Is China Heading for Crisis?

With America's current political crisis sucking up most of the media attention, even as Trump strives to be an authoritarian ruler above the law, it is easy to forget that even dictatorships seem to have a maximum life expectancy and that nations like China, which seeks to hold a hegemony of Asia, have their own perils to face. While the Chinese regime is not as fossilized as that of the Soviet Union on the eve of its collapse, political strains are growing and not just in Hong Kong, a city state that exists as a sharp reminder of a dictatorial regimes limitations. Yes, China's leadership has a vision of where it wants the country to go in terms of economic power and influence, but the very prosperity that this will bring undermines dictatorial rule.  A piece in the New York Times looks at the growing difficulty China is experiencing in holding conflicting goals and desires under control.  How it all ends is anyone's guess.  Here are column excerpts:

China — or, rather, the Chinese regime — is in trouble. Tuesday’s gigantic parade in Beijing to celebrate the 70th anniversary of the People’s Republic looked like something out of the late Brezhnev era: endless military pomp and gray old men. Hong Kong is in its fourth straight month of protests, marked and stained by this week’s shooting of an unarmed teenage demonstrator. The Chinese economy is growing at its slowest rate in 27 years, even when going by the overstated official figures.

Meantime, capital is fleeing China — an estimated $1.2 trillion in the past decade — while foreign investors sour on Chinese markets. Beijing’s loudly touted Belt-and-Road initiative looks increasingly like a swamp of corruption, malinvestment and bad debt. Its retaliatory options in the face of Donald Trump’s trade war are bad and few. And General Secretary Xi Jinping has created a cult-of-personality dictatorship in a style unseen since Mao Zedong, China’s last disastrous emperor.

Remember the “Chinese Dream” — Xi’s vision of China as a modern, powerful, and “moderately well-off” state? Forget it. The current task for Chinese leadership is to avoid a full-blown nightmare of international isolation, economic decline, and domestic revolt.

The question is whether that’s still possible.

China’s presumptive trajectory once seemed clear. In domestic affairs: rapid economic reform; slow political opening. Lather, rinse, repeat. In international affairs: peaceful rise; burgeoning clout. It was to be a model of managed development, a Middle Kingdom fit for the 21st century.

That’s not what happened, for reasons that Chang and others saw coming long ago. Rapid growth is easy when labor and capital are plentiful and cheap. But most developing countries inevitably fall into what’s called the middle-income trap, when they no longer have the cost advantages of poor countries but haven’t yet acquired the legal, educational, or technological advantages of rich ones.

Beijing’s dilemmas go deeper. Economic reforms generate sudden riches that are ripe targets for extravagant graft, particularly by powerful state actors. Graft creates incentives for further self-dealing, which distorts economic decision-making and breeds public cynicism. . . . The result: more corruption, more cynicism, more repression. How long that can keep going is an open question.

[S]cholars such as Larry Diamond and Minxin Pei have noted that dictatorships tend to have a roughly 70-year lifespan. At some point, the revolutionary fervor that sustains the first generation of leaders and the will to power that sustains the second gives way to the policy failures, mounting discontents, outside shocks and inner doubts that prove the undoing of the third.

Especially when the regime experiences some kind of blunt trauma, either in the form of a foreign-policy fiasco, an economic shock, or a moral outrage. In its attempts to respond to Hong Kong’s protests, Beijing risks all three.

Accommodating the protesters’ demands, above all the granting of genuine universal suffrage, is the right thing to do, but introduces a democratic principle fatal to the regime’s self-preservation.

Hence the looming crisis. It could be defused, if Beijing guarantees amnesty for all nonviolent protesters and removes the troops it has brought in from the mainland in exchange for a meaningful process of negotiation. Or it could be “solved” through some form of hyper-aggressive policing that stops short of an outright massacre. But that only puts a lid on discontents that will continue to boil.

A policy of hoping the protesters discredit themselves or simply run out of steam shows no sign of working. A Tiananmen-style crackdown would underscore the regime’s brutishness and incompetence, destroy Hong Kong as a global financial capital, and spur China’s neighbors to arm to the teeth and draw closer to Washington.

But if the regime’s travails prove anything, it’s that China’s current despot is no more enlightened than despots elsewhere, and China’s people are no less eager to have what people have elsewhere: justice, fairness, rights, freedom from fear, freedom itself. In China’s looming crisis, the human condition shines through.

Most Canadians Are Now Better Off Than Most Americans

While the malignant individual in the White House bloviates about "making America great again" and tells his knuckle dragging supporters that he will bring back their economic hopes, a piece in Bloomberg reports that other than America's obscenely rich very wealthy, Canadians are better off economically than their American counterparts (seemingly without factoring the fact that Canadians have a national healthcare system).   Moreover, the piece notes that a number of other advanced nations are seeing their citizens pulling ahead of their American counterparts.  The net take away?  The GOP's version of America's vulture capitalism is serving the very rich but failing the majority of Americans.  Here are article excerpts:

Everybody knows that the U.S. version of capitalism is rougher and tougher than is the norm in other affluent countries. The rich are richer here, the poor poorer and the welfare state less exhaustive. Not surprisingly, the U.S. scores poorly versus other rich nations in terms of health outcomes, education levels and other such metrics.

Defenders of the U.S. approach can point, though, to the fact that per-capita gross domestic product has remained higher in the U.S. than in all but a few small nations with unique characteristics (Qatar, Luxembourg, Singapore, Switzerland, Norway, etc.) — so much higher that even with the less-equal income distribution here, most Americans continue to have higher incomes than their peers in other large, affluent countries.

Times may be changing, though, and international income comparisons are definitely getting more precise. Five years ago, David Leonhardt and Kevin Quealy of the New York Times showed using numbers from the Luxembourg Income Study Database that the median income in Canada had caught up with that of the U.S. as of 2010, and speculated that Canada had probably passed the U.S. since.

