Week of September 29

     The following sad editorial in The Wall Street Journal is symbolic of America’s total industrial base.

From The Wall Street Journal, October 1.

COMMENTARY

Jean Genie

By PATRICK COOKE

Levi Strauss & Co. has announced that it's closing its last factory in North America. Its blue jeans, a spin-off of the Great California Gold Rush, will now all be made overseas. There's the loss of 800 U.S. jobs, of course, but one is tempted also to lament the departure of this all-American symbol, created out of cheap, durable canvas. Yet the fact is that unless you're a gold miner you haven't got much claim on blue jeans any more. They belong to the world now….

     Not only does the production of blue jeans “belong to the world now” (a euphemism for “not made in America”), so does the production of any manufacturing product in existence.

     Although The Wall Street Journal can’t avoid reporting the bad news, at least they can try to minimize its negative impact on the political scene.

     So, they report that “The U.S. poverty level rose in 2002, but income inequality didn't worsen because the rich took a hit, too.” Implication: Gee, everyone—even the rich—is hurting from the recent economic slowdown.

From The Wall Street Journal, September 29.

Income Gap Is Steady,
But Poverty Spreads

WASHINGTON—The U.S. poverty level rose in 2002, but income inequality didn't worsen because the rich took a hit, too.

For most of the past 20 years, those at the top of the income ladder have been the big winners in the U.S. economy. But last year, incomes of the wealthiest Americans fell by the same percentage as incomes of those toward the lower end of the scale, according to Census data released Friday.

Household income of Americans in the 95th percentile slipped by 1.9%, to $150,002 from $152,893 in 2001. Income in the 20th percentile dropped similarly, to $17,916 from $18,256. Percentiles, a scale that divides levels in order of magnitude, is one measure used by the Census Bureau to compare 2002 findings with those of previous years….

Income levels across the board suffered in 2002, according to Census figures. Income in the second-highest percentile slid by 3.3% to $114,112 in 2002 from $117,952 in 2001. Income in the lowest 10% sank by 4.2%, to $10,620 from $11,087….

Though the income disparity didn't increase, poverty levels climbed to 12.1% last year from 11.7%. Nearly 34.6 million people lived in poverty in 2002, about 1.7 million more than the previous year, the data show. Critics of the Bush administration seized on these numbers to lambaste its economic policies….

     Talk about the selective use of statistics. The Journal noted that “Income in the second-highest percentile slid by 3.3% to $114,112 in 2002 from $117,952 in 2001. Income in the lowest 10% sank by 4.2%, to $10,620 from $11,087.” While they admitted that the lowest percentile income slid by 4.2%, they failed to note that the highest percentile just slipped 1.9% (being content to pick the second-highest percentile for comparison).

     Of course, noting that all income categories suffered income declines is almost irrelevant. The fact is that the lowest 10% of Americans suffered the greatest income loss, 4.2%, and all other categories, except the second highest, suffered a 1 to 2% loss.

     In addition, any loss of income—no matter how little—directly affects the daily lives of those at the bottom, while even a significant loss of income at the top has no effect whatsoever on their quality of life.

     All of which is irrelevant to the readers of The Wall Street Journal, who take righteous comfort in knowing that all income levels have had to suffer from the recent economic downturn.

     As poorer Americans continue to see their incomes go down, the Journal gladly reports that the economy—and, thus, corporate profits—continue to grow.

     And, incidentally, of course, working Americans (non-investors and non-high-level-corporate executives) are seeing their jobs go to third world countries.

From The Wall Street Journal, September 29.

Economy Grows At
Faster Pace Than Estimated

The U.S. economy grew at a faster pace than previously estimated in the second quarter, but consumers remain worried about their job prospects.

Second-quarter gross domestic product, a measure of all of the goods and services produced in the U.S., rose at a revised 3.3% annual rate, up from the 3.1% rate previously reported, the Commerce Department said in its final estimate of second-quarter growth. The economy grew at a 1.4% pace in the first quarter.

     Once America’s aristocracy becomes used to extremely high returns on their investments, and high-level corporate executives become dependant on their huge bonuses—it’s hard to ever return to reality.

     Thus, to keep the corporate profits coming in, even in an economic slowdown, the greedy and materialistic figure out ways to maintain their lifestyles.

     At the direct expense of consumers.

From Business Week, September 29.

Fees! Fees! Fees!

Companies can't raise prices, so they're socking consumers with hundreds of hidden charges—and that's creating stealth inflation and fueling a popular backlash

America used to be the land of the free. Now, it's the land of the fee. Companies, hard-pressed for money, are taking every possible opportunity to nickel-and-dime people to death.

Need a monthly brokerage account statement mailed to you? Ameritrade may charge you $2 per statement. Want your hotel room cleaned? The Alexander Hotel in Miami Beach, Fla., will bill you an extra $2.50 daily for housekeeping. Have to return a new camcorder? Best Buy Co. will dock you 15% as a "restocking fee." Want to buy a season ticket for pro football? The New York Jets will make you pay $50 for the privilege of getting on their waiting list.

The U.S. economy has become sneaky. Inflation is officially low, but Americans face an ever-growing mountain of extra charges that are pushing up the true cost of purchases. No area is safe, from retail to finance to travel to sports….

The extra hits—each one typically small by itself—add up to big money. AT&T could bring in as much as $475 million by charging its long-distance customers a new 99 cents monthly "regulatory assessment fee."…

The plethora of stealth charges makes it much harder for consumers to use the Internet to do comparison shopping, as they started to do in the late 1990s. The result is that apparently simple buying decisions are turning into a hopeless and discouraging labyrinth….

The growing significance of extra fees means that inflation is understated. Surprisingly, many add-on charges are not reflected in the Bureau of Labor Statistics consumer price index….

State and local governments are also willing participants in the fee game. Rather than hike taxes, politicians are hitting up Americans with a bewildering array of fees, fines, and penalties. Cash-strapped states will pull in $2.6 billion in new revenues this year by raising more than 200 different fees on everything from fishing licenses to fingerprint processing to driving with new tires….

Nobody figures fees will be eliminated entirely. But as the country recovers from an era of corporate scandal, it's not too much to ask that companies keep prices easy to understand. That way people will know they're getting what they pay for.

     Self-interest is a good thing. It keeps the world running. But greed—excessive self-interest—leads to behaviors that are deceptive, fraudulent, manipulative, and ultlimately destructive to a healthy society.

     This mentality even allows conservative politicians to lie to voters and to maintain the fiction that they can govern without taxing the rich.

     Sound familiar?

     Remember when President Dubya said we had to give tax breaks to the rich so they could invest their money and create jobs? Turns out, a lack of investment capital isn’t the problem, and hasn’t been for at least three years.

From Business Week, September 29.

All Cashed Up with No Place to Go

VCs have $84 billion to invest and an aversion to risky startups

The venture-capital industry is facing an embarrassment of riches. Venture firms have a staggering $84 billion in their coffers to invest, a near-record amount. And institutional investors are eager to give them more dough, anticipating that the tech industry will regain its financial luster…."Even today, after all the problems the business is having, there are tons of institutional investors clamoring to get into the venture business," says Joshua Lerner, a professor at Harvard Business School. "This is what we call the potential overhang."

But the flood of money could turn out to be more bane than boom. For starters, the seemingly endless supply of resources could lead venture capital firms to throw good money after bad, keeping alive faltering companies instead of shutting them down. VCs also are chasing bigger and bigger deals, putting increasing amounts into later-stage projects and even leveraged buyouts. These investments may use up big chunks of capital, but they hardly fit the high-risk profile for which venture firms are traditionally known….

With so much money focused on a few areas of technology, some question whether a new bubble is forming. "I'm nervous that this will result in mindless competition," warns Roger B. McNamee, a veteran tech investor now with Silver Lake Partners, a high-tech buyout fund in Silicon Valley. "The mismatch of capital and opportunity is a real threat."…

     What has been missing all along in this economic slump is the lack of money in the hands of the consumers who will spend it. That’s what creates demand, and demand creates investment, and that creates jobs.

     It’s obvious: to stimulate the economy, we should have given most of the tax breaks to the middle- and low-income worker, who would immediately spend it.

     The ultra-rich already were already spending all the money they wanted to. Their huge tax breaks resulted primarily in investment in other countries—which will further aggravate conditions for America’s workers.

     Even ultra-conservative Forbes magazine is admitting the looming disaster of globalization—corporate America’s strategy to destroy working-class wages and increase profits.

From Forbes, September 29.

Giant Sucking Sound

Battered by the tech slowdown, EDS is shipping white-collar jobs offshore to catch up with low-cost competitors.

The new Electronic Data System office in Mumbai (formerly Bombay) is half a world away from company headquarters in Plano, Tex….

This is where Amit, 24, works. "This is Andy. How may I help you?" he says politely, hour after hour, to the Midwesterners who have forgotten their e-mail passwords or need the phone number of a colleague. EDS hired Amit and 500 of his colleagues—young men and women dressed in khakis or saris—to answer phone calls and e-mails on behalf of American companies that have outsourced tech work or customer service calls to EDS.

Amit and colleagues are paid $1.25 an hour. His counterpart in the U.S. would get $10. On that difference rests whether or not EDS can wiggle itself out of deep trouble. Victimized by cheap outsourcing by competitors, EDS is playing the low-cost-labor game itself now. It is rushing to hire thousands of mostly Asian college graduates like Amit, who are desperate for the kinds of jobs found in the U.S. Frantic to cut costs, EDSplans to hire 13,800 workers by the end of next year—a of its current global work force of 137,000—in low-wage countries like India, Malaysia, Hungary and Mexico, places where starting pay is as low as $2,400 a year. Meanwhile, EDS plans to lay off at least 2,750 higher-paid workers, mostly in the U.S. and Europe.

Companies as varied as General Electric and Morgan Stanley are making the same calculation. White-collar jobs—in engineering, programming and accounting—are leaving America's shores for low-cost locales at a pace of nearly 4,000 a week, according to Forrester Research. The U.S., Europe and Japan combined are losing 600,000 a year, says McKinsey & Co….

There's also a price to be paid in angry and anxious workers. "I'm sure I lost my job to offshoring," says Richard Randall Mohler, 51, an EDS programmer from Midland, Mich. who earned $68,640 a year until he was let go last year. That job in India pays about $6,500 a year. Mohler remains unemployed and says his former colleagues at EDS are worried, too. "They are all scared to death," Mohler says. "When you can get the same job done for a fraction of the cost, it puts everybody on edge."

Is Jordan the bad guy? If he doesn't export jobs, someone else will.

     "Is Jordan the bad guy? If he doesn't export jobs, someone else will." This one sentence explains two things: the ultimate disaster of globalization for working Americans; and who the bad guys really are.

     First, the inevitable disaster is that the only Americans with jobs will be those who provide products and services that can be produced only in the U.S. And many more millions of those who previously had good-paying jobs will be competing with them in a race to the bottom of the wage scale.

     Second, the real villains are not the businesses who are forced to abandon the U.S. by other businesses without any moral standards. The real villains are the Republicans and conservative Democrats who passed legislation that made this kind of ruthless global competition legal and profitable. In effect, they announced to American businesses that they were removing any and all protections of business persons with moral standards; it's everyone for his own greedy self.

     Forbes warns its sophisticated readers of the pitfalls, not only of investing in so-called hedge funds, but also suggests pitfalls in investing in mutual funds generally. Again, from one of America’s premier conservative financial publications, an unintended message: to privatize Social Security would be a horrible mistake for unsophisticated investors (which includes most of us).

From Forbes, September 29.

Money & Investing

Suckers Wanted

…The big hedge fund story of the moment: accusations from crusading New York State Attorney General Eliot Spitzer that the hedgies are ripping off investors in mutual funds via secret trading arrangements with operators of the mutual funds. If anything, the scandal makes you want to invest in hedge funds, to get in on the illicit gains.

The untold story: Hedge funds are rotten investments, too. A good example of why you shouldn't have anything to do with them comes from Alpha Strategies I, a crossover product of sorts that is like a mutual fund in its mass-market appeal but like a hedge fund with its exotic strategies and high fees….

…do you want to invest in Alpha? Not if you have any brains.

Start with Alpha's murky disclosures, all too reminiscent of hedge funds….

The main reason not to own Alpha, though, is not its past performance but its steep fees, 4% of assets annually….

     This is just a brief excerpt of an extensive article criticizing the mutual fund industry. Investors who are interested in the investment implications of the article should go to the original source.

     The following three excerpts come from the same issue of The Wall Street Journal and, together, describe the disaster that health-care has become in the U.S.

The following three excerpts are from The Wall Street Journal, September 30.

Wal-Mart Cost-Cutting Finds
Big Target in Health Benefits

Restrictions, Tough Stance on Basic Claims
Keep Its Outlays Below the U.S. Average

BENTONVILLE, Ark.—Wal-Mart Stores Inc. is famous for cutting costs everywhere it can. Today a giant target for the world's biggest retailer is the health-care costs of its employees. Wal-Mart makes new hourly workers wait six months to sign up for its benefits plan and doesn't cover retirees at all. Its deductibles range as high as $1,000, triple the norm. It refuses to pay for flu shots, eye exams, child vaccinations, chiropractic services and numerous other treatments allowed by many other companies. In many cases, it won't pay for treatment of pre-existing conditions in the first year of coverage.

The payoff: Last year, average spending on health benefits for each of the company's roughly 500,000 covered employees was $3,500, almost 40% less than the average for all U.S. corporations and 30% less than the rest of the wholesale/retail industry, according to estimates by Mercer Human Resource Consulting, a unit of Marsh & McLennan Cos…. Wal-Mart has been using a team of six people to scour every state for the lowest-cost networks of doctors and hospitals….

"The problem is rising health-care costs," responds Jay Allen, Wal-Mart's senior vice president for public affairs. "We're grappling with it like everyone else."… Wal-Mart also is aggressive in controlling medical costs related to on-the-job injuries. The company says these claims are a related and additional expense on top of the 18% increase in its health-care outlays last year, a rise in line with industry averages.

Mittie Funderburk, 52, says she injured her back in 2000 while moving photo-lab merchandise in the San Angelo, Texas, Wal-Mart. She didn't report the incident until two months later, when growing numbness in one of her legs immobilized her. Her doctor prescribed surgery, and a second doctor, selected by Wal-Mart, concurred. Nevertheless, Wal-Mart fought the claim for months, first alleging Mrs. Funderburk hadn't reported the accident in a timely fashion and then arguing she didn't need the surgery….

Number of Americans Who Lack
Health-Care Coverage Is Rising

Census Bureau Counts 43.6 Million
As Employer-Based Plans Shrink

WASHINGTON—The federal government says 43.6 million Americans lacked health insurance last year. That's more than the population of the nation's 24 smallest states plus the District of Columbia, and it adds fuel to a growing debate about both the cost and availability of health care.

The figures, released early Tuesday by the U.S. Census Bureau, show that 15.2% of Americans didn't have coverage for all of last year, an increase of 2.4 million people from 2001, when 14.6% were uninsured….

More Companies That Self-Insure
Get Stuck With Huge Medical Bills

Some Insurers 'Laser' Sickest Workers

In the game of hot potato that health insurance has become, employers and insurers keep trying to pass rising health costs to each other. Now, insurers are using a tactic called "lasering," which shifts the costs of the sickest workers back into the lap of employers.

Typically, self-insured employers—a common practice under which a company pays most of its employee medical bills—contract with stop-loss, or reinsurance, carriers to pay catastrophic claims. This protects an employer from being hit with a single medical bill that could wreak havoc on its health plan.

But now, as employers seek to renew their stop-loss coverage or obtain new contracts, reinsurance companies are lasering, or carving out, severely ill employees from coverage….

     It’s time to face reality. Our health-care system is broken. It’s been taken over by investors who insist on outrageous corporate profits, greedy high-level corporate executives, and the politicians who support their every desire in Congress and the White House. The health-care of working-class Americans is irrelevant to them.

     Note that five separate members of the Walton family—of Wal-Mart fame—are among the richest 400 persons in the United States. And these selfish people not only don’t give their own employees decent health-care benefits, they are leading the corporate trend to give stingier benefits throughout our country.

     A single-payer government-sponsored program—as already successfully exists in many other civilized nations—couldn’t possibly be less efficient or more costly than our present system, and is long overdue.

     If the following article were to be published in the “biased liberal news media,” conservative critics would say that it was intended to make the U.S. look bad—to such an extent that it was unpatriotic to publish such nonsense.

     This excerpted article, however, came out in The Wall Street Journal, October 1.

U.N. Peacekeeping
Is a Troubled Art

Congo Mess Shows Rich Countries Send Money,
The Poor Send Troops— Operations Often Suffer

BUNIA, Democratic Republic of Congo—Earlier this year, while the world was transfixed by the war in Iraq, the Congolese district of Ituri was on the verge of genocide and the United Nations was in trouble. For months, the U.N. had searched for a military force capable of stopping another African holocaust. No significant power accepted the challenge.

