Top 10 songs of the month: People Making Money Net

By Lindsay Beyerstein, Media Consortium blogger

Meet the new global elite. They're pretty much the same as the old global elite, only richer and more smug.

Laura Flanders of GritTV interviews business reporter Chrystia Freeland about her cover story in the latest issue of the Atlantic Monthly on the new ruling class. She says that today's ultra-rich are more likely to have earned their fortunes in Silicon Valley or on Wall Street than previous generations of plutocrats, who were more likely to have inherited money or established companies.

As a result, she argues, today's global aristocracy believes itself to be the product of a meritocracy. The old sense of noblesse oblige among the ultra-rich is giving way to the attitude that if the ultra-rich could do it, everyone else should pull themselves up by their bootstraps.

Ironically, Freeland points out that many of the new elite got rich from government bailouts of their failed banks. It's unclear why this counts as earning one's fortune, or what kind of meritocracy reserves its most lavish rewards for its most spectacular failures.

Class warfare on public sector pensions

In The Nation, Eric Alterman assails the Republican-controlled Congress's decision to scrap the popular and effective Build America Bonds program as an act of little-noticed class warfare:

These bonds, which make up roughly 20 percent of all new debt sold by states and local governments because of a federal subsidy equivalent to some 35 percent of interest costs, ended on December 31, as Republicans proved unwilling even to consider renewing them. The death of the program could prove devastating to states' future borrowing.

Alterman notes that the states could face up to $130 billion shortfall next year. States can't deficit spend like the federal government, which made the Build America Bonds program a lifeline to the states.

According to Alterman, Republicans want the states to run out of money so that they will be unable to pay the pensions of public sector workers. He notes that Reps. Devin Nunes (R-CA), Darrell Issa (R-CA) and Paul Ryan (R-WI) are also co-sponsoring a bill to force state and local governments to "recalculate" their pension obligations to public sector workers.

Divide and conquer

Kari Lydersen of Working In These Times explains how conservatives use misleading statistics to pit private sector workers against their brothers and sisters in the public sector. If the public believes that teachers, firefighters, meter readers and snowplow drivers are parasites, they'll feel more comfortable yanking their pensions out from under them.

Hence the misleading statistic that public sector workers earn $11.90 more per hour than "comparable" private sector workers. However, when you take education and work experience into account, employees of state and local governments typically earn 11% to 12% less than private sector workers with comparable qualifications.

Public sector workers have better benefits plans, but only for as long as governments can afford to keep their contractual obligations.

Who's screwing whom?

Former Secretary of Labor Robert Reich is calling for a sense of perspective on public sector wages and benefits. In AlterNet he argues that the people who are really making a killing in this economy are the ultra-rich, not school teachers and garbage collectors:

Public servants are convenient scapegoats. Republicans would rather deflect attention from corporate executive pay that continues to rise as corporate profits soar, even as corporations refuse to hire more workers. They don't want stories about Wall Street bonuses, now higher than before taxpayers bailed out the Street. And they'd like to avoid a spotlight on the billions raked in by hedge-fund and private-equity managers whose income is treated as capital gains and subject to only a 15 percent tax, due to a loophole in the tax laws designed specifically for them.

Signs of hope?

The economic future looks pretty bleak these days. Yes, the unemployment rate dropped to 9.4% from 9.8% in December, but the economy added only 103,000, a far cry from the 300,000 jobs economists say the economy really needs to add to pull the country out its economic doldrums.

Andy Kroll points out in Mother Jones that it will take 20 years to replace the jobs lost in this recession, if current trends continue.

Worse yet, what looks like job growth could actually be chronic unemployment in disguise. The unemployment rate is calculated based on the number of people who are actively looking for work. Kroll worries that the apparent drop in the unemployment rate could simply reflect more people giving up their job searches.

For an counterweight to the doom and gloom, check out Tim Fernholtz's new piece in The American Prospect. He argues that the new unemployment numbers are among several hopeful signs for economic recovery in 2011. However, he stresses that his self-proclaimed rosy forecast is contingent upon avoiding several huge pitfalls, including drastic cuts in public spending.

