Saturday, February 28, 2015

HAWB 1876 - The Granger Laws, Munn v. Illinois, TPP, and Net Neutrality - How America Was Built

I was in the middle of preparing a post on how early corporate charters included provisions to ensure that corporations would serve the general welfare, but had to deal with a grave medical issue. My doctor sent me to the ER, and for over a week following, I found I was sleeping 12 to 14 hours a day, with little energy to do much else than watch the boob tube. I had intended to return to my post on early corporate charters, but listening to the news yesterday morning on the way to pick up a prescription, decided instead to post one long excerpt from a 1912 dissertation on railroad legislation in Minnesota.

Railroads, of course, had been constructed in the United States decades before the Civil War. So had  some telegraphs. But they were not fully developed into an integrated national system until after the Civil War. There were three problems. Remember, our purpose here is to examine the history of USA economic development, to identify and adduce the proper principles of political economy for a republic. The United States was established as a republic at a point in world history where all other countries were ruled by monarchs and oligarchs. What sets the USA apart as a republic, so far as political economy is concerned, is the Constitutional mandate to promote the general welfare.

What I want to focus on here is the Dartmouth College case of 1819, which unfortunately, as time passed, became a shield behind which corporations tried to escape the regulatory will and intent of state and national governments. But as corporations became ever more powerful, and their activities affected the lives rapidly increasing numbers of people, the first stage of the populist uprising of the late 1800s emerged. This was the National Grange of the Patrons of Husbandry (The Grange), which was formed in the summer of 1867 and grew steadily until the financial crash of May 1873.  As the resulting economic depression wore on, The Grange was surpassed in membership, political activity. and radicalism, by the Farmers Alliances, which had adopted the much more thorough Greenback critique of American capitalism. But it was the members of The Grange that first pushed through significant legislative regulation of corporations in the1870s. These became known as the Granger laws.

One of the principal grievances The Grange, and farmers more generally had, was the railroad companies' practice of giving preferential freight rates and storage rates to larger customers. This is not quite the exact same issue of rate differentials involved in today's debate over net neutrality (in which the internet carriers argue that they should be able to charge more for faster service, thus getting larger data users to pay more for improving and upgrading internet infrastructure), but it is remarkably similar. More important are the principles of political economy that we can adduce from the significant court decisions that resulted when corporations affected by the Granger laws attempted to have those laws declared unconstitutional under the legal precedent of the Dartmouth College case. The most important case was Munn v. Illinois, 94 U.S. 113 (1876). Before we return to the historical narrative, I think an excerpt from the summary of the case will show why it is so important.
1. Under the powers inherent in every sovereignty, a government may regulate the conduct of its citizens toward each other, and, when necessary for the public good, the manner in which each shall use his own property.

2. It has, in the exercise of these powers, been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeepers, &c., and, in so doing, to fix a maximum of charge to be made for services rendered, accommodations furnished, and articles sold.

3. Down to the time of the adoption of the fourteenth amendment of the Constitution of the United States, it was not supposed that statutes regulating the use, or even the price of the use, of private property necessarily deprived an owner of his property without due process of law....

4. When the owner of property devotes it to a use in which the public has an interest, he in effect grants to the public an interest in such use, and must, to the extent of that interest, submit to be controlled by the public, for the common good, as long as he maintains the use. He may withdraw his grant by discontinuing the use....
These republican principals elaborated by the Supreme Court in Munn v. Illinois are, of course, completely at odds with the conservative and libertarian renderings of American economic history, which have been carefully rewritten and misinterpreted to present a view of untrammeled property rights. And I write "carefully rewritten and misinterpret" deliberately, having in view the thousands of shills and propagandists at places such as Club for Growth, American Enterprise Institute, Reason magazine, and the Cato Institute, maintained and funded by the Koch brothers and other conservative and libertarian enemies of the republic.  
To return to our historical narrative, here is an extended excerpt from Railroad Legislation in Minnesota, 1849 to 1875, by Rasmus S. Saby, published by the Minnesota Historical Society, in Volume XV of its Historical Collections. The Volkszeitung Company, Saint Paul, Minn. May, 1912.
P 177
Whenever attempts were made to subject the railroads to regulation in the interest of the people, they sought refuge behind the Dartmouth College decision. In this case the United States supreme court had held that the original charter of Dartmouth College constituted a contract between the Crown and the trustees of the college, which was not dissolved by the Revolution, and that an act passed by the state legislature of New Hampshire altering this charter without the consent of the corporation impaired the obligation of the contract and was therefore null and void. (n789) All rights once legally vested in corporations were thus placed beyond the reach of subsequent state legislation. “This decision,” said Chancellor Kent approvingly, “did more than any other single act proceeding from the authority of the United States to throw an impregnable barrier around all rights and franchises derived from the government; to give solidity and inviolability to the literary, charitable, religious, and commercial interests of the country.” (n790) This statement, made in 1826, seems almost prophetic in the light of later developments. The growth of corporate enterprise and the part this decision was to play could not be foreseen, even by such far-sighted men as Marshall and Kent. The doctrine laid down in this decision was followed in later cases in federal and state courts, and it soon came to be regarded as a settled principle of American constitutional law that charters of private corporations were inviolable contracts between the legislature and the corporators, and that the subsequent power of the legislature was restrained by their terms. (n791)

…. different states began almost immediately to guard against the interpretation of future charters as inviolable contracts by expressly reserving to the state legislature the right to alter, amend, or repeal acts incorporating private corporations. (n793) …A third plan was to insert this reservation of power in the state constitution. Beginning with the Delaware constitution as amended by a constitutional convention in 1831, we find that by 1866 this provision is to be found in the constitution of at least fifteen different states. (n796)

From the great amount of legislation and constitutional enactment which it provoked, it is evident that the doctrine promulgated in the Dartmouth College decision was regarded as new and not altogether acceptable by the different states. And as time went on and railroads were built and railroad corporations grew in power, the situation became more and more serious; for the new corporations, though controlling an essential factor in the economic life of the country, claimed exemption from state regulation in the interests of the public they were serving as common carriers, because their charter rights were constitutionally beyond legislative interference….

