A Socialist by Necessity: The Anonymous Societies

Witnessing the effects of business deregulation was a significant element of my decades-long leftward shift from Centrist Republican to Socialist.  The earliest deregulatory actions of the Reagan Administration and the later capture of the legislative and regulatory functions created the environment for what has become a wholesale pillaging by the corporate sector and the uber-wealthy.  It has been the route by which millions of jobs have been sacrificed to short-term profit goals and the American Middle Class has been strangled.  This progressive regulatory neutering has fertilized the bloom of kudzu-like moral hazard and allowed the return of a corporate culture that was shackled by our predecessors:  the Anonymous Societies.

What exactly is a corporation?  The phrase that sticks with me from a distant business law class – more notable by the presence of a fellow student’s bandana-clad labrador retriever that sat at a desk two rows over – is “fictitious legal entity”, a construct that forms the groundwork for giving a non-breathing, bloodless entity the same standing legal standing as a real person.  There were other descriptions and meanings but the full meaning of a corporation didn’t sink in until years later.  At its core, a corporation is simply a legal mechanism to pool capital to gain the requisite critical mass necessary to fund a new venture to gain wealth.  Jeff Bezos and Sergei Brin might have the financial capital necessary to fund a new venture but the great mass of humanity will have to figure out a way and the corporation is a decent mechanism if you don’t have $25 million in pocket.  You come up with a plan and seed money, sell the idea to a group of interested individuals and in return for a promise to share in the profits, they provide the necessary funding.

Corporations go back to the Middle Ages, when they existed for finite periods of time to raise money for specific purposes such as chartering a school or building a cathedral.  That changed at the beginning of the 17th century when the English king provided a charter to the East Indies Tea Company; that company then raised money for the express purpose of turning a profit for the new shareholders.  These early corporations, including the West Indies Tea Company and the Dutch East Indies Company, not only lived to make money but to assist their respective governments in the colonization of their respective regions.  These companies finally failed by the 1800s when their respective colonial regions either became independent or impossible to administer.  It was only in the early years of the 19th century Industrial Revolution that the modern variant of the corporation came into being, existing in perpetuity (hopefully) to turn a profit for the shareholders.

If you understand the comment that evil is twice around the block before good has even put on shoes, then you have a sense of the relationship between corporate behavior and government oversight.  Throughout history, regulation has largely been behind in responding to the various corporate misbehaviors.  Before any meaningful regulation began in the late 19th and early 20th centuries, men grown so wealthy as to be known as robber barons engaged in such activities as bribing Civil War telegraphers to obtain advance notice of battle results to sell or purchase gold in advance of the public.  They manipulated the price of company stocks like a Duncan Yo-yo.  They engaged in bare-knuckle price fixing to eliminate competition.  They became the earliest lobbyists by camping in the lobby of Civil War Washington’s Willard Hotel to buttonhole Union officials to procure contracts.  They fought – and sometimes killed – labor organizers in disputes about working conditions.  And in one of the more entertaining episodes now known as the Erie Railroad War, two robber barons swindled another by simply printing thousands of new stock certificates to sell to him as he attempted to buy up control of their railroad.  The point being that in the absence of meaningful regulatory oversight, gross illegalities – with significant collateral damage – occurred in the pursuit of profit.

The term Anonymous Society is foreboding, the image evoking shadowy figures moving in the background to satisfy their own ends.  It is also a term explicitly linked to the corporation.  I first learned the term in a college Spanish class when a professor corrected me in conversation, clarifying that the correct Spanish term for corporation was Sociedad Anonima and that any Spanish corporation would carry the identifier SA after its name.  But it was decades later that I learned the history behind the phrase Sociedad Anonima.  Unlike today, where ownership of shares is recorded and reportable, the practice in 19th century Europe was that share ownership was not recorded.  A European corporation of that period didn’t know who owned their shares; the shareholders were literally anonymous and company dividends could only be paid to those individuals who showed up with their certificate chits as proof of ownership.  Corporate directors did not know if the shares changed hands between owners and the early European corporations were literally anonymous societies of shareholders.  Because the practice fed illegalities, most often tax evasion, that anonymity was eliminated but the original terminology, SA, remained.

The collective decline of the American Middle Class, since the Reagan Administration, is rooted in the notion of shareholder capitalism.  It was during the first part that I was witness to one of those countless actions in the name of shareholder capitalism.  At that time in the early 1990s, I worked on the corporate staff of a multinational telecommunications company that provided long-distance services.  The firm had an immensely successful marketing program, Friends and Family, which offered lower phone service rates to anyone enrolled who was calling a friend or family who was likewise enrolled.  The program was marketed and sold via phone sales from multiple call centers located across the Midwestern United States.

The call centers were a mix of fixed and variable costs, equipment and labor respectively.  To keep costs down, corporate would place them in economically distressed areas; they would find a locality with cheap property, empty building and a population with higher unemployment.  The farm debt-ravaged Midwest met that criteria in spades.  The company would establish a site, lease and retrofit an unused warehouse or empty supermarket as a call center and then hire the locals to work there as phone bank operators to sell the Friends and Family program.  Understand this about the corporate mindset:  Labor is viewed as an accounting concept, a variable cost.  You cannot just tear up hundreds of miles of fiber-optic cable nor recoup the cost of switching equipment installed in temperature controlled rooms.  Those costs are fixed and woe to the executive who advocated for those decisions if they don’t pan out.  But people can be hired and terminated, in many states at will.

My position was in Risk Management, but my small department was located oddly in the Treasury Operations Group.  A part of the job was to make periodic trips to the division that managed the F&F program and that entailed flights to those call centers.  Senior executives could take the corporate jets to Hong Kong or London, but I caught an evening flight to Minneapolis and a subsequent crop-duster to Iowa or Missouri.  There were instances that I sat as an observer with the call center workers.  The system would auto-dial a number and it would be routed to the employee, who would commence the sales pitch upon being answered.  Upon the call’s ending, often unpleasantly, the employee would have a few seconds to mentally reset before the system repeated the process again.  During breaks, I did what I frequently do:  I chatted with the people.  They were not there for a career but solely to make ends meet in a difficult place at a difficult time.  They were college students, divorced parents and ex-farmers working for second income money and modest benefits, supporting immediate or extended family.  They were real people doing their best to handle real financial situations.

Fast forward to a late-Spring Friday afternoon in the downtown Washington, DC headquarters.  My cubicle was located on the third floor immediately outside the front conference room adjacent to the Treasurer’s office.  As I worked, I overheard him and others entering the conference room, joined shortly afterwards by the CFO and other senior executives and staff.  It was notable because the CFO and those executives typically stayed on an upper floor with a view towards the Washington Monument and the White House.  When everyone had later gone and the day was winding down, I stepped into the office of a cash management director and made a crack about the presence of the gods amongst us mortals.  She didn’t respond at first, unlike other times, but then commented that the senior management was concerned about the share price and that it had been stalled near a particular level.  The executives wanted to make a gesture to the market to demonstrate that they were “serious” about controlling costs and they would announce that they would be shuttering multiple call centers.  I didn’t think that the decision made great sense since this program was a certifiable marketing phenomenon with wide brand recognition and yes, the company was in the black.  Was it as profitable as it could have been?  Probably not.  But the decision was framed within the context of proving a point to the stock market and as executives with stock options, the decision makers in that room had a vested interest in seeing that price rise.

The decision to close centers, with the resultant loss of hundreds of  jobs, was announced the following week.  Like tufts of dried dandelions in stiff breeze, the jobs were simply gone.  Mortgages, health insurance, family circumstances, whatever…all were meaningless to those executives so long as the market understood that they were serious.

Although my own job was safe, the experience was educational.  When we found that my wife was pregnant about a year later, we talked at length and decided that it made more sense if one of us stayed home with the child.  This experience was not the principal reason behind my decision to resign and stay home but it certainly lurked in the background of my thinking.  This act, and the countless others throughout the economy, proved that corporate loyalty to the employee was dead and that I could be unemployed regardless of my competence or job performance.  We would take a significant short-term pay cut but my wife’s long-term employment would be far more stable.

Just a few years ago, almost twenty-five years after the closures, I wandered the local high school auditorium lobby during a play’s intermission.  I was perusing the plaques honoring notable alumni and stopped abruptly at one plaque, which honored the CFO of that corporation for his contribution to establishing a gift to the school.  I looked him up upon returning home and found that he had left the company a few years after me and was now a principal at an established investment firm.  He had managed to avoid the final implosion of the company after it was purchased by Worldcom, which itself ceased to exist because of a massive accounting scandal.  The Treasurer was himself established as the CFO of an oil company and the CEO, who wasn’t in the room but would certainly have signed off on the closure decision, was now an independent investor specializing in tech start-ups.  My thought now, as it was that night?  You got yours, you Bastards.  What about everyone else?

A corporation is a valuable tool but in the end, it is only that, a tool.  There are certainly decent corporate leaders who abide by the rule of law, but the cumulative acts of the others are sufficiently damaging that we can no longer allow the conflicts of interest arising through stock options.  We can no longer accept them at their words that the books weren’t cooked (Enron and Worldcom), their scientific research wasn’t flawed (Theranos), their actions weren’t damaging to the marketplace (Amazon).  I am sure at this point that you can identify any number of other corporations which can fit the bill here.

