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“Privilege, Pathology And Power”: What Happens To A Nation That Gives Ever-Growing Political Power To The Super Rich?

Wealth can be bad for your soul. That’s not just a hoary piece of folk wisdom; it’s a conclusion from serious social science, confirmed by statistical analysis and experiment. The affluent are, on average, less likely to exhibit empathy, less likely to respect norms and even laws, more likely to cheat, than those occupying lower rungs on the economic ladder.

And it’s obvious, even if we don’t have statistical confirmation, that extreme wealth can do extreme spiritual damage. Take someone whose personality might have been merely disagreeable under normal circumstances, and give him the kind of wealth that lets him surround himself with sycophants and usually get whatever he wants. It’s not hard to see how he could become almost pathologically self-regarding and unconcerned with others.

So what happens to a nation that gives ever-growing political power to the superrich?

Modern America is a society in which a growing share of income and wealth is concentrated in the hands of a small number of people, and these people have huge political influence — in the early stages of the 2016 presidential campaign, around half the contributions came from fewer than 200 wealthy families. The usual concern about this march toward oligarchy is that the interests and policy preferences of the very rich are quite different from those of the population at large, and that is surely the biggest problem.

But it’s also true that those empowered by money-driven politics include a disproportionate number of spoiled egomaniacs. Which brings me to the current election cycle.

The most obvious illustration of the point I’ve been making is the man now leading the Republican field. Donald Trump would probably have been a blowhard and a bully whatever his social station. But his billions have insulated him from the external checks that limit most people’s ability to act out their narcissistic tendencies; nobody has ever been in a position to tell him, “You’re fired!” And the result is the face you keep seeing on your TV.

But Mr. Trump isn’t the only awesomely self-centered billionaire playing an outsized role in the 2016 campaign.

There have been some interesting news reports lately about Sheldon Adelson, the Las Vegas gambling magnate. Mr. Adelson has been involved in some fairly complex court proceedings, which revolve around claims of misconduct in his operations in Macau, including links to organized crime and prostitution. Given his business, this may not be all that surprising. What was surprising was his behavior in court, where he refused to answer routine questions and argued with the judge, Elizabeth Gonzales. That, as she rightly pointed out, isn’t something witnesses get to do.

Then Mr. Adelson bought Nevada’s largest newspaper. As the sale was being finalized, reporters at the paper were told to drop everything and start monitoring all activity of three judges, including Ms. Gonzales. And while the paper never published any results from that investigation, an attack on Judge Gonzales, with what looks like a fictitious byline, did appear in a small Connecticut newspaper owned by one of Mr. Adelson’s associates.

O.K., but why do we care? Because Mr. Adelson’s political spending has made him a huge player in Republican politics — so much so that reporters routinely talk about the “Adelson primary,” in which candidates trek to Las Vegas to pay obeisance.

Are there other cases? Yes indeed, even if the egomania doesn’t rise to Adelson levels. I find myself thinking, for example, of the hedge-fund billionaire Paul Singer, another big power in the G.O.P., who published an investor’s letter declaring that inflation was running rampant — he could tell from the prices of Hamptons real estate and high-end art. Economists got some laughs out of the incident, but think of the self-absorption required to write something like that without realizing how it would sound to non-billionaires.

Or think of the various billionaires who, a few years ago, were declaring with straight faces, and no sign of self-awareness, that President Obama was holding back the economy by suggesting that some businesspeople had misbehaved. You see, he was hurting their feelings.

Just to be clear, the biggest reason to oppose the power of money in politics is the way it lets the wealthy rig the system and distort policy priorities. And the biggest reason billionaires hate Mr. Obama is what he did to their taxes, not their feelings. The fact that some of those buying influence are also horrible people is secondary.

But it’s not trivial. Oligarchy, rule by the few, also tends to become rule by the monstrously self-centered. Narcisstocracy? Jerkigarchy? Anyway, it’s an ugly spectacle, and it’s probably going to get even uglier over the course of the year ahead.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, January 1, 2016

January 2, 2016 Posted by | Donald Trump, Economic Inequality, Money in Politics | , , , , , , , , | Leave a comment

“Who’s Buying The Midterm Elections? A Bunch Of Old White Guys”: White Men Make Up 65 Percent Of Elected Officials

This is the year of the mega-donor: just forty-two people are responsible for nearly a third of Super PAC spending in the 2014 election cycle. Super PACs, meanwhile, are outspending the national parties. The list of would-be kingmakers includes Tom Steyer, the former hedge-fund manager who’s poured out $73 million to elect environmentally friendly Democrats; Michael Bloomberg, who’s distributed upwards of $20 million on behalf of both sides; and Paul Singer, the “vulture-fund billionaire” and powerful Republican fundraiser.

