Whether and How to Sell the Jobs Policy

Burning the Midnight Oil for Progressive Populism

First off, the thing to do with the BS about gutting the safety net on the excuse that the Take Everything Away Party wants to kill it is to take the idea of gutting the safety programs behind the farmhouse to the mint bed and apply a sharp ax.

How to do that, I don't know.

But if it can be done, then there's still the question of whether and how to sell the "Jobs Policy"
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Fusion Tickets: why US 3rd Parties once worked, and why they stopped.

Burning the Midnight Oil for Progressive Populism

We in the US take the two party system for granted, but a two party system is not normal among advanced industrial countries. And, in our history, we used to have a lot more third parties with a lot more impact on our political system in the US. What happened?

This diary is one of a series that was originally published as [http://thestarshollowgazette.com/diary/3679/the-insideroutsider-response-to-the-detb-ceiling-cavein single, long, sprawling diary].

For most of its political history to the late 1800's, the US was either dominated by one or two political parties. The (extra-constitutional) winner take all electoral college system and the winner take all nature of a state legislature selecting the state's Senator strongly pushed in that direction.

But alongside this was a political institution that allowed third parties to emerge and compete for influence ~ and indeed, the Great Re-Alignment from the Democrats and the Whigs to the Republicans and the Democrats occured in part thanks to the existence of third parties that were available to merge with the Anti-Slavery Whigs once they had been purged from the Whig Party.

How did this system work, and where did it go?
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Progressivism in the New Gilded Age

Burning the Midnight Oil for Progressive Populism

The "Progressive Era" was not so named because it was an era in which Great Progress was automatic, or effortless. It was so named because it was an era where Income Inequality was high, even by US historical standards, and extraordinarily high by the standard of the Great American Middle Class Era of the 1940's to 1970's ...

... and that meant that winning Progress that went against the vested interests was very hard, and required long, determined fights against a torrent of money deployed to oppose its progress.

Indeed, one of the fruits of the Progressive Era victories was to eliminate Progressivism as a distinct political force. But now the enemies of the Square Deal, New Deal and Great Society have rebuilt a Gilded Age, and we need it once more.

Progressivism, however, while necessary, is not sufficient on its own.

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The Fight Ahead is the House Caucuses and the Senate Filibuster

Burning the Midnight Oil for Progressive Populism

So, what is a Progressive Populist to make of an election when with a 14% real unemployment rate (see below), where the House changes parties?

Is a Progressive Populist supposed to be surprised that a House Majority that fails to accomplish substantial jobs legislation for over a year in the face of a clearly Depressed recovery and real unemployment stuck in the neighborhood of 14% loses its majority in the next election?

Back in 1934 was the closest analogy, but back in 1934 the Majority in the House was clearly fighting for jobs bills, the President was clearly fighting for jobs bills, Republican Obstructionists and Nine Old Men were clearly fighting against jobs bills. The stakes were clear, and the result one of two first midterm swings to the President's party in the past century.

This is not blaming the House membership so much, of course: its the Senate that let us down, early in 2009, when they wimped out on filibuster reform on the "a bird in the bush is worth two in the hand" theory. Its not a matter of blame, just of what the situation was. A big House loss was guaranteed, and the only betting was how big.

Add in Citizen's United, probably worth an extra 10 seats for the RepubliCorp, and the winning bet was, "huh, that big."

Since the next election is in the future rather than in the past, the question is, what to do about the massive Corporate win last Tuesday.
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14% Unemployment Rate? The Newspaper says 9%

Note that people do not vote the newspaper headlines when it comes to their own standard of living, they vote life as they experience it.

So the headline unemployment rate is not the one to use. In the headline unemployment rate, if you are not working and haven't applied for a job in the last four weeks, you do not count either way. That includes a lot of discourage workers and a lot of people following the help wanted but not finding anything they are qualified to apply for. When the headline rate is extended to "interested in gaining employment" and "have applied for work sometime in the last year", that is called "marginally attached", and that unemployment rate is 11%.

And of course, if you want full time 40 hours a week work and have 4 hours a week work, you are 36/40 unemployed, but count just as "employed" in the headline rate. The rate including people marginally attached and those working part time who want full time work is about 17%.

17%-11%=6% working part time who want full time work.

To be cautious, I take the people working part time who want full time work as "half employed, half unemployed", and add half of that number to the marginally attached:

11%+(6%/2)=11%+3%=14%

That's where the "14%" came from above.


One Thing Not To Do: Primary The President

Y'all probably know that I am not now nor have I ever been President Obama's biggest fan. In terms of economics, I view him as a Hedge Fund Democrat, or what is known in the rest of the English speaking world as a "neoliberal" (remembering back to 1800's Liberalism, not the mid-1950's Social Liberalism of the US).

If faced in a primary with a challenger even slightly better that I view as equally likely to win, heck, I might vote in favor of that challenger.

But there's nobody on the Democratic side who can win the nomination and have an equally strong chance of winning the 2012 election who is any better than Obama. The fact is that a primary challenge will open a fight

If you're recruiting me for your candidate of choice for the 2016 Presidential Primary season, I'll listen ~ but just don't waste your time with me, either on the pro or con, on the "Primary Obama in 2012" argument.

See, in my own personal view, fighting on either side of that fight is a massive waste of time and effort as far as achieving any progressive result, so its not something I am going to bother with.

In my view, the Progressive Populist President who achieves tremendous successes and goes through eight years righting wrongs and breaking the chains of the past is a bedtime story for children.

In my view, the way that Progressive Populist change happens is that a Progressive Populist coalition is formed and through fighting and struggling, grows, and based on how well put together it is and how well it executes and, in part, on luck, it achieves some of what it sets out to achieve.

Given that view, I don't see a Progressive Populist movement that can decide between now and March of next year that its time to replace Obama with standard bearer "X". Indeed, I expect that getting all tied up into the pro or con of whether to Primary Obama is more likely to tear apart the small beginnings of the movement we need to have than to help grow the movement.

Mind, if I could support a primary challenge to Eric Holder, I would, but we don't have directly elected Attorney's General at the Federal level, so no opportunity there.


Right Now, Pass the Blue State Jobs Bill

This one is a little subtle. There is this regulation called a "feed-in tariff" that can be used to give much more certainty about investment in domestic renewable energy generation, both at the household level and at the utility level.

And the regulation works by setting a price that the power company has to pay.

And under US Federal regulations, states are not allowed to set prices like that any higher than "avoided cost".

As presently handled by regulators, that means the current spot price, which is the oppposite of providing the certainty required for high up front cost, low operating cost energy harvesting.

Now, there's no real chance of getting Federal feed-in tariffs passed: but that is not the lame duck target here. The lame duck target is passing permission for states to set feed-in tariffs if they so desire.

All that is required is legislation that defines "avoided cost" for long term stable feed in tariffs as the average cost of power over the recent past. In particular, I'd say anywhere up to the middle of the annual average cost of power over each of the past five years.

Further, for household feed-in tariffs, for levels of electricity that can be consumed within the local substation, that avoided cost can include the generator-to-substation transmission charges.

No Federal spending, no Federal taxes ... just a small dose of states rights to go into the sustainable energy future a bit faster if they so desire. Of course, it is a jobs bill, since any state that adopts it will see increased investment in both utility grade and household level renewable power, and that investment will come with people doing the installing and manufacturing and, for the utility grade power, maintenance and oversight.

Then to a growing extent in 2012 and 2014 and 2016, it will be possible to ask the residents of the states that do not have those jobs, well, why not? And why not will be because they have Republican Governors and/or State Legislators.


At the Same Time, time to start on 2012 House and State Legislature races

Not today of course. We can take our time to start. 9 November 2010 is soon enough.

We need to do an inventory of:

• The surviving Blue Dogs at the State and Federal Level that are up for primaries in 2012
• The seats lost in this election that will be up for primaries in 2012
• The seats that were only narrowly lost in 2006 and 2008 that will be up for primaries in 2012

And we need to pencil in which seats are opportunities for social liberals, which are opportunities for economic populists, which are opportunities for rural progressives, and so on.

Step 2: ???

Step 3: Profit!

Seriously, after that is all the political tactics and strategy in identifying and encouraging likely candidates and identifying and recruiting possible candidates, and how in the hell would I know how to do that? I'm a fracking academic economist, after all, not a partisan strategist.

But it seems that we could get started by identifying former incumbents and challengers who we wished were holding those seats, and finding out if they intend to run again.

This is a one year task, since for a progressive populist campaign, if they don't know that they are running by Thanksgiving the year before the election, how are they going to be able to knock on all the doors of their district?


