Saturday, September 15. 2012
There's a very succinct description of how private equity works in Matt Taibbi's Greed and Debt: The True Story of Mitt Romney and Bain Capital:
Under the debt load, with new management planted by Bain who knew nothing about the toy business but knew enough to rubber stamp Bain's dividend, KB went bankrupt. That may have been disappointing to Bain -- the longer KB survived, the more its owners could bleed it -- but Bain's investors and owners had already made a handsome return on the deal. And deals are what private equity is all about, one deal after another, each one a windfall. Back during the S&L crisis someone pointed out that the best way to rob a bank was to own one. Turns out that's true for any business.
But it used to happen less frequently. Several reasons come to mind, the most obvious being that business owners have fewer scruples now than they used to. The most corrosive idea behind this shift is the notion that the sole responsibility of business owners is to maximize profits, especially given that we can only truly measure profits in the short-term. This has always been a latent idea among business owners and (especially) financiers, but for most of our history has been limited both by law and by custom.
For instance, family-owned companies have good reason to take a longer-term view of a business that will be handed down through the generations. Even the case of a broadly held corporation is likely to have a mix of short- and long-term-oriented investors, and need to balance those interests off. On the other hand, when a company is taken over through a LBO, the ownership is narrowed drastically, and the debt overhang all but forces the owners to focus on the short-term.
Other trends add in. When owners live in the same locale as the plant, they are less likely to harm the community. Replace them with outside owners and those scruples go away. When owners are expert in their industry, they are more likely to strike a balance between short- and long-term needs, because they see their whole careers developing within a single industry which has few options should they blow up. Replace them with finance people and those considerations vanish: to a financier, all companies look the same, and there are always more companies around the corner. (Financiers, after all, don't build companies; they buy them -- and usually with other people's money.)
A unionized work force also limits the management's options, so the loss of union protection has made it easier for companies to be looted and plundered. Then there is the law: most of us still believe that business owners are still subject to law, that they are prohibited from criminal activity (significantly including fraud), but the overall trend had been toward less regulation, toward less effective enforcement, and toward less exposure to torts: the result is that business owners need have fewer scruples about their compliance with the law. (Possibly the best example of this was the Citibank-Travelers merger, at the time blatantly illegal, but rather than prosecuting the Clinton administration arranged to change the law, making the merger retrospectively legal.)
The result of all these trends is that we are now plagued by a new breed of businessman: one that's only in it for the money, and willing to take the money from anywhere it's available, using any methods he can get away with. The particular scheme that Romney practiced at Bain is especially odious because even in cases where the extra debt and looting don't kill the business, everyone related to the business (workers, customers, neighbors) except for the owners is much poorer as a result, while only a handful of already rich investors get richer. But they're just the worst of the worst. The whole financial sector has more than doubled in the last thirty years as the business of business has shifted from making products and providing services to making deals with huge payouts to the dealmakers, those profits to be squeezed out of everyone else.
Thursday, January 5. 2012
Boeing announced that they're closing what's left of their Wichita plant. That means laying off 2,160 workers, and not fulfilling any of the promises they've made to Kansas politicos over the last decade while pursuing the great $35 billion tanker scam. The Boeing plant dates back to 1927 when it was Stearman Aviation. The plant greatly expanded during World War II, mostly at government expense, when employment swelled to over 50,000 and Wichita built the B-29s that won the war against Japan, and into the 1950s the B-47s and B-52s that pounded Korea and Vietnam (and still occasionally fly over Afghanistan).
My father worked at Boeing for 38 years, and my brother worked there for 23 years. In my father's day Boeing had several large plants in Washington plus the one in Wichita: all were unionized and the IAMAW negotiated nationwide, so Boeing's workers caught a break in Wichita. Nowadays it seems like they have hundreds of plants. The company isn't much good at building aircraft any more, but they do big business in auctioning off plants to cities and states eager to pay to have their citizens exploited. In 2005, Boeing spun several properties, including most of their Wichita plant, off in a private equity deal to create Spirit Aerosystems, reducing their Kansas employment from 15,000 to 4,500, and they cut more than half of that in the six years since.
It's not that Wichita and Kansas haven't been willing to cut Boeing hundreds of millions of dollars in loans and abatements and other favors, nor that the local politicians ever hesitated to ply their influence for Boeing's benefit -- the tanker scam is only the grossest example. It may be the unions: before Boeing carved up their plant in 2005 SPEEA had organized the office workers, giving the Wichita plant (in right-to-work KS) the highest percentage union representation of any Boeing plant. That's no longer true, but Boeing still claims it costs 70% more to do work in Wichita than in San Antonio, where they have a non-union workforce in a fresh government-built plant. Wichita workers aren't used to thinking of themselves as overpaid, but Boeing has no scruples when it comes to screwing over their workers.
I skipped over the ones searching for reaction from Kansas politicians. About all they had to say was that they were sad or sorry. In the 1940s the government built McConnell Air Force Base across Oliver Street from the plant they built for Boeing. The two have always had a symbiotic relationship. The reason the Air Force still flies 1950s-vintage aircraft like B-52s and KC-135s is that they've been periodically flown into McConnell and rebuilt by Boeing -- in fact, the KC-135 tankers are based here, even though they're mostly used to support fighters in Asia. Take Boeing away and there's no need for McConnell.
For some reason no one noticed how vulnerable McConnell would be once the KC-135s were replaced. Now if those same politicians are finally moved to salvage some jobs here, they'll do whatever they can to kill the new tankers. They never were a good idea, but now for Kansas at least the jobs excuse works against them.
I sent the following squib to the Eagle's Opinion Line:
The Eagle is asking for stories telling them "what impact has Boeing had on you and your family over the decades?" They provided a living for my father, although it's also likely that the leukemia that killed him was rooted in the chemical he was exposed to there. They turned into a nightmare for my brother, firing him for being too pro-union and for being a medical insurance liability. By then they liked to brag that "this isn't your father's Boeing." Indeed, they're not. They haven't just tracked the moral rot of the nation; they've repeatedly been the cutting edge.
UPDATE: One more Boeing article: Boeing misses deliveries target; Airbus beats goal. This just reinforces my argument above that in redirecting its business to maximizing its political clout and using that to extort income and financing from government and profits from workers, Boeing has lost its fundamental competency at building airplanes. It used to be that Boeing would build entire planes in one factory, with a great deal of vertical integration. If the advantages of doing so aren't obvious, look at the accompanying picture, which shows a 787 fuselage being loaded into an even larger airplane to be flown to the final assembly plant. As Boeing added more properties (to gain more political angles), and started to do more subcontracting (mostly to screw their workers, although wide supplier networks also helped build political clout), the manufacturing process became vastly more complex, while Boeing's quality control has declined. You see all this in the 787 program, which is about five years (and counting) behind schedule.
