What Healthcare System Do Americans Want?

Popular Economics Weekly

This is a quiz. What country had the second-highest mortality from noncommunicable conditions — like diabetes, heart disease or violence — and the fourth highest from infectious disease? Also, from adolescence to adulthood to old age, what country has the highest chance of dying an early death?

The United States of America—where else, since the U.S. is the only developed country in the world without universal health care? A recent New York Times Business Insider article by Eduardo Porter highlighted a recent study by the Institute of Medicine and the National Research Council of 16 of the richest countries in the world that set out to assess our nation’s health.

The results are devastating, and show how far America has fallen behind in caring for its citizens. And the new Senate version of repeal and replace Obamacare strips even more benefits and money from Obamacare

This problem should have nothing to do with ideology, and whether access to affordable health care should be a privilege or a right. Too many Americans are dying of drug overdose and violence. Too many Americans suffer from depression, a major cause of drug abuse.

And too many Americans are obese, making them less productive and more prone to accidents in the workplace. “The United States ranks in the bottom fourth among the 30 industrialized nations in the Organization for Economic Cooperation and Development in terms of days lost to disability,” says Porter. “Women will lose 362 days between birth and their 60th birthday; men about 336. Mental health problems like depression will account for most.”

Graph: LastTechAge.com

But all of these statistics hide the real problem—rampant income inequality. The U.S. ranks 106^th of the 149 countries in income inequality as ranked by the CIA’s World Factbook; with a Gini inequality index of developing countries like Peru and Cameroon. Finland and the Scandinavian countries are at the top of equality, Germany and France are 12^th and 20^th, respectively. The higher the index, the greater the gap between wealthy and poorer citizens of a country’s population.

And the poorer the person, family, or community, the more prone to illness and drug use is that person, or family, or community. This is where the Senate version of repeal and replace Obamacare hurts the most—in the poorer red states that voted for President Trump.

“What’s more, the United States’ higher tolerance of poverty undoubtedly contributes to higher rates of sickness and death,” says Porter. “Americans at all socioeconomic levels are less healthy than people in some other rich countries. But the disparity is greatest among low-income groups.”

Finally contributing to our health crisis is the incredible amount of violence—both due to guns (33,000 per year killed by guns), workplace accidents, and drug abuse, that a universal health care system could treat via mental health coverages as well.

In other words, there are much higher costs because we don’t have a healthy healthcare system and we the citizens are paying those costs, rather than those that are pushing the $1.1 trillion in tax cuts that Obamacare utilizes to pay for many of those costs.

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

T Piketty and Capital Beyond the 21st Century

Popular Economics Weekly

Thomas Piketty’s Capital in the 21^st Century is about more than proving that excessive income and wealth inequality has been the norm over centuries by so-called free market capitalism, or its social democratic versions in Europe. It’s also about how future generations might share in that wealth, and hence what capitalism must look like in future centuries, if it is to survive.
For it has to be no surprise that capital growth must exceed economic growth, and so earnings, for a country to be able to feed all its citizens. Because the whole system is built upon creating enough excess to invest in order to expand future growth. That is why the capitalist system was created. That excess is called profits; or the amount of capital above and beyond operating expenses, including wages and salaries. And companies need to invest most of their profits in expanding their output, if they hope to survive.
Piketty’s contention is that capital has to be taxed in some way to guarantee a more equal distribution of its benefits for future generations, so as to avoid some of the risks inherent in more unequal wealth distribution—such as Great Recessions, Depressions, or rising levels of crime and social dysfunction as enumerated in Richard Wilkinson and Katie Pickett’s The Spirit Level.
There are several forms this can take. Nobel economist Robert Shiller has proposed inequality insurance as an answer to the propensity of capitalist systems to accumulate its wealth in fewer hands. This is insurance that governments could set up to redistribute the excess wealth being created under capitalism.

“Inequality insurance would require governments to establish very long-term plans to make income-tax rates automatically higher for high-income people in the future if inequality worsens significantly, with no change in taxes otherwise,” says Dr. Shiller, as an example. “I called it inequality insurance because, like any insurance policy, it addresses risks beforehand. Just as one must buy fire insurance before, not after, one’s house burns down, we have to deal with the risk of inequality before it becomes much worse and creates a powerful new class of entitled rich people who use their power to consolidate their gains.”

