Posts
Who is the enemy in Afghanistan?
Matthew Hoh fought in Iraq in 2004- 2005 and again in 2006 - 2007 both as a commissioned officer in the Marine Corps and as a civilian employee of the US government. He is a hero and a patriot. During the last six months he worked in Afghanistan as a foreign service officer. When he resigned his job last week, he stated that the war in Afghanistan, in his view, served no purpose. Human lives, by no means only American, and huge amounts of money were being wasted on a misguided undertaking.
From where we are in the US, it is difficult to say whether Hoh's doubts about the Afghan war are correct. But the questions he raises are critical. Whatever President Obama and his advisors decide about that war, Hoh's questions must be answered if our government chooses to continue that war in any form.
We attacked Afghanistan in 2001 because Obama Bin Laden, the mastermind behind the 9/11 attacks, was said to be hiding out in Afghanistan. The Taliban, then in power in Afghanistan, refused to surrender him to us. US and NATO troops destroyed their government. While no one knows where bin Laden is, the most common opinion is that he is now living in Pakistan. Fighting in Afghanistan will not bring us any closer to capturing him.
Hoh insists that, moreover, Al Quaeda has training camps in Sudan, in Yemen, in the former Yugoslavia, and in Europe. The 9/11 attack was hatched in Hamburg, Germany. The war in Afghanistan will only marginally weaken Al Quaeda. Afghanistan plays a minor role in the continued existence of Al Quaeda.
Who is the enemy in Afghanistan? It is often said to be the Taliban--religious fanatics whose political outlook is the opposite of ours: they despise democracy and seek to establish a theocratic state. (They regard the separation of Church and State, practiced by us, as evil). They do not believe in equality for women, or in individual liberty (the freedom to run one's life as one chooses--as long as others are not harmed by one's choices). Our ways are abhorrent to the Taliban; their ways are anathema to us.
But says Hoh, is that a reason for continuing that war? Surely an excellent question.
What is more, Hoh thinks, the insurgency we are fighting is not primarily led by the Taliban, by the Islamist movement that wants to establish a theocratic state in Afghanistan. The energy for the bloody fighting against US and NATO troops comes from sheer nationalism. When George Washington and the American Patriots fought the British, they fought a nationalist war. Their goal was to have Americans govern themselves and to force the British out of any positions of power in the colonies. The enemy in Afghanistan, according to Hoh, are similar nationalist movements. But they differ from the Patriots in the US in that they are not defending the independence of the entire country, but often of a small area, one particular valley, the home of a particular tribe.
Afghanistan, in the opinion of Hoh and of many other observers, is not one country, but a collection of very local populations focused on their locality, their own language and traditions. All of this is held together by a corrupt and ineffective government in the largest city Kabul. But Afghanis think of themselves not as citizens of the country, Afghanistan, but as citizens of the specific place where they were born that their families inhabit, and where they have been for generations. No common language, tradition, and family connections link all Afghanis to each other. Their identity is connected to their locality, not to the country as a whole.
These very local groups want to be left alone to run their collective lives as they have for a long time. The longer US troops remain in the area, the more we will inflame this nationalist resistance. The Russian invasion faltered for the same reasons--all the tanks and guns of a superior army were powerless in the face of the local loyalties of Afghan tribesmen.
These local Afghan tribes are no threat to the safety of the US. They want to be left alone. If we do that, that will be the end of their interest in us.
Does Hoh assess the Afghani situation correctly? Has he understood some fundamental truths about Afghanistan? Most likely there will be sharp differences of opinion among people who know Afghanistan at first hand. These questions have no answers that all the experts accept.
But Hoh does raise the key question in Afghanistan: who is the enemy? It seems extremely plausible that in Afghanistan Al Quaeda is not the enemy. Are the Taliban the enemy? Why are we fighting them in 2009? Are the enemies very local tribesmen defending their desire to be left alone? Who is the enemy?
President Obama and his advisors must give us a clear and persuasive answer to the question of who the enemy is. Once the enemy is identified, we must be told why that enemy is worth fighting. Unless there are answers to those two questions, we should should tell all Americans in Afghanistan--military and civilian--to get on the next plane home.
It is pointless to fight a war if you do not know whom you are fighting.
Saturday, November 7, 2009
Sunday, November 1, 2009
Public Option anyone?
In the debate about the health reform in the works in Congress, the “public option” is frequently mentioned as a particularly controversial item in the health reform plan. What is it?
The public option refers to government health insurance to be offered to some small businesses and private citizens who cannot afford to buy health insurance from commercial insurance companies.
The simplest form of insurance is money prudent persons put aside, if they can, to cover unexpected bills. No one spends their weekly earnings to the last cent--if they can possibly help it--because next week they might need a new pair of shoes or, with the coming of winter, a new hat or overcoat.
Another humble form of insurance takes the form of saving for large expenses that you cannot pay for out of current income--your kids' college education, a down payment on a house, your retirement. But if the anticipated expenses are too large for anyone person or family to cover, people get together and pool their resources. Different members of the group withdraw significant amounts and then pay them back while others draw on the same fund.
The cooperative bank is the most obvious example of that where we all put in money that we don't spend immediately. If one of us has a big expense, she borrows from all of us. While she is paying back her loan, all of continue to pay in and then someone else borrows money to cover a large expense.
In the early 20th century, immigrant communities in the US had such cooperative savings schemes. Everyone paid a few pennies a week into a burial society that would take care of funeral expenses when members died. Similarly people can pool their resources to be ready to rebuild a member's house in case of fire, or flood, wind damage and other perils.
