AlterNet.org: Economy

Meet the Elite Business and Think-Tank Community That's Doing Its Best to Control the World

Andrew Gavin Marshall, Andrewgavinmarshall.com — Wed, 19 Jun 2013 10:13:00 -0700

The large foundations of America's industrial giants have played a truly profound – and largely overlooked – role in the shaping of modern society.

Read more at Occupy.com.

In an article titled "The Global Corporate Elite" in the journal International Sociology, William K. Carroll and Jean Philippe Sapinski examined the relationship between the corporate elite and the emergence of a “transnational policy-planning network,” beginning with its formation in the decades following World War II and speeding up in the 1970s with the creation of “global policy groups” and think tanks such as the World Economic Forum, in 1971, and the Trilateral Commission, in 1973, among many others.

The function of such institutions was to help mobilize and integrate the corporate elite beyond national borders, constructing a politically “organized minority.” These policy-planning organizations came to exist as “venues for discussion, strategic planning, discourse production and consensus formation on specific issues,” as well as “places where responses to crises of legitimacy are crafted,” such as managing economic, political, or environmental crises where elite interests might be threatened. These groups also often acted as “advocates for specific projects of integration, often on a regional basis.” Perhaps most importantly, the organizations “provide bridges connecting business elites to political actors (heads of states, politicians, high-ranking public servants) and elites and organic intellectuals in other fields (international organizations, military, media, academia).”

One important industry association, according to researchers Carroll and Carson in the journal Global Networks (Vol. 3, No. 1, 2003), is the International Chamber of Commerce. Launched by investment bankers in 1919, immediately following WWI, the Paris-based Chamber groups roughly 7,000 member corporations together across 130 countries, adhering to largely conservative, “free market” ideology. The “primary function” of the ICC, write Carroll and Carson, “is to institutionalize an international business perspective by providing a forum where capitalists and related professionals... can assemble and forge a common international policy framework.”

Another policy group with outsized global influence is the Bilderberg group, founded between 1952 and 1954, which provided “a context for more comprehensive international capitalist coordination and planning.” Bringing together roughly 130 elites from Western Europe and North America at annual closed meetings, “Bilderberg conferences have furnished a confidential platform for corporate, political, intellectual, military and even trade-union elites from the North Atlantic heartland to reach mutual understanding.”

As Valerie Aubourg examined in an article for the journal Intelligence and National Security (Vol. 18, No. 2, 2003), the Bilderberg meetings were organized largely at the initiative of a handful of European elites, with heavy financial backing from select American institutions including the Rockefeller Foundation, the Ford Foundation and the CIA. The meetings incorporate leadership from the most prominent national think tanks, such as the Council on Foreign Relations, Brookings Institution, Carnegie Endowment and others from across the North Atlantic ‘community.’

Hugh Wilford, writing in the journal Diplomacy & Statecraft (Vol. 14, No. 3, 2003), identified major philanthropic foundations such as the Rockefeller, Ford, and Carnegie foundations as not only major sources of funding but also providers for much of the leadership of the Bilderberg meetings, which saw the participation of major industrial and financial firms in line with those foundations (David Rockefeller of Chase Manhattan is a good example). Bilderberg was a major force in helping to create the political, economic and strategic consensus behind constructing a common European market.

With the support of these major foundations and their leadership, the Bilderberg meetings became a powerful global tool of the elites, not only in creating the European Union but in designing the process of globalization itself. Will Hutton, a former Bilderberg member, once referred to the group as “the high priests of globalization,” and a former Bilderberg steering committee member, Denis Healey,once noted: “To say we were striving for a one-world government is exaggerated, but not wholly unfair...we felt that a single community throughout the world would be a good thing.”

The large industrial foundations have played a truly profound – and largely overlooked – role in the shaping of modern society. The ‘Robber Baron’ industrial fortunes of the late 19th century – those of Morgan, Rockefeller, Carnegie, Harriman, Vanderbilt, etc. – sought to shape a new order in which they would maintain a dominant influence throughout society. They founded major American universities (often named after themselves) such as Vanderbilt, or the University of Chicago which was founded by John D. Rockefeller.

It was through their institutions that they sought to produce new elites to manage a new society, atop of which they sat. These universities became the harbingers of modern social sciences, seeking to "reform" society to fit the needs of those who dominated it; to engage in social engineering with the purpose of social control. It was in this context that the Carnegie Corporation, the Rockefeller Foundation, and later the Ford Foundation and others were founded: as engines of social engineering. One of their principal aims was to shape the development of the social sciences – and their exportation around the world to other industrial and imperial powers like Great Britain, and beyond. The social sciences were to facilitate the “scientific management” of society, and the foundations were the patrons of "social control."

The Rockefeller, Carnegie and Ford foundations were instrumental in providing funding, organization and personnel for the development of major American and international think tanks such as the Council on Foreign Relations, which became essential to the emergence of a dominant and entrenched U.S. business class linking academia, political, strategic, corporate and financial elites. The Rockefeller and Ford foundations in particular constructed the field of modern political science and "Area Studies" with a view to educating a class of people who would be prepared to help manage a global empire.

They were also prominent in developing the educational system for black Americans designed to keep them relegated to labor and “vocational” training. They helped found many prominent universities in Africa, Asia and Latin America to train indigenous elites with a "Western" education in the social sciences, to ensure continuity between a domestic and international elite, between core and periphery, empire and protectorate.

Another major policy planning group is the Trilateral Commission, created out of the Bilderberg meetings as a separate transnational think tank and founded by Chase Manhattan CEO (and Chairman of the Council on Foreign Relations) David Rockefeller along with academic-turned-policymaker Zbigniew Brzezinski in 1973. The Trilateral Commission linked the elites from Western Europe, North America and Japan (hence “trilateral”), and it now also includes members from China, India and a range of other Pacific-East Asian countries.

Consisting of a membership of roughly 350 individuals from finance, corporations, media, think tanks, foundations, academia and political circles, the Trilateral Commission (TC) has been immensely influential as a forum facilitating the development and integration of a "transnational elite." The aim of the TC was “to foster closer cooperation among these core industrialized areas of the world with shared leadership responsibilities in the wider international system.”

The most famous report issued by the Trilateral Commission in the mid-1970s suggested that due to the popular activism of the 1960s, there was a “crisis of democracy” that it defined as an “excess of democracy,” which needed to be reduced in order for “democracy to function effectively.” According to the Trilateral Commission, what was needed was increased “apathy and noninvolvement on the part of some individuals and groups” to counter the “crisis” being caused by “a highly educated, mobilized, and participant society.”

Moving elsewhere, the World Economic Forum, founded in 1971, convenes annually in Davos, Switzerland and was originally designed “to secure the patronage of the Commission of European Communities, as well as the encouragement of Europe’s industry associations” and “to discuss European strategy in an international marketplace.” The WEF has since expanded its membership and mandate, as Carroll and Carson noted, “organized around a highly elite core of transnational capitalists (the 'Foundation Membership') – which it currently limits to '1000 of the foremost global enterprises’.” The meetings include prominent individuals from the scientific community, academics, the media, NGOs and many other policy groups.

Another major policy planning group emerged in the mid-1990s with an increased focus on environmental issues, called the World Business Council for Sustainable Development (WBCSD), which “instantly became the pre-eminent business voice on the environment” with a 1997 membership of 123 top corporate executives, tasked with bringing the “voice” of big business to the process of international efforts to address environmental concerns (and thus, to secure their own interests).

Among other prominent think tanks and policy-planning boards helping to facilitate and integrate a transnational network of elites are many nation-based organizations, particularly in the United States, such as with the Council on Foreign Relations, the Brookings Institution and the Center for Strategic and International Studies (CSIS), among many others. The advisory boards to these organizations provide an important forum through which transnational elites may help to influence the policies of many separate nations, and most importantly, the world’s most powerful nation: the United States.

The Council on Foreign Relations, founded in 1921, refers to itself as “an independent, nonpartisan membership organization, think tank, and publisher,” with roughly 4,700 members. It is largely based in New York with affiliate offices in Washington D.C. and elsewhere. The CFR is, and has been, at the heart of the American foreign policy establishment, bringing together elites from academia, government, the media, intelligence, military, financial and corporate institutions.

The CFR worked in close cooperation with the U.S. government during World War II to design the post-War world over which America would reign supreme. The Council was active in establishing the “Grand Areas” of the American Empire, and in maintaining extensive influence over the foreign policy of the United States.

As Carroll and Carson noted, there is a prominent relationship between those individuals who sit on multiple corporate boards and those who sit on the boards of prominent national and transnational policy-planning groups, “suggesting a highly centralized corporate-policy network.”

Studying 622 corporate directors and 302 organizations (five of which were the major policy-planning groups: ICC, Bilderberg, Trilateral Commission, World Economic Forum and World Business Council for Sustainable Development), Carroll and Carson assessed this network of transnational elites with data leading up to 1996, and concluded: “The international network is primarily a configuration of national corporate networks, integrated for the most part through the affiliations of a few dozen individuals who either hold transnational corporate directorships or serve on two or more policy boards.”

Out of the sample of 622 individuals, they found roughly 105 individuals (94 “transnational corporate linkers” and 11 others “whose corporate affiliations are not transnational but who sit on multiple global policy boards”) making up “the most immediate structural contributions to transnational class formation.” At the “core” of this network were 17 corporate directors, primarily European and North American, largely linked by the transnational policy groups, with the Trilateral Commission as “the most centrally positioned.” This network, they noted, “is highly centralized in terms of the individuals and organizations that participate in it.”

In undertaking a follow-up study of data between 1996 and 2006, published in the journal International Sociology (Vol. 25, No. 4, 2010), Carroll and Sapinski expanded the number of policy-planning groups from five to 11, including the original five (ICC, Bilderberg, TC, WEF, and WBCSD), but adding to them the Council on Foreign Relations (through its International Advisory Board), the UN Global Compact (through its advisory board), the European Round Table of Industrialists (ERT), founded in 1983, the EU-Japan Business Round Table, the Transatlantic Business Dialogue, and the North American Competitiveness Council.

The results of their research found that among the corporate directors, “policy-board membership has shifted towards the transnationalists, who come to comprise a larger segment of the global corporate elite,” and that there was a growing group of elites “made up of individuals with one or more transnational policy-board affiliations.” As Carroll and Sapinski concluded:

"The corporate-policy network is highly centralized, at both the level of individuals and that of organizations. Its inner circle is a tightly interwoven ensemble of politically active business leaders; its organizational core includes the Trilateral Commission, the Bilderberg Conference, the European Round Table of Industrialists and the World Business Council for Sustainable Development, surrounded by other policy boards and by the directorates of leading industrial corporations and financial institutions based in capitalism’s core regions."

Organizations like the European Round Table of Industrialists (ERT) are not think tanks, but rather, industry organizations (exclusively representing the interests and individuals of major corporations), wielding significant influence over political and social elites. As Bastiaan van Apeldoorn wrote in the journal New Political Economy (Vol. 5, No. 2, 2000), the ERT “developed into an elite platform for an emergent European transnational capitalist class from which it can formulate a common strategy and – on the basis of that strategy – seek to shape European socioeconomic governance through its privileged access to the European institutions.”

In 1983, the ERT was formed as an organization of 17 major European industrialists (which has since expanded to several dozen members), with the proclaimed objective being “to revitalize European industry and make it competitive again, and to speed up the process of unification of the European common market.” Wisse Dekker, former Chairman of the ERT, once stated: “I would consider the Round Table to be more than a lobby group as it helps to shape policies. The Round Table’s relationship with Brussels [the EU] is one of strong co-operation. It is a dialogue which often begins at a very early stage in the development of policies and directives.”

The ERT was a central institution in the re-launching of European integration from the 1980s onward, and as former European Commissioner (and former ERT member) Peter Sutherland stated, “one can argue that the whole completion of the internal market project was initiated not by governments but by the Round Table, and by members of it... And I think it played a fairly consistent role subsequently in dialoguing with the Commission on practical steps to implement market liberalization.” Sutherland also explained that the ERT and its members “have to be at the highest levels of companies and virtually all of them have unimpeded access to government leaders because of the position of their companies... So, by definition, each member of the ERT has access at the highest level to government.”

Other notable industry associations include the Canadian Council of Chief Executives (CCCE), formerly called the Business Council on National Issues (BCNI), a group comprised of Canada’s top 150 CEOs who were a major force for the promotion and implementation of the North American Free Trade Agreement (NAFTA). The CCCE remains one of the most influential “interest groups” in Canada.

In the United States there are prominent industry associations like the Business Council, the Business Roundtable, and the Financial Services Forum. The Business Council describes itself as “a voluntary association of business leaders whose members meet several times a year for the free exchange of ideas both among themselves and with thought leaders from many sectors.”

Likewise, the Business Roundtable describes itself as “an association of chief executive officers of leading U.S. companies with more than $7.3 trillion in annual revenues,” which believes that “businesses should play an active and effective role in the formation of public policy.”

Finally, the Financial Services Forum proclaims itself to be “a non-partisan financial and economic policy organization” which aims “to pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.”

Big Lie: America Doesn't Have #1 Richest Middle-Class in the World...We're Ranked 27th!

Les Leopold, AlterNet — Tue, 18 Jun 2013 14:04:00 -0700

America is the richest country on Earth. We have the most millionaires, the most billionaires—and a increasingly poor "middle class."

America is the richest country on Earth. We have the most millionaires, the most billionaires and our wealthiest citizens have garnered more of the planet's riches than any other group in the world. We even have hedge fund managers who make in one hour as much as the average family makes in 21 years!

This opulence is supposed to trickle down to the rest of us, improving the lives of everyday Americans. At least that's what free-market cheerleaders repeatedly promise us.

Unfortunately, it's a lie, one of the biggest ever perpetrated on the American people.

Our middle class is falling further and further behind in comparison to the rest of the world. We keep hearing that America is number one. Well, when it comes to middle-class wealth, we're number 27.

The most telling comparative measurement is median wealth (per adult). It describes the amount of wealth accumulated by the person precisely in the middle of the wealth distribution—50 percent of the adult population has more wealth, while 50 percent has less. You can't get more middle than that.

Wealth is measured by the total sum of all our assets (homes, bank accounts, stocks, bonds etc.) minus our liabilities (outstanding loans and other debts). It the best indicator we have for individual and family prosperity. While the never-ending accumulation of wealth may be wrecking the planet, wealth also provides basic security, especially in a country like ours with such skimpy social programs. Wealth allows us to survive periods of economic turmoil. Wealth allows our children to go to college without incurring crippling debts, or to get help for the down payment on their first homes. As Billie Holiday sings, "God bless the child that's got his own."

Well, it's a sad song. As the chart below shows, there are 26 other countries with a median wealth higher than ours (and the relative reduction of U.S. median wealth has done nothing to make our economy more sustainable).

Why?

Here's a starter list:

We don't have real universal healthcare. We pay more and still have poorer health outcomes than all other industrialized countries. Should a serious illness strike, we also can become impoverished.

Weak labor laws undermine unions and give large corporations more power to keep wages and benefits down. Unions now represent less than 7 percent of all private sector workers, the lowest ever recorded.

Our minimum wage is pathetic, especially in comparison to other developed nations. (We're # 13.) Nobody can live decently on $7.25 an hour. Our poverty-level minimum wage puts downward pressure on the wages of all working people. And while we secure important victories for a few unpaid sick days, most other developed nations provide a month of guaranteed paid vacations as well as many paid sick days.

Wall Street is out of control. Once deregulation started 30 years ago, money has gushed to the top as Wall Street was free to find more and more unethical ways to fleece us.

Higher education puts our kids into debt. In most other countries higher education is practically tuition-free. Indebted students are not likely to accumulate wealth anytime soon.

It's hard to improve your station in life if you're in prison, often due to drug-related charges that don't even exist in other developed nations. In fact, we have the largest prison population in the entire world, and we have the highest percentage of minorities imprisoned. “In major cities across the country, 80% of young African Americans now have criminal records” (from Michelle Alexander's 2010 book, The New Jim Crow: Mass Incarceration in the Age of Colorblindness).

Our tax structures favor the rich and their corporations that no longer pay their fair share. They move money to foreign tax havens, they create and use tax loopholes, and they fight to make sure the source of most of their wealth—capital gains—is taxed at low rates. Meanwhile the rest of us are pressed to make up the difference or suffer deteriorating public services.

