Hedge-fund manager: “We are witnessing our second tech bubble in 15 years”

David Einhorn has a three-pronged thesis as to why we’re in bubble territory — and the result won’t be pretty VIDEO

 

Hedge-fund manager: "We are witnessing our second tech bubble in 15 years"

We’re in a world where venture capital flows to companies without clear sources of revenue, Facebook buys apps for billions and Twitter is a publicly traded company. Amid this status quo, David Einhorn, president of Greenlight Capital Inc., wrote an ominous letter to investors warning of the growing tech bubble and what might “pop” it.

Einhorn, as one may remember, gained a deal of notoriety for his dealings with Allied Capital, and, of course, for short-selling Lehman Brothers and very publicly calling out its fuzzy practices. (At the 2008 Ira W. Sohn Investment Research Conference he called for federal regulators to “guide Lehman toward a recapitalization and recognition of its losses—hopefully before federal taxpayer assistance is required.”)

Now he has a different warning: an expanding tech bubble. Though he doesn’t name any specific companies, according to the Wall Street Journal, he is particularly worried about three specific issues. They are the “rejection of conventional valuation methods,” huge first day IPOs and “short-sellers forced to cover due to intolerable market-to-market losses.”

Einhorn is not the only market-watcher worried about the growing tech bubble and how it might burst. Venture capitalist George Zachary went on Bloomberg West earlier this month and warned of a bubble. In March, Canadian research firm BCA Research managing editor and chief strategist Chen Zhao wrote to his clients about bubblelike conditions.

A portion of Einhorn’s letter can be viewed below via ValleyWag:



“We have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods. After all, twice a silly price is not twice as silly; it’s still just silly. This understanding limited our enthusiasm for shorting the handful of momentum stocks that dominated the headlines last year. Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it.

In our view the current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm.

Some indications that we are pretty far along include:

  • The rejection of conventional valuation methods;
  • Short-sellers forced to cover due to intolerable mark-to-market losses; and
  • Huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital.

And once again, certain “cool kid” companies and the cheerleading analysts are pretending that compensation paid in equity isn’t an expense because it is “non-cash.” Would these companies be able to retain their highly talented workforces if they stopped doling out large amounts of equity? If you are trying to determine the creditworthiness of these ventures, it might make sense to back out non-cash expenses. But if you are an equity holder trying to value the businesses as a multiple of profits, how can you ignore the real cost of future dilution that comes from paying the employees in stock?”

The entire letter can be viewed below via Scribd:

Greenlight

h/t ValleyWag, Wall Street Journal

http://www.salon.com/2014/04/23/hedge_fund_manager_we_are_witnessing_our_second_tech_bubble_in_15_years/?source=newsletter

Sean Parker and the next generation of libertarian billionaires

Young, rich and politically ignorant:

A young billionaire adorably thinks he can solve Washington’s problems through centrism! Why our democracy’s a mess

Young, rich and politically ignorant: Sean Parker and the next generation of libertarian billionaires
Sean Parker (Credit: Reuters/Gonzalo Fuentes)

Those who own the country ought to govern it -Founder John Jay

That quote may be apocryphal, but the sentiment has been with us since the beginning of the Republic. I think we all know he wasn’t talking about that amorphous mass known as “the people,” don’t you? Much better for the real stakeholders of democracy to be in charge. You know, the people with money and property.

And it appears as though they got what they wanted. According to this blockbuster study from Martin Gilens and Benjamin Gage, the fact that the people sometimes have their policy preferences enacted is purely a matter of coincidence: It only happens if it happens to coincide with the preferences of the wealthy. If not, we’re just out of luck. The practical result of that is that while the wealthy might view certain issues along progressives lines, such as gay rights or maybe even gun control, it’s highly unlikely they will ever allow us to get too far out on the egalitarian limb. They tend to draw the line at anything that affects their own interest. And that interest is to keep most of the money and all of the power within their own control, regardless of whether they see themselves as liberals or conservatives.

Take, for instance, what Thomas Frank in this piece astutely described as liberal Mugwumpery, the “reformist” strain among aristocrats in which they take it upon themselves to reform the state and better the characters of the lower orders. Yes, they may want to clean up government corruption and coerce the “unhealthy” to change their ways, whether through temperance or prohibition, but they cannot be counted upon to fully engage on issues that infringe on their own interests. Frank quotes historian Richard Hofstadter describing the “Mugwump types” of the 19th century:



[T]he most serious abuses of the unfolding economic order of the Gilded Age he either resolutely ignored or accepted complacently as an inevitable result of the struggle for existence or the improvidence and laziness of the masses. As a rule, he was dogmatically committed to the prevailing theoretical economics of laissez faire. . . . He imagined that most of the economic ills that were remediable at all could be remedied by free trade, just as he believed that the essence of government lay in honest dealing by honest and competent men.

Frank applied that term specifically to Michael Bloomberg, who has pledged to spend $50 million to defeat the NRA, a worthy cause if there ever was one. As he points out, however, as much as this particular pledge might benefit the population at large, Bloomberg will also use his power to defeat anything that looks to directly benefit working people economically. Just as the Gilens-Gage paper suggests, as long as the billionaires’ interests align with the people, there is a chance it might get done. Where they diverge, it might as well be impossible. That is a very odd definition of democracy.

Not all of our wealthy warriors for liberal causes are as openly hostile to the economic reforms at the center of the progressive agenda as a Wall Street billionaire like Bloomberg. In fact, many of them are probably just unaware of it, as they are the scions of great wealth who are flush with the idealism of youth and simply wish to make a difference. These Baby Mugwumps have good intentions, but somehow their focus also tends to be directed at worthy causes that don’t upset the economic apple cart.

For instance, these nice young would-be philanthropists who were invited to the White House last week to share their thoughts on how to fix the problems of the world:

“Moon shots!” one administration official said, kicking off the day on an inspirational note to embrace the White House as a partner and catalyst for putting their personal idealism into practice.

The well-heeled group seemed receptive. “I think it’s fantastic,” said Patrick Gage, a 19-year-old heir to the multibillion-dollar Carlson hotel and hospitality fortune. “I’ve never seen anything like this before.” Mr. Gage, physically boyish with naturally swooping Bieber bangs, wore a conservative pinstripe suit and a white oxford shirt. His family’s Carlson company, which owns Radisson hotels, Country Inns and Suites, T.G.I. Friday’s and other brands, is an industry leader in enforcing measures to combat trafficking and involuntary prostitution.

A freshman at Georgetown University, Mr. Gage was among the presenters at a breakout session, titled “Combating Human Trafficking,” that attracted a notable group of his peers. “The person two seats away from me was a Marriott,“ he said. “And when I told her about trafficking, right away she was like, ‘Uh, yeah, I want to do that.’ ”

Of course. Who wouldn’t be against human trafficking? Or limiting the proliferation of guns, either? But I think one can see with those two examples just how limited the scope of our patrician betters’ interest in the public good really is. Whether undertaken through the prism of their own self-interest or a youthful idealism born of privilege, it represents causes, not any real challenge to the status quo.

But what should we make of the latest audacious entry into the political arena? Sean Parker, Napster inventor and Facebook billionaire, announced that he’s jumping into politics with both feet. He’s not signing on to any specific cause or even a vague political philosophy. In fact, it’s almost impossible to figure out what it’s about.

