Category Archives: Politics

Post Hansen Kerfuffle in Nevada Legislature

Hansen Sometimes it’s your friends.  In the case of Assemblyman Ira Hansen (R-NV32) it’s friends and some relatives. 

“John Wagner, the chairman of Nevada Independent American Party, which was founded by Ira Hansen’s father, Daniel Hansen, defended Ira Hansen Sunday and said he should not resign the speakership.  Wagner defended Hansen for a column the assemblyman wrote about civil rights activist Martin Luther King, Jr.:

“King’s private life was trashy at best,” Hansen wrote in a column for the Tribune. “King Jr. is as low as it gets, a hypocrite, a liar, a phony, and a fraud.” That does not make Hansen a racist, Wagner said.  “And I suppose if you criticize Jessie Jackson or if you criticize Al Sharpton, does that make you a racist today?” Wagner said.”  [RGJ]

Since when?  Let’s not conflate racism with ideological differences. Racism has a clear definition: “the belief that all members of each race possess characteristics or abilities specific to that race, especially so as to distinguish it as inferior or superior to another race or races.”    It’s entirely possible to criticize Reverend Jackson, or Reverend Sharpton without reference to their “innate inferiority,”  However, it’s impossible to dodge the racism inherent in the acceptance of the smear campaign to discredit Reverend Martin Luther King, Jr. and to discredit the modern civil rights movement as an attack on white supremacy.

“The problem is that racism isn’t reducible to “different treatment.” Since if it is, measures to ameliorate racial inequality—like the Voting Rights Act—would be as “racist” as the policies that necessitated them. No, racism is better understood as white supremacy—anything that furthers a broad hierarchy of racist inequity, where whites possess the greatest share of power, respect, and resources, and blacks the least.” [Slate]

The expression of this concept is illustrated by Assemblyman Hansen in one of his columns:

“He wrote that African-Americans are insufficiently grateful for being given their freedom: “The lack of gratitude and the deliberate ignoring of white history in relation to eliminating slavery is a disgrace that Negro leaders should own up to.” [NNR]

Lack of gratitude?  Deliberate ignoring?  How might that “gratitude” be expressed in a manner which would please Mr. Hansen?  Should it be that African Americans would “know their place” and remain ‘gratefully’ in it all the while thanking the White Masters for the ‘privilege’ of being human? Racism doesn’t get more blatant than in Mr. Hansen’s expression.  Assemblyman Hansen seems not to have traveled too far from his roots, from the Nevada Independent American Party, founded by his father, and recently adopted by none other than outlaw rancher Cliven Bundy. [Fox]

If the Nevada Republican Party leadership is uncomfortable with having a blatant racist in the Assembly speaker’s chair – who might be available?

Names such as Michele “Pistol Packing Mama” Fiore, of the Bundy Ranch Epic have emerged, along with those of Paul Anderson,  John Hambrick, and  Wes Duncan. [RGJ]

Fiore may be just a little too close to the Bundy Ranch business, which leads to thoughts of Cliven Bundy explaining why African Americans were better off as slaves, which leads the Nevada GOP right back to where it started with Assemblyman Hansen’s “ungrateful” scoundrels who won’t apologize for the modern civil rights movement.

Hambrick is a lesser known member of the Assembly representing District 2 (Summerlin) in Carson City.  His major contributors are the gaming industry, including the Sands, real estate interests and general contractors. [InfExp]  During the 2013 legislative session he was one of the co-sponsors of SB 520, section 14 of which provided criminal and civil immunity for a person who does not request a background check for a firearm sale – for “any act or omission that was taken in good faith and without malicious intent.”  AB 373, also sponsored by Hambrick, established a tax credit for donations to a school tuition organization (BDR 34-716).  In short, Hambrick has been a loyal, gun supporting, contractor supporting, private school supporting, and vote suppression supporting Republican regular.

Wesley Duncan, has proposed amending the state constitution to allow voucher schools, enacting the “Nevada Preservation of Religious Freedom Act,” and enacting SB 378 from the last session, the Nevada Liberty Preservation Act.  This last item comes from the Right Wing Fever Swamp which at one point was Outraged! about two sections of the National Defense Authorization Act which allowed for the capture and detention of terrorists. The radical right was convinced the Obama Administration was about to round up the citizenry and open the detention camps. 

