What Has Caused Record Inequality (and Greater Recessions)?

Popular Economics Weekly

Economists Lawrence Mishel and Heidi Shierholz of the labor think tank Economic Policy Institute (EPI) have been asking a question in their latest work that is at the root of our various economic crises, “Why did the richest 1 percent of Americans receive 56 percent of all the income growth between 1989 and 2007, before the recession began (compared with 16 percent going to the bottom 90 percent of households)? Why are corporate profits 22 percent above their pre-recession level while total corporate sector employees’ compensation (reflecting lower employment and meager pay increases) is 3 percent below pre-recession levels?”

The answers have become becoming blindingly obvious in the glare of the Great Recession. A concerted effort by business interests in general, and Republicans in particular, instigated a massive transfer of newly created wealth from wage earners to the owners of capital via various measures, including lowering upper income tax rates, restricting employees collective bargaining, rolling back regulations on financial institutions, and the like.

Such a wealth transfer has caused tremendous harm to our economy and society. The major casualty has been recurring recessions since the 1970s brought on in large part by mountains of debt. In fact, most of that debt was taken out by households with declining incomes who took advantage of increasingly available credit to borrow to make up for their income shortfall.

What created the wealth? Information age technologies, which massively increased worker productivity. Labor productivity has increased 254 percent since 1948. Hourly wages, however, increased just 113 percent. That can be seen in Figure A from the EPI, which presents both the cumulative growth in productivity per hour worked of the total economy (inclusive of the private sector, government, and nonprofit sector) since 1948 and the cumulative growth in inflation-adjusted hourly compensation for private-sector production/nonsupervisory workers (a group comprising over 80 percent of payroll employment).

Figure A: EPI

That transfer of wealth since the 1970s has been well documented in books such as, Jacob Hacker and Paul Pierson’s, “Winner Take-all Politics” that documents the massive lobbying effort by businesses to bring in business-friendly legislation and administrations resulting not only in the ownership of much of Congress, but an extremely conservative, corporate-friendly Supreme Court that in Citizen’s United now allows unlimited corporate donations to political campaigns, and so corporate control of 2 of the 3 branches of government for years to come.

The other side of that coin is blatant attempts by Republicans to suppress incomes by taking away collective bargaining rights of both private and public sector workers, such as happened in Wisconsin. The result is the almost disappearance of the middle class that has been the main driver of growth since WWII.

Big Business chose to raise their own incomes and that of their shareholders, but not their workers’ incomes, in other words. Yet Big Business was more than willing to lend consumers money via Wall Street and relaxed banking regulations, so much so that the personal savings rate dropped to almost zero during the Bush II administration, as the Calculated Risk graph clearly shows after peaking in 1980. Those consecutive recessions—6 since 1973—have been a tremendous drag on economic growth, in spite of the productivity increases.

Graph: Calculated Risk

According to the Federal Reserve’s Survey of Consumer Finances, the percentage of households holding revolving credit card debt rose from 16 percent in 1970 to 71 percent in 2004.

“Essentially, economic policy has not supported good jobs over the last 30 years or so,” said EPI. “Rather, the focus has been on policies that were thought to make consumers better off through lower prices: deregulation of industries, privatization of public services, the weakening of labor standards including the minimum wage, erosion of the social safety net, expanding globalization, and the move toward fewer and weaker unions. These policies have served to erode the bargaining power of most workers, widen wage inequality, and deplete access to good jobs. In the last 10 years even workers with a college degree have failed to see any real wage growth.”

All this has been part of an even larger trend, the maturing of our economy from industrial to a service-oriented economy dependent mostly on consumer demand, rather than capital investment as in the past. The result has been documented by Rutgers Economic Historian James Livingston. Though most economic activity over the past 100 years is generated by consumer spending, it hasn’t benefited most consumers.

This has to change. We can no longer tolerate such a diversion of wealth that has weakened our economic and social fabric so much that we have fallen behind the rest of the developed world in education, health care, ageing infrastructure, and even environmental protection.

