Category: Economy
The Real Causes of Deficits and the US Debt (Next Phases in Trump Fiscal Strategy)
| December 7, 2017 | 8:43 pm | Analysis, Donald Trump, Economy, Jack Rasmus | No comments

The Real Causes of Deficits and the US Debt (Next Phases in Trump Fiscal Strategy)

The Real Causes of Deficits and the US Debt (Next Phases in Trump Fiscal Strategy)

With the Senate and House all but assured to pass the US$4.5 trillion in tax cuts for businesses, investors, and the wealthiest 1 percent households by the end of this week, phases two and three of the Trump-Republican fiscal strategy have begun quickly to take shape.

Phase two is to maneuver the inept Democrats in Congress into passing a temporary budget deficit-debt extension in order to allow the tax cuts to be implemented quickly. That’s already a ‘done deal’.

Phase three is the drumbeat growing to attack social security, Medicare, food stamps, Medicaid, and other ‘safety net’ laws, in order to pay for the deficit created by cutting taxes on the rich. To justify the attack, a whole new set of lies are resurrected and being peddled by the media and pro-business pundits and politicians.

Deficits and Debt: Resurrecting Old Lies and Misrepresentations

Nonsense like social security and Medicare will be insolvent by 2030. When in fact social security retirement fund has created a multi-trillion dollar surplus since 1986, which the U.S. government has annually ‘borrowed’, exchanging the real money in the fund created by the payroll tax and its indexed threshold, for Treasury bonds deposited in the fund. The government then uses the social security surplus to pay for decades of tax cuts for the rich and corporations and to fund endless war in the middle east.

As for Medicare, the real culprit undermining the Medicare part A and B funds has been the decades-long escalating of prices charged by insurance companies, for-profit hospital chains (financed by Wall St.), medical devices companies, and doctor partnerships investing in real estate and other speculative markets and raising their prices to pay for it.

As for Part D, prescription drugs for Medicare, the big Pharma price gouging is even more rampant, driving up the cost of the Part D fund. By the way, the prescription drug provision, Part D, passed in 2005, was intentionally never funded by Congress and George Bush. It became law without any dedicated tax, payroll or other, to fund it. Its US$50 billion plus a year costs were thus designed from the outset to be paid by means of the deficit and not funded with any tax.

Social Security Disability, SSI, has risen in costs, as a million more have joined its numbers since the 2008 crisis. That rise coincides with Congress and Obama cutting unemployment insurance benefits. A million workers today, who would otherwise be unemployed (and raising the unemployment rate by a million) went on SSI instead of risking cuts in unemployment benefits. So Congress’s reducing the cost of unemployment benefits in effect raised the cost of SSI. And now conservatives like Congressman Paul Ryan, the would be social security ‘hatchet man’ for the rich, want to slash SSI as well as social security retirement, Medicare benefits for grandma and grandpa, Medicaid for single moms and the disabled (the largest group by far on Medicaid), as well as for food stamps.

Food stamp costs have also risen sharply since 2008. But that’s because real wages have stagnated or fallen for tens of millions of workers, making them eligible under Congress’s own rules for food stamp distribution. Now Ryan and his friends want to literally take food out of the mouths of the poorest by changing eligibility rules.

They want to cut and end benefits and take an already shredded social safety net completely apart–while giving US$4.5 trillion to their rich friends (who are their election campaign contributors). The rich and their businesses are getting $4.5 trillion in tax cuts in Trump’s tax proposal—not the $1.4 trillion referenced in the corporate press. The $1.4 trillion is after they raise $3 trillion in tax hikes on the middle class.

Whatever financing issues exist for Social Security retirement, Medicare, Medicaid, disability insurance, food stamps, etc., they can be simply and easily adjusted, and without cutting any benefits and making average households pay for the tax cuts for the rich in Trump’s tax cut bill.

Social security retirement, still in surplus, can be kept in surplus by simply one measure: raise the ‘cap’ on social security to cover all earned wage income. Today the ‘cap’, at roughly US$118,000 a year, exempts almost 20 percent of the highest paid wage earners. Once their annual salary exceeds that amount, they no longer pay any payroll tax. They get a nice tax cut of 6.2 percent for the rest of the year. (Businesses also get to keep 6.2% more). Furthermore, if capital income earners (interest, rent, dividends, etc.) were to pay the same 6.2% it would permit social security retirement benefits to be paid at two thirds one’s prior earned wages, and starting with age 62. The retirement age could thus be lowered by five years, instead of raised as Ryan and others propose.