The contrast to Airbus should be instructive. You'd think that Airbus, with its government bureaucratic control forcing work to be spread over multiple countries, and its unions not only pushing labor costs up but effectively co-managing the company, should be much less efficient than Boeing, but at least Airbus can concentrate on actually building planes. And while Boeing is constantly whining about how urgently they have to cut labor costs to remain competitive, Airbus not only pays higher wages, they do so in Euros which are much more expensive than dollars. But in the end the ability to deliver planes makes all the difference.
Tuesday, November 29. 2011
Tony Capaccio: Overrun Forecast in Boeing Tanker Work: Well, that didn't take long. The overrun is $500 million over the first $4.8 billion chunk of $7.1 billion in "development funds" -- the first actual aircraft, based on Boeing's now-obsolete 767 airframe, aren't scheduled for delivery until 2015. Moreover, the widely touted $35 billion program is now described as "planned as a 179-aircraft, $51.7 billion program that includes research, production, and aircraft support." Unlike the golden age of cost-plus-10% Air Force contracts, Boeing's on the hook for the overruns -- which is good news, unless you work there, in which case it just becomes more fuel for Boeing's psychotic efforts to squeeze its workforce, and to scam all of the political jurisdictions that think Boeing is doing them a favor by exploiting their labor. We've already seen the first of that with Boeing's threat to close its Wichita facility -- i.e., the one plant Boeing has that has almost all of the company's experience maintaining the Air Force's KC-135 tanker fleet. Still, despite all its attention to cost, delays and overruns have plagued Boeing's management for decades now. They've become so adept as scamming the system they've forgotten what got them into the game in the first place: the skills to build airplanes.
In another sense, the cost overruns are Boeing's fault: it was widely felt that they deliberately underbid the tanker contract to counter EADS. They had lost the previous competitive bid in large part because their numbers were way out of line, and only got the contract rebid through their lobbying clout. I wouldn't be surprised to find they found the right numbers through their revolving door contacts: they've had one VP go to jail for trying to fix the deal, and it would be surprising if the graft ended with her.
I keep returning to the Boeing tanker story because it seems so central to what is sick with America today. The tankers themselves are the platform upon which the American military empire is built: you can't project power to the far corners of the globe unless you can find a gas station when you get there. Any time some fool calls for a "no flight" zone, they're not only calling for the fighters and bombers to shoot down contraband flights, they're calling for the tankers to keep those fighters and bombers in the air over their targets. Making a $51.7 billion investment in new tankers shows us that the imperial command has no plans to back down from America's commitment to bully the world. On the other hand, if you do accept the need for the US to roll back its armed forces, the first place to cut funding is this $51.7 billion -- plus the untold billions it will cost to maintain and fly those planes if and when they ever get built.
On the other hand, stopping the new tanker program leaves the old one in place, and that KC-135 fleet has gotten the US to where it is today. Indeed, there's no reason why those planes can't stay in service for many more decades. They've been repeatedly rebuilt, periodically refitted with new wings and/or engines. They fly in spaces where they don't need to worry about being shot down. The main people who have emerged as opponents of Boeing's tanker scam have either been anti-graft imperialists like Sen. John McCain, or pro-graft ones like Sen. Richard Shelby who want more of the booty for themselves. So while opposing new tankers is one step, opposing the old ones is another. The main reason to shut down the old ones is to make it harder for the US to get involved in foreign wars -- most obviously the air-focused ones like Kosovo and Libya, although the ability to maintain the "no fly" zones in Iraq was what kept war with Iraq on the burner, making the 2003-11 war virtually inevitable.
But then there are a whole other set of reasons for opposing the new tanker program: those rooted in the management culture of Boeing, their vast political lobbying network, their revolving doors in and out of the Pentagon. For a while Boeing could market itself as a national treasure as America's number one manufacturing exporter. They may still be, but they've turned into a national disgrace. They've become poster boys for the collapse of business ethics that plagues the entire country. It used to make sense for the public to support corporations that in turn made useful things that built up the public's standard of living. That they made a profit in the process was tolerated, in large part because it was taxed -- another way corporations gave back to the society, and to the nationhood, that supported them. Now, however, they've become rackets, predators, out to suck as much profit as possible any way they can get away with it. Nor are they merely part of a bad trend: Boeing is an innovator here, a model for other companies to follow. This isn't so much because anyone at Boeing was all that clever. It's more because ever since WWII Boeing has been nursed by the Defense Department, a training that they wound up taking as their entitlement. Moreover, they built their commercial business the same way, through one crooked, cross-financed deal after another. Most notoriously, to sell planes in China, they agreed to build some of them there, and they went further and lent out their lobbying subsidiary to promote China's "most favored nation" trading status. (If you factor in the subsequent trade loss to China, Boeing no longer looks like much of an exporter.)
Some of this may be inevitable in the airframe business. Europe wound up nationalizing its various aircraft companies, consolidating them into Airbus. Airbus has two advantages over Boeing. One is that they can draw on public funds for development expenses -- actually, not that big of an advantage given how Boeing has been able to scam the US military and so many states and cities across the country for just that purpose. The other is that while Airbus has to break even to stay in business, it does so for the sake of the industry, its workers, and the nations that own it. It isn't compelled to strip and scavenge the way Boeing does. Those actually seem like good reasons to nationalize Boeing: run it as a unionized non-profit, allow it to borrow cheap through the Fed (even to finance sales, given sane regulation), cap the executive salaries and get rid of the crooks.
If I had much more time and patience than I do, I'd start a website dedicated to squashing the tanker program and smashing Boeing; maybe nomoretankers.org. It would be one way to start a reevaluation of what companies are good for in America, and a realization of what they are no good for. And armed forces, too. The tanker deal is a "teachable moment" -- and Boeing is an object lesson.
