Snake Oil

Graphic by Kevin Kreneck

Richard Berman, right-wing PR hack, tries “red baiting” proponents of raising minimum wage

By Marc Jampole

Richard Berman is the kind of unethical public relations executive who gives the PR profession a bad name. His métier is to use right-wing money to establish and operate so-called think tanks that spew out spurious and misleading position papers, opinion articles and reports that support his clients’ positions on issues.

His Employment Policies Institute (EPI), for example, works diligently against raising the minimum wage, health care mandates for employers and mandatory sick leave. Berman tries to hide both the fact that his think tanks are propaganda machines and the names of his clients.  This deception often works, as he provides fodder for Fox News, the Wall Street Journal, Rush Limbaugh and other right-wing media.

Berman and EPI hit a new low in a full-page article in the New York Times that takes the form of an open memo to President Obama about the 600 economists that the President cited as favoring raising the minimum wage.  The memo essentially repeats quotes from or about (we’re never sure) eight of the 600 economists that suggest that they are Marxists or anti-American.  The first six are identified as Marxists, where as the seventh makes the mistake of criticizing U.S. foreign policy and the eighth questions the official account of 9/11. A legend at the bottom of the ad says, “Many of the 600 economists you rely on are radical researchers or full-time employees working at union-backed organizations.”

Calling opponents communists, Marxists or socialists is an old trick of the right wing that predates Wisconsin Senator Joseph McCarthy, who provoked the country into a massive witch hunt against so-called communists and fellow travelers in the late 1940s and early 1950s with lies about identifying huge numbers of communists working in government positions. McCarthy’s red baiting resulted in large numbers of teachers, film professionals, lawyers and others losing their jobs because at one time or another they had joined or went to meetings of left-wing organizations.  It took a lawyer for the U.S. Army to jolt the country out of this “red terror” with his comment that McCarthy had lost all sense of shame by accusing the army of harboring communists.

The ad is odiously misleading on many levels. Let’s start with the simple fact that there is nothing wrong with having socialist or Marxist leanings. It doesn’t mean that you are anti-democratic or anti-American. It also doesn’t mean that your economic research or analysis is suspect. Samuel Bowles, Immanuel Wallerstein, Richard Wolff and David Gordon are all well-known 20th-century Marxist economists or economic theorists who have published viable research.

But even if you accept that Marxist economics is not a viable alternative to classical economic theory, the ad still smells like yesterday’s tilapia. For one thing, there’s the conflation of “radical researcher” and “union-backed groups.” Both radicals and unions are thrown into the same grouping. The not-so-hidden message is that there is something radical and inherently bad about labor unions.

Moreover, there is the use of the word “many” to describe the numbers of suspect economists on the list.  Why can’t Berman’s group give us an exact number? They found eight to smear, but that’s 1.33% of the 600. Take them off the list and there are still 592 economists who support raising the minimum wage. The ad is able to stipulate 45% as the exact percentage of those economists not labor specialists who support the minimum wage increase, leading me to believe that if there were many more than eight who had Marxist leanings, the ad would have used that number.

The ad’s implied accusation, of course, is that anyone who is on the left, has ever criticized U.S. policy or works for a union will “cook the books” in their research. All we have here is repellent name-calling, and is often the case, the name-callers are guilty of the crimes they accuse others of committing. Reputable academics have frequently found EPI’s research to be misleading or based on skewed or cherry-picked data.

What’s most interesting about Berman‘s pot pointing out the dirt smudges on the leftists’ kettles is that the people the ad implies are distorting their research all freely and openly admit the names of their organizations or political sympathies. Berman and his clients hide behind several layers of organizations.

This smear ad reflects the desperation felt by the right-wing and corporations. Theyknow that the current minimum wage must increase by 47% for it to have the samepurchasing power as it did in 1968. They know that a good part of the increased profit margins and profits that corporations enjoy compared to 30 and 40 years ago comes from squeezing down the salaries of all workers by suppressing adjustments to the minimum wage for inflation, killing unions and privatizing government jobs. They know that once the minimum wage goes up, they’ll have to give raises to other employees. They like the current arrangement in which a growing part of the income pie goes to owners and executives and a shrinking share goes to employees. They can see that people are fed up with the gutting of the middle class and ready to embrace a higher minimum wage. They understand that a higher minimum wage is probably inevitable.

As demise of Mt. Gox shows, anyone investing in bitcoins is a fool

By Marc Jampole

Money has always been based on faith, even when it was theoretically convertible to gold or another precious metal. Throughout history, governments and economies have sometimes used gold, silver or copper as money, putting their faith in the value of these metals to others. But sometimes they have also used beads or shells or anything that can be counted, stored and transported without deterioration. It would be unwise, for example, to use raspberries as currency, because they spoil so quickly.