Harlan Green © 2012

Rental Markets Strongest in Q1

The Mortgage Corner

After hitting bottom in 2010, Reis Reports, a leading rental property analyst, reported in Q1, “After five quarters of improvement, it is apparent that we are in the midst of a recovery in the office sector”, said the report. “National asking and effective rent growth improved slightly in the first quarter, continuing the slow upward trend that began in the first quarter of 2011. Annual gains of 1.6 and 2.1 percent, respectively, also indicate a moderate pace of improvement, but are unimpressive.”

The sector continues to be hampered by the anemic pace of improvement in the labor market. There is certainly positive churn in leasing, but rents remain at levels last seen in 2007, and five-year leases coming due in 2012 run the risk of being signed at equivalent or lower rent levels, exerting a dilutive effect on landlord incomes.”

Office Effective Rent Growth

Graph: Reis Reports

Apartment Vacancy and Rent

Apartment leasing was more favorable, with the national vacancy rate now below 5 percent. Activity showed little signs of slowing during the first quarter, partly because of the relatively mild winter in the Northeast, said Reis. Net absorption, or the net change in occupied stock, remains strong with 36,488 units leasing up. Tight supply conditions with only 7,342 apartment units coming online in the first quarter are helping the performance of apartment properties around the nation. National asking and effective rents remain strong, with effective rents (asking rents net of concessions) increasing at its fastest rate since end-2007. Asking rents grew by 0.5 percent and effective increased by 0.9 percent in the first quarter. Reis expects effective rent growth to accelerate even more as vacancies tighten within the 4 percent band; with availability so scarce, landlords have little incentive to concessions.

Graph: Reis Reports

Neighborhood and Community Shopping Center Effective Rent Growth

Asking and effective rents both increased by 0.1 percent, in line with the changes from the fourth quarter of 2011. This is the second consecutive quarter of rent increases and another cautiously optimistic sign for neighborhood and community centers. Additionally, relative to the first quarter of 2011, both asking and effective rents grew 0.2 percent. This represents a slight acceleration versus the fourth quarter when year-over-year asking and effective rents were either unchanged or marginally negative. These data points offer more, but still insufficient, evidence of a nascent recovery.

But, “We remain cautious about pronouncing a turnaround until we observe a couple more quarters of improvement,” said Reis. “As we have observed in the recent past, two consecutive quarters of improvement are not necessarily the beginning of a trend and are insufficient to declare that a recovery is underway.”

Graph: Reis Reports

So it seems apartment leasing and construction is leading the real estate recovery, as builders are still reluctant to start much new single family construction. Econoday reports that optimism continues for the apartment industry, according to the latest results of the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The findings reflect a gradual recovery for the multifamily sector that faced a 50-year low in apartment starts in 2009.

Graph: Econoday

"Market conditions improved across the board, even from the rather strong level of three months ago,” said NMHC Chief Economist Mark Obrinsky. “Demand for apartment residences – and apartment properties – continues to grow. We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.”

The Market Tightness Index increased to 74 from 60. Nearly half (49 percent) reported tighter markets – reflecting lower vacancy rates and/or higher rents – compared to only one percent reporting looser markets.

Harlan Green © 2012

Employment Will Drive Recovery in 2012

Popular Economics Weekly

It seems the lingering doubts about better growth in 2012 have nothing to do with reality. Predictions that job growth may have slowed come from a recent uptick in weekly initial jobless claims, but such numbers are notoriously subject to revisions, while the Bureau of Labor Statistics’ Job Openings Layoffs and Transfer Survey (JOLTS) that measures actual job layoffs and openings says employment is surging.

Graph: Wrightson ICAP

Which should we believe? JOLTS, because it has shown steady improvement since its mid-2009 low, and isn’t subject to large swings! The hire rate has steadily improved to 3.3 percent from its 2.9 percent low, while the number of job openings has increased from 2.2m to 3.5m in February 2012.

