August 2016 - Page 2 of 2 - Country Parson

Center-right, Center-left, and Populists

August 10, 2016 Steven WoolleyLeave a comment

Note: This is a follow up to my previous article. If you don’t like it, ignore it.

Several commentators have written about the need to restore healthy center-right and center-left parties, capable of negotiating in good faith with each other, to drive public policy decision making in our legislative bodies. We’ve had too much of fringe politics making progress difficult, if not impossible. I agree. At the same time, I don’t want to dismiss altogether what the fringe might be saying that is truly important.

Let’s start with center-right and center-left. Center-right is cautious about using the powers of government to address social and economic problems, preferring private sector solutions. It works to keep taxes as low as possible without jeopardizing their highest priorities, which seem to favor defense and stimulus targeted at major industries. Center-left is enthusiastic about using the powers of government to address social and economic problems. It is suspicious of private sector control over matters of public welfare, and is willing to raise taxes as needed to fund social services. Both desire the nation to be a vigorous, even dominant, player in world affairs, including trade. Both support defense spending, but center-left questions the need for more advanced equipment when basic needs are left wanting. Each is able to negotiate with the other in the good faith intention of finding an agreed upon workable decision. The problem is that each is inclined toward the laws of inertia. It takes a whack of substantial force to wake them up to issues critical to the health and well being of the nation.

On the sidelines are various fringe groups complaining that centrists are just Tweedledum and Tweedledee ignoring the real problems, refusing to listen to the cries of those left behind. Some are far right, some far left, and some have narrowly defined interests that defy being systematically categorized. They are the ones providing the whack of substantial force. But they are not the ones who can be trusted to run the country. Thankfully, they don’t, but they have managed to gain enough political power to make it difficult to get anything done because they are incapable of negotiating in good faith.

During the Reagan era (1981-89), conservative and corporate lobbyists began using a new tactic to move the centrist debate outcomes more favorably in their direction. They announced that because liberals had staked out such extreme positions toward the left, the only way they could balance the negotiating outcome was to stake out a position farther toward the right, which they did. The thing is, the center-left had not staked out a far left position at all, so the fulcrum was moved way over to the right, and the tactic worked. The intent was to benefit business, or more specifically corporate, interests, but along the way they picked up fringe movement allies such as Falwell’s Moral Majority that were disinterested in corporate matters, but could see the value in changing the terms of the debate for their own conservative social agenda. It planted the seeds for today’s tea party inspired polarization in which nothing will happen if they can’t get their way. I am not impressed by those who try to be fair and balanced by condemning both sides. As Friedman, Krugman, Dionne, Robinson, and others have noted, the polarizing intransigence has come from the tea party side of things.

Speaking of which, when the tea party movement took hold around 2009, commentator Rachel Maddow said it was not a true grass roots movement because it was financed by a few wealthy persons (who?), and energized by the professional provocateurs of conservative talk radio and television. She was wrong. However financed and provoked it may have been, it was a genuine outpouring of disaffected people who were suspicious of a black president, discouraged about their economic future, and frightened of a federal government government that might take their weapons. There were enough to them to elect enough state legislators and members of congress to use the old Reagan era corporate tactic to stop everything, or nearly everything, if it didn’t go their way. Except for Kansas, it hasn’t gone their way, and the result has been deadlock in too many places, especially in D.C.

With that in mind, it is time for centrists to forcefully reject tea party like tactics, and get back to the business of working out decent workable decisions directing the future of the nation. My own politics are center-left, and that’s the direction I think we need to go. From my point of view it means policies that encourage and support a vibrant private sector, but not at the expense of public policies and programs aimed at giving the poor, oppressed, and marginalized whatever is needed for them to participate fully with the rest of us in economic and social opportunity. Centrists also need to listen with open minds to what the fringe is saying. Yes, there are paranoid nuts among them, but there may also be something worth hearing. Let’s call them populists, and leave the term fringe for the truly goofy. Populists, in their anti-elite, anti-establishment outrage, can call attention to real thorns and sores infecting the community.