The wealthy dominate politics. Nowhere else in the developed world are the rich and their corporations able to buy elections with such impunity.

Big Money dominates the media. The real story about how we're getting ripped off is hidden in a blizzard of BS that comes from all the major media outlets...brought to you by....

America encourages globalization of production so that workers here are in constant competition with the lower-wage workers all over the world as well as with highly automated techonologies.

Is there one cause of the middle-class collapse that rises above all others?

Yes. The International Labor organization produced a remarkable study (Global Wage Report 2012-13) that sorts out the causes of why wages have remained stagnant while elite incomes have soared. The report compares key causal explanations like declining bargaining power of unions, porous social safety nets, globalization, new technologies and financialization.

Guess which one had the biggest impact on the growing split between the 1 percent and the 99 percent?

Financialization!

What is that? Economist Gerald Epstein offers us a working definition:

"Financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies."

This includes such trends as:

The corporate change during the 1980s to make shareholder value the ultimate goal.
The deregulation of Wall Street that allowed for the creation of a vast array of new financial instruments for gambling.
Allowing private equity firm to buy companies, load them up with debt, extract enormous returns, and then kiss them goodbye.
The growth of hedge funds that suck productive wealth out of the economy.
The myriad of barely regulated world financial markets that finance the globalization of production, combined with so-called "free trade" agreements.
The increased share of all corporate profits that go to the financial sector.
The ever increasing size of too-big-to-fail banks.
The fact that many of our best students rush to Wall Street instead of careers in science, medicine or education.

In short, financialization is when making money from money becomes more important that providing real goods and services. Here's a chart that says it all. Once we unleashed Wall Street, their salaries shot up, while everyone else's stood still.

Do we still know how to fight!

The carefully researched ILO study provides further proof that Occupy Wall Street was right on the money. OWS succeeded (temporarily), in large part, because it tapped into the deep reservoir of anger toward Wall Street felt by people all over the world. We all know the financiers are screwing us.

Then why didn't OWS turn into a sustained, mass movement to take on Wall Street?

One reason it didn't grow was that the rest of us stood back in deference to the original protestors instead of making the movement our own. As a result, we didn't build a larger movement with the structures needed to take on our financial oligarchs. And until we figure out how to do just that, our nation's wealth will continue to be siphoned away.

Our hope, I believe, lies in the young people who are engaged each day in fighting for the basic human rights for all manner of working people—temp workers, immigrants, unionized, non-union, gays, lesbians, transgender—as well as those who are fighting to save the planet from environmental destruction. It's all connected.

At some point these deeply committed activists also will understand that financialization both here and abroad stands in the way of justice and puts our planet at risk. When they see the beast clearly, I am confident they will figure out how to slay it.

The sooner, the better.

Celebrate the Defeat of the Granny Bashers! Billionaire-backed Campaign Fails to Cut Social Security and Medicare

Dean Baker, Beat the Press — Tue, 18 Jun 2013 10:50:00 -0700

The Peter Peterson-inspired Campaign to Fix the Debt could not convince Americans to hurt seniors.

It isn't often that progressives in the United States have much to celebrate. After all, the news has swung between bad and worse for most of the last three decades. That is why we should be celebrating the victory over the Campaign to Fix the Debt and its efforts to cut Social Security and Medicare.

Just to remind everyone, the Campaign to Fix the Debt (CFD) is yet another Peter Peterson-inspired initiative that has as its main goal cutting and/or privatizing Social Security and Medicare. Peterson has used the billions of dollars he earned as a Wall Street investment banker and private equity fund manager to finance a whole slew of Washington-based outfits for this purpose over the last two decades.

The CFD was the biggest and boldest effort yet, incorporating funding and support from the heads of many of the largest corporations in America. It hoped to take advantage of the deficits that resulted from the collapse of the housing bubble.

The idea was to whip up hysteria over a deficit crisis. They wanted to paint a picture of out-of-control government spending that could only be addressed by major cuts to the country's two most important and popular social programs. While they got the cooperation of much of the national media, who consistently put the CFD's views and spokespeople at the center of the budget debate, the facts refused to cooperate.

First, the real scary projections of exploding deficits in the next two decades largely disappeared as the rate of health care cost growth slowed sharply. When the Congressional Budget Office and other official forecasters incorporated slower health care cost growth into their numbers, the deficits projections no longer provoked the same sort of hyper-ventilation. Slower projected health care cost growth eliminated almost 70 percent of the projected shortfall in Medicare.

Second, there were actually substantial cuts in the budget, both in 2011 and more recently as a result of the sequester. These cuts are not good news, they are hurting important programs. They also are slowing the economy and costing jobs, but they have lowered projected deficits to levels that fall within almost anyone's acceptable range.

Finally, the intellectual case for a looming debt crisis got blown out of the water because of the famous Reinhart-Rogoff Excel spreadsheet error. The uncovering of this error led to a debate that showed conclusively that there is no debt cliff at 90 percent of GDP. Furthermore, the evidence that there is causation from high debt to slower growth (as opposed to the opposite) is weak to non-existent. The idea that we were about to raise our debt to levels that would lead to a sharp falloff in growth had no basis in reality.

As a result of this turn of events, the FTD crew seem prepared to abandon ship. Maya MacGuineas, the leading spokesperson for FTD, apparently having given up on Congress, was last seen calling on Silicon Valley to use its technological prowess to disrupt the political process. And the Washington Post, which has been an open CFD cheerleader, mournfully noted the improbability of a deal involving major cuts to Social Security and Medicare.

In this case the strong support of the public for these programs -- which cuts across party and demographic lines -- overcame the power of corporate money and the political elite. When push came to shove, not enough politicians were prepared to go against the strongly held views of their constituents. And it helped that the facts were on their side.

It would be great if we could switch from defense to offense. The Wall Street financial types who brought on this economic catastrophe are richer and more politically powerful than ever. They are laughing at the Dodd-Frank financial reforms, and looking to several more decades of free "too-big-to-fail" insurance from the government. In the same vein, other major industries such as the pharmaceutical companies, the health insurance industry, and the telecommunications industry, continue to rake in record profits due to their monopoly power and government protections.

It would be great if the same people who recognized cuts to Social Security and Medicare as attacks on low- and middle-income people could also see the need to move the ball forward onto the other team's turf. This means applying the same sort of sales taxes to financial speculation that the rest of us pay when we buy clothes or shoes. It means breaking up the big banks. It means ending the abuse of patent monopolies by drug companies who push bad drugs at high prices. And it means ending abuses of market power in a number of industries.

The result will be a somewhat smaller share of the pie for those on top and a larger share for everyone else. And it will almost certainly also mean a more rapidly growing economy. The latter would especially be true if we could reverse the sequester and other pointless austerity measures.

But the move to offense is not about to happen right now. And with all the money it has available, we can't even assume the CFD effort will stay dead.

But we should take a moment to celebrate the victory we have achieved. So pick up a glass of the beverage of your choosing and drink a toast to Social Security and Medicare, to the people whose lives they have made more secure, and to the people who have worked to ensure that these programs are there for current generations and those yet to come in the decades ahead.

Why Are Techies Trying to Tar Snowden and the Reporters Who Went After the Story?

Yves Smith, Naked Capitalism — Tue, 18 Jun 2013 08:13:00 -0700

Efforts to take down Greenwald and Snowden are ultimately destructive of the interests of American technology companies and American security.

Some Silicon Valley figures, along with some Democratic party-aligned media outlets, have tried assailing Glenn Greenwald, and indirectly, Edward Snowden, by trying to discredit certain aspects of the Guardian account of NSA surveillance in the US. Greenwald, who has an appetite for trench warfare, deigned to rebut their efforts as of last Friday. But the tech pedants’ efforts to take down Greenwald and Snowden aren’t simply petty and disingenuous, they are ultimately destructive of the interests of American technology companies and American security.

Some of the tactics used have been a bizarre combination of focusing on minutiae and straw manning. For instance, one site, Little Green Footballs, claimed that though the Guardian had said Snowden had smuggled four “confidential” laptops out, he’d in fact used a thumb drive to carry documents out of Booz. Golly gee, that means you can’t trust ANY of the rest of the story!

However, the Guardian had simply said that Snowden had four laptops with him when he first met with their reporters. The piece was silent on how exactly he extracted the data. So, using Little Green Footballs’ own logic, you should not trust one iota anything Little Green Footballs has to say on this matter, either. We similarly have the range war over the “direct access to servers” language, when anyone who read the original Guardian story would recognize that the ‘direct access’ language tracked that of a PowerPoint slide on the PRISM program, a document whose authenticity has never been denied; the story wrote up the slides. Funny how people who would have laughed at Clinton’s famed “it depends what the meaning of the word ‘is’ is” were eager to use the same stick to try to beat Greenwald.

Or as Lambert has said, “Shorter tech dudes on Greenwald: The NSA slides show the servers weren’t built my way, so the slides are wrong. Also, my boss would never lie to me.”*

This front of the PR war against Greenwald, the Guardian, and Snowden is using a tactic familiar to anyone who remembers the financial crisis: that the story is a technology story, ergo, only technologists are qualified to opine on it. But that rhetorical approach (“it’s all too complicated, you just need to believe what we tell you”) was seldom used by people who were acting in good faith to unravel what had happened. It was instead used mainly by incumbents and people who wanted to preserve their relationship with them to circle the wagons.

There was at least some underlying logic for this position during the market meltdown. It was, after all, a financial crisis. By contrast, the NSA scandal is not a technology story. It is at its heart a story about surveillance, the Constitution, and whether we really have any rule of law left in the US. Technology is only an enabler, folks, although, as we will discuss, this story does have important implications for major US technology players.

This clip from The Lives of Others (which is a wonderful and important movie) will hopefully serve as a reminder:

The modern society with the most intensive surveillance, East Germany, had the Trabant as its most noteworthy home grown product. Now the technology fans may argue that the selection above proves their point, that the Stasi used the best technology they had to bug the suspect’s apartment. But they forget that the Stasi depended first and foremost on spying, meaning the active cooperation of much of the population. And as this selection shows, the effectiveness of the installation of devices could have been sabotaged by the watchful neighbor had she not been cowed into silence.

Spying and surveillance do not depend on fancy electronic toys, but devices can be helpful. Japan in the Tokugawa era hadmind-numbingly detailed sumptuary laws, which were used to maintain fine social distinctions. And they were enforced via neighbors spying on each other. This sort of intrusion was sufficiently troubling to elicit a warning from Adam Smith. He opposed having “kings and ministers…pretending to watch over the economy of private people and to restrain their expense” and advocated taxation as a less intrusive way to constrain consumption. Similarly, the use of espionage as a tool of the state considerably antedates the Industrial Revolution; for instance Francis Walsingham, a minister to Elizabeth I, had a large, organized a network of informants and snoops.

Via e-mail, Ed Harrison honed in on what is wrong with the tech company fixation:

What gets lost is that the Internet companies are largely irrelevant here. They are the equivalent of hostile witnesses for the prosecution. What is more pertinent is that the NSA had serious unfettered access at the three largest US telecom companies and have had this for years. The second thread of interest is that private companies like Booz are running large pieces of our whole intelligence operations. These are two very big problems. And I would love to see people hone in on those two areas instead of bickering over Google, Microsoft, Facebook, etc
My sense is that the Internet community is up in arms because they feel unfairly maligned and this is coming from journalists and tech people who are long known to be anti-surveillance. So it’s not just a ‘shoot the messenger’ thing. It is a sort of reptilian kind of self-protection thing that’s happening where these people, as part of an industry that prides itself on being counter-culture, feel unfairly attacked by someone they believe either has an agenda or doesn’t know what he’s talking about.

It’s actually worse than Harrison depicts. Recall how the PRISM slides depict the major telecom and technology players like Google, Microsoft, Yahoo as “partners”. That’s no misnomer. Look at the business model of Google, Facebook, Yahoo. If you think ordinary customers are all that important to them, given that most of the markets they compete in are oligopolies, I have a bridge I’d like to sell you. It also helps to follow the money.

The NSA, and the Department of Defense in general, have long been sponsors and funders of advanced technology. Need we say DarpaNet? Physicists and mathematicians, many of whom wind up in Silicon Valley or Wall Street, can still get an advanced education without going up to their eyeballs in student debt thanks in no small measure to government funding. The NSA is an important customer and validator of tech products. It was a big buyer of NeXt computers back in the 1990s when the NeXT was the most advanced workstation/network device. It is a big funder of open source software today. A Wall Street Journal article last week details how the NSA adopts and builds on Yahoo’s and Google’s technology:

NSA stumbled in a number of its data-collection and management efforts, particularly a program called Trailblazer, but it began to gain traction with another program, which became known as Real Time Regional Gateway, or RTRG, former officials said.
Initially deployed in Iraq, the program’s focus moved to Afghanistan in 2010, where it assembled and analyzed all the data over a 30-day period on transactions that intelligence officials could get their hands on: phone conversations, military events, road-traffic patterns, public opinion—even the price of potatoes, former officials said. Changes in prices of commodities at markets proved to be an indicator of potential for conflict, they said…
A computing and software revolution, launched in Silicon Valley a few years earlier, made sifting all that data easier. That was particularly true with the development of Hadoop, a piece of free software that lets users distribute big-data projects across hundreds or thousands of computers.
Named after a child’s toy elephant and developed at Yahoo Inc., the software reached commercial scale for Internet-wide tasks in 2008 and soon became a favored application for handling big-data demands…
Mr. Garrett now runs RTRG’s successor program, which was moved to the Defense Advanced Research Projects Agency and renamed Nexus 7. That effort has been using Hadoop and similar software to help manage large masses of data. One of the pieces of software, called Accumulo, was developed by the NSA using technology from Google, said a person briefed on the program.

And no less than Google’s Eric Schmidt has been touting this sort of collaboration as virtuous. His 2013 book The New Digital Age, co authored with Jared Cohen of Google’s in-house think tank, Google Ideas, stated: “What Lockheed Martin was to the 20th century, technology and cybersecurity companies will be to the 21st.”

An important Bloomberg article, U.S. Agencies Said to Swap Data With Thousands of Firms, last week cracked open the window a bit on how close these ties are. A sampling:

Some U.S. telecommunications companies willingly provide intelligence agencies with access to facilities and data offshore that would require a judge’s order if it were done in the U.S….
The extensive cooperation between commercial companies and intelligence agencies is legal and reaches deeply into many aspects of everyday life, though little of it is scrutinized by more than a small number of lawyers, company leaders and spies. Company executives are motivated by a desire to help the national defense as well as to help their own companies, said the people, who are familiar with the agreements…
In addition to private communications, information about equipment specifications and data needed for the Internet to work — much of which isn’t subject to oversight because it doesn’t involve private communications — is valuable to intelligence, U.S. law-enforcement officials and the military.
Typically, a key executive at a company and a small number of technical people cooperate with different agencies and sometimes multiple units within an agency, according to the four people who described the arrangements.

Yves here. This is why the early “I/we never heard of PRISM” denials were absurd on their face. Of course the spokescritters hadn’t heard of PRISM. Only a “need to know” group did. Back to Bloomberg:

Intel Corp. (INTC)’s McAfee unit, which makes Internet security software, regularly cooperates with the NSA, FBI and the CIA, for example, and is a valuable partner because of its broad view of malicious Internet traffic, including espionage operations by foreign powers, according to one of the four people, who is familiar with the arrangement.
Such a relationship would start with an approach to McAfee’s chief executive, who would then clear specific individuals to work with investigators or provide the requested data, the person said. The public would be surprised at how much help the government seeks, the person said…
According to information provided by Snowden, Google, owner of the world’s most popular search engine, had at that point been a Prism participant for more than a year.
Google CEO Larry Page said in a blog posting June 7 that he hadn’t heard of a program called Prism until after Snowden’s disclosures and that the Mountain View, California-based company didn’t allow the U.S. government direct access to its servers or some back-door to its data centers. He said Google provides user data to governments “only in accordance with the law.”