Assemblyman Paul Anderson has wanted the speakership before, and still wants it now.   He, too packs his NRA credentials on his sleeve, signing on to the Assembly support for SB 223AN ACT relating to concealed firearms; authorizing employees of the Nevada System of Higher Education or a private or public school who hold permits to carry concealed firearms to carry concealed firearms on school property under certain circumstances; and providing other matters properly relating thereto.”  As if what we need are more guns on more school campuses.  He, too, is a school privatization advocate.

The trick for the Assembly Republicans will be to find a speaker who doesn’t have a history of Fever Swamp Activity, who will be amenable to the ALEC program of corporate support, and who can convince the leadership that he or she won’t prove to be too big an embarrassment?

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Ira Hansen: Hapless Victim?

Victim Card “For the greater good of the State of Nevada and the cause I support it is necessary for me to withdraw as Speaker Designee. The tens of thousands of people who both read my columns and listened to my radio shows through two decades in the media know this has been a carefully orchestrated attack to remove a conservative Republican from a major leadership role in State government. The deliberate character assassination and the politics of personal destruction have totally distorted my views and record.” Ira Hansen (R-NVA39) [RGJ]

Merciful Heavens what a whine!  Better still, it has all the hallmarks of a classic Victim Card – there’s the “carefully orchestrated attack” line, and the “deliberate character assassination” line, and finally the “politics of personal destruction” canard.   All the ingredients deemed necessary to include in a perfect recipe for a Great White Whine.

An additional element which makes Hansen’s announcement even more interesting is that, as usual, none of the GOP powers-that-be actually called for his resignation:

“Lt. Gov. Mark Hutchison, State Senate Majority Leader Michael Roberson, R-Henderson, and state Sen Greg Brower, R-Reno, joined the GOP leadership choir in condemning Hansen’s views Friday. None of them, including Sandoval Heller or any prominent Nevada Democrat, have called for Hansen’s ouster.” [RGJ]

This certainly isn’t the first instance in which a Nevada Republican has strayed into the weeds of the Neo-Confederacy.  Assemblyman Jim Wheeler (R-NV39) was ever so willing to vote in favor of slavery, if that’s what his constituents wanted him to do. [LVSun 2013]  Gee whiz, he just couldn’t fathom how anyone might have mis-interpreted his words.  Wheeler remains in the Assembly.  Congressman elect Cresent Hardy opined, that GOP candidate Romney was right about those 47% “takers,” although neither the statistics or the context substantiate the claim [LVRJ] and, no, SNAP benefit recipients aren’t driving their Escalades down to the food pantry – a riff on the Cliven Bundy assertion about African Americans in Clark County – who would be “better off” learning to pick cotton.  Hardy will take his seat in the Tea Party Caucus in January.  What’s different now?

Just perhaps the reason Mr. Hansen faced such powerful opposition was not for some ill-timed, ill-advised, and ill-meaning commentary but because his was predicated on a history of Limbaugh Wanna Be rhetoric which if dribbled out over time threatened to box the Nevada GOP into its already convenient container. Consider the support Mr. Hansen received from one conservative activist:

“Hansen has his supporters. Conservatives in the Nevada GOP are rushing to his aid even as party leaders are condemning Hansen’s comments.

“Why should any Republicans give a damn about what the NAACP thinks?” said conservative activist Chuck Muth of Las Vegas. “They don’t vote for our candidates. That is not who our base is.” [RGJ]

Nothing says Old White Guys quite so succinctly.  

Assemblyman Hansen represents a district (32) which is predominantly white (83.7% compared to the statewide 73.5%), with a mode household income between $50,000 and $75,000, and has a 48.2% to 29.7% Republican registration edge. [NVLeg pdf]  These are people who quite possibly don’t care what the NAACP thinks, or what any other ethnic or minority population might think either.   Mr. Hansen’s strength in Assembly District 39, his appeal to Old White Guys disgruntled with the possibility of women, members of the Hispanic/Latino community, and African Americans taking positions of political, economic, and social power, is also a fatal weakness when dealing with a state in which the African American population is 8% (unlike the 1.4% in the district) and 26.1% Hispanic or Latino compared to the 17.4% in the district.  The statewide figures, which are almost irrelevant for the local campaigns, could be deadly when placed in a statewide context.

Assemblyman Wheeler (NV32) may continue to represent his constituents, so long as he doesn’t commit another gaffe of the first water, and Congressman Hardy may take his place in the Gohmert Caucus, so long as he keeps his head down and doesn’t make a pilgrimage to the Bundy Ranch.  However, when there’s the prospect of inflammatory opinion columns ranging from 1994 to 2010 – every attempt at outreach beyond the Old White Guys Box by the Republicans can be countered by the Top Ten Latest Revealed Quotes from the pen and pixels of Mr. Hansen.

