Year: 2010

To find out who rules America and how they do it, go to William Domhoff’s WhoRulesAmerica.net website.

Posted on by Marc Jampole

I made a slight factual error in yesterday’s blog.  I said that Sweden has a more equitable distribution of wealth than both the UK and the United States.  I should have checked it out first on Professor G. William Domhoff’s website, WhoRulesAmerica.net.

In a recently updated article titled “Wealth, Income, and Power,” that’s on his website, Professor Domhoff presents a table comparing the percentage of wealth held by the wealthiest 10% of the population in various western countries.  It turns out I was half right:  in the United States, the wealthiest 10% own 69.8% of all wealth, whereas in Sweden, it’s 58.6% and in the UK it’s 56%.  So Sweden has a far more equitable distribution of wealth than the U.S., but a slightly less equitable distribution than in the U.K.

BTW, I highly recommend both the WhoRulesAmerica.net website and Professor Domhoff’s two masterpieces, Who Rules America (which has been updated since the original 1967 edition) and The Powers That Be.  For more than 40 years, Domhoff has studied who has power in the United States, why they have it and how they use it.  He combines key social insight with the most advanced techniques for gathering and analyzing data.

Although Professor Domhoff wouldn’t know me from Adam, I have been his disciple since I first ran into his books in the Printer’s Ink bookstore in Palo Alto, California in the early 80s.  Both Who Rules America and The Powers That Be appear on my list of 15 books (actually 14 books and one article) that I give to all young professionals who go to work for me and recommend to students when I lecture at universities.  I have used Domhoff’s “policy formation process” chart to help me advise clients who want to influence public opinion about an issue.  This model of how powerful people effect change in a post-industrial representative democracy has also helped me to understand many of the moves made by influential individuals, religious groups, politicians, business associations, think tanks and the other entities seeking to control or influence our complex society.  For example, I’ve referenced the model and Domhoff in blog entries twice over the last year.

I usually fact-check every assertion of fact I make in my blog entries.  The one time I didn’t, I should have.  But in a way, I’m glad, because it gave me an excuse to speak about William Domhoff and his very important research and ideas.

And mentioning Professor Domhoff gives me the excuse to present my entire list of 14 books and one article that I would recommend to any student of public relations or mass communications, or to anyone who wants to understand the process of communicating for organizations in civil and sometimes not so civil society:

  1. “Politics & the English Language”/George Orwell
  2. Ars Poetica/Horace
  3. Course in General Lingustics/Ferdinand La Saussure
  4. Manufacturing Consent/Noam Chomsky & Edward Hermann
  5. Poetics/Aristotle
  6. Propaganda/Bernard Taithe & Tim Thornton, ed.
  7. Social History of Art/Arnold Hauser
  8. The Elements of Style/William Strunk, Jr. & E.B. White
  9. The Lonely Crowd/David Riesman
  10. The Power Elite/C. Wright Mills
  11. The Powers That Be/William Domhoff
  12. The Structure of Scientific Revolutions/Thomas Kuhn
  13. The Theory of the Leisure Class/Thorsten Veblen
  14. Who Rules America Now/William Domhoff
  15. Working/Studs Terkel

A new award named after the condiment that the Reagan Administration said was a serving of vegetables.

Posted on by Marc Jampole

When BP Chairperson Carl-Henric Svanberg earlier this week used the term “small people” to describe, I think, the average person without wealth, social standing or political connections, he was most certainly misspeaking. 

We can’t look into his mind, but there is no doubt that whatever his true feelings are, as the titular head of a large multinational company, Li’l Carl’s official position would always be to show respect to all victims of the devastating oil spill that his company’s sloppy cost-cutting caused.  It’s possible that Li’l Carl, a native Swede, was translating an expression from Swedish that does not have the taunt of an insult that “small people” does.  On the other hand, as my life partner Kathy points out, the very concept of “small people” seems less likely to be part of the Swedish ideology than the British or American, since Sweden has a flatter social hierarchy and a more equitable distribution of wealth.

Li’l Carl made a verbal error, no doubt, but what about those people and institutions who purposely misspeak, with the goal of misleading or enforcing their own reality on both the English language and everyone else?  Sometimes they expropriate a term and misapply it, and sometimes they make up a new combination of words.

Here are some recent examples:

