Category: Social & Political Issues

 Last June, The New Yorker ran a feature story about the founder and head honcho of Wikileaks, Julian Assange.   

In conversations, more than one person who doesn’t like what Wikileaks is doing has referred to that article, and in particular his quote about the possibility that his leaks hurt innocent people.  The quote is bolded in the following excerpt from the story:

Recently, he posted military documents that included the Social Security numbers of soldiers, and in the Bunker I asked him if WikiLeaks’ mission would have been compromised if he had redacted these small bits. He said that some leaks risked harming innocent people—“collateral damage, if you will”—but that he could not weigh the importance of every detail in every document. Perhaps the Social Security numbers would one day be important to researchers investigating wrongdoing, he said; by releasing the information he would allow judgment to occur in the open.

Let’s neglect the fact that the statement comes to us hearsay, not in quotes but from the reporter’s notes.  Let’s focus on the offense to polite sensibilities made by Assange’s willingness to create innocent victims as collateral damage in his war against government confidentiality.

Consider the following types of people who routinely sacrifice innocents:

1. Do Presidents of the United States or leaders of any other countries care that much about innocent victims when they send soldiers into the neighborhoods of foreign cities?
2. Do legislators care that much about innocent victims when they refuse to extend unemployment benefits or cut people from Medicaid roles?
3. Do reporters care that much about innocents when they file stories that could hurt people, whether the information is truly news or based on unsubstantiated reports from Matt Drudge and other bottom-feeding online speculators?
4. Do chief executive officers care that much about innocent victims when they lay off thousands of workers while giving millions to senior management?
5. Do cost-cutting contractors who do substandard work or drug companies that hide studies care that much about innocent victims?

I venture that most people will agree with #1 on that list—that presidents sometimes have to go to war—and the last election tells us that many people are okay with #2.  The further down the list we go, the fewer people are going to agree that the creation of human collateral damage warrants the actions undertaken.

Where do Assange and Wikileaks stand?  I think Assange got it right: he is a kind of journalist, but only a kind, just as the duck-billed platypus is a kind of mammal, no matter that it lays eggs.

Journalists pretty much have to cover the release of documents, although they can do so with discretion by keeping the discussion on a general level.

Buts as a special subspecies of journalism, Assange and other leakers must pick and choose.  If the release of documents is justified because it shows the government committed crimes or lied in a major way, then Assange can justify his victims, at least to some extent.  But, as I stated in an OpEdge post earlier this week, if the documents show neither crime nor major lie, then they should not be released for at least 20 years.  The fact that innocent people suffer from the unnecessary release of confidential documents just increases the magnitude of the offense.

A few months back, I was very happy that Wikileaks leaked U.S. government documents, because the material demonstrated a pattern of misconduct and abuse in the conduct of current U.S. wars.  It was exhilarating to see yet more proof of the disastrously stupid strategy and illegal tactics the Bush II administration took in Iraq and Afghanistan.  In my mind, I equated these leaks to the Pentagon papers, which showed the American people how much the U.S. government was lying to them about the Viet Nam War. 

I don’t feel so good about the latest round of Wikileaks leaks of U.S. government documents.  In fact I was a little pissed-off at Wikileaks honcho Julian Assange for revealing confidential government documents.

It’s simple why my reaction differed so much this time around: in these latest Wikileaks leaks there was nothing or very little revealed that showed that the government of government officials engaged in illegal activities or lying to the American people.

So are the Wikileaks leaks right or wrong?  Or more aptly put, when is leaking confidential material appropriate?

Many people want to live in a world of sharply-defined right and wrong in which there are no gray areas.  Unfortunately, the real world is a messy place when it comes to ethics and morals.  As an example, let’s take a look at “Thou shalt not kill,” one of the 10 commandments, the accepted moral foundation for three religions.  Consider how society (not me) will react to these instances in killing:

• A soldier kills an armed enemy soldier on the battlefield.
• A woman is attacked with a knife and as she struggles, she accidentally plunges the knife into the heart of the assailant.
• A man finds his wife in bed with another man.
• A crazy guy with a gun shoots a bunch of people in a mall. 