These cooperative schemes are different from commercial insurance. Here the goal is not protection against expensive misfortunes--death, fire, illness, violent weather damage--bu profit. The commercial health insurance company is organized to make as much money as possible. The well-being of its subscribers is definitely a secondary interest. In order to make money as an insurance company you need to reduce risk as far as possible and reduce pay-outs. You want to take in as much as you can and pay out as little as possible. From the point of view of the consumer, commercial health insurance is a rational choice only if there is no better alternative.
As a first strategy for enriching themselves maximally, the commercial insurance companies do not insure persons with “pre-existing conditions.” Here is an example of that. A woman has a drink with a stranger in a bar “The next thing she knew, she said, she was lying on a roadside with cuts and bruises that indicated she had been raped. She never developed an HIV infection. But months later, when she lost her health insurance and sought new coverage, she ran into a problem. The insurance companies examined her health records. Even after she explained the assault, the insurers would not sell her a policy because the HIV medication raised too many health questions.” After she took some anti-HIV drugs, just to be safe, after she had been raped, the insurance company now feared that she might be HIV positive and that was enough to deny her health insurance. The Huffington Post that reported this case also had accounts of other rape victims being denied health insurance on the grounds that they might be suffering from PTSD and need help for that. Since that might cost money, the insurance company refused to insure rape victims. Paul Krugman, the Princeton economics professor and New York Times columnist observed that "The most successful companies are those that do the best job of denying coverage to those who need it most."
The commercial insurance company has a second strategy for making huge profits: not paying out when insured persons put in a claim. An example is the couple who, in middle age, lost their health insurance when the companies they work for went broke. They were forced to sell their house, but still could not get insurance because the husband had a mild heart condition; the wife had a gynecological problem that disappeared after menopause. One kind-hearted insurance agent explained to them that even if they did manage to buy insurance, their insurance companies would try hard not pay any claims on the grounds that their illness was the result of “pre-existing conditions.”
Here is where the public option comes in. The government is not going to enter the health insurance field in order to make money. It will be a scheme like the immigrants burial society or a co-op bank. People pay their premiums; they get their health care paid when they need it. No one is aiming to profit from the sickness of the subscribers as does the commercial insurer. Since profit is not the goal, the government insurance is going to be cheaper than the private insurance.
A few weeks after the government bailed out the AIG insurance company, AIG spent $400,000 at a fancy resort for a retreat for its executives. $20,000.00 was reputedly spent on manicures for the execs alones. When you pay private insurance, you pay for that--and, more importantly, for the big paychecks of the top managers and the income of the investors. In public, that is non-profit, insurance you do not need to pay for all that. So you pay less.
The private insurance will be cheaper. It will serve to keep commercial companies a little bit honest.
You can see why those commercial insurers putting up such a big fight against the public option. They don't like competition from a non-profit insurance company. They don't want to be kept a little bit honest. They want to be sure that they can get their retreats complete with manicures (and, of course, their profits).
In the debate about the health reform in the works in Congress, the “public option” is frequently mentioned as a particularly controversial item in the health reform plan. What is it?
The public option refers to government health insurance to be offered to some small businesses and private citizens who cannot afford to buy health insurance from commercial insurance companies.
The simplest form of insurance is money prudent persons put aside, if they can, to cover unexpected bills. No one spends their weekly earnings to the last cent--if they can possibly help it--because next week they might need a new pair of shoes or, with the coming of winter, a new hat or overcoat.
Another humble form of insurance takes the form of saving for large expenses that you cannot pay for out of current income--your kids' college education, a down payment on a house, your retirement. But if the anticipated expenses are too large for anyone person or family to cover, people get together and pool their resources. Different members of the group withdraw significant amounts and then pay them back while others draw on the same fund.
The cooperative bank is the most obvious example of that where we all put in money that we don't spend immediately. If one of us has a big expense, she borrows from all of us. While she is paying back her loan, all of continue to pay in and then someone else borrows money to cover a large expense.
In the early 20th century, immigrant communities in the US had such cooperative savings schemes. Everyone paid a few pennies a week into a burial society that would take care of funeral expenses when members died. Similarly people can pool their resources to be ready to rebuild a member's house in case of fire, or flood, wind damage and other perils.
These cooperative schemes are different from commercial insurance. Here the goal is not protection against expensive misfortunes--death, fire, illness, violent weather damage--bu profit. The commercial health insurance company is organized to make as much money as possible. The well-being of its subscribers is definitely a secondary interest. In order to make money as an insurance company you need to reduce risk as far as possible and reduce pay-outs. You want to take in as much as you can and pay out as little as possible. From the point of view of the consumer, commercial health insurance is a rational choice only if there is no better alternative.
As a first strategy for enriching themselves maximally, the commercial insurance companies do not insure persons with “pre-existing conditions.” Here is an example of that. A woman has a drink with a stranger in a bar “The next thing she knew, she said, she was lying on a roadside with cuts and bruises that indicated she had been raped. She never developed an HIV infection. But months later, when she lost her health insurance and sought new coverage, she ran into a problem. The insurance companies examined her health records. Even after she explained the assault, the insurers would not sell her a policy because the HIV medication raised too many health questions.” After she took some anti-HIV drugs, just to be safe, after she had been raped, the insurance company now feared that she might be HIV positive and that was enough to deny her health insurance. The Huffington Post that reported this case also had accounts of other rape victims being denied health insurance on the grounds that they might be suffering from PTSD and need help for that. Since that might cost money, the insurance company refused to insure rape victims. Paul Krugman, the Princeton economics professor and New York Times columnist observed that "The most successful companies are those that do the best job of denying coverage to those who need it most."
