Saturday, August 29, 2015

Editorial: Anger Babies Roil GOP

Donald Trump has staked out a so-far successful campaign to attract American xenophobes, white supremacists and low-information voters who form an increasingly large base of the Republican Party.

Two weeks after the first Republican debate, despite the controversy over his past sexist comments and his baiting of Fox News host Megyn Kelly, Trump has solidified his frontrunner status, as polls have showed him the choice of 24 to 32 percent of Republican voters, far ahead of the 16 other presidential candidates.

Trump has set much of the tone for the race with his call to deport an estimated 11 million undocumented aliens, as well as an estimated 4.5 million children who were born in the US and thus claim citizenship under the 14th Amendment to the Constitution. Most of his Republican rivals joined in the immigrant bashing.

The real estate mogul and reality show celebrity has picked up support from white supremacists, including David Duke, a former grand wizard of the Ku Klux Klan, who said Trump was “the best of the lot” running on the GOP side.

“Immigration is an existential threat for our people in every way,” Duke said during his radio show on Aug. 18.

“I’ve said from the beginning I think his campaign is good in the sense that it’s bringing these issues to a discussion which we have to have in America,” Duke said, referring to Trump’s high-profile immigration remarks. “And he’s continuing to move the envelope further and I think he understands the real sentiment of America.”

Latinos also appear to understand the sentiment of the Republican Party. They comprise the largest ethnic minority in the US, with 54 million, or 17% of the population. In 2012, Latinos amounted to 9.2% of voters in federal elections and they helped President Obama win re-election despite getting only 39% of the white vote. Mitt Romney got just 27% of the Latino vote.

Republicans need 42 to 47 percent of the Latino vote to win in 2016, the polling firm Latino Decisions says. Latino voters may put the swing in several purple states next year, including Colorado, Florida and Nevada.

Trump insists that Latinos love him, but actual Latinos have a different opinion. A Gallup poll of 2,183 Hispanic adults in all 50 states and D.C. conducted July 8 to Aug. 23 found that Trump was by far the best-known Republican, as 79% of Hispanics were familiar with him, but 65% had an unfavorable opinion. Only 14% were favorable, for a net 51 points unfavorable.

Jeb Bush, the only other Republican recognized by a majority of Hispanics, was known to 57%, with 34% favorable and 23% unfavorable, or a net 11 points favorable — though most of the survey occurred before Bush referred to the children of undocumented immigrants as “anchor babies” on June 19.

Latinos were unimpressed with the two Cuban Americans in the race: Marco Rubio and Ted Cruz were known to 43% of US Hispanics; 24% like Rubio, for a net 5 points favorable, while only 18% like Cruz, for a net 7 points unfavorable.

On the Democratic side, Hillary Clinton was familiar to 76% of Hispanics, and 58% like her, for a net favorability of 40 points. Only 25% knew of Sen. Bernie Sanders of Vermont, and 15% were favorable, for a net favorability of 5 points.

Trump didn’t help his standing among Latinos when Univision news anchor Jorge Ramos was forcibly ejected from his news conference June 25 in Dubuque, Iowa, after Ramos repeatedly tried to question Trump about immigration issues. “Go back to Univision,” Trump yelled at Ramos, as Trump’s bodyguard pushed him out of the hall.

After other reporters asked Trump why he would not take questions from the newsman, Ramos was allowed back in a few minutes later. He asked Trump about his comments about “anchor babies,” his plans to build a 1,954-mile-long wall along the US-Mexico border, and Trump’s assertion that many Mexican immigrants are criminals.

Trump said he plans to deal with immigration problems “in a very humane fashion,” adding, “I have a bigger heart than you do.”

Ironically, while the incident probably will further alienate Latino voters, it could help Trump secure more white supporters in his race for the nomination.

The next morning, Trump told NBC’s Today show that Ramos was “ranting and raving like a madman” and “totally, absolutely out of line.”

Ramos replied on Twitter, “What’s ‘totally out of line’ is to eject a reporter from a press conference for asking questions.” Ramos has two million nightly viewers and 1.48 million Twitter followers. He is often called variations on “Latino Walter Cronkite.”

In an essay written for before his confrontation, Ramos noted that deporting all undocumented immigrants would cost an estimated $137 billion, or $12,500 per immigrant, according to estimates from US Immigration and Customs Enforcement. Building the wall along the border would cost more than $300 billion. And that still wouldn’t stop the 40% of undocumented immigrants who enter the US by airplane and then simply overstay their visas. In 2013, he noted, more undocumented immigrants entered the US from China (147,000) than from Mexico (125,000), according to the Wall Street Journal.