As for Medicare Parts A and B, raising the ridiculously low 1.45 percent tax just another 0.25 percent would end all financial stress in the A & B Medicare funds for decades to come.

For SSI, if Congress would restore the real value of unemployment benefits back to what it was in the 1960s, maybe millions more would return to work. (It’s also one of the reasons why the labor force participation rate in the U.S. has collapsed the past decade). But then Congress would have to admit the real unemployment rate is not 4.2 percent but several percentages higher. (Actually, it’s still over 10 percent, once other forms of ‘hidden unemployment’ and underemployment are accurately accounted for).

As for food stamps’ rising costs, if there were a decent minimum wage (at least US$15 an hour), then millions would no longer be eligible for food stamps and those on it would significantly decline.

In other words, the U.S. Congress and Republican-Democrat administrations have caused the Medicare, Part D, SSI, and food stamp cost problems. They also permitted Wall St. to get its claws into the health insurance, prescription drugs, and hospital industries–financing mergers and acquisitions activity and demanding in exchange for lending to companies in those industries that the companies raise their prices to generate excess profits to repay Wall St. for the loans for the M&A activity.

The Real Causes of Deficits and the Debt

So if social security, Medicare-Medicaid, SSI, food stamps, and other social safety net programs are not the cause of the deficits, what then are the causes?

In the year 2000, the U.S. federal government debt was about US$4 trillion. By 2008 under George Bush it had risen to nearly US$9 trillion. The rise was due to the US$3.4 trillion in Bush tax cuts, 80 percent of which went to investors and businesses, plus another US$300 billion to U.S. multinational corporations due to Bush’s offshore repatriation tax cut. Multinationals were allowed to bring US$320 billion of their US$750 billion offshore cash hoard back to the U.S. and pay only a 5.25 percent tax rate instead of the normal 35 percent. (By the way, they accumulated the US$750 billion hoard was a result of Bill Clinton in 1997 allowing them to keep profits offshore untaxed if not brought back to the U.S. Thus the Democrats originally created the problem of refusing to pay taxes on offshore profits, and then George Bush, Obama, and now Trump simply used it as an excuse to propose lower tax rates for repatriated the offshore profits cash hoard of US multinational companies. From $750 billion in 2004, it’s now $2.8 trillion).

So the Bush tax cuts whacked the U.S. deficit and debt. The Bush wars in the middle east did as well. By 2008 an additional US$2 to US$3 trillion was spent on the wars. Then Bush policies of financial deregulation precipitated the 2007-09 crash and recession. That reduced federal tax revenue collection due to collapse economic growth further. Then there was Bush’s 2008 futile $180 billion tax cut to stem the crisis, which it didn’t. And let’s not forget Bush’s 2005 prescription drug plan–a boondoggle for big pharmaceutical companies–that added US$50 billion a year more. As did a new Homeland Security $50 billion a year and rising budget costs.

There’s your additional US$5 trillion added by Bush to the budget deficit and U.S. debt–from largely wars, defense spending, tax cuts, and windfalls for various sectors of the healthcare industry.

Obama would go beyond Bush. First, there was the US$300 billion tax cuts in his 2009 so-called ‘recovery act’, mostly again to businesses and investors. (The Democrat Congress in 2009 wanted an additional US$120 billion in consumer tax cuts but Obama, on advice of Larry Summers, rejected that). What followed 2009 was the weakest recovery from recession in the post-1945 period, as Obama policies failed to implement a serious fiscal stimulus. Slow recovery meant lower federal tax revenues for years thereafter.

Studies show that at least 60 percent of the deficit and debt since 2000 is attributable to insufficient taxation, due both to tax cutting and slow economic growth below historical rates.

Obama then extended the Bush-era tax cuts another US$803 billion at year-end 2010 and then agreed to extend them another decade in January 2013, at a cost of US$5 trillion. The middle east war spending continued as well to the tune of another $3 trillion at minimum. Continuing the prescription drug subsidy to big Pharma and Homeland Security costs added another $500 billion.

In short, Bush added US$5 trillion to the US debt and Obama another US$10 trillion. That’s how we get from US$4 trillion in 2000 to US$19 trillion at the end of 2016. (US$20 trillion today, about to rise another US$10 trillion by 2027 once again with the Trump tax cuts fast-tracking through Congress today).