With nowhere else to turn, U.N. peacekeeping chiefs dispatched to the war zone 840 Uruguayan soldiers. It was a moment of excitement for the men, who came from a country that hadn't fought a war in over a century, says one of their officers, Lt. Colonel Waldemar Fontes.

Their mood soon changed as they dropped unsuspectingly into a place they would later term the devil's caldron. Equipped only with rifles and a few armored personnel carriers, the Uruguayans were appalled to find tribal militias rampaging through the dusty streets with machetes and machine guns. Child soldiers chopped Hema residents to pieces and took body parts as souvenirs. Hundreds of cadavers littered the city. …

As the U.N. struggles for relevance in the wake of the Iraqi war, nowhere are its dilemmas and limitations more stark than in its peacekeeping campaigns in forlorn lands. The troubled effort in Bunia shows how the U.N.'s best-known function has languished, as world powers send money, not men, leaving the work to soldiers from the developing world. In effect, the rich countries subcontract the actual soldiering to poor nations….

Since 1995, no major power has put any of its combat troops under the U.N. flag. Instead, countries with bloated armies such as Pakistan, Bangladesh and Nigeria lead the U.N. peacekeeper ranks, lured by cash, on-the-job training and international prestige. "Western countries have essentially created a form of apartheid in peacekeeping," says David Malone, president of the International Peace Academy, a think tank in New York. "The toll is much-less-effective peacekeeping."…

The White House sees this notion of peacekeeping efforts outside the auspices of the U.N.—but with its blessing—as the right approach for Iraq. "We need to be flexible to have different models for different kinds of problems," says Kim Holmes, Assistant Secretary of State for International Organization Affairs. "What we are asking for Iraq falls under this new tradition or model. It's certainly not blue helmets under a U.N. command."

     Sounds almost like a model for what’s happening in the U.S. The rich “chicken-hawks” (those who have never been in a war, but are quite willing to send others) in Congress and the White House send our poor citizens (who have no other opportunity for employment) to war, while the rich collect war profits.

     The evidence against privatizing Social Security continues to build, as the underbelly of Wall Street exposes itself, from one prestigious firm to another prestigious firm.

From The Wall Street Journal, October 2.

Fund Probe Reaches Prudential

The investigations into market timing increasingly are noting the involvement of fund managers. One reason managers might have allowed timers to trade in and out of their funds—despite the fact that such trading can cut into a fund's returns—is that many managers have their compensation tied to how much money they control.

     Prudential Financials entices new investors with the following assurance: “Our goal is to help you grow your wealth and to help you keep it. As a leader in asset management and insurance, we have the experience and services you need.” Of course, the rookie assigned to you will be competing with their real brokers who are “working on behalf of hedge funds, investment pools for the wealthy and institutions.”

     The following three excerpts go together, since they are directly related. It should be obvious why, but in case you’ve been in a cave for the past 20 years, their connections will be explained below. All three are:

From The Wall Street Journal, October 3.

     These three articles in a single issue of The Wall Street Journal illustrate the total corruption of our entire American corporate culture. The last article just describes the corporate executives who got caught.

     Bear in mind that Grasso’s behavior would never seen the light of day had it not been for a much broader investigation of his overall job performance and recent practices of the New York Stock Exchange.

     The outrageous incomes of practically all the Chief Executive Officers of our major corporations are, in themselves, indictments of their moral standards. A review of other articles throughout this website demonstrate that workers, consumers, and investors are paying dearly for those high incomes via higher prices, scarcities, lost jobs, inadequate health care—and on and on.

     These clowns couldn't get away with all this skullduggery if it weren't for sympathetic politicians in Washington. It’s time for a regime change in in our national government.

Week of September 22

     Now, for the real reason drug companies are so concerned about counterfeit medicines and the public’s safety:

From The Wall Street Journal, September 22.

Drug Companies Cry
'Danger' Over Imports

The pharmaceutical industry is sounding alarms about what it calls a growing danger from counterfeit medicines—especially in drugs bought abroad. The tough talk is a break from drug makers' traditional reluctance to put even the slightest dent in consumers' confidence for fear it could discourage them from filling prescriptions.

But drug companies have found that the specter of bogus medicine is a forceful lever for moving public and policy-maker opinion in the U.S. against imports.

Counterfeits may be a growing problem, but so far, the documented risks pale next to the rhetoric where imports are concerned. In Canada, the main source of drug imports to the U.S., authorities say they haven't detected problems in the supply there. "We're not aware of any counterfeit activity at this time," says Jirina Vlk, a spokeswoman for Health Canada, that country's equivalent of the U.S. Food and Drug Administration.

Drug-company profits are threatened as more Americans buy their medicines from cheaper markets, particularly Canada. IMS Health, which tracks prescriptions, estimates that American consumers are buying $350 million to $650 million in prescription drugs annually from Canada, either over the Internet, by mail order or by driving across the border.

The potency of the safety issue became apparent to the Pharmaceutical Research and Manufacturers of America, or PhRMA, the principal trade group for U.S. makers of brand-name drugs, after it engaged Edelman, a public relations concern based on Chicago and New York, to help develop a communications campaign that would dissuade Americans from importing prescription medicines.

Edelman convened focus groups of people without drug-insurance coverage in St. Louis, Detroit, and Fort Lauderdale, Fla., in March. The firm's report on the research asserts that "fear and accountability 'move the needle' of consumer perceptions" the most. The report recommends that the U.S. industry question the safety and effectiveness of medicines procured elsewhere….

The testing by Edelman indicated that the illegality of drug importation has little effect on consumers' perceptions or their likely behavior. "So what? Speeding is illegal as well," said one focus-group participant, according to the memo. While older people in the groups were less inclined to risk breaking the law, the report says, consumers with a "larger financial burden/higher prescription drug usage" are less likely to worry about abiding by the rules….

Several drug makers, including Eli Lilly and Pfizer Inc., are providing financial support to the National Association of Chain Drug Stores for an effort to combat illegal drug imports. "International mail order is downright dangerous," says Larry Kocot, the group's senior vice president and general counsel. Meanwhile, one of the highest-profile Canadian companies that exports drugs to U.S. consumers defends its safety record. "All of the drugs that we ship into the U.S. from Canada are approved by Health Canada," says Daren Jorgenson, president of American Drug Club, of Winnipeg, Manitoba. "Billions of dollars have been sold into the U.S. over the last four and half or five years from Canada with no reports of injury or death as a result of a counterfeit, outdated or substandard product."

     The big question is why buying drugs from Canada should be illegal in the first place. Isn’t that what the conservative mantra of “free trade in all things” is all about? Of course not. If free trade will cut into corporate profits, it’s lobbyists make sure their stooges in Washington make it illegal.

     Since many Americans see little moral wrong in cutting into corporate profits that are obscene to begin with, about the only course left to the pharmaceutical companies is to deliberately lie to the public with trumped-up charges of supposed dangers.

     Want more demonstration of the real reason for “globalization”? This excerpt demonstrates what is left of the power of labor unions to protect American jobs.

From The Wall Street Journal, September 22.

GM, Ford Win UAW Permission
To Close or Sell Eight Facilities

DETROIT—General Motors Corp. and Ford Motor Co. won permission from the United Auto Workers to close three assembly plants and to sell or close five other facilities under terms of the four-year contract agreement struck last week.

In a contract summary prepared by the union, the UAW said it gave GM clearance to close a Baltimore assembly plant that builds vans. The factory employs about 1,100 workers. The UAW is also allowing GM to close an auto-parts factory in Saginaw, Mich., and to sell a GM division that builds locomotive engines. The union also said that it will allow GM to close the Argonaut Building, a Detroit structure that once housed photographic and real-estate offices. In total, about 3,000 GM workers are affected….

Ford said it won UAW approval to close or sell four plants, affecting 4,500 people. Ford will close two assembly plants: a small pickup-truck factory in Edison, Ill., which employs 863, and a full-size van plant in Lorain, Ohio, that has 1,640 workers. Ford will also close Vulcan Forge in Dearborn, Mich., and Cleveland Aluminum Casting in Ohio….

DaimlerChrysler AG, in its deal with the UAW , got union clearance to close or sell five of nine operations the company has deemed uncompetitive. About 4,700 workers at the company are affected.

     Republicans and conservative Democrats finally have American workers where they want them. Unions have almost totally lost their power to protect jobs. They either agree to more lost jobs—and thus retain some jobs for the immediate future—or they totally lose all their jobs to manufacturers who have no commitments to the moral treatment of workers.

     And this is just the beginning of the end, as American auto manufacturers get totally out of the business of making cars. They are becoming investment bankers—not auto makers—by outsourcing every aspect of manufacturing, even including the assembly of the vehicles, to those countries with the lowest labor costs.

     Business Week joins the crowd in condemning the mutual fund industry. If there were ever any doubt, there isn’t now: As an industry, America’s mutual funds are concerned only with their own profits and incomes, and could care less about the welfare of their investors.

From Business Week, September 22.

How to Fix the Mutual Funds Mess

Hidden fees, lax boards, and now scandal. Here's what has to be done

Used to be, the worst you could say about a mutual fund was that it lost money. Nowadays, there's worse: losing money dishonestly. Thanks again to the crusading efforts of New York State Attorney General Eliot Spitzer, some mutual-fund managers have made the growing list of investment-industry professionals willing to sacrifice investors' best interests for the sake of profits.

On Sept. 3, Spitzer tore the veneer from the almost pristine, 79-year-old fund business. In a $40 million settlement with hedge fund Canary Capital Partners, he outlined a series of improper practices in the trading of mutual-fund shares. Not only were four blue-chip companies implicated—Bank of America, Bank One, Janus Capital Group, and Strong Capital Management—but dozens of others, Spitzer suggested, schemed to bilk investors of billions each year. "Looks like they are taking advantage of investors like everyone else on Wall Street," says James Punishill, an independent analyst with Cambridge (Mass.)-based Forrester Research Inc….

Representative Richard H. Baker (R-La.), the author of a mutual-fund reform bill watered down after pressure from industry lobbyists earlier this year, is sharpening his pencil. And the Securities & Exchange Commission—already miffed over negligent boards, hidden fees, and conflicts plaguing both the mutual and hedge-fund businesses—plans a rulemaking push in coming weeks….

Who's watching out for you? Certainly not the fund's board of directors. Most rubber-stamp management's recommendations, and few bother to negotiate lower fees. The largest mutual funds, in fact, pay money-management advisory fees that are more than twice those paid by pension funds….

Mutual-fund companies have had three years of watching their stock portfolios plunge, and fees along with them. That has tempted some to get creative about enhancing their profits, which has gotten them into hot water with regulators. "Salesmanship and not enough stewardship" rule the day, quips Vanguard's Bogle….

     Again—from one of America’s top conservative financial publications—a solid argument against privatizing Social Security. Note that this is just a brief excerpt from an extensive article that describes the many ways mutual funds and Wall Street takes ruthless advantage of sophisticated, as well as unsophisticated, investors. (As New York State Attorney General Eliot Spitzer put it, they: “…schemed to bilk investors of billions each year. ‘Looks like they are taking advantage of investors like everyone else on Wall Street.’”)

     In the U.S., we live in a world of auction markets. That means that the more money other people have, in effect, the less you have. Nowhere is this more evident than in medical care.

From The Wall Street Journal, September 23.

At One Hospital,
A Stark Solution
For Allocating Care

Galveston Facility Cuts Drugs,
Treatments for the Uninsured

GALVESTON, Texas—Joan Richardson, chief medical director at the hospital of the University of Texas Medical Branch, faced an agonizing decision: Should she approve a $1,500 drug for a 52-year-old woman with metastatic breast cancer?

The patient had no money, no insurance and rapidly fading hope. Three powerful cancer drugs had failed to help her. A fourth, exemestane, offered a slim chance, but strict rules at the hospital barred the drug from being given to patients who couldn't pay for it. Dr. Richardson would have to authorize the money to come from a $25,000-a-month drug fund for indigents—meaning some other poor person who needed a costly drug might not get it….

The rules restricting drugs at this 795-bed hospital are part of a bold experiment in allocating health care at a time of rising costs. In most other U.S. medical centers, decisions about who gets scarce resources such as expensive drugs and surgical procedures are often made on an ad hoc basis—with few formal guidelines for doctors and nurses on how to help their patients while hewing to budget restrictions.

But UTMB, as this state-supported hospital is known, has developed a detailed playbook to help determine exactly who gets treated and who doesn't. Its rules require that patients undergo financial screening before they can be admitted and that virtually everybody pay a fee before seeing a doctor. For patients who are poor or uninsured, the rules restrict or proscribe the use of certain drugs and treatments….

Unlike most hospitals, UTMB is also blunt about its need to limit some services on financial grounds. "We are rationing," says John Stobo, UTMB's 62-year-old president and chief executive….

     Rationing medical care—which, in effect, often eliminates health care for the uninsured or poor—is not the fault of specific hospitals or doctors. They have limited budgets and have no easy choices in the matter.

     The fault is in the health care system itself—from insurers to drug companies to legal firms to administrators: top corporate executives are making multi-millions in income, corporations are making huge profits, and millionaire and billionaire investors are cleaning up on the stock market. Those inflated incomes result from the huge prices charged for everything from the health care itself to the insurance people must pay to protect themselves.

     In a broader context, the stagnant wages of workers over the past 30 years, reduced income taxes on the wealthy, and federal legislation that favored investors over workers—have resulted in many people not having enough money to meet the inflated costs of health care or insurance, while others, who have financially benefited from this inflation—have no problems with the system.

     Those who fight for a system that rations health care —Republicans and conservative Democrats—don’t want it changed because it results in less corporate profits and may increase tax rates on the wealthy. Naturally, they charge anyone who tries to make the system more equitable as being socialists or communists.

Actually, they are just capitalists who have a conscience.

     Public outrage about Dick Grasso’s 140 million dollar payoff stimulated all kinds of counterspin from America’s right-wing. After all, the public’s acceptance of greed as a new American virtue is crucial to our established wealthy. It’s an important factor in keeping voters from electing politicians who will bring back a progressive tax system.

     The following excerpt from a The Wall Street Journal editorial is typical of the conservative spin.

From The Wall Street Journal, September 24.

Who Decides How Much Is Too Much?

By HOLMAN W. JENKINS, JR.

In all the folderol about Dick Grasso's paycheck last week, one question worth pondering is how did it come to be everybody's business what he was paid? The money isn't yours or mine but comes out of the revenues of the New York Stock Exchange, owned by its 1,366 seatholders. They're the ones who get socked with the costs of the exchange (including the onerous new "technology" fee that keeps the exchange's head above water these days)….

Whatever you think of the exchange's defenestrated impresario and its goofy board of directors, the spectacle put on by Mr. Grasso's critics was hardly more attractive, full of self-righteousness and the kind of chicken-bleep hostility that isn't even brave enough to find its own target but simply looks around for a socially approved punching bag. The mob's behavior, rather than Mr. Grasso's, may end up supplying the odor that lingers.

Perhaps it's time to remember that fat pay—even misguidedly fat pay—is not an offense against anybody's rights. Luck was the biggest factor in tipping over the old salary scale at the exchange….

It's no skin off anybody else's back if his employer paid him too much, and looking over the past 20 years, one might readily conclude that we all benefit from the willingness of companies to wave big money carrots in front of their servants….

Little hissyfits of envy, like the one we witnessed in the Grasso case, might seem an expensive luxury when measured against the benefits of a fertile, lively economy, even one that occasionally offends us by delivering dramatic paydays to a few conspicuous public figures. David Altig, an economist at the Cleveland Fed who has studied income inequality, once put the anti-envy case this way: "I would gladly see you gain a zillion dollars of real income if doing so would obtain a billion for me, even if the distribution of our incomes becomes more unequal in the process."…

     The absurdities in this editorial are too numerous to deal with briefly. However, the crucial economic fallacy—that this editorial suggests, and that needs to be exposed to public scrutiny—is that wealth is not a zero-sum game.

     Wealth is a zero-sum game. When Jenkins Jr. questions “how did it come to be everybody's business what he was paid?,” he suggests that no one is hurt when Mr. Grasso’s investment advisors buy hundreds of rental homes for the benefit of his heirs. Those homes are taken off the market, and the prices of housing and rents continue to go through the ceiling—at great cost to the poor and middle-class.

     “The money isn't yours or mine but comes out of the revenues of the New York Stock Exchange.” Not true. The money did come from you and me, in the form of higher prices for the products and services that ultimately financed the entire financial community in New York.

     "Luck was the biggest factor in tipping over the old salary scale at the exchange." Not true. Luck had nothing to do with it. It was all part of a planned strategy by the "good 'ol boys club" to feather each others' nests, and at the direct expense of the clients of the New York Stock exchange. It's the same strategy that corporate executives have been using for the entire century, but especially in the past 25 years.