In January, Fix The Filibuster

Best is to eliminate it. Just ax it. But with 50 votes plus Biden to break a tie, the votes are not likely to be there.

So instead, make the filibuster real. Anytime 24 houra or more after a cloture vote has been taken, while a filibuster is in process, and after a quorum call has successfully concluded, then a motion for an immediate cloture vote is in order, and cloture requires 60% of those who answered the quorum call.

Force the filibustering minority to stay and sleep in cots and defend their filibuster night after night, and allow the majority to go back to their office and sleep at home, and leave a couple of night watchmen to keep tabs on how many filibuster defenders are there and to organize the strike for 60% of members voting if their numbers have dipped.

See, that is the big difference in the rules of the Senate that eliminated the "Mr. Smith Goes to Washington" filibuster: the change from a fraction of Senators voting, to a fraction of the Senators in the Senate.

Force the Minority to sleep in their cots for seven nights in a row, unable to go attend fundraisers, unable to dial for dollars, unable to get wined and dined by K-street lobbyists, while the majority gets to do all of that and wait for the will of the minority to flag ... and the "routine filibuster" can be beaten out of the toolkit of the Minority Party.

A real filibuster is dramatic. Its like reality television. People start to choose sides. And, hell, since it allows the majority to go home and sleep in their DC beds while the minority are chained to the Senate chambers ... what's not to vote for, for the majority?

Its not like the lily livered "New Dem" wing Democrats are going to filibuster anything minor when they are in the minority, so its not giving away any real power that the Democrats in the Senate would ever really be able to exercise in minority. The Democrats would only filibuster if they figured a majority were on their side and would stay on their side, and in those circumstances, sleeping in the cots for a week could be worth months of dialing for dollars.


And in conclusion ...

Just kidding. There aint no conclusion two years minus a few days from the next big fight. We haven't even finished the beginning yet!

Hey, its Boehner v Pelosi, Obama aint on the Ballot

Burning the Midnight Oil for Progressive Populism

Really, not as intense a tragedy as Kent State, but if he gets the Speaker's Gavel in a wave election, another tragedy from my home state, Boehner of Orange.

Versus Nancy Pelosi.

People, its the midterms. I understand that many had their hopes stoked by the Presidential campaign, and many had their hopes satisfied, at least somewhat, and many had their hopes dashed, at least somewhat ... but this aint Presidential Primary season. Its the General Election Midterms.

Where are the YouTubes telling young Hispanic first time 2008 voters in Spanish "Poder para el Pueblo / Nadie Silente! Vota!" ... where's the Green fightback against Republican scorched earth ... is it all lost in naval gazing in the middle of General Election season?
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We don't vote in the Midterms to celebrate the choice in front of us.

We vote to shout back, to make the SOB's in DC and their corporate paymasters unhappy with the fact that we are voting.

We don't vote in the Midterms to place a bet on which team will win.

We vote to be in the game.

Its only one weapon in our armory. But if we don't exercise it, it blunts the edge of all the others.

ITS SEPTEMBER PEOPLE. SET THE PRO-ANTI-PRO-ANTI OBAMA ASIDE FOR TWO FREAKING MONTHS.

Its Pelosi versus Boehner. That's the contest.

It aint lofty fine inspiring speeches time, its the midterms.

Its political trench warfare. And we let the other side dig the trenches ... so, yeah, we are going to take some political casualties.

But even though its the other bastards who lit the oilfield, its our dirty job to put them out.


Gotta get down to it. Should have been done long ago.



Aint no guarantees in the fight for freedom, except:

Find the cost of Freedom. Buried in the Ground.
Mother Earth will swallow you. Lay your body down.

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O'Donnell Hits a Social Security Foul Tip

Burning the Midnight Oil for Progressive Populism

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When Lawrence O'Donnell started berating the woman who received the email from Alan Simpson with this BS (5:05)], I was forced to leave the room until Rachel came on:

It is solvent until 2037.
Workers your age who are contributing to social security every day, we concurrently tell you when your time comes to collect, the money will not be there according to all projections we have today.

"According to all the projections we have today"? First, that is false. Its according to one projection we have today ~ among a range of projections that are made. And second, if Lawrence O'Donnell is going to shift from host to pundit, he is responsible when he uses figures in a misleading way.

Over the fold, how this is wrong, let me Countdown the Ways.
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Now, before I begin, I must confess that I am an economist, and given the performance of the majority of my colleagues over the past forty years, it would not be surprising if you turn the channel immediately on knowing that.

However, I will say in my defense that I have also been arguing that the majority of my colleagues have been engaging in an anti-scientific approach to understanding the economy for two decades now, since starting grad school in what was then one of the few places you could pursue an PhD while learning from American Institutional economists ... and while I am not a macro-economist, several of American Institution macroeconomists were among those who "called it" as far as the Panic of 2008. Indeed, the Association for Evolutionary Economics has collected a list of economists who are placed among the "nobodies" whenever anyone says, "Nobody Could Have Seen It Coming": Got It Right Project

There Is No Immediate Crisis: Rich People Just Do Not Want to Pay Back Money They Borrowed from Poor People Via Tax Cuts

Originally, the Social Security Trust Fund was set up on a Pay As You Go basis: except for a small buffer, funds coming in covered liabilities. But with demographic swings in the American population, and in particular with growing life expectancies, we looked ahead and saw that when the Baby Boomers started retiring, that would lead to a very high rate of payroll tax.

So Tip O'Neill and Ronnie Raygun reached a deal, where the Social Security rate would be raised, in the early years the resulting surplus would go the General Fund to allow for up front tax cuts, and then when the rate fell behind obligations, the Congress would raise revenues to "pay back" the funds that the Social Security trust fund had lent to the General Fund.

Of course, now that it is nearing time to start paying back, this deal has stopped being a sweet tax deal, swapping higher regressive taxes that rich people do not have to pay for lower progressive taxes that rich people do have to pay, and is entering the flip side of the deal, where the progressive taxes are below Pay As You Go rates, and the funds lent to the wealthy in the form of tax cuts have to be paid back to cover the bonds in the Trust Fund.

Rich People enjoyed borrowing the money from the Trust Fund in the form of tax cuts largely for Rich People. While Borrowing, they were all for the deal. Now that it is time to pay back, they do not like the deal any more.

Now, if we had put this money into an infrastructure fund, we would have a massive amount of infrastructure projects now paying back and it would not be an issue ... but we decided to let rich people borrow it instead. Because we listened to all sorts of BS framing about this deal ... framing mindlessly repeated by people like "Congressional Staffers" (and being a former Senate Staffer with the ability to repeat inside the beltway "expert opinion" is Lawrence O'Donnell's claim to fame) ... instead of seeing this as rich people paying back money they've been borrowing since the mid-1980's, its framed like Social Security is a private insurance fund that is threatened with "insolvency".

So that is the introduction: this is all about Rich People trying to renege on a borrow and pay back deal now that the pay back time is approaching. THAT is the "crisis", not the fictitious 2037 insolvency.


5. The Predictable Movements of the Insolvency Year Projection

The first way that "the projection says its 2037" is BS is that Lawrence O'Donnell, if he checks, will know perfectly well that the projection itself moves in a very regular way. Consider the projection from 2000 to 2009:

• 2000: Payback 2015, Insolvency 2037
• 2001: Payback 2016, Insolvency 2038
• 2002: Payback 2017, Insolvency 2041
• 2003: Payback 2018, Insolvency 2042
• 2004: Payback 2018, Insolvency 2042
• 2005: Payback 2017, Insolvancy 2041
• 2006: Payback 2017, Insolvency 2040
• 2007: Payback 2017, Insolvency 2041
• 2008: Payback 2017, Insolvency 2041
• 2009: Payback 2017, Insolvency 2037
• 2010: Payback, Present to 2011, then 2014, Insolvency 2037

When the economy is in the middle of the deepest and longest recession since the Great Depression (though both Great Depression recessions were deeper and the Hoover recession far longer), the Insolvency year goes down. When the economy is treading water, the Insolvency year treads water. When the economy is doing OK, the Insolvency year goes up.

If a Big Recession like the Panic of 2008 costs us 4 years, and even a sluggish recovery (for the bottom 90% of the income ladder that pays into the trust fund) pushes the year back by half a year or better each year, that means that AVOIDING A REPEAT OF THE PANIC OF 2008 will guarantee that there are still funds in the Trust Fund by 2037.

And, of course, we can avoid a repeat of the Panic of 2008 by adopting policies that ensure it does not happen again. In other words, taking the 2037 year as a "fact" depends on assuming that we won't fix the structural flaws of our financial system.