To sum up, the problem with chronic U.S. federal deficits and escalating Debt is not social security, Medicare, or any of the other social programs. The causes of the deficits and debt are directly the consequence of financing wars in the middle east without raising taxes to pay for them (the first time in U.S. history of war financing), rising homeland security and other non-war defense costs, massive tax cuts for businesses and investors since 2001, economic growth at two thirds of normal the past decade (generating less tax revenues), government health program costs escalation due to healthcare sector price gouging, and no real wage growth for the 80 percent of the labor force resulting in rising costs for food stamps, SSI, and other benefits.

Notwithstanding all these facts, what we’ll hear increasingly from the Paul Ryans and other paid-for politicians of the rich is that the victims (retirees, single moms, disabled, underemployed, jobless, etc.) are the cause of the deficits and debt. Therefore they must pay for it.

But what they’re really paying for will be more tax cuts for the wealthy, more war spending (in various forms), and more subsidization of price-gouging big pharmaceuticals, health insurance companies, and for-profit hospitals which now front for, and are indirectly run by, Wall St.

Jack Rasmus is the author of the recently published book, “Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression.” He blogs at and his twitter handle is @drjackrasmus.

A Nobel Prize for a Return to Reality?
| October 25, 2017 | 9:30 pm | Analysis, Economy | No comments

A Nobel Prize for a Return to Reality?

– from Greg Godels is available at:

Wednesday, October 25, 2017

A Nobel Prize for a Return to Reality?