A better name for money is “currency,” because the word contains a definition of what money does—allows objects and services to flow without encumbrance between people and organizations. The current of these goods and services—their exchange from person to person—would be much harder if there weren’t some easy thing to count, handle and transfer to serve as a medium of exchange. I can’t negotiate with the supermarket, dry cleaner and bus driver to have them take something I’ve written in return for groceries, cleaning services and in-town transportation. They will take my money, though, and fortunately other companies will pay me the same to write articles, commercials, brochures, blog entries and websites.  Multiply my situation millions upon millions of times and you’ll see how much we as a society depend on having currency. Money is the lowest common denominator of exchange value.

Currency creates value relationships between different items. A loaf of bread may cost three dollars and a ticket to a first-run movie may cost twelve dollars, meaning that theoretically a movie ticket is worth four loaves of bread, except during a famine when four tickets to the movie might not even be tradable for a single slice of bread.  

In using money, we engage in an act of faith—faith that what we accept will have just about the same value when we want to spend it.  Usually governments issue currency and our faith in the currency reflects are faith in the government and the economy it controls. 

Having more than one kind of currency issued by more than one source by definition creates a value relationship between the different currencies, similar to the value relation between all products and services. Any value relationship is subject to change. For example, the euro, which serves as currency for 23 countries, may be worth $1.40 one month and $1.25 another. Political and economic events and decisions can affect the relationship between two currencies, just as it can affect the relationship between specific goods and services.

Without money, it’s impossible to conceive of any kind of complex economy. And yet only our collective faith in any specific type of money will enable us—society—to use it. If we didn’t believe that it would be accepted as exchange value by others, it would have no value to anyone.

Which is why anyone who invested even one dime in bitcoins was and is a fool.

The Bitcoin system is a computer-controlled private network consisting of s series of private enterprises that have agreed to follow the same protocols for “printing,” distributing and setting the value of bitcoins. The bitcoins exist entirely as numbers in accounts; there are no physical versions such as coins and paper bills. You can’t go to a bank and get a few bitcoins. Like all currencies, bitcoin value floats and is determined on the open market. If you bought one bitcoin a year ago, it’s worth more today—that is, unless you were holding it at Mt. Gox, which just went under. In that case, you may have lost everything. If an American bank fails, the money in your account is insured (up to $250,000 per person per bank). No such protection exists for those holding their bitcoins at Mt. Gox.

I fail to see any advantage of using bitcoins over euros, dollars, yuan or other currencies. All of these currencies are subject to failure—except that individual institutions and businesses fail much, much more frequently than governments do.  Dollars are backed by the “full faith and credit” of the U.S. government and euros are backed by the full faith and credit of the EU. What backs bitcoins? The full faith and credit of the Bitcoin system? What’s that?

Other than currency failure, there is another drawback to bitcoins: Organizations and individuals have to agree to accept payment in bitcoins, whereas they all accept the currency of the country in which they do business. Only if and when a significant number of organizations begin recognizing bitcoins as currency will it have a true exchange value. But the rampant speculation that makes bitcoin’s exchange value jerk up and down dramatically serves as an impediment for corporations to accept them as payment. Who wants to accept a bitcoin worth $579 the moment you sell your product knowing it may only be worth $400 in a week? That’s speculation, which, by the way, is a polite way of saying “gambling.” That’s what buying bitcoins has been from the start—nothing but a gamble.

Some may argue that one could use the bitcoin to hedge against a decline in all world currencies.  What they’re really saying is that an artificial currency that exists only as numbers in computers is a better hedge against a regional or worldwide economic disaster than gold or silver—things that are finite (you can’t print more gold) that you can hold, barter and use to make things.

People are attracted to the bitcoin concept because it represents the pie-in-the-sky ultimate in privatization. Instead of using government-issued currency, we’ll use private currency. But the bitcoin adds nothing to make the economy, society or individual asset holders any richer or safer. In fact, the unusual speculation in bitcoins makes it less safe as an investment. It may go up significantly in value, but it’s just as likely to go down.

People like to speculate, especially rich folk who buy paintings, baseball cards and vintage cars hoping they will increase is value. But if you buy a Manet and suddenly the world hates Manets, you still have a pretty picture. With bitcoins all you have is a bunch of numbers on the screen.

I’ll stick to dollars, euros and yuan—with an occasional Swiss franc thrown in for balance.