The horizon is not so far as we can see, but as far as we can imagine

Month: September 2016 Page 1 of 2

Trump/Clinton Debate Open Thread

I used to get paid to watch these things. I don’t any more. So…I’m going to go read a nice novel in a coffee shop. Please feel free to talk about the debate in comments. I will, actually, be curious to hear what people have to say, just not willing to sit through so much sewage to get my own “take.”


The Golden Laws of Prosperity

Image by [rom]

Image by [rom]

Implement policy which is as good for as many people as possible.

Keep the rich poor.

Punish negative externalities, encourage positive externalities.

Tax economic rents punishingly.

Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.

Do not allow elites to opt out of the experience of ordinary citizens.

Allow no unregulated monopolies or oligopolies (and by regulated, I mean 5 percent + inflation profit, no more, no less and strict limits on executive compensation).

Keep so-called “intellectual property” to an absolute minimum.

Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting).

Never use widespread targeted incentives.

Do not allow the rich to grow rich any faster than the bottom or middle of society.

Do not allow fraudulent profits to drive out real profits.

Allow easy bankruptcy.

Do not allow usury.

Do not allow resource extraction profits to drive out profits in other sectors of the economy.

Keep the real rate of return low, except on genuinely risky entrepreneurial activities.

Do not reward people for winning lotteries (economic competitions someone was going to win, like Facebook winning the social site competition).

Do not allow the financial sector to be the tail that wags the dog.

Allow no financial instruments which are more complicated than the underlying asset or project.

Do not allow anyone to take future profits in the present.

Make sure that people cannot cash out of the system without taking a huge loss.

Ensure that no one can give themselves a payday by destroying real value (i.e., much private equity).

Do not allow the old to make deathbets.

Enforce accountability on decision-makers, especially corporate decision-makers.

Do not allow private money to buy elections (taxpayers should pay for their own elections and not expect donations to do so).

Do not allow lawmakers or public executives to ever make more money (adjusted for minimum wage increase, median wage increase, and CPI) than they did while in office.

Give lawmakers generous pensions that kick in after only a few years of service, so that they are not worried about their next job.

Pay lawmakers generously, but link pay to minimum wage, CPI, and median wages.

Recognize health externalities caused by urban and exurban planning, pollution, and additives.

Reduce barriers to entry in new industries, including outlawing non-compete agreements and restrictive patents.

Reward creatives not primarily by patent or copyright, but by levy and distribution. Corporations are not creatives.

Do not allow trade to be used to externalize negatives like pollution.

Restrict capital flows significantly.

Treat credit as a utility and regulate all credit grantors as utilities.

Credit rates should be based on the utility of the end use of credit.

All universal or near-universal insurance should be run by the government, as the government is always the insurer of last resort.

Do not have large standing armies.

Do not obsess over inflation targets. Moderate inflation, to as much as 10 percent, is not harmful and is less harmful than very low inflation.

Do not use monetary policy for fiscal policy or vice-versa.

Do not lock up a large part of your population.

Do not make reintegration of criminals who have served their time effectively impossible.

Make sure your population eats healthily. There is no such thing as cheap food. Cheap food is paid for by death, disease, and health care costs.

Do not allow educational advantage to be bought by high housing prices or by money in general.

Do not impoverish your cities by allowing politicians to use city money to buy rural and suburban votes.

Do not allow city folks’ mores to run the country, nor country mores to run the cities.

Do not allow unproductive suburbs which do not allow light businesses or have covenants.

Do not borrow significant amounts of money in anything but your own currency.

Do not allow people to make large amounts of unearned money (i.e., as when housing inflation is much faster than general inflation).

Do not allow the costs of your society to outrun real gains spread over the population (i.e., housing prices to rise faster than wages).

Make sure that the consumer economy has an alternative.

Understand what the government does well and what the public sector does well.

Use competition between the private and public sectors.

Do not allow your elites to enter into direct competition with foreigners running resource economies.

Do not allow your economy to be owned or run by foreigners.

Do great things, not because of the return, but because they are great.

Seek the health and happiness of your citizenry, not maximum income.

(First published Sept 7, 2011. This is old, but the only relatively comprehensive list I’ve written, so back to the top. My thought has evolved on a few issues, but it’s still a very good list. – Ian)

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War Criminals, I See War Criminals

So, Bush Jr., of Iraq and torture fame, will vote for Clinton. The Clinton team is pleased. Michelle Obama has a publicity photo with her embracing him.

Meanwhile, they are screaming at third-party voters, claiming they caused the Iraq War by not voting for Al Gore?

Bush is a war criminal. Nazis were hung at Nuremburg for the exact same crime he committed. Clinton voted for that war, though she tries to claim she didn’t think she was voting for it. Even if she wasn’t, Libya was another war crime of the same sort. What did Clinton say about Gaddafi? “We came, we saw, he died.”