….The right of the legislature to control its own creatures, the corporations, was at the time of the granger movement no longer an academic question of political and legal theory; it was a vital question in the economic life of the country, and it had to be faced squarely. Thomas M. Cooley, the eminent jurist, expressed his opinion of the situation in 1873 as follows: “It is under the protection of the decision in the Dartmouth College case that the most enormous and threatening powers in our country have been created; some of the great and wealthy corporations actually having greater influence in the country at large, and upon the legislation of the country, than the States to which they owe their corporate existence. Every privilege granted or right conferred—no matter by what means or on what pretence—being made inviolable by the Constitution [according to this doctrine], the government is frequently found stripped of its authority in very important particulars by unwise, careless, or corrupt legislation; and a clause of the Federal Constitution, whose purpose was to preclude the repudiation of debts and just contracts, protects and perpetuates the evil.” (n799)

In an address in 1873 James A. Garfield criticised the judicial application of the Dartmouth College case, and ventured the opinion that some feature of that opinion as applied to the railway and similar corporations must give way under the new elements which time had added to the problem, and said further: “It will be a disgrace to our age and to us if we do not discover some method by which the public functions of these organizations may be brought into full subordination, and that too without violence and without unjust interference with the rights of private individuals.” (n800 James A. Garfield, "The Future of the Republic: Its Dangers and its Hopes," 5 Legal Gazette Phila 408 9, Dec. 19, 1873)

Railroads had from their first appearance been considered common carriers, both in England and in the United States; (n801) and this being the case, many failed to see why railroads should not like other common carriers be subject to legislative regulation. That railroads, though constructed by private corporations and owned by them, were public highways, had been the doctrine of nearly all the courts since the earliest days of railroad construction. (n802) Because they were public highways for the public benefit, the right of eminent domain had always been given to them; (n803) and courts had frequently held that the public had an interest in such roads, whether they were owned and operated by a private corporation or not. (n804) Because railroads performed public duties and functions and were indispensable to the public interests, the state legislature could rightfully tax or authorize taxation for the purpose of aiding railroads. (n805) The United States supreme court in 1872 expressed this doctrine in the following words: “A railroad built by a state no one claims would be anything else than a public highway, justifying taxation for its construction and maintenance, though it could be no more open to public use than is a road built and owned by a corporation. Yet it is the purpose and the uses of a work which determine its character.” (n806 Alcott vs The Supervisors, 16 Wall., 678, 696)

The granger movement was an attempt on the part of the people to secure control over railroad corporations and to prevent extortionate and discriminating rates by legislation, which according to the usually accepted understanding of the Dartmouth College decision, would be unconstitutional. The granger states were those whose legislatures enacted such laws and provided means for their enforcement. Cases involving the constitutional rights of state legislatures to regulate railroad rates soon came before the United States supreme court from three of the four granger states, namely, Iowa, Wisconsin, and Minnesota. (n809) The railroads contended that state laws fixing maximum rates, or authorizing railroad commissions to do so, were unconstitutional because they impaired the obligation of the charter contract, because they virtually deprived the corporations of property without due process of law, and, finally, because such laws were a regulation of inter-state commerce over which Congress had been given exclusive jurisdiction. (n810) The constitution of the state of Wisconsin reserved to the legislature the right to amend or repeal charters. (n811 Const. of Wis., Art 11, sec 1) The railroad corporations here argued that this reservation clause must be construed in connection with the fourteenth amendment of the federal constitution, for the right to a reasonable compensation for their services was not a franchise or privilege granted by the state, but an inherent right which could not be abridged or impaired by the state,—the question of reasonableness was not for legislative but for judicial determination. (n812)

The supreme court however followed the decision it had just rendered in the case of Munn vs. Illinois. (n813) In this case it had held constitutional an Illinois statute which fixed the maximum charges for the storage of grain in warehouses at Chicago and other places in the state having not less than one hundred thousand inhabitants. The court asserted that, under the powers inherent in every sovereignty, a government may regulate the conduct of its citizens toward each other, and, when necessary for the public good, the manner in which each shall use his property; when the owner of property devotes it to a use in which the public has an interest, he in effect grants to the public an interest in such use, and must, to the extent of such interest, submit to be controlled by the public for the common good as long as he maintains the use; of the propriety of legislative interference within the scope of legislative power, the legislature is the exclusive judge. (n814 Munn v. Illinois, 94 U.S. 113 (1876))
I have already pointed to one the principles of republican political economy we may adduce, which is that property rights are subject to regulation in the interest of the general welfare - the public interest. Saby's quote of Kent reflects another principle: the rights of the people are natural, and exist before and independent of the government, but the rights of corporations are derived from the government. It is a gross mistake to not distinguish between people and corporations, as the Supreme Court notoriously did in Citizens United v. FEC.  

Finally, in view of this history, it should be easy to see that the push to protect the profits of multi-national corporations from the regulations of national governments, as is contained in the Trans-Pacific Partnership and other “free trade” agreements, is a gross violation of the long-standing legal understanding of corporations’ relationship and responsibility to the community in which they operate. These trade agreements establish extrajudicial tribunals to adjudicate "investor-state disputes" in which corporations can sue governments for "lost profits" caused by the regulations of those governments. It should be obvious that the very idea of "investor-state dispute settlement" is an abomination to the principles of a republic, as articulated in Munn v. Illinois.

Try a Google search for "investor-state dispute settlement Munn v. Illinois" and you will see that nothing pertinent comes up. It is amazing that today's critics and opponents of the TPP and other “free trade” agreements have not applied the lessons of history to these latest attempts by corporations to escape their public duty. Proving, once again, that those who forget history are doomed to repeat it.

Friday, February 27, 2015

Naomi Klein on the economics of climate change

Naomi Klein has a new book out that already looks important.  In it she traces links between the madness of neoliberalism and the fact that we can't seem to do anything meaningful about climate change.  Of course I love it!  I have been arguing that neoliberalism can only wreck things around here for years, so I congratulate her for writing a book about why thinking like an economic primitive tends to lead to disaster.