Consider a few historical examples. The Peoples Party (Populists) of the late 19th century raised important issues about unfair corporate manipulation of farm costs and prices, and the instability of monetary policies. Labor union Wobblies helped raise public awareness of abusive labor practices. National Child Labor Committees did the same for child labor. W.E.B DuBois demanded equality ini civil rights for blacks. MLK brought it to a head. PETA raised awareness of wide spread animal abuse. Occupy Wall Street made questions about banking and financial practices hit the front pages. You get the idea, and can probably add more to the list. The point is that as uncompromising and socially offensive as populist movements can sometimes be, they also raise important issues that can be resolved only through centrists negotiating in good faith. That is never satisfying to the populist soul because they don’t want to negotiate or compromise on anything.

Bernie or Bust and Trump supporters are unrelenting, non-compromising populists on opposite sides of an issue that can rip our society to shreds: income inequality. Each is anti-elitist, anti-establishment, which gives them their populist credentials. They have each identified excessive income inequality as an issue that has the potential for undermining the structural integrity of our republican democracy, even if there are dramatic differences between them about what republican democracy is, or what should be done to resolve the issue. Neither of them is competent to guide the affairs of state, although the Trump gang is going for it. Parenthetically, Trump and Trump supporters are two different things. One is delusional, and the other is suffering the illusion that the delusional one is on their side, but I digress. What we need are healthy center-left and center-right parties willing to work things out because they are competent to guide the affairs of state.

The Republican Party, as it currently exists, is no longer a healthy center-right party. Indeed, it’s not a health party at all. What may be needed is a cathartic cleansing through the overwhelming defeat of it’s populist (and extremist) candidates so that it can rebuild as a responsible center-right party. In the meantime, the next congress and administration needs to bend to the task of restructuring our system to address the issue of excessive income inequality because it really is a cancer that can destroy us as a nation that prides itself on economic opportunity for all.

Hopefully, something similar will happen in state houses as well. I certainly hope it does in my state. We shall see.

Possibilities for a more robust national economy

August 9, 2016October 21, 2020 Steven WoolleyLeave a comment

Note: What follows is an attempt to gather a few thoughts that have been shared over the last few years into a more cohesive whole that speaks to what I believe can lead to a stronger American economy. Do with it as you will.

There is a lot of discomfort over the slow pace of economic recovery, which, nevertheless, has been the longest, steadiest recovery in our history. Several years ago, as it was just getting underway, I wrote a short piece on my hope that it would be slow paced. It seemed to me that we needed to position the economy to better resist the cycles of boom and bust that have often characterized its performance. A slow recovery, I thought, might help because it would give time for entrepreneurs, investors, and corporations to investigate long term opportunities rather than jumping on the next bubble, hoping to bail out before it burst.

I also hoped that a slow recovery would help Americans begin to recognize that, in an interdependent global economy, we don’t have to be Number One in everything, we don’t have to be the Greatest Nation on Earth, and we don’t have to pretend that we control the ebb and flow of global trade. We can just get on with the business of being Americans doing the best we can at what we are best at doing, doing well at what we are good at doing, and not obsessing about what we are not good at doing, even if we once were. Finally, I hoped that the informed public would recognize that a 2 – 3% annual growth rate was a good and sustainable one for a mature economy, and that a return to sustained GDP growth rates above 5% is unlikely.

Not everything has worked the way I had hoped. It’s hard to tell what the informed public thinks about our economy because I’m not sure we have an informed public of any size worth mentioning. Most of the small segment of the public I get to talk with seems to think the glory days of some indeterminate prior decade should be the norm. Otherwise intelligent friends join the chorus calling for the return of manufacturing jobs without any clear idea of what that actually means. Others seem to be anxious about other countries outperforming the U.S. in this arena or that, in the same way they get anxious about the Broncos outperforming the Seahawks. When “We’re Number One”, “Make America Great Again”, and “America First” become the rallying cries of the body politic, we sound like spoiled children stomping our feet, demanding attention amidst a global community that is getting very tired of such boorish behavior. There is serious business to attend to, and such nationalistic childishness not only gets in the way, it diminishes our ability to be taken seriously in negotiations with others.

However, they have a point. Jobs that were once the foundation of the “American Dream,” offering a dependable path into the middle class, have gone away. To where? Are trade and unions the villains, and if so, what can be done?