Sunday, November 27. 2011
Crowson's editorial cartoon in the Wichita Eagle today, on Boeing's tanker scam bait-and-switch. In their big PR push to dislodge EADS's winning bid and rejigger the $35 billion contract in their favor, the PR flacks at Boeing had upped their usual 1,000 job promise to 7,500 -- counting all sorts of multiplier effects, something Republicans never believe in unless they hear it from a defense contractor. Now that the deal is done Boeing's decided maybe they don't need Wichita after all -- although there's always the suspicion that they may just be angling for yet another bribe, something they've repeatedly done in the past.
Molly McMillin has another article on Boeing in the paper today: Analysts: Loss of Boeing Would Hurt City, Region. Not much new there. One thing the analysts didn't factor in was the extent to which Boeing's presence corrupts local politics, but that was the subject of an anonymous Opinion Line comment:
Probably no Weekend Roundup today, but I do hope to get something else up this evening. One Kansas-themed story likely to lose out in the shuffle is Brownback Complaint About Student Tweet Lands Kansas Teenager in Principal's Office. As someone who's been there for doing something like that -- admittedly, long before Twitter made it easy to do and easy to get caught -- I can only applaud Emma Sullivan. Also, quote another Opinion Line commenter:
By the way, driving around Wichita a couple nights ago, I came upon several small roadside signs proclaiming "Christmas Doesn't Suck!" If Brownback's concerned about language, well, that horse has left the barn.
Thursday, June 2. 2011
Michael Lind kicked off an argument on energy and climate policy. Andrew Leonard was taken aback, and Lind tried to regroup. The three pieces:
Lind's basic point is that fracking will save our energy-intensive way of life:
Lind skips over the two basic problems with nonconvential hydrocarbon extraction: the cost, especially as measured in energy, and the side effects, which include pollution and climate-altering carbon dioxide created when those hydrocarbons are burned. Lind doesn't deal with cost factors at all. Lind handwaves evidence that fracking pollutes, attacks Greens for promoting uncompetitive renewables, and dismisses climate change as "low probability" -- if it were probable that would be all the more reason for going nuclear, but since nobody wants nuclear the climate change risks must be negligible.
He goes further to blast conservation:
Leonard doesn't get into costs either, which I suspect is the real limit on how much nonconventional hydrocarbons we actually extract, but he does note the pollution externalities -- a word which attempts to translate oft-ignored intangibles like pollution into costs. And while he concedes that it would be nice to have more cheap energy to fall back on, he sees this as buying time, not carte blanche to act like the world's problems aren't our own.
Lind at least tried to put some distance between himself and the industry propagandists:
At least Lind didn't reiterate the relatively underdeveloped smears against conservation and renewables from the original article. I'm one of the first to admit that windmills have a downside -- the cemetery where many of my ancestors are buried is towered over by the things, creaking eerily in the sky, destroying an atmosphere that should be serene. But even if the upper limits of wind and solar power fall short of current, let alone future, fossil fuel demands, every kilowatt they shift extends the available reserves. Same for local food, for public transit, for tighter cities. It makes no sense to dismiss an alternative because it doesn't solve everything.
As for nuclear, Lind is either attempting to scare us, or he naively believes in utopia. There is a lot of uranium scattered about the crust of the earth, and quite a bit of thorium too. But it's not clear how much can really be mined and refined efficiently enough to produce more power than is consumed along the way -- a way that necessarily includes whatever you wind up having to do to safely dispose of the waste. Plus we don't have an especially good record of understanding the risks and accounting for their costs. Lind may be happy to suffer "an occasional Fukushima or Chernobyl" but most of us are more cautious, especially near our own backyards. I'm not hardcore anti-nuclear, but I don't see how this works.
I'm also not a global warming crank, but I can see a lot of real bad things happening short of turning Earth into Venus. Again, even if the little things that are doable prove inadequate, I don't see the logic of ridiculing them: can't hurt, and maybe they buy you a little time and flexibility to grapple with the big problems. Lind, however, rejects any moderating effort until we snap, at which point all he can offer us are horrors: martial law, conscripted business, an accident-prone nuclear power industry, God knows what else. He immediately rejects the first principle of progressivism, which is, hey, let's stop a minute and think about this, so we can plot out a course that does what we want to do.
But let's go back to the beginning here: fracking. I saw the movie Gasland recently. It's hard to tell from one personal take whether gas fracking is always destructive to the environment, but the movie does make the case that sometimes it is, and that there needs to be more trustworthy oversight so we can understand when things go wrong and what can be done about it. One thing that is clear is that the fracking fluid is deadly poisonous. Another is that industry standard practices of drilling gas wells and hooking up pipelines and infrastructure are not as safe and reliable as they should be. Another is that the profit-seeking gas companies have powerful incentives to hide rather than to face up to problems. It also isn't clear how economical it is to tap into shale gas: the deposits are thin and often poorly sealed; the horizontal drilling and fracturing are expensive and difficult. This raises questions: how densely do you have to drill? how quickly do the fields loose pressure? how much gas is actually recoverable? Unless all of this can be done by spending much less energy than is returned it will prove uneconomical.
The same basic questions apply to any tight oil or gas source. Until fracking was developed gas shale was uneconomical. Now, how far have we move that equation. We've known for a long time that there is a lot of oil shale in Canada, but it's always been real expensive to extract it. For now, all we can do is to strip off the shale closest to the surface, heat the rocks up to extract the oil, and dump almost everything as waste. Every step along the way uses up a significant fraction of the extracted oil, so you don't wind up with much profit. Tar sands are even tougher. When oil was $20/barrel people speculated that tar sands would be profitable at $40/barrel, but we've still never hit a price that works: it just takes too much energy. And everything else in the industry works that way. The biggest conventional oil finds in recent times have been deepwater offshore fields, and the real costs of drilling them just took a sudden leap in 2010.
And now Lind just waves his hand and we'll be able to process massive amounts of gas hydrates. All we have to do there is sink robots to the bottom of the ocean, have them dig off the sediment, then pick up little clumps of ice and methane and shuttle them back to the surface. Good news is that once you got them, the chemistry is pretty simple, but getting them is something else.
I don't doubt that eventually we'll pump every recoverable barrel of oil out of the ground, that we'll suck up all the gas we can afford, and that we'll mine all the coal we can get to. Nor do I doubt that we'll convert almost all of that carbon into carbon dioxide because we'll want to use all of the energy packed into those molecules. And we'll dump most of that carbon dioxide into the atmosphere, where it will trap solar energy and make the planet hotter and hotter. We've spent the last century doing just that as unthinkingly as possible, and if Lind has his way we'll just keep on doing just that, assuming that any problems that do crop up will miraculously solve themselves.