People, many being supporters of President Trump, fear the impact of a Democratic party victory upon shareholder capitalism.  They neither recall nor understand that much of the damage to their middle class is a result of shareholder capitalism, a Randian and morally bankrupt conceit that serves as window dressing to justify the legalized looting and pillaging by corporate elites for decades.  Without the re-imposition of government oversight and regulation, the pillaging will continue until the Anonymous Societies succeed as neo-feudal lords amongst hundreds of millions of American serfs.

A Socialist by Necessity: Capitalism? Let Them Eat Cake

“To admire, and almost to worship, the rich and powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”

Adam Smith, The Theory of Moral Sentiments (1759)

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.  We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.”

Adam Smith, The Wealth of Nations (1776)

“Follow the money.”

Deep Throat to Bob Woodward, 1973

If you want to understand why I shifted from Centrist Republican to Socialist, you need to think about Adam Smith and Capitalism.  What we presently call Capitalism has spawned a massive division of wealth – gutting an entire Middle Class – because it leans upon a bastardized propaganda version of Smith.

Capitalism is a young concept relative to the history of the world.  First elucidated by Smith in his 1776 The Wealth of Nations, it gained traction during the early 19th century with the Industrial Revolution.  It spawned fortunes to a very few at the expense of the many.  Early capitalism grew explosively during the technological upheaval of that period, fostered by weak legislative and judicial systems which not only permitted, but supported, a system free of any regulation.  Toss in Western Civilization’s social and religious structure, recognizing and reinforcing class distinctions, and it was off to the proverbial races for the wealthy few.  It was only through decades of muck-raking journalism, labor unrest and early legislative efforts that society’s ball was slowly moved forward on the field against the power of concentrated wealth.  In the United States, these efforts largely failed during what we know as The Roaring Twenties as public sentiment bowed to the supposed acumen of the business and corporate class.  When Great Depression congressional hearings uncovered just how badly that class screwed up, it was a series of regulatory actions and social programs that set the stage for the version of mid-20th century American Capitalism that most reflected the full range of Adam Smith’s work.

According to the International Monetary Fund, “Capitalism is an economic system in which private actors own and control property in accord with their interest, and demand and supply freely set prices in markets in a way that can serve the best interests of society.”  In the event that you think that in the best interests of society is a socialist term added by some IMF pinko leftist, just remember that Adam Smith was a strict Scot Presbyterian who wrote The Theory of Moral Sentiments almost two decades before he penned The Wealth of Nations.  While everyone gloms onto his phrase about the rational self-interest of the butcher and baker as justification for the inherent success of capitalism, they ignore the fact that in a sense, Smith was using the idea of capitalism as a means of raising the proverbial tide of all boats in the waters of society.  Fine, says Smith, the best way to make money and improve their condition is to understand that people will act in their own best self-interest.  But understand that fixating upon the accumulation of wealth is self-corruptive and ignores the larger obligations that we owe to society.  

How did we manage to divorce capitalism from any concern for the welfare of society at large?

Start with the question, what exactly is Capital?  We have an entire economic system predicated upon the word and I frankly doubt that many have even thought about it.  Google the question what is capital? and the response can vary by site.  Investopedia is the first response and defines capital as “…financial assets such as funds held in deposit accounts and/or funds obtained from special financing sources…Capital assets can include cash, cash equivalents, and marketable securities as well as manufacturing equipment, production facilities, and storage facilities.”  Wikipedia (yeah, I know, I know…) defines capital as “human created assets that can enhance one’s power to perform economically useful work.”  Most sites ignore the concept that people can also be capital; the Corporate Finance Institute notes that capital has a human component including social, intellectual, physical and talent skills.  And this is the crux of our present issue.  There is supposed to be a degree of balance between the various aspects of capital, a general equilibrium between the human, financial and physical assets with all of them coming together to create wealth and grow the economy.  But in the four decades since the election of Ronald Reagan, that equilibrium has vanished and those who view capital as solely the purview of financial instruments have gained control of the economy.

The wealthy are like the poor in that they have always been with us, their power flowing and ebbing over the political events of generations and constrained by taxation, regulation and occasionally, the guillotine.  Their most recent ebb came after the Great Depression, when Congressional inquiries revealed the depth and extent of their financial misbehavior.  But they didn’t leave and they continually lobbied over decades for the lowering of taxes and the repeal of the regulations that held them in check.  My kids have heard me say on multiple occasions that the seed for our era was planted by Ronald Reagan, who rode the promise of a renewed America and lower taxation into office in a landslide.  Tax rates were cut and that freed money to sustain the pent-up demand unleashed after the problematic 1970s.  But there were two singular changes in Reagan’s first term that set the stage for what has happened since.

Like an Amazonian butterfly whose flapping wings spawn a Bangladeshi monsoon, the first of these changes was notable only in the stunningly dull pages of the B section of the Wall Street Journal.  As a college business/economics student during that term, I was required to subscribe to the WSJ and read it regularly.  My morning routine consisted of early classes followed by a walk to the post box for the paper and mail, and then to the cafeteria for a coffee and morning read.  That read began with the stock results in the C section and then onwards to what I now recognize as the utterly schizophrenic A section editorial page, then the print counterpart to today’s Fox News.  In each case, the news side was essentially reliable but the Editorial side was highly conservative and occasionally batshit crazy.  What popped out one morning in the B section was a wonkish accounting article discussing a proposal to alter CEO pay packages to allow stock options in addition to the standard salary.  The rationale was that the presence of equity options would provide a greater sense of ownership in the company and by extension, a greater willingness to accept risk.  It was a shift of philosophy from company steward to company owner.  There were a few articles afterwards and the practice was quietly adopted.

Score an early point for potential conflict of interest.

The second change was the innocuously sounding passage of SEC rule 10b-18  in 1982, which again legalized the practice of corporate stock buybacks.  Buying back one’s stocks was once legal, but was abolished with the passage of the Securities and Exchange Act in 1934 when Congressional inquiries discovered that more than a few high-flyers of the 1920s markets used the practice to manipulate their share price upwards.  The rationale behind the 1982 allowance was rooted ostensibly in the high interest rate environment of that period.  In corporate finance, the idea is to invest in those projects which provide a sufficiently large rate of return relative to the cost of money or whatever management deemed the appropriate internal rate of return.  In an environment where the cost of money was 15% and higher, there were few projects which could even come close that benchmark.  The proposal was that instead of companies just sitting on cash, it was better to simply return it to the shareholders and let them use it to their own best advantage.  The optimal way to do that would be the buyback of stock instead of paying higher dividends to gain the tax advantage of the buyback’s capital gains rate versus the dividend’s higher income tax rate.

Score another point for potential conflict of interest and manipulation.

After these two early acts set the stage for the later triumphant looting, events took place in distinct strands that ultimately came together to literally throttle the American Middle Class and contribute to our immense wealth gap.

The first strand was conservatism’s foothold through and after the Reagan years.  Conservatives were no longer stodgy middle-aged lodge members that sold insurance and met for Wednesday league golf.  They became acolytes to a gospel cult of Wall Street and profitability.  I began working in the corporate office of a now-defunct multinational telecommunications firm in 1992.  As a first entered the Treasury Group area, I met the prototype for the Young Republican capitalist:  tanned and handsome with wavy sandy blonde hair, dressed in an impeccable suit with matching red power tie and suspenders.  As he shook my hand and introduced himself, his next words were Y’know, Reagan is a God.  I don’t recall my response apart from a mental note to the effect of well, this is special.  Our subsequent conversation afterwards was an inquiry about my weekend and then a storyline about how wasted he had been at the beach the immediate weekend before.  He was an avatar of what was to follow – supremely self-confident, narcissistic and completely vacuous.

Capitalism during the Reagan years began morphing into what is now termed shareholder capitalism, which was proposed and promoted by Nobel award economist Milton Friedman in the 1970s.  Shareholder capitalism posited that executives were to work at the behest of shareholders to the exclusion of all others, including customers and employees.  I don’t recall anybody pointing out the inherent conflict of interest as top executives were now shareholders as well.  This was the point at which the concept of capital became the purview of financial instruments to the practical exclusion of all else.

Corporate finance shifted with the rise of corporate raiders such as Carl Icahn and firms such as Kohlberg, Kravis and Roberts.  These adhered to the shareholder capitalism principles and readily used large amounts of debt – the so-called Other People’s Money – to acquire companies and dismember them, selling off profitable divisions.  They then took their proceeds and left the surviving portion of the new firm with to deal with their massively increased debt load.  More than a few companies perished because they were unable to cope and more recent examples of this include retailers Toys R Us and Neiman Marcus.

My beach capitalist former co-worker would have felt at home amidst these proceedings.

Assisting in this period was the creation and growth of conservative media, which paved the way with a new attack narrative questioning the role of government and painting the poor as lazy and undeserving.