I have a few squabbles with her ideas but none of importance.  I would have liked her to slide a bit further towards the historical Progressives than she does, but as you can see in the interview, the good neoliberal German interviewer apparently thinks she is already too radical.  He asks if we must really have an economic revolution (or at least a reformation) before we can accomplish anything about climate change.  The implication was that if that is true, we are doomed because those things take time we don't have.  This exchange:
SPIEGEL: Ms. Klein, that's nonsense, because it's illusory. You're thinking far too broadly. If you want to first eliminate capitalism before coming up with a plan to save the climate, you know yourself that this won't happen.

Klein: Look, if you want to get depressed, there are plenty of reasons to do so. But you're still wrong, because the fact is that focusing on supposedly achievable incremental changes like carbon trading and changing light bulbs has failed miserably. Part of that is because in most countries, the environmental movement remained elite, technocratic and supposedly politically neutral for two-and-a-half decades. We are seeing the result of this today: It has taken us in the wrong direction. Emissions are rising and climate change is here. 
Poor Brinkbäumer has it exactly backward.  The first order of business is to rid ourselves of the ridiculous BS that has infected the minds of the economic establishment for the past 40 years because it not only has wrecked what our grandfathers worked so hard to achieve, it has made it impossible to address the most important problem facing humanity.  Oh, and it isn't really necessary to eliminate capitalism—just the finance version demanded by the neoliberals.

Something to read over the weekend.  There is also a thoughtful piece on climate change from the perspective of the Germans who are actually trying to do something about it.

Thursday, February 26, 2015

Angry heart attacks

The day after the Paul Wellstone funeral, I was driving down I-35 listening to Minnesota Public Radio. They had a panel on to discuss the "controversy" surrounding the political remarks Paul's friends had inserted into the proceedings. A Republican clown by the name of Sarah Janacek starting lying her fool head off—at one point claiming that the crowd had only cheered these remarks because the closed captioning system had put "cheers" on the big screen (because the crowd was actually cheering).

Wellstone was a friend. I was upset that he had died so suddenly. I was REALLY upset that the Republicans were now trashing his funeral. Suddenly, I began to have major chest pains. Long story short, I wound up at St. Mary's in Rochester (Mayo) where they inserted a stent in my heart.

A couple of months ago, I found out that the stent they had put in was utterly unnecessary. The doc looked at the old records and said, "Based on what I see here, you should not even have had symptoms." So I told him how angry I had been. He claimed that serious anger was not enough to have triggered the event that got me to Rochester in the first place.

I am going to send him a copy of this article.  And in the meantime, I really try not to let myself become enraged about whatever madness is threatening to destroy us all—although goodness knows, there is an excess of provocation out there waiting to drive up the rage index in anyone minimally curious or aware.  In the name of my poor ticker, the appropriate response would have been to turn off the radio.

Of course, that doesn't let the Mayo system off the hook for an unnecessary stent insertion.  It's difficult to criticize the folks at Mayo because in many ways large and small, they really have earned their reputation for being the best in the land.  The level of competence from every level of employee is breath-taking—the nurses are spectacular.  But this place is also a perfect example of what is wrong with USA medicine because it has to be the global epicenter for expensive and unnecessary testing.  Show up as a middle-aged male with chest pains, and they have tests to run and boxes to check.  Lots of Republicans in medicine and they simply could not believe I could be so overcome with grief over the death of a left-wing Democrat as to trigger an MI (or at least the symptoms.)  So it was run the angio and while they were there, insert a stent anywhere that looked like it could develop into a problem.  They were institutionally disposed to sell me a stent—a big hospital like that probably does at least 100 procedures a day like mine.  And apparently a lot of people love all this attention—folks fly in from around the world to get their medical treatment in Rochester.  It really is quite amazing.

Wednesday, February 25, 2015

Harvard-Smithsonian sells out

One barely knows what to think about the following story.  The very idea that someone employed by the Harvard-Smithsonian Center for Astrophysics is a climate change denier who rejects the easily demonstrable idea that CO2 traps enough energy to actually alter the climate is shocking enough.  But that such a well-known and endowed institution makes their scientists scramble for the meagre funds from anyone willing to throw a few bucks their way explains why there are always a few cranks up for sale to say anything about almost anything.  Guy's got to make a living and Soon wasn't exactly making a pile—$1.2 million over a decade is only $120,000 a year.

This scandal also points out the fact that after the banksters, the energy companies seem to have most of the rest of the world's loose change.  Over the years, we have pointed out the goofy nonsense folks are willing to write to please the moneychangers, so why should it be any surprise that the same sort of integrity-free intellectuals are willing to whore themselves out to the energy companies.

What is especially sad about all this is that we are going to have to come to grips with the end of the Age of Petroleum whether we like it or not.  Wouldn't it be a whole lot better if the society was so organized that the large piles of money were dedicated to those fields attempting to find our way out of this trap.  Of course it would.  One of the advantages of pushing the "$100 trillion solution" is that folks could become immediately aware of where the big piles were.  Not only would it create an environment where parents would send their children off to become civil engineers so they could design the new infrastructure, it might even give someone like poor Dr. Soon honest employment.

I am also not convinced that the best way to deal with climate denial is some sort of public shaming as suggested below.  There are a lot of levels of climate denial, and it is probably a waste of time to start splitting hairs over what constitutes politically-incorrect denial.  The topic simply must become "What the hell are going to do about climate change? And how do we organize and fund such a project?"  The "whose denial is worse" question should be relegated to after hours.

Tuesday, February 24, 2015

Will oil prices soon be returning to "normal"?

While everyone I know is really benefitting from the lower gasoline prices, all of them assume that this is just a temporary price holiday.  In fact, the consensus seems to be that by August, gasoline might be nearing $5 / gallon as the oil people seek to recoup their losses from this spring.  The idea that these low prices were driven there by fundamentals like an oil glut is simply not believable.  Yes, there are still places on earth where the cost to produce is less than $50 / barrel, but there aren't many of them.  And almost all of the new oil coming online is very expensive indeed.  This most especially includes the output of fracking.

