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Saturday, January 14, 2012

Job Creators vs. Lost Creators

I’m concerned this week on two fronts that are most often seen separately, although they are inexorably intertwined by an interdependence and mutual responsibility engendered by the nature of our democratic society. 

One, is the rhetorical keystone used by the radical right-wing Republicans that attempts to equate being rich with being a “job creator.”  It’s so patently misleading as to fall easily into the category of bamboozling.  This isn’t the first time Republicans have used this ruse to mislead the public. 

An article from September 2011 on Salon.com recalls that Republicans have been using it for years (even decades) to push a vision of capitalism in which those who most benefit from the system are most essential to its continued success.  As long ago as 1991, a Republican conservative, who just happens to be running currently for the Republican nomination for President, Newt Gingrich, characterized  Democratic opposition to a cut in the capital gains tax as evidence that liberals “hate job creators; they’re envious of job creators.  They want to punish job creators” and then he added that they “believe in class warfare.”  Sound familiar?

Even more revealing is the debate over the 1993 Clinton budget plan, which aimed to cut the deficit by raising the top income tax rate.  Republicans fought this tooth and nail, but ended up losing on a tie-breaking vote by Vice-President Al Gore in the Senate.  Of course, one of their leaders at the time, Phil Gramm, made it plain that this was very unlikely to promote investment and job creation.  In fact, he invoked pretty much the whole world as believing it could not succeed.  Hindsight lets us see that higher taxes on the “job creators” did not create an obstacle to economic growth.  In fact, what resulted was economic growth for 116 consecutive months, the deficit cut by $290 billion, and a path established toward a balanced budget.  

As the comedian, Jon Stewart, has pointed out, “Republicans are no longer allowed to say that people are rich.  You have to refer to them as ‘job creators’.”  However, it is harder and harder to figure out who the job creators among the rich truly are.  All Americans spend, save, invest money in varying ways and varying degrees.  What distinguishes the rich as job creators from everyone else?  As a group, they have more money but probably don’t create any more jobs than all the other 99% of us. 

The success of capitalism, or “free-enterprise,” is dependent on a complex system of work and exchange that depends on the “assistance and cooperation of many thousands” of people, as Adam Smith once said.  In such a society, no single group can be meaningfully singled out as the “job creators.”  It takes a society of managers, supervisors, workers, and consumers in the stores and broader marketplace, to create jobs and to keep on creating them.  The current rhetoric about “job creators” seems to elevate a group of people whose only outstanding trait is their shared tax bracket.

Finally, it has to be said that the 1% in this country - basically the millionaires and billionaires - are not necessarily employers.  They are essentially investors; they are the moneyed making money off their money.  Those who are CEOs or Executives are not necessarily in total charge of hiring whenever they feel the need to do so.  They may be the heads of corporations, but they are constrained by their investors and their boards, and moreover, by the appeal of their products or services.  Expansion is not necessarily in their hands.  So, the so-called job creators have to answer to others with money who may decide that expansion is not feasible, especially within the United States.

We also hear from Republicans (and many Democrats) that small businesses are the engine of job growth and economic growth in this country.  While there are lots of small businesses, there are not a lot of jobs in businesses with 20 or fewer employees.  Numbers suggest there are about 6 million businesses with paid employees.  Ninety percent of these are small businesses defined as having 20 or fewer employees. (Another definition of small businesses having 500 employees or less is nonsensical).  However, that 90% of firms only makes up 20% of all jobs.  So, this so-called engine of the economy can only be characterized as a very small engine!  Looked at another way, while small businesses may create a lot of jobs, they also destroy a lot of jobs.  If we only count small business successes, then we can say they do a lot of hiring.  But small businesses often fail, and that produces a lot of lost jobs and lost wages.  Finally, what is so often not taken into account is that many of these small businesses are made up of just one person, or a few persons: the barber, the dry cleaner, lawyers, doctors, the hairdresser, etc.  And, these businesses are not innovative or expansive.  They are interested in the day-to-day operation of a small enterprise, delivering a service or product to their customers.  Thus, most small businesses don’t even contemplate being the engines of economic growth or of jobs.

One very important reason why this rhetoric about the rich as “job creators” and small businesses as the engine of growth bothers me is because of something that came to my attention on television news the other night.  The story was about a young high school student who has a chance to participate in a prestigious national science competition because of her research and scientific involvement.  This young woman - Samantha - is also homeless.  She lives in a shelter with her mother, and does not have all the advantages of wealth or position.  The story brought home to me the interconnectedness of our society, and the danger of rhetoric that divides us into groups that must, or must not, have our undivided attention.

