Thursday, February 28, 2013


This article from the LA Times' Michael Hiltzik is one of the best essays to explain why the deficit hawks aren't really deficit hawks. They're simply using deficits and other red herring arguments to gut programs they don't like. Why? Because the programs - like social security and Medicare - are not only popular but they undermine their utopian world view that that government doesn't work.

Worse, the continued success of social security and Medicare blows up their argument that only market players in the financial, health care, and insurance industries can adequately provide America's retirement and health needs.

As an example, Hiltzik looks at the notion that social security and Medicare amount to little more than "generational theft." Robbing our children of money to pay for old age programs is their tug at your heart argument. Hiltzik correctly points out that the deficit hawks arguments here are wrong on the numbers and an outright sham.

Their position, which is led by the Republican Party, has everything to do with their inability to discredit the services and popularity of these programs. So they have to argue that the programs are uncontrollable, ungovernable, and therefore undesirable.

Read the article. It's a good one.

- Mark

Wednesday, February 27, 2013


"The person who reads 
and doesn't understand 
is no better off than the 
person who can't."

I can't remember where I first heard this, but it rings true the more I read the responses to the things I write. Specifically, I'm convinced that illiteracy goes far beyond the inability to read, and also applies to one's inability to understand simple graphs, charts, and written nuance.

This Monday my article "All hail the Gop's Stunning sequestration chutzpah" appeared in our local paper, the Bakersfield Californian. Among the points that I made, two of the most prominent are that: (1) President Obama inherited trillion dollar deficits as far as the eye could see and that; (2) new federal spending under President Obama has actually gone down. I also provided a chart with information drawn from the Congressional Budget Office to make my point on new spending (information that originally appeared in the Wall Street Journal's Moneywatch, which is reposted here).

So, what do I see in the on-line comment section of the Bakersfield Californian?

... Obama has outspent any other US president (by far), has increased the amount of Americans in Poverty and increased the number of Americans on government assistance to 128 Million. Obama refuses to stop spending money he doesn't have; he wants to collapse the Dollar. He wants all Americans dependent on the government. Part of his socialism push.

Besides going off track, the on-line writer - and others, as we shall see - completely ignored or missed what I said in my op-ed. Or, and this seems more probable, the on-line writer (he calls himself "giwillikers") simply doesn't understand what he reads.

Look, in very simple terms I was referring to NEW spending by administration. In fact, I wrote "new" spending  twice in the article. The term "annualized growth of federal spending" is also in the accompanying chart (I know, a bit tough for some, but this is supposed to be the editorial page).

So, in real simple terms, NEW federal spending refers to what President Obama is responsible for putting on the books. It's what the president proposes and gets to spend. What President Obama had on his desk when he walked into the Oval Office (the built-in deficits) is another matter.

So, let me make it simpler for all those who read at the same level as my on-line friend ...

Blaming President Obama for total spending levels today is like congratulating the man who marries the girl who's already pregnant from her previous boyfriend.

The fact that Congress fails to do anything about the budget mess every year is akin to the old boyfriend sneaking back into the house of his former girlfriend (annually).

Too blunt? Well, when people don't understand nuance or the finer points of the written word blunt is necessary.

The reason I didn't make this point in the article I submitted to the Californian is because of space limitations. You only get so many words. But most importantly I'm assuming that the people who read and respond to the Californian's editorial pages can read for nuance.

Apparently, I was wrong.

All of this wouldn't be so bad, except for one thing: I have a colleague (outside of my department, mind you) who can't seem to read for nuance either. Here's the link to his Letter to the Editor. In a few words, he's made the same mistake that my on-line friend did, and he's a statistician to boot.

But wait, it gets worse.

To make his point, my colleague invented an entirely new category - spending as a percentage of GDP - that I never made reference to in my article. I discussed NEW spending. My colleague would've known this if he understood nuance, or even paid attention to what was presented in the accompanying chart where, incredibly enough, it says "annualized growth of federal spending" (something a supposed veteran reader and student of statistics should be able to interpret).

To my colleague - who you can find by clicking here - all I can say is seek help ...