I don't predict oil prices because there is often a disconnect between the cost of production and the price at the pump.  I mean, here in USA, there are some serious refinery strikes going on.  Under "normal" circumstances, the oil companies would seize on this as an excuse to raise prices.  Not now.  But since oil companies will never be confused with charitable organizations, high production costs will almost always translate into higher pump prices.

Monday, February 23, 2015

Interesting lesson from the other night

A few months back, I had one of those insights that actually startled me—it dawned on me that with the development of affordable solar cells, the human race was on the verge of another era of cheap energy (and all that entails.)

Well the other night I had another.  I was describing what it was like to live in one of those super-insulated Swedish homes.  Of course, it was cozy and warm but what made it so remarkable was that in order to eliminate the possibility of mold and mildew buildup (which is a major problem with super-tight buildings) it had a positive ventilation system complete with a heat exchanger so it could renew the indoor air without heat loss.  This system was so effective that it not only sucked the moist and odorous air from the kitchen and bathrooms, but supplied warmed outdoor air to the living room and bedrooms.  And because the house was within a few hundred meters of the sea, the make-up air smelled of salt water (which was an extra treat for me who has lived my whole life near the center of a large continent.)  I exclaimed, "I never had such clear sinuses during the winter before in my life."

This was part of an explanation for a Powerpoint slide that contained the following:
What are the most important economic issues of the Producers?

Honesty, Virtue

The drag of predatory behavior
Regular readers know I cover these subjects pretty extensively so there was nothing new here.  But even so, I flashed on the question "What kind of paradise could the Producers build if they really did get their hands on the $100 trillion Tony and I have been arguing is the minimum necessary to rebuild the global infrastructure to eliminate the causes of climate change."  I mean we are talking about things like healthy indoor air times many thousands.

The future need NOT be Mad Max.  The future could just as easily be millions of people working at good jobs that would save the planet.  Instead of young people destroying their mental health because of the futility of unemployment, they could be doing work they will be proud to show their grandchildren.  And because this would be a Producer Class agenda that leveraged the Instinct of Workmanship, it would teach the virtues of a successful society.

I actually smiled about this as I fell asleep.  And in the future, I am going to try to keep from proclaiming that we must spend the $100 trillion or we all die and stress that IF we spend this sort of money, it will make a lot of us VERY happy and fulfilled.

Saturday, February 21, 2015

Well, that went pretty well

One of the more strange experiences one can have is to watch yourself give a speech as recorded by someone who actually knows how to run a video camera.  I watched most of the file this morning—it ran 100 minutes including the question session.

And yes, 100 minutes trying to keep up with a bunch of retired Ph.Ds wore me out!

This was a group of Minnesota liberals who knew enough of the Midwest progressive traditions to get most of my references to Thorstein Veblen and giggled at my description of the different legacies bestowed on our politics by the various Nordic immigrant groups.  One audience member was especially upset that governor Scott Walker was assaulting the Wisconsin Idea and thanked me for mentioning the role of UW in the various Progressive ideas that have been successful over the years.

The videographer claimed during the speech's post-mortem that even though I was speaking to a highly educated group of Minnesota Liberals, most would be spending a bunch of time with Google before the night was over.  He may be right but I did attempt to use the old Populist method of using examples that people can verify on their drive home.

Anyway, I have a 18-gig AVCHD file I hope to turn into a Youtube version of the evening.  We will see if I can cram all the good stuff into a speech that lasts less than an hour.  One of the main things I learned from this was that people are really interested in a description of a future that is worth living.  I intend to expand on this theme in the next few months because it really is the best approach I have.  Yes, the solar future can be very beautiful, we CAN employ our young in useful pursuits, economics need NOT be a dismal science, etc.  Turn the Producer Classes loose on humanity's problems with sufficient resources and watch how magnificently they solve them!

Thursday, February 19, 2015

Should be ready

Got the Powerpoint presentation done.
Got all the batteries charged and the equipment works.
Got to time to relax and get centered.

Hope this speech goes well.  I have been trying to branch out from the blog.  Creating a meaningful plan to address a big project like climate change is LONG overdue.  (It's harder than it looks!)

If this goes well, a Youtube video should be available soon.

Wish me luck.

Wednesday, February 18, 2015

Checking out the venue

Powerpoint has a well-earned reputation for being accessories to some truly awful speeches.  And even though I have had access to Powerpoint software for years, I honestly cannot remember using it.  But this time around, I thought the situation appropriate mostly because I have points I can really only make with illustrations and pictures.

So I call the folks at Plymouth Congregational Church to find out what sort of setup I would be facing.  Yes there is a projector for your Powerpoint presentation and it needs a VGA hook-up.  Naturally, I panicked.  In the world of Apple, I have not seen a VGA hookup since the 90s and I could not find any adaptor on-line that would fit any computer in the house, that I could use to get to VGA.  Besides, I had a couple of high-def movie clips I wanted to embed in my presentation and some pictures with important details.  VGA projectors are usually 800 x 600 resolution. Ugh!

I called a friend who arranged to borrow a medium definition projector that at least had a digital input.  But now I needed to see the room in case they are set up with a ceiling mount or some other problem with showing up with your own equipment.

So at 2:00 pm. today, I am waiting to see the Jackman Room in the biggest and most prosperous Congregational Church in Minnesota.  After satisfying myself that I could quite easily set up a projector I brought myself, I requested to see the big meeting hall.  The Puritans were never into ornamentation but this church does a fine job of dressing up the structural features like the roof trusses—which are really lovely examples of the woodworker's art.  The Scandinavians and Germans may dominate Minnesota culture but make no mistake, the Puritans still pretty much own things.  And they take very good care of their meeting house.  I was overwhelmed by the notion that I was at ground zero where they put the "P" in WASP.

Interesting place.  I had a good time.

Monday, February 16, 2015

Big speech this week

Been working really hard on this and hope some of my local readers can show up.  It will be on some favorite topics of mine including why doing right by the environment will complex, difficult, and very expensive.  The good news is that it will also employ millions for several generations.

You know, the basic point of this blog.
Sponsored by Citizens for Global Solutions, Minnesota Chapter


Thursday, February 19, 2015,
7:00-9:00 p.m.