There are other signs, as well. Calculated Risk reports the Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for March 2012. In the past month, the indexes increased in 48 states, decreased in one state (Rhode Island), and remained stable in one state (South Dakota), for a one-month diffusion index of 94.

Graph: Philadelphia Fed

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. In March, 49 states had increasing activity, up from 47 in February. The number of states with increasing activity has been at or above 47 for the last seven consecutive months. The states with highest growth indexes are dark green.

And labor productivity has been sliding as employers continue to try to squeeze more out of their workers, who are already maxed out, instead of hiring additional workers. But the NFIB small business survey says small businesses which hire something like two-thirds of new workers have been adding workers.

The composite survey rose by one tenth of a point to 93.9, which left it just below the high point reached in last winter’s economic pick-up. The economic expectations index continued its recovery from last summer’s low point by five points, but the other measures that go into the headline index were mixed. Needless to say, tight credit conditions have been the biggest obstacle to small business growth.

Graph: Wrightson ICAP

One moderately encouraging aspect of the report is the fact that the credit expectations indexes held onto the previous month’s gains, according to Wrightson ICAP. “The indexes for current and expected credit conditions held steady at their December levels, which matched the best readings in those measures since the collapse of Lehman. Small business owners still view credit availability as somewhat restricted, but conditions have eased again since the summer,” said Wrightson ICAP.

Graph: Econoday

Lastly, the bears had to have been disappointed with the Conference Board’s latest Index of Leading Indicators (LEI) report—still no sign of pending collapse in the recovery. The index of leading economic indicators continues to signal healthy growth ahead. And signals outside this factor are also positive especially growth of building permits -- which is an important and hopeful signal of badly needed recovery for the housing sector. The stock market is also a positive as is the report's reading on lending conditions.

Harlan Green © 2012

Housing Recovery Has Begun

The Mortgage Corner

“There is no question that housing starts and residential investment have bottomed,” says Calculated Risk, perhaps the best real estate blog. “And it appears new home sales have also bottomed. For the housing industry, the recovery has started. The debate is about the strength of the recovery, not whether there is a recovery”

We agree. Not only have new home construction and sales picked up, but the new HARP 2.0 Fannie/Freddie “refinance plus” programs are kicking into high gear, thus reducing the short sale and foreclosure inventories.

Graph: Calculated Risk

On the national level, inventory of for-sale single family homes, condominiums, townhouses and co-ops declined by -21.48 percent in March 2012 compared to a year ago, and declined in one month in all but two of the 146 markets covered by Realtor.com, said its March 2012 Real Estate Data report.

The median age of the inventory fell 19.82 percent on a year-over-year basis last month and the median national list price was up by 5.56 percent last month to $163,800 compared to March 2011.

This is while sovereign debt worries in Europe led to a drop in rates last week, with the 30-year rate tying its early February low. Refinance activity picked up in response, increasing 13.5 percent for the week. “Participants in our survey indicated that about 32 percent of this refinance volume was for HARP loans," said Jay Brinkmann, MBA's Chief Economist "While purchase activity declined sharply for the week, this was mostly due to a 23 declined sharply for the week, this was mostly due to a 23 percent drop in applications for FHA purchase loans. This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week. The demand for conventional purchase loans was down only slightly."

This in turn has pushed down both delinquency and foreclosure rates.

Graph: Calculated Risk

And according to The December Mortgage Monitor released by Lender Processing Services (LPS), 8.15 percent of mortgages were delinquent in December, unchanged from November, and down from 8.83 percent in December 2010, also the lowest since end of the recession.

LPS reports that 4.11 percent of mortgages were in the foreclosure process, down from 4.16% in November, and down slightly from 4.15% in December 2010.

This gives a total of 12.26 percent delinquent or in foreclosure, of the more than 50 million outstanding mortgages. It breaks down as:
• 2.31 million loans less than 90 days delinquent.
• 1.79 million loans 90+ days delinquent.
• 2.07 million loans in foreclosure process.
For a total of 6.17 million loans delinquent or in foreclosure in December.

What will this do for housing prices is the next question? 