     “Little hissyfits of envy, like the one we witnessed in the Grasso case, might seem an expensive luxury when measured against the benefits of a fertile, lively economy, even one that occasionally offends us by delivering dramatic paydays to a few conspicuous public figures.” Wrong. It’s not envy, it’s anger. Anger against the greedy jerks at the top of our society who have destroyed working-class wages for the past 25 years—just so they could be incredibly rich. This “lively economy” has been a boon to rich investors and top corporate executives, primarily because it was a premeditated disaster for America’s workers.

     "I would gladly see you gain a zillion dollars of real income if doing so would obtain a billion for me, even if the distribution of our incomes becomes more unequal in the process." That’s probably true at the billion- and million-dollar levels. But it’s not true at the level of working-class wages. They’ve been stagnating for the past 25 years, while the rich have driven up the costs of everything from medical care to rents.

     The fallacy, “wealth is not a zero-sum game,” is one of the most important propaganda ploys of right-wing America, and it needs to be confronted at every opportunity.

     Good times have come back for investors: companies are announcing employee cutbacks and the stock market is celebrating.

From Barron's, September 22.

Sackings Help Some Stocks Surge

…While the most recent data released Thursday showed fewer people filing for state unemployment insurance, other disquieting trends suggested an overall deterioration in the jobs scene. The four-week moving average of jobless claims, considered to be a truer, less volatile measure, rose to 410,750 for the week ending Sept. 13 from 408,750 the previous week. The number of jobless drawing benefits rose to about 3.7 million in the week ended Sept. 6, the highest level since late June. In leaving interest rates unchanged at 45-year lows Tuesday, the Federal Reserve's Open Market Committee cited the fragile jobs picture.

Nonetheless, investors focused on the sunnier side of the stats, including a steadily improving leading-indicators index, which has risen four months in a row, as well as two straight weeks of lower mortgage rates. Broader averages shot higher, rallying more than 100 points on Tuesday and Thursday, and reached new 52-week highs by week's end despite giving back some gains in Friday's volatile "quadruple witching," in which four sets of options and futures contracts expire. The Dow Jones Industrial Average gained 1.8% to end the week at 9644.82, and the S&P 500 rose 1.7% to 1036.30, levels not seen in 15 months. The Nasdaq powered ahead by 2.7% to close the week at 1905.70, breaking through the important 1900 mark, putting it nearly back to heights reached in March 2002.

Indeed, contrary to being concerned about weakness in the job market, investors showered largesse on those companies that continue to cut costs.

Long-distance telecommunications provider Sprint vowed Wednesday to cut expenses by 5%-7% in the next three years by eliminating $1 billion a year. The number of job losses expected wasn't specified… Sprint PCS, which reflects the wireless business, advanced nearly 5% to 6.10….

Wednesday, R.J. Reynolds Tobacco Holdings said it planned to cut 2,600 jobs, or 40%, of its workforce in the next year, mostly at its Winston-Salem, N.C., headquarters….

RJR stock jumped 16% after the announcement to end the week at 39.81….

     People don’t remember that back in 1960, college professors, economists, politicians and corporate executives were promising workers that they would benefit from increased corporate profitability, and that they should contribute their best efforts to help it happen.

     Just as the 60-70 hour workweek of the 1920s gave way to the 40-hour workweek—and better working conditions and better benefits—employees could look forward to a 3-day, 30 hour workweek and even better benefits.

     That’s before the 1980s and conservative economics and the adulation of greed came along. Now, employees are simply an expense to be minimized. (“investors showered largesse on those companies that continue to cut costs.”) Today the only ones who profit from the corporation’s successes are the investors and top corporate executives. The employees who made the corporation successful to begin with get sacked.

     It has nothing to do with fairness, or even sound economics. It has everything to do with power, and today—because of their Republican representatives in government—corporations have all the power and employees have none.

     Anyone who doubts that Clinton and Gore were disasters for working-class Americans should read the editorials in The Wall Street Journal.

     Whenever the Journal supports someone, you know it’s got to be a bad sign. And when they oppose the leading Democratic presidential candidates—for opposite reasons—you know it's got to be a good sign for them.

A The Wall Street Journal editorial, September 25.

Trading Places

…We had our differences with Bill Clinton, but there's no doubt one of his achievements was leading his party away from protectionism. Open trade was a pillar of his New Democrat philosophy. He and Al Gore routed the AFL-CIO and Ross Perot to pass Nafta in 1993, followed by bills to create the World Trade Organization and allow most-favored nation trading status for China. A decade later all three have contributed to American prosperity.

But without a Democrat looking out for the national interest from the Oval Office, the party is now slipping back toward trade parochialism. On Capitol Hill, the party's regional and union interests have become dominant; most Democrats opposed giving President Bush new trade negotiating authority last year. More ominous still is the rhetoric coming from the Presidential candidates….

The Democrats insist they don't oppose free trade but only that any new trade agreements must have "labor and environmental standards" written into them. Dr. Dean has told several interviewers that he would withdraw from the World Trade Organization and Nafta if they weren't altered to ensure that foreign workers have "the same labor laws and labor standards and environmental standards" as the U.S….

     Realize what the Journal is saying here. Clinton/Gore “routed the AFL-CIO and Ross Perot….” In other words, they joined the Republicans and the conservative cause and betrayed the interests of workers, which resulted in the giant sucking sound of jobs leaving the U.S., which Ross Perot and many others predicted.

     The “decade of prosperity” that it created was actually the Journal’s version of prosperity: stagnant wages, soaring corporate profits, and a skyrocketing stock market.

     And its been downhill for American workers ever since.

Week of September 15

     This is typical of the news coming from the conservative press today: greatly increased productivity as a result of technological advances, rising corporate profits, a great stock market, and signs that the present economic recovery will continue.

     The news for workers, however, isn’t as rosy. They get laid off, replaced by outsourcing, and experience increased job pressures because of competition from other corporations, etc.

From Business Week, September 15.

Productivity: Still Getting Stronger

Tech-driven productivity is powering profits, stock prices-and now, spending

It has been a long time since prospects for the U.S. economy looked this good. Profits are up, capital spending is rising, and inflation remains under control. Even ailing manufacturers are showing signs of life, with the Institute for Supply Management reporting on Sept. 2 an upswing in factory orders and production. And following the second quarter's surprisingly strong 3.1% gain in gross domestic product, economists are scrambling to revise their second-half forecast skyward. Many now think growth could finish the year at a healthy 4% clip.

But the most important news is the continuing surge in productivity….

The continued surge in productivity is a key reason why profits have strengthened considerably in recent quarters even as growth remained tepid. Even now, pricing power remains nonexistent in many sectors, and capacity is excessive. Yet ever-improving productivity has enabled companies to squeeze costs and rebuild their bottom lines….

Yet technology explains only part of the productivity boom. Economists also failed to appreciate how tighter management could contribute to efficiency gains year after year. Practices such as benchmarking performance against comparable companies, outsourcing, use of temporary workers, and business-process redesign have not only raised the level of productivity but raised the rate at which companies improve. Companies are also quicker to resort to layoffs. Painful though that might be, it helps avoid the big drops in productivity that come from having far too big a workforce when orders dry up….

That means that over the longer term, the economy is capable of higher growth without inflation than many economists have predicted. If long-term productivity is now closer to 3% and the labor force is growing at 1% a year, output can grow steadily at roughly 4%.

There is a downside, of course. While it's good for the economy as a whole, rising productivity accounts for the jobless recovery the U.S. has seen so far -- and will continue to see for some time. Since rising productivity lets companies meet new demand without adding workers, GDP will have to grow at a higher rate than in the past before new jobs are created. Most economists think it will take a long period of growth above 4% for the unemployment rate, now over 6%, to fall back to 5% or so….

     What’s missing from this article is any mention of corporate obligations to its own workforce, or any moral consideration of the inequity of giving all the results of improved productivity to just investors and the top corporate executives.

     This is a direct violation of the promises that were made to workers during the 1950s, ‘60s, and ‘70s—when they were encouraged to put their best ideas into productivity improvements. Economists and politicians of those decades promised workers that they would continue to benefit from productivity improvements, just as they had during the previous three decades.

     Economists, politicians, management consultants and corporate executives were promising 35 hour work weeks, 5 week vacations, better health, education and pension benefits, etc.

     With the arrival of the 1980s and conservative economics and politics, all promises were to workers were forgotten. All the benefits of productivity go to investors and senior corporate executives, and workers are forced to work harder than before, because they must compete with workers from impoverished countries.

     When will the insanity stop? In the not too distant future, the only jobs left in the U.S. will be those that require a physical presence in this country. Jobs like waiters and waitresses, dentists, garbage handlers, and retail clerks.

From Barron's, September 15.

Call-Center Shuffle

As telemarketing jobs vanish or migrate, who'll absorb the glut of space left behind?

…So many call-center jobs that were moved to rural areas are now being pushed to cheaper Ireland, India and the Philippines….

Other firms closing call centers: Starwood Hotels & Resorts Worldwide, Harrah's Entertainment, Best Western International, InterContinental Hotels, Marriott Vacation Club, Cendant and Carlson Hospitality Worldwide. Carlson, which operates a number hotel brands, including Radisson and Regis International, has closed its call center in Albuquerque, N.M., consolidating those jobs into its Omaha, Neb., center. But that's its only remaining call center in the U.S. The others are in Mexico City, Dublin, and Sydney, Australia.

Technology and telecommunication call-center jobs are being transferred overseas, too. Earthlink, according to The Wall Street Journal, shut six of nine such U.S. facilities, opening a large center in India. Other companies moving overseas for customer service include AOL, Yahoo and IBM. Convergys, which provides customer service, technical support and telemarketing services, employs thousands in India and the Philippines. And it's not just the lower salaries. Many foreign call-center workers are university graduates—unlike most of those in the U.S….

So while call centers business should continue thriving—despite Do Not Call and the Internet—the real estate it will occupy is, increasingly, outside the U.S.

     These jobs are leaving our country because conservatives have created a political climate that has shifted all the power to corporations and away from workers. Corporations can drive down wages with impunity, and that’s exactly what they are doing when they abandon American communities and go to other countries. And that’s the only reason they’re doing it.

     Think of the following article the next time huge media corporations lobby Congress to pass laws which will allow them to swallow even more of the media.

From The Wall Street Journal, September 15.

How Media Giants Are
Reassembling The Old Oligopoly

Mix of Broadcast, Cable Proves Lucrative
In Making Many Deals, Promoting Shows

Two years ago, Mattel Inc. gave CBS a choice. The network had refused to broadcast the toymaker's movie "Barbie in the Nutcracker" in prime time. So Mattel threatened to pull millions of dollars of advertising from the Nickelodeon cable channel—owned by CBS parent Viacom Inc.

Viacom, which had spent a decade bulking up with acquisitions, now wielded its new clout, according to people familiar with the situation. If Mattel made good on its threat, Viacom said, it would be blacklisted from advertising on any Viacom property—a wide swath of media turf that also includes MTV, VH-1, BET, a radio broadcasting empire and even billboards. Mattel backed down, and the Barbie movie ended up running during a less-desirable daytime period….

…the media giants have discovered that owning both broadcast and cable outlets provides powerful new leverage over advertisers and cable- and satellite-TV operators. The goliaths are using this advantage to wring better fees out of the operators that carry their channels and are pressuring those operators into carrying new and untried channels. They're also finding ways to coordinate promotions across their different holdings….

Entertainment giants such as Viacom, NBC parent General Electric Co. and Walt Disney Co., which owns ABC, now reach more than 50% of the prime-time TV audience through their combined broadcast and cable outlets….

The big media companies are quietly re-creating the "old programming oligopoly" of the pre-cable era, notes Mr. Wolzien, a former executive at NBC. Of the top 25 cable channels, 20 are now owned by one of the big five media companies….

     Sounds like a true gentleman’s industry—with high moral standards for serving the public’s interest—doesn’t it?

     Finally some good news. Poor countries are coming to the defense of their small farmers, and not all agricultural trade policy will be geared to benefit the huge corporate farms of rich countries.

From The Wall Street Journal, September 15.

Trade Talks Fail Amid
Big Divide Over Farm Issues

Developing Countries
Object to U.S., EU Goals;
Cotton as a Rallying Cry

CANCUN, Mexico—In a severe blow to the future of global trade negotiations, talks here among 146 countries collapsed in a dispute between rich and poor countries who failed to bridge differences over farm subsidies and other issues that have plagued trade-liberalization efforts for years….

From the start, however, the talks in this Caribbean resort exposed raw differences between the world's rich and developing countries over what further trade liberalization means.

The talks all along hinged on how deeply the rich countries, particularly Europe, would be willing to slash their huge farm-subsidy programs. Developing countries say the $300 billion a year in rich-country farm payments depress world-wide crop prices, making it difficult for their own farmers to compete….

"The pretense of the development objective has finally been rejected and discarded," said a furious Indian Commerce Minister Arun Jaitley. Instead of special treatment for poorer countries, he said, the WTO was creating new carve-outs for powerful developed countries.

Some delegates said the shifting balance of power within the WTO contributed to the impasse. Not long ago, the U.S. and the EU could largely dictate events at the global trade body. But developing countries have become increasingly well organized and willing to throw their weight around….

• small investors usually get taken by Wall Street,

• investment professionals and exchange officials drain huge amounts of money from the system with their outrageously high fees and salaries,

• improper trading practices by insiders take advantage of little investors, and, in sum,

• why Social Security should not be privatized.

From Business Week, September 15.

How Eliot Spitzer Makes the SEC Look Stodgy

Will Spitzer's mutual-fund probe get the feds moving faster?

Eliot Spitzer, New York State's attorney general, is at it again. Like Batman out to save a sordid Gotham City, he continues to pursue and torment the professional investment community, vowing to end everything from fraud to conflicts of interest that affect investors. Now, he's taking on the mutual-fund industry.

On Sept. 3, in an energy-infused press conference, Spitzer said "illegal trading schemes" allowed at least one hedge fund to buy mutual-fund shares at prices that were not available to most other investors….

But while Spitzer continues to grab headlines, many wonder: Where is the Securities & Exchange Commission?… Now, expectations are high that Spitzer's big splash will spur the SEC to adopt those measures quickly, and perhaps more….

Says Mercer Bullard, a law professor at the University of Mississippi and founder of Fund Democracy, a mutual-fund advocate: "The real failure has been on the enforcement side. The SEC has done nothing to show that it really means business."…

Says Russel Kinnel, Morningstar's director of fund analysis: "One of the reasons that funds are so popular is the perception that they're very ethical—they supposedly treat the little guy like the big guy. But clearly, they haven't done that here."…

From Business Week, September 15.

The $140,000,000 Man

What Dick Grasso's excessive payout reveals about how he runs the New York Stock Exchange

… To Grasso's detractors, what matters most is not his financial performance but his moral leadership—and in that realm, they maintain, Grasso is sorely wanting. On Sept. 2, SEC Chairman William H. Donaldson fired off a letter demanding that the NYSE explain, in detail, how it determined Grasso's pay package. And as if to drive home the point, the SEC released the letter, which contained an extraordinary public bawling-out of a sitting NYSE chairman. "In my view," Donaldson wrote, "the approval of Mr. Grasso's pay package raises serious questions regarding the effectiveness of the NYSE's current governance structure." Even before the paycheck bombshell, institutional investors were going public with long-festering complaints about improper practices on the NYSE trading floor…. … the public's patience with the NYSE is growing short. For years, Dick Grasso has been the undisputed overlord of a private entity that all too often has paid lip service to its public purpose. It's a long-running act. But an experienced showman like Grasso ought to know better than anyone when a long-running act is starting to wear thin.

     As if the credit card industry needed another example of how they deliberately “educate” the most vulnerable members of the public to become financially irresponsible—here’s another one.

From The Wall Street Journal, September 16.

A Bonus for Blowing Off Your Bills

Credit Cards Offer Rewards
For Carrying a Balance;
5% Back vs. 13% Interest

"Hey—We know you're not dumb," says the come-on from Citigroup. "You can tell a good deal when you see one."

Then comes an offer of questionable generosity: Up to 3% cash back on all credit-card purchases—but only during months when you don't pay off your monthly balance.

Just when you thought you'd seen everything from the credit-card industry, now come cards that reward customers for not paying their bills. The conventional wisdom is that it rarely makes sense to carry a balance on a credit card. But, in fact, 61% of Americans do. That accounts for the bulk of credit-card company revenues, making it only a matter of time before the industry's rewards-and-miles obsession came rolling their way….

Do the extra rewards from these rewards-for-debts credit cards compensate consumers for the interest costs associated with carrying a balance? Almost never, since the interest charges range from 8.99% to 16.99%….