This set of examples should convince readers that according to most civil societies the act of killing a human being can often be justified.  What matters is the context.

With that in mind, I developed a set of principles that I propose leakers and potential leakers of all types should use in determining whether to push the “enter” key or hold off:

1. Leaking is not hacking.  Hacking into someone else’s computer system is always wrong if an individual or a private organization does it, and almost always wrong when a government does it.
2. If the leaked material demonstrates that a crime has been committed against either the law of the country or international law or that a government or organization has lied explicitly about policy or other important matters, then the leaker has a moral responsibility to leak the documents as soon as possible.
3. If the leaked material does not show illegal activity or a pattern of lying (not a little yarn told at a cocktail party), then the leaker should wait at least 20 years to release the material.  

We should rightfully exempt the news media from these prescriptions.  Once the news media has the material, they have to report it, that is, if it’s real news. 

Professors from Duke and Harvard recently completed a study of Americans’ knowledge of and attitudes towards the unequal distribution of wealth that has developed in the United States since about 1980.

Professors Michael I. Norton and Dan Ariely find that Americans are not aware of how bad the distribution of wealth is in the United States, as demonstrated by the fact that the typical respondent in their survey thought that the richest 20% of the population own 60% of the wealth.  The correct answer is 85%, according to a recent analysis by Edward Wolff, another professor, this one at NYU. 

The Duke-Harvard guys report that people think that the bottom 40% own 10% of total wealth.  In fact, Wolff finds that the bottom two-fifths have a negative net worth.

But what is truly amazing given the results of the recent elections is the fact that most people—be they rich, poor or in the middle—want the distribution of wealth to be more equitable than either what they think it is or what it actually is.  Weird as it may seem, people want the top 20% to own a mere 30% of the wealth and the bottom 40% to own about 25% of the wealth.

Then why did they vote for people who want to lower the tax rate on the wealthy?  Why did they vote for people who want to end the redistribution of wealth that comes when the government provides benefits to the poor, the elderly, students and the ill?  Why do they vote for the party against universal health care and good public schools? Why do they vote for people who want to pass more laws that make unions weaker and thereby suppress the wages of the working class?

It’s completely bizarre.

Perhaps the answer lies in the fact that people never gain easy access to the information that would teach them what actions will lead to the society and economy they want and what actions won’t. Perhaps we are too bombarded daily by news media propaganda about free markets and small government to analyze the actual ramifications of actions such as lowering taxes on the wealthy, mandating universal healthcare insurance coverage or taking money from public schools to give to non-unionized charter schools.

For example, I bet most people would be surprised to know how many of their fellow citizens want to take 50% of the total wealth of the country, now in the hands of the very richest, and spread it around to the rest of us to make a fairer, more equitable society.  They don’t know because the Norton-Ariely study received virtually no coverage in the news media.  The esteemed profs were able to get an opinion piece about their study picked up by the Los Angeles Times.   But a Google News search revealed a miniscule five articles or blog entries about the study in total.  In other words, all media outlets, regardless of their political propensities, ignored the news that most Americans want a society with an equitable distribution of wealth in which no one is too poor or too rich.

Last Friday, I analyzed the tax proposals that the National Commission on Fiscal Responsibility and Reform put in the outline of the plan it presented last week.  As it turns out, I was among the first but not the only observer to notice the subtle shift in the tax burden that the National Commission proposes, making the middle class pay more and the wealthy pay less.

Today I want to take a look at the National Commission’s proposal to cut government spending.  The theme of the cuts that the National Commission proposes is that we must learn to live with less government. The result will still be a deficit, but much less of one than we have now.

My question is: if deficit reduction is so important to long-term economic well-being, why not reduce the entire deficit by raising the maximum tax rate to more than the proposed 21%? 

