“Elizabeth Warren Makes A Powerful Case”: Who Does The Government Work For?
Sen. Elizabeth Warren says she isn’t running for president. At this rate, however, she may have to.
The Massachusetts Democrat has become the brightest ideological and rhetorical light in a party whose prospects are dimmed by — to use a word Jimmy Carter never uttered — malaise. Her weekend swing through Colorado, Minnesota and Iowa to rally the faithful displayed something no other potential contender for the 2016 presidential nomination, including Hillary Clinton, seems able to present: a message.
“We can go through the list over and over, but at the end of every line is this: Republicans believe this country should work for those who are rich, those who are powerful, those who can hire armies of lobbyists and lawyers,” she said Friday in Englewood, Colo. “I will tell you we can whimper about it, we can whine about it or we can fight back. I’m here with [Sen.] Mark Udall so we can fight back.”
Warren was making her second visit to the state in two months because Udall’s reelection race against Republican Cory Gardner is what Dan Rather used to call “tight as a tick.” If Democrats are to keep their majority in the Senate, the party’s base must break with form and turn out in large numbers for a midterm election. Voters won’t do this unless somebody gives them a reason.
Warren may be that somebody. Her grand theme is economic inequality and her critique, both populist and progressive, includes a searing indictment of Wall Street. Liberals eat it up.
“The game is rigged, and the Republicans rigged it,” she said Saturday at Carleton College in Northfield, Minn. The line drew a huge ovation — as did mention of legislation she has sponsored to allow students to refinance their student loans.
Later, Sen. Al Franken (Minn.) — a rare Democratic incumbent who is expected to cruise to reelection next month — gave a heartfelt, if less-than-original, assessment of Warren’s performance: “She’s a rock star.”
In these appearances, Warren talks about comprehensive immigration reform, support for same-sex marriage, the need to raise the minimum wage, abortion rights and contraception — a list of red-button issues at which she jabs and pokes with enthusiasm.
The centerpiece, though, is her progressive analysis of how bad decisions in Washington have allowed powerful interests to re-engineer the financial system so that it serves the wealthy and well-connected, not the middle class.
On Sunday, Warren was in Des Moines campaigning for Democrat Bruce Braley, who faces Republican Joni Ernst in another of those tick-tight Senate races. It may be sheer coincidence that Warren chose the first-in-the-nation nominating caucus state to deliver what the Des Moines Register called a “passion-filled liberal stemwinder.”
There once was consensus on the need for government investment in areas such as education and infrastructure that produced long-term dividends, she said. “Here’s the amazing thing: It worked. It absolutely, positively worked.”
But starting in the 1980s, she said, Republicans took the country in a different direction, beginning with the decision to “fire the cops on Wall Street.”
“They called it deregulation,” Warren said, “but what it really meant was: Have at ’em, boys. They were saying, in effect, to the biggest financial institutions, any way you can trick or trap or fool anybody into signing anything, man, you can just rake in the profits.”
She went on to say that “Republicans, man, they ought to be wearing a T-shirt. . . . The T-shirt should say, ‘I got mine. The rest of you are on your own.’ ”
The core issue in all the Senate races, she said, is this: “Who does the government work for? Does it work just for millionaires, just for the billionaires, just for those who have armies of lobbyists and lawyers, or does it work for the people?”
So far this year, Warren has published a memoir, “A Fighting Chance,” that tells of her working-class roots, her family’s economic struggles, her rise to become a Harvard Law School professor and a U.S. senator, and, yes, her distant Native American ancestry. She has emerged as her party’s go-to speaker for connecting with young voters. She has honed a stump speech with a clear and focused message, a host of applause lines and a stirring call to action.
She’s not running for president apparently because everyone assumes the nomination is Clinton’s. But everyone was making that same assumption eight years ago, and we know what happened. If the choice is between inspiration and inevitability, Warren may be forced to change her plans.
By: Eugene Robinson, Opinion Writer, The Washington Post, October 20, 2014
“And There You Have It”: Walker On Minimum Wage; ‘I Don’t Think It Serves A Purpose’
Wisconsin Gov. Scott Walker (R) debated challenger Mary Burke (D) on Friday, and the issue of the minimum wage offered the candidates a chance to highlight their differences. The question posed summarized the situation nicely: can a full-time worker live on $7.25 an hour? And does the state have a responsibility to even set a minimum wage?
