Article 43


Saturday, July 28, 2012

Republican Redux 7

Are Progressives and Liberals Fascists? Or Are Conservatives The Real Fascists?

By Wendy Gittleson
Addicting Info
July 27, 2012

Our country is at war. To anyone who has read a headline or watched a news promo, it should come as no surprise. No, Im not speaking of the war on terror or the war in Iraq or Libya or any other foreign country. This war is taking place right on our own soil. IҒm not talking about the war on drugs. Im not even talking about the fact that the war on poverty has turned into a war on the poor. We are in a war of wordsa war of soundbites, and we are losing.

Conservatives in general and tea partiers in specific love to throw words at us. One day we are socialists or communists, the next we are fascists. Sometimes, we are all three at the same time. Though poorly articulated, their arguments defend a vague idea of freedom against a principle of totalitarianism.

This is where the ideas generally end. To the American extreme right (which is most of the current Republican party), freedom seems to mean the freedom to hire their own cops and firefighters. Freedom to the left means an agreement that there is a public good, that if our neighbors house catches on fire, a fire department will make sure that ours isnҒt ignited by a spark, that if theres an epidemic, everyone can afford to go to the doctor so it doesn’t spread further. Freedom means the ability to achieve greatness because there is a safety net that makes a fall slightly less painful.

Like many progressives, it doesn’t bother me when I am called “socialist.” In fact, I wear the badge with honor. A socialist is against oppression. A socialist is for rule by the people, not by a dictator or by for profit corporations. A socialist believes in democracy in its purest form. As with any system, when the people put the wrong government in place, totalitarianism can be the result, but totalitarianism is no more inherent in socialism than in democracy.

If the right really wants to call us totalitarian, they are on the right track with the word “fascism,” or are they? Are they really just projecting?

In 2004, Dr. Laurence Britt, a political scientist, studied the fascist regimes of: Hitler (Germany), Mussolini (Italy), Franco (Spain), Suharto (Indonesia), and Pinochet (Chile). He compiled a list called The 14 Points of Fascism. Next time Glenn Beck or Rush Limbaugh trots out the word “fascism” in reference to President Obama or the progressive movement, perhaps they should consult the following:

1. Powerful and continuing expressions of nationalism

From the prominent displays of flags and bunting to the ubiquitous lapel pins, the fervor to show patriotic nationalism, both on the part of the regime itself and of citizens caught up in its frenzy, was always obvious. Catchy slogans, pride in the military, and demands for unity were common themes in expressing this nationalism. It was usually coupled with a suspicion of things foreign that often bordered on xenophobia.

This one speaks for itself. As an American, there is no greater sin than to criticize the symbols of America.

2. Disdain for the importance of human rights

The regimes themselves viewed human rights as of little value and a hindrance to realizing the objectives of the ruling elite. Through clever use of propaganda, the population was brought to accept these human rights abuses by marginalizing, even demonizing, those being targeted. When abuse was egregious, the tactic was to use secrecy, denial, and disinformation.

Denial of basic human rights is typically hidden in code. These code phrases can be, “playing the race card,” “asking for special rights,” “playing the victim,” “states rights” and “property rights. “While these phrases might sound innocuous, they are all protecting privilege, not rights.

3. Identification of enemies/scapegoats as a unifying cause

The most significant common thread among these regimes was the use of scapegoating as a means to divert the people’s attention from other problems, to shift blame for failures, and to channel frustration in controlled directions. The methods of choice - relentless propaganda and disinformation - were usually effective. Often the regimes would incite spontaneous acts against the target scapegoats, usually communists, socialists, liberals, Jews, ethnic and racial minorities, traditional national enemies, members of other religions, secularists, homosexuals, and terrorists. Active opponents of these regimes were inevitably labeled as terrorists and dealt with accordingly.

Muslims, gays, women, the poor, Mexicans, etc.

4. The supremacy of the military/avid militarism

Ruling elites always identified closely with the military and the industrial infrastructure that supported it. A disproportionate share of national resources was allocated to the military, even when domestic needs were acute. The military was seen as an expression of nationalism, and was used whenever possible to assert national goals, intimidate other nations, and increase the power and prestige of the ruling elite.

Despite a frenzy to cut the budget, almost no one, especially on the right, dares touch the sanctity of the military.

5. Rampant sexism

Beyond the simple fact that the political elite and the national culture were male-dominated, these regimes inevitably viewed women as second-class citizens. They were adamantly anti-abortion and also homophobic. These attitudes were usually codified in Draconian laws that enjoyed strong support by the orthodox religion of the country, thus lending the regime cover for its abuses.

Sexism is becoming slightly less prevalent, but it is still rampant. The growing anti-choice movement is anti-woman. The traditional white male is still trying to hold on to his last vestiges of power. Rush Limbaugh is the perfect example.

6. A controlled mass media

Under some of the regimes, the mass media were under strict direct control and could be relied upon never to stray from the party line. Other regimes exercised more subtle power to ensure media orthodoxy. Methods included the control of licensing and access to resources, economic pressure, appeals to patriotism, and implied threats. The leaders of the mass media were often politically compatible with the power elite. The result was usually success in keeping the general public unaware of the regimes excesses.

Despite the accusation of the left-wing media, the vast majority of news outlets are owned by right leaning, large, for profit corporations. Companies like Comcast are being handed the ability to control what is seen in a viewer’s home as well as what is seen on the internet.

7. Obsession with national security

Inevitably, a national security apparatus was under direct control of the ruling elite. It was usually an instrument of oppression, operating in secret and beyond any constraints. Its actions were justified under the rubric of protecting national security,ғ and questioning its activities was portrayed as unpatriotic or even treasonous.

Patriot Act, anyone?

8. Religion and ruling elite tied together

Unlike communist regimes, the fascist and protofascist regimes were never proclaimed as godless by their opponents. In fact, most of the regimes attached themselves to the predominant religion of the country and chose to portray themselves as militant defenders of that religion. The fact that the ruling elites behavior was incompatible with the precepts of the religion was generally swept under the rug. Propaganda kept up the illusion that the ruling elites were defenders of the faith and opponents of the Ԓgodless. A perception was manufactured that opposing the power elite was tantamount to an attack on religion.

Is there one conservative in power who doesnӔt call him or herself a Christian conservative?

9. Power of corporations protected

Although the personal life of ordinary citizens was under strict control, the ability of large corporations to operate in relative freedom was not compromised. The ruling elite saw the corporate structure as a way to not only ensure military production (in developed states), but also as an additional means of social control. Members of the economic elite were often pampered by the political elite to ensure a continued mutuality of interests, especially in the repression of have-notғ citizens.

This is the Republican platform in a nutshell.

10. Power of labor suppressed or eliminated

Since organized labor was seen as the one power center that could challenge the political hegemony of the ruling elite and its corporate allies, it was inevitably crushed or made powerless. The poor formed an underclass, viewed with suspicion or outright contempt. Under some regimes, being poor was considered akin to a vice.

Need I say more?

11. Disdain and suppression of intellectuals and the arts

Intellectuals and the inherent freedom of ideas and expression associated with them were anathema to these regimes. Intellectual and academic freedom were considered subversive to national security and the patriotic ideal. Universities were tightly controlled; politically unreliable faculty harassed or eliminated. Unorthodox ideas or expressions of dissent were strongly attacked, silenced, or crushed. To these regimes, art and literature should serve the national interest or they had no right to exist.

Todays attacks are on education in general and specifically on intellectualism. People of Ԓfaith are demanding proof of near universally accepted scientific facts such as as global climate change and evolution.

12. Obsession with crime and punishment

Most of these regimes maintained Draconian systems of criminal justice with huge prison populations. The police were often glorified and had almost unchecked power, leading to rampant abuse. Normal and political crime were often merged into trumped-up criminal charges and sometimes used against political opponents of the regime. Fear, and hatred, of criminals or traitors was often promoted among the population as an excuse for more police power.

13. Rampant cronyism and corruption

Those in business circles and close to the power elite often used their position to enrich themselves. This corruption worked both ways; the power elite would receive financial gifts and property from the economic elite, who in turn would gain the benefit of government favoritism. Members of the power elite were in a position to obtain vast wealth from other sources as well: for example, by stealing national resources. With the national security apparatus under control and the media muzzled, this corruption was largely unconstrained and not well understood by the general population.

Cronyism can mean anything from no-bid contracts for companies like Blackwater and Halliburton to the hiring of unqualified people to head up important agencies such as the CIA and FEMA, as was done during the Bush administration. Mitt RomneyӔs Utah Olympics were rampant with crony capitalism, on the taxpayer dime.

14. Fraudulent elections

Elections in the form of plebiscites or public opinion polls were usually bogus. When actual elections with candidates were held, they would usually be perverted by the power elite to get the desired result. Common methods included maintaining control of the election machinery, intimidating and disenfranchising opposition voters, destroying or disallowing legal votes, and, as a last resort, turning to a judiciary beholden to the power elite.

Elections are not stolen through isolated incidents of voter fraud. They are stolen through voter suppression tactics, such as ID laws.