Still, some of the pitches are aimed at people who are just beginning to learn about credit and managing their own finances. The Citibank card is targeted specifically at students. It offers 3% cash back on all purchases but only during months when you don't pay off your entire bill. Write a check for the full amount each month, however, and there's no rebate at all….

     Incredible. And the executives of these companies probably have advanced degrees in some of America’s most prestigious colleges and universities. Aren’t any of them teaching ethics?

     If you need any more reasons to believe that our health care industry in broken and needs substantial revision, check the article below.

From The Wall Street Journalk, September 16.

Health Club:

Behind Medicare's Decisions,
An Invisible Web of Gatekeepers

TUCSON, Ariz.—One evening in 1986, while Chris Erringer was sitting in his Toyota Land Cruiser, a stranger approached him and shot him under the right eye….

The attack left Mr. Erringer a quadriplegic, with painfully knotted back and neck muscles….

Then, in September 1999, came a letter that would change his life again. Medicare would no longer cover the injections. "It didn't really explain why," he says. "It just said no."…

Finding the answer took Mr. Erringer more than a year of frustrating arguments and appeals, a legal crusade that turned into a class-action suit against Medicare's bosses. The decision-makers, it turned out, weren't in the massive Baltimore headquarters of the federal Centers for Medicare and Medicaid Services, which runs the Medicare program for nearly 40 million elderly and disabled Americans. The real authority lay in the hands of a North Dakota insurance company—one of the hidden gatekeepers of American medicine who ration health care.

About two dozen of these government-contracted insurers handle the claims for doctor visits and hospital outpatient procedures submitted to the $250 billion-a-year federal program. The Medicare agency, commonly known as "CMS," sets national policies on coverage for some items, including expensive new technical advances.

But the agency gives the insurers--whose territories cover multiple states or even whole regions—broad authority to fill in the blanks, laying down local rules on what Medicare will cover and what it won't. The result: Decisions on everything from trigger-point injections to psychiatric services to the use of ultrasound and CT scans are in the hands of the insurers and their little-known medical directors….

"It's rationing. It's a way to limit things," says Grant Bagley, a former top Medicare coverage official who now represents manufacturers, providers and beneficiaries as a partner at the Arnold & Porter law firm in Washington….

     Not covered in this article about the invisible gatekeepers who ration health care—are the outrageous incomes of all the top players in the medical industry who have made it so expensive in the first place: hospital and HMO administrators, health insurance executives, pharmaceutical industry executives, many doctors and specialists, and the investors in all aspects of the health care industry who put pressures on executives for excessive profits.

     The following two articles go together. As frequently noted about other articles in this website section, they demonstrate the disaster that would follow privatizing Social Security.

From The Wall Street Journal, September 17.

Struggling to Retire on $1 Million

Advice for a Thrifty Couple
Overexposed to a Few Stocks;
Getting Past a Fear of Bonds

Jim and Sue May have accomplished the dream of so many savers: The Kentucky couple has amassed a nest egg exceeding $1 million—and on a combined income that, in the best years, never topped $100,000.

Now, the Mays have a worry: Is even a million enough for a comfortable retirement?…

From time to time we're asking readers like the Mays to expose their portfolios and their worries in exchange for professional guidance from three financial planners. This time, we consulted planners from Pillar Financial Advisors, Mayhew Asset Management and Zussman Financial Advisors.

The planners all agree the Mays should be able to afford the retirement they seek, so long as they restructure their portfolio now….

     Roughly once a month an article similar to the above comes out in one of our prestigious financial publications. The message always is: even the rich have serious challenges planning for retirement, and it requires the ability to consult with financial advisors.

     Think of the challenges for the bottom 80% of Americans, who—if the Republicans have their way and privatize Social Security—will have to manage their own meager funds.

     Under a privatized Social Security system, not only will retirees have to manage their own funds, they will have to rely on brokers like the ones described below:

From The Wall Street Journal, September 17.

NASD Says Firm Gave
Improper Rewards

Morgan Stanley, Official Fined;
Incentives Used to Boost Sales
Of Proprietary Mutual Funds

NEW YORK—The National Association of Securities Dealers charged securities firm Morgan Stanley and one of its top executives with improperly rewarding the firm's brokers with tickets to concerts, sporting events and other noncash incentives valued at more than $1 million in an effort to boost Morgan Stanley's sales of in-house mutual funds and variable annuities….

The NASD's charges target the heart of Morgan Stanley's system for motivating its brokers to sell the firm's own lines of mutual funds to investors rather than funds run by outside that also are available for sale through its brokers….

"This action points to a culture that put tremendous pressure on its brokers to not let down the rest of the team regardless of whether or not it was in the best interest of investors," said Mary Schapiro, vice chairman of the NASD, which regulates mutual-fund and annuity sales….

Week of September 8

     The utter corruption of corporate America is becoming clearer every day. Remember the CEOs of recent years who demanded multiple millions of dollars for their ability to improve the corporate bottom-line?

     The following excerpt describes one of the many fraudulent ways they were able to do it.

From Business Week, September 8.

Economic Viewpoint

The Great American Pension-Fund Robbery

By Robert Kuttner

America's corporate pension system is said to be facing a perfect storm: Equities have taken a big hit (they are still way off their highs), and returns on bonds have plummeted, leaving pension funds with reduced earnings to pay benefits. In addition, corporate downsizing and lengthening life spans have left many companies, particularly in manufacturing, with a rising ratio of retirees to active workers. U.S. Treasury Under Secretary Peter R. Fisher has testified that pensions are underfunded by $300 billion—far exceeding the resources of the government's Pension Benefit Guarantee Corp.

But if pensions are under water, the cause is less a perfect storm than a leaky boat ravaged by pirates. For more than a decade, corporate sponsors of pension plans have been systematically looting them. The great pension raid is of a piece with the other accounting deceptions of the 1990s, and it had the same motivation—to boost reported earnings and stock prices….

Among the favorite gimmicks for creative theft of pension assets:

• Project an unrealistically high rate of return and claim that the plan is overfunded….
• Convert from conventional plans to "cash-balance plans."…
• Redefine employees as independent contractors.…
• Sell off units that have older employees, who then lose their pension benefits….
• Declare bankruptcy, but set up a special bankruptcy-proof pension plan for top executives as an off-the-books trust….

Once, pension plans were intended to induce loyalty and long service in workers. Now, big corporations and their executives seem to care about only one category of worker—top managers, who loot the plans while protecting their own assets. Ordinary long-tenured employees are deemed liabilities.

The remedy for depleted pension funds is much tougher regulation. But the Bush Administration wants to weaken anti-discrimination rules to make it even easier for top executives to have one set of rules for employees and another for themselves….

It's fine to have an Administration that prides itself on being pro-business. But don't the tens of millions of employees who loyally serve Corporate America also count as part of business? Shouldn't their pensions be protected as well?

     With monotonous repetition, the Bush Administration has again demonstrated its total disregard for the welfare of America’s workers—and its commitment to help its corporate supporters to get incredibly rich.

     In one sense, the following three articles are similar: they demonstrate again that—despite all the recent reforms—Wall Street is still a jungle for the unwary and the unsophisticated.

     As they both point out, even the experienced investors who read Business Week and The Wall Street Journal need to be warned of the pitfalls awaiting anyone who counts on the integrity of the securities industry.

From Business Week, September 8.

Commentary: The Myth of Independence

….investors shouldn't be lulled into thinking that independent research is the holy grail for stockpicking. Some academics who study financial markets question whether stock research has much value at all, given the amount of information bouncing around the markets. Untainted research is obviously preferable to the flawed kind, but it's no silver bullet.

From Business Week, September 8.

The Latest Magic in Corporate Finance

For their part, the companies say they aren't hiding anything. Instead, they're doing the deals to get cheap capital, they say…. However, Christopher Senyek, an accountant at Bear Stearns who looked at more than 100 of the contingent convertible issues, says public information on the deals is often "sketchy at best," making it hard to gauge their impact on stock prices.

From The Wall Street Journal, September 8.

How Market Timers Can
Drain Returns For Some Investors

Long-term mutual-fund holders are disadvantaged in several ways. Waves of cash flowing rapidly in and out of a fund increase the commissions that managers pay to buy and sell securities, and those expenses eat into returns. Rapid withdrawals can force managers to sell some winning investments to pay off those selling their fund shares. And to offset fast trading, some fund managers hold a larger portion of their assets in cash than otherwise would be necessary, a move that dilutes fund returns when markets are rising….

     These were just three more brief examples (in one day) of the hypocrisy of conservative economists who want to privatize Social Security, and to let loose the Wall Street barbarians to prey on America's workers.

     These were extensive articles and only brief excerpts were used to demonstrate a point. Those who are interested in the actual investment implications of the issues cited should go to the original articles.

     Remember Bush’s reasons for giving our richest Americans a huge tax cut? It was to stimulate investment and create jobs. As usual, Bush addressed a problem that didn’t exist. Our economy wasn’t weak because of a lack of investment money, it was because poor and middle-class consumers didn’t have enough money to buy the products they needed.

     The real problem of recent years, as the Wall Street Journal describes it, has been “capacity glut.”

From The Wall Street Journal, September 8.

Long a Drag on the Economy,
Capacity Glut Begins to Ebb

"In the flush years, the 1990s, we could absorb that," says Anne Marie Gattari, a spokeswoman for Ford. "We can't any longer." The Big Three want to end the moratorium in the new contract now being negotiated. Ford, the most financially strapped of the three, wants to reduce its current North American capacity of 5.7 million units to 4.8 million, its normal level of annual sales….

     This is beginning to sound ominously similar to 1929, when the richest Americans had 44% of the privately held wealth in the nation. It was reduced to 19.9% in 1976, but rose to about 42% in 1998 and is probably close to 44% again today.

     Again, investors seem to have most of the money, but their consumers don’t have enough to buy the products they need. Even with all this going on, corporate America's biggest concern, of course, is their ability to "boost profits and resist pressures to cut prices."

     In this regard, the Journal seems to think the economy is getting better. Let’s hope so, even if the corporations take most of the profits, at least workers will have jobs. But don’t count on it, with the current crowd we have in Washington wanting to pursue the same policies that got us into trouble in the first place.

     It has taken some time for the world to wake up to the disastrous effects of globalization and the WTO—for most citizens of all nations. The issue has never been, and still isn’t, rich versus poor nations as whole entities. The issue has been rich versus poor citizens in all nations, rich and poor alike.

     The wealthy of both rich and poor nations have formed a club, called the WTO, to ensure the continued accumulation of wealth by pitting workers of the world against each other, and calling the barbaric practice “free trade.”

     Unfortunately for the rich, conditions have gotten so bad that there are real threats to political stability throughout the entire world. Thus, we are seeing the WTO's problems described in the following excerpt:

From The Wall Street Journal, September 9.

Post-Iraq Influence Of U.S.
Faces Test At New Trade Talks

Activists are criticizing the agreement. One criticism is that it's worded so vaguely nobody can be sure how it will work. Some fear that poor countries lack the legal sophistication to take the steps needed to receive the drugs. The nations have to find a foreign company to make the drugs for them and then inform both the drug maker that holds the patent and the WTO's committee on intellectual-property rights. Finally, they have to be prepared to fight a challenge to their use of the drugs at the WTO's dispute-settlement body. Several countries, including the Philippines and Kenya, had last-minute worries about the deal but agreed in the face of heavy-duty U.S. arm-twisting.

     America’s self-interest, bordering on naked greed, is evidenced by the U.S. negotiator, Mr. Zoellik, who insisted that poor nations put their poor farmers at a severe disadvantage—if America’s giant corporate farms are to give up some of their own protections and subsidies.

     The U.S. is among the last nations on earth willing to risk public health in the name of corporate profits. Not only that, we pressure other nations to go along with us in our gambling with the future of mankind.

From The Wall Street Journal, September 9.

U.S. Opposes EU Effort to Test
Chemicals for Health Hazards

"It's not the mandate of those agencies to do what they're doing," contends Joe DiGangi, a scientist with the Environmental Health Fund. "The government has adopted the industry position and tried to sell it," he says….

     Could the close connection between the Bush Administration and the worst aspects of corporate America be clearer?

     The corruption caused by political incest continues.

From The Wall Street Journal, September 10.

Many Ties Link Pension
Lobby To Regulators

Ms. Bradshaw, the Treasury spokeswoman, objected to questions about the party. The policy positions of those invited to the party "had no bearing on whether they were invited or not," Ms. Bradshaw said. "This was two buddies throwing a party for friends."

     The pretended innocence of it all is especially disturbing: "This was two buddies throwing a party for friends." Even if that was true, it demonstrates a total lack of appreciation for the inbred biases that color political decision-making. When the regulators and the regulated—just friends—get together to schmooze, corporations always win and the public always gets screwed.

     Again, it’s Republicans and big business against working Americans. This Wall Street Journal editorial endorses the removal of protections of the rights of organized federal employees to earn decent wages and to have humane working conditions.

From The Wall Street Journal, September 9.

The Union Libel

The effort can't succeed, of course, unless some Republicans cooperate. In the House, GOP Members Jack Quinn (New York), Steve LaTourette (Ohio) and Ron Kirk (Illinois) are among the wobbly. Over in the Senate, New Jersey Democrat Frank Lautenberg is expected to attempt a filibuster, and GOP Senators Jim Inhofe of Oklahoma and Jim Talent of Missouri are listening too closely to the union libel. If Republicans help defeat this gift to taxpayers, we'll know they no longer believe in smaller government.

     Apologies: Just another article in the continuing series about the corruption of America’s securities industry—and why Social Security should not be privatized.

From The Wall Street Journal, September 9.

Will Funds Disclose More—Publicly?

"To restore faith in the fund industry, it's not just important that everyone gets the same [fund-trade] execution, but also the same [portfolio] information," says Russ Kinnel, director of fund analysis at researcher Morningstar Inc. "It doesn't take any more effort to post a fund's portfolio to a Web site than it does to e-mail it to a hedge fund."

Week of September 1






     The following two Wall Street Journal articles go together: first, the news report that details the looming disaster of the misguided Iraq war. Second, the editorial that—despite all the evolving evidence—still tries to convince voters that Republicans are strong on defense and Democrats are weak.



From The Wall Street Journal, September 5.
The Postwar Bill
For Iraq
 Surges Past Projections

Sabotage, Looting Take a Heavy Toll;

Oil Revenue Flows, but Only Weakly






Rebuilding Iraq is turning out to be far more expensive than the Bush administration predicted just months ago, with U.S. taxpayers likely to foot much of the tab.
… officials involved in the process say the U.S. tab for helping to rebuild and sustain Iraq through next year—aside from the $3.2 billion already put into the effort—could exceed $10 billion. On top of that, the administration expects to spend as much as $50 billion next year to keep tens of thousands of U.S. troops in Iraq, beyond the $70 billion Congress approved earlier this year to pay for the war and its immediate aftermath.
That picture is strikingly different from the one the Bush administration sketched out before the war in Iraq began. Then, the official message was simple: Unlike Afghanistan, oil-rich Iraq would largely pay its own way. "We're dealing with a country that can really finance its own reconstruction, and relatively soon," Deputy Defense Secretary Paul Wolfowitz told Congress a week after the war began. Oil revenue, he predicted, "could bring between $50 billion and $100 billion over the course of the next two or three years."
That estimate, which was predicated on aggressively optimistic assumptions, now looks off course. In reality, Iraq seems likely to fall short of even the $12 billion to $14 billion in oil revenue next year that coalition officials say they expect.
The mounting price tag for Iraq comes as President Bush grapples with a yawning deficit at home, expected to hit $480 billion next year, and continued hostility among many erstwhile allies in Europe that might otherwise contribute. All this could become a major political liability for Mr. Bush moving into the election season next year….
Bechtel Group, hired to do $680 million in U.S.-funded infrastructure repairs, estimated soon after it arrived in Iraq this spring that putting the country in working order would cost at least 24 times that much. L. Paul Bremer III, the top U.S. official in Baghdad, in recent weeks has made even higher estimates….
That means that outside sources—some combination of the U.S., Europe, Japan, Persian Gulf nations and international financial institutions—may have to contribute more than $16 billion to Iraq's budget and rebuilding needs next year, aside from the military costs of occupation. And, unfortunately for the U.S., there isn't much sign of serious help from elsewhere, thanks in part to lingering prewar tensions between the U.S. and many allies….


