Friday, November 19, 2010

Congressmen Bail Out Firms to Protect their Own Investments

Equity ownership, stocks and shares owned by politicians, influenced their legislative and financial monitoring activities. The financial interests of politicians increased the probability that banks received bailout money, how much support these institutions received and how quickly.

Representatives’ stock ownership influenced members of the US House of Representatives to bailout the financial sector by voting for the bills HR 3997 on 29 September and HR 1424 on 3 October, 2008. In the initial vote, the likelihood of voting for the bailout was 41 percent for non-investors and 58 percent for equity owners. In the final vote, the likelihood was 55 and 69 percent respectively.

Congressional equity ownership in a given firm was also shown to affect the probability of receiving a bailout, the bailout amount and the timing of government support to that firm. Congressional committees with jurisdiction over the finance sector can affect regulatory outcomes. Equity ownership of members of these congressional committees affects bailout decisions, largely due to the powerful members in each committee, the chairs and ranking members.

Lobbying is indubitably an important means of exerting influence in politics. In the United States, campaign donations also matter. What has gone virtually unnoticed thus far though is that politicians also are investors. Part of their wealth rests with firms whose wellbeing falls under their legislative and regulatory influence.

Professor of Business Laurence van Lent of Tilburg University in the Netherlands and Ahmed Tahoun of Manchester Business School (UK) drew these conclusions on the basis of an analysis of 555 publicly listed financial sector firms, 295 of which received government support under the Troubled Asset Relief Program (TARP).

Thursday, November 18, 2010

Cash Bailouts Are Frittered as Added Executive Compensation

A business study of corporate bailouts has found that debt relief is more successful than cash injections. It revealed that, in the year after a cash bailout, executives paid themselves and some employees higher compensation!

Executives of firms that receive cash almost immediately give their employees and themselves raises.
Professor Kenneth Kim

The study of the performance of 104 corporate bailouts in 21 countries between 1987 and 2005, was carried out by Kenneth Kim, associate professor, and Zhan Jiang, assistant professor, at the University at Buffalo School of Management, and Hao Zhang, assistant professor, at the Rochester Institute of Technology.

They found also that bailed out firms could recover to a point where their performance was as good as before, depending upon several factors. Recovery was best for firms that had had a sudden decline for reasons outside management control, or because they had problems servicing their debt. Firms that had declined more gradually with no significant external factors, or were unprofitable, were genuinely sick, and could not recover as well despite the bailout, though many did survive. Kim noted:

The former were profitable, they just needed a hand. So, it makes more sense to rescue firms that have been otherwise strong than to keep afloat “prolonged decliner” firms that have been weak or inefficient for some time.

Firms recovered least from governmental bailouts, because governments:

  1. don't monitor firms after the bailout as closely as large shareholders and banks
  2. may bail out a firm to keep people employed or to keep the economy going, regardless of the firm's performance
  3. are more inclined to bail out firms with government connections.

Tuesday, November 16, 2010

Help the Heroes Day?

In the UK we are coming to the end of “Help the Heroes Day”, a day of fundraising for the charity, Help the Heroes, recently started by an army officer to provide for war wounded soldiers. It has had vast media coverage in its short life and has raised an enviable amount of money, money at least that the Royal British Legion (poppy day) might envy, since it was set up for the same purpose.

Well, no one would disagree with helping seriously hurt people, would they? but, beside the British Legion, the UK has, or had, a comprehensive National Health Service (the NHS) for which we all pay a National Insurance Stamp while we are working which entitles, or entitled, us to free health care, a basic pension in our old age so that we are not destitute or forced to beg, and benefits when we are sick or unemployed, for the same reasons. Soldiers, of course, were entitled to all of this together with any special care the government or military were willing to provide for the wounded, together with what the RBL provided on top.

The issue I have is that all the publicity that the new charity has received is more than simple advertising for a good cause, it is tantamount to a military and militarization campaign across the country.

Take the word “heroes”. Is it proper to call these soldiers “heroes”? A hero these days is considered simply to be someone who is courageous, and I don't doubt that soldiers involved in active service are courageous. But with this definition so too are many others, and among them are people who the public would not agree were heroes. The 9/11 attack involved people willingly driving aeroplanes into high buildings with death a sure consequence. These people were courageous, and so must have been heroes. Were they?

Then again, when we fight a war we fight an enemy who are also facing us as their enemy, and they too are facing death, just as our soldiers are. They too are courageous, so must be heroes, mustn't they?

Indeed, in the middle of the twentieth century we lost many myriads of heroes facing the Axis powers, Germany, Japan and Italy, and 55 million people in total lost their lives on both sides, soldiers and civilians. Were they all heroes?