What bothers me about all this is its unthinking nonchalance. I don't doubt that if we really did think about it we would wind up burning all that fossil fuel. But we would recognize the benefits of slowing down the pace, both of the burning and of everything else that depends on that energy. Slow down the pace and you'll postpone the reckoning. Slow down the pace and you'll reduce the concentration of carbon dioxide and lessen its warming effect. Slow down the pace and you'll have more time to think about what you really want to do. In particular, you might think about how much consumption is enough for human happiness, and narrowing the band between not enough and too much to develop a more equitable society that leans more to cooperation than to competition, and therefore reduces conflict, allowing us to slow down further, and stretch out the time before we face the end of our fossil fuel endowment.
On the other hand, Lind doesn't want to slow down. He wants to keep racing on until we hit a wall, then start a big fight over whatever's left. Reminds you he never was a real progressive. He just got a lot of credit for turning on his fellow neocons and opposing the War on Terror. But here he is, dumb again.
Bonus link: Bill McKibben: Obama Strikes Out on Global Warming: Tom Engelhardt's intro reviews the latest climate news, before McKibben gets to what's bugging him:
Needless to say, this is just a small subset of Obama's handling of energy and environmental issues since taking office. You might recall that he had just unveiled a huge giveaway program to open up deep water oil drilling in the Gulf of Mexico and up and down the Atlantic coast when BP's well blew up. And he had just announced another round of incentives and subsidies for the nuclear power industry when Fukushima melted down. Time and again he's tried so hard to follow in GW Bush's footsteps, championing the crony capitalism his predecessor(s) worked so hard to advance. And time and again he's tripped himself up. That's not change you can believe in. That's the same old story you voted against.
Friday, May 20. 2011
Henry Farrell: Count Me In With the Unsophisticated Six Year Olds: Starts by quoting a Kindred Winecoff attack on Krugman, arguing that things like the Bush tax cuts, the Medicare D program, and the housing bubble were actually cases of popular will at work in a democracy, not (as Krugman argues) the results of intense lobbying by self-interested elites. Farrell writes:
The Medicare D example is worth exploring a bit. Adding some sort of drug perscription coverage to Medicare was a very popular proposition. Most health insurance plans provide some sort of coverage. Originally it was a relatively cheap benefit, but under its cover pharmaceutical companies were able to push prices way up, which made the omission all the more glaring in Medicare. It was one issue that Democrats seemed to have some traction with, which is basically why Karl Rove felt the need to sweep the issue away. Once Rove and the Republicans decided to do something, the actual legislation was pure giveaway to the industry. So popular demand wanted the benefit, but not the law as written. In particular, the prohibition against the government negotiating drug prices had no popular benefit -- it greatly increased costs, some of which were passed to seniors in forms like the "donut hole" and the rest fobbed onto taxpayers. The law was clearly an inside deal, but it is true that if the benefit hadn't had such broad popular support it wouldn't have been pushed or passed. So in that sense Medicare D wasn't purely the work of ensconsed elites. On the other hand, the Iraq War was.
No one denies that popular opinion limits what elites can do, nor that it can provide a wedge for one set of elites to campaign against another. However, the latter happens very infrequently, in large part because there are rarely serious splits between elite opinion. One finds, for instance, that both parties hire Treasury officials from the same sets of Citibank and Goldman-Sachs executives. The defense and foreign policy establishments are nearly as integrated. For some 30 years now the US relationship with Israel has been hamstrung by the Dennis Ross-Elliot Abrams tag team, who are nothing more than foreign agents, yet they've managed to pin down what we like to think of as a popular democracy.
When popular opinion demands health care reform, Obama consults with the usual industry lobbyists and comes up with a right-wing think tank plan. The Democrats response to global warming, which quite a few people are seriously worried about, is yet another right-wing think tank scheme. The right then abandons both plans to move the debate even further right, even further away from the issues people actually care about. Working through these charades you wind up with a disaffected populace that doesn't even bother to vote -- it's not like there are any candidates anyway.
: Later on I see Henry quoting Krugman on this:
Emphasis added. The other budget-busters were sold to the public, and you can cite some polls showing that the selling was successful, but not ones that show that the people who were sold to understood what they were buying.
Winecoff later argues that most Americans don't want a healthcare system run by the government, then tries to broaden "anti-government ideologues" to include those masses. In fact, very few Americans have any major problems with the healthcare systems that are actually run by the US government -- Medicare, Medicaid, the Veterans Adminstration. It's only imaginary ones they object to, which makes you wonder if they really know what they are opining about.
This, in turn, is followed by 262 comments. Some are worth quoting.
An examination of the character of Karl Rove is all that is required to support Krugman's thesis of irresponsible and incompetent elites. This "Mayberry Machiavelli" could in no way be described as a public servant. He was a cynical manipulator of public opinion relentlessly pursuing the the political agendas of his patron(s). To suppose that a creature like Rove was simply responding to the wishes of the public is lunacy.
Kindred Winecoff :
I pretty much gave up on Winecoff's frequent comments after here. At one point he argues that elite opinion is divided then gives Krugman as an example of an elite who disagrees with various Bush policies. In fact, I wound up stopping near the point where Winecoff wrote, "The consensus here seems to be that I should shut up."
Area Man :
Martin Bento :
Jim Harrison :
Regarding the presence of evil in political leadership, there is a simple test. Knowingly making false representations to achieve goals that are harmful to the general electorate, but beneficial to one's patrons, is evil. People who regularly do this to advance their political careers are evil. [ . . . ]
There is a valid criticism of Krugman to be made in particular as regards the financial crash -- while it was of course made possible by deregulation, that deregulation was a necessary component of the financialisation of modern capitalism that in turn is a response to the problems of the tendency of the rate of profit to fall and the surplus absorption problem. Seen this way, it IS indeed simplistic to blame the actions of elites, as in, individual members of the elite, for it.
This is one that could use some unpacking, but even if you regard financialization as an inexorable law of capitalism -- David Harvey wrote a Marxist take on this, and Kevin Phillips wrote a non-Marxist one -- it still comes down to actual, well-moneyed elites to grease the wheels and make it happen. If it was just surplus absorption, one could find plenty of poor workers to distribute that to -- but the bankers had other ideas.