Now there’s more evidence. A report released this summer by the Centre for the Study of Living Standards, an Ottawa nonprofit, contends that as of 2016 Canada had in fact pulled ahead of the U.S. in median household income, with a $59,438 to $58,849 advantage in U.S. dollars . . . . The study also compares incomes in every percentile of the income distribution, and finds that up through the 56th percentile Canadians are better off than their U.S. counterparts.

U.S. residents at the top of the income distribution make a lot more than Canadians at the top of the distribution, and Canadians at the bottom make a lot more than their south-of-the-border peers. In the middle of the distribution the income differences are much smaller, but the Canadians have seized the advantage.

Finally, and this is of course totally anecdotal, but I think most Americans who have visited Canada lately would attest that it feels like a more broadly affluent place than the U.S. does. That is, the claim that most Canadians are more prosperous than most Americans is not patently unreasonable.

It’s not just in Canada that those in the middle of the income distribution have been gaining on their American peers. From 1990 through 2018, according to the World Bank, per-capita real gross domestic product grew at the same 1.5% annual rate in the U.S., the European Union and the OECD, which counts 36 affluent democracies on five continents as members. In other words, the rough-and-tough U.S. approach to capitalism hasn’t delivered faster per-capita growth, and istribution, that means Americans in the middle and the bottom have been losing gbecause growth in the U.S. has been concentrated at the very top of the income dround to their counterparts in other countries.

The bottom line: When it comes to improving the lives of the middle class, other rich countries have been doing a better job than the United States.

Homeowners, Businesses and Farmers Begin to Suffer from Trump Shutdown

As the last post noted, some congressional Republicans are beginning to feel pressure from their constituents to vote to end the Trump created shutdown crisis.  A piece in the New York Times looks at the sectors of the economy that are beginning to suffer real harm and the forecasts that economic growth will be curtailed - all so Trump can please his hideous base.  What is in my view most sad is that Trump cares noting about those being harmed.  All that matters is boosting his ego and telling his racist, knuckle dragging base that he's "winning." The man is evil.  Here are article highlights:

The impact of a partial government shutdown began to ripple across the economy as it stretched into Day 17, with mortgage applications delayed, public companies unable to get approval to raise capital and thousands of Secret Service agents expected to show up for work without pay.

President Trump and congressional Democrats have made little progress in negotiations to end a shutdown that has affected about 800,000 federal workers, many of whom will miss their first paycheck this week, and who owe a combined $249 million in monthly mortgage payments, according to the online real estate firm Zillow.

The standoff is beginning to inflict pain on Americans, whose lives are affected, in one way or another, by the federal government. It is already the second-longest shutdown in history, behind the one that started in December 1995 and lasted 21 days.

The effects of a prolonged shutdown have some Wall Street economists predicting a hit to the United States economy.

The effects extend from the president’s inner circle, to Wall Street to farm country.

Virtually every employee with the Secret Service involved in investigations, security and the protective division, which protects Mr. Trump and dozens of other current and former government officials and their families, is required to work during the shutdown. And 6,000 of the organization’s roughly 7,000 employees will not be paid.

The same is true at the Securities and Exchange Commission, which has come to a standstill with “only an extremely limited number of staff members available to respond to emergency situations,” according to a shutdown plan posted on the commission’s website.

[C]raft brewers cannot get approval from the Bureau of Alcohol, Tobacco, Firearms and Explosives for new beer labels. And the Commerce Department has stopped processing requests from auto suppliers and other manufacturing companies seeking an exemption from Mr. Trump’s metal tariffs, leaving them uncertain over the price they will need to pay for key materials this year.

Farmers who planned to apply for subsidies to help mitigate the effect of Mr. Trump’s trade war must wait to get paid until the Agriculture Department’s Farm Service Agency offices reopen. And in neighborhoods across the country, as many as 39,000 federally backed mortgage applications may have already been delayed because of reduced staffing in federal agencies, according to Zillow estimates.

Several nonprofit organizations, including the Federal Law Enforcement Officers Association, are trying to aid Department of Homeland Security workers who need immediate help with a limited pool of cash and other resources, an officer with the group’s charitable foundation said. The Navy Federal Credit Union is offering no-interest loans to service members who face the prospect of missed paychecks.

Secret Service agents are growing increasingly anxious and angry about the shutdown, according to several current and former agents. . . . . “They are asking you to put your life on the line and not paying you — it’s ridiculous,” said Donald Mihalek, 49, a 20-year Secret Service veteran whose own retirement paperwork has yet to be processed because of the shutdown.

[C]orporate America will now have to wait for the government to reopen in order to move ahead with things like initial public offerings and pending corporate mergers that need approvals from regulators. . . .  A dearth of those deals could create financial hardships for midsize public companies that have fewer financial resources to draw upon.

The biggest and most far-reaching effect of the shutdown looms on Feb. 1. Trump administration officials say that funding for the Supplemental Nutrition Assistance Program, or SNAP, which provides food benefits for about 40 million people, will run out of cash by the end of the month.

Other food assistance programs are facing a more immediate cash crunch. The Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, has already been cut off, with state funds filling the gap as the shutdown drags on. WIC provides aid to an additional seven million low-income Americans who are considered to be at “nutritional risk.”

Kansas Voters Rejected Failed GOP Tax-Cut Experiment

Brownback, architect of Kansas' disastrous tax cuts.

Since the days of Ronald Reagan, the Republican Party has pursued the myth that tax cuts "pay for themselves" and result in a surge in the economy.  It's the same myth that Republicans used in arguing to pass their 2017 Trump/GOP give away to the very wealthy and corporations. Now, the deficit has exploded and no promised surge in investment or economic growth has taken place,  Most of the tax give away went to stock by-backs and shareholders who have stockpiled the money.  This same formula was used in Kansas to disastrous results.   In the last election, voters in Kansas did the unbelievable: they elected a Democrat as governor.  A piece in The Hill looks at Kansas voters' rejection of GOP voodoo economics which ought to send a message nationally - especially when millions of taxpayers find themselves unexpectedly owing money to the IRS in April, 2019, thanks to deliberate IRS under withholding guidelines.  Here are article highlights:

Former Kansas Governor Sam Brownback’s failed “red state experiment” has truly come to an end.