Notice the hiding behind the fig leaf of legality. The Wall Street Journal article on the surveillance establishment’s reliance on private sector technology included this revealing comment (emphasis ours):

As it has gathered ever more data, the government has had to develop new ways to include privacy protections by reworking legal theories

“Reworking legal theories”? In the light of John Yoo-like language-torturing statements like national intelligence director James Clapper trying to deny he’d committed perjury before Congress by trying to depict his statement as the “least untrue” he could make (um, untrue is untrue), just imagine what “reworking” amounts to. Actually, you don’t need to imagine all that much. Marcy Wheeler has done a lot of spadework on this front. For instance, a post on Saturday, PRISM: The Difference between Orders and Directives, lays out some key elements of the framework, such as it is, for the surveillance regime. Marcy highlights one element: that a considerable ambit of these programs are defined not by specific orders, but by “directives”. She quotes an Associated Press story:

Every year, the attorney general and the director of national intelligence spell out in a classified document how the government plans to gather intelligence on foreigners overseas.
By law, the certification can be broad. The government isn’t required to identify specific targets or places.
A federal judge, in a secret order, approves the plan.
With that, the government can issue “directives” to Internet companies to turn over information.

Read that twice. Every year, the Feds draw a big line around the patch of sand in which they’d like to operate. A judge rubber stamps signs off on the program. So when the various tech companies talk about the various “orders” they’ve received, this great big enabling one that lets the government make lots of binding requests is ONLY one. And if you watched the video of Alan Grayson reviewing the Verizon order that the Guardian leaked, he stressed that it had no start date, meaning that on its face, it demanded that Verizon cough all all of the customer data going back as far in time as its records allowed.

Marcy describes how, quelle surprise, when Obama came into office, he found that the NSA had been overzealous and had been accessing far more data about US citizens at home than it should have. Marcy notes:

Remember, this overcollection was self-reported by the Obama Administration at the time, not discovered by the FISA Court. Good for the Obama Administration, though we’re trusting them at their word that the overcollection was unintentional.

But lo and behold, Obama in 2009 said he’s fixed the problem but three years later the FISA court (remember, this is the FISA court that approves 99.97% of the order requests submitted to it) said it found cases where the collection overstepped the Fourth Amendment. And that took place even with deficient oversight structures and a hand-picked-to-be-complaint FISA court in place. The court doesn’t do its own monitoring; it relies on self-scored report cards semi-annual certifications by the Department of Justice and the director of national intelligence (now our “least untrue” Clapper).

I also wouldn’t take as much comfort as some have from New York Representative Jerome Nadler’s retreat on his widely reported statement over the weekend via CNET, that Congressmen had been told in a classified briefing that the NSA could obtain the substance of a phone call based on an analyst’s decision. His spokesman walked that back on Sunday, but as NC readers pointed out, the retreat was in the formula “the Administration has reiterated that…”. And bear in mind that the CNET story also said:

Sen. Dianne Feinstein (D-Calif.), the head of the Senate Intelligence committee, separately acknowledged that the agency’s analysts have the ability to access the “content of a call.”

Similarly, the various disclosures by major tech players that are coming in the tens of thousands ranges aren’t necessarily what they seem to be. For instance, Facebook said it received, in the words of the Wall Street Journal, “9,000 to 10,000 requests from all government entities in the U.S.—local, state and federal as well as classified national security-related requests—in the second half of 2012,” supposedly on 18,000 to 19,000 individual users. But what is a request? The sweeping Verizon order published at the Guardian that kicked off this firestorm was a single request. And the New York Times reported last year that law enforcement officials were relying more on “requests” and less on actual warrants.

And please don’t try the line of argument that the technology companies are blameless, that if there was any overreach, it was the doing NSA and the FISA star chamber. What can they do besides fight some orders in secret, lose, and follow orders?

The truth is plenty. If the technology companies were really concerned, lobbying dollars would go a hell of a lot further than money spent in quixotic fights in the FISA star chamber. But where has Silicon Valley been spending its money? Let’s look at Google. It is the 8th biggest spending lobbyist in DC, outstripping defense contractor Lockheed Martin. And where does the money go? From a June 2013 story in the Atlantic:

So far the fruits of Google’s lobbying efforts have resulted in a huge win in an anti-trust case, but the company has even bigger plans to prod legislation in its own self-interest. See, back in 2010 Schmidt realized “much of the laws are written by lobbyists,” he said during The Atlantic’s Washington Idea’s Forum. Google hired and funded an army of capable policy crafters, not only to save itself from government fines that don’t even make a dent but also to help write Google-powered legislation. In the near future, that means ramped up efforts to influence immigration reform. Schmidt is part of the contentious Silicon Valley group FWD.us, which is lobbying for a very specific type of immigration reform. Google also has Molinari working on updates to the Electronic Communication Privacy Act — that pesky bill the government uses to justify spying on your Gmail without a warrant.
But in the long term, all those billions of dollars will also go toward Schmidt’s foreign policy visions, and Google’s attempts at worldwide domination outside of Washington. Along with his book, Schmidt has attempted (and so far failed) to broker diplomatic relations with foreign nations, visiting North Korea back in January and Myanmar in March.

Oh, so Google is lobbying on your behalf, right? Don’t get too excited. Their focus as far as the Electronic Communication Privacy Act is concerned is to get e-mails older than six months to require a search warrant to access them (right now, these aged e-mails require only a subpoena). That does little to restrain law enforcement officials or the NSA; its big implication is to make it harder for civil litigants (such as the SEC) to get access to e-mails in discovery. Google has spent a great deal of money in Washington beating back the Department of Justice’s antitrust suit. For Silicon Valley companies generally, their lobbying dollars go to trying to get a tax holiday so they can repatriate foreign earnings and use them to pay bonuses in dividends (that’s what they did in the last tax holiday, in 2004, so don’t believe their blather about using it to invest), on immigration policy (more HB-1 visas). And remember Google on net neutrality. It was happy to accede to a deal brokered by the FCC, so long as the telcos were required not to block Google. And perhaps I missed, it but my recollection and brief Web search shows Google was nowhere to be found in the outrage over the suicide of Aaron Swartz.

As much as the tech industry defenders may feel that they’ve scored some points in their Internet rows, they are losing the battle where it counts, in the court of public opinion. While a significant number of Americans still have no point of view on l’affaire Snowden, poll results here have been showing more and more support for his whistleblowing.

And far more important, as Ed Harrison pointed out, the tech industry loyalists seem not to grasp the real stakes in this battle. The Administration and tech industry have a full court press on to demonize Snowden and reassure the public that there is nothing to see here. But this all boils down to “trust me.” That’s also the position of the tech titans. As Evengy Morozov wrote in his review of the Schmidt/Jared book:

The goal of books such as this one is not to predict but to reassure—to show the commoners, who are unable on their own to develop any deep understanding of what awaits them, that the tech-savvy elites are sagaciously in control. Thus, the great reassurers Schmidt and Cohen have no problem acknowledging the many downsides of the “new digital age”—without such downsides to mitigate, who would need these trusted guardians of the public welfare? So, yes, the Internet is both “a source for tremendous good and potentially dreadful evil”—but we should be glad that the right people are in charge. Uncertainty? It’s inevitable, but manageable. “The answer is not predetermined”—a necessary disclaimer in a book of futurology—and “the future will be shaped by how states, citizens, companies and institutions handle their new responsibilities.” If this fails to reassure, the authors announce that “most of all, this is a book about the importance of a guiding human hand in the new digital age.” The “guiding hand” in question will, in all likelihood, be corporate and wear French cuffs.

The wee problem is of course that Obama has so often lied egregiously, well beyond previous political norms, that it’s remarkable that he has any brand equity remaining. Admittedly, his strategy has worked just fine up to now, but he’s made the mistake of relying heavily on propaganda rather than action, and then went and alienated a big chunk of his messaging apparatus by going after 20 Associated Press reporters in a widely-criticized secret phone records request. And the Democratic party stalwarts such as MSNBC, had fallen badly in the ratings before this scandal broke out. And the more the NSA appears in public, at least so far, the less convincing it becomes.

That does not mean that Obama and his fellow travelers might not eventually turn public opinion around. They still have tremendous resources at their behest. But overseas is quite another matter. US technology companies and their privacy policies already grated on the EU. China has been wary of US “openness” excuses to have its Internet vendors establish large footprints. And reassurances directed at US audiences aren’t going over so well abroad. For instance, the Chinese Army’s official newspaper attacked the PRISM program today. As recounted in the Australian (hat tip 1 SK):

The People’s Liberation Army (PLA) Daily on Sunday hit out at the US for implying that spying on citizens from other countries was justified…The remarks about the program are some of the most scathing to appear in China’s state-run press after Beijing’s refusal to make an official comment..
“US President Obama has said that PRISM is not directed at US citizens,” the article said.
“The implication is that for the purposes of US security, monitoring citizens of other countries is not a problem. This simple, overbearing logic is the frightening aspect of the PRISM program.”

The Snowden disclosures are hitting an already sore nerve hard. Richard Kline gives a recap of what is really at stake:

The position of the US spyboys, now shown redhanded as spying far over any formally granted authority on American citizens, is “You can trust us with absolute power, we’re the good guys and know what’s right.” Snowden is *systematically* destroying that plausibility by giving up evidence that the US spyboys are a) not ‘good guys,’ b) lie utterly in every utterance, c) can’t be trusted with a postage stamp, because d) they couldn’t find ‘what’s right’ to within a few parasecs using all of SETI’s resources and the Hubble’s chillun for back-up. Snowden has set out to prove that the US spy apparatus isn’t simply unconstitutional but is utterly untrustworthy.
If I was guessing, which is all that I’m doing, I would say that Snowden’s move is “You can harm me, but I’m leaving you cut off at the knees before you even start.” It’s like the situation of the French Army in the Drefuss Affair: they were able to hound their critics into exile or prison, but their own credibility never recovered, they were demonstrated as despicably abusive liars who’d hurt anyone to cover up their own treachery and incompetence. And yes, the US power apparatus really is that bad. I mean, _most are_ so that’s no surprise, but we’ve a demonstrated record over the last twenty years of being everything we claim to despise and assail others for: torturers; murderers; conquerors; looters; trafficking in racism; propping up and even creating odious quislings abusing their won peoples; megalomanic spiers; hyper-paranoid ubermenschan; completely indifferent to law, treaty, or custom; ready to frame and jail domestic critics of any of that; so deep in the chamber pot of our own hypocrisy we’ve come to take the stuff for mustard on our foot-long untruths; frequently incompetent because under a vail of pervasive secrecy accountability goes to zero. “And you _TRUST_ these guys?” Ed Snowden is saying. His move isnt to play for sympathy, it’s to irreparably damage the credibility of the securecrats. And yes, he’s managed to do much to that effect _without_ revealing any military secrets…. I don’t know whether he’ll get out of Devil’s Island intact, but one has to acknowledge he has a strategy, and it’s a well-founded one.

The best move for the technology giants would be to throw their DC dollars at getting the Department of Defense, via the NSA, out of domestic operations, as long-standing US laws prescribed, and making those strictures look plausible enough to appease America’s aggrieved foreign web product and services customers. Otherwise, the most likely outcome is the worst for them, that the security state apparatus and the Administration succeed in getting through this crisis with at most cosmetic changes to their domestic surveillance apparatus. That means the FISA star chamber remains intact. And the record of the original Star Chamber was that it went from being a useful and well-regarded part of the jurisprudence system over time to a being a potent political weapon.

The implication is clear: it’s too easy for secret courts to be abused, and the NSA’s history of whistleblowing shows that they are precisely the sort of folks who have no compunction about power grabs and deception, and that includes deceiving the America public. If the tech industry does not throw its weight decisively on the side of curbing the agency, the odds are high that the EU countries and China will exploit this spectacle to wrest control of the Internet in their countries away from the US (a long term project, mind you) and to encourage domestic champions to develop more secure devices and services. The result will be exactly what would be the opposite of professed US security interests: a balkanized and somewhat opaque Internet overseas (serves you right!) with Americans at home still subject to ongoing, escalating surveillance.

But I don’t have much hope. Americans, especially members of what passes for our elites, are unable to take a good look in the mirror. Ironically, Schmidt and Jared, in their New Digital Age book, which the New Republic reviewer Morozov called Future Schlock, had an unexpected moment of prescience in their algorithmic image generation:

Or consider their prediction that the world will soon “see its first Internet asylum seeker.” Don’t tear up just yet: “a dissident who can’t live freely under an autocratic Internet and is refused access to other states’ Internets will choose to seek physical asylum in another country to gain virtual freedom on its Internet.” I have no doubt that someone might one day try this excuse—it would hardly be the oddest reason for requesting asylum—but would any reasonable government actually grant asylum on such grounds? Of course not.

Snowden comes awfully close to this model. But perilous few among America’s tech elite appear ready to face that they are the purveyors of what is on the knife’s edge of becoming an autocratic Internet.

____
* Please don’t try the “they had a dropbox.” This was the New York Times’s account on June 7:

In at least two cases, at Google and Facebook, one of the plans discussed was to build separate, secure portals, like a digital version of the secure physical rooms that have long existed for classified information, in some instances on company servers. Through these online rooms, the government would request data, companies would deposit it and the government would retrieve it, people briefed on the discussions said.
The negotiations have continued in recent months, as Martin E. Dempsey, chairman of the Joint Chiefs of Staff, traveled to Silicon Valley to meet with executives including those at Facebook, Microsoft, Google and Intel. Though the official purpose of those meetings was to discuss the future of the Internet, the conversations also touched on how the companies would collaborate with the government in its intelligence-gathering efforts, said a person who attended.

http://www.nytimes.com/2013/06/08/technology/tech-companies-bristling-co...

Notice the use of the conditional, and “discussions have continued”? There may be a plan for a dropbox, but the Times sources said they were merely under consideration.

One in Three Americans is Poor — And Getting Little Relief

Jeanette Wicks-Lim, Dollars and Sense — Tue, 18 Jun 2013 07:47:00 -0700

A look at the U.S.'s new, but only marginally improved, poverty measure.

In 1995, a blue-ribbon panel of poverty experts selected by the National Academy of the Sciences (NAS) told us that the “current U.S. measure of poverty is demonstrably flawed judged by today’s knowledge; it needs to be replaced.” Critics have long pointed out shortcomings including the failure to adequately account for the effects of “safety net” programs and insensitivity to differences in the cost of living between different places.

The Census Bureau, the federal agency charged with publishing the official poverty numbers, has yet to replace the poverty line. However, in the last couple years it has published an alternative, the Supplemental Poverty Measure (SPM). The SPM is the product of over two decades of work to fix problems in the federal poverty line (FPL).

This new measure takes us one step forward, two steps back. On the one hand, it has some genuine improvements: The new measure makes clearer how the social safety net protects people from economic destitution. It adds basic living costs missing from the old measure. On the other hand, it does little to address the most important criticism of the poverty line: it is just too damned low. The fact that the poverty line has only now been subject to revision—50 years after the release of the first official poverty statistic—likely means that the SPM has effectively entrenched this major weakness of the official measure for another 50 years.

The 2011 official poverty rate is 15.1%. The new poverty measure presented—and missed by a wide margin—the opportunity to bring into public view how widespread the problem of poverty is for American families. If what we mean by poverty is the inability to meet one’s basic needs a more reasonable poverty line would tell us that 34% of Americans—more than one in three—are poor.

What’s in a Number?

The unemployment rate illustrates the power of official statistics. In the depths of the Great Recession, a new official statistic—the rate of underemployment, counting people working part time who want full-time work and those who have just given up on looking for work—became part of every conversation about the economy. One in six workers (17%) counted as underemployed in December 2009, a much higher number than the 9.6% unemployment rate. The public had not been confronted with an employment shortage that large in recent memory; it made political leaders stand up and pay attention.

The supplemental poverty measure had the potential to do the same: a more reasonable poverty line—the bottom line level of income a household needs to avoid poverty—would uncover how endemic the problem of economic deprivation is here in the United States. That could shake up policymakers and get them to prioritize anti-poverty policies in their political agendas. Just as important, a more accurate count of the poor would acknowledge the experience of those struggling mightily to put food on the table or to keep the lights on. No one wants to be treated like “just a number,” but not being counted at all is surely worse.

With a couple of years of data now available, the SPM has begun to enter into anti-poverty policy debates. Now is a good time to take a closer look at what this measure is all about. The supplemental measure makes three major improvements to the official poverty line. It accounts for differences in the cost of living between different regions. It changes the way it calculates the standard of living necessary to avoid poverty. And it accounts more fully for benefits from safety net programs.