Someone might say, "but, what is the evidence we will?" ... but the point is, Lawrence O'Donnell pointedly ignored that fact that "fix the massive problems that we created when we started pretending that the Finance Sector can be a sustainable Engine of Growth" as one of the possible "fixes". It was all regressive tax increases or regressive benefits cuts.


4. Projections, with an S. Its Plural. 2037 is just one Scenario

The statement that "according to all the projections we have today" is simply a baldfaced lie. Its not even true according to all the projections done by the OASDI Trustees. The image to the right displays "all the projections" done by the OASDI Trustees for their 2009 report. The left hand line, exhausting the fund around 2029, is the bad economic growth scenario. The middle line, exhausting the fund around 2037, is the intermediate economic growth scenario. And the right hand line, never exhausting the fund, is the strong economic growth scenario.

Obviously, if the optimistic scenario never exhausts the fund, then there is a range of scenarios between "intermediate" and "strong" growth that exhaust the fund in 2040, or 2050.

Even more to the point, the strong economic growth scenario shows just how important the scenarios are. If the fund exhausts sometimes after 2050, it would only represent a small shortfall, since the Baby Boomers will, to put it delicately, start to retire from the status of being social security recipients. If the trust fund exhausts at a time that Social Security tax receipts cover 90% to 95% of entitlements, then it would be entirely possibly to put in a small levy at that time to cover the shortfall, and once the receipts have returned to 100% of entitlement, to then put Social Security back on a Pay As You Go basis.

Well then, there is another "Fix Social Security" policy for you, that Lawrence O'Donnell conveniently forgot to mention: grow the economy. For example, the 10 cent a gallon tariff on imported crude oil that I have proposed to finance investment in oil-independent transport is part of a Social Security Fix.

Its not "on the table" because its a "Bipartisan" commission, and that means that the Republicans and Corporate Democrats who brought us the current slow-growth economic policies are the majority of the Commission. But that is no excuse for Lawrence O'Donnell: he is not bound to respect the slow-growth, wage-minimizing, sluggish investment (and environmental damage maximizing) policies of the "Bipartisan", aka Corporate, Economic Consensus.

Indeed, as seen in Story Number 5, we have had a strong test of how "unbiased" the "intermediate" projection is: the first business cycle without growth in median income since World War II, then followed by the deepest recession since World War II is what was required to keep the projection stable. In 2000, the intermediate insolvency projection was 2037, and in 2010, the intermediate insolvency projection is 2037. So just keep median incomes from falling, in addition to avoiding a repeat of the worst recession since World War II, and the real world track ought to be to the right hand side of the middle projection in the figure above.


3. Its Not One Trust Fund: It's Two

Taking the 2010 report, under current law, the exhaustion of the main Social Security Trust Fund under the (floating and biased low) "intermediate" projection will take place in 2040.

Wait a minute, what about the 2037 figure?

That is a combined figure, combining the main Social Security trust fund with the Disability trust fund. The Disability trust fund is projected to exhaust its assets in 2018. If the law is changed to allow the Disability trust fund access to the main Social Security trust fund assets, then the combined pool will be exhausted (under the biased-low intermediate projection) in 2037. But under present law, that is not allowed, and so under present law, the main Social Security trust fund will be dedicated to the main Social Security entitlement.

There is, in other words, a funding problem to fix, but its in the Disability trust fund. That fact is entirely obscured by Lawrence O'Donnell's beltway-conventional-wisdom driven punditry from the host's chair.

Fix it a different way and exhaustion of the Social Security trust fund is pushed out toward 2040, even under the biased-low "intermediate growth" estimate.

Say, impose a levy on combined unearned and earned income above $250,000, set each year to retain one year's balance in the Disability Income trust fund. Off the table from the "Bipartisan", aka Corporate Majority, Commission, but a perfectly reasonable fix. It avoids a tax increase now, and by transferring income that will be largely directed to accumulating wealth to those who will largely spend it on newly produced goods and services, acts as a mild stimulus when it does kick in.

And of course, if the wealthy were to abandon the policy of holding economic growth hostage to prevent wage increases, the levy would be substantially smaller than under the current approach to economic policy.


2. What About Income Growth

Time for another graph. To the right is median income growth in the US since the mid-1960's, when the Census started keeping track.

That is the source of the remark I made previous about the Bush Business Cycle having no median income growth, even before the Great Bush Recession pushed the economy into a ditch.

What if we changed that? What would that do to the trust fund? Well, the OASDI Trustee's report does not project that directly ~ they only include it indirectly to the extent that strong economic growth will drive income growth.

But what if we made a "secular" change to that trend, and grew the incomes of people in the middle. That means that the payroll tax taxbase rises, and the trust fund insolvency year steadily climbs up ... remembering that if it hits somewhere in the 2050 to 2060, then there is no problem to be solved, since the Baby Boom demographic bulge will have been bridged. Solving the immediate DI trust fund issue pushes the main Social Insurance trust fund insolvency out to 2040, 30 years from now. We only need to push the year back by an average of 2/3 of a year each year, and we are home free.

So here is another Social Security Fix policy that Lawrence O'Donnell left off the table: pass the cardcheck unionization bill. Increased rates of unionization will lead to higher median income growth, and thus will steadily push back the insolvency year even under the biased-low "intermediate" growth projection.


1. Income Inequality

And for the top story this afternoon, consider the graph to the right. The Social Security payroll tax kicks out at $106,800, which means that the bulk of income in the to 10% of the income ladder is outside of the Social Insurance tax base.

And we have been putting more and more of our national income in the hands of the people who do not pay FICA on the majority of their earned income ~ and of course who pay FICA on none of their unearned wealth income.

According to the Trustees report, if the Disability Insurance trust fund is taken care of, covering the (overestimated) shortfall of Social Insurance will require 1.62% of taxable payroll.

Now the FICA tax rates for the Social Insurance fund are 10.6% (only half of that tax is shown on your paycheck, the other half if taken out of the cost of employing you as an "employer contribution". Of course, since its all considered to be a cost of employing you by an employer, the difference is only cosmetic).

Shifting 9% of US income back from the 10% who largely do not contribute to Social Insurance to the 90% who fund the program ... would be roughly a 9%/58% increase in the "taxable pay" ... which is a 15% increase in the Social Security taxbase ... and 10.6% of that is 1.59%, or almost the entire amount of the (over-estimated) projected shortfall.

So:

• 1. going back to the income distribution that the US had when we gained the status of the wealthiest nation on the face of the earth, rather than the income distribution we have had as we lost that status ... basically closes the hole entirely
• 2. Restoring median income growth will certainly reduce and has the prospect of closing the hole
• 3. Fixing Disability Income without putting a brake on growth with regressive tax increases or benefit cuts closes the only part of the problem that threatens to hit this coming decade
• 4. Reversing our slow-growth income policies will certainly reduce and getting even halfway to the fast-growth scenario would likely close the hole entirely and
• 5. Avoiding a Second Great Recession in the next thirty years will reduce the hole substantially over the next thirty years.

Without a single regressive tax and without a single regressive benefit cut, that is reducing the hole one ways and closing the hole entirely three ways.

So the next time Lawrence O'Donnell tries this shit, hit him back with a shitstorm of calling him on his bullshit. Hit him here, hit Countdown's email, hit twitter, hit facebook ... whatever social media you are connected to, hit it. The fix is in and unless we call them on it, it will stay in.


Midnight Oil ~ Power and the Passion



You Take All The Trouble That You Can Afford
At Least You Won't Have Time To Be Bored

If the College Educated hit 16% unemployment, would it be different?

Burning the Midnight Oil for Progressive Populism

While Matthew Yglesias tends to be susceptible to patently absurd conventional wisdom economics, he does have his moments, as back in February when he observed:

The people in all the key jobs—not just the members of congress and cabinet secretaries and FOMC members and newspaper editors, but the bulk of the people who staff those people—are virtually all college graduates. And the way America works in 2010 those people are overwhelmingly going to have friends, neighbors, and acquaintances who are also college graduates. And while the labor market outlook for college graduates is bad by the standards of recent history, it’s really not catastrophic. Things look very different for people with high school diplomas.

The figures are stark, and starker when plotted as a graph:


The people I teach are mostly on that purple line trying desperately to climb down onto that green line, out of the 10% (headline) rate to the just-under-8% rate. Which may be part of why I am skeptical when Richard Florida reckons that the 'Knowledge Economy' as currently constituted, which mostly constitutes people making intellectual property claims to slice and dice existing income streams, is sufficient as a future for the American economy.