The commercial insurance company has a second strategy for making huge profits: not paying out when insured persons put in a claim. An example is the couple who, in middle age, lost their health insurance when the companies they work for went broke. They were forced to sell their house, but still could not get insurance because the husband had a mild heart condition; the wife had a gynecological problem that disappeared after menopause. One kind-hearted insurance agent explained to them that even if they did manage to buy insurance, their insurance companies would try hard not pay any claims on the grounds that their illness was the result of “pre-existing conditions.”
Here is where the public option comes in. The government is not going to enter the health insurance field in order to make money. It will be a scheme like the immigrants burial society or a co-op bank. People pay their premiums; they get their health care paid when they need it. No one is aiming to profit from the sickness of the subscribers as does the commercial insurer. Since profit is not the goal, the government insurance is going to be cheaper than the private insurance.
A few weeks after the government bailed out the AIG insurance company, AIG spent $400,000 at a fancy resort for a retreat for its executives. $20,000.00 was reputedly spent on manicures for the execs alones. When you pay private insurance, you pay for that--and, more importantly, for the big paychecks of the top managers and the income of the investors. In public, that is non-profit, insurance you do not need to pay for all that. So you pay less.
The private insurance will be cheaper. It will serve to keep commercial companies a little bit honest.
You can see why those commercial insurers putting up such a big fight against the public option. They don't like competition from a non-profit insurance company. They don't want to be kept a little bit honest. They want to be sure that they can get their retreats complete with manicures (and, of course, their profits).
Saturday, October 24, 2009
You need to think about capitalism if you want to change the world.
Riane Eisler has written a number of books about personal and social change. The most recent one, published in 2003 is called The Power of Partnership:Seven Relationships that will change your Life. The book is interesting; it makes many important points, chief among them that the world is often run on a domination model and that we want to replace that by a partnership model. Well said, but how do we go about that?
People have thought about that question for centuries and many people all over the world and in the US have tried to do just that. Examples are the coops founded by farmers, or the collectively run workplaces that exist all over the US. Examples are the intentional communities of Amana, Oneida, of the Shakers and many others. These communities were founded as intentional alternatives to the capitalist market place and the dog-eat-dog capitalism often encourages.
But Eisler will have no truck with any of those earlier advocates of cooperation. In a recent article in Tikkun that gives a brief summary of her ideas she writes that we should not talk about capitalism--because that is “yet another old way of thinking.” Considering capitalism is “useless for understanding what a more equitable, sustainable and caring system would look like.”
Is that true?
Eisler makes some really important observations in her critique of economics. As it is practiced now, economics focuses on prices and commodities – things you could sell or buy, that have monetary value. As a consequence family caretakers-- primarily women –do work that is thought to have no economic value in our society. They are said to be “economically inactive.” Even worse is the fact that many destructive activities, for instance, producing tobacco products or cluster bombs, since they involve commodities bought and sold, count as positive values in the gross national product of a society even though their effects are an entirely destructive.
All of this is terribly important and needs repeating. So is her insistence that we move from dominative ways of organizing society to cooperative ones. Many people agree on that: cooperation needs to replace domination. The question of how to move our societies from domination to cooperative structures has long been debated and tried out in different communities. The sad fact is that we have not yet managed it. But Eisler is undaunted. She tells us that we must not pay attention to centuries of thinking about these changes. Forget the Diggers and Levelers in 17th century England, forget Marx and Engels, forget the socialist kibbutzniks or the flower children of the late sixties,and many, many others. Theirs are “old ways of thinking that we must . . . transcend.”
What we must do instead is explained in Eisler's 2003 book The Power of Partnership. We must prevail upon existing enterprises to treat their employees as human beings instead of as interchangeable factors of production. (67) Eisler has many stories of corporations that have done that and have not only, thereby, done the right thing, but also made a lot of money. Doing well by your fellow men and woman and doing well by your bottom line are in Eisler's new economics perfectly compatible.
But things are not quite so simple. One of the companies mentioned in her book, Hyatt Hotels, is cited for treating its employees better than many other companies and being rewarded by employee loyalty. A few weeks ago three Hyatt hotels in Boston laid off about 100 housekeepers – mostly women who make beds, clean floors and toilets –some of whom had been with the company for 20 years or more. These housekeepers had a pension plan and health insurance and made $15 an hour – about $30,000 a year. Hyatt replaced them with housekeepers working for eight dollars an hour without any benefits.
How could Hyatt Hotels, committed to treating their employees humanely do such a thing? When they were criticized for their action, Hyatt Hotels justified themselves as follows: In the present economic crisis, the hospitality business is suffering and so is the hotel chain's bottom line. Hence the firings of long term employees, replacing them with others paid half the wages of the fired workers. As long as we live in a capitalist economy that is a perfectly good justification. Companies like Hyatt are responsible to their stockholders who want their stocks to go up and their dividends to come in regularly. The managers of Hyatt hotels are not the owners; their job is to increase stock value and if that requires cutting their wage bill by firing established housekeepers that is what they will do even if, personally, they really hate doing it.