Plymouth Congregational Church
Jonathan Larson, Presenter


Plymouth Congregational Church (Jackman Room, lower level)
1900 Nicollet Avenue S., Minneapolis (Nicollet at LaSalle)

Free and open to the public. Abundant free parking is available in the lot on Franklin Ave. adjacent to the church. You can enter the building from the lot on the La Salle Ave. side.

Dresden—70 years later

Recently, a young Jordanian pilot was shown being burned alive by his captors.  The "civilized" world was horrified.  After all, pilots have long been a protected species—a practice left over from the early days of flying when pilots were always officers and most of them gentlemen.  His name was Baron Manfred von Richthofen, after all, and he was rich enough to have a silver cup engraved for every one of his kills—and he had 80 of them.  When he was finally shot down, the Brits accorded him a military funeral with full honors—something quite rare in the carnage of WW I.

But the days of rich kids dueling in the skies for the love of the adventure are long gone.  Ironically, for those horrified by the immolation of the Jordanian, weapons that fly very often have as the designed goal of burning people alive.  That was certainly the point of using napalm in Viet Nam.  But the practice really got going during WW II.  The fire bombing of Hamburg in July of 1943 may be considered that start of this vicious practice.  By March 9, 1945, air crews had perfected the practice so that when Tokyo was fire bombed, at least 100,000 people were burned alive.

Industrialized barbarism!  But one of the most memorable fire attacks happen Feb 13-15, 1945 to the city of Dresden.  Not only were thousands of people burned alive, but one of the great architectural jewels of Europe was destroyed—including the Frauenkirche that housed the great Gottfried Silbermann organ orginally dedicated by J.S. Bach himself.   They finally got around to rebuilding it in 2005 at a cost of over 180 million Euros.

There are those who still look at airstrikes as somehow still being cleaner and more "civilized."  Such people are wrong.

Thursday, February 12, 2015

Paul Singer—evil Predator

It is really hard to imagine a more sinister figure than Paul Singer.  As the head of a so-called vulture fund, he buys up repudiated debt at pennies on the dollar and then finds some sleazeball judge to rule that this worthless paper is now worth its face value.  Singer has taken his greed out on countries like Peru, the Congo, and Argentina.  Not content with making the lives of the world's poor more miserable, it has been recently revealed that he is funding some Danish half-wit who has made it his goal in life the defense of the continued burning of fossil fuels.

So for those of us who keep wondering how the climate change denialists can persist in the face of so much overwhelming evidence, the answer is actually pretty simple.  The rich can buy whatever reality they choose.  The fact that the rest of us cannot get on with solving such an obvious problem is a mere detail in the lives of those rich enough to buy their own reality.  And while any jackass can kick down a barn, a rich jackass can kick down a whole lot more.

It is really quite easy to imagine a scenario where a combination of weather events brought on by climate change actually produces a global food shortage (or some similar event that would bring out angry mobs.)  Will the ability to describe an alternate reality by the Singers of this world be enough to save themselves?  Who knows.  Perhaps the historical ghosts of Louis XVI or Czar Nicholas II can describe the possible outcomes of such events.

Wednesday, February 11, 2015

Paul Craig Roberts on Russia

As someone who spent much of the Cold War in a state of terror that every day could be my last before the madmen blew up the planet, I am not especially thrilled that folks are talking about bringing it back.  It is utterly unbelievable that there are those who would provoke international conflict over what? Crimea?  Shades of Lord Tennyson and The Charge of the Light Brigade.

Here is Europe staggered by economic problems of their own making compounding their woes by trying to topple arguably the world's most popular politician by means of economic sanctions.  And all to please whom?  Some old Russia "hands" who still have an ax to grind in their old age?

Some of this I don't find SO unbelievable.  When I was still a teenager, I was exposed to a bitter old guy who had been a Christian missionary in China when the Communists came to power in 1949.  Even in 1965, he was still furious that the Chinese had ordered the missionaries to leave on very short notice.  On one hand, it was possible to sympathize with someone who had lost his life's work overnight.  On the other hand, he was such a miserable old coot that it was pretty easy to understand why the Communists wanted people like him to leave.  Missionaries had formed an effective cover for ugly western imperialism over the years and so had been targeted by Chinese nationalists from well before the Boxer Rebellion of 1898-1900.

It might have been easy to ignore the crazy old China Hands except that one of them, Henry Luce, was the editor of Time Magazine.  The drumbeat to involve USA in the Vietnamese Wars of Liberation from 1945-1975 was driven mostly by this crowd.  Today, Zbigniew Brzezinski may be a ridiculous old Pole who is still angry about the USSR's occupation of Poland, but he still has the ear of powerful people who believe the USA militarism should not only be dominant, but occasionally used to prove just how dominant it is.  So old Russia hands can be just as dangerous as old China hands.  And just as freaking crazy.

Tuesday, February 10, 2015

Greece tries to make nice with evil

A "leftist" response to the global bankster establishment by the newly-elected Greek government is not off to a flying start.  Not that anyone thought it would be easy.  Having watched the various raids on the economies around the world by the greedheads since the 1980s, I personally put Syriza's chances at getting meaningful debt restructuring at somewhere between zero and zero.  I mean, what exactly did the Greeks think they had going for them that Indonesia or South Korea or Bolivia didn't have when the debt ghouls came knocking?  Did they really think that all they had to do was remind the Germans that debts that cannot be repaid, will not be repaid?  Or that maybe the Greeks could provoke some German contrition by reminding them of the war crimes of the Second World War?

Good luck to that.  Considering what the banksters have destroyed in the name of their naked greed and abject stupidity in the last 40 years, expecting something as basic as empathy from these sociopaths is really unrealistic.  The banksters have created conditions where addressing Peak Oil and climate change is impossible so we already know they are willing to destroy human life on the planet.  If we cannot humiliate them over something so serious, what hope is there for people who simply want to defend an historically important culture.

With each passing day and each new revelation of yet another example of bankster outrage, I become more and more convinced that the future of mankind is only even possible when the rest of us remove the drag these thieves place on the real economy.  Jail them, humiliate them, whatever it takes—just get them out of the business of setting economic policy.

