Debunking "trickle-down"

As a follow-up to my "How Obama Wins" post of the other day, please go to the Christian Science Monitor and read Jared Bernstein's excellent article entitled, "The Problem with the Trickle-Down Theory."  I cannot recommend this piece highly enough.  He explains that "trickle-down" isn't the answer:

[A] much better way to generate robust, lasting, and broadly shared growth is through an economically strengthened middle class. 

At the most basic level, this growth model is a function of customers interacting with employers, business owners, and producers.  A recent article by successful venture capitalist Nick Hanauer very compellingly describes this interaction: 

"I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate. 

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small.  What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be."

Excerpts and summaries won't do this article justice.  Please go read it.  For more on the same topic, follow Bernstein's suggestion and check out David Madland's article at democracyjournal.org.  Madland convincingly explains that the middle class is not the product of economic growth; it is the SOURCE of economic growth: 

A strong middle class provides a stable consumer base that drives productive investment. Beyond that, a strong middle class is a key factor in encouraging other national and societal conditions that lead to growth. It is a prerequisite for robust entrepreneurship and innovation, a source of trust that greases social interactions and reduces transaction costs, a bastion of civic engagement that produces better governance, and a promoter of education and other long-term investments.

Movies that you ... can't ... turn ... off ....

Recently, I was doing a few projects around the house and folding piles of laundry, and I turned the television on to discover the beginning of Grease.  It was a network airing, heavily edited for language and innuendo, and yet I couldn't turn the thing off!  I sat there, folding towels and singing along, as my daughter rolled her eyes, made fun of my lifelong crush on John Travolta, and occasionally asked snarky questions like, "Did you dress like that in high school, Mom?"

Having reminded her that I was an 80s teen, not a 50s (as depicted in the 70s) teen, I watched until Danny and the guys sang "Greased Lightning," a song made essentially meaningless without some of its fun, risque lines.

This post at The Awl got me laughing this morning...apparently many (most? all?) of us have movies that we can't turn off when they happen to be on television.  Grease is one for me, as is The Breakfast Club.  I always stop for at least a few minutes of The Wizard of Oz.  I can't turn off Casablanca.  Ferris Bueller is bound to take up an hour or more, and Say Anything is the same.  How about you?

David O. Selznick fights for Rhett's "damn"

Today, at Letters of Note, there's a wonderful post about the inclusion of Rhett Butler's famous final line to Scarlett O'Hara in Gone with the Wind. Producer David O. Selznick was not going to exclude "damn" from "Frankly my dear, I don't give a damn" without a fight. As generations of viewers know, Selznick prevailed.

Just imagine the film with the final line (which was filmed and previewed), "Frankly my dear, I just don't care."

And yes, I am named after the plantation in the book/movie (my parents also wanted a name that was short enough to be paired with my long last name). The fictional Tara, in turn, is named after the seat of the ancient Irish kings. Jeff and I will be visiting it in a couple of weeks!

How Obama wins in November

Over at the Daily Beast, Michael Tomasky has a very good piece in which he suggests that President Obama needs to move beyond arguments about fairness (particularly with respect to taxation) and start explaining to voters WHY this is good for our nation's future.  I agree with Tomasky that the President needs to focus more on achieving fairness as a means to an end: growth and prosperity will flow from an economic structure in which the middle class expands.  As Tomasky explains:

To liberals, it’s enough that it will lead to a fairer society. Therefore, it doesn’t even occur to many liberals that the “What will it lead to?” question even needs to be answered. A fairer society is enough. But for many Americans, it’s not enough. A fairer society is fine, they think, if we can afford it. But what these Americans want is a society where there are lots of good jobs. A prosperous society. So what Obama and his speechwriters should be hoping people summarizing his speeches would say is something like: he’s for building up the middle class and making the rich pay more because things are out of whack and unfair, and because doing so will create a more prosperous society. That’s the missing piece.

This is one of my main criticisms of the Occupy movement (inspired by Roger Ebert's excellent piece on the topic).  Arguing against the status quo isn't enough for many people.  I (personally) think it's simply WRONG that some people have more than they need and others don't have enough--and that injustice should be addressed.  But unless we can translate that personal notion into something that matters to more of the electorate, by linking systemic change and a larger middle class to a better future for all of us, we risk leaving many voters to choose the "trickle-down" notion as one that at least appears to provide something for everyone. 

