Economic absurdities that
Democrats must expose:
...because it's wrong to penalize success and hard work.
...therefore, we should eliminate the capital gains tax.
...After all, they came from, and understand business.
...even though it is based on pitting the worlds' workers against each other.
...union bosses are only out for themselves.
...and the more the rich have, the more will trickle down to everyone else.
...Democrats are communists, or at least, socialists at heart.
...so when we tax wealthy investors, we lose jobs.
...so investors, not workers, create wealth.
...so we should give them all the tax breaks possible.
...Democrats just want to tax and spend today.
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General Issues:
...for those of Indonesia, Mexico, China and India.
...and how not to do it again.
...and the "crisis" is just a ploy by those who want to destroy it.
...Republicans' most important propaganda technique.
...and get the media on your side
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(Because of its significance prior to the coming election, this news item will lead this section until the election is over. More recent items from the conservative press are below it.)
This was a page 1 “news item” in The Wall Street Journal. Since when has the ultra-conservative Journal started trying to help Democrats come up with an effective campaign strategy by giving them good advice?
From The Wall Street Journal, October 2, 2006.
Political Divide
Democrats' Risky Strategy:
Trumpeting the Wealth Gap
Candidates Blame Republicans
For Economic Inequality,
Woes of the Middle Class
Tactic Could Alienate Voters
WENTWORTH, N.C.—Many Democratic politicians, shrugging off lessons of recent political history, see this as the year when the widening gap between the rich and the rest of America will help win them votes.
As a group of his constituents munched on pot roast and buttered green beans in a school cafeteria here, Rep. Brad Miller—a two-term Democrat seeking re-election in a district spanning rural, suburban and urban communities—launched into what he believes is a winning pitch.
"People who are doing well are doing very well," he said into a handheld microphone, his tie loosened as he walked among the tables. "The rich are doing just fine. But wages aren't budging for the majority of Americans."…
It's a risky bet. Government data do show an unambiguous trend toward a widening gap between the rich and everyone else, a trend that pre-dates Mr. Bush's election in 2000. And yet U.S. electoral history is littered with Democrats who tried to use the inequality issue only to find voters unswayed and Republicans accusing them of "class warfare" or business-bashing….
Economists cite a variety of factors for widening inequality. Technology has favored the most skilled and most educated, and hurt the less qualified.
Globalization has brought competition from millions of new workers around the globe, crimping wages for some workers while boosting demand for others. American unions have grown steadily weaker. And social mores have changed, tolerating much wider pay disparities within the same workplace, be it a manufacturer or a law firm….
The last two paragraphs need a reality test:
- Technology has nothing to do with the wealth gap. Throughout our entire history we have had technological breakthroughs. When Democrats were in charge of the economy, however, working-class Americans shared in the benefits of that technology.
- Globalization HAS contributed to the stagnation of working-class wages, and it’s good that the Journal recognizes that. The Journal should also acknowledge, however, that although globalization is “boosting demand for others (jobs),” those other jobs don’t pay nearly as well as the ones we lost.
- “unions have grown steadily weaker.” Sure, and that’s because of the economic and political policies of Republicans and conservative Democrats.
- “And social mores have changed, tolerating much wider pay disparities within the same workplace.” Of course, but why doesn’t that outrage working-class voters? It means that Republicans have turned us into an aristocracy, and voters are letting them get away with it.
There’s too much to comment more about this item. Just check out these files:
- Democrats must confront the dirty words: “class warfare,” and “politics of envy.”.
- Roosevelt and Truman: winning models for true democrats, and
- It’s the Republicans who are waging class war.
This kind of news item about our modern corporate culture is getting so routine, I probably should stop citing it.
From The Wall Street Journal, October 16, 2006.
Embattled CEO
To Step Down
At UnitedHealth
The scandal over backdated stock options claimed one of corporate America's most successful chief executives, William McGuire of UnitedHealth Group Inc., who agreed to leave the giant health insurer after an internal probe concluded that the stock-option grants that have brought him a huge fortune were likely manipulated.
The probe's findings, released yesterday, provided a detailed picture of how stock-option backdating worked at the company, offering glimpses of cronyism and a culture in which vast sums of compensation were handed out with few controls or written records. Among the troublesome option grants detailed in the report was a massive 1999 award to Dr. McGuire that ranks among the most lucrative ever….
At the end of last year, Dr. McGuire's cache of unexercised options was valued at $1.78 billion…
And you wonder why so many people can’t afford health insurance any more. Remember: that $1.78 billion merely represents a miniscule index of the amount of profit McGuire delivered to United Health investors. The more he and his executive lieutenants can screw the American public out of decent health care coverage, the more they get paid by their shareholders.
It’s a great system, isn’t it?
Greed has been considered a vice by virtually every major religion. Republicans, however, have turned it into a virtue. Look at what the effect has been on corporate America.
The following two articles came from the same issue of The Wall Street Journal. These are just excerpts of very long articles. To get the full impact—and outrage—you should read the originals.
From The Wall Street Journal, October 12, 2006.
Money Rules
Behind Soaring Executive Pay,
Decades of Failed Restraints
In 1993, activist investor Ralph Whitworth shuttered United Shareholders Association, a group that was trying to tackle the contentious issue of executive pay. It looked as if his work was done.
Federal securities regulators had just forced companies to reveal details about pay and perks for top officials, in some cases for the first time. The changes would "make boards think twice" before approving compensation plans that couldn't be justified, Mr. Whitworth recalls thinking. Around the same time, Congress attacked executive pay for the second time in a decade by removing tax breaks on compensation above one million dollars.
Since then, the average pay for chief executives of large companies has quadrupled, according to Kevin Murphy, a professor at the University of Southern California's Marshall School of Business. The average last year was $10.5 million, a figure that includes salary, bonus and the value of stock and stock-option grants.
There are many reasons why Mr. Whitworth was mistaken in his prediction, including the bull market of the 1990s, cozy corporate boards and CEOs striving to keep pace with highly paid athletes and entertainers. What's often overlooked is the role of all the efforts -- by Mr. Whitworth and many others -- to limit CEO compensation. For more than two decades, critics tried to slow skyrocketing pay through regulations, legislation and shareholder pressure. Few of their tactics worked. Many backfired.
As it turns out, disclosure requirements can push pay higher by revealing to CEOs what their peers receive. Limiting one type of compensation often encourages new types of pay, such as stock options, which were pushed as a solution only to become tainted by scandal…
In recent years, CEOs have raced ahead of other Americans, including their own lieutenants. Mr. Murphy calculates that average CEO pay was 369 times as much as the average earned by a worker last year, compared with 131 times in 1993 and 36 times in 1976. Meanwhile, the average U.S. paycheck has barely kept ahead of inflation in recent years….
Golden parachutes are back, too. James Kilts, CEO of Gillette Co., received about $164.5 million in severance and other benefits after the razor maker was acquired by consumer-products giant Procter & Gamble Co. last year. North Fork Bancorp CEO John Kanas received $185 million for selling his Melville, N.Y.-based bank to a rival.
"By the time the payments are disclosed, the CEO is gone," notes Sarah Teslik, a longtime corporate-governance watchdog. "The worst that happens is a day's trashing in the press."