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Ira Hansen Becomes a National Embarrassment

Ira Hansen

Oh my, merely a few hours after his selection as the Speaker of the Nevada State Assembly Ira Hansen (R-NVA32) made national headlines – mostly for all those “interesting”  columns he wrote between 1994 and 2010. [Wonkette]  Mr. Hansen has gathered attention to himself from Think Progress, and The Huffington Post, and the Atlantic, and Talking Points Memo, and Media-ite.   Mr. Hansen, who won his Assembly seat with  71.96% of the vote in the 2014 election, [NVSoS] offered a formulaic apology:

“I am deeply sorry that comments I have made in the past have offended many Nevadans. It is unfortunate that these comments, made almost 20 years ago as a newspaper columnist and talk radio host, have been taken out of context and are being portrayed as intentionally hurtful and disrespectful. These comments were meant to be purposely provocative in various political, cultural and religious views. I have the utmost respect for all people without regard to race, gender, religious or political beliefs.” [RGJ]

This statement is almost pure Limbaugh.  “I’m sorry IF you were offended.” Of course people were offended – his comments were intrinsically, blatantly, offensive.

The comments were made long ago,”  And, what have you said or done since, say,  last Wednesday to demonstrate you’ve cleaned up your act since?

And, “they were taken out of context…” In what context would these have been appropriate comments in the 21st century – or the 19th for that matter? Doesn’t that “taken out of context” refrain ever get old and hirsute?

And, “the comments were purposefully provocative,” PLEASE! Of course, and Limbaugh was only kidding?  Just trying to get a rise out of your audience?  Those right wing hate speech, hate radio, pack of bigots, racists, and fringe wingers, who call in to shows that re-enforce their own bigotry, racism, and homophobia?

And, Mr. Hansen, if you’d had any respect for non-white people, members of the LBGT community, members of the Hispanic/Latino community, you’d not have made the comments in the first place.

And, he ends his non-apology apology on the common hackneyed note:

“I am committed to showing that actions are much louder than words and my office will always have an open door to all backgrounds and political viewpoints. This will not distract us from finding solutions to building a brighter and more prosperous Nevada.” [RGJ]

Right,  the door’s open.  We’re supposed to believe that the Tea Party Darling who bested a Party Regular (no raving moderate himself, Pat Hickey) for the Speakership doesn’t believe in the privatization of any public activity in which someone can make a buck, and maintains overtly racist, bigoted, beliefs, is going to lead us to the Promised Land of whatever…

However, this isn’t Grandpa’s Republican Party anymore.  This is the Party of Cliven Bundy, [Reuters] of Jim “I’d vote for slavery if my constituents wanted it” Wheeler, [LVSun] of Cresent “The BLM doesn’t have the right to enforce federal laws on federal land” Hardy. [LVRJ]  This is the Republican Party in Nevada which adopted a Tea Party Platform at its 2014 convention. [RenoNewsR

There’s one Nevada Republican who’s embarrassed – our Striving For A Centrist Image Senator Dean Heller:

“Assemblyman Hansen’s past comments and positions on race, religion, and gender that have recently been reported give me great concern. These comments were insensitive, wrong, and extremely offensive and insulting. Statements like these do not have a place in public discourse.” [EDFP]

Yes, Senator Heller is concerned – however, where was Senator Heller’s concern when his state party adopted the Tea Party platform, promoted the election of Wheeler, and the election of Hardy?  The “moderates” were noticeably silent before the 2014 elections, and before the selection of the Assembly Speaker – and now that the cat has slipped the bag they are “concerned,” nay “greatly concerned.”

In the immortal words of Meryl Streep’s character in the 1992 comedy “Death Becomes Her,” “Now a Warning?”

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In time for Thanksgiving: 20 Bible Verses Right Wing Opponents of Immigration Reform Would Like To Forget

Bible immigrants

These are 20 Bible verses concerning the treatment of “strangers” from the Old and New Testaments which right wing extremist opponents of immigration policy reform would not like to be reminded of over Thanksgiving Dinner.   Enjoy.

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The Economic Elite Agenda

Economic Elite

How does 0.5% of the population manage to control the political discussion about the economic realities of the remaining members of the citizenry?  If everything is a commodity, then everything can be bought and sold – including information.  There are repercussions related to this. For themselves and others.

