The Logic-Bomb Explodes

There’s a rule in systems management – if you’re going to fire an arrogant pain-in-the-ass rogue programmer, that prima donna who does more harm than good with what he thinks are his brilliant ideas, done without any approval at all, do it fast. The folks in Human Resources will tell you to do the counseling, documenting each session, then the verbal warnings, also documented, and then the multiple written warnings – all to avoid a wrongful-discharge suit – but that rogue programmer will know exactly what’s going on. Not only will he have already lined up another job, probably with your competitor, if he’s ticked off enough, he’ll have time to plant a logic-bomb in your systems. No one will notice a thing, if he’s good, until eighteen months later when your entire billing system collapses, so no money is coming in, and all the account balances go to zero, when everything has to be rebuilt from scratch. Revenge is sweet and this has been known to happen – so one must be careful. Don’t blow off tiresome smart people as useless and insignificant. They can be dangerous. They sometimes plant logic-bombs.

That’s what happened with the Occupy Movement – now forgotten. There was Occupy Wall Street in Zuccotti Park, not far from Wall Street, back in September 2011, a lot of drumming and speeches and chanting, without much organization. There was talk of the One Percent and the Ninety-Nine Percent, and of the absurdity of our extreme income inequality, and its immorality, and inefficiency, but there were no demands, much less a coherent set of specific goals. Within a month there were protests all across the nation, and then around the world, but it came to nothing. A month later authorities everywhere were forcibly removing the protest camps, and by February, 2012, the last of them were gone. Wall Street continued to make big money, for the right sort of people, setting records for corporate profits again and again, and wages for most everyone who wasn’t at the top remained flat, as they had been for a decade, and in the presidential campaign that year, the Occupy Movement was hardly mentioned at all. The year before Herman Cain had called these folks “jealous” Americans who “play the victim card” and want to “take somebody else’s Cadillac” – but all that back-and-forth was absent from the 2012 campaign. It didn’t matter. The 2012 campaign, on both sides, was financed by the One Percent – each side had their handful of billionaires. Only the industries varied, so we kind of have a system that is of, by, and for the One Percent. The folks who had protested may have been right about the way the few had taken over and were systematically screwing everyone else, but politicians and the media had pretty much blown them off. They were tiresome smart people who were useless and insignificant.

They didn’t account for the logic bomb that had been planted, and it exploded this Thanksgiving at Wal-Mart:

At least 55 total people have been arrested in Black Friday Wal-Mart protests, according to organizers. Those arrests, which came amid a statement of support from a handful of congressional Democrats and plans for 1,500 total protests, took place at civil disobedience actions in Ontario, California; Arlington, Virginia; Chicago; Dallas; and Secaucus, New Jersey. Arrests were also expected at mid-day demonstrations in St. Paul, Sacramento, and Seattle, and at a Bay Area rally…

American Federation of Teachers President Randi Weingarten, who led a protest outside a White Plains, New York Wal-Mart, told Salon she was “honored” to support the cause. … She said about a third of the roughly hundred activists at her protest were teachers, because “we know what happens to families when you’re making these horrible choices about whether you can have a roof over your head… whether you can have enough in your budget for food, whether you can pay for school supplies.” She added, “Capitalism was supposed to be about, you know, people making profits, but not… abusing and pauperizing their workers and communities.” When workers organize, she charged, “Wal-Mart’s first impulse is to fire them.”

Wal-Mart has maintained that it did not break the law when it enforced its attendance policy against workers who had been on strike. The National Labor Relations Board announced last week that it had found sufficient merit in intimidation allegations against Wal-Mart to issue a complaint.

It took just over two years, but the political problem had to come up:

Democratic Senators Sherrod Brown and Ed Markey, and House members Jan Schakowsky, Judy Chu, William Lacy Clay, Gwen Moore, and Jim McDermott also voiced their support in a Friday statement, saying “It is time that Walmart pays its workers a fair wage and stops trampling on their rights.” The Democrats charged that the company “has systematically and illegally retaliated against workers who have had the courage to stand up to improve conditions.”

In contrast, the White House, which has repeatedly praised or held public events with Wal-Mart, did not respond to a request for comment. The union-backed labor group OUR Walmart, whose members and supporters are protesting today, this month launched an online petition seeking a meeting with the president. Independent Senator Bernie Sanders this week told Salon he “would hope that the president would join us in demanding that Wal-Mart start paying its workers a living wage.”