Sunday, February 8, 2015

Repeating History - dirty money at the Hong Shang aka HSBC

Eric Lewis on DailyKos pointed to a Guardian article on how the Swiss branch of HSBC "helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities..."

The Guardian article is based on the latest blockbuster from the International Consortium of Investigative Journalists, Whistleblower? Thief? Hero? Introducing the Source of the Data that Shook HSBC, by Martha M. Hamilton. In turn, Hamilton's article details the secret HSBC data revealed by Hervé Falciani, a computer systems specialist employed by HSBC Private Bank (Suisse).

While Swiss authorities have charged Falciani with data theft from HSBC, Hamilton reports that
Falciani’s HSBC data trove ended up first in the hands of authorities in France, which then indicted London-based HSBC for illegal direct marketing to French nationals, money laundering and facilitating tax fraud.

The French authorities shared the data with other countries, including the U.S., and it is being used in tax probes and attempts to recover evaded taxes all around the world. The French newspaper Le Monde obtained the data as well, and shared it with the International Consortium of Investigative Journalists. 
As usual, however, the liberals and progressives promoting the story of HSBC's latest misdeeds are operating in complete blindness to the long and sordid history of HSBC, which used to be named the Hong Kong and Shanghai Bank Co. The Hong Shang, as old Asia hands in the diplomatic and intelligence communities called it back a quarter century and more ago, has historically been one of the dirtiest banks in the world.

And here's the really crucial part - the Hong Shang has also always been intimately linked to the highest levels of the British oligarchy. Handling dirty money has a long and honorable record at the Hong Shang. It was one of the leading British institutions that directed the opium trade which destroyed and subjugated India and China. In fact, it was established entirely for that purpose. During the Viet Nam war,  Lucien Conein and Ed Lansdale of the CIA used HSBC to launder heroin money. The first time Ghandi was jailed by the British was when he wrote about the role of the Hong Shang in the opium trade. The British accused Ghandi of interfering with the imperial revenues.

Nothing much has changed: just look at the HSBC Board of Directors today. Here's about half of them: keep in mind as you go through this that these are the one percent who control almost all the world's wealth, and wield massive influence with governments around the world.

Douglas Flint has been Group Chairman of HSBC Holdings since December 2010. He joined HSBC in 1995, and in February 2010, was made Chief Financial Officer, and - note this - Executive Director Risk and Regulation. from 2005 to 2011, Flint was a non-executive director of BP PLC. That would be British Petroluem, again, a company at the commanding heights of the still-extant British Empire. Note Flint's role in calming the waters before and espeically after the 2007-2008 financial crash:
Chairman of the Financial Reporting Council’s review of the Turnbull Guidance on Internal Control from 2004-2005 and served on the Accounting Standards Board and the Advisory Council of the International Accounting Standards Board from 2001-2004. He also served on the Shipley Working Group on Public Disclosure and co-chaired the Group of Thirty report on Enhancing Public Confidence in Financial Reporting, and the 2008 Report of the CRMPG III, “Containing Systemic Risk: The Road to Reform”.

Jonathan Evans, Lord Evans of Weardale, former Director-General of the British Security Service, the United Kingdom's domestic security and counter-intelligence service. You really think this guy does not know what HSBC is doing under his very nose while he's a director? Evans' presence on the board points to the intimate links between intelligence, drugs, and dirty banking that you're not supposed to talk about openly.

Joachim Faber, CEO of Allianz Global Investors from 2000 to 2012, and chairman of the German Stock Exchange Group since May 2012. Allianz is the world's largest insurance company. In April 2001, Allianz bought 80 per cent of Dresdner Bank, the largest bank in Germany.

Sir Simon Robertson, former Chairman of Kleinwort Benson, which has historically been used by top British elites, particularly for off shore banking.   Kleinwort Benson was a pioneer in privatisation: it was the lead adviser on the privatisation of British Telecom which, at the time in 1981 was the largest public offering ever. In 1995, Kleinwort Benson was bought by Dresdner Bank. Sir Robertson was also President of Goldman Sachs Europe.

Jonathan Symonds, CBE, former Chief Financial Officer of Novartis AG, the Swiss company which is the largest pharmaceutical company in the world based on sales. Symonds was a Partner and Managing Director of Goldman Sachs in 2007-2009.

Janis Rachel Lomax was Deputy Governor of the Bank of England from 2003 to 2008.

Philip D. Ameen, Senior Vice President, Principal Accounting Officer and Controller of General Electric Capital Corporation and General Electric Capital Services, Inc; Vice President and Principal Accounting Officer of General Electric Company until March 15, 2008 and Comptroller of GE from April 1994 to March 15, 2008. According to his HSBC blurb, Ameen  "has extensive experience in accounting standards setting and reporting." What standards, exactly, is he setting? According to the Bloomburg bio, Ameen "is a Member of the Advisory Board of University Business School's Center for Excellence in Accounting and Security Analysis. He serves on the International Financial Interpretations Committee of the International Accounting Standards Board. He was the longest-serving member of the Financial Accounting Standards Board Emerging Issues Task Force."

John Phillip Lipsky, the IMF's representative in Chile beginning 1978, the time when Milton Friedman's "Chicago Boys" were imposing their "shock therapy" on Chile, backed up by Augusto Pinochet's military dictatorship. In 1984 he joined Salomon Brothers, then the largest bond trader in the world. In 1998 Lipsky joined JPMorgan as Chief Economist, and after Morgan merged with Chase Manhattan was appointed Chief Economist and Director of Research, eventually becoming Vice Chairman of JPMorgan Investment Bank. Lipsky is also on the Board of Directors of the National Bureau of Economic Research, the Advisory Board of the Stanford Institute for Economic Policy Research, and the Council on Foreign Relations (you just knew the CFR had to be in there, somewhere, right?).