You know, that's enough for today. Only got to the 193rd comment, one from Henry, which sent me off on a tangent. This comment was mostly a quote from Banjamin Wallace-Wells' New York profile What's Left of the Left: Paul Krugman's Lonely Crusade. We can close on this quote, which says something about Krugman's contention that his politics is driven by his understanding of the data:
A lot of things fall out of this observation. One, for instance, is why Krugman regards Ron Paul as an ultra-rightist instead of as someone who has some very favorable traits, especially his steadfast opposition to using American military force abroad. It also shows why Krugman is always able to find a rationale to favor a Democrat over a Republican, even if he can say nothing else nice about the Democrat. Also helps explain why he consistently views Clinton as better than Obama -- there's even a bizarre section where he imagines the Democratic Party revolting to nominate Clinton in 2012 (he gives that the same odds as Michele Bachmann winning the election).
Not as good a profile as one might hope for. Still worth quoting the best line, in a back-and-forth section on Larry Summers:
One more, an insightful lesson from Argentina that many others missed:
Thursday, May 19. 2011
Somehow I got way behind on Paul Krugman's twice-weekly New York Times columns. Rather than clutter up the Weekend Roundup with them, I thought I'd kick out the salient points here. Actually, although the columns are always well thought out and tightly crafted, most of my many Krugman quotes come from his blog, where he strays wider from his basic themes and strikes things at more interesting angles. In the columns he tends more to harp on the same points, not that they don't deserve some harping.
People read this stuff and get the silly idea that Krugman is some kind of radical, but he's nothing of the sort. He qualifies as being on the left because he thinks that a more equitable society is a good thing; that people should be able to feel more secure, and that we are all better off when people have more opportunities and freedom, but he's no utopian: he's pretty happy within the bounds not just of most modern social democracies but within the exceptionally modest one we enjoyed from the New Deal through the Great Society. He's really moved very little since he worked for Reagan 30 years ago. What's scary is how far the right has slid past him, how dogmatic and intractable they've become. Even so basic an idea as that the government should provide deficit-financed countercyclical spending to lessen the damage caused by recessions is now fought tooth and nail by a party whose own presidents (as late as G.W. Bush) were first in line to open the tap.
Thought I might do a post about Krugman as a bonus, but it's taking me too long to sift through the comments (which are worth sifting), so maybe tomorrow.
Thursday, May 12. 2011
Just got a piece of email from Craig Aaron at freepress.net. I get a lot of mail like this but this is the first time I've just copied it verbatim:
Baker's new position is actually Senior Vice President of Government Affairs, working directly for Comcast. Baker was appointed to the FCC by Obama, assuming office July 31, 2009, and has been an opponent of "net neutrality" ever since she landed. She's listed as a Republican, married to the son of Reagan-Bush consigliere James Baker. I have no idea how she got appointed, but this is a question that anyone who thought that Obama might actually change anything important needs to contemplate.
Whether this is the most blatant corruption ever is something we can debate. When Boeing paid Pentagon procurer Darleen Druyun off with a Vice President job, she (but not the Boeing execs who hired her) wound up in jail. When Billy Tauzin pushed the Medicare D bill through the House -- the one that prohibited the government from negotiating prices with pharmaceutical companies -- he didn't even bother to finish his term before cashing in as President and CEO of PhRMA, the pharmaceutical industry lobbying conglomerate. Those are two of the more blatant cases I can think of, but there are many more. On Obama's watch, the biggest one thus far has been Peter Orszag, who served as CBO Director before landing the job as Citigroup's Vice Chairman of Global Banking: you can say that was less blatant, but Orszag was an important peripheral figure in the bank bailouts and the new job is worth millions.
I'm sure we'll be hearing much more about this over the next few weeks, including numerous campaign quotes from Obama about how he was going to clean up the stench of corruption that smells just like this.
Don't have any new links, but the NLRB ruling against Boeing for building a new aircraft assembly plant in South Carolina is heating up. Boeing is acting dumbfounded, as well you might expect given how little flack they've gotten for their anti-union activities in the recent past. (Among other things, when the office workers in Wichita unionized, Boeing sold off the plant in a private equity deal, then managed to decertify the union from the tiny rump group they kept for military work.) What I find even more disturbing than the anti-union aspects of the South Carolina move is that they got the state to fork over $900 million in bribes to build the plant. Even there, only the size of the booty is surprising: for quite a while now Boeing has made a practice of selling jobs to state and local politicians, both in the US and abroad. Their whole business swims in an ocean of corruption: that they can't deliver new aircraft like the 787 and that they aircraft they do sell like the 737 have been turning up to be defective is a side effect. Like all good US corporations, their real business is making money for investors (and upper management), and their products hardly matter.
Thursday, January 27. 2011
That's as far as my links go back -- about the point when I first noticed her. Her pieces tackle real world problems, but always with the methodological logic that makes economics the dismal science it aspires to be. This logic has its own inner beauty, and its ability to trivialize human concerns turns out to be part of its utility. Still, Udall never lost track of those concerns; she somehow managed to bring the logic back to real issues and problems, and she often brought back some new insight into them that I previously didn't have. That actually doesn't happen all that often -- we are all much more comfortable reading things that confirm what we already think we know -- and that's what landed her on my short list. As far as economists are concerned, I feel now almost exactly the way I felt when George P. Brockway died. I've read more than a hundred books on economics, but most of what I actually learned came from Brockway. I don't have enough perspective to measure Udall, but hardly anyone I've read in the last year has been more rewarding.
I should spend some time digging back through the many pieces I missed. I'd like to quote one at some length here, partly because it's more personal than I suggested above was her norm: 'Tis the Season . . .:
She did come back, and wrote several brilliant pieces, the last, What Price Microfinance?, posted on Jan. 17, the day she died.