If the US is going to be importing the actual manufactured products, mostly from the Factory of the World across the Pacific, we have to have something to export that people can work on without genuinely requiring a four year college education.

Now, I don't believe in silver bullet, all-in-one miracle solutions, so none of these are intended to be silver bullets, but all of these involve work below the four year college level, in addition to the college-educated work that it generates:

• Pass a Federal Law that long term fixed tariff electricity rates may take as their "avoided cost" the average annual wholesale price of power in the median of the past five years. This will allow states to pass feed-in tariffs, establishing jobs in manufacturing, installing, and maintaining wind turbines in all states that take up the offer
• The same Federal Law allows for stable feed-in rates to buy back power from small scale solar and industrial cogenerated electricity, further expanding the employment that can be generated
• A 10 cent a gallon tariff on imported crude oil to finance Steel Interstates, High Speed Rail, Electric Transport, Public Transport and Active Transport, with the ability to borrow ahead on the tax revenue, can generate millions of new jobs ~ many college educated, and many not requiring a four year college education

This is a point that is perhaps lost in the noise: when the Oil Industry founded and as it funds the Radical Right Wing echo chamber, including the Cato Institute, the Heritage Foundation, the Reason Foundation, among the notable opponents to Energy Independence and supporters of maintaining America's vulnerability to its greatest national security threat ...

... they are opposed to the creation of jobs for ordinary working families.

While the Republican noise machine generates outrage about a non-existent Mosque which will not look onto Ground Zero to distract attention from its own jobs policy of "prosperity is just around the corner".

People know that someone has ripped off their American Dream. Too many Democrats are beholden to the same interests that did the ripping off to stand up and say loud and clear who did the ripping off ... in this election cycle. But what that means is that we have to organize so that starting around December 2010, we are working to getting people on the ballot for State Legislatures and Congress ~ Democrats if they'll let us, independents if need be ~ who are willing to stand up and say loud and clear who is on the getting side of the Great American Rip-Off Economy.

Remember what happened when gasoline hit $4/gallon. Over the decade ahead, we will be starting to slide down from the Peak of Peak Oil, and will be looking back fondly at $4/gallon oil, unless we start doing something now to tap the jobs that are available from Working to Kick Oil.


Midnight Oil ~ Dreamworld

The Breakfast Creek Hotel is up for sale
The last square mile of terra firma gavelled in the mail
So farewell to the Norfolk Island pines
No amount of make believe can help this heart of mine
End - your dreamworld is just about to end
Fall - your dreamworld is just about to fall
Your dreamworld will fall

The Job Free Recovery Continues

Burning the Midnight Oil for a Brawny Recovery

crossposted at ProgressiveBlue

The March Jobs Report has come, and though there appears to have been some employment growth in the rose colored glasses retailing sector, in most other sectors, the headline is that the Job Free Recovery continues.

There are three main numbers to focus on when looking at the monthly employment report:

• employment
• the headline unemployment rate, seasonally adjusted
• the broad ("U6") unemployment rate, seasonally adjusted

... so let's have a look at them.
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The report employment figure showed employment growth of 162,000. Is that good news? Bad news?

Well, its news to the extent that "the normal average season growth in employment" means that the string of job losses have come to an end. The headline unemployment rate was unchanged at 9.7%, while the broad unemployment rate increased from 16.8% to 16.9%, both seasonally adjusted.

When trying to work out what's going on with the business cycle, we look at seasonally adjusted figures, and that is, part of why the headline unemployment rate is constant. The raw figure is down by 0.2% ... but that's on average what is normal in moving from February to March.

The uptick in the seasonally adjusted broad unemployment rate is explained directly in the summary:

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased to 9.1 million in March. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

So while employment increased, some of that was part-time work held by people who want full time work. Just as we would expect this early in a recovery, many businesses do not feel that they have to hire people full time when there is a wide choice of perfectly good workers who can be had with no commitment on their part.


How long would it take to get to full employment at this rate?

I saw someone "tweet" that at this rate, it would take a year to get the unemployment rate down by 1%. However, actually, since this increase in employment is very close to the seasonally expected increase, employment could grow "like this" for years without bringing the unemployment rate down by 1%.

"Like this" would, after all, be increases in employment in months where that's normal, and reductions in employment in months where that's normal.

This is why we need a Brawny Recovery: a recovery where we roll up our sleeves and get down to the work of catching up on thirty years of postponed investment in infrastructure, and thirty years of postponed establishment of a New Energy Economy to address the fact that we have an oil-addicted economy.

And there is no way to describe it other than oil addiction. After all, we are still a major oil producer. We produce about twice the world average, per person. However, we consume five times the world average.


Something to demand immediately

Something that can and should be done immediately is for the Federal Government to make up transit system budgets that are directly due to reductions in state and local sales tax receipts.

Of course, this needs to be in proportion to the downturn in tax receipts for given tax rates. We have to avoid setting up a system that encourages and rewards state and local governments that treat a budget crisis as an opportunity to throw the bus under a bus ... as in California, where the Governor seems determined to kill off public transport as a favor to his big oil contributors.

However, it should be backdated. This is something we should have been doing since September 2008, at the latest ... it is, indeed, something we should do for any recession. During a recession, farebox revenues decline, because people that have lost their job no longer have their daily commute. But the cost of operating the services remain fairly stable, and the need to have access to the services often increases. When at the same time dedicated or general fund tax receipts at the state and local level decline due to the recession, transport and transit authorities get hit with a double whammy.

There are lots of things that are a rightful part of a Brawny Recovery: electrification of local public transport corridors, establishment of Electricity Superhighways, establishment of a nationwide electric freight rail system, investment in energy efficiency upgrades to both public and private buildings ...

... but one that can have very rapid impacts is helping local transport cope with the fact that this recovery, like the two before it, look like it will take about a year before genuine employment growth starts to show up.

Not only will this help keep people in useful employment, but it will also ensure that the most vulnerable are not locked out of participating with the real employment growth, when it really does start to appear.

The 1850's and the Path Ahead

Burning the Midnight Oil for Progressive Populism

Now that the Republican Health Care Reform legislation of the early 90's has been passed with no Republican votes, I've been musing on the Path Ahead.

The Path Ahead on Health Insurance Reform

The path ahead for health insurance reform seems straightforward, at least for as long as the Republicans remain trapped in a strict "Repeal" stance by the angry and noisy opposition to health insurance reform that corporations have stirred up in their base.

First step, electorally punish those Conserva-Dems who voted against reform, so that the "Rockefeller Republicans" who now call themselves Democrats after the alliance of "Taft Republicans" and Dixiecrats purged from the Republican party are less aggressive in undermining progressive policy.

And the second steps are labelled "2a", "2b" and "2c", because they can operate in parallel.

• Second step, 2a, introduce a Medicare Buy-In for the health insurance exchanges.
• Second step, 2b, scrap the RomneyCare Individual Mandate and replace it with a 4% Employer Mandate, with the payment made into the employee's health insurance exchange account.
• Second step, 2c, accelerate the expansion of Medicaid.

Third step, accelerate the introduction of the health program.

Fourth step, allow states to opt their state exchanges into a regional exchange, with the opt-in required for the large number of state exchanges that will have an inadequate variety of policies available.

In order to get any or all of steps 2 into place, language has to be included in the 2011 budget resolution that always any or all of them to proceed via reconcilation. Then if the serious flaws with the RomneyCare version of health care exchanges have been corrected, the health care exchanges can be put into place

It has always been a misnomer to call the current legislation "health care reform" when it has always been primarily health insurance reform. Yet there is a necessary-through-not-sufficient relationship that applies here. Just as arriving at a less broken health insurance system was necessary to even apply bandaids to the health care system, a not-at-all broken publicly administered, not-for-profit health insurance system will allow actual reform of the health care system to proceed.

But then, thinking about how to organize to work for progress on Health Insurance Reform leads to thinking more broadly about achieving progressive social change in the face of our thoroughly corrupted political establishment.


Thinking Ahead by Looking Back

Every once in a while, I finish another chapter of 1831: Year of the Eclipse. I've just finished the chapter talking about the party politics - the Anti-Mason party, the National Republicans, soon to rename themselves the Whigs, Jackon's Democrats, and the petticoat rebellion that led to the dismissal of Jackson's first cabinet.

But I've also read some bits and pieces about what is coming up next ... especially for the Whigs. Any electoral college website bears the footprint of what was coming next. In 1832, Clay running as a National Republican, and refusing a fusion ticket with the Anti-Masons, would come second to Jackson ... but the only other candidate receiving more than a single state.