Surely, a hero is not just brave, a hero is also noble, so we can count out the 9/11 bombers, and soldiers who are fighting for any cause that is itself not noble, like the fascist soldiers of Germany and Italy, and the soldiers of imperial Japan. They were all invading foreign countries and killing innocent civilians in those countries to make them submit to the conqueror. We are not like that. We do not send troops into foreign countries to make other people submit to us, do we?

By now, I hope you have got my point. Soldiers who are forcing themselves into the homes of innocent people in a foreign country can hardly be regarded as doing anything noble, they are not being heroes. They are acting like Nazis. We are not fighting them because their governments, with the support of their people, have invaded our country. The government of Afghanistan is in place because the US has put it there. The leader of the Iraqis was in place because the US had put him there. We are killing innocent farmers and their wives and children while fully aware that most of them would prefer it if we just went away.

The whole point of the current militarization campaign is to condition us to permanent warfare, just as the people of the US have been conditioned, and just as George Orwell prophesied. We are not helping heroes, and if we want to help heroes, we would do much better to force our governments not to make young men into heroes, dubious as the title is, by killing innocents abroad. Young men would be better served by an anti-war movement, not one that gives help too late to young people with shattered bodies all for a political myth.

All we have to do to see the injustice of it is to imagine that a foreign army was raiding our houses at dawn, killing or detaining our fathers and sons, and killing or raping our mothers and sisters, and all on some pretext given them by a few extremists. That is what we fought the Nazis and the Japanese to stop. But we are now doing it ourselves, and calling our bullying troops, when they suffer in retaliation, “heroes”.

Are we to suppose that we would not fight back if we were invaded and misused by some foreign bullies? Have Americans so completely forgotten that they set up their own state by fighting off the invading soldiers of the British that they are now repeatedly determined to bully other people into submission?

And what of 9/11 itself? Is that a sufficient pretext for killing tens of thousands of foreign people who had no part in the original monstrous plot? Indeed, if we had already shown our own lack of basic justice for others by supporting oppression of poor Arabs, are we supposed to stand by and expect them not to want to retaliate against the mean spirited unfairness of our own previous actions.

You can keep whipping your dog to keep it cowed, but when it gets the courage to bite you, whose fault is it? If we treat these poor foreign farmers like dogs then we can expect to get bitten, and there is nothing noble or heroic about beating innocent animals or humans that have done us no harm, and who could not kill and maim our dubious “heroes” if they were not there to be harmed.

We still need to oppose foreign wars, and not be beguiled by bogus sentimentality disguising military propaganda. Help our heroes by stopping foreign wars and bringing them home before they are wrecked.

Sunday, November 14, 2010

Tory Toff Cameron, British PM, Greets His Deputy, Liberal Toff, Nick Clegg

Cartoon by Chris Riddell from Guardian Newspapers and the Observer.

David Cameron is the British Prime Minister. He is a toff, a man with very rich parents who had a very expensive education, the best you can buy in the UK. The British Deputy Prime Minister is Nick Clegg. He is another toff from a banking family, and had a superior education, albeit not quite in the Cameron bracket.

Cameron is a Tory, the traditional conservative party of the UK, while Clegg is a Liberal Democrat, but the two have united in a coalition government against the New Labour Party created out of the traditional Labour party by the machinations of one odious opportunist, Tony Blair. The New Labour Party became unelectable because of the lies, spin, lack of principle, and the general careerism and dishonesty of most of Blair’s pick of grifters who stepped forward to be selected as a candidate for New Labour in the Blair and Brown years.

Clegg’s party pretended to have taken the mantle of the old Labour party in standing up for the ordinary worker and the middle classes, the old, the disabled, the deprived, and generally those struggling to manage in a world increasingly designed to favor the sharks and other financial raptors. But he welched on his promises, and joined David Cameron in the most vicious attack on the standards of anyone less than minted in almost a century.

Clegg, however, leads the junior arm of the coalition, and hence he is depicted as a doormat by Chris Riddell, having to endure the muck and mud of popular ire, and growing sense of betrayal by the Lib-Dems, because the attack on the people would have been impossible without Liberal help, and their full ire would have been directed against Cameron’s Tories.

As it is, the anger is growing, the pressure is mounting. Already students have wrecked the entrance of the Tory HQ on Millbank in London, knowing that good humored, quiet, and orderly demonstrations never get the demonstrators anywhere. They are ignored or subverted from their original aims.

Look at the orderly million strong demonstrations against the Iraq war. The antiwar feeling was rapidly extinguished and turned, by ceaseless military publicity and propaganda, into pro war sentimentality and “charities” like “Help The Heroes”, a way of keeping in the public eye the “heroism” of our soldiers killing peasant farmers, their wives, daughters and sons, in their own homes and homeland 4000 miles away.