The “entitled rich people” have already begun to counterattack Piketty’s research data that he has posted online. They mainly contest his assertion that income and wealth inequality is built into the current capitalist systems. Chris Giles, Economics Editor of the Financial Times, even asserts that in Europe there hasn’t been any inequality, historically. Even though he doesn’t challenge Piketty’s main thesis, that historical returns on capital have outpaced the growth in wage and salary, and even overall economic and population growth.
Conservatives have to be looking out of another window, if they are trying to refute his data, though Giles doesn’t challenge Piketty’s conclusion for the US economy. It has the highest level of inequality of all developed countries per the CIA’s World Factbook, higher even than many developing countries.
For instance, we know that US corporate CEOs’ average CEO-to-worker pay ratio in 2012 was about 350 to 1. In 1960, the average chief executive earned 40 times as much as the average worker. By 1990, the average CEO earned 107 times as much. In the following decade, this ratio rose to 525:1 before settling back to 301:1 in 2003, after the 1991 recession.
That’s in part because average household incomes have been stagnant since 1980 after inflation, whereas the top 1 percent’s earnings have skyrocketed—garnering some 96 percent of total US national income generated since the end of the Great Recession.
British economist Andrew Smithers observes in his new book, "The Road to Recovery," one of the reasons. Stock-related bonuses for executives encourage them to make decisions that boost their share prices in the short term, rather than in the long term. The result is that they spend corporate capital less on long-term investments, which will set their companies up for future profit, and more on shoveling dividends to investors, which props up their shares quarter by quarter.
And that is the very antithesis of what the capitalist system was created to do. Otherwise it is just benefiting the few vs. the many, as we said. For instance, Smithers observed American companies devoted 15 times as much capital to investments as they disbursed to shareholders, until the 1990s. Today the ratio is less than 2 to 1. And we know the top 25 hedge fund managers earned some $24.3 billion in 2013, according to Forbes Magazine.
So will the capitalist systems we know today survive? And if so, in what form, or is there a better, more equitable, economic system we cannot yet see?

Harlan Green © 2014

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Do We Have Two Countries?”

Popular Economics Weekly

 

Former CIA assistant director Mike Morell lamented on a recent CBS 60 Minutes that he didn’t understand why congressional Democrats and Republicans couldn’t work together to boost economic growth for “the good of the country” when our weak economy was the greatest problem facing US, above even terrorist threats.

“I don’t understand the inability of our government to make decisions that push our economy and society forward,” he said. “Our national security is more dependent on the strength of the economy and society than anything else.”

The real answer is that we are living in two countries at the moment, mainly divided into anti-government Republican Red states and pro-government Democratic Blue states. And the Red states are suffering, with the lowest per capita incomes, education levels, and everything else that modern economies need to thrive.

To be sure it’s about politics and Republican ideological intransigence. But in the Old South it’s also about fighting the last Civil War—which means preserving racism. They are getting their wish to secede from the union, but it’s economically rather than politically.

This is while those states depend on government most for their social safety needs, whether it is farm subsidies or food stamps and Medicare for their poorest populations. More government monies flow into their states than flow back to the federal government, in other words.

This is a little-known fact that puzzles economists. Why are the states most dependent on government aid most opposed to it, particularly to Obamacare and the expansion of Medicare?

“A South Carolina legislator put it bluntly earlier this year,” in a recent Huffington Post column. “State Rep. Kris Crawford told a business journal that he supports expansion, but said electoral math is the trump card. "It is good politics to oppose the black guy in the White House right now, especially for the Republican Party," he said.”

Most of the Red states also adamantly oppose the expansion of voters’ rights, union collective bargaining, better healthcare, immigrants’ rights, environmental regulation, abortion and women’s rights, as if they want to turn the clock back to the last century.

Government gridlock not only endangers our security, but the resultant inequality—greatest in the Red states—endangers our democratic system itself, needless to say. The CIA should know, as it has kept track of the economic well-being of nations in its World Factbook, with the U.S. now ranked below other developed countries in income equality, birth-death rates, longevity, and health outcomes.

The problem today is the huge amount of damage gridlock is doing to economic growth, from downgrades of government debt by Standard & Poor’s rating agency to reluctant consumer spending. Even Moody’s has put U.S. debt on credit watch. The Red and Blue states seem to still be fighting the Civil War all over again after 150 years, as I’ve said in past columns.

So the question is, government and the Congress should work for the good of whose country? Tea Partiers and southern politicians in particular want to take back “their” country. If that is their sentiment, we will have two countries living one century apart.