Take a look at the list of top donors. They might have distinctly different political agendas, but they have one thing irrefutably in common: they’re almost exclusively old white guys. Only seven women made it into the forty-two, and not a single person of color.

One of the things highlighted in the aftermath of Michael Brown’s death in Ferguson, Missouri, is how poorly America’s political leadership, from city councils to the US Senate, reflects the diversity of the country. According to data compiled by the Reflective Democracy Campaign, white men make up 65 percent of elected officials—more than twice their proportion in the general population. Only 4 percent of our political leaders are women of color. As Jelani Cobb writes in The New Yorker, the midterm elections won’t right this imbalance between demographics and political representation, no matter which party wins the Senate.

In fact, the midterms suggest that white men are gaining clout, at least behind the veil. As campaign-finance laws erode, political power is increasingly concentrated among the billionaires playing the strings of the electoral marionette—a pool that looks less diverse even than Congress. (Given the prominence of dark-money groups, it’s likely that some of the biggest individual players in the midterms are anonymous. But there’s no indication that secret donors are any more diverse than others.)

It’s shrinking, too. Between 1990 and 2010, the number of individual donors increased each election cycle. This year, the pool contracted from 817,464 individual contributors in 2010 to 666,773 as of late October, according to a new analysis from CRP. “Despite only a slight increase in the cost of the election, outside groups, which are overwhelmingly fueled by large donors, are picking up more of the tab, candidates are cutting back on their spending, and there are fewer large (over $200) individual donors contributing overall to candidates and parties,” reads the report.

Politicians should be accountable to the electorate, which is growing more diverse. But the fact that candidates are growing more dependent on a narrow group of contributors means that they may be responsive to a limited set of concerns. There are many factors blunting the political impact of demographic changes, but certainly laws that amplify a less diverse group of people’s voices over others’ in an election is one of them.

The unfettering of big money also makes it harder to elect minority candidates. “Why is it that the Congress we have right now doesn’t look anything like the rest of the country? A lot of it has to do with our campaign-finance laws and the fact that there’s so much money in the system and you need so much money to run for office,” said Lawrence Norden, deputy director of the Democracy Program and the Brennan Center for Justice. “There’s no question that it makes it more difficult for people who aren’t connected to these very wealthy donors to run for office.”

Candidates raise money from people they know, Norden explained, and American social circles are deeply segregated. Three-quarters of white Americans, for example, don’t have any non-white friends. Neighborhoods remain segregated by race and class. “If you don’t have a lot of money to begin with, you’re not interacting with the people who can provide that money,” said Norden.

A number of structural changes have been proposed to right lopsided representation, many of them focused on increasing turnout among minority voters. Those suggestions are particularly salient in response to the GOP’s campaign to pass laws that make it more difficult for low-income people and people of color to vote. But turnout won’t affect the diversity of elected officials if the pool of candidates isn’t diverse to begin with. As long as the financial bar for running a viable campaign keeps rising, it’s going to be more difficult for people of color, women and low-income people to appeal for votes at all.

There’s some evidence that public campaign financing increases proportional representation. Connecticut implemented a voluntary public-financing system in 2008, which provides a fixed amount of funding to candidates who rely on small donors. A study by Demos found that the program led to a more diverse state legislature and increased Latino and female representation. Another study found that the percentage of women elected in five states with public financing was significantly higher than the national average. Unfortunately, in several states recently politicians have set to dismantling, not strengthening, public financing.

“It’s really clear that that’s a major barrier to women and people of color, in particular, that can happen on all levels, even the local level,” said Brenda Carter, director of the Reflective Democracy Campaign, about the growing power of outside money. Still, she noted that there’s been little research into the specific ways in which the influence of money in politics has a disproportionate effect on minority candidates. “Adding a race and gender lens to the money-in-politics conversation is a really important thing,” she said.

 

By: Zoe Carpenter, The Nation, October 31, 2014

November 1, 2014 Posted by | Elected Officials, Midterm Elections, White Men | , , , , , , , , | Leave a comment

“Christie’s Latest Scandal”: How He Sold Public Pensions To Wall Street Donors

The media would label it Pensiongate — if they were interested.

