Tuesday, August 31, 2010

An Opportunity Missed

So literally the last tweet I made before the President's speech tonight was:

I think we can all agree that this administration has been crap at promoting its accomplishments even w/o Fox Noise.

And then President Obama started telling us all about how all the fighting troops have left Iraq (which happened last week, where was he then?), how much the war has cost us, and how we need to buckle down to fixing the nation.

He spoke of fixing the nation as if, now that we were free of the cost of the Iraq war, we were finally free to do so. And in saying this, he completely dismissed the last 19 months of real progress that he helped to drive and for which he will be held accountable.

The flow would have been perfect. Celebrating one achievement, ending war in Iraq, naturally segues to a reminder of the long list of previous achievements. This naturally segues to saying that we still have a long way to go, that we are economically lighter without the burden of a second war, and then the inspirational message about striving for better things.

I liked the frontal assault of coming out for hope instead of fear--take that, fearmongers.
I liked making a point of the economic cost of Iraq. It felt like sniper fire (direct but subtle) into the Bush tax cut renewal debate.

But wow, there was a big gaping hole where a bragfest should have been. It didn't have to be a laundry list, but at a bare minimum, it had to change the spin from "start improving" to "continue improving."

Mr. President, do you, like Robert Gibbs, wonder why you aren't given the credit you are due?

Here is Exhibit A.

Saturday, August 28, 2010

More DNC Commercials

And a few scare commercials:

Commercial 2
Visual: pix of Armey and Beck
VO:Former Republican House Majority Leader Dick Armey has said that Glenn Beck is the instructional arm of their political movement, yet his message is so offensive that these companies have withdrawn advertising from his show:

[scrolling list]

VO: The Republicans don't care about representing you. Vote [Democrat]

Commercial 3

Visual [scrolling list]
VO: Most or all Republicans voted against these measures that have helped the economy

Visual [scrolling list]
VO: Republicans blocked these bills that would have helped Americans

Visual [scrolling list]
VO: Republicans have supported these measures that favor the wealthiest 2% of Americans. The Republicans don't care about the majority of Americans. Vote [Democrat]

Commercial 4

Visual: GW Bush
VO: How do the Republicans really feel about Americans?

Montage of video clips of Republican candidates insulting different groups intercut with still photos of those groups as smiling Americans.

Visual: John of Orange
VO: What would the Republicans do if they controlled Congress?

Montage of video clips of Republican candidates saying they would undo SS, Medicare, HCR, etc., not do any proactive legislation, but instead spend all their time bringing charge after charge against everyone in the admin.

Republicans don't care about the majority of Americans. Vote [Democrat]

DNC Commercials

Democratic commercials are playing in my head, so this is a brain dump of one of them. Please feel free to use any or all ideas here to support Democratic candidates. This is one way to promote "it could have been worse:"

Visual: 1930s breadlines
VO: The stock market crash of 1929 left the country devastated. During the Great Depression that consumed the next decade, there was 20% unemployment.

Visual: juxtaposition of George Bush and a chart showing stock market from 1925 to 2008 with lines for first and second standard deviations below average. This chart will show 1929 and 2008 both below the second standard deviation and no other year remotely close.
VO: In 2008, George W. Bush left the country in a state of economic devastation not seen since the crash of 1929. We all feared another Great Depression.

Visual: Obama juxtaposed with chart comparing economy with ARRA and projected arc without ARRA
VO: President Obama's economic recovery act prevented another Great Depression by creating jobs and putting money directly into the economy just when it was most needed.

Visual: from the recent celebration of profit in the auto industry
VO: Thanks to our federal government, Detroit is stronger than ever and paying us back with interest. Thousands of jobs were saved.

Visual: teacher in classroom juxtaposed with firefighter
VO: Thanks to Democrats in Congress, thousands of state jobs were saved, protecting our safety and our children's education

Visual: montage of ribbon cutting ceremonies featuring Congressional Dems
VO: From California to Maine, from Alaska to Florida, we're all better off because of Democratic economic policies to put money into the economy. We can't recover overnight, but....

Visual: dissolve to gear shift knob shifted forward
VO...we know we're going the right direction

Video of Obama doing the "D to move forward, R to Reverse" speech, quick shift to candidate pic.
Text over: Keep us moving forward. Vote for [candidate]

Wednesday, August 18, 2010

System Failure

Early in his term during the dark heart of the meltdown, President Obama said he didn't categorically blame business or even banks for America's woes. These are good people, he said, caught in a system that rewards them for doing things that end up harming the economy. Change the system, change the incentive, and you change the outcome.