Yup. He was sodomized with a bayonet, then killed.

Let us be clear: While Trump is a member of the establishment, he is not a member of the political establishment. Bush and Clinton and Obama are closing ranks against an upstart who threatens to change their world, to change how things are done.

You can’t make much of an argument from principle against Trump if you’re kissing up to George W. Bush.

I never believed Obama would have voted against Iraq if he’d been in the Senate, and I sure know he has no strong feelings about Bush. (No, no, his wife did not do a photo-op with Bush that Obama didn’t want done.)

This is a complete farce.

Make your lesser evil arguments. There is no candidate here with even a marginal case for being good.

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Jeremy Corbyn Re-elected as British Labour Leader

61.8 percent of the vote, after a massive voter purge.

Labour Purge Numbers by Eoin

Labour Purge Numbers by Eoin

Labour Purge #s by Eoin

Labour Purge #s by Eoin

This is a fairly remarkable set of numbers. Even if we take them to be on the high side, a concerted effort appears to have been made to deny people votes, and almost always, from the anecdotes of those purged, they were Corbyn supporters. What is amazing is that even with so many people denied a vote, Corbyn crushed Smith.

The National Executive Committee (NEC) is the body which has the power to execute the purges.

I will suggest, strongly, that with a new roster on the NEC, Corbyn’s allies should re-instate virtually all the purged members, and that they should then purge those who were behind the purges.

There have been calls from neo-liberal Labourite leaders, like Kinnock, for ex-members of Labour’s Shadow Cabinet who participated in the abortive coup to ask to be reinstated and for Corbyn to let them back. Beyond a small number, I do hope Corbyn does not. These are not honest actors who can be trusted to stay loyal to Corbyn, and having lost two elections in a row, even despite the massive purge, they have little mandate.

We will now see if there is a split–many Tories and Labour MPs feel there should be a neo-liberal party dedicated to remaining in the EU.

This is a good day and a good result. Let us see what an actual left-wing Labour party is able to do going forward. For the first time in years, one of the two major parties in a Westminister democracy is actually left-wing, not “center-left” Blairist and neo-liberal.

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The Wells Fargo Scandal Was by Design

American dollar toilet paper roll

American dollar toilet paper roll

Some years ago I worked for a mid-sized financial multinational. Towards the end of my tenure, my employer merged with another company, and the senior executives in my department were replaced with Americans. (It was the smallest department in the division, and they felt they should give the Americans something.)

There had been some… dubious… practices before, stuff that skirted the line, mostly related to moving near future earnings into the current month, quarter, or year end. Because I was involved in both operations and compliance, I had made my concerns known, but what was being done was legal–if marginally so.

When the new senior managers took over, they started to require certain “numbers” of lower management. These numbers were hard to reach, but we tried. One day, the dictum came down to reach a number which simply could not be met.  Fortunately, it wasn’t a number involving money.

Junior and middle management told the senior executives that the number was impossible; could not be done. The seniors insisted, the lower management resisted. The seniors said, “Do it, or else.”

They got their numbers. 100 percent on a specific metric. The reports all said so.

Problem was, getting 100 percent on that metric was legitimately impossible. The reports were now being changed.  Straight up lies were being reported to the executives. And that was only the beginning; having forced lower management to lie about one thing, there was no reason for them not to lie about other things.

To be clear, they did it to save their jobs. “Get these results or lose your jobs” will get you the results you ask for–especially if you dangle bonuses on the other side: “If you do, we’ll reward you.”

So I have no trouble understanding how Wells Fargo got 1.5 million bank accounts and 565,000 credit cards that customers didn’t want. No trouble at all. “If you fail to meet the numbers we’ll get rid of you. If you meet them, we’ll reward you.”

Of course, for this to happen with actual financials, not just operations, the compliance staff and most of management had to be onside. Any decent audit or internal controls will pick that up, any competent junior operations management will figure it out. It can be done by small groups, not by 5,300 employees.

This is confirmed by how the senior executive in charge was treated.

Carrie Tolstedt, the divisional senior vice president for community banking, was the person responsible for Wells’s 6,000 branches where the infractions took place. When she retired, quietly, in July, the bank knew that her operation had been under scrutiny for sales tactics for more than a year. Ms. Tolstedt spent 27 years at Wells Fargo, and was no doubt steeped in the bank’s culture. In the last three years, she was paid a total of $27 million. She remains employed at the bank until the end of the year. When she leaves, she will probably be able to take with her nearly $125 million in stock and options.

The NYTimes and most commenters are obtuse about this. Completely obtuse.

