Recently in Democracy Category

I came across the article, Why the Economy Grows Like Crazy Amid High Taxes, by Larry Beinhart, and it says some things that the people of California should hear.

Beinhart make some very good points. first, he points out that if you look at the periods of higher taxes, you see that these are the very periods when the economy does much better. He writes,

Examples include World War II and the Truman-Eisenhower years, when it was around 90 percent, and the Clinton years, when it was high relative to the preceding and following administrations.

He also points out that big tax cuts are often followed by bubbles and crashes, like the big crashes of 1929, 1987 and 2008.

Beinhart says that one reason for this is that low taxes encourage businesses to distribute profits rather than reinvest them in their companies. When taxes are low the owners have incentive to grab all the cash they can out of the company.  But when taxes are high every dollar they take out of the company is immediately reduced.  If the money stays and is reinvested in the company the company's value grows and can later be taken as capital gains.  As a former business owner I understand how this works. 

Beinhart writes,

With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest.

The higher taxes are (and from 1940 to 1964 the top rates were around 90 percent), the more this is true.

This creates a bias toward long-term planning.

If a business is planning for the long term, it wants a happy, stable work force. It becomes worthwhile to pay good wages and offer decent benefits.

So low taxes cause companies to only think a few months ahead and sacrifice their long-term good for short-term gain, instead of planning to be in business year after year.  Also, low taxes encourage a fast-buck climate in which takeovers and disruption rule.  Beinhart writes that when the Reagan tax cut era took over,

It was no longer enough for a business to be a reasonably good business, making steady, reliable profits.

Indeed, that became a very bad condition for a business to be in. It made it a target for takeovers by people who were willing to milk them of their profits.

There is a lot more over at the article, so go read the rest.

This holds important lessons for Californians.  Along with Beinhart's observations, there are other reasons to think that low taxes harm the economy.  For one, it is the nature of our economic system that a few people can come into possession of huge shares of the wealth.  This dries up the economy because regular people don't have enough of a share of the wealth to allow them to spend much on consumer goods, etc.  We are seeing this happening today.  On top of that we are seeing the government forced by tax shortfalls to lay people off just at the time we need more people to be able to buy houses, cars, etc.  Taxes provide jobs and redistribute the wealth in multiple ways, so that regular people CAN buy houses, etc.

But in California we have rules that don't let us raise taxes, even though we can see that we need the income so that the state can keep teachers, firefighters, roadworkers, etc. employed!  We as citizens actually tolerate rules that keep us from asking corporations and wealthy people from pitching in to help fix the economy!  It is time for us to start looking at how to fix these rules that hobble us during times of economic emergency.
 

Try this: Every time you read the word "government" substitute the appropriate variation of the term "We, the People" or "democracy" and then see how you feel about what is being written.  Use the same substitution for the term "the state."

This is especially fun when reading anything written by a conservative or a right winger.

Ronald Reagan's famous phrase, "Government is not a solution to our problem, government is the problem" takes on a whole new meaning, doesn't it?  He was saying that "democracy is the problem" -- and here we are 25 years later seemingly living under corporate rule instead of democracy.  How has that turned out?

When conservatives complain about government or "the state" they are complaining about control of decision-making by the people rather than by a few.  Never forget that.

Calitics has their list of 2008 election initiative endorsements up.  Go see: Calitics: Our Positions on the Statewide Propositions.

Suddenly Proposition 8, the ballot initiative that removes the right of gay people to marry, is ahead in the polls.  A month ago Proposition 8 was behind in the polls by about 14 percent, suddenly it is ahead by 5.

At Calitics Brian Leubitz writes about reasons for this shift,

First is the massive spending of the Yes campaign ... Yes is outraising No by about $10 million.

Once again we see a huge shift in opinion after a well-funded interest group steps in and spends millions of dollars on TV ads.

California's elected Republicans continue to block any and all efforts to pass a budget, because any honest budget must ask the wealthy and big corporations to pay their fair share. Even the Governor's extremely modest one cent sales tax increase was too much for them.