University of Chicago professor Richard Thaler won the 2017 Nobel Prize in economics for telling economists something that everyone else already knew. One of the pioneers of what has come to be called “behavioral economics,” Thaler has put forward the earthshaking, profound claim that people do not always, or consistently, act rationally.
Now why would this seemingly commonsensical observation deserve a Nobel Prize? Why would anyone believe otherwise?
Until the catastrophic collapse of the global economy in 2007-2008, a significant portion of US academic social sciences was constructed on the assumption that public, political, and economic behavior could be understood through the prism of individual self-interest and the presumption of rational choice. Though the crash cast a shadow over the absolute dominance of that assumption in the field of economics, it remains the methodological pillar of great swaths of social scientific research today. The crisis was a much needed reminder of the folly of investing “rationality” in economic life.
Thaler’s Nobel recognition will put little more than a dent in the long-reigning ideological disposition to see the individual as fundamental to scientific analysis, along with the individual’s self-acquired interests and rationally-determined goals. Anglo-American social scientists will continue to embrace individual rational choice as the centerpiece of their explanatory framework, as the fundamental building blocks for understanding human behavior.
The Story Behind the Story
The idea of the importance of individuals, interests, and reason in explaining human action is not a new one. Aristotle’s conceptual model– the practical syllogism– sought to expose the logic of human action, basing it upon individual ends or desires and the knowledge of how to attain those ends and desires. But Aristotle did not believe that reason and interests determined human action with the force of logic. Instead, he wondered why, in real experience, they did not produce the expected results, why people acted differently from what was, in fact, their best interests. He was convinced that individual self-interest, reason, and knowledge were not sufficient to explain how people behaved. The break in the chain of goal-setting and deliberation was, he surmised, weakness of the will (ἀκρασία). In this regard, Aristotle anticipated Thaler by over two thousand years.
With the ascendancy of capitalism and its ideological superstructure, the role of individuals, reason, and self-interest took on a new importance. At the heart of the capitalist world view is the notion that the individual should have the opportunity to place satisfaction of his or her wants at the center of her or his world and enjoy the opportunity to strive to realize those goals without the restraint of others (what came to be today’s popular, uncritically embraced concept of freedom). The centrality of rights-talk in the modern era follows inexorably.
At the same time, the capitalist world view required a social component to protect and promote the opportunities afforded to individuals. Individuals cannot pursue every whim without denying some of the whims of others. Conflict would necessarily follow if everyone pursued goals with no consideration of others.
On the face of it, the two ideas– individual freedom and social constraint– collide, since one person’s intended actions may, indeed likely will, intersect with the realization of another’s intended action. Hence, it would appear that guaranteeing freedom of action in the particular is not always compatible with guaranteeing everyone the same freedom of action at the same time. Everyone can’t go through the same door at the same time; someone’s freedom of action must cede to the freedom of others.
Reconciling individual freedoms became the great challenge for thinkers in the capitalist era. The solution, exemplified canonically by the work of Hobbes, sought to resolve the conflict between clashing “freedoms” through the mechanism of a contract, agreement, or constitution. Reaching into the toolbox of rationality, defenders of the capitalist ethos argued that rational individuals would see that it was obviously in each and every person’s best interest to accept constraints on individual actions. People would recognize that it was reasonable to surrender complete autonomy to a common good. Thus, the consent of individuals to forego some freedom of action would serve as the bridge between individual choices and the common or general will, between the individual and the social. It would be possible to both avoid the anarchy of unrestrained freedom and to create a civil society, while retaining individualism, rationality, and the core of freedom as much as would be reasonably possible.
While this defense of the capitalist world view raises as many questions as it answers, it met its greatest challenge from the rise of the workers’ movement and the clash of classes. The challenge was best articulated in the work of Marx and Engels. They argued that individual interests and collective or common interests are qualitatively different. They saw classes as having interests over and above individual interests taken alone or in the aggregate. Thus, it is possible for most workers to believe individually that it is in the interest of each and every one of them to sign a labor contract and work in a privately owned coal mine under barely tolerable conditions while it is true that it is in their interest as a class to overthrow the private ownership of that mine and not accept the contract.
How could both be true?
Marx and Engels maintained that from the class perspective, from the perspective of the working class as a social whole, the elimination of the wage system and private ownership of the means of production represents the true interest of the workers. Or, if you like, there is a contradiction between the interests of the workers as individuals and as a class.
This claim is not dissimilar to the classic tenet of informal logic, the fallacy of composition: properties ascribable to each individual in a class of individuals cannot be necessarily ascribed to the class itself; properties of the parts are not transferred as properties to the whole. For example, most of the poor people in the world may be hungry, but the class of poor people is not, in any proper sense, hungry.
The intellectual defenders of capitalism seek to place shared rational choice (a fictitious “vote”) at the center of its explanation of civil society, of the legal, moral, and political edifice consensually constructed to promote individual freedom. Marxists, on the other hand, argue that individual consensus cannot exhaustively account for class interests and the ensuing action and interactions of classes. The realm of the social is, in important ways, autonomous from the realm of the individual. Bourgeois social thinking, grounded in the individual, leaves a host of social phenomena untouched, unexplained.
However, it is not the logical divide between the personal and the social, the gulf between the individual interests and class interests alone that challenges the worldview erected from individualism, self-interest, and rationality. The two centuries following the rise of industrial capitalism saw a growth and development of the working-class ideology with Marxism at its core.
In the aftermath of the Second World War and the Chinese Revolution, the capitalist world view lost its luster as more and more people in more and more places seriously considered the socialist option. Newborn countries freed from the colonial yoke considered socialist development as an alternative to the course recommended by their former colonial masters. The Marxist method that gave priority to class in social analysis found new adherents worldwide. The momentum of Communism threw capitalism into a panic, not only in politics, but in ideology as well.
Foundations and think tanks mounted a war on the growing credibility of the socialist option. Thinkers began to work feverishly to meet the challenge of shoring up the capitalist ideology against the success of class analysis.
As S.M. Amadae demonstrates in her brilliant book Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism (2006), much of the new thinking to legitimize capitalism sprung from Ford Foundation support, along with the RAND corporation and its stable of hired guns (the Ford Foundation played a similar role in supporting the effort on the cultural front as Frances Stoner Saunders documents in her equally impressive book, The Cultural Cold War).
While Amadae is no advocate of socialism, she clearly sees the construction of a scientifically credible theory as an increasingly urgent and conscious effort to arm the capitalist West ideologically against socialism’s growing popularity. Her careful research shows the commitment to re-found anti-Marxist social science on the rock of rational choice theory and its close variants.
Rather than accept the existence of an explanatory framework that goes beyond a universe of individuals, rationality, and narrow interests, the new thinking, as embodied in the pioneering work of Nobel laureate Kenneth Arrow, simply denies that there is any coherent social choice beyond individual choice.
The Arrow argument exhibits an interesting turn.
Arrow demonstrates (1951) mathematically that it is impossible (“the impossibility theorem”) for the rational choice calculus to generate coherent collective preferences from individual preferences. For Arrow, this result supports a skepticism about social goals expressed as collective preferences. While the import of Arrow’s findings might have generated a healthy debate, the elevated emotions of the Cold War era and the ideological needs of the anti-Communist academy promoted the theory– rational choice theory– to the head of the class. A theory that “rigorously” dismissed the intelligibility of class interests was too valuable to subject to serious scrutiny.
One might have equally and reasonably objected that any theory that could not account for collective preferences was theoretically defective. One could turn the tables and argue, as Marx would undoubtedly have, that collectives, social phenomena were as real, as objective as individuals. So, a calculus that could not explain class interests was theoretically “skinny;” foundations built on individuals, self-interest, and rationality alone were not sufficiently robust to serve as a foundation for the social sciences. If rational choice theory cannot account for collective preferences, then jettison rational choice theory! But in those feverish times, Western academia– bourgeois social science– would not countenance this reductio ad absurdum argument.
From the Arrow moment, rational choice theory spread quickly to other social sciences. Nobel laureates followed in its wake. This theory and its variants served as a basis for “grounding American capitalist democracy. In its guise as ‘objective’ or ‘value free’ social science, it is difficult to appreciate the full import of social choice, public choice, and positive political theory for reconceptualizing the basic building blocks of political liberalism. In light of the Cold War ideological struggle against the Soviets, this enterprise of securing the philosophical basis of free world institutions was critical,” in the words of S. M. Amadae.
Rational choice theory has penetrated deeply into the pores of social science, especially in economics and especially in the US. Its methodological ascendance has established it as a gatekeeper against the inroads of Marxism in Western social theory. Ironically, it has even penetrated into Western Marxism under the guise of “Analytic Marxism;” scholars trained in rational choice theory drew the conclusion that methodological individualism, self-interest, and rationality were incompatible with major tenets of Marxism– a surprising conclusion to all but Marxists!
The struggle for a new politics based on the rejection of the dominant capitalist ideology cannot be won without critically addressing the failings of rational choice theory. A revolutionary socialist ideology must confront it directly. It has left much of the social sciences in the US a barren, but ideologically pure apologist for capitalism. It contaminates public policy, justifying the explosion of inequality and the obsession with public sector austerity.
Professor Thaler’s award acknowledges its failings in a small way, but leaves the dogma intact.
Greg Godels (Zoltan Zigedy)
Homelessness Reveals the ‘Blatant Failure’ of Capitalism: New NZ PM
| October 21, 2017 | 6:42 pm | Analysis, Economy | No comments
New Zealand Labour Party leader Jacinda Ardern during a visit to Addington School in Christchurch, New Zealand, Wednesday, Aug. 16, 2017. New Zealand will hold a general election on Saturday September 23, 2017.