One of the nice things about being a billionaire is that even if you have no idea about what you believe or any sense of how the political system works in theory or in practice you can meet with the actual players and have them explain it to you. That’s what Parker has been doing, meeting with politicians of such disparate ideologies as Rand Paul, Bill DeBlasio and Charlie Christ. I’m sure they all told him to put them on speed dial and to call day or night if he had any questions.

His plan, if one can call it that, makes the naive young heirs to the great fortunes look like grizzled old political veterans by comparison:

Unlike other politically-inclined billionaires, such as the conservative Koch brothers and liberal environmentalist Tom Steyer, Parker hopes to avoid a purely partisan role as he ventures more deeply into politics.

Having donated almost exclusively to Democrats up to this point, Parker made a trip to Washington in December for the purpose of meeting quietly with Republican officeholders and strategists around town. He plans to donate to both sides starting this year, associates say, for the first time committing big sums to aid Republicans he views as credible deal-makers in a bitterly divided Congress.

He’s not even a Mugwump. He’s just a mess. Apparently, he thinks he can “make Washington work” by financing a group of deal makers in both parties who will knock some heads together and get the job done. What, exactly, it is they are supposed to get done remains a mystery. Indeed, from the sound of it, it doesn’t really matter.

I have an idea for Parker. There’s a group of “activists” out there who are right up his alley. He could just buy their outfit outright and rebrand it to his liking. It’s called “No-Labels” and they’ve been flogging this idea of bipartisan nothingness for a very long time. For some unknown reason it just hasn’t taken hold with the public. But if anyone can market this dog to the public, the guy who made hundreds of millions for the singular advice to take “the” out of “The Facebook” seems like just the guy to make it happen.

According to the article, a battalion of opportunistic political consultants from across the ideological spectrum are already on the payroll and are going to make a whole lot of money from this quixotic venture, however it goes, so no matter what, I suppose he’s at least trickling some of his wealth down to lower orders. In the current political environment run by radical right-wing billionaires, Mugwumps and fools, that may be the best we can hope for.

Heather Digby Parton is a writer also well-known as “Digby.” Her political and cultural observations can be found at www.digbysblog.blogspot.com.

 

http://www.salon.com/2014/04/22/young_rich_and_politically_ignorant_the_next_generation_of_libertarian_billionaires/?source=newsletter

Chicken Little and Inequality

Too Much
THIS WEEK
Folks who find themselves rich — and getting richer — typically tend to react psychologically in one of two ways. They can either see themselves as incredibly fortunate or incredibly deserving.

Those rich who come to see the luck in their lives also usually come to understand that they have no more talent — and work no more diligently —  than plenty of people who hold not much wealth at all. Those among the rich who see their wealth as a well-deserved reward, on the other hand, often come to see those without wealth as undeserving — of anything except contempt.

The latest sign of that contempt: The rush by localities to criminalize sleeping in cars. Communities where the wealthy predominate — like Palo Alto in Silicon Valley — have been particularly eager to do this criminalizing. Palo Alto last year had over 12 times more homeless people than available shelter beds.

We have housing meanness in America today. We also have housing madness. This week’s Too Much has a bizarre example of the latter. And lots more, too.

GREED AT A GLANCE
Last year’s congressional “fiscal cliff” deal raised the tax rate on ordinary income over $450,000 from 35 to 39.6 percent — and the tax on capital gains from 15 to 20 percent. On paper, taxpayers making over $2.6 million a year — America’s top 0.1 percent — should now each be paying about $232,000 more in federal taxes this year than last. In real life, many may not. The reason: Federal budget cuts have left the IRS, the Associated Press reports, with “fewer agents auditing returns than at any time since at least the 1980s.” IRS funding this year has dropped 7 percent. Last year the agency audited only 10.9 percent of taxpayers with over $1 million in income. This year’s audit rate, IRS chief John Koskinen acknowledged last week, will run lower. That will mean that “some people we should catch,” says Koskinen, “we’re not going to catch.”

Lee ScottThey pay Yahoo CEO Marissa Mayer the big bucks — $24.9 million last year — to make the big decisions. Mayer two years ago decided to hire Henrique De Castro to overhaul her stumbling company’s operations. De Castro, Mayer led everyone to believe, “had a unique set of highly valuable skills and experiences.” Fifteen months later, after still more corporate stumbling, Mayer gave Mr. Unique the heave-ho. De Castro is walking away, Yahoo has just disclosed, with $58 million in severance. Shareholders seem none too happy about that. Mayer’s answer? To calm down anger over Yahoo’s executive pay giveaways, she’s bringing on to the Yahoo board H. Lee Scott Jr., the retired Wal-Mart CEO. In his last year as Wal-Mart’s chief, Scott took home $30.2 million, over 1,500 times average Wal-Mart worker pay . . .

For generations, the Guardian reported earlier this month, “fine dining” has meant “haughty waiters, hushed rooms, starched table linen, and endless interruptions to pour wine and water.” But celebrity chefs these days are going casual. At the UK’s uber trendy House of Tides, for instance, Michelin-starred chef Kenny Atkinson has “dispensed” with “hovering waiters” — and has diners pouring their own wine.  And no fancy-pants dress code either. Atkinson doesn’t mind if people come dressed in jeans: “Their money is as good as anybody else’s.” Any diners in jeans will need, of course, to bring plenty of the money Atkinson so prizes. His tasting menu starts at $92.

Quote of the Week

“Even in this era of extreme partisanship, broad bipartisan agreement supports an agenda that helps the wealthy — including austerity budgets, free trade, big bank bailouts, and policing the world. Big Oil, Big Pharma, Big Agra, the health insurance industry, and Wall Street deploy legions of lobbyists to make it clear that messing with them costs dearly.”
Robert Borosage, Populism? Where are the pitchforks? April 16, 2014

PETULANT PLUTOCRAT OF THE WEEK
Howard LutnickRecreation? Howard Lutnick, the CEO at high-finance power Cantor Fitzgerald, can’t get enough of it. The 40-acre Hamptons estate he bought back in 2003 — at a cost of $56 million — came with a swimming pool, spa, and tennis court. Lutnick moved quickly to add a basketball court and a barn big enough to house an equestrian team. But three different zoning and planning boards refused to grant the permits for Lutnick’s additions. The chief exec then sued the boards — and all their individual members — for $56 million in damages. Wall Streeters who frolic in the Hamptons every summer, one of those sued noted last week, “don’t like to be told what you can or can’t do.” Lutnick’s lawsuits, he added, amount to an attempt at “’intimidation plain and simple.”

IMAGES OF INEQUALITY
Huguette Clark mansion

Get the dust mops ready. This French-style chateau in Connecticut’s New Canaan has gone empty the last 60-odd years. But fashion designer Reed Krakoff has just picked up the 52-acre estate for a relative song, a mere $14 million. The manse went on the market after the 2011 death of the long-time owner, Hugette Clark, the 104-year-old copper heiress. Clark had bought the manse in 1951 as a refuge in case the Russkies ever threatened to drop an atom bomb on her Manhattan isle home. She never moved in. She never even furnished the place.

Web Gem

Populist Majority/ This Campaign for America’s Future site tracks poll data to show that Americans remember when we shared our prosperity and want that America back.

PROGRESS AND PROMISE
PayWatch siteWith vivid graphics and first-person worker testimonials, the 2014 edition of the AFL-CIO’s online PayWatch is putting some needed new pressure on executive pay excess. CEOs at companies listed in the S&P 500, the labor site calculates, took home 331 times the pay of average American workers last year — and 774 times the take-home of minimum-wage workers. The backdrop for this gap: Corporate profits in 2013 — for the nation’s top 500 corporations — averaged $41,249 per employee, a 38 percent jump over the profit level in 2008. If the minimum wage had kept up with top 1 percent income gains since 1968, adds the new PayWatch, minimum-wage workers would now be making $31.45 per hour.