Tea Party: All-Powerful Or Not?

Once the media gets a hold of a theme, it's not eager to let it go. On the right-wing blogs, I'm constantly reading that the GOP presidential nomination race is between the "Tea Party candidate," Newt Gingrich, and the "establishment candidate," Mitt Romney.

When Newt soared in South Carolina, it was a reassertion of power by the Tea Party. Now that he is failing in Florida, it's a win for the establishment.

Here's the key point within all this analysis:

...Mitt Romney has opened a double-digit lead in Florida as the perception grows among Republican primary voters that he is the strongest general election candidate against President Obama.(emphasis added)

It needs to be understood that a majority of people voting in caucuses and primaries are not associated with any organized group; the majority of attendees are not hyper-involved activists.

They are voters who are registered Republicans and want to have a role in picking the nominee. The successful candidate appeals to this wide swath of GOP voters rather than going "all in" with a particular group.

Here Is How A Talking Point Dies

We were told that Warren Buffett's secretary pays a higher tax rate than Warren Buffett.

ABC reports that the secretary, Debbie Bosanek, pays a tax rate of 35.8 percent. If true, it means that Bosanek is making in excess of $200,000 a year--which doesn't make her a good representative of the working class.

After conservative pundits did the math, it was revealed that Bosanek makes $60,000. Megan McArdle then does some complex mental gymnastics trying to figure out HOW Bosanek pays less than Buffett. In summary, it's not possible UNLESS you are willing to compare apples to oranges.

Bosanek's salary also becomes a source of embarrassment for Buffett. He's willing to pay more taxes--when actually, he could do his part to end income inequity by increasing his secretary's salary. His net worth is estimated at 39-billion dollars.

And so a talking point fades from the national consciousness. Until VH-1 does another "I Love The 2000s" special.

In all seriousness, this again proves the worth of the Internet is disallowing the use of unchallenged spin to influence national debate.

Romney/Simmons 2012

My favorite rock group is KISS.

I caucused for Mitt Romney.

Today, Gene Simmons of KISS expressed his support for Mitt Romney.

I didn't know that Simmons would be supporting Romney when I went to caucus for Mitt. Awesome minds simply think alike.

And if you support someone else, you are just NOT COOL.

Speaking of cool, Arizona Governor Jan Brewer's book sales have jumped from 285,568th place to 29th following her verbal smackdown with the President.

Who'll be Newt's "Mini-Me" when he rules the moon?

From BoingBoing.  Awesome.

Invisibility!

The other day, Jeff and I found ourselves with some time to kill at the Bass Pro Shop near Des Moines.  For non-campers/non-hunters/only occasional fisher-people like us (don't tell the NRA that Jeff doesn't hunt!), it's a wonderland of mysterious gadgets and weird objects.  There's a whole aisle of bottles of fake deer urine.  There are taxidermied creatures in the rafters.


Always the bargain shopper, I noted that there are great deals on polarized sunglasses (the better to see the fish you're trying to catch or, in my case, the better to see as you drive through glittery snowfields on winter days).  There were also some super markdowns on shorts in my size (it being winter here in Iowa--not that the guy I saw at the bus stop in shorts yesterday got the memo).  But the thing that got us laughing the hardest was the camouflage lingerie.  Giggling like teenagers (come on, we were extremely bored), I snapped a photo.


If invisibility in the bedroom isn't enough for you, you might be interested to know that there's been scientific progress toward invisibility elsewhere--and while it's not quite a Harry Potter or Lord of the Rings elf style invisibility cloak, it does have "exotic electromagnetic properties."  Sexy!

Will the posthumous baptism issue hurt Romney's campaign?

I am an amateur genealogist.  I have been researching my family's history for over 17 years, and I have an extensive database of information and photographs.  I can trace some branches of my family back over 500 years.  If I could choose any career, it would be to be a professional genealogist and historian.