Looking around her blog, before I close I can't help but share the two quotes Udall picked out from the original girl economist, Joan Robinson (incidentally, one of the first economists I read at any length):
I spend some time looking for further information about Udall. Came up with many tearful links to the announcement, but not much else, other than this:
Friday, January 7. 2011
I've been meaning to write about Maxine Udall's Company Store Redux post. It's based on a paper by Michael Kumhof and Romain Ranciere called "Inequality, Leverage, and Crises." As economists like to do, this builds its understanding around a simplified model, dividing the world into two income groups: workers and investors:
Udall goes on to describe mining company stores in terms that will be familiar to anyone who recalls Tennessee Ernie Ford's "Sixteen Tons" (actually a Merle Travis song, and worth seeking out in the original, although Ford's version is the one permanently etched in my mind, probably the most-played record I owned in the late 1950s). The key point is that when corporate control is so complete, wages just recycle back to the company in a closed loop -- kind of like the old joke about the bar that only rents you beer. The result:
That's a pretty bad situation, at least if you're a worker or a servant, but it also turns out to be unsustainable:
My emphasis there, because that's the point I want to make sure you all get. The so-called investor class has pretty much had free reign to run the world company store since the early 1980s. They've become ever more dominant, ever more powerful, and ever more exposed to the absurdity of their political chokehold on the economy. The crisis occurred because they extended debt to people who couldn't afford it and justified it by pointing to asset values inflated by their own excesses. This basic critique has been made now and then -- David Harvey's The Enigma of Capital and the Crises of Capitalism (2010, Oxford University Press) is pretty dry but gets it right. The important thing about this piece is that it's one of the very few pieces that zeroes in on the only viable solution. As Kumhof and Ranciere put it:
Udall added the emphasis in her quote. Nice to have some theory here, but this should also be clear from practical examples. The US economy grew much faster from 1945-70 when real working class incomes were on the rise than it has from 1980-2010 when real incomes have been stagnant at best, even while asset prices inflated even faster. Even today, when you look at economies that are actually growing at significant rates -- China, India, Brazil -- one thing they have in common is that they are places where workers' real incomes and standards of living are growing (regardless of how pitiful they may seem relative to US and Europe). Moreover, real investments -- that is, investments that actually bother to increase productive capability -- are most often made in economies where real wages are growing (as opposed to the US, a capitalist nation with an ever-dwindling capital resource base, because we don't have the political will to halt its erosion). As Udall concludes:
I've been trying to make this point all along, so let me reiterate: the only way to get the American economy going again -- seriously, the only way to save capitalism -- is to increase demand from the bottom of the economy up, and that can't be done without a redistribution of wealth and won't be done without a redistribution of political power. There are lots of ways to do this, and it doesn't have to result in perfect equality or anything close to it (although that would be nice), but it can't be faked (as it has through the extension of debt over the last twenty years). Still, we are a long ways from recognizing this truth, and will suffer mightily until we do.
Tuesday, October 12. 2010
Peter Diamond is one of the winners of the Nobel Prize for Economics this year. He was also one of Obama's appointees to the Federal Reserve Board of Governors that's being held up by Republican obstructions in the Senate. The Federal Reserve, you may recall, has a legal mandate to promote full employment. Diamond is one of the world's foremost scholars in researching why unemployment remains a persistent problem, lagging as it does well into so-called recoveries, so you might think that he'd be a useful person to have working on the problem -- actually, under current circumstances, what may be the biggest, most immediate problem we face right now. But a lot of people in business don't see any real problem with persistent longterm unemployment, and not just because bankers dread inflation. Unemployed workers drag the whole labor market down, which tilts the balance of power to capitalists, and capitalists have found, at least since the 1970s, that there is more profit to be made at the expense of labor than through growth that they would have had to share with labor. (You may also recall how helpful economists were back in the 1970s with their NAIRU theories: Non-Accelerating Inflation Rate of Unemployment, the idea that the only way to limit inflation -- which is to say, to protect the value of money -- is to throw people out of work.) I don't know that Diamond would go as far as I'm suggesting -- Paul Krugman, for instance, still seems to think that NAIRU is solid economics and not just class war -- but he clearly makes Republicans like Sen. Richard Shelby nervous.
Some relevant links:
Sunday, August 29. 2010
Andrew Leonard: "I was wrong again!" What Ben Bernanke meant to say: A pretty apt translation of the Fed Chairman's speech to the choir in Jackson Hole. Most memorable line: "The working class is unbelievably screwed." Followed by the gratuitous, "This is kind of bumming me out." It's not like Obama had no choice but to renominate Bush's top pick for the Federal Reserve chairmanship. The chatter campaign behind giving him a second term was based on his supposed success but any way you slice it we're worse off now than when Bush nominated Bernanke in the first place. It's bad enough when Obama recycles Clinton advisers; it's downright indecent when he keeps Bush cronies in office.
Andrew Leonard: Paul Krugman: "I told you so, again": This was written over a week ago, so it doesn't include Krugman's latest Predictions I Wish Had Been Wrong:
But Leonard is right that that "Reading Paul Krugman's blog these days is like looking into a hall of mirrors, infinitely refracting the same message: I told you so." I'm not sure that Krugman's prescription for the stimulus was big enough but he was sure right that Obama's figure was way too small. I see today that Laura Tyson has a New York Times op-ed on Why We Need a Second Stimulus, so maybe that's something that Obama will finally run on even though passing it has no chance in the current Congress. She doesn't note that at least since Nixon Republicans have a perfect record of supporting stimulus spending when in office and only opposing it when they think the Democrats will get blamed for the economic downturn. One thing that Krugman points out is that austerity-minded Germany has actually done more stimulus spending than the US given how Obama's efforts have been eroded by cuts in state and local spending. You'd think they could have thought that through, and moreover that they could have explained the analysis, but they don't seem to have even tried. In fact, Christina Romer's analysis was in Krugman's range, about double what Obama asked for, so you can't even say they didn't have the analysis. They just didn't have the guts to level with the American people, and that at a time when they had virtually nothing to lose.
The old saw is that hindsight's 20/20, but that's clearly wrong here. Even Obama's hindsight isn't that good. On the other hand, people like Krugman and Leonard keep seeing these things as they're happening.
Wednesday, August 11. 2010
Matthew Yglesias: Progressive Consumption Taxes. I meant to write something about this a few weeks ago, but it slipped out of my consciousness, until Yglesias brought it up again. What he calls a "progressive consumption tax" is actually an opt-out income tax: it lets rich people opt out of paying income tax on any money they choose to save rather than spend. I can think of several things wrong with this.
For starters, consumption taxes should be point-of-sale, since that's precisely when one has the money to pay them -- if the tax pushes the price above what you are willing to pay, then you walk away from the purchase. (Sales taxes depress economic activity a bit, but more often than not you need what you're buying so you pay the tax. Sales taxes also depress profits a bit, since every now and then a seller will settle for a bit less profit rather than losing the sale.) The problem is that point-of-sale taxes can't be progressive unless you can distinguish how much buyers have bought in the past, something that would take a lot of nosey bureaucracy and would still be almost laughably easy to subvert. (You could, of course, tax more expensive items or certain kinds of items at higher rates, which would make a sales tax somewhat progressive, but that gets real complicated real fast.) Robert Frank's scheme gets around this problem by taxing income minus savings, so the rap on consumption is false advertising.