I'm not sure everyone heard the message beyond not blaming banks, but as a business consultant who used systems to change behavior, and as a student of law and investing, it made perfect sense. It also tied off perfectly with the large systemic reforms we needed in finance, health care, immigration, environmental management, and more.

Public corporations have no moral compass and no soul. Their motivation is short-term profit. Not a lot of nuance there. Show them the money, and they'll do what you want.

At least that's how it ought to work. The trouble is, when you describe the ideal environment for corporate profit, it looks like the opposite of what humans need to thrive. That's a lot to overcome with a few carrots.

For example, unfettered corporations would like to:

--Drive down the worldwide cost of human capital. Indentured servitude would be nice.
--Drive down the value of human capital. Zero value means the elimination of wrongful death as a cause of action. It also means the elimination of most medical care and all but the most basic education for most people.
--Ban unions and anyone else who does not support corporate objectives.
--Make all property private property with no public input on how it is used (up).
--Turn everything possible into a profit center:
----Pay wages in company scrip so that workers are forced to spend with the company.
----Overcharge for everything so that workers are forced to borrow from the company to survive.
----Force children to inherit a parent's debt at death.
----Charge for things like fresh water if the company has contaminated the local supply
--Reduce all expenses possible
----No corp taxes, employee benefits, safety precautions, vacations, leisure time
----Longer work hours (fewer workers reduces training cost)

Think it could never happen? Google: Company Town

Think it could never happen again? Consider what is happening right now in western New York at the Mott's Applesauce plant, as reported in The Nation. Some excerpts:

Until 2008, Mott's was owned by Cadbury Schweppes, and as workers explained, there had been a family atmosphere at the plant for decades. Management gave workers hams at Easter and held an annual Christmas party. If workers exceeded production goals, managers organized hot dog roasts as a reward. And the union and management had an active work-safety committee. Local 220 secured pay increases in good times and made concessions when the company was in a crunch, veteran workers said.

Then Cadbury spun off the Plano, Texas–based Dr Pepper Snapple Group, which took the Mott's brand with it. From then on, everything changed at the Williamson facility. No more company parties, and safety committee meetings ended. Managers over-enforced work rules to the point of absurdity; one worker who had previously been the union local's president said he was fired for keeping a knife in his locker, even though he needed it during his shift to open boxes.
(all emphasis mine)

Then later...
At no point did its representatives say the company was in trouble and needed to cut operational costs to survive. Far from it—DPS posted a $555 million profit last year. So why was the company driving such a hard bargain? The way the union's bargaining committee saw it, the company knew unemployment in western New York was high, so it wanted to cash in on the suffering.

"They said that if we can't meet our finances on the contract they're offering us, then we need to sell our houses," said label operator and union bargaining committee member Bruce Beal, adding that a company official said that workers needed to think of themselves as commodities, like "soybeans or oil," and that as supply rises, the price goes down.
After this, the workers went on their first strike. The company responded that it was just doing what companies are supposed to do.
In a statement, DPS said, "The union contends that a profitable company shouldn't seek concessions from its workers. This argument ignores the fact that, as a public company, Dr Pepper Snapple Group has a fiduciary responsibility to operate in the best interests of all of its constituents, recognizing that a profitable business attracts investment, generates jobs and builds communities."
Though one wonders what kind of communities are built when everyone has to sell their homes because of wage cuts.
But the wage issue is a diversion, workers said, because the union agreed to a wage freeze on the condition that benefits also stayed untouched. It was a reduction in benefits, they said, that would have pushed them out of the middle class....

...in a country where private-sector union membership has hit historic lows and strikes have become rare, the picketers here in western New York say it's not just their jobs that are on the line. If DPS can get away with this, they believe, all other blue-collar workers in the middle class will be sitting ducks for what the strikers call "corporate greed."...

...Dozens of strikers said that if a profitable company can extract unlivable concessions from workers, it would encourage a new offensive on middle-class workers across the country. "America has just gotten to be where they want us to be like China and come down to these wages, and it's not going to happen."

Any mainstream economic or political system can work in the abstract. Communism, Socialism, Democracy, Monarchy, Capitalism, even Theocracy all sound lovely on paper. It's those darn people that muck it up in practice. It's not systems that implode. It's people, usually greedy people, who push systems to degrade.

It's one thing to create a business system that rewards workers for keeping good records, cleaning the work area, and bringing in potential clients. It's another thing entirely to create a system that can somehow channel the rampage of human greed in socially productive directions.