We live in a global economy that is a different place than it was thirty or forty years ago. Other nations can manufacture many things cheaper than we can, and manufacturers have located some of their operations in those places, or installed new technology that reduces the need for routine work done by humans. Those that haven’t have stagnated or gone out of business. Trade agreements are handy scapegoats, but the flow of jobs to other places would have taken place without them. If anything, they have done at least a little to open up foreign markets to U.S. goods. Clearly they have done more to protect the interests of corporations than of employees or the environment, but using that as an excuse to oppose them achieves nothing. Corporations have also used, with considerable success, the threat to move jobs offshore as a way to fight union organizing and elections. It’s a lot easier to run a business if you don’t have to deal with a union, especially if the union has taken on the role of belligerent, anti-management foe. In my opinion the big unions blundered in trying to protect jobs that they could not protect while abdicating a more forceful role in trade agreement negotiations.

It’s worth noting that American job growth has far exceeded job loss attributed to trade, but the new jobs that could have been filled by former factory workers have been in the low wage service sector, or in far away anti-union states. Higher paying new jobs have often required education and technical skill beyond the reach of displaced workers, and that brings up a related issue. What has been the effect of technological improvement in manufacturing processes? How much work, at union scale, that was done by hand is now done by machines? In the 1950s I visited a number of unionized flour and cereal mills where bags were filled and sewed shut by human operators, puffed cereals were truly shot by guns fired one load at a time, and automation of bulk cargo handling was just being implemented. Decades later I was in a nickel mine operated by less than a dozen miners, and the adjacent refinery was run by one supervisor who monitored the fully automated processes. Who got paid the big bucks? The engineers who knew how to create the system, and the technicians who knew how to keep it running, neither of whom worked for the mining company. A few years earlier I was in a toy factory, the backbone of a small city, that employed hundreds of assemblers paid good union wages to do boring, repetitive tasks. They were soon replaced by automated production lines in another country.

None of that is morally good or bad in and of itself. It’s simply the function of a society where rapid developments in technology combined with rapid economic development throughout the world have resulted in painful dislocations that we, as a country, have not handled well. What we need to do, say some, is return to the economic vitality we had back in the (insert years of your choice here). Is that possible?

Following WWII America had the only industrial economy in the world that had not been bombed into rubble. It’s not surprising that we dominated manufacturing and world trade. We were the only game in town. Economic resuscitation, aided by American equipment, was well underway in Europe and Japan by the 1950s, and continued for almost thirty years. Then came the rapid industrialization of nations such as China, India, South Korea, Vietnam, Taiwan, Brazil, Argentina, and Chile, and others. It’s likely that in not too many years to come we will see the same happening in Africa. It is a global market place – an interdependent global market place – in which large corporations try to play in which ever country is most advantageous to them, and without regard for the people and communities they leave behind. How dramatic has the change been? Different sources vary in the numbers they offer, but the point is that in the aftermath of the war, the U.S. accounted for half of the entire world’s income. Now it’s in the vicinity of 20% and declining, as is natural in a global economy where others are growing into renewed or first time prosperity.

So what should we do? The first thing is to stop trying to recreate a world that is dead and gone. Get over it! We need to be creative about the new world we are in, but there are some policy changes that might help.

Raise the minimum wage and index it.
Invest heavily in education at every level.
Invest heavily in rebuilding the nation’s infrastructure.
Repeal anti-union laws.
Reimagine unions as agents of helpful change rather than combatants in cage matches with management.
Clarify and simplify corporate governance and tax laws to keep them globally competitive and ethically accountable.
Get it through our collective heads that taxes are our investment in the good life now and yet to come.

It would also help to acquire a new national ethos in which corporations value employees as human beings and not commodities, super salaries are signs of moral irresponsibility, and commitments to communities in which they are located are taken seriously. A revitalized national ethos would reject tea party thinking in its totality, and it would hold governments at all levels accountable for fair, efficient, and just provision of services. Governments, in like measure, would consider themselves to be in the business of customer service instead of regulatory enforcement. It could happen.

