Monthly Archives: August 2018

Elizabeth’s Big Idea

As the United States approaches the critical November 6th midterm elections, Democratic candidates convey three themes: costs, wages, and corruption. While aspects of the corruption theme are readily apparent — almost every week some Republican big wig is indicted for corruption, what has been lacking is a “big picture” proposal to address inequity. Now, Massachusetts Senator Elizabeth Warren has proposed a sweeping reform of capitalism.

Democrats have winning messages on costs and wages.  Costs because consumer prices are increasing for health care, housing, and energy.  Wages because Trump’s economic policies have increased corporate profits but this hasn’t translated to more money in the wallets of working families.  (Republican largesse has enabled corporations to raise their dividends, increase CEO salaries, and buy back their stock; but it hasn’t benefited their employees.)

Democrats also have a winning issue on corruption.  As each days passes, there’s more evidence of corruption in the Trump administration — this week saw Trump’s campaign manager, Paul Manafort, convicted of financial crimes, and Trump’s personal attorney, Michael Cohen, plead guilty to campaign finance violations.  (This week we also saw an early Trump supporter, California Congressman Duncan Hunter, indicted for misuse of campaign funds.)

Although these events support a Democratic campaign narrative of “rot at the top,” they do not address what is really happening in American society: Capitalism is failing working Americans. (One of 2018’s savage ironies is that Donald Trump, who ran as a populist candidate, has abandoned America’s workers.)

That’s why Senator Elizabeth Warren’s proposal, The Accountable Capitalism Act ( ), is important: This act seeks a fundamental reform in capitalism; one that will make capitalism work for all Americans — not just the top 1 percent.  Senator Warren noted that in the last forty years there has been a fundamental shift in the relationship of large corporations and American society: “In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities… But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders. Because the wealthiest 10% of US households own 84% of American-held shares, the obsession with maximizing shareholder returns effectively means America’s biggest companies have dedicated themselves to making the rich even richer.”  Warren observed, “Real wages have stagnated even as productivity has continued to rise.  Workers aren’t getting what they’ve earned.”

To change corporate behavior, Senator Warren’s Accountable Capitalism Act has four components.  1. Charter Reform.  “Big corporations that make more than $1 billion a year in revenue would need to get new charters from the federal government. Those new charters would make it clear that the companies must consider the interests of their workers – and other people affected by the company – not just shareholders.”  In other words, corporation would need to consider the needs of their employees; not just the need for equitable wages but other needs such as healthcare and childcare — and environmental safety.

2. Worker Participation: “Workers would elect at least 40% of board members for big corporations – giving them seats at the table when big decisions need to be made.”  It’s estimated that this would affect 3500 public US companies — and hundreds of private companies.

3. CEO compensation: “Top corporate executives are now compensated primarily in company equity, which gives them huge financial incentives to focus exclusively on shareholder returns. To make sure CEOs are focused on the long-term success of the company, rather than the short-term interests of shareholders, executives at big corporations wouldn’t be able to sell company shares for at least five years after receiving them – and for at least three years after a stock buyback.”

4. Political Contributions: “Corporate executives wouldn’t be able to use company dollars to make political contributions unless they got approval from 75% of directors and shareholders. This ensures any political expenditures benefit all corporate stakeholders.”

5. Consequences: “Permits the federal government to revoke the charter of a United States corporation if the company has engaged in repeated and egregious illegal conduct.  State Attorneys General are authorized to submit petitions to the Office of United States Corporations to revoke a United States corporation’s charter. If the Director of the Office finds that the corporation has a history of egregious and repeated illegal conduct and has failed to take meaningful steps to address its problems, she may grant the petition.”

Senator Warren’s proposal is likely to get little traction in a Republican-controlled Congress.  Nonetheless, it’s an important idea.  One that should get the attention of all Democratic candidates. We have to reform American capitalism and Elizabeth Warren has suggested a significant first step.

Will the Economy Decide the Midterms?

By many indicators, the US economy is strong. As Donald Trump travels around the country campaigning for Republican candidates, he touts the economy as evidence that his policies are working. Will this be enough to determine the outcome of the November 6th midterm elections?

Probably not.  But there’s little dispute that the US economy is strong.  Since Trump became President, 3.4 million jobs have been created; 7 in 10 Americans say they are doing fine or living comfortably; the official unemployment rate is 3.9 percent; and the stock market (Dow Jones Industrial Average) is up 33 percent.

Trump’s problem, and the problem for Republicans in general, is that many Americans are looking beyond the glitzy economic numbers.  And, depending upon their Party affiliation, many voters don’t like what they see when they examine their own situation.