By Wall Street standards, the Wells Fargo fiasco is minor in terms of dollar amounts. According to the Consumer Financial Protection Bureau, the employees opened something like 1.5 million unauthorized deposit accounts in the name of unsuspecting customers and made 565,000 unauthorized credit card applications, generating $2.6 million in fees and enabling the employees to qualify for bonuses. Wells agreed to pay $185 million to settle

This wasn’t about revenue. It was about being able to say, “We opened so many new accounts and credit cards” to Wall Street. Much of executive compensation is based on stock options and stock prices go up when you “beat expectations” and report good news. New accounts and credit cards aren’t expected to generate a lot of money immediately, but they are leading indicators of future earnings. By beating expectations on these numbers, Wells Fargo would have a higher stock price than if they didn’t, and everyone who was paid in stock options in the company (a.k.a. every executive, likely) would receive more money for those options.

Carrie Tolstedt is being treated well because she did what she was supposed to. The 185 million dollar settlement is worth more than the accounts were to Wells Fargo, BUT the executives running Wells Fargo got a lot of personal money out of it and were not punished. Some of them, those Tolstedt reported to, may well have “earned” promotions from it as well, based on meeting or exceeding sales goals.

Everyone who makes decisions at Wells Fargo, in other words, benefited from the scam. The only people punished were junior employees who, while complicit, I guarantee were doing what management wanted them to do, and who would have been fired before this if they hadn’t been willing to play along.

Financial fraud of this sort always follows this pattern: Executives get rich doing it, the company takes a hit–but not the executives–and the executives have no reason not to go on to their next fraud or even go back to what they were doing (sub-prime loans are a thing again, and we’ll find out many of them were based on fraud, again.)

The only way this sort of thing will stop is if we start charging senior management, the CEO, and their board members with crimes. Use RICO statutes to say it was organized crime (it was), and take their money. Assign them public defenders. Even if they don’t go to jail, they will lose a decade of their life defending the case, and it will serve as a genuine deterrent to other financial fraudsters. (If they do go to jail, it should be to nasty maximum security penitentiaries.)

Fines for the company are NOT a disincentive. In this case, the fine is more than the company made, while in other cases it has been much less, but it doesn’t matter: The executives got their money and they make the decisions. The company is a fictional person, not a real person; it does not make decisions.

This sort of thing will continue until we get serious about stopping it. People will probably only get serious when a financial and economic crisis occurs which is so severe that most everyone in power is swept out of power and not before. Criminal charges did not occur over the last financial crisis because no one in power, most especially Obama and his Justice department, did not want to insist upon them.

Bill Clinton had a hundred million not long after retiring as President. He pushed through massive financial deregulation. A few years after being President, Obama will be worth even more than Clinton. Financial executives may bitch about Frank-Dodd, but they know Obama saved them from long terms in prison and did not get in the way, and indeed abetted, trillions of dollars being funneled to save their companies and keep the game, and the frauds, going.

Those who “win” the capitalist game always immediately try to buy out the system, meaning buy the politicians and regulators, so that they can never truly lose their position of power and wealth.

And that, in the end, is what the Wells Fargo “scandal” (a good name, because scandals usually have no real consequences for anyone who matters) is about.

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Vancouver to Tax Those with Empty Properties

I grew up in Vancouver more than any other city, but left in 1986. It’s one of the most beautiful large cities in the world, and was a lovely place to live. Recently, due in large part to the influx of foreign money and buyers, it’s become unaffordable, both for buying and renting. The provincial government just slapped a tax on foreign buyers, and now the mayor is going to add another tax.

Vancouver plans to tax its vacant homes by the end of the year, the city’s mayor said on Wednesday, announcing the second government move in as many months to address foreign investments that officials say have helped drive up home prices.

This combination of action is absolutely the right thing to do, especially a tax on vacant homes (I assume it will include apartments and condos.) This action should be copied by cities around the world who are experiencing similar foreign buyer driven booms: like Australia’s large cities, London, and Canada’s Toronto.

This is what I have been pushing for for some time. The issue is that the fee must be punitive, and I fear that Vancouver won’t set it high enough.

As I wrote in 2015 in reference to a similar New York city proposal.

People who can afford luxury apartments can afford that fee. Make it simple: Put in a residency requirement. Someone must live in the apartment six months to a year. If they don’t, the tax rate is 50 percent of the ostensible value of the apartment. If that doesn’t work (and it might not, given how rich they are), well, then just make it illegal to own apartments that aren’t used and have the government seize the apartment and use it for social housing, or sell it. And if the next owner doesn’t use it, seize it again.

The simplest way to stop stuff is to just forbid it. Foreigners don’t have any “right” to buy property in other countries. It’s a privilege. If they’re making life miserable for the permanent residents of a city, there’s no particular reason not to just stop them buying more residences. There will always be ways around such bans, of course, but it will still make such purchases far fewer.