The key event event for shareholder capitalism however was the 1999 repeal of the 1934 Glass-Steagall Act.  This was the fundamental act which regulated the actions of the banking sector, effectively forcing banks to focus upon commercial banking.  It was actively promoted by Limbaugh and his peers and permitted money center banks such as JP Morgan Chase and Citibank to again become involved in investment banking.  They became active participants in the subsequent use and sale of Mortgage Backed Securities and other derivative instruments which ultimately led to the Financial Crisis of 2008 as they became actual threats to the stability of the entire financial system.  They were now effectively Too Big to Fail.

The next strand was woven within the political arena.  Conservative principles of deregulation also led to the neutering of regulatory bodies such as the SEC via both defunding and executive direction to scale back investigations.  The promise of lucrative private sector careers for cooperative regulatory officials put the cherry on the sundae of what is known as regulatory capture.  The legislative branch was compromised by the failure to control lobbying and campaign financing.  My own personal bugaboo is the growth of the American Legislative Exchange Council, which acts as a conduit of legislation between corporate beneficiaries and legislators, most at the state level.  ALEC was a pre-Reagan entity but came into its own after Reagan came to office.

Score ten points for self-interest.

The third strand was a new attitude towards failure.  A key feature of capitalism is that success is obviously met with reward and failure with loss; more power to you if you succeed but you had better be ready for the consequences of failure.  But remove the consequences of failure and what begins to occur is moral hazard.  Market participants begin to expect that they will be spared the cost of failure and are thus willing to undertake greater and more irrational risk.  Perhaps the first financial event to evoke this was the collapse of a private fund named Long Term Capital Management in 1998.  The gist of the firm’s strategy was to make money arbitraging the differences in interest rates of different instruments, a transaction with a very small profit margin.  To maximize their return, the owners borrowed larger and larger sums of money to create a critical mass of capital to make the strategy lucrative.  But when some of the supporting bonds defaulted, the remaining assets could not support their nosebleed levels.  The government was forced to step in and arrange, through multiple large banks, an orderly winding down of the trades to prevent a collapse that would have likewise destroyed other firms interlocked via a web of financial relationships.  Yes, the firm failed and people lost money but there was a lesson to those few paying attention.

Go ahead and engage in the excessive risk-taking, the system will be protected should things go south.  I can argue that this was the precursor event signaling to shareholder capitalists that it was a new game.  Hey…we can do all kinds of things now and take our rewards.  The market will be fine and we can make money until then.  We just have to get out first.

The final strand was a new philosophy about interest rates.  The arrival of Ben Bernanke as Federal Reserve Chair in 2006 was a signal moment for the American financial sector.  Bernanke’s academic focus was the study of the Great Depression and his premise was that the 1929 Fed exacerbated the collapse by raising interest rates and siphoning liquidity from the system.  His proposal would be to lower interest rates and flood the markets with liquidity.  The hiring was a tacit acknowledgment of market over-value and that a crash was to be expected.  Any issues with the market would be met with a flood of liquidity.  The 2008 collapse put this proposal to the test and rates were lowered to historic levels.  This was additionally matched by Fed mechanisms, aka “the windows”, to flood the severely damaged financial sector with gob-smackingly stupid amounts of liquidity.

It was here that cheap credit became the new crack.

Significant market issues would be met with rate adjustment downwards and despite efforts in the twelve years since then, rates have not returned to pre-crisis levels.  So how is this crack?  Corporate executives saw the opportunity to use ultra-low rate debt to their advantage:  they began borrowing signficant sums of money on their corporate books and using it…to buy back shares of stock.  Cumulative growth of BBB rated corporate debt rose 400% between 2008 and 2018.  The effect of this on cumulative Earnings Per Share has been a rise more than seven times higher than sales per share over the same period.  Oh, and by the way, the executives are concerned that the market will tank if we ban stock buybacks.

The Federal Reserve has literally become the enabling mother of narcissist sociopaths.

So after Milton Friedman and Ronald Reagan, four strands were woven:

  • Inherent conflicts of interest were legalized and allowed;
  • A national narrative attacking government regulation occurred and the subsequent financial decline was blamed upon out-groups such as the poor and illegal immigrants;
  • The legislative and regulatory processes were seized and neutered;
  • Monetary policy and the Federal Reserve were co-opted by the practices of Mutually Assured Financial Destruction brought about by the first three bullet points.

These strands have been woven into the rope that is literally strangling the nation.

The tributes and nods to Adam Smith from the conservative media are a joke.  The conservative movement has seized upon a singular work, cherry-picked it and beaten it like a drum to justify decades-long chicanery, theft and wholesale looting.  They have helped to rig a system that purposefully strip-mines the wealth of large segments of American society and used their media allies to clothe it in respectability.

Smith would be appalled by what has happened and would likely say this:  Read the other book.

 

 

 

 

A Socialist by Necessity: Losing the Angry Man

There is no singular road-to-Damascus event that triggered a socialist conversion.  It cannot be measured in a few years, but instead by decades.  Many Republicans today bemoan that the party shifted to the right and left them where they were.  In my case, experiences and observation have progressively forced me to the left so that I am  now functionally socialist.

PracticalDad:  A Socialist by Necessity

…and a little child shall lead them.

Isaiah 11:6

Becoming a socialist didn’t happen overnight.  It came by degrees over the span of decades via divergent experiences that forced me to reassess not only my political beliefs, but also what would be necessary for my own children – and grandchildren – to have a semblance of an economically stable life.  The first step of that transition was simply an occurrence which in the moment made the home atmosphere a little lighter:  shutting down talk radio.  And as Isaiah noted, it was a little child – my then three-year old daughter, Eldest – who led me.

Like many conservatives, I listened to Rush Limbaugh.  I wasn’t there at the very beginning of his decades long run but I did start listening in 1991 when I began to share an office with a talkative and easy-going co-worker while working in North Carolina.  Nor was I a daily listener for the full three hours because part and parcel of the job was to spend considerable time walking the enormous medical center complex as a member of the Risk Management department.  But when we were both in the office, Rush was reliably in the background.  When I paid attention, I didn’t always agree but I did find him politically well-versed and frankly entertaining.  As his popularity grew over the next several years, I listened intermittently simply because my new job in DC didn’t allow radios in the offices.

That listener status changed in the latter half of 1994 however, with the birth of Eldest and our mutual decision that I should stay home with the baby.  While it is far more common for fathers to do so in 2020, it wasn’t the case in 1994.  Perhaps the most frustrating aspect to being the stay-at-home father was the isolation.  Mothers that I met at the playground were talkative and friendly but once they understood that I was the primary caregiver and not the engaged father with a day off, a switch was literally flipped.  So what’s his deal?  Is he unable to hold a job or is there something wrong here?  Wow, his poor wife…  Chat would peter out and any hope of setting up a play date for the toddler would wither like an elapsed time rose on the trellis.  Starved for adult conversation and any variety in the day, I began to flip on Limbaugh at noon when Eldest and I had lunch and it stayed on when I put her down for her nap.

This routine continued for three years.  It wasn’t as though I ignored Eldest and we ate in silence; children require conversation and interaction and as she grew, we would discuss the trip to the park or the change in seasons or even the squirrel who seemed to enjoy putting on a show retrieving plums from the tree outside the kitchen window.  But Limbaugh was also on low in the background and I would listen more intently after she was napping, keeping me company while I cleaned up the kitchen or any other number of household chores.  Until one day when was three years of age and she commented at the table about “the angry man”.  The conversation proceeded along the lines of :

Daddy, why is the man so angry all the time?

What man?  I don’t know who you are talking about.

Him, Daddy.  The man who is angry.

I don’t know who you are talking about, honey.

Him, Daddy.  The man who is talking now.  He’s always so angry.  Why?

It wasn’t until she mentioned that he was talking at that moment that I finally understood.

I made a point of relating that head-scratching conversation to my wife that evening after Eldest and Middle, the infant, were in bed.  It was treated as a curiosity item from the day but my wife, BH, didn’t leave the conversation there.  Maybe it’s more than just a remark by a little girl.  His tone is obviously something that has caught her attention and sufficiently enough to remark upon it.  And she’s saying that he’s always angry.  When I responded to the effect that he wasn’t always angry and that such was part and parcel of his persona, she retorted that a persona was beyond the comprehension of a three-year old child. Her final question was succinct:  Is this the kind of atmosphere that we want in the house through the day?  

Point taken.  With that, Limbaugh was off the air when Eldest was awake.  It wasn’t that the kids were running the household and we were beholden to them; it was simply that every household has a particular rhythm and vibe and we chose not to have this ever-present angst humming in the background.  By now, Eldest had been joined by Middle and the game of Dad, the Human Pinball was starting to get interesting and as the kids grew, there would be sufficient paternal crankiness without the talk-radio overlay nudging it along.  Seriously, as much as you love your children and would die for them, raising small children is sometimes like being continually pecked by ducks.