Different Poverty Lines for Cost-of-Living Differences

Everyone knows that $10,000 in a small city like Utica, New York, can stretch a lot farther than in New York City. In Utica, the typical monthly cost of rent for a two-bedroom apartment, including utilities, was about $650 during 2008-2011. The figure for New York City? Nearly double that at $1,100. Despite this, the official poverty line has been the same regardless of geographic location.The supplemental poverty measure adjusts the poverty income threshold by differences in housing costs in metropolitan and rural areas in each state—a step entirely missing in the old measure.

We can see how these adjustments make a real difference by simply comparing the official poverty and SPM rates by region. In 2011, according to the official poverty line, the Northeast had the lowest poverty rate (13.2%), the South had the highest (16.1%), and the Midwest and the West fell in between (14.1% and 15.9%, respectively). With cost-of-living differences factored in, the regions shuffled ranks. The SPM poverty rates of the Northeast and South look a lot more alike (15.0% and 16.0%, respectively). The Midwest’s cheaper living expenses pushed its SPM rate to the lowest among the four regions (12.8%). The West, on the other hand, had an SPM rate of 20.0%, making it the highest-poverty region.

Updating Today’s Living Costs

Obviously, household expenses have changed a lot over the last half-century. The original formula used to construct the official poverty line used a straightforward rule-of-thumb calculation: minimal food expenses time three. It’s been well-documented since then that food makes up a much smaller proportion of households’ budgets, something closer to one-fifth, as new living expenses have been added (e.g., childcare, as women entered the paid workforce in droves) and the costs of other expenses ballooned (e.g., transportation and medical care).

The new poverty measure takes these other critical expenses into account by doing the following. First, the SPM income threshold tallies up necessary spending on food, clothing, shelter and utilities. The other necessary expenses like work-related child care and medical bills are deducted from a household’s resources to meet the SPM income threshold. A household is then called poor if its resources fall below the threshold.

These non-discretionary expenses clearly take a real bite out of family budgets. For example, the “costs of working” cause the SPM poverty rate to rise to nearly doubles that of the official poverty rate among full-time year-round workers from less than 3% to over 5%. Bringing the Social Safety Net into Focus

Today’s largest national anti-poverty programs operate in the blind spot of the official poverty line. These include programs like Supplemental Nutrition Assistance Program (SNAP) and the Earned Income Tax credit (EITC). The supplemental measure does us a major service by showing in no uncertain terms how our current social safety net protects people from economic destitution. The reason for this is that the official poverty measure only counts cash income and pre-tax cash benefits (e.g., Social Security, Unemployment Insurance, and Temporary Assistance to Needy Families (TANF)) towards a household’s resources to get over the poverty line. The supplemental poverty measure, on the other hand, adds to a household’s resources near-cash government subsidies—programs that help families cover their expenditures on food (e.g. SNAP and the National School Lunch program), shelter (housing assistance from HUD) and utilities (Low Income Home Energy Assistance Program (LIHEAP))—as well as after-tax income subsidies (e.g., EITC). This update is long overdue since the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (a.k.a., the Welfare Reform Act) largely replaced the traditional cash assistance program AFDC with after-tax and in-kind assistance.

Here are some figures for 2011 that illustrate the impact of each of twelve different economic assistance programs. Social Security, refundable tax credits (largely EITC but also the Child Tax Credit (CTC)), and SNAP benefits do the most to reduce poverty. In the absence of Social Security, the supplemental poverty rate would be 8.3 percentage points higher, shooting up from 16.1% to over 23.8%. Without refundable tax credits, the supplemental poverty rate would rise 2.8 percentage points, up to nearly 19%, with much of the difference being in child poverty. Finally, SNAP benefits prevent poverty across households from rising 1.5 percentage points. The SPM gives us the statistical ruler by which to measure the impact of the major anti-poverty programs of the day. This is crucial information for current political feuds about falling over fiscal cliffs and hitting debt ceilings.

A Meager Supplement

Unfortunately, the new poverty measure adds all these important details to a fundamentally flawed picture of poverty.

In November 2012, the Census Bureau published, for only the second time, a national poverty rate based on the Supplemental Poverty Measure: it stood at 16.1% (for 2011), just one percentage point higher than the official poverty rate of 15.1%. Why such a small difference? The fundamental problem is that the supplementary poverty measure, in defining the poverty line, builds from basically the same level of extreme economic deprivation as the old measure.

In an apples-to-apples comparison (see sidebar), the new supplemental measure effectively represents a poverty line roughly 30% higher than the official poverty income threshold for a family of four. For 2011, the official four-person poverty line was $22,800, an adjusted SPM income threshold—one that can be directly compared to the FPL—is about $30,500. Unfortunately, the NAS panel of poverty experts appears to have taken an arbitrarily conservative approach to setting poverty income threshold. Reasonably enough, NAS panel uses as their starting point how much households spend on the four essential items: food, clothing, shelter, and utilities. A self-proclaimed “judgment call,” they choose what they call a “reasonable range” of expenditures to mark poverty. What’s odd is that their judgment leans back toward the official poverty line – the measure they referred to as “demonstrably flawed.”

To justify this amount they show how their spending levels fall within the range of two other “expert budgets” (i.e., poverty income thresholds) in the poverty research. What they do not explain is why, among the ten alternative income thresholds they review in detail, they focus on two of the lower ones. In fact, one of these two income thresholds they describe as an “outlier at the low end.” The range of the ten thresholds actually spans between 9% and 53% more than the official poverty line; their recommended range for the threshold falls between 14% and 33% above the official poverty line.

Regardless of the NAS panel’s intention, the Inter-agency Technical Working group (ITWG) tasked with the job of producing the new poverty measure adopted the middle point of this “reasonable range” to establish the initial threshold for the revised poverty line. This conflicts with what we know about the level of economic deprivation that households experience in the range of the federal poverty line. In a 1999 book Hardship in America, researchers Heather Boushey, Chauna Brocht, Bethney Gunderson, and Jared Bernstein examined the rates and levels of economic hardship among officially poor households (with incomes less than the poverty line), near-poor households (with incomes between the poverty line and twice the poverty line), and not poor households (with incomes more than twice the poverty line).

As expected, they found high rates of economic distress among households classified as “officially poor.” For example, in 1996, 29% of poor households experienced one or more “critical” hardships such as missing meals, not getting necessary medical care, and having their utilities disconnected. Near-poor households experienced these types of economic crises only a little less frequently (25%). Only when households achieved incomes above twice the poverty line did the incidence of these economic problems fall substantially—down to 11%. (Unfortunately, the survey data on which the study was based have been discontinued, so more up-to-date figures are unavailable.) This pattern repeats for “serious” hardships that include being worried about having enough food, using the ER for health care due to lack of alternatives, and falling behind on housing payments. So if what we mean by poverty is the inability to meet one’s basic needs, then twice the poverty line—rather than the SPM’s 1.3 times—appears to be an excellent marker.

Let’s consider what the implied new poverty income threshold of $30,500 feels like for a family of four. (This, by the way, is about what a household would take in with two full-time minimum-wage jobs.)

This annual figure comes out to $585 per week. Consider a family living in a relatively low-cost area like rural Sandusky, Michigan. Based on the basic-family-budget details provided by the Economic Policy Institute, such a family typically needs to spend about $175 on food (this assumes they have a nearby grocery store, a stove at home, and the time to cook all their meals) and another $165 on rent for a two-bedroom apartment each week. This eats up 60% of their budget, leaving only about $245 to cover all other expenses. If they need childcare to work ($180), then this plus the taxes they have to pay on their earnings ($60) pretty much wipes out the rest. In other words, they have nothing left for such basic needs as telephone service, clothes, personal care products like soap and toilet paper, school supplies, out of pocket medical expenses, and transportation they may need to get to work. Would getting above this income threshold seem like escaping poverty to you?

For many federal subsidy programs this doesn’t seem like escaping poverty either. That’s why major anti-poverty programs like that National School Lunch program, Low Income Home Energy Assistance Program (LIHEAP), State Children’s Health Insurance Program (SCHIP) step in to help families with incomes up to twice the poverty line.

If the supplementary poverty measure tackled the fundamental problem of a much-too-low poverty line then it would likely draw an income threshold closer to 200% of the official poverty line (or for an apples-to-apples comparison, about 150% of the SPM income threshold). This would shift the landscape of poverty statistics and produce a poverty rate of an astounding one in three Americans.

Now What?

The Census Bureau’s supplemental measure doesn’t do what the underemployment rate did for the unemployment rate—that is, fill in the gap between the headline number and how many of us are actually falling through the cracks.

The poverty line does a poor job of telling us how many Americans are struggling to meet their basic needs. For those of us who fall into the “not poor” category but get struck with panic from time to time that we may not be able to make ends meet—with one bad medical emergency, one unexpected car repair, one unforeseen cutback in work hours—it makes us wonder, if we’re not poor or even near poor, why are we struggling so much? The official statistics betray this experience. The fact is that so many Americans are struggling because many more of us are poor or near-poor than the official statistics lead us to believe.

The official poverty line has only been changed—supplemented, that is—once since its establishment in 1963. What can we do to turn this potentially once-in-a-century reform into something more meaningful? One possibility: we should simply rename the supplemental poverty rates as the severe poverty rate. Households with economic resources below 150% of the new poverty line then can be counted as “poor.” By doing so, politicians and government officials would start to recognize what Americans have been struggling with: one-third of us are poor.

Sources: Kathleen Short, “The Research Supplemental Poverty Measure: 2011,” Current Population Report, U.S. Bureau of the Census, November 2012 (census.gov); Constance F. Citro and Robert T. Michael (eds.), Measuring Poverty: A New Approach, Washington D.C.: National Academy Press, 1995; Trudi Renwick, “Geographic Adjustments of Supplemental Poverty Measure Thresholds: Using the American Community Survey Five-Year Data on Housing Costs,” U.S. Bureau of the Census, January 2011 (census.gov).

Why America & China's Future Plans Are Totally Nuts

James Howard Kunstler, Kunstler.com — Mon, 17 Jun 2013 12:32:00 -0700

Big plans for the future for the world's biggest economies will take them both further down the hole.

Societies periodically go insane. Fallacious memes sweep through a frightened and confused populace and bad things happen, bad choices get made. Two bad ideas in particular infect the American thought-o-sphere these days: 1) that non-cheap oil can keep all the rackets of consumerism going; 2) that we can offset all the quandaries of non-cheap oil with accounting fraud and debt creation.

These ideas present themselves in the places of greatest authority and influence. The president says “we have a hundred years of shale gas.” The Wall Street Journal says that an inflating Dow Jones index stands for a growing economy. My recent favorite came out of the increasingly demented New York Times on Saturday: Even Pessimists Feel Optimistic About the American Economy. Quoting an econ professor named Tyler Cowen from George Mason University The Times said:

The recent surge in domestic oil and gas production signals “the start of a new era of cheap energy,” he said, while less expensive online education programs could open the door to millions of people who have been priced out of more traditional academics.

That was a two-fer of stupidities since A) it ought to be self-evident that $90-a-barrel oil is not cheap oil, and B) that because of A, there’s unlikely to be lucrative employment for people who learn double-entry book-keeping on their laptops. In fact, anyone who actually learns math over the Internet must conclude that $90-a-barrel oil will crash all the supposedly normal operations of a consumer society, including the ability of oil-and-gas companies to get the capital investment necessary for further oil production.

None of these accredited morons seems to get the basic equation between available cheap energy — e.g. oil with a high energy-return-on-investment — and capital formation — the accumulation of wealth that can be deployed to produce more wealth-producing activity. That was only possible on the way up Hubbert’s curve. On the way down, alas, the relationship enters a Ponzi unwind of too many claims on excessive promises to pay. The net result is a society with a lower standard of living. Personally, I think it will go way lower, and way sooner than later.

The idea that online education is a sovereign tonic for economic vitality is just another gloss on the inane belief that technology can take the place of energy in the equation above. Tom Friedman, grand poobah, of The New York Times Op-Ed page is the cheerleader-in-chief for that meme, but it is accepted by virtually all authorities in business and politics, and their handmaidens in the academic chairs. As the American economy dissolves in an acid bath of capital scarcity and grievance, these idiots will be waiting for the next iPhone app that can power the electric grid — and thus all the new iPhones streaming out of the Apple factories of China into the hot little hands of nineteen-year-olds in Michigan taking “Macroeconomics” on the Kahn Academy website.

Speaking of China, The New York Times ran another humdinger over the weekend: China’s Great Uprooting: Moving 250 Million Into Cities that illustrates how meshugga that society is. Such are the tragic sorrows of late-blooming techno-industrialism that China is doing exactly the opposite of what the future requires — namely, destroying the basis for small-scale local food production. But, not to put too fine a point on it, China is fucked. They are simply in the hopeless zone of population overshoot and resource scarcity. There was some loose talk in thatTimes story to the effect that China will offset all its problems by colonizing Africa (and, who knows, other lands with other resources), but it will be interesting to see how it goes on the slow boat back to Shanghai with all that bok choy rotting in the hold as it plies east out of Mombasa under an ever-hotter tropical sun.

Chinese leadership apparently thinks this is the way to go. Just as the Princeton-bred American economists think that we can all migrate onto the Web and live a virtual existence on virtual wealth with virtual energy. The manifold disappointments that societies around the world face as they discover the falsity of their own memes is already leading to a lot of dangerous mischief, which is to say armed conflict. There is potential for a lot worse.

Meet America’s Most Shameless Defender of the 1 Percent, Harvard Economist Greg Mankiw

Lynn Stuart Parramore, AlterNet — Mon, 17 Jun 2013 11:13:00 -0700

Is there anything Mankiw won’t say to serve plunderers and plutocrats?

It’s not really news that America’s economics departments, particularly at elite institutions, are stuffed with people whose careers are founded on protecting monied interests. But it’s pretty rare when someone just comes straight out and announces the fact.

Meet Greg Mankiw, chairman and professor of economics at Harvard, one of the most influential economists in the country. As chairman of the Council of Economic Advisers, he guided the economic blundering of George W. Bush. Then in 2006, he became an adviser to Mitt Romney and steered Romney's economic positions in 2012, which included some of the most shocking expressions of classism yet heard from a presidential candidate.

Mankiw's name might not be a household word, but the tentacles of his power and influence extend into Washington, the blogosphere and the classroom, where he molds young minds through his ubiquitous textbooks and lectures (that is, when students are not walking out to protest his conservative bias and harmful agenda).

Above all, Mankiw is the self-appointed Defender in Chief of the 1 percent. How do we know this? Well, because he just published a 23-page paper called “Defending the One Percent.” It’s helpful to understand the official propaganda line in the class war, and Mankiw has laid it out in a paper that purports to determine whether income inequality requires any intervention.

Professor Mankiw begins by asking the reader to imagine a perfectly egalitarian society where the economy is totally efficient and everybody has the same amount of money. What happens, he asks, when a Steve Jobs pops up? Somebody smarter, more creative than everybody else? Suddenly Mr. Entrepreneur makes amazing things that everybody wants to buy, and now economic inequality has entered the egalitarian utopia. Is it fair to intervene and restore equality by penalizing Mr. Entrepreneur?

It must be said that this opening sally, with its clumsily constructed straw man, would not pass muster with a high school debating coach. Most of Mankiw’s opponents do not ask for perfect income equality or imagine perfect efficiency, but rather envision a playing field in which everyone has a chance to succeed and Mr. Entrepreneur has incentives to conduct his business fairly and to share some of the rewards of his efforts with the community that made them possible.Instead of forming a cartel to hold down the wages of his young engineers, as Steve Jobs did. Or colluding to fix prices, as Steve Jobs is also accused of having done. Or backdating stock options to be sure he comes out in the money. And so on.

Mankiw’s writing displays the sensibility of a young person suddenly infatuated with the writings of Ayn Rand, and in the fine tradition of Randian entrepreneur worship, he pretends that economic inequality is mostly the result of certain people being smarter and more creative than others (one brief glance at the Forbes list of the richest Americans, which is populated by quite a few trust fund babies, destroys this illusion). In a nutshell, he argues that egalitarianism in antithetical to entrepreneurialism.

Not many people would actually argue that we don’t want smart people making cool things. We do. But we also recognize that sometimes Mr.Entrepreneur, heady with his economic success, becomes greedy and starts to try to arrange things so that other entrepreneurs will not be able to compete with him. He begins to cheat and bully and set his boot on the neck of his fellow residents of Utopialand. He may even channel his brilliance into making things that don’t help his neighbor, but actually do harm, like a complicated financial product rigged to drain the bank accounts of unsuspecting citizens.