------------------------------------------------------
As Companies Probe Backdating,
More Top Officials Take a Fall
Five senior officers at two well-known Silicon Valley companies became the latest corporate casualties of the stock-options backdating scandal, adding to a toll that is likely to continue to rise as companies wrap up probes of their internal practices….
More than 100 companies are under investigation for options backdating, and scores of them are still conducting internal probes. Many would like to finish them in time to make disclosures during quarterly earnings reporting, which will be heavy in the next several weeks. The companies face pressure to finish because they may not be able to tally their earnings without knowing whether they will need to record charges for any improper options discovered by the probes….
At a minimum, backdating generally involves accounting and disclosure violations. It can also constitute fraud….
So, apparently we can’t even pass laws and regulations to cap the unrestrained greed of today’s rich and powerful.
But, at least, if we can get Democrats back into power, we can raise their top tax bracket to 88% as we did between 1941 and 1962, or to 70% as we did between 1962 and 1982. Incidentally, these were the best years in history for working-class citizens.
To read more about this issue, check out the Best argument for taxing the rich.
If you still believe that our “free market” isn’t ruthlessly controlled by corporations, and that a nationalized health care system isn’t a good idea, read the following.
From The Wall Street Journal, October 6, 2002.
Book Value
How Quiet Moves by a Publisher
Sway Billions in Drug Spending
For years, a little-known unit of publishing giant Hearst Corp. called First DataBank has played a powerful role in determining what Americans pay for prescription drugs. First DataBank doesn't buy or sell drugs—it publishes lists of drug prices. Health plans and state Medicaid programs use those prices as a benchmark in determining what they pay pharmacies.
If the benchmark goes up, so do costs for these payers. That's what happened in 2002, when First DataBank suddenly made broad revisions to its key published list. The new prices had the effect of fattening the profits of pharmacies, out of the view of patients and companies who pay for the soaring cost of health care.
A 2002 email by a manager at one of the nation's largest drug wholesalers, San Francisco-based McKesson Corp., describes how pharmacies would be able to more than double their profit for dispensing the cholesterol drug Lipitor and adds, "that is awesome!!"…
"that is awesome!!" Kind of reminds you of the Enron trader who cheered “burn baby, burn,” when California had its fires, and Enron was cleaning up by manipulating the energy industry.
Here’s yet another email that betrays what happens behind the scenes in a corporate America that controls Congress. Republicans don’t really believe in government and its oversight of industry. To them, unrestrained greed is a virtue, and anything corporations do is ok as long as they make a profit.
And you wonder why so many Americans can’t afford to pay today’s health insurance premiums!
Forbes latest special issue indicates that every one of our 400 richest Americans is worth at least one billion (that’s with a “b”) dollars. The whole issue is an obscene celebration of unbridled greed, but two items are especially illustrative.
From Forbes, October 9, 2006, special edition.
The 400 Richest Americans
A NINE-FIGURE FORTUNE won’t get you much mention these days, at least not here. This year, for the first time, everyone in The Forbes 400 has at least $1 billion. The collective net worth of the nation’s wealthiest climbed $120 billion, to $1.25 trillion. Surging real estate, oil and other asset prices paved the way for 28 new members and 14 returnees.
-----------------------------
Landlords
These [32 in number] tycoons own thousands of apartments, gobs of office space and acres of developable land….
“Surging real estate, oil and other asset prices” explains how the rich and powerful can drive up prices for everyone else. Of course, the 32 mentioned in the second article are only those whose fortunes were primarily in real estate. You can count on it: the rest of the 400 billionaires also have extensive holdings in real estate and other hard assets that are becoming scarcer by the day.
If you want to understand the implications of all this, check out Why Wealth is a Zero-sum Game. It also explains why real estate is one of the best routes to wealth, and, because of our laws favoring the rich and powerful, is one of the greatest causes of poverty.
If you ever doubted why you should never vote for a Republican anywhere, read this. There can’t be a clearer description of the philosophical differences between Democrats and Republicans.
Republicans are clearly anti-worker, even when the workers are nurses.
From The Wall Street Journal, October 4, 2006.
Labor Board Eases Supervisor Rule
Decisions Could Give Firms
Sway to Keep More Workers
From Entering Union Ranks
In three widely anticipated decisions, the National Labor Relations Board opened the door for some employers to classify more workers as supervisors and exclude them from union representation. The decisions outraged unions, but didn't go as far as business groups had hoped.
In the main decision, by a 3-2 vote, the five-member board said nurses who independently assigned staff based on such things as patient conditions, and were involved in such decision-making more than 15% of their time regularly, should be considered supervisors and exempt from collective-bargaining protections….
The decisions, which were expected to favor employers at a board controlled by Bush administration appointees, could at a minimum hinder labor's chances of organizing workers in the fast-growing health-care sector….
Rose Ann DeMoro, executive director of the California Nurses Association, called the decisions "horrendous," and said it would cause nurses to turn down work as charge nurses and trigger protests by nurses across the country. "Ultimately what this has done is redefine a 'registered nurse,'" she said.
Key sentence above: “The decisions, which were expected to favor employers at a board controlled by Bush administration appointees.” Let’s face it. When Republicans “favor employers” they do it at the direct expense of workers.
Most Democrats believe that the balance of power between corporations and their workers has tilted much too far in favor of corporations.
The following editorial is typical of the myopia of conservatives who feel that Republicans have given us a good economy.
From Forbes, October 2, 2006.
The World's Accelerating Prosperity
Rich Karlgaard
The U.S. economy grew 30% between Sept. 11, 2001 and Sept. 11, 2006. Our GDP today is $3 trillion higher than it was five years ago. That change alone surpasses the entire size of the world's hottest domestic economy, China.
The global economy has done even better. It expanded 47% during the last five years and is now $15 trillion a year more bountiful than it was when the terrorists crashed jets into the World Trade Center, the Pentagon and a field near Shanksville, Pa.
Sorry, naysayers, but this fact is indisputable: Humankind is growing richer at accelerating rates….
As happy warriors for entrepreneurial capitalism, FORBES takes a backseat to no one. But let's be honest. The plight of the world's poor is appalling….
Of course, wealth gaps in and of themselves are not immoral. Bill Gates is more than 10,000 times richer than I am, but I have no complaints (and neither do you). I am typing this column in Microsoft Word, a tool that's made every writer's life easier, not to say more productive and, thus, more wealth-producing. Thanks to Bill G., I am composing this column in a luxury hotel in Singapore….
Of course, Rich Karlgaard, a member of America’s new aristocracy, is doing great in a luxury hotel in Singapore. Although he admits that “the plight of the world's poor is appalling,” he refuses to see any connection between the rich getting richer and the poor getting poorer.
The statistics he presents in the first two paragraphs describe absolutely nothing about how well America’s middle class and its poor are faring in our society.
Fact is, although individuals can rise from poverty to wealth in any kind of economy or political environment, government ALWAYS determines how well classes of people will do. From Louis XV prior to the French Revolution, to Herbert Hoover prior to the depression, to Franklin Roosevelt during the greatest economy in history—governments always set the rules about how wealth can be accumulated.
Right now, Republicans have rigged our economy to benefit the wealthy and powerful, and at the direct expense of working-class Americans. (Cruise through the rest of this website and you’ll see that there are no doubts about this claim.)