The economic elite, the financialist allies, and the compliant Republican Party would like very much to remove the fetters on their capacity to accumulate wealth.  Deregulate banking,  cut taxes for the ultra-wealthy and remove the taxation on capital gains, get rid of unions and any other form of organized labor, privatize and monetize as many formerly public services as possible and then they’ll be happy?  Probably not.  They may be “shackled in golden handcuffs,”  or  “addicted to wealth.”  Or, they are simply following the prescribed path to riches, adopt the Shareholder Value Theory of Everything as if it described any economic reality other than their own.

Controlling the Flow

In order to advance the Shareholder Value Theory of Everything it must take precedence over all other topics of conversation.   For example, see the current web page for CNBC, and look at the major topics for today:  Comprehensive Immigration Reform is reduced to a political article about a possible government shutdown.  It’s a relatively shallow piece, speculative in nature, and purely political.  It will not tell you the findings which demonstrate the value of immigrants to this country in economic terms.

“Immigrants are not the cause of unemployment in the United States. Empirical research has demonstrated repeatedly that there is no correlation between immigration and unemployment. In fact, immigrants—including the unauthorized—create jobs through their purchasing power and their entrepreneurship, buying goods and services from U.S. businesses and creating their own businesses, both of which sustain U.S. jobs.”  [AIC]

Interesting, that sounds just like DB’s favorite theme:  Increase the aggregate demand and you will grow the economy.   Nor will a speculative political piece inform us that the top occupations for foreign born workers between the ages of 25 and 64 were construction jobs and extraction related employment. [CBO pdf]   Better still for our economy, immigrants play a large role in our overall economic life:

“Immigrants have an outsized role in U.S. economic output because they are disproportionately likely to be working and are concentrated among prime working ages. Indeed, despite being 13 percent of the population, immigrants comprise 16 percent of the labor force. Moreover, many immigrants are business owners. In fact, the share of immigrant workers who own small businesses is slightly higher than the comparable share among U.S.-born workers. (Immigrants comprise 18 percent of small business owners.)”  [EPI]

And here comes the point – if CNBC is trying to grab ratings in order to boost advertising, and thereby increase the value of its shares – then the Shareholder Value Theory of Everything is ultimately determining what kind of “business news” we are getting.  Not information about the economic value of immigrants, or even what portion of our demographics they represent; instead we are fed a pabulum of political speculation. Nothing so enhances the power of the economic elites as the capacity to offer little or no economic information beyond the stock market reports and the endless speculation of analysts.

For information which has not been sifted through the tentacles of the economic elite see: “Facts About Immigration and the U.S. Economy” (EPI) “Immigration / EPI” (EPI) “Value Added Immigration,” (EPI), “Immigration and American Values,” (Our Future),  “Immigration and the Rural Workforce,” (USDA), “The Economic Benefits of Fixing Our Broken Immigration System,” (WhiteHouse pdf)  Clicking on just a couple of these links will give you 100% more economic information than you would get from the CNBC lead article.

Interestingly enough, considering the ridiculousness of Fox’s reporting on climate related issues, their Big Story of the day is about Toyota’s hydrogen powered car.  Fox is quick to inform its readers that other car manufacturers are ramping up development of more ‘climate friendly’ vehicles – but as for the effect of climate problems on our economy – you’ll have to go elsewhere.   Honda, they note with emphasis, is not keeping up in order to keep costs down – thus complying with the Shareholder Value Theory of Everything.

For information about the relationship of climate change and the economy, there’s the UCS site including  the “Hot Map,”  or the CBO’s “The Economics of Climate Change,” (pdf) “Modeling the Impact of Warming in Climate Change Economics,” (NBER), and “Climate Change: Of Warming and Warnings,” (Economist) Again, reading just a few articles out of many will offer far more knowledge about climate and the economy than most of what appears in the so-called business channels.

Good luck finding any comprehensive information about the American work force, or about the increasing threat of income inequality which could have a profound impact on our consumer based economy, or even about the state of American research and development – these are not topic which grab the viewers and focus attention on the sponsor’s products.  Worse still, information about the economic impact of income inequality or the struggles of middle income Americans in the ‘wrong’ hands could lead to some serious questioning of the motives of the economic elite.