Unfortunately, a fascist future is not unforeseeable. But these ideals are not progressive ideals. They are the ideals of the corporatists. They are the ideals of the Supreme Court who declares personhood for corporations and in turn, fraction of personhood for those who are not blessed with billions. They are the ideals of those who would bless the highest bidder with the power to control our most basic needs. These are the ideals of those who would require a religious purity test to serve office. They are the ideals of those who would blame those less fortunate for their own hardships. They are the ideals of those who respect power over humanity. They are the ideals of rigid ideologues. While some Democrats admittedly adhere to some these ideals, they are the ideals of todays Republican party.


Republican Redux
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Posted by Elvis on 07/28/12 •
Section Dying America
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Preying On The Poor


How Government and Corporations Use the Poor as Piggy Banks

By Barbara Ehrenreich
May 17, 2012

Individually THE POOR are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a months rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

The trick is to rob them in ways that are systematic, impersonal and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up thirty minutes or more before the time clock starts ticking.

LENDERS, including major CREDIT COMPANIES as well as PAYDAY LENDERS, have taken over the traditional role of the street-corner loan shark, charging the poor INSANELY HIGH RATES OF INTEREST. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600 percent a year, which is perfectly legal in many states.

It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, FEES and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.

The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old sons incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.

Government Joins the Looters of the Poor

You might think that policymakers would take a keen interest in the amounts that are stolen, coerced or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans and subprime mortgages.

These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributes about $55 billion a year, for example, through the largest single cash-transfer program for the poor, the Earned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the tens of billions of dollars in exorbitant interest that businesses charge the poor, it is notably chary with public benefits for the poor. Temporary Assistance to Needy Families, for example, our sole remaining nationwide welfare program, gets only $26 billion a year in state and federal funds. The impression is left of a public sector that’s gone totally schizoid: on the one hand, offering safety-net programs for the poor; on the other, enabling large-scale private sector theft from the very people it is supposedly trying to help.

At the local level though, government is increasingly opting to join in the looting. In 2009, a year into the Great Recession, I first started hearing complaints from community organizers about ever more aggressive levels of law enforcement in low-income areas. Flick a cigarette butt and get arrested for littering; empty your pockets for an officer conducting a stop-and-frisk operation and get cuffed for a few flakes of marijuana. Each of these offenses can result, at a minimum, in a three-figure fine.

And the number of possible criminal offenses leading to jail and/or fines has been multiplying recklessly. All across the country from California and Texas to Pennsylvania - counties and municipalities have been toughening laws against truancy and ratcheting up enforcement, sometimes going so far as to handcuff children found on the streets during school hours. In New York City, its now a crime to put your feet up on a subway seat, even if the rest of the car is empty, and a South Carolina woman spent six days in jail when she was unable to pay a $480 fine for the crime of having a “messy yard.” Some cities - most recently, Houston and Philadelphia have made it a crime to share food with indigent people in public places.

Being poor itself is not yet a crime, but in at least a third of the states, being in debt can now land you in jail. If a creditor like a landlord or credit card company has a court summons issued for you and you fail to show up on your appointed court date, a warrant will be issued for your arrest. And it is easy enough to miss a court summons, which may have been delivered to the wrong address or, in the case of some bottom-feeding bill collectors, simply tossed in the garbage - a practice so common that the industry even has a term for it: “sewer service.” In a sequence that National Public Radio reports is increasingly common, a person is stopped for some minor traffic offense - having a noisy muffler, say, or broken brake light - at which point the officer discovers the warrant and the unwitting offender is whisked off to jail.

Local Governments as Predators

Each of these crimes, neo-crimes and pseudo-crimes carries financial penalties as well as the threat of jail time, but the amount of money thus extracted from the poor is fiendishly hard to pin down. No central agency tracks law enforcement at the local level, and local records can be almost willfully sketchy.

According to one of the few recent nationwide estimates, from the National Association of Criminal Defense Lawyers, 10.5 million misdemeanors were committed in 2006. No one would risk estimating the average financial penalty for a misdemeanor, although the experts I interviewed all affirmed that the amount is typically in the hundreds of dollars. If we take an extremely lowball $200 per misdemeanor, and bear in mind that 80-90 percent of criminal offenses are committed by people who are officially indigent, then local governments are using law enforcement to extract, or attempt to extract, at least $2 billion a year from the poor.

And that is only a small fraction of what governments would like to collect from the poor. Katherine Beckett, a sociologist at the University of Washington, estimates that deadbeat dads (and moms) owe $105 billion in back child-support payments, about half of which is owed to state governments as reimbursement for prior welfare payments made to the children. Yes, parents have a moral obligation to their children, but the great majority of child-support debtors are indigent.

Attempts to collect from the already poor can be vicious and often, one would think, self-defeating. Most states confiscate the driver’s licenses of people owing child support, virtually guaranteeing that they will not be able to work. Michigan just started suspending the drivers licenses of people who owe money for parking tickets. Las Cruces, New Mexico, just passed a law that punishes people who owe overdue traffic fines by cutting off their water, gas and sewage.

Once a person falls into the clutches of the criminal justice system, we encounter the kind of slapstick sadism familiar to viewers of Wipeout. Many courts impose fees without any determination of whether the offender is able to pay, and the privilege of having a payment plan will itself cost money.

In a study of fifteen states, the Brennan Center for Justice at New York University found fourteen of them contained jurisdictions that charge a lump-sum ‘poverty penalty’ of up to $300 for those who cannot pay their fees and fines, plus late fees and ‘collection fees” for those who need to pay over time. If any jail time is imposed, that too may cost money, as the hapless Edwina Nowlin discovered, and the costs of parole and probation are increasingly being passed along to the offender.

The predatory activities of local governments give new meaning to that tired phrase “the cycle of poverty.” Poor people are more far more likely than the affluent to get into trouble with the law, either by failing to pay parking fines or by incurring the wrath of a private-sector creditor like a landlord or a hospital.

Once you have been deemed a criminal, you can pretty much kiss your remaining assets goodbye. Not only will you face the aforementioned court costs, but you’ll have a hard time EVER FINDING A JOB AGAIN once you’ve acquired a criminal record. And then of course, the poorer you become, the more likely you are to get in fresh trouble with the law, making this less like a cycle and more like the waterslide to hell. The further you descend, the faster you fall - until you eventually end up on the streets and get busted for an offense like urinating in public or sleeping on a sidewalk.

I could propose all kinds of policies to curb the ongoing predation on the poor. Limits on usury should be reinstated. Theft should be taken seriously even when its committed by millionaire employers. No one should be incarcerated for debt or squeezed for money they have no chance of getting their hands on. These are no-brainers and should take precedence over any long-term talk about generating jobs or strengthening the safety net. Before we can do something for the poor, there are some things we need to stop doing to them.



Jaw-Dropping Corruption: America’s 47 Million Hungry Mouths Are Just Another Corporate Cash Cow
An attorney’s courageous report exposes just how ruthless and greedy big business is capable of being.

By Mark Anderson
July 22, 2012

A unique, hard-hitting report just completed by a California attorney exposes a largely unknown federal food-stamp racket involving large grocery retailers, food manufacturing giants and other private players, including the Federal Reserve and JPMorganChase, which combine to channel food stamp spending into a gravy train for the heavy hitters in the food industry.

And the reports author, Michele Simon, says administrative costs added by these privateers inflate the overall price tag of the Supplemental Nutrition Allowance Program (SNAP). And high program costs are prompting potentially deep legislative cuts to SNAP in the pending Farm Bill - when a record 46 million Americans use SNAP, of which 47% are children.

A major fear is that SNAP cuts could wrongly target the programs central mission to feed the hungry, when cuts should target the private players who harness the program for their own gain.

“If we want to cut, lets look at administrative cuts - not [necessarily] cutting the benefits themselves,” Simon told this writer. She’s disturbed that JP Morgan and the Federal Reserve are well positioned in this debacle. Yet, her 28-page report, for all that it reveals, just begins to explore this fathoms-deep issue, since critical data is being withheld by the USDA.

Over the last 7 months, Simon organized the report, Food Stamps, “Follow the Money: Are Corporations Profiting from Hungry Americans?” She wrote it because she felt there was more to the story after a 2010 debate over how SNAP dollars should be spent in New York City.

The city asked the USDA for a waiver in order to conduct a two-year trial to prevent SNAP funds from being used to purchase sugar-sweetened beverages,Ӕ wrote Simon, who added, Several [nine] states have proposed bills similar to New York’s approach, to modify SNAP-eligible items to promote health. But each time, the food industry fought these bills. To date, none have passed.

The big picture is that once Congress approves the Farm Bill budget for the USDA, (which administers SNAP 50/50 with the states), the states, upon enrolling SNAP participants, contract with banks to get the EBT debit cards that SNAP recipients now use (replacing the old food coupons). Card-carrying participants then enter a system wherein the major food manufacturers lobby the USDA to deny states the right to alter SNAP-purchase guidelines, so major food and beverage-makers (Mars, PepsiCo, Coca Cola, Kraft etc.) can reap the harvest of 46 million cardholders buying their products - including sweets with little to no nutritional value.