There is an important lesson in the story: a capitalist economy encourages the spread of domination. Capitalist managers must do whatever it takes to make ever more money, even if that means expanding domination and restricting cooperation. If that is what you oppose, as Eisler does, then you cannot just ignore capitalism as “another old way of thinking.” Replacing domination with cooperation is not merely a matter of trying as hard as you can to be a good person, to change, and to encourage others to do likewise. In our world capitalism promotes domination; it encourages laying off workers, cutting wages, foreclosing on mortgages, denying health care to the sick and to the poor. Capitalism is a serious component of the problem of domination. Yes, capitalism also promotes cooperation—as long as it makes you money. When it is no longer “cost-effective” as the Hyatt case shows so vividly, cooperation goes out the window.
The project of replacing domination by cooperation is a very ancient one. Human beings have tried it in many different ways and found it extraordinarily difficult. It has not become any easier. We must not misrepresent the difficulties of this task. To overlook centuries of thinking about capitalism – about the private ownership of productive resources – and to make the whole project of one of goodwill and personal change does a disservice to all of us. Well meaning reformers, if they believe Eisler, will try to change themselves and others only to find that good will does not take you very far in times of economic crisis. Why do we have almost 10% unemployment--while CEO's get excessive bonuses and salaries-- or a still rising rate of foreclosures? Eisler's followers will, most likely, be discouraged when they encounter capitalism at its most predatory, blame “human nature” and give up trying to change society. Eisler's oversimplification will in the end only produce frustration, cynicism, and political passivity.
Her advice to ignore ideas of past generations, also dishonors many, many generations of persons of good will who have struggled against domination and for cooperation, sometimes sacrificing their lives. It completely overlooks the most striking contemporary efforts to replace domination by cooperation--the Mondragon cooperatives in the Basque country of Spain, or the large and complex cooperatives in of Emilia Romagna in Northern Italy. Mondragon has been providing jobs and decent income to the employees of 150 associated co-ops for 70 years. The Italian co-ops are equally large and well established. These and myriad other cooperatives, here and abroad, function well because they are self-consciously opposed to domination, in the form of capitalism.
Reducing domination and fostering cooperation is very, very difficult. If you are unwilling to think about capitalism, it is impossible.
Riane Eisler has written a number of books about personal and social change. The most recent one, published in 2003 is called The Power of Partnership:Seven Relationships that will change your Life. The book is interesting; it makes many important points, chief among them that the world is often run on a domination model and that we want to replace that by a partnership model. Well said, but how do we go about that?
People have thought about that question for centuries and many people all over the world and in the US have tried to do just that. Examples are the coops founded by farmers, or the collectively run workplaces that exist all over the US. Examples are the intentional communities of Amana, Oneida, of the Shakers and many others. These communities were founded as intentional alternatives to the capitalist market place and the dog-eat-dog capitalism often encourages.
But Eisler will have no truck with any of those earlier advocates of cooperation. In a recent article in Tikkun that gives a brief summary of her ideas she writes that we should not talk about capitalism--because that is “yet another old way of thinking.” Considering capitalism is “useless for understanding what a more equitable, sustainable and caring system would look like.”
Is that true?
Eisler makes some really important observations in her critique of economics. As it is practiced now, economics focuses on prices and commodities – things you could sell or buy, that have monetary value. As a consequence family caretakers-- primarily women –do work that is thought to have no economic value in our society. They are said to be “economically inactive.” Even worse is the fact that many destructive activities, for instance, producing tobacco products or cluster bombs, since they involve commodities bought and sold, count as positive values in the gross national product of a society even though their effects are an entirely destructive.
All of this is terribly important and needs repeating. So is her insistence that we move from dominative ways of organizing society to cooperative ones. Many people agree on that: cooperation needs to replace domination. The question of how to move our societies from domination to cooperative structures has long been debated and tried out in different communities. The sad fact is that we have not yet managed it. But Eisler is undaunted. She tells us that we must not pay attention to centuries of thinking about these changes. Forget the Diggers and Levelers in 17th century England, forget Marx and Engels, forget the socialist kibbutzniks or the flower children of the late sixties,and many, many others. Theirs are “old ways of thinking that we must . . . transcend.”
What we must do instead is explained in Eisler's 2003 book The Power of Partnership. We must prevail upon existing enterprises to treat their employees as human beings instead of as interchangeable factors of production. (67) Eisler has many stories of corporations that have done that and have not only, thereby, done the right thing, but also made a lot of money. Doing well by your fellow men and woman and doing well by your bottom line are in Eisler's new economics perfectly compatible.
But things are not quite so simple. One of the companies mentioned in her book, Hyatt Hotels, is cited for treating its employees better than many other companies and being rewarded by employee loyalty. A few weeks ago three Hyatt hotels in Boston laid off about 100 housekeepers – mostly women who make beds, clean floors and toilets –some of whom had been with the company for 20 years or more. These housekeepers had a pension plan and health insurance and made $15 an hour – about $30,000 a year. Hyatt replaced them with housekeepers working for eight dollars an hour without any benefits.
How could Hyatt Hotels, committed to treating their employees humanely do such a thing? When they were criticized for their action, Hyatt Hotels justified themselves as follows: In the present economic crisis, the hospitality business is suffering and so is the hotel chain's bottom line. Hence the firings of long term employees, replacing them with others paid half the wages of the fired workers. As long as we live in a capitalist economy that is a perfectly good justification. Companies like Hyatt are responsible to their stockholders who want their stocks to go up and their dividends to come in regularly. The managers of Hyatt hotels are not the owners; their job is to increase stock value and if that requires cutting their wage bill by firing established housekeepers that is what they will do even if, personally, they really hate doing it.