  • In May of this year, Spirit Airlines announced that it is now installing seats that can’t move backward or forward on some of its aircraft.  Spirit describes these new seats with less legroom than ever, as “pre-reclined.”  The use of the term “pre-reclined” is supposed to communicate that instead of taking something away from the passenger, Spirit is adding a new service—they recline the seats for you before you even step on board.  Of course, no one is buying it.  People still say they’re thinking about buying a “used car,” decades after luxury auto makers introduced the term “pre-owned.”  In the same way, all Spirit has done is call attention to its latest cost-cutting move.
  • In a sermon delivered this past Good Friday, Raniero Cantalamessa, the official preacher of the papal household, equated the criticism over the priest sex abuse scandal with anti-Semitism.  Of course it is, Father Cantalamessa, but only if it’s a sin to be Jewish.  The good father was trying to say that the sex abuse scandal has been blown out of proportion, much as some unstated harmless peccadilloes of the Jews are blown out of proportion by anti-Semites.  Two problems: 1) Jews do nothing wrong merely by being Jewish, whereas abusing children sexually is inherently wrong; 2) The comparison is based on the false and unstated notion that there are some things inherently wrong with Jews.
  • In March, former Texas Congressman Dick Armey called the founders of Jamestown “socialists” and said that’s why the town failed.  Sure thing, Dick, I understand that socialism is also why the 1962 Mets lost so many games.  Armey is completely wrong: as many historians point out, at the time, Jamestown was purely a business venture based on the principles of early industrial capitalism.  But for Armey, anything that is bad and fails is by definition socialist.   
  • Also in March, The New York Times reported that Wahoo, a seafood restaurant in Islamorada, Florida, claims to serve only local fish.  When confronted by the fact that a lot of its fish comes from Viet Nam and elsewhere, the owner said that it’s local because he buys from a local distributor.  
  • Finally, my personal favorite, from the June 12 issue of The Economist: in an article on what’s wrong and right about America’s right-wing, the writer describes Mitt Romney as a “self-made multi-millionaire.”  First of all, it’s probably not true, as his father was a successful businessman who served as head of a large multi-national corporation.  While I don’t know for a fact, I think it’s a pretty fair guess that Mitt started out with a few million to his name.  But beyond the error in fact is the false impression that the Economist is trying to create.  We are ideologically programmed, almost from first grade, to admire the self-made person like Andrew Carnegie who started in poverty with no social connections and rose to riches and fame.  The Economist wants to extend that admiration to Mitt, but it’s a rank distortion, because even though Romney made hundreds of millions through the purchase and sales of corporate assets, he is in no way, shape or form “self-made.”

Beginning this December or January, I am going to make a special award to the most absurd bending of language of the prior year.  I’m calling it The Ketchup Awards, in honor of the condiment that the Reagan administration declared a vegetable for the purpose of evaluating the nutritional value of the federal school lunch program.  In a special blog or maybe two, I will list at least 10 finalists and make three awards:  3rd Place gets One Dollop; 2nd Place Two Dollops; and the grand prize winner will get The Full Squeeze.

If you would like to nominate someone for the first annual Ketchup Awards, just post it in a comment on one of my blog entries or email your nomination to ketchupawards@gmail.com.  Please include the phrase and the person or organization who said it in your nomination.  No need for any links, but keep in mind that we will have to verify the facts and a link will make this task a little easier.

The real alternative to small government and low taxes is a more equitable distribution of wealth, Part II.

Posted on by Marc Jampole

Yesterday I think I pretty much demolished the ideas that less government is always better and that the private sector can always do things better than government can.  Today, I want to tackle the companion idea that lower taxes are always better.

We currently have historically lower taxes and historically higher debt than at any time since before World War II.  As we have lowered taxes, we have nevertheless kept spending and paid for it by borrowing money.  What would have happened if instead of borrowing that money, we had kept taxes high or not lowered them as much?

To answer this question we have to know two things: who pays the taxes and who lends the money, because the first flow of money will go from those who loaned it to the government to those whose taxes were thereby lowered.

The wealthiest families and individuals and bigger businesses are the ones whose taxes have been lowered the most over the 30-year rein of Reaganism.   That’s just the facts. 

Moreover in theory, lowering taxes alomost always gives more money to the wealthy than to others.  Here’s why: the higher taxes go, the more of total taxes the wealthy should always theoretically pay.  Even when tax rates are flat, the wealthy pay more because they earn and have more.  As we all know, rates are progressive, which means that the more you make, the higher the tax rate.  For example, the highest tax rate before Reagan pushed through his first tax cut was 70% and now it’s 35%.  It is theoretically possible that we could have a tax system in which rates were so regressive (the more you make, the lower the percentage of your income you pay) that the wealthy paid less when taxes were raised, but it would probably first take the installation of a dictatorship.

It’s clear that with the lowering of taxes, in what actually has happened since 1980 and in theory, rich people get the biggest break, which means they have the most extra money to spend.

Now who are the lucky souls who fund the debt that the government floats instead of collecting taxes?  I call them lucky because when they loan the federal government money, they are making the single safest investment that has ever existed in the entire recorded history of humankind: the U.S. Treasury bond!

Why it’s the very same people who got the most extra money from lowered taxes—the wealthy—who buy the bonds.  Sure, people in the middle class and the poor may have a couple of government bonds, but the wealthy own the preponderance of T-bills and other government investments not held by China and other foreign countries.  In other words, under low-tax regimes, instead of wealthy people giving taxes to the government, the government ends up creating safe investment havens for the wealthy, and in the recent past, foreign countries as well.

And who pays the interest?  Future generations do, as interest to the bondholders, which means that the same tax base in future years will not be able to cover as many goods and services for the common good.  If a low-tax regime persists, and remember that except for the boom Clinton years we have had a low-tax regime since 1980, a pernicious double helix is created, as the increase in debt and the decrease in government effectiveness both spiral into a societal dance of death.  It happened in 16th century Spain and if we don’t raise taxes soon, it will happen here.

The rich primarily get the investment income, whereas all of us pay it out, so when we lower taxes and fund the government by borrowing money as Reagan and both Bushes did and, unfortunately, Obama now is still doing, we are making another net transfer of wealth up the economic ladder, this time from the poor and middle classes to the wealthy.