One way to help it happen would be to dramatically increase the the marginal tax rate on very high levels of income, treating most income as earned. The current federal income tax system has three categories of tax payers: single, joint, and head of household. Each is treated in a slightly different way, so for the purpose of argument, let’s stick with joint filers and rough estimates in order to make a point. Everyone pays 10% on the first $19,000 of income, minus some standard deductions. The rate on the next $56,000 is 15%. Then it’s 25% on the next $74,000; 28% on the next $80,000, and so forth until it’s 39% on everything above $460,000. Given the ability to maximize deductions, or take advantage of special gimmicks such as “carried interest,” top income earners can often pay much less. What I want to suggest is a gradual increase in the top marginal rates to 60% or 70% for annual incomes in the millions.

It will not increase revenue to the government by much. It’s a crude tool at best, but it would create a disincentive to pay astronomical salaries to just a few people. There’s no point in giving multi-million dollar raises or bonuses if most of it will be taxed away. A national policy that says super salaries are essentially unethical would also encourage corporate rethinking about how to more fairly distribute monies available for wages and salaries.

Over the last several decades major corporations in every industry improved productivity and the bottom line by eliminating jobs and forcing down rates of pay for employees other than those at the top. At the same time, the American economy has been driven partly by unthinking consumer spending spurred by sophisticated marketing techniques. The current, and no doubt brief, joy over modest improvements in GDP growth rates is the result of increased consumer spending while consumer income and levels of unemployment have remained stagnant. A nation cannot simultaneously force middle and lower incomes to remain stagnant (or decline) while encouraging greater savings, paying down on consumer debt and building a revitalized economy on consumer spending.

An unnamed wire service reporter wrote in a recent article that, “Economists believe that growth in consumer spending, which accounts for about 70 percent of economic activity, will be restrained until incomes start growing at healthier levels. That is unlikely until hiring picks up.” At the same time, Census Bureau data show that between 1979 and 2007 the top 1 percent of households saw their incomes rise 273 percent while middle income households saw theirs go up 40 percent and low income households 18 percent. The buying power of increase at the middle and lower income levels actually decreased. It’s a systemic problem, and, as argued above, it’s also an ethical problem that lies squarely in the laps of business leaders and government legislators.

The sooner Congress and state legislatures can rid themselves of tea party type intransigence, the sooner our legislative processes can begin to work again for the benefit of the whole. Mindless anti-tax and small government voices need to be exposed for the frauds that they are. We don’t need small government, we need good government run as efficiently as our democratic processes allow. We need government committed to creating and maintaining the social and physical community infrastructure needed to establish the most equitable pathways to opportunity for all persons that we are capable of doing. We need to see taxes as investments, not burdens. And we need to recognize that we can do all of that while encouraging individual responsibility, and without jeopardizing our constitutional freedoms.

My letter from Trump clears up everything

August 6, 2016 Steven WoolleyLeave a comment

Well, the Trumpeter in chief sent a fund raising letter to me. It arrived just a few hours ago. Wow! I know you want to know, so let’s take a look together.

He’s truly humbled, he says, and I think we can all agree that a humbled Trump is a good thing. So let’s go on. Of course it’s a campaign to make American great again. That should go without saying, but he does anyway. I’ve tried to figure out what great means, and have concluded that it is a wonderfully useful word with no concrete meaning yet it elicits emotional responses of generalized agreement. If I say that dinner was “great, just great,” others will nod agreeably. No one will have any idea what great actually means, but each will feel a meaning that suits them, while assuming that others feel something similar. I guess America was great, isn’t great now, and needs to become great again. That’s just great!

Moving on; he announced that entire communities are reeling as factories shut down and jobs go overseas, all due to over-regulation and high taxes. The loss of well paid manufacturing jobs is a reality going back thirty years or more. That manufacturing employment has been on a slow but steady rise for the last six years seems to have gone unnoticed. To be fair, that hasn’t helped communities where entire industries have shut down. They hurt. Multinational corporations have little loyalty to the communities in which they operate, and that is a real problem. Going offshore is just a bottom line calculation, no offense intended. Trump will tell them they can’t do that anymore. I know they’ll listen in trembling fear of the deal maker in chief. The Trumpeter didn’t mention trade agreements in this letter, but I bet he does in the next one because they are handy scape goats. Flawed though they are, there is not much evidence that they’re the reason for jobs being moved offshore, but they still make terrific scape goats. As for regulations and taxes, they appear to have had little effect on corporate profits, but that’s another issue because there are problems with them.