There is an important lesson in the story: a capitalist economy encourages the spread of domination. Capitalist managers must do whatever it takes to make ever more money, even if that means expanding domination and restricting cooperation. If that is what you oppose, as Eisler does, then you cannot just ignore capitalism as “another old way of thinking.” Replacing domination with cooperation is not merely a matter of trying as hard as you can to be a good person, to change, and to encourage others to do likewise. In our world capitalism promotes domination; it encourages laying off workers, cutting wages, foreclosing on mortgages, denying health care to the sick and to the poor. Capitalism is a serious component of the problem of domination. Yes, capitalism also promotes cooperation—as long as it makes you money. When it is no longer “cost-effective” as the Hyatt case shows so vividly, cooperation goes out the window.
The project of replacing domination by cooperation is a very ancient one. Human beings have tried it in many different ways and found it extraordinarily difficult. It has not become any easier. We must not misrepresent the difficulties of this task. To overlook centuries of thinking about capitalism – about the private ownership of productive resources – and to make the whole project of one of goodwill and personal change does a disservice to all of us. Well meaning reformers, if they believe Eisler, will try to change themselves and others only to find that good will does not take you very far in times of economic crisis. Why do we have almost 10% unemployment--while CEO's get excessive bonuses and salaries-- or a still rising rate of foreclosures? Eisler's followers will, most likely, be discouraged when they encounter capitalism at its most predatory, blame “human nature” and give up trying to change society. Eisler's oversimplification will in the end only produce frustration, cynicism, and political passivity.
Her advice to ignore ideas of past generations, also dishonors many, many generations of persons of good will who have struggled against domination and for cooperation, sometimes sacrificing their lives. It completely overlooks the most striking contemporary efforts to replace domination by cooperation--the Mondragon cooperatives in the Basque country of Spain, or the large and complex cooperatives in of Emilia Romagna in Northern Italy. Mondragon has been providing jobs and decent income to the employees of 150 associated co-ops for 70 years. The Italian co-ops are equally large and well established. These and myriad other cooperatives, here and abroad, function well because they are self-consciously opposed to domination, in the form of capitalism.
Reducing domination and fostering cooperation is very, very difficult. If you are unwilling to think about capitalism, it is impossible.
Saturday, October 17, 2009
Paying big business to send jobs off-shore.
Would you believe it? The US government, the government you and I elect, has had a tax policy for 50 years or more that encourages companies to send jobs off-shore. President John F. Kennedy spoke out against it in 1961. But nothing happened.
A company--GE and IBM are examples--may build a plant in Asia and produce products previously produced at home. American workers lose their jobs.
One reason for doing that is, obviously, that wages are higher in the US than anywhere else in Asia. But there are other benefits. The profit IBM makes from its foreign subsidiary are tax free as long as the money remains outside the US. If IBM has a profitable operation in Taiwan or in Thailand, they only pay taxes on those profits if they send them home. If they use them to invest in Taiwan or Thailand or anywhere else outside the US, they pay no taxes to Uncle Sam. Not only is there a tax incentive for producing goods abroad and thus shipping jobs out of the country, but there is also a tax incentive for re-investing their profits abroad and not here at home where it would create more jobs.
USA Today reports that “From 2000 through 2005, U.S. multinationals eliminated 2.1 million jobs at home while adding 784,000 to their payrolls abroad, according to the Bureau of Economic Analysis. At the end of 2005, the most recent statistics available, U.S. corporations employed almost 9 million people outside the United States.”
During the campaign and during the early weeks of his administration, Pres. Obama promised to reform the tax code. Multinational corporations, the US Chamber of Commerce and other have been lobbying furiously against this change in the tax code. So nothing may come of it.
The government--your and my government--will continue to reward large American corporations for job creation elsewhere while taking work from American workers and bread out of the mouths of their families.
Would you believe it? The US government, the government you and I elect, has had a tax policy for 50 years or more that encourages companies to send jobs off-shore. President John F. Kennedy spoke out against it in 1961. But nothing happened.
A company--GE and IBM are examples--may build a plant in Asia and produce products previously produced at home. American workers lose their jobs.
One reason for doing that is, obviously, that wages are higher in the US than anywhere else in Asia. But there are other benefits. The profit IBM makes from its foreign subsidiary are tax free as long as the money remains outside the US. If IBM has a profitable operation in Taiwan or in Thailand, they only pay taxes on those profits if they send them home. If they use them to invest in Taiwan or Thailand or anywhere else outside the US, they pay no taxes to Uncle Sam. Not only is there a tax incentive for producing goods abroad and thus shipping jobs out of the country, but there is also a tax incentive for re-investing their profits abroad and not here at home where it would create more jobs.
USA Today reports that “From 2000 through 2005, U.S. multinationals eliminated 2.1 million jobs at home while adding 784,000 to their payrolls abroad, according to the Bureau of Economic Analysis. At the end of 2005, the most recent statistics available, U.S. corporations employed almost 9 million people outside the United States.”
During the campaign and during the early weeks of his administration, Pres. Obama promised to reform the tax code. Multinational corporations, the US Chamber of Commerce and other have been lobbying furiously against this change in the tax code. So nothing may come of it.
The government--your and my government--will continue to reward large American corporations for job creation elsewhere while taking work from American workers and bread out of the mouths of their families.
Tuesday, October 13, 2009
Private property and common goods: parking vs. children's play area..