The greatest folly in all of this, of course, is that so much of the current federal deficit was directly caused by the military adventurism of the last 30 years, and specifically the sheer disasters of Iraq and Afghanistan.

I’m not saying that governments should never borrow money and instead fund all operations with taxes.  For example, municipal bonds earmarked to build needed schools and highways make a lot of sense, just as it makes a lot of sense when a business borrows money to build a new factory or improve its computer systems.  And just as some businesses have working lines of capital to provide them with the cash flow they always need, perhaps government also needs a ready source of funds that makes more sense to fund by borrowing instead of taxing.

What I am saying, though, is that when you hear conservatives talk about keeping taxes low or lowering them still more, they are advocating that we create investment opportunities that lead to a mass transfer of wealth from the poor and middle class to the wealthy.

The real alternative to small government and low taxes is a more equitable distribution of wealth, Part I.

Posted on by Marc Jampole

The two constants that unify the Republican party and the right-wing since the ascension of Reaganism in the late 70’s are the calls for lower taxes and less government.  These are the two pillars of the right that unify the wing-nuts, the Christian right, the libertarians and the dwindling number of what used to be called “Main Street Republicans” or “Rockefeller Republicans” (most of whom have fled to the Democratic party, driving that political party rightward).

The pull of these two ideas is obvious:  On the surface when there is less government and lower taxes people have more freedom and more money. 

Over the next few blog entries, I want to take a look at what the alternative is to less government and lower taxes.  I think at the end of the day, we’ll find that less government and lower taxes do not lead to more wealth, but instead, to a transfer of wealth from the poor and middle class to the extremely wealthy.

Let’s start with less government, not as a to-die-for philosophical concept, but as an option to address problems and challenges.  Are public schools better or private/charter schools?  Should governments or private businesses run prisons?  How much should our military do in the war and how much should it job out to consultants such as Blackwater and KBR? Should we regulate industries or let them set their own standards?

One of our leading beliefs over the past 30 years embedded in virtually every media story about business and economics is that the private sector can accomplish any task much more efficiently and with a higher-quality solution than government can.  Comedians joke about government workers and journalists assume the private sector always is the first choice.  Both Republicans and Democrats rail against big government when running for office.

But if businesses were inherently so superior to governmental bodies, why would it be the case that 56% of all new business fail within four years? By contrast, the number of municipalities that have ever gone bankrupt in the United States is infinitesimally low. 

Some will immediately realize that one main reason for the low rate of government failure is that it is easier for a stable government to raise taxes or borrow money than it is for an unstable business to find financing to continue operations, but that is exactly one of the advantages of having government address broad social needs like building and repairing roads, protecting our communities, educating our young or providing health care to the elderly and poor.  A government, while it must bend to the will of the people, can think and act long term and therefore not break under the momentary pressures of the marketplace.

Let’s go beyond philosophy now and look at performance:

  • Virtually all studies on charter school performance demonstrate that charter schools almost always fail to improve student performance and often worsen it.  Here is one of many examples: a recent Stanford University study found that the math performance of 46% of charter schools is indistinguishable from public schools, 17% had substantially higher scores and 37% of charter schools had substantially lower scores than their public school equivalents.
  • The privatization of our prisons over the past 25 years has been a festering scandal of prisoner abuse and fraud.
  • Did you prefer how our wars went when we used relatively few contractors as in World War I and II, or now that we’re making massive use of military contractors in Iraq and Afghanistan?  
  • When the government loans money to students for college and career training, the terms are significantly better than when the private sector was allowed to do so between the early 90’s and this year. 
  • We all hear jokes about trying to interact with government workers, and I can honestly say that every call I have ever made to a government agency that didn’t know me already was an extremely frustrating experience.  But why don’t you spend the afternoon trying to talk with your cable system provider, telephone service provider, a company that sold you your computer, the electrical power company and one airline, and then tell me that the private sector is any better.

So let’s look at what happens every single time a private for-profit company does something that government can do or traditionally has done: Whether for schools, prisons, or cooking and delivering meals to soldiers, the private company makes (or sets its budget with the intention to make) profit for its key executives and shareholders. 

Now it’s a simple fact that low level government workers, many of whom are unionized, typically make more money than their peers in the private sector, most of whom aren’t unionized, whereas private sector presidents, officers and senior management make far more than department heads and other civil service executives.  

Some government contracting makes sense, e.g., to manufacture tents for soldiers or provide a special social service to an “at-risk” population.  In fact, some very successful government programs; for example, Medicare and Medicaid are really public-private partnerships in which government uses private insurance companies for claims processing and quality control.

But whether successful like Medicare benefit management companies or a sheer failure like privatized schools, prisons and war-making, when the government awards a contract out instead of doing it with its own resources, it is taking money from lower paid employees, who tend to be middle class, and giving it to executives and investors, who tend to be wealthy.

In the case of education, lower-paid nonunionized charter school teachers replace higher-paid unionized teachers.  The idea that this transfer of wealth from workers to management will increase student performance goes completely against the grain of basic U.S. thought.  Remember, an ideological tenet we hold especially dear is that people who make more money generally do a better job than those who make less money in any given field.  If it works for attorneys, marketing executives, athletes, movie stars, architects, engineers, physicians, accountants, business leaders and other professionals, why doesn’t it work for school teachers?  Shouldn’t the basic economic flow of money in charter schools from school teacher to executive by definition produce a decline in performance? Of course it should, and the statistics prove it does.