Harlan Green © 2012

The National Mortgage Settlement

The Mortgage Corner

The $25B National Mortgage Settlement has finally been signed off by a federal judge, and 5 of the largest banks will begin the process of providing relief to the estimated 9 million present or former homeowners who are either now underwater with their mortgages, or who have already lost their home due to foreclosure.

Who May be Eligible for Assistance

Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief. Borrowers from states who did not sign the settlement will not be eligible for any of the relief directly to homeowners. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.

The settlement provides assistance for:

• Homeowners needing loan modifications now, including first and second lien principal reduction.  The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.

State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.

• Borrowers who are current, but underwater.  Borrowers will be able to refinance at today’s historically low interest rates.  Servicers will have to provide up to $3 billion in refinancing relief nationwide.
• Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process.  $1.5 billion will be distributed nationwide to some 750,000 borrowers.

TIMELINE

• Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.
• Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
• This settlement will be executed over the next three years.

WHERE YOU CAN GO FOR HELP

For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers. Keeping in mind the timeline above, you may contact the banks directly if you need additional information:

• Ally/GMAC: 800-766-4622
• Bank of America: 877-488-7814 (Available M-F  7am - 9pm CT and Saturdays  8am CT - 5pm CT
• Citi: 866-272-4749
• JPMorgan Chase: 866-372-6901
• Wells Fargo: 800-288-3212 (Available M-F 7 a.m. to 7 p.m. CST)

Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement.  You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:

• http://www.fanniemae.com/loanlookup
• http://www.freddiemac.com/mymortgage

These sites will also include links to information about mortgage and foreclosure programs you may be eligible to access.  You may also call 1-888-995-HOPE (4673)

Harlan Green © 2012

The Terrible Cost of Bush II’s Deficit

Popular Economics Weekly

It is now becoming evident just how much damage the GW Bush budget deficit has done to the U.S. In part from the tax cuts of 2001 and 2003, which sharply reduced taxes on income, capital gains, and corporations, two wars, and the Great Recession that began halfway through Bush's second term, the deficit now threatens not only our fiscal soundness, but status as the world's economic powerhouse.

It was VP Cheney who maintained that Reagan had said deficits don't matter, but President Reagan raised taxes 11 times during his tenure to save the budget, and economy, as his Budget Director David Stockman described so well in The Triumph of Politics. In other words, President Reagan didn't dare go as far as Dubya and VP Cheney in creating a deficit that siphoned off revenues to the wealthiest 1 percent and raised corporate profits to the highest in history as a percentage of GDP, while almost causing the disappearance of our middle class and endangering Medicare and social security.

So it shouldn't be a surprise that Republican Paul Ryan's 2013 budget proposal passed by the Republican House follows in GW Bush's footsteps. President Obama assailed it as "...a Trojan horse, disguised as deficit-reduction plans," said the president at an Associated Press luncheon in Washington on April 3. "It is thinly veiled social Darwinism."

Obama was referring to the fact that Ryan's plan doesn't really reduce deficits. Because it calls for $trillions in spending cuts without raising revenues, 62 percent of which would come from low-income programs, just as the Bush II budgets did. And both revenue increases and spending reductions are necessary to pay down the budget deficit. In fact, the new tax cuts at the top would dwarf those for middle-and lower-income families, says The Center for Budget and Policy Priorities, a non-partisan think tank. After-tax incomes would rise by 12.5 percent among millionaires, but just 1.9 percent for middle-income households. It's Bushonomics all over again.

What was most unconscionable about the Bush tax cuts was that they occurred during his first recession -- from March to November 2001, caused mostly by the dot-com bubble bust. In fact, he was starving the government of revenues at the same time that he was planning two wars, as has been revealed in several books by Ron Susskind, including The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neil.