Rona Fairhead is currently Chairwoman of the BBC Trust, which replaced the BBC's Board of Governors in January 2007. She launched her "business" career in the 1980s at Mitt Romney's Bain and Company, then moved on to Morgan Stanley. In 1996, she became director of planning and acquisitions for Imperial Chemical Industries, historically one of the strategic firms at the top of the British empire. From there, she became chief financial officer of Pearson PLC, again, one of the strategic firms at the top of the British empire, with a particularly crucial role in intelligence gathering and the molding and directing of public opinion through its subsidiary, Financial Times Group, which Fairhead was made CEO of in 2006.

I looked at the Board of Directors of the Hong Shang in the mid-1990s, and it astounds me to find the interlocking relationships with all the same companies again. I really shouldn't be surprised: we have yet to witness a USA President who is serious about confronting the gang of criminals who oversees the world's flows of dirty money. After all, they're such dependable campaign contributors.

So, there you have it: history repeating itself. The British Empire is alive and well, with the same old  junction of oil, chemicals, finance, and intelligence in the City of London. Dirty money flows with direction from the highest levels of British intelligence. There's even the possibility of a lively confrontation between France and Britain.

What is new is the role of a whistle blower revealing the electronic secrets of one of the corporations we most need to wipe off the face of the planet. May God preserve him against our enemies.

Thursday, February 5, 2015

Democrats and neoliberalism

Of all the sell-outs the Democrats made when they decided to favor their new Wall Street buddies over folks who made things, none were so egregious as the trade deals like NAFTA.  The destruction left behind by the mindless vandals of neoliberalism is just stunning.  Great cities like Detroit, or Baltimore, or Chicago are going out of business because some thieves figured out how to steal factories and ship them to China.  The Midwest looks like it lost a war.

Clinton used up the political capital of the 1992 election in a hurry.  The party of labor unions had become the party of hedge funds and other forms of bucket shops.  Clinton thought he won that election because he was charming, but at least 85% of his vote came because he was from the party that once passed medicare.  He owed his party big time and he sold them out so fast, most never knew what hit them.

Clinton was well paid for his treachery.  He left office in debt and ten years later, he was one of the richest men in the country.  So now we have some even MORE sinister trade deals being negotiated in secret.  Obama wants to be the next Bill Clinton so he's out there pitching.  And Hillary wants to be President so she's running up an astounding neoliberal track record.

If you look on this sort of behavior as brazen corruption (as I do) then it really is a perfect example of all that has gone wrong with our "democracy."  But they don't.  The Clintons are the sort of "liberals" who think the markets are at least legitimate, if not ordained by God.  Stock trading is just a cleaner business than smelting steel.  I cannot imagine the Obamas OR the Clintons losing a wink of sleep over the lives they are destroying with their trade deals.

What is worse, these crackpot trade deals seem to have intellectual legitimacy in spite of their baleful track records. I am reminded of the advisors to Franz Joseph in Amadeus who asserted that "all educated people agree that operas must be in Italian."  All "educated" people agree that Free Trade is just the bestest idea ever, too.  And so we are body-slammed by yet another example of trained incapacity.

Wednesday, February 4, 2015

Syriza is right about the debt

Predicting what will happen in Greece is nearly impossible.  There are a lot of cross-currents in play.  The banksters don't want the globe to discover that debt-restructuring is almost always a good thing.  The warmongers certainly do not want to lose such a strategic navel site in the eastern Mediterranean.  The Left sees a chance at a comeback after wandering in the wilderness since 1989.  Obviously, this crowd is not in any position to fight the military-financial complex either intellectually or culturally but remember, as recently as 1970, socialists ran half the world and scared the hell out of the other half.

The Brits and the Germans have resorted to scolding.  How DARE the Greeks suggest that they renege on a promise to a moneychanger?  Everyone with a pulse who has been run over by the neoliberal catastrophe is hoping like hell the Greeks stand up to the banksters and their lying economists who write that pain—someone else's pain—is GOOD for the economy.  Goodness knows what conversations are going on the back rooms but they are probably not as crude as the silver-or-lead choices offered to the brown leaders of the world who have found out how profoundly evil the IMF can be.  But damn near.

Perhaps the most surprising cheerleader for Greek debt repudiation is none other than David Stockman—Reagan's Director of the Office of Management and Budget.  This guy has hauled a lot of water for the bankster classes over the years.

The biggest wild card may be the rumor that Russia is considering a $10billion bridge loan that would get Greece past the end of February deadline.  Now that will bring the geopolitical madmen out of the woodwork—even if it is only a rumor.  Or not.

Tuesday, February 3, 2015

The lesson from Matthew 18

One of the main reasons why Christians became Protestants is that it was a set of religious beliefs that tended to lead to prosperity.  Not always, of course, and there were times when Protestants could become seriously ugly but they were the first to condemn human slavery (Anabaptists / Mennonites 1534), they organized the first true Protestant state that was astonishingly successful (Dutch Reformed from 1581-1795) they triggered the Industrial Revolution in England (Quakers and other dissenting Protestants) they organized the first working social welfare system (German Lutherans Krupp and von Bismarck 1889) etc.  One of the prime reasons why the prosperity charlatans running those mega churches get away with their send-me-money-and-God-will-make-you rich scams is that in Northern Europe and North America, living like a Protestant tended to lead to unheard-of levels of prosperity.  There is an historical basis for these beliefs.

But here's the problem.  Protestant beliefs can be terribly cruel.  The other side of the you're-rich-because-God-loves-you-and-has-blessed-you is the-you-are-poor-because-you-have-sinned argument.  Germany and Greece may consider themselves secular societies but there is a LARGE element of that argument when the Germans blame the economic woes of Greece on laziness.

Fortunately, debt restructuring like the Greeks need has been covered in the foundation text of Christianity—the Bible.  I have reprinted the text in full just so there is no debate about its meaning.  And here is what cannot be forgotten, Wirtschaftswunder—the postwar German economic miracle—was a combination of many factors but one of the most important was debt restructuring of Germany at the London Conference of 1953.  They had 50% of their debt wiped out.  No debt restructuring—no Wirtschaftswunder.

What is so amazing about the Greek debt problem is that a majority of the loans are held by large institutions like the European Central Bank.  Those folks could push some sort of reset button and wipe out serious amounts of Greek debt and nothing bad would happen to the ECB.  Greece could get around to restarting their economy at a pain to almost no one.