Take Action
on Inequality

At the new PayWatch site, Americans working at major firms can compare their pay to their CEO’s compensation — and CEO pay in their state. Spread the word and help build the charge for a smaller corporate pay gap.

inequality by the numbers
real wages since peak years

Stat of the Week

Oracle CEO Larry Ellison leads the latest New York Times list of America’s most highly paid CEOs. Ellison makes more per second, notes analyst Deborah Meier, then the current federal hourly minimum wage.

IN FOCUS

Why Our Sky Sometimes Does Start Falling

You don’t have to be a rocket scientist to be able to demonstrate the link between inequality and catastrophic environmental change. But a little help from rocket scientists can certainly help.

The sky, we all learn as children, is not falling — and never falls. Only silly Chicken Littles prattle about “precipitous collapses.”

Only silly Chicken Littles, apparently, and applied mathematicians.

One of those mathematicians, the University of Maryland’s Safa Motesharrei, has joined with two colleagues to publish a new paper that sees the “precipitous collapse” of our global order as a distinct possibility.

In fact, the three conclude, that possibility will become a hard-to-avoid probability unless the world becomes a far less unequal place.

Motesharrei and his fellow researchers — University of Maryland meteorologist Eugenia Kalnay, a former Goddard Space Flight Center exec, and University of Minnesota political scientist Jorge Rivas — reached that conclusion after running “a range of hypothetical scenarios” through an innovative model developed with funding support from NASA, America’s space agency.

Scientists at NASA usually spend their time looking up at the heavens. The investigators behind this new study kept their focus distinctly earth-bound.

Sophisticated human civilizations, the three investigators point out, have in the past collapsed and on a fairly regular basis. The Romans broke down, as did the Han in China and the Gupta in India, the Maya in Central America, and a variety of Mesopotamian civilizations.

These collapses, Motesharrei and his collaborators note, naturally raise the question whether we today remain “similarly susceptible.” Or can our modern civilization, with all our “greater technological capacity, scientific knowledge, and energy resources,” survive whatever did in our sophisticated predecessors?

And what did do in these predecessors? In previous collapses, we see some similar patterns. The doomed societies overextended themselves environmentally. They depleted their natural resources at an unsustainable pace — and failed to see, despite their sophistication, the warning signs of their impending implosion. They soldiered on, oblivious to the danger.

Or rather, to be more precise, the elite movers and shakers of these societies soldiered on. In deeply unequal societies, elites seldom feel the strain and pain that environmental degradation engenders — until that degradation has gone too far to reverse.

This “buffer of wealth,” as the Motesharrei team puts it, “allows elites to continue ‘business as usual.’”

Could we go down the same clueless path? The Motesharrei study explores that question with “the first model of its kind that studies the impacts of inequality on the fate of societies.” Under conditions “closely reflecting the reality of the world today,” the study finds an eventual collapse “difficult to avoid.”

Difficult but not impossible. We can avoid collapse, the Motesharrei paper notes, if we reduce the “per capita rate of depletion of nature” to a “sustainable level” and start distributing resources in a more “reasonably equitable fashion.”

For specifics on what that would actually mean in practice, we need to look elsewhere. The new Motesharrei paper soars at a theoretical level and offers no practical roadmap to a more sustainable and equal society.

Other analysts have made that effort, no one more so than Herman Daly, the former World Bank senior economist now widely considered the founding father of ecological economics.

Daly and his colleagues have been calling for a “steady-state economy” that acknowledges the limits of our physical world. We can’t go on, they contend, endlessly depleting our stocks of natural resources and polluting the world with the wastes from our resource exploitation.

“We need,” says Daly, “to build the physical constraints of a finite biophysical environment into our economic theory.”

And into that theory, he adds, we need to build justice, too. This past fall, Daly spelled out ten specific steps that could help us push back against our current unsteady state. Among them: “Limit the range of inequality in income distribution with a minimum income and a maximum income.”

“Rich and poor separated by a factor of 500,” Daly observes, “have few experiences or interests in common.”

Maybe not even, the new Motesharrei study suggests, avoiding a cataclysmic environmental collapse.

New Wisdom
on Wealth

Matt Taibbi, The Super Rich in America Have Become ‘Untouchables’ Who Don’t Go to Prison, Democracy Now! April 15, 2014. Our income gap reflects a “justice” gap.

Susan Holmberg, The Pay’s the Thing: How America’s CEOs Are Getting Rich Off Taxpayers, Next New Deal, April 16, 2014. The price we pay for tolerating the performance pay loophole.

Robert Reich, Antitrust in the New Gilded Age, April 16, 2014. America is facing the same concentrations of wealth and economic power that endangered democracy a century ago.

Howard Steven Friedman, American Inequality: Ticking Time Bomb, Huffington Post, April 17, 2014. Plutarch had it right: An “imbalance between rich and poor” remains our most “fatal ailment.”

Floyd Norris, Merely Rich and Superrich: The Tax Gap Is Narrowing, New York Times, April 17, 2014. A step toward a tax policy less hostile to work.

Will Hutton, Extravagant CEO pay doesn’t reflect performance, it’s all about status, Observer, April 19, 2014. We now live in an era of “conspicuous executive pay,” only understandable as a social phenomenon because its excess has ceased to have any economic logic.

Zoë Carpenter, Will Phony Populists Hijack the Fight Against Inequality? Nation, April 21, 2014. Plenty of top Dems are still arguing that wealth’s concentration doesn’t really matter.

The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class cover

Barbara Ehrenreich, Gar Alperovitz, and Jim Hightower would like you to read this book. Read this excerpt online and check out more details.

NEW AND notable

Do Americans Still Live in a Real Democracy?

Martin Gilens and Benjamin Page, Testing Theories of American Politics: Elites, Interest Groups, and Average CitizensPerspectives on Politics, forthcoming Fall 2014.

America’s political scientists have been arguing for generations over who really runs the United States. Do Americans have a democracy where the people rule? Or something else? Do American citizens, as political scientists Martin Gilens and Benjamin Page ask in this blockbuster new paper just published online, rate as “sovereign, semi-sovereign, or largely powerless”?

Gilens and Page, distinguished professors from Princeton and Northwestern, give a surprisingly chilling response to that question, based on their analysis of “a unique data set” that culled responses to 1,779 policy questions pollsters asked between 1981 and 2002.

The researchers crunched this set of response data by income level and then probed to see whose policy preferences actually prevailed.

“Economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy,” they conclude, “while mass-based interest groups and average citizens have little or no independent influence.”

One analyst is already calling this new Gilens-Page paper “the first-ever scientific study” of the question whether the United States can rightfully claim to be a democracy. Gilens and Page, for their part, pull no academic punches.

“Our analyses suggest that majorities of the American public,” the pair write, “actually have little influence over the policies our government adopts.”

The nation, the scholars note, does sport “many features central to democratic governance,” everything from elections to freedom of speech and association.

“But we believe that if policy making is dominated by powerful business organizations and a small number of affluent Americans,” they go on to add, “then America’s claims to being a democratic society are seriously threatened.”