Now we have a yawning federal deficit that continues to grow past $15 Trillion. Bush Treasury Secretary Paul O'Neill, who was fired by VP Cheney for advocating that the four Clinton years of budget surpluses be used to put social security and Medicare on a more secure footing, described the result of the debate that led to such a disastrous decision in The Price of Loyalty. It was return government to its 1900 size, the era of William McKinley and the Robber Barons, by reducing government spending enough "to shrink it down to the size where we can drown it in the bathtub", said Grover Norquist once famously, architect of the no tax increase pledge signed by more than 200 Republican legislators.

So we now know what makes up the current $15 trillion federal debt. Most of the deficit was created by the Bush tax cuts, war spending, and the second Great Recession that occurred under the Bush presidency -- from December 2007 to June 2009-- says the CBPP. It resulted in the most anemic recovery since WWII, with just 5 million jobs created, not even recovering from the 8 million jobs lost since 2000, and the median household income decline from $56,000 in 2000 to $52,000 in 2011 dollars, where it was in 1997, according to the New York Times and Moody's Analytics.

Graph: CBPP

That cost of the Bush II deficit is just now becoming evident, because of its growing size and the fact that budget matters are so arcane and hard to understand by the public and politicos alike. But all of the Bush tax cuts contributed to the deficit, because they weren't paid for. GW Bush wouldn't cut back spending to match the loss in revenues because he wanted to pay for his wars, so he borrowed the monies. Whereas during the Clinton era, legislators had agreed to pay-as-you-go rules, where spending cuts had to match tax cuts.

And the Great Recession has continued to grow the deficit. In fact, if just the Bush tax cuts were extended it would increase that deficit by $4.6 trillion over the next 10 years, says Andrew Fieldhouse and Ethan Pollock of the Economic Policy Institute, a labor think tank. That means we are now facing its terrible cost. Republicans have proven their ideology of starving the beast of government ends up starving the economy of growth, except for the 1 percent who are their supporters.

Harlan Green © 2012

Jobs Key to 2012 Election

Popular Economics Weekly

We know what will win or lose the 2012 Presidential election—jobs. Will enough jobs be created to give Obama a second term? Or, will enough independent voters change horses (to elephants) and become Republicans, because not enough jobs were created? The polls aren’t clear on this. The Pollster Gallup, for one, believes that Obama will be reelected if current job creation trends continue.

For starters, Gallup believes March’s unemployment rate will decline to a seasonally adjusted 8.1 percent. Gallup’s Job Creation Index reported that March’s four-percentage-point increase is the largest one-month jump in the index that Gallup has recorded since instituting the measure in 2008..

Graph: Econoday

The monthly ADP private payroll survey is also just out, which closely tracks the BLS unemployment survey out tomorrow, also shows strength with some 209,000 jobs created in March. And ADP revised February upward from 216,000 to 230,000, so March’s number may be low. Economists’ consensus for the Labor Department’s employment report is that up to 230,000 public and private payroll jobs were created in March, and the unemployment rate will drop from 8.3 to 8.2 percent.

Graph: Econoday

There are still questions whether overall economic growth can top last year, which had bottomed out for the second time in Q1 2011, but has risen steadily since then. For its final estimate, the Commerce Department kept fourth quarter GDP growth at 3.0 percent, matching the second estimate for the overall number.  The latest quarter was stronger than the 1.8 percent rise in the third quarter.

Economists are now saying that we might see slightly higher average growth in 2012—maybe averaging 2.5 percent. Europe, which absorbs some 25 percent of U.S. imports is the main reason for uncertainty. Another worry is domestic wages and salaries, which have been rising approximately 1 percent annually after inflation of late, but isn’t enough for robust growth. Households lost some 6 percent of incomes from 2000-08, so they have a lot to make up.

Graph: Econoday

Personal spending seems to be also increasing along with GDP growth, particularly retail sales. Spending on all items is up 4 percent annually.

Graph: Econoday

Very good news was that both the industrial and service sector economies have been expanding for 27 months. This will also give a boost to GDP growth this year, with its employment index near the post-recession high, another reason to be optimistic about job creation this year.