Private property is very important. Most people work hard for what they own and it matters to them that they be secure in their possession. They want to be sure, when they go to work in the morning, that they find their car in the driveway where they parked it last night. They want to feel completely safe in their house and not have their yard invaded by drunken party-goers. Owning private property means that one can exclude all others from one's house, one's yard, one's car. It is up to the owner to decide who may enter her house or drive her car.
Not all things in this world can be privately owned. There are many goods from which one cannot exclude other users. Clean air is there for all to enjoy. All breathe the same air. To be sure the air in inner cities tends to be worse than in wealthy suburbs. But within each area, the air is the same for all. No one can exclude others from breathing the same air. Parks and playgrounds belong to all. No one can claim private ownership and exclude everyone else. Some cities are livable; they are clean, their parks well kept and passersby are courteous and helpful. Those characteristics of an urban landscape cannot be privatized. Inevitably they are shared by all. They are a common good.
Sometimes private ownership and common goods conflict. I may own a forest and should, therefore, be allowed to cut down my trees if I so choose. But the trees contribute to clean air which is a common good and cutting down my trees may worsen the air quality for all. Here then some decision has to be made whether private property rights-- cutting down my trees -- should override the common good-- clean air for all, or whether the common good should take precedence.
Here is another example of such a conflict: The former City Hospital in Worcester has been flanked for many years by two or three acres of open space with some majestic old trees. The neighborhood is densely built-up; there are no parks within walking distance. The neighborhood children have played in this open space for generations, thereby avoiding having to play in the streets. A woman I know who is now close to thirty told me about growing up in the neighborhood and playing in the grassy area next to City Hospital. UMass/Memorial Hospital, owners of the building, some time ago decided to pave over this green space and cut down the trees. The planning board granted the necessary permits on the grounds that the hospital owned this open space and therefore had private property rights to exclude other users – in this case the neighborhood kids who had played there for many years.
The planning board refused to see the real conflict between the hospital's private property rights and the common good of the community to have a safe place for their children to play. This conflict confronts us in many different contexts, for instance, when ocean beach front homeowners want to exclude the public from using the beach and swimming in the ocean. We encounter the conflict when drug companies want to have unlimited potential for profits even if that means that poor people may die prematurely because they cannot afford to buy the needed medicines. Private profit is chosen as more important than a full life span for all. Entire cities decay when major industries move offshore. The private profit of the automobile company takes precedence over the quality of life in Michigan cities such as Detroit or Flint. The common good is made to yield to private property rights again and again.
The conflict is a serious one; it is not easy to resolve. But we tend, in too many cases, to sacrifice the common good for the rights of private owners. Because of that neglect of the common good, the quality of life of too many Americans has deteriorated in the last fifty years.
Private property is very important. Most people work hard for what they own and it matters to them that they be secure in their possession. They want to be sure, when they go to work in the morning, that they find their car in the driveway where they parked it last night. They want to feel completely safe in their house and not have their yard invaded by drunken party-goers. Owning private property means that one can exclude all others from one's house, one's yard, one's car. It is up to the owner to decide who may enter her house or drive her car.
Not all things in this world can be privately owned. There are many goods from which one cannot exclude other users. Clean air is there for all to enjoy. All breathe the same air. To be sure the air in inner cities tends to be worse than in wealthy suburbs. But within each area, the air is the same for all. No one can exclude others from breathing the same air. Parks and playgrounds belong to all. No one can claim private ownership and exclude everyone else. Some cities are livable; they are clean, their parks well kept and passersby are courteous and helpful. Those characteristics of an urban landscape cannot be privatized. Inevitably they are shared by all. They are a common good.
Sometimes private ownership and common goods conflict. I may own a forest and should, therefore, be allowed to cut down my trees if I so choose. But the trees contribute to clean air which is a common good and cutting down my trees may worsen the air quality for all. Here then some decision has to be made whether private property rights-- cutting down my trees -- should override the common good-- clean air for all, or whether the common good should take precedence.
Here is another example of such a conflict: The former City Hospital in Worcester has been flanked for many years by two or three acres of open space with some majestic old trees. The neighborhood is densely built-up; there are no parks within walking distance. The neighborhood children have played in this open space for generations, thereby avoiding having to play in the streets. A woman I know who is now close to thirty told me about growing up in the neighborhood and playing in the grassy area next to City Hospital. UMass/Memorial Hospital, owners of the building, some time ago decided to pave over this green space and cut down the trees. The planning board granted the necessary permits on the grounds that the hospital owned this open space and therefore had private property rights to exclude other users – in this case the neighborhood kids who had played there for many years.
The planning board refused to see the real conflict between the hospital's private property rights and the common good of the community to have a safe place for their children to play. This conflict confronts us in many different contexts, for instance, when ocean beach front homeowners want to exclude the public from using the beach and swimming in the ocean. We encounter the conflict when drug companies want to have unlimited potential for profits even if that means that poor people may die prematurely because they cannot afford to buy the needed medicines. Private profit is chosen as more important than a full life span for all. Entire cities decay when major industries move offshore. The private profit of the automobile company takes precedence over the quality of life in Michigan cities such as Detroit or Flint. The common good is made to yield to private property rights again and again.
The conflict is a serious one; it is not easy to resolve. But we tend, in too many cases, to sacrifice the common good for the rights of private owners. Because of that neglect of the common good, the quality of life of too many Americans has deteriorated in the last fifty years.
Sunday, October 11, 2009
Who is the enemy?
