Bernie, Elizabeth and Joe

From 1933 to 1980 the wealth of this country grew twice as fast as it has grown from 1981 to today.

From 1933 to 1980 we averaged 2.7% growth per year and our National debt ended where it started at 30% of GDP.   Since 1981 total GDP growth is 105%.  But the National debt has grown from 30% to 105% of GDP, a 75% increase.  Subtract the 75% debt growth from the 105% output growth and our actual wealth as a country only increased about 1.4% of GDP per year. 

The difference between 47 years of growing wealthier by 2.7% per year and 37 years where we have grown wealthier by 1.4%?   Trickle down economics.

From 1933 to 1980 the highest income tax rate averaged around 80%.  Since 1981 the highest tax rate has averaged under 40%.  The robust debt free growth from 1933 to 1980 flies in the face of the notion taxing the rich hurts the economy.  In fact it appears high tax rates changed rich folks behavior - they kept more money in productive activity instead of pulling it out to stash in safe wealth storage.  The result was from 1933 to 1980 the rich got richer even as the middle class experienced a growth in income that today contrasts with the stagnant incomes of their children.

If we want to turn our economy around and enjoy real growth rather than just piling up debt this coming election should be about major structural change to our tax laws.  Who can best accomplish that goal?

Probably no Republican. Tax cuts for the rich have always come from Republicans and have been the primary Republican accomplishment over the last 37 years.

So that leaves the Democrats.  

So far, though, the Democratic candidates seem stuck in 20th century Capitalism v. Socialism thinking.  Thinking the solution to stagnant middle class incomes is in using the law to extract money from wealthy folk without giving any thought to economic efficiency or the impact on productivity and growth.  21st century thinking should be bringing more carrots into the tax code instead of relying on regulatory sticks.  Incentivizing productive activity and discouraging speculation and exploitation.  But no Democratic candidate seems to care about what happened from 1933 to 1980.

Joe doesn't even seem interested in major structural change.  He seems like he just wants to captain the ship, making slight changes in course.   Amy also seems to be in the Joe mold.  Don't rock the boat.

Bernie promotes structural change, but his touchstone seems to be a modified form of Socialism, heavily reliant on the 20th century regulatory sticks oblivious to market forces.  He does not seem flexible enough to start thinking about carrots.

Elizabeth also seems stuck in the 20 century, but does seem to be a more flexible problem solver.  However since she has taken regulatory stick based positions (wealth tax for example) during the campaign she may be reluctant to give her detractors ammunition by changing her mind.

Pete?  Kamala?  It's not clear either of them have any economic plan, nor is it clear they perceive any need for structural change.

I think voters are going to have to figure this out first and start asking why we can't have the consistent 2.7% debt free growth that spread wealth all though the economy that characterized US life between 1933 to 1980.

For data spreadsheets about the data cited above link to

 http://www.theidp.org/data-compilations.html

For a broader discussion of historical economic performance see the volume "Curious Correlations:  Party Politics and Economics" available at Amazon books.

https://www.amazon.com/s?k=Curious+Correlations%3A+Party+Politics+and+Economics&i=stripbooks&ref=nb_sb_noss

Fox News Has Become Obsessed With California

Almost every day these days my news feed pops up with stories from Fox News how bad things are in California.

Part of the Fox News business model for decades has been to promote a brand of conservatism that focuses on keeping taxes on wealthy folk as low as possible - maximizing the power and influence of the folks that own Fox News.  Even though low taxes on the wealthy are not beneficial to working folks Fox News has been very adept at cultivating voting support for their political goals with a divide and conquer strategy.  

They exploit the natural human tendency to note physical or cultural differences by vilifying politically weak minorities then convincing folk they need to vote conservative to keep those bad people from ruining everything.

Now that strategy is threatening to blow up in their face.  We have a President whose knowledge of public policy seems to have been shaped by Fox News, who is almost joined at the hip with Fox News.  A President who, in three years, has effectively abandoned Asia to despots, undermined the world economy with his ill conceived and poorly executed tariffs, destroyed arms control agreements without offering an alternative, exploded our national debt and demonstrated a constant lack of any heart or compassion.  A President on his way to becoming the first President in history to repeatedly collude with foreign governments to help his business and personal political agenda.

On top of the Trump problem Fox News has lost gay rights as an issue as gays have moved mainstream, Pro-lifers are creating their own party with socialist leanings and vilification of immigrants is effective on fewer and fewer voters as noisy immigrant bashing is causing many to realize immigrants are not bad people and maybe deserve a little compassion.

So evidently Fox News new plan to is in part vilify California.  It is California politicians that are leading the impeachment probe of our truthfulness-challenged President.  Republicans controlled California in the 1980's and 1990's but folks got so sick of them they are virtually an endangered species in modern California.  Of course a State of 40 million people has some problems (many of which are leftovers from the days Republicans ran the state)., but the reality is California has a budget surplus, is the wealthy, happy and provides decent health care to a bigger percentage of folks that any Red State.  The success of Democratic California is a thumb in the eye of the conservative ideology Fox News peddles.  