All of this is meant to distract public attention from the way they have been robbed of trillions by the bankers and those who depend upon financial fiddling like Cameron and Clegg, not to mention the creepy Blair, so much admired, it seems, in the Land of the Free. Please take him and keep him, treating him to the same torture that he and Bush have meted out in the world, by Bush’s own admission, when the US eventually gets to prosecute war criminals instead of sheltering them.

Saturday, November 13, 2010

Cooperation and Monitoring to Deter and Punish Free Loading Works Best

The default assumption of evolution is that each individual animal follows only its own interests, and so cooperation in more than small groups is impossible because free riders take advantage of the others to enjoy the benefits without contributing anything, or as much, to the joint venture. Yet, human beings do cooperate, and field studies show that many communities are able to manage their commons—woodland, pasture, fishing. They manage to do it by combining a degree of cooperation with monitoring free riders to deter them.

Researchers, Professor Michael Kosfeld, Devesh Rustagi and Professor Stefanie Engel, studied a forest commons management program of pastoralists in Ethiopia. They recorded the degree of conditional cooperation in a group—the proportion of members willing to cooperate provided that others cooperate too. They found that groups differ widely in their share of conditional cooperators, from 0 percent to 88 percent. When conditional cooperators were a small proportion, not surprisingly, many were free riders. Presumably, this amounted practically to free exploitation of the resources.

Statistical analysis showed that the groups with more conditional cooperators were more successful in managing their forests, as measured by the number of immature trees there were per hectare. Looking into this further, the researchers investigated what the groups actually did to guard against free riding. They measured the time spent in monitoring the forest.

Groups with more conditional cooperators not only cooperated more but also monitored more by patrolling the forest to detect and deter free riders. With 60 percent conditional cooperators, a group spent on average 14 hours more per month monitoring than a group without any conditional cooperators. It shows that conditional cooperators spend time not just helping each other but also trying to stop free riders. Professor Kosfeld said:

Our findings fill a long standing gap between field and laboratory studies on human cooperation.

A positive correlation between conditional cooperation and costly monitoring sheds light on the evolution of human cooperation. The theory of gene culture evolution predicts greater cooperation in groups which enforce cooperation by deterring or punishing free riders. Rustagi explained:

The results yield important policy implications for the governance of human collective action. Because humans differ in their motivation to cooperate, an effective solution to commons problems should not be based on incentives for purely self regarding individuals alone but needs to explicitly take into account the complex interplay of heterogeneous motivations and behavioral norms to cooperate voluntarily.

This circumlocution must mean that free riders ought to be deterred from having the benefits of the cooperation of others or somehow punished for it. What can that mean in our modern societies, however? Are the so called benefit scroungers to have their benefits withheld, as the UK Con-Dem government are threatening, so that they have to starve, beg or turn to thieving to live? Or do the cooperators accept that people who are willing or are only able to live at a sustenance level nevertheless have the right to life without being starved to death. Earlier human societies always let the poor, aged, and disabled use common heath land, and a commandment in the Jewish scriptures (the Old Testament of the Christians) was to leave a portion of a field to be picked by the poor. No decent society has ever let people starve in the midst of surplus.

Does it mean then that the very rich, who pay others to do their work and are able to do so by taking much more than their fair share of society’s output, should be punished for being greedy and selfish while others have to work for their share? These wealthy people surely are the latter day free riders of our society. Mostly, they have done nothing themselves to advance society. They are where they are because some relative, a father, grandfather or perhaps uncle, who did something useful and successful, have left them with money and possessions that they have never earned themselves, but yet that they insist is rightfully their own, or nowadays by voting themselves huge compensation packages and bonuses. They are the free riders of today, and they are the ones who should be rightfully punished by society.

By far the easiest way to punish them, and to allow the ones in society who do the work to benefit, is to tax the rich at a suitably punitive level, and to distribute the money in social wages, that is to say, better social services like health and education, services that everyone in a decent society should expect to get free when they need it. Everyone will be freely educated when they are young, will be freely treated when they are ill or injured, and will be freely cared for as old people.

That is a society in which cooperation works, in which the real scroungers, the free loading rich are benignly punished by removing some of their unearned wealth and giving it to the poor who at present cannot afford many of the basic things in life. It has the benefit for the wealthy too, the people who still own the factories and banks, of letting people consume, for it is out of consumption that the free riders take their surpluses. A proper civil society is called civilization, and harks back to the sort of societies we used to have albeit on a smaller scale. It is human and humane. Let’s do it.

Friday, November 12, 2010

How Does Mixing Business with Politics Differ from Corruption and Bribery?

Most people would disapprove of corruption. It is one of those things people think are bad. Yet few of these same people realize that politically connected firms get massive benefits from their sponsoring of favored candidates in elections, once their favorites get into government. The bailouts of the banks deemed “too big to fail” are the latest and most obvious example.