The big-box food makers refuse to surrender this arrangement, for, as Ms. Simon sees it, if they and their cohorts at the major retail outlets allow diverse nutritional considerations requested by the states to decide policy, then SNAPs vast purchasing power could be redirected not only toward nutritional food (a novel idea for a supplemental nutrition program) but also toward smaller food outlets, including farmers’ markets - which, according to Simon, currently receive perhaps 0.01% of SNAP purchases. She imagined how much SNAP spending could revive the economy if most of it helped local agriculture, spurred jobs and ironically even helped some people get off food stamps. Indeed, the nationגs food relief program started on the basis of helping the needy buy fresh produce to reduce farm surpluses, says the report, which adds:

Given the huge stakes for the food and beverage industry in the debate over SNAP purchases, lobbying has played a critical role in shaping public policy. Unfortunately, due to reporting rules, itӒs difficult to paint the entire picture of exactly who lobbied and how much money was spent against any one proposal [to limit SNAP purchases to real food].

Meanwhile, JPMorganChase has EBT contracts with more states than any other bank and rakes in fees galore. ԓ[SNAP] store purchases at the register go to JP Morgan ... which authorizes the request. And that [purchase data] goes to the Federal Reserve Bank and the Fed reimburses, say, Wal Mart, explained Simon, who stressed that the USDA strangely refuses to release comprehensive SNAP purchase-redemption data so the big picture can be fully understood.

This issue has become so touchy that at least one journalist, Michael Morisy (, is in hot water with the USDA for managing to obtain some of this data. But the truth cannot be contained forever. A newspaper, the Sioux Falls, S.D., Argus Leader, last year in South DakotaԒs federal court district filed a lawsuit to try and force the government to release all redemption amounts, including how much the Fed reimburses the stores who accept EBT purchases, and how much SNAP money goes to buy specific products.

Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at . Simon, who compiled the SNAP report referenced here, is a public health lawyer and president of Eat Drink Politics, an industry watchdog consulting group. Contact her at


Posted by Elvis on 07/28/12 •
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Sunday, July 22, 2012

Wealth Doesn’t Trickle Down - It Just Floods Offshore


A far-reaching new study suggests a staggering $21tn in assets has been lost to global tax havens. If taxed, that could have been enough to put parts of Africa back on its feet and even solve the euro crisis

By Heather Stewart
Guardian UK
July 21, 2012

The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad a sum larger than the entire American economy.

James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group - sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.

Comedian Jimmy Carr became the public face of tax-dodging in the UK earlier this year when it emerged that he had made use of a Cayman Islands-based trust to slash his income tax bill.

But the kind of scheme Carr took part in is the tip of the iceberg, according to Henry’s report, entitled THE PRICE OF OFFSHORE REVISITED. Despite the professed determination of the G20 group of leading economies to tackle tax secrecy, investors in scores of countries including the US and the UK - are still able to hide some or all of their assets from the taxman.

“This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and most importantly - to have very significant negative impacts on the domestic tax bases of ‘source’ countries,” Henry says.

Using the BIS’s measure of “offshore deposits” cash held outside the depositor’s home country - and scaling it up according to the proportion of their portfolio large investors usually hold in cash, he estimates that between $21tn (13tn) and $32tn (ã20tn) in financial assets has been hidden from the world’s tax authorities.

“These estimates reveal a staggering failure,” says John Christensen of the Tax Justice Network. “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people.

“This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich.”

In total, 10 million individuals around the world hold assets offshore, according to Henry’s analysis; but almost half of the minimum estimate of $21tn $9.8tn - is owned by just 92,000 people. And that does not include the non-financial assets art, yachts, mansions in Kensington ֖ that many of the world’s movers and shakers like to use as homes for their immense riches.

“If we could figure out how to tax all this offshore wealth without killing the proverbial golden goose, or at least entice its owners to reinvest it back home, this sector of the global underground is easily large enough to make a significant contribution to tax justice, investment and paying the costs of global problems like climate change,” Henry says.

He corroborates his findings by using national accounts to assemble estimates of the cumulative capital flight from more than 130 low- to middle-income countries over almost 40 years, and the returns their wealthy owners are likely to have made from them.

In many cases, the total worth of these assets far exceeds the value of the overseas debts of the countries they came from.

The struggles of the authorities in Egypt to recover the vast sums hidden abroad by Hosni Mubarak, his family and other cronies during his many years in power have provided a striking recent example of the fact that kleptocratic rulers can use their time to amass immense fortunes while many of their citizens are trapped in poverty.

The world’s poorest countries, particularly in sub-Saharan Africa, have fought long and hard in recent years to receive debt forgiveness from the international community; but this research suggests that in many cases, if they had been able to draw their richest citizens into the tax net, they could have avoided being dragged into indebtedness in the first place. Oil-rich Nigeria has seen more than $300bn spirited away since 1970, for example, while Ivory Coast has lost $141bn.

Assuming that super-rich investors earn a relatively modest 3% a year on their $21tn, taxing that vast wall of money at 30% would generate a very useful $189bn a year more than rich economies spend on aid to the rest of the world.

The sheer scale of the hidden assets held by the super-rich also suggests that standard measures of inequality, which tend to rely on surveys of household income or wealth in individual countries, radically underestimate the true gap between rich and poor.

Milorad Kovacevic, chief statistician of the UN Development Programme’s Human Development Report, says both the very wealthy and the very poor tend to be excluded from mainstream calculations of inequality.

“People that are in charge of measuring inequality based on survey data know that the both ends of the distribution are underrepresented - or, even better, misrepresented,” he says.

“There is rarely a household from the top 1% earners that participates in the survey. On the other side, the poor people either don’t have addresses to be selected into the sample, or when selected they misquote their earnings usually biasing them upwards.”

Inequality is widely seen as having increased sharply in many developed countries over the past decade or more - as described in a RECENT PAPER from the IMF, which showed marked increases in the so-called Gini coefficient, which economists use to measure how evenly income is shared across societies.

GLOBALISATION has exposed low-skilled workers to COMPETITION from CHEAP economies such as China, while the surging profitability of the financial services industry - and the spread of the big bonus culture before the credit crunch - led to what economists have called a “racing away” at the top of the income scale.

However, Henry’s research suggests that this acknowledged jump in inequality is a dramatic underestimate. STEWART LANSLEY, author of the recent book The Cost of Inequality, says: “There is absolutely no doubt at all that the statistics on income and wealth at the top understate the problem.”

The surveys that are used to compile the Gini coefficient “simply don’t touch the super-rich,” he says. “You don’t pick up the multimillionaires and billionaires, and even if you do, you can’t pick it up properly.”

In fact, some experts believe the amount of assets being held offshore is so large that accounting for it fully would radically alter the balance of financial power between countries. The French economist Thomas Piketty, an expert on inequality who helps compile the WORLD TOP INCOMES DATABASE, says research by his colleagues has shown that “the wealth held in tax havens is probably sufficiently substantial to turn Europe into a very large net creditor with respect to the rest of the world.”

In other words, even a solution to the eurozone’s seemingly endless sovereign debt crisis might be within reach if only Europe’s governments could get a grip on the wallets of their own wealthiest citizens.


Posted by Elvis on 07/22/12 •
Section Dying America
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The Soul Of Capitalism Part 2


Killing the competition:  How the new monopolies are destroying open markets

By Barry C. Lynn
Harpers Magazine
February, 2012

Fear, in any real market, is a natural emotion. There is the fear of not making a sale, not landing a job, not winning a client. Such fear is healthy, even constructive. It prods us to polish our wares, to refine our skills, and to conjure up every so often - a wonder.

But these days, we see a different kind of fear in the eyes of Americas entrepreneurs and professionals. It’s a fear of the arbitrary edict, of the brute exercise of power . And the origins of this fear lie precisely in the fact that many if not most Americans can no longer count on open markets for their ideas and their work. Because of the overthrow of our antimonopoly laws a generation ago, we instead find ourselves subject to the ever more autocratic whims of the individuals who run our giant business corporations.

The equation is simple. In sector after sector of our political economy, there are still many sellers: many of us. But every day, there are fewer buyers: fewer of them. Hence, they enjoy more and more liberty to dictate termsor simply to dictate.

Over the past four years of financial collapse, many of us have come to view markets as a fantastical scam: a giant mechanism geared to transfer our hard-earned dollars into the hands of a few select bankers. And when it comes to the Wall Street markets we rely on to trade our equities and debt and commodities, this sentiment is not all wrong.

But as every previous generation of Americans understood, a truly open market is one of our fundamental democratic institutions. We construct such markets to achieve some of our most basic rights: to deal with whom we choose, to work with whom we choose, to govern our communities and nation as we (along with our neighbors) choose.

And so, as every previous generation of Americans also understood, monopolization of our public markets is first and foremost a political crisis, amounting to nothing less than the reestablishment of private government. What is at stake is the survival of our democratic republic.

This rush back to the feudal past is nowhere more evident than in that region of California we have so long viewed as the incubator of our future.

Until recently, few places in the world could boast of markets as open as those of Silicon Valley. Yes, large corporations thrived here for decades. But true denizens of the Valley would rarely let themselves get caught inside those walls. Why should they? Their skills were portable, venture capital was abundant, and California refused to enforce the דnon-compete agreements that tech firms elsewhere often used to control their employees.

It was in Silicon Valley that America’s entrepreneurs seemed to rediscover their rootsor rather, their primal rootlessness. Serial founders staked out tech venture after tech venture, in much the way Daniel Boone once cleared homesteads as he wandered from Carolina to Kentucky to Missouri. And behind these pioneers swarmed freelance engineers and cowboy coders, hardly distinguishable from the first-generation entrepreneurs and soon in direct competition with them.