America’s hungry 21st Century

21 April 2014

Feeding America, the US national network of food banks, released its annual report on local food insecurity Thursday, showing that one in six Americans, including one in five children, did not have enough to eat at some point in 2012.

The report found that there are dozens of counties where more than a third of children do not get enough to eat. The incidence of hunger has grown dramatically. The percentage of households that are “food insecure” rose from 11.1 percent in 2007 to 16.0 percent in 2012.

Food insecurity is more widespread in the United States than in any other major developed country. According to separate data from the Organization for Economic Cooperation and Development (OECD), the rate of food insecurity in the US is nearly twice that of the European Union.

The growth of food insecurity has paralleled the growth of extreme poverty. The number of American households that live on less than $2 a day per person more than doubled between 1996 and 2011, from 636,000 to 1.46 million. There are now nearly 3 million children who live in households that earn less than $2 per day.  Fresh milk and dairy products are a luxury, as are fruit and vegetables. With an average food stamp allotment of $1.40 per person, per meal, it is not possible to buy the types of food required to maintain “an active, healthy lifestyle.”

Widespread hunger exists alongside the most shameless displays of wealth. Just last week, Copper Beech Farm, a palatial 50-acre estate just outside New York City, sold for $120 million, setting a new record for the most expensive home sale in history. The ultra-luxury car market is also booming. Luxury carmaker Bentley, which recently introduced a revamped quarter-million-dollar, twelve-cylinder coupe, said sales were up by 17 percent last year.

Christie’s, the art auction house, sold $7.1 billion worth of art last year, a 16 percent increase from the year before and the highest on record. This included the $142 million sale of Francis Bacon’s “Three Studies of Lucian Freud,” the most expensive art sale on record, to casino mogul Stephen A. Wynn.

According to Feeding America, food-insecure people reported needing an average of $2.26 per person, per day to have enough food. On that basis, ensuring that all 16 million hungry children in the US had enough to eat would cost just $13 billion a year. There are 80 billionaires in the United States whose wealth, as individuals, exceeds this amount.

In an earlier period of American history, these levels of poverty and hunger amidst opulence were seen as a national disgrace. Michael Harrington’s 1962 exposure of poverty in Appalachia and elsewhere, The Other America, moved sections of the political establishment of the day to support such reforms as Medicare, Medicaid and Food Stamps. There is no significant tendency in the political or media establishment today that identifies itself as “liberal” and supports genuine social reform.

The prevalence of hunger is “higher than at any time since the Great Depression,” Feeding America told the WSWS in an interview earlier this week. Yet the spread of hunger is barely noted by politicians of either party or by the media.

The responsibility for this social disaster lies with the capitalist system and its political defenders. Administrations, both Democratic and Republican, have starved antipoverty programs of funds for decades. The Obama administration and Congress have overseen two successive food stamp cuts over the past six months: first in November, when benefits were slashed across the board by $36 per month for a family of four, and again in January of this year, when benefits were cut by an average of $90 per month for nearly a million households.

In between these two cuts, the White House and Congress allowed federal extended jobless benefits to lapse for some three million people, together with their two million dependent children. These cruel and inhuman actions come from an administration that has transferred trillions of dollars to Wall Street while refusing to prosecute the financial criminals responsible for the 2008 crash.

Obama’s signature social initiative, Obamacare, is already being exposed as a scheme to reduce the quantity and quality of health care available to ordinary working people while increasing their out-of-pocket costs. Government spending on health care will be slashed, Medicare gutted, and corporate outlays reduced, boosting the profits of the insurance monopolies, hospital chains and pharmaceutical companies.

Then there is the corporate-controlled media, which treats the roaring stock market and lavish displays of wealth by the rich with either open or thinly veiled enthusiasm, while barely acknowledging the existence of poverty. Major networks spend just 0.2 percent of their airtime covering issues relating to poverty, according to data from the Pew Research Center’s Project for Excellence in Journalism.

As for the auxiliary organizations of the corporations and the government, the trade unions, they too have facilitated the attack on working people. As the ruling class has carried out an unprecedented redistribution of wealth from the bottom to the top, the unions have focused their efforts on suppressing working-class opposition and preventing a political break with the Democratic Party.

What is emerging is the true, brutal face of capitalism, a system that piles up vast wealth at one pole of society and ever-greater poverty and wretchedness at the other.

This is true not only in the United States, but internationally. To satisfy the dictates of the banks, brutal austerity measures are being imposed around the world. The 85 richest individuals in the world now possess more wealth than the bottom half of the global population—some 3.5 billion people.

The means exist to provide all people with the necessities for a comfortable and fulfilling life—healthy food, decent housing, health care, education, access to culture and recreation. But the capitalist system, and the ruling class that sits atop it, make any rational control of production and distribution impossible. This system must be done away with and replaced with socialism—the rational planning of society under the democratic control of the working class to meet social needs, not the drive of a financial aristocracy for personal wealth and corporate profit.

Andre Damon

The Rise of the Digital Proletariat

In open systems, discrimination and barriers can become invisibilized,’ says author and activist Astra Taylor. (Deborah DeGraffenreid.)

Astra Taylor reminds us that the Internet cannot magically produce revolution.

BY Sarah Jaffe

It really challenges the notion that we’re all on these social media platforms purely by choice, because there’s a real obligatory dimension to so much of this.

The conversation about the impact of technology tends to be binary: Either it will save us, or it will destroy us. The Internet is an opportunity for revolution; our old society is being “disrupted”; tech-savvy college dropouts are rendering the staid elite obsolete. Or else our jobs are being lost to automation and computers; drones wipe out families on their wedding day; newly minted millionaires flush with tech dollars are gentrifying San Francisco at lightning speed.

Neither story is completely true, of course. In her new book, The People’s Platform: Taking Back Power and Culture in the Digital Age, out now from Metropolitan Books, Astra Taylor takes on both the techno-utopians and the techno-skeptics, reminding us that the Internet was created by the society we live in and thus is more likely to reflect its problems than transcend them. She delves into questions of labor, culture and, especially, money, reminding us who profits from our supposedly free products. She builds a strong case that in order to understand the problems and potentials of technology, we have to look critically at the market-based society that produced it.

Old power dynamics don’t just fade away, she points out—they have to be destroyed. That will require political action, struggle, and a vision of how we want the Internet (and the rest of our society) to be. I spoke with Taylor about culture, creativity, the possibility of nationalizing Facebook and more.

Many people know you as a filmmaker or as an activist with Occupy and Strike Debt. How do you see this book fitting in with the other work you’ve done?

Initially I saw it as a real departure, and now that it’s done, I recognize the continuity. I felt that the voices of culture makers were left out of the debate about the consequences of Internet technology. There are lots of grandiose statements being made about social change and organizing and about how social media tools are going to make it even easier for us to aggregate and transform the world. I felt there was a role I could play rooted in my experiences of being a culture maker and an activist. It was important for somebody grounded in those areas to make a sustained effort to be part of the conversation. I was really troubled that people on all sides of the political spectrum were using Silicon Valley rhetoric to describe our new media landscape. Using terms like “open” and “transparent” and saying things were “democratizing” without really analyzing those terms. A big part of the book was just trying to think through the language we’re using and to look at the ideology underpinning the terminology that’s now so commonplace.

You make the point in the book that the Internet and the offline world aren’t two separate worlds. Can you talk about that a bit more?

It’s amazing that these arguments even need to be made. That you need to point out that these technologies cannot just magically overcome the structures and material conditions that shape regular life.