------------------------------------

From The Wall Street Journal, September 5.
John Kerry Puts the Big
 
Issue Before the Voters


By DANIEL HENNINGER

… the Democratic Party is not quite a normal party now. It has become the antiwar party. It is the hell-no-we-won't-ever-go-party. Which is why Howard Dean, the most antiwar candidate among the party's presidential hopefuls, is stretching his lead in polls based on phone calls to Democratic warrens, with the result reflecting what Salon.com's David Talbot calls "the party faithful's passionate mood."…
I don't doubt that a President Kerry or even a President Dean would deploy the U.S. military on relatively modest missions—a Haiti or Liberia, or Somalia. But an Iraq war? A strike and follow-through against North Korea? After Vietnam and no matter that September 11 happened, and no matter what the merits, Mr. Kerry and the others (perhaps excepting Sen. Lieberman), give the impression they would not act, or not act in time. They would consult, specifically with France, Russia, Germany and the U.N. secretary general.
There is no way to know with certainty whether any of them would act on the scale of the Iraq war on behalf of American security. But Mr. Kerry has usefully raised the issue. It won't be sufficient to say they would have "done things differently." The real question is whether they would do it at all.


     Remarkable. The news story details the disastrously poor planning and decision-making of the Bush Administration, and the terrible mistake of going alone without the U.N. and others. 
     And in the same Journal issue, the editorial criticizes Democrats for doubting the wisdom of going to war with Iraq in the first place, and then wanting to get the support of other countries and the U.N. in the second place.
     Being “strong on defense” doesn’t equate to going to war with Iraq. It means you correctly analyze likely terrorist threats and allocate your recourses according to priorities that make sense. For more on this, see How the Republicans Beat the Democrats on Spinning Iraq.












     The stock market continues to go up, investors and corporate executives see their incomes continue to go up. And competition among Americans for jobs continues to reduce working-class incomes.


From The Wall Street Journal, September 5.
Payrolls Drop by 93,000 Jobs

As Unemployment Rate Declines



WASHINGTON—Employers cut jobs for a seventh consecutive month in August, as the labor market remained in a funk despite the economic recovery gaining steam.
Nonfarm business payrolls declined by 93,000 last month, the Labor Department said Friday. The cut, the steepest in five months, brought total job losses since the start of the year to 431,000. The unemployment rate fell a tenth of a percentage point to 6.1%….
The numbers highlighted the peculiarity of the current economic recovery. The economy grew at a solid 3.1% annual rate in the second quarter, and forecasters are betting third-quarter growth will be at least 5%.
But employers keep cutting payrolls. One reason is a surge in productivity, which rose at 6.8% in the second quarter. That allows companies to delay hiring until profits improve and the economy recovery has solidly taken hold….
August's job cuts were broad based and remained heavy in manufacturing, a sector that suffered the brunt of the economic downturn. Manufacturers shed 44,000 jobs last month, raising the total of jobs lost in the sector to about 2.7 million over the last three years. President Bush on Monday announced he was creating a new assistant-secretary position in the Commerce Department to focus on revitalizing the factory sector….


     A key issue has been omitted from the above excerpt. A major reason for increased productivity of American industry amidst declining payrolls is that employees are under the threat of losing their jobs, and are much more willing to work harder under more stressful conditions.
     Republican politicians and corporate America have working-class Americans exactly where they want them. However, there are signs that they may be beginning to realize that they have taken things too far. This lopsided economy is bound to crash if workers don’t start getting more income to spend.
     Although globalization has led to the rapid accumulation of wealth to America’s investors and corporate executives, the massive exodus of jobs to other countries is beginning to worry even some moderate Republicans.  











     The effects of corporate greed and misbehaviors are rapidly multiplying, and the economic news continues to get worse—especially for those who didn’t benefit from the economic boom of the 1980s and ’90s. 


From The Wall Street Journal, September 5.
Warning of Pension-Plan Shortfall

Raises Pressure for Financial Fix




The government agency that insures 44 million workers' retirement benefits said the nation's pension system is in worse financial shape than previously believed, a politically charged warning at a time when economic uncertainty, unemployment and rising fears about the loss of manufacturing jobs overseas already are stoking debate in Washington.
It raises the prospect that companies could be forced to contribute more to the government insurance plan, that benefits to retirees could be reduced and even that taxpayers ultimately could have to bail out the pension-guarantee program….
The Bush administration wants Congress to approve legislation that would ease the pension burden on companies for two years, allowing for the economy to turn around. After that, the administration is proposing a transition period of three years that would end with tougher, long-term rules for determining pension-contribution requirements. Democrats such as Rep. George Miller of California are calling for greater disclosure of existing problems, so workers can judge for themselves how likely they are to receive the benefits they've been promised.
Business groups, meanwhile, are pressing Congress for changes that could permanently ease their pension burden….


     It’s the usual cast of characters: Republicans and business groups wanting to protect the profits of corporations and minimize protections of employee retirement benefits. And Democrats who want to protect the interests of retired workers.
     No matter how this is resolved, you can count on it: Corporate executives who caused the problems will continue to get income increases, the American taxpayer will pay through the nose, and benefits to retirees will be reduced. 











     For those who have been victimized by the economy of the past 25 years (at least) The Wall Street Journal is always looking for good news among the bad. It has finally found some. There are terrible jobs out there for those who want to work.




From The Wall Street Journal, September 2.
Why Some Jobs Go Begging

Despite Weak Labor Market



While many Americans feel insecure about their jobs in the current tough labor market, workers in certain fields enjoy a surprising degree of job security.
These careers often have industry-specific reasons for their strength, but typically they have three things in common: Many require considerable training and certification even though pay levels can lag behind those in other careers. None of these jobs can be outsourced to lower-cost nations. And the most secure jobs are often seen as undesirable to many job seekers.
Among these are many positions in health care, which often is stressful and can have higher injury rates than some construction jobs. Another field, selling cars, takes relentless effort and garners little respect….
More than nine million people, from computer programmers to factory workers, are looking for work. Millions more say they don't make as much money as they should….
Barbara Williams, a 58-year-old clinical nurse specialist at Dominican Hospital in Santa Cruz, Calif., watched younger nurse colleagues depart in the 1990s. The fast pace of the work and rising number of patients assigned to each nurse led to burnouts and career switches. Pay was another issue. In 1998, nurses, who attend college for two to four years, made an average annual salary of $43,070, not competitive in many regions with jobs requiring a similar level of education. "If they were young and able to, they walked out," Ms. Williams says. The result: The Labor Department projects nursing will be one of the top generators of new jobs during the coming decade.


     The last example of nursing is an excellent demonstration of how corporate greed and conservative economics combined to almost destroy one of our most revered, and desired, professions. For the past 20 years nurses have found their pay and working conditions deteriorate, simply because they had no negotiating power compared to pharmaceutical companies, insurance companies, hospital administrators, and organized physician groups. 
     Wealth is a zero-sum game (see Zero-Sum), and in one way or another, those groups were responsible for recklessly cutting the costs of nursing in order to increase their own incomes.


     Unfortunately, other groups of workers won't be as lucky to see their pay and working conditions improve, as apparently is happening in nursing. Increasingly, working Americans are going to find that their jobs must fit the three requirements described above:

 Considerable training and certification even though pay levels can lag behind those in other careers (or lower pay for the same level of work they did before). 
The jobs cannot be outsourced to lower-cost nations (just how many of those are left nowadays?) and 
 The jobs must be seen as undesirable to many job seekers.

     What a glorious society conservative economists and politicians have created for us.








     It always starts slowly. A corporation like GM sets up a new labor force in another country. They train them, give them the very best technology and equipment, and pay them somewhat better wages than they could get otherwise.

     As the foreign workers develop their expertise, they begin to take the jobs of much higher-paid workers in the U.S. to produce products, technology, or services intended for the U.S. Eventually, they replace virtually all the U.S. workers, except those who must physically be present in this country.

     The corporation’s investors and top executives benefit financially from the reduced labor costs and the American consumer may get cheaper products and services. 

     But it’s the replaced U.S. workers who make all the sacrifices, and their numbers are growing rapidly. 



From Business Week, September 1.
China's Design Dream Team

Industrial designers are making a mark

…Today, though, Sun (Yunbo) is one of 21 Chinese designers working on the Buick Excelle, an new sedan that General Motors Corp. plans to start selling in China this fall. “Now auto design is natural for me,” Sun says.

Sun is at the vanguard of a trend that’s shaking the world of design. As China grew into an export powerhouse over the past decade, most of what its factories churned out was designed elsewhere. Now, like the Japanese in the 1970s and the Koreans in the 1990s, Chinese companies are keen to reap the higher margins and market share that often reward flashy, well-designed products. "Our goal is the transition from 'Made in China' to 'Designed in China,"' says He Renke, chairman of the industrial design department at Hunan University….

Even so, it may be a while before designers in Milan, London, or Detroit need to worry about finding a new line of work. So far, most Chinese designers have simply tweaked color and form for export products, while conceptual work on new cars, appliances, and electronic gadgets is done in Europe or the U.S. "They have good designers, but they don't know the U.S. market" in many products, says Jerry W. Edwards, executive vice-president for merchandising at retailer Home Depot Inc., which hires Chinese subcontractors to produce items such as faucets and ceiling fans….

For a glimpse of the future, check out 28-year-old Fang Zhen, who works with Sun at GM. He sports orange hair, favors black T-shirts and cargo pants, and looks to Italy for inspiration. "First, I want to be the Giorgio Giugiaro of China," says Fang, referring to the legendary Italian who designed Alfa Romeos, Lamborghinis, and the 1967 Oldsmobile Toronado. "Then I want to be a top auto designer globally." With that kind of ambition coming out of Shanghai, designers in the West may want to keep one eye on the rearview mirror.


     When the time comes to face the fact that we have totally destroyed—not only America’s middle class, but also the upper-middle class—will those who profited from the globalization craze be willing to voluntarily pay for the social dislocations and problems they have created? I wouldn’t count on it.

     It’s going to take a new batch of politicians who aren’t afraid of being called “traitors of their class” (as was Roosevelt), and a new “new deal.”

     Corporations can always think of reasons for swallowing smaller companies and getting bigger. They never mention one of their best reasons: Like Donald Trump, when you get really big—and the economy, jobs and economic stability are threatened—there’s no way the politicians and banks will allow you to fail. Of course, in the case of these accounting firms, it’s the sheer lack of diversity of independent accounting firms that is at issue.

     Too many of the little firms have been absorbed by the greedier ones.

From Business Week, September 1.

Commentary: The Big Four: Too Few to Fail?

The mild punishment raises a troubling question that has lurked ever since last year's collapse of Arthur Andersen: Are the surviving Big Four accounting firms now too few to be allowed to fail—and effectively beyond regulators' reach? Any severe, firmwide sanction, such as a one-year ban on auditing public companies, could put an accounting firm out of business. That would only strengthen the ever-growing concentration of the Big Four. Already, their market dominance threatens to make unworkable an idea the SEC is studying to boost auditor independence—requiring companies to rotate audit firms every five years.

     The Bush administration’s dismal environmental record gets worse every day. This excerpt from The Wall Street Journal clearly informs those who care about the environment which political party and which lobbyists support legislation that could eventually kill our planet—all to protect short-term corporate profits, and to keep the public buying gas-guzzling cars.

From The Wall Street Journal, August 29-September 1 (Labor Day Holiday).

Bush Team Clears Carbon Dioxide

Glenn Kelly, spokesman for the Alliance for Climate Strategies, a Washington-based group that represents the mining, chemical, utility and other industries, applauded the Bush administration decision. Mr. Kelly pointed to recent efforts by both Republicans and Democrats in Congress to amend the Clean Air Act specifically to allow regulation of greenhouse-gas emissions as evidence that the law as written doesn't now permit such regulation.

     Not only to Republican legislator and lobbyists want to keep the federal government from protecting the environment, they threaten to sue those individual states who want to set standards for themselves. So much for the Republican reverence for “states rights.”

     Another Wall Street Journal report that demonstrates that the Journal’s editorial staff’s chronic criticisms of governmental regulations doesn’t jive with its own news stories:

From The Wall Street Journal, August 29-September 1 (Labor Day Holiday).

Experts Urge More Investment
In Power Industry , Clearer Rules

The report asks Congress to pass mandatory rules for transmission operators, asserting that the blackout was a "terrible reminder that the system of voluntary compliance with nonbinding reliability rules for electricity grids is breaking down across North America." Energy bills approved by the House and Senate include such mandatory rules, and there is little disagreement in industry….

     Count on it. In this bipartisan approach to preventing future power blackouts, the Democrats will focus on “clearer regulation” [corporate misbehaviors that need oversight]. The Republicans will make sure that corporations get “greater incentives to invest in new equipment” [money from the American taxpayer, or higher electric rates approved for consumers].

     Corporate investors and high level corporate executives who caused the blackout will suffer no losses, and may even gain materially from the new preventative measures the Republican Congress comes up with.

     Conservatives insist on getting their way, no matter what they have to do to get it. If they can’t privatize public schools, then they just cut taxes and, hence, funding for public schools.

     The Wall Street Journal describes how conservatives can make everyone—rich and poor alike—pay for their “public” education. Of course, the rich benefit, because they can use their huge tax cuts to fund much more than just their own kids’ school fees.

From The Wall Street Journal, September 3.

Public Schools Pile on Fees

The notion of a public education is "truly in jeopardy when you have to start charging these kinds of user fees," says Markham Jeep, a Gurnee school-board member who voted against them. For some kids, he points out, the very thing that keeps them coming back to school are the kinds of activities that will no longer come without added cost….

     So what’s next? Fees for science class, computer education, algebra, etc.?

     The following is just another small item that probably won’t make the mainstream press or Fox news. It’s just another example of the good ol’ boys at the top sticking together and giving themselves huge incomes—at the direct expense of their own organizations.

From The Wall Street Journal, September 3.

SEC Head Demands Details on
Pay Deal For NYSE's Grasso

Mr. Donaldson is also concerned about how the NYSE is going to fund the payout to Mr. Grasso and whether that is the best use of the exchange's money, SEC officials said….

     Of course, one of “the best uses of the exchange’s money” could go to overseeing the unethical behaviors that have characterized the Exchange over the past few years—instead of into the pocket of the lead guy who should have prevented it.

     Again, the stock market is soaring and investors are getting richer, while the “Employment numbers have continued to worsen.”

From The Wall Street Journal, September 3.

Dow Industrials Surpass
9500 On Strong Data

Employment numbers have continued to worsen, he said, but he added that he expects them to improve this month or next….

     It’s almost like the infamous 1980s and ‘90s, when the stock market soared, investors got richer, and wages for working Americans declined. Only this time, even the jobs that pay poorly are getting fewer.

     And, of course, although investors benefit immediately, or prematurely, from conservative economic policies, conservatives promise workers that they'll benefit from their economic policies sometime in the future ("this month or next").

     Maybe. If everything goes well. And if the economy gets better than the most optimistic expectations. And if conservatives can't figure any new ways to further screw those who actually work for a living.

     I apologize for the following redundancy. The number of articles from conservative financial publications that describe the utter corruption of America’s securities industry is mind-boggling. And anyone who reads the file, “Previous Weeks’ Conservative Press,” must get tired of so many similar articles that have come out in recent months.

     However, the conservative pressure to privatize Social Security—and to encourage working Americans to put their retirement future into the hands of a corrupt industry—deserves constant refutation.

     Here again, is an excerpt that demonstrates the need for a reliable and honest national program, Social Security. It ensures at least minimal retirement benefits for those who work in jobs that don’t provide enough funds to realistically participate in an individually directed, diversified investment program on Wall Street.

From The Wall Street Journal, September 4.

Spitzer Kicks Off Fund Probe
With a $40 Million Settlement

In a statement after Mr. Spitzer's announcement, SEC Chairman William H. Donaldson called the abuses charged "reprehensible" and pledged to continue a review of regulatory issues regarding both mutual funds and hedge funds. But by his action, Mr. Spitzer again encroached on the SEC's regulatory turf, beating them to the punch as he did with his cases on the conflicts facing Wall Street research analysts. SEC officials said they were somewhat frustrated that Mr. Spitzer didn't involve the agency or brief its officials on his investigation.

     Thank heavens for Mr. Spitzer, who “encroached on the SEC's regulatory turf, beating them to the punch as he did with his cases on the conflicts facing Wall Street research analysts.” If it weren’t for him, we’d never have heard of this scandal or the analysts’ scandal.

     Certainly the SEC club of greedy good ol’ boys aren’t interested in discovering corruption in their own securities industry.

     Joe Lieberman has always been my least favorite Democratic candidate. His positions are classical “Republican-Lite”—just like Bill Clinton and Al Gore. All of them seem to believe that the key to winning an election is to show how much they can please the corporate power brokers.

     My suspicions were confirmed when The Wall Street Journal published the following commentary by Republican-Lite Bob Kerry (former Democrat Senator from Nebraska). The Journal was only too happy to support Kerry’s endorsement of loser Lieberman, as the now-desperate Lieberman demonstrated his “courage” when he “reaffirmed his support for open markets and free trade and for private school voucher experiments for poor children.”

     All of those positions are music to America’s right-wing crackpot supporters of rich investors and of our top corporate executives

From The Wall Street Journal, September 4.