So let's talk about paying a fair share. David Sirota has a good column today at the Campaign for America's Future blog, The Aristocrats, Part II - Starring George Will. In the column Sirota writes about wealthy Republicans who complain when regular people get decent pay for performing services that benefit ... guess who ... wealthy Republicans. Sirota writes,

In a column about underfinanced municipal pension systems today, Will expresses deep anger that veteran police, firefighters and municipal workers eventually get paid well for their services. In one California town on San Francisco Bay, Will tells us that - gasp! - "after just five years, all police and firefighters are guaranteed lifetime health benefits." The horror.

Such salaries and benefits, of course, are part of a bargain: Enticing people to turn down the high-paying private-sector job and instead run into burning buildings (firefighters), do the dangerous work of apprehending criminals (police), disposing of sewage (garbage collectors) and administrating all the other services that conservatives pretend aren't necessary (municipal workers) requires, well, an enticement - namely, the promise that making such a public-minded choice will result in decent and stable pay and benefits.

When you accept a public sector job, that's the bargain: In exchange for being willing to do a tough job and accepting that you won't have the chance to make hundreds of millions dollars like a corporate CEO, you are rewarded with the chance - if you play by the rules - to make a pretty good living.

Yes, there is a BARGAIN at work here. We, the People have built a system that has been working pretty darn well for the rich. We built a system of roads, schools, courts, police departments and firefighters. We built up a system of laws. We work in the factories and offices.

The following was submitted by Speaker of the U.S. House of Representatives Nancy Pelosi:

When I was sworn in as the first woman Speaker of the House in January, my 8-year-old granddaughter Madeleine said she hoped because of my step forward, more women would also be able to have jobs like mine. With those words, Madeleine spoke a simple but powerful truth: Without the pioneering women who have blazed the trail before us, we would not have come nearly as far as we have today.

When I proudly assumed the role of Speaker, it was with a nod to both the past and to the future. It was in honor of those pioneering suffragettes and women whose tenacity and sacrifice allowed me to become the first woman Speaker. And it was in honor of our children, who represent our hope for the future and for change. At the time, I said that we have made history, and now we must make progress.

One problem that many people attending this convention are forced to deal with is the sheer distance between events. First, getting from the airport into town is a very expensive cab ride with few other choices.

I was immediately struck that there is no light rail system out to the airport! I don't understand how a major airport near a major city could have been planned and built without incorporating light rail from the start. Of course, this was all done in the unfortunate oil/car-dominated era that we are all working to end...

In town convention events are vast distances apart. Even inside the security perimeter itself things are far apart. It is a long walk in the sun to get from the Pepsi Center to the Tivoli, where the Starz Green Room is. It is a very long walk from the Big Tent to the Starz Green Room. Etc.

Getting my official convention credentials this morning meant taking a cab for miles, to a hotel in another part of town. (Long lines, waiting, waiting...) And then there were no cabs available to take me back. Miles and miles... There was a free city "16th street mall" shuttle that helped part of the way.

So this is a problem with this convention. Having things far apart might be OK if there was some way to get from one place to another. You can't have a car here but everything seems to require that you do.

And of course in the larger picture this is the problem with the way America has built up its housing/mall/freeway infrastructure. You have to have a car, period, or you cannot participate in the modern America except in a few larger cities that have well-thought-out transportation. This requirement that you have a car imposes a certain cost on people. But there are plenty of people who can't meet those costs and are forced to drop out of participation. So look what happened in New Orleans when Katrina hit. Many people simply could not evacuate because they did not have their own cars, and there was no real transportation available otherwise.

America has created distances between people, classes, and even physical distance requirements that work against us in the long run. This kind of approach, where you can't participate if you can't afford your own car is anti-democracy. In the case of this convention, it was just dumb.

It is about 6:45pm Denver time in The Big Tent -- the "blogger central" of the convention. Finally some time to blog. Senator Ted Kennedy just spoke. That was quite a moment, reminding us that America was once able to send people to the moon, and that maybe one day we can get back to that kind of vision. Later Michelle Obama speaks and I will post an update.