It harkens back to previous waves of technological optimism. People have always invested a lot of hope in their tools. I talk about the way that we often imbue our machines with the power to liberate us. There was lots of hope that machines would be doing all of our labor and that we would have, as a society, much more free time, and that we would have this economy of abundance because machines would be so dramatically improved over time. The reasons that those predictions never came to pass is because machines are embedded in a social context and the rewards are siphoned off by the elite.

The rise of the Internet really fits that pattern. We can see that there is this massive shifting of wealth [to corporations]. These gigantic digital companies are emerging that can track and profit from not just our online interactions, but increasingly things that we’re doing away from the keyboard. As we move towards the “Internet-of-things,” more and more of the devices around us are going to have IP addresses and be leaking data. These are avenues for these companies that are garnering enormous power to increase their wealth.

The rhetoric a few years ago was that these companies are going to vanquish the old media dinosaurs. If you read the tech books from a few years ago, it’s just like “Disney and these companies are so horrible. Google is going to overthrow them and create a participatory culture.” But Google is going to be way more invasive than Mickey Mouse ever was.

Google’s buying drone companies.

Google’s in your car, Google’s in your thermostat, it’s in your email box. But then there’s the psychological element. There was this hope that you could be anyone you wanted to be online. That you could pick an avatar and be totally liberated from your offline self. That was a real animating fantasy. That, too, was really misleading. Minority groups and women are often forced back into their real bodies, so to speak. They’re not given equal access to the supposedly open space of the Internet.

This is one of the conversations that I think your book is incredibly relevant to right now. Even supposedly progressive spaces are still dominated by white people, mostly men, and there’s a real pushback against women and people of color who are using social media.

It’s been amazing how much outrage can get heaped on one person who’s making critical observations about an institution with such disproportionate power and reach.

The new media elites end up looking a whole lot like the old ones. The other conversations about race and gender and the Internet recently has been about these new media websites that are launched with a lot of fanfare, that have been funded in many cases by Silicon Valley venture capital, that are selling themselves as new and rebellious and exciting and a challenge to the old media—the faces of them are still white men.

The economic rewards flow through the usual suspects. Larry Lessig has done a lot of interesting work around copyright. But he wrote basically that we need to cheer on the Facebooks of the world because they’re new and not the old media dinosaurs. He has this line about “Stanford is vanquishing Harvard.” We need something so much more profound than that.

This is why I really take on the concept of “openness.” Because open is not equal. In open systems, discrimination and barriers can become invisibilized. It’s harder to get your mind around how inequitable things actually are. I myself follow a diverse group of people and feel like Twitter is full of people of color or radicals. But that’s because I’m getting a very distorted view of the overall picture.

I think it’s helpful to look at the handful of examples of these supposedly open systems in action. Like Wikipedia, which everyone can contribute to. Nonetheless, only like 15 percent of the editors are women. Even the organizations that are held up as exemplars of digital democracy, there’s still such structural inequality. By the time you get to the level of these new media ventures that you’re talking about, it’s completely predictable.

We really need to think through these issues on a social level. I tried to steer the debate away from our addiction to our devices or to crappy content on the Internet, and really take a structural view. It’s challenging because ultimately it comes down to money and power and who has it and how do you wrest it away and how do you funnel some of it to build structures that will support other types of voices. That’s far more difficult than waiting around for some new technology to come around and do it for you.

You write about this tension between professional work from the amateurs who are working for free and the way the idea of doing work for the love of it has crept in everywhere. Except people are working longer hours than ever and they’re making less money than ever, and who has time to come home at the end of your two minimum wage jobs and make art?

It would be nice to come out and say follow your heart, do everything for the love of it, and things’ll work out. Artists are told not to think about money. They’re actively encouraged to deny the economic sphere. What that does though is it obscures the way privilege operates—the way that having a trust fund can sure be handy if you want to be a full time sculptor or digital video maker.

I think it’s important that we tackle these issues. That’s where I look at these beautiful predictions about the way these labor-saving devices would free us all and the idea that the fruits of technological advancement would be evenly shared. It’s really interesting how today’s leading tech pundits don’t pretend that [the sharing is] going to be even at all. Our social imagination is so diminished.

There’s something really off about celebrating amateurism in an economy where people are un- and under-employed, and where young people are graduating with an average of $30,000 of student debt. It doesn’t acknowledge the way that this figure of the artist—[as] the person who loves their work so much that they’ll do it for nothing—is increasingly central to this precarious labor force.

I quote this example of people at an Apple store asking for a raise and the response was “When you’re working for Apple, money shouldn’t be a consideration.” You’re supposed to just love your work so much you’ll exploit yourself. That’s what interning is. That’s what writing for free is when you’re hoping to get a foot in the door as a journalist. There are major social implications if that’s the road we go down. It exacerbates inequality, because who can afford to do this kind of work?

Of course, unpaid internships are really prevalent in creative fields.

Ultimately, it’s a corporate subsidy. People are sometimes not just working for free but then also going into debt for college credit to do it. In a way, all of the unpaid labor online is also a corporate subsidy. I agree that calling our participation online “labor” is problematic because it’s not clear exactly how we’re being exploited, but the point is the value being extracted. We need to talk about that value extraction and the way that people’s free participation feeds into it.

Of course we enjoy so much of what we do online. People enjoy creating art and culture and doing journalism too. The idea that work should only be well-compensated and secure if it makes you miserable ultimately leads to a world where the people who feel like they should make a lot of money are the guys on Wall Street working 80 hours a week. It’s a bleak, bleak view.

In many ways the problem with social media is it does break down this barrier between home and work. You point this out in the book–it’s everywhere, you can’t avoid it, especially if you are an independent creative person where you have to constantly promote your own work, or it is part of your job. There’s now the Wages for Facebook conversation—people are starting to talk about the way we are creating value for these companies.

It really challenges the notion that we’re all on these social media platforms purely by choice, because there’s a real obligatory dimension to so much of this. Look also at the way we talk to young people. “Do you want a college recruiter to see that on your Facebook profile?” What we’re really demanding is that they create a Facebook profile that appeals to college recruiters, that they manage a self that will help them get ahead.

I was at a recent talk about automation and the “end of jobs,” and one researcher said that the jobs that would be hardest to automate away would be ones that required creativity or social intelligence—skills that have been incredibly devalued in today’s economy, only in part because of technology.

Those skills are being pushed out of the economy because they’re supposed to be things you just choose to do because they’re pleasurable. There is a paradox there. Certain types of jobs will be automated away, that can be not just deskilled but done better by machines, and meanwhile all the creative jobs that can’t be automated away are actually considered almost superfluous to the economy.

The thing about the jobs conversation is that it’s a political question and a policy question as well as a technological question. There can be lots of different types of jobs in the world if we invest in them. This question of what kind of jobs we’re going to have in the future. So much of it is actually comes down to these social decisions that we’re making. The technological aspect has always been overhyped.

You do bring up ideas like a basic income and shorter working hours as ways to allow people to have time and money for culture creation.

The question is, how do you get there? You’d have to have a political movement, you’d have to challenge power. They’re not just going to throw the poor people who’ve had their jobs automated away a bone and suddenly provide a basic income. People would really have to organize and fight for it. It’s that fight, that element of antagonism and struggle that isn’t faced when we just think tools are evolving rapidly and we’ll catch up with them.