Hold the Applause!

One notable example of that was Joe Lieberman's recent performance before a national gathering of labor leaders. Knowing that some of his views would be unpopular, Mr. Lieberman stood his ground and reaffirmed his support for open markets and free trade and for private school voucher experiments for poor children. He was loudly booed, and in response Mr. Lieberman said, "I'm going to speak the truth; I'm going say what I think is best for America regardless." I wanted to endorse him on the spot. He understands that America has always performed at its best when leaders know how to lead.

Week of August 25

     As you read the following excerpt, realize that this article was not on the editorial page of The Wall Street Journal. It was the lead news story on the front page, August 28, 2003.

     Also note that, a few days earlier, the Journal reported that a likely cause of the massive and costly blackout over much of the country was the result of corporate mismanagement and a lack of effective government oversight. Even this article acknowledges the need for better regulations of corporate behaviors.

     Apparently not wanting to leave it at that—just reporting corporate misbehaviors and the need for government oversight—The Wall Street Journal editors decided to assign one of its right-wing propagandists the job of equating government regulation by the “left” (Democrats), no matter how necessary and sensible, with communism. (Certainly no reputable journalist would repeat the following Republican mantras in a supposed news story.)

From The Wall Street Journal, August 28.

A Lesson From the Blackout:
Free Markets Often Need Rules

Until the 1970s, electricity in the U.S. was provided primarily—and successfully—by privately owned, state-regulated monopolies that both generated and delivered power to prescribed areas, and didn't compete with one another. Ever-bigger and efficient power plants brought the price of power down by about 20% a decade, according to the Electric Power Research Institute, an industry think tank….

     Of course, when disaster strikes, propagandists like David Wessel must create the impression that Republicans are not a total idiots and ideologues. So Wessel quoted Patrick Wood, chairman of the Federal Energy Regulatory Commission, who said, evidently for publicity purposes only, “Ideology alone will not capture the benefits of competition while preserving customer protections.” The implication of the article is that Republicans are capitalist regulators, whereas Democrats are communist regulators.

     Naturally, any legislation the Republicans come up with will be designed to achieve three objectives:

1. Correct the electrical transmission problems with as few regulations on corporate greed as possible, and in a way that

2. Allows corporations to make still more money out of the disaster by charging as much as possible to fix the problems (count on it: either taxpayers or rate payers will pay through the noses for the new regulations), as they then

3. Claim another victory for “capitalism over communism.”

     Republicans believe that capitalism is a system that should allow the American aristocracy to control markets for their own profit, no matter what the cost to the consuming public.

     Often this means that they design rules for the economic “playing field” to favor those with power and money, rather than those who have high moral standards.

     Of course, this also means that they must make Herculean efforts to convince the public that this is all in the best interests of the American public. Hence, propagandists write articles like the above in the Journal.

     There are so many absurdities in the above article, it is almost insulting to the intelligence to list them. Nevertheless, a brief mention of the most obvious one might be indicative of the extent to which America’s right-wing will go to defend its ideologues.

     Most obvious, to equate the past policies of Chinese Communist Party with the kinds of regulations, government agencies and legislation that Democrats have created over the years is criminally stupid. The Securities and Exchange Commission, environmental legislation, social security, national parks service, Communicable disease center, OSHA, etc., etc.—all those things that help civilize a society and that Republicans always equated with communism and opposed—China NEVER had.

     And by implication, to equate Mao and Marx with people like Roosevelt and Truman should be beneath even The Wall Street Journal. But that seems, sadly, to be characteristic of the times we live in.

     Supposedly, this week’s Barron’s and Wall Street Journal were giving investment advice to their readers. However, in doing so, they inadvertently blew the cover on the real goal of globalization.

     Sometimes the most revealing part of an article can be one or two sentences. Today’s conservative values were again displayed in an extensive Barron’s article analyzing investment opportunities in German stocks—and concluding that it may be a bad idea.

From Barron's, August 25.

Auf Wiedersehen, German Rally?

…For all the market's embrace of Berlin's proposed reforms, Carl Astorri, head of strategy at Barclay's Private Client division, points out that in reality the easy fixes were the ones accomplished so far, rather than tough-to-swallow measures that could, for example, make it easier to hire and fire in Germany's famously rigid labor market. "We're coming up to the trickier part," he says of September, when the federal legislature considers in earnest the proposed reforms. "That will be much more of a test," he maintains….

     Whereas Barron’s was presenting investment opinion with regard to Germany generally, The Wall Street Journal presented a specific case.

From The Wall Street Journal, August 27.

Despite Rally, the Skeptics
Dial In on Deutsche Telekom

It employs 141,000 workers and is the main target of management's plan to cut 50,000 jobs by 2005….

     Those who don’t regularly read investment advice in the conservative financial press may not realize the conclusion that “tough-to-swallow measures … could … make it easier to hire and fire in Germany's famously rigid labor market,” is a regularly repeated theme. It is applied to most of Europe, where workers get up to five weeks vacation a year, have much better working conditions than do American workers, and where unions still have at least a little political influence.

     Americans who actually have to work to make a living should pay special attention to the Journal’s comment that “About 70% of the workers are in Germany, and more than a quarter of those are employed under generous civil-servant contracts.” Implication: Germany had better export most of those jobs to third world countries where working conditions are the worst, and labor costs are least.

     And that’s after they already announced plans to reduce costs by eliminating 50,000 jobs out of 141,000 by 2005.

     Naturally, American investors see good working conditions and decent pay for employees as undesirable because:

• It means that workers get a greater share of corporate income, either in wages or humane working conditions—as you would expect in a civilized society.

• Since those workers get more money, corporate profits are not as excessive.

• When corporate profits are not excessive, investors abandon Europe and move to countries where workers can be brutalized at will.

• So, if investors have their way, Europe will lose its industry and its jobs, and eventually its workers will have the same kind of lives as workers in China, Indonesia and elsewhere.

     So, conservatives prove that they were right all along when they threaten: “If you treat workers decently and fairly, we’ll abandon you, you’ll lose your jobs, and you’ll be impoverished—even as we investors become fabulously wealthy from the process of pitting workers of the world against each other."

     And they regularly use Europe as an example of how they can carry out their threats. They constantly refer to Germany, France and Italy as examples of countries that have lost industry because of high labor costs. They can't be as open about the U.S. because that would be too inflammatory to American voters.

     The conclusion that Barron's and The Wall Street Journal want to leave the politicians of the world with: National legislatures must have the courage to do the "trickier part" of reforming labor laws. (Meaning, of course, that they had better deliberately screw their workers in order to benefit the investors of the world—or they will lose their industries.)

     It's about time American voters gave politicians a different message: quit screwing workers in order to benefit investors, or we'll vote you out of office.

     Even the conservative Wall Street Journal can’t avoid the obvious hypocrisy of the Bush administration’s environmental policies.

From The Wall Street Journal, August 25.

Clean Air Act Change
Spurs Criticism of Bush

The planned change in the Clean Air Act's so-called New Source Review program leaked just as the president was standing in the Northwest touting his fish and timber policies. While the setting allowed Mr. Bush to display personal interest in the environment, the arguments advanced by the administration on the New Source Review rules are broadly similar to those made by the president for his timber and fisheries policies. All are described as "practical, results-oriented" and are nonconfrontational toward industry. Carl Pope, executive director of the Sierra Club, said Mr. Bush is trying to curry favor with voters by embracing the "right rhetoric," but contended that his actions betray a shallow commitment to the environment.

     It’s the same old story. Describe your environmental policy as a profit motivated—and, thus, superior to government regulations and oversight. It never ends. Despite common sense and a dismal history of private industry environmental disasters in the past, conervatives say the environment will benefit from fewer, not more, regulations.

     The following excerpt indicates why it’s important to get progressive politicians elected to public office. They don’t appoint right-wing judges who always find in favor of corporations, no matter how much damage they have done to the public or the environment.

From The Wall Street Journal, August 25.

U.S. Court Rejects $5 Billion
Punitive Award for Exxon Spill

The 1989 spill, the largest in U.S. waters, damaged the fisheries and other wildlife in the sound.

     "We will continue to pursue this case until we are satisfied that a fair decision has been made"—means that “we have enough money to carry this through the courts until we find enough conservative judges (almost ten years later) to rule in our favor.”

Week of August 18

     The debate about our country’s outsourcing of jobs continues, although the evidence is so clear, one wonders why it’s necessary. The following Business Week article was so large, and the issues are so widely discussed in other sources, only a few key portions were excerpted for purposes of criticism.

     Actually, this is almost a non-debate. Even the debater who warns of the dangers of outsourcing jobs seems comfortable when it's only manufacturing jobs being lost. She becomes alarmed only when the jobs are higher-status.

From Business Week, August 18-25 (a double issue).

Commentary: Outsourcing Jobs:
Is It Bad?

By Michael J. Mandel
Chief Economist Mandel writes about innovation and economic growth from New York.

     You’ll note that Ms. Madigan subconsciously sabotages her own logic. The looming problems she sees with the loss of higher-skill jobs are exactly what we’ve already seen with the loss of lower-skill jobs.

     Although she doesn't mention them specifically, the problems include the loss of income for masses of workers, the destruction of communities, the breakdown of families, etc., as have been reported elsewhere. When these problems were limited to working-class workers and communities, Ms. Madigan saw only benefits to American society.

     Now that the problems have migrated up to her social level, she’s beginning to get concerned. She says she believes in “free trade.” Not true. She believes that it’s perfectly ok to destroy workers' incomes by constantly pitting them against one another. That’s not “free trade.” That’s barbarism—and what we now know as globalization.

     (Free trade should be based on purely economic factors: nearness to raw materials, access to the distribution system, competence of management and technical talent, etc. It should not be solely a device to drive wages down and destroy workers' ability to negotiate for decent working conditions.)

     Also, when she notes that now "one out of three jobs is at risk," she demonstates that she has no clue as to the real downside of our job losses. When you lose one job out of three, it means that the two jobs that are left pay will now pay less, because of the greatly increased competition for jobs. This is exactly what we have seen happen to working-class wages over the past 25 years (which is of no concern to Ms. Madigan or Mr. Mandel).

     Mr. Mandel, arguing the negative, still sees no problem even when lower-level high-level workers lose their incomes (the lower-upper “rungs on the ladder”). After all, at the same time, a few lucky workers in the breakthrough technologies (the top rung of the ladder) become fabulously rich. But, hey Mike, the ladder is becoming much taller, and the top rungs are fewer and much narrower.

     Of course, for both Ms. Madigan and Mr. Mandel, and for most of the readers of Business Week, everything will turn out ok, no matter what.

     After all, investors, high-level corporate executives, and conservative economists and politicians, will continue to profit from the race to the bottom for international wages.

     Two lessons from the following excerpt: First, moral standards of the U.S. health industry are becoming corrupted by greed, to the extent that government regulations and oversight are absolutely essential. The supposed “magic hand of the free market” is simply not working. As previous news releases have indicated, it’s not working in many other entire industries as well.

     Second, how could our present privately controlled health industry possibly be better than a single-payer, carefully monitored system as exists in other developed countries? Somehow, we’ve got to get the corrupting effects of unrestrained greed from further destroying the health system in the richest country in the world.

From The Wall Street Journal, August 18.

Health Industry Sees
Surge in Fraud Fines

"I don't know why it is that these very large companies continue to engage in behavior that's going to get them in trouble when they can see all these other companies falling like dominoes," Mr. Mahon says. "I hope we're not at a point where people are cynical enough to say, 'Well, that's the cost of doing business.'"…

     The disconnect between The Wall Street Journal’s editorial policies and its news stories is a regular occurrence. The following two article excerpts clearly demonstrate the need for more government regulation to protect consumer interests. Yet, you can count on it, the Journal, like its Republican representatives in Congress, will oppose any legislation that protects consumers and lessens corporate profits.

     A careful reading of these articles will clearly indicate which political party always supports the interests of corporations—and stretches logic to justify its support—even when it is at the direct expense of American consumers.

From The Wall Street Journal, August 19.

Furor Greets Bid to Alter System
Of Closing Costs on Mortgages

Like Rep. Manzullo, Sen. Shelby is critical of HUD's proposal. His aides say this is no time to be fooling with the housing economic engine….

From The Wall Street Journal, August 20.

Eli Lilly Battles Bill Provision
That Challenges Drug Patents

Republican Sen. Orrin Hatch of Utah, author of the 1984 drug-patent law that the generics section would modify, helped Lilly by holding a hearing on the provisions earlier this month. His staff plans to raise the issue in House-Senate negotiations on the Medicare bill. "If we turn and completely balance it in favor of the generics because it's a cheap, easy thing to do ... we will lose our capacity to do the [research] necessary to come up with the blockbuster drugs," Mr. Hatch said at the hearing….

     It's especially notable that Congressional Republicans support high profits for the major drug companies—at the public's expense—at a time when drug costs are reaching crisis levels.

     Here’s another article that demonstrates the disaster of globalization. The masses of older workers who have lost their jobs are NOT going to be retrained into better ones. In many devastated communities they are likely to find no jobs at all. And when the companies that used to employ them go bankrupt, it will be up to the U.S. taxpayer (through the Pension Benefit Guaranty Corp., a government agency ) to provide them with their pensions.

     Meanwhile, the investors who caused the job losses get richer, have their taxes reduced by the Republicans in Congress and the White House, and continue putting their money into producing jobs in Third World countries.

From The Wall Street Journal, August 20.

Older Workers in the Lurch
For an Employee Laid Off After Decades

Pillowtex says it's unlikely that workers will ever get severance pay. Their pensions are most likely to end up administered by the Pension Benefit Guaranty Corp., a government agency. In most cases, those workers who were fully vested would maintain their benefits, according to Milliman USA, a firm now handling the pensions….

     For the past 20 years, articles like the following have been published in the conservative financial press, every six months or so. The only difference between them over the years has been their extravagance. It was absurd 20 years ago, and it’s beyond absurdity today.

From The Wall Street Journal, August 20.

Nu 5BR/4Ba Home,
Perfect to Tear Down

As for the new suburban chateaus being erected, they may not be around long either. In Bernards Township, N.J., a family recently ripped apart a 10-room, 7,000-square-foot, $2.6 million Colonial—built in 1996. (They left two rooms intact from the original structure.) The new owners loved the large 9.8-acre lot, but the layout wasn't right for their family and they couldn't find an equivalent lot in the area, says Jane DiGian of Weichert Realtors in Warren, N.J., who represented the home buyers. The family didn't stay in the new place for long. Less than a year after building their new manor, they are moving out of town for business. Their brand new 15-room, over-11,000-square-foot replacement home is now listed for more than $4.8 million.

     Think of the incredible economic waste these people are causing, at a time when so many workers can’t even afford to live in the communities where they work. Of course, as Class War in America points out, it’s the sacrifices politically forced on American workers that have allowed so many people to become so rich in the first place.

     Ever wonder why the editorial pages of conservative financial publications universally support immigration? That’s supposed to be a liberal cause; a humanitarian attempt to help disadvantaged people from other countries.

     But it’s also a neat way to increase the labor supply and to drive down wages. And that’s the only reason conservatives—not known for their humanitarian instincts—ever support immigration.

From The Wall Street Journal, August 19.

Hispanic Newcomers Damp Wages

She says the best way to eliminate the wage gap is to improve working conditions for new immigrants, by enforcing minimum wage standards for immigrant workers, providing an amnesty for illegal immigrants and strengthening their workplace protections. "Policies aimed at raising the social status of immigrants would protect native workers from both immigrant competition and brown-collar wage penalties," she says.

     American Electric Power Company is representative of today’s corporate morality: cut costs, maximize profits, and no matter how an action (like cutting costs) affects the public—if it’s not specifically prohibited by laws or regulations—do it.

From The Wall Street Journal, August 22.

AEP Line Maintenance
Faulted Before Blackout

Mr. Hemlepp said AEP has been able to cut expenditures in some areas by "process improvements and more efficient use of manpower." But he said AEP always spends whatever amount is necessary to do its duty under the law. Utilities are required to provide safe and reliable service in exchange for being allowed to maintain monopolies….

     So, AEP gets approval from the electric commission to raise rates to customers, because they had to provide necessary maintenance. Then, they didn’t do the maintenance—thus cutting costs and increasing profits, and, undoubtedly made the investors and top execs richer. Modern capitalism at its best.

     The key statement in the above article, however, was by the company representative who demonstrated why government regulations are necessary: “AEP always spends whatever amount is necessary to do its duty under the law.”

     It’s guys like that who make regulations absolutely necessary. And they are found throughout corporate America.

     The problem with the following article is that similar articles have been regularly published over the past 30 years—bad times, like today, and good times, like in the roaring 1980s and '90s. It's not "bad times" that caused the unions' lack of power; it's a dramatic change in the political climate during the last half of the past century.