After running an unsuccessful split ticket, involving Harrison, Clay, and several others, designed to deny outright victory to the Democrats and throw the election into the House of Representatives, in 1840 the Whigs ran Harrison, as a "hero of 1812" (who had actually won his victory before the peace treaty was signed), who won election.

In 1852, the Whigs refused to nominate their own incumbent President Fillmore, and lost with General Winfield Scott.

Then in 1856, the Whigs in their last convention nominated Fillmore, who was no longer a member of the Whig Party.

Of course, what tore the Whigs apart was the Great Issue of the Day - Slavery. The Pro-Slavery Whigs purged the anti-slavery Whigs (including, for example, Abraham Lincoln) from their party but were then unable to maintain coherence as a coalition of state parties and collapsed.

By the last gasp of the Whigs, the 19th Century Republican Party had already been formed by pasting together a coalition of anti-slavery Whigs, abolitionists, former Know Nothings, Free Soilers, and others. The rest, as they say, is history.


But what is the Great Issue of the Day

It may seem like we face a blizzard of issues, rather than one. But of course, there is a single source for that blizzard of issues. The great issue of the day is Corporate Feudalism.

With the Republicans firmly entrenched in the most extreme of pro-feudalist camps, and the Democrats divided between "pro-reformed-feudalism" (quite like the pro-slavery Whigs "regulation of the worst excesses of abusive slaveholders") and anti-feudalists, the Democrats of today are in a position quite similar of the Whigs of the 1840's.

From climate chaos through Peak Oil through the cancer epidemic through the military industrial complex shredding our Constitutional rights in pursuit of slightly higher profits for the quarter ... there is a common core to the blizzard of issues that we face.

Now, given the real world conditions, there is no need for a Leninist strategy of deliberately monkey-wrenching things to radicalize the situation. The real world is already throwing monkey wrenches and will throw more and more over time.

We need to build organizations - no need to call them political parties, since they would be what political parties at one time used to be, not what political parties are today - that can take over city hall through the ballot box and put in effective emergency measures if the shit hits the fan. Movements. Likely distinct movements in different, overlapping, regions.

Up from there, we need to have a balance of power position in state legislatures to prevent the state legislature from blocking what needs to be done locally, which includes freeing up the ballot box and keeping it free.


But What Can an Individual Town Do if the Shit hits the Fan?

Consider the basics of a serious economic convulsion (and, no, the Panic of 2008, while a deep recession, was not an economic convulsion on the magnitude of what we face in the next two decades). People need shelter and a place to eat.

Now, even in the Great Depression, three quarters of the population was still employed. Even in Weimer Germany when a wheelbarrow was required to carry the bills to buy a load of bread ... there were people with wheelbarrows buying bread. There is a wide range of "serious problem" between the worst we have experienced since WWII and the worst that an economy can experience without descending into "Mad Max" territory.

A local community will still have some tax revenue, and some ability to obtain resources from the regional and national economy. However, the financial resources will fall far short of the need.

Now, suppose that the national government does not do what it could do, establishing a Job Guarantee program to ensure that labor resources are mobilized and put to work to cope with the challenges that we face. While it is certainly possible for the national government to take effective action - it is by no means guaranteed.

A local community is not powerless. With enough "volunteers", it is possible to grow food in community gardens. With enough "volunteers", it is possible to keep watch on those gardens at night and prevent a loss of the harvest through praedial larceny. With enough "volunteers", it is possible to cook and serve the harvest, combined with imported staples from the region or nationally, in community kitchens. With enough "volunteers", it is possible to keep a much larger number of people fed than can be done with local community US$ tax revenues alone.

In the face of economic convulsions, some buildings will fall vacant, and their owners will be unable to meet their property tax obligations. With enough "volunteers", large open interior spaces in big box or medium box stores can be refitted into livable shelter for individuals and families. With enough "volunteers", the problems of maintaining utilities and retrofitting the buildings to be more self sufficient can be addressed. With enough "volunteers", it is possible to keep a much larger number of people housed in livable accommodation than can be done with local community US$ tax revenues alone.

And why would people volunteer? Well, suppose that you are unemployed, and in return for volunteering to help, you can receive vouchers good for meals at community kitchens, and shelter in community housing.

Indeed, suppose that the local community allows local businesses to meet part of their property tax with volunteer vouchers in lieu of payment. Then with vouchers, you could also obtain additional amenities, beyond just food and shelter.

Of course, it would be difficult to operate any substantial share of an automobile based transport system on this basis ... since gasoline needs to be paid for in whatever currency the petroleum exporter will be demanding in the midst of an economic convulsion. But bicycle based transport ... that is something different, with a far smaller imported input component.


The Headliners: Midnight Oil

So, anyway, I've been thinking about the path ahead. What about you?

Is Rupert Murdoch Picking His Partner's Pockets ...

... or is NewsCorp just an Old Media Dinosaur that cannot keep up?

Burning the Midnight Oil for Breaking the Silicon Cage
In Orange 5pm Wednesday, EST

Breaking the Silicon Cage is for breaking down those barriers that prevent us from leveraging the full potential of the netroots for progressive populist action - whether that involves using the internet for collaboration on works to be delivered live on the street, or breaking down barriers between different social networks on the internet itself.

The latter is what we have here. The progressive blogosphere, if people are to believe our words (though not always our actions) is an enemy of Rupert Murdoch and his Iraq-Invasion-supporting, Conservative-Politician-electing multinational media empire. We in the US know him primarily for the Faux News Channel, but in the UK and Australia they know him for his grossly biased newspaper oligopolies.

Now, if Progressives were indeed intent on taking power (something Cassiodorus questions), we would be eager to take any shots at Rupert Murdch's Media Empire that we could.

Now, I'm game, and a few others have expressed their interest, but for the most part the reaction of the blogosphere is a big, "why should I become outraged by that in particular". If the thousands of US service members and hundreds of thousands of lives disrupted - hundreds of thousands of Iraqis kills and millions of Iraqi lives disrupted - is too big a reason to grasp for being outraged at Rupert Murdoch and his media empire ... then be outraged for the mother (above right) of Cpl. Kareem Rashad Sultan Khan, Bronze Star, Purple Heart, killed in action in a War of Choice that Rupert Murdoch loudly banged the drum in favor of choosing.
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Because rather than being serious in our antagonism with Rupert Murdoch and NewsCorp, rather than owning our antagonism, rather than recognizing that sometimes, some people are just committed to opposing almost everything you are committed to supporting and so much be attacked whenever they present a target of opportunity...

... it may well be that many members of the "progressive blogosphere" are only comfortable in acting when they have been manipulated into outrage. If someone else can push our buttons, and tick us off, then we can join in expressing outrage. If, on the other hand, we have to pursue our revenge against Rupert Murdoch's media empire with cold calculation, that's not the same. And, no, its not the same - it would be an indication that we are serious about taking power.

Because this is an issue that on its own merits is not likely to be a big button pusher in the progressive blogosphere. The eternal online temptation to sneer is too strong, and the opportunity to land a punch on the enemy is lost in the joy of being smugly superior to the line of the attack.


The Line of Attack

Because the line of the attack is US translations of Japanese anime. US distribution of bootleg anime has long been on the bleeding edge of the New Media economy, with VHS tape bootlegs of fan-subtitled Japanese anime series circulating in the 80's, early adoption of computer digital video in the 90's, and early adoption and a strong presence in peer-to-peer networked file sharing.

This was a fringe of the anime audience that the industry ignored in the US growth period of the 90's and early part of this decade. However, an industry that had become increasingly reliant on US licensing fees, with US sales reaching a peak of around $500m earlier in this decade, has been hit hard in the second half of this decade. The distribution of bootlegs through free streaming sites has cut growing swathes of the fanbase out of the audience for licensed work, and US sales have slumped to a figure closer to $350m.

Particularly hard hit have been the higher end US distributors that dub Japanese anime with US voice actors - considered essential for packaging a series for US broadcast, but representing a substantial fixed cost for a US distributor to take on with no guarantee of recouping the cost from increased sales. In the past few years, one long time US distributor, Central Park Media, has gone bankrupt, and another, ADV, restructured as Section 23 Films and spun off its dubbing division into a separate company.

OK, so what does this have to do with Rupert Murdoch?

One of the ways that the anime industry has been trying to cope with the rapid distribution of bootleg fansubs on streaming sites has been to make legitimate licensed streams available to fans, in a mix of ad and subscriber supported business models. Examples include Joost, with over 30 anime series available, and Crunchyroll, with over 100.

But of course, legitimate sites can only stream what they can license, while the bootleg streamers can stream anything they can find available on a free video stream host site. For example, Hulu.com focuses entirely on North American rights, and has a running fight with services that allow overseas access via US-based Internet addresses, while Crunchyroll.com faces constant irritation from overseas members when a show they want to watch is not available for streaming to their country.