In rejecting Republican gubernatorial candidate Kris Kobach, who advocated restoration of the Brownback experiment, Kansas voters on Election Day put the final nail in the coffin of what even Republican leaders had come to see as a disastrous set of tax and spending cuts that ruined the Kansas economy. 

Kansas’s 2018 election should serve as a political lesson to our national leaders, and the experience of Kansas over the past several years should serve as a policy lesson. 

In 2012 and 2013, Republican Gov. Sam Brownback signed into law the largest tax cuts in Kansas history. The top state income tax rate fell by nearly one-third and passthrough taxes that affected mainly relatively wealthy individuals were eliminated. With the decline in revenues came significant spending cuts in numerous areas. 

“Our new pro-growth tax policy,” Brownback predicted, “will be like a shot of adrenaline into the heart of the Kansas economy.” The theory, one that should sound familiar, was that cutting taxes and regulations on the wealthy would lead to greater investment and innovation, new jobs, more rapid economic growth and a stronger middle class.

Brownback also called his plan “a real live experiment.” . . . But experiments can go badly wrong, and unfortunately Kansans were guinea pigs for one of the worst. It soon became clear that the Brownback experiment had failed to deliver on his promises.

Analysis by Menzie Chinn, a professor of public affairs and economics at the University of Wisconsin-Madison, found that after the enactment of the tax cuts, economic growth in Kansas fell well below its pre-Brownback trend and, by the spring of 2017, the rate of job growth in Kansas was not only lower than the rates in most of its neighboring states but less than half of the national average.

Brownback’s experiment was such a failure that his party turned against him. In 2017, the Republican-dominated legislature, overriding the governor’s veto, rolled back the tax cuts.

But some were not convinced, including Kris Kobach, who made a resumption of the Brownback experiment (with even deeper spending cuts) a fundamental part of his platform in the just-ended campaign. The voters of Kansas, however, had had enough, and his advocacy of the tax and spending cuts was critical to his defeat.

The same arguments used to sell the Brownback experiment were used to sell the $1.5 trillion tax cut signed into law by President Trump last year. Most of the benefits of the cuts went to those at the top of the income spectrum.

This is reminiscent of Kansas, where the extensive cuts in everything from education, health care and transportation to agriculture and higher education dragged down the state’s economy while the money that was accruing to the rich wasn’t being used to ramp up investment. 

The reason for the failure of the Brownback experiment, and the likely failure of the Trump tax cuts, is that they didn’t account for the ways that economic inequality today obstructs, distorts and subverts the pathways to economic growth that is strong, stable and broadly shared.

They ignore extensive evidence of what — in fact — drives economic growth and stability and can deliver improvements in living standards.

Instead, they reflect supply-side economics, as trumpeted by Arthur Laffer, who was a paid consultant for the Brownback plan and a volunteer cheerleader for the Trump tax cuts. Laffer’s theory of growth has been a foundation for economic policies since the 1980s.  

There is an alternative explanation for how the economy grows. . . . . It comes from ensuring that economic inequality doesn’t subvert our institutions — undermining our democracy, our government and the way the market works to the benefit of the few at the top of the income and wealth ladders, rather than the majority.

The voters of Kansas learned a bitter lesson and made sure history did not repeat itself. Leaders in Washington need to learn that lesson and look for ways to invest in a strong middle class for sustained and balanced economic growth.

Of course, the GOP will not heed this advice.  It will be up to voters and Democrats to repair the damage.

Hampton Roads' Reliance on Military Spending Comes Home to Roost

Norfolk Naval Base

For many decades the Hampton Roads region has blindly relied on U.S. military spending to power the local economy.  On a larger scale, Virginia has made the same mistake, but nowhere to the extent of Hampton Roads.  Far too little effort was made to attract other businesses and to diversify the local economy and, as a result, for years there has been a brain drain of college educated young adults who often choose to go to New York, Atlanta or Washington, D.C. for not only a more vibrant economy, but also for more socially diverse and welcoming to all communities.  Now, with government and military spending cuts the proverbial chickens are coming home to roost.  A piece in the Washington Post looks at the results of such shortsightedness and until recently social conservatism.  Here are highlights:

NORFOLK — The hammerhead crane hangs over the shipyards here, a pistol-shaped steel cage that could lift 350 tons in its day. It is rusting, its power system has been disconnected, and the U.S. military has no plans to ever employ it again. . . . . The crane is obsolete, built to lift turrets onto battleships the Navy no longer deploys. But its fate embodies the economic uncertainty that has swamped one of the nation’s most military-dependent regions.

For three-quarters of a century, the Hampton Roads area rose and fell with the federal defense budget, always confident that any cutbacks would prove temporary. Under President Obama, a new reality has sunk in. Spending cuts have stalled growth in the region, pushed thousands of blue-collar workers out of good-paying jobs and forced civic leaders to contend with a once-unmentionable question: how to survive if the military spigot never opens again.

The Norfolk area has suffered disproportionately, even among defense communities, from decisions by Obama and Congress to reduce the size and composition of military budgets. Economists and union leaders say that is because Hampton Roads has been late to follow the lead of other regions, including the Washington area, that took steps over the past decades to incubate private industries and balance out their reliance on defense.

Norfolk has become a national outlier, saddled with a workforce that is less educated than many comparable communities and an economy that has depended too much, for too long, on government.

Communities across America have struggled with economic transition in recent decades . . . Many of them have followed a similar playbook. They use tax breaks and other government incentives to attract clusters of businesses in knowledge-based industries such as technology. And they woo entrepreneurial, high-skilled workers who might work at those companies — or start their own businesses.