Behind that question is another: The National Commission wants the government to help fewer people and businesses who suffer damages from disasters such as Hurricane Katrina or the BP Gulf oil spill.  It wants the government to spend less on transportation and cut all spending to support commercial space flight.  Wouldn’t the country be better off if we keep those programs at current levels and instead raise taxes on the wealthy, which are historically low for both the United States and for all other western democracies since the establishment of income taxes? Amazingly, the commission to deal with our debt couldn’t figure out a way to take care of all of it, but did figure out a way to lower taxes more for a group already enjoying very low taxes. 

I have the same type of questions about what the National Commission proposes to do to “save” Social Security.  Why this particular trade-off?   The National Commission proposes eventually raising the retirement age to 69 and raising the cap on income assessed by the Social Security tax to $170,000.  The age of 69 seems pretty old for retirement from most jobs. Why couldn’t the National Commission have knocked a few years off that number and taken the cap off the income to be taxed for Social Security?

One of the most specious arguments made by those who say that it’s not in the best interest in the country to tax wealthy people too much is that the government does not create jobs while the private sector does.  

By isolating a single decision between “tax-and-spend” or “let the free market do what it does best,” we can see what a steamy crock this argument is:  Let’s imagine the choice is between raising taxes by $1.0 trillion to support a job-producing program, say in alternative fuels, repairing bridges or mass transit OR keeping the highest tax rate low, which means that wealthy people pay less in taxes and have more money, which we all hope they invest in businesses and technologies to create more jobs:

• If the government has the money, 100% will go to creating jobs either through direct purchases from the private sector; grants, tax abatements or other financial support for private businesses which will therefore be able to hire more employees; or more government jobs to administer and manage the private sector companies getting the aid. 
• If the wealthy keep the money, they could do one of many things with it, including:
  • Invest in paintings, sculpture, baseball cards, old movie posters, coins and other real assets that create very few jobs and take a lot of money out of the economy.
  • Put money in existing stocks and bonds, which creates no additional wealth, because the companies who floated the stocks and bonds already raised all the money they have through the initial offerings.
  • Invest in financial machinations, such as options and other hedging, which create no additional companies or jobs beyond a relatively few highly-paid financial whizzes.

The “tax-and-spend” scenario must almost by definition create more jobs because the government is going to put 100% of the money right back into the economy and the private individual will not.  One thing is for sure, especially over the past 15 years—the wealthy will invest less of their money into job-creating ventures than the government will.

Now the answer is not so clear when we’re talking about funding a government jobs creation program by taxing the middle class and the poor, mainly because these groups, especially the poor, tend to spend a much higher percentage of their income on goods and services than the wealthy do.  Spending on goods and services in and of itself will create jobs, which is why many economists are proposing to keep the temporary Bush tax cuts for everyone but the wealthy.

I’ve taken a look at the plan outline that the National Commission on Fiscal Responsibility and Reform released yesterday.  The final plan will include a lot of details that may change my view of it, but the plan looks to me to be a very subtle shell game that results in smaller government for which the wealthy pay less, the middle class pay more and the poor neither gain nor lose.

The National Commission is proposing to cut federal spending two dollars for every dollar it proposes in new taxes.  In this blog, I want to take a look at the taxation side, because that’s where the shell game is.  Next week, I’ll give a bird’s-eye analysis of the impact of the spending cuts the National Commission proposes and discuss its approach to Social Security funding and benefits.

The Commission proposes that we cut the federal tax rate to 21% and get rid of a bunch of deductions, the most important of which are capital gains, employee healthcare insurance and mortgage interest.  The idea of creating a simpler tax structure with fewer deductions is very attractive, although technically outside the purview of the debt commission.   