With the GOP in Congress seemingly determined to starve the states for cash, the future might not be so rosy after all.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Through most of my adult life I’ve always believed that even though the country might be deeply divided about the direction of the county, there was at least one major party or movement sufficiently sane and principled to give us hope things could, with luck and effort, eventually work out. But not now.

Today, a Tea-GOPer group with the oxymoronic name, Republican Study Group, released a list of proposed spending cuts [complete list from Wendydavis]. which can be summed up in a few words: virtually every cut they want to make will make life meaner for everyone but the rich. We’ll have less public health research and care, more pollution, fewer public services, less science, less public art, more hardship for more people and less assistance for the poor, and on and on.

If we were a destitute nation, flat broke with no future for growth, one might accept some of this as regrettable but unavoidable, but we’re none of those. There is literally no rational barrier to spending the money on the things our society needs. The Tea-GOPers, with framing assistance from the President and very foolish Democrats, just want us to behave as though we’re an impoverished nation and so they’re willing to impoverish the nation’s spirit and cripple its governance to prove it. It’s as though a hostile enemy had put the nation under economic siege, and we’d decided to let them win.

If only there were at least one opposition party to call out these medieval nihilists and crackpots. But alas, we’re stuck with a party that foolishly allows itself to be led by an Administration with no respect for its roots, little vision and even less courage. Every day, Team Obama makes up a fresh excuse for not confronting the nation’s needs, or even describing them honestly, while pretending they’ve done everything they can think of that won’t upset the 60th Senator. Why did these people even want the White House?

And we’re told the Administration’s primary message is to endorse the enemy’s view of America’s economic helplessness and the necessity of making things worse for the most vulnerable in our society.

Yet today, the latest polls tell us Mr. Obama’s and Democrats’ approval ratings are up. Is it because despite his other priorities, Congress managed to adopt several clearly liberal policies in December? Or is it that voters are simply more optimistic about the economy even though they still have a dim view of the direction of the country?

I predict this momentary spurt will collapse. The country faces a related set of crises:

– 15 million unemployed, with millions jobless for more than six months; there is no apparent, dependable engine of growth to reverse that soon;

– a huge collapse in aggregate demand coupled with a deleveraging process after homeowners lost trillions when the housing bubble burst; with depressed demand, businesses have little reason to expand;

– a resulting severe mortgage crisis made even more cruel by pervasive fraud on the part of banks and their servicing entities, with negative implications for the housing market, underwater owners, bank insolvency and the integrity of the foreclosure/judicial system;

– massive budget crisis in many states, forcing layoffs and declining public services, including cuts to safety-net programs whose needs mushroomed because of the recession;

– an out of control financial/banking sector that continues to loot consumers and run an unregulated casino with nearly free money from the Feds;

– a mind-numbing denial about the dangers of global climate change, as its consequences literally begin to flood vulnerable parts of the planet;

– debilitating wars that continue to drain the US while destroying or destabilizing countries we presume to be helping;

. . . and on and on.

Now match that list of actual problems against anything we’ve heard from the Obama Administration or the new Tea-GOPer Congress about their priorities. There’s almost zero overlap. There’s no jobs program, no mortgage solution, no state budget rescue, no reining in the financial sector before the MOTU tank the economy again, no end to wars, no restoration of the rule of law. In short, we see nothing even remotely helpful coming from Washington.

Instead, the DC/Third Way’s top agenda is to cut Social Security, as though the problem with America is that our elderly, having seen their home or market savings wiped out, have too much economic security. Then they want to cut federal spending at the same time state and local governments are contracting and consumers are deleveraging, which can only reduce the country’s standard of living further. And to finish the demolition, they want to cripple government’s ability to address any of the actual problems.

Shouldn’t we be protesting in the streets? These people are trashing the place, but there are no grownups in charge, and as far as I can tell, none waiting in the wings, not even a government in exile, if the whole structure crashes again. We look like early Tunisia, only less aware.

John Chandley

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Monday 24 January 2011

People Making Money Net

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