Norfolk had not launched such an effort, in earnest, until 2012. . . . They need one now. Defense spending has fallen quickly from making up more than half of the Hampton Roads economy to less than 40 percent.

Over the past two years, nearly 4,000 manufacturing workers in the region have lost their jobs, according to the Labor Department. Layoffs from defense contractors, including 700 members of the Boilermakers union who were given pink slips less than a month before Christmas, came as the Navy reduced spending on ship building and maintenance.
The cuts have drained buying power from the local economy. Compounding the problem, there are nearly 30,000 fewer military jobs in the region today than a decade ago, and the remaining members of the military stationed here have seen their pay curbed in recent years.

Federal defense contract spending in the region was $9.4 billion in 2015, a $1.5 billion drop from the previous year — and lower than 2009 levels, even before adjusting for inflation. . . . Norfolk lost more businesses in the economic recovery than any other major city in the nation, according to census data compiled by the Economic Innovation Group.

The debate over how to transition the region’s economy is not far along. The local chamber of commerce and a nonprofit economic development are seeking to identify “clusters” of industries that could carry the region going forward and have preliminarily found a few, including biotechnology and advanced manufacturing. But their report is not finalized, and local leaders are only beginning the process of figuring out how to seed the growth of those industries.

Regional officials do not hold much hope of defense spending surging again, at least not in a way that will lift Hampton Roads. Today’s Navy is shifting focus to the Pacific Ocean, which means more action for West Coast shipyards and less here. Across its branches, the military is spending more on information technology, which benefits higher-tech regions such as the Washington area.

Compounding the problem is the backwardness of the Republican controlled General Assembly that seeks to inflict right wing Christian beliefs on all of Virginia and which will not even take climate change seriously even as it threatens some of the major military bases in Hampton Roads.  Since taking office, Democrat Governor Terry McAuliffe has been on a mission to attract new businesses and industries to Virginia and argued that Virginia must be welcoming to all.  So far that message has fallen on deaf ears with the Virginia GOP. 

Lt. Governor Northam: Anti-LGBT bill Threatens Virginia’s Economy

Ralph Northam speaking at a friend's home

As North Carolina Republicans are hopefully learning, hate and bigotry are not good for a state's economy.  In an op-ed the Virginian Pilot, Lt. Governor Ralph Northam makes that very argument and states that Virginia GOP/Christofascist efforts to enact similar animus based bills in Virginia threatens the states economy.  In my view, the Christofascists and their political whores in the Republican Party at all levels need to be defeated and their beliefs need to be thrown on the trash heap of history where they can join beliefs that supported slavery, segregation and so many other horrors brought to mankind by religion.  Here are op-ed highlights:

A governor’s priorities and values make an enormous difference in the direction of a state. Recent events have shown us that having the right governor can make all the difference.

Last month, Gov. Terry McAuliffe vetoed Senate Bill 41. The bill would discriminate against thousands of Virginians and send the absolute wrong message to current and prospective employers who want their employees and their families to live in a welcoming and inclusive commonwealth.

North Carolina’s Republican governor recently signed that state’s House Bill 2, one of the most anti-LGBT laws in the country, and an upsetting response to a non-discrimination law passed in the city of Charlotte.

The negative response has been overwhelming, with more than 90 major employers calling on Gov. Pat McCrory to repeal the bill.

The response has already caused McCrory to backpedal, signing an executive order to prevent state employees from being fired for being gay or transgender. His action, however, stops far short of correcting the ills of HB2.

I cannot imagine why any member of the LGBT community would want to visit a state with such backwards legislation.

Why does this matter in Virginia? As a member of McAuliffe’s Economic Development Partnership and the Virginia Tourism Corporation, I work hard to make sure that Virginia is business-friendly and welcoming to all. The passage of SB41 through our General Assembly sends a signal to major companies, CEOs, and talented workers that Virginia could be the next North Carolina if we’re not careful.

Marriott CEO Arne Sorenson said “As a global hospitality leader and multistate employer, these legislative skirmishes can be frustrating and costly. We still see a patchwork of gaps in state and local nondiscrimination laws that add complications and uncertainty for our people and local managers. It dismays many of us that, in 29 states, people are still at risk of losing their job just for being gay or transgender. Predictability in nondiscrimination laws would be welcome.”

Businesses should be interested in serving the most customers the best product possible, not figuring out the gender or relationship status of people who walk in the door. When Virginia offers a pro-business, all-are-welcome environment, we are better able to compete with other states.

Especially in light of federal budget cuts and sequestration, we have to continue to be innovative and forward thinking to grow our economy. This type of legislation hurts our efforts to attract new businesses and increase jobs, and that is why inclusion will continue to be one of my top priorities.

That means recruiting new businesses and supporting current businesses in order to bring good-paying jobs and top talent. That means providing basic services that every citizen needs in order to contribute to our common good. And that means ensuring that every Virginian has a fair shot to reach their full potential.

I will fight to keep Virginia focused on these priorities. I urge the General Assembly to sustain the governor’s veto of SB41 so that companies, families and the entire country knows that Virginia is open for business and welcoming to all.

In my view, conservative Christianity is a virulent cancer on society that needs to be eradicated,  If one over the course of history, I believe Christianity - especially conservative strains - have brought more harm than benefit to the world.  Now, conservative Christianity is a main force seeking to drag America backward in time and to grant unconstitutional special privileges to those motivated by hate and bigotry and who embrace ignorance and superstition rather than knowledge and science. 