From The Wall Street Journal, August 22.

Labor Talks Become Marathons

Labor experts say the lack of real hostile moves reflects both progress at the bargaining table and a tougher economic environment. "In the 1990s it was fashionable, and with good reason, to say companies were provoking strikes," says Michael LeRoy, a labor professor of University of Illinois. "Multinational corporations were egging for a major fight. They would make an offer to provoke a walkout, then hire replacements." Today, he says, "companies are trying to hold off using those weapons."

     The real reason labor unions have lost their power to negotiate, in both good and bad times, is that corporations have discovered that, among other things: 1. our labor laws have no teeth and corporations can replace strikers and union supporters at will; and 2. globalization—and its threat of job loss to other countries—has shifted the balance of power almost totally in corporations' direction.

     Another problem was caused by the unions themselves. When they were strong, they should have used more of their resources to increase union membership across more companies and industries—thus getting the political support of more workers. As it is, too many underpaid (and short-sighted) nonunion workers are jealous and have no sympathy for pro-union politicians.

     The following is just another example of corruption in the industry that conservative politicians want to handle workers’ Social Security funds. Note that the firms mentioned are among the industry's most prestigious.

From The Wall Street Journal, August 22.

Smith Barney Is Fined
By NYSE Over WorldCom

Merrill Lynch & Co. was ordered to pay $3 million to a couple who alleged Merrill gave them bad investment advice on their options, including the tax consequences they faced. Many of the investor complaints against Smith Barney's Atlanta office are scheduled to go to arbitration this year, plaintiff lawyers say….

Week of August 11

     As you read this excerpt from this past week's Wall Street Journal, bear in mind that the total article was read by the same corporate executives who have caused these conditions to exist. By getting conservative politicians elected, they have deliberately created an economic climate that has no respect for families, workers, or stable communities.

     These bastards know full well that globalization, as opposed to true international trade, is not based on sound economic principles (closeness to raw materials, central to the distribution area, etc.). It is based solely on the theory that workers have no human rights and are to be treated like machinery or raw material—to be callously used and discarded at will.

     When they close down operations in the U.S., they know full well that they are deliberately cutting working Americans out of the wealth-creation process. And they move to areas that are chosen because of—not in spite of—their uncivilized working conditions.

From The Wall Street Journal, August 14.

Textile Powerhouse Learns
Downside of Globalization

Looking ahead, the government's problem is moving its work force beyond factories. "You can't run a country on cheap labor. You can't rely on cheap labor. Eventually, you've got to give the people something better," says Jayen Cuttaree, Mauritius commerce minister….

     Same old story. To drive down wages at home, export jobs to desperate states or countries who are willing to sell-out their own workers to the lowest bidders. The wealthy in both areas become richer, workers benefit temporarily, and the bill doesn’t come due until the workers begin to actually benefit from the system.

     Then, naturally, industry moves to a new area, where workers have fewer protections and worse conditions.

     Amazing. Jayen Cuttaree, commerce minister of a tiny island off the coast of Madagascar has a greater understanding of what the survival of a civil society requires—than the entire Bush or Clinton administrations combined: "You can't run a country on cheap labor. You can't rely on cheap labor. Eventually, you've got to give the people something better."

     (Both Clinton and Bush supported NAFTA, WTO, and "fast track" trade negotiations with third world countries. At least Clinton pretended to be conserned about worker and envrionmental provisions in trade agreements.)

     The U.S. has not only lost most of its middle-class, it’s now in the process of losing much of its upper-middle-class. Our loss of jobs and industries now involve high-skilled and professional workers with advanced educations and degrees. Soon, we'll have only two classes of people: investors and those who can still find jobs in the U.S. that can't be exported.

     If you still don't believe that globalization has been an utter disaster, check out other recent excerpts from Previous Weeks’ Conservative Press.

     Even The Wall Street Journal can’t keep the bad economic news off its front page. When you read this, remember that it’s just an excerpt. The entire article gives many more depressing examples of workers’ downward mobility and illustrates, perhaps unintentionally, the sham of the “recovery” we’re experiencing.

From The Wall Street Journal, August 13.

After Long Boom, Workers
Confront Downward Mobility

The unemployment rate, at 6.2%, fell slightly last month, but the drop was largely because nearly 500,000 job seekers stopped looking for work. Job searches have become much longer. Last month, the share of job seekers who had spent at least 15 weeks looking for work was 39.8%, the highest level since the bleak job market of 1983….

     This article doesn't even touch the subject of what is happening to so many upper-income people who are saddled with small mansions—along with many other expensive lifestyle choices—that they bought in the exuberance of the 1990s. There's a gathering storm that few economic observers seem to appreciate.

     To see many more examples of how conservative economists and politicians are destroying our nation's economy, check out the past two months of Previous Weeks' Conservative Press.

     Steve Forbes, editor-in-chief of Forbes magazine, once ran for president of the United States and was a strong advocate of totally eliminating the “death” tax.

     Consider this: In February, 2002, corporate raider Victor Posner died. He couldn't raid any more corporations. He no longer could buy lottery tickets. He couldn’t be injured in a traffic accident. He was no longer hassled by a worsening arthritis condition. And guess what?

     He could no longer be taxed by the federal or state governments. He was DEAD. As in permanently gone. A previous human.

     However, the greedy, materialistic idiots described in one of Forbes own articles could—and should—have to pay an ESTATE tax on the millions they will eventually receive. Just like you will have to pay taxes on every cent of the money (minus deductions) that comes from your labor, they should have to pay taxes on the money they get just for being born—or married—to millions of dollars.

     How obvious can this be?

From Forbes, August 11.

All in the Family

For witnesses the grandchildren are prepared to trot out nurses saying that in his last months Victor confused reality with fantasy and could not string a sentence together….

     America’s loss of high-paying jobs is becoming a tidal wave of bad news.

From Business Week, August 11.

MOVE OVER, INDIA

China's low-cost talent is another edge. Although India is a powerhouse in high-end IT services, latecomers these days must pay higher wages for experienced engineers. That's one reason BearingPoint chose Shanghai for its new software-development center, says the company's Greater China President, Bryan Huang. BearingPoint pays $500 a month for engineers in Shanghai. In India, he says, the pay would be $700, and $4,000 in the U.S. "Where can we sustain our cost advantage for the next 40 years?" Huang asks. "We're convinced that China is the only place."…

     "China's ascent could inflame an already heated debate in the U.S. about companies sending work abroad." No kidding. Why wasn’t there a heated debate when the whole “globalization” absurdity began in the first place?

     There is a massive redistribution of wealth today, going from workers to investors and high-level corporate executives. Some day, our politicians will have to figure out how they can peacefully redistribute wealth in the opposite direction. Either that, or we’ll have a total collapse of our orderly society, as increasing numbers of families cannot meet basic needs.

     The willful blindness of conservative economists and politicains is truly amazing.

     Here’s another “So what’s new?” article. Despite the proclaimed purposes of the last tax cut bill, those who advocated—and benefited most from—the tax cuts were the very rich.

     As usual, the losers will be the general public who benefit from the governmental agencies that are starved for tax revenues: in education, health care for the poor, police and fire services, environmental protection, even veterans' benefits—and all those things that only government can address.

From The Wall Street Journal, August 11.

As Taxes Fall, Dividends Rise—
And Executives Reap Big Gains

Of the tax cut itself, the Urban-Brookings Tax Policy Center, a research organization, says that 29.1% of the benefits accrue to the top 1% of taxpayers and 61.6% will go to the top 10%….

     Another round in the battle of states’ rights vs. federal government, plus corporate interests vs. the public good.

From The Wall Street Journal, August 11.

Auto Makers to Drop Suit
Over Plan to Cut Emissions

The California air board appealed that decision. The Bush administration supported the auto makers' argument that California's changes amounted to a state usurpation of federal authority. In April, the California board proposed changing the rules to remove the reference to fuel economy and make it easier for the industry to comply with hybrids and fuel-cell-powered cars. "We thought it would be faster and more efficient" to change the rules rather than to continue the legal fight, a spokesman for the California air board said.

     Whenever conservatives want to weaken the federal government—say national standards for workers' right to organize—they divide and conquer by allowing individual states to destroy unions with their "right-to-work" laws. They say that states rights are supreme.

     But when the Bush administration wants to support its corporate sponsors, it joins them in fighting the rights of states ("a state usurpation of federal authority") to control their own environment, and insists that the weaker national environmental standards prevail.

     Then there is the issue of the total absence of corporate morality. They are quite willing to destroy the air of California in order to maximize corporate profits. They KNOW that what they are doing to the air is detrimental to health; yet they insist on the right to produce high-profit polluting cars—a right made legal because of the power of money and the machinations of lawyers.

     The next pair of articles go together. They demonstrate the hypocrisy of those who want to "give average workers the same kind of benefits that rich investors get from the stock market."

     Apparently it's difficult even for the sophisticated readers of the Journal to get good financial advice, and also to find their way around the Wall Street Jungle of hungry tigers. Think what a disaster it would be for many (most?) unsophisticated novices to use some of their Social Security funds to speculate on Wall Street.

     None of the Journal's proprietary advice is repeated here. These excerpts are for purposes of criticism only.

From The Wall Street Journal, August 13.

Fast Talker? Five Ways to Gauge
A Potential Financial Adviser

So how do you find a top-notch broker or planner? Try these five steps:…

Also from The Wall Street Journal, August 13.

Wall Street's Plan
For Your Nest Egg

"It's pretty daunting to think about having to save a million dollars just to generate 40 grand," Mr. Spiegelman says.

     Ah, the trials and tribulations of wealthy investors: what they've got to go through just to get 40 grand for not working.

Week of August 4

     What is the hidden agenda behind the following article? It’s apparently intended as helpful advice for a diverse group of professionals who find themselves in need of new employment.

From The Wall Street Journal, August 5.

Employees Leave Struggling Jobs
In Search for More Fertile Fields

The most difficult aspect of such a change is the typical drop in income….

     Articles like this suggest that the current professional malaise is just another mid-life crisis, and people simply need to seek out new opportunities—usually at lower pay.

     The hidden agenda: the reduced incomes of all kinds of professionals is a planned result of political and economic policies brought about by rich investors and top corporate executives. These people see workers purely as expenses to be minimized. Increasingly, those workers include everyone from PhD. Chemist, to computer programmer, to electrical engineer, to doctor—to everyone who works for a living.

     When the jobs of whole groups of professionals are shipped overseas—and skilled immigrants imported into the country—people who previously had good jobs enter the job market for photographers, stock brokers, travel agents, and so on. Or they go into the business of industrial cleaning, fast-food franchises, home repair, etc. The inevitable result: more competition for jobs and, if in a business, for customers or clients. Result: lower incomes for everyone.

     And remember, "globalization" is just one of many strategies to destroy incomes of professionals. (Classifying employees as temps, reducing benefits, contracting work outside the organization, etc.)

     It’s basic Econ. 101. And the conservative politicians who brought it about know very well what they are doing, and what the long term effects will be. After all, they read the conservative financial publications cited in the files throughout this website.

     Want more evidence that a higher education or advanced skills training are not the keys to higher incomes in the U.S.?

From The Wall Street Journal, August 5.

Grads Seeking Public Service
Find Few Jobs Are Available

"There aren't 40 dot-coms saying, 'Come and play with us for a couple of years, and you'll be with a group of extremely smart people, and, if we do extremely well, the world will be your oyster,' " says Bill Wright-Swadel, the director of career services at Harvard. Recalling a time when seniors got signing bonuses to work in business, he says: "That kind of market doesn't exist at this point in time, so students have to be much more assertive."…

     If advanced education and higher skills are not the key to a good income, what is? Easy. Same as it always has been. The groups who have most of the political power always control the economy to benefit themselves and their descendants.

     Right now, those in power believe in aristocracy—that wealth and political power should be inherited, and that those who work for a living should get a marginal income at best.

     Before the next election, voters had better figure out which politicians have the best interests of most Americans at heart—and not just the interests of the few at the top.

     Isn’t there a connection between lowering the incomes of professionals and increasing profits? This article came out on the same day as the previous two.

From The Wall Street Journal, August 5.

Profits at Big Companies Show
Solid Gains in Second Period

"How much more proof do you need that profits are improving," said Nancy Lazar, an ISI economist. "They are improving and it's good for the economy."

     How nice. Companies are still cutting payrolls and yet their “net income is approaching historic highs.” Of course, that’s how you do it.

     Cut payrolls, intimidate those who are left with the threat of job loss, contract work out to firms that brutalize workers, and then pocket the profits. Naturally, you promise that the economy will get better for everyone after our wealthiest Americans have become true aristocrats.

     As if we needed more reasons not to privatize Social Security, here’s another one.

     According to stock market expert Lee Gomes, in The Wall Street Journal, unsophisticated investors are again going to be taken to the cleaners by those who know how to play the “greater fool” game on Wall Street:

From The Wall Street Journal, August 4.

Investors Still Believe
In Tech-Stock Magic

It's essentially the "greater fool" approach to investing, and as long as you know the risks, it's a perfectly valid approach to follow. It's just not a very good approach to running an economy. Why must we always suffer through these bipolar market swings? Why can't we just settle into "slow and steady"?

     Of course, the ones who will suffer most from the upcoming burst of the Wall Street bubble will be those who don’t read the Journal and similar publications. Even some of them will probably get caught in the snare of the fickle greater-fool game of stock speculation.

     That’s why Social Security was never intended to be a vehicle for individuals to speculate with their own retirement funds.

     In their book, Lessons of History, Will and Auriel Durant concluded that bankers—or those who control money—eventually rise to the top in any society as it grows older.

     Their lessons are not lost on America’s corporations, as they go from manufacturing products or producing services to contracting out all the labor required for the businesses to operate. General Motors is becoming a classic example of a manufacturing company that is becoming a mortgage and investment banker.

From Business Week, August 4.

For GM, Mortgages Are the Motor

Until then, GM will struggle and remain dependent on its finance arm. The question, says Deutsche Bank Securities Inc. analyst Rod Lache, is whether GM can turn around its auto business in time to offset the decline in the finance unit. If not, GM could face lean times once GMAC is no longer minting money.

     Although this article deals mostly with GM’s mortgage business, its role of investment banker is far more significant—as it abandons American communities and contracts out its manufacturing operations to Third World countries.

     In the following article, Robert Barker describes another way corporations use political and legal power to control the stock market in ways that favor its executives and insider investors—and possibly (likely?) at the expense of unsophisticated investors.

From Business Week, August 4.

A Legal Way to Keep Investors in the Dark

The question for the SEC is if rules set 38 years ago still reflect today's markets. Egon Guttman, an American University law professor and expert in the field, thinks not. Bigger companies going dark this way, he said, violates the law's spirit. How many investors are too few for the law to protect? That's beyond me. But any outfit with thousands of shareholders strikes me as the definition of a public company.

     Below: Another example of the extent to which powerful corporations will go in order to reward their investors and high-level corporate executives. If bending the rules will do it, that’s fine. And if what they did turns out to be illegal, you can count on it—nobody will go to jail.

From The Wall Street Journal, August 7.

Banks Shifted Billions Into Funds
That Shelter Income From Taxes

Another complaint came from the tax lawyer for a bank that received a proposal to set up one of the funds but declined to do so after the lawyer concluded it was illegal. The bank ordered its lawyer, Edmund Cohen, to let California and the SEC know about the practice….

     The airline industry joins most other American industries as being totally corrupt and without any regard to the moral standard of utility. The greed of top executives—at a time of financial distress and huge sacrifices forced on lower-level employees—is incredible.

From The Wall Street Journal, August 8.

Delta's Retention Program Fails
To Stop Some Executive Departures

United and American, also saddled with losses, have won substantial pay cuts from their employees. Delta has asked its pilots for a 26.5% pay cut and cancellation of a 4.5% raise next year, plus a later round of talks on work rules changes to raise productivity. The pilots union, which represents over 9,000 Delta pilots, has offered to take less-drastic wage cuts.

Week of July 28

     Articles describing the disastrous effects of globalization have now become a steady stream. The only mystery now is: Why can't American voters see what is clearly staring them in the face?

From The Wall Street Journal, July 30.

In Quest for Steady Work,
A Man Traces State's Decline

It became clear to Mr. Harp that even his new government job wasn't immune. In late April, Lane County announced it would cut about 80 jobs as part of an effort to slash $20 million from its $408 million annual budget. "We are in the midst of a full-scale financial storm," County Administrator William Van Vactor warned in his budget report….

     It's the same old story:

• Jobs are shipped overseas,

• Displaced workers enter the job market,

• Wages for everyone are reduced,

• Tax revenues dry up,

• Public services for those who need it most are eliminated,

• Conservative investors and top corporate execs get incredibly richer, and use their money to

• Blame liberals for being "tax and spenders," and

• More conservatives are elected to public office, who then

• CONTINUE THE PROCESS!