As a genealogist, I know that one of the greatest resources for researchers like me is the extensive collection of records compiled and archived by the Church of Latter Day Saints (the Mormons).  This ever-expanding, searchable collection is one of the first stops for any new researcher and a reliable source of primary records. Genealogists can visit Salt Lake City for the greatest access, but there are also family history centers at Mormon churches throughout the world.

The reason for this, in simplistic terms, is that Mormons believe that it is important to provide everyone, even people who have died, with the opportunity to be baptized into the LDS church.  In order to do that, you have to know who they were.

Andrea Stone, at the Huffington Post, has a great article that explores the potential ramifications of this practice for the Mitt Romney campaign.  The loudest voices in opposition to the practice have come from Jews who protest that the posthumous baptism of Holocaust victims is a terrible insult to the faith that they were killed for having.  The Vatican has also weighed in, directing Catholic churches not to release records to the LDS church for microfilming.

The death of a once-promising campaign

Folks who like "campaign insider" stories will enjoy this one, from First Read, about the "rise and fall" of Rick Perry's campaign.

Shared Cultural Values

As a perfect follow-up to my post on the loss of America's shared cultural values, Kyle Munson of the Des Moines Register profiles the work of the better half of this blog during Munson's 99-county tour of Iowa.

Folks ask how Tara and I navigate our political differences during our marriage.

In this article, Tara describes our shared commitment to building strong families and instilling a work ethic in our young people.

Those are principles which unite us (and most Americans) beyond specific policy views.

It's snowy and it's Monday

So you definitely need to watch this video (via BoingBoing) about whales and dolphins playing together.  Near Hawaii.  Where it's warm.

We Have Met The Enemy...

And he IS us.

When talking politics with neighbors, I find that their number one complaint is that "Washington doesn't get anything done...they just fight with other and can't agree to anything."

Extreme or hyper- partisanship is what this is labeled.

I am reminded of the saying, "you get the government that you deserve." We live in a representative democratic republic, and what we don't want to face is that the divisions among our elected officials represent us quite nicely.

Those divides come into clear focus in the new book by Charles Murray called "Coming Apart: The State Of White America 1960-2010."

In a column summarizing the book, Murray uses statistics to contend that, despite income disparities, Americans had formerly shared common cultural values.

But that's not the current case. At one point in American history, the rich worked its way up from the middle class and understood the values of working hard, getting a good education, and taking advantage of opportunities.

The nation is now seeing a class of rich and powerful families who have had money and power for multiple generations and have lost this ethic.

Meanwhile, the working class is walking away from the institutions and values that unite that group: marriage, religion, and education.

Each group looks contemptuously and without understanding at the lives of the other group.

Then we elect people to speak for us. They are doing so successfully.

Why Mitt's tax returns matter

As we now know, Mitt Romney's defeat in South Carolina has prompted him to agree to release his 2010 tax return and an estimate of his 2011 taxes.  We've also heard that he pays taxes an the infuriatingly-low rate of 15%, because his earnings are taxed as capital gains, rather than income.  In addition, the release of these returns will pull back the curtain on the kind of "work" a guy does to earn the income he's had.  James Surowiecki has a short piece in the New Yorker that explains why private-equity firms like Romney's are bad news all around (this is a long excerpt, but you should click through for the rest):

The real reason that we should be concerned about private equity’s expanding power lies in the way these firms have become increasingly adept at using financial gimmicks to line their pockets, deriving enormous wealth not from management or investing skills but, rather, from the way the U.S. tax system works. Indeed, for an industry that’s often held up as an exemplar of free-market capitalism, private equity is surprisingly dependent on government subsidies for its profits.

...

Having already piled companies high with debt in order to buy them, many private-equity funds had their companies borrow even more, and then used that money to pay themselves huge “special dividends.” This allowed them to recoup their initial investment while keeping the same ownership stake. Before 2000, big special dividends were not that common. But between 2003 and 2007 private-equity funds took more than seventy billion dollars out of their companies. These dividends created no economic value—they just redistributed money from the company to the private-equity investors.