Right now, the middle class, those living below a defined poverty level (almost 50% of us), the homeless, the disabled and the aged, and many others, are being stereotyped and addressed as though they are not an essential part of the commonwealth of persons that makes up our whole nation.  They are being seen as dregs, as drains, as groups pulling us down from being a productive economy and government.  They are the groups being targeted as having too much government support, as being responsible for programs that cost too much, as being responsible for moving us toward a “welfare state”, like the socialistic countries of Europe.   Where is the understanding that we live within a contractual society that must support each other - the rich and the poor and those in-between-- because everyone must have a chance to contribute for the good and the advancement of all.  The divisive rhetoric of the radical Right is destructive of a social contract theory of government and society that has been in effect since the founding of our country.

Although someone has now come forward and offered a home to Samantha and her family, we are continuing to damage our democracy when we neglect the potential of all people, no matter to which grouping of society they may belong.   Here is a very brief list of some successful people of this country who either started out in poverty or in unusual circumstances that were far from privileged:

Oprah Winfrey who went from being a young girl clothed in potato sacks (literally) to the richest and most powerful female media mogul in the world;  worth around $2.9 billion in 2009.

J.K. Rowling went from being on the dole to starting a $15 billion industry. The author of the Harry Potter books series was estimated to be worth $843.92 million U.S. dollars as of 2008.

David Geffen is responsible for signing Crosby, Stills and Nash, Bob Dylan and Nirvana, starting Geffen Records and was a founding member of DreamWorks studio.  He grew up poor in Brooklyn, living in a one-bedroom apartment with his family and sleeping on the couch.  At 67, renowned art collector and philanthropist Geffen is worth an estimated $4.6 billion.

Starbucks Chairman and CEO Howard Schultz is the man known for transforming the Seattle coffee chain into a global empire.  Schultz grew up in the Canarsie Projects of Brooklyn where he lived in a cramped two-bedroom unit in an apartment building that housed about 150 families. He recalls how embarrassed he was when he found out that the sleep-away camp he went to as a kid one summer was "a subsidized program for underprivileged kids". 

John Paul Dejoria’s hair care company John Paul Mitchell Systems began as a $700 startup from loans.  He started his first job at the age of nine when Dejoria, his mom, and his brother would wake up at 4 a.m. everyday to fold and deliver newspapers.  When his mom could not support him anymore, he was sent to a foster home. He was homeless twice before making his fortune, working jobs from being a janitor to driving a tow truck.

The Xerox CEO,  Ursula M. Burns, grew up on New York City's Lower East Side "when it was really bad, when the gangs were there and the drug addicts were there," she told the NY Times.  Her mother ran an at-home daycare center taking care of other children and also ironed shirts for people in order to allow her daughter to afford to go to Catholic school. Burns is the first African-American woman to oversee a Fortune 500 company.

My point?  
We are not only on the wrong track with this divisive rhetoric.  By buying into this rhetoric, and by defending a government structure that fails to deliver on freedom and justice and support for all the citizens of this wonderful country, we are heading for destruction of our social contract, and thus of our democracy, our economy, our principles, and of our way of life. .  Let us pay attention to all our job creators, and to all the creators who may be lost to us if we fail to recognize the potential of people at all levels of our society.   It is long past time to expand our vision of what we can do and what we should do and what we need to do to support, involve, and nurture our citizenry.  A narrow vision of that task - centered on the 1% of the richest among us - does not bode well for our future.

Sunday, January 8, 2012

Real Reform of Washington

Congressman Richard Hanna (R-NY 24th) has again sent his constituents a colorful (and expensive) flyer that makes claims far beyond reality.  Entitled, “Reforming Washington to Work for You”,  this piece of propaganda makes the absurd claim that Mr. Hanna has been “focused on reforming government to make it more responsive and responsible.”

To back up this claim, he points to several pieces of legislation that he has either sponsored, co-sponsored, or voted to support:
--sponsored legislation that would put a “time-out” on rules and regulations
--voted to support a “balanced budget amendment”
-- voted to cut Congress’ budget by 5%
--offered an amendment that would ban Members of Congress from leasing luxury vehicles
--introduced a bipartisan “AGREE Act” which combines the best jobs ideas from Republicans and Democrats
--cosponsored the Congressional Budget Accountability Act that requires leftover dollars in congressional budgets be used for deficit reduction

Mr. Hanna desperately wants us to believe that these measures constitute reform of Washington.  They do not.  They simply nibble around the edges of what is being passed-off as reform by a regressive Republican majority in the House and a recalcitrant minority in the Senate.  Putting a time-out on regulation and rule-making, for instance, does nothing more than leave the playing field wide-open for those business entities that want to earn profits in an unfettered environment, and end up cheating consumers like you and me.  Look at what big banks are trying to do with outrageous new fees; or what Verizon wanted to do by charging you a fee to pay your bill by phone or online.  Anyone remember the Netflix debacle?