These days the Valley is once again abuzz. Headlines report bulging wallets and a smorgasbord of new perks. Venture capitalists hum down Route 101, and angel investors lurk and listen in the bars. But instead of a disruptive melee like that of the late 1990s, with its diversity of players and voices, the overwhelming tendency today is a further consolidation of power by the already powerful.

During the past decade, a few giants have managed to fence in market after market for hardware, software, and content. Some did so simply by buying up their competitors. Oracle CEO Larry Ellison once said that acquiring another company was “a confession that there’s a failure to innovate.” But Ellison himself decided to opt for the more reliable profits that come from buying ones competitors, which in Oracle’s case included PeopleSoft, Siebel, BEA, Sun Microsystems, and more than sixty other firms. During the same period, Googleeven while branding itself as the dreamiest of inventors - vacuumed up close to a hundred companies, including such core components as YouTube, DoubleClick, and ITA.

John D. Rockefeller, whose Standard Oil ruled the energy industry for decades, liked to present his predations as acts of altruism. “We will take your burdens,” he would tell his target. “We will unite together and build a substantial structure on the basis of cooperation.” But all understood perfectly the ultimatum hidden in the honeyed words: Join or be crushed.

So, too, todays lords of the Valley, who enjoy the power to choreograph competition among the latest generation of upstarts and then buy whom they please, when they please. Yet this de facto license to govern a trillion-dollar industry - and with it, entire swaths of the American economy - appears to have left these high-tech headmen unfulfilled. Or so we learned when the Justice Department complained in 2010 that senior executives at Apple, Google, Intel, Pixar, and two other corporations had “formed and actively managed an agreement that ‘deprived the engineers and scientists who work for them’ of “access to better job opportunities.”

Even in those reaches of society long accustomed to the rule of the few, the fact that some of the biggest and the richest had agreed not to poach one another’s workers managed to shock. In an editorial, the New York Times wondered “What Century Are We In?” Yet in the Valley itself, from those most directly affected, weve heard only the rarest of whimpers. The anger is there. But it’s tamped down by fear.

To see how these employees react to their bosses getting busted for running a labor cartel, I recently toured Apple’s hometown of Cupertino, California. I strolled the Infinite Loop, the road encircling the six edifices at the heart of the empire. I wandered the side streets lined with low-slung buildings adorned with discreet Apple logos. I ambled down North De Anza Boulevard to the center of town. All around I saw Apple employees, easily identifiable by the white badges dangling from their necks or clipped to their pants pockets. And I approached many of them to ask what it felt like to work in the company’s town.

An older fellow named Steve, with scraggly white hair, told me he had read all about the settlement, and that the news had come as no surprise. “They treat us like dirt,” he said before unleashing a string of curses. Market capitalism should be a two-way street, no? “If they get to make us compete against one another, then they too should have to compete.” At this point Steve walked off. Hed like to talk more, he said. But his contract renewal was coming up, and someone might see him with me.

At a crossroads just south of Apple headquarters, in front of a Valero gas station, I caught up with John, who was speed-walking to the dentist. “Of course I dont like it,” he told me, and proceeded to recount the facts of the settlement in detail. “But what can we do? It’s not like anyone ever dares to speak about it. I mean, they actively encourage us not to talk to one another. Its all taboo.”

Outside the Bagel Street Caf, in the lines for the shuttle buses that carry employees north to San Francisco, at BJs Restaurant and Brewhouse, I come upon the same urge to talk, followed by the same mumbled apologies as prudence takes hold. Sometimes the fear kicks in almost instantaneously. One employee actually spun on his heel, jumped back into his pickup truck, and sped away, though not before hissing that, “even if I did know anything, I wouldn’t ever be able to talk about it.”

Eventually I did find one employee willing to speak up. Last spring, a San Francisco law firm announced plans to file a class-action lawsuit against Lucasfilm and the six corporations named in the DOJ settlement. Such lawsuits require at least one person to publicly represent the class, and finally a former Lucasfilm software engineer named Siddarth Hariharan stepped forward. After some back-and-forth with his lawyers, Hariharan (who also goes by the name Neil Haran) agreed to discuss how the masters of these estates treat their tenants.

Over lunch in San Francisco, Hariharan, dapper in a stylish sport coat, starts by telling me all the reasons he LOVED HIS JOB, especially the opportunity to take part in sprawling, complex projects. “Sure, the pace was grinding, the hours crazy. One team, he recounts, worked for 110 hours per week for nine months straight. But everyone believed they were making something important.”

Hariharan says his attitude began to sour after Lucasfilm completed a particularly ambitious project. The very next day, he says, shaking his head, “executives came in and fired almost everyone.” THESE WERE EMPLOYEES who hadn’t had a day off in months. “People were running around the office,” says Hariharan, whose own job was not affected. “They were running around crying. It was a bad sight.” He pauses, and looks at me. “Then, on top of that, I hear they were conspiring to lock people in a box? It was the allegations about the labor cartel,” Hariharan says, that angered him sufficiently to join the lawsuit. “Its simple,” he says. “If you do something bad, you should be punished.”

“Many entrepreneurs and workers in Silicon Valley want to speak out,” Hariharan believes. “Many would love to restore the open job market of the early 1990s. But for most, it would be career suicide.” Even Hariharan might have thought twice if he hadnt already established himself as an independent entrepreneur. “I’m not rich,” he says, “but I never have to work for anyone else again. So I felt I had to do something. I had to stand up for those who couldn’t.”

No matter how adept Silicon Valley CEOs have become at corralling the men and women who actually make what they sell, they are still relative beginners when it comes to manipulating fear for profit. To get a sense of what the future may hold for America’s computer engineers - and, for that matter, our teachers, lawyers, and doctors - I recently drove through a notch in the Allegheny Mountains into West Virginias Sweedlin Valley. There I visited with poultry farmers who supply birds to a plant in Moorefield owned by the Brazilian food giant JBS. (The largest meat processor in the world, JBS operates the plant under the name Pilgrim’s.)

The broiler industry was one of the first in which the generation of monopolists unleashed by Ronald Reagan succeeded in replacing open markets with vertically integrated systems designed to be controlled by a single local buyer. The men who rule Americas chicken-processing plants have therefore had decades to master the art of setting individual farmers - who still own the land, equipment, and liabilities - against one another. And the goal of this competition is not merely to extract the most work from each individual, but also the most capital.

“The concept of such competitions - or tournaments,” as the industry calls them - is generally credited to the economist Edward Lazear, who served as one of George W. Bush’s top advisers and now teaches at the Stanford Graduate School of Business. The idea, first laid out in a 1981 paper titled “Rank-Order Tournaments as Optimum Labor Contracts,” is straightforward enough. Rather than pay all workers at the same rate for any particular task, Lazear wrote, “why not set up a labor market contest,” in which those who produce more also get paid more per task or per piece? Such a system of reward (and, for those at the bottom, punishment) would, he claimed, increase the incentive to work harder.

The problem with Lazear’s theory becomes clear when we recall some of the basic characteristics shared by all real markets. Most important is an equality between the seller and the buyer, achieved by ensuring that there are many buyers as well as many sellers. Second is transparency. Everyone sees the quantity and quality of the product on offer, and the price at which each deal is done. A third characteristic is a tendency to deliver egalitarian outcomes. On any given day, once the supply of a product has been hauled to market and appraised, all sellers receive roughly the same price per unit. Offer a seller less than the prevailing price, and you walk away empty-handed. Demand more from buyers, and your goods sit untouched.

Lazear repeatedly uses the term “market” to describe his tournaments. But his theory has almost nothing in common with how open markets actually function. For starters, he assumes that the sellers of goods and services must have, for all intents, nowhere else to go. A 2003 study of tournament theory by economists Tom Coup, Valrie Smeets, and Frdederic Warzynski, which builds explicitly on Lazears work, makes this point painfully clear. “Tournaments take place,” the authors explain, “in the context of an internal labor market with no explicit role for outside options.”
The political aim of tournaments, in other words, is exactly opposed to that of real markets. Citizens structure markets, first and foremost, to protect individuals from massed capital. Lazear’s tournaments are designed to maximize return to capital. They do so precisely by setting individual citizens against each other, like cocks in a pit.

This sounds bad enough. But when I sit down with poultry grower Mike Weaver in his snug rambler to learn how such tournaments work in practice, he seems astonished at my navet. “That’s not even the half of it,” he begins.

Weaver, a former fish and game officer who can raise flocks as large as 94,000 birds on his farm, slides a settlement sheet across the table. It records the amounts JBS paid to seventeen farmers who delivered their flocks to the plant on one particular day. The company, he shows me, paid the top-ranked chicken grower 63 percent more per pound than it paid the bottom-ranked grower. “Naturally,” he says, “this sort of differential will tend to make a man work harder to stay ahead of the next fella.”

“What makes the system truly insidious,” Weaver adds, is that the whole competition takes place without any set standards. “There is no baseline,” he explains. For one thing, JBS requires the farmers to procure from the company itself all the chicks they raise and all the feed they blow into the houses. Yet the quality of the chicks and the feed can differ tremendously, from day to day and from farm to farm.

Whats more, the full-grown chickens are weighed after being trucked off the farm. The farmer is not allowed to see whether the figure on the scale is accurate - nor can he tell whether the chickens hes being paid for even came from his farm. He is simply expected to take the money he is given and say thank you.