Many Americans now have personal experience with what happens when Mankiw’s vision turns into a nightmare. They’ve begun to realize that markets often don’t work the way he says they do and that our political system has not been doing enough to correct their failures and address the resulting unfairness that leaves many smart, energetic people unable to find an opportunity to fully contribute to society and demonstrate their talents. That’s why Nobel Prize-winning economist and Columbia professor Joseph Stiglitz, whose proclivity for truth-telling has alarmed his Ivy League colleagues, wrote a book called The Price of Inequality in which he points out that America, our beloved land of opportunity, “may have become more class-based than old Europe” due to gross economic unfairness.

Unlike Stiglitz, Mankiw seems to be less interested in thinking about how to correct the market’s failures than reinforcing them. Why is this?

I don’t normally like to play the psychologist, but in trying to get a sense of what kind of man could be so blinded as to fail to grasp the fundamental challenge of our time, I watched some public appearances by Mankiw on the Web. I found something very revealing—a commencement speech he gave just a few weeks ago at Chapel Hill-Chauncey Hall, a prep school in North Carolina, where one of his children has been enrolled.

The story Mankiw tells about himself to those students seems to encapsulate so much of what is wrong with the field of economics that I think it’s worth dissecting. Mankiw comes off as an affable guy who transcended his early math geek persona to become a highly regarded economic professional. The fundamental moment in his history was when his parents chose to take him out of a large public school, where he was not being properly nurtured, and send him to an elite private school in New Jersey, where he flourished. Mankiw congratulates the students at Chapel Hill-Chauncey Hall for making a similar smart “choice” to better themselves in the supportive, tight-knit community of prep school. He seems blissfully unaware that for most children, attending an elite, expensive private school is not on the menu of options. Rather, he sees the world as a place where some succeed solely because they make better choices than others, not because some people have more money with which to advance themselves.

There’s also something very telling in Mankiw’s description of his youthful enthusiasm for mathematics. He was an excellent math student in high school, but realized in college that he would make a second-rate mathematician, so he turned to economics, graduating in 1980 from Princeton and going on to study at Harvard and MIT. This was just around the time that economics was falling into a deep infatuation with mathematical models and losing the sense of itself as a social science grounded in politics, history and culture. The result has been devastating. Economists left the human world behind and entered a mechanistic paradise where their dogmatic and ultimately destructive paradigm failed to acknowledge the forces that were gathering into an economic storm worse than anything the country had seen since the Great Depression.

Slowly and fitfully, the field is now trying to reorient itself. Some economists, like Rob Johnson and his colleagues at the Institute for New Economic Thinking, are calling to reestablish economics as a broad, interdisciplinary field, open to disagreement and grounded in the humanities. Figures like Mankiw, dedicated to the old model, will stand in the way of this process. The Mankiws of the economics profession have devoted themselves to math, but they have not been steeped in the traditional values and ethics that underpin our democracy, and they consistently fail to imagine that their elegant mathematical models might not accurately depict the real world of complex human interactions and institutions.

Mankiw is not a reality-based economist, and it’s no wonder, as he has been cocooned in elite institutions since his parents pulled him out of public school as a boy. He bounced from an elite private school to elite colleges, and then landed softly at Harvard where he has been teaching for three decades. Mankiw lives in Wellesley, Massachusetts, a town in suburban Boston that is one of the wealthiest in the country. He is a defender of the 1 percent because he knows no other community, and the 1 percent has embraced and richly rewarded the insecure math geek who sat in the back of his public school classroom trying to hide behind his spectacles. How could he question them now?

Economists talk a lot about bubbles, but not enough about the kind Mankiw occupies, which so disastrously impacts his ability to contextualize his models or think clearly about the experiences of most of his fellow citizens. During Occupy, 70 students walked out of his introductory economics class in protest (the class, interestingly, was on inequality). In the New York Times, Mankiw accused the protesters of spewing platitudes and insisted that economics is not “laden with ideology.” According to his account, he watched the students walk out, and then, “After a few minutes, I resumed the class as usual.”

More recently, instead of braving the painful process of exposing the failures of prevalent economic theories, like the recently discredited work on debt and economic growth of his fellow Harvard economists Carmen Reinhart and Kenneth Rogoff, he has leapt to defend promoters of nonsense. In a blog post centered on the theme, “Hey, everybody makes mistakes,” he dismissed the seriousness of pushing shoddy economic work that was molded into austerity policies that have caused job loss, hunger and misery for millions of the Earth’s inhabitants.

With his latest paper, Mankiw defends the 1 percent as the source of all good in our economy and society, sounding much like an astronomer defending the Earth as the center of the universe. An astronomer who, if Galileo walked into his class, would look up briefly, and then, in a few minutes, resume business as usual.

NYU’s Gilded Age: Students Struggle With Debt While Vacation Homes Are Lavished on the University’s Elite

Pam Martens, Russ Martens, AlterNet — Mon, 17 Jun 2013 10:41:00 -0700

The problems at NYU are emblematic of an insular institution whose Board is heavily dominated by the same Wall Street people who heaped disgrace upon their own institutions.

A review of deeds and mortgages in some of the toniest towns on the East Coast reveals that not only is New York University financing luxury Manhattan brownstones and high rise condos for its faculty and administrators out of its nonprofit coffers, it has also been secretly financing country homes for a select group. These extravagances have fallen directly on the shoulders of financially struggling students. NYU ranks fourth in Newsweek’s 2012 list of the least affordable colleges.

In September 2009, the New York Times published a remarkable exercise in inanity, profiling John Sexton, President of NYU, relaxing at his Fire Island beach house. Sexton calls his summer getaway a “rather large, wonderful house” in the interview. We learn what Sexton eats for breakfast (black coffee and yogurt), the name of his dog (Legs), how long it takes him to walk to church from the ferry (five minutes), how much weight he’s lost (30 pounds), and little else.

We don’t, for example, learn from the interview that his home on Fire Island has been financed since 1994 by several million dollars in loans from the NYU School of Law Foundation and NYU itself, according to the Suffolk County Clerk’s records.

This is not the only residence that NYU has made possible for its President. He has the use of two well appointed apartments owned by NYU in Manhattan. Sexton, who turned 70 in September, is also set to receive a length of service bonus of $2.5 million in 2015 and an annual pension of $800,000 when he retires. That pension is the equivalent of NYU taking $10 million of its assets and placing them in an immediate annuity for Sexton.

Sexton has plenty of company when it comes to getting out of the city in the summer through the generosity of NYU. Richard Tsien, Director of the NYU Neuroscience Institute, bought a house in East Fishkill, New York, 76 miles from the university, for $1,125,000 in February 2012 with $500,000 in financing from NYU. According to an online description, it’s a stone house on 7 park-like acres with a flowing stream and a functioning 12-foot water wheel.

Numerous other NYU professors have country homes financed by the NYU School of Law Foundation or NYU. Between primary residences and vacation homes, NYU and its affiliated nonprofits have an estimated $72 million to $96 million outstanding in loans to faculty and administrators. The university has acknowledged 168 loans.

These revelations come on top of other recent outrages at the university, such as the purchase of a $6.15 million condo on East 70th Street to house Robert Grossman, Dean of the NYU Medical Center. Grossman’s combined compensation at NYU as of the fiscal year ending August 31, 2011 was $3,488,960. Five other doctors at the Medical Center receive a combined total of $10.5 million in compensation.

The excesses at NYU under the presidency of John Sexton came partially to light during the Senate confirmation hearings of Jack Lew, President Obama’s pick for Treasury Secretary. As NYU’s Chief Operating Officer, Lew had received a partially forgivable mortgage loan for $1.4 million to buy a luxury home in Riverdale and “severance pay” of $685,000 – even though he had voluntarily left to join Citigroup. In testimony to the Senate, Lew said NYU provided him with an annual payment equal to the interest paid on his mortgage.

Senator Chuck Grassley, ranking member of the Committee on the Judiciary, was part of Lew’s confirmation hearings and was deeply disturbed by Lew’s opaque and grudging release of the materials requested. As a result of what he had heard in the hearing, Grassley sent a March 15, 2013 letter to NYU requesting “all loan documents for loans made to individuals from 2000 to the present,” along with a demand to know the details about whose loans were forgiven, interest reimbursed, and so forth.

It’s now three months later and according to a spokesperson for Grassley, his office still doesn’t have all the loan documents. NYU is refusing to turn over the documents, instead forcing Grassley’s aides to look at the documents in the presence of NYU lawyers and “take notes but not make copies of the documents.” The next session is scheduled for June 27, according to the spokesperson. Grassley is a Republican. Because the Democrats have majority control in the Senate, Grassley lacks subpoena power.

The NYU chapter of the American Association of University Professors has asked the New York State Attorney General’s Charities Bureau, which oversees nonprofit organizations, to probe the mushrooming mortgage scandal and other matters. The faculty at a number of schools on the campus have delivered a no-confidence vote of Sexton, with particular ire arising from his NYU 2031 plan to broadly expand NYU’s real estate footprint in Greenwich Village with vast construction projects earmarked that would disrupt neighborhood life and cost the university billions of dollars. NYU is already the second largest real estate owner in New York City, with $3.3 billion in residential and commercial holdings according to its 2010 federal tax return.

I emailed one Law Professor, Geoffrey Miller, who had a home in New Rochelle financed by the NYU School of Law Foundation, and asked why he didn’t simply use the NYU Federal Credit Union, as many other faculty have done to finance their homes. The Credit Union’s web site indicates that it offers a “full range” of home mortgage loans in New York, New Jersey, Connecticut, New Hampshire, Pennsylvania and Vermont, up to a cap of $750,000. I also asked Miller if his loan was forgivable. Miller responded that he wouldn’t provide “personal financial information” over the internet. Of course, I wasn’t asking for sensitive things like account numbers or social security numbers or even dollar amounts. I was asking two very basic questions: why didn’t you use the Credit Union and was your loan forgivable.

I reached out to NYU to justify these loans under IRS rules for 501(c)(3) nonprofit organizations, the structure under which both NYU and the School of Law Foundation are organized. One rule is quite specific, warning that 501(c)(3)s “must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual.”

NYU spokesman, John Beckman, responded: “NYU is located in the highest cost-of-living area in the country. NYU loan programs are one part of strategy that has transformed New York University over the last several decades from a regional, largely commuter, school to one of the top ranked research universities in the world. A core tenet of the transformation was to create a cohesive, residential academic community of faculty, students, and administrators committed to and interacting in university life, including academic and extracurricular activities (and, in the case of senior administrators, where they can be available around the clock).”

But that doesn’t explain Sexton’s home 57 miles from Manhattan or Tsien’s home an hour and a half away or any of the other country homes far outside of New York City. If anything, it’s an argument against the ability to have senior administrators “available around the clock.” (Not that this is an acceptable practice under any circumstance.)

Beckman continued on the matter of country homes: “NYU loan programs, while primarily targeted for the purchase of principal residences accessible to campus, also can assist in meeting other financial needs of the accomplished faculty and senior administrators that NYU seeks to recruit and retain in a highly competitive market for such talent. NYU’s peer institutions typically also have loan programs and other housing assistance programs for faculty and senior administrators. For these reasons, NYU's loans are directly related to NYU’s exempt purposes.”

One detail on NYU’s 2010 federal tax filing raises further red flags. A little footnote reads as follows: “One highest compensated employee received compensation over a base salary based on the surplus of revenues after expenses for the IVF Faculty Practice Group.” That would seem to be in direct conflict with the IRS ruling that “no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual.”

IVF refers to in vitro fertilization, available through the NYU Medical Center’s Fertility Center. Two individuals appearing on NYU’s highest compensated individuals’ listing on the 2010 tax filing for NYU are Dr. Jamie Grifo, listed as earning $2.9 million, and Dr. Nicole Noyes, listed at $1.8 million. Both are listed as employees of the Fertility Center on its web site.

One person who is not getting financing from NYU for a country home, a city home or a multi million dollar salary is Chen Guangcheng, a blind human rights activist and lawyer who has been a fellow at NYU for the past year. Chen had escaped house arrest in China and fled to the U.S. Embassy in Beijing before arriving at NYU.

Chen released a statement Sunday night, saying he was getting the boot at NYU because of pressure from the government in China. Since the New York Post ran an article to that effect last Thursday, NYU has vehemently denied the accusation. NYU plans to open a campus in Shanghai this fall, a plan that requires the goodwill of Chinese officials. The plan has caused great controversy at NYU because of ongoing human rights abuses by the totalitarian government there. NYU’s campus in autocratic Abu Dhabi is equally contentious, with faculty charging that NYU is simply selling its brand abroad in exchange for big donations.

The problems at NYU are emblematic of an insular institution whose Board is heavily dominated by the same Wall Street people who heaped disgrace upon their own institutions. The NYU Association of American University Professors has proposed a broad new blueprint for governance at NYU. It includes faculty and student representation on the Board of Trustees, participation in selecting new presidents and provosts, the ability of faculty to have a say in any domestic or global expansion plans, and a full knowledge of the university’s fiscal affairs. When John Sexton returns from Fire Island and meets with the Board, adopting the new management model should be the first order of business.

How Corporate Greed Is Starving Our Public School System

Paul Buchheit, AlterNet — Sun, 16 Jun 2013 19:32:00 -0700

The total cost of K-12 educational cutbacks in recent years is about equal to the amount of state taxes left unpaid by these companies.

We hear a lot about corporations avoiding federal taxes. Less well known is their non-payment of state taxes, which along with local taxes make up 90% of U.S. education funding.

Pay Up Now just completed a review of 2011–12 tax data from the SEC filings of 155 of the largest U.S. corporations. The results show that the total cost of K-12 educational cutbacks in recent years is approximately equal to the amount of state taxes left unpaid by these companies.

Corporations Neglect Their State Tax Responsibilities

For 2011 and 2012, the 155 companies paid just 1.8 percent of their total income in state taxes, and 3.6 percent of their declared U.S. income. The average required rate for the 50 states is 6.56 percent.

Similar results were found in a Citizens for Tax Justice (CTJ) report on 2008–10 state taxes. In their evaluation of 265 large companies, CTJ determined that an average of 3% was paid in state taxes, less than half the average state tax rate. The results are summarized at Pay Up Now.

How much money is this? The 2011–12 underpayment, for just 155 top-earning companies, is about $14 billion per year. In the 2008–10 study, CTJ noted that "these 265 companies avoided a total of $42.7 billion in state corporate income taxes over the three years." That's also about $14 billion per year.

Unpaid State Taxes Are More Than ALL the K-12 Cuts

A comparison of the above results with educational cutbacks shows the devastating impact of tax avoidance on our children. A Center on Budget and Policy Priorities (CBPP) report revealed that total K-12 education cuts for fiscal 2012 were about $12.7 billion. A separate analysis of CBPP data shows total 2008–12 cutbacks of about $20 billion. According to the Census Bureau, K-12 funding rose about 5% a year from 1998 to 2008, after which it leveled off and began to decline.

More stunningly, higher education experienced a nearly $17 billion state appropriations cut in 2012–13, in comparison to 2007–8. Much of the shortfall was made up by tuition increases. As noted by the CBPP, "The entire increase in tuition at public colleges and universities over the last 25 years has gone to make up for declining state and local revenue." Tuition has risen almost 600% over those 25 years.

Games Corporations Play to Take Our State Funds

Maddening as this is, a look at behind-the-scenes corporate subterfuge makes it even worse. A Good Jobs First report describes how companies play one state against another, holding their home states hostage for tax breaks under the threat of bolting to other states, with the whole process masked in inspirational language: "business recruitment" and "retention incentives" instead of the more accurate description of transferring jobs to the state that offers the most generous subsidies. The report notes that "This is a net loss game, with footloose companies shrinking the tax base necessary for the education and infrastructure investments that benefit all employers."

Good Jobs First also reported on the personal income tax (PIT) subsidy, through which employers simply take the state tax paid by their workers. States are pressured into such agreements to keep corporations from moving out. Employees, as a result, are effectively "paying taxes to their boss."

The Impact on All of Us

The end result of this hostage-taking is a breakdown in public services, most notably in education. Schools are deemed to be "not working," and a frantic rush toward privatization leads to even more tax cuts for the business interests charged with the responsibility of "fixing" the broken system. But rarely are we informed that it's our self-serving business and political leaders who broke the system.

Will Legalizing Pot Destroy Humboldt Or Transform It into the Napa Valley of Weed?