Burke “strongly” endorsed a higher legal minimum, but the Republican incumbent largely dodged the question, though he seemed to express opposition to the law itself. “I want jobs that pay two or three times the minimum wage,” Walker said, adding, “The way that you do that is not by an arbitrary level of a state.”
Daniel Bice at the Milwaukee Journal Sentinel followed up on that point in an interview with the governor today, asking Walker whether he believes the law should exist. The governor replied:
“Well, I’m not going to repeal it but I don’t think it’s, I don’t think it serves a purpose. Because we’re debating then about what the lowest levels are at. I want people to make, like I said the other night, two or three times that.”
It’s a striking thing for a governor to say during a tough re-election campaign, especially given his economic record – Walker promised Wisconsin voters four years ago that he’d create 250,000 jobs in his first term, and he’s struggling to get to Election Day with roughly half that total.
Indeed, if the governor doesn’t think the minimum wage “serves a purpose,” it’s not too late for Walker to ask someone to explain the law’s rationale.
Establishing a minimum wage is not about creating a target income for an entire population – it’s about creating a floor so that full-time workers don’t have to live in poverty.
Walker’s comments are rather bewildering. When Democrats created the federal minimum wage – after Henry Ford helped prove its value – the point wasn’t to “debate what the lowest levels” would be for most people, but rather, the law was created as a protection against abuse. Its existence did not prevent U.S. workers from creating the world’s most dynamic middle class.
How an incumbent governor of a Midwestern state can still find this confusing is a bit of a mystery.
For that matter, we can look around the country and see plenty of states doing quite well after raising their minimum wage, which makes sense – when more workers have more money in their pockets, they’ll spend more, which creates more economic activity and more jobs.
It’s one of the reasons a higher minimum wage is so popular with so much of the country.
It’s heartening, I guess, that Scott Walker isn’t pushing for the repeal of the wage law, but the fact that he doesn’t see its “purpose” seems like the sort of thing Wisconsin voters will be hearing again in the campaign’s final three weeks.
By: Steve Benen, The Maddow Blog, October 14, 2014
“A Little Hard To Swallow”: The ‘Pressing’ Need For More Tax Breaks For The Rich?
President Obama delivered a pretty interesting speech on the economy yesterday, but towards the end, he completely abandoned his prepared text, ignoring the teleprompter to reflect on something that clearly bothered him on a personal level.
“[J]ust last month, at least one top Republican in Congress said that tax cuts for those at the top are – and I’m quoting here – ‘even more pressing now’ than they were 30 years ago. More pressing. When nearly all the gains of the recovery have gone to the top 1 percent, when income inequality is at as high a rate as we’ve seen in decades, I find that a little hard to swallow that they really desperately need a tax cut right now, it’s ‘urgent.’
“Why? What are the facts? What is the empirical data that would justify that position? Kellogg Business School, you guys are all smart. You do all this analysis. You run the numbers. Has anybody here seen a credible argument that that is what our economy needs right now?”
Almost every word of this was ad libbed. Presented with the Republican argument that the wealthy really need yet another tax cut, the president seemed genuinely gobsmacked. To appreciate the degree to which Obama was amazed, watch the video – go here and forward to the 48:02 mark.
Of course, the president wasn’t making up any of the allegations themselves – a leading congressional Republican really did argue last month that tax breaks for the very wealthy are “even more pressing now” than a generation ago.
The congressman is none other than House Budget Committee Chairman Paul Ryan (R-Wis.), who recently suggested combating poverty is one of his top priorities.
Here’s the interview the far-right Wisconsinite did with the conservative Weekly Standard.
“I’m a classic growth conservative. I believe that the best way to help families, the best way to help the economy is to reduce rates across the board,” Ryan said when asked about Utah senator Mike Lee’s plan to increase the child tax credit and create two income tax brackets of 15 percent and 35 percent. “Growth occurs on the margin, which is a wonky way of saying, if you want faster economic growth, more upward mobility, and faster job creation, lower tax rates across the board is the key-it’s the secret sauce.