These tiresome people talking about income inequality were supposed to have gone away, and they did. They just left something behind, to explode later:

Firebrand Congressman Alan Grayson hailed Black Friday civil disobedience in an afternoon interview, saying the protests by Wal-Mart workers and supporters show “the dissatisfaction of the middle class” since the 2008 financial crash “coming to a slow boil.”

“If one person falls out of the middle class, that’s sad,” Grayson told Salon. “But if millions of people fall out of the middle class, that creates a backlash which is being seen all over the country, and will potentially create a new political movement of the disenfranchised.”

That may never happen, but Zachary Goldfarb, in the Washington Post, reports that the Democrats may have to change their tune:

For more than two years, President Obama has endorsed reducing Social Security payments as part of an ambitious deal to tame the national debt. But then Sen. Elizabeth Warren (D-Mass.) – viewed by supporters on the left as a potential 2016 presidential candidate – embraced a far different proposal: increasing benefits for seniors.

As Obama struggles to achieve his second-term domestic agenda, a more liberal and populist voice is emerging within a Democratic Party already looking ahead to the next presidential election. The push from the left represents both a critique of Obama’s tenure and a clear challenge to Hillary Rodham Clinton, the party’s presumptive presidential front-runner, who carries a more centrist banner.

The left’s influence will be on display in coming weeks when a high-profile congressional committee formed after the government shutdown faces a deadline to forge a budget agreement. Under strong pressure from liberals, the panel has effectively abandoned discussion of a “grand bargain” agreement partly because it probably would involve cuts to Social Security.

“The absolute last thing we should do in 2013 – at the very moment that Social Security has become the principal lifeline for millions of our seniors – is allow the program to begin to be dismantled inch by inch,” Warren said recently on the Senate floor, announcing her support for a bill that would expand the program.

Liberals say Social Security is one example of how Democrats are likely to face sustained pressure in coming months to move in a more populist direction on a host of issues.

Hillary Rodham Clinton isn’t the one for that – she and Bill are pretty close to Wall Street – and Obama turned out to be useless. Saving the banks and Wall Street might have been important, but enough is enough, and this goes beyond Wal-Mart, and the battle is underway now, but it’s tricky:

The push from the left carries political risks for Democrats, who could be accused of being reckless about the national debt or insensitive to the demands of business and economic growth. What’s more, many Americans are uncomfortable with the notion of the government redistributing income far beyond what happens today in order to accomplish basic elements of the populist agenda. Liberal congressional or presidential candidates could pressure more moderate candidates to veer to the left, perhaps reducing their electability.

People are angry, but how angry? Hillary Clinton can make populist sounds, when she needs to, so she might do just fine, or not:

Liberals, however, are fawning over Warren, who was the brains behind the new Consumer Financial Protection Bureau and focused on the economic condition of the working class when she was a professor at Harvard. In addition to calling for breaking up the big banks and expanding Social Security, she has proposed a range of new policies to cut student debt.

Warren received a resounding response when she spoke at the AFL-CIO convention this past fall in what many considered an encapsulation of her populist message going forward.

“We know even though pundits and big corporate lobbyists in Washington might need to be dragged kicking and screaming, we know America agrees with us. We believe Wall Street needs stronger rules and tougher enforcement. And you know what? So do more than 80 percent of people,” she said. “Wall Street will fight us, but the American people are on our side.”

Yep, the Occupy Movement did its job, planting its logic-bomb, and there’s the other guy:

Another potential source of pressure building on the left is Sen. Bernard Sanders (Vt.), an independent who caucuses with Democrats. He has said he might run for president if no liberal he considers adequate steps up.

Although his chances would be slim at best, he could serve as an agitator who pulled other candidates to the left – or as a potential spoiler if his campaign got off the ground.

“I don’t wake up every morning saying, ‘Oh my goodness, I really want to be president,'” Sanders, who calls himself a democratic socialist, said in an interview. “But somebody’s got to be out there, and if nobody is, I’ll do it.”

At the Washington Monthly, Kathleen Geier considers that:

That definitely sounds like he’ll run if Elizabeth Warren or another progressive – Sherrod Brown, maybe? – doesn’t. Bernie Sanders is now 72, a little old to be running for president, but no one expects him to win. The point would be to inject some important ideas into the national conversation and to pull Hillary politically to the left.

In the past, I’ve expressed skepticism as to whether this gambit actually succeeds. Did Dennis Kucinich pull Obama or Kerry to the left? Did Jesse Jackson do the same for Mondale or Dukakis? I’d like to see what political science research says about the phenomenon. Sanders or Warren might not be comparable to Kucinich or Jackson, however, because as senators, they have more mainstream respectability, and thus (maybe) more clout.