The following item demonstrates why Thomas Friedman’s solution of “education” will not be the American worker’s salvation in a globalized world.
From The Wall Street Journal, September 29, 2006.
China's Spending
For Research
Outpaces the U.S.
An unprecedented surge in research and development spending is helping China catch up with the two longstanding leaders in the field, the U.S. and Japan, a new study found.
R&D spending in China has been growing at an annual rate of about 17%, and is far higher than the 4% to 5% annual growth rates reported for the U.S., Japan and the European Union over the past dozen years.
China's massive investments in education are also bearing fruit. In 2002, its industrial-research work force was 42% the size of the equivalent U.S. work force, up from 16% in 1991. China is increasingly making its mark with scientific discoveries and patents held by its scientists….
"China's significant investment in R&D is predicated on the assumption that they want to be a player and competitor both economically and militarily," said Jules Duga, senior analyst at Battelle Memorial Institute, a nonprofit trust in Columbus, Ohio, that runs labs for the government and industry….
Despite the shifting R&D landscape, "there's no need for the U.S. to panic," said Mr. Duga. Instead, he said, "the U.S. needs to be prepared for a change. We need to figure out how we can keep ourselves in a strong position" in crucial areas of science and technology. His prescription: Spend more on math and science education, and invest more in pure research, which U.S. industry increasingly has shunned.
China and India are not becoming the economies of the future because they have huge populations, or that they work harder, or because they are inherently smarter today than they were 20 years ago.
What’s changed in the last 20 years is our Republican government’s policy to destroy working-class wages in the U.S. They did this, first, by shipping our manufacturing industries to other countries, including China and India. Then, they found that they could also cut costs for engineers and scientists if the U.S. also gave China and India our research and development facilities, along with their proprietary secrets, and the skills to develop them.
Result: The number of American billionaires and multi-millionaires has exploded, while working-class living standards have deteriorated. And now, the emerging world-class economies are in China and India.
Mr. Duga's solution to the problem is absurd. The reason education won’t help our working-class citizens is that China, with it's low wages and low standard of living in every profession, can educate its citizens far more cheaply than we can do it in this country. And after their citizens are educated—because of their country’s labor policies—they will still drive down American wages by undercutting them.
The U.S. developed a strong middle class, not because they were educated, but because of government policies that balanced their interests with the interests of investors and the rich and powerful. By globalizing our economy, we have, in effect, put or workers at the mercy of China and India—countries that place workers into the same category as raw material or machines.
A worrisome note: China wants to "to be a player and competitor both economically and militarily. There are more downsides to this globalization debacle than meets the eye.
As you read the following, note that in 2005 Michael B. McCallister raked in $5,383,515 in total compensation including stock option grants, and he has another $60,865,194 in unexercised stock options from previous years. Mike is the Chief Executive Officer of Humana, a major medical insurance company.
Also, In 2005, John W. Rowe raked in $17,709,543 in total compensation including stock option grants. From previous years' stock option grants, he cashed out $27,367,351 in stock option exercises. Unbelievable as it may seem, he has another $265,503,766 in unexercised stock options from previous years. Quite understandably, he is CEO of Aetna insurance company.
From The Wall Street Journal, September 27, 2006.
Health-Care Premiums Rise 7.7%,
Outpacing Wages and Inflation
The health-care premiums of employers and their workers have climbed twice as fast as wages and inflation in 2006—to nearly double their cost in 2000—and they look to rise at a similar clip next year, two nationwide surveys show….
The average family premium rose 7.7% in 2006. That compared with a 3.8% rise in wages and inflation of around 3.5%….
The cost for family coverage under an employer health plan is now $11,480, well over what a minimum-wage worker would earn in a year and beyond what many companies and their workers can afford….
Even when employers do offer health insurance, not all workers get it or can afford it. On average, only 78% of employees are eligible at these companies, either because they don't work full-time or fail to meet other eligibility requirements. And given that employers require workers to pay an average 27% of the total premium—or $2,973 for family coverage—many employees can't afford to accept the coverage….
The medical insurance industry is a classic example of how Republicans have totally skewed our economy in favor of the rich and powerful, and at the direct expense of working-class Americans.
Remember that the millions of dollars these greedy modern barbarians are making merely represent a minor index of the huge amount of money that is going from the pockets of workers, and into the hands of investors.
The reason investors are willing to give these barbarians such obscenely high incomes is that they are returning record profits—and high stock prices—to them. And how do CEOs achieve this? By screwing workers and denying them decent health care, of course.
To look at another dimension of this issue, check out Why Wealth is a Zero-sum Game.
Want to know why working-class wages have been stagnating since the early 1970s? And why the wealth and income gap between the wealthy and the working-class has exploded? Here’s a brief example that says a lot.
From The Wall Street Journal, September 20, 2006.
UPS, Teamsters Begin Negotiations
DETROIT -- United Parcel Service Inc. and the Teamsters union opened negotiations yesterday amid investor worries over the package-delivery giant's labor costs and employees' concerns over their weakening pension plans….
Some investors questioned whether the company's high labor costs may be hampering growth….
In addition, rival FedEx Corp. of Memphis, Tenn., continues to gain market share in the ground-delivery segment. The company is doing so with nonunionized, independent contractors as drivers, keeping employee costs lower than those at UPS. Wages and benefits were 65% of operating expenses at UPS in fiscal 2005, which ended May 31. Compensation at FedEx accounted for 43% of operating expenses in its most recent fiscal year, ended May 31….
"The company is going to say to the union that, 'If you want bigger pensions, you're going to have to give up something on health care.' Most unions have come to understand that," said labor professor Richard Block of Michigan State University.
Only hypocrites and those with IQs under 80 can claim that unions aren’t good for working-class Americans. There is no way a corporation can pay decent wages to its employees today when their competitors undercut their wage costs. As Block noted: “Most unions have come to understand that.”
Why have unions lost their power to negotiate for higher wages? Because anti-worker Republicans have loaded the courts with conservative judges, they have passed legislation that favors corporations over workers, and they have put right-wing crackpots in charge of government offices, like the Department of Labor.
If you ever wondered why the Bush administration supports immigration and wants to extend amnesty to foreign workers, both legal and illegal, just read the following.
From The Wall Street Journal, September 18, 2006
Labor Movement
As U.S. Debates
Guest Workers,
They Are Here Now
In Construction, 'Subidos'
Don't Tax Social Services
But May Depress Wages
…Union officials complain bitterly that competition from Mexico is driving down wages, and there is evidence to back them up. Roberto Cantú's Pueblo pay stub shows he earned $14 an hour for a 45-hour week, and $21 for every additional hour. Pete Mustacchio, business manager of Cement Masons Local 577 in Denver, says Colorado's union pourers earn twice that, including an hourly wage of $23.40, plus health-insurance and pension benefits valued at another $9 an hour. Overtime starts at $35.10 an hour.
Figures compiled by the U.S. Bureau of Labor Statistics indicate wages in concrete work fell 16.5% in 2005 from 2000 -- to $508 a week from $604, adjusted for inflation -- despite a soaring demand for workers. Meanwhile, the proportion of cement workers described as "foreign-born Hispanic" has risen to almost 55% from around 35% in the late 1990s. Statistics suggest many are replacing African-Americans, whose employment in concrete work declined to 9,000 in 2005, from 18,000 six years ago.