The bigger question is why exempt savings, especially since savings is simply what people who have too much money have left over after they've bought everything they needed. For years and years economists lecture us on the virtue of savings, arguing that the economy depends on investors, that government policy should do everything possible to increase savings. We already bend over backwards to encourage savings, deferring taxes on retirement accounts, deducting taxes on home borrowing, barely taxing dividends and capital gains. One paradox is that with all of this policy favoring savings the nationwide savings rate keeps dropping -- which of course is cited as evidence that we need even more favorable treatment of savings. Also curious is that the rare occasion where savings goes up is precisely when the economy as a whole tanks. So why on earth should we think that savings drives the economy?
Well, the reason some people say that is because pretty much by definition savings is the exclusive defining trait of the rich: people who have more money than they need to satisfy their consumption desires have savings, and people who don't don't. Sure, there are marginal cases where poor people scrimp to save something away, and there are rich people who come up with ever more fanciful ways to squander their money, and you're no doubt right to find the former virtuous and the latter foolish, to expect that the former will improve their lot and the latter will throw it away. But what's good for individuals is often irrelevant to the whole economy or society. (Drug use is often tragic for individuals but is big business coming and going for the economy as a whole.) So whenever you hear someone talking on about how we need more savings, what he's saying is that rich people should be able to dig deeper into your pockets. Encouraging savings is one of the main ways we allow our country to become more and more inequal.
Another big way we make wealth more inequal is by flattening the tax rate. That's what repeated movements to cut "marginal" tax rates have done. Shifting to sales taxes, which are necessarily flat, also favors inequality. And capped payroll taxes and special treatment for unearned income is even more regressive than flat tax rates. The only real way to keep inequality from getting way out of hand -- as it's pretty much done in America, and done even worse in the crony capitalist havens of the developing world -- is to progressively tax excess income, which is to say: what we need to do is to tax savings. Frank and Yglesias imagine they can make up for the inherent shortcomings of their scheme by jacking up the tax rates on extravagant spenders. That might help a little, but the opt-out nature of their scheme is a big and dangerous loophole.
I've written a lot about taxes in the past so let me reiterate a few points:
Most people on the left instinctively reject non-progressive or even regressive taxes, probably because they are tired of losing battles over progressive income and estate taxes. You can have a progressive tax system with a lot of regressive or flat taxes if the progressive component is truly effective. Similarly, people on the left rarely care to cut or eliminate property taxes because taxing property is a straightforward way to soak the rich, but the need to save for property taxes introduces a lot of distortions in the system.
This all seems to self-evident to me that sometimes I think someone should set up a soapbox and campaign on these ideas -- I'm tempted to call them Smart Taxes. (Can't use Fair Tax, which has already been debased to sheer stupidity. How can anyone think that eliminating a one-page rate table simplifies the tax code, as compared to the thousands of pages of FASB rules that try to figure out what is income and deductible expense, a problem that will persist no matter what the rate.) But this sort of jiggering of the tax system is just a nice way to make the system a bit more efficient and sensible. The real question is whether we want to live in a more equitable society, whether we appreciate the core values of mutual respect, openness, fair treatment, equal opportunity, honesty. There is much research, as well as common sense, that shows that more equitable societies are happier, less stressful, more productive societies. If you want that, then devising a tax system to represent those values is straightforward. Meanwhile, the people who don't want that will be screaming bloody murder over any scheme that hints at progressivism, even one like Yglesias and Frank proposed with an opt-out for the superrich.
Wednesday, July 28. 2010
Something I meant to add to yesterday's "The Raw and the Cooked" post but ran out of time and/or patience. One point there is that I recognize that where one stands on global warming is more often than not consistent with one's political stance. Leftists of most stripes not only see the need for aggressive state intervention to mitigate (or even better to reverse) the global warming trend, they tend to insist that the dire threat of global warming commands us to adopt their policy directions. One reason I'm especially cognizant of this is that I've recently read two books that do just that.
One is Bill McKibben: Eaarth: Making a Life on a Tough New Planet; the other is Juliet B. Schor: Plenitude: The New Economics of True Wealth. Neither book has much to say about global warming, other than to assert that the global warming crisis makes their economic schemes all that more urgent.
McKibben, whose first book, The End of Nature was one of the first books on the subject back in 1989, does have an introductory chapter which reads like a catalog of horrors, but he's more interested in reprising his 2007 book Deep Economy: The Wealth of Communities and the Durable Future -- you wouldn't be wrong to think of the new book as a mash-up of the two previous books -- which is to say he's primarily concerned with promoting the ideal of small scale local economies. McKibben builds on a lot of recent work, especially regarding food, but his basic ideas have been kicking around for decades now, developed by people like Murray Bookchin and Paul Goodman who developed them without the slightest concern for global warming.
Schor is a sociologist who at least as far back as the early 1990s decided that the rat race isn't all it's cracked up to be. She's expressed that in at least two previous books: The Overworked American: The Unexpected Decline of Leisure (1992) and The Overspent American: Why We Want Want We Don't Need (1998). The new book goes further toward sketching out a more satisfying economy based on less overwork and overspending. And while global warming and peak oil play into her rationales, there's no reason to think she'd think differently if they weren't factors at all. Again, her ideas aren't terribly original -- Goodman and Bookchin have been there, as well as Marxists like Paul Sweezy and Andre Gorz, and for that matter the notion even shows up in John Maynard Keynes, who -- see John Skidelsky: Keynes: The Return of the Master -- saw capitalism as a path to "the good life" rather than an end in itself.
You can click on the links, including the cover images, to pick up a fair sampling of quotes from each book.
The economic visions of McKibben and Schor are only two of many possible programs that can be hitched to global warming, but all but the most dystopian involve taking deliberate and systematic direction to mitigate (or better still to reverse) the consequences. The proposals of someone like Al Gore or the various thinkers in the Obama administration hardly seem to me to be leftist, but conservatives are stuck in such a rut of denial they can't even warm up to market-oriented approaches like cap-and-trade or tax credits to stimulate investment in non-carbon-based energy sources -- ideas that used to come out of conservative think tanks when thinking was still permitted.
There is, of course, something disingenuous about hoisting one's pet ideas (or nonsense) up whatever flag pole seems to be getting attention, but that doesn't invalidate them -- best to try to sort out each problem and each proposal on its own terms. McKibben and Schor (and for that matter Skidelsky/Keynes) offer attractive notions of how to re-engineer the economy to make is more satisfying, and that seems like something worth thinking about -- at least on the left, where we believe that how we run the world is at least largely a matter of choice.