How the GOP Gets Voters to Vote Against Their Own Interests

click image to enlarge

With the Republican presidential candidates in full hew and cry stirring up fear and racial and ethnic animosity in the wake of the Paris so as to improve their electoral chances, the Daily Kos has a timely and lengthy piece that looks at how the Republican Party routinely gets voters to vote Republican and against their own best interests. For the poor and working class voters, the GOP's economic policies should be anathema, yet time and time again one sees this demographic supporting the very party that has accelerated their economic misery.  But there is another factor at play as well: so many of those helped by the social safety net fail to get out and vote.  It's enough to make one pull their hair out in frustration.  Here are article excerpts:

Ever wonder why all those folks in rural, “red” America still vote in droves for the same Republicans who brag about gutting the very social programs keeping them alive?  How someone like Matt Bevin can run a winning campaign in Kentucky based on cutting people’s access to affordable health care? How Republican governors can get away with refusing free Medicaid for their own citizens?  Every election it seems that Democrats end up shaking their heads in dismay as yet another mean-spirited red-state Republican manages to defeat the Democrat by essentially promising to make his own constituents’ lives more miserable.  


In one of the more insightful articles ever written about what motivates the rural poor to vote Republican, Alec MacGillis, who covers politics for ProPublica,  took a tour through deep red America, asking the same questions. In an Op-Ed for today’s New York Times, MacGillis explains that it’s not all about guns and abortion that drives people in economically-depressed areas to vote Republican. In fact it’s something very basic to human nature, which the GOP exploits at every turn. And Democrats ignore it at their peril.

MacGillis’ first observation is that many people living in the nations’ more downtrodden areas—and specifically, the ones who benefit the most from programs such as Medicaid and Social Security Disability— are completely disconnected from the political process. They simply choose not to vote. Visiting a free medical clinic in Tennessee, MacGillis asked the people lined up how they felt about Obama. Contrary to his expectations he didn’t encounter hostility, Many people expressed support for the President. But practically none of them had bothered to vote:

[T]he people who most rely on the safety-net programs secured by Democrats are, by and large, not voting against their own interests by electing Republicans. Rather, they are not voting, period. They have, as voting data, surveys and my own reporting suggest, become profoundly disconnected from the political process.

West Virginia, for example, ranked 50th out of all the states in voter turnout in 2012. Other states near the bottom in terms of turnout include Arkansas, Kentucky and Tennessee, largely rural states that have significant populations of poor people, including large percentages of working-class whites.

Why, then, are the folks who choose to vote in these locales so overwhelmingly predisposed to vote Republican?  MacGillis finds that the operative motivation is a strong sense of resentment among those who are just getting by towards those who have completely fallen off the economic grid:

The people in these communities who are voting Republican in larger proportions are those who are a notch or two up the economic ladder — the sheriff’s deputy, the teacher, the highway worker, the motel clerk, the gas station owner and the coal miner. And their growing allegiance to the Republicans is, in part, a reaction against what they perceive, among those below them on the economic ladder, as a growing dependency on the safety net, the most visible manifestation of downward mobility in their declining towns.

In his article MacGillis cites many specific examples of how this resentment operates in practice:

[T]hese voters are consciously opting against a Democratic economic agenda that they see as bad for them and good for other people — specifically, those undeserving benefit-recipients who live nearby.

The belief that those who receive government assistance are somehow “undeserving” and “getting a free ride” is not only a phenomenon of rural areas, but is borne out in surveys nationwide.

The pattern is right in line with surveys, which show a decades-long decline in support for redistributive policies and an increase in conservatism in the electorate even as inequality worsens. There has been a particularly sharp drop in support for redistribution among older Americans, . . .

The unfortunate human tendency to think yourself as better than your ”undeserving”  neighbor is what drives these people, even as their own lives are diminished by the very policies they vote to impose on others. To call this a vicious circle would be an understatement. Republican politicians thrive on and exploit these very real resentments, which are not by any means limited to “red” states.  That’s how people like Paul Le Page can be elected governor on an anti-welfare platform in relatively “liberal” states like Maine, where reliance on social programs, particular in rural areas, has increased. Meanwhile, those at the top of the economic ladder become more and more aggressive in securing all of the wealth for themselves, while the poor are played off against one another.   If you can get people to think they’re somehow being taken advantage of by an undeserving “other” (especially if that “other” is a different color than they are), you can motivate them to vote any way you want.

There are no easy answers for Democrats to deal with and change these attitudes. . . . There is also an obvious and intractable racial component driving this “politics of envy” . . .

Ultimately, however, the answer lies in investing the people who live in these areas with an economic future:

The best way to reduce resentment, though, would be to bring about true economic growth in the areas where the use of government benefits is on the rise, the sort of improvement that is now belatedly being discussed for coal country, including on the presidential campaign trail. If fewer people need the safety net to get by, the stigma will fade, and low-income citizens will be more likely to re-engage in their communities — not least by turning out to vote.

The difficulty is, however, that many of these regions - e.g., Southwest Virginia - are so backward and socially reactionary that many businesses find little to motivate them to relocate there.  Few progressive business want to find themselves situated in racist, Bible thumping areas where the populace oppose modernity itself.  It is easy to talk about bringing economic growth, but something needs to be done to get these rural populations to face the fact that they are in part the main obstacle to a better future.  Talented people flee and businesses stay away.  It is a one way road to an economic death spiral. 

Quote of the Day: Are Americans Insane?

By any objective standard, America is in much better shape than it was when Barack Obama took office.   Yet on election day last week, far too many Americans believed the lies disseminated by the Republican Party and its affiliated PACs backed by the likes of the Koch brothers and similar sleazy oligarchs who care not a whit for average Americans.  The irony, of course, is that the improvement that has occurred is despite of all the efforts of the GOP to sabotage everything Obama and the Democrats have sought to do to better the country.  Sometimes a disinterested third party can better see what those closer and hand fall to see.  Thus, this letter to the editor in Detroit Free Press from a Canadian:

Many of us Canadians are confused by the U.S. midterm elections.

Consider, right now in America, corporate profits are at record highs, the country's adding 200,000 jobs per month, unemployment is below 6%, U.S. gross national product growth is the best of the Organization for Economic Cooperation and Development (OECD) countries.