David Card, a University of California at Berkeley economist, says the decline in earnings is part of a long-term trend of nonunion construction workers replacing a unionized work force. Other factors are at play besides the subidos. Illegal-immigrant labor drives down wages even more than do legal subidos, and technology has reduced the need for some skilled workers.
An expanded guest-worker program probably would deepen the wage squeeze, says Harvard University immigration economist George Borjas. "I find a 10% rise in worker supply results in a 3% decline in wages" locally.
The Journal is here describing the #1 class warfare weapon: increasing the labor supply. Rampant immigration, coupled with globalization, has virtually destroyed any semblance of working-class power to negotiate for higher, decent, wages. There are many other things Republicans have done to destroy wages, but these probably are the biggest ones. Throughout this website, you’ll find others.
Note: although some Republicans have recently come out against immigration, they have traditionally been its great supporters. But lately, the terrible economic impact on working-class Americans is becoming so obvious, that they must change their positions if they are to remain in office.
If you thought Enron, Tyco, etc., were just aberrations and not characteristic of today’s modern corporation, check this out.
From The Wall Street Journal, September 18, 2006
Double Bypass
Health-Care Consultants Reap
Fees From Those They Evaluate
As Insurance, Drug Costs Rise,
Employers Seeking Advice
Often Discover Conflicts
When Kevin Grady took over as an employee-benefits consultant for the Columbus Public Schools District in 2001, he signed a contract promising to act "in the best interest" of the schools. The Ohio district agreed to pay him $35,000 a year to help it choose a health insurer. Officials thought that was all Mr. Grady was getting out of the deal.
It wasn't. After the district switched its health insurance to UnitedHealth Group Inc. on what it says was Mr. Grady's recommendation, he started getting payments and other compensation from the big Minnetonka, Minn., insurer. "Thank you and United for the steaks," Mr. Grady wrote in a Dec. 20, 2001, email to a UnitedHealth employee. "We'll have those on Christmas eve."
All told, UnitedHealth paid Mr. Grady $517,138 for helping it get the district's business….
The episode spotlights a widespread and largely invisible practice that critics say boosts the cost of health care. Many consultants and brokers who are hired to help employers get the best deal on health insurance or prescription-drug coverage have significant financial ties with the health vendors they are supposed to be scrutinizing. The ties may take the form of bonuses for bringing in business, commissions or consulting fees. Often they are disclosed only partly or not at all.
Note that the Journal described this "largely invisible" practice “widespread.” No wonder health care costs are skyrocketing.
The only thing unique about Enron was that the main characters were unusually stupid, and their greed blinded them to common sense. Our modern corporate culture has transformed greed from a vice to a virtue, and today’s ethics standard is “anything goes,” as long as it makes you personally rich and won’t get you jail time. Even then, sometimes it seems worth taking the risk of jail.
The September 18 issue of Barron’s is truly a jewel. It’s the perfect illustration of how totally clueless—and devious—our richest and most powerful citizens are. The cover story was about how great our economy is because some people are becoming obscenely rich.
The following four items are from Barron’s, September 18, 2006.
Glorious Times
Life's Next Act
AMERICANS ARE LIVING LONGER, healthier lives than ever before and, if you believe everything you read, this is terrible news. With the cost of health care out of control, a Social Security system in crisis and an uncertain economic future, millions of worried, hard-working folks now fear they face an old age beset by… hard work and worry.
They may be right, but there's another side of the story: The number of prosperous Americans has never been greater. More than 2.6 million of us are bona fide millionaires, including 72,000 with net financial assets in excess of $15 million. As these people retire, they're investing their wealth and freedom in good works, adventure and self-expression, making their later years perhaps the richest of their lives….
How fantastic! The vast majority of Americans are “beset by hard work and worry,” but, who cares, the top 2.6 million Americans have become members of our new aristocracy. 72,000 of them are even worth in excess of $15 million.
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They’re not living in a bed of roses, however because they must be concerned about:
Charting a New Course
THEY MAY HAVE SPENT DECADES BUILDING their wealth, but retiring executives often take just minutes on the big financial question of life's next phase: Will I have enough money to do what I want?…
Even after taking precautions, retired executives may occasionally share the worry of all retirees—that their nest egg just isn't big enough to last. "They could have $25 million in investments and feel a slight discomfort," says Aulino of Glenmede.
How sad. You’d think that $25 million would give someone peace of mind. The general public should learn to appreciate the burdens of those who have to maintain mansions in three different countries, a yacht, an expensive wife, several mistresses, a personal jet, and so on.
Pity the poor rich people.
--------------------------------------------------
But don’t pity them too much, because they have their propaganda experts who do everything they can to make sure that our political system is biased in favor of aristocrats. They do it by deliberately promoting economic absurdities and perpetuating deliberate lies. Consider this Barron’s op-ed by Fritz Meyer, who is a senior investment officer with AIM investments in Denver.
Naturally, he and his clients are doing very well in this economy, as he vividly describes in the following:
It Sure Beats Factory Work
By FRITZ MEYER
AT THE END OF WORLD WAR II, 38% of America's non-farm labor force was employed in manufacturing. By 1950, that portion had slipped to 30% and it was responsible for producing 26% of the nation's total output of goods and services. Today, just 11% of non-farm workers are engaged in manufacturing, producing 12% of the GDP. The numbers don't lie: For over half a century, manufacturing as a percent of total employment and total production has been in steady decline….
But, there's a far more sanguine perspective: While manufacturing has been in decline as a percentage of total employment and total output measured in dollars, real manufacturing output has lately been growing at a year-over-year rate of 4.4%, and at a 10-year annualized rate of 3.7%-a bit above the long-term rate of real GDP growth.
Also, declining manufacturing employment and output as a percent of the total is not unique to America. It's a pervasive global trend. Although China's slight growth in the value of manufacturing as a percent of total output is the exception to the global trend; it lost 15 million manufacturing jobs-a 15% decline-in 1995-2002. And measured by value-added, the U.S. is still the world's largest manufacturer, with a share of total global manufacturing value-added that has slipped only about one percentage point in more than two decades.
U.S. manufacturing has not "hollowed out," as some have suggested. Rather, services have exploded, and that transformation has been hugely beneficial to our economy. Recessions are rarer and of shorter duration. From 1869 to the start of World War II, the U.S. was in recession more than 40% of the time. In the last 25 years that figure is less than 9%. The steady decline of manufacturing and agriculture in proportion to total economic output is largely responsible for steadier, more predictable growth.
What does it mean to be a "service" economy? When I compare my family's possessions with what my parents had, as far as I can see there's not that much difference. But, we are far richer than their generation. Not because we have more stuff, but because we have both access to and the capacity to purchase a vast array of services the likes of which they could only dream of. This is the modern definition of wealth.
My wife and I used daycare in raising our children; and the kids also had many more teachers, tutors and coaches along the way. Whereas our parents only occasionally ate out or saw a movie, we eat in restaurants-fast food and fine dining-as we please. We purchase entertainment in all sorts of ways.