So whenever politicians are making a case for smaller government that involves one of the basic goods and services that have traditionally been a task of democratic governments in the U.S. or Western Europe, part of that case always involves a massive transfer of wealth up the economic food chain, typically from the middle class to wealthy.

Tomorrow I’ll look at that other sacred cow of conservatives: lower taxes.

Here’s more proof that the news media are actively facilitating those who want to question global warming.

Posted on by Marc Jampole

This week has brought more proof that the news media, taken either as a large group of individual media or a much smaller group of large media conglomerates, are actively facilitating those who want to question global warming.

Stanford Research Institute’s Political Psychology Group, under the direction of the estimable Professor Jon Krosnick, released a study on either Wednesday or Thursday that shows that 74% of all Americans believe the Earth has been warming over the past 100 years and 75% believe that humans have been substantially responsible for the new heat.  An overwhelming 86% want the federal government to limit the amount of air pollution businesses emit.  The survey polled 1,000 people.

In both the news release about the study that was released on Thursday and the Op/Ed piece by Professor Krosnick the day before in the New York Times, the Professor analyzes other studies by CNN, Gallop and Pew that have, on the surface, shown greater public doubt on global warming.  Professor Krosnick demonstrates that these studies asked indirect or confusing questions.  For example, Gallup asked “Thinking about what is said in the news, in your view, is the seriousness of global warming generally exaggerated, generally correct or is it generally underestimated?,” which is a question about media reporting not about beliefs in global warming.

How did reporting on this study fare in the news media?  If we count the release of the study as the day the Times article appeared, then on the second day the survey had 22 hits on Goggle News and the third day (today) had 37 hits.  If we count the distribution of the news release as the first day of the announcement, then the second day’s total was 37.

Let’s compare this coverage to the release of the George Mason University study that 50% of TV weather personalities don’t believe global warming.  You know, TV weather personalities, half of whom have never studied weather, the other half of whom are meteorologists who are not required to study climatology.  I’ve talked about this survey twice before, on March 30, 2010 and two days later.  This survey had second day Google News totals of 96 and third day totals of 108.   The news media actually perverted the goals of the study, which were to measure a barrier to communicating to the public effectively about global warming issues.

So depending on how you jigger the numbers, the news media have given from 259% to 290% more coverage to the misunderstood survey from the much smaller and lower ranked George Mason than it has given to the clear and precise survey by the much more prestigious Stanford University.  No offense to George Mason, but facts are facts.

Why do the news media persist in overplaying the statements of disbelievers in global warming and underplaying the statements of proponents?  Why is it even an issue?  Global warming is a fact.  The real issue is what countries, businesses and each of us individually is going to do about it. 

Some might say that my Google News results are skewered by the large right-wing news media led by Rush, Sean and Glen, but even if you remove these wing-nuts from the numbers, there still seems to be extensive coverage of “if it exists” in what is considered the “mainstream” news media.  Moreover, when you consider the small number of media owners nowadays and the way the main stream media cover the right-wing media as a story in and of itself, I’m beginning to believe that it may no longer be accurate to make a distinction between right-wing and mainstream media.

By keeping up the discussion on whether global warming exists, the news media slow down consideration of how to respond.  I’m sure many readers will remember how long the cigarette industry tried to stonewall the undeniable proofs that smoking or chewing tobacco products causes cancer.  I don’t remember the news media being quite so accommodating to the tobacco industry once the facts were in.  But then again, as much as the tobacco companies advertised and lobbied, the oil companies, electrical utilities and large manufacturing, metal extraction and chemical industries do more.

Random notes on various subjects to thrill and bore you at the same time.

Posted on by Marc Jampole

Time to do some blog housekeeping again.

First, I want to make sure everyone sees the response to my June 7 blog on Nestlé’s new product–an elaborate system that produces a ton of waste just so people don’t have to boil water for tea.

As you’ll see, John Sargent thought I implied that Nestlé was no longer doing exploitative marketing against which people have boycotted for years.  I wasn’t saying that, but John is right that I could have used the opportunity to remind people that there is still a boycott of Nestlé products.  John does in his response:

John Sargent says:

June 7, 2010 at 12:49 pm

I am surprised by the tone at the end of this article which seems to suggest that Nestle are no longer guilty of inappropriately marketing their baby milk products in developing countries. If only that were true. Sadly this isn’t the case. They are still in breach of the WHO guidelines and the boycott on their products remains.

See the Baby Milk Action blog:
http://info.babymilkaction.org/news/campaignblog260510

Find Baby Milk Action on Facebook:
http://www.facebook.com/group.php?gid=4978994961

Moving right along, I’ve posted twice about the need to make sure the National Commission on Fiscal Responsibility and Reform, on June 2 and February 19, 2010.

In my June 2 blog entry, I asked readers to write all the Commission members asking them to make sure that the Commission recommends that the federal government pays the Social Security Trust Fund back all the money it has been borrowing from the Trust Fund since the Reagan administration.   I gave everyone a list of the contact information for all the Commission members, which I will repeat at the end of this blog.

I thought I would post two sample letters for those interested in joining the “Save Social Security” movement.  The first one I sent to all the Commissioners yesterday; the second one comes from my assistant, Colette.