And the bootleg streamers can survive on the miniscule revenues of web ads and donations, because they contribute nothing back to the creative artists, contribute nothing back to the "fansub" groups that translate and subtitle works as a community activity, and indeed do not actually do the streaming of the material itself.

The flipside of that, however, is that the bootleg streamers can only exist due to the tolerance of their activity by the free video stream sites or due to the ineffectiveness of enforcement efforts.

Which is what raises the question in the title: is Rupert Murdoch's MySpace video streaming tolerating bootleg anime streams, in order to attract more users in their ongoing fight with FaceBook (note if you click through to [http://www.joost.com/epg/us/shows/animation/anime/ Joost], you can sign in via Facebook) ... or is NewsCorp just an Old Media Dinosaur that is incapable of being fast enough on its feet to cope?

Because, as I began to document last week, and finished working out just this last weekend, Rupert Murdoch's MySpace servers, owned by 20th Century FOX, are the Pirate Support Base of preference of the particular bootleg streaming source that I have been datamining for stream host information.

In particular, looking at all series on the site that are available in a licensed free stream at either Hulu.com, Crunchyroll.com, or the AnimeNewsNetwork.com, the count of links as of 30-10-2009 by host server is:

• MySpaceCDN.com: 461, MySpace.com: 47, Total: 508
  
• imeem.com: 100
  
• google.com: 85
  
• megavideo.com: 81
  
• Source Hidden behind Local Link: 47
  
• LiveVideo.com: 39
  
• Veoh.com: 22
  
• YouTube.com: 18
  
• SevenLoad.com: 14
  
• TwitVid.com: 1
  
• Zoopy.com: 1
  

So in one part of his "trying to into the New Media Economy" strategy for his media empire, it turns out that Rupert Murdoch's MySpace is a major free streaming hosts for bootleg anime. Those in turn undermine the efforts of production houses and US distributors to provide US access to content shortly after Japanese airtime, while providing some income stream to keep the creative artists, producers, and translaters employed.

There is nothing that can be done to stop peer-to-peer file sharing, and so the market for DVD's is the market for people who want the DVD's. That genie is out of the bottle and cannot be put back in. But clearly, not everyone wants to or can work out where to download bootlegs, or how to get them playing on their system - that is why the bootleg streaming sites exist and attract an audience. There are those who prefers the simplicity of just browsing to a site and watching the show.

And that is the potential audience that Rupert Murdoch's MySpace is helping to divert away from the legitimate streaming sites.


The Pick-Pocket Thesis

One of Rupert's other ventures in trying to buy his way into the New Media Economy is Hulu.com, a free streaming joint venture between NewsCorp, NBC/Universal and Disney/ABC (there may be others - I'll be happy if you can add to that list of joint venture partners in the comments).

Which is where it gets weird, because when you look at the top four shows on Hulu.com by popularity, the list is topped by Naruto Shippuden - also available at Joost.com and Crunchyroll - with "Bleach" at number four. Hulu.com seems to be the sole source for legit streams of "Bleach".

Bleach is important for the bootleg streaming sites as well - in one it features as one of three series with direct links provided at the very top of every page.

And it is argued in some quarters that Hulu.com definitely needs more audience if it is going to be a successful venture. The Silicon Valley Insider at The Business Insider:

We have been skeptical that Hulu will receive enough of a revenue cut from its content and distribution partners to cover what we believe is a high cost structure. After conducting more research, we remain skeptical. It is not impossible that Hulu's model will work, but we continue to think it will be challenging for the company to turn a profit and build a sustainable business.

And there may be a fight over the business model brewing between NewsCorp on one side, and NBC/Universal and Disney/ABC on the other:

Here’s the skinny: A story on B&C’s Web site says Carey “hopes that it will move to a subscription model,” While Entertainment Weekly said Carey firmly stated the site would start charging in 2010. Whatever really happened, it was enough for a Hulu spokesperson to speak up — which hasn’t happened in the past over this issue — pouring cold water on the paid idea, at least for now:

Hulu’s mission has always been to help people find and enjoy the world’s premium, professionally produced content. We continue to believe that the ad-supported free service is the one that resonates with the largest group of users and any possible new business models would serve to complement our existing offering. There are no details or timelines to share regarding our future product roadmap.

So, if Rupert Murdoch and NewsCorp are trying to push Hulu.com into some form of subscriber model, and at the same time they are faced with the power-law distribution of social networks in their fight for market share against Facebook, the "Pickpocket" thesis is:

• NewsCorp tolerates bootleg video except when required by law to act, because it serves their interests, even if it undermines the interest of Hulu.com under its current business model.

After all, the argument would go, they are not entirely troubled by the prospect of that market model failing if they expect it to fail anyway. Why devote effort to protecting the market audience of a lost cause?


The Dinosaur Thesis

Only considering a single hypothesis leaves a risk of looking for confirming evidence and overlooking contradictory evidence. And there is, after all, a second hypothesis that should be considered.

Suppose NewsCorp is simply an Old Media Dinosaur, is competing against itself through simple incompetence, which is just one more signal that it is doomed to fall as the oligopolistic market structures in both press and broadcast media that it was built upon are torn apart as we build the New Media Economy.

One of the tests of the "tolerance" scenario is whether any action is taken when information is passed on by someone other than the rights owner. The streaming host is legally required to act on a Cease and Desist order from the rights owner - but they are certainly permitted to investigate and take action no matter what their source of information is.

And so I have been passing my results on to the various streaming sites, to see what their reaction is. Many of the "minor sources" above react quite quickly. Indeed, if I had taken the count a week earlier, the count of Veoh.com clips would have been 50% higher, amd from my exploration yesterday and today, the count would be substantially lower again today.

Some sites show a splash screen that content was taken down due to copyright infringement. Others, such as Imeem.com, simply bring up the embedded video player with no content for it to stream.

The most interesting reaction is that of MegaVideo. Many of the MegaVideo videos have been replaced by a "copyright infringement" take-down notice. However, at least two bring up an entry portal into the iReel.com site - which appears to be a site for licensed streams of movies and shows, and which might indeed have a license to stream that particular show.

Exploration of the "Bleach" show, where Hulu.com has exclusive streaming rights, shows that some but not all of the MySpaceCDN streams have been taken down. In particular, those links referred to in an email to the site registration owner and administrator at the end of last week seemed to be in the process of being taken down - but while sites like Megavideo.com and Imeem.com have a reaction time of a day or two - the reaction time for MySpaceCDN.com seems to be more in the range of a week or two.

So, myself, I lean toward the "Dinosaur" thesis. Indeed, it would appear that few streaming hosts are as well placed to replace streams of bootleg anime with a pre-packaged stream that advertises the series availability on Hulu.com. At the very least, they can get rid of bootleg streams of episodes that they are hosting in competition against themselves in a timely manner. However, in practice, they are clearly slower in reacting than Veoh.com, Sevenload.com, Imeem.com and Megavideo.com - I had inadvertently omitted LiveVideo from the cc: list of the email I sent to NBC/Universal Disney/ABC, but I would not be surprised of LiveVideo.com is also quicker on their feet than NewsCorp.

They might defend themselves that I am using the wrong email addresses to contact them, but on the other hand I am just using publicly available registration, copyright violation, or Terms and Conditions violations contact addresses.

Still and all, they are, slowly, reacting. They just do not seem to have the ability to react as fast as the little mammals scurrying around their feet.


So, What Are We Supposed to Do About It

In the end, while anime fans might feel compelled to work out why NewsCorp is acting the way it does, the progressive blogosphere really does not. Whether they are one of the biggest Pirate Support Bases in the US streaming anime market because they are pursuing a dishonest game against their Hulu.com joint venture partners, or because they are simply not as competent at shutting down bootleg streams as their smaller, nimbler, New Media Economy rivals ...

... they still remain one of the biggest pirate support bases, which is a great big glaring contradiction with NewsCorp's aggressive and noisy public attacks on "copyright piracy". Indeed, Rupert Murdoch (note that the picture at the right is not from the event itself) has just recently lectured the Chinese on the subject:

"The embrace of the digital is as vital to China today as its decision 30 years ago to take its place in the global economy," he said. News Corp owns Dow Jones & Co., which publishes The Wall Street Journal. "Chinese media and entertainment companies have a remarkable opportunity to expand their international influence and revenues." But Mr Murdoch said "piracy will make it difficult for them to generate the profits at home that would fuel growth abroad."