I could go on but would rather finish with this. Last week I posted this article on my blog. It's one of those run of the mill surveys. It says Bakersfield is the least literate city in America (yes, we're #1). I posted it because I found it amusing.

Then I started reading the responses to my op-ed.

They breathe life into Bakersfield's literacy ranking.

Worse, they make it clear that the person who reads and doesn't understand is really no better off than the person who can't.

- Mark

Tuesday, February 26, 2013


From The Atlantic Monthly ...

This is a story of the man who deliberately committed a crime (he stole skin cream) to go back into prison for surgery that he needed. It's written by the medical doctor who performed the surgery. It raises some serious questions about our health care system. While the person of interest (the patient) in the story is not the nicest guy the author forces us to ask questions about our economic system and how our bankruptcy laws don't take into account the families who have to make the decision between giving up everything they've worked for during their life in order to keep someone alive.

This is especially the case when we find that America has the most expensive system in the world, but doesn't provide the same level of outcome as the costs might suggest we should have.

- Mark 

Monday, February 25, 2013


After posting this sequestration piece on my blog I decided it needed more context. So I rewrote it and incorporated this post on Marco Rubios' State of the Union response, and sent it off to The Bakersfield Californian. This appeared in the Californian this morning. Enjoy ...

Sunday, Feb 24 2013 11:00 PM

MARK MARTINEZ: All hail the GOP's stunning sequestration chutzpah

Chutzpah. It's a term best understood as a blind arrogance that pushes the kid who killed his parents to ask the court for leniency because he's now an orphan. One element of this is when people try to change story lines or shift blame so others will ignore their role in creating a mess of things.

The Republicans' attempt to change the story line on the budget, and then shift blame onto President Barack Obama for our looming sequestration deadline is a classic case of chutzpah.

If you're catching up, sequestration is part of the Budget Control Act of 2011 that mandates across the board spending cuts in defense, health and other areas. After missing established deadlines, we're now waiting for the hatchet to fall on March 1.
According to the GOP -- and if we're to believe Sen. Marco Rubio's State of the Union response -- we're at this point because Obama is an irresponsible big spender who only wants to make government bigger. Worse, the president has refused to work with the Republicans, so they argue that their only option was to accept the president's sequestration proposal. All in the name of fiscal discipline, of course.
Comparing the rhetoric to the real world makes it clear that blaming the president for the sequestration mess might actually take chutzpah to another level. Let's take a look.
If you watched Rubio's State of the Union response, you couldn't be blamed for believing that Obama was the second coming of Lenin. Rubio painted a scary picture of a big government socialist monster in the White House. He has a problem though. If we follow his logic, and Obama is Lenin, that makes Presidents Ronald Reagan and George W. Bush outright Marxists; new spending under both grew three times the rate under Obama.

Simply put, new federal spending under Obama has risen at its slowest pace since Dwight Eisenhower was president. Remove the recession-induced stimulus spending (left on the president's desk) and new spending under Obama almost grinds to a halt.
But wait. There's more. The size of our federal workforce isn't growing either.

The ratio of federal workers to our civilian population has gone down under Obama. In fact, not only does Obama beat Reagan and Bush II in this area, but we need to go all the way back to President Lyndon B. Johnson to find the same ratio of federal workers to civilians that we see today.
Put more simply, the spending spree the GOP is hammering Obama about -- and is using to refuse to negotiate with him -- never happened.
So why blame Obama for growing government if it's not true? Simple: The GOP wants America to forget that President Obama was handed built-in trillion-dollar deficits as far as the eye could see and a toxic economy. The GOP needs a (false) narrative to go along with their larger "just say no" strategy.
"In Do Not Ask What Good We Do," author Robert Draper explains how GOP leaders got together on inauguration night 2009. They pledged to sabotage Obama's agenda by showing "united and unyielding opposition to the president's economic policies." That night, Newt Gingrich even boasted that sabotaging the president would sow the electoral "seeds of 2012." From there the "Party of No" was born.