There were occasions that I continued to tune in when the opportunity arose, even if I increasingly disagreed with him.  But the final break occurred in the late 1990s when Congress was looking to repeal the Glass-Steagall Act of 1933, a mainstay of financial regulation.  Limbaugh continually argued with through that period that government regulation was as unnecessary in the financial sector as it was in the other sectors.  He remarked – presciently – that far more wealth would be generated if the government and the liberals would only step back and let Wall Street make money.  It was his use of the term liberal during one of these monologues that grabbed my attention one evening.  Seriously…liberal?  The principal Senate sponsor of the bill was  Democratic Senator Carter Glass of Virginia.  He was actively involved in laying out multiple pieces of key federal legislation regarding the national financial system, including the passage of the Federal Reserve Act of 1913.  He was also a highly conservative segregationist, certainly not one of this generation’s Democrats.  After multiple Congressional hearings about the collapse of the market in 1929, Glass was ready to move with FDR’s inauguration and sponsored the act that subsequently bore his name.  This bill was one of the few areas in which he agreed with FDR and he pushed for it because he saw that the collapse occurred due largely to the lack of any meaningful regulatory oversight of a laissez-faire financial sector that went far beyond the bounds of any semblance of rational behavior.

Glass-Steagall was not about ratcheting down and stifling innovation.  It was about creating and maintaining a set of boundaries on unethical and dangerous financial behaviors.  It was Limbaugh’s willful disregard that finally made me turn him off.

Through the subsequent years, talk radio expanded.  It expanded across media platforms to television and podcasts as well as the political spectrum so that even the most far-left and far-right proponents had their own shows.  That I didn’t listen was more about the function of time than dislike.  By now, Eldest and Middle were joined by Youngest and there were now three children across a span of three educational levels.  With constant activities and oversight, who had time?  I might still hear a little bit here and there and I was well aware enough that I knew who was now on the airwaves.

This dislike of broadcast punditry fully blossomed when Youngest was in elementary school and I began to share greater responsibility with my sibling for an aging parent.  Our father had died years before and as our mother aged and her horizons shrank, she increasingly spent her time watching Glenn Beck and all of the Fox evening programming.  Her natural conservatism sharpened with the ongoing stories of liberals and societal decline and her fear increased.  Over time, there were more phone calls seeking reassurance about that or that political issue, or why the Democrats would allow themselves to run a candidate who wasn’t actually an American citizen, let alone a Muslim.  What I noted when I visited her retirement community apartment was that all of the public area televisions, as well as in the apartments whose residents had left the doors open, were tuned to Fox News.  Her final four years were notable by an increasing level of paranoid dementia.  She wasn’t incompetent but obviously paranoid and this was only fed by the constant barrage of fear-mongering and criticisms from Beck, O’Reilly and Hannity.  The number of phone calls increased further and the tenor of our visits changed dramatically.

My mother’s television faced the front door to her apartment and when I entered, after a short hallway silent prayer and an unheard knock, I could tell what kind of day it would be.  If she sat in her swivel chair facing the television and Fox News was airing, I knew that she had watched at least some of Fox and Friends and with her anger stoked, some fresh new misery awaited me.  In those instances, she would hear me loudly call out a greeting, swivel her chair towards me like the turrets on a battleship and fire the first of what would be multiple angry salvos.

These instances, and the phone calls, increased in frequency and yes, they were also synced to her mental status decline.  By the time that Eldest was in college and gearing up for a semester abroad to Central America, the dam broke while having lunch with her in the community cafeteria.  This was also during the period that candidate Donald Trump was proclaiming Mexico as a land of rapists and drug dealers, his immigration comments trumpeted by the evening Fox commentators.  Confused about where Eldest was traveling, she began by loudly questioning my competence as a father by allowing my daughter to travel to such a place.  Heads swiveled across the entire cafeteria as she yelled.  She couldn’t identify the destination that so badly scared her, simply referring to it loudly as there.  Nor could she say who it was that scared her, only repeating the words them and those people.  It required some minutes of quiet conversation to talk her down and get her to understand that her granddaughter would be safe from them, those unknown people that she couldn’t name but who scared the living shit out of her because the Republican candidate and good folks of Fox News said that they were bad.

As the comment goes, no amount of therapy and bourbon will erase that.

It is now impossible to avoid the political punditry even if I keep the programs turned off.  The gas-bagging has taken over the actual news cycles and they are replete with reports about what nonsense has been uttered by Limbaugh or Carlson.  Even Maddow and Scarborough on MSNBC make news with their  commentary.  I will sometimes verify what I read or hear and it is usually correct in it’s ridiculousness.  I suppose that it would be exactly as the late Roger Ailes would have wanted with various commentators tossing out verbiage that itself becomes the news instead of the reality of what is actually occurring.  The death toll today was more than a thousand lives, but did you hear what Carlson said?  Roger Ailes would be proud.  He helped to create Rush Limbaugh in the late 1980s and under his later guidance, he led Fox News to top ratings and immense profitability.  It was, is and will be about the money and if you doubt that, I refer you to then-CBS President Les Moonves comment in 2016 about candidate Donald Trump:  It may not be good for America, but it’s damn good for CBS.

As I write this, Rush Limbaugh is still broadcasting despite stage IV lung cancer.  I haven’t listened in years apart from the rare verification under the heading of did he really say that?  My own father passed away of that illness almost twenty years ago and having been there with my sister at his death, I don’t wish poorly for Limbaugh because it’s not likely to be an easy death.  But I will absolutely not miss his presence.  What he and his ilk, on both sides of the  airwaves, have done in the pursuit of ratings and profit is multi-fold.  They have assisted in the fragmentation of a nation and encouraged the practice of reducing people to broad-stroke caricatures.  They dumbed down important topics and abetted the corporate class in selling and justifying a system of wholesale greed and theft.  They preyed upon and fed the fears of a multitude of elders, including my mother, frightened by the natural course of change.  They made the personal lives of so many adult children all that more difficult for their fear-mongering and dissembling.

More importantly for me however, it was the observation of a pre-schooler that forced me to re-evaluate my own involvement.  It freed me from the constant barrage of one-sided narrative and gave the latitude to pursue current events free of the profit-driven angst and come to my own conclusions about the state of American society.

That was frightening enough, without the assistance of any of the gas-bags.

A Socialist by Necessity

“April 29, 1938

To the Congress:

Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people.

The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself.  That, in its essence, is Fascism – ownership of Government by an individual, by a group, or by any other controlling private power.

The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.”

Franklin Delano Roosevelt, Message to Congress on Curbing Monopolies

“Dad, I don’t think that people understand how liberal you are.”

Middle to PracticalDad, approximately 2015

The Facebook profile photo changed in April as Middle and I were driving home from an errand during the Pandemic.  We chatted and he commented that perhaps it was time to remove the outdated picture of Andrew Jackson, which I had placed there years before.  Perhaps I needed something more fitting with my political inclinations and I concurred.  There was a time, almost a decade ago, that we needed a Jackson-esque leader who would take on the monied interests and restore a sense of balance to the economy.  But instead, we got…well, you know who.  As I prepared to make an ironically appropriate left turn into the neighborhood, I said that the picture should be Karl Marx.  Trusting him with my password, he made the swap as I finished the drive home.

Arriving at the point of adopting a photo of Karl Marx has been a process.  I didn’t awaken that morning and decide to spontaneously declare to the essential grocery workers that you need to unite and take back the means of production for you have nothing to lose but your chains!  It has been decades since I read any of Das Kapital, a challenge because Marx wrote with the torpid grace and style of an artery accumulating plaque.  My real takeaway was the understanding that he wasn’t a fire-breathing demon but instead a corpulent intellectual repulsed by the grotesque economic inequities of his period in the mid-19th century.  That it seems strident is understandable given the initial publication in 1867, only two decades removed from the failed European-wide rebellion of 1848.  Rebellion?  Yeah, the rebellion that led to a Prussian repression which caused a huge influx of German immigrants to America in that same period.

I am now a Socialist neither by choice nor inclination, but by necessity.

I am a Socialist by necessity because the monied interests have used the power of the purse to capture the political system via massive amounts of dark money political contributions and lobbying.

I am a Socialist by necessity because that capture has fostered an economic system that benefits them to the harm of the rest of the citizenry.  The Middle Class was failing before this President, but the Pandemic exposed our economy for the Potemkin Village that it truly was.  Tens of millions have been thrown out of work and the national average of Americans facing eviction is at 40%, with some states above 50%.  Simultaneously, a handful of billionaires have seen their wealth during this Pandemic increase by $584 billion while the rest of America’s households lost more than $6 trillion in wealth.

I am a Socialist by necessity because so many of the programs and benefits that supported our great-grandparents and grandparents have been rolled back and carved away, placing those burdens upon the American family itself.  As of this writing, the President has commented that if he is re-elected, he will move to permanently end the payroll tax; this would effectively starve the Medicare and Social Security programs upon which so many of our elders depend.

I am a Socialist by necessity because a one-sided media complex has hijacked the airwaves with a malign gospel that those who require assistance in today’s America are somehow lazy or at fault, instead of asking how our nation reached a condition in which someone working a full-time job still cannot afford to survive.

I am a Socialist by necessity, having raised children into a rapacious, grotesque economic system devoid of the under-girding of the rule of law and a system of governance that would give a shuddering sensual thrill to Ayn Rand.  Reusing the word grotesque isn’t editorial laziness but instead an indication that America has reached a condition recognizable to Dickens.

