as well as inefficient and energy-intensive at all levels. As a result, growth decreases while debt increases except for high end rentiers and labor expropriators - who prosper (and hence deserve to have their wealth redistributed). All of this was explained in detail in my earlier blog post: http://brane-space.blogspot.com/2013/09/44-trillion-in-deficits-by-2024-minus.html

As I noted therein, essentially, a nation which had become addicted to energy delivering 20 to 30 or even 40 times as much energy as it costs to extract, now faces a future with energy return 5 to 8  times less. This spells monetary-economic disaster because at the end of the day it is energy which  determines wealth of nations, money is only the medium to represent it.  Dilute the energy sources and money's value must be diluted also, what the wonks call "debasing the currency". The alteration of the EROEI fuel projections also translates to less growth. If Samuelson really knew about this fundamental underpinning of economics he wouldn't be so mystified as to why growth must diminish as high EROEI fuel sources do.  He also would be less surprised that we have now entered more into a redistributive society.  

Since assets must remain basically fixed as high EROEI energy stores plummet, it means that a fixed resource 'pie' is all we have to divide, and there is no "adding" to it. We have entered what we call a "zero sum" economy.  If the richest have more resources, then we must redistribute their excess resources and wealth  to ensure all citizens are able to meet their basic life needs. It's as simple as that. Samuelson can squawk all he wants about taking spoils, but all the foot stomping in the world will not repeal the diminishing energy future with which we are faced. At least the guy is honest about one thing, when he admits: "The promise of economic growth was oversold."

As for those who may be mesmerized by the recent report that the U.S. is now "the greatest oil producer in the world" (on account of oil shale) don't make me laugh.  If you really, truly believe that low EROEI shale oil (kerogen) provides a way out of the debt, low growth and lower production morass (and hence 'spoils society')  then I have five acres of choice beach land in Barbados to sell you for a song.

As Richard Heinberg notes (Snake Oil: How Fracking's False Promise Imperils Our Future', page 110 ):

"Kerogen is not oil. It is better thought of as an oil precursor that was insufficiently cooked by geologic processes. If we want to turn it into oil, we have to finish the process nature started: that involves heating the kerogen to a high temperature for a long time. And that in turn takes energy- lots of it, whether supplied by hydroelectricity, nuclear power plants, natural gas, or the kerogen itself. Therefore the EROEI in processing oil shale is bound to be pitifully low. According to the best study to date, by Cutler Cleveland and Peter O'Connor, the EROEI for oil shale production would be about 2:1. That tells us that oil from kerogen will be far more expensive than regular crude oil."

And oh, btw, if more expensive it is not going to solve either our lower growth problem, or our higher debt problem. As for fracking, that's no savior either. As Heinberg puts it (p. 116):


"No evidence suggests that the technology of fracking has actually raised the EROEI for natural gas production. It temporarily lowered prices but only by glutting the market."


In other words, like it or not, we are indeed enmeshed in a veritable  "spoils society"- but not out of spite or envy of those who have the "most toys" - as Samuelson asserts. But rather on account of a declining energy base for us all. And unless Neoliberals like Samuelson know where we can find another Earth to populate with plenty of resources and energy (and the least energy intensive way to get there), or know how we can downsize our current system to accommodate lower energy sources  - he better just shut up and learn to like it. Meanwhile, we need progressive and even socialist thinkers to conceive of improved ways of resource re-distribution from the hyper-rich to the struggling citizens who can now barely feed their families because of the sequester and government shutdown.

Holman Jenkins: Cease with the "Inequality Obsession'!

WSJ staffer Holman Jenkins can ignore propping up the fat cats, the hyper wealthy and all manner of capitalist parasites that made their money by expropriation of others' labor. After all, he works for the most reactionary journal of finance ever conceived....and on its op-ed pages! You gotta deliver the goods and please Master Rupert when he demands it!

Anyway, Holman, in his latest piece ('The Inequality Obsession', April 19), admonishes those of us who dare to be diehard socialists, as well as certain media instigators (you can count them on one hand) and the Occupy movement, that they must all get a grip, back off and finally halt the "inequality obsession". Never mind that the best indicator of all, the Gini coefficient, shows we have regressed as a nation since the Bush tax cuts took effect, and the index - at 0.48- is about the same as the Phillippines and Mexico.

Meanwhile 12 million more have ended up on food stamps, and the number in poverty has increased to 1 in 6. (A pity that if Mitt Romney is elected all these people will face an even more sordid future with the Reeps cutting food stamps to the bone, even as they reinstate even bigger tax cuts for the Richest!)

But what really makes me howl with laughter are some of the analogies little Holman uses to try to make his specious point. A case in point, he writes:

"If it were learned that the car driven by the average American is 10 times more likely to burst into flames than the car driven by the richest 1%, what should the policy response be? Should it mandate that cars driven by the rich burst into flames more often?"

Uh......no, Holman! It should mandate that the same safety standards that are applicable to the "rich man's" vehicle are also used for the average American's. This sort of stupid analogy is like posing the unserious question: "If the ground beef a rich man eats is 10x less likely to have E. coli, brain parasites or campylobacter as the beef the average American eats will an equitable policy require that the rich man's burger also have as much E. coli, brain parasites and campylobacter as the average guy's?"

Again, the answer is no, only that the same safety standards apply! (Which means the same regulations!) Some may argue here that cars aren't like burgers, but in fact, when it comes to safety margins, they are. If you have ten times more average autos bursting into flames than those owned by the rich, it eventually becomes something of an obvious outrage - even to the corporo-media- and the auto company's sales will plummet. Thus, it makes more sense to put safety factors in to minimize bursting into flames, which engineering details would show (based on past instances of such autos) that the increased cost is negligible when compared to the benefits, and sales accruing from a safe, economy class auto.