When Governor Chris Christie (R-NJ) cruised to his first statewide election victory in 2009, his promise to responsibly manage the state’s pensions helped deliver him the governor’s mansion. It’s Democrats like Governor Jon Corzine who are playing fast and loose with public pensions, the Christie campaign argued. “Jon Corzine made it easier for his friends from Wall Street to manage New Jersey’s pension fund,” read a campaign press release.

But soon after Christie took the reins as governor, his skepticism of the relationship between Wall Street and pension funds quickly evaporated. Hedge funds managed by influential Republican donors soon landed enormous contracts to manage public pensions. Friends of The Governor benefited handsomely.

As the Investigative Fund’s Lee Fang reports, the controversy centers around Paul Singer, the billionaire founder of Elliott Associates. The month prior to Christie’s first 2009 gubernatorial victory, Singer donated $100,000 to the Republican Governors Association, a fervent supporter of Christie’s election bid. After his election, and despite his campaign rhetoric to the contrary, Christie suggested that Elliot Associates be given a contract to manage $200 million in public pensions. In 2012, the firm was indeed granted the contract.

The result of this investment was large payoffs for the hedge fund, while New Jersey public workers saw their pension returns fall below average. In 2013, the median pension return was 16.1 percent; in New Jersey, the pension program delivered a return of just 11.79 percent.

But because of fines and fees associated with a hedge fund investment, it was a lucrative business for managers like Singer. As Fang reports, Singer benefited greatly from the deal: Chris Tobe, a former trustee of Kentucky Retirement Systems, estimates that in 2013 alone, Elliot Associates collected close to $8.6 million in fees from the New Jersey public pension fund.

And Singer, it seems, is not one to let a favor go unreturned. After Christie became chair of the Republican Governors Association in 2013, Singer donated $1.25 million to the group.

Interestingly, Singer’s profitable deals with politicians do not start and stop with the embattled Governor Christie. A recent report in The Hill shows former Rep. Connie Mack (R-FL) may also have used his office to aid the notable Republican donor. Mack, now a lobbyist, has registered to lobby for American Task Force Argentina, a group that seeks to “hold medium and wealthy nations accountable for the repayment of their debts to U.S. creditors and to uphold U.S. court judgments against these same nations.” Holding impoverished South American nations accountable for their debt to American companies is an initiative Mack touted during his time in office.

As it happens, Elliot Associates is also a member of Task Force Argentina. According to The Hill, employees of Elliot management were the second largest contributor to Mack’s failed 2012 Senate run. Furthermore, another hedge fund linked to Singer is owed $1.6 billion by the Argentine government.

 

By: David Feuerherd, the National Memo, March 20, 2014

March 22, 2014 Posted by | Chris Christie, Wall Street | , , , , , , , | Leave a comment

“A Matter Of Character And Trust”: Did Mitt Romney Break The Law By Failing To Disclose Delphi Investments?

We now know, thanks to Greg Palast’s recent scoop in The Nation, that Mitt Romney reaped a large financial windfall from the auto bailouts. Romney didn’t talk up this shrewd investment while touting his business experience on the campaign trail, for obvious reasons—he is a strong critic of those bailouts.

But while Romney had ample political reasons to conceal his investment, he apparently had no legal justification for doing so. Federal law requires that candidates disclose stock holdings that are affected by government action—and Romney’s million-dollar (at least) investment in a hedge fund that bought up Delphi stocks surely fits that bill.

Now, unions and good-government groups are calling on the feds to investigate Romney’s oversight.

Thursday afternoon in Toledo, Ohio—where the story has received significant play in local media—United Auto Workers president Bob King joined Palast and Service Employees International Union vice president Tom Woodruff to call upon the US Office of Government Ethics to look into Romney’s financial disclosures and their failure to list the Delphi investments. Along with several groups like CREW and Public Citizen, the union leaders also sent a letter to OGE demanding a formal investigation.

“The American people have a right to know about Governor Romney’s potential conflicts of interest, such as the profits his family made from the auto rescue,” said King. “It’s time for Governor Romney to disclose or divest.”