... while he himself owns one of the biggest Pirate Support Bases for anime streaming in the Internet!

So the reason number one for the progressive blogosphere to make a big noise about it is simply that its a vulnerable point.

And if its publicized broadly enough, NewsCorp will have to take action to shut the Anime Pirate Support Base. If it is pushed hard enough to be picked up by any of the mess media, NewsCorp will have to come out denying that it is intentional, and declaring that they will take steps to shut down what they had no idea was happening.

After all, whether they are doing it because they are a Pickpocket or because they are an Old Media Dinosaur, they have to pretend to be a New Media Not-Pickpocket once the question is asked publicly enough.

But then there is the question - do they just shut down the streaming they are doing in competition with themselves? If they decisively defend their own streams, but do not take the same decisive action to stop infringing on the rights of Crunchyroll.com, Joost.com, or the AnimeNewsNetwork, then we have them on the hook for another kick of the story.

And then if we force them to take decisive action to shut down the Anime Pirate Support Base for all legitimate streaming anime - well, then we win. If the solution requires ongoing organized action by anime fans in defense of the modest income streams available from free streaming, as I suggested in The Teaspoon Model - that's for the mature segment of the anime fanbase to take on. The progressive blogosphere would declare victory and move on.

OK, now suppose that we raise a ruckus but not enough to make the Dinosaur move its feet. We still will have been on the right side of trying to defend the livelihoods of the creators, against the Digital Millenium Copyright Act which is of course biased toward the big media middlemen. And, indeed, whether we force Murdoch to act or not, any ammunition we can give to any of his enemies is a good thing. After all, much of the evil that Murdoch does is in the realm of propaganda, and if he does not change MySpace's status as a primary Anime Pirate Support Base, that is something to snipe at him with every time he sounds off on the issue of copyright.

And win or lose, working in coalition in support of the growth of a New Media Economy is a useful networking exercise. After all, these are people with skills that the blogosphere needs very badly when we hit the campaign trail. We have got an ocean of words, but to get through to more than 30% of the electorate, we need effective moving images with sound. And the fans of the section of the New Media Industry we would be coming to the aid of here - include numbers of people with effective image creation and video production skills.

Well, at least, if progressives are serious about pursuing power. If being "progressive" is about sitting on the sideline and complaining, not so much.

If you are interested in joining the fight, keep a watch out for the "PirateCorp" tag, do what you can to publicize the direct actions in the fight, and to push the story into the media.

And if you can come up with additional / better direct actions than the Friday download-a-thon, be sure to pipe up.

The rich get richer, the poor get the picture
The bombs never hit you when you're down so low
Some got pollution, some revolution
There must be some solution but I just don't know
The bosses want decisions, the workers need ambitions
There won't be no collisions when they move so slow
Nothing ever happens, nothing really matters
No one ever tells me so what am I to know

You wouldn't read about it, read about it
Just another incredible scene, there's no doubt about it

Playing Hardball with the Senate: Bring out the Nuclear Option

Burning the Midnight Oil for Progressive Populism

OK say, just hypothetically, that you are an administration looking to get one of your two signature policies passed. And the Senate, deeply entrenched in the pockets of the affected industry, looked like it will gut your legislation so badly that getting the result passed will stink of failure almost as much as the stench of failure if it is defeated.

Suppose its so bad that the Senate action is the most likely way for your party to lose the Majority in the House is for the disappointed Democratic supporters of so-called "Blue Dogs" to stay home in the midterms while fire up Republican opponents turn out in large numbers.

That would be the time to bring out the "nuclear option" ... the threat to radically change the Senate Filibuster rule so it can no longer be used as a roadblock to reform.


A short note on terminology

Yes, this soon after the anniversary of Hiroshima, it is striking that calling elimination go the filibuster "the nuclear option" is absurd hyperbole. It is, however, the term that is used, since the Republicans (back in the days when a "permanent Republican Majority" was a theory floating around) proposed eliminating filibusters on judicial appointments.


The Greatest Reform

Eliminate the filibuster, which is to say, restore the point from the original Senate rules of order that made a motion to bring the previous motion to a vote in order. That would make half the Senate plus One (or half the Senate plus the VP, when they are on the same side of the issue) sufficient to close debate - that is the rule that is used to make it impossible to have a filibuster in most committees and legislatures and boards around the world.


The Wikipedia Machine says that Aaron Burr proposed eliminating the rule, because it seemed redundant and had only been used once in the prior four years. However, the framing point here is that at the founding of the Senate, a filibuster was not possible: if a measure had the votes to win, debate could be closed off by the same winning margin.


The Great Reform

Don't know how likely the Greatest Reform is. However, if not likely, here's a version that runs on the "Make the Senators Do Their Goddamned Jobs" frame.

Under our system, each House can initiate legislation, and each House acts as a House of Review for legislation initiated by the other body. Now, the Senate can work under whatever arcane rules it wants to for initiating legislation, and indeed it can stage a sit-down strike on initiating legislation at all ... especially since early in the last century, it is now made up of elected representatives from every state in the union.

However, why should a House of Review have the right to refuse to fracking review the goddamned work of the House of Government, which is also made up of elected representatives from every state in the union.

So the "Great Reform" (but not Greatest Reform) is simply this: if the Senate has not brought its own version of legislation passed by the House to the floor in two calender months, it is in order to bring the original house legislation to the floor for an up or down vote without debate or amendment. Two months is plenty of time to get an existing bill out of committee and to the floor for a vote.

Note that legislation brought to the floor in this way does not require a conference committee and a second passage of the reconciled bill through both houses ... it is both houses passing the same wording, so it goes straight to the President for signature.

If the Senate wants to change something, bring an amended version to the floor. If the Senate wants to defeat something, bring the legislation to the floor and vote it down. But the Senate can no longer have a minority of Senators simply go on strike and refuse to do their goddamned job on something already enacted by the other chamber.

Note that if this was presented as legislation by the President (and there are various bills that touch on Congressional procedures ... various versions of PAYGO are an example) ... and in the event that it passes ... it would then be protected from being overturned by either a Senate filibuster, or a House majority in opposition to changing the rules.

Of course it would be subject to a filibuster threat, but the Senate filibustering on the principle of protecting its right to sit on its fat ass and do nothing would be a fine spectacle for setting up a rare increase in Senate majority by the party taking the White House in the first mid-term election.


The Small Reform

The Small Reform is more procedural than that one. It is changing the rules of the Senate so that the 3/5 required for cloture is 3/5 of the members present, and making quorum calls out of order once the Senate has been in session 24 continuous hours.

This would turn the filibuster back into the high political theatre it once was - and it would force the supporters of the filibuster to bring in their cots. They have to stay there and rotate control of the floor, and once a cloture vote has been brought to the batters box procedurally, the supporters of cloture are in a position to bum rush the room when the ranks of the filibusterers wane.

You can just see some of the hijinks ... the cable news channels will love to retell the story of the Senator that flew out of town, then put the slip on snoops watching the airport by catching the sleeper train back and walked in leading 50 Senators to bring the bill to a vote as seven of the filibusterers had headed off to caucus and fell asleep in the caucus room.


Once Rahm Gets Over His Hissy Fit ...

If we stand firm and push hard, the Progressive Caucus will stand firm on the public option. We are, collectively, stronger than Rahm Fracking Emanuel. He can swear and scream and carry on, but we are a threat to the job security of most members of the Progressive Caucus, if we get our backs up and support a primary opponent ... and Rahm Fracking Emanuel is not.

However, after he had beaten his head against that brick wall for long enough for it to sink into even his thick skull, this is where Rahm takes his "I don't give a frack what is in the bill, I want a win" act on the road to the Senate, and threatens to take away their filibuster toy unless they get something through that the Progressive Caucus will pass.


Conclusion

What, you think I can reach a conclusion on this without feedback? If you do, your more nuts than that lady at the townhall who said ...

... oh, never mind. Just have at it.

Beware of Geeks Bearing VATs

Burning the Midnight Oil for a Brawny Recovery also posted at My Left Wing, cross-posted to ProgressiveBlue, Docudharma and more TBA

If you wander around the fringes of economic discussion on these Interwebs, you may encounter sites extolling the wondrous vitrues of the VAT. "If only we would adopt a massive VAT, our two decade long decline in manufacturing output would be gone, and we would be an exporting powerhouse once again." ... well, no, that would be a stereotyping of the argument. A real sample of the claims sound more like this, from tradereform.org:

I Squared R Element Company is in Akron, New York. It makes industrial heating elements which are used for many processes to make other things, including glass and computer chips. The company was the low bidder on a contract to export to China.

However, the company lost the bid. Why?