The more romantic predictions about rising prosperity and the inevitable increase in free time were made against the backdrop of the post-war consensus of the 1940s, ‘50s and ‘60s. There was a social safety net, there were structures in place that redistributed wealth, and so people made predictions colored by that social fabric, that if there were advancements in our tools that they would be shared by people. It just shows the way that the political reality shapes what we can collectively imagine.

Finally, you make the case for state-subsidized media as well as regulations—for ensuring that people have the ability to make culture as well as consume it. You note that major web companies like Google and Facebook operate like public utilities, and that nationalizing them would be a really hard sell, and yet if these things are being founded with government subsidies and our work, they are in a sense already ours.

The invisible subsidy is the thing that we really have to keep in mind. People say, “Where’s the money going to come from?” We’re already spending it. So much innovation is the consequence of state investment. Touchscreens, the microchip, the Internet itself, GPS, all of these things would not exist if the government had not invested in them, and the good thing about state investment is it takes a much longer view than short-term private-market investment. It can have tremendous, socially valuable breakthroughs. But all the credit for these innovations and the financial rewards is going to private companies, not back to us, the people, whose tax dollars actually paid for them.

You raise a moral question: If we’re paying for these things already, then shouldn’t they in some sense be ours? I think the answer is yes. There are some leverage points in the sense that these companies like to talk about themselves as though they actually are public utilities. There’s this public-spiritedness in their rhetoric but it doesn’t go deep enough—it doesn’t go into the way they’re actually run. That’s the gap we need to bridge. Despite Silicon Valley’s hostility to the government and the state, and the idea that the Internet is sort of this magic place where regulation should not touch, the government’s already there. We just need it to be benefiting people, not private corporations.

Sarah Jaffe is a staff writer at In These Times and the co-host of Dissent magazine’s Belabored podcast. Her writings on labor, social movements, gender, media, and student debt have been published in The Atlantic, The Nation, The American Prospect, AlterNet, and many other publications, and she is a regular commentator for radio and television. You can follow her on Twitter @sarahljaffe.

More lies from Obama on Obamacare

http://cdn.breitbart.com/mediaserver/Breitbart/Big-Government/2012/Obamacare/obama-health-insurance.jpg

19 April 2014

At a press conference on Thursday, President Barack Obama extolled the virtues of the Affordable Care Act (ACA). As a sign of the health care law’s great “success,” he pointed to the government’s estimate that 8 million people had signed up through HealthCare.gov and the other insurance exchanges set up under the bill by the March 31 deadline.

“All told,” he stated, “independent experts now estimate that millions of Americans who were uninsured have gained coverage this year—with millions more to come next year and the year after.” The rosy picture of Obamacare painted by the president is an insult to the intelligence of the American people and ignores the most basic facts about the present state of the health care overhaul.

First of all, those signing up have not done so voluntarily. The key component of the ACA, the “individual mandate,” requires that those without insurance from their employer or a government program such as Medicare or Medicaid obtain insurance or pay a tax penalty. Essentially, the uninsured are being blackmailed into purchasing coverage from private insurance companies.

Secondly, the claim that being insured through plans purchased on the exchanges constitutes anything approaching quality, affordable coverage for the vast majority of people is a fraud. Those shopping for policies have discovered that most of the least expensive “bronze” plans carry deductibles in excess of $5,000 for an individual and other high out-of-pocket costs, which must be paid before coverage even kicks in.

While acknowledging that “premiums will keep rising, as they have for decades,” Obama said they were projected to be “15 percent lower than originally predicted,” and that this would somehow miraculously translate into “more money that families can spend at businesses, more money that businesses can spend hiring new workers.”

As Obama is well aware, US businesses are currently sitting on a cash hoard estimated at $1.5 trillion, even as they shed jobs and boost productivity, while corporate profits and CEO pay soar. Obamacare will not reverse this trend, nor is it intended to.

On the contrary, it has been designed to enable the insurance monopolies, pharmaceutical firms and health care giants to slash costs and make even more money.

The biggest lie from Obama is that the program is a genuine reform on a par with Medicare, and that it will improve health care for millions of Americans. From the start, the health care overhaul has been aimed at establishing an even more heavily class-based system of health care delivery than that which already exists, in which spending is slashed for the government and employers and medical care is rationed for workers and their families.

A front-page article in Friday’s New York Times, “Cost of Treatment May Influence Doctors,” points to how this brutal reality is playing out under Obamacare. The article begins: “Saying they can no longer ignore the rising prices of health care, some of the most influential medical groups in the nation are recommending that doctors weigh the costs, not just the effectiveness of treatments, as they make decisions about patient care.

“The shift … suggests that doctors are starting to redefine their roles, from being concerned exclusively about individual patients to exerting influence on how health care dollars are spent.”

The article details how medical groups—including the American Society of Clinical Oncology, the American College of Cardiology, the American Heart Association and others—are developing guidelines that could influence doctors to rate the value of drugs and treatments based on costs. The Times explains that traditionally these guidelines have “heavily influenced the practice of medicine” and “are also used by insurance companies to help determine reimbursement policies.”

The implications are far-reaching and ominous. Such guidelines could serve as the basis for a doctor choosing one drug over another, or deciding that a particular treatment is too expensive and withholding it. Cardiology societies, for example, are considering rating the value of treatments on the “cost per quality-adjusted life-year, or QALY,” a method currently in use in Britain and by some health economists. QALY is based on the number and quality of the years of life that would be added by a proposed medical intervention.

The Times notes as an aside, “In the extreme, some critics have said that making treatment decisions based on cost is a form of rationing.” But this is precisely the point. And it is clear that the elderly would be the main target of such rationing. Why spend money on a drug or treatment that would prolong life for only a few weeks, months or even years when an elderly person is chronically ill, approaching the end of life, and no longer producing profits for a capitalist?

As the WSWS noted previously, such arguments have a distinctly fascistic odor: “What are the ‘potential social benefits’ of the mentally impaired, or the physically disabled? Wouldn’t society be better served if their lives were cut short as well?”

It is no exaggeration to say that rationing of health care based on cost will result not only in the withholding of treatments and medications to the detriment of the health of millions of people, but also in needless deaths. Of course, the wealthy will have access to the best medical care that money can buy, as these rationing rules do not apply to them.

According to the Times, the soaring cost of drugs and treatments is behind the drive toward rationing. The society of oncologists, for example, is “alarmed by the escalating prices of cancer medicines” and is developing a method of evaluating drugs based on cost and value. The article also notes the $84,000 per course cost of Sovaldi, a new drug for hepatitis C from Gilead Sciences. It is never mentioned that such obscene prices are overwhelmingly the result of price gouging by pharmaceutical companies profiting off of the desperation of people battling life-threatening diseases.

The article notes that the cardiology societies, in a paper outlining new policies rating the cost and value of treatments, argue that doctors have to consider the financial burdens faced by patients: “Protecting patients from financial ruin is fundamental to the precept of ‘do not harm.’” This is remarkable! According to this reasoning, doctors will be doing patients a favor by withholding potentially life-saving treatments.

If patients need protection from anything, it is the for-profit health care system, in which the value of a procedure or medicine is judged not by its value for the patient, but by its impact on the bottom line of the giant health care chains, pharmaceutical corporations and insurance companies.

It is clear that rationing in health care, including moves by influential medical groups to establish new guidelines rating medical treatments according to cost, has accelerated under Obamacare. This highlights the reactionary character of Obama’s signature domestic policy. It is not a reform, but a counterrevolution in health care aimed not only at slashing and rationing health care for ordinary Americans, but at reducing life expectancy for the working class.