Let’s analyze the potential impact of ending these deductions, one at a time:

• Most of the wealthy would gladly pay an additional 6% on capital gains if it means that the tax on most of their income would be cut by a whopping 14%.  So while capital gains tax is up when you sell investment assets, the compensating decrease in the income tax rate (which applies to income, interest and most dividends) probably will leave rich people with more money.
• You don’t pay healthcare insurance based on what you earn. As expensive as health insurance is, the most expensive plan is still not a large amount of money to someone earning more than $250,000 a year, while the cheapest plan is a hardship for someone earning a low wage.  In other words, ending the deduction for healthcare insurance really raises the taxes significantly for those in the middle class and those poor who do not qualify for free healthcare.
• The bulk of the benefits of being able to deduct interest on a mortgage go to the middle class, and they will pay the bulk of the additional taxes if and when this deduction is phased out.  The wealthier someone is, the lower the percent of their wealth is represented by their primary residence, so the less important the income tax deduction is for mortgage interest.  (One should note that if we end the mortgage deduction, the housing market will likely collapse again and interest rates on mortgages will probably decline as well.  I think it’s a good idea to end the deduction, but doing so will roil the U.S. economy over the short-term until we get used to not depending so much on housing to create individual wealth and overall economic growth.)

Thus, the simpler system that the National Commission proposes will probably increase the taxes of the middle class but reduce the taxes of the wealthy, while leaving the taxes of the very poor about the same.  We won’t know if my analysis is true until we see the complete proposal and someone does a line-by-line analysis of who’s paying more or less and by how much.

I wrote this blog yesterday afternoon for posting this morning.  This morning I read Paul Krugman’s opinion piece in the New York Times.   Krugman makes the same point, that the probably cash flow from the tinkering with the tax system proposed by the National Commission on Fiscal Responsibility and Reform will be from the middle class upwards to the wealthy.  Bravo to Krugman for doing the conceptual math.  And yet, my competitive nature tells me that next time I should post my blog as soon as it is written.

Yesterday the Los Angeles Times identified the true culprit in our continued recession.  All this time I thought it was Congress to blame for not passing a larger stimulus bill that would have included more aid to those out of work and more spending on our basic infrastructure of roads, bridges, mass transit and public schools.

Turns out I was wrong (thinly veiled sarcasm).  Turns out, at least according to La-La’s Land’s newspaper of record, that the recession would be over a lot sooner if all those honest people who continue to pay off their mortgage even though the mortgage is now worth more than the house would just stop it.  According to the article titled “Millions of homeowners keep paying on underwater mortgages,” those committed to meeting their contractual obligations are keeping money out of the economy that would otherwise be spent on consumer goods.  

Here’s how reporter Don Lee puts it:

“Because, with home prices stagnant in much of the country, payments on mortgages that are underwater could absorb billions of dollars that might be used for other forms of consumer spending — a drag on family finances, the housing market and the overall economy.”

In simple English, the LA Times wants people to stop paying their mortgages so that they’ll have more money to spend on new cars, refrigerators, phones, flat-screen TVs, vacations and clothes, hopefully leveraging their new-found funds, which means not only spending the difference but also borrowing more.

Like most economists and economic reporters of all persuasions, Lee and the experts he quotes can only fathom one way to get out of the recession: spend more.  They fail to see that spending more only works out in the very short term, for two reasons:

1. Sooner or later you have two choices only: either pay back the money, which will cripple a spending-induced economy or screw your creditors (meaning the American public, since the banks who loan the money will no doubt receive bailout assistance again).
2. In the long run, an economy based on ever greater spending will consume resources and pollute the earth.

Some of my readers will remember the word “potlatch” from a college introductory course on anthropology.  It comes from the native American tribes in the Pacific Northwest.  According to Merriam-Webster’s, it means “a ceremonial feast or festival of the Indians of the northwest coast given for the display of wealth to validate or advance individual tribal position or social status and marked by the host’s lavish destruction of personal property and an ostentatious distribution of gifts that entails elaborate reciprocation.”  A potlatch is thus a mindless celebration of wastefully conspicuous consumption.  Preparing for these potlatches was a major economic driver in Indian societies.