Harlan Green © 2013

Follow Harlan Green on Twitter: www.twitter.com/HarlanGreen

Why Isn’t Washington Working “For the good of the Country?”

Popular Economics Weekly

If we really want to know what is depressing consumers, look at how Congress is tied up in knots over the debt ceiling and spending losses from sequestration cuts--$109 billion per year, according to labor economist Jared Bernstein.

Former CIA assistant director Mike Morell on CBS’s 60 Minutes said he didn’t understand why congressional Democrats and Republicans couldn’t work together to boost economic growth for “the good of the country” when our weak economy was the greatest problem facing US, above even terrorist threats.

“I don’t understand the inability of our government to make decisions that push our economy and society forward,” he said. “Our national security is more dependent on the strength of the economy and society than anything else.”

But for “the good of whose country” are we talking about? We seem to be living in two countries at the moment, mainly divided into anti-government Republican Red states and pro-government Democratic Blue states. Most of the Red states adamantly oppose the expansion of voters’ rights, union collective bargaining, better healthcare, immigrants’ rights, environmental regulation, abortion and women’s rights, for starters.

Government gridlock not only endangers our security, but the resultant inequality endangers our democratic system itself. The CIA should know, as it has kept track of the economic well-being of nations in its World Factbook. The U.S. now ranks below other developed countries in income equality, birth-death rates, longevity, and health outcomes.

The problem today is the huge amount of damage gridlock is doing to economic growth, from downgrades of government debt by Standard & Poor’s rating agency, to higher borrowing rates. Even Moody’s has put U.S. debt on credit watch. The Red and Blue states seem to be fighting the Civil War all over again, after 150 years, as I’ve said.

Graph: Reuters

The latest evidence of the damage being done is orders for a wide range of U.S.-made capital goods plummeted in September and consumer sentiment weakened sharply in October, signs that the budget battle in Washington has held back the economy, said Thomson-Reuters. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 73.2in October from 77.5 in September and was the lowest final reading since December 2012.

Then we have the latest unemployment report that showed more workers dropping out of the labor force, while the Labor Department’s JOLTS report of labor layoffs and hires remained stagnant over the past year.

Graph: Econoday

There were 3.883 million job openings on the last business day of August, up from July at a revised 3.808 million. The job openings rate improved slightly to 2.8 percent from 2.7 percent in July. But it has leveled off after increasing steadily since the end of the Great Recession.

So the question is, government should work for the “good of whose country”? Tea Partiers want to take back “their” country, a country that no longer exists. If that is their sentiment, how do we push our country and society forward?

Harlan Green © 2013

Follow Harlan Green on Twitter: www.twitter.com/HarlanGreen

The Hunger Games Are Coming…

Financial FAQs

Was the Sandy Hook Elementary School massacre the sign of an apocalyptic future? Or the Aurora Theatre shootings by a cold-blooded killer?

The Hunger Games is a riveting portrayal of how the young see the modern world, where a privileged elite has a “Stalin-like” control over who lives in plenty or poverty in a post-apocalyptic North America. Author Susan Collins has said it "tackles issues like severe poverty, starvation, oppression, and the effects of war among others."

And the young just coming of age are not far from the truth. A vision of decline and limited opportunity fills the daily news. Declining resources and global warming could cause future wars, says the Pentagon. America has become a war zone with school children no longer safe and more than 10,000 gun-related deaths per year. Even Social Security and Medicare may not be available for future generations, say its Trustees.

In fact, a record number of Americans are already living below the poverty line, while University of California economist Emmanuel Saez found the top 1 percent of households garnered 65 percent of the nation’s income growth from 2002-07, the beginning of the recession.

And that is the problem. The U.S. doesn’t suffer from a scarcity of needed resources, or the means to finance adequate social services. It has been suffering from a redistribution of the wealth upward over the past 30 years that is no longer available to finance those means.

While overall household incomes (and consequent economic growth) have been steadily declining, the wealth of the top income brackets has been as steadily increasing. And the result is what the young see—a vision of scarcity in the real world that isn’t real. Modern industry has conquered the means of production. Rather, such scarcity results from a conscious policy by a politically powerful minority that demands more benefits for them while cutting benefits for all Americans.

The result is wages, money that flowed to employees of firms, fell to a record low of 43.5 percent of GDP, while corporate profits are the highest on record. It is a level of inequality and redistribution of resources matched by a few of the poorest countries in the world. The U.S. level of inequality has been ranked just above some of Africa and Asia’s poorest countries by the CIA’s World Fact Book.