So they seem to be seizing the opportunity to try to undermine the impeachment effort by convincing red state groupies that California is not to be trusted.  Unfortunately for them, Donald Trump has left so much evidence scattered in the chaos that follows him through life it is becoming clear to all but the most blindly partisan groupies that he is undermining the traditions and government of checks and balances that have sustained our democracy for 2.4 centuries. 

I thought, as I was living through the Nixon years, I was witnessing something the likes of which would not repeat in my lifetime.  But now it appears even Watergate is being Trumped. 

How Can We Prevent California Wildfires?

The conditions that cause enormously destructive wind/fire storms -  lack of rain and dry winds - occur virtually every year, and may be getting worse.  We can't stop wildfires from occurring but we can fix the problems that turn a wild fire into a firestorm.   

PG&E is where a lot of fingers are pointing.  There is no question PG&E, like all corporations, and many people, finds it hard to spend money on long term public safety in the face of short term desires to maximize profits and executive bonuses.  PG&E is justifiably in bankruptcy for their negligent practices and are not be be excused.

But we shouldn't lose sight of all the other factors that play as big a part, or perhaps a bigger part in these disasters.

The fires generate massive fires storms because big parts of the State are undeveloped land.  Over the decades they develop huge "fuel loads" - overgrown forests and underbrush that are ideal incubators for a fire storm.

Who owns all this land?  Why don't we require landowners to reduce the fuel load regularly?  It could cost a lot less to create a mechanism to enforce fuel load reduction than it does to fight and then clean up the mess after one of these huge fires.

Probably a lot of the land is owned by investors who are essentially parking wealth in an asset that is indestructible and costs them little.  Their will be objections about intrusive government and personal freedom.  But I submit this is an area where the tension between individual rights and community safety should tilt heavily towards community protection.  

By letting these landowners ignore fuel overloads on their land we are allowing them to impose enormous costs in fire fighting, loss of life and property destruction on other people and government while they wait to reap a profit from selling their land.  

Reducing fuel overload doesn't have to be a huge expense, some local governments have taken to hiring goat herds to graze off the underbrush.

What is foreseeable can be mitigated  We need to be willing to spend some money on fuel load reduction and enforcement if we want to reduce the size and destructive power to these fall firestorms.

Corporations Are Not People*

The 2010 Supreme Court decision that found corporations have the same free speech rights as individuals is built on a foundation of logic divorced from reality.  

Corporations in the United States are created under State law.  Without State legislation creating rules for them to exist and regulating their conduct they do not exist. Modern Corporations effectively did not exist when the Constitution was written and were not mentioned in the Constitution.(footnote 1).   Yet somehow Conservative Supreme Courts miraculously divined that the founding fathers intended the first amendment to give Corporations the same free speech rights people enjoy.  

As a result corporations have an almost unfettered right to seek to influence government policy and can do so behind a dizzying array of shell corporations hiding who is really behind the message.  We now have campaigns that never end and spend more money on political advertising than our forefathers could have imagined in their wildest fantasies.  Income inequality and our National Debt have exploded.

To protect this gift from the Supreme Court Corporations have funded organizations whose entire purpose is to protect the ability of Corporations to use the massive money they generate to influence elections.  

There are also organizations seeking to amend the constitution to clarify that corporations are not people.  Here is a link to one. https://www.americanpromise.net/5-reasons-we-need-an-amendment-to-say-corporations-arent-people/?   But a Constitutional amendment is difficult because Corporations are willing to spend so much money to undermine those efforts.  So the people who reject the notion corporations have the same constitutional rights as people have been sadly ineffective.  

The supporters of a Constitutional amendment seem unaware, or unwilling to use the leverage they have to push Corporate interests to the table to develop a more acceptable view of Corporate rights.

Since Corporations are created under State law, states have a lot of leverage not available to Congress.  If enough big urban States linked limited liability to consent to regulation of political spending for all corporations formed or operating within their state no big corporation would give up those markets to protect their right to spend bundles of money influencing national elections.

Just saying - if we want to make progress on overturning this crazy decision we can't let Corporations define the playing field.

Footnote 1 - https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=2255&context=facpub

*  The title for this blog is borrowed from a book by the same title that is a great source for in depth discussion of the topic - "Corporations Are Not People" by Jeffrey D. Clements.

Warren Kumley's Comments - What Are Corporations For?

A recent article in the Economist discussed the current buzz in the business/academic world about big corporations changing their stated goal to encompass the interest of all stakeholders (shareholders, workers and the public).  Since the Reagan years the prevailing view ideological view was the only thing a CEO had to be concerned with was maximizing value to shareholders.  

I was discussing the article with Warren Kumley (who has many years experience in corporate management).  He made some very cogent observations about the article, so I reproduce his comments below with some edits to fit this format and explain some things that he wrote responding to my comments.

...I thought starting a discussion on this topic was solid, but the analysis is very weak.  Two significant factors I did not see raised:

1.  Capitalism does not equal competition.  Capitalism..(can progresses from) .. competition to oligarchies, and monopolies.  (Thus)..discussions comparing socialism to capitalism are theoretical not realistic. The time it takes to move to evolve ...(from competition to oligarchies or monopolies) has shrunk significantly during the last two hundred years.  