Republican candidates also have opened up a new front for attack: Asian immigrants and the general threat from China. Bush tried to recover from his gaffe of using the term “anchor babies” to refer to children of Latino immigrants by saying on Aug. 24, “What I was talking about was the specific case of fraud being committed where there’s organized efforts and, frankly, it’s more related to Asian people coming into our country.”

Paula Young Lee noted at (Aug. 25), “In one sentence, Jeb not only managed to unify all of Asian-America into a single voting bloc, he made that bloc highly disinclined to be voting Republican in the next election.”

That bloc includes Chinese, Taiwanese, Filipinos, Vietnamese, Koreans, Japanese, Asian Indians, Malaysians, Pakistanis, and so on, under this “Asian” umbrella, Lee noted. “Each country of origin has a distinct language, cuisine, history, and culture, but once these groups become US citizens, they are all ‘Asian-American’ — currently a population of 20.5 million, and one of the fastest growing voting groups in the US.

“And yet a Bush just told the highest income-earning, best-educated minority group in America that Asians of all kinds don’t really belong in this country, including the legal ones.”

Wisconsin Gov. Scott Walker followed up by demanding that President Obama cancel his meetings with Chinese President Xi Jinping after the Chinese stock market plunge apparently initiated a correction in Western stock markets, including New York’s.

Despite his own business ties with China, Trump returned to bashing the communist-capitalist hybrid, which has been a feature of his xenophobia. “I’ve been telling everybody for a long time,” he said, “China’s taking our jobs; they’re taking our money. Be careful — they’ll bring us down. You have to known what you’re doing — we have nobody that has a clue.”

The crazies in the GOP race for president have gone a long way toward ruining the Republican brand. This isn’t Dwight Eisenhower’s Republican Party. It isn’t even Ronald Reagan’s Republican Party. This is the John Birch Society’s Republican Party, sponsored by Charles and David Koch.

We’d like to think that the Trump-inspired madness will make it easier for Democrats to retain the White House and perhaps regain control of Congress next year. But ever since George W. Bush was re-elected in 2004 we have found it hard to trust in the good sense of the American electorate (or the integrity of the vote counters) to carry the day. The only good thing about Donald Trump is we don’t think the Republican power brokers, or the Koch Brothers, trust him either.

Organize for Bernie Sanders or Hillary Clinton, or whoever you prefer on the left, but don’t make the fatal error of thinking that the 2016 election won’t matter. Don’t leave the election up to the anger babies. — JMC
From The Progressive Populist, September 15, 2015

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Selections from the September 15, 2015 issue

COVER/Michael Klare
Big Oil takes a spill 

Anger babies roil GOP


Drug testing signals a meaner conservatism

RURAL ROUTES/Margot McMillen
Why local crops matter

Trump gets support from white supremacists;
Trump, Sanders lead in N.H. polls;
Hillary still leads potential GOP rivals;
Questions about Trump’s deals, mob ties and corporate welfarfe;
Market plunge exposes dangers of privatizing Social Security;
Some utilities want surcharge for solar generators ...

What do Republican candidates stand for?

The anti-choice disinformation war

Scapegoating immigrants isn’t the answer

Do the rich rule America?

What is Trump distracting attention from?

HEALTH CARE/Joan Retsinas
Chicken littles: relax

Unbalanced amendment

Europe’s bully and Europe’s victim

Democracy’s dark side

Austerity, ‘hire and fire’ policies activate workers

US needs more than Bush-Clinton matchup

Native American lives matter too

California voters will judge pension ‘reform’

Don't sneer at Trump's chances

and more ...

Tuesday, August 25, 2015

Mainstream media goes to repudiated conservative expert for analysis of China’s problems

By Marc Jampole

“Of all the gin joints in all the towns in all the world, she walks into mine,” is what Humphrey Bogart’s character says when his long-lost love, played by Ingrid Bergman, walks into a bar in “Casablanca.”

I have a variation for Andrew Ross Sorkin, who writes the “Dealbook” column for the New York Times. “Of all the economists in all the universities in the world with all the theories predicting China’s decline, Sorkin writes a full-length feature article on one whose theory has been discounted because he and his associates couldn’t count.”

I’m referring to Sorkin giving Professor Kenneth Rogoff of Harvard a platform for applying his repudiated theory of debt to China’s current problems in a Times article titled “A Warning on China Seems Prescient.”