A study by Russell Crook and David Woehr of the University of Tennessee, Knoxville, found that when firms engage in corporate political activities, such as lobbying and making campaign contributions, they get roughly 20 percent higher profits. So, to fatten your company’s profits, donate to a political campaign!

The analysis of 7,000 firms over various time periods, showed what led them into corporate political activity. The larger the firm, the more likely it was to be politically active, and politicians closer to power, more able to influence policy and legislation, were more likely to receive corporate donations. Incumbents more often got money than new candidates.

Yet in January 2010, the US Supreme Court in Citizens United v Federal Election Commission overturned an old ruling limiting corporate donations to politicians. It gave the nod to higher levels of corporate political influence. Consequently, corporate political donations will be subject to less scrutiny and transparency, and it will be all the harder to know who is sponsoring whom, and to what amount. Crook said:

Given this, we think that the Supreme Court ruling means that corporations and politicians will develop closer relationships than ever before.

In fact, corporations have already donated more money to politicians in the recent elections than ever before, despite the parlous state of the US economy. It reflects the money that big political donors seem to find quite readily to support supposedly grass roots Tea Parties, despite the country allegedly being on its uppers. Plainly the rich donors are not on their uppers.

Why then do corporate political donations lead to fatter profit margins? The corporate bosses do not like throwing money away to no purpose, so political corporate spending has a purpose, obviously. It is to get favorable legislation enacted. The donations are actually bribes! Besides the bank bailouts, another example was the “Copyright Term Extension Act”, sarcastically called, the “Mickey Mouse Protection Act”, in which Disney successfully lobbied to extend US copyrights by 20 years.

Though Crook and Woehr are careful not to say these practices are corrupt, they plainly think they are a cause for concern to citizens. Sticking with the market model, Crook said:

We do not believe that this activity is illegal, but this activity constrains natural market forces and is thus undesirable. And with the new Supreme Court ruling, it is only going to get worse.

The journal, Financial Management, has also revealed that corruption is widespread in the corporate world, and has confirmed successful corporations are often the ones with the most extensive political connections.

Mara Faccio studied several thousand firms and found:

Politically connected firms have higher leverage in the form of preferential loans, pay lower taxes, have regulatory protection, are made eligible for government aid, and have stronger market power. They differ more dramatically from their peers when their political links are stronger, and in more corrupt countries, although these characteristics can be observed worldwide.

She alleges that connected firms appear to enjoy substantial favors from governments, distorting the allocation of public resources. “Firms with no political ties appear to be at a disadvantage”, so, it seems, the pressure is on for all firms to corrupt government! Her study was not restricted to the USA. She looked at 47 countries all together, but political influence by companies was common in both emerging and developed countries, although the methods of political influence varied somewhat.

These studies show that the ordinary voter is oblivious to the way that democracy is commonly swindled by political bribery and corruption, in the USA and in most other capitalist countries, whether advanced or developing. People consider corruption as wrong, but show no curiosity that it is happening daily, and the one who suffers in the end is Joe and Jane Doe, the common man and woman, you and me.

It is time this corrupt system was ended, and it is certain that right wingers dressing up as Captain America and in tricorn hats—led by the nose by private sponsors from among the rich—will not do it. A genuine grass roots movement is needed, and it will probably be led, as it is in France and latterly in Britain, by serious students and angry unemployed young people.

Darwinian Leadership and Human Society

Professor of business, Paul Lawrence, says he has discovered a new idea he calls “Renewed Darwinian” theory. He tells us it addresses questions that have “been amazingly ignored by the academics”, but have “been on the minds of humans since we have had history”. It is a renewed version of Darwin! The common idea is that Darwin is all about the survival of the meanest and the fittest. The most ruthless survive. But Lawrence thinks there is more to it than just being mean fit and ruthless.

It is curious that anyone nowadays should think, like a Christian fundamentalist, that Darwin’s notion expressed as survival of the fittest means that the physically fittest, or the meanest, are the ones who survive the struggle for existence. Evolutionary theory says there are more ways to be fit besides having big muscles, big teeth or claws, and a disregard for anything other than self. And nor have these other methods been ignored by the academics, unless Lawrence is talking about academics like himself, academics in fields other than biology. The academic experts in biology and evolution never doubted that there are many ways of being fit to survive, from being very small to being very big, from being very fast to being very slow, from having unusual senses like echo location to having other peculiar qualities like intelligence, and so on.

Professor Lawrence seems amazed by some of Darwin’s views expressed in his book The Descent of Man:

Any creature, whatsoever, that has the social instincts comparable to those of humans and the intellectual capacities close to those of humans would inevitably develop a moral sense of conscience.

Lawrence explains:

Now, what he’s saying here is that if humans—any creature—had the drive to bond, a social instinct, and a drive to intellectual drives like to comprehend, would have the conscience to help them fulfil those two drives because without conscience you could not fulfil those two drives.

