Saturday, December 14, 2013

Editorial: No ‘Fast Track’ for Secret Trade Deal

The Obama administration, its corporate partners and a dozen Pacific nations have been negotiating behind closed doors on a massive trade agreement that, among other things, would allow corporations to challenge national, state and local laws if they believe regulations put profits at risk. Congress hasn’t seen the text of the Trans-Pacific Partnership, which hasn’t been finished yet, but the White House has requested that Congress proceed with granting “fast track” authority that would commit to an up-or-down vote on the deal with limited review and no possibility of amendment.

Congress should not approve fast track review for a trade deal that has been negotiated in secret. Dave Johnson noted at Campaign for America’s Future ( that the agreement itself is also about getting democracy and government power out of the way of the big corporations. “It actually sets (certain) corporate (‘investor’) interests above the law of any country. For example, word has leaked that TPP negotiators are arguing over whether to prevent countries from running anti-smoking campaigns, because this interferes with tobacco-company profits. One side says this is going too far and they should “carve out” tobacco from the agreement, the other side says carving out tobacco sets a precedent of allowing governments to protect their citizens from other things corporations might want to profit from. This should tell you all you need to know about why Fast Track must not pass, enabling them to push TPP through with no changes.”

Talks on the TPP will resume in January, after the 12 prospective members in December gave up on meeting Washington’s year-end deadline for a deal, Agence France-Presse reported Dec. 10. The TPP is being negotiated by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. They make up 40% of the global economy and other countries may join the pact later.

One of the sticking points has been the US negotiators’ insistence, backed by the powerful pharmaceuticals industry, that drug companies get longer patent protection for a new class of drugs called “biologics” which are developed from living tissue, AFP reported.

Drug firms say this is necessary to allow them to recoup investments and continue research into fresh cures. But critics such as the humanitarian organization Doctors Without Borders say such patent protection would restrict access to cheaper generic drugs for millions of poor people.

Documents leaked to the Huffington Post suggest that concerns about the Obama administration’s push for corporate power to challenge regulations are shared by some of those who are negotiating across the table from the US. HuffPost’s Zach Carter quoted a memo from another country charging the US had “shown no flexibility on its proposal” for investor dispute tribunals; Carter reported that with such language, “companies could challenge an even broader array of rules” than under the North American Free Trade Agreement, the deal that allowed companies like Exxon Mobil and Dow to fight Canadian rules on issues from drilling to drug patents. The same memo said the US “shows zero flexibility” on its push for restrictions on bank regulation, and had reintroduced a widely-opposed proposal to restrict governments’ negotiations to push down drug prices. A USTR spokesperson told Carter that “some elements” in those documents were “outdated, others totally inaccurate,” but did not specify which.

The Teamsters set out key fair-trade objectives three years ago that the proposed trade deal had to meet to earn the union’s support. They are:

If the Tea Party Republicans really were a populist movement, as many of their advocates claim, progressive Democrats would be able to make a coalition with them to stop these trade deals that interfere with American and local sovereignty. But we don’t expect the teabaggers to provide the sort of obstruction to “free trade” that they did against extension of jobless benefits. After all, the Tea Party has never showed much concern for workers’ rights, environmental protection or sustainable agriculture — indeed, the original call for action in January 2009 was not a reaction against the banks that abused the mortgage financing system, but instead focused anger on homebuyers — particularly minorities — who bought homes but were unable to keep up their mortgage payments. And one of the main sponsors of the Tea Party, the Koch brothers, run a petrochemical refining and distribution empire that would be a beneficiary of the dismantling of environmental rules by special trade tribunals, so they don’t have to get approval of the EPA or other state and federal agencies to pollute the air, water or other natural resources. Certainly Democrats in Congress should have no part of this chicanery.

Skinflint Budget Deal Accomplishes Little

Congress’ top two budget chiefs on Dec. 10 produced a bipartisan agreement that would set spending levels for two years and fix some spending cuts required by the sequester.

The deal announced by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) would establish spending at $1.012 trillion in 2014 and $1.014 trillion in 2015 — up from the $967 billion required by the across-the-board sequester cuts. It provides for about $63 billion in sequester relief, divided equally among defense and non-defense programs.

The deal offsets the sequester relief with a mix of targeted spending cuts and non-tax revenues via higher government fees and sales, totaling $85 billion over 10 years. That means it would reduce the deficit by about $23 billion. The revenue raisers include higher federal worker contributions to pensions and higher airline ticket fees. In an effort to secure conservative support, none of the revenues come from the tax code. The budget deal doesn’t resolve the impasse over the farm bill and the House’s $40 billion cut in food assistance that would drop as many as six million poor Americans from the anti-hunger rolls.

Sen. Bernie Sanders (I-Vt.) called the budget deal a “very modest proposal that will prevent a disastrous government shutdown. On the other hand, it goes nowhere close to addressing the enormous crises facing this country, including the expiration of unemployment benefits, rebuilding infrastructure, creating millions of jobs, investing in clean energy and early childhood education.”