It turns out that Rogoff has predicted that China’s economic difficulties would affect the world economy for a number of years now. His reason—too much debt.

Sorkin spends a lot of time building up Rogoff’s credentials, mentioning that he is a chess grandmaster and calling This Time It’s Different, the 2008 tome of economic history he wrote with Carmen Reinhart, a “seminal book.” A few years back, when government debt trumped all other macroeconomic concerns in the news media, This Time Is Different caught the attention of the news media because it concluded that countries with public debt greater than 90 percent of gross domestic product suffered measurably slower economic growth. Politicians and journalists throughout the world used this “new discovery” to bolster assertions that governments everywhere had to reduce debt instead of pumping money into the economy to create jobs. The problem was that Reinhart and Rogoff miscalculated in a number of places and even made counting errors. With their bad math corrected, no real correlation was found between levels of debt and economic growth.

In other words, within a few years of publishing their study, Rogoff and Reinhart’s theory was disproven.

Sorkin, who is supposed to be a specialist in these matters and therefore familiar with the literature, explicates Rogoff and Reinhart’s theory but makes no mention of its repudiation. I can’t imagine the learned and honored Sorkin not having read that their bad math led to a false conclusion.

We can only assume that Sorkin wanted to use Rogoff as his expert because he wanted to float the theory that too much debt is causing China’s economic problem.
Apart from the fact that use of a bad expert calls into questions Sorkin’s credibility, the idea that debt is to blame for the Chinese stock market crash and economic slowdown is absolutely ridiculous, for reasons of fact and common sense.

First the fact: because of the lack of transparency in the Chinese economy, no one really knows how much debt the Chinese government and its citizens really hold as a percentage of gross domestic product (GDP). You can’t say “too much” if you don’t know “how much.”

Now the common sense: For years, China’s economy has grown at an enormous rate that was bound to eventually falter. Its lowest annual growth rate since 1989 has been 3.4%, its highest 14.2%, with most years more than 7%. That’s a phenomenal growth rate. For example, since 1800, the growth rate in Great Britain has averaged less than two percent. As measured by GDP, the U.S. averaged growth of 3.24% between 1947 and 2015. Before about 1800, the average economic growth rate throughout the world was less than 1%. For a country to essentially sustain a 7% growth rate for more than 25 years is exceedingly rare.

China may or may not have too much debt. The Chinese leaders may or may not be mismanaging the short-term crisis, as some have said. There may or may not be a real estate bubble in China. Maybe all or some of these factors exacerbate what’s happening in China now. But one thing is certain: China could not sustain its rapid growth forever and whenever that growth slowed down, it was going to be a bumpy ride for China and any country that does business with it (meaning every country!).

With Rogoff’s help, Sorkin looks past the obvious and blames too much debt—the excuse that conservatives always like to give for economic problems. For those new to the “three-card monte” that the ruling elite and mainstream media constantly pull on the public, let me explain that “too much debt” always begins a conversation or thought process that ends with decisions not to pump government money into the economy, but instead to pay off debt without raising taxes; in other words, to starve the government.  If Sammy Kahn were an economist, instead of “Love and marriage go together like a horse and carriage,” he would have written, “Too much debt and austerity go together like a golf ball and a tee.” Politicians tee up “too much debt” theories and hit the austerity ball hundreds of feet.

Unfortunately, the austerity ball always ends up in the sand trap. As we have seen everywhere in the world since the 2008 economic crisis, countries that follow austerity programs run into greater problems, and countries whose governments spread money around recover quickly with less permanent damage to their economies. 

Monday, August 24, 2015

Those in looking-glass world of investments think making financial advisors responsible to client harms public

By Marc Jampole

There’s a scary series of ads on broadcast and cable television lately that warn us that the federal government is about to make it more expensive to get financial planning, make it impossible for people to use the trusted financial planner who has helped them reach their financial goals for years, and may even leave people with phone robots as their only source of investment advice.

The two ads I saw focus on two distinct demographic groups: One ad describes a conversation a couple have in the car ride home after dropping a child off at college. It seems as if the only thing threatening their financial future is a nebulous action the government is about to take. The other spot is a pained soliloquy of a minority small business owner—in the construction industry—who is worried what the impact of this unexplained government action will be on his ability to provide his employees with 401K plans. The call to action in each spot is to contact Congress and ask it to “fix this now.” Of course the ads never define what “this” is, instead focusing on what the speakers predict are the dire consequences of “this.”