In attempting to explain it further, he tells us a great deal about the mentality of many modern Americans, the people of the “Christian Nation”. He says:

We’ve all heard of the Golden Rule: “Do unto other as you would have them do unto you”, But, we’re not quite sure what it means!

Despite all that Christianity, Americans and, it seems, especially American corporate and political bosses, do not know what the Golden Rule means. That is quite staggering but explains a great deal that has utterly baffled us foreigners, who have admired aspects of American life, but been bemused by American mass selfishness, lack of empathy for others, and readiness to kill everyone they meet in the world to get their own way.

It also confirms a Pew Poll that showed us that, though maybe 90 percent of Americans might claim to be Christians, three quarters of them do not know enough about Christianity or relevant aspects of their own constitution to be able to honestly claim they actually are Christians. Let is not assume that all of them are sociopaths, but simply that the US is not the freedom loving place they like to propagate for the good of the rest of us. Most Americans bend to the pressure of their peers because they are afraid of becoming the butt of their peers’ humor, or worse in a country with more guns than people, put up with their disdain and anger.

People have a natural social need or drive to bond with others, and a desire to be liked and respected. They are indeed aspects of evolution because humanity is a social species. We have evolved to live together, and for that to have happened, we have to have certain instincts or traits like the ones that Lawrence has just discovered, albeit late by over a century. For all that, it is to be hoped that Lawrence will continue to carry forward his ideas into the territories where they are anathema, into the US in general, and management there and in many other countries too.

Four Drives

So has Professor of business studies Lawrence actually understood Darwinism to come up with something novel? Well, he says that humans beings have other drives besides the drive to gain resources. He says we are born with four drives, essential for our basic survival. They are necessary for our species to thrive as a whole species and they are encoded in our DNA and we sense them and feel them mostly by the emotional messages we get from our subconscious as we witness the world around us.

These four drives are:

  1. to acquire, to possess, to own things that are necessary for our survival and to enhance our status as individuals
  2. to defend our resources from hazards, not only ourselves, our loved ones and our possessions, but our beliefs
  3. to bond in long term, mutually caring relationships with other humans
  4. to make sense out of the world, to build knowledge that lets us get on with with our everyday lives.

Well, there is not much there that the academics did not know, though it might indeed be new to financiers and business men who always behave as if the whole purpose of life is to grab as much as you can, even though you have no idea how to use it all when you have it.

Lawrence seems to believe that these principles he thinks he has newly discovered go beyond the preservation of particular genes, but he has not so far shown that these traits he describes are not conditioned by genes. But, now perhaps he gets to do his job when he tells us that good leaders take into account all four drives, not just the desire to acquire. He asks us to note that we all have these drives as human beings, and the good leader recognizes it, and ought not put all the emphasis on greed. In practical terms, it means, Lawrence says:

  • the drive to bond—treat people honestly, do not lie to them, and keep your promises to them
  • the drive to comprehend—tell people the truth not lies, and not spread misinformation
  • the drive to defend—be there when the going gets tough, to back up your staff, friends and anyone you have relied on to do work you asked them to do.

These are the ways to have strong long term relationships, and they are natural ways for humans to behave. It is natural too for huimans to look to a leader, but you have to have and keep their respect by helping them understand, acquire and develop basic human drives for themselves. It is having a good conscience, because the Golden Rule in application makes the helper and the receiver feel good, and ready to reciprocate the assistance in future.

Lawrence rightly equates good leadership with good moral leadership. Leaders without any conscience, or one only poorly developed, simply cannot have any fellow feeling:

They do not know what compassion is, they do not know what empathy is, they do not know even what love is. That is something they are never going to experience in their life because they don’t have that feature in their brain when they are born.

If we try to figure out how do we respond to fulfil those drives for ourselves, and are successful in doing so, people will begin to pay attention to us, and maybe think they’ll trust us to leadership. Leadership grows out of one’s own success in leading one’s own life. But, though we mostly have the necessary abilities, we have to refine them, practice them, train our minds to be more effective in ourselves and leading others. So, experience is also needed.

An example is that the world has a lot of organizations loaded with distrust. People do not trust enough in each other to cooperate properly. They think they are going to be undercut some way. The good leader can use the skills inherent in humanity to encourage cooperation, but people have to feel secure enough.

Our Sociopathic Leaders

It is refreshing to hear him say that a disproportionate number of leaders are sociopaths, who lack the drive to bond with others. It is a problem for less than 4 percent of the population, but Lawrence guesses that 10% of people in positions of power may be sociopaths. Like Tony Blair, the former PM of the UK, and in many people’s opinion an archetypal sociopath, they are often charming, and use their charm and lack of scruples about others to climb to positions of power.