As much as he resents being forced into a gladiatorial relationship with his neighbors, Weaver says an actual tournament with a level playing field would be “far better than what we have now. Under the current regimen, the processors dont just force us to compete against each other. They rig the competition any way they like. They can be as sloppy as they wish or as manipulative as they wish. We are entirely subject to the company.” After a moment, Weaver modifies his statement. Really, we are entirely subject to the foreman at the plant, to the technician who keeps a watch on us. Those men can make us and they can break us, and they know it.”

His face reddens. The market in this valley is very simple to understand. “They give preferential treatment to THOSE who kiss their ass.”

For the local community, the outcome of this arrangement can be devastating. Traditionally, farmers have tended to join politically with their neighbors. But Weaver, who heads the local poultry-growers association, says nowadays many farmers end up viewing their neighbors as rivals. Most of the 400 or so farmers who sell into the Moorefield plant try to resist such feelings, he says. But over time, the system wears them down.

It also makes them highly reluctant to speak out in public. Most of the farmers are afraid to say boo for fear the companies will take away their chickens,Ӕ Weaver tells me. The processors know we have our house and our land in hock to pay for the equipment. They know we are honorable people who won’t walk on a promise. And they exploit this.

Weaver has learned this from bitter experience. In 2010, he spoke at two Department of Agriculture hearings on the consolidation of the packing and processing industries. Ever since, he tells me, the foremen have rated his chickens near or at the bottom, after years of ranking them near the top. This costs him thousands of dollars per flock.

“I cant prove a thing,” Weaver says when I ask if theres any way to verify that the company is retaliating against him FOR SPEAKING OUT. “Thats the beauty of the system. They know everything and we know nothing. They get to decide what’s real.”

Like Hariharan, Weaver dares to talk openly only because he possesses a measure of financial independence. “I can speak because I don’t need the company,” he says. They can cut me off tomorrow and I have enough saved up so I won’t go flat-out bankrupt. But this is not true for many of the farmers who sell chickens to the Moorefield plant, he adds. “They have nowhere else to go. They have to take what theyre given.”

The revolutionary achievement of the American people two centuries ago was not merely to establish an independent republic. It was to prove that every citizen in that republic could be independent, economically as well as politically.
This vision was not atomistic. It was not based solely, as libertarians like to claim, on a realization of individual rights. Instead, the belief was that self-conscious, self-reliant citizens would come together as equals and use their collective power to protect their communities, their nation, and themselves.

The practical challenge was to enable citizens to exchange their goods, ideas, and labor with one another as freely as possible. And so Americans mastered the political art of making public markets, and used their new legislatures to closely restrict trading companies, industrial estates, and other forms of private corporate government.

These open markets swiftly proved to be as fundamental to our democracy as the ballot box. They buttressed our system of checks and balances, both by distributing power among many sellers and many buyers and by promoting a more equitable distribution of wealth. They helped to foster open debate and prodded citizens to speak out against competitors who bent or broke the rules.

Right from the beginning, however, these markets proved hard to keep.

George Washington’s administration was barely a year old when Alexander Hamilton, the nation’s first treasury secretary, attempted to use a government bailout of speculators to concentrate power in banking estates controlled by his friends and allies. (Hamilton later touched off the Whiskey Rebellion with a tax that steered the distilling business away from yeoman farmers to local landlords.) And for more than half a century after the Civil War, we lost many of our markets entirely, as a small clique of men seized control of the new railroad and telegraph systems, then consolidated their power over many other important sectors of the economy.

By 1913, the apex of the plutocratic era, President Woodrow Wilson was decrying the rule of fear that had been imposed on the American entrepreneur and worker. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something,Ӕ Wilson said. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.Ӕ

Yet in two great pushesduring the early years of the Wilson Administration, and then during the Second New Deal in the 1930sחthe American people succeeded in restoring many of the open markets we had lost. Even as the lords of industry and the prophets of socialism joined hands to defend the scientificӔ rationalization of productive activities, the people forced their representatives to enact law after law designed to disperse power.

Adapting the principles of eighteenth-century republicanism to the industrial landscape of twentieth-century America proved to be remarkably easy. Where there was no compelling reason to concentrate power - as in retail, agriculture, services, and light manufacturing - the goal now was to promote a wide distribution of both property and opportunity.

In practice, this required not merely heading off further monopolization, but unwinding many existing powers. The legislation used to achieve these ends - including the Packers and Stockyards Act and the fair-trade laws of the 1930s, which allowed manufacturers to set minimum retail prices for their goods - are seldom recalled today. However, their long-term impact was profound. In the 1920s, the five largest beef packers controlled upward of 70 percent of the U.S. market; by 1975, that figure had dropped to roughly 25 percent. In 1933, the four largest grocery chains controlled 27 percent of the market; by 1982, that figure had dropped to 16 percent.

Where some concentration of capacity and control was viewed as necessary - as in heavy industry - the goal was not to break up the monopolies. Instead, markets were restructured to ensure that at least three or four companies competed to make any particular product. In 1945, for instance, the government forced Alcoa to share its aluminum monopoly with Kaiser and Reynolds. This also meant restraining the power of the capitalist over these quasi monopolies, mostly by reinforcing the rights of the worker, the engineer, the local community, and the small investor.

This bottom-up reconstruction of our economy was one of the great political achievements of the twentieth century. At a time when every other industrial nation of the world was engineering corporatist structures that tended toward authoritarianism, the United States went in the opposite direction. It was, arguably, a second American Revolution.

By the 1970s, however, our open markets were under siege once again. And this time, the assault was more subtle, and camouflaged by myth, euphemism, and outright falsehood. The generation of Rockefeller and Morgan had acknowledged its power openly and defended that power on its merits, such as they might be. Yes, they had centralized control over entire industries, and yes, they ruled their realms as despots. But they claimed to wield such power for one purpose only: to organize production and trade more efficiently. And wasnt efficiency a great benefit to the commonweal? Such honest impudence, in turn, made it easier for citizens to identify and beat back the political threat.

Today, our overlords not only refuse to defend the power they hold - they deny that it is even possible for any American to accumulate such power. And to make such an absurd claim stick, they (or the more politically sophisticated of the academic economists in their employ) have undermined our language itself. Their most impressive act of lexical legerdemain was the coinage of various misnomers, some so audacious as to be worthy of Orwell’s Ministry of Truth. Corporate monopoly? Let’s just call that the “free market.” The political ravages of corporate power? Those could be recast as the essentially benign workings of market forces.

Even more dangerous was the transformation of efficiency into the highest economic good. For centuries, dating back to the British East India Company’s promise to manage our tea trade for us, Americans have used antimonopoly action and law to protect our liberties as producers. Along the way, we learned to distrust most talk of efficiency as a justification for reducing the number of buyers. It was this very sentiment that inspired Justice Louis Brandeis to celebrate the political and economic virtues of friction in a 1926 Supreme Court decision.

Little more than a generation ago, however, economists of the “Chicago School” began to publish studies claiming that the enforcement of our antimonopoly laws was harming the interests of that defenseless figure, the American consumer, by promoting “wasteful competition.” After Ronald Reagan took office in 1981, his new head of antitrust enforcement, William F. Baxter, swiftly abandoned efforts to promote competition and promised instead a policy “based on efficiency considerations.” The goal now was to promote the “welfare of the consumer,” theoretically by increasing his or her access to cheap goods.

No gun was ever fired, no protest ever mounted, no direct attack on our antimonopoly laws was ever unleashed. Yet the most fundamental purpose of these fundamental laws - to protect the liberty of the citizen and to ensure the safe distribution of power - was flipped on its head by the innocent-sounding substitution of a few key terms. And in the three decades since, the impact of this rhetorical sleight of hand has only grown. The “consumer welfare” framework has provided its creators with exactly the cover they need to writetheir efficiency argument straight into the mainstream of American law and to erect their private corporate governments right in the town square of the American political economy.

To understand the true architecture of power in our America of 2012, we must set down the hymnals of the economists and speak directly to those of us who strive every day to make, to grow, to build, to serve - but who find that some immense power blocks their way. Take the craft-beer brewer I met recently in Chicago. Worshipped by his ever-thirsty fans, he grinned proudly for a photo shoot as I watched from the sidelines. But in the privacy of the hotel hallway, he whispered about how Anheuser-Busch InBev is slowly strangling his company. The multinational colossus controls much of the beer distribution in the United States and has a huge influence over who rides those rails. When I want to get my beer on a store shelf, “I don’t call the retailer,” he explains. “I have to beg ABI.”

The backstory in brewing is much the same as in Silicon Valley. In 1978, the production of beer in America was divided among forty-three firms, with the biggest controlling only a quarter of the market. Today, more than 1,750 companies make beer in this country. But ABI and MillerCoors have locked down more than 90 percent of the U.S. market. This gives them the power to jack up prices almost at will. More important, it gives this cadre of capitalists the ability to decide which American craft brewers thrive and which don’t.

Or take the advertising executive who recently told me about her decision to ditch her career and become a teacher. Over the course of a decade, this executive steadily accumulated responsibility as she moved from Wunderman to Omnicom to Young & Rubicam, confident she was destined for a corner office. Then, a couple of years ago, she hit a wall. “Every place I wanted to work was already owned by WPP,” she said, referring to the British giant that controls Y&R and many other firms. “And I realized that to move, I’d need the approval of some grand poobah.