There's much more. We are among Starbucks' best customers. We exercise at a facility staffed with Pilates trainers and other professionals. Many in our generation travel by airplane and stay in hotels when time, not money, permits. We gamble in casinos. We buy legal and financial advice. We hire somebody to do our taxes. We are piped into the Internet for hours, saving much time and shoe leather, while relying on volumes of software code that, in many cases, kids are writing. We expect these kids to go to college and we assume an ample supply of professors to teach them.
Our generation buys modern miracle drugs, CAT and MRI scans, implantable devices, new knees, hips, and laser eye surgery to prolong and enhance the quality of our lives. We're planning for cruises in retirement and, ultimately, some lively assisted living in our decrepit years….
Most of these service jobs didn't exist in my dad's day. But, on average, they pay approximately the same hourly wage as today's average manufacturing job.
Productivity gains are the reason we've been able to transform our economy. Continuously improving the efficiency of our manufacturing and service processes has led to more production of better goods with steadily fewer people, freeing them to provide an expanding array of valuable services. Americans' standard of living-real purchasing power-has risen decade upon decade as a result.
Because Americans have allowed for and encouraged innovation and labor flexibility, only one nation in the 30-nation OECD group of developed countries has greater GDP per capita than the U.S. It's tiny Luxembourg, where many workers commute in from neighboring countries and aren't in the official head counts for per-capita GDP. Even the famously industrious Swiss produce just 85% of what Americans do….
Basically, what Fritz is telling us here is that he and his clients are our new aristocrats and are able to afford just about anything they want to do—because those who are providing all those low cost services are making “the same hourly wage as today’s average manufacturing job.”
Wouldn’t the more accurate statement be that “manufacturing workers are now making as little as service workers”? As stated elsewhere on this website, workers generally haven’t kept up with inflation since the early 1970s.
And shouldn’t workers—if they are so productive—be making more money, working shorter hours and under better working conditions?
Of course not. Technology and productivity improvements are to make the lives of aristocrats better—not the common working folk. They’re to be manipulated, just like machines or raw materials.
Fritz wrote that “The decline of manufacturing's piece of the GDP pie has meant progress. Unless we are very foolish, the process will naturally keep marching on and we Americans will continue to benefit.” The reality is that the decline of manufacturing lowered wages—which equals “progress,” and if the trend continues RICH Americans will continue to benefit.
--------------------------------------------
For a more accurate description of what’s happening to our country and its workers, check out this analysis by an expert investment professional, in this same issue of Barron’s:
Investing in a Shaky World
Interview With Rudolph-Riad Younes,
Co-manager, Julius Baer International Equity Fund
By SANDRA WARD
TALK ABOUT WINNING WAYS. Since we started seeking his investment views in 2002, this head of international equity investing at Julius Baer has seen his stock picks in these pages appreciate 41.75% a year, on average, through the end of August, handily beating the benchmark MSCI EAFE index during the same period….
Barron's: Give us the Big Picture….
U.S. corporations have a lot of leverage on politicians and on government decisions. They finance both political parties, and they're not strictly U.S. companies anymore, but global companies, and people tend to forget that. U.S. companies care about what is good for the global economy, not necessarily what is good for the U.S. economy.
The short electoral cycles in the U.S., in which every two years you have the full House up for re-election and one-third of the Senate being elected, exacerbates the problem. Everybody knows that monetary and fiscal policy takes about 12 to 18 months to have any affect on the economy and, while the opportunities are great for tactical decisions, they are terrible for strategic decisions.
So give an example of how multinational companies, by embracing a more global outlook, have not served America well?
Look at profits as a percent of GDP [gross domestic product]. Historically, it averaged about 5.4%, but today it has almost doubled to about 10.2%, way above its previous peak at 7%. That's exhibit A. That's happened as U.S. corporations have moved jobs offshore and Congress has let certain policies go on longer and longer than maybe they should.
Yes, but what about the argument that companies are more efficient and more productive?
We are so efficient that we don't do anything anymore, that's how efficient we are. We are so efficient we beg the Chinese to buy something from us. We are so efficient that debt to GDP is above 200%. We are so efficient that we have a trade deficit that is 7% of GDP. Even Turkey would be ashamed of that….
OK, so what are the implications of this on how you invest?
Inflation is something there should be no debate about and somehow there is. As the Bank of England observed recently, our core inflation number should include energy because energy is affected by demand from China. The same way China is exporting deflation to us by manufacturing goods more cheaply, it is importing inflation through its demand for commodities and energy. Core inflation should also include house prices and other asset prices, rather than just rental equivalents, as is done now. Again that would change the inflation picture dramatically. If you consider headline inflation and include asset prices instead of rental equivalents, the true inflation number would be between 7% and 10%. The question is: If real inflation is 7% to 10%, why don't we see it in wages?
That's been a big mystery. What's your answer?
The reason we don't see wage inflation is not just because of China, but more importantly, because people used their houses as ATM machines, basically refinancing their houses and withdrawing equity. If your wages are not enough to support your spending, your house bills or your education, but you manage to get an additional loan against your house and use that loan to refurbish your house or pay for your children's education, then you are not going to complain and you are not going to go on strike and you are not going to be militant because you are not being paid enough money. Wages, plus equity withdrawal from your house, was enough to support your living standard. Once that sort of financing dries up for the consumer, we will see significant wage pressure.
Incidentally, this article demonstrates an important point: if you want to know what conservatives really think about our economy and society, don’t rely on their editorials. They feel perfectly free to lie in an editorial, as in the Fritz editorial above. However, when they’re giving investment advice, they feel they must tell their readers the truth.
And the truth, as Mr. Younes sees it, is that:
- American corporations have no loyalty to this country:
- Their only loyalty is to the world economy insofar as it affects the corporate bottom line.
- The “efficiency” argument that conservatives used to justify globalization was a sham (“we don’t do anything anymore”).
- By giving away our industries and technologies—we’ve made China the new world economic powerhouse.
- And all this was done just to destroy the wages of working-class Americans, although China isn't the only reason "wage inflation" isn't happening.
Incidentally, there was much more to this article, and those interested in its investment implications should read the entire article.
As you read the following, remember that, since the early 1970s, working-class wages have been stagnating, corporate profits have been rising, the stock market has been soaring, and the disparity in income and wealth between rich and poor has been exploding.
This article is a classic for the study of class war in America.
From Business Week, September 18, 2006.
U.S.: Why The Labor Markets Could Ignite Inflation
Overall compensation costs are soaring, and that could push prices higher
Through the spring and summer, most of the news from the labor markets has been encouraging for the inflation outlook. Job growth has slowed, and the unemployment rate has stopped falling….
Despite smaller increases in payrolls, the job market remains tight enough to keep pushing up labor costs….
In fact, revised data from the Labor Dept. on Sept. 6 show that productivity growth, while very good, is nowhere near fast enough to offset the impact of rising labor costs on businesses….
THE QUESTION for the inflation outlook is this: To what extent are cost pressures pushing companies to lift their prices in order to support their bottom lines?…
The 3.9% rise over the past year in hourly earnings for production and nonsupervisory workers has been eaten up by inflation, a fact much commented on. But the more important gauge for spending is overall income. For this group, about 80% of payrolls, income was up in August by 6.2% from a year ago, based on the combined pattern of both hourly pay and hours worked….