It's worth noting that during their only debate, congressional candidate Terry Phillips even reminded Rep. Kevin McCarthy about this meeting (which McCarthy attended) only to have him effectively ignore the issue when asked if Draper was telling the truth.
So, here we are, days before falling off yet another fiscal cliff. We have to ask why we're here. The president inherited built-in trillion-dollar deficits. GOP claims about Obama's big spending and growing government aren't true. And the GOP never had any intention of working with Obama. (Forget the Democrats' Senate majority in 2009. I'll just say get a high school student to explain "filibuster" and then have them explain what Joe Lieberman, Ben Nelson, et al., meant to the Democratic team.)
But let's be clear here. We wouldn't have this sequestration mess if the GOP hadn't threatened to blow up the economy in 2011 over a false narrative, and then voted overwhelmingly for sequestration (which both Rep. Paul Ryan and House Speaker John Boehner wanted and praised).
Yet the GOP wants to blame the president for the sequestration mess. Chutzpah indeed.
Mark A. Martinez, Ph.D., is the author of "The Myth of the Free Market" and professor of political science at CSU Bakersfield.


- Mark

UPDATE: Several people wrote in to our local paper to correct my math. Too funny. Click here for my response to the ignorance and illiteracy that exists all around us.

Friday, February 22, 2013


In my new effort to post things that catch my attention, or make me go hmmm, below are a few clips and articles that get me thinking about ideas to write about but I never find the time to act on.

* The Republican Party, then and now. Wow.

* Check this out for a look at what unhinged NRA paranoia looks like ... then break out the tin foil hats.

* Speaking of tin foil hats, take a look at this unhinged immigration stupidity. The comments would be amusing if they weren't so serious. Really ugly.

* Republicans and right wing pundits are complaining - with no supporting evidence (again) - that raising the minimum wage from $7.00 to $9.00 an hour will harm the economy. Check out this "facts and myths" site for a long list of studies that will help you understand the minimum wage debate.

* Proving that they really don't have a clue about modern economics, here's Fox News downplaying the impact of sequestration (mandatory budget cuts after March 1).

* What happens when you don't actually choose to purchase a service (like emergency health care), or pick where you will consume your product (a heart attack will determine this for you)? Time Magazine does an excellent job of explaining why there is no free market when it comes to health care.

And in the Orwellian WTF Category we have this ...

- Mark 

Thursday, February 21, 2013


It seems like these kind of reports on one  topic or another pop up every other year. This year? Bakersfield is the least literate city in the nation. Here's the original linksupporting data (thanks Tom) and, for those unfamiliar with the region, a map of the state ...

- Mark

Monday, February 18, 2013


A few years back I wrote about the special exemptions that privileged groups had in Latin America before its independence from Spain in 1810.  As I wrote then, these exemptions of privilege were called fueros, and were granted to members of the nobility (pre-independence), the clergy, certain government officials, and the military.

These privileged exemptions, as you can imagine, contributed to a culture of impunity and established a history of hierarchy and status. Apart from enabling the elites of Latin America to live a life of privilege and, in many cases, charmed luxury these privileges did much to skew Latin America's economic development on many levels. 

I then discussed how a Morgan Stanley wealth manager - in fuero-like fashion - was given the option of not facing felony charges for a hit-and-run case in Colorado because prosecutors didn't want him to face a career backlash (that would inhibit his ability to pay restitution). The fund manager, Martin Erzinger, struck a cyclist while driving, and - in spite of the wishes of the injured cyclist - was allowed to plead guilty to misdemeanor charges. 

Fast forward to 2013 and we get Matt Taibbi's most recent piece on our dysfunctional financial system from Rolling Stone magazine. In fuero-like fashion Taibbi writes of a banking system that has become "Too big to jail." Taibbi makes it abundantly clear that "gangster bankers" in America enjoy an emerging fuero financiero in America because of their extortion-like capability (threat?) to bring down the entire economy if they are punished according to their crimes. 

Here's U.S. Assistant Attorney Lanny Breur explaining why he refused to pursue criminal charges against banking giant HSBC:

“HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."

Sounds like too big to jail to me. Breur didn't want the bank to lose its banking license, with the now standard threat of collapsing our financial system. So he fined them $1.9 billion (or about 5 weeks of HSBC profits). Not only is no one at HSBC punished for catering to drug dealers and terrorists, but HSBC will probably find a way to write off the fine as a business expense. 