MARC’S LETTER

June 8, 2010

Honorable Alan K. Simpson
Burg Simpson Eldredge Hersh Jardine, P.C.
1135 14th Street
P.O. Box 490
Cody, WY 82414

Dear Honorable Simpson:

I am writing you concerning your role as part of the National Commission on Fiscal Responsibility and Reform. 

As you know, under the Reagan Administration the federal government started borrowing money from the Social Security Trust fund instead of raising or maintaining taxes or floating other Treasury debt.  Many people such as Peter Peterson would like the United States to walk away from these loans that the federal government has taken from the Social Security Trust Fund and not pay the money back as part of a package to deal with our pressing debt problems. 

As the owner of a very successful small business, I am quite concerned about this alarming and irresponsible proposal.  If we do not pay this debt back, it will be disastrous not only for the millions of people who will see their Social Security benefits gutted, but to the ability of the U.S. to borrow money  because it will mark the first time that the country has ever defaulted on a loan.  A much better approach to addressing our national debt is to increase corporate, income and capital gains tax.

Please make sure that the National Commission on Fiscal Responsibility and Reform recommends that the federal government repay the Social Security Trust Fund every penny it owes so that Social Security can remain solvent without major changes and the federal government can work on its real challenge, which is lowering the federal debt. 

Best regards,

Marc Jampole

COLETTE’S LETTER

June 8, 2010

Honorable Alan K. Simpson
Burg Simpson Eldredge Hersh Jardine, P.C.
1135 14th Street
P.O. Box 490
Cody, WY 82414

Dear Honorable Simpson:

I am writing you concerning your role as part of the National Commission on Fiscal Responsibility and Reform. 

As you know, under the Reagan Administration the federal government started borrowing money from the Social Security Trust fund instead of raising or maintaining taxes or floating other Treasury debt.  Many people such as Peter Peterson would like the United States to walk away from these loans that the federal government has taken from the Social Security Trust Fund and not pay the money back as part of a package to deal with our pressing debt problems. 

As someone who has contributed to the Social Security Trust Fund for over two decades, I am deeply concerned that the money promised to me from this Trust will not be available to not only me but others who have contributed to the system.  As promised, I want the money to be available for my family.  The government can’t solve its debt problems by forgiving the debt it owes to its citizens. 

If the Social Security Trust is gutted, millions of people will be forced to rely on other forms of government programs such as Medicaid and Social Security Disability which will also become insolvent.   The federal government needs to concern itself with the welfare of its citizens in need rather than corporate welfare or the desire of the wealthy to increase its wealth at the expense of fellow citizens.

The federal government has a responsibility to ensure that Social Security remains solvent and the promise to provide financial support to its citizens in their retirement be fulfilled.  The federal government should address the national debt problem by increasing corporate, income and capital gains tax. 

Sincerely,

Colette Roessler

COMMISSION MEMBERS

Here are the Commission members:

Co-Chairmen:

Sen. Alan Simpson, former Republican Senator from Wyoming
Hon. Alan K. Simpson
Shareholder
Burg Simpson Eldredge Hersh Jardine, P.C.
1135 14th Street
P.O. Box 490
Cody, WY 82414
asimpson@burgsimpson.com

Erskine Bowles, chief of staff to President Clinton
President
University of North Carolina at Chapel Hill
910 Raleigh Rd
Campus Box 9000
Chapel Hill, NC 27514
ebowles@northcarolina.edu

Executive Director:

Bruce Reed, chief domestic policy adviser to President Clinton and chief executive officer
Democratic Leadership Council
600 Pennsylvania Ave., SE
Suite 400
Washington, D.C. 20003

Commissioners:

Sen. Max Baucus (D-MT)
511 Hart Senate Office Building
United States Senate
Washington, D.C. 20510

Rep. Xavier Becerra (D-CA 31)
1119 Longworth House Office Building
Washington, D.C. 20515

Rep. Dave Camp (R-MI 4)
341 Cannon House Office Building
Washington, D.C. 20515

Sen. Tom Coburn (R-OK)
172 Russell Senate Office Building
Washington, D.C. 20510

Sen. Kent Conrad (D-ND)
530 Hart Senate Office Building
United States Senate
Washington, D.C. 20510-3403

David Cote, chairman and chief executive officer, Honeywell International
Honeywell International Inc.
101 Columbia Road
Morristown, NJ 07962

Sen. Mike Crapo (R-ID)
239 Dirksen Senate Building
Washington, D.C. 20510

Sen. Richard Durbin (D-IL)
309 Hart Senate Building
United States Senate
Washington, D.C. 20510

Ann Fudge, former chief executive officer, Young & Rubicam Brands
2400 Beacon St, Ph 601
Chestnut Hill, MA 02467

Sen. Judd Gregg (R-NH)
201 Russell Senate Office Building
Washington, D.C. 20510

Rep. Jeb Hensarling (R-TX 5)
129 Cannon House Office Building
Washington, D.C. 20515

Alice Rivlin, senior fellow, Brookings Institute and former director
Office of Management & Budget
Brookings Institute
1775 Massachusetts Ave, NW
Washington, D.C. 20036
arivlin@brookings.edu

Rep. Paul Ryan (R-WI 1)
1113 Longworth House Office Building
Washington, D.C. 20515 

Rep. Jan Schakowsky (D-IL 9)
2367 Rayburn House Office Building
Washington, D.C. 20515

Rep. John Spratt (D-SC 5)
1401 Longworth Building
Washington, D.C. 20515

Mary Kay Henry, president, Service Employees International Union
1800 Massachusetts Ave NW
Washington, D.C. 20036

Can a product be so wasteful and unnecessary that it is inherently immoral? Nestlé tests the limits.