Controlling the Ballot Box

Money is valuable – especially when a bit of it spread about can offer success in the election of those amenable to the interests of the economic elite.  If there’s “runaway spending” in this country it’s NOT coming from the federal government, its sources are corporations – some of which are foreign – pouring vast amounts of the coin of the realm into American politics.  Would it surprise anyone that the debate over the pipeline project is driven by about $60 million in election and lobbying funding? [Common Cause]   We’re talking about “net neutrality,” and others were discussing it as well – to the tune of some $42 million in federal and state lobbying efforts from AT&T, Comcast, Verizon, NCTA, Time Warner Cable, [Common Cause] all of whom oppose neutrality.

Of course, the concept of net neutrality is at odds with the short term business interests of the corporate giants listed above, and since we remain in the land of the Shareholder Value Theory of Everything this must not be implemented – less the share prices go down during the quarter.

However, there is much more attached to the election of those enamored of the economic elite – there’s deregulation of the banks because they had so much fun, and so much profit, the last time they turned Wall Street into such a casino that there are no more investment banks; there’s the privatization of public services because who can complain about someone’s idea to turn public education into test driven private schooling?  What better opportunity to make a few million than to privatize public water systems? Privatize public library and internet connection services?  We could even privatize our roads, bridges, dams, airports, air traffic control systems? Food inspection? Hospital and clinic inspections?   All in the interest of the economic elite.  But mostly we could insure the continued prosperity of the economic elite by making certain they don’t have to pay taxes.  “Only little people pay taxes.” 

Combining The Queen of Mean with the Shareholder Value Theory of Everything  yields such excesses as the taking of approximately $30 Trillion from financial gains since the recession – almost all of it going to the richest 1% of our nation’s population – and much of it tax free.  The economic elite have framed the system such that you pay less on the income earned from stocks than from the labor of your hands, you can use “carried interest” as an excuse not to pay taxes for hedge fund profits.  Roth IRA’s are a tax loophole for the 20% of Americans who own 95% of our financial wealth, and you can insure that your derivatives are paid off first if the bank collapses.  And, by the way – a business can get out of debt by declaring bankruptcy, but a student can’t. [Salon]

Did you hear any of this from the corporate controlled media?  Probably not.  Put the Queen of Mean with the Shareholder Value Theory of Everything and add a Wealth Addiction and we get a picture of the economic elites:

“Only a wealth addict would feel justified in receiving $14 million in compensation — including an $8.5 million bonus — as the McDonald’s C.E.O., Don Thompson, did in 2012, while his company then published a brochure for its work force on how to survive on their low wages. Only a wealth addict would earn hundreds of millions as a hedge-fund manager, and then lobby to maintain a tax loophole that gave him a lower tax rate than his secretary.”  [NYT]

Ours was supposed to be a republic, founded on the democratic principle of voting by citizens who shared in the future of the nation – it was not intended to be an aristocracy much less a plutocracy.  Nor was it ever meant to be a nation pandering to the addictions of those for whom the love of money became the rationale for their existence.

We can do better.

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The Great Pension Swipe Coming to a State Near You

Burglar

“Elections have consequences” and this time the results may be a disaster for public employee pensions.  The rationale underpinning this contention is simple.  Wall Street is running out of Big Pots of Money.  They’ve already run through the money which flowed in from the earnings of more women in the work force – the Wall Street Casino used up the proceeds from the increasing number of two income families by 2000, when the number of women in the work force increased from 18,389,000 in 1950 to 65,616,000 in 2000.  To add a bit of context here:  In 1950 there were 43,819,000 men in the work force, and 18,389,000 women.  By 2000 there were 75,247,000 men working and 65,616,000 women. [BLS pdf]   Some families were induced to join in the new Money Market Accounts made possible by the Garn-St. Germain Depository Institutions Act of 1982.  This new form of “savings” account allowed the banks to get and keep the deposits.

“Banks are required to discourage customers from exceeding these limits (on withdrawals), either by imposing high fees on customers who do so, or by closing their accounts. Banks are free to impose additional restrictions (for instance: some banks limit their customers to six total transactions). ATM, teller, and bank-by-mail transactions are not counted towards the total.”  [link]

And so, Wall Street had a big pot of money to play with. But enough is never enough.   Wall Street invented more money pots – using securitized assets. These were non-existent before the 1970s.  For review, a securitized asset is something done to create “debt securities, or bonds, whose payment of principal and interest derive from cash flows generated by separate pools of assets.”  [ HFS pdf 2003]  In plainer English this means that Wall Street can use securitization to immediately (and that’s a key word – immediately) make money on any “cash-producing asset” – like trade receivables, leases, auto loans, credit card lines, and, of course, mortgages.