Emily Brady, AlterNet — Sat, 15 Jun 2013 09:52:00 -0700

The marijuana capital of the world tries to figure out the future of its illicit product.

Mare Abidon had first heard about the event while listening to KMUD-FM, the community radio station. A local talk show host named Anna “Banana” Hamilton was organizing it. The flyers she posted around town advertised the event two ways: “The Post-Marijuana Prohibition Economy Forum,” and the shorthand version, which rolled off the tongue much easier: “What’s After Pot?” The accompanying art featured a pot leaf, two nude female figures wearing baseball caps, clumps of trimmed marijuana buds, and what appeared to be dollar bills with wings fluttering away.

The meeting was taking place at the Mateel Community Center in Southern Humboldt, an area of 1,200 square miles of sprawling wilderness in the far reaches of Northern California. The area used to be known as the Mateel, after the Mattole and Eel rivers that flow through it, but now, as if it were some Manhattan neighborhood, many people called it by the abbreviated term SoHum.

Over the years, SoHum, the rest of Humboldt, and neighboring Mendocino and Trinity counties had become known around the country as the Emerald Triangle, after the region’s brilliant green clandestine marijuana crop. Since the mid-1970s, outlaw farmers throughout the Triangle had been supplying America with its favorite illegal drug. What had started as a lark nearly forty years earlier had become the backbone to the county’s economy. Throughout the region, and particularly in SoHum, marijuana farming had become a way of life, one that transcended class and generations. “It’s what we do here,” people would say.

Mare herself had grown a half-dozen plants every year for decades.

But the code of silence surrounding the marijuana industry was such that, until one March evening in 2010, there had never been a public gathering in Southern Humboldt where what people did there was openly discussed.

Sure, for twenty years there was an annual hemp festival, where pot-related books and paraphernalia were sold, and for decades there had been meetings to discuss the actions of law enforcement in the community, but a public discussion about the dependence of the local economy on the black market marijuana crop had never happened before. Up until this moment, it was even considered bad form to ask what someone did for a living in the community. It was just understood.

Mare passed through the front doors of the Mateel Community Center and a giant wooden sculpture of an open hand. Inside, the stage where musicians from around the world came to play shows was empty, but the entire oak floor below was filled with a dozen long banquet tables and an army of folding chairs. On each table were handwritten place cards indicating who should sit there. There were tables for landowners, local government, medical marijuana patients, the press, “Growers,” and “Just Curious.” There was even a gray metal chair labeled “FBI.”

It was a large crowd for Southern Humboldt. Nearly two hundred people were milling about. Instead of picking a table, Mare headed for the fireplace in the back corner that was sculpted to resemble a giant redwood tree trunk and looked as though it should have a cauldron bubbling away inside it. There were other familiar faces in the crowd—neighbors and friends—and the unfamiliar. Seated at the landowners’ table was a woman with long, coppery red hair named Kym Kemp. A third-generation Humboldter, Kemp had been blogging about local marijuana culture since 2007, under the name Redheaded Blackbelt. Her blog posts ranged from photos of local wildflowers and quilts she helped stitch to links to stories about the marijuana industry and flyers of the occasional missing person. Sitting nearby was a man Mare knew named Charley Custer, who was dressed in his trademark Stetson hat and Jesus sandals. Custer had moved to Humboldt from Chicago in 1980 to write a book that he referred to as his “opus dopus.” It was, as of yet, incomplete.

Engrossed in a conversation over by the stage was the event’s mastermind, Anna “Banana” Hamilton. Hamilton was an outspoken folksinger in her sixties who hosted a monthly talk show on KMUD called Rant and Rave. She normally tooled around town in jeans and a baseball cap, but on this evening, she was dressed up, in a lavender velvet top and pearls.

The irony was that every table was now full except for the growers’ table, where only two brave souls had claimed a seat. One of them was Mare’s neighbor Syreeta Lux, a sturdy blonde who wore an enormous grin. Lux had lived in the community for decades and figured it was impossible to have a conversation about the future of the marijuana industry if growers were still invisible. It’s now or never, she figured, as she pulled her chair up to the empty table. Lux quickly waved over a friend, and wrote “medical” above the word growers, to try to get people to feel more at ease. Like Mare, she recognized many faces of friends, neighbors, and other community members in the crowd who were also growers, but still no one else joined her.

It may have seemed strange that fourteen years after California passed the nation’s first medical marijuana law, which allowed people to grow pot legally with a doctor’s recommendation, America’s most infamous marijuana growers might be hesitant to claim their heritage, but this was a community that had paid a price for its decades-long rebellion. It had endured annual government raids, and the army itself had once invaded. Then there was the lawless side of the business, the home-invasion rip-offs, and the occasional murder. For decades, to announce oneself as a grower would have been like painting a big target on one’s back. The times were indeed changing, but they didn’t change quickly in Humboldt.

The event was about to begin, and Syreeta Lux decided to take things a step further. She stood up, held the “Growers” sign high above her head, and commanded the room’s attention.

“If anyone is looking for a place to sit, there’s lots of room at our table to grow,” she announced in a loud, booming voice.

And then she grinned even wider.

From her spot by the fireplace, Mare figured she would let Syreeta represent the female growers. After years of living in the shadows, Mare had no intention of claiming a seat at that table. She had glanced around the room and realized that regardless of where people were sitting, the majority were what she called marijuana moonshiners, just like her. But when Syreeta stood up and encouraged others to join her, it was as if Mare’s feet had a mind of their own, and just like that, she found herself stepping forward. In front of her family, friends, community, elected officials, local and national media, and maybe even the FBI, Mare shuffled toward the growers’ table.

And she wasn’t the only one.

“Come on!” Syreeta Lux shouted for others to join them, and they did.

Like some kind of illicit farming coming-out ceremony, more growers stepped into the light. Eventually their numbers swelled to a few dozen, and later they had to retreat to the outdoor patio to have enough space to talk among themselves. But first, from her perch near the stage, Anna Hamilton spoke the words that everyone knew, but no one had yet dared to declare publicly.

“The legalization of marijuana will be the single most devastating economic bust in the long boom-and-bust history of Northern California, impacting local businesses, nonprofit organizations, the workforce, and county tax revenue,” she said, pausing for dramatic effect to peer at the crowd over the top of her reading glasses.

As Hamilton and everyone else knew, pot farming was not only a way of life in the region; it was the foundation of the entire economy. People had grown so dependent on the lucrative black market prices that some locals referred to marijuana’s illegality as the best government price support program in U.S. history. Prohibition and suppression create risk for growers and artificial scarcity on the market, sending prices and profit margins through the roof.

But that price support system was now at risk.

The U.S. government effectively outlawed marijuana in 1937. Though it is nontoxic and there are no recorded cases in history of anyone ever dying from overdosing on the drug, since the creation of the Controlled Substances Act in 1970 the federal government has classified marijuana as a Schedule I substance. This means the government considers pot more dangerous than cocaine or methamphetamine, with no medical value whatsoever. Many American people are of a different mind. In the late 1990s, starting with California in 1996, states began adopting medical marijuana laws. By the spring of 2010, fourteen states and Washington, D.C., had passed such laws.

These new laws, coupled with a cultural shift toward the acceptance of marijuana on a national level, brought more people into the industry and caused the price of pot on the black market gradually to decline. Marijuana was now a multi-billion-dollar industry in the Golden State, and a measure to legalize and tax it for adult recreational use had just gathered enough signatures to appear on the November ballot.

As Anna Hamilton pointed out that evening, if the measure passed, it could change everything in Humboldt.

“Every member of our society holds a stake in the consequences of legalization,” she said, as she began to point to the various tables—to the landowners, educators, members of the business community, and pot growers.

“Did I skip anyone who wants to be recognized tonight?” she asked. “Any representatives from the federal government? I see someone’s sitting in that fed chair over there. Is that just a joke?!”

Apparently it was, so Hamilton continued.

If the legalization measure passed, she predicted that the price of marijuana grown outdoors in the sun, the traditional Humboldt way, could drop from its current rate of around $2,000 a pound to as low as $500. If that happened, the effects would be catastrophic. The market would bottom out, affecting growers and everyone who worked for them, which Hamilton estimated to be between fifteen and thirty thousand people in Humboldt County alone.

In a few months’ time, the RAND Corporation, a nonprofit think tank, would release a study with a similar prediction. It estimated that the legalization of the production and distribution of marijuana in California could cause prices to drop up to 80 percent.

There was reason to worry in the room, and it wasn’t just about economic self-interest. Proceeds from marijuana had not only supported and sustained individuals in the community, but had also helped build local institutions, including a health clinic, the radio station KMUD, and the Mateel Community Center, where the evening’s conversation was taking place. Donating earnings from a plant or a pound to these nonprofits, and to the community schools and volunteer fire departments, was how for years many locals paid their “taxes.”

All this was poised to change.

“If the value of marijuana drops below a certain level,” Hamilton warned, “the state will be faced with the collapse of its rural economies. Businesses will be shuttered, the nonprofit community will be unable to provide services to suddenly displaced peoples, and the golden goose will be dead.”

She looked up at the crowd.

“We will all face this economic decline together. For the sake of our region, it is time to begin planning for this upheaval now, together.

“What will we do?” she asked.

There was dead silence.

“We have all the talent and all the answers we need right here in this room.”

Among the ideas that bubbled up that evening was an advisory panel of pot growers that would meet with local elected officials to discuss how to regulate their industry. One couple came away from the meeting inspired to form the area’s first collective to try to sell organic, artisanal Humboldt pot legally under the state’s medical model. Some audience members expressed the long-held fear that legalization would bring the corporatization of the industry and that the market would be flooded with cheap, mass-produced weed, and they wouldn’t be able to compete. Others, including a local government official, saw it as an opportunity to take advantage of Humboldt’s legendary brand. Across the country and beyond, the Humboldt County name had become deeply linked with pot.

“We’ve had this name association for thirty or forty years now,” County Supervisor Mark Lovelace remarked. “If this is a newly legitimized industry, shouldn’t we be looking at capitalizing on that?”

There was talk of creating an appellation, modeled after the world’s great wine-growing regions, to designate that local pot was Humboldt homegrown. The way Hamilton saw it, the future of the area was either “appellation or Appalachia.” Should marijuana become legal, Humboldt County could become the Napa Valley of Pot, complete with “marijuanaries,” where tourists could visit and sample the latest harvest. The business possibilities were endless: “bud and breakfasts,” where rooms overlooked fragrant green gardens; a marijuana museum, detailing the history of the area’s decades-long experiment in civil disobedience; food and pot pairings at local restaurants; and some kind of four-wheel-drive trolley service, like the limos of the Napa Valley, to cart intoxicated tourists up unpaved roads to tour the pot farms.

“I’m not dying until there’s a tasting room in Humboldt County!” a woman with a brown bob and glasses passionately declared.

She was greeted with an enthusiastic round of applause.

That evening, Mare Abidon wasn’t worried about the price of pot or how she might brand herself; instead, she was bursting with hope. She had always expected that marijuana would become legal one day, and when it did, she planned to plant big pot bushes in plain sight between the cherry trees around her deck. In fact, she’d never imagined it would take this long. She never really understood the whole War on Drugs, or why the government considered marijuana such a menace. She thought it was great medicine, and even safer than alcohol as a way to unwind at the end of the day.

With the coming legalization, Mare thought that all the jails were going to be emptied of people arrested for pot, and that she and her friends who grew it were finally going to become legitimate members of society. Much was discussed that night, but what Mare took away, what she’d always remember, was that giddy rush of emotion, the feeling of pure liberation as she stepped into the light and walked toward that growers’ table. “It was like crawling out from under a rock that I had been under for decades,” she later confessed.

But, of course, not everyone felt that way.

Are the Young People That Shrinks Label as Disruptive Really Anarchists with a Healthy Resistance to Oppressive Authority?

Bruce E. Levine, AlterNet — Fri, 14 Jun 2013 11:40:00 -0700

Many young people diagnosed with mental disorders have acted on their beliefs in ways that threaten authorities.

Many young people diagnosed with mental disorders are essentially anarchists who have the bad luck of being misidentified by mental health professionals, who 1) are ignorant of the social philosophy of anarchism; 2) embrace, often without political consciousness, its opposite ideology of hierarchism; and 3) confuse the signs of anarchism with symptoms of mental illness.

The mass media equates anarchism with chaos and violence. However, the social philosophy of anarchism rejects authoritarian government, opposes coercion, strives for greatest freedom, works toward “mutual aid” and voluntary cooperation, and maintains that people organizing themselves without hierarchies creates the most satisfying social arrangement. Many anarchists adhere to the principle of nonviolence (though the question of violence has historically divided anarchists in their battle to eliminate authoritarianism). Nonviolent anarchists have energized the Occupy movement and other struggles for economic justice and freedom.

In practice, anarchism is not a dogmatic system. So for example, “practical anarchist” parents will use their authority to grab their child who has begun to run out into traffic. However, practical anarchists strongly believe that all authorities have the burden of proof to justify control, and that most authorities in modern society cannot bear that burden and are thus illegitimate—and should be eliminated and replaced by noncoercive, freely participating relationships.

My experience as a clinical psychologist for almost three decades is that many young people labeled with psychiatric diagnoses are essentially anarchists in spirit who are pained, anxious, depressed, and angered by coercion, unnecessary rules, and illegitimate authority. An often-used psychiatric diagnosis for children and adolescents is oppositional defiant disorder (ODD); its symptoms include “often actively defies or refuses to comply with adult requests or rules” and “often argues with adults.”

Among young people diagnosed with attention deficit hyperactivity disorder (ADHD), psychologist Russell Barkley, one of mainstream mental health’s leading ADHD authorities, says that they have deficits in “rule-governed behavior,” as they are less responsive to rules of authorities and less sensitive to positive or negative consequences. A frequently used research tool that distinguishes alcohol/drug abuser personalities was developed by Craig MacAndrew, and is commonly called the MAC scale. It reveals that the most significant “addictive personality type” have discipline problems at school, are less tolerant of boredom, are less compliant with authorities and some laws, and engage in more disapproved sexual practices.

I have encountered many people who had been diagnosed with bipolar disorder, schizophrenia and other psychoses, and who are now politically conscious anarchists, including Sascha Altman DuBrul, author of Maps to the Other Side: The Adventures of a Bipolar Cartographer. DuBrul, several times diagnosed with bipolar disorder, has lived in rebel communities in Mexico, Central America and Manhattan’s Lower East Side, worked on community farms, participated in Earth First! road blockades and demonstrated on the streets in the Battle for Seattle. He reports that many of his anti-authoritarian friends also have been diagnosed with mental illness.

Teenagers, as evidenced by their musical tastes, often have an affinity for anti-authoritarianism, but most do not act on their beliefs in a manner that would make them vulnerable to violent reprisals by authorities. However, I have found that many young people diagnosed with mental disorders—perhaps owing to some combination of integrity, fearlessness, and naïvity—have acted on their beliefs in ways that threaten authorities. Historically in American society, there is often a steep price paid by those who have this combination of integrity, fearlessness, and naïvity.

While DuBrul and his friends have political consciousness, my experience is that most rebellious young people diagnosed with mental disorders do not, and so they become excited to hear that there is actual political ideology that encompasses their point of view. They immediately become more whole after they discover that answering “yes” to the following questions does not mean that they suffer from a mental disorder, but instead have a certain social philosophy:

Do you hate coercion and domination?
Do you love freedom?
Are you willing to risk punishments to gain freedom?
Do you instinctively distrust large, impersonal and distant authorities?
Do you think people should organize themselves rather than submit to authorities?
Do you dislike being either an employer or an employee?
Do you smile after reading the Walt Whitman quote “Obey little, resist much”?

Young people who oppose inequality and exploitation, reject a capitalist economy, and aim for a society based on cooperative, mutually owned enterprise are essentially left-anarchists—perhaps calling themselves “anarcho-syndicalists” or “anarcho-communitarians.” When they discover what Noam Chomsky, Peter Kropotkin, Kirkpatrick Sale, or Emma Goldman have to say, they may identify with these thinkers. These young people have a strong moral streak of egalitarianism and a desire for social and economic justice. Not only are they not mentally ill but, from my perspective, they are the hope of society.