The dollar is at its strongest levels in years, the stock market is near record highs, gasoline prices are falling, there's no inflation, interest rates are the lowest in 30 years, U.S. oil imports are declining, U.S. oil production is rapidly increasing, the deficit is rapidly declining, and the wealthy are still making astonishing amounts of money.

America is leading the world once again and respected internationally — in sharp contrast to the Bush years. Obama brought soldiers home from Iraq and killed Osama bin Laden.

So, Americans vote for the party that got you into the mess that Obama just dug you out of? This defies reason.

When you are done with Obama, could you send him our way?

Richard Brunt, Victoria, British Columbia

As I have said before, a part of me believes that Americans deserve the misfortunes they bring upon the nation all be cause of their own idiocy and bigotry.

Suddenly Wall Street Realizes that Income is Bad for Wall Street

It seems pretty elemental to economic projections that having wealth concentrated in a tiny percentage of the population while everyone else struggles to survive is not going to stimulate spending on consumer goods and other expenditures that keep corporate America in business.  Yet all too belatedly Wall Street seems to be catching on to the reality that the creation of a new Gilded Age as envisioned by the GOP is not going to bode well for the captains of industry or Wall Street itself.  While the Koch brothers continue to court cretins in the GOP base like the authors of the signs in the image above, others seem to be having second thoughts.  Here are highlights from a piece in Mother Jones:

There's a lot of evidence that record-high income inequality has gutted the United States' post-recession recovery. But on Tuesday, the argument was made by an unexpected source: Standard & Poor's (S&P), a Wall Street firm providing ratings and analysis on stocks and bonds, issued a report pointing out economic disparity's role in "dampening US economic growth."

Over the next decade, S&P forecasts that the economy will expand at just a 2.5 percent annual rate, a downgrade from the 2.8 percent growth it predicted just five years ago. One explanation: "At extreme levels, income inequality can harm sustained economic growth over long periods. The US is approaching that threshold."

The gap between the richest and poorest Americans has been skyrocketing for decades, with no end in sight. How exactly does this widening wealth gap affect the economy? "Higher levels of income inequality increase political pressures, discouraging trade, investment, and hiring," the report explains. It leads extremely wealthy households to save more and consume less, while lower-income households must borrow to sustain consumption. "When these imbalances can no longer be sustained, we see a boom/bust cycle such as the one that culminated in the Great Recession."

S&P suggests focusing on education to increase national productivity. According to the report, one additional year of education in the American workforce could increase GDP by $525 billion—about a 2.4 percent boost—over the next five years.

As S&P ominously concludes the report, "A lifeboat carrying a few, surrounded by many treading water, risks capsizing."

Now Broke and Swmimming in Red Ink, Kansas Was Supposed to be the GOP’s Tax-Cut Paradise.

If one wants to see in microcosm what GOP fiscal policy of tax cuts and promised economic growth would actually do to America, look no farther than Kansas were unrestrained tax cuts of GOP voodoo economics have stunted economic growth and left the state struggling to pay its bills.  Seeming oblivious to objective reality and unable to learn from past experience, the GOP and it's Tea Party lunatics continue to call for precisely the policies that have proved disastrous in Kansas.  A piece in the Vox looks at the damage Gov. Sam Brownback (pictured above) and the GOP have wrought on Kansas.  Here are highlights:

In 2012, Kansas governor Sam Brownback signed a massive tax cut into law, arguing that it would boost the state's economy. Eventually, he hoped to eliminate individual income taxes entirely. "Our place, Kansas, will show the path, the difficult path, for America to go in these troubled times," he said.

National conservative activists raved. Patrick Gleason of Americans for Tax Reform said Kansas was "the story of the next decade." The Cato Institute praised Brownback's "impressive" tax cuts and gave him an "A" on fiscal policy. And the Weekly Standard's Bill Kristol said that, if reelected, Brownback would be "a formidable presidential possibility."
 
Yet though Brownback is running for reelection this fall in a deep red state, he's trailed his Democratic challenger in 3 of the 4 most recent polls — and his marquee tax cut appears to be the main reason. Kansas is now hundreds of millions of dollars short in revenue collection, its job growth has lagged the rest of the nation, and Moody's has cut the state's bond rating. "Governor Brownback came in here with an agenda to reduce the size of government, reduce taxes, and create a great economic boom," says University of Kansas professor Burdett Loomis. "Now there's been a dramatic decline in revenues, no great increase in economic activity, and we've got red ink until the cows come home."

The bill's estimated price tag rose from about $105 million to $800 million, but Brownback kept supporting it anyway. "I'm gonna sign this bill, I'm excited about the prospects for it, and I'm very thankful for how God has blessed our state," he said.
 
Democrats, and some Republicans, weren't buying it. "It bankrupts the state within two years," said Rochelle Chronister, a former state GOP chair who helped organize moderate Republicans against Brownback's agenda. And the House Democratic leader, Paul Davis, laid down a marker. "There is no feasible way that private-sector growth can accommodate the price tag of this tax cut," he said. "Our $600 million surplus will become a $2.5 billion deficit within just five years." In return, Brownback's administration claimed the bill would create 23,000 jobs by 2020, and would lead 35,000 more people to move to Kansas.

[S]ome supply-side analysts, like economist Arthur Laffer, argued that increased economic growth would deliver more revenue that would help cushion this impact. 

Yet it's now clear that the revenue shortfalls are much worse than expected. "State general fund revenue is down over $700 million from last year," Duane Goossen, a former state budget director, told me. "That's a bigger drop than the state had in the whole three years of the recession," he said — and it's a huge chunk of the state's $6 billion budget. Goossen added that the Kansas's surplus, which had been replenished since the recession, "is now being spent at an alarming, amazing rate."

The declining revenues have necessitated extensive cuts in state education funding, according to the Center on Budget and Policy Priorities. Moody's cut of the state's bond rating this May was another embarrassment. And the economic benefits Brownback promised haven't materialized either. Chris Ingraham wrote at Wonkblog that Kansas's job growth has lagged behind the rest of the country, "especially in the years following the first round of Brownback tax cuts."