A lot of history records the fact that such people have gotten into important positions. The Renaissance was an effort to move away from a sociopathic kind of leadership. The Constitution of the United States was a effort to create a government able to keep free of such leadership. Balancing the power, and not getting power concentrated in any one office are ways of avoiding that kind of leadership.

Some prominent leaders in business are highly suspect of being sociopathic. Lawrence suggests the recent Wall Street crisis, with the crash in the market and the resulting worldwide depression, illustrates sociopaths at work. Some in the big banks saw that by buying subprime mortgages—granted with little regard whether they could be repaid and so subject to foreclosure—they could sell them to Wall Street banks which could dice them up into derivatives and sell them as Triple-A bonds to people who were trustees of pension funds and endowments, and collect 100 percent on the dollar for them. The bonds were phony, worth maybe half of their face value when they bought them.

And that was the con, the absolute fraud that was pulled off. And we still don’t have a clear understanding by the public or even by the Department of Justice that that is what happened, and we should be prosecuting those people and getting the evidence out that will prove that those are criminal actions.

Conclusion: Is “Renewed Darwinian” New?

Profesor Lawrence does not have anything new in scientific terms but he does something new in speaking out about the perilous state we are in through neglecting the traits of our evolved nature. The western economic system, called capitalism, requires us to act as if we were solitary creatures fending only for ourselves, and perhaps our immediate families, in a state of nature—meaning acting like savages. Humans though are not savages, not solitary, and the reason is that we have evolved to be social animals who live amicably together in groups by sacrificing a little personal freedom—the freedom to be savage towards others—so that others will work with us in a community for our mutual advantage.

As soon as someone took more than a fair share of the communal produce, human society traditionally shamed them, and if that did not work, it expelled them from the group, exiled them. They were left to fend for themselves by themselves, unless another group was willing to accept them. As most groups will have realized why some human was wandering alone, they would have been chary at admitting them into their own group.

Now we cannot expel people from society, but bad crimes are seriously punished. The bad crimes that, so far, have not been seriously punished are the banking and financial crimes, like the scam described by Professor Lawrence. It is time these criminals against humanity were properly punished, and it is time that immoral profits by the few at the expense of the many were progressively taxed and redistributed so that there is no underclass of people abandoned on the grounds that they are work shy, when there is not enough work to go round.

A society of chimpanzees will look after the ones among them that are not fully capable, and even the alpha male will show care and compassion to a defective or disabled chimpanzee. Why cannot human leaders be the same? Obviously, they can, and professor Lawrence suggests how, but society has the right and the duty to protect itself against the massively greedy, who move their money to wherever in the world it will continue to accumulate profit, irrespective of what happens to the poor and unemployed in their own country. These are the people without consciences that Lawrence describes. They are indeed criminals. Punish them!

Tuesday, November 9, 2010

Where is All the Money? Ask Credit Suisse Bank!

Sam Pizzigati, editor of Too Much, an online newsletter on excess and inequality, reports that the Swiss banking giant Credit Suisse has issued for the first time a Global Wealth Report based on financial data from over 200 countries. It shows that total global net worth, despite the 2008 global economic meltdown, has rocketed up 72 percent since 2000. Credit Suisse sums up:

The past decade has been especially conducive to the establishment and preservation of large fortunes.

The world has more than enough wealth to ensure no one on the planet need be potless. The study shows the world has 4.4 billion adults and the total wealth they own is $194.5 trillion. Shared out, every adult in the world could have $43,800. The fact is, though, that three billion people, almost 70 percent, have less than $10,000, and 1.1 billion, a quarter of all adults, have less than $1,000. These figures are net worth, meaning their assets less their liabilities. Half the people on earth who are 20 and older have less than 2 percent of global wealth—each less than $4,000.

The world’s richest 1 percent—adults who have at least $588,000—hold 43 percent of the world’s wealth. They constitute the ruling class, the wealthiest class, and they break down as:

  • just over 1,000 billionaires, with over $1000 million each
  • 80,000 more super rich people worth between $50 million and $1 billion each
  • 24 million more people who are millionaires worth between $1 million and $50 million.

Those wealth differences are exacerbated by the local conditions. In uncivilized societies with poor public health care, poor quality public education, and no state pensions, then the poor are hit by ill health, a miserable old age, and ignorance because they cannot afford to pay for the absent public services. Moreover, epidemics like swine flu, natural disasters, like Katrina, and unemploment are additional shocks for which the poor do not have the reserves to survive easily. In a society with the opposite conditions, a history of civilized caring governments which have provided public services and benefits then poverty does not have the stigma and practical horrors it has in poor societies.

No other nation has as much total wealth as the United States, with only 5.2 percent of the world’s population. It has 23 percent of the world’s adults worth at least $100,000 and an even greater proportion, 41 percent, of the world’s millionaires. Yet, it is a society with inadequate social services, so its people need more personal wealth to survive than people in countries like France, Sweden and Germany which have good social services.