What matters most, though, for the inflation outlook -- and for Fed policy -- is the trend in prices outside of energy. On that verdict the jury is still out, but the recent evidence from the labor markets on business costs and household income raise a red flag. The Fed noted in the minutes of its Aug. 8 meeting its wish "to accumulate more information before judging whether additional firming [in interest-rate policy] would be necessary." The danger is: While the Fed waits, the labor markets may already be generating new inflation pressures.
Consider:
- ”…news from the labor markets has been encouraging.” Translation: As more people seek work (the unemployed), wages stay down and corporate profits soar. That’s the point, isn’t it, of the Republican version of capitalism.
- Talk about a loaded question: “To what extent are cost pressures pushing companies to lift their prices in order to support their bottom lines?” It’s as though the multimillions paid to CEOs and top executives have no effect on bottom lines. It also ignores the fact that the bottom lines lately have been huge, and enriching investors as never before.
- “The 3.9% rise over the past year in hourly earnings for production and nonsupervisory workers has been eaten up by inflation.” In other words, workers in one normal job can’t keep up with inflation. But when you add “hours worked” in overtime and second jobs, they might keep up with inflation.
- "What matters most, though, for the inflation outlook -- and for Fed policy -- is the trend in prices outside of energy.” Translation: the most important determinant for Fed policy is whether or not working-class citizens are getting a larger share of the benefits of their own productivity.
- Wow! Workers may be beginning to share in the prosperity of our country. Obviously, it’s time for the Fed to raise the prime interest rate to slow down the economy.
This type of news item is the most common you’ll find on this website. That’s because Republicans watch the incomes of working-class Americans like predatory hawks, and if they see any signs that wages may be about to go up, they’ll call on the Fed to raise the prime interest rate.
To read more about how Republicans keep wages down, go to The Income Gap is no Accident.
A class war between shareholders and managers is described in the following article. Read it, and guess who’s not even mentioned as a class that has an interest in the outcome.
From The Wall Street Journal, September 8, 2006
In Some Deals,
Executives Get
A Double Payday
Managers Profit When Companies
Are Sold to Private-Equity Firms,
Then Stay on With Big Options
Private-equity firms have notched seven of the 10 largest leveraged buyouts of all time this year. For the top executives of the target companies, such deals could be the difference between being rich and being very rich.
That is because in many cases the executives are both buying and selling the company. Consider a trio of massive deals: The bids for HCA Inc., Kinder Morgan Inc. and Aramark Corp., valued at more than $40 billion combined, all have involved top executives teaming up with private-equity firms to buy their own companies and to continue running them.
As increasing numbers of executives heed the siren call of private-equity firms, the dynamic pitting shareholders against management is bound to intensify. (Private-equity firms buy companies or divisions using vast amounts of debt and later sell them or bring them public.)
In such cases, management, with all its detailed knowledge of the company, goes from being a seller striving for a high price to being a buyer looking for an attractive price. Usually the sale of a public company involves an auction or a competitive-bidding process. But when management joins the private-equity buyers, there often isn't such an open procedure, and the process is especially fraught with potential conflicts of interest….
Who’s interests are missing? The workers, of course. And it’s only a matter of time before they’ll be told that they must work harder for less pay—because the corporation has taken on so much debt, and it’s a matter of survival (of jobs, of course)!
Connect the dots between the following editorial by Gene Epstein and the news item in the same issue of Barron’s.
From Barron’s, September 4, 2006.
Economic Beat
It's Goldilocks Time
By GENE EPSTEIN
THE AUGUST JOBS REPORT, RELEASED FRIDAY, lent added confirmation to the modified Goldilocks outlook for the U.S. economy: not too hot or too cold -- and if not just right, not so wrong, either.
It will not be just right, because the correction in the housing market has already begun. And the price inflation that began early this year, which concerned Federal Reserve chairman Ben Bernanke, will probably continue, although without worsening.
It won't be so wrong, however, because gains in payroll employment should keep the jobless rate at less than 5%, a happy situation by most standards….
-----------------------------------------
Widening Gap
The median income of American households rose by 1.1% adjusted for inflation last year, after falling for five successive years, according to the Census Bureau. The survey showed the gap between the richest and poorest widened, as it has since the early 1970s.
What is this “Goldilocks Time” that Epstein is so proud of? It’s an economy is hot enough to increase corporate profits and a soaring stock market, but not so hot that working-class wages start to go up. Conservative politicians keep a lid on wages in a growing economy by controlling the supply of labor. To read about how they do it, go to The Income Gap is no Accident.
The news item just tells us what we already know: real wages have been going down for most of the past six years, and the disparity in income and wealth between rich and poor has been increasing since the early 1970s.
And we thank our Republican friends for achieving all that for us.
There was so much bad news in the following item, it was hard to cut it down to a manageable size. Note that this analysis is coming from The Wall Street Journal, hardly a member of the “biased liberal news media.”
Despite the Journal’s headline, and a few of the optimistic paragraphs, it’s clear that we’re losing the war on terror, and all because of the Bush Administration: “Once you're cast as a foot soldier of Bush, it's a powerful symbol" for adversaries [of those who would support the goals of the U.S.].
From The Wall Street Journal September 8, 2006.
Five Years Later
In Indonesia, War on Terror Shows
Both Gains and Worrisome TrendsSince 9/11, Big Islamic Nation
Has Caught Bomb Suspects
But Seen Militancy Grow
Anger Over American Policies
JAKARTA, Indonesia -- At the five-year mark in America's global struggle against Islamic terrorism, the world's largest Muslim nation offers hope, and a warning.
Last November, Indonesian police trained by the U.S. tracked their region's most-wanted bomb-maker to a house in central Java. Bedecked in a suicide belt, Azahari Husin lobbed several bombs at his pursuers and invited them to enter the house and join him in "paradise." Police responded instead with a burst of bullets, some of which pierced Mr. Azahari's heart….
Elsewhere in Indonesia, however, Islamic militias this summer were openly recruiting men to go to Lebanon to fight alongside Hezbollah. A man the U.S. says is the spiritual leader of Southeast Asia's main terrorist group was freed from jail to resume his verbal attacks on the U.S. and Israel. And Islamic militias and fundamentalism are both growing forces inside Indonesia, say political analysts….
Indonesia illustrates the conflicting results in the war on terrorism since 9/11. Indonesia has captured or killed more than 200 terrorists in five years, its officials say. It has cut deeply into the top ranks of Jemaah Islamiyah, the principal ally of al Qaeda in Southeast Asia. But alongside this progress are a creeping shift to a more conservative brand of Islam in Indonesia and the continuing growth of hard-line militias.
Indonesian officials say anger about U.S. support for Israel and about wars in which Muslims die undercuts their ability to cooperate with the U.S. in fighting terrorism. "I've always appealed to my colleagues in the U.S.: If there are changes in U.S. policy in the Middle East, there would be a significant reduction in terrorist attacks here. This is not a theory," says Ansyaad Mbai, who oversees Indonesia's counterterrorism operations and is a close aide to President Susilo Bambang Yudhoyono.
Indonesia has a secular constitution, and traditionally its nearly 200 million Muslims practiced a moderate form of the faith. But lately, some local jurisdictions have been unilaterally implementing elements of Islamic law, or Shariah, such as alcohol bans and limits on women's rights. At the national level, parliament is debating an "anti-pornography" bill that, as initially filed, would authorize a government agency to regulate skirt lengths and how long couples may kiss in public.