Homelessness Reveals the ‘Blatant Failure’ of Capitalism: New NZ PM

© AP Photo/ Mark Baker

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New Zealand’s newly-elected prime minister has called capitalism a “blatant failure” that has failed low-income people in the country and around the world.

Jacinda Ardern, who will take office next month after the New Zealand First Party agreed to form a center-left government with her Labor Party, aims to limit the systemic problem of homelessness plaguing New Zealand.

In her first interview since becoming the new prime minister, Ardern told The Nation that “wages are not keeping up with inflation.”

“What is the point of economic growth when we have some of the worst homelessness in the developed world?” she stated.

Ardern, 37, suggest that prior New Zealand governments have failed the country’s people.

“When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required.,” she said.

“Has it failed our people in recent times? Yes,” Ardern asserted, adding, “How can you claim you’ve been successful when you have growth roughly three percent, but you’ve got the worst homelessness in the developed world?”

The new prime minister offered that her government would use more than the simple measure of gross domestic product (GDP) to measure economic success, observing that life is much more complicated than a mere financial statistic, cited by

“We need to make sure we are looking at people’s ability to actually have a meaningful life, an enjoyable life, where their work is enough to survive and support their families.”

Her newly-formed New Zealand coalition government will include child poverty reduction targets in the country’s laws and increase the minimum wage to $16.50, with the intention of increasing it again at an unstated point in the future.

“We have to make sure we balance the need to see that wage increase whilst at the same time ensure that we give enough notice so we can ensure the cushioning for those who are paying those wages. $16.50 is our first step. We’ll look to move beyond that over time,” Ardern said.

A Tsunami of Finance: German Expert Warns of Imminent Collapse of ‘World Casino’
| October 12, 2017 | 8:17 pm | Analysis, Economy, Imperialism | No comments

A Tsunami of Finance: German Expert Warns of Imminent Collapse of ‘World Casino’


A Tsunami of Finance: German Expert Warns of Imminent Collapse of ‘World Casino’

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Financial expert Ernst Wolff gives Sputnik a taster of his new book, which warns that dependence on the financial industry and the US dollar has created a “financial tsunami,” the consequences of which the world is wholly unprepared for.

Financial expert Ernst Wolff, author of a bestselling analysis of the International Monetary Fund‘s “modern day crusade against the working people on five continents,” has turned his attention to the global financial system in his latest book.

Wolff sees the financial system at risk of imminent collapse and likens it to a “Financial Tsunami” which threatens to take us all by surprise, leaving devastation in its wake.

In a taster of the book’s contents, he told Sputnik Deutschland that the US-based financial industry has been on “life support” since the 2008 crisis and its prognosis “doesn’t look good.”