I am a Socialist by necessity because it is going to take a massive and prolonged effort to reform and restore the rule of law, especially regarding the financial sector where much of this started.  It is going to take serious push-back against a conservative media that sells a mythic version of America and routinely describes any who disagree as them, and sometimes worse.  This will be an unpleasant process if the labor history of the late 19th and early 20th century is any guide.

This election, and the next several afterwards, are crucial.  Why?  Because this nation has continually abused its currency, which also serves as the global reserve currency.  For that, the world will be – is – looking to see what will replace the Dollar.  This election, and the next several afterwards, will help decide how we choose to subsequently allocate our national resources which will no longer enjoy the privilege bestowed upon the global reserve currency.  That coming date is unknown, but it will arrive sooner than later.

My upbringing wasn’t socialist and in some ways, I am still the product of a mid/late 20th century corporate family mindset.  I still believe in property and the idea that there are some things that are better handled by the private sector (not including the prison system).  Taxes can be too high and I am not in the least comfortable with the surveillance authority that we have given our government.  I believe that people should be allowed to prosper and succeed…within reason.  If you want to make three quarters of a million dollars and enjoy the fruits of that labor, have at it.

The problem is this:  despite decades of commentators spouting descriptions of America as a land of unlimited opportunity and endless potential, there are still a finite number of zeroes in a 2019 national GDP of $21,430,000,000,000.  Our national output is indeed immense, but it is still finite and the massive wealth disparity is clear evidence that all of this money is now going to only a small handful of people.  There is a point at which wealth accumulation becomes a zero sum game and a person’s accumulated gains indeed rob many of the sheer means of survival.  When a literal handful of billionaires make more than $584 billion in a period when the annualized GDP declines by almost 33% in a single quarter?  Well, this is long past zero sum.

This is economic cannibalism.

There is no singular road-to-Damascus event that triggered a socialist conversion.  It cannot be measured in a few years, but instead by decades.  Many Republicans today bemoan that the party shifted to the right and left them where they were.  In my case, experiences and observation have progressively forced me to the left so that I am  now functionally socialist.  Do I hate capitalism?  No.  I frankly think that it is a more efficient allocator of resources than socialism but it requires a degree of morality and above all else, a willingness to let failure occur.  With the failure to address real systemic issues after the Long Term Capital Management and the 2008 Financial crises, and obscene amounts of liquidity to buoy the markets, it was obvious that the fix was in and honest-to-God capitalism was dead.  If you ascribe to FDR’s 1938 description of fascism noted at the outset of the article – and I do – then we’ve been living in a charcoal gray, wing-tipped corporate fascism for the past two decades.  That our President has harnessed fear and division to create a racist neo-brown shirt movement is only a shift to a more recognizable variant that we witnessed in Nazi Germany.

But make no mistake that we were functionally fascist before this President.

There are different route steps on my arrival as a Socialist by necessity and most are framed within the context of children and family.  Each will be covered separately in the coming weeks.

First, I stopped all routine listening to any manner of broadcast political commentary on both sides of the spectrum because that is simply a business model of anger generation.

Second, I came to understand that capitalism was replaced by what some refer to as corporate socialism (where gains are privatized and losses are socialized), or simply fascism.

Third, I witnessed first hand the callousness and disregard of senior corporate management towards innocent employees.

Fourth, I literally stopped watching all television, varied my news sources and simply read.  A lot.

Fifth, I spent considerable time on the internet, backtracking information and learning which sites were trustworthy and which were trash.

Sixth, I learned that it is indeed possible to take these various social and economic statistics and see them in action in my daily life and in my community.

Finally?  I have tried to listen to the youngsters as they have grown and matured, opening myself to learning from them.  This includes understanding that my focus upon family and economics simply didn’t give anything close to sufficient acknowledgement to the effect of racial disadvantage in the spectrum of daily American life.

Yes.  Black Lives Matter.

 

 

 

 

 

Pandemic Food Price Index: 7/20

In order to ascertain the impact of the Covid-19 Pandemic and it’s dislocations on food pricing, I re-booted an old project to track the pricing on a market-basket of typical food items in three local grocery stores.  The original pricing for this new project was done in May, 2020 and the pricing for July was completed last week.  The  results of May 2020 are the base index level of 100.  Following are the results and some comments.

First, the Index rose slightly from June’s 100.66 ($89.09/basket) to 100.77 ($89.19/basket).  Although prices were relatively stable, increasing by about .1% over the previous month, there was considerable turbulence within the basket of foodstuffs.  Specifically:

  1. As with last month, there were 7 separate items of 111 priced (37 items in the basket at 3 stores) not available at all, for a missing rate of 6.3%.  Not only missing from the shelf, but with the shelf label either completely gone or else with a notice that the item is temporarily discontinued.  What was also notable about these missing items was that five of the seven were in the locally owned supermarket; the shelves at multiple points in that store also had temporarily discontinued labels on a number of other foodstuff items that were not considered since they were not in the sampled basket.  (Note:  The attached monthly pricing at the bottom has eight prices missing instead of seven; there hasn’t been a price for 80% ground beef for one store from the outset in May.  That store no longer carries 80% ground beef in any form and the missing prices thus exclude that item.)
  2. Because these items were missing, they were not priced and were thus removed from calculation for the monthly result.  It is impossible to say what the basket value would have been had they been on the shelves.
  3. The largest change however, was seen in the staples section, specifically for five pound bags of flour and four pound bags of sugar ($.09/lb and $.61/lb respectively).  Topping that off, the largest supermarket chain (internationally based) simply did not even carry their store brand sugar and were sparse on levels of the name brand sugar.

My wife, BH, linked an article from the NY Times to my phone.  Specifically, the writer noted that foodstuffs were reappearing again, most especially toilet paper and flour but that the breadth of product offerings was less.  In other words, I can get toilet paper and flour but not in the variety that was offered previously.  This would perhaps account for what I am seeing in the locally owned grocery as the store brand, offered via an independent grocer Group Purchasing Organization.  The food suppliers are shifting their production to the larger and more flush entities, crippling the offerings of the independent supermarkets.  With greater economies of scale among their stores, the larger entities will be at a greater advantage to the smaller independent stores moving forward.  So, yeah, Mick was right:  you can’t always get what you want, but you can get what you need.

Basket Results (7/2020)

 

The Consumer Economy Headshot

The truth is that the consumer-driven model is now functionally dead, an economic zombie shambling along and awaiting the merciful head shot that drops it, allowing it to be kicked into the gutter and out of the way.

PracticalDad, Post-Consumer Parenting (April 8, 2016)

The consumer-driven model that has powered this nation’s economy for three quarters of a century is now officially dead, the head shot delivered by…a virus.  Like any zombie, it was compelled to mindlessly consume yet was malnourished by an increasingly severe lack of purchasing power.  I would have been less surprised by the manner of death than to find that Bette White was cast as the new villain on The Walking Dead.

It starved for years, certainly longer than April 2016, when I wrote the above linked post.  Zombification occurred in stages over the course of decades.  One contributing factor was the effort by corporate employers to shift from pensions to 401k plans, citing the need to cut costs and allow for funding to compete against other companies.  Another was the claimed throttling cost of benefits, consequently cutting back on health care benefits in the face of rising costs.  Yet another was the drive to maximize shareholder value by decreasing labor costs, shipping jobs – even entire plants – overseas or increasing the drive to automate them.  Even with these ongoing hits, the process was accelerated by an economic demand that now mandated a college degree for entry into the fabled American Middle Class.

The condition however, became terminal with the Financial Crisis of 2008, from which it never recovered.

The symptoms have been there for years in any variety of news articles:

To quote Captain America:  I can do this all day.

Understanding the impact of this collapse is helped by understanding how the model came about in the first place and for that, you have to return to the period immediately prior to the Great Depression.  Economists were developing the Expenditures Theory of Gross Domestic Product:  C + I + G +(X – M) to help create a systemic framework for understanding the national economy .  Simply put, a nation’s GDP is a function of the aggregate spending of Consumers (C), Business (I), Governments (G) as well as the aggregate international balance of trade between exports (X) and imports (M).

We might recall the decade as the “Roaring Twenties” but the reality was different.  There was supreme confidence in the business community and many industrialists and financiers bought into the notion that the historic business cycle of boom-and-bust had been eliminated.  But there was an awareness among others that significant problems still existed.  The agricultural sector was mired in an economic depression as crop prices had collapsed years before the Wall Street collapse.  Some were aware of the inequitable distribution of wealth in society and others noted that the lion’s share of the economy’s productivity gains through the decade had accrued to the wealthiest class.  The average American worker saw significant wage gains but the top 5% of wage earners garnered 34% of the disposable income, up from 24% in 1920.  Then came the collapse of 1929.

President Herbert Hoover’s responses to the Great Depression were constrained by the philosophy – along with almost everyone else – that the Federal Government must annually balance it’s budget.  There was plenty of rah-rah jawboning and some effort to run a small deficit and create additional relief programs but in the end, he was bound by his personal belief that it was up to American individualism to find a way out instead of government action.  Relief programs were left to charity and local and state governments but the continued spiral downwards left everyone without money so that by 1932, destitution reigned; the economy was at the point of real collapse and Senators were warning of open revolt by the election of 1932.