“Some conservatives have argued that reducing the top rate is less urgent now than it was during the Reagan administration, when the top rate was cut from 70 percent to 50 percent and then cut again from 50 percent to 28 percent. But Ryan says that cutting the top rate is “even more pressing now” than it was back then “because the American economy was so dominant in the global economy and capital was not nearly as mobile as it is today.”
As a substantive matter, this serves as a reminder of why it’s tough to take Paul Ryan seriously as an alleged wonk. As Matt Yglesias explained after the Ryan interview was published, “The idea that globalization, which tends to increase the overall size of the economy while also increasing inequality, makes tax cuts for the rich even more urgent strikes me as a little bit hard to defend intellectually.”
But as a political matter, let’s not lose sight of the larger context. Sen. Mike Lee (R-Utah) has floated a tax cut plan that focuses primarily on the middle class. Paul Ryan is drawing a distinct between Lee’s approach and his own – Ryan wants the tax cuts focused on the rich.
In light of everything we’ve seen, in light of the enormous class gap, in light of the already low U.S. tax rates as compared to most of the world, Ryan’s ideas about tax breaks for the wealthy just won’t budge.
Is it any wonder the president is astonished?
By: Steve Benen, The Maddow Blog, October 3, 2014
“The Show-Off Society”: In A Highly Unequal Society, The Wealthy Feel Obliged To Engage In ‘Conspicuous Consumption’
Liberals talk about circumstances; conservatives talk about character.
This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”
Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.
But has there really been an explosion of elite ostentation? And, if there has, does it reflect moral decline, or a change in circumstances?
I’ve just reread a remarkable article titled “How top executives live,” originally published in Fortune in 1955 and reprinted a couple of years ago. It’s a portrait of America’s business elite two generations ago, and it turns out that the lives of an earlier generation’s elite were, indeed, far more restrained, more seemly if you like, than those of today’s Masters of the Universe.
“The executive’s home today,” the article tells us, “is likely to be unpretentious and relatively small — perhaps seven rooms and two and a half baths.” The top executive owns two cars and “gets along with one or two servants.” Life is restrained in other ways, too: “Extramarital relations in the top American business world are not important enough to discuss.” Actually, I’m sure there was plenty of hanky-panky, but people didn’t flaunt it. The elite of 1955 at least pretended to set a good example of responsible behavior.
But before you lament the decline in standards, there’s something you should know: In celebrating America’s sober, modest business elite, Fortune described this sobriety and modesty as something new. It contrasted the modest houses and motorboats of 1955 with the mansions and yachts of an earlier generation. And why had the elite moved away from the ostentation of the past? Because it could no longer afford to live that way. The large yacht, Fortune tells us, “has foundered in the sea of progressive taxation.”
But that sea has since receded. Giant yachts and enormous houses have made a comeback. In fact, in places like Greenwich, Conn., some of the “outsize mansions” Fortune described as relics of the past have been replaced with even bigger mansions.
And there’s no mystery about what happened to the good-old days of elite restraint. Just follow the money. Extreme income inequality and low taxes at the top are back. For example, in 1955 the 400 highest-earning Americans paid more than half their incomes in federal taxes, but these days that figure is less than a fifth. And the return of lightly taxed great wealth has, inevitably, brought a return to Gilded Age ostentation.
Is there any chance that moral exhortations, appeals to set a better example, might induce the wealthy to stop showing off so much? No.
It’s not just that people who can afford to live large tend to do just that. As Thorstein Veblen told us long ago, in a highly unequal society the wealthy feel obliged to engage in “conspicuous consumption,” spending in highly visible ways to demonstrate their wealth. And modern social science confirms his insight. For example, researchers at the Federal Reserve have shown that people living in highly unequal neighborhoods are more likely to buy luxury cars than those living in more homogeneous settings. Pretty clearly, high inequality brings a perceived need to spend money in ways that signal status.