PS: It finally occurs to me that one defense of Schor and McKibben is that if one adopted their economic ideas, there would be an immediate and substantial reduction in the forces driving global warming. Again, if you choose an economy meant to satisfy the needs and desires of its inhabitants, you'd come up with something that doesn't just drown us in destabilizing pollutants, like we have gotten from laissez faire approaches.
One might also add that the cap-and-trade people are the real conservatives, since they're basically trying to stabilize the existing system using levers that are consistent with its current operation. Again, the right fails to conserve anything; they're happy to let the economy flail itself to death in contradictions they're too ignorant and/or uncaring to even recognize.
Tuesday, July 13. 2010
Matthew Yglesias: Taxophobia: I read the referenced posts by Greg Mankiw and Brad DeLong, and don't think they're really saying what Yglesias thinks they're saying, but Yglesias does sum up one political view that seems to be well entrenched if not necessarily spreading wide:
Mankiw's nonsense can be highlighted in three lines:
Let's start in the middle: nobody is arguing for "historically unprecedented levels of taxation" -- I'd be inclined to kick up the estate tax a notch, but I don't see a need for 90% marginal tax rates. (I'd cap top bracket income taxes around 50%, where they might be aggravating but wouldn't be a real disincentive -- which is not to say that higher, truly disincentivizing tax rates wouldn't have social value in capping greed.) Nor do any currently projectable federal debt levels require unprecedented levels of taxation. So a key part of Mankiw's argument -- my second quote above is an elaboration of the second point alluded to in the first quote -- is sheer demagoguery. Moreover, refuting it lets us invoke historical cases. In particular, the period when the US had its highest tax rates was exactly the period when the nation's economy grew the fastest, which at the very least lends no credence to the claim that raising tax levels depresses the economy.
The first point about Ricardian effects strains credulity. Is anyone ever so smart that they can correctly anticipate how future events will eventually prefer investment decisions today? It's easy to pile on counterexamples: when did the inevitability of a bubble of real estate or high-tech stocks or Dutch tulips bursting ever inhibit that bubble from developing? If there is any one thing you can count on it's that business only thinks in the short term. There may be good reasons to worry about the long term, but the current behaviour of business isn't one of them.
The third quote raises two problems. While it is true that current tax policy allowances and deductions affects business behaviour inasmuch as it adjusts (or distorts) prices, it isn't at all clear that overall tax levels have much effect except on distribution -- low tax rates let profits accumulate much faster (making the rich much richer and increasing inequality) while high tax rates slow down that accumulation, but there is little evidence of whole industries boarding up due to higher tax rates. More generally, investors -- i.e., people with more money than they can consume -- will seek out higher returns but will settle for the best returns they can get, folding only when there are no profits to be had at all. As long as tax levels allow for some profits, and the taxes are then recirculated as spending, it's hard to see how higher tax levels depress the economy -- at most they depress the upper classes, which isn't necessarily a bad thing.
The other canard is the bit about the economy "reaching its full potential." I have no idea what Mankiw thinks this means, especially since he implies that it relates to low taxes. A more plausible definition would tie "full potential" to full employment. We tend to think ass backwards on this issue: that a booming economy causes fuller employment, rather than that fuller employment is what makes the economy bloom; much as we are led to believe that business investment creates jobs, as opposed to realizing that labor is what creates all that we value in the economy. For various reasons, capitalists left to their own devices never produce full employment. The only way to get there is for government to fill the gap, both by spending to prop up the private sector and by creating jobs directly. And to pay for those jobs you have to raise taxes, and the most productive way to do that -- with inequality approaching historically unprecedented levels, and especially with the the rich sitting on cash they can't find productive investments for -- is to target the rich.
And that's the deeper context for Mankiw's argument. It's not just that he dislikes taxes. Just as important is that he isn't bothered by unemployment. In fact, I think you'll find that he rather likes unemployment: more unemployment means cheaper labor, less pressure to share profits, tilting the balance of power toward capital. Friendly economists may pollute the air with Ricardian mumbo jumbo, but the prime reason capitalists don't like taxes, labor rights, and any sort of government action to create jobs or lessen the pain of unemployment is that they don't want to share. In fact, their power viz. labor matters so much that they'd rather suffer through a sluggish economy than lose any of their relative advantages.
One problem here is that in polite political discourse, Mankiw et al. can't just come out and say, "hey! we like this 10% unemployment, we like that the safety net is unraveling, we're looking forward to squeezing labor even harder." Rather, they talk about how we can't afford the deficit (sooner or later, at least in some crackpot theories), about how taxes only hurt the economy (and therefore how we can't fix the deficit problem). They have to pretend that only the richer rich create jobs (even though most of their gains have come from bidding up each other's assets), and that the economy they build somehow benefits us all.
One thing Yglesias is right about is that Krugman, DeLong, et al. are "a bit too literal in their disagreements with the center-of-center economists [whoever that is] of the world." I have three or four recent books on why Ricardo was full of shit, but that's not what this is really about. It's really about power: who pays and who benefits. And that reflects a fundamental difference in worldviews: do we share the world, or do we compete for its spoils? The Great Depression and WWII shocked people into a sense that we're all in this together, and out of that we forged a more equitable society, based on labor rights, a safety net, and steep progressive taxation to pay for it. It wasn't perfect, and flaws going back to the beginning would eventually undermine it. But in the 1970s the rich revolted, exploiting their substantial advantages for political and economic gain, and they have gradually tore the social compact apart while compounding problems. The eight disastrous years of George Bush led to a change of leadership, but sadly, pathetically not to a change in thinking. We are in the midst of a one-sided class war, where the putative defenders of the non-rich don't even recognize they're being fired on, and don't make more than the most paltry efforts to defend the people who voted them in.
On the other hand, I don't blame Krugman and DeLong for focusing on the economic nonsense. They've worked hard to keep the economists from pulling the wool over our eyes. I blame the Democratic Party politicos, starting with the guy in the White House, for not finding principled political issues to run on and drive home, such as the need for full employment to lift working wages, and more progressive taxes to level the playing field; the need to get out of the global war business -- one which only serves to fund the right and keep the left on the defensive -- and the need to reverse the great risk shift -- the real security threat that most Americans face these days.