Now the Money Mad Denizens of Wall Street have run through the addition of women’s earnings, the accumulation of funds in money market accounts created thereby, and they mis-managed their money in securitized assets such that the Housing Bubble of the early 2000’s burst and splattered all over their operations.  But enough is never enough.  One former Wall Street trader described the Wealth Addiction rampant in the firms:

“But in the end, it was actually my absurdly wealthy bosses who helped me see the limitations of unlimited wealth. I was in a meeting with one of them, and a few other traders, and they were talking about the new hedge-fund regulations. Most everyone on Wall Street thought they were a bad idea. “But isn’t it better for the system as a whole?” I asked. The room went quiet, and my boss shot me a withering look. I remember his saying, “I don’t have the brain capacity to think about the system as a whole. All I’m concerned with is how this affects our company.” […]

“From that moment on, I started to see Wall Street with new eyes. I noticed the vitriol that traders directed at the government for limiting bonuses after the crash. I heard the fury in their voices at the mention of higher taxes. These traders despised anything or anyone that threatened their bonuses.” [NYT]

What might threaten those bonuses? Not having Big Pots of Money to play with.   There are some money pots out there – and more and more of them are being “touched” by the Wall Street bankers who see them as ways to enhance those precious bonuses.  Pension funds.

How to unlock that next Big Money Pot for the Wealth Addicts of Wall Street?  The strategy has been alarmingly simple.

First, bash public employee unions – the organizations which negotiated defined benefit plans for retiring public employees.  Union bashing has been a staple of Republican politics since time out of mind, so it makes perfect sense to incorporate it into the strategy for raiding public pension funds. Public employees are no longer to be seen as the helpful librarian, or the firefighter who saves the kittens, or the police officer who donates time to direct traffic at the high school football game.  He or she is no longer the person willing to work in frigid temperatures clearing snow from highways at 3:00 A.M. Nor is the public employee to be thought of as the bookkeeper who diligently keeps track of taxes paid, fees assessed, or paper-work properly filled out to prevent fraud.  No! These people are to be seen as “greedy teachers” who think only of job security, “lazy” bureaucrats who create paperwork, and “leagues of over-paid shovel leaners” who don’t care about the snow on the roads…. The cynicism of this is excruciating.  The result is little else than a contemptuous, divisive, misanthropic perspective which divides private sector employees earning $45,000 per year from public sector employees earning $45,000 per year.

Secondly, once the bashing begins the misanthropes add in a measure of jealousy.   Publish the retirement incomes of Everyone, because surely someone is making more money in retirement income than the targeted population of disaffected voters.  Cover this in the banner of Right to Know. “You,” meaning the disenchanted audience, have a “right” to know what “each and every public employee is making” because, “you know” they have been “feeding at the public trough.”  The argument is predicated on the jealousy factor – who else would care what a firefighter, police officer, highway department employee, teacher, librarian, public health nurse, etc. would receive in a year?

That the release of this information would allow personal identity thieves to thrive is of little consequence to the advocates of total transparency – so much transparency that the former public employees have no right to any financial privacy whatsoever.

Third, flat out lie about the sustainability of defined benefits pension plans.  There are three major advantages of a defined benefit plan.  It provides security.  The person who has paid into the plan knows exactly want the financial benefits will be and can do some financial planning accordingly. The person also know exactly how long he or she has to work to be eligible for the benefits.  And, finally, the person knows that the pension is covered by the Pension Benefit Guaranty Corporation.

We know that some public employee pension plans are better administered than others, but the opponents of defined benefit plans are eager, enthusiastic even, about publicizing the problems of some as the characteristics of all.  This is evident in the ALEC assault on public pension funds, all 45 pages of it which blatantly calls for defined benefit plans to be morphed  into “properly defined alternatives, such as defined contribution, cash balance, and hybrid plans.”  Read: The Next Big Money Pot for Wall Street.

Creeping Financialism

The ALEC advocates and associates are only too pleased to discuss the delights of the defined contribution plans.  Most often they are couched in friendly wording such as “you can manage your own plan,” which sounds like “freedom.”  It also sounds like a 401(k).   What they aren’t anxious to publicize is that 401(k) plans have been a bust.

“The 401(k) plan was never meant to be a mainstream pension plan and is a poor substitute for one. It’s a voluntary program that was intended to supplement retirement savings –  one of those quirky little options in the byzantine tax code that employers seized upon as a way to save money while pretending that they were doing the right thing by their employees.” [Forbes]

That’s putting it about as bluntly as possible.  Oops! The 401(k) was never intended to be the main source of retirement funds, and it’s a poor substitute for a defined benefit plan.