That ignores the key factor here. The Occupy Movement’s logic-bomb finally went off, even if Geier says this:

At this point, Elizabeth Warren is sounding genuinely reluctant to challenge Hillary. Yet a challenger would be a healthy thing for Hillary, and the party. Hillary Clinton hasn’t run for office since the 2008 primary, so a strong challenger would sharpen her political skills. Also, if a challenger to her left forced her cut her ties to the investment banker-type economic advisers who have had a stranglehold on economic policy during the last two Democratic presidential administrations… that would be a wonderful thing.

Besides, Bernie’s a lively, outspoken guy who would be fun. He’d be sure to add some excitement to what might otherwise become a tedious coronation. What do he, and the party, have to lose?

They have nothing to lose. The fatal damage to the system has already been done, and Henry Blodget at Business Insider points out that those who laughed at the Occupy crowd were dead wrong about who are the good guys here, because rich people really don’t create jobs:

“Rich people create the jobs.”

Specifically, by starting and directing America’s companies, rich entrepreneurs and investors create the jobs that sustain everyone else.

This statement is usually invoked to justify cutting taxes on entrepreneurs and investors. If only we reduce those taxes and regulations, the story goes, entrepreneurs and investors can be incented to build more companies and create more jobs.

This argument ignores the fact that taxes on entrepreneurs and investors are already historically low, even after this year’s modest increases. And it ignores the assertions of many investors and entrepreneurs (like me) that they would work just as hard to build companies even if taxes were higher.

But, more importantly, this argument perpetuates a myth that some well-off Americans use to justify today’s record inequality – the idea that rich people create the jobs.

This is a myth:

Entrepreneurs and investors like me actually don’t create the jobs – not sustainable ones, anyway.

Yes, we can create jobs temporarily, by starting companies and funding losses for a while. And, yes, we are a necessary part of the economy’s job-creation engine. But to suggest that we alone are responsible for the jobs that sustain the other 300 million Americans is the height of self-importance and delusion.

So, if rich people do not create the jobs, what does?

A healthy economic ecosystem – one in which most participants (the middle class) have plenty of money to spend.

Over the last couple of years, a rich investor and entrepreneur named Nick Hanauer has annoyed all manner of rich investors and entrepreneurs by explaining this in detail. Hanauer was the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion.

What creates a company’s jobs, Hanauer explains, is a healthy economic ecosystem surrounding the company, which starts with the company’s customers.

The company’s customers buy the company’s products. This, in turn, channels money to the company and creates the need for the company to hire employees to produce, sell, and service those products. If the company’s customers and potential customers go broke, the demand for the company’s products will collapse. And the jobs will disappear, regardless of what the entrepreneurs or investors do.

Yes, Blodget is stating the obvious, and David Atkins adds this:

This isn’t he-said-she-said economic theory. This is known fact, demonstrable time and again through empirical evidence just like evolution or climate science.

Yet while there’s general agreement on treating the consensus around evolution and climate science as known fact regardless of the moneyed interests who would prefer otherwise, there’s no such consensus on economics. In fact, much of the economics profession seems – as Paul Krugman often laments – contradicting its own basic models in service to the propaganda interests of the wealthy.

Trickle-down economics is a known and proven failure. The experience of record stock market highs, record corporate profits, low effective tax rates and record income inequality in the context of a stagnant economy is all the proof anyone should need that the conservative theory of economics is a sweeping failure.

Atkins simply wonders why this is a valid opinion anywhere these days, but he can see why:

Conservatives get very upset when liberals accuse them of racism and prejudice as their basic underlying motives. But even discounting plain evidence of said prejudice, it’s simply too easy to draw the conclusion that some form of prejudice must be the underlying motive for refusing to attempt to boost demand-side growth rather than supply-side growth. Boosting supply-side growth is such an obvious and dramatic failure that the only rational explanation for the insistence on refusing demand-side growth is that some folks just don’t like the idea of certain kinds of people getting demand-side help.

Without that prejudice, the supply-side position wouldn’t just be laughably weak under peer review – it would be risible politically as well.

Certain kinds of people shouldn’t get help? That may be at play here, although Atkins also sees the government-as-inherently-evil thing at play too:

Certainly, demand-side policies require government intervention in a way that supply-side policies do not. A libertarian must by necessity be a supply-sider, so if your gut instincts about the world run libertarian, intellectual consistency will also lead you to gravitate toward supply-side theories. But it doesn’t actually logically follow that obsessing over government deficits should lead to insistence on low taxes for the rich and cuts to Social Security. The question of whether it’s important to keep deficits low is actually a separate question from whether we need to allow gigantic income disparities.