It’s not reasonable for a city’s rent and/or cost of purchasing a house to rise much faster than its economy. It’s not fair to shove out residents and people with jobs so that foreigners can have vacation homes or homes to which they can escape with their corrupt wealth if things go bad in their home country.

If they want such a house, well, there are plenty of small municipalities who would be happy to sell to them, but turning one of the countriy’s main, economically viable cities into a place its actual residents can’t afford isn’t smart or fair. The same is true of Toronto, London, or Melbourne.

China throws off so much money and wealth that smaller nations (and Canada, Australia, or Britain are all smaller where it matters in population) can be swamped just by their overflow.

Don’t let that happen.

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That Great Census News

That metropolitan-area household incomes in 2015 are up five percent is, indeed, good news, but as Stoller points out, men’s income is up 1.5 percent and women’s is up 2.7 percent, so what it means is that more people per household are working.

Household income is still 1.7 percent below the 2007 level.

Income being up indicates that the Fed can now crush wages, however. Let’s see how long this runs, or how long they let it run.

Overall, however, the job market is still trash.

Employment / Population Ratio

Employment / Population Ratio

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The Consequences of 9/11

iraqi_girlOn September 11, 2001, I was at work. As the reports came in, the company set up a TV in a large room and work ground to a halt as people watched.

I turned to a friend and said, “I hope America doesn’t attack the wrong country in retaliation.”

He scoffed.

Assuming that Osama bin Laden was behind 9/11, it was a master stroke. Osama was the first great man of the 21st century, the man who changed the course of history in precisely the way he planned. (Remember, “great” and “good” are not synonyms. Plenty of great men and women have been monsters.)

Osama was a smart man and had spent a lot of time considering the Muslim world’s situation.

He believed that the regimes he wanted to overthrow, like Egypt, survived due to the support of an enemy much further away: the US. His thesis was that US support propped up enemy societies.

The usual rule in Islam is to fight the local tyrant, but OBL argued that the US must be fought first: Only once it was defeated, or at least severely weakened, could Islam win the more local battles. He also wanted to prove that US soldiers could be defeated.

What he wanted to do was to draw US soldiers into a killing field. He figured it would be Afghanistan, and America did oblige and attack, but Afghanistan wasn’t much of a quagmire in those first years.

Then, the US decided to attack Iraq, one of OBL’s enemies, as Iraq was run by a secular regime. And Iraq turned out to be a complete mess.

The US walked all over the conventional army of Iraq, then was fought to a bloody loss by irregulars (and it was a loss–US troops had to pay bribes in order to leave the country without being fired upon).

And Islamic groups and revolution spread, and if the US wasn’t defeated, well, all the money, men, and attention spent on Iraq did contribute to the great financial crisis, and Muslims learned that they could beat the US if they were willing to take enough pain doing it.

Osama won. He got much of what he wanted. He must have praised Allah mightily for making his enemies attack Iraq.

As for the US, the “state of emergency” declared after 9/11 is still in effect. The Patriot Act is still in effect. The Authorization to Use Military Force (AUMF) is still in effect. These are the Enabling Acts of Bush’s republic–and of Obama’s.

US citizens did, in fact, lose many of their freedoms and a great deal of their prosperity as a result of 9/11.

9/11 was a milder form of the Reichstag Fire. No, Bush wasn’t Hitler, but he did change the nature of the US significantly–enough so that it is a recognizably different country than it was before.

Americans ratified those changes by re-electing Bush in 2004, knowing fully that he was torturing and so on.  Then came Obama.

Obama is Bush’s heir. Anything one party does can be undone by the next, but Obama chose to roll back very little of Bush’s republic, and in fact, he extended many of Bush’s policies. He is worse on whistleblowers than Bush (far, far worse). He has performed far more drone assassinations. He has deported far more immigrants.  And he has kept all the enabling acts in place.

I make no claim that the US before 9/11 was “good,” but it was better than the US after 9/11, to the great harm of very many people all around the world–including Americans themselves.

But 9/11? 9/11 was a success. It got the man who planned it about three-quarters of what he wanted.

A very great success. Too bad the US handed that success to Osama. He couldn’t have made you do anything, he had to to take a gamble on you.

Osama understood the US well enough to get the US to do what he wanted. The US did not understand Osama well enough to avoid walking straight into his trap…or they had so much hubris they figured they could walk through it unharmed.

So many dead. So many maimed. So many refugees. So many economically destroyed. So many better roads not taken.

But Osama, Osama at least was happy with 9/11.

That was Bush, and the US’s greatest gift to Osama, which outweighs his death a 1000/1. Men like Osama are not scared of death.

So much stupid, so much evil. But Osama was just evil, not stupid.

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