The July 2nd Quinnipiac Poll ( ) asked, “What is the most important issue to you in deciding how to vote in this year’s election for the U.S. House of Representatives: the economy, taxes, health care, immigration, or gun policy?”  Nationally, 27 percent said immigration, 23 percent said the economy, 22 percent said health care, and 12 percent said gun policy.  But the preference depended upon political Party: Immigration was the number one issue for Republicans and Independents; for Democrats it was health care.

50 percent of Quinnipiac respondents said they would vote for the Democratic candidate for the House, versus 41 percent who said they would vote for the Republican candidate.  Of this 50 percent, 71 percent said that health care was their most important issue; their second choice was gun policy.  For Republicans, their most important issue was immigration; the economy was their second choice.

The Quinnipiac poll is another confirmation of political polarization.  Approaching the midterm election. the issues for Democratic voters are costs, wages, and corruption.  The issues for Republican voters are immigration and support for Trump.

Democratic voters are concerned about healthcare costs and the cost of living in general.  That’s the result of a harsh reality: while corporate profits have surged, the economic uptick hasn’t produced real wage increases.  According to the Center for American Progress   ( ), “Despite the fact that the country is experiencing positive GDP growth, the benefits are not trickling down the way Trump predicted they would.”

Of course, whether you believe this or not depends upon whether you trust what Trump says.  The July 25th Quinnipiac poll contained this question: “Who do you trust more to tell you the truth about important issues: President Trump or the news media?”  75 percent of Republicans trusted Trump; while only 5 percent of Democrats trusted him.

Recently AP News factchecked Trump on his exorbitant claims about the economy (’s-economic-fiction:-‘record’-GDP,-jobs ) and concluded: “Trump is distorting the truth on U.S. economic growth and jobs, pointing to record-breaking figures that don’t exist… He cites the highest-ever gross domestic product for the U.S. that’s not there.”

Rising costs, inflation, are wiping out any wage gains garnered by working families. ( )   In July, Inflation rose 2.9 percent; the highest level in seven years.

Nonetheless, consumer confidence in the economy is at the highest level in eighteen years ( ).  And, while Trump’s overall approval rating remains negative, the latest CNBC poll ( ) indicates that 51 percent of respondents approve of his handling of the economy.  (A recent New York Times article  ( ) suggests this is because Trump has done a good job of selling his positive spin on the economy.)

The current economic figures indicate the economy is not working for all Americans; the uptick is disproportionately helping corporations and the top one percent.  (A recent Guardian article ( ) reported, “The chief executives of America’s top 350 companies earned 312 times more than their workers on average last year.”)

This economic imbalance is why it’s a good idea for Congressional Democratic candidates to focus on costs, wages, and corruption.  Costs because consumer prices are increasing for health care, housing, and energy.

Democratic candidates should focus on wages because Trump’s economic policies have increased corporate profits but this hasn’t translated to more money in the wallets of working families.  Republican largesse has enabled corporations to raise their dividends, increase CEO salaries, and buy back their stock; but it hasn’t benefited their employees ( ).

While Trump promised to “drain the swamp,” he’s actually deepened the swamp.  The issue of Republican corruption complements the economic issues of costs and wages for two reasons.  The first is that an unusual number of Trump associates appear to be corrupt.  For example, this week New York Republican Representative Chris Collins — the first member of Congress to endorse Trump — was indicted for insider trading.  Also in this week, Trump cabinet member Wilbur Ross (Commerce) was accused of having stolen $120 million at his investment company ( ) — Ross is also accused of violating conflict-of-interest laws and filing false information.

More generally, Trump Administration corruption ties to its economic policy.  For example, this week the New York Times   ( ) reported that the implementation of the steel tariffs has guided by Trump supporters at two large US steel companies, Nucor and US Steel.  As another example, Trump plans a coal company bailout that will help some of his biggest donors.  ( )  And, of course, it’s well established that the 2017 Trump-sponsored tax cuts primarily favored big GOP donors ( ).

Will the economy help Republican candidates in the midterm election?  Probably not.  Democratic candidates will run on the interconnected issues of costs, wages, and corruption.  That should be enough to influence most contested Congressional districts.

Why is California Burning?

In case you missed it, California is beset with an unusual number of intense wildfires; the state is covered by smoke.  In response, on August 5th, Donald Trump tweeted: “California wildfires are being magnified & made so much worse by the bad environmental laws…” Hmm, so California “environmentalists” are responsible for the fires?  Or is someone else to blame?