Here's what I take away from Mott's. Profit may be the corporate manifesto, but corporations are run by people. The management of Cadbury Schweppes chose to run the Mott's factory in a family atmosphere. The management of Dr Pepper Snapple chose to take advantage of its workers.

Corporate managers are not forced by some law of corporate physics to screw people. That's a choice that people make. Yes, corporations make more money when they treat people badly, but some people still choose not to screw over their fellow humans.

So perhaps a public corporation is like other abstract systems that work great on paper and even work fine when humanists are running them but become unsustainable in the hands of greedy people.

Can we create a system that discourages greed? That rewards individuals for group accomplishments? That rewards individuals for creating sustainability? That punishes individuals for creating inequitability and corruption? That can adapt itself to attempts to circumvent it? That's the real challenge.

A few days after I wrote this, Neal Gabler wrote this piece arguing that tax rates are better than regulations to modulate greed.

See also Free Lunch by David Cay Johnston

Tuesday, August 10, 2010

Imagining the Future Through Google's Eyes

Google and Verizon want to sever the handling of wire-based communication and wireless communication, with wire-based regulated and wireless unregulated. They want wireless communication unregulated so they can be "unfettered" to develop it. The Internet that we all know would remain neutral. The wireless cloud would not.

Consumer protection groups are strongly opposed to an unregulated wireless world, but actual consumers haven't said much about it, possibly because the idea hasn't gotten around yet, but more likely because it's hard to understand what we might be losing. How can you miss what doesn't exist yet?

Google is one of the best companies (along with Apple) at envisioning the future and creating it. It built the Google Books project for years before it occurred to the rest of us that maybe one company shouldn't control all the content in every book ever written. It was months after authors received very one-sided release forms that the media and the government finally got involved.

This alone makes me think Google has envisioned a wireless future, and it's not in our best interests to let Google own it. Remember what happened when Bill Gates understood the future better than IBM? Microsoft happened. Google is already a megacompany. What could it become with a good running start?

Imagine 3-D computing as seen in Iron Man. This is the carrot they hold out. But...
Imagine a reliable, high-quality video conferencing network that many businesses will have to have to stay competitive. Now imagine there is no competition and no regulation for this service, and businesses must pass its cost on to its customers (us).
Imagine having to listen to a commercial before your cell call goes through.
Imagine unregulated satellite TV (hey, there's always cable).
Imagine unregulated monthly service fees for iPad and Kindle like you now pay for TV and telephone.

Imagine paying for access to wireless content like you now pay for TV channels. Let me be clear, I don't object to content developers getting paid for content; they should.

--I object to a gate fee to all content equivalent to a gate fee on a library.

--I object to bundling content that either forces you to view content you don't want or provides a disincentive to access a broad range of content.

We assume that the Internet as we know it will stay the way it is, but why? Why shouldn't Google move its operations to the more profitable wireless network? And what would be left of the wired web without:
-Google search, the dominant search utility
-Google merchant services and shopping listings, essential to Internet sellers
-Google maps
-the aforementioned Google books
-Google blogs (like this one)

And who will follow Google to the unregulated frontier? If there's an app for that, it becomes part of the unregulated world. The better question is, what's left in the wirebound zone?

---WSJ already has a pay wall. If WSJ, NYT, LAT and Financial Times got together and offered themselves as a bundle behind a single paywall, that would be fine. That would be the equivalent of paying extra for HBO. If the top 200 major news sites around the world bundled themselves, you're now looking at something like a toll gate on a library--having to pay to access any news. Not a problem if news is available on the wired web, but what if these sites go wireless-only, too?

----Now think of the flip side: no access to sites except the bundle you pay for--the cable TV model. There are a limited number of cable channels, but there are an infinite number of web sites. All those blogs and pages that have connected political activists would become out of sight, out of mind, consigned to the wired gutter that is getting less and less traffic.

This is the future that consumer groups can imagine all too well.

This post from ARSTechnica discusses Google's change in position away from net neutrality.
This post by John Nichols at The Nation also describes a potential divide between the corporate sponsored information superhighway and the winding dirt road address the rest of us will have.

Fair is Fair

Whenever you have truth it must be given with love, or the message and the messenger will be rejected. ~ Mahatma Gandhi

Liberals and conservatives have enough conflict without inventing more. It's hard to compromise. What makes it harder is when either side mischaracterizes the position of the other and makes fun of the extreme characterization as if it were what was really at issue.