Then we have Bank of America gaming the system to prevent investigations into their predatory and negligent foreclosure practices, for which they paid $1.2 billion in fines (part of a larger $8.5 billion settlement). Sigh ...

There's more, but you get the point. The special exemptions are so strong for the big banks that they are literally having a financial ball, at our expense. Call it the Bankers Ball.

As I've pointed out over and over, the arrogance and greed of the industry is going to collapse the economy some time down the road. Banks are neither following the most basic rules of capitalist markets, and are aided by favorable legislation that props up their bottom line but is killing America's middle class. The privileges and immunities they now have will only speed up the next market meltdown. 

We need to start prosecuting the criminality as it happens. 

That we are not prosecuting the banks, and the bankers who sign off on the illegality, tells the world that the banks have become a privileged class in America. Worse, they have become too big to jail, or even take to court.

- Mark 

Sunday, February 17, 2013


Some time ago our local Congressman Kevin McCarthy (R-Bakersfield) decided to remove me from his message list on Facebook. I can't say that I blame him. I would regularly let him know where he was wrong, and wrote many times that the political game the GOP is playing is pretty obvious. He especially didn't like me calling him on the GOP's "Just Say No to the President" strategy.

We're still "friends" (I think), but we're not good enough friends for him to let me know what he's thinking. The spririt of democracy lives strong in our congressional district ;-).

Anyways, although I haven't been there in months I decided to take a look at Rep. McCarthy's site. What do I find? This passage from Bob Woodward's book, The Price of Politics ...

Yeah, Rep. McCarthy is trying to blame President Obama for the looming sequestration deadline, which mandates automatic spending cuts if a budget deal isn't reached by March 1, 2013.

Why is Rep. McCarthy pointing to this passage from Woodward's book? Because the GOP knows the results of sequestration could be devastating to the economy. So he's trying to set the tone for the next news cycle: "Obama to blame for ruining the economy" (or something like that). This strategy has been in the works for some time now (more on this below). 

Citing senior Obama advisors - Rob Nabors and Jack Lew - as the source of the sequestration idea is McCarthy's way of finding scapegoats on an issue that the GOP has wanted for some time now. The reality is the Republicans have not only refused to consider President Obama's budget proposals - which include tax hikes on America's wealthiest population - but Rep. Paul Ryan even praised sequestration as a way to impose automatic spending cuts that the GOP wanted all along. 

Now the GOP wants to blame President for sequestration in spite of the fact that they have steadfastly refused to consider his policy proposals, and then voted for a sequestration bill they wanted all along. This takes some real chutzpah

Chutzpah, for those of you unfamiliar with the term, is best explained as a blind arrogance that pushes the kid who killed his parents to ask the court for leniency because he's now an orphan. The GOP's chutzpah on the sequestration issue is especially appropriate since the GOP's strategy since President Obama entered office in 2009 has been to say no to every major policy initiative from the White House and then blame the president for not fixing the economic mess left by his predecessor

This is a key point made in Robert Draper's book, Do Not Ask What Good We Do

In his book Draper outlined how Rep. McCarthy met with his GOP colleagues the night of President Obama's 2009 inauguration and pledged to sabotage President Obama's agenda by demonstrating "united and unyielding opposition to the president's economic policies" (which I discuss herehereherehere and here)

That night Newt Gingrich even suggested sabotaging the president would sow the electoral “seeds of 2012” (a claim Gingrich has not denied). From there the Party of No was born, with Kevin McCarthy at the helm (
the strategy continues, as Newt Gingrich explained this morning).

So this is what we have. President Obama wanted congressional Republicans to work with him to fix our wrecked economy in 2009 (which includes tax hikes on those who did fabulously well after helping to crash the economy in 2008). But Congressman McCarthy and his GOP colleagues preferred to sabotage the economy to create a crisis-like atmosphere that they desperately want to pin on President Obama. After making it clear that they would not help President Obama fix the economy the GOP then accepted and voted for sequestration (August of 2011) with the goal of pinning the outcome on the White House.