A balanced budget amendment is not reform.  It is a power-grab meant to limit the Executive’s ability to propose federal solutions to national problems and a way to put a cap on spending, especially for government programs that assist the poor and workers and the middle class.  It limits the power of the Presidency without a corresponding check on Congress.  If we need a Balanced Budget Amendment to limit the spending that the  President can propose, then we also must have a Line Item Veto Amendment to give the President some control over the penchant of Congress to pass unneeded spending within large essential appropriation bills.  It also limits the federal government from taking necessary measures to address an ugly recession or an emergency situation.  Moreover, it serves as a crutch for the Congress to lean on.  Instead of making difficult decisions like raising more revenue through a fair tax system, and cutting out all the loopholes in that system, they would get to hide from that particular responsibility. 

Real reform is what President Obama is trying to bring about with the Consumer Financial Protection Bureau (C.F.P.B.) that will regulate mortgage brokers, lenders and servicers, as well as payday lenders, credit card companies, private student loan providers, and all banks with assets over $10 billion.  This is a rulemaking and enforcement authority that has been consolidated out of 12 different federal agencies and placed in a semi-independent bureau that targets the very groups that happen to be large donor patrons for the Republican Party.  Congressional Republicans (including Rep. Hanna) tried to undercut the bureau at every opportunity.  Let me count the ways:

--trashed Elizabeth Warren in hearings when they thought she would end up being nominated as head of the agency.
--tried to replace the C.F.P.B.’s single director with a five-member bipartisan commission
--attempted to lower the number of votes required for the newly created Financial Stability Oversight Council to overturn any CFPB rule.
--proposed legislation to prevent the Bureau from functioning without a Senate-confirmed director in place; and then proceeded to hold up, oppose, and delay the approval of Obama’s appointee (until the President made a recess appointment)
--in addition, its budget is capped; it is subject to GAO oversight, and is required to report regularly to Congress -- all compromises with Republicans in order to get it passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Real reform of Washington will be accomplished when politicians like Mr. Hanna stand up for consumer protection, public financing of elections, ending of all PACs that benefit no one but special interests;  re-districting drawn by non-partisan citizen commissions in every state; restricting amounts that can be spent for primaries or general elections for all offices; setting standards for political advertisements in all media and restricting the length of time allowed for campaigning; enhancing voter registration, not curtailing it with pseudo reforms like picture IDs.

Real reform of Washington will be accomplished when representatives and senators vote to amend our constitution in a thoughtful and balanced way:  by establishing term limits for congressional and judicial office-holders; outlawing any and all gifts or contributions (broadly defined) to office-seekers or office-holders;  severely limiting the ability of office-holders, and their family and staff members, from any involvement with consulting or lobbying firms while they hold, and after they leave, office; not only calling for a balanced budget but for a line-item veto; and, ending any ability to establish earmarks and tax loopholes that benefit a limited constituency.

Finally, real reform of Congress will involve the transparency of the budget of every congressional office; reduction in the number of committees and sub-committees (they all cost money); the demolition of all political offices within the leadership of the House and Senate;  the elimination of irrelevant or special privilege offices like chaplains or in-house medical clinicians; the elimination of all special privileges not available to most ordinary citizens (like leased limousines and special drivers; and corporate jet transport by big business interests); no more exemptions or exceptions for members of the legislative branch -- all laws passed must apply equally to them as to ordinary citizens; legal restrictions on the use of insider information to feather their own nests in the stock market, land development or 3rd party aggrandizement.

Although this is just a starting point, it is a much more substantive plan than that presented by Mr. Hanna, or by most of our representatives who fear real governmental reform and the threat it augurs for their positions, their power, and their crony capitalism.  Nibbling at the edges like Mr. Hanna wants to do will not solve our issues with a dysfunctional Congress, nor will it change the way Washington functions.  Real reform must aim at the very core of our governmental processes.  I challenge Mr. Hanna, and his colleagues, to make such in-depth reform of  our federal government a top priority and the imperative for our times.