Posted on by Marc Jampole

For some years now, several companies have sold coffee-making systems that produce coffee and other warm beverages while creating a mountain of waste.  The coffee is in a sealed aluminum pod that the user inserts into the machine and voila, one cup of the coffee you selected is sent through a common dispenser into your probably Styrofoam cup.  Now these systems do not brew coffee in a different way as an espresso maker does; but rather they bring technology to the art of making instant coffee.  The pods come in an array of coffee strengths and flavors (usually artificial), and often include hot chocolate and some tea varieties.   

I have seen these set-ups from several companies in a number of homes and business, and I can see why businesses fall for this machine:

  • No more arguments about cleaning up the coffee pot
  • People get a wide choice of drinks
  • It’s completely sanitary

I don’t drink coffee, but the tea and hot chocolate from these contraptions has always struck me as having two strong back flavors—one of coffee and the other of that general processed flavor you can taste in certain processed foods. 

And these tins will accumulate quickly and create unnecessary waste.  It’s absurd—every cup of coffee, tea or cocoa makes another aluminum pod.  Whatever the convenience factor, how can anyone justify the packaging waste this system produces.

And now the New York Times reports that Nestlé is coming out with one of these pod systems just for tea!!! 

You remember Nestlé.

That’s the Swiss food giant that promoted infant formula over breast-feeding to mothers in less economically developed countries, which led to health problems and infant deaths because of the unavailability of clean water with which to mix the formula.

Nowadays, instead of exploiting the poor, Nestlé is pandering to the wasteful tendencies of our throwaway society. 

Okay, let’s take it all in:  You buy an expensive machine plus expensive pods of tea and whatever artificial flavorings and preservatives are also in there and you create a nice cup of litter for every single cup of tea you have—all to avoid boiling water.

It makes you wonder if there are some products such as these beverage making systems that are so useless and unnecessary that they are inherently immoral.

To all individuals and businesses:  Do not buy this machine.  Buy a tea pot and a coffee maker. 

And when you run into these machines, do what I have started doing: refuse to drink any beverage from them.  You don’t have to make a big deal about it if you don’t want to be confrontational.  Don’t say why you’re not having any coffee if you feel uncomfortable about “dissing” your client or your lawyer, or your significant other’s bourgeois parents whom you’re meeting for the first time.  Just don’t drink the coffee or tea.

Our man-made disasters: are the risk management models wrong or do people feed in overly optimistic information?

Posted on by Marc Jampole

A common element in some recent man-made or man-assisted disasters has been the failure of risk models to predict the disaster.  The subject of risk models is a bit complicated, so let’s start with a simple definition.

Many events are caused by not one thing, but by a bunch of things.  For example, position of the earth, humidity, wind, levels of CO2 and air particulates, conditions on the ground and a host of other factors that can affect whether it’s going to rain, or how much it’s going to rain. 

Essentially, a risk model tells you how likely something is going to happen.  You set up your model as a set of mathematical equations that define measurable factors.  You then do little thought experiments:  What if we raise the temperature?  What if we assume that local factories and cars are spewing out more CO2?  What if we assume that it doesn’t rain for five years?  Changing each of those factors would give us a different answer.

Engineers, insurance companies, economists, businesses and scientists all use risk models to predict how likely something is going to happen based on the most likely or common numbers for each factor.  They then predict future behavior by changing these variables:  How many sales will we lose if we raise the price of this new product?  What will happen to traffic patterns if we double the size of the store we’re building?  How will putting a tax on sweetened drinks affect consumption and tax revenues?  What is the likelihood that Iran will have an atom bomb by 2015?  Will it cost more to fix the very minor flaw in this piece of equipment or to defend the small number of lawsuits we can expect if we don’t fix it?

But here are some recent huge risk model failures:

  • A risk model was used to measure the likelihood of an oil spill occurring when using the technologies, equipment and maintenance schedule BP used on its oil rig that is currently spilling about 19,000 gallons of oil into the Gulf of Mexico on a daily basis.  That risk model said that such an accident was highly unlikely.
  • Risk models were used to package, sell and buy the sophisticated synthetic investments that sent the economy into the toilet two years ago.  These models said that it was almost impossible for certain combinations of investments to fail, and when they did, large banks failed or almost failed. 
  • Risk models helped state and federal budgeters for years decide they could put off fixing the New Orleans levies for yet another year.  Other risk models said that the levies were safe enough to handle even the rarest of storms.  These risk models proved wrong when the rarest of storms, Ms. Katrina, paid a visit to the Gulf coast.