Yet debate among economists continued during that period and it was in 1930 that John Maynard Keynes wrote A Treatise on Money, which became the basis for what we now know as Keynesian Economics.  Another economist caught the ear of nominee FDR in that period however, and his name was William Trufant Foster.

The heart of Foster’s concept was that the Depression was ultimately caused by under-consumption, that the average person simply didn’t have the financial wherewithal to support the purchasing power required for all of the economic output produced.  If there was to be renewed growth of output and through it, employment and wage growth, it had to come via increased consumption in any fashion, whether by the individual, the business sector or the government.  Keynes’ work provided the intellectual justification to allow government deficit spending to spur that aggregate demand in economic downturns.

I don’t know that we can now appreciate the level of political and economic chaos in the period between FDR’s election in November 1932 and his inauguration in March of 1933 (the inauguration date was later moved to January).  Farmers were banding together to actively deter farm foreclosures via threat and in some cases, actual violence.  The Soviet government actively supported a rising Communist party and through it all, hundreds of banks across the country were closing their doors, destroying the little savings that were left to the individual.  Two states independently declared bank holidays, temporarily closing all banks within the state for a one or two week period.  Why?  Fear.  The average American had so lost faith in the system and government that, anticipating his or her own bank to collapse, began pulling all their remaining money from banks.  By doing so, they themselves guaranteed a collapse.

Fear.

This was the backdrop for FDR’s now-famous First 100 Days.  It was the backdrop for the creation of new and untested programs to get people working and money once again flowing through the economy.  Fear was the enemy that FDR fought in that early period of his Administration and was the basis for his statement in his first inaugural address, The only thing we have to fear is fear itself.  FDR understood that money must be flow and consumption must be restored and in the short-term was willing to use the government budget to do it.  He also acknowledged the power of the budget and knew that in the longer term, the average citizen would have to step up and this could not happen until fear was lessened and purchasing power grown.

Why the introduction of bank deposit insurance via the FDIC?  To lessen the fear of bank collapse with the resulting loss of savings.

Why the introduction of Social Security?  To lessen the fear of poverty in old age.

Why the creation of multiple job and agricultural programs?  To lessen the fear of poverty, bankruptcy and ultimately, starvation.

And why the creation of multiple public authorities such as Rural Electrification and the Tennessee Valley Authority?  To spur the development of the physical infrastructure necessary for future growth and keep it out of the hands of the private sector, most particularly the financiers.

All of this was undertaken to rebuild the purchasing power of the American citizen and ultimately, to diminish fear because fear eroded faith in the system.

Remember that phrase:  purchasing power.

Government spending alone was insufficient however, and it was clear by the severe recession of 1937 that something new had to be tried.  This was interrupted by the Second World War and any other activity was shelved for the duration.  What happened through the post-war period however, was a series of measures that, by design or happenstance, assisted not only the economy and purchasing power of the American consumer but diminished the fear that kept it from being exercised.

  • The wide-spread availability of health insurance from employers meant that Americans were relieved of the fear of crippling medical bills.
  • Higher education was made more available to the large number of returning veterans via the GI Bill of 1944 and the quality of that education was increased with significantly higher public funding for facilities at state universities.
  • The existence of Social Security and the availability of company sponsored pension plans meant that Americans were, to a considerable extent, relieved of the fear of poverty in their old age.

This is where we find ourselves today.  The Consumer-driven economic model was predicated not just upon the wealth and incomes to support reasonable purchasing power, but also the assurance that there was a sufficient safety net to protect the constituent consumers.  The high cost of healthcare via premiums, deductibles and co-pays has shifted to the family with a subsequent loss of purchasing power.  The high cost of the college degree that is now a prerequisite to a job that at least promises stability has shifted first to the family, and then to the youth, with a subsequent loss of purchasing power.  The decrease of pension plans and the rise of self-funded retirement has shifted that to the family as well, with a subsequent loss of purchasing power.  Couple these with the disproportionate rise in the actual costs for healthcare and higher education?  Disaster.

There is a terminal lack of purchasing power.  That the average American had nothing upon which to rely when social distancing shutdowns occurred with no economic support forthcoming while the financial system and corporations were backstopped fed a smoldering anger.  That small business was forced to shutter while certain large retailers were declared essential spiked that anger.  People can talk all that they want about the pandemic measures impinging upon their rights, the underlying fear is that they face economic ruin unless they can return to their jobs.  Regardless of where you are on the political spectrum, it is ultimately an anger built upon the practical implications of economic inequality that we have allowed to take root.

Perhaps the only remote silver lining to this freakishly misbegotten shit show is that it is occurring in an election year.  What we have known as an economy is functionally dead.  The national savings rate has spiked to 33% in April 2020 and the economic establishment states that we are hoarding cash.  Do you know what I say?

Good.

Why should we now spend for anything other than necessities?  Why should we spend when government and corporate policies make it clear that our families will receive no meaningful support?  Why should we upgrade and consume when the products, although ostensibly American, are built overseas and profits are disseminated only to shareholders and senior executives?

There is now a debate brewing in Washington as to whether the temporary additional weekly unemployment benefits of $600 should be extended past their July 31, 2020 expiration.  This is occurring because research finds that fully 68% of American workers now have UI benefits greater than their weekly wage.  Conservative legislators fear – understandably – that there is no longer an incentive to work and that such benefits constitute a moral hazard.  Yet they oppose an increase in the minimum wage.  They oppose any public sector financing for healthcare.  They oppose any increase in public funding for higher education and some even support decreasing funding for elementary and secondary education.  And they support a President whose 2020 budget proposal called for Medicare and Medicaid cuts to address a trillion dollar deficit.

And they do not answer the underlying question:  How have we come to this juncture that the wages are so disproportionate to what is required to survive in America today?

This is why the election year timing matters now.  There must be clear and progressive – even radical – policy choices made to help create a new model driving economic growth, one that is not piled upon the back of an American citizen again bereft of purchasing power and crippled by fear.

And yes, one that actively encompasses a real core of social justice.

Pandemic Food Price Index (6/2020): You Can’t Always Get What You Want…

May of 2020 saw the inaugural edition of the Pandemic Food Price Index, a 37 item market basket of foodstuffs to measure the impact of the Pandemic on grocery store food prices.  Here are the results and observations for June, 2020.

  • The nominal cost of the 37 item basket, shown at the bottom, was $89.09 in June.  This was an increase of $.58 from the May 2020 baseline cost of $88.51.  The Pandemic FPI is now at 100.66:

(((89.09-88.51)/88.51)*100) + 100 = 100.66

  • An increase of .66% seems minor, but this is monthly and extrapolates to an annualized rate of 7.92%.
  • A basket of 37 items priced at three stores is a total item count of 111 individual items.  Of these 111 items, there were seven of the 111 not in stock at the time for an out-of-stock rate of 6.3%.  Note that in each of the seven items, there were still labels on the shelves so the items were still for sale but just not in stock at that moment.  This is in comparison to the three items out-of-stock in May, 2020 (rate of 2.7%).
  • Five of the seven out-of-stocks were at the largest, internationally owned grocer and involved three of the four Staple category items (Canola Oil, Sugar, Flour generics) and two of the three cereals (Frosted Flakes, Rice Chex generics).  In each of the cases however, there were other alternatives for sale so it really is a case of you can’t always get what you want…
  • The anomaly was a case of stealth inflation.  The local grocer was no longer offering the 32 ounce jar of generic grape jelly and had replaced it with an 18 ounce package at a lower price.  I recalculated the per ounce price at the 18 ounce package level to an equivalent price at the original 32 ounce and this recalculated amount was used in the Index.  The nominal impact is a price decrease of 36% for the lesser amount but the real impact, had the original package been used, would have been a 14% increase.
  • The meat stocks were plentiful and what was notable in June versus May was the presence of the three pound “chub” of ground beef.  These packages first appeared in my local markets in approximately 2014 and were produced from factory-style meat processing plants; I suspect that the grocers were introducing them in response to the declining purchasing power of their customers.  These items were absent when I did the initial pricing on May 2 and their absence was due to the issues with Covid exposures at the factory-style meat processing plants.

Comments

As I noted, an increase of .66% doesn’t seem like much but annualized to almost 8% in a nation in which the family income has been smashed and the Q1 GDP has dropped by 5%, it is highly problematic.  Fortunately, enhanced SNAP benefits are in place for the remainder of FY 2020 and WIC benefits are likewise enhanced through the end of September, 2021.  Where it is an immediate problem is for senior citizens relying upon their Social Security benefits.  Why?  Because the cost of food is not included in the calculations for determining the COLA increases that occur in the latter half of each year.  If the prices continue to rise, the effective purchasing power of the senior citizen will actually lessen as the COLA amounts for the past five years have averaged 1.34%.