It’s unusual but logically consistent to be a demand-side deficit fetishist who doesn’t believe that the rich create jobs, wants to drastically raise taxes on corporations and the wealthy, and proposes to use the extra revenue to draw down the deficit. That, in fact, is the position of many neoliberal Democrats including Jerry Brown and presumably Barack Obama. It’s also theoretically possible, though even more unusual, to be a supply-side Keynesian, believing that deficits don’t matter and that the best way to stimulate the economy is to give lots of money to rich people. In fact, it’s arguable that this guns-and-butter approach was the operant policy of the Reagan and Bush II administrations.

That may be confusing, and intentionally so. All of this is confusing. Concern over deficits doesn’t necessarily mean you hammer the middle class and the poor, accepting radical supply-side economics, but that is hard to explain:

It will be always be a tough sell, politically, to convince people that big deficits during recessions should be met with delving farther into debt, and that taxes should be raised and spending cut counter-cyclically during good times precisely when the government seems to be flush with money. That argument, even though it’s right, will always be very hard.

But that argument should in theory be entirely separate from whether rich people are job creators. Not even deficit fetishists should be buying into that one anymore.

There are a lot of things people aren’t buying into any longer. Wal-Mart isn’t a fine place to work and good for the community, or the country – their current advertising campaign notwithstanding. There’s more to Walmart than you think? Yes, there certainly is, and none of it’s good. Their tag-line was made bitterly ironic when the Occupy logic-bomb finally went off. Cut Social Security and Medicare and Medicaid and food stamps, to lower the deficit and eliminate our national debt, while keeping taxes low on the very wealthy, because the rich create jobs? Yeah, you can do that, and cripple the economy, which sort of depends on everyone being able to buy stuff, even the bare necessities – so do that and there will be fewer jobs, not more.

They were saying such things in Zuccotti Park over two years ago, but the media and the politicians sort of fired them – but one must be careful. Don’t blow off tiresome smart people as useless and insignificant. They can be dangerous. They sometimes plant logic-bombs that crash your large-scale system. It seems that just happened.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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2 Responses to The Logic-Bomb Explodes

  1. Rick says:

    At first I thought what this David Atkins guy was saying about supply-side vs demand-side was fine, but when he started confusing the issue by talking about the deficit (which is both pretty much a side-issue and a non-issue, used by conservatives because they don’t have the guts to really argue for what they really believe in, which is tiny, ineffective government), and then he called Obama a “neoliberal” (which, confusingly, is just another word for a fiscal or economic conservative), he sort of lost me. Still, I suspect he and I agree on more than we disagree.

    In any event, I think any strong argument against the idea of rich people being “job creators” should also include these two points:

    (1) If rich people are such job creators, why haven’t they been doing more of it?

    It’s not for lack of money, since everyone knows they’ve been sitting on trillions of dollars for years, yet unemployment is still a bit on the high side. Some (mostly political types, not actual entrepreneurial types) have argued business is waiting to see what happens with taxes and Obamacare, but as several top actual successful rich investors have pointed out, you always have taxes and such to contend with, but if you want to make money, you work around these. But then, what about those who claim “job creators” are feeling burdened by government regulation?

    (2) If “government regulation” puts such a damper on business investment, why don’t business people mention that more often, when asked?

    Surveys of businesses, trying to find out why they’re not investing during weak economies, including the present one, have found that “burdensome regulations” are actually very low on the list of reasons given by real businesses (not conservative pundits and politicians) for not investing more — I heard of one survey conducted by the Labor Department that found them mentioned by only six-tenths of one percent of businesses.

    The real reason the so-called “job creators” are not “creating jobs”? Simply, it’s bad economic conditions. Business types are not stupid. They don’t invest willy-nilly, on a whim. They are not going to spend a lot of money and effort selling stuff to people who don’t have the money to buy it. And they will start investing more once demand returns to the marketplace.

    So yes, if we’re looking for the real “job creators”, we need look no further than consumers. It’s really just as simple as that.

    Rick

  2. Russell Sadler says:

    Occupy’s logic-bomb. Beautiful. Just beautiful. Your brief hiatus over the holiday didn’t stop you from thinking. This is one of your best, most persuasive syntheses. Trust you and yours had a happy holiday.

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