The biggest win in the budget deal, Sanders said, was that progressives rallied the American people to stop the proposal to cut Social Security, Medicare and Medicaid benefits. But the deal still leaves 1.3 million Americans losing their long-term unemployment benefits three days after Christmas, expected to scrounge for work despite an official unemployment rate of 7% and an underemployment rate of 13.2%.

Democrats said they would continue to push for an extension of unemployment benefits in a separate bill — but that initiative has little chance of passage when many Republicans, including House Budget Chairman Paul Ryan (R-Wis.), think aid to the unemployed encourages the jobless to stop looking for work. (Extension of jobless benefits would cost $26 billion next year — or about the same amount that the Republican government shutdown cost in October.)

The budget deal likely will be one of the last bills to clear Congress before it adjourns for the year. That leaves those 1.3 million long-term unemployed on their own. And this skinflint budget is the entirely foreseeable result of giving Republicans a majority in the House of Representatives. Until Republicans fear the electoral backlash of the unemployed, and the other working classes that the GOP trashes, the least among us will continue to be cast adrift in favor of the corporate sponsors masquerading as “job creators.” — JMC

From The Progressive Populist, January 1-15, 2014
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Selections from the January 1-15, 2014 issue

Thursday, December 12, 2013

Why did the FDA make its new antibiotic restrictions voluntary instead of mandatory?

By Marc Jampole

Were you as delighted as I was when I read the headline that the Food and Drug Administration has a new policy prohibiting the use of antibiotics to speed the growth of pigs and other animals cultivated for human consumption? Trace antibiotics in the animals we eat have contributed to the increasing resistance of bacteria to the antibiotics we use to treat infections.  The new policy forbids use of antibiotics as growth stimulants and also requires farmers to get prescriptions each and every time they want to treat a sick animal with antibiotics.

On the surface it looks like a great victory for every American because it is going to make all of us safer and less likely to die in an illness. The New York Times version of the announcement points out that two million people fall sick and 23,000 die every year from antibiotic-resistant infections.  CNN reports that in April the FDA said that 81% of all the raw ground turkey the agency tested was contaminated with antibiotic-resistant bacteria.  Currently every hospital patient encounters the danger of opportunistic infections that don’t respond to antibiotics.

Every one of the 15 news reports I read hail it as big news: “major new policy,” ”broad measures” and “sweeping plan” are some of the descriptions of the FDA action.

But before we break out the champagne, let’s read the fine print: It’s all voluntary.

Virtually all the news stories bury this fact or downplay it.  For example, the Times says that, based on comments made during the discussion period that proceeds all federal regulation, rules and advisories, the FDA was confident that drug companies would comply (which I suppose means refusing to sell antibiotics to farmers without prescriptions for specific animals). 

Then there’s the matter of a three-year phase-in period. No one has bothered to explain why anyone would need three years to implement this plan: just stop doing it, right away.

As some reports have noted, health officials have warned about the overuse of antibiotics leading to increased resistance since the 1970s. In other words after 40 years of warnings, studies, discussions and negotiations regarding a major public health challenge, the best we can come up with is a voluntary plan.

Have no doubts about it: Some drug company somewhere in the world will continue to sell this stuff to farmers and farmers will still use it. 

If the federal government were really serious about lowering the amount of antibiotics humans ingest in their food and water, it would have set mandatory regulations that took effect within 30 days. But such an action would take a cash stream from drug manufacturers and raise the cost of raising domesticated animals. Farmers and meat processors would make less money and consumers would likely pay a little more for their ground round and chicken nuggets.  It’s worth it, though, as the eradication of the use of antibiotics will make everyone in the United States (and the world) safer from the threat of contracting a life-threatening infection every time they have an operation and safer from the risk of an epidemic of virulent and untreatable infections.

Industry pressures most assuredly caused the wishy-washy action of asking drug makers to resist the urge to make more money. The news behind the news then is that once again, our government has compromised the health, safety and economic well-being of its citizens to enable a small group of companies to continue making money. The additional illnesses and deaths are paid for by all of society, bringing down the costs or raising the profits for a small segment of society.  It’s another example of shifting of the costs from companies to society at large, and it demonstrates once again that unfettered free market capitalism does not lead to the greatest good for the most people.       

Monday, December 9, 2013

Serious economists must be laughing at Wall Street Journal attempt to use Laffer Curve to support tax cuts

By Marc Jampole

Wall Street Journal editorials often twist facts, leave out key facts, make incorrect inferences from facts or just plain get the facts wrong.  But the editorial titled “Britain’s Laffer Curve” shows that sometimes the editorial writers simply have no idea what the facts are saying.

In this editorial, the Journal wants to show that cutting taxes leads to increased tax revenues and invokes the notorious Laffer curve to do so. Laffer Curve theory has been around for ages but is associated with right-wing economist Arthur Laffer who supposedly drew it on a paper cocktail napkin for some government luminaries during the 1970s.  When I interviewed Laffer in 1981 for a television news report, he denied the myth.