What the Trumpeter wanted to drive home is that he is not “Crooked Hillary,” a phrase he likes so much he repeated it three times. And who would have the temerity to be on her side? The “biased hacks that pass as journalist …acting as PR agents for Hillary…[who] twist everything I say…and use vicious smears to try to undercut my momentum.” Golly. Who knew? Biased hacks, all of them. Even the Foxes can’t be trusted these days. They are not alone, Hillary, excuse me, “Crooked Hillary” is also supported by “phony establishment allies.” You know who they are. They are the ones out to enrich themselves (and their special interests) at the expense of Main Street.

If he’s not “Crooked Hillary,” who is he? He’s the one who will bring jobs back, build a wall and make Mexico pay for it, tear up the “terrible” Iranian deal, and make Muslim extremists pay dearly. That certainly clears things up. When he is president America will start winning again. Winning, I take it, means that under his leadership America will dictate terms and conditions to the rest of the world. There are some interesting nuances about that in his speeches, but not in the fund raising letter. It’s a quasi-isolationist position in which America would pick fights only where it is assured of victory. You know, like invading Grenada. You remember that. Otherwise, America would leave the world alone to do whatever it wants, except for Russia, we should be more friendly with Russia. He said that a day or two ago.

That’s about it. He closed with a reminder that there is work to be done to counter liberal lies and vicious attacks, oh, and send money. Now you know.

An essay about Investing, but first a few words about social change

August 4, 2016 Steven WoolleyLeave a comment

We live in uncertain times. That seems to be the theme of the day, but when have we not lived in uncertain times? I suspect that what most people mean is that established institutions that have given us a sense of stability during uncertain times are themselves being disestablished, with no mutually agreed upon replacements in sight. The trusty balloon of American generic Protestantism has deflated. Public schools are demeaned. Police are feared and distrusted. Government was declared the enemy by Reagan, and the chorus of amens has escalated ever since. Every major corporation is now multi-national with little loyalty to any interest other than its own. Local fraternal organizations, once the birthplaces of local leadership, are dead or dying. Unions were busted a long time ago. The institutions we relied on to give predictable structure to society have failed us, and now to whom can we turn? As a Christian, I have some thoughts about that, but not right now.

It began in the Viet Nam era when anti-war and civil rights protests turned violent, and no one over thirty was to be trusted. They coincided with passage of civil rights legislation dismantling legally sanctioned segregation that had, if nothing else, fixed the lines of social structure in a knowable way. They also coincided with Great Society legislation that strengthened an expanded social safety net financed in large part by the federal government. The past fifty years has been a political tug-of-war between forces trying to stop or reverse those trends, and forces trying to improve and extend them. With the frightening advent of a black president, and the dawning recognition that whites would very soon no longer be in the majority nor hold dominant political power, a substantial number have been engaged in a toddler’s tantrum, refusing to do anything, or let anyone else do anything, unless they get their way. Indeed, they now have their own candidate for president.

Yes, the times are uncertain. It isn’t simply that uncertain change is upon us, it’s that the velocity of change is increasing. It is said that we are in a new age, the information age, which is driven by technology changing so fast that no one can keep up, or so it seems. Is there anything out there that can be relied on to stand still long enough for us to get our bearings? It remains to be seen what kinds of institutions will rise to give stability to the nation in the sea of uncertainty that we are now and have always been in.

I don’t believe it’s that dire. The tantrum throwing toddlers, you know who you are, need to be given a long, long time out. The rest of us need to bend to the task of reenergizing institutions that can serve an ethnically diverse population. We also need to get on with the business of recrafting the social safety net to do its job well while, at the same time, encouraging self reliance as a treasured American virtue. It can be done. With that in mind, I want to drift into a related field: investing. After all, if we are to be self reliant, we, each of us, must take some responsibility for investing in our own future, and that means investing money.

One of the silliest things I’ve read and heard said in conversations about finance and world markets is that the problem is uncertainty. If it wasn’t for such unpredictable uncertainty, the markets would be more rational. And, say the analysts and financial managers, our advice to clients about how to increase the return on their investments would be much more reliable. If the markets were predictably certain, the analysts and managers would be out of business. By definition markets are always uncertain, and hardly ever predictable. Investing is a calculated bet, and just as often a dumbass bet, that the uncertainty will fall favorably in one’s direction. Rather than uncertainty, I think what is meant is that the number of variables affecting market performance has increased beyond our ability to apprehend them, much less comprehend them.