“Authors like Helaine Olen have been right on the mark in saying that the financial services industry and employers are all too eager to tell us how little we’re saving, yet don’t serve as honest brokers in maximizing our retirement savings. That would require cutting fees, eliminating middlemen, increasing employer contributions and getting rid of the fee structure that is based on assets under management. And above all, the most dangerous part of this equation: Educating employees on how to invest cost- and risk effectively.”  [Forbes]

And for all this – while the fund administrators collect the fees, hire middlemen, and thrive under the fee structure – the public employee is asked to give up any and all financial privacy, learn to be a financial manager, and forget about the security a defined benefits plan offers. All this so that Wall Street will secure the next Big Money Pot.  And it’s already started.

Creepy Financialists

The unease felt by public employees about their future financial security isn’t merely the result of escalating fiscal paranoia; it’s very real. The Rhode Island Case describes what happens when crony capitalism merges with Wall Street wealth addiction when state treasurer Gina Raimondo issued forth :

“Nor did anyone know that part of Raimondo’s strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb’s Third Point Capital was given $66 million, Ken Garschina’s Mason Capital got $64 million and $70 million went to Paul Singer’s Elliott Management. The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 “Urban Innovator” of the year.

The state’s workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws.” [Rolling Stone]

Worse still, the states that were supposed to be making defined contributions didn’t seem to be taking the process very seriously.

Chris Tobe, a former trustee of the Kentucky Retirement Systems who blew the whistle to the SEC on public-fund improprieties in his state and wrote a book called Kentucky Fried Pensions, did a careful study of states and their ARCs. While some states pay 100 percent (or even more) of their required bills, Tobe concluded that in just the past decade, at least 14 states have regularly failed to make their Annual Required Contributions. In 2011, an industry website called 24/7 Wall St. compiled a list of the 10 brokest, most busted public pensions in America. “Eight of those 10 were on my list,” says Tobe.

Among the worst of these offenders are Massachusetts (made just 27 percent of its payments), New Jersey (33 percent, with the teachers’ pension getting just 10 percent of required payments) and Illinois (68 percent). In Kentucky, the state pension fund, the Kentucky Employee Retirement System (KERS), has paid less than 50 percent of its ARCs over the past 10 years, and is now basically butt-broke – the fund is 27 percent funded, which makes bankrupt Detroit, whose city pension is 77 percent full, look like the sultanate of Brunei by comparison.” [Rolling Stone]

However, nothing stops the administrators of the Annual Required Contribution plans from drawing their salaries. Nothing stops the hedge fund managers and wealth managers from earning their money, and nothing stops the hedge funds, wealth funds, and bankers from getting nice bonuses from playing with these new Big Money Pots.

2013 also brought the disclosure of other pension swindles.  A report on North Carolina’s pension plan yielded the most opaque atmosphere surrounding a supposedly transparent pension system, with the Wall Street characters benefiting from the opacity:

“Today, TSERS assets are directly invested in approximately 300 funds and indirectly in hundreds more underlying funds, the names, investment practices, portfolio holdings, investment performances, fees, expenses, regulation, trading and custodian banking arrangements of which are largely unknown to stakeholders, the State Auditor and, indeed, to even the (State) Treasurer and her staff,” he reports. “As a result of the lack of transparency and accountability at TSERS, it is virtually impossible for stakeholders to know the answers to questions as fundamental as who is managing the money, what is it invested in and where is it?” [Salon]

How are the investors in the system (the state, the locality, the employees) supposed to act as “free” administrators of their own pension plans when they can’t discover who is managing the money, what investments have been made, and where the money is?  Much less ask what fees are being paid to the money managers of the new Big Pot?  In the initial example above, Rhode Island, state treasurer Raimondo couldn’t answer the question about the amount paid in fees.

President George W. Bush famously tread on the third rail of American politics, privatizing Social Security in 2005, and just as famously backed away from the precipice.  It seems that Americans have not forgotten what is supposed to be a “mainstream pension plan.”   If continued symbolic acts continue to be promoted by the Cato Institute and if there continue to be the likes of Iowa senator-elect Ernst who call for a hybrid plan in which younger workers are allowed to put a portion of their Social Security into a Retirement Savings Account (read: Wall Street Money Pot) we can’t declare the nation free of schemes to privatize Social Security.  If a state treasurer in Rhode Island who promoted the defined contribution plan in her jurisdiction can’t find out how much is being raked in by money managers, then how do we expect our average “younger worker” to effectively track his or her retirement account.

