Tuesday, July 22, 2014

The Hobby Lobby Supreme Cout decision

"Benjamin I. Sachs, a law professor at Harvard University, notes that while federal law lets union members prevent the use of their dues for political purposes, shareholders do not have similar rights. “If we’re going to say that collectives have speech rights, then we should treat unions and corporations the same,” Sachs told me. Employees are even more vulnerable. When companies like YUM! Brands, which owns KFC and Taco Bell, campaign against minimum-wage increases, they are effectively using the profits generated by their employees to limit the compensation of those same employees. And of course, some of Hobby Lobby’s 13,000 workers will now need to pay for contraception." NYT 20 July 2014

Monday, July 21, 2014

For Shame America

For Shame America.  More than 57,000 young migrants have been apprehended, coming without parents, mostly from Central America since October.  At great expense, we have thousands of immigration control officers and elaborate fences.  I try to imagine the desperation of parents to send their children north hoping to escape killing and rape by drug gangs.  Do we need extensive interviews to determine if these children are eligible for entry? We are ruining our neighbors.
      The whole thing is our fault.  If we treated our addicts, the demand and profits of the drug trade would dry up. 

Saturday, July 5, 2014

Why We Have No High-speed Rail Lines

America is the only rich country in the world with no high-speed rail lines connecting our major cities.  As any European tourist quickly notes,  fast trains such as the Euro-Star and the French TGV are comfortable and reliable and cheaper than flying.  And, you are not treated like a crimnal while boarding.
       Opponents of rail improvement argue that roads are self-sustaining via tolls and gas taxes.  But, in fact the US Treasury yearly transfers from its General Fund to the Highway Trust Fund huge sums that do not equal all of the Amtrack subsidies for the past 40 years.  Federal highway subsidies were $41 billion in 2013; aviation subsidies were $16 billion, while Amtrak received only $1.6 billion.  (Reported in Harpers, July 2014)  
       Wisconsin's Republican Governor rejected a Federal offer to build a high-speed rail line from Madison to Milwaukee.  General Motors and Exxon and the oil exporting countries must have cheered this stupidity. 

Why Do Many Embrace Inequality?

Papers and books describe the widening inequality in our society.  They provide little understanding of why the 99% put up with it.
          The explanation of Prof. Justin Friesen  et. al. suggest that "When we feel a lack of personal control, we compensate by looking for order or predictability in our environment.  So we desire and perceive governments and gods to be particularly powerful.  Those who suffer inequality often even defend the social system responsible,  rather than accept that life has been unjust." (reported in the NYT June 22, 2014)
       The constant litany in our press and TV emphasizes that capital provides jobs, and we can't threaten it or it will go away.  This slogan translates into no protest against the favorable treatment of capital gains and low effective tax rate for the super rich. 
    It is just as true that labor provides opportunities for capital, but this is seldom noted.  Our political energy is captured by the Tea Party who rails against big government (whatever that means) and ignores inequality with the lame excuse that doing anything about it would mean more government (whatever that means).

Merger Fever--the patient is sick

The Federal Reserve has gone to great lengths to keep interest rates low.  So what have American firms been doing?  Borrowing to build new plants and employ more people?  Wrong! 
They are using retained earnings and borrowing to buy their own stock and other companies.
Prof. Richard Roll of the University of California has formulated "the hubris hypothesis of corporate takeovers."  "Lately Prof. Roll has been studying the role of narcissism--a personality disorder characterized by excessive self-love--in corporate takeovers.  When executives are excessively self-involved, he said, they may ascribe unrealistic attributes to themselves, like great strategic vision or deal-making ability, leading them to extend their domains by seeking acquisitions and wheeling and dealing rapidly." (reported in the NYT Jun 22, 2014)
         And what are the results? Prof. Rene Stutz found that during the Merger and Acquisitions mania of the period 1998-2001 shareholders of public corporations over-all lost huge sums. 
         Economic theorists have gone to great lengths to exclude psychology from economics, but it comes at a cost of reality.  Just because psychology does not fit mathematical models is no reason to exclude it. Theorists deride the above as just telling stories.  But, a good story is worth a lot of equations that miss the point.

Thursday, June 26, 2014

WW I and other Idiocies

It is the 100th anniversary of WW I, one of the bloodiest and unnecessary wars in human history.  The excuse for the war was the assassination of the Austrian Archduke by a crazy man.  The Austrians demanded compensation (as if there is compensation for murder).  When it was refused, countries began to take sides based on historical and cultural ties—not unlike kids choosing sides on a playground.  The tragedy was compounded by the generals who did not understand machine guns.  Wave after wave of soldiers were sent to slaughter on both sides.  The eventually “victorious” Allies demanded huge reparations from the Germans. The consequence was bitter resentment that provided the base for Hitler’s rise.  We ignored the push-back of human emotions.
      Among the other idiotic moves was the drawing of uninformed boundaries in Africa.  We are still living with the consequences such as ethnic wars. Another result was a revulsion against war that resulted in Western delayed response to the armed invasions by Hitler.

Inequity and Hierarchy

“When we feel a lack of personal control, we compensate by looking for order or predictability in our environment.  So we desire and perceive governments and gods to be particularly powerful.  Those who suffer inequity often even defend the social system responsible, rather than accept that life has been unjust.” 
Based on Friesen and Kay as reported in NYT 22 June 2013
Case in point, the popularity of Putin in Russia and popular working class support for the Republicans who are anti-labor in US.