Harlan Green © 2012

2012 Election—The Propaganda Campaign Begins

Financial FAQs

Now that Mitt Romney seems to have sewed up the Republican delegates needed for his Presidential candidacy, the war for the Hearts and Minds of Americans begins in earnest. And we can trust that the Lee Atwater—Karl Rove propaganda machine that elected Ronald Reagan and the Bushes will be in full swing.

For starters, we heard Wisconsin Republican Paul Ryan congratulate Mitt Romney on his Wisconsin primary win with the assertion that Obama was the divider, not the uniter he had promised to be. And then ‘Mitt’ repeated his assertion that more jobs had been lost during Obama’s tenure that at any time since WWII.

This is classic Rovian tactics. Republicans since Lee Atwater—Rove’s mentor—have always attempted to project their own weaknesses on their opponents—to blame their opponents for their own shortfalls, in other words.

But it is the Republicans who are the classic dividers, of course, in attacking women, immigrant and minority rights with their culture wars. And Bush had the worst job creation record since WWII on his watch—just 5 million jobs created in his 8 years, plus a record deficit and the Great Recession, which caused the loss of a record 8 million jobs. Whereas 3.6 million jobs have been created in just Obama’s first 3+ years.

Graph: BLS

President Obama is already in full campaign attack mode, as he pointed out how extreme is Paul Ryan’s 2013 budget, “an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism”….In fact, “broad-based prosperity has never trickled down from the success of a wealthy few,” he said.

So it strains credibility that Mitt Romney even has an economic platform to stand on. As we have pointed out in past blogs, Republicans have neither had a good growth or employment record for at least the past 30 years. Why? Because they have consistently taken the wrong side of the economic argument. They have always advocated for the ‘rentiers’, owners of wealth, rather than those that produce it as well as create the demand for those products—the employees, 80 percent of which are wage and salary earners. In so doing, Republicans have demonized all who would oppose their most-vested interests; including labor unions, public education, and even publicly-owned assets and activities that they assert are more efficiently run by private entities.

That just isn’t so, of course. Government regulated Medicare has just a 3 percent administrative overhead, whereas private health care providers have a 25 percent overhead, much of it spent on advertising to sell their products. The record of private armies isn’t better, as Blackwater, Kellogg, Brown and Root, mercenaries, et. al., spent $billions in Iraq that have never been accounted for. And privatized prisons are known for overcharging governments, as well as abusing their prisoners.

The worst Republican propaganda has been with federal debt, as they continue to advocate tax cuts, while asserting that Democrats are responsible for the soaring deficits. But this is again Rovian reasoning, as it was Presidents Reagan and GW Bush who created most of the current deficit with their ‘supply-side’ theory that lower taxes created more wealth for everyone. Well, it certainly helped the 1 percent, but has almost bankrupted the federal government, as the historical deficit chart shows.

Graph: Wikipedia

Public debt had come down to 40 percent of Gross Domestic Product by 1970s, and had almost paid off the remaining $1 trillion of WWII debt when Clinton left office in 2000 after 4 years of budget surpluses.

This is while Republicans even today insist in further lowering tax rates. Ryan’s 2013 budget has even upped the ante, with cuts to Medicare and other social programs to pay for the Republican tax cuts that continue to mostly flow to the wealthiest. The Republican recipe for reviving our economy won’t work, in other words.

Harlan Green © 2012

Corporations Plus NRA Equals Greater Lawlessness

Financial FAQs

“Florida’s now-infamous Stand Your Ground law, which lets you shoot someone you consider threatening without facing arrest, let alone prosecution, sounds crazy — and it is,” said New York Times columnist Paul Krugman recently. “And it’s tempting to dismiss this law as the work of ignorant yahoos. But similar laws have been pushed across the nation, not by ignorant yahoos but by big corporations.”

“Specifically, language virtually identical to Florida’s law is featured in a template supplied to legislators in other states by the American Legislative Exchange Council, a corporate-backed organization that has managed to keep a low profile even as it exerts vast influence (only recently, thanks to yeoman work by the Center for Media and Democracy, has a clear picture of ALEC’s activities emerged). And if there is any silver lining to Trayvon Martin’s killing, it is that it might finally place a spotlight on what ALEC is doing to our society — and our democracy.”