Note: check out the "new class war" op-ed piece near the top of the center column of http://www.opednews.com/

     How many Barron’s readers see the significance of the article below? Both in terms of where the money came from, and what is going to happen to all that wealth that has been sunk into foreclosed “conspicuous consumption”—golf courses for affluent Americans?

     Also, how does this make you feel about wealthy conservatives' claim that "we can spend our money better than the federal government can."

From Barron's, July 28.

A Rough Round
Why golf's prospects are dimming

Golf's problems aren't only on the demand side. During the 1990s a surge in golf-course construction created an oversupply. According to Pellucid's Koppenhaver, around the middle of the decade the rate of new capacity additions began to outpace the rise in rounds played. For a time, the economic boom disguised the growing disequilibrium. Golfers, flush from rising real incomes and stock-market gains, willingly fattened the coffers of course owners by paying ever-higher greens and guest fees and golf-cart rental charges….

     Question: How much better off had much of that money been invested in roads, schools, hospitals, etc.? The benefits would still be pouring in—instead of being abandoned in foreclosures.

     In addition, an important reason affluent golfers could afford $200 for an afternoon of golf is that America’s corporations kept workers’ wages low—while exerting pressures on them to be more productive. The resulting increase in profits were then shared by investors and top corporate executives, who saw their incomes skyrocket.

     But that’s not the worst part. The worst part of this scenario is that large numbers of affluent Americans have been locked into an extravagant lifestyle, and, although very costly to our society, golf is only a minor symptom.

     With Silicon Valley going to India, manufacturing to China, and professional services to Ireland—and this is just a small listing of the problem—many affluent Americans are beginning to feel the effects of globalization, and it’s scaring hell out of them. They aren’t going to use their tax cuts to stimulate the economy. They’re going to retrench. Besides cutting back on golf, many of them will have to sell their second mansion and the family jewels.

     After all, it’s beginning to dawn on them that their affluence of the past two decades resulted from our country selling-out working-class Americans, and the pool of workers to sell-out in the future is getting increasingly small.

     The Great American Sell-Out has fewer places to go—so it’s going up the income ladder, to where they are. Investors have no loyalties—even to the ones who made them rich in the first place.

     One of my all-time favorite writers is Barron’s Alan Abelson. This introduction to an editorial about President Bush’s stretching of the truth is just a sample.

From Barron's, July 28.

The Prevaricator

The moral here is... well, there are several morals. Don't write down the name of a horse on a piece of paper likely to fall into your wife's hands, especially if the name is Betty Jane. And, for gosh sakes, don't give the horse your home phone number….

     Nuff said.

     Some things never change. An article almost identical to the one below appeared in The Wall Street Journal on February 18, 1997.

From The Wall Street Journal, July 28.

Dairy Aisle's Secret:
Milk Is a Cash Cow

Hard-pressed dairy farmers across the country are cutting production so much that raw-milk prices will probably rebound later this year, closing the door on big potential supermarket bargains.

     It's the usual story. Those without the power—in this case, the dairy farmer and consumers—lose out to the corporations who have the power to control what is happening in our country.

     The Journal article of 1997 said the following:

The problem is chronic... [I]t takes more than a year for the full impact of a decline in raw-milk prices to reach consumers. And the dairy industry has become a frequent target for antitrust investigations. Economists and Wall Street analysts say grocers, who generate about 6% of their sales from dairy products, are taking advantage of lower raw-milk costs to sweeten their bottom lines.

From The Wall Street Journal, July 28.

'Protection' Funds: Peace
Of Mind Becomes Pricey

The average principal-protection fund is up 2.2% year to date, while the average U.S. stock fund is up 15%, according to Lipper. And over the past three months, the average protected fund is up 1.9%, far behind the average stock fund, which is up 11.4%. There were very few of these funds around three years ago, but those that were outperformed pure stock funds during the bear market, thanks to their bond holdings….

     If these kinds of "investment professionals" are taking ruthless advantage the readers of The Wall Street Journal, what about average workers who don't read The Journal? Just another reason, among many, why social security should not be privatized. Even sophisticated investors need at least one source of ironclad retirement security—not vulnerable to market fluctuations or fast-talking financial hucksters.

An editorial comment from The Wall Street Journal, July 29.

Clothing Costs

The bad news is that Beijing has too often settled for managed trade, and indications are it might settle for voluntary restrictions in textiles too. But China would do American consumers a service if it used its leverage as a large and growing market for American products to accelerate the political demise of the U.S. textile lobby.

     Ten years ago, when "globalization" was rapidly destroying American industry, conservative politicians assured us that American workers—with their ingenuity and their increasing productivity—could compete with any workers in the world.

     Now the Journal editors tell us that we can forget our textile industry, it's history. Not only that, our country (meaning wealthy investors and tight-fisted consumers—not workers, however) are better off for it.

Also from The Wall Street Journal, July 29.

J.P. Morgan, Citigroup Reach
Settlement in the Enron Case

The Securities and Exchange Commission said both banks agreed to the payments and the changes in the way they do business after "helping to commit a fraud" on Enron's shareholders, according to Stephen M. Cutler, the SEC's enforcement chief. Regulators said the settlement involves $8.3 billion in loans improperly accounted for by Enron. Neither bank admitted any wrongdoing….

     This is just another example of greed and fraud that conservatives are well aware of. How can they possibly claim that Americans are better off when corporations—and not government—control the ground rules for our economy.

     Yet another article in the Journal that illustrates Wall Street's country club of "good ol' boys," who look out for each other's financial interests, and at the expense of the investing public. Still want to privatize Social Security?

From The Wall Street Journal, August 1.

NYSE's Corporate Governance
Is Harshly Criticized in Report

The council report also criticizes business relationships among several NYSE board members, suggesting that someone with such a tie "may be reluctant to oppose that director" and members with multiple connections "may fail to be an independent check on the system."…

     The number of whole industries in our country that are rotten to the core seems to be exploding. To better understand how all human organizations (religions, corporations, unions, public charities, armies, societies—you name it) tend to degenerate as they get bigger, older and more complex, check out: Proactive Vs. Reactaive Management.

Week of July 21

     Most people are becoming much more aware of the extent to which congressional legislation over the past several years has adversely affected their lives. Few, however, seem to understand the extent to which judicial elections and appointments can affect working-class incomes, consumer protections, and civil rights.

     Forbes magazine was quite pleased to report that America's right-wing conservatives are making significant progress in loading the courts with their own ideologues.

From Forbes, July 21.

Buying Justice

… McRae (liberal judge)… ends his 11-year tenure next January, passing the gavel to a pro-business corporate lawyer and Republican named Jess Dickinson. Dickinson was swept into office on a down-and-dirty, name-calling campaign bankrolled by $1.2 million he raised from doctors and small-business owners—an unheard of sum for a judicial election. But he also had a hidden helper: Unbeknownst to some Mississippi voters, the U.S. Chamber of Commerce pumped $1 million more into anti-McRae ads, funneling it through local groups such as Mississippians for Economic Progress.

McRae's ouster is part of a secret war on judges now being waged by the chamber. It has spent $100 million since 2000 and will spend $50 million or more this year. The prime objective: to vote out judges supported by trial lawyers, labor unions and the Democratic Party and install new judges sympathetic to insurance companies, multinational corporations and the Republican Party. The chamber also is taking aim at state attorneys general, trial lawyers and state legislators.

So far the chamber has won in 21 of 24 judicial elections in eight states—and prevailed in 11 attorney general races. It helped win 7 open seats in Illinois, Pennsylvania, Texas and elsewhere and helped reelect 11 pro-business jurists. And it ousted 3 incumbents—2 in Alabama and 1 in Mississippi (Justice McRae). Sixty-three judges in 28 states are standing for reelection next year, and the chamber hopes to throw at least 10 of them out of office, aiming in particular at antibusiness courts in West Virginia, Texas, Mississippi and Ohio….

This is a dirty business. The Brennan Center says ads have "grown increasingly negative and controversial, and in some cases [have] fallen far beneath the level of dignity most Americans associate with their judicial system." Adding to the intrigue, the chamber cloaks its efforts by sidestepping disclosure laws that require revealing contributions. Instead of donating cash to candidates, it provides ad money and couches the effort as "informational" and policy-based. "We're seeing that politics is rearing its ugly head," says professor Lester Brickman of the Cardozo Law School in New York. "But politics has always been present, if shrouded in black robes. Now it's out in the open."…

     Forbes, probably our most conservative financial publication, reports this disgusting state of affairs with a mixture of pride and awe, and it seems characteristic of today's right-wing political movement. The public be damned. Any strategy is justified if it benefits corporations, businesses and the established wealthy.

From The wall Street Journal, July 21.

Laid-Off Factory Workers Find
Jobs Are Drying Up for Good

Pennsylvania has lost one out of 10 manufacturing jobs, or 90,300 jobs, in the past three years. Industrial cities such as Butler have been disproportionately hit by job loss. Earlier this year, unemployment in the county jumped to 7.3%, the highest level since 1994….

     This is yet another article describing how conservative economists and politicians have changed our society from one which produces the greatest good for the greatest number—to one which creates a few big winners and many losers.

     Through "globalization," investors and corporate executives make out like bandits, while those who actually built, developed and maintained our country—through their ideas and creativity, as well as their manual labor—lose their livlihoods.

     It's no accident. The negative effects of globalization have been predicted by its critics at every stage of its development. And at every stage conservatives assured American workers that it was being done for their benefit, if they would just wait long enough.

     Now, even the right-wing Journal is admitting that the changes are fundamental and permanent, and conditions aren't going to get better for manufacturing workers. Not only are they losing their jobs, they are entering the job market and exerting downward wage pressures on jobs that can't be exported out of our country.

     Middle-class America is a permanent loser, unless some serious changes are made in our political system.

From The Wall Street Journal, July 21.

The World Bank Wonders
About Utility Privatizations

World Bank officials have now decided it doesn't matter so much whether infrastructure is in public or private hands. What matters is that it be run in a business-like manner, perhaps more frequently combining public ownership and private management. But above all, they now say, bureaucrats, investors and, yes, the World Bank itself must pay far greater attention to the fiery politics of privatization and especially to the effect of rising prices on the poor and disaffected….

     Here's another wake-up call from "surprised" conservative economists. They've found that privitization doen't always work the way they promised us it would.

     And why should it be a surprise when privatization doesn't work? As the article states: "What matters is that it be run in a business-like manner." Suppose Enron executives were in charge of our postal service, Tyco execs in charge of our national parks, etc. Who would ever want that crowd in charge of a public service?

     Unfortunately, that's usually the kind of managers you get when greedy investors dominate business decisions. At least one advantage of government-managed utilities is that the "CEO" and his cronies don't make the outlandish incomes that are now characteristic of corporations, and the public's interests, not profits, are the organization's priority.

     In the early 1980s, I attended a meeting for management consultants in Atlanta, GA. We all described the kinds of activities we were doing and the kinds of consulting that corporations were requesting.

     The consensus was that "soft" consulting was out, and "hard" consulting was in. This was the beginning of the Reagan years—the time when conservative thought became dominant in the American culture, both politically and economically.

     Soft consulting focused on developing human resources in an organization by improving working relationships and working conditions. The emphasis was on developing teamwork with people committed to doing a good job—because they were motivated to do so.

     Hard consulting was pure and simple cost reduction. Of course, the easiest and quickest way to reduce costs is to : close down a manufacturing facility in the U.S. and move it to Mexico, for example, or reduce staff and pressure the remaining employees to work harder or longer.

     The following two articles will not be carried by the main media. They are almost incidental in today's news market. However, they are symbolic of the radical change in corporate philosophy since 1980, and they sort of go together.

From The Wall Street Journal, July 23.

Reuters Swings to a Profit;
Cautious Outlook Hurts Shares

Opponents of napping argue it's bad form. But maybe it's just another example of our fetish with the appearance of productivity and professionalism. In our fake-it-till-you-make-it culture, superficiality is a substitute for real productivity. There's hardly a gripe about power lunches or pumping iron….

     So, Reuters Group had a sharp fall in revenue, yet still managed to make a profit. How? By, among other things, firing 3.000 people and, undoubtedly, making those left in the company work harder under the threat of also losing their jobs.

     No doubt the present CEO will be called an outstanding leader and given a bonus for his brilliance.

     He'll also be able to take naps to keep himself sharp, while his employees scurry around trying to keep their jobs by looking vital to the organization.

     This is just another example—that the mainstream press will ignore—of the sorry state of corporate ethics. Corporate defrauding of Medicare and Medicaid is so common, I'm not quite sure why I should include it in this week's conservative press.

From The Wall Street Journal, July 23.

Abbott Labs Unit to Plead Guilty

An Abbott Laboratories subsidiary Wednesday plans to plead guilty to a federal felony charge of obstructing an investigation of an alleged scheme to defraud government health-insurance programs, according to people familiar with the investigation....

     One of the best things about the Journal's news pages is that readers can get a feel for which politicians are supporting corporate interests, and which politicians support the interests of consumers and small investors. The first three paragraphs say it all:

From The Wall Street Journal, July 25.

State-Level Stock Cops Retain Power

Mr. Spitzer was quick to crow over the action, calling it "an encouraging step" because the bill "was attempting to address a nonexistent problem and was being supported by investment houses that simply do not want state prosecutors to protect small investors." He had rejected a last-minute call for a compromise from New York Republican Vito Fosella of Staten Island and Brooklyn….

Week of July 14

     In Barron's, Market strategist Barry L. Ritholtz accurately described the real intentions and strategy of Bush's tax cuts. Instead of directly stimulating the economy by putting money in the hands of low- and middle-income consumers, Bush is putting money into the hands of rich investors—despite the fact that we are already in a period of over-investment and excess capacity.

     It's the usual conservative spin: benefit the wealthy today, and it will benefit workers in the future—which never arrives, at least under their policies. As in the early 30s, it'll take a progressive government to turn around this economy, now unbelievably biased in favor of the established wealthy.

From Barron's, July 14.

It Really is Different this Time

Consider this: Dividend tax cuts have raised the value of stocks with yield; Capital gains tax cuts encourage greater speculation; Income tax cuts targeted to the highest income brackets encourages investment, rather than spending; The Federal Reserve rate cuts have made "cash trash," forcing money to flee fixed income instruments and money market accounts. It has rushed into equity markets simply because it has nowhere else to go….

     The next two items go together. Conservatives have passed legislation that allows corporations to treat employees ruthlessly—which they are doing with impunity—and at the same time they also are trying to cut funding for those programs that can correct the social and economic problems that corporations have caused.

From The Wall Street Journal, July 14.

To Save on Health-Care Costs,
Firms Fire Disabled Workers

"Life today is a far cry from the way it used to be a decade ago," when she and her husband lived in suburban Easton, Mass., she says. "Between the two of us we made $90,000 a year. We sent our son to Boston College and we thought life was good. I never thought I was going to end up this way."…

     So, after impoverishing long-term loyal employees, corporations want government "to come up with a broad solution to fix the problem."

     Yet, the same class of people who caused the problem want to destroy the kind of government that can correct it:

From Business Week, July 14.

Can Bush Finally Finish Off the Great Society?

… if the President wins a second term, he is almost sure to step up efforts to reshape more costly low-income assistance programs, including Medicaid, which provides health care to the poor and disabled, and federal housing. Four more years, and Reagan's deferred dream of shrinking the federal government could be realized by Bush.

     Just when you think it can't get any worse, it does. Even the conservative press knows what's going on. They just don't tie it all together in a way that the public can understand it.

     Even the conservative press can't help exposing—in their news stories—the need for the kind of regulations their owners and editors always condemn.

From The Wall Street Journal, July 15.

How Food Labels Legally Mislead

At a time when most of the country is overweight, the food label is the single most important tool dieters have to help them control how much and what kind of foods they eat. But right now, the flaws in the food label mean consumers may easily misunderstand the true content of foods, though manufacturers are complying with the regulations….

From The Wall Street Journal, July 17.

     Three articles, each one with a different lesson. The first two demonstrate two things: the lack of moral standards in America’s for-profit health-care system, and the need for governmental regulations when corporate morality breaks down (as it always does without regulations, see the introduction for Proactive vs. Reactive Management).

     The third article is another sad example of how conservatives are selling-out American workers to the false god of globalization.

House Panel Begins Inquiry
Into Hospital Billing Practices

The influx is taking a toll on U.S. manufacturers and this week triggered a trade protest from 14 companies that say China's factories appear to benefit from subsidies and currency issues. Domestic companies have closed scores of factories and laid off more than 34,000 workers during the past 2½ years in the wood-furniture-making industry alone….

Week of July 7

     In Barron's, Howard Gold defends globalization and, along the way, dismisses the severe injustices against those in America who still actually work for a living.

From Barron's, July 7, 2003.

Globalization Meets Creative Destruction