More recently, radical Muslim leaders in Indonesia, furious over the recent combat in Lebanon, have urged supporters to strike out against American and Israeli targets. Militias such as the Islamic Defenders Front and Indonesian Mujahedeen Council openly recruited fighters to go to the Middle East to fight Israel in Lebanon, though the government says it prevented any from actually going.
An Islamic radicalization of Indonesia is far from a sure thing. Presidential elections in 2004 gave 60% of the vote to Mr. Yudhoyono, a staunchly secular retired general. Purely Islamist parties won only around 15% of parliamentary seats that year, though recently, some secular parties have also backed legislation with an Islamic tint. Senior Indonesian and American officials say Jakarta is making significant strides in building one of the Islamic world's most vibrant democracies, after nearly 30 years of dictatorial rule under former President Suharto, who resigned in 1998.
Women's and minority groups have increasingly taken to the streets in recent months to push back against attempts to implement forms of Shariah law. And Indonesia's two largest Islamic organizations, Nahdlatul Ulama and Muhammadiyah,have shown an increasing willingness to combat the radical preachers and boarding schools that bred the suicide bombers that struck Bali and Jakarta in recent years. "This is a Muslim-majority country but it's not an Islamic state," says Defense Minister Juwono Sudarsono, who has worked to strengthen military ties to Washington.
Yet the Indonesian government's sway over what localities decide on matters such as Shariah is somewhat limited, officials here acknowledge. The central government is trying to wield a light hand, a reaction to the long years of Suharto's authoritarian rule.
Before Sept. 11 and for a while afterward, the U.S. was frustrated that the Indonesians didn't seem to take terrorism very seriously. U.S. diplomats were deeply worried that al Qaeda or its Indonesian sympathizers were casing their embassy and planning to hit it. Indeed, in 2002, a captured al Qaeda operative, Omar al Farooq, provided detailed intelligence to Americans of a plot to strike inside Indonesia.
Indonesian officials played down the threats and declined to receive U.S. intelligence briefings, say U.S. diplomats. Americans "couldn't get a dial tone" to discuss terrorism with the Indonesians, says one U.S. diplomat who was based in Jakarta. He says the police even failed to close off a road in front of the embassy that could be used for a truck bombing.
Then came the nightclub bombings in Bali. The October 2002 attack killed 202 people. More than 80 were Australian tourists, and within hours, Australian police were at the resort island working with Indonesian police to provide forensic and other technical help. They used a serial number on an engine block to trace the attack to a mechanic in east Java. After that, software supplied by Australia let Indonesian police trace phone traffic to a wider web of plotters.
The attack was a wake-up call to Indonesian authorities. Today they pursue terrorism more vigorously with a police unit called Detachment 88, a name inspired by the pronunciation of "ATA," the U.S. Anti-Terrorism Assistance program. The State Department has pumped more than $35 million into Detachment 88 since 2001, according to the U.S. Embassy in Jakarta.
At a camp in the hills outside Jakarta, Detachment 88 operatives have been trained in counterterrorism tactics by the Federal Bureau of Investigation, Central Intelligence Agency and Secret Service. Indonesian forensic specialists have studied methods to identify the "signatures" of munitions. Others have received sniper training or been taught techniques such as how to preserve crime-scene evidence from water or other damage.
A payoff came in the hunt for Mr. Azahari, a British-trained engineer and former university professor who, Indonesian authorities say, made the bombs that Jemaah Islamiyah has used in four major terrorism strikes since 2002, including the Bali bombing of that year.
Last October, after a second lethal Bali attack, at outdoor gathering spots, Detachment 88 tracked plotters to just outside the Javanese city of Malang through phone calls and Internet traffic. Spies located Mr. Azahari and his men at a safe house, which police surrounded with snipers. They were able to kill him before he detonated his suicide belt, preventing a large explosion that would have obliterated documents and other evidence, say Indonesian officials.
An especially important technology obtained from the U.S. and Australia, says Indonesia's Col. Golose, is software that enhances police ability to monitor Internet chat rooms. As the capture or killing of top Jemaah Islamiyah leaders gradually erodes its hierarchy, smaller cells have emerged, increasing the importance of such tracking technology, he says.
Indonesia also needed legal upgrades to tackle terrorism. Its colonial-era legal code had to be amended to permit courtroom use of such modern evidence as emails and video clips revealing suspects at attack sites. The government instituted a new counterterrorism law after the first Bali attack that permitted detention of suspects for a week without charges and introduced new rules of evidence. Indonesia has sent police, judges and prosecutors on missions to the U.S. and Europe to learn how to implement the rules.
American officials say these changes are impressive given the previous dictatorial rule in Indonesia, which marginalized the police and courts. "If you look at their system in 1998, everything depended on the army, as it was Suharto's instrument for control," says the U.S. ambassador to Indonesia, B. Lynn Pascoe. "They are now building new systems, including effective police operations."
Authorities have won several death sentences for Jemaah Islamiyah operatives, three of whom could face a firing squad this fall. In a court in Jakarta last September, Judge Roki Panjaitan pronounced such a sentence for Iwan Dharmawan, also known as Rois, a plotter of a September 2004 suicide bombing of Australia's embassy. (It's believed Australia was targeted because of its support of the U.S.-led wars in Iraq and Afghanistan.) Judge Panjaitan says he faced a crush of men in white robes screaming that his sentence "was a decision from Satan." He says a beefed-up police presence provided a sense of security both for him and for witnesses.
Despite the Indonesian police's sharpened skills, the threat posed by militants is palpable. Abu Bakar Baasyir, thought to be Jemaah Islamiyah's spiritual leader, is out of prison now after serving two years for conspiracy in the first Bali attack. During the recent fighting in Lebanon, he was on television calling for a global jihad against Israel and America.
Still at large is the suspected mastermind of the 2005 Bali attack, Noordin Mohammed Top, who escaped the shootout that killed Mr. Azahari. Counterterrorism officials here believe Mr. Noordin has established a network separate from Jemaah Islamiyah. Particularly troubling, investigators say, were the arrests last month of two men who were communicating with one of the imprisoned plotters of the first Bali bombing via the Internet.
Every year since 2002, terrorists have struck Western targets here in September or October, leading many Indonesians to call the period the "bombing season." Just last week, the U.S. Embassy issued a warning that terrorist groups "continue to plan attacks against Westerners and Western interests in Indonesia."
Many Indonesians voice concern that fundamentalist, militant Islam is gaining ground. Government officials and analysts are convinced the wars in Iraq and Afghanistan have helped push some Indonesians down a militant path. Islamist political parties here openly say their opposition to U.S. foreign policy has helped grow their ranks. While militancy alone doesn't equal terrorism, it sets the stage.
One organization that has fed off the U.S. wars is the Islamic Defenders Front, known as FPI. When the FPI emerged in the late 1990s after Mr. Suharto's fall, it focused on actions such as forcibly closing bars during the holy month of Ramadan. But after the U.S. invaded Afghanistan following 9/11 to rout the fundamentalist-Muslim protectors of al Qaeda, the FPI's ranks swelled and it became a loud voice against U.S. foreign policy.