As Palast reported, a trust in Ann Romney’s name listed “more than $1 million” invested with Elliott Management, run by hedge fund guru and GOP mega-donor Paul Singer. (That’s the minimum amount of disclosure required by law, so it could have been much more than $1 million.) Singer subsequently snapped up large amounts of stock in Delphi at pennies on the dollar, and then, along with other hedge funds, demanded that the government assume pension responsibilities and bail the company out—or they would shut it down, thus crushing General Motors as well.

The government acceded, Delphi became lucrative again and then went public, and Elliott Management and its investors—including Romney—reaped enormous rewards.

Under any rational interpretation of the Ethics in Government Act of 1978, these are holdings that a presidential candidate would need to disclose, because they can be affected by government action. The Romney campaign doesn’t argue that they are not, but rather that, since Ann Romney’s trust is “blind,” there is no disclosure requirement.

Today’s letter points out, however, that Ann Romney’s trust is blind in name only. Romney himself has said that “the blind trust is an age-old ruse, if you will. Which is to say you can always tell a blind trust what it can and cannot do.” Moreover, this is not a federally recognized blind trust of the sort Romney would be forced to create if he won the White House. If it was, he would have never been able to reap his windfall from Delphi, the letter points out.

Whether or not Romney broke the law will come down to this question of how blind this trust really is, and Romney at least has some plausible deniability there. But no doubt this is a story his campaign doesn’t want to see playing out in Ohio five days before the election.

 

By: George Zornick, The Nation, November 1, 2012

November 2, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

“Son Of Detroit”: Mitt Romney Profited From The Auto Bailout And Jobs Shipped To China

“I’m a son of Detroit. I was born in Detroit. My dad was head of a car company. I like American cars,” said Mitt Romney on Monday night when he met with President Obama to discuss foreign policy. “And I would do nothing to hurt the U.S. auto industry.”

That might be considered true—unless moving the most important American auto parts manufacturer to China counts as hurting the U.S. auto industry. But those words now stand as one of Romney’s most glaring falsehoods in the final debate.

Romney’s defensive statement came in response to a remark by Obama noting that the Republican nominee is “familiar with jobs being shipped overseas because you invested in companies that were shipping jobs overseas.” Moments later, he added: “If we had taken your advice, Governor Romney about our auto industry, we’d be buying cars from China instead of selling cars to China.”

Most viewers had little idea what Obama was talking about or why Romney felt the need to rebut him so specifically. But their coded exchange almost certainly referred to an investigative report that broke wide on the Internet, without much attention from the mainstream media so far—Greg Palast’s article in The Nation magazine, exposing Romney’s huge profits from Delphi, a crucial auto parts company that moved nearly all of its jobs to China after taking billions in auto bailout money from the Treasury.

As Palast reported, the Romneys made millions from that intricate deal, put together by one of his main campaign donors, billionaire investor Paul Singer — through a “vulture fund” known as Elliot Management. Having bought up Delphi at fire-sale prices, Singer and his partners essentially blackmailed the Treasury into paying them billions so that Delphi would keep supplying parts to General Motors and Chrysler. They stiffed the company’s pensioners, pocketed the bailout funds, and moved all but four of the firm’s 29 plants to China.

The neglect of the Delphi story by mainstream and even progressive outlets such as MSNBC has been remarkable, particularly because neither Romney nor his campaign has denied it. If anything, a statement issued by the campaign to The Hill, a Washington publication, seemed to confirm Palast’s reporting by attempting to deflect blame onto the Obama administration:

Romney’s campaign did not deny that he profited from the auto bailout in an email to The Hill Wednesday afternoon, but it said the the report showed the Detroit intervention was “misguided.”

“The report states that Delphi had 29 US plants before the misguided Obama auto bailout, and just four after. Is this really what the president views as success?” Romney spokeswoman Michele Davis said.

“Mitt Romney would have taken a different path to turning around the auto industry,” Davis continued. “As President, Mitt Romney will create jobs and give American workers the recovery they deserve.”

Taking Delphi bankrupt under the management of Singer and Romney’s other partners didn’t create jobs or security for Delphi’s American workers. After taking nearly $13 billion in bailout financing from the Treasury — with the support of Rep. Paul Ryan, who has also received generous support from Singer — the new Delphi management abrogated the company’s pensions, closed all those U.S. plants, and moved production to China. And so far, Romney has escaped any questions about why he and Ann Romney invested their millions with vulture investors who used taxpayer funds to destroy American jobs.

By: Joe Conason, The National Memo, October 23, 2012

October 25, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

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