Thus we can look forward to more proposals for Hybrid Plans – which augment the Big Money Pot, and Defined Contribution Plans – which can’t be tracked and make a mockery of the entire concept of transparency, and more assaults on public employees who might be victims of the latest Great Burglary of their pension systems.  Elections do have consequences, and the last mid term election put more than $100 billion in public pension funds in the hands of financialists turned politicians.

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Let’s Save Capitalism

Adam Smith If we want to do something big why not craft a nationwide campaign to save capitalism?  Basic, dictionary definition capitalism:

“ (noun) an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.” [Dict.com]

Let’s declare, right out front, that capitalism is NOT a political system.  It does, however, require a political apparatus and infrastructure to maintain our economic institutions.   Let’s assume that Adam Smith was correct, that monarchical controlled monopolies and charters were counter-productive.  Indeed, Adam Smith was quite vehement on the subject of monopolies. He was particularly opposed to those guild members, shop keepers, and manufacturers who conspired to operate in the Wretched Spirit of Monopoly.”  [Kurz pdf]  He’d seen the results of  conglomerates such as the East India companies of Great Britain and the Netherlands – and he disapproved.   That critique hasn’t prevented the monopolists from mangling the message by adding a bit of  Mandeville here, adding a touch of Samuelson there; marinated in the toxic and sophomoric economics of Rand,  and devising a philosophy to justify unadulterated greed.

The problem for the Justification of Greed crowd is that at some point in the economic process someone has to buy something.  At least in the real world, someone must manufacture a product using primary products (minerals, timber, etc.) and then must transport the products to distributors (secondary) markets, so that ultimately a consumer will purchase the product at a price determined by the balance of supply and demand.  This, at its simplest, is pure capitalism.  We need more of it.

In America’s bifurcated economic system the financial sector, which once primarily facilitated the investment in the manufacturing, distribution, and selling of goods and services, has taken it upon itself to function for its own benefit – one all too often at odds with the Main Street economy it was meant to serve.

The financialists [Forbes]  discovered the gold to be mined from mountains of debt, and sought profit from the debt, the service of the debts, the trading of debt, the manufacturing of securitized assets based on debts, and they turned Adam Smith on his head:

“Adam Smith never espoused the beliefs that control our capitalist system today, that the only purpose of a business is to create shareholder value and that the unfettered market will effectively regulate itself. These two views have been widely adopted, without empirical foundation, by many influential financial and political policy-makers. They have been used to justify systemic deregulation and a maniacal focus on generating short-term earnings that are not necessarily real economic earnings.” [Forbes]

And, they’ve held sway for almost the last three decades:

“Over the last 25 years American capitalism has become financialism, which is primarily transactional, unrestrained greed. Financialism embraces the view that the only purpose of business is to create shareholder value, measured primarily by short-term results. The dominance of short-termism is evidenced by the magnitude of institutional stock “renting” for terms of 12 months or less, the volume of high-speed, high-frequency algorithmic short-term trading, the short average tenures of chief executive officers and the dominance of executive compensation tied solely to short-term results.” [Forbes]

In short, ‘faster and more volatile’ has replaced ‘visionary and more rational’ in our economic system.  And the politicians in place are either wedded to this financialism and actively abetting it, or they are such close allies that the differentiation is difficult to discern. Or to put it in harsher terms: The politicians are selling out the long term benefits of American capitalism for the benefit of short-term financialism.  What’s been the result?

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first,” said Piketty, “capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” [Piketty, Farrell]

We might simplify this statement by saying: When the financialists take over the field from the capitalists the economic inequalities they create unleash havoc on our real economy and our national values.  Who warned us about this?  None other than the patron saint of financialists – Adam Smith:

“The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.” [Piketty, Farrell

Smith wasn’t quite finished with the Greedy:

“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.” [Smith; Theory of Moral Sentiments]

So, what have we done for the past 25 years?  We de-regulated the avaricious, we praised the vain-glorious, and we rewarded those harboring these “extravagant passions” with riches beyond their dreams.  Then we declared it “good,” and “American” and the culmination of “Free Enterprise,” when in fact the effect was to “disturb the peace of society,”  and create such income inequality that it is difficult to sustain the basic capitalism we say we admire.

Politicians need to make their positions clear: Do you support American capitalism or do you support Financialism?  If the former, you are deserving of our praise and votes. If the latter, you need to be out of any office of influence until you understand that you are destroying the very system you purport to value above all else.

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