They have a live audio feed from the hall itself, and big-screen TVs around the tent with network coverage, so you don't always see on the TV what you are hearing. That is probably a very good thing because I don't care what Wolf Blitzer says and I can safely say that none of the bloggers here do either.

There are supposed to be about 400 people here in the blogger Big Tent. That seemed about right today. This is a steel-frame temporary building that was just finished Saturday, I think. The name comes from the Republican Party's focus-group certified slogan, which means that everyone is welcome to vote for Republicans -- and no matter what you end up giving tax cuts to the rich and losing your health insurance, savings, pension, home and job.

Around Pepsi Center

There is a very big perimeter around the Pepsi center itself. I walked several blocks around that over to the other side of the perimeter. As you walk you pass so many people heading to or from the convention, many of them recognizable. "Isn't that ...?" Paul Begalia riding in a bicycle taxi. Journalists you've seen on TV, etc...

The convention has a different crowd that the big tent -- people are dressed better. Bloggers tend to wear shorts and t-shorts. In the convention hall (I learned four years ago the hard way) a guy would tend to dress up much more and you might feel out of place without a sportcoat. (I don't know how to describe the same thing for a woman.)

Starz Green Room

After walking (and walking) I checked in at the Starz Green Room. It is well air conditioned. You see, that matters a lot when there are hundreds or more people everywhere you go, after walking on a hot day with the sun at this altitude burning you. And everyone here does a lot of walking because of that several-block security perimeter.

The Starz green Room has a film festival going on, and the Seachange Forum panel series. Click through and scroll down for the schedule.) I wasn't able to stay long, but it is a great, welcoming environment, professionally run with great content. If you have a credential into the convention itself you should look at the schedule and reserve a place for one of their events.

More Big Tent

So this evening many people have gone over to the convention hall so it has cleared out and is somewhat less of a zoo (there is free beer). You can actually find a seat now, but not that many I was an idiot who didn't get his credentials in time so I get to stay here. Tomorrow I will be in the hall.

Here is what I look like blogging on a couch here:

(Taken with Flip Video supplied by the Voter Genome Project)

Click here to see today's earlier convention post with pic and video.

Let me know what you want me to cover here at the convention.

Not content with blocking the budget, the right is going after the Republican Governor for trying to govern. See Schwarzenegger engages in talk-show tussle,

Schwarzenegger tried to defend new taxes as necessary because the state was still paying off debts incurred by predecessor Gov. Gray Davis. But the hosts pressed further and suggested that Schwarzenegger abandoned his original mission of fixing the state's fiscal situation in order to pursue environmental goals.

That seemed to upset the governor, who maintained that his environmental policies had nothing to do with the state budget.

"This is absolutely absurd what you're saying right now," Schwarzenegger said. "....You're living in the Stone Age if you think that the environmental issue has anything to do with the budget or the declining economy worldwide."

"Don't lie to the people," Schwarzenegger added. "That's all I can tell you, don't lie to the people. Don't pull wool over their eyes. It's nonsense Republican right-wing talk."

That prompted the "anesthesia" joke. Schwarzenegger underwent anesthesia Saturday when he had arthroscopic surgery to repair cartilage in his right knee.

In fact the state is paying off debts incurred by Governor Schwarzenegger, but at least he is trying to move the far-right Republicans off of their "no taxes under any circumstances" ideology. The Governor is trying to govern and should get credit for that, even if it is governing from the right. The far-right that is the rest of the state's Republican Party apparently doesn't want government at all, especially not government-by-the-people. There are lots of people. They want a one-dollar-one-vote approach favored by corporations and the rich who have lots of dollars.

One more attempt to get a state budget in place collapsed -- blocked by the Republicans because it included tax increases. Republicans insist that the budget be balanced with billions and billions of dollars in cuts in our schools and fire protection and the other things most of us want our state to do.