Why did these risk models fail?  We of course have to entertain the possibility that some situations are just too complicated for prediction, but in many cases, it’s not the model, it’s the numbers that people crunch into the model.  If you put overly optimistic predictions in, you will get an overly optimistic result.  We saw an example of optimistic prediction in western Pennsylvania a few years back when a local university put its name on a study that concluded that passage of a funding referendum that included building new football and baseball stadiums would lead to the creation of thousands of jobs.  But when you dug deep into the study, the conclusions were based on assumptions that every new industrial park funded by the referendum would fill up to capacity in townships which had seen population and business losses for more than 20 years.  The assumptions were optimistic, so the prediction of the model was bound to fail.

There are plenty of indications that in the three examples of recent man-made or man-assisted disasters that I gave, people involved were too optimistic in their predictions.  And why?  Because by doing so, they were able to make money or save money on a short term basis.  Every day engineers, economists and other people working with risk models get pressure from their clients to come up with the results the clients want.  So they fudge on their estimates.

There’s nothing wrong with risk models, but there are many old expressions that cover what can happen when they are misused.  The acronym GIGO comes to mind—“garbage in, garbage out.”  And Mark Twain once said, “Figures never lie, but liars figure.”

Tea party positions show either the inconsistency or hypocrisy of Tea Party leaders, and perhaps also followers.

Posted on by Marc Jampole

Over the past week, the news media has given some publicity to two Tea Party stands that seem wildly inconsistent with its basic principles.

Let’s start with those principles, as I understand them.  I’m listing the core beliefs of its leaders and members, the few statements that come to mind as soon as you think of the Tea Party; its brand, if you will:

  • Grass roots movement of the people
  • Wants lower taxes
  • Wants smaller government that does what the people want
  • Wants more dependence on the free market

Yet in several states, Tea Party members are pushing for repeal of the 17th amendment, which mandates election of Senators instead of appointment by state legislatures, which was what the Constitution called for and was the practice in the U.S. until well into the 20th century.  There have been a number of articles on the Tea Party move to end democratic election of U.S. Senators, including two in the New York Times “Tea Party’s Push on Senate Election Exposes Limits” and “So You Still Want to Choose Your Senator?.”  A brief search also yielded articles in local newspapers like the Anniston Star in Alabama, plus U.S. News & World Report, Huffington Post and Atlantic.  One of the New York Times articles reminds us that George Will, the raving right-wing ideologue disguised as a mild-mannered intellectual, and Alan Keyes, perpetual “longshot“ values candidate,  both have proposed repeal of the 17th amendment.

The arguments for repeal are weak and include the idea that 30-second sound bites have turned elections into circuses and that with direct election of Senators, state legislations lost all their influence over Congress.  These arguments mask the basically anti-democratic nature of appointing legislators instead of having all the people elect them.  As the approximately 125-year history of appointing Senators showed, Senators tend to support the special interest groups that support their candidacy, whether the voters are all the people or just the 50-200 members of a typical state legislature. 

Why would a grass roots movement of the people want to take power away from the people and give it to government?  The Tea Party movement doesn’t like any government, so why do its leaders suddenly want to put their faith in state government?

But now for the really weird: Last weekend there were a number of rallies in the state of Arizona in favor of and against the new Arizona anti-illegal immigrant law that allows the police to stop anyone for suspicion of being an illegal alien and ask them for their papers proving they are U.S. citizens. (Do you carry your passport around all the time?  I don’t, but I guess I don’t have to since I don’t look Hispanic or Muslim.) 

It turns out that Tea Party groups from Dallas and St. Louis sponsored one of the rallies in favor of the new law.  Tea Party members were at the rallies supporting the Arizona law and not at the rallies against this carte blanche invitation to racial profiling. 

And why does the Tea Party say it’s supporting the new Arizona law.  From the New York Times  “We are doing this to crush any boycott against the free market,” said Tina Loudon, a Tea Party member from St. Louis who helped organize the rally.

It seems to me that someone in favor of a free market would not only support accommodation of illegal aliens but want to open up our borders completely.  Free means free, without encumbrance or regulation, and yet the Tea Party wants police to intervene in the free passage of people.  Furthermore, someone who doesn’t like government butting its nose into private business should not be happy with any law that puts the government into the business or regulating labor markets, and a law policing immigration certainly does that.

But these are only apparent contradictions because as a study released today by the University of Washington shows, “opposition and frustration with government is going hand in hand with a frustration and opposition to racial and ethnic minorities and gays and lesbians.”  There are about 40 stories showing on Google about the survey.  For example, the Seattle Times reported that the director of the study said, “The tea party movement is not just about small government or frustration. It’s (also) about a very specific frustration with government resources being used on minorities and gays and lesbians and people who are more diverse.“

At heart, while the Tea Party throws around concepts such as “free market,” “lower taxes” and “small government,” what the members really are concerned with is maintaining and gaining power for their concept of what constitutes what Sarah Palin calls “the real America”—in other words: white, rural/suburban and Christian.

Tell National Commission on Fiscal Responsibility members to make federal government pay what it owes Social Security.

Posted on by Marc Jampole

Reading William Greider’s article titled “Whacking the Old Folks” in the most recent Nation reminded me that I wanted to list on this blog the contact information for every member of the National Commission on Fiscal Responsibility and Reform, the independent bipartisan commission that President Obama set up to address the budget deficit.

As William Greider and Nation and seemingly few others have been saying for many months, the hidden agenda of this commission may be to address the enormous federal budget deficit by gutting Social Security. This move would be disastrous because it would destroy faith in the United States’ ability and willingness to pay its debts. I can’t see how an economic system built on faith in credit can survive if the largest economic player is seen as untrustworthy, and that’s how our country will be seen if we make substantial cuts to Social Security benefits.