Brownback's approval rating has plummeted — in a recent poll by PPP, his 33 percent was actually lower than Barack Obama's 34 percent approval. This is good news for state House Democratic leader Paul Davis, who announced his run for governor last September. "I'm profoundly troubled by the direction our state has been heading over the past three years," he said in his first campaign email. "The wealthiest and well connected have gotten all the breaks, and the Kansas economy feels broken." In the most recent poll of the race, Davis leads Brownback by 6 points. 

Charlatans, Cranks and Kansas

It seems that no matter what happens, the Republican "magic bullet" for everything is to slash tax rates and take the nation to war so that profiteers like Halliburton cane gouge the American public.  Among the GOP controlled red states is Kansas where the GOP controlled legislature pushed through massive tax cuts yet, contrary to Republican myth making, the economy did not wondrously improve.  Instead, the economy is depressed and the state is facing a massive budget debt.  A column in the New York Times looks at what Kansas ought to teach the rest of the country especially when we hear the same old gospel of tax cuts from Republicans in Congress.  Here are column highlights:

Two years ago Kansas embarked on a remarkable fiscal experiment: It sharply slashed income taxes without any clear idea of what would replace the lost revenue. Sam Brownback, the governor, proposed the legislation — in percentage terms, the largest tax cut in one year any state has ever enacted — in close consultation with the economist Arthur Laffer. And Mr. Brownback predicted that the cuts would jump-start an economic boom — “Look out, Texas,” he proclaimed.

But Kansas isn’t booming — in fact, its economy is lagging both neighboring states and America as a whole. Meanwhile, the state’s budget has plunged deep into deficit, provoking a Moody’s downgrade of its debt.

There’s an important lesson here — but it’s not what you think. Yes, the Kansas debacle shows that tax cuts don’t have magical powers, but we already knew that. The real lesson from Kansas is the enduring power of bad ideas, as long as those ideas serve the interests of the right people.

Why, after all, should anyone believe at this late date in supply-side economics, which claims that tax cuts boost the economy so much that they largely if not entirely pay for themselves? The doctrine crashed and burned two decades ago, when just about everyone on the right — after claiming, speciously, that the economy’s performance under Ronald Reagan validated their doctrine — went on to predict that Bill Clinton’s tax hike on the wealthy would cause a recession if not an outright depression. What actually happened was a spectacular economic expansion.

So how did the charlatans and cranks end up dictating policy in Kansas, and to a more limited extent in other states? Follow the money.

For the Brownback tax cuts didn’t emerge out of thin air. They closely followed a blueprint laid out by the American Legislative Exchange Council, or ALEC, which has also supported a series of economic studies purporting to show that tax cuts for corporations and the wealthy will promote rapid economic growth. The studies are embarrassingly bad

And what is ALEC? It’s a secretive group, financed by major corporations, that drafts model legislation for conservative state-level politicians. Ed Pilkington of The Guardian, who acquired a number of leaked ALEC documents, describes it as “almost a dating service between politicians at the state level, local elected politicians, and many of America’s biggest companies.” And most of ALEC’s efforts are directed, not surprisingly, at privatization, deregulation, and tax cuts for corporations and the wealthy.

[I]ts agenda involves cutting taxes at the top while actually increasing taxes at the bottom, as well as cutting social services.

But how can you justify enriching the already wealthy while making life harder for those struggling to get by? The answer is, you need an economic theory claiming that such a policy is the key to prosperity for all. So supply-side economics fills a need backed by lots of money, and the fact that it keeps failing doesn’t matter. . . . . it’s about finding reasons to give powerful interests what they want.

 Sadly, the cretins of the GOP base just don't get it that they policies they support are the ones that are screwing them over. 

Will Liberal Cities Leave the Rest of America Behind?

In Virginia the contrasts between liberal areas and ultra-conservative areas of the state are stark, with higher incomes and economic growth increasingly concentrated in urban and liberal areas such as Northern Virginia.  In sharp contrast, in conservative areas of Virginia - largely in Southwest Virginia, so-called Southside and parts of the Shenandoah Valley, unemployment is high and economic activity is either stagnant or declining.  Yet the Republican Party of Virginia continues to favor the policies backed by the conservative regions which would drag the Commonwealth as a whole backward in time and economic progress.  The phenomenon is not unique to Virginia and highlights the contrasts between the GOP policies of "no," obstructionism and reaction and efforts being made in liberal cities to move the working and middle classes forward.  A piece in the New York Times looks at the possibility that liberal cities will leave the rest of America in the dust economically and socially.  Here are column highlights:

The declining ability of the American political order to deliver a steadily rising standard of living to the vast middle and working classes began to show itself in the 1970s, well before most people grasped the significance of what was happening around them. Decades of globalization have been accompanied by diminishing opportunity for those in midlevel jobs; by stagnant wages, especially for men without college degrees; and by the virtual collapse of private-sector unionization.

Standing in opposition to these adverse trends, a wave of newly elected mayors from New York to Seattle has taken office committed to deploying the power of city government and aggressive wage and tax policies to attack inequality and revive social and economic mobility.

These outspoken mayors have generated a growing optimism on the Democratic left that local officials can restore support for government activism. Mayors and city councils, in this view, can lead the drive to improve the prospects and living conditions of those in the bottom third of the income distribution.

Harold Meyerson, the editor at large of The American Prospect, argues in “The Revolt of the Cities” that this insurgency is already in motion. Urban chief executives are raising minimum wages; requiring contractors to hire inner-city residents and to increase pay on municipal projects; backing local union organizing efforts; initiating or expanding pre-K schooling; extending public transit into poor neighborhoods; and requiring police to videotape contacts with citizens.

“They are, in short, enacting at the municipal level many of the major policy changes that progressives have found themselves unable to enact at the federal and state levels,” Meyerson writes. “They also may be charting a new course for American liberalism.”