Canada has a national public health insurance. Credit Suisse calculates the wealth of the typical Canadian family is $94,700, double the $47,771 US average. It shows that good public services add to a nation’s wealth. Public services provide jobs, and need private business suppliers, and health and pension security means people are less risk averse, and will be more inclined to start up new businesses.

Why then have we given trillions of dollars to the banks, depleting our treasuries so much that we are told we have been living too extravagantly? It is a big lie, and we ought to be taking direct action to change it. But we can do without Tea Party economics. We do not need tax cuts for the rich, we need services for the poor, paid for by taxing the rich. They can afford it, we cannot!

Wednesday, November 3, 2010

Another Election: But US Voters Still Not Being Heard

A poll in Ohio shows independent voters are unhappy with the political system. Previous polls have already demonstrated a low level of trust, among independents especially. 70 percent of respondents reported low satisfaction with Ohio politics, with higher figures among independents than among Democrats or Republicans. Dr John Green, distinguished professor of political science at UA, said:

This unhappiness raises questions about the legitimacy of the political process.

Independent voters thought the political system has been unresponsive to the public, especially on the economy. Participants had a variety of views about the problem:

  • we’re not being heard
  • politicians were self-serving careerists
  • politicians were arrogant and insulated from the problems of the public
  • corruption was a common allegation, symbolized by the large sums of money raised and spent in campaigns
  • politicians should “wear patches on their suits from their sponsors” like NASCAR drivers.
  • people were alienated from the political process
  • public officials were puppets of special interest groups.

In the US political system, the buck stops at the presidency, so Obama carried the can, not just for Tea Partyers, but because he had not done enough to address the problems of the average American. But views on Congress were also negative:

  • it needed to be revamped
  • anything would be better than the system we have now
  • members of Congress did not respond to the needs of the public at large
  • we just need new people in government
  • parties were viewed as hell bent on their own agenda
  • parties too far apart on every issue
  • it takes years to get anything done
  • parties needed to put America first
  • parties needed to stay more to the Constitution
  • a third or fourth political party was needed to keep the system honest
  • a “common sense” party was needed to revive the economy and limit the size of government.

Some thought additional parties would not be “common sense” parties, but a base for lunatics, and would not be competitive. If any were a base for lunatics, it would have to be competitive to match the Republican Tea Partyists. Indeed, many independents were skeptical of the Tea Party agenda, but others were supportive. Many accepted that problems were partly their own fault for not being more involved in politics, but anger and distrust were strong motivations for political activity:

  • the people need to exercise their power
  • it is time for a revolution

There needed to be more free access and response from politicians:

  • more and regular town hall meetings
  • quick and thorough responses from contacted officeholders
  • a greater presence of politicians in the community
  • being a politician should not be seen as a job choice but a service to the country.

These lists of solutions offered are incoherent and inconsistent, illustrating the voter disunity, and failure to comprehend what is happening. It reflect the sense of being ignored by the government among independent voters. There is no way that Americans can solve the problem. They live in a society in which the ordinary people, workers and middle classes, refuse to accept they live in a class society in which the ruling class, the rich elite, control their system from top to bottom. As long as that is so, there can be no change unless the ruling class volunteer to give up some of their wealth and power in a redistribution for fairness and justice. It is not likely to happen. So, revolution is the only option, but that requires unity, and US workers are utterly divided and will remain so while the right wing media are so influential, and their target audience are so gullible.

Monday, November 1, 2010

God or Liberty? A Fair Society, Please!

Not Freedom from Taxation, Nor Mystical Faith, but a Fair Distribution of Wealth and a Functioning Society

US religious and social history has been characterized by a periodical pulsation of religious fervor. Since the 1980s, the pulsation has been upbeat, evangelical movements and their leaders grabbing a lot of publicity and political power. These periods of religious fervency rarely last over half a century, so the latest one is probably on the wane, and the religious enthusiasts are riding the Tea Parties as if it were a religious revival. But Pulitzer Prize winner, Jon Meacham, a journalist and a historian, sees the Tea Party as “nationalistic, not moralistic”.

Tea Partyers are less concerned about the moral issues and more concerned about economic ones. It is conservative Christians who still say, “We need government to protect our morality, to protect us from ourselves”.

The myth stems from the original event in 1773, the Boston Tea Party, which was an act of rebellion against taxation without representation. The colonies were ruled by the King Georges of England and had no say in their own affairs. Three years later, the American colonies rebelled, and won independence. For Meacham:

It is liberty, less than religion, that holds us together.