This morning's Boston Globe reports that an intelligence expert in Washington DC denies that the enemy in Afghanistan are the Taliban ”ninety percent [of the enemy] is a tribal, localized insurgency... ten percent are hard-core ideologues fighting for the Taliban.” The 90% “use the threat of force to further their own economic interests – extorting payments from people shipping goods through the mountains...” According to this expert ninety percent of the people we are fighting in Afghanistan are nationalist bandits.
That is utterly astonishing. It shows what a strange war it is we are fighting in Afghanistan. The wars I have known are between different countries. One identifies which side someone is on by their uniform or the markings on their vehicle. The object is control over territory; the method is killing. But this war in Afghanistan is very different. We do not know who the enemy is. We are not very sure why we are fighting them, or they us.
Is this expert telling us that we have been shooting at the wrong people, or is he telling us that the people we were shooting at were not who we thought they were? We thought we were fighting religious fanatics, but it now turns out that they are bandits who do not like Americans and other foreigners.
If this expert is correct, the solution to the Afghanistan puzzle is very simple. They are shooting at us because they want us to go away. We do not want to be there in the first place so why not leave and avoid further unpleasantness?
But, you say, what about Al Qaeda? And that is, of course, the key question. The Taliban are of no interest to us. The central question is whether we need to remain in Afghanistan in order to increase our safety against further terrorist attacks? One-way of increasing our safety is through law enforcement agencies that find persons who appear to be plotting to bomb something. An example is the young man recently arrested in Denver after long surveillance by the FBI. Other examples are arrests made in Britain in recent years. I have not seen any evidence that the war in Afghanistan enhances the ability of law enforcement to protect us against potential bombers. What is more, if we left Afghanistan, we would have a lot more money to do careful surveillance.
Al Quaeda appears to be a shadowy network of desperadoes much like organized crime. There are international networks of drug dealers, of traffickers in women, young girls and boys. There are international traffickers in body parts. They kidnap children and adults in the Third World, take out their cornea or kidney and sell those and then release their victims. No believes that military attacks on the Taliban or on other nationalist insurgencies are helpful in stopping this trafficking. Mexico is currently using its military in its struggle with drug cartels, but only to take the place of corrupt or under manned police forces. In addition, the Mexican military has so far not made a dent in the international drug traffic. If Al Quaeda is really like an international crime network, we stop fighting the Taliban in Afghanistan and leave.
One thing is clear: if Pres. Obama decides to keep our troops in Afghanistan he must provide to us with reasons that remaining there is essential in order to neutralize international terrorism. There is no point in continuing to shoot at people and to be shot at by them, as long as we do not know who these people are. If all they want is for us to leave, let's by all means do that.
This morning's Boston Globe reports that an intelligence expert in Washington DC denies that the enemy in Afghanistan are the Taliban ”ninety percent [of the enemy] is a tribal, localized insurgency... ten percent are hard-core ideologues fighting for the Taliban.” The 90% “use the threat of force to further their own economic interests – extorting payments from people shipping goods through the mountains...” According to this expert ninety percent of the people we are fighting in Afghanistan are nationalist bandits.
That is utterly astonishing. It shows what a strange war it is we are fighting in Afghanistan. The wars I have known are between different countries. One identifies which side someone is on by their uniform or the markings on their vehicle. The object is control over territory; the method is killing. But this war in Afghanistan is very different. We do not know who the enemy is. We are not very sure why we are fighting them, or they us.
Is this expert telling us that we have been shooting at the wrong people, or is he telling us that the people we were shooting at were not who we thought they were? We thought we were fighting religious fanatics, but it now turns out that they are bandits who do not like Americans and other foreigners.
If this expert is correct, the solution to the Afghanistan puzzle is very simple. They are shooting at us because they want us to go away. We do not want to be there in the first place so why not leave and avoid further unpleasantness?
But, you say, what about Al Qaeda? And that is, of course, the key question. The Taliban are of no interest to us. The central question is whether we need to remain in Afghanistan in order to increase our safety against further terrorist attacks? One-way of increasing our safety is through law enforcement agencies that find persons who appear to be plotting to bomb something. An example is the young man recently arrested in Denver after long surveillance by the FBI. Other examples are arrests made in Britain in recent years. I have not seen any evidence that the war in Afghanistan enhances the ability of law enforcement to protect us against potential bombers. What is more, if we left Afghanistan, we would have a lot more money to do careful surveillance.
Al Quaeda appears to be a shadowy network of desperadoes much like organized crime. There are international networks of drug dealers, of traffickers in women, young girls and boys. There are international traffickers in body parts. They kidnap children and adults in the Third World, take out their cornea or kidney and sell those and then release their victims. No believes that military attacks on the Taliban or on other nationalist insurgencies are helpful in stopping this trafficking. Mexico is currently using its military in its struggle with drug cartels, but only to take the place of corrupt or under manned police forces. In addition, the Mexican military has so far not made a dent in the international drug traffic. If Al Quaeda is really like an international crime network, we stop fighting the Taliban in Afghanistan and leave.
One thing is clear: if Pres. Obama decides to keep our troops in Afghanistan he must provide to us with reasons that remaining there is essential in order to neutralize international terrorism. There is no point in continuing to shoot at people and to be shot at by them, as long as we do not know who these people are. If all they want is for us to leave, let's by all means do that.
Thursday, October 8, 2009
One perswon's private property is another person's unemployment
Many people believe that it is free enterprise – the single-minded pursuit of private profit-- that makes our country great, that gives us a high standard of living.