The grocery shelves are not bare and in each of the cases that I noted, there were other options available.  Even toilet paper is back in each store, albeit in smaller package sizing.  Rice was there but typically in larger sized bags and even in April and May, there was rice available but it was in brands sold to the Hispanic community and hence in a separate aisle.  The generic brand staples (canola oil, sugar, flour) were missing in the one store and although the stocks were minimal in the other two as well, there were reasonable amounts of name brand items available.  And no, I’m not going to count the damned bags of flour.  The indication is thus that people are doing what they can to stretch their dollar as they hunker down.

The renewed presence of the lowest price per pound “chub” had a significant impact here.  Had I used even last month’s lowest per pound price for ground beef, the FPI would have had a June Index level of 101.52 versus the actual 100.66.  Extrapolating to an annualized rate, the impact would be a hypothetical 18.24% rise versus the present annualized rate of 7.92%.  But I have severe qualms about that since I know that those plants are operating under the aegis of the invoked Defense Production Act, despite increased infection rates for those in the meat packing plants because of work conditions.

And I wonder whether or not, were we asked as part of a communal sacrifice for the common good, we would be willing and able to forego so much meat as part of our diet.  It was what our great-great-grandparents did for the common good on the home front of the Second World War, sacrificing something for those on the front lines.  But in times of Pandemic, the front lines are here.

Pandemic FPI (6/2020)

 

Addict America

What we are witnessing are the visceral images of a nation in the throes of an addiction.  It is an addiction to a message of Constitutional narcissism.  It is an addiction that has been knowingly fed by its dealers – Limbaugh, Hannity and their ilk – within the self-proclaimed Conservative Media for more than three decades.

Our nation is the same as any other well-heeled addict from prosperous circumstances.  We think we convey a sense of normalcy as the addiction grows, unaware that to the outside world, our property has grown seedier and our household more disorganized.  Most importantly, our children and most vulnerable are neglected and left as prey to the hard mercies of others.  The addiction stresses our ability to cope until something happens which collapses the facade and exposes our reality in its awful ugliness.  It is an addiction whose propagation now willingly courts death, a literal siren song luring the body politic to a mass fatal encounter as senseless as the American Civil War.

This something is obviously the Pandemic.  As I write this, the national daily death toll is such that the entire population of my hometown would be dead within a week and the numbers continue to rise, at least outside New York.  Yet many localities are again re-opening despite metrics that don’t even come close to those laid down by the Trump Administration and armed protesters stand on the steps of state capitol buildings proclaiming opposition to measures which purportedly infringe their Constitutionally mandated civil rights.  This opposition, fomented by the Conservative Media and the President – the guy whose folks put out the re-opening metrics less than a few days before, remember? – is predicated upon a wholesale misleading characterization of the Constitution.

How?

There is an inherent tension within the construct of the Constitution and that is the tension between the Me and the We.  The Me is encased within the Bill of Rights and has been the focus of the Conservative Media since the arrival of Rush Limbaugh after the repeal of the Fairness Doctrine in 1987.  Who doesn’t love our Bill of Rights?  It was the first written attempt in human history to enumerate and guarantee what were considered the essential rights of the individual in a society.  It is the most identifiable aspect of the Constitution.  The great majority of Americans can’t define the 17th Amendment let alone even tell you how many Amendments even exist.  But you can be damned sure that people know about their First Amendment right to freedom of speech and their Second Amendment right to bear arms.

Except that the Bill of Rights is only one part of the Constitution.  The other part of the Constitution is about the We.  The obvious and accelerating failure of the original Articles of Confederation prompted the calling of the meeting that became the Constitutional Convention of 1787.  It was the We that concerned Madison, Hamilton and the rest of the attendees.  Multiple states with different personalities based upon unique founding charters and culture, let alone geographic and economic differences, were too diverse to ensure continued political coherence.  The national structure was collapsing and the success of the Revolution would be rendered meaningless.

The Convention’s intent was not the Me, the Bill of Rights.  The Me wasn’t the first, second or third thing in the mind of either Madison or Hamilton.  It wasn’t on any agenda, as little as there was of one.  The Bill of Rights was an outgrowth of the debates as the Anti-Federalists pushed back against Madison.  In their minds, what was the point of the Revolution if it allowed the creation of a new government which could trample the individual as badly as the recent English king?  The resulting compromise created this Bill of Rights to assure that an individual’s rights were protected.  This compromise created an astounding document of political duality that attempted to balance the We Yin and the Me Yang.  There is supposed to be a balance.

These were the questions that most concerned the Constitution’s framers:  How can We maintain a civil society that can peaceably abide together under the principle that all are created equal under the law?  How can We allow for a civil society to change and adapt to the world around it within the framework of the first question?  How can We control power and allow the peaceable transfer of power?  Most importantly, how can We as a civil society protect ourselves from falling prey to predators such as demagogues, despots and zealots?

When viewed from this aspect, much of our history has been made in the effort to expand the We in the face of resistance from individual groups fearful of a loss of their own powers and wealth.  Expanding it to who?  Securing the rights of blacks and other minorities , including that key right to vote, expands the We.  Securing the rights of women, including that key right to vote, expands the We.  Why?  Because it’s through the securing of their own individual rights and enfranchisement that these groups – one of which actually comprises more than half of the population – can find a voice that entitles them to a place at the economic table sharing in the common wealth of the nation.  Not only sharing in the common wealth, but expanding it by dint of their own talents and efforts.

Commonweal.  It’s an archaic word used by my wife in a recent conversation as we discussed the multiple acronymic lifelines already thrown to the business community and capital markets but not extended in any meaningful measure to the average person.  It forms the basis of the word commonwealth and in its simplest terms is the common good.  It is the idea that while the members of a community can expect their rights to be respected by the community, they have a like obligation to the well-being of that  community, politically and economically.  Is it important to distance ourselves for a period to not overwhelm our medical system as well as protect our most vulnerable?  Then it’s what we do for the community and in turn, we expect the community to support us through this period.  Commonweal.

Except that that hasn’t happened.  The community has responded with full support to the wealthiest and only one-time payments to the general citizenry with the understanding that they would still be responsible for the upkeep of their bills.  In the meantime, the unemployment rate has skyrocketed.  The public has been left to bear the losses from a communal disaster without certainty of income for an unknown period.  In a society that embraced the commonwealth philosophy, the community would be certain to provide sufficient support to support its members while they were asked to participate social distancing to protect the community.

Not only do we ignore the concept of the common good, we have a Chief Executive who ignores the Constitution, exemplifying the fatal flaws of the original Articles of Confederation by abdicating responsibility for a national crisis to the individual states.

There should be balance.  We haven’t had that for decades.

Why?

The cultural birth of the Me preexisted it’s maturation in the 1980s.  The Boomer Generation were a cultural phenomenon and their quirks led to their titling as the Me Generation by the writer Tom Wolfe in 1976.  That generation – mine – turned society on its head in search of self-fulfillment and it persisted as they aged and entered the economic and political mainstream.

Their entry into the mainstream set the stage for the economic and political rise of the Me in the 1980s.  Rush Limbaugh, the first of the Conservative Media, arose on the back of a resurgent conservative response to Ronald Reagan’s famous comment:  Government isn’t the solution, it’s the problem.  Limbaugh expanded upon that with the message that I earned that money and I should be allowed to keep it.  Soon, other commentators entered the field and proceeded to help fracture the We by separating the nation into Good Americans versus Liberals and Republicans versus Democrats in the search for listeners and market share.  Understand this:  Conservative Media is not only a message of anger but a business model of anger as well.  Anger and fear are profitable and this profitability has caused an even harder push.

Uncertain about this?  Consider Les Moonves’ – then CEO of Columbia Broadcasting – comment about Donald Trump in 2016:  “It may not be good for America, but it’s damn good for CBS”.

It’s the same for the other side of the media spectrum as increased competition extends the boundaries and coarsens the dialogue to gain listeners.

But why do Conservative Commentators have the advantage in ratings?  Where do they find the materials to gin up rage, secure listeners and earn profits?  The materials are ensconced right there within the Bill of Rights.  Some of the ten amendments are outdated and not suited for the propagation of rage.  Quartering troops in houses?  Archaic.  Unreasonable search and seizure?  Right to a jury trial and reasonable bail?  Perhaps, but if you obey the law – like any of our salt of the earth listeners – then it isn’t pertinent, is it?  State’s rights?  Not since 186…never mind.  Just go to the first two amendments right up front:  religious freedoms in the First Amendment and gun rights in the Second Amendment.  The rancor of the past two decades has built within these two amendments but it has been stirred, spiced and served on a scalding hot plate in our laps by our Chef Executive.

We are near the culmination of the Conservative drive for power and money.  The Conservative Media has relentlessly pushed fear and anger and the President has mastered it, wielding it venomously in a strategy of Divide and Conquer.  To secure his election in 2016, he divided us from the world and in the aftermath of the inauguration, proceeded to remove or threaten to remove us from multiple international treaties.  When he viewed the push back demonstrated by the Women’s March after his inauguration, he narrowed the Divide and Conquer Strategy to focus on the nation itself and found his ammunition in the first two amendments of the Bill of Rights.  He has openly stoked his followers with fears of religious persecution and the threat of a repeal of the Second Amendment.  A call to “Liberate Michigan!” via Twitter led to his supporters bringing semi-automatic weapons to a rally at the state Capitol.