Every country with the means does something to define its borders and regulate who comes in and out and who stays. U.S. immigration laws have procedures for people wishing to become citizens, and we prioritize based on who we'd like to see come in.

Conservatives see anchor babies as a circumvention of our immigration laws. By an application of the 14th amendment that wasn't an issue when it was passed, non-citizens who could not themselves become citizens can force the U.S. to accept their children as citizens by giving birth here. Then, because their children are entitled to rights as citizens, the parents get to raise the children here, citizens or not. After 18 years, the child is grown, but it doesn't seem right to deport the parents who have built a life here. Thus, the child is the "anchor" for the family.

Sensible conservatives (yes, they do exist, though maybe not in Congress) are not afraid that these children will grow into terror babies. Maybe some of the tinfoil hat crowd is, but as far as I can see, sensible conservatives don't like 1) seeing this back door access to life in the U.S. exploited 2)by people who could not get in the front door. They view this back door as letting in unskilled workers who have come from poor areas and are probably bringing communicable health problems with them.

Is our immigration system a good system? Not really. Is it due for an overhaul? Most definitely. This is something on which we can all agree.

Work from that starting point by at least acknowledging their real concerns. Data would be great. How many are coming in this way? What % is this of total undocumented residents? Where do these parents settle? Do they get jobs? Pay taxes? Carry diseases? This is what conservatives (like my parents) want to know. Some conservatives are incurably racist, but some are just going by stereotypes and are willing to be educated. We owe it to them and to ourselves to address their concerns and break the stereotype.

My point is, if you want to work something out that conservative voters can support, don't ridicule them for being afraid of babies. Conservatives will assume--and not unreasonably--that you'd rather ridicule them than discuss actual issues, and that you're trying to change the subject because you like the open back door. Like the term "death panels," the term "terror babies" shows you're really not here to debate the merits, you're here to stir up emotions (and insult the voters).

Sunday, August 1, 2010

The Rich Get Richer

The time period of the economic meltdown and its ongoing aftermath have the potential to move even more money upstream to the wealthiest Americans than happened in the previous decade. As part of the Bush tax bills, high-income earners have the limited opportunity this year and next to roll their traditional IRAs into Roth IRAs. This move is for long-term wealthy who do not anticipate needing the money for a long time, if ever.

--In a traditional IRA, you deposit money before tax, the money grows without tax, but you pay tax on the entire balance as you withdraw it in retirement. The assumption is that your tax bracket will be lower after retirement, so you will pay less overall. After age 70, you must start withdrawing an amount based on a formula determined by your age and your total balance.

--In a Roth IRA, you deposit after-tax money and never pay tax again. There is no minimum withdrawal ever. Until this year, contribution to a Roth IRA was limited by income. The modified adjusted growth income (MAGI) limits for 2009 were $105,000 - $120,000 for those filing single and $166,000-$176,000 for those filing married.

Contributions to IRAs are limited, but other nonqualified accounts can be rolled into IRAs and then into Roth IRAs, which can increase the total substantially.

If you elect to convert, you pay tax on the balance at the time of conversion (over a 2-yr period), no tax on further growth, and no tax on withdrawal. Thus, you want to convert when the market looks bad (say, June 30). Once you convert, that money is essentially taken out of the taxable stream. No one will ever pay tax on its earnings.

The government has known for years that this conversion window would be a boon to revenue--all those rich people paying taxes on retirement balances at the same time. But by doing this, it is also frontloading tax revenue--taking some revenue now instead of more over time later.

The big factor determining whether a person ought to convert is how soon he will need the money. Obviously it doesn't make sense for someone to pay a big tiered tax bill now if he had been planning to start withdrawals soon at a lower rate. But if he has many years of earnings ahead--and doesn't want to be forced to take withdrawals at age 70--converting makes a lot of sense.

Adding to the incentive to convert, the rich currently enjoy low tax rates--rates that will rise. It may be better to pay a lump sum tax at known rates now than incremental tax in some unknown future at a rate that might be higher even after retirement.

Add to that:

--The rich have the opportunity to add to their wealth now by acquisition of assets--real estate and business--at depressed prices.

--The millions of unemployed and underemployed are draining their own wealth. And all that money withdrawn from qualified retirement savings before retirement generates penalty income to the government.

--The longer the recovery is dragged out, the more people will be sucked under--and their assets delivered up to the wealthy.

And it's clear we still have a long way to go to stop the gravy train for the rich, let alone reverse it.