That’s because Social Security has plenty of money, but it’s loaned all its surplus to the federal government, a practice started in the Reagan Administration. If we assume that loan will be repaid, we have enough money in the Social Security Trust fund to last a long time, some estimates say until the 2040’s. With that loan repaid, we can pretty much make Social Security permanently solvent by some quick fixes, mainly raising the cap on income for which Social Security is collected and raising the retirement age a little. In other words, while the U.S. faces a severe deficit crisis, brought on by too many tax cuts and too much war-making, Social Security does not have a problem.

But virtually all the people like Pete Peterson who are wringing their hands that Social Security is in trouble act under the assumption that the federal government will not repay this loan. As opposed to raising income, corporate and capital gains taxes to close the deficit, Peterson and his ilk want to raid the Social Security fund and then make massive cuts to Social Security benefits, thus effecting perhaps the greatest mass transfer of wealth from the poor to the rich in U.S. history and completing the political agenda laid out by Ronald Reagan in the late 70’s.

This thinking is very short-sighted for many reasons. Even rich people who want the tax breaks and don’t need Social Security are not immune to the upheaval that will be caused when worldwide financial markets catch on to the fact that raiding Social Security is nothing more than defaulting on a loan. No one likes to do business with countries that default on loans. We saw how the recent possibility of the default of the small nation of Greece rocked financial markets. Imagine what would happen when the financial community wakes up and realizes that the United States government has walked away from a loan made by its own citizens.

Greider suggests that President Obama has filled the National Commission on Fiscal Responsibility and Reform with those hostile to Social Security. The Commission website proposes a very fast timetable for action:

“The Commission will vote on a final report containing a set of recommendations to achieve its mission no later than December 1, 2010. The final report will require the approval of at least 14 of the Commission’s 18 members.”

That means we don’t have much time to act. Below is a list of every member of the National Commission on Fiscal Responsibility and Reform, including email and/or snail mail contact. I am asking that all my readers contact every member of the commission and tell them some version of the following message:

Please make sure that the National Commission on Fiscal Responsibility and Reform recommends that the federal government repay the Social Security Trust Fund every penny it owes so that Social Security can remain solvent without major changes and the federal government can work on its real challenge, which is lowering the federal debt.

Don’t just send your note to one member, send to all. And ask your friends and neighbors to do the same. If you have a blog, post it on your blog, with all the contact information. We can’t just sit around and let politicians representing the very wealthy steal our Social Security money.

Here are the Commission members:

Co-Chairmen:
Sen. Alan Simpson, former Republican Senator from Wyoming
Hon. Alan K. Simpson
Shareholder
Burg Simpson Eldredge Hersh Jardine, P.C.
1135 14th Street
P.O. Box 490
Cody, WY 82414
asimpson@burgsimpson.com

Erskine Bowles, chief of staff to President Clinton
President
University of North Carolina at Chapel Hill
910 Raleigh Rd
Campus Box 9000
Chapel Hill, NC 27514
ebowles@northcarolina.edu

Executive Director:
Bruce Reed, chief domestic policy adviser to President Clinton and chief executive officer, Democratic Leadership Council
600 Pennsylvania Ave., SE
Suite 400
Washington, DC 20003

Commissioners:
Sen. Max Baucus (D-MT)
511 Hart Senate Office Building
United States Senate
Washington, D.C. 20510

Rep. Xavier Becerra (D-CA 31)
1119 Longworth House Office Building
Washington, D.C. 20515

Rep. Dave Camp (R-MI 4)
341 Cannon House Office Building
Washington, DC 20515

Sen. Tom Coburn (R-OK)
172 Russell Senate Office Building
Washington, DC 20510

Sen. Kent Conrad (D-ND)
530 Hart Senate Office Building
United States Senate
Washington, DC 20510-3403

David Cote, chairman and chief executive officer, Honeywell International
Honeywell International Inc.
101 Columbia Road
Morristown, NJ 07962

Sen. Mike Crapo (R-ID)
239 Dirksen Senate Building
Washington, DC 20510

Sen. Richard Durbin (D-IL)
309 Hart Senate Building
United States Senate
Washington, DC 20510

Ann Fudge, former chief executive officer, Young & Rubicam Brands
2400 Beacon St, Ph 601
Chestnut Hill, MA 02467

Sen. Judd Gregg (R-NH)
201 Russell Senate Office Building
Washington, DC 20510

Rep. Jeb Hensarling (R-TX 5)
129 Cannon House Office Building
Washington, DC 20515

Alice Rivlin, senior fellow, Brookings Institute and former director, Office of Management & Budget
Brookings Institute
1775 Massachusetts Ave, NW
Washington, DC 20036
arivlin@brookings.edu

Rep. Paul Ryan (R-WI 1)
1113 Longworth HOB
Washington, D.C. 20515

Rep. Jan Schakowsky (D-IL 9)
2367 Rayburn House Office Building
Washington, DC 20515

Rep. John Spratt (D-SC 5)
1401 Longworth Building
Washington, DC 20515

Mary Kay Henry, president, Service Employees International Union
1800 Massachusetts Ave NW
Washington, DC 20036