Twelve years ago, I wrote “Global Warming? Not in My Back Yard” ( ), pointing out that while most Americans are concerned about global warming (climate change), in general, they don’t get excited about it, in particular, until there’s evidence at the local level — because they have a lot of other issues to worry about such as the cost of their healthcare or housing or jobs.

Two years of extreme wildfires has gotten Californians’ attention.  Waking up each morning worried about air quality — because of the smoke — or worse yet, wondering if you will be forced to evacuate, has made everyone in California aware that we have a problem.  The issue is what to do about it.

In Trump’s full tweet, he said: “California wildfires are being magnified & made so much worse by the bad environmental laws which aren’t allowing massive amount of readily available water to be properly utilized. It is being diverted into the Pacific Ocean. Must also tree clear to stop fire spreading!” Even by Trump standards, this was an incredibly ignorant tweet.  The wildfires are not being caused by lack of water or the absence of tree clearing.  Most experts agree they are the result of dryness — due to the state’s prolonged drought, high temperatures — July was the hottest month ever recorded, and — in many cases — ferocious winds.

As a native Californian, I’ve learned a lot about wildfires.  (If you’ve lived here for more than a couple of years, you have fire stories to tell.)  In October of 1991, the Oakland Hills Firestorm occurred about 12 miles from my Berkeley residence.  This fire killed 25 people, injured 150, and destroyed 3280 residences.  It covered an area of approximately 3 square miles.   In October of 2017, the Tubbs fire occurred about 15 miles from my west Sonoma County property.  This fire (spanning Lake, Napa, and Sonoma Counties) killed 22 people, injured more than 100, and incinerated 5643 structures.  The Tubbs fire covered a much larger area than the Oakland Hills fire; on its northern edge the Tubbs fire stretched 12 miles.

Both fires were similar.  They occurred in hot, dry conditions and were fed by intense winds from the northeast.  The blazes started small and quickly became conflagrations; people in the path of the firestorms literally ran for their lives.  (In both cases I knew folks who lost their homes.)

In neither case was California water policy an issue.  (Sorry, Donald.)  A recent article by Alice Hill and William Kakenmaster ( ) reported: “Many factors contribute to [California] wildfires, but two in particular greatly contribute to increasing risk: climate change and growing development in the wildland-urban interface (WUI).”

Many Californians attribute the violent wildfires to global climate change.  (Last year, California Governor Jerry Brown called extreme fire conditions “the new normal” under climate change.)  The most recent California poll ( ) found that two-thirds of respondents believe the effects of climate change “are already occurring” and 81 percent believe it to be “a serious threat” to the state’s future.  Not surprisingly, the attitudes about climate change split along Party lines: only 24 percent of Republicans view climate change as a threat.

One of the ongoing wildfires is the Carr fire, northwest of Redding, adjacent to Lake Shasta.  It’s the most Republican congressional district in Northern California, represented by Doug LaMalfa. a climate-change skeptic, who says he “doesn’t buy” human-made climate change: “The climate of the globe has been fluctuating since God created it.”  (A recent Guardian article ( ) observed: “Like LaMalfa, the citizens of Redding are far more skeptical about climate change than the average American is. In 2016, a team from the Yale Program on Climate Change Communication found that only 35% of Redding residents believed that global warming would harm them personally.”)

Notwithstanding climate-change skeptics, most Californians agree that we need to take action to mitigate climate change.  One of these is to reduce fossil-fuel emissions.  Notably the Trump Administration has just taken steps to reduce California’s ability to do this; On August 2nd, Trump’s EPA revealed plans to strip California of its right to set air-quality rules ( ).

Hill and Kakenmaster noted that in addition to climate change, where homes are placed greatly impacts the destruction wrought by wildfires; they pointed out the destructive potential of placing houses adjacent to wildland vegetation, the wildland-urban interface (WUI):  “In 2010, California had more people and homes located in the WUI than any other state in the continental United States—close to 4.5 million homes and 11 million people… [according to] the U.S. Commerce Department, ‘Fires within communities surrounded by natural areas [the WUI] are the most dangerous and costliest fires in North America.'” (The WUI was a factor in the Tubbs fire, but not in the Oakland Hills fire — there the primary issue was housing density.)

The catastrophic impacts of climate change aren’t confined to wildfires on the West Coast, each state has its own unique disaster profile ranging from drought to megastorms. Each state, and each community, will have to develop their own particular response.

At the national level, it’s time to take climate change seriously.  Trump isn’t going to do this.  It’s time for Americans to elect leaders who have the intelligence and the resolve to deal with “the new normal.”