A true reform of America’s health care system would look nothing like the Affordable Care Act. The defense of health care as a social right requires that the entire health care industry be placed on socialist foundations, under public ownership and the democratic control of the working class.

Kate Randall

Thom Hartmann: How America Killed Its Middle Class


We’re heading into a world that looks like a Charles Dickens novel.

There’s nothing “normal” about having a middle class. Having a middle class is a choice that a society has to make, and it’s a choice we need to make again in this generation, if we want to stop the destruction of the remnants of the last generation’s middle class.

Despite what you might read in the Wall Street Journal or see on Fox News, capitalism is not an economic system that produces a middle class. In fact, if left to its own devices, capitalism tends towards vast levels of inequality and monopoly. The natural and most stable state of capitalism actually looks a lot like the Victorian England depicted in Charles Dickens’ novels.

At the top there is a very small class of superrich. Below them, there is a slightly larger, but still very small, “middle” class of professionals and mercantilists – doctor, lawyers, shop-owners – who help keep things running for the superrich and supply the working poor with their needs. And at the very bottom there is the great mass of people – typically over 90 percent of the population – who make up the working poor. They have no wealth – in fact they’re typically in debt most of their lives – and can barely survive on what little money they make.

So, for average working people, there is no such thing as a middle class in “normal” capitalism. Wealth accumulates at the very top among the elites, not among everyday working people. Inequality is the default option.

You can see this trend today in America. When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today’s dollars, about $50 an hour with benefits. Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical “raw capitalism,” what we call “Reaganomics,” or “supply side economics,” our nation’s largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed – this huge change was done in less than 35 years.

The only ways a working-class “middle class” can come about in a capitalist society are by massive social upheaval – a middle class emerged after the Black Plague in Europe in the 14th century – or by heavily taxing the rich.

French economist Thomas Piketty has talked about this at great length in his groundbreaking new book, Capital in the Twenty-First Century. He argues that the middle class that came about in Western Europe and the United States during the mid-twentieth was the direct result of a peculiar set of historical events.

According to Piketty, the post-World War II middle class was created by two major things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war. This brought wealth and income at the top down, and raised working people up into a middle class.

Piketty is right, especially about the importance of high marginal tax rates and inheritance taxes being necessary for the creation of a middle class that includes working-class people. Progressive taxation, when done correctly, pushes wages down to working people and reduces the incentives for the very rich to pillage their companies or rip off their workers. After all, why take another billion when 91 percent of it just going to be paid in taxes?

This is the main reason why, when GM was our largest employer and our working class were also in the middle class, CEOs only took home 30 times what working people did. The top tax rate for all the time America’s middle class was created was between 74 and 91 percent. Until, of course, Reagan dropped it to 28 percent and working people moved from the middle class to becoming the working poor.

Other policies, like protective tariffs and strong labor laws also help build a middle class, but progressive taxation is the most important because it is the most direct way to transfer money from the rich to the working poor, and to create a disincentive to theft or monopoly by those at the top.

History shows how important high taxes on the rich are for creating a strong middle class.

If you compare a chart showing the historical top income tax rate over the course of the twentieth century with a chart of income inequality in the United States over roughly the same time period, you’ll see that the period with the highest taxes on the rich – the period between the Roosevelt and Reagan administrations – was also the period with the lowest levels of economic inequality.

You’ll also notice that since marginal tax rates started to plummet during the Reagan years, income inequality has skyrocketed.

Even more striking, during those same 33 years since Reagan took office and started cutting taxes on the rich, income levels for the top 1 percent have ballooned while income levels for everyone else have stayed pretty much flat.

Coincidence? I think not.

Creating a middle class is always a choice, and by embracing Reaganomics and cutting taxes on the rich, we decided back in 1980 not to have a middle class within a generation or two. George H.W. Bush saw this, and correctly called it “Voodoo Economics.” And we’re still in the era of Reaganomics – as President Obama recently pointed out, Reagan was a successful revolutionary.

This, of course, is exactly what conservatives always push for. When wealth is spread more equally among all parts of society, people start to expect more from society and start demanding more rights. That leads to social instability, which is feared and hated by conservatives, even though revolutionaries and liberals like Thomas Jefferson welcome it.

And, as Kirk and Buckley predicted back in the 1950s, this is exactly what happened in the 1960s and ’70s when taxes on the rich were at their highest. The Civil Rights movement, the women’s movement, the consumer movement, the anti-war movement, and the environmental movement – social movements that grew out of the wealth and rising expectations of the post-World War II era’s middle class – these all terrified conservatives. Which is why ever since they took power in 1980, they’ve made gutting working people out of the middle class their number one goal.

We now have a choice in this country. We can either continue going down the road to oligarchy, the road we’ve been on since the Reagan years, or we can choose to go on the road to a more pluralistic society with working class people able to make it into the middle class. We can’t have both.

And if we want to go down the road to letting working people back into the middle class, it all starts with taxing the rich.

The time is long past due for us to roll back the Reagan tax cuts.

The face of food stamp cuts: Part one

“The system is set up for those in poverty to stay in poverty”

Jennifer – Portland, Oregon

By C.W. Rogers
18 April 2014

On February 7, president Obama signed legislation cutting $8.7 billion from the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, over the next ten years. This latest comes on top of an across-the-board 5 percent reduction of benefits to all food stamp recipients last November.

Jennifer Noonan (24) with her children Wenona and Taima at her home in the Portland area. Jennifer saw a $49 drop in her monthly SNAP benefits after the November 2013 cuts.

In 2012, there were 49 million people in the US who were “food insecure” at some point throughout the year, according to the US Department of Agriculture, meaning that nearly 50 million individuals (including 16 million children in nearly 18 million households) “did not have access at least part of the year, to enough food for an active, healthy life.” That is, one out of five children in the United States are living in households that cannot afford enough food and do not get enough to eat.

Food insecure households in the United States, according to Joel Berg of the NY Coalition Against Hunger, are families that are forced into a position of having to ration food, or “choosing between food and rent, choosing between food and health care—parents going without meals so that they can feed their children, or children having to sometimes go through the dumpsters in the back of their school to get a meal.”

“Food insecurity is basically hunger in the American context, it’s not necessarily people starving in the streets like North Korea or Somalia,” Berg stated in a recent interview with NPR. “We’re the only major industrialized Western society on the planet that has this high a level of hunger and this high a level of poverty. And this is a country that has so many billionaires, merely only having a billion dollars doesn’t get you on the Forbes 400 list any more…so it’s incredible that even though we don’t have Somalia-type starvation, that we do have mass deprivation—and the only reason we don’t have mass third-world style starvation is because of the very nutrition assistance programs [that are being cut].” Berg continued, “The SNAP program is what keeps us [the United States] from having mass famine and starvation.”

Last November’s SNAP cuts meant that every single one of the nearly 50 million people that depend on these benefits to feed themselves and their families were hit with reductions, the average amounting to around $30 per month, with many families facing even higher cuts. The latest round of cuts from February’s legislation as part of the Farm Bill will add another $8.7 billion in slashed spending to these, which will have devastating consequences for millions of Americans, hitting particularly hard the country’s most vulnerable people: children, the elderly and disabled.

The WSWS spoke to Portland, Oregon resident Jennifer Noonan and her two young children Taima and Wenona. Jennifer, who is now 24 years old, grew up in poverty and was placed in foster care along with her sister as a child after her mother, a schizophrenic, and her father, a drug addict, were no longer able to properly care for them. She spent her teen years running away from group homes and bouncing back and forth between foster families in the Northwest and then had her first child at the age of 18. Before being placed in foster care, and even after, she has many memories of going hungry in her childhood. Before the cuts in SNAP funding at the end of 2013 she was receiving $524 per month and she is now getting $475.