2.  The other key discussion involves short term vs long term objectives, asset allocations, and costs. The list of companies that are booming for 10-20 years and then are gone is very long. They fail for many reasons, but most have to do with compromising the long term to maximize short term profits for share holder, especially favoring the largest shareholders.  Many (most) equity firms run on this principle. 

... (the) third significant factor is governments role in the marketplace. Who provides the oversight and market regulations if not the government?  

(The Economist Article chided Theodore Roosevelt for interfering with the free market by stepping into labor negotiations - Warren's response: Theodore Roosevelt was absolutely correct to step in and negotiate between management and labor.  The only other option from history is revolution that leads to a period of anarchy then to a monarchy, mostly, or more recently to democracy.  These transitions have enormous costs.

Only recently has a fourth factor arisen - consumers. This arena is still evolving. It might become the glue or beacon that can better focus the actions of the other three.

Capitalism is very messy. There is a built in advantage for short term cheating, fraud, and all forms of chicanery. Government responses (recognizing there is a problem and resulting investigations followed by court cases) to new business areas is usually much slower than the markets and profits. This allows companies to obfuscate their illegal activities in many ways.  Of course, buying off government action may remain the most popular strategy...

Gun Control - A Non-partisan Solution

The sheer number of recent mass shootings has created an environment where Congress might actually do something.  I fear Congress will just slap a band aid on a fundamentally flawed law and then continue fighting about it for the foreseeable future.  

We can make the problem go away with a Constitutional amendment that lets each State control deadly weapons within their state.  Gun possession is a uniquely local concern.  Everyone has a legitimate interest in whether angry, careless or mentally unstable people in the geographic area where they spend their life have access to firearms and ammunition.  Or whether their neighbor keeps a loaded handgun in his bedside table that could be accessible to a thief or a curious child.

On the other hand as a resident of California I have very little stake in whether people in Colorado walk around with a handgun strapped to their belt, or possess assault rifles.  Or if people in Wyoming drive around with loaded rifles in a rack in their pick up, or if people in Montana manufacture their own assault weapons.

Our 50 states are vastly different in geography, population density and culture.  The Federal Government should not be making gun laws applicable to every state, each state should be setting their own rules.

The Second Amendment of the United States Constitution reads:

 "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."  

The second amendment was written when we were 13 sparsely populated colonies on the eastern seaboard still engaged in periodic conflict with other colonial powers and native populations on the northern, western and southern borders of the country.  It does not make sense today.  State Militias, citizens keeping weapons in their home so they could respond to danger to the community, effectively no longer exist.  Instead every state has a National Guard and multiple highly trained and armed law enforcement agencies, many with SWAT teams.   

A revised second amendment could read:

"Control of deadly weapons being a uniquely local concern, the right of the people to keep and bear Arms, shall not be infringed by the Federal Government. The right of the States to control deadly weapons shall not be limited by the commerce clause.  

Some will argue they still need their weapons to protect themselves from an over-reaching State government.  But the ability of the State to deprive citizens of their rights as citizens will be limited by the Federal Constitution and Federal courts.  

This should be an eminently politically feasible amendment based on current polls that show overwhelming support for gun control.  Instead of a Red State / Blue State battle to impose nationwide rules, each states voters could determine the status of firearms in their state, or could let each county or city within the state decide for themselves how they wanted to treat deadly weapons.  In 1918 when Congress sent the proposed 21st amendment out to the states to ban alcohol nationwide many experts predicted it would not get adopted by enough states for many years, in fact it happened in months.

The NRA and the gun lobby will not like this solution so will oppose it, but most Americans will recognize it as a fair minded solution.  

The sentence about the commerce clause is to limit the ability of those with an interest in selling lots of guns to use the courts to limit a State's right to  control deadly weapons.

The resolution of our national disagreement over the second amendment should not be driven by all or nothing partisans on the two opposing sides.  The sensible middle must take the lead. 

Gun Control - September 4, 2019

One of the lead stories was the latest in the regular string of bombings of weddings and other public events by the Taliban in Afghanistan.  I thought to myself, as I have for most of my life when I hear about violence in the "backwards" parts of the world, how blessed we are to live in a country where folks rarely go around killing people for no apparent reason, or to make a political statement.

But almost the next story covered the shooting in Odessa Texas.  It was like having a bucket of ice water dumped on my head as I realized we are becoming Afghanistan.  We may have had more crazy or politically motivated mass murder events this summer than Afghanistan.

Deep down I  always had a little bit of a feeling it could never happen to here because our dominant religions are rooted in the teachings of Jesus.  Yet the proliferation of mass murder events are a direct result of the most noisily Christian folk in this country supporting, or tolerating, the Gun Lobby dictating policies to Republicans for 40 years.  

In their zeal to have a veto power over women's reproductive decisions they have sought appointment of conservative Supreme Court justices.  Those justices have twisted the words of the second amendment to the point their decisions preclude the state from stopping angry or crazy or politically unstable people from walking into stores, or churches or other public places with assault weapons and opening fire.

Not a legacy Jesus would be happy with.