“The patient is about 75 years old. Our financial system was founded in in Bretton Woods, USA in 1944. The patient is in great difficulty because in 1998 and a second time in 2007/2008, he almost died. Since this second crisis, he has only been kept alive artificially. The financial system is lying in the intensive care unit.”

While most countries have a state central bank, US monetary policy is conducted by the Federal Reserve, a consortium of 12 regional banks in which commercial banks own shares. Wolff describes the system as a “cartel.””One not only gives a patient a diagnosis, but also a case history. First, we need to understand the power of the Federal Reserve, the American central bank which was established a hundred years ago. Many people still don’t know that the Federal Reserve is not a state institution, but is in private hands. This is a bank cartel which lies in the hands of several large, very rich families. This fact has been covered up in the course of history.”

“Since 1944, the dollar has been the most important currency in the world, and since the mid-seventies it has been the most important reserve currency because oil, the most important and most traded commodity in the world, can only be traded in dollars.”

“But the dollar has been hit because the US has been hit. There is great competition on the world market, especially from China. However, it takes time to replace the world’s main currency. Those who have opposed the dollar until now have suffered a terrible fate. Saddam Hussein was the first to try to sell his oil in euros, and he was executed. Then Gaddafi tried the same in Libya, and we know how that ended. The conflict with Iran is also related to the fact that Iran has announced its intention to sell its oil in euros, and now we have the next flashpoint of this kind with Venezuela.”

Wolff says that the financial industry has grown in power along with the US dollar. The proportion of the world economy stemming from the financial industry has increased significantly in recent decades, although the exact figure depends on pinning down a definition of financial services.

The IMF estimates the total service economy to make up 60-65% of total global revenue, while the OECD has suggested that financial services comprise 20-30% of the total service market.

Wolff declared that “the financial economy is infinitely larger than the real economy and has been completely detached from the real economy by not producing anything of value.”

“In the last 30 years it has become a huge casino in which money is simply pushed back and forth. Since the system is built on loans that need to be serviced, more and more money must be pumped into the system. The central banks, such as the IMF or the ECB, are the largest manipulators of the financial system. They are printing more and more money, which they now offer for zero or negative interest rates.”

The financial system rules the world yet it seems impenetrable to most ordinary people, Wolff said.

“That’s the way it’s meant to be. Today, people in finance speak a language that a normal person can no longer understand. They hide behind it,” Wolff said, likening the discourse to the “Doublespeak” in George Orwell’s book 1984.

“You mustn’t lose yourself in the details, you have to see the big picture. With derivatives, for example, there are all sorts of options — puts, options, calls, swaps. You don’t have to know all the differences. You just have to know that derivatives are financial betting. And this huge bookmaker threatens us all.”

Wolff said that the finance industry is to blame for many of the problems currently facing Europe, which at first glance seem unconnected.

“The two prime causes of the refugee crisis are social inequality and wars. The financial industry is at fault for both. In the background, big investors are making money from wars and also treat the third world like a Christmas tree.”

Can we talk about our relationship to the oil industry? It’s not our savior | Opinion
| September 29, 2017 | 7:58 pm | Analysis, Economy, Local/State | No comments

Can we talk about our relationship to the oil industry? It’s not our savior | Opinion

Tugboats tow the Delta House oil and gas production facility away from port facilities in Aransas Pass, Texas and into the Gulf of Mexico. Covington-based LLOG Exploration began installing the $2 billion production facility in the Gulf of Mexico in late September 2014. (Photo by Redding Communications)
Tugboats tow the Delta House oil and gas production facility away from port facilities in Aransas Pass, Texas and into the Gulf of Mexico. Covington-based LLOG Exploration began installing the $2 billion production facility in the Gulf of Mexico in late September 2014. (Photo by Redding Communications)(Bob Redding)

Louisiana and its politicians have long embraced some unhealthy myths: Corruption in our politics isn’t so bad. Teachers are the real problem with our schools. Poor people are lazy. Climate change is a hoax. Oil is crucial to our economy because it employs so many workers and funds our government.

Few myths have damaged us more than the last one. Our blind allegiance to oil and gas has led to lax or poorly enforced environmental laws. The worst actors in the industry have contributed to the disappearance of our wetlands and poisoned our water.

And our eagerness to subsidize this industry has cost us billions in tax revenue. A 2015 report by the Legislative Auditor found that one exemption from one state tax — the severance tax on horizontal drilling — resulted in the loss of $1.1 billion from 2010 to 2014. Last year, the 27 state tax exemptions Louisiana grants to oil and gas interests amounted to $195 million. In 2012, during the height of the oil boom, the state let slip away $527 million in oil revenue; the following year, $462 million.