                 

Apparently you can’t be empathetic, or help the homeless, without a GoPro

Today in bad ideas: Strapping video cameras to homeless

people to capture “extreme living”

Today in bad ideas: Strapping video cameras to homeless people to capture "extreme living"

GoPro cameras are branded as recording devices for extreme sports, but a San Francisco-based entrepreneur had a different idea of what to do with the camera: Strap it to a homeless man and capture “extreme living.”

The project is called Homeless GoPro, and it involves learning the first-person perspective of homeless people on the streets of San Francisco. The website explains:

“With a donated HERO3+ Silver Edition from GoPro and a small team of committed volunteers in San Francisco, Homeless GoPro explores how a camera normally associated with extreme sports and other ’hardcore’ activities can showcase courage, challenge, and humanity of a different sort - extreme living.”

The intentions of the founder, Kevin Adler, seem altruistic. His uncle was homeless for 30 years, and after visiting his gravesite he decided to start the organization and help others who are homeless.

The first volunteer to film his life is a man named Adam, who has been homeless for 30 years, six of those in San Francisco. There are several edited videos of him on the organization’s site.

In one of the videos, titled “Needs,” Adam says, “I notice every day that people are losing their compassion and empathy — not just for homeless people — but for society in general. I feel like technology has changed so much — where people are emailing and don’t talk face to face anymore.”

Without knowing it Adam has critiqued the the entire project, which is attempting to use technology (a GoPro) to garner empathy and compassion. It is a sad reminder that humanity can ignore the homeless population in person on a day-to-day basis, and needs a video to build empathy. Viewers may feel a twinge of guilt as they sit removed from the situation, watching a screen.

According to San Francisco’s Department of Human Services‘ biennial count there were 6,436 homeless people living in San Francisco (county and city). “Of the 6,436 homeless counted,” a press release stated, “more than half (3,401) were on the streets without shelter, the remaining 3,035 were residing in shelters, transitional housing, resource centers, residential treatment, jail or hospitals.” The homeless population is subject to hunger, illness, violence, extreme weather conditions, fear and other physical and emotional ailments.



Empathy — and the experience of “walking a mile in somebody’s shoes” — are important elements of social change, and these documentary-style videos do give Adam a medium and platform to be a voice for the homeless population. (One hopes that the organization also helped Adam in other ways — shelter, food, a place to stay on his birthday — and isn’t just using him as a human tool in its project.) But something about the project still seems off.

It is in part because of the product placement. GoPro donated a $300 camera for the cause, which sounds great until you remember that it is a billion-dollar company owned by billionaire Nick Woodman. If GoPro wants to do something to help the Bay Area homeless population there are better ways to go about it than donate a camera.

As ValleyWag‘s Sam Biddle put it, “Stop thinking we can innovate our way out of one of civilization’s oldest ailments. Poverty, homelessness, and inequality are bigger than any app …”

 

http://www.salon.com/2014/04/17/today_in_bad_ideas_strapping_video_cameras_to_homeless_people_to_capture_extreme_living/?source=newsletter

New study finds US to be ruled by oligarchic elite

by Jerome Roos on April 17, 2014

Post image for New study finds US to be ruled by oligarchic elite

Political scientists show that average American has “near-zero” influence on policy outcomes, but their groundbreaking study is not without problems.

 

It’s not every day that an academic article in the arcane world of American political science makes headlines around the world, but then again, these aren’t normal days either. On Wednesday, various mainstream media outlets — including even the conservative British daily The Telegraph — ran a series of articles with essentially the same title: “Study finds that US is an oligarchy.” Or, as the Washington Post summed up: “Rich people rule!” The paper, according to the review in the Post, “should reshape how we think about American democracy.”

The conclusion sounds like it could have come straight out of a general assembly or drum circle at Zuccotti Park, but the authors of the paper in question — two Professors of Politics at Princeton and Northwestern University — aren’t quite of the radical dreadlocked variety. No, like Piketty’s book, this article is real “science”. It’s even got numbers in it! Martin Gilens of Princeton and Benjamin Page of Northwestern University took a dataset of 1,779 policy issues, ran a bunch of regressions, and basically found that the United States is not a democracy after all:

Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.

The findings, of course, are both very interesting and very obvious. What Gilens and Page claim to have empirically demonstrated is that policy outcomes by and large favor the interests of business and the wealthiest segment of the population, while the preferences of the vast majority of Americans are of little to no consequence for policy outcomes. As the authors show, this new data backs up the conclusions of a number of long-forgotten studies from the 1950s and 1960s — not least the landmark contributions by C.W. Mills and Ralph Miliband — that tried to debunk the assertion of mainstream pluralist scholars that no single interest group dominates US policymaking.

But while Gilens and Page’s study will undoubtedly be considered a milestone in the study of business power, there’s also a risk in focusing too narrowly on the elites and their interest groups themselves; namely the risk of losing sight of the broader set of social relations and institutional arrangements in which they are embedded. What I am referring to, of course, is the dreaded C-word: capitalism — a term that appears only once in the main body of Gilens and Page’s text, in a superficial reference to The Communist Manifesto, whose claims are quickly dismissed as empirically untestable. How can you talk about oligarchy and economic elites without talking about capitalism?

What’s missing from the analysis is therefore precisely what was missing from C.W. Mills’ and Miliband’s studies: an account of the nature of the capitalist state as such. By branding the US political system an “oligarchy”, the authors conveniently sidestep an even thornier question: what if oligarchy, as opposed to democracy, is actually the natural political form in capitalist society? What if the capitalist state is by its very definition an oligarchic form of domination? If that’s the case, the authors have merely proved the obvious: that the United States is a thoroughly capitalist society. Congratulations for figuring that one out! They should have just called a spade a spade.

That, of course, wouldn’t have raised many eyebrows. But it’s worth noting that this was precisely the critique that Nicos Poulantzas leveled at Ralph Miliband in the New Left Review in the early 1970s — and it doesn’t take an Althusserian structuralist to see that he had a point. Miliband’s study of capitalist elites, Poulantzas showed, was very useful for debunking pluralist illusions about the democratic nature of US politics, but by focusing narrowly on elite preferences and the “instrumental” use of political and economic resources to influence policy, Miliband’s empiricism ceded way too much methodological ground to “bourgeois” political science. By trying to painstakingly prove the existence of a causal relationship between instrumental elite behavior and policy outcomes, Miliband ended up missing the bigger picture: the class-bias inherent in the capitalist state itself, irrespective of who occupies it.

These methodological and theoretical limitations have consequences that extend far beyond the academic debate: at the end of the day, these are political questions. The way we perceive business power and define the capitalist state will inevitably have serious implications for our political strategies. The danger with empirical studies that narrowly emphasize the role of elites at the expense of the deeper structural sources of capitalist power is that they will end up reinforcing the illusion that simply replacing the elites and “taking money out of politics” would be sufficient to restore democracy to its past glory. That, of course, would be profoundly misleading. If we are serious about unseating the oligarchs from power, let’s make sure not to get carried away by the numbers and not to lose sight of the bigger picture.

Jerome Roos is a PhD candidate in International Political Economy at the European University Institute, and founding editor of ROAR Magazine.