The point is that while chiding the rich for their vulgarity may not be as offensive as lecturing the poor on their moral failings, it’s just as futile. Human nature being what it is, it’s silly to expect humility from a highly privileged elite. So if you think our society needs more humility, you should support policies that would reduce the elite’s privileges.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 25, 2014
“Neglecting Human Costs”: Harvard Business School’s Role In Widening Inequality
No institution is more responsible for educating the CEOs of American corporations than Harvard Business School – inculcating in them a set of ideas and principles that have resulted in a pay gap between CEOs and ordinary workers that’s gone from 20-to-1 fifty years ago to almost 300-to-1 today.
A survey, released on September 6, of 1,947 Harvard Business School alumni showed them far more hopeful about the future competitiveness of American firms than about the future of American workers.
As the authors of the survey conclude, such a divergence is unsustainable. Without a large and growing middle class, Americans won’t have the purchasing power to keep U.S. corporations profitable, and global demand won’t fill the gap. Moreover, the widening gap eventually will lead to political and social instability. As the authors put it, “any leader with a long view understands that business has a profound stake in the prosperity of the average American.”
Unfortunately, the authors neglected to include a discussion about how Harvard Business School should change what it teaches future CEOs with regard to this “profound stake.” HBS has made some changes over the years in response to earlier crises, but has not gone nearly far enough with courses that critically examine the goals of the modern corporation and the role that top executives play in achieving them.
A half-century ago, CEOs typically managed companies for the benefit of all their stakeholders – not just shareholders, but also their employees, communities, and the nation as a whole.
“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in a 1951 address, “is to maintain an equitable and working balance among the claims of the various directly affected interest groups … stockholders, employees, customers, and the public at large. Business managers are gaining professional status partly because they see in their work the basic responsibilities [to the public] that other professional men have long recognized as theirs.”
This view was a common view among chief executives of the time. Fortune magazine urged CEOs to become “industrial statesmen.” And to a large extent, that’s what they became.
For thirty years after World War II, as American corporations prospered, so did the American middle class. Wages rose and benefits increased. American companies and American citizens achieved a virtuous cycle of higher profits accompanied by more and better jobs.
But starting in the late 1970s, a new vision of the corporation and the role of CEOs emerged – prodded by corporate “raiders,” hostile takeovers, junk bonds, and leveraged buyouts. Shareholders began to predominate over other stakeholders. And CEOs began to view their primary role as driving up share prices. To do this, they had to cut costs – especially payrolls, which constituted their largest expense.
Corporate statesmen were replaced by something more like corporate butchers, with their nearly exclusive focus being to “cut out the fat” and “cut to the bone.”
In consequence, the compensation packages of CEOs and other top executives soared, as did share prices. But ordinary workers lost jobs and wages, and many communities were abandoned. Almost all the gains from growth went to the top.
The results were touted as being “efficient,” because resources were theoretically shifted to “higher and better uses,” to use the dry language of economics.
But the human costs of this transformation have been substantial, and the efficiency benefits have not been widely shared. Most workers today are no better off than they were thirty years ago, adjusted for inflation. Most are less economically secure.
So it would seem worthwhile for the faculty and students of Harvard Business School, as well as those at every other major business school in America, to assess this transformation, and ask whether maximizing shareholder value – a convenient goal now that so many CEOs are paid with stock options – continues to be the proper goal for the modern corporation.
Can an enterprise be truly successful in a society becoming ever more divided between a few highly successful people at the top and a far larger number who are not thriving?
For years, some of the nation’s most talented young people have flocked to Harvard Business School and other elite graduate schools of business in order to take up positions at the top rungs of American corporations, or on Wall Street, or management consulting.
Their educations represent a substantial social investment; and their intellectual and creative capacities, a precious national and global resource.
But given that so few in our society – or even in other advanced nations – have shared in the benefits of what our largest corporations and Wall Street entities have achieved, it must be asked whether the social return on such an investment has been worth it, and whether these graduates are making the most of their capacities in terms of their potential for improving human well-being.
These questions also merit careful examination at Harvard and other elite universities. If the answer is not a resounding yes, perhaps we should ask whether these investments and talents should be directed toward “higher and better” uses.
By: Robert Reich, The Robert Reich Blog, September 13, 2014; This essay originally appeared in the Harvard Business Review’s blog.
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