The ads do a good job of raising anxiety and anger levels—anxiety about your financial future and anger at the government for making ominous if undescribed changes to the law.

Both spots drive viewers to, which describes the “this”: “new retirement regulations from the Department of Labor.” Throughout the website, we learn about the consequences of the new retirement regulations, but we never learn what the regulations are or do.

That’s because, counter to what the campaign may say, the new Labor Department retirement rules do not raise fees, mandate robo-advisors, nor of necessity make it harder to have a financial advisor or offer a retirement plan to employees.

What the new regulations, which have not yet been finalized, will do is make anyone providing financial advice for a retirement account to become a “fiduciary” of the client. Fiduciary is an odd- and corporate-sounding word about which thousands of books and article have been written. But the basic meaning of fiduciary is quite simple: A fiduciary must act in the best financial of the client.

That’s right. Under current law, registered financial advisors and others giving investment advice do not necessarily have to act in the best interest of their clients. They are free to recommend buying a stock to accommodate a larger client who wants to sell or to unload a large purchase their brokerage house just made. They are free to recommend mutual fund A over mutual fund B, if A gives the advisor a bigger commission and B is better for the client. They are free to sell fee-based accounts to clients who hardly trade and would save money if they switched to a commission-based account. As a fiduciary of the client, all these common actions would expose the investment advisor to a lawsuit.

The new rules would require advisors offering individualized recommendations to sign a contract detailing their fiduciary responsibilities. The advisor would also have to provide extensive information about fees and expenses and follow specific procedures to minimize conflicts of interest. Under the new regulations, individuals and businesses will have new rights to sue advisors for breach of fiduciary responsibility.

Who in the world could be opposed to making financial advisors fiduciaries, and therefore responsible for acting in the best interests of the client? How could acting in the clients’ best interests hurt the public? 

The twisted, almost pathological reasoning of those opposed to the new regulations is that the cost of financial advice will rise, pricing many Americans out of the market for financial planners.

Let’s consider the ways in which the new regulations might lead to higher prices: Investment companies might get sued more often for not putting the client’s interest first, which would raise insurance costs. Or many advisors—the less competent ones to be sure—may get out of the business, unable to make a good living anymore because they won’t be able to steer their clients into more expensive options for the same basic investment; with fewer advisors out there, the cost of advice could go up. On the other hand, service will improve as advisors become both more competent and less conflicted, which should lead to fewer lawsuits and better returns in the long run. I’m thinking a good analogy is seatbelts: the industry said they would make the cost of new cars prohibitive, but they added very little cost while making automobiles much, much safer. No one was priced out of the market.

Some opponents also say that disclosure and record-keeping under the new regulations might be so extensive that it would make it too expensive to give advice to investors who aren’t wealthy. LOL! It will only take a few months for the industry to develop software that automates disclosure, just as it has automated financial planning for virtually everyone not a millionaire.  That’s the “robo-advisors” the ads warn you about, except the ads don’t tell you that many current financial advisors do nothing more than follow the recommendations of the software already. I don’t think the new regulations will dissuade the investment industry from continuing the “live robo” strategy of having human financial planners present the results of a software analysis.

I’m sure few readers are wondering who is financing this war against making investment advisors responsible for acting in their client’s best interest. We all know it’s the insurance and investment industry. The website, TV commercials and other campaign elements are financed by Americans to Protect Family Security, which describes itself as “a partnership of America’s financial advisors, life insurance agents, and life insurance companies that is dedicated to educating policymakers about the role our products play in the financial lives of 75 million American families.”

The financial industry has every right to fight regulations that will make it harder to make money, even if their position hurts the very clients they are supposed to serve. We see organizations advocating selfish positions all the time—automobile manufacturers arguing against higher fuel standards; coal companies and heavy manufacturers arguing against environmental regulations; Republican politicians arguing in favor of laws that restrict the right to vote.

What’s particularly horrifying is when the organizations lie or mislead. Talking about the hypothetical impact of a new regulation without telling us what the regulation does is as misleading as quoting weather personalities who don’t believe in global warming or creating nonexistent problems such as voter fraud. For the investment industry, this duplicitous approach is likely to backfire. The organization is acting deviously to oppose a new regulation that makes it harder for the industry it represents to act deviously. It seems as if all the Americans to Protect Family Security campaign is doing is showing just how necessary the regulations it opposes are.