We’ll never know for sure when potlatches would have depleted the resources of the Northwest tribes, because before it happened, European settlers arrived with diseases that reduced the population by 75%.  We do know that a potlatch of monumental building depleted the resources on the Pacific island of Rapa Nui and led directly to the total eradication of the population there.

We in the United States have developed a potlatch society and the only economic advice that most experts can offer for exiting the economic doldrums is to go on another potlatch.  But it just won’t work anymore.

Meg Whitman’s spending to win election as Governor of California is now up to $162 million, which the Associated Press reports is more than Al Gore spent on his 2000 election campaign for president of the entire country, not just its biggest state. 

When you do the math, it works out to an incredible $4.78 per voter.  Included in this enormous sum is $142 million of Whitman’s own money, much of which she has because tax rates are so low on the wealthy and ultra-wealthy in this country.  Whitman’s great extravagance in attempting to buy an election is exhibit #1 in the argument not to continue the temporary tax cuts Bush II and his Craven Congress gave rich folk in 2003. 

Exhibit #2 and #3, respectively, would be Carly Fiorina who spent untold millions of her personal fortune to become a U.S. Senator from California, and Linda McMahon, who is spending $50 million of her wrestling stash for her Senatorial run in Connecticut. 

Let’s turn now to the Republican’s chief ally in the mainstream media, The New York Times:  Yesterday, the Times outdid itself in its year-long effort to help the Republican Party.  On page A17 of the national edition, it published three feature articles in third-of-the-page strips across the page.  The topics: the gubernatorial elections in Florida, Texas and Maine.  In all cases, the writer wrote the article from the Republican candidate’s point of view.  In all cases, the article had a large photo of the Republican candidate campaigning and a small insert formal head shot of the Democratic candidate.  In other words, you didn’t even need to read the stories to see, and understand, a pro-Republican slant. 

At least the Times also has to cover the news, and so was forced to run a story that detailed the unethical and perhaps illegal machinations of Carl Paladino, Republican candidate for governor of New York, as the financial guardian of his aunt’s property.  As the article reports, the mother of Paladino’s illegitimate child ended up owning the home.  

This election reminds me of the presidential elections of 1968 and 2000.  In 1968, the young, minorities and progressives were very angry at Vice President and Democratic candidate for president, Hubert Humphrey, who refused to come out against the Viet Nam war.  These groups sat on their hands and didn’t vote in large numbers and the result was that Nixon won the election, the war dragged on for another 7 years and Nixon began his campaign of illegal activities.  In 2000, lots of progressives were turned off to Al Gore, perhaps from reading too many articles in which Maureen O’Dowd said Gore was a nerd and Georgie Porgie a cool guy.  Lots of progressives voted for Ralph Nader and Georgie Porgie won.  Georgie, AKA Bush II, proceeded to get the country into two senseless wars, establish a global torture gulag, assault civil and privacy rights in the United States, give tax cuts to the rich, gut environmental and financial regulations and pretty much run the United States into the ground while enriching his cronies.

I’m therefore asking readers not to stay home on election day, but instead go to your place of voting, take a deep breath, hold your nose and vote for the Democratic candidate.

It’s not that I like the Democrats, whom I find to be a craven, compromising bunch who always have to balance their good intentions with the demands of the corporate special interests that fund their campaigns.

But the Democrats are certainly the lesser of two evils in the current election, especially those Dems going up against Tea Party candidates.  The Republicans have narrowed their base to include only the most right-wing of elements, and if given a chance, will continue its 30-year agenda to take money from the middle class and poor and give it to the wealthy, while ending government regulations, pursuing needless wars and ignoring the pressing need nationwide to repair our infrastructure of roads, bridges, mass transit and public schools.

The only voters to whom I am not giving the advice, “Hold your nose and vote for the Democrat” is in the state of Connecticut, in which the choice for U.S. Senator is between Tea Party Linda McMahon and the known liar Richard Blumenthal, who has pretended to be an ex-Viet Nam vet on multiple occasions.  In Connecticut, maybe the best thing to do is write in a candidate.