S Augustine, in City of God, defined a people as “the association of a multitude of rational beings united by a common agreement on the objects of their love.” The “City of God” he meant was the Christian Church, in those days, the Catholic Church, and the objects of their love were their fellow human beings, and, of course, God, in the form of Jesus Christ, who had identified himself with the meek and the downtrodden in the world. When the new Christian religion began to spread from the original Jews to gentiles in the Roman empire, it was indeed the poor and the downtrodden who responded, and a much smaller number of mainly rich women, glad to give up their legacies for salvation.

For modern American Christians none of that applies. According to Meacham, “the attack culture has subsumed everything else”. American conservative Christians, like those who supported Bush, and who are now supporting “Tea Parties” to get rid of Obama think, and like to say, that the United States is a “Christian nation”. Even many liberal Americans agree. They think the country’s founding principles are based on Christianity, through the settlement of New England by the Pilgrim fathers in 1620.

It was not the Christian ideas of the Pilgrim Fathers who initially settled in America, but the Enlightenment values of the Founding Fathers of the new republic who set out the documents that proclaimed the nature of the new political entity, and set out its founding principles, principles that still apply. Since the country’s founding, Americans have confused its defining features.

Mark McGarvie, a history professor at the University of Richmond, points out that the stress on man’s duties and responsibilities towards his fellow man, according to the teaching of Christ, was an element in the motivation of the founding of some of the early US colonies, but Christianity had nothing to say about anyone’s individual freedom. Christ had nothing to say specifically about slavery. Plainly, though, slaves fell into the category of the poor, the meek and the downtrodden, people whom Christ said were blessed, would enter the kingdom of heaven and ought to be treated like God. The man Christians treat as their God, Paul, the one they prefer to cite rather than God—Christ whom they largely ignore—told slaves to settle for their lot. Paul marginalized Christ’s emphasis on being loving and kind to each other—on works, as the New Testament calls it—by substituting for Christ’s practical teaching his own mystification, faith in God and the body of Christ!

The Declaration of Independence was based on the ideas of the Enlightenment, the teachings of Locke and Rousseau, as expressed by Jefferson and Madison. These men were also concerned with the poor and downtrodden, with the centuries of oppression people had suffered while Europe was ruled by the Church, and its hereditary nobility, who wanted the people to believe that kings were divinely appointed and had to be obeyed, even when they were wicked. It is what S—Paul taught, but not Christ.

With the rise of the merchant class of capitalists, the Feudal System of government by the nobility and royalty was doomed, but struggles were needed to put it firmly in its grave, and the American Declaration of Independence was one of the acts that established that kings were not divinely right! Instead of the divine right of kings, the Enlightenment idea was that God had nothing to do with individual rights, except that free will meant everyone was personally free in God’s own view! The Enlightenment was about protecting individual rights, in contradiction of divine rights.

Now the point of individual rights is not that everyone should do as they like, for that would be intolerable, and indeed would be quite alien to anything that Christ taught or any Christian should believe. The Founding Fathers thought that humans were primarily good to each other, and that society should allow them to prosper according to their good nature. They inscribed on the country’s Great Seal the motto “Out of many, one”. Americans were to pursue their own interests and desires with the ultimate aim of doing good not just for themselves but for a whole united society.

The other side of the US Great Seal has two mottoes, one of which announces that the birth of the USA begins a “New Order of the Centuries”, while the other is simply “It Has Favored Our Efforts”, “It” meaning Fortune or Providence, according to your religious inclination. So, although Christians will read this as being God’s Providence, and therefore God, the deists who drew up the documents could be more neutral and read it as Fortune. Even here, then, a Christian interpretation is not the only one. Deists believed in a God, but not one that twiddled with the world he made.

The conflict between the mystified Christianity of Paul and Luther, and the practical Christianity of Christ himself, filtered through the Enlightenment, existed from the outset of the USA, and there seems little to be gained in denying it. Christians nevertheless do, or they do not recognize it at all.

In modern practical terms, freedom is the freedom of the hyper rich one or two percent of the people to take the enormity of the country’s wealth that leaves the poor and even the middle classes struggling, either to stay alive or to maintain their standards. It is not social schemes like health and education, schemes that no civilized country can do without but which are being starved of sufficient cash to offer a proper service, both in the US and abroad. Christ went about curing people gratis and blessing the poor like Lazarus, the beggar, while approving the damnation of the rich, like Dives, the rich man. The greed of the minority is the real moral problem of all societies. That is what Christ taught.

It is all very simply set out in the Christian gospels but none of the evangelical crowd, who think Tea Parties are sent by God, have read or comprehend the teachings of Christ. They believe what their Republican pastors and politicians tell them, and, as Limbaugh and Beck prove, being idiotic is what the conservative Christian loves—“That’s just how I feel. Boy aren’t these guys just great!” They are too easily conned to see they are being conned! These guys are not idiots. They are! They are being taken for a ride, and the only benefactors are the Republican grandees, the mega rich, whom they think will help them by reducing taxation when all it does is leave those with the income worth taxing, better off.