Again we encounter the familiar story. Well into the 1980s, power on Madison Avenue was dispersed among more than a dozen large agencies and scores of vibrant smaller firms. But over the past thirty years, four sprawling holding companies - WPP, Interpublic, Omnicom, and Publicis - swallowed up almost the entire industry. WPP alone controls more than 300 ad agencies, including such once iconic shops as the Grey Group, Ogilvy & Mather, and Hill & Knowlton. And the four giants vigorously shore up this power with strict non-compete employment contracts.

You’ll hear the same thing if you talk to the musicians who find themselves subject to the caprices of Live Nation. Or if you talk to the legions of doctors watching helplessly as hospital corporations begin to regulate medical services across entire regions. Where only a few short years ago these citizens controlled their own destinies, they wake today to find themselves the de facto chattel of some domestic (or increasingly, foreign) lord.

But perhaps the best way to understand the true structure of Americas political economy in the twenty-first century is to talk to some of the people who publish, edit, and writebooks in America.

These days, most articles on the book industry focus on technology. The recent death of the retailer Borders is depicted as a victory of Internet sales over brick-and-mortar stores, the e-book market as a battle between the Kindle e-reader and the iPad. But if we look behind the glib narrative of digitization, we find that a parallel revolution has taken place, one that has resulted in a dramatic concentration of power over the individuals who work in this essential, surprisingly fragile industry.

A generation ago, AmericaҒs book market was entirely open and very vibrant. According to some estimates, the five largest publishers in the mid-1970s controlled only about 30 percent of trade book sales, and the biggest fifty publishers controlled only 75 percent. The retail business was even more dispersed, with the top four chains accounting for little more than 10 percent of sales. Today, a single companyAmazonחaccounts for more than 20 percent of the domestic book market. And even this statistic fails to convey the companys enormous reach. In many key categories, it sells more than half the books purchased in the United States. And according to the companyҒs estimates, its share of the e-book market, the fastest-growing segment of the industry, was between 70 and 80 percent in 2010. (Its share of the online sale of physical books is roughly the same.)

Not surprisingly, then, we find the same sort of fear among our book publishers as we do among the chicken farmers of the Sweedlin Valley. I recently sat down with the CEO of one of the biggest publishing houses in America. In his corner office overlooking a busy Manhattan street, he explained that Amazon was once “a wonderful customer with whom to do business.” As Jeff Bezoss company became more powerful, however, it changed. “The question is, do you wear your power lightly?” My host paused for a moment, searching for the right words. “Mr. Bezos has not. He is reckless. He is dangerous.”

Later that same day, I spoke with the head of one of the few remaining small publishers in America, in a tattered conference room in a squat Midtown office building. “Amazon is a bully.” Jeff Bezos is a bully, he said, his voice rising, his cheeks flushing. “Anyone who gets that powerful can PUSH PEOPLE AROUND, and Amazon pushes people around.” They do not exercise their power responsibly.

Neither man allowed me to use his name. Amazon, they made clear, had long since accumulated sufficient influence over their business to ensure that even these most dedicated defenders of the book - and of the First Amendmentdare not speak openly of the company’s PREDATIONS. If a single event best illustrates our confusion as to what makes an open market - and the role such markets play in protecting our liberties - it was our failure to respond to Amazon;s decision in early 2010 to cut off one of our biggest publishers from its readers.

At the time, Amazon and Macmillan were scrapping over which firm would set the price for Macmillan’s e-books. Amazon wanted to price every Macmillan e-book, and indeed every e-book of every publisher, at $9.99 or less. This scorched-earth tactic, which guaranteed that Amazon lost money on many of the e-books it sold, was designed to cement the online retailers dominance in the nascent market. It also had the effect of persuading customers that this deeply discounted price, which publishers considered ruinously low, was the “natural” one for an e-book.

In January 2010, Macmillan at last claimed the right to set the price for each of its own products as it alone saw fit. Amazon resisted this arrangement, known in publishing as the “agency model.” When the two companies deadlocked, Amazon simply turned off the buttons that allowed customers to order Macmillan titles, in both their print and their e-book versions. The reasoning was obvious: the sudden loss of sales, which could amount to a sizable fraction of Macmillan’s total revenue, would soon bring the publisher to heel.

This was not the first time Amazon had used this stratagem. The retailer’s executives had previously cut off small firms such as Ten Speed Press and Melville House Publishing for bucking their will. But the fight with Macmillan was by far the most public of these showdowns.

In the late 1970s, when a single book retailer first captured a 10 percent share of the U.S. market, Congress and the regulatory agencies were swift to react. As the head of the Federal Trade Commission put it: “The First Amendment protects us from the chilling shadow of government interference with the media. But are there comparable dangers if other powerful economic or political institutions assume control?” In the intervening years, however, we have failed time and again to protect our open market for books. We did nothing as the super chains rolled up retail. We did nothing as six enormous conglomeratesfour of them foreign-owned - absorbed many of our publishers. These failures are inexcusable. Yet always we could reassure ourselves that the absolute worst had not come to pass, that there was still some competition in our market for books, that no sovereign boss had emerged.

Today, by contrast, a single private company has captured the ability to dictate terms to the people who publish our books, and hence to the people who writeand read our books. It does so by employing the most blatant forms of predatory pricing to destroy its retail competitors. It does so by gathering up massive amounts of information about the most private thoughts, interests, and habits of the American citizen. And all the while, this new sovereign justifies its exercise of raw power in the same way our economic autocrats always do: it claims that the resulting efficienciesӔ will serve the interests of the consumer.

Meanwhile, all these manipulations - as audacious as any ever pursued by the antique bosses of steel or oil - have raised only the rarest murmurs of concern from Congress, the Obama Administration, and the FTC. (Antitrust enforcers in Washington and Brussels did launch investigations. Blinded, however, by the Orwellian framework of consumer welfare,” they have mostly taken aim at the publishers, for daring to seek some control over the prices of their own products.)”

Not that there have been no warnings at all. In his capacity as head of the Authors Guild, novelist Scott Turow has repeatedly condemned what he says is Amazon’s intent to, as he put it recently, “drive paper publishers out of business.” Oren Teicher, who heads the American Booksellers Association, told me that “Amazon is threatening the whole ecosystem of how ideas are created, how they are developed, how they are sold.”

In the event, Amazon did turn Macmillan’s buttons back on (but only after more than a week). And it did allow publishers to price their own e-books (though not their physical books). Still, there is little doubt the individuals who run Amazon got exactly what they wanted. They displayed the full extent of their dominance to the people most directly subject to it. They proved to those same people that most of the American public no longer understands the nature - or the political danger - of that dominance.

In rare moments of disquiet, we like to assure ourselves that all shall turn out well. Surely some Schumpeterian upstart will emerge, as if by magic, to disrupt Amazons reign. Or Apple or Google will choose to intervene, in some fashion that avoids the political dangers posed by Amazon’s control, even though these firms wield powers at least as awesome as the online retailers.

Then we drift back into our private utopias, there to marvel at all the wonders of modern technology and the freedoms that await us if only we are patient and trust the great corporations to deliver what they promised. And truth be told, it is an amazing world we live in. I mean, who would ever have imagined that one day we’d be able to read Common Sense right on our Kindles?

For years, Americas upper-middle classes - of all political leanings - have tended to gaze on our political economy with a certain smug self-confidence. Even as our new masters imposed their rule over the markets once run by our farmers and small shopkeepers, and smashed the unions that empowered industrial workers and flight attendants to bargain as equals with their bosses, we turned away.

Servility, our political fabulists assured us, was for the little person. For our refined skills, competition was becoming every day only more intense. America, or at least our cozy enclave within it, was being transformed into a “free-agent” nation.

Well, it’s clear now that we never quite managed to slip the hold of the ancient truths. It was 150 years ago that Alexis de Tocqueville condemned top-down, long-distance control over any task that a community or individual could manage just as easily on its own. Observing the widespread sycophancy of French society under the July Monarchy, he noted “how men routinely subjected to such power become accustomed to set their own will habitually and completely aside; to submit, not only for once, or upon one point, but in every respect and at all times. Not only, therefore, does this union of power subdue them compulsorily, but it affects their ordinary habits; it isolates them, and then influences each separately.”

And so our new masters administer us in America today. They use their great nation-spanning and world-spanning corporations to isolate us as individuals, and then to pit us against our neighbors. They capture and hide away the information that until recently spilled from our open markets. And so they shatter our ability to speak coherently to one another from a base of common experience, to process even the most rudimentary of economic and political facts.

To step outside the open market is to step outside the rule of law and to come under the rule of whim. To step outside the open market is to step outside the rule of reason and to enter a realm of nonsense. We have a choice in America today. We must learn how to make real markets once againor bend our knees, perhaps forever.



Posted by Elvis on 07/22/12 •
Section Dying America
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Monday, July 16, 2012

Try Telling These Jobless People Retraining Is The Answer


You’ll find a lot of stuff here DEBATING that RETRAINING is the answer to cure joblessness, and I’m sure the LAYED OFF NASA PEOPLE can put the retraining myth in perspective.

But the reality is a BA is needed to apply for most jobs today like a high school diploma was 30 years ago.  It doesn’t matter in what - just that you got one of those EXPENSIVE things.  It helps HR departments screen out WHAT THEY CONSIDER UNDESIRABLE.  But even if you do, that doesn’t mean much either.