The political impetus behind this ideological development is the fact that American cities are on the cutting edge of the current demographic transformation of the United States into a majority-minority nation.

Minorities are significantly more liberal and more pro-government than whites, according to survey data from American National Election Studies.

While Meyerson’s political and demographic data is on target, and he accurately describes a movement toward more redistributive policies, there are reasons to be cautious. 

First and foremost, a number of the cities Meyerson points to have exceptional, built-in advantages: major research universities; financial and high-tech corporate centers; substantial and strong artistic and intellectual communities. 

Another way to look at this is that it takes money and resources to become a liberal city. “You can’t be a progressive without prosperity,” Bruce Katz, director of the Brookings Institution’s metropolitan policy program, said in a phone interview.

In their book, “Toward a 21st Century City for All,” John Mollenkopf, a professor of political science and sociology at CUNY, and Brad Lander, a Brooklyn city councilman who represents Cobble Hill, Park Slope and Boro Park, acknowledge the disparity favoring already successful cities.

The larger question is whether the current left-leaning urban agenda is restricted to small elite of well-off municipalities with substantial resources. If so, the cities equipped to finance major enhancements will leave their less well-off counterparts sinking ever deeper in the hole.

Urban America is now on a reconnaissance mission for progressive politics. What we’re still waiting to find out is whether the policies and programs developed in the nation’s thriving urban core will prove to be broadly applicable. Can the new progressive mayors lay the groundwork for a national agenda, or will bold and innovative policy experiments that privilege New York and Seattle fail their disadvantaged cousins like Stockton, Detroit, Buffalo and Baltimore?

One thing that is certain is that the Virginia GOP's policies are not working and will only impede Virginia's progress.  To date, Virginia has moved forward in spite of, not because of the policies of today's GOP.

 

Gay Flight: Should Anti-gay States Begin to Worry?

In its quest to prostitute itself the the Christofascists - e.g., here in Virginia the hate merchants at The Family Foundation - the Republican Party has time and time again shown itself only too willing to indulge in horrific gay bashing and a willingness to work to keep gays as a modern day equivalent of blacks under the Jim Crow laws.  However, as additional states and countries embrace LGBT rights and full gay marriage, LGBT citizens who are treated as lepers in their home states and countries have a growing number of options in terms of places where they can emigrate to where they will be granted equal rights with all other citizens.  If these LGBT individuals do choose to leave, their states will find that they will reap a negative consequence.  As I have noted many times before, if circumstances were different, I'd leave Virginia in a heartbeat and shake the dust off of my shoes as I crossed the border.  The Huffington Post looks at the phenomenon including at least one high profile LGBT individual who may be ready to move in order to be treated as an equal citizen.   Here are highlights:

If the Supreme Court decides to leave marriage equality up to the states to decide, will gay couples be concentrated in a few select states while the rest of the U.S. languishes behind in civil rights?   Suze Orman, the financial planning guru, TV host, and HuffPost blogger who lives with her lesbian partner in Fort Lauderdale, recently threatened to take her riches to another state where her relationship is recognized.

"Currently I am a resident of Florida … and I have substantial wealth and I pay substantial taxes," Orman said on MSNBC's "Now With Alex Wagner."  "I would be more than happy to move to New York or California if I could get married and be recognized on a federal level," she continued. "Because I want to live in a state that validates me, and I would validate them with my money."

"I am hoping, wishing and praying that DOMA is overturned," Orman said on her own show. "Obviously I have a lot at stake here. I have been gay my whole entire life. I've been in a relationship with KT for 12 years. And I want enjoy the same benefits as everybody else. I want to feel valid 100 percent of the time."

Florida might be a tad closer to making couples like Suze and KT feel at home.  The state's 2013 legislation session includes a bill finally granting civil rights protections against discrimination for reasons of sexual orientation and gender identity, and another that will create a statewide domestic partnership registry.

Gays are the harbinger of cities and states that will be attractive to the so-called "creative class."  If gays pack up and leave states like Florida (and Virginia) the message is clear:  Anyone deemed "other" is unwelcomed.  And other states and cities that accept diversity will be  only too happy to put down the welcome mat for refugees seeking to escape hate and bigotry.

Kentucky Legislature Overrides Veto of Bill Protecting Right to Discriminate Against Gays

Illustrating the problems facing the GOP is the state of Kentucky where the GOP controlled legislature passed a bill that would allow Christofascists to discriminate against gays and largely ignore any law they did not like based on professed religious belief.  Kentucky governor Steve Beshear vetoed House Bill 279. Now,the knuckle draggers and Bible beaters in the legislature have overridden Beshear's veto.  The selfishness and belief that they can ride rough shod over the rights of others are among the most notable aspects of today's conservative Christians.  Put simply, they are NOT nice people.  USA Today has details:

The Kentucky legislature voted Tuesday night to override the governor's veto of a controversial "religious freedom" bill.  The House's 79-15 vote sent House Bill 279 to the Senate, which voted 32-6 to override the measure.

During the House debate Tuesday, Democratic state Rep. Darryl Owens said the U.S. and Kentucky constitutions already protect religious freedom -- a freedom he said he does not see under threat.

"This is a piece of legislation looking for a reason," Owens said.

But Republican Rep. Stan Lee said, "It wasn't so long ago we had prayer in the schools, but they made us take it out."  

Gay-rights and human-rights groups have warned that the bill could be used to challenge local laws in Louisville, Lexington, Covington and Vicco designed to protect gays and lesbians from discrimination.

Gov. Steve Beshear added additional concerns in his veto message Friday, saying the bill's unintentional consequences also could harm economic development efforts and enforcement of drug laws.

Kentucky has sent a clear message to the world: if you're not a far right religious nutcase, you probably do not want to locate to Kentucky.   Hopefully, businesses will get that message and locate in states that embrace modernity and equality for all citizens.