Ms. Collins has said her stories were inspired in part by TV reality games, with their fight for survival, as well as the Iraq War, a war over the control of resources. But the popularity of The Hunger Games, or Survivor and all the TV reality shows is a testimony to the present reality for millions of Americans. One reason this young adult fiction remained 100 weeks on the New York Times’ best seller list was that it does mirror the modern reality for many, where starvation and the fight for survival still exists.

That is certainly true in the developing world, but shouldn’t be true in the United States of America. The adults have badly made a hash of the modern world, says The Hunger Games. They have created poverty in the land of plenty, and so are not to be trusted.

The adults lied about the Iraq War, when they covered up the knowledge that there were no weapons of mass destruction. Adults also lied about the benefits of tax cuts for the wealthy. It made everyone else poorer. Their policies created 5 successive recessions since 1980. The Great Recession happened because adults ignored or broke existing laws and regulations in order to enrich themselves. The adults have made a hash of governing because they strove to break down the government’s power to govern.

The Hunger Games is a cry that adults can no longer rule their world wisely. So beware, adults. The young are watching you.

Harlan Green © 2012

Follow Harlan Green on Twitter: www.twitter.com/HarlanGreen

Gun Violence Has Too Many Causes

Popular Economics Weekly

The tragic Newtown, Connecticut elementary school mass shooting is just the latest in a string of mass shootings that have contributed to more than 1 million dead by guns over the past 3 decades in the U.S.—an average of almost 32,000 per year.
This is when no other country in the developed world has had more than 400 documented gun killings in a year, outside of wartime. The problem in understanding the causes of such mass shootings may be that much gun violence has many causes that make it difficult if not impossible to understand in isolation.
But not if we look at the culture of violence that has made U.S. the most violent nation on earth. In fact, gun violence, as violence in general, has too many causes. Studies bear out that record income inequality, a poor social safety net and lax, almost nonexistent gun control laws all contribute to the U.S. record as the most gun violent culture in the world.
The Trayvon Martin killing illustrated this culture with the Stand Your Ground Laws being enacted in several states. 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.
As Paul Krugman said in a March New York Times Op-ed after the Trayvon Martin killing:

“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.”

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.
Why the push by the NRA, and Big Business for more guns, as I said back in April? The reason most gun advocates and the NRA give, is that it is for the purpose of self-defense in an increasingly violent world. The NRA even 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 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 a 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 those who look 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.”

The culture of violence is not a pretty picture in our crowded cities in particular. Philadelphia averaged more than 30 gun-related deaths per month in 2011, when Europe as a whole had less than 300 per year. The last time U.S. gun violence was this high was during the Great Depression, when we had gangsters like Al Capone, John Dillinger, and Bonnie and Clyde.
English Sociologist Richard Wilkinson has brought this out in books and lectures, especially his TEDx lecture on the roots of violence and crime, in which he charts that countries with the most inequality in wealth are also the most violent countries. And surprise, the U.S. is now one of the most unequal countries—in terms of wealth and opportunities for wealth—in the world, as has been brought out by the CIA World Factbook. It is ranked 94th of the 136 countries ranked by the CIA for income inequality, next to Camaroon, Zimbabwe, which are some of Africa’s poorest countries.
There are many who will say that the deeds of a psychopath cannot be prevented. But is that the point when it is so ridiculously easy for an individual to purchase an arsenal without an alarm being set off? Why would anyone such as the Aurora, Colo. shooter need 6,000 rounds, for instance, said the New York Times?

“With a few keystrokes, the suspect, James E. Holmes, ordered 3,000 rounds of handgun ammunition, 3,000 rounds for an assault rifle and 350 shells for a 12-gauge shotgun — an amount of firepower that costs roughly $3,000 at the online sites — in the four months before the shooting, according to the police. It was pretty much as easy as ordering a book from Amazon.”

Do we need another reason to require reporting such weapon sales, other than for war?

Harlan Green © 2012

Two Percent Growth Isn’t ‘New’ Normal

Popular Economics Weekly

There are many ways to look at the “weak” 2 percent growth numbers for Q3, though just the ‘Advance Estimate’ and so subject to at least 2 more revisions. But such weak growth isn’t due to excessive government regulations (since deregulation has not created greater overall growth, only more recessions). The record low interest rates mean that banks and corporations have too much money to spend, but no place to invest it, since consumers aren’t spending as they used to.