The group has often massed white-robed followers outside the U.S. embassy and parliament in Jakarta to denounce the invasions of Iraq and Afghanistan. After months of relative quiet this year, the group rekindled its rhetorical offensive when Israel struck back at Hezbollah. The FPI militia claimed it had trained 2,000 warriors for action in support of Hezbollah in Lebanon.
At FPI headquarters in Jakarta, graffiti on a front walkway call the compound an "anti-Israeli zone" and label the U.S. "evil." Inside are photos of Osama bin Laden and various Palestinian clerics and Afghan mujahedeen. A 25-year-old administrator in the office, Soleh Mahmud, said the FPI must bear arms "to be prepared if George Bush will attack us." He claimed the FPI has 60,000 militiamen in Jakarta and operates in 23 of Indonesia's 32 provinces. Independent analysts acknowledge the FPI's swift growth but say its claims of 30 million supporters are vastly inflated.
After the tsunami that devastated the Indonesian province of Aceh 20 months ago, and was followed by a major aid effort from the U.S. military, the FPI offered help as well. It said it was there partly to prevent Western aid groups from "Christianizing" the province.
The FPI uses its growing ranks to target groups it regards as apostate or as agents of the West, say some Indonesian minorities and moderate Islamic groups. Last year, FPI militiamen helped shutter the offices of an Islamic sect called Ahmadiyah. Indonesia's powerful Muslim religious arbiter, known as the Ulamas Council, had issued a fatwa calling Ahmadiyah heretical.
On an August morning in 2005, about 300 members of the FPI and another Islamist militia appeared outside the offices of a group called the Liberal Islam Network, a U.S.-funded organization that promotes interfaith dialogue. A large police force prevented an attack, which leaders of Liberal Islam Network say they feared. The FPI says it had merely come to find out why the group was espousing doctrines contrary to Islamic teaching. "We went there to get an answer," Mr. Mahmud says.
Extremists "see us as a tool of the Americans" and sometimes telephone death threats, says the Liberal Islam Network's executive director, Hamid Basyaib. "The Islamists are riding the wave of democracy" to achieve their long-term goal of an Islamic state….
Some of these critics say that when faced with a threat such as this they normally might seek political and financial support from the U.S. government and American aid organizations, such as the Ford Foundation or the Asia Foundation. But now, they're afraid that doing so would open them to being labeled as tools of the U.S. "Once you're cast as a foot soldier of Bush, it's a powerful symbol" for adversaries, says Kamala Chandrakirana, chairwoman of the National Commission on Violence Against Women, who says the conflicts in Iraq and Lebanon have made her job harder.
Despite the horribly bad news, there is hope that the U.S. can turn things around. It’s may be true that “An Islamic radicalization of Indonesia is far from a sure thing. Presidential elections in 2004 gave 60% of the vote to Mr. Yudhoyono, a staunchly secular retired general.”
But only a radical change in U.S. foreign policy is going to make it happen. In other words: out with the Republicans, and in with some progressive politicians who actually believe in a sensible foreign policy.
How's this for the most optimistic statement in the following article? "Mr. Bush "prefers to have half an ally over not having one at all," says Husain Haqqani, director of Boston University's Center for International Relations."
Again, we're seeing the utter disaster the Republicans have made of their "war on terror."
From The Wall Street Journal September 8, 2006.
Pakistan Prioritizes
Its Battles at U.S. Expense
Truce in Border Area Frees
Army to Fight Separatists,
But May Fuel Afghan War
Pakistan's decision to end a military offensive against Islamic militants in the country's troubled northwest frontier reflects mounting pressure on President Pervez Musharraf to deal with an even bigger security problem: a growing rebellion in the resource-rich province of Baluchistan.
Political analysts say Gen. Musharraf, boxed in by a pair of increasingly costly conflicts, has been forced to focus on the more important political threat to his government -- the Baluch separatist movement -- even if it means U.S.-led forces across a porous border in Afghanistan could pay a price for the Pakistani military's withdrawal from the northwest region of Waziristan.
Under a cease-fire agreement struck this week between tribal chieftains and the military, a three-year government campaign against Islamic militants in Waziristan ended. The military released hundreds of prisoners taken in the rugged tribal area and granted amnesty to others, including some with known links to al Qaeda. Soldiers have vacated advance outposts in the region and relocated to a nearby army camp, according to a senior military official….
Mr. Bush "prefers to have half an ally over not having one at all," says Husain Haqqani, director of Boston University's Center for International Relations….
How many times does it have to be proven: instead of attacking our best counterbalance for militant Islam in the Middle East--Iraq--we should have solidified our gains in Afghanistan.
Here's a short one to remind you that this is the industry that Republicans want to handle your Social Security retirement funds.
From The Wall Street Journal, September 8, 2006.
Mutual Funds Struggle
With Scandal Payouts
The next stage in the saga of the mutual-fund scandal of recent years is about to begin: reimbursing investors who were hurt.
After several fund companies got in trouble three years ago -- they let a few preferred customers trade improperly, generating short-term profits but hurting long-term fund shareholders -- the companies paid more than $2 billion in fines. Now, investors are a step closer to getting a refund from the resulting pool of cash.
"..hurting long-term fund shareholders"--that sounds like old codgers who would like to have some reliable retirement funds..
The utter callousness of the Republican mind is illustrated in the following. Despite decades of wage stagnation and an exploding gap in wealth and income between rich and poor, they are now concerned that “…workers are benefiting unequally from the [current economic] expansion.
From The Wall Street Journal, September 7, 2006.
Sharp Jump in U.S. Labor Costs
May Presage a Rise in Inflation
The nation's labor costs in the second quarter rose at the fastest rate in nearly six years as employers passed on productivity gains to workers in the form of higher pay. But economists disagreed on whether the rise stemmed from one-time items like bonuses or a broad rise in paychecks or benefits that could signal rising inflationary pressures.
The Labor Department reported yesterday that nonfarm business productivity rose at a seasonally adjusted annual rate of 1.6% in the second quarter, surpassing an earlier estimate of 1.1%. In the first quarter, productivity increased 4.3%.
However, unit-labor costs -- a gauge of inflation -- rose an upwardly revised 4.9% in the latest quarter and 9% in the first quarter. Those increases -- which were revised from earlier estimates of 4.2% and 2.5%, respectively -- mean labor costs have jumped 5% in the second quarter compared with the year-earlier period, the fastest pace since the third quarter of 2000. Unit-labor costs reflect the cost of labor for each unit of output….
Yesterday's report isn't likely to douse concerns workers are benefiting unequally from the expansion. For example, other recent reports have shown average hourly earnings of workers, excluding managers, have risen by an inflation-adjusted 0.5% in the 12 months through July. Wage and salary income for all workers, including managers, has risen an inflation-adjusted 4.5% in the same period when other forms of pay, such as bonuses, are included.
So,average hourly earnings of workers, excluding managers, have risen by an inflation-adjusted 0.5%--and when you add managers and their bonuses, you get 4.5%. And conservatives (Republicans) are concerned about those whose incomes went up only .5%. Unbelievable--except, believe it.
Also note that those who say we shouldn't be envius of the rich--are the same ones who watch the wages of working-class Americans like predatory hawks.
To read about how Republicans destroy working-class wages, and standard of living, go to The Income Gap is no Accident.
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