I loathe the US mothballing the space shuttle, and killing other US SPACE PROGRAMS.

CBS’ 60 Minutes did a SOBERING STORY April 1, 2012 on the aftermath of the shuttle’e’s retiring, our country’s space policy, and the former NASA workers, whose lives are now rotting away.


High joblessness in the home of U.S. space flight

When the last space shuttle took off from the Kennedy Space Center in Florida in July—when the crowds left and 7,000 space center workers lost their jobs—what happened to Brevard County, Florida? Scott Pelley tells the story of a county struggling with the loss of its largest employer, and of FORMER SHUTTLE WORKERS who miss both the paycheck and the deep pride they had in their work.

The following scriptis from “Hard Landing” which aired on April 1, 2012. Scott Pelley is the correspondent. Robert Anderson and Nicole Young, producers.

President Obama canceled NASA’s plan to replace the space shuttle in favor of a more modest program, and then Congress slashed the funding for that. So, for the first time in 50 years AMERICA IS NOT THE LEADER IN SPACEFLIGHT. Fact is, we couldn’t launch an astronaut today if we had to. With the end of an era, we wondered what would happen to the generation that put America in space. So last July when the smoke cleared from the last space shuttle launch we stayed behind in Brevard County, Florida. The home of the Kennedy Space Center. What comes after reaching for the stars? For many, in Brevard County the answer is: a hard landing.

There was nothing like it in the world, arguably the greatest engineering achievement of man. At liftoff, it weighed four and a half million pounds, its top speed 17,000 miles an hour.

[The space shuttle spreads its wings one final time for the start of its sentimental journey into history.]

It was built by the hands of people like Lou Hanna.

Lou Hanna: It was the experience and the job of a lifetime. I was working with Pad one day, with a friend of mine. And he’s a crane operator too. And I ask him, I said, “How many other crane operators do you suppose that there are doing what we’re doing? There’s two, you and me.”

Shuttle work wasn’t just work. There was enormous pride in doing for America what no other workers in the world could even dare. Lou Hanna manned a gigantic crane that cleared the platform before launch. He worked on the first shuttle in 1981. And the last, 135 missions later.

Scott Pelley: What did seeing the last shuttle launch mean to you?

Lou Hanna: I felt anger.

Scott Pelley: Anger?

Lou Hanna: Oh, yeah. Because this does not have to be the last launch. It doesn’t have to end this way. I mean, it, it just DOESN’T MAKE ANY SENSE. It doesn’t compute. I guess I’m still in denial because I’m thinking they’re gonna call me back one day. “We got a launch coming up. We need your help.” How can they do that?

They did it to save three billion dollars a year. Now the only way an American can fly into space is to buy a seat on a Russian rocket. At the Kennedy Space Center, 7,000 workers lost their jobs.

Fifty years of liftoffs are becoming eight months of layoffs.

Have a look around Brevard County. It’s shrinking. Lots of people are moving away taking businesses down with them.

Chris Milner: It was like, bam, gone. Gone. Gone.

The work ethic that built the shuttle keeps Chris Milner fighting to hang on.

Scott Pelley: How long did you work at the space center?

Chris Milner: Eight years.

Scott Pelley: And your wife?

Chris Milner: 29 years.

Scott Pelley: Both laid off?

Chris Milner: Both laid off.

In the spirit of an entrepreneur, Milner planned for the layoffs. Five years ago he launched a landscape business on the side. And then he added a sign shop in this industrial park. Still, there was one thing he didn’t plan on.

Chris Milner: Seafood it’s gone. There’s nothing there. Edwards Exterminating is the only one that’s left, it’s right around the corner. But basically everything’s empty. It’s a nightmare.

Chris Milner: Everybody that’s been laid off. It’s a ripple effect. Businesses closing down, it affects everybody else and it affects me.

The 7,000 layoffs at the space center triggered 7,000 more in the community. Unemployment has been close to 11 percent.

Chris Milner: People are moving away. People are going in up north. Nothing’s happening here. I know people that move all the way to Seattle. For a job. Left their house. Left the key in the front door. Here ya go. It’s gone.

Milner had 12 employees in the lawn business. Now he has three.

Scott Pelley: You know, you are running these two businesses.

Chris Milner: Yes.

Scott Pelley: How many hours a day are you working?

Chris Milner: Literally?

Scott Pelley: Literally.

Chris Milner: I’m here at 7 a.m. in the morning. And you know, the last couple weeks I’ve been here until 1-2 o’clock in the morning. My last day off was Christmas.

Scott Pelley: Working 17-hours a day, seven days a week can’t be all that good for your health.

Chris Milner: No. My wife’s worried. She’s scared. She’s told me that.

And she’s taken out a life insurance policy on him.

Chris Milner: But at the same time, she knows what I gotta do. And the problem is we have a 12-year-old at the house that doesn’t understand ‘cause he’s never had to go without. He’s constantly asking for McDonald’s. We don’t get McDonald’s anymore.

This isn’t the first hard landing on the space coast. There were big layoffs in 1972 after the last mission to the moon. But here’s why today is worse. When we left the moon, NASA was already years into designing the shuttle. And it looked like it would be that way now because President Bush approved a program to follow the shuttle.

Scott Pelley: The new man space program rocket WAS SUPPOSED TO BE called Constellation.

Group: Uh huh. (affirm)

Scott Pelley: And now you guys call it---

Group: Cancellation.

Holly Petrucci: Unfortunately.

Lou Hanna, and Joe Urich, Holly Petrucci, and Mike Carpenter planned to transfer from shuttle to Constellation. They were encouraged when candidate Barack Obama came to Brevard County in 2008, three months before the election.

[Barack Obama, Titusville Speech, 8/2/08: I’m gonna ensure that our space program doesn’t suffer when the shuttle goes out of service by making sure that all those who work in the space industry in Florida do not lose their jobs when the shuttle is retired because we can’t afford to lose their expertise.]

Mike Carpenter: Well, we were lied to when Obama came through, gave us a lotta hope and supposedly a lotta change. Well, I’ve got change in my pocket, but the hope is gone.

In 2010, President Obama cancelled Constellation and turned over development of a new spaceship to private enterprise. Then, Congress dealt another blow by cutting the funding for the Obama plan in half. At the very least it will be 5 years before America flies astronauts again. Now the workers with that expertise Mr. Obama referred to are setting course for Carole Bess.

Carole Bess: And I’ve had several who’ve told me, “I was considering SUICIDE before I came to you.”

Carole Bess is a bankruptcy attorney.

Scott Pelley: What drove them to that point?

Carole Bess: They felt like failures. You know, “Here I am. I can’t pay my debts. And I’m probably worth more dead than alive, if I have life insurance.”

Scott Pelley: And folks either aren’t finding work. Or if they do, they’re making a lot less than they were before.

Carole Bess: Correct. And that’s not gonna change. These people have NO HOPE. It could still get a lot worse, I think.

Following the Great Recession, we visited a lot of communities that lost their main employer, but never one like Brevard County. We learned about the sense of loss with our first question to Lucas Maxwell, who used to handle the dangerous fuel for the rockets.

Scott Pelley: What was it like when it was launched? Paint that picture for me.

Lucas Maxwell: Awesome. I--

The thought was too much for a moment. Then he came back to tell us why.

Lucas Maxwell: Made your heart stop. It’s awesome no matter what, you know, the pride that goes into a vehicle like that. But I knew it was the end too. You know, I knew I was gonna be out on the street.

Scott Pelley: And space shuttle for you, I have the sense was a statement about the country.

Lou Hanna: Oh, yeah, absolutely. This is a matter of national pride.

The end of the shuttle is threatening businesses that families have built over decades. Like “Shuttles” the first bar you come to leaving the space center—not just a bar really—it’s the place where astronauts land. In July, before the last launch, we stopped in to the see owner Bill Grillo.

Scott Pelley: How many employees did you have at the peak?

Bill Grillo: We had 25.

Scott Pelley: And now?

Bill Grillo: We’re down to eight.

Scott Pelley: And you’re one of ‘em?

Bill Grillo: Yeah. If it comes down to just myself, my son and the cook, we’ll hang on. Shuttles will be here. I won’t let it go.

Seven months later, this is Shuttles today.

Scott Pelley: I’m sorry about this. When we were here before you were optimistic. You said this place wouldn’t close.

Bill Grillo: Yeah. Within 45 days after the last shuttle, we lost 70 percent of our business. We weren’t able to sustain. As much as it, it killed me to do that, I had to.

Scott Pelley: And you’ve been gone for a couple of months now but I don’t think you’ve moved a thing in here.

Bill Grillo: I can’t right now. It’s, it’s too painful to do that. I got a lot of--a lotta my heart is here and I can’t take anything off the walls yet.

Scott Pelley: It’s not just a business.

Bill Grillo: No. No. This is an institution. And I don’t wanna be the one that takes it apart.

No one we met back in July expected to be the one to take apart the life they’d known. Some were the second or third generation in their family to work at the space center. Before the last launch we met several at a jobs center applying for the remaining aerospace work. Sammy Rivera worked on the shuttle 26 years, reviewing engineering drawings.

Sammy Rivera: I figured the day I wake up dead, I won’t go to work. That’s the bottom line there’s not gonna be anything for me to retire on.