What the Laffer Curve postulates is that as taxes are raised, less money circulates in the economy and rich folk are less likely to invest to make more money, since they are keeping so little of it. Research suggests that neither of these statements are true, but by assuming that they are true, one could imagine a situation in which taxes are so high that by lowering them, you raise the amount of revenue that is raised by the government.  Laffer Curve theory proposes that there is a theoretical point at which the tax rate is at a level that produces the most revenues possible from an economy. Laffer Curve theory also predicts that there are occasions when raising taxes will indeed raise significantly more revenue and lowering taxes will indeed lower revenues—it depends on whether we are on the upward or downward slope of the imaginary Laffer Curve.

President Ronald Reagan and a slew of right-wingers since him have used the theory of the Laffer Curve to justify cutting taxes. They assume that no matter what the conditions are, we are always on the side of the imaginary Laffer Curve on which a cut in taxes always leads to an increase in revenues.

The Journal of course takes it for granted that taxes are always too high, especially on businesses, even though they are currently still much lower than during most of the last hundred years and certainly far lower than when Laffer supposedly took Mont Blanc to napkin.    

The editorial in question proudly states that since Great Britain cut its corporate tax rate from 28% to 22% in 2010 that the British Treasury has gained from 45 cents to 60 cents in additional taxes for every one dollar of revenues lost by cutting the tax rate. In other words, economic growth (or more people paying all their taxes) compensated for 45%-60% of the revenues lost through the tax cut.

Now that may or may not prove the existence of a Laffer Curve that can describe the relationship between tax revenues and taxes collected. But it does prove that you cannot use Laffer Curve economics to justify a tax break.   Even after the Laffer Curve effects, the British government is still 55%-40% in the hole, meaning it must find other sources of revenues or cut government spending by that amount. 

And where did the shortfall go? To businesses and their owners, AKA rich folk, who history suggests will invest their additional wealth in the secondary stock market and luxury goods, neither of which really help the economy to grow.

The Journal wants us to believe that the experience of Britain should make us want to cut taxes to raise government revenues. But what the example shows is that cutting taxes leads to a loss of government revenue and a net transfer of an enormous amount of wealth from the poor and middle class to the wealthy. It’s as if the editorial writers have looked at a blue sky and declared, “Look at that blue sky. It proves that the sky is always yellow.” They see the facts, but that doesn’t persuade them from believing what they want to believe is true.

Real economists the world over must be laughing at the Journal and its editorial board’s gross misinterpretation of the facts. Except, of course, those economists in the pay of right-wing think tanks.

Increase in adults reading juvenile fiction another sign of infantilization of Americans

By Marc Jampole

The title of Alexandra Alter’s Wall Street Journal article on adults reading fiction written for middle-schoolers describes the situation perfectly. “See Grown-ups Read. Read, Grown-ups, Read” suggests not middle school, but an elementary school reading level.  Alter’s story describes one of the many ways that our mass culture is infantilizing adults, turning them into oversized children.

Alter finds several reasons why adults like reading fiction written at the reading, intellectual and maturity level of 12- to 15-year-olds:
  1. The Harry Potter series of books continues to influence reading choices.
  2. There is less of a difference in tastes between generations today than in the past.
  3. There is less of a stigma in adults reading children’s books for pleasure.
  4. The quality of literature for middle-school children has increased and the themes have become more mature.
The first three reasons are euphemistic ways to say that many adults now maintain the interests of childhood or pursue childhood interests. Of course, Alter avoids the negative judgment implied—and meant—by my expression, “the infantilization of adults.”  As one of the several experts Alter quotes puts it, “It used to be kids would emulate what their parents were reading, and now it’s the reverse.”

The fourth reason is worth analyzing further. Let’s accept the premise that the quality of the writing in books for the middle school audience has improved and the themes and situations are more complex than in the past. The easy rhetorical response is that these books are still for children and not for adults. There is no stream of consciousness writing, no shifting of perspectives without signaling the shift (known as free indirect discourse), no long elegant Proustian sentences, and no modernistic imagery. Even today’s new and improved middle school fiction falls short of the best of fictional writing for adults. In addition, the themes covered are those of interest to the middle schooler and thus inherently less complicated than what should be of interest to adults.

Alter peppers the article with quotes from experts, but all of them are authors, editors or publishers of juvenile fiction. No place does she have room for the views of a sociologist, psychologist or philosopher, who might fear, as I do, that adults are losing their capacity for complex thought by reverting to their childhood joys and activities, be it juvenile fiction, theme parks or shoot-shoot-bang-bang video games. In fine Wall Street Journal free-market tradition, the article is about a growing market. In the Journal’s view, all free markets are good and the results of free market growth are always good.  The editorial slant of the newspaper reflects a modern version of Voltaire’s buffoonish professor, Dr. Pangloss. He’s the one who keeps repeating in Candide that everything is for the best in the best of all possible worlds. For the Journal, everything is for the best when the free market is operating.

Besides, infantilization of adults is good for Journal advertisers and the American consumer economy is general. Infantilization makes people less able to understand the fine print, less able to understand if what is for sale is really of value. It leaves people less in control of their emotions and more insecure and susceptible to manipulation, just as children and teens are when compared to mature adults. In short, it’s easier to sell products and services—especially useless ones—to the less mature mind.