I squared R was told it did not include, in its bid, China's 10% customs duty or the 17% value added tax(VAT) that must be paid at the border.

All our goods pay a 17% VAT at the Chinese border. And the uninformed say we are a high cost producer. Chinese exporters also get a 17% VAT rebate, i.e. they get paid to export.

And, yes, I have picked out this quote to pick on VAT-uber-alles advocates, precisely because it focuses on the part of the argument that is simply wrong.

The protection against imports is the tariff, not the VAT. The Chinese company that beat out the producer in that other Akron also has to pay 17% VAT on its production. If omitting the 17% VAT alone was what made the Akron, NY producer the "low bidder", its simply lying to call them the low bidder ... its like two different companies in the same state competing for a contract, and one claiming to be the low bidder because they left sales tax off their bid, which the other company included.

That element of VAT advocacy is nothing but hypocritical posturing at some stage along the line ... though not necessarily on the part of a particular VAT advocate, since it may well be that a particular VAT advocate has been misinformed by hypocritical posturing polluting their sources of information.


VAT and Trade

The other part of VAT that is raised is the export rebate (again from tradereform.org:

Companies are put out of business because of VAT subsidies. Foreign exporters are paid to export, in the form of VAT rebates. The products are relieved of tax burden.

This is the real effect of VAT on trade. A natural side effect of heavy, regressive, indirect taxes is that it increases the costs of exports. That is true of VAT, over-taxing for Social Security or other payroll taxes, retail sales taxes, (hidden) wholesale sales taxes, stamp duties ... its a general effect of heavy indirect taxes.

Now, from the perspective of the wealthy, a massive benefit of heavy indirect taxes is that those with freely disposable income can normally duck out on paying the indirect taxes if they direct their income to wealth accumulation instead of consumption. So if the poor, who spend all of their income, are paying 20% of their income in indirect taxes, the very wealthy, who devote much of their income to perpetuating their status as a member of a stable aristocracy of wealth, would only pay 10% if they only consume half of their income, and the more of their income they devote to accumulating wealth and economic power, the less of their income is subject to tax.

Further impoverishing the working poor, and pushing the shrinking middle class toward poverty ... well, them's the hazards. However, from the perspective of the wealthy, there is a downside ... that nasty trade effect.

However, the WTO permits indirect taxes to be rebated on exports. We do this in the US for some of our indirect tax burden ... indeed, we do it on a state by state basis, with sales taxes assessed in one state one payable by residents of that state. But if a particular municipality in Ohio has a total of 7% of state, county and city sales taxes, any exports from Ohio to China have a 7% "export rebate".

VAT is as easy to rebate as retail sales taxes, because of the way it works. Each business pays VAT on its inputs, and collects VAT on its sales, and hands over to government the difference between what it collected and what it paid. In other words, the government receives the VAT on every step in the production chain on the increase in the value of sales over the value of outlays.

Since each step of the way, the VAT that is owed is a simple percentage of the sale price, computing the amount to rebate at the border is straightforward.

By contrast to China and most of Europe, in the US our biggest indirect taxes are payroll taxes, and we do not have a mechanism in place to rebate the payroll taxes.

The rebate of indirect taxes on exports ... that's the trade effect of a VAT. Claiming that there is an impact on the import side is as silly as if a Chinese firm claimed we had unfair protection against Chinese products because "The Wal-Mart between Kent and Ravenna in Ohio charges sales tax on imports!!!".


Pushing Progressive Options Out of the Frame

Now, if the US wishes to pursue the neo-mercantalist policies of China, most of Southeast Asia, and etcetera ... what would that policy package be?

• Peg our currency at a steep discount, for exchange rate stability and competitive advantage
  
• Levy steep indirect taxes on domestic consumption, and rebate those taxes on exports
  
• Maintain protective imports and discriminatory trade practices for those industries that we are trying to develop

Some of the people pushing for the VAT would happily accept that full package. Others, however, might criticize it.

The progressive critique is that neo-mercantalism is an effort to export our unemployment overseas by pursuing trade surpluses, at the expense of the standard of living of the majority of the our population. Some few at the top will benefit from successful neo-mercantalist policy, while for the majority of the population, its a policy of taxing domestic consumers to finance infrastructure used for domestic production and export production alike.

And just like old-fashioned mercantalism, neo-mercantalism only works if there are countries that are in a position to run sustained trade deficits. After all, one country's exports is another country's imports - so the whole world cannot run a global trade surplus with itself. If everyone pursues a trade surplus, then on average half must fail.

Back in the days of "paleo-mercantalism", that country running the perpetual trade deficits was Imperial Spain, possessor of two mountains of silver in Mexico and Peru, which could be acquired by merchants in other European nations by selling things to wealth Spaniards, and then used to buy into the lucrative Asian carrying trade. More recently, it has been trade deficits by the United States as we have progressively hollowed out our industrial capacity while maintaining consumption on the back of credit extended to us ... as a side effect of the cheap currency policy.

But one reason the world experienced a financial crisis is that the US was in a financially fragile position, where our financial sector did not have the resilience to withstand a nasty shock ... which came in the form of an oil price shock. And if the US is the country chasing trade surpluses ... how then plays the trade deficit role we used to play?

While balanced trade can be sustainable over the long term, trade surpluses for all is strictly impossible, They are more than unsustainable, they cannot happen in the first place. So a policy regime in which economic success requires trade surpluses is a policy regime that, by definition, dooms at least half of the economies in the world to failure.

The corporatist critique of that policy package is different. Pegging the currency at a steep discount undermines the economic strength of corporations earning income in that currency. Further, it makes the maintenance of a 700+ strong foreign base network more difficult, and so undermines the coercive force that can be deployed in support of corporate economic power. And protective tariffs in high income nations undermines the ability of large transnational corporations to benefit from their relative advantage in operating cross-border production systems.

So the only element from the neo-mercantalist policy package that seems appealing to the corporatist is the VAT itself.

Of course, when we read David Brooks extolling the virtues of the VAT in the NYT ... we can be confident that it is not in a policy package including an exporters exchange rate for the US$, nor one that includes a general revenue tariff on all imports.


Naive populism deployed against the interests of the populace

This is not to say that a VAT is an unambiguously bad thing. Any tax is an element of a tax structure, and what matters is the shape of the entire tax structure. This is, of course, itself a critique of much VAT advocacy, which treats the VAT as a good thing in and of itself, no matter what the context.

Consider two different scenarios:

• (1) A VAT is put into place in order to avoid restoring capital gains taxes to a two-tier structure, placing a SSI levy on incomes in excess of $250,000 and simplification of the personal income tax structure to close loopholes used primarily by those earning over $250,000
  
• (2) A VAT is put into place that is large enough to eliminate the 12%+ payroll income tax that funds Social Security and Medicare

These two VAT's have quite different impacts, both in terms of trade and in terms of impact on the working poor and the middle class.

In the first scenario, the relative tax burden is shifted onto the working poor and middle class. A VAT of, say, 10%, taken on top of the 12%+ payroll income tax, would mean that the working poor would be paying 22%+ of their income in taxes. And the rebate of the VAT is primarily a way to increase indirect taxation without making the trade impact worse ... there is no substantial trade loss from a two-tiered capital gains tax or from closing income tax loopholes, and a payroll tax on incomes over $250,000 is not going to affect the decision whether production facilities should be located in the US or some other country.

In the second scenario, the relative tax burden is shifted away from the working poor and the middle class. VAT is levied on all "Value Added", and not on wage and salary "Value Added" alone. This is a net progressive impact, and its stronger then the regressive impact of shifting the tax burden off of production for export ... so over-all, its a net progressive change.

Now, which of the two do you think David Brooks is really arguing for ... using VAT to shift more of the tax burden onto the working poor and shrinking middle class, or using VAT to shift the tax burden off the working poor and shrinking middle class?

Naive VAT advocacy which overstates the trade benefits of the VAT and is, underneath that, founded on the impossibility of all countries replicating the trade surpluses of China ...

... that form of VAT advocacy plays into the hands of the corporatist version of VAT, where VAT is used because we have started to reach the limits of sales tax and payroll tax, and some other mechanism is needed to drive regressive indirect taxes up still further.

There is no way to achieve a progressive use of VAT if the political alliance that is formed in support of VAT includes the paymasters of the David Brook's of the world ... because under that political alliance, VAT will be use as a regressive tool. And once the machinery of VAT collection is put into place, and people become accustomed to it, it becomes entrenched ... it is far easier to defend against VAT used in a regressive way than it will be to restructure the system once it is in place.

So Beware of Geeks Bearing VATs.