With the sequestration deadline of March 1, 2013 around the corner congressional Republicans are refusing to entertain President Obama's budget proposals, again. You might think that they would budge a little since President Obama convincingly won re-election, with a mandate to raise taxes on America's richest class. Think again.

Let me leave you with this question. Which is worse? Proposing a sequestration plan that the GOP worked for, and wanted in the first place, or proposing a plan that undermines a newly elected President and places the interests of a political party above country? 

- Mark 

Thursday, February 14, 2013


When discussing how dysfunctional our political system has become in my American Politics class this opening scene from HBO's Newsroom helps set the tone. The theme? We're not not the greatest country in the world.

The short version ...

A few more minutes ...

- Mark 

Wednesday, February 13, 2013


Senator Marco Rubio (R-FL) used almost all his State of the Union response time telling America that President Obama wants bigger government, which means we should all be prepared for more spending. What an idiot  ...

While President Obama inherited a budget train wreck, with built in trillion dollar deficits as far as the eye could see, he hasn't embarked on any kind of spending spree. Rex Nutting from MarketWatch put it best: "Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree."

Senator Rubio also completely ignored something else. The size of our federal government has been shrinking under President Obama. The ratio of government workers to our civilian population is at its lowest levels since LBJ was president (that's more than forty years for the Fox viewers out there). Check out this chart from the Federal Reserve ...

So, yeah, the size of our government as a percentage of our population has been shrinking under President Obama. In fact, if we take a closer look we find that President Obamas numbers on the topic are far better than under Presidents Reagan, Bush I, and Bush II.

For the record, the uptick in public sector job growth you see in 2010 is tied to the hiring that was done for the 2010 census. But you wouldn't know any of this because, apparently, Senate Republicans drink from the same Kool-Aid bottle that Mitch McConnell does (which might explain Senator Rubio's Big Gulp moment).

There's more, but this is the key. Both spending and the size of government have been going down under President Obama, big time.

The fact that Senator Marco Rubio got up in front of America - on a presidential stage - to suggest otherwise makes him this weeks village idiot.

- Mark

Monday, February 11, 2013


Courtesey of the U.S. Senate, but mainly Sen. Bernie Sanders (I-VT), we get: "Meet the Top Wall Street and Corporate Tax Dodgers" ...

Here's one example of 31 cases illustrating how corporations in general and Wall Street banks in specific have significantly harmed our economy and the federal budget:

Bank of America CEO Brian Moynihan.
Number of Offshore Tax Havens in 2010? 371.
In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%. 
Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.
Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes.  Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.  
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.
Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits. 
Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.
During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.

Read the report to learn about another 30 tax dodgers who use tax gimmicks and off shore accounts to evade the same tax responsibilities that you and I cannot avoid (because we don't have access to the Cayman Islands and million dollar tax lawyers). You can also go here to get a synopsis of the report, or here and here for additional information on the topic.

At the end of the day, as the report makes clear. "Instead of cutting Social Security, Medicare, Medicaid, and veterans’ benefits, it is time for these corporate and Wall Street tax dodgers to pay their fair share in taxes and bring jobs back home to America."

Pretty simple.

- Mark 


The PBS documentary Silicon Valley is one of the best examples of how state incentives and market players functioned in the past to help create America's dynamic economy in the last half of the 20th century. Market reward for market performance is how it's supposed to work.

If you watch this then watch the incredibly frustrating "Untouchables" (which I posted on last week) you'll walk away with a better understanding of how dysfunctional and myopic our private market system has become over the past thirty years.

Market bailouts for market incompetence is not how it's supposed to work.

The vast majority of our current privatization and free market zealots don't seem to understand any this, or the real keys to market success (as Steve Jobs pointed out). The PBS documentary Silicon Valley helps shed light on the entire process.

Enjoy ...

Watch Silicon Valley on PBS. See more from American Experience.

- Mark 

Saturday, February 9, 2013

Friday, February 8, 2013


There are so many thought provoking articles and posts that I come across. They often inspire me to write posts, op-eds, and even contributed to helping me develop a couple of book chapters (including several in my next one). Unfortunately, I don't have the time to develop all of the ideas I get, and often leave the articles in folders that eventually get lost in some literary black hole.