Civic insanity.

Our nation has had two other encounters with governance according to the Me.  The first was the original Articles of Confederation ratified at the end of the Revolution, which created a Federal government that was only a weak shell and ceded almost all power to thirteen states.  It went so well that six years later, the Articles were replaced by our Constitution.  The second was the Confederacy.  Nominally a nation of sovereign states that heavily espoused states rights.  By the latter half of the war, the Confederacy suffered crippling problems as different states opted to withhold money, supplies and men from the central government in order to support their own needs.

Some of our greatest national moments occurred during the Commonweal moments of the We.  We eliminated slavery through a Civil War which incurred more death and national destruction than any other war in our history.  We beat totalitarianism and did it twice in a quarter century, almost just to prove a point.  We expanded our educational structure during these conflicts through a series of Commonweal political acts – The Morrill Land-Grant Act of 1862 and The Servicemen’s Readjustment Act of 1944 during two of these conflicts.  We put a man on the moon and expanded the frontier of space because as a society, We willed it so.

We have now lost more than 90,000 of our citizens as I write this and an untold number of thousands of those deaths could have been prevented.  Our Chief Executive minimized the notice, hampered preparation and then abdicated all responsibility to the individual states, who have been left to fend on their own domestically and internationally.  Don’t like social distancing and lockdowns?  Look to Washington, DC and ask if things might have been different had 50 individual governors not had this dumped in their laps.

Once again, the Me has failed.  It’s time for the We.

 

 

Re-Boot: The Pandemic Food Price Index (FPI)

What is happening to the price of a market-basket of food due to the economic effects of the Covid-19 Pandemic upon:  (1) the upheaval in the supply chain; (2) the collapse in aggregate family income?

This two-pronged question is the reason for the resumption of the PracticalDad Price Index after an almost four year hiatus.  We know from the US Department of Labor’s report for April 2020 that food prices rose by the highest monthly amount in 46 years due to the supply chain upheaval.  It’s bad, but it only gives for general food groups (meats, vegetables, etc) and doesn’t go into further depth than that.  This kind of information will also miss the impact of the supply chain’s efforts to mitigate the cost increases and attempt to keep foods affordable for the shopper.

The modified index (for the original Index introduction, see here) will focus solely upon the original 37 foodstuff items from the original index, broken into categories of Meat, Dairy, Bread, Staples, Cereal, Produce and Grocery items.  The pricing will occur within the first five days of each month at the same three groceries, each unrelated to one another.  The groceries represent three separate tiers of size:  local, Mid-Atlantic regional chain, international chain.  The prices for the items from the three stores will be averaged and the the mean prices added to find the total cost for the composite basket.  The total for the composite basket as of the pricing for May, 2020 will serve as the index baseline of 100.  The total for the month composite baskets moving forward will be likewise totaled and their results shown as a comparison to the initial index level of 100.

Caveats:

  1.  This is not meant to be representative of national trends.  This is three store survey in a single county and is meant to be a data point in a larger picture.
  2. I will discontinue the Index if I believe that the supply chain is so kinked that I cannot present an accurate picture in good faith.
  3. I cannot objectively verify inventory quantity within the stores but I can provide anecdotal commentary about what I am seeing and that can serve as anecdotal evidence.
  4. Within the past month, I have noted that products that are simply gone from the supply chain have not only disappeared from the shelves , but the shelf labels themselves have been removed or covered over with blank labels.  If the item is not on the shelves but the label is present, I will treat that item as temporarily out of stock and report the price as listed on the shelf label.
  5. The items priced are almost all store- or off-brand, which would be purchased by a shopper attempting to extend a fixed food budget.  There are rare instances in the Index in which a name-brand product is used and that same product will be priced moving forward to assure consistency.
  6. Pricing will occur, whenever possible, in the morning.
  7. If new alternatives are offered for an item, as happened continuously in the old Index, that alternative will be used then and afterwards to assure consistency.  The same will happen with package sizing.

The May 2020 FPI results are shown in the linked pdf below.  Note that a few items are not listed in two columns; these items were part of the original survey and they were not available in those stores, even searching for shelf labels.

The Total Cost of the May 2020 FPI is $88.51 and that amount will serve as the Index level of 100.

FPI Base Results – 5/20

 

 

 

Life in a Time of Corona: Accommodations on “Re-Opening”

Mr. Murdoch, what are your orders?

Full ahead and no course change, Mr. Hichens.  Let’s see if Titanic lives up to her press!

It’s abundantly clear that the social distancing effort will be abandoned and the process of “re-opening” will move ahead, damn the cost.  The question now is this:  what accommodations should we make to live in a society which demands that life returns to pre-pandemic patterns despite the ongoing presence of the virus that disrupted those patterns in the first place?

My family’s personal adjustments will be driven by what we decide because there is no longer any meaningful public health guidance from the government.  The incompetency is glaring and stunning, all the money that we have invested over decades in a federal public health infrastructure to help manage such events completely pissed away.  After ignoring and downplaying the virus so that the impact was worsened, the President finally issued a framework for managing a return of societal functions over a two week period of virus metric declines.  Only a day later, he undermined it with a series of tweets to “Liberate” three separate states from social distancing and lockdown measures.  That none of these three states even came close to meeting the new guidelines was irrelevant.

The majority of states are now moving ahead with “re-opening” despite any lack of control of the virus that even meets the President’s own metrics.  Neither is there any meaningful testing to ascertain the spread of the virus until it shows up to burn through through a locality’s hospitals.  Indeed, the President has effectively removed any public health aspect from this process by shelving the guidelines set out by the CDC.  The guidance for a public health pandemic is now managed solely by political and economic criteria.

What is happening is, in a sense, a darkly hilarious irony.  A verbose and gun-toting minority – in their fear of any potential abridgment of their preferred freedoms under the Bill of Rights – embraces and lifts up a Chief Executive who has actively transferred all responsibility for management and action for a national crisis to the states, resurrecting a style of government which existed last under the post-revolutionary Articles of Confederation.

You remember that one?  Yeah, that one.

The one without a Bill of Rights.

Because things can’t get any more local than the molecular level of the family, what might we consider?  The important point to remember is that we must somehow lessen our risk and decrease our exposure to the virus if we cannot socially distance or isolate ourselves.

First, consider how to manage with elderly parents and other relatives.  What are the contact and exposure rules if you have to visit or take them to appointments?  What is the status of their paperwork and executors?  What is the default plan in the event of your own illness?

Second, make sure that the personal affairs are in order.  Take to heart the philosophy of The Next Man Up.  Assure that the wills and various powers of attorney are in order should they have to be utilized.  This also means considering the inclusion of secondary executors and decision-makers.  Note the critical passwords and pass that information to your executor.  While the virus most impacts the elderly and immune-compromised,  there are all age levels in the ICU and even children are being affected with their own issues.

Third, make a re-usable mask part of the daily routine.  The notion of a truly disposable mask is dead as even healthcare providers are having to extend their usage for lack of availability.  I don’t know enough about the availability of gloves but anticipate that I will save those for high traffic public areas such as grocery stores.

Fourth, assure that there is hand sanitizer in every vehicle and use it after each venture out of the vehicle.  That also means finding an alternative source for hand sanitizer and re-using the existing bottles if the replacement sanitizer comes in large quantity containers.

Fifth, consider the use of a small notebook in the glove compartment to note where I’ve been on different days in the event that I contract Covid-19 and contact tracing efforts are made.

Sixth, broaden the family’s food supply chain so that there’s not a complete dependence on the grocery store.  If possible, plant a garden or join a CSA to provide a wider access to a dependable source of food.  Even within the grocery store, consider widening your preferential supply chain by purchasing food items not being purchased by everyone else.

Seventh, what is the process for returning home from work or another outside exposure?  This is a real thing for healthcare workers in hard-hit areas because they don’t want to expose their own families.  What processes should you adopt within the household?  It might range from disrobing in the garage and leaving clothing in the laundry room prior to a shower, to a simple hand-washing upon returning home.

Eighth, decide whether the trip or errand is worth the exposure.  Do a more thorough job of planning so that only one trip is required instead of multiple return trips.  If it isn’t necessary, is it sufficiently important enough to justify the exposure?  Visiting a movie theater might not be worth the risk, but traveling out of state to take a kid to college for the first time?  That would likely be worth the risk with proper precautions.  Assuming that it happens, of course.

Ninth, reconsider the shopping habits.  In this environment, ignore the economic establishment thinking that the public is hoarding cash and ratchet down the discretionary spending to what is necessary.  If you do have money available for discretionary spending, then give serious thought to directing it to the food banks that are now serving a significant portion of our citizenry.  Consider another charity or simply rebuild your own finances to your comfort level.  If you shop online to avoid exposure in a bricks-and-mortar store, decide if Amazon is the go-to site or if it’s possible to spread that cash to other online stores instead of further enriching Jeff Bezos.

This is meant to be a point-of-departure for the planning moving forward instead of an exhaustive and comprehensive list.  Consider your own circumstances and risk tolerances.  But do it now so that you are ready for when the re-opening takes place.