As a result, private-equity firms are increasingly able to profit even if the companies they run go under—an outcome made much likelier by all the extra borrowing—and many companies have been getting picked clean. In 2004, for instance, Wasserstein & Company bought the thriving mail-order fruit retailer Harry and David. The following year, Wasserstein and other investors took out more than a hundred million in dividends, paid for with borrowed money—covering their original investment plus a twenty-three per cent profit—and charged Harry and David millions in “management fees.” Last year, Harry and David defaulted on its debt and dumped its pension obligations. In other words, Wasserstein failed to improve the company’s performance, failed to meet its obligations to creditors, screwed its workers, and still made a profit. That’s not exactly how capitalism is supposed to work.

The people who ran Harry and David into the ground have a defense: economic conditions changed in unforeseeable ways. But that’s precisely why loading firms with debt in order to reap short-term benefits is bad. It leaves companies unable to weather tough times, and allows private-equity firms to make money even if things go wrong.

As if this weren’t galling enough, taxpayers are left on the hook. Interest payments on all that debt are tax-deductible; when pensions are dumped, a federal agency called the Pension Benefit Guaranty Corporation picks up the tab; and the money that the dealmakers earn is taxed at a much lower rate than normal income would be, thanks to the so-called “carried interest” loophole. The money that Mitt Romney made when he was at Bain Capital was compensation for his (apparently excellent) work, but, instead of being taxed as income, it was taxed as a capital gain. It’s a very cozy arrangement.

Now I know that some people will argue (see the long comment thread over at Althouse for a prime example) that the lower rate on capital gains is an incentive to investment.  Maybe that's true, especially given the above.  When you're pretty much guaranteed a payout, even if the company in which you're investing fails and dumps its obligations on the Federal government, what's not to like?  And the suggestion that those capital gains have already been taxed at the corporate tax rate of 35% is just nonsense.  There's no getting around the Gordon Gekko comparisons, because they are accurate.

The Vengeance Of The Newt

While reviewing the South Carolina primary results over the weekend, I couldn't help but continually think of this column by Kevin D. Williamson which sums up the race between Gingrich and Romney:

It is between those Republicans who disagree with Barack Obama, believing his policies to be mistaken, and those who hate Barack Obama, believing him to be wicked. Mitt Romney is the candidate of the former, but is regarded with suspicion, or worse, by the latter. The former group of Republicans would be happy merely to win the presidential election, but the latter are after something more: a national repudiation of President Obama, of his governmental overreach, and of managerial progressivism mainly as practiced by Democrats but also as practiced by Republicans.

If you've got Democratic friends on Facebook who spend a lot of time laughing at Republicans (and were out in full force this weekend mocking the Gingrich win), it's a wonderful fantasy to picture Gingrich not only beating Obama, but humiliating him and the media while doing it.

“Conservatives are very frustrated, and rightfully so. Their feeling is that they play by the rules – they work hard, pay their taxes, raise their kids right – but what do they get for it? Their values are mocked on television and the movies, the media castigates them as a bunch of extremists, they pay taxes while half of the country does not, and the Obama administration took to demagouging them virtually from day one of his tenure. I know of what I speak – a few months back I was driving down the road and saw a sign in front of a business lamenting, ‘Where is the America I grew up in?’ I nodded my head in approval.

“Enter Newt Gingrich, the person on the debate stage who finally speaks truth to power. ‘Not so fast, John King!’ ‘Hold it just a damned minute, Diane Sawyer!’ ‘How dare you talk to me like that, Brian Williams!’ These are the sorts of thoughts that millions of conservatives have every week. And now here is Newt Gingrich actually saying it right to them.

Setting aside emotion for the moment, one must take a look at Newt's huge unfavorables.

With Newt as the nominee, the Republican message to swing voters is, “Vote for the guy you detest to replace the president who you still like but who has disappointed you.” That’s not an impossible sales pitch, but it is an extraordinarily difficult one.

So look for the Obama campaign to play up the likability and the media to consent: witness this past week, when we debate Mitt's taxes and Newt's marriages while ogling President Obama singing...and preparing for Michele Obama's "healthy kids" tour. Remember that there's reality and there's politics...the Obamas may actually be arrogant and contemptuous of the working class, but the media won't be focusing on that.