For this reason I'm going to make an effort to post links to insightful articles, with simple one or two-line commentary for your convenience.

* This article from the LA Times' David Horsey offers a short but solid analysis of how manipulated and flawed our gerrymandering (redistricting) process is today. 
* The Justice Department is suing ratings agency Standard & Poor's over fraudulent bond ratings that helped toxic crap smell like roses. It's about time.  
* From Barry Ritholtz: "Why the ratings agencies deserve the death penalty." And, yes, I agree with Ritholtz. 
* Open the link here to learn about the top 5 denigrating references Wall Street uses when ripping off clients (are you a "Muppet"?). This article from Bloomberg provides some specific stories of incredible arrogance.

* If you're wondering why letting financial markets work their magic - a.k.a. laissez faire economics - isn't always the correct path for building market confidence you'll want to read Bloomberg's "World War I debts that wouldn't go away."

* In the stories that makes you go "Hmm" category ... It appears that Republican heavy counties are to blame for most of the growth in food stamp consumption. 
* Another story that makes you go "Hmm" ... House Republicans continue to damage "their brand" while, ironically enough, pushing policies that makes it clear what's behind their brand.  
* Another story that should make you go "Hmm" (and maybe even generates a WTF moment) ... Over the past 3 years - and for the first time since 1937 - our nation's budget deficit declined as a percentage of GDP. 

Believe it or not, this is the type of information that inspires posts, op-eds, and even some book chapters that I write. Now, if I only had more time ...

- Mark

Thursday, February 7, 2013

UNDERSTANDING PRESIDENT OBAMA'S DRONE WAR (and why it shouldn't surprise anyone)

On the surface this is not a good media week for our national security institutions ... 

An independent report, Globalizing Torture: CIA Secret Detention and Extraordinary Rendition, was released this week. In a few words it explains where and how the United States was able to abduct and torture terror suspects around the world. It is regarded as "the most comprehensive account of human rights abuses" by the CIA. 

Then we have Michael Isikoff's story this week, which outlines how President Obama is increasingly relying upon drones to attack suspected terrorists, and even U.S. citizens abroad who pose a threat to the United States. It doesn't matter if the individuals were ever tried in a court of law, or if they are United States citizens. We also learn that President Obama has a "more elastic" concept of imminent threat. 

Whether you agree with torture or the drone attacks as a matter of policy, it's important that we have an understanding of how we have arrived at this point in our national security road


* The Post-9/11 Environment: Fear dominates America's national scene.

The Patriot Act: This act of Congress immediately after 9/11 reduced restrictions on law enforcement for gathering information, and expanded the definition of terrorism to include domestic incidents (however loosely defined). Many FISA-like provisions were made available as well. In 2011 President Obama signed a four year extension for roving wiretaps, business record searches, and for the surveillance of "lone wolves" (individuals suspected of terrorist activities, but not connected to any terrorist groups). 

* Operation Enduring Freedom (originally Operation Enduring Justice): An on-going and seemingly open-ended war linked to the larger and more amorphous war on terror. This has given rise to what has been called the national security state and America's unitary executive.

* The Unitary Presidency: After 9/11 White House lawyer John Yoo wrote a memo to President Bush that stated the president’s powers were not confined to the battlefield or wars because “Congress has recognized the President’s authority to use force in circumstances such as those created by the September 11, 2001 incidents … These decisions, under our Constitution, are for the President alone to make.”

* NSA Eavesdropping: President Bush ordered the National Security Agency to eavesdrop on ordinary Americans without obtaining a warrant, and did so numerous times. The president and his advisers claimed the president has the authority during war time and that judicial oversight is not necessary and/or is too cumbersome to deal with real time threats.

* Extraordinary Rendition: The Bush administration asserted that it had the authority to kidnap and fly (or transport) suspected enemies to interrogation stations around the world. This practice is called extraordinary rendition, and was initiated during the Clinton administration. 

* Torture Redefined: An August 2002 memo, written largely by John Yoo but signed by Assistant Attorney General Jay S. Bybee, argued that torture required the intent to inflict suffering “equivalent in intensity to the pain accompanying serious physical injury, such as organ failure, impairment of bodily function, or even death.”