A local example might help explain. We grow a lot of wheat around here. The market for wheat has become much less predictable than it once was. What was once? Once was when there were a few markets where wheat was traded by agents tasked with buying it for domestic milling companies. Now wheat is an international commodity bought and sold in many markets. Most of our local wheat is headed straight for export, which means it’s in competition with wheat grown anywhere in the world. Global news that might affect the price of wheat is instantaneous, and sometimes not well verified. Speculators, who have no intention of actually owning any wheat, buy and sell it in a game of commodity blackjack. Algorithmic trading throws computer driven market manipulation into the mix in unsettling ways. It’s all so uncertain. Well, yes it is, it always has been, but now we have to contend with more variables than we can count, and many of them have nothing to do with the business of growing wheat to be sold to a miller, who will make it into flour to be sold to a baker, who will sell bread and pasta to hungry customers.

Wheat, oil, gold, corporate stocks, municipal bonds, mutual funds, hedge funds, treasury notes and bills, they are all part of several games of commodity blackjack, which differ from casino blackjack in major ways. The deck, for instance, is never the same size two games in a row. One cannot be sure from game to game that it contains complete sets of suits, or whether new unknown suits have been added. Casino games favor the house, with the dealer bound to be the evening’s winner. Commodity blackjack dealers are analysts and fund managers who have very little real knowledge about the game, but a lot of pretend knowledge backed up by reams of data collated to look like research. Nevertheless, each year ends with someone producing yet another report showing that they underperform the market at every level, except when one or two don’t, and that’s just gamblers’ luck.

So let’s hear no more talk about market uncertainty as the subject of blame for why markets are not more rational, especially when that talk is made with the implied expectation that more rationality will return as soon as things settle down a bit. There will be no settling down. Market rationality, if it ever did exist, is a thing of the past. So what to do? My preference, as one whose retirement depends on market performance, is to push investments toward funds that pick industries, and companies within those industries, that show long term performance in ethically responsible ways, and to stick with those investments regardless of market fluctuations. Not very exciting. I’ll never be a billionaire. So what. Never wanted to be one in the first place.

A Brief Reflection on Morning Prayer

August 1, 2016 Steven WoolleyLeave a comment

My morning routine includes the Episcopalian Office of Morning Prayer, but my brain needs to warm up before I’m ready, which requires a half cup of coffee and a couple of morning comics, notably Non Sequitur and Shoe. I try not to look at the news, especially during campaign season. While following the liturgy, at least in principle, I take whatever time seems right to simply meditate. The Office helps through its prayers that focus attention in different directions each day. It keeps things from getting too rote. It took a long time to realize that. When I first started almost thirty years ago, it got repetitive, boring, to say the same cycle of daily prayers over again each week. Only later did I discover that they were not prayers to be said and ended, but doors that opened communication with God in new ways with new perspectives that are seldom repetitive. It took even longer to discover that in the silence between prayers God was telling me to pay attention to what he might be saying throughout the day, and not in the few minutes of more formal morning prayer time.

Most of the year its my study is where it happens. There’s my reading chair, side table, desk, books, note pads, array of electronic gadgets, icons, bay window overlooking the north garden. I like it. It fits me. But it’s not most of the year right now. It’s high summer, and there is nothing more inviting that the cool of a summer morning sitting on the south patio just as the sun rises over the mountains. Coffee, iPad and prayer book in hand, it’s where I go, and it’s where the liturgy dissolves. Prayers and scripture get interrupted by birds flitting on and off the feeder, drinking from the fountain, and dodging in and out of bushes. Squirrels scurry from their nests high in the trees. Morning breezes ruffle leaves. Formations of geese fly from east to west on their way to feeding grounds. Local turkeys gobble from their roosts in trees a block away. Nature provides the only sounds, at least for a while. If I sit still, none of the others seem to notice that I’m there too.

The liturgy gives way to morning conversation with God, open ended reflection on the day’s scripture, and sometimes nothing other than just sitting there enjoying the moment in grateful thanksgiving for having the moment to enjoy.