Weak growth over the past decade in particular can mainly be traced to the fall in household incomes, and what consumers can really afford. If their incomes were growing as in 2000 before the Bush tax cuts and wars, for instance, then we would already be back to 1990s levels of economic growth—when 4 to 6 percent annual growth rates were more normal—before the last 2 recessions (gray bars) as the graph shows.

Graph: Calculated Risk

And where has the lost household income flowed, since corporations have the highest profits in history as a percentage of GDP? It has been paid to the investor class and corporate CEOs, in the form of increased dividends, capital gains and stock options, or is part of the $2 trillion cash hoard held by corporations.

Graph: CBPP

For it is the tremendous shift of wealth that has stunted growth since 2000 and caused the Great Recession. Incomes of the wealthiest have soared, mainly because of 2001 and 2003 tax cuts that lowered investment tax rates for the wealthiest and drastically cut tax revenues, while incomes of 99 percent barely grew. This diminished purchasing power of consumers has accounted for most of the $6 trillion in lost output that resulted from the 18-month Great Recession (12/2007 – 6/2009).

It is an example of the failure of small government policies that instead of creating more prosperity for all, diverted it to the wealthiest. And the resulting record income inequality has damaged economic growth say more and more studies, such as a recent IMF study by Andrew Berg and Jonathan D. Ostry that suggests income inequality might shorten our economic expansion by one-third in jobs lost and goods products.

“…a careful look at the varying levels of inequality in different countries demonstrates just how much societal divides in wealth really matter. Countries with high inequality are far more likely to fall into financial crisis and far less likely to sustain economic growth,” said the authors in a Foreign Affairs article.

The U.S. has fallen to the lowest ranking on income inequality. The CIA World Fact Book ranks the U.S. 94^th in income equality below all developed countries, Iran, and Russia. In fact, the U.S. is just above Jamaica and the poorest African countries. Wealth—both income and assets—has become concentrated among fewer and fewer Americans, in other words.

In spite of consumers’ massive loss of income, the University of Michigan reports confidence is being restored—though nothing like the 1990s readings of 100 plus. Hence the belief that consumers are becoming resigned to a ‘new’ lower growth normal. The 88.1 reading for current conditions is up a noticeable 2.4 points from September to hint at general growth for October's slate of economic data. The expectations index is up a sizable 5.5 points from September which hints at confidence in income prospects and is a positive for the holiday shopping outlook.

Graph: DShort

But this new normal for lower growth is nothing like the 1990s, as we’ve said, and as the graph makes clear. Contrary to Mitt Romney’s assertion that governments don’t create jobs, we can now see the effects of FEMA’s disaster relief efforts after Tropical Storm Sandy. Governments spend most revenues in the private sector—whether for defense, education, environmental protection, infrastructure or research.

So we do not have to accept slower growth, if we recognize and right the record inequality that has caused our market economy to repeatedly crash. As Nobel Economist Joseph Stiglitz was quoted in a recent review of his latest book, The Price of Inequality, “Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset — its people — is not being fully used. Many at the bottom, or even in the middle, are not living up to their potential, because the rich, needing few public services and worried that a strong government might redistribute income, use their political influence to cut taxes and curtail government spending. This leads to underinvestment in infrastructure, education and technology, impeding the engines of growth… “

Harlan Green © 2012

Gun Violence Has Too Many Causes

Popular Economics Weekly

The shooting in Aurora’s Central Theatres is not something “impossible to understand” as was said by Denver’s Mayor just after the massacre, if we look at the culture of violence that has made U.S. the most violent nation on earth. In fact, gun violence, as violence in general, has too many causes. Studies bear out that record income inequality, a poor social safety net and lax, almost nonexistent gun control laws all contribute to the U.S. record as the most gun violent culture in the world.

The Trayvon Martin killing illustrated this culture with the Stand Your Ground Laws being enacted in several states. 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.

As Paul Krugman said in a March New York Times Op-ed after the Trayvon Martin killing:

“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.”

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.

Why the push by the NRA, and Big Business for more guns, as I said back in April? The reason most gun advocates and the NRA give, is that it is for the purpose of self-defense in an increasingly violent world. The NRA even 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 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 a 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 those who look 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.”

The culture of violence is not a pretty picture in our crowded cities in particular. Philadelphia averaged more than 30 gun-related deaths per month in 2011, when Europe as a whole had less than 300 per year. The last time U.S. gun violence was this high was during the Great Depression, when we had gangsters like Al Capone, John Dillinger, and Bonnie and Clyde.