* Tools of War and State Secrets: The Bush administration claimed they could not release prisoners exposed to certain interrogation "programs" (i.e. torture techniques).  The administration claimed that torture programs – which they also denied existed – are state secrets. 

Releasing prisoners who have been part of the "program" could undermine national security because they could then speak with the press, and release details of our interrogation methods. Al Qaeda, it’s assumed, would then begin to practice these methods and build up some kind of - for lack of a better term - torture stamina.

State Secrets and Corruption: According to the State Secrets Doctrine Congress and the American taxpayer can’t ask to take a look at national security related items - like the books of Iraqi Prime Minister Nuri al-Maliki’s troubled Shi'ite government - because releasing embarrassing information could undermine U.S. security, or U.S.-Iraq relations.

* State Secrets and Due Process: The Supreme Court refused to hear Masri v. United States. Here the plaintiff, a German national, argued that he was abducted in Macedonia in 2003 and then transported to overseas prisons where he was tortured. The assumption here is that the State Secrets Doctrine can be employed (by the Supreme Court) to dismiss cases without evidence ever being produced.

* Intent is Good Enough: Hamid Hayat of Lodi, Ca. was arrested and convicted although the government had no direct evidence. What the U.S. government argued was that Hamid Hayat had a “jihadi heart and a jihadi mind.” In spite of withdrawing their original affidavit because of what it revealed about Hayat and the process, the prosecutor’s argued Hayat’s intent was clear. For those who have seen Tom Cruise’s “Minority Report” you know where this leads. 


To make a long story short, as I pointed out many times before, the war on terror has aided in turning America into a national security fortress, and the American president into a fledgling American Caesar. If Americans don't like what's happening with President Obama and the drone war they need to learn more, and get Congress to turn back the clock on the developments listed above. 

President Obama, like President Bush, is simply doing what Congress authorized him to do.

- Mark 

Wednesday, February 6, 2013


Income inequality is killing capitalism in America (or what's left of it). Here's why.

In my book I look at the numerous factors - globalization, hostility towards labor, OPEC-induced inflation, favorable legislation for corporate America, the financialization of our economy, etc. - that led to the steady collapse of middle class incomes in America after the 1970s. I explain in detail how these developments contributed to deliberately skewed income patterns in America.

The impact of these developments on middle class America has been a wholesale redistribution of wage wealth from one group of Americans to another. And it hasn't been pretty.

Unfortunately, most Americans don't understand the story behind these developments. Many are angry over what has happened to "their America." What they're really upset about is that they don't know what happened to the idyllic one income middle-class family storyline that Father Knows Best / Ozzie and Harriet / Leave it to Beaver helped inspire many Americans to embrace.

To help us understand what's happened to America's now debt drenched middle class over the past 30 years we need to take a look at the forces - some natural, others deliberately contrived - that have disrupted the American economy.

First, an aggressive American foreign policy and the success of the post-war Bretton Woods institutions helped make globalization possible. While global trade has boomed, this also brought product competition from low wage regions around the world. Sending American jobs overseas soon followed.

Related, a rather weak immigration enforcement program has allowed many low skilled workers in to America. Low skilled workers pushed many traditional blue collar workers out of construction, agriculture, and other areas. Anemic responses to immigration virtually guaranteed that there would be sustained downward pressure on wages in America. Declining support for unions - which Ronald Reagan accelerated when he fired air traffic controllers - effectively undermined the post-war bargain with labor, which further depressed wage levels.

As well, skill based technology placed an emphasis on brains over brawn, and removed many laborers from traditional union supporting jobs (telecommunications comes to mind). Finally, bouts of OPEC-induced inflation during the 1970s ate away at real incomes in America, and encouraged the financial industry to become creative with debt, interest, and credit instruments (and executive pay scales), which further drained American workers of what they earned.

To deal with the macro-level pressures that began to depress wages in America we saw an increase in the number of two income families beginning in the 1970s. Both males and females were expected to work to maintain the household.

Then we increasingly saw individuals take on more than one job. To be sure, roughly 20% of these job holders did so to get experience, or because they enjoyed the work. But almost two-thirds said they wanted the extra money or needed the money to make ends meet.