And thereby we are beginning to see where the National Rifle Association, backed by some elements of Big Business, is leading this country—into a greater lawlessness, at the very least. For the Stand Your Ground Law enshrines the gangster code—shoot first and ask questions later. Krugman was exposing the links between corporations and the NRA that continues to push for guns to be worn by everyone everywhere, with or without background checks or even licenses.

And this is when the U.S. has the highest rates of gun violence of anywhere in the world. The last time such violence was this high was during the Great Depression, when we had the likes of gangsters like Al Capone, John Dillinger, and Bonnie and Clyde.

“Specifically, language virtually identical to Florida’s law is featured in a template supplied to legislators in other states by the American Legislative Exchange Council,” said Krugman, “a corporate-backed organization that has managed to keep a low profile even as it exerts vast influence (only recently, thanks to yeoman work by the Center for Media and Democracy, has a clear picture of ALEC’s activities emerged). And if there is any silver lining to Trayvon Martin’s killing, it is that it might finally place a spotlight on what ALEC is doing to our society — and our democracy.”

Why the push by the NRA, and Big Business for more guns? The reason most gun advocates and the NRA give, is that it is for the purpose of self-defense in an increasingly violent world. In fact, the NRA asserts it decreases violence. But studies cited in an excellent book, Gun Violence: The Real Costs by Philip J. Cook and Jens Ludwig show that in fact gun use tends to increase gun violence—i.e., there are almost 4 times more fatalities in gun-related robberies than other robberies with knives, clubs, etc.

And another study cited in the Justice Department’s National Crime Victimization Survey (NCVS) on home invasions found that just 3 percent were able to use guns against someone who broke in (or attempted to do so) while they were at home, when 40 percent of households have guns.

So it turns out guns are not very helpful in self-defense. Also overlooked is the fact that criminals are predators, and predators prey on the weakest and most vulnerable, not someone who looks like they can defend themselves. So really, does the agenda of the NRA to abolish all gun controls do more than reinforce the fear factor, the fear that your neighbor may be your assailant?

“But where does the encouragement of vigilante (in)justice fit into this picture?” asks Krugman. “In part it’s the same old story — the long-standing exploitation of public fears, especially those associated with racial tension, to promote a pro-corporate, pro-wealthy agenda. It’s neither an accident nor a surprise that the National Rifle Association and ALEC have been close allies all along.”

Or, has it become a symbol of opposition to government, as an argument for fewer laws, in fact? The real argument isn’t about whether the availability of guns makes us safer, but advocating fewer gun controls is a way of opposing all forms of regulation, which leads us to their real agenda.

What is ALEC? “Despite claims that it’s nonpartisan, it’s very much a movement-conservative organization, funded by the usual suspects: the Kochs, Exxon Mobil, and so on. Unlike other such groups, however, it doesn’t just influence laws, it literally writes them, supplying fully drafted bills to state legislators. In Virginia, for example, more than 50 ALEC-written bills have been introduced, many almost word for word. And these bills often become law.

“What this tells us, in turn, is that ALEC’s claim to stand for limited government and free markets is deeply misleading. To a large extent the organization seeks not limited government but privatized government, in which corporations get their profits from taxpayer dollars, dollars steered their way by friendly politicians. In short, ALEC isn’t so much about promoting free markets as it is about expanding crony capitalism.”

And that is what we had in the Great Depression as well, a greater lawlessness that is part vigilantism, but this time robbing from the public coffers to fill private pockets. President GW Bush called it the ownership society, but it's really the reverse Robin Hood effect. The drive to privatize government services -- such as social security, Medicare, the military, schools, prisons -- is the drive to eliminate public services that serve all, to benefit the few. This is when corporations already make record profits as a share of total income, while the share of household incomes continues to decline. The wealthiest will continue to prey on the poorest, in other words, if their methods are not exposed.

Harlan Green © 2012