We caught up with him today.

Scott Pelley: You didn’t expect to be unemployed 11 months and counting.

Sammy Rivera: At the max I figured three months. I’ve applied for engineering jobs. I’ve applied for technician jobs. I’ve applied for entry level jobs.

Scott Pelley: Have you had any interviews?

Sammy Rivera: Three.

Scott Pelley: Total of three?

Sammy Rivera: Total of three.

Scott Pelley: Three interviews in 11 months?

Sammy Rivera: Yes, sir.

Scott Pelley: Do you have health insurance?

Sammy Rivera: No sir. No sir. My health insurance terminated on my last day of employment.

Scott Pelley: How are you getting along?

Sammy Rivera: A lot of prayer. The medications that I was on, out-of-pocket expense, runs me over $800 a month. With no money coming in, I can’t afford that.

So he’s taking only one of the two pills that his doctors say he has to take to avoid a heart attack.

Scott Pelley: You know, when you’re raising that flag in your front yard?

Sammy Rivera: Yes sir.

Scott Pelley: What are you thinking?

Sammy Rivera: This is my country. And I can’t let it go down without a fight.

The four remaining shuttles are headed to museums. Atlantis will be on display at the Kennedy Space Center. She was designed for 100 missions but flew only 33. Like so many in Brevard County, Florida, she was pulled from the service of her country, long before she was ready.



Space workers struggle a year after last shuttle

By Milke Schneider
Associated Press
July 16, 2012

A year after NASA ended the three-decade-long U.S. space shuttle program, thousands of formerly well-paid engineers and other workers around the Kennedy Space Center are still struggling to find jobs to replace the careers that flourished when shuttles blasted off from the Florida “Space Coast.”

Some have headed to South Carolina to build airplanes in that state’s growing industry, and others have moved as far as Afghanistan to work as government contractors. Some found lower-paying jobs beneath their technical skills that allowed them to stay. Many are still looking for work and cutting back on things like driving and utilities to save money.

“Nobody wants to hire the old guy,” said Terry White, a 62-year-old former project manager who worked 33 years for the shuttle program until he was laid off after Atlantis landed last July 21. “There just isn’t a lot of work around here. Or if so, the wages are really small.”

White earned more than $100,000 a year at the end of his career at the space center. The prospects of finding a job that pay anywhere near that along the Space Coast are slim.

“I could take an $11-an-hour job that is 40 miles away,” he said “But with gas prices and all that, it’s not really worthwhile.”

More than 7,400 people, who once had labored on one of history’s most complicated engineering achievements, lost their jobs when the shuttle program ended last July. While other shuttle workers in Houston, New Orleans and Huntsville, Ala., lost jobs, those areas had bigger economies to absorb the workers. In less economically diverse Brevard County, the mainly contractor positions cut by NASA accounted for just under 5 percent of the county’s private sectors jobs.

The Kennedy Space Center’s current workforce of 8,500 workers is the smallest in more in than 35 years. In the middle of the last decade, the space center employed around 15,000 workers.

James Peek, a 48-year-old quality inspector for the shuttles, has applied for 50 positions with no success since he was laid off in October 2010. He has taken odd jobs glazing windows for a luxury hotel in Orlando and working as a security guard. He has no health insurance and incurred a $13,000 bill when he was hospitalized for three days last May.

“With most companies, it’s like your application goes into a black hole,” Peek said. “We’re struggling to stay afloat.”

Jobless space workers have signed up for Brevard Workforce’s job placement and training services. Slightly more than half of the 5,700 workers the agency has been able to track have found jobs, but more than a quarter of those positions were outside Florida. Those jobs have been in the fields of engineering, mechanics and security, according to the agency.

Brevard County’s unemployment rate spiked in the months that the shuttle program wound down, going from 10.6 percent in April 2011 to 11.7 percent in August 2011. It has since declined to 9 percent, a result of a smaller workforce as many former shuttle workers either moved away or retired earlier than planned. Brevard County has added 2,700 jobs since the beginning of the year, but many are in the southern part of the 72-mile-long county where information technology giant Harris Corp. and airplane-maker Embraer are located. Jobless space workers in the northern part of the county jokingly refer to those high-tech workers as “their rich cousins.”

Some local employers are finding that the former space workers’ salary demands are sometimes too high.

“STOP sending former Space Center employees,” one employer wrote to Brevard Workforce, the local job agency, in a comment included in its monthly committee report. “They have an unrealistic salary expectation.”

Taxpayer money allocated for job training programs for displaced space shuttle workers also is dwindling a year after the program ended.

Adding to the difficulties of finding a new job is the age of many of the former shuttle workers. Many spent their entire careers working on the space shuttles and are now in their 50s and 60s.

In between sending out resumes and meeting at networking events, many of the space workers are volunteering at Kennedy Space Center, giving tours to dignitaries and providing oral histories to tourists who stop by the Vehicle Assembly Building.

Even though many of the older space workers like White had years to plan for the end of the shuttle program, they stuck around, hoping to prepare the orbiters for displays in museums in Florida, Los Angeles and Washington after the program ended. They expected younger shuttle workers to move over to the successor Constellation program whose goal was to send astronauts to the moon and then Mars. But the cancellation of the Constellation program in 2010 increased the competition for those few jobs left prepping the shuttles.

Some shuttle workers, such as Kevin Harrington, had been holding out hope that the program announced after Constellation’s demise - a heavy-lift rocket system that would launch astronauts in an Orion space capsule - would offer immediate widespread job opportunities. But the plans announced last year won’t have unmanned test launches of the Space Launch System for another five years, and the first manned mission won’t be for about another decade.

Private-sector companies, such as Paypal founder Elon Musk’s Space X, are starting unmanned launches from Kennedy Space Center, but their need for workers doesn’t come close to what was required for the shuttle program.

“We expected a little more action from our government, at least in figuring out what direction we’re going to go in,” said Harrington, 55, who worked on the shuttles’ thermal protection system earning about $80,000 a year. “Ultimately, that would inform which direction we would go in. A lot of us thought, since we have such deep roots in the community, we could wait it out. It was hopeful at first. Now it isn’t so hopeful. Things aren’t moving fast.”

Many of the former space workers find camaraderie and job tips each Friday at the weekly breakfast of the Spacecoast Technical Network, a group created by former Kennedy Space Center workers. Just hours before 70 members dined on eggs, biscuits and coffee at a recent meeting, three Chinese astronauts parachuted back to Earth in a capsule halfway around the world. For the space workers, it was yet another sign of the growing competition facing the United States as a leader of space exploration. At the moment, the United States has no way of sending astronauts to space in its own vehicles, and NASA is relying on the Soviet-made Soyuz capsules to send U.S. astronauts to the international space station.

One of the network’s founders, Bill Bender, recently joined more than two dozen other colleagues working on a reconnaissance project for a contractor in Afghanistan where they are earning six-figure annual incomes.

Bender had been out of work for about a year from his job on the cancelled Constellation program when he took the one-year contract to work halfway around the world.

“As the months passed, I began to realize the hard reality that things I had known and taken for granted no longer existed. Stable work, good pay, benefits, etc. were no longer a reasonable expectation,” Bender wrote in a recent email from Afghanistan. “As time went by and it was getting closer to a year without a job ... the (Afghan) opportunity looked better and better. The money was very good due to compensation for hardship and danger.”

Those who have remained on the Space Coast without jobs are cutting back on small luxuries. Harrington has trimmed back on eating out and vacations.

Al Schmidt, who worked 27 years at the space center, has cut back on using his car and utilities at home to save money. The 60-year-old’s unemployment benefits are running out soon, and without a new U.S. space program offering ready-to-go jobs, he is contemplating retirement, something he doesn’t want to do.

“I live day to day. I can’t afford new cars or lots of groceries,” Schmidt said. “From where I sit, there is nothing coming online soon enough to resolve my problem.”



Who are the long-term unemployed?
By Brad Plumer
Washington Post
May 6, 2012

Right now, nearly 30 percent of all unemployed Americans have been out of work for more than a year. All told, thats 3.9 million workers, slightly more than the number of people who live in Oregon.

But who are the long-term unemployed, exactly? The PEW CHARITABLE TRUST has a new REPORT (pdf) out about these Americans, and some of the stats are surprising. For one, long-term unemployment is an equal risk for all unemployed workers, regardless of education level. Here’s a chart showing this:


The charts a bit confusing, but basically, the red bar shows the likelihood of a worker in each education category becoming unemployed in the first place. The blue bar shows how likely it is that a worker stays unemployed for a year or more once he loses his job.

And the chart shows something unexpected: A worker with a PhD is less likely to become unemployed in the first place than a worker who never finished high school. But, once those workers lose their jobs, they both have a roughly equal chance of being out of work for more than a year. In fact, an unemployed worker with a PhD is slightly more likely to have trouble finding work again.

The Pew report also breaks this down by age. In the current recession, older workers are less likely than younger workers to become unemployed in the first place. But, once an older worker loses his job, heҒs far, far more likely to enter the ranks of the long-term unemployed than the younger worker is.


Theres plenty of reason to worry about the long-term unemployed. Plenty of evidence suggests that when a person stays unemployed for seven months or more, it becomes harder and harder for him or her to ever return to the workforce.

Posted by Elvis on 07/16/12 •
Section Dealing with Layoff • Section Dying America
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