English Sociologist Richard Wilkinson has brought this out in books and lectures, especially his TEDx lecture on the roots of violence and crime, in which he charts that countries with the most inequality in wealth are also the most violent countries. And surprise, the U.S. is now one of the most unequal countries—in terms of wealth and opportunities for wealth—in the world, as has been brought out by the CIA World Factbook. It is ranked 94th of the 136 countries ranked by the for income inequality, close to Camaroon, Zimbabwe, some of Africa’s poorest countries.

There are many who will say that the deeds of a psychopath cannot be prevented. But is that the point when it is so ridiculously easy for an individual to purchase an arsenal without an alarm being set off? Why would anyone need 6,000 rounds, for instance, said the New York Times?

“With a few keystrokes, the suspect, James E. Holmes, ordered 3,000 rounds of handgun ammunition, 3,000 rounds for an assault rifle and 350 shells for a 12-gauge shotgun — an amount of firepower that costs roughly $3,000 at the online sites — in the four months before the shooting, according to the police. It was pretty much as easy as ordering a book from Amazon.”

Do we need another reason to demand laws that require the reporting of such weapon sales?

Harlan Green © 2012

Who is Elizabeth Warren?

Financial FAQs

Now that Elizabeth Warren, Harvard Law Professor (Contracts) and creator of the barely born Bureau of Consumer Financial Protection, is running for Ted Kennedy’s former Senate seat, she should receive the attention she deserves. Professor Warren is perhaps the most eloquent spokesperson for rebalancing 30 years of policies that tilted income and wealth from the middle class to the investor class (i.e, to producers/investors, rather than consumers) of our economy.

A recent New York Times’ editorial said it best: “Ms. Warren talks about the nation’s growing income inequality in a way that channels the force of the Occupy Wall Street movement but makes it palatable and understandable to a far wider swath of voters. She is provocative and assertive in her critique of corporate power and the well-paid lobbyists who protect it in Washington, and eloquent in her defense of an eroding middle class.”

But really, even the New York Times misses the point. Not only has income inequality destabilized our financial system, but the economy as a whole. Don’t take my word for it. Clinton Labor Secretary Robert Reich, and many others have pointed out the results of too much inequality that puts us near the bottom of developed countries. We are 97^th of the 136 countries ranked—next to Cameroon and a handful of other African countries, according to the CIA Factbook.

The more frequent financial destabilizations of late are but a symptom, while the redistribution of wealth itself is the core illness that has in fact directly lowered economic growth by reducing overall aggregate demand—which is the willingness of consumers, investors and government to spend or invest.

In other words, the supply-side theories implemented by Milton Friedman, Ronald Reagan, et. al., have taken away the wealth of those who create most demand—middle class wage and salary earners. Their incomes have become stagnant, and may result in a permanent underclass, if Elizabeth Warren doesn’t have her way.

The remedies are available. Bring back a more progressive tax structure that existed even as recently as the Clinton era. And re-regulate the banking and shadow banking systems as mandated by Dodd-Frank—specifically implement the so-called Volcker Rule that won’t allow banks to trade for their own profit—as well as other measures that reduce the size of the too-big-to-fail financial sector. The bloated financial sector was the real cause of the Great Recession, and reducing it will return resources and capital taken away from the productive sectors of our economy.

Professor Warren fought this battle when creating the Consumer Financial Protection Bureau, which is within the U.S. Treasury. Her message was simple in creating the Bureau: the consumer “market” for financial products does not operate like a proper market because leading firms (bigger banks and also nonbanks, like some payday lenders) have figured out how to make a great deal of money by confusing their customers.

“If someone attempted to sell boxed cereal in the same fashion that many financial products are now sold, that person would be drummed out of the cereal business.  The norms of that sector (and many other nonfinancial sectors in the United States) would not stand for this degree of deception and malpractice”, said one critic of the successful Republican campaign against her nomination as first Bureau Director.

Transparency is an issue with all financial markets, not just mortgage and payday loans, of course. The multi-trillion dollar derivatives’ business is controlled by a self-appointed consortium of the major banks. And they have resisted providing a record of their transactions to a central clearing house, a provision of the Dodd-Frank bill that is still being developed.

So let us listen to Elizabeth Warren for Massachusetts Senator in her campaign to reoccupy Ted Kennedy’s Senate seat. The principles she espouses to restore the middle class will actually restore economic growth for all of us, if carried out.

Harlan Green © 2011