There is another group of freedom-loving young people who hate the coercion of parents, schools, and the state but lack an egalitarian moral streak, and are very much into money and capitalism. Some of them may have been dragged into the mental health system after having been caught drug dealing, and are labeled with conduct disorder and/or a personality disorder. While these young people rebel against they themselves being controlled and exploited, many of them are not averse to controlling and exploiting others, and so are not anarchists, but some have spiritual transformations and become so.

An Underground Resistance for Oppressed Young Anarchists

There are at least two ways that mental health professionals can join the resistance: 1) speak out about the political role of mental health institutions in maintaining the status quo in society; and 2) depathologize and repoliticize rebellion in one’s clinical practice, which includes helping young anarchists navigate an authoritarian society without becoming self-destructive or destructive to others, and helping families build respectful, non-coercive relationships.

If a nonviolent anarcho-communitarian (politically conscious or otherwise) is dragged by parents into my office for failing to take school seriously but is otherwise pleasant and excited by learning, I tell parents I do not believe there is anything essentially “disordered” with their child. This sometimes gets me fired, but not all that often. It is my experience that most parents may think that believing a society can function without coercion is naive but they agree it’s not a mental illness, and they’re open to suggestions that will create greater harmony and joy within their family.

I work hard with parents to have them understand that their attempt to coerce their child into taking school seriously not only has failed—that's why they’re in my office—but will likely continue to fail. And increasingly, the pain of their failed coercion will be compounded by the pain of their child’s resentment, which will destroy their relationship with their child and create even more family pain. Many parents acknowledge that this resentment already exists. I ask liberal parents, for example, if they would try to coerce a homosexual child into being heterosexual or vice versa, and most say, “Of course not!” And so they begin to see that temperamentally anarchist children cannot be similarly coerced without great resentment.

It has been my experience that many rebellious young people labeled with psychiatric disorders and substance abuse don’t reject all authorities, simply those they’ve assessed to be illegitimate ones, which just happens to be a great deal of society’s authorities. Often, these young people are craving a relationship with mutual respect in which they can receive help navigating the authoritarian society around them.

The U.S. Centers for Disease Control on May 17, 2013, in “Mental Health Surveillance Among Children—United States, 2005–2011,” reported: “A total of 13%–20% of children living in the United States experience a mental disorder in a given year, and surveillance during 1994–2011 has shown the prevalence of these conditions to be increasing.”

Is there an epidemic of childhood mental illness, or is there a curious revolt? My experience is that many young Americans, feeling helpless, hopeless, bored, scared, misunderstood, and uncared about, ultimately rebel; but given their wherewithal, their rebellion is often disorganized, futile, self-destructive, and appears to mental health professionals as a disorder or illness. Underlying many of psychiatry's diagnoses is the experience of helplessness, hopelessness, boredom, fear, isolation, and dehumanization. Does society, especially for young people, promote:

Respectful personal relationships—or manipulative impersonal ones?
Empowerment—or helplessness?
Autonomy (self-direction)—or heteronomy (institutional-direction)?
Participatory democracy—or authoritarian hierarchies?
Diversity and stimulation—or homogeneity and boredom?

Emotional and behavioral problems are often natural human reactions to a society that cares little about: 1) autonomy—self-direction and the experience of potency; 2) community—strong bonds that provide for economic security and emotional satisfaction; and 3) humanity—the variety of ways of being human, the variety of satisfactions, and the variety of negative reactions to feeling controlled rather than understood. Young anarchists are especially sensitive to American society’s absence of autonomy, community, and humanity—and this can result in overwhelming anxiety and depression.

While giant pharmaceutical corporations promote psychiatry’s authority as a vehicle for increased drug sales, the whole of the corporate state supports psychiatry so as to maintain the status quo. In the old Soviet Union, political dissidents were diagnosed by psychiatrists as mentally ill, then hospitalized and drugged. Even more effective for those at the top of the hierarchy is what now occurs in the United States: diagnosing and treating anti-authoritarians before they have reached political consciousness and before they have created communities of resistance.

One reason that there is so little political activism in the United States is that a potentially huge army of anti-authoritarians are being depoliticized by mental illness diagnoses and by attributions that their inattention, anger, anxiety, and despair are caused by defective biochemistry, not by their alienation from a dehumanizing society. These diagnoses and attributions make them less likely to organize democratic movements to transform society.

In the early 19th century in the United States, a network of secret routes, conductors, and safe houses were used by African Americans to escape from slavery. This network was commonly called the Underground Railroad, organized by runaway slaves, free African-American abolitionists, and white abolitionists. Today, communities of ex-psychiatric patients (see MindFreedom and the Icarus Project) are helping young anti-authoritarians resist their mental illness labeling and coercive treatments. There are also a handful of mental health professional dissident organizations that, while not promoting the social philosophy of anarchism, do oppose dehumanizing diagnoses and coercive treatments (for example, the International Society for Ethical Psychology and Psychiatry).

While there are career risks for modern-day mental health professional dissidents, these are small risks compared with those taken by slavery abolitionists. So as a mental health professional, I find it quite embarrassing that there are so few professionals involved in the current resistance. In American history, there have been several shameful periods where groups—including Native Americans, homosexuals and assertive women—have been pathologized, dehumanized and given oppressive treatments by mental health professionals in an attempt to alter their basic being. Today’s psychiatrists, psychologists, social workers, and counselors would do well to recognize that historians do not look kindly on those professionals who participated in institutional dehumanization and oppression.

The Latest Outrageous Waste of Money for the Pentagon's Playthings

Medea Benjamin, James Marc Leas, AlterNet — Fri, 14 Jun 2013 11:02:00 -0700

'Noise zones' are being used to drive a money-soaked scheme for rich commercial developers, while putting thousands of families in affordable homes at risk.

Is the Vermont Air National Guard being used for corrupt purposes having nothing to do with its military mission? The answer is yes. Big time. And for big money. In the article, “Those who 'Fudged' Should not be Allowed to Judge” we described how military brass fudged their own scoring process to get Senator Leahy’s home state of Vermont on the list as the “preferred alternative” for basing the F-35. We know who loses: thousands of Vermonters whose homes are in noise and crash zones. This article will follow the money to see who benefits from the corrupt practices of the military brass who fudged.

The developers who stand to gain the big money did not have to invest their own dollars to position themselves. They got the taxpayers to do that for them. The City of Burlington applied for and received a federal grant of $40 million to buy 200 families out of their affordable homes near the airport entrance, and the City now holds title to most of those homes. 55 have so far been demolished. Another hundred homes stand vacant awaiting demolition. Other homes are awaiting purchase for demolition.

The federal government put up the money to buy those 200 homes as "mitigation" for noise being made by the F-16 jet fighter currently flown by the Vermont Air National Guard at the local Burlington International Airport. The 200 homes are in a zone that is being blasted by a noise level from the F-16 jets that the federal government considers so loud that their neighborhood is “unsuitable for residential use.” A report about Burlington International Airport prepared for the Federal Aviation Administration (the “FAA report”) says that “land acquisition and relocation is the only alternative that would eliminate the residential incompatibility” with that noise level (page 29).

Certain Vermont officials, including Senator Leahy and Governor Shumlin, continue to repeatedly suggest that the F-35, which the Air Force draft Environmental Impact Statement (EIS) says is more than four times louder than the F-16, would be fine for thousands more Vermont families who live in affordable neighborhoods of Winooski, Burlington, Williston, and South Burlington Vermont. The Air Force draft EIS says the F-35 would put 3410 homes within that same noise contour that the federal government considers “unsuitable for residential use.”

But here is how the developers stand to make their millions: according to a chart in the FAA report (page 6), different land uses have different federally mandated noise limits. Noise levels that make a home “unsuitable for residential use” are perfectly fine for commercial and industrial use. This may be because residential use generally involves children going out to play, open windows during spring, summer, and fall, family conversation, and sleeping. Hotels and other commercial buildings may have permanently closed windows and incorporate other measures in design and construction to achieve substantial sound reduction. This difference in FAA mandated noise limits is what the big money people will exploit.

The FAA report indicates that the land left after the homes are demolished within the high noise contours is not scheduled to be left as green space. Taking into account the fact that land unsuitable for residential use can still be used for commercial and industrial activity, the FAA report calls for adoption of a “Reuse Plan.” In fact, the FAA report says, “preparation of a property reuse plan is an FAA grant requirement.” Thus, the affordable residential properties the City of Burlington acquired with $40 million of federal funds in South Burlington are officially being demolished for the purpose of making the land available for the non-residential commercial reuses.

The emptied land from those 200 families is being eyed by certain developers who stand to make lots of money by putting up commercial buildings near the airport entrance—similar to the commercial development one sees at other airports. The president of one of the state's biggest commercial developers, Ernie Pomerleau, is a member of the Airport Strategic Planning Committee. Its meetings openly discuss things like building hotels and other commercial real estate on land next to the airport that used to be a thriving community of tiny affordable homes. In an interview on WPTZ TV on June 6, 2013 Pomerleau said, “"Should there be a hotel? Yea, if it works for Burlington and South Burlington I would fully encourage that."

Vermont Air Guard vastly increased F-16 noise

Commercial flights had nothing to do with driving out the 200 families. The Air Force draft EIS states that “The contribution of civilian aircraft is negligible compared to the military aircraft contribution” to Burlington airport noise (page BR4-21). In the neighborhood near the airport entrance, the major component of F-16 noise comes from the use of the afterburner by F-16s for routine takeoffs.

Routine afterburner use on takeoff was not required with the original configuration of the F-16. Only when the Vermont Air Guard switched from an external fuel tank located under the fuselage to tanks mounted under the wings did pilots find that they needed to use the afterburner for takeoff.

The F-16 fuel tanks, the afterburner, the noise, and federal funds were all methodically and smoothly used to remove the two hundred families living peacefully in affordable homes. Without any hearing, a thriving community of affordable homes was destroyed in favor of the Vermont Air Guard changing the position of its external fuel tank—and in favor of making this consolidated acreage available to commercial developers.

The only remaining obstacle between those developers and giant profits is the level of South Burlington City government willingness to rezone the newly vacated land from residential to commercial.

Buying an election in Vermont

Just in time to push that rezoning for commercial development, heavily moneyed interests recently formed a political action committee (PAC) and spent an unprecedented amount to almost literally purchase seats on the South Burlington City Council for two pro-developer candidates in the March 2013 election. While the amount spent was among the highest ever to buy a city council seat in Vermont, it is a tiny fraction of the projected gain developers can expect from redeveloping the land when the remaining houses are torn down and Burlington makes the land available to the commercial developers.

The Air Force says the F-35 is more than four times louder than the F-16. Just as F-16 noise was vastly increased and harnessed to acquire federal money for use to eliminate residential neighborhoods and make their valuable real estate near the airport entrance available to commercial developers, F-35 noise might in another way work magic for the developers: to facilitate major airport expansion goals. The F-35 is so loud that any amount of noise from the goal of doubling commercial jet traffic will be totally negligible compared to the F-35 noise. Just as the shift in the F-16’s external fuel tanks and routine afterburner use is now being leveraged to remove housing near the airport entrance for commercial development, continued massive military jet noise from the F-35 can be leveraged for ambitious airport expansion to pass zoning and Vermont environmental review.

The fudge reported by the Boston Globe may only be the frosting on the cake.

The ones who "fudge" should not be the ones to judge

With thousands of Vermont families and their homes at risk, with the integrity of the Air Force basing process undermined, with questions swirling about whether facts or political influence drives the basing decision, and with personal gain by a certain commercial developer an underlying factor, an independent and impartial investigation is needed to determine whether the numbers were fudged, and if so by whom and at whose behest. If indeed numbers were fudged, the Pentagon officials who fudged should not be allowed to continue to be the ones to make the final decision. And they should be prosecuted.

No more tricks--the process was fixed, the F-35 should be nixed

If fudging was essential for Burlington to come out on top, that alone should be enough to stop the process. Honest Vermont public officials and the Vermont Air National Guard should now join with local residents and Burlington area clergy in asking the Air Force to skip Burlington for the first F-35 basing round.

But we can have no confidence in view of a money-soaked scheme by which noise zones are being put to use to drive personal gain for rich commercial developers while thousands more families in affordable homes are being put at risk.

Now is the time to build a national grass roots movement demanding an immediate halt in any plan to base the F-35 in Burlington or anywhere else and to call for canceling the entire F-35 program.

Why Elizabeth Warren’s Plan For Student Debt is an Economic Breakthrough

Ellen Brown, Web of Debt blog — Fri, 14 Jun 2013 08:53:00 -0700

Sen. Elizabeth Warren’s “Bank on Students Loan Fairness Act” has been denounced as populist demogoguery. Here's why it isn't.

On July 1, interest rates will double for millions of students – from 3.4% to 6.8% – unless Congress acts; and the legislative fixes on the table are largely just compromises. Only one proposal promises real relief – Sen. Elizabeth Warren’s “Bank on Students Loan Fairness Act.” This bill has been dismissed out of hand as “shameless populist demagoguery” and “a cheap political gimmick,” but is it? Or could Warren’s outside-the-box bill represent the sort of game-changing thinking sorely needed to turn the economy around?

Warren and her co-sponsor John Tierney propose that students be allowed to borrow directly from the government at the same rate that banks get from the Federal Reserve — 0.75 percent. They argue:

Some people say that we can’t afford low interest rates for students. But the federal government offers far lower rates on loans every single day — they just don’t do it for everyone. Right now, a bank can get a loan through the Federal Reserve discount window at a rate of less than one percent. The same big banks that destroyed millions of jobs and broke our economy can borrow at about 0.75 percent, while our students will be paying nine times as much as of July 1.
This is not fair. And it’s not necessary, either. The federal government makes 36 cents on every dollar it lends to students. Just last week, the Congressional Budget Office announced that the government will make $51 billion on the student loans it issued this year — more than the annual profit of any Fortune 500 company, and about five times Google’s yearly earnings. We should not be profiting from students who are drowning in debt while we are giving great deals to big banks.

The archly critical Brookings Institute says the bill “confuses market interest rates on long-term loans (such as the 10-year Treasury rate) with the Federal Reserve’s Discount Window (used to make short-term loans to banks), and does not reflect the administrative costs and default risk that increase the costs of the federal student loan program.”

Those criticisms would be valid if the provider of funds were either a private bank or the American taxpayer; but in this case, it is the U.S. Federal Reserve. Warren and Tierney assert, “For one year, the Federal Reserve would make funds available to the Department of Education to make these loans to our students.” For the Fed, completely different banking rules apply. As “lender of last resort,” it can expand its balance sheet by buying all the assets it likes. The Fed bought over $1 trillion in “toxic” mortgage-backed securities in QE 1, and reportedly turned a profit on them. It could just as easily buy $1 trillion in student debt and refinance it at 0.75%.

Which is a Better Investment, Banks or Students?

Students are considered risky investments because they don’t own valuable assets against which the debt can be collected. But this argument overlooks the fact that these young trainees are assets themselves. They represent an investment in “human capital” that can pay for itself many times over, if properly supported and developed. This was demonstrated in the 1940s with the G.I. Bill, which provided free technical training and educational support for nearly 16 million returning servicemen, along with government-subsidized loans and unemployment benefits. The outlay not only paid for itself but returned a substantial profit to the government and significant stimulus to the economy. It made higher education accessible to all and created a nation of homeowners, new technology, new products, and new companies, with the Veterans Administration guaranteeing an estimated 53,000 business loans. Economists have determined that for every 1944 dollar invested, the country received approximately $7 in return, through increased economic productivity, consumer spending, and tax revenues.

Similarly in the 1930s and 1940s, the Reconstruction Finance Corporation funded the New Deal and World War II and wound up turning a profit, without drawing on taxpayer funds. It’s an initial capitalization was only $500 million; yet the RFC eventually lent out $50 billion – the equivalent of about $500 billion today. It raised money by issuing debentures, a form of bond. It got all of this money back, made a profit for the government, and left a legacy of roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more that the country did not have before.

In 1944, President Franklin Roosevelt proposed an Economic Bill of Rights, in which higher education would be provided by the government for free; and in the progressive 1960s, tuition actually was free or nearly free at state universities. Some countries provide nearly-free higher education today. In Norway, Denmark, France and Sweden, the cost of college is less than 3% of median income, as compared to 51% in the U.S.

Other countries make loans available to their students interest-free. For more than twenty years, the Australian government has successfully funded students by giving out what are in effect interest-free loans. They are “contingent loans,” which are repaid only if and when the borrower’s income reaches a certain level. New Zealand also offers 0 percent interest loans to New Zealand students, with repayment to be made from their incomes after they graduate.