Since 2013, Louisiana has absolved one natural gas company, Cameron LNG, of more than $3 billion in property taxes. Since 2010, the state has awarded Cheniere Energy and its subsidiaries more than $3 billion in local and state tax subsidies. And in 2016, Louisiana gave Venture Global LNG $1.86 billion in property tax exemptions.

Total permanent jobs promised by those companies in return for the tax exemptions: about 1,400 (an average of $5.5 million in state and local subsidies per job). Industry officials claim without these generous tax breaks, they cannot afford to do business here.

That might be a stronger argument if energy exploration and refining weren’t already among the most profitable enterprises on Earth. Five of the 12 largest corporations in the world (by revenue) are oil companies, despite the slump in oil prices.

But these corporations provide plenty of good jobs for Louisiana workers, right? “The Louisiana oil and gas industry is one of the leading employers in the state,” the Louisiana Mid-Continent Oil and Gas Association claims. The most recent employment numbers on its website — 64,000 — are from 2013, when oil was around $90 a barrel. The American Petroleum Institute (API), meanwhile, claims 291,00 Louisiana workers were employed in the industry in 2015.

The August 2017 report on industry employment from the Louisiana Workforce Development Commission, however, pegs the number working in or supporting oil and gas at about 40,000 or 2 percent of Louisiana’s total workforce. It’s likely the API’s 2015 numbers were wildly inflated. Even Louisiana oil industry lobbyists acknowledge a sharp jobs downturn caused by slumping oil prices.

Nationally, the API claims the oil and gas industry employed more than 10.3 million direct and indirect workers in the U.S. in 2015. Meanwhile, the BLS, which does not count indirect jobs, estimates the industry’s current national job number is 178,000.

Counting indirect jobs from a specific industry is an inexact science, so let’s consider only the API’s claim of 2.9 million “direct impact” jobs in 2015. According to the API study, almost a million of those jobs were at gas stations, where employees also sold cigarettes, beer and slushies.

The myth of oil as a once-and-future major employer and massive contributor to the economy is dangerous not only because it absolves the industry from paying its fair share in taxes; the myth also has strengthened the industry’s case as it lobbies to avoid or evade environmental regulations in Washington and the states.

The jobs narrative has led to another harmful myth: We can have oil industry jobs or a clean environment, but we cannot have both. Well, look no further than California, where the nation’s toughest environmental regulations exist in harmony with a vibrant oil and gas industry. (To their credit, Gov. John Bel Edwards and six coastal parish governments are suing to hold oil companies accountable for how they damaged portions of our coast.)

Pitting jobs against a clean environment is also how industry supporters crush regulations to address climate change. That jobs-versus-environment argument ignores that oil and gas companies are automating tasks that once required warm bodies.

The real issue is not jobs so much as how states like Louisiana suffer when the oil and gas industry doesn’t pay its fair share in taxes. As the oil companies automate, their profit margins will increase. And their lobbyists continue persuading legislators in places like Louisiana, Texas, Oklahoma and Washington, D.C., to increase or maintain billions in “drilling incentives.”

For decades, Louisiana has acted like providing corporate welfare to the oil industry is our patriotic duty. We’ve behaved like a feckless colony and allowed oil companies to swoop in, scoop up our oil and gas and pay us little in return. The industry buys the fealty of our politicians who have persuaded us that it’s our salvation.

It’s not. And if Louisiana wishes to enter the 21st Century, it’s time to wake up, smell the crude and quit behaving like a third-world petro state.

Robert Mann, an author and former U.S. Senate and gubernatorial staffer, holds the Manship Chair in Journalism at the Manship School of Mass Communication at Louisiana State University. Read more from him at his blog, Something Like the Truth. Follow him on Twitter @RTMannJr or email him at

1 in 3 U.S. families struggle to afford diapers: report
| September 25, 2017 | 8:35 pm | Economy, Poverty in the USA | No comments

Updated on September 25, 2017 at 2:57 PM

A survey by Huggies in partnership with the National Diaper Bank Network finds one in three families in the United States struggles to afford diapers for their children, CBS News reports.

The report says the average cost of diapers for one child is $18 a week, or $936 a year. The cost is pushing some families to experience what the survey calls “diaper need” – the struggle to provide enough diapers to keep a baby or toddler clean, dry and healthy on a consistent basis.