In yet another effort to make ends meet by the mid-1990s American families began tapping into - or gave up on - family savings. America's savings rates effectively collapsed below zero after the 2008 market meltdown (savings are higher today because of record bankruptcy filings and because Americans are spending less).

A significant increase in the use of credit cards, not surprisingly, shadowed all of these developments.

The end result? At the same time that incomes stagnated in America, and more families were forced into two (or more) income situations, the amount of personal credit card debt skyrocketed in America.

Another way to think about all of this is to think of credit card use in historical terms. If we take what all Americans owed to the credit card industry in 1969 and average it we learn that each household owed $37 in credit card debt. If we do the same thing for 1980 we find that each household owed $670. By 2010 the average household owed $7,800 (but slightly less in 2012).

Latchkey children, record debt, higher divorce rates, soaring bankruptcies, and increased societal dysfunctions are some of the ugly byproducts of these dynamics. Not all of these dysfunctions can be attributed to stagnant wages, but there's no doubt that it played a big part in making these activities a normal features of American life. Worse, many of these market developments were contrived and deliberate, as I point out in my book (and here and here).

By the end of the 20th century few Americans understood why these developments were occurring. This is unfortunate because this lack of understanding set the stage for the next round of wealth extraction games orchestrated by Wall Street and the biggest financial institutions in America.

At the end of the 20th century wages began to climb (slowly), but Americans were still confronted with soaring personal debt and declining savings. Then the wage gains stopped. Americans had to find a new way to increase disposable income during the 2000s. Enter Wall Street and the bankers.

After getting Congress to rewrite the rules so that shadow bankers and Wall Street didn't have to abide by previous underwriting standards (under the guise of "deregulation"), Americans found that they could use their homes as a personal ATM to extract money (via home refinancing). Home equity withdrawals (blue columns below) surged so much during the aughts (from 2000 through 2009) that "disposable personal income" approached 10 percent of all middle class "income" by 2006.

So, what does all this mean, you ask? If you listen to the right wing noise machine, and the political Oompa Loompahs who follow their lead, you learn one thing. The people who got richer are just that much smarter, harder working, and all around better people who deserve everything they have. Those in the middle and on the bottom of our economic ladder, however, are simply dumber and lazier. They are moochers and deserve their station in life.

End of story.

But it's not the end of the story. Far from it.

What these people don't understand, and will never understand, is that since the 1970s there has been a series of forces at work designed to build up, sustain, and bailout corporate America.

State managed globalization (which facilitates shipping jobs overseas), political hostility to labor initiated by the Reagan administration (which artificially restricts wage flows), record deficit spending (which distort financial flows) and the unaddressed economic setbacks caused by OPEC price hikes in the 1970s (which caused uncertainty and chaos in financial markets and among households) have worked to skew and undermine the "free market" in America.

In fact, these developments have compelled Wall Street and other corporate interests in America to do what they can to protect and guarantee their interests, at the expense of America's middle class. The subsequent income inequality has been devastating.

Today the American consumer is effectively tapped out (as I've pointed out many many times) because of these trends. We will not see a vibrant economic recovery any time soon without addressing the skewed market forces that contribute to income inequality in America.

On this one, let's be very clear. Debt driven consumption is no panacea for what ails America. Only consumers with viable disposable incomes can create demand.

If we fail to address this issue, as economist Robert Skidelsky suggests, growing inequality will ultimately kill capitalism in America, and then around the world.

- Mark

UPDATE: I didn't see it when I posted this, so I'm adding this link ...

Tuesday, February 5, 2013


I know that the rationale behind the 2008 market collapse is off of everyone's radar, for the moment. Still, because we're heading for a similar economic meltdown, this PBS documentary (aired 1-22-13) is instructive because of how it illustrates how high level Wall Street executives became "untouchable" after 2009.

Watch The Untouchables on PBS. See more from FRONTLINE.

To be sure, lower level workers in the financial sector have been brought up on charges. But procsecuting low level financial fruit is nothing to write home about if the players who signed off on the mess are still running the show.

There's more, but I'll just leave you to watch the documentary.

- Mark