Banks Are Good Credit Risks Only Because They Are Backed by the Government

In a National Review article titled “Warren’s Student-loan Demagoguery,” Ian Tuttle argues that the discount window should not be available to students because the Fed defines that resource as “an instrument of monetary policy that allows eligible institutions to borrow money, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions,” and because the discount window is “an emergency measure used to prevent runs on banks.”

It may be true that the Fed’s discount window is open only to banks, but the Federal Reserve Pact was passed by Congress and can be modified by Congress. The reasoning behind the policy needs to be re-examined.

The question is, why do banks routinely have “shortages of liquidity”? What does that mean? It means they have lent out depositor funds that don’t properly belong to them, gambling that they will be able to replace the money before the depositors demand it back. The banks have a binding commitment to return customer money “on demand.” They can make good on that commitment because, and only because, the Fed and the FDIC back them up in a massive shell game, in which they borrow from each other or the Fed overnight – just long enough to make their books appear to balance – and then give the money back the next day. Banks are good credit risks only because they have the backstop of the Fed and the government behind them. Without those guarantees, we would be back to the cycle of endless bank runs of the 19th and early 20th centuries.

“Our students are just as important to our recovery,” says Warren, “as our banks.” What if students, too, were backed by the government’s guarantee? What if, as in Australia and New Zealand, students were not required to repay the investment in human capital represented by their educations until the economy provided them with jobs? What if the government made it a policy to provide them with jobs? This too has been done before, quite successfully. It was part of Roosevelt’s New Deal. As detailed by Prof. Randall Wray, citing N. Taylor’s The Enduring Legacy of the WPA:

The New Deal jobs programs employed 13 million people; the WPA was the biggest program, employing 8.5 million, lasting 8 years and spending about $10.5 billion. It took a broken country and in many important respects helped to not only revive it, but to bring it into the 20th century. The WPA built 650,000 miles of roads, 78,000 bridges, 125,000 civilian and military buildings, 700 miles of airport runways; it fed 900 million hot lunches to kids, operated 1500 nursery schools, gave concerts before audiences of 150 million, and created 475,000 works of art. It transformed and modernized America.

In the 1930s, the government was in a worse financial position to achieve all this than it is now; but the commitment and the will were there, and the means were found. In World War II, the means were found again. The government always seems to be able to find the means to fund a war. We can just as easily find the means to fund our economic recovery. And if the funding comes from the Federal Reserve, the government need not be propelled into a mounting debt owed at mounting interest. The funds can be provided interest-free; and because they represent an investment in productive capital, the debt itself can be repaid with the fruits of the investment – the jobs that create the salaries that generate taxes and consumer demand.

The default rate on student loans is close to 10% today because there are no jobs available to repay the loans, and because the interest rate is so high that the debt is doubled or tripled over the life of the loan. Give students loans and jobs, and the default problem will cure itself.

Investing in our young people has worked before and can work again; and if Congress orders the Fed to fund this investment in our collective futures by “quantitative easing,” it need cost the taxpayers nothing at all. The Japanese have finally seen the light and are using their QE tool as economic stimulus rather than just to keep their banks afloat, and we need to do the same.

How America's Bully Economy leads to a "Bully Society"

Jessie Klein, NYU Press — Thu, 13 Jun 2013 13:40:00 -0700

Jessie Klein's new book explains how school shootings, bullying and stressed-out kids stem in part from the U.S.'s cutthroat economy.

The following is an excerpt from Jessie Klein's new book "The Bully Society: School Shootings and the Crisis of Bullying in America's Schools," (New York University Press, 2013).

Schools are microcosms of American society where students are told that financial wealth and superficial gender markers are compulsory for social acceptance. They learn these lessons from each other but also from grown-ups—parents, teachers, and the wider culture they inhabit. As they prepare to enter the adult workforce and social life, children come to understand that being perceived as the richest or prettiest, or the most powerful or confident, could dramatically enhance their futures—and that without these marks of American success they may become lifelong outcasts. They also learn to see life as a zero-sum game, where they can win only if someone else loses, rise only by ensuring that someone else falls. These values are at the core of bullying behavior, and they are also the foundation upon which much of the economic, political, and social life of our nation is built.

Not all cultures are so obsessively focused on winning. In the Southwest, for instance, coaches say that teams of Hopi Indians want to win but that they often try not to win because they don’t want to embarrass their opponents. In some traditional cultures, the game isn’t over until the two sides are tied. They work hard to make sure no one loses. Even in Europe, as T. R. Reid writes in “The European Social Model,” some core human needs are seen as everyone’s birthright rather than as something to be “won” through competition with one’s compatriots. “To Americans,” Reid writes, “it is simply a matter of common sense that rich families get better medical care and education than the poor; the rich can afford the doctors at the fancy clinics and the tutors to get their kids into Harvard. But this piece of common sense does not apply in most of Europe. The corporate executive in the back seat of the limo, her chauffeur up front, and the guy who pumps the gas for them all go to the same doctor and the same hospitals and send their children to the same (largely free) universities.”

In the United States, however, hardcore competition and striving to be the best are generally considered vital to keeping people motivated and functioning at optimal levels. Harsh inequalities are considered, at best, an unfortunate consequence. Yet gender pressures—and especially the expectation to embrace hypermasculine values and behaviors—are seldom examined in the context of the larger socioeconomic forces that shape them.

In one of my criminal justice classes, I asked students to tell me what words they associated with capitalism. What qualities do you need to be successful in our society? The board filled up quickly: competitive, aggressive,and powerfulwere some of the first suggestions. At that point, we were discussing white-collar crime and the unprincipled behavior that had produced both the Enron scandal and the economic meltdown of recent years. Later in the course we discussed school shootings and their relationship to gender, and I asked my students to list some words they associated with masculinity. The same list emerged—competitive,aggressive,and powerful. Without intending to, my students had highlighted the link between the values of masculinity and capitalism.The school shooters, for the most part, grew up in the 1980s or later. The rise in school shootings roughly coincides with the Reagan administration’s restructuring of the American economic, political, and cultural landscape—a period that glorified unrestrained capitalism and reemphasized an “up by your own bootstraps” ethos. Following a landslide reelection in 1984, Reagan promised an America rich with freedom, individualism, and financial reward for those who skillfully met the standard, coupled with a lower degree of support for those who did not. Increasingly, success was defined in terms of power, economic attainment, and social status—the same barometers increasingly used, at the high school level, to assess masculinity.

Capitalism is hardly new to the United States, nor is the system’s relationship to core American values. But as former labor secretary Robert Reich observed in his book Supercapitalism, in recent decades the power of unregulated, unrestrained capital has increased to such an extent that it has outstripped democracy as a primary foundation of our society. According to Reich, Americans became identified more as investors and consumers and less as citizens and members of a community.

Further, in this same period, a slew of books documenting America’s increasing social problems hit the shelves. The titles alone explain why Americans are more stressed, broke, unhappy, and doing whatever they can to survive: The Overworked American (1993), The Overspent American(1998), The Cheating Culture(2000), and The Lonely American(2009). Another set of recent titles document the new plagues with which our children are grappling—increased anxiety, depression, materialism, and even narcissistic personality diagnosis: Branded: The Buying and Selling of Teenagers(2004); The Road to Whatever: Middle-Class Culture and The Crisis of Adolescence(2004); The Price of Privilege: How Parental Pressure and Material Advantage Are Creating a Generation of Disconnected and Unhappy Kids(2006); and Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitled—and More Miserable Than Ever Before(2007). Couple these telling titles with the alarming statistics depicting the United States as scoring highest on almost all of the worst social problems in the industrialized world (including murder, rape, and infant mortality), and it becomes less surprising that school bullying is so common here, or that its vicious and fatal retaliations in the form of shootings are more prevalent in the United States than in the rest of the world combined.

What is a Compassionate Economy?

Competitive and punishment-oriented schools mirror the combative workforce. In the larger world, adults are given little support if they meet hard times and are unable at some point to work at their best, or work at all. Similarly, as adolescents struggle to find their identities and their place in the world, the emotional ups and downs of their journey can undermine academic performance. Even students who tend to do well risk failure, and their confrontations with widespread cliques and bullying only add to the stress. Children’s understanding of this antagonistic culture feeds their fury and fear as they find that their every move in school so profoundly affects their future prospects.

In his book Going Postal: Rage, Murder, and Rebellion: From Reagan’s Workplaces to Clinton’s Columbine and Beyond, Mark Ames writes:

“The kids are stressed out not only by their own pressure at school, but by the stress their parents endure in order to earn enough money to live in [a prestigious] school district. ... Everyone is terrified of not ‘making it’ in a country where the safety net has been torn to shreds.”

Children who might otherwise look forward to a life after high school see, in the model of their parents and the larger society around them, a similarly brutal environment.

While their safety nets are weakening as well, in most European countries the government still takes some responsibility for ensuring that everyone has basic health care, education, housing, food, child care, elder care, and even indefinite unemployment if necessary. There are real limitson work hours (in Finland, for instance, a six-hour workday), and mandatory paid vacation and holiday time is often four to six weeks.

In contrast, even before the start of the latest recession, workers in twentieth-century America were losing some of the gains they had fought for in the earlier part of that century. The eight-hour day (forty-hour week) that Americans finally won in 1938, under President Roosevelt’s New Deal Fair Labor Standards Act, is a dim memory for most Americans today, who tend to toil more often at fifty to seventy or more hours per week.

Americans once hoped to achieve the demands made by the Welsh social reformer Robert Owen for eight hours of work, eight hours of leisure, and eight hours of sleep, but most now have little if any leisure and much less sleep. We are working much longer hours than our counterparts in other industrialized countries. John P. Walsh and Anne Zacharias-Walsh write in “Working Longer, Living Less” that the average American works seventy more hours per year than his or her Japanese counterpart and 350 hours or nine more weeks per year than Europeans. Americans tend to work more hours and then spend money paying others to do the services they don’t have time to do because of they are working.

Because we Americans work so much, it becomes more difficult to take care of our children and our homes. In many European countries, the government pays mothers as well as fathers to stay home with their young children so they can return to work when the children are older. In the United States, middle-and upper-class adults make money and often pay other people to do these tasks; many small children in the United States are under the care of nannies or some other form of child care worker. Rather than a system designed to meet human needs, our economy prioritizes profit. Instead of opportunities to nurture ourselves, and our friends and family, and larger community, our time is managed by someone else’s drive to make money. Walsh and Zacharias-Walsh write that “to argue that an expensive factory should be left idle because workers are tired or that production should be organized using a less efficient but more comfortable process—is considered absurd.” Yet the “overworked American,” to use Juliet Schor’s term, does not necessarily generate more profit. As Anders Hayden notes,

“Several shorter-hours innovators in Europe—Belgium, France, the Netherlands, and Norway—are actually more productive per hourof labor than is the United States. Higher hourly productivity in these countries is almost certainly due, in part, to shorter work-time’s beneficial effects on employee morale, less fatigue and burnout, lower absenteeism, higher quality of work, and better health.”

European economies tend to prioritize family and community as a primary value. The notion of “time affluence,” not just “material affluence,” is important—a concept that is less common in the United States. Instead, Americans work longer and live with their family less. Walsh and Zacharias-Walsh write about one mother of two young children who summed up this collective quandary: “This is the only job I could get that paid enough for me to take care of them, but it never lets me be home when they need me. I can either feed them or be with them, never both.” The increased workday also prevents participation in community life—politi- cal organizations, social clubs, sports leagues, religious institutions—as well as family life, leading to what Robert Putnam called the “Bowling Alone” phenomenon; other research also notes a related plummeting of social connections and increased loneliness and isolation among Americans.

In recent decades, the U.S. government has taken less responsibility for people’s basic human needs. Life has become a struggle for many working parents, especially single working parents. In addition to lacking the government-supported universal health care that is available to citizens in virtually all European countries, the United States does less than any other industrialized country to support parents, who receive no legally mandated paid leave when a child is born or adopted. Among the168 nations surveyed in a 2004 Harvard University study, 163 have paid maternity leave, while the United States stands in a category with Lesotho, Papua New Guinea, and Swaziland.

The lack of economic support for American citizens means adults are under more pressure and stress to keep their jobs and succeed in them in order to support themselves and their families. Driven to succeed, with dwindling access to community, adults end up forming similar social cliques to those that fester in children’s schools. Workplace massacres, then, tend to have causes that parallel those found in school shootings.

One in Eight People Go Hungry As World's Richest Countries Gather for G8 Meeting

Bill Nighy, Comment Is Free — Thu, 13 Jun 2013 13:36:00 -0700

Leaders might consider something radical: tackling the forgotten scandal of hunger.

It seems a long time since G8 leaders last gathered in the UK for their annual get-together. Back in 2005, we were at the height of a global boom and there was a real sense that this could be the summit to Make Poverty History.

I was proud to be a small part of the campaign that urged world leaders to boost aid, cancel debt and "make trade fair". We only got two out of three: debt and aid, and aid was not fully delivered. Yet despite that relative failure, the wins we did get made a massive difference to millions of the world's poorest people. To take just one example, 30% fewer children die of malaria in Africa than did in 2004 – that's 300,000 lives saved every year.

The week before the G8 convenes once again is a natural time to reminisce about the good old days but this is about more than nostalgia. Even in today's age of austerity, the G8 has a chance to build on the successes of the Gleneagles summit and, in particular, tackle the forgotten scandal of hunger.

A child dies every 10 seconds from malnutrition – not because their parents are reckless, stupid or lazy – but because they were unlucky enough to be born at a time and place where there is too little food available or, perhaps more tragically, where people cannot afford to buy the food that is.

One in eight people in the world will go to bed hungry tonight. That's 870 million people. The total population of the G8 is just 890 million. Just imagine the urgency to act if those 870 million lived in the G8 rather than in Africa, South Asia and other poor countries.

Since 2005, I've visited developing countries and campaigned with Oxfam at a number of G8 and G20 summits – pushing leaders to deliver on their promises to the poorest and seeing for myself the difference the money can make. In Tanzania, I met the charming and humbling villagers of Engare Sero, who explained to me that for them aid meant a grain bank so they no longer had to endure a life-sapping 10-day round trip for a single bag of maize. In Nairobi's Kibera slum I met girls as young as eight scavenging for food who were forced to give sexual favours to the criminals who controlled the dump so they could get to the fresher garbage as it was unloaded from the lorries.

At Tokyo and then Toronto leaders pledged again to deliver the aid they had promised, but with the notable exception of the UK, those expected to stump up significant sums have fallen short – increases, yes but billions shy of their promises.

In Cannes at the G20, we hoped a Robin Hood tax on banks might fill the gap – it still might. Eleven countries in Europe are pressing ahead with a financial transaction tax that could raise tens of billions from the sector that caused the economic crisis to help people in Europe and poor countries. The UK is not only not one of those countries, but George Osborne is going to court to block it.

This year's G8 is unlikely to see much movement on aid beyond the very welcome additional money for nutrition announced at last weekend's hunger summit. The UK has let it be known that this will not be a pledging summit. But that does not mean it cannot help the villagers of Engare Sero, the slum girls of Kibera and millions like them.

Protecting poor people from land grabs, making it easier for them to find out what companies and their governments are doing and stopping the ridiculous situation where G8 members' policies actively encourage land to be used for growing fuel rather than food: all these will help.

But perhaps the biggest step forward the G8 could make would be to end the scandal that sees companies dodge more than $160bn a year in tax they should pay poor countries.

It is money that could be invested in farms – providing the seeds, equipment and knowhow to get more food from the same plot of land. And it could be used to provide safety nets to help people whose ability to earn a living has failed to keep pace with rising food prices.

In the 6th century BC the Chinese philosopher Lao Tsu observed: "The people are hungry: it is because those in authority eat up too much in taxes." Now in large parts of the world the reverse is true.

The actions the G8 needs to take are relatively simple. They need to agree new global rules – on information exchange and public information so it is clear who assets belong to – to ensure that companies can no longer use tax havens to avoid paying their fair share here and in poor countries. Here David Cameron has a crucial role to play – the UK is responsible for more tax havens than any other country in the world.

As the prime minister said earlier this year: "The fact is the poorer the nation the more they need the tax revenues but often the weaker the capacity they have to collect them. All of this in developed and developing countries alike comes down to a simple issue of fairness." I couldn't have put it better myself.

AlterNet.org: Economy

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