I would bet that most of California's public doesn't know what is going on with our budget. They only know that there isn't one, and that this is causing problems. It makes people angry, and causes them to lose faith in government.

People know that government employees are being forced to take pay cuts, and many are being laid off. But they really do not know why.

Yesterday's budget vote was 45-30. The public doesn't understand that this means that there were forty-five votes FOR the budget and only thirty votes against, and this is why it failed. They don't understand that because it does not make sense. But because of a trick that the Republicans were able to play on the public the rules are that it takes a two-thirds vote to pass a budget. So an overwhelming vote of 45-30 FOR the budget means that the budget does NOT pass!

Every Republican in the state has taken a vow not to raise taxes on wealthy corporations or massively wealthy individuals. They won't vote to require people who buy yachts or private jets to pay the same sales taxes that the rest of us pay when we buy cars. They refuse to ask oil companies to pay fees when they take our oil out of the ground and sell it to us. (Maybe they understand that such a vote will dry up their campaign funding...)

News stories about the latest budget collapse:

San Jose News:

Although the $105.2 billion budget blueprint garnered a majority vote, 45-30, it fell short of the two-thirds supermajority that California's constitution requires to pass a budget.

. . . The vote "shows clearly that we're not going to vote for taxes," said Assembly Republican leader Mike Villines, R-Fresno.

Wall Street Journal:

"We're fundamentally saying 'no tax increases,'" said Mike Villines, the Assembly Republican leader.

They will require workers to take pay cuts and layoffs. They will cut our school budgets. They will cut transportation, the DMV, road repair, law enforcement, prisons, fire protection. But they will not ask wealthy corporations or extremely wealthy individuals to pitch in.

And here is why: by and large California's public doesn't know this. They are not being informed that this is entirely because a small minority of Republicans refuse to represent the public's interests, choosing to represent the wealthy corporations and wealthiest few people.

In fact, the public likely believes that it is the Democrats who are keeping the budget from being passed. If you Google the word Democrat with the word obstruction and you get about 600,000 results. This is a national result, but it reflects the same strategy in use in California. Republicans spent years accusing Democrats of being "obstructionist" when they were not, as a strategy to pressure them to pass Republican-/corporate-oriented bills. Now, after blocking almost everything that the nation's Congress is doing, the Republicans are campaigning saying that the Democrats in Congress aren't passing anything! Meanwhile a new Drum Major Institute polls shows that 72% of middle-class Americans can't name a single bill passed by Congress in the last two years that benefited them or their families! (Minimum wage increase, stimulus package, college more affordable, SCHIP...)

Less than two in five (38%) middle-class respondents to the Drum Major Institute's new poll say they live comfortably. One-third (34%) say they meet their basic expenses each month with just a little left over for extras, while one-quarter (26%) of middle-class adults would say they just meet their basic expenses (17%) or have trouble meeting their basic expenses each month (9%). And, economy and jobs tops their concerns. They are pessimistic about the direction of the economy. They think it's more likely that Brangelina will celebrate their 25th anniversary than gas prices returning to $3 a gallon.

But they do not understand WHY. They don't make the connection between the corporate-controlled Republican party and what is happening to the country.

How do Republicans get away with this? How are they able to get the public to think so many things that are not true? The Republicans have a vast "noise machine" that tells the public things that are not true. (Remember how they were able to convince so many people that Iraq had attacked us on 9/11?) It costs a lot of money to have a noise machine like this, but they get the money from the very corporations and wealthy individuals whose interests they are representing. So it works for them.

Plain and simple, they are bale to reach the public and tell them stuff, and get the public to believe it. The use of overwhelming repetition is the tactic. I use the word “stuff” here with meaning: it’s just stuff they want the public to believe, with no grounding in reality. They do it, and here we are. Nationally the debt is approaching TEN TRILLION DOLLARS and they are still able to get the public to think taxes are bad. In California they are able to force layoffs and school cuts while refusing to make the ultra-rich pay even the same taxes the rest of us pay.

Please leave comments with suggestions on how to fight this.