But along comes the Simmons Mattress company forced into bankruptcy by several private equity firms. A sad story that shows that pursuit of private profit is often ruinous for workers and owners both.
For 133 years Simmons has made exceptional mattresses. In the 1990s it was bought out by a private equity firm. These are private financial firms that buy out a business mostly with borrowed money. The equity firm borrows money to buy a company. Once it owns the company, it borrows large sums against the company's assets and uses that money to pay of its own debts. The company purchased ends up paying off the debt incurred by the equity firm.
The private equity firm buys a company in the hope of being able to sell it fairly quickly and at a higher price. It therefore tries to improve the profitability of the firm. Sometimes that involves appointing new management and making them more efficient – a clear benefit. Sometimes it involves firing employees, closing plants that are unionized and moving production to plants that are not. The company becomes more profitable but its workforce loses a lot of money. The company becomes more profitable at the expense of its workers. The private equity firm makes a whole lot of money; the executives of the company may also profit handsomely. Unionized workers lose their jobs and are replaced by non-unionized, poorly paid women and men.
This is what happened at Simmons. Bought and sold several times by private equity firms since the 1990s, being forced to take on new debt with each sale, losing its established and unionized workforce, the company is finally forced into bankruptcy. Several private equity firms have profited handsomely. Some of the executives received generous pay, free memberships in country clubs and captains for their private yachts paid for by their company. The workers received pink slips.
A number of financial institutions profited handsomely. A much larger number of ordinary loyal Simmons employees were left confronting serious financial crises. After having worked for Simmons for 20 or more years, now in their 40s or 50s, they were facing a bleak future.
A number of other financial institutions also suffer. When Simmons goes bankrupt, its debtors loose. A company goes into bankruptcy in order to make a deal with the people it owes money to. It emerges from bankruptcy when it has managed to persuade its debtors to settle for less than the total money owed them. When private equity firms make a bundle by pushing a company like Simmons into bankruptcy they earn their profits at the expense of other investors.
Imagine you invent a better mousetrap. Motivated by the desire for private profit you produce and sell that mousetrap and-- lucky for you – you make a lot of money. You also create jobs. As time goes on, still wanting more money, you streamline your operation, improve your product, lower your price. Perhaps you do that by making production more efficient. But perhaps you do it by moving production to Thailand. Your American workers are now unemployed. The pursuit of private profit for you did not profit them.
Private Equity firms and other financial institutions do not produce any goods. They buy and sell businesses that do. Sometimes they make a profit by improving the business; sometimes, as in the case of Simmons, they make a profit by running the company into the ground. Its all the same to them as long as they get theirs.
The next time you would agree that private enterprise is an unmixed blessing, think of the workers at Simmons, or the American workers who produce your better mousetrap before you moved your factory offshore.
But along comes the Simmons Mattress company forced into bankruptcy by several private equity firms. A sad story that shows that pursuit of private profit is often ruinous for workers and owners both.
For 133 years Simmons has made exceptional mattresses. In the 1990s it was bought out by a private equity firm. These are private financial firms that buy out a business mostly with borrowed money. The equity firm borrows money to buy a company. Once it owns the company, it borrows large sums against the company's assets and uses that money to pay of its own debts. The company purchased ends up paying off the debt incurred by the equity firm.
The private equity firm buys a company in the hope of being able to sell it fairly quickly and at a higher price. It therefore tries to improve the profitability of the firm. Sometimes that involves appointing new management and making them more efficient – a clear benefit. Sometimes it involves firing employees, closing plants that are unionized and moving production to plants that are not. The company becomes more profitable but its workforce loses a lot of money. The company becomes more profitable at the expense of its workers. The private equity firm makes a whole lot of money; the executives of the company may also profit handsomely. Unionized workers lose their jobs and are replaced by non-unionized, poorly paid women and men.
This is what happened at Simmons. Bought and sold several times by private equity firms since the 1990s, being forced to take on new debt with each sale, losing its established and unionized workforce, the company is finally forced into bankruptcy. Several private equity firms have profited handsomely. Some of the executives received generous pay, free memberships in country clubs and captains for their private yachts paid for by their company. The workers received pink slips.
A number of financial institutions profited handsomely. A much larger number of ordinary loyal Simmons employees were left confronting serious financial crises. After having worked for Simmons for 20 or more years, now in their 40s or 50s, they were facing a bleak future.
A number of other financial institutions also suffer. When Simmons goes bankrupt, its debtors loose. A company goes into bankruptcy in order to make a deal with the people it owes money to. It emerges from bankruptcy when it has managed to persuade its debtors to settle for less than the total money owed them. When private equity firms make a bundle by pushing a company like Simmons into bankruptcy they earn their profits at the expense of other investors.
Imagine you invent a better mousetrap. Motivated by the desire for private profit you produce and sell that mousetrap and-- lucky for you – you make a lot of money. You also create jobs. As time goes on, still wanting more money, you streamline your operation, improve your product, lower your price. Perhaps you do that by making production more efficient. But perhaps you do it by moving production to Thailand. Your American workers are now unemployed. The pursuit of private profit for you did not profit them.
Private Equity firms and other financial institutions do not produce any goods. They buy and sell businesses that do. Sometimes they make a profit by improving the business; sometimes, as in the case of Simmons, they make a profit by running the company into the ground. Its all the same to them as long as they get theirs.
The next time you would agree that private enterprise is an unmixed blessing, think of the workers at Simmons, or the American workers who produce your better mousetrap before you moved your factory offshore.
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