Following the above screwed up analogy, Holman next uses similar logic to make the following statement:

"Income inequality is a strange obsession, at least to the extent obsessives focus their policy responses on trying to adjust the condition of of the top 1% rather than improving the opportunities for everyone else."

But he misses the point, which is (stated in a question): What if the opportunities for everyone else hinge on the "condition" of the top 1% ?

The latter, you see, recognizes the zero sum game that modern economics (governed by the Pareto Distribution) foists on everyone else.

As a tiny reminder of how it works:

The wealthiest 1% get on average $394,000 each and every year from tax cuts.....compared to the average blue collar bloke(currently leaning toward Romney, if you can believe it!) who gets maybe $400 back in tax cuts if lucky. Call this guy, Joe and his 1% counterpart, Reginald (see Reginald's cartoon image attached puffing on his $500 cigarillo - though this image would more fit the top 0.001 % who receive $1.4 million back a year in tax cuts).

Joe, with his $400, can maybe buy most of a month's groceries, or maybe get minor repairs done on his 1997 Dodge Truck.

Reginald, who is in the top 1%, will use maybe $100,000 of his tax cut takings to invest in commodities futures markets where he will speculate on oil futures, and make maybe another 200 grand. With this much money, he will give at least a 50 grand donation to Romney's campaign to sow even more lies about Obama and the economy. (Such as the one he pulled yesterday when he appeared at a closed factory - 4 years since closed under Bush- and blurted: "Had the president’s economic plans worked, it would be reopened by now. But it’s still empty. And it underscores the failure of this president’s policies with regards to getting this economy going again.” )

Actually, the real culprits were the Reeps in the House, who voted down Obama's $440 billion jobs plan that would have provided the capital whereby the plant could have opened. You see, rather than enable workers to have jobs and thereby keep plants open in the Rust Belt, the Reeps have more been about preventing Obama's re-election. But the cost of that has been pissing on the heads of everyone else.

But this is how Romney operates. How the elites operate, as well as their defenders and sundry shameless apologists like Holman Jenkins, Jr.

He also lies in other ways, as by claiming this marvelous market "is actually increasing the competitive advantages of the educated". Actually, last I looked, these recently educated had more than $1 trillion of college loan debt outstanding, mainly as a result of parasitical private loans (made by elitists of the 1% in assorted banks, private companies) which carry uncapped variable interest rates and which aren't required to include flexible payment options. As a result, s student taking out $50,000 in private loans, could well end up paying back more than $180,000 total by the time she's all done. That's about enough to buy a decent home in Charlotte, NC or Milwaukee, for example.

But.....most of these kids can't even get decent paying jobs because the elitist -financed banks hold more than $2.7 trillion from corporations who's rather sit on their money than create jobs.

Holman Jr. insists that "generalizing about the distribution of incomes is an academic specialty seemingly incapable of freeing itself from tendentiousness"

But in fact, not. It's very real and personal to the (once) middle class teacher in Ohio who has now been cut loose from her long time job, because of state budget cuts to education, because the Reep dominated state legislature won't raise state taxes to pay for more teachers.

And as this mom barely hangs on with the earnings of a substitute teacher, she's left to wonder how she will afford to keep the lights on in her home, far less pay the mortgage.

But to entitled, coddled twerps ensconced in the ivory towers of reactionary finance, like Holman Jenkins, Jr. , these things aren't the stuff of the real world but "academic obsessions". Maybe because they've never had to suffer, or if they did suffer, they conveniently forgot the leg up they got compliments of a lucky break or timely Samaritan. After all, very very few of us "make it" entirely on our own.

Hence, it's more than grating when financial creepozoid hacks like Jenkins, Jr. remark that "there's a certain soul sickness that's impossible to put a constuctive gloss on".

Referring, for example, to how The New York Times has catalogued the excessive consumption of the über rich, as I have, e.g.

http://brane-space.blogspot.com/2012/02/wealthiest-one-percent-get-even-more.html

Now, Holman perceives such "cataloguing" as a case of rank envy (hence his "soul sickness" descriptor), but in fact it is a case of information that reinforces that data we already have at hand, say from the Gini index. With such cataloguing and blogs such as I have done, one can see first hand how the wealthiest are able to live off the taxes THEY aren't paying but which the rest of us are!

Thus, we can see how we are getting screwed because these rich elites are making out like bandits, most paying less taxes than their overworked secretaries.

It was within this economically unbalanced tableaux, that a whole group of Caribbean Socialists based at the Univ. of the West Indies arrived at the concept of excess wealth in the late 1970s. Their main theme was that any capital used for "frivolous" purposes could be regarded as excess, and they generally set a criterion that in a nation such as the U.S. - anything over $10 million had to be excess wealth. Making allowances for where one lived, if one had money left over to burn ...say on $150 grand commodes, one was awash in excess wealth.

Their objective here was practical, because especially in re-building former colonial outposts and socieities, it was critical to know the economic balance sheet if one intended to forge prosperous future nations. Thus, the off-side balance sheet led many Caribbean nations to impose much higher taxes, including even on the pensions received by their own expat retirees living outside the country!

The Caribbean socialists of the 1970s, including Dr. Ralph Gonsalves, maintained that 50% ought to not be too much to part with in taxes for a hyper rich capitalist. For the top one percent in the U.S. one may argue that anything over what those Bush tax cuts provide is definitely excess wealth....and hence,...if they don't voluntarily give that money back in some way, say to homeless charities, then Uncle Sam needs to help them out.

Maybe the next time Holman Jenkins, Jr. writes about "soul sickness" to do with inequality "obsession" I can put him in touch with Ralph Gonsalves for a much needed reality check!