Experts say keeping children in dirty diapers longer not only increases health risks, including urinary tract infections and diaper rash, but can also lead to emotional stress and depressive symptoms in parents stressed about not being able to provide for their children, the report says.

The report says the survey questioned parents in 1,000 U.S. households with young children, more than two-thirds of whom are married and employed.

Read the full CBS News report.

Let’s face facts: Louisiana is sick and dying | Opinion
| September 10, 2017 | 8:44 pm | Economy, environmental crisis, Local/State | No comments

Let’s face facts: Louisiana is sick and dying | Opinion

Two questions have dogged me lately: If I could go back 18 years, would I raise my children in Louisiana? Would I still view this as a place that would nurture and educate them, offer opportunities for personal and financial growth and help my wife and me imbue in them the values important to us?

When my son and daughter were born, I believed the answer was yes. I had hope. Even three years ago, I still had faith in Louisiana, as I wrote in a column to young people who considered abandoning the state: “Stay here, find like-minded people, organize them, expand your influence, demand change, but don’t give up on this amazing, beautiful place. Its good people — flawed as we might be — are worth your efforts.”

When I wrote that, I believed Louisiana had brighter days. I hoped there was a small flame of desire to recreate something great here. I thought Louisiana’s people wanted to redeem their state.

I was wrong.

Today, I ask only, “Is this as good as it will ever be?” The answer, I believe, is yes. It’s not getting better and could get much worse.

For all its rich and diverse culture and abundant natural resources, Louisiana is the sick man of the United States. We’re an economic basket case and a toxic waste pit of environmental neglect and misconduct.

We are the state most adept at missing opportunities and abusing and wasting our abundant natural resources.

Louisiana is my home in every way and, at 59, I cannot imagine living anywhere else. And yet it’s time to admit this is a place with no visible promise and little hope. To pretend otherwise is to engage in delusional thinking. We must face facts.

I’m not saying everyone should give up and leave. I’m staying and fighting for our future. There is much work to do, and I believe I can make a difference. I suspect most of you feel the same. But if we’re staying, we must be honest about Louisiana’s deplorable condition and bleak future.

Blame our leaders, if you like. But the problem is us. On average, we aspire to mediocrity; we are happy with good enough. We live in a land of plenty but view the world from an attitude of scarcity.

We mask our state’s profound illness and disease with colorful festivals and spicy food.

We tolerate — sometimes celebrate — our corrupt politicians. (Witness the recent outpouring of affection for disgraced former Gov. Edwin Edwards on his 90th birthday.)

Speaking of celebrations, nothing makes us happier than college football, which is our true religion. In the fall, we worship on Saturday nights in Tiger Stadium, the state’s holy shrine. Meanwhile, what transpires across campus — in the classrooms and lecture halls — barely concerns us.

Our elected leaders sell their souls to big oil and the chemical industry. The first has spoiled our land, pillaged our resources and damaged our coast, while the other has poisoned our air and water.

We are 47th in environmental quality. Perhaps it’s no coincidence we have the nation’s highest cancer rate.

Almost a third of our children live in poverty, the third-highest rate in the nation. That’s not changed for decades.

We have the seventh-lowest median household income and the third-highest unemployment rate. After decades of so-called “reforms,” we still have the worst public schools in the country. We’ve cut higher education funding more than almost every other state.

I could go on. We are first in almost everything that’s bad and last (or near last) in almost everything that’s good. In most cases, even mediocrity seems beyond our reach.

The experience of the last four decades should settle any question about whether Louisiana and its people will soon awaken from their coma of complacency. We know well the diseases of ignorance, poverty and pollution that afflict us — and have accepted them as sad facts, not obscenities.

The question isn’t whether there is much hope or aspiration left in Louisiana’s people. There is not. The question, instead, is whether this is a place our promising young people should abandon as soon as possible.

So here’s what I’ll tell my children: If you want to stay, then regard Louisiana as a mission field. However, if you want a place that will enlarge your life, expand your horizons, offer new opportunities and challenge your thinking, you should look elsewhere.

Our insular, prehistoric ways will not soon spawn a dynamic, creative culture to revive our economy and attract bright young minds to study at our universities and, after graduation, remain here to build a vibrant state. Our people have said loud and clear over the decades that we do not desire such a state.

It’s time to admit that Louisiana is sick and dying.

Robert Mann, an author and former U.S. Senate and gubernatorial staffer, holds the Manship Chair in Journalism at the Manship School of Mass Communication at Louisiana State University. Read more from him at his blog, Something Like the Truth. Follow him on Twitter @RTMannJr or email him at