Angela Merkel is the daughter of a Lutheran devine.  Either dad never preached on Matthew 18 or she slept in that Sunday.  Damn shame because she and her ilk are on the verge of blowing up the EU over what is clearly mistaken theology.  Angela, dear, people DIED so we could be Protestants.  It's pretty clear you haven't the foggiest notion why they would do that.  Hint—it's economics, dummkopf, and you are doing it all wrong!

Sunday, February 1, 2015

HAWB 1783 - Benjamin Franklin on the Augmentation of Wages Occasioned by the American Revolution - How America Was Built

The United States was created as a self-governing republic at a time when all other nations and states in the world were ruled by monarchs, aristocrats, and oligarchs. Are there principles of political economy that should distinguish a republic from monarchies and oligarchies?

How history has been rewritten
Interestingly, most of today’s economic textbooks do not even consider the question. In fact, the leading introductory economic text book in use today, Principles of Economics, by H. Gregory Mankiw does not even mention Alexander Hamilton. or George Washington, or Thomas Jefferson. Mankiw does mention Benjamin Franklin, but only once. However, Mankiw discusses Ronald Reagan six times in his book. This is an example of the brazen conservative / neo-liberal bias of Mankiw, who was chairman of the Council of Economic Advisers under George W. Bush Jr., and then economic adviser to Mitt Romney during the 2012 presidential campaign. Yet, somehow, we tolerate conservatives and libertarians asserting that their extreme market fundamentalism is based on the ideas that created the United States. As I will show in this and the next few posts, their assertion is a bald faced lie.

Are there statements and writings by the Framers of the United States that deal with political economy? In fact, there are a great many, and they often involve some discussion of the general welfare and the common good. It should be noted that modern conservatives, neo-liberals, and especially  libertarians openly and explicitly attack the concepts of the general welfare and the common good as a subterfuge for would-be tyrants to impose a “statist” repression of economic liberty. See, for example, Frederick Hayek’s 1944 screed, The Road to Serfdom.

A fixation on "property rights"
The foundation of these conservative / libertarian ideas is that government has no business telling people what to do with their property. But in the United States, we fought a Civil War that was fundamentally caused by these ideas.  The horrifying whipping scene in Twelve Years a Slave, for which actress Lupita Nyong’o won an Academy Award, has one line near the end that captures the enormous cruelty and inhumanity of these conservative / libertarian ideas. When the slave Solomon Northup attempts to warn the slaveholder Epps that his brutal, hate-rage whipping of Patsey is a sin which will be judged, Epps pauses long enough to say, “There is no sin. A man does how he pleases with his property.”

No, in a republic, you cannot do with your property what you want. The crucial concept in the political economy of a republic is that self-interest must be balanced with the public interest. There is a reason the Framers included the term General Welfare, and with prominence, twice in the Constitution.

Franklin's Reflections on the Augmentation of Wages
In 1783, the year after he had helped negotiate a peace treaty with Britain to end the Revolutionary War, Benjamin Franklin wrote an essay “Reflections on the Augmentation of Wages, Which Will Be  Occasioned in Europe by the American Revolution,” which was published in Paris in the Journal d Economie Puplique. It is a deliberate and comprehensive attack on the “free trade” ideas of the house economists of the British East India Co., such as Adam Smith and Thomas Malthus.
...If the term wages be taken in its widest signification, it will be found that almost all the citizens of a large state receive and pay wages. I shall confine my remarks, however, to one description of wages, the only one with which government should intermeddle, or which requires its care. I mean the wages of the lowest class, those men without property, without capital, who live solely by the labor of their hands. This is always the most numerous class in a state; and consequently, that community cannot be pronounced happy, in which from the lowness and insufficiency of wages, the laboring class procure so scanty a subsistence, that, barely able to provide for their own necessities, they have not the means of marrying and rearing a family, and are reduced to beggary, whenever employment fails them, or age and sickness oblige them to give up work.

Further, the wages under consideration ought not to be estimated by their amount in money, but by the quantity of provisions, clothing, and other commodities, which the laborer can procure for the money which he receives.

....The horrible maxim, that the people must be poor, in order that they may remain in subjection, is still held by many persons of hard hearts and perverted understanding, with whom it were useless to contend. Others, again, think that the people should be poor, from a regard for the supposed interests of commerce. They believe that to increase the rate of wages would raise the price of the productions of the soil, and especially of industry, which are sold to foreign nations, and thus that exportation and the profits arising from it would be diminished. But this motive is at once cruel and ill founded.

....To desire to keep down the rate of wages, with the view of favoring the exportation of merchandise, is to seek to render the citizens of a state miserable, in order that foreigners may purchase its productions at a cheaper rate; it is, at most, attempting to enrich a few merchants by impoverishing the body of the nation; it is taking the part of the stronger in that contest, already so unequal, between the man who can pay wages, and him who is under the necessity of receiving them; it is, in one word, to forget, that the object of every political society ought to be the happiness of the largest number.

…. High wages attract the most skillful and most industrious workmen. Thus the article is better made; it sells better; and in this way, the employer makes a greater profit, than he could do by diminishing the pay of the workmen. A good workman spoils fewer tools, wastes less material, and works faster, than one of inferior skill; and thus the profits of the manufacturer are increased still more.

The perfection of machinery in all the arts is owing, in a great degree, to the workmen. There is no important manufacture, in which they have not invented some useful process, which saves time and materials, or improves the workmanship. If common articles of manufacture, the only ones worthy to interest the statesman, if woollen, cotton, and even silk stuffs, articles made of iron, steel, copper, skins, leather, and various other things, are generally of better quality, at the same price in England than in other countries, it is because workmen are there better paid.

The low rate of wages, then, is not the real cause of the advantages of commerce between one nation and another; but it is one of the greatest evils of political communities.

.... The rate of wages in Europe will be raised by yet another circumstance, with which it is important to be acquainted. I have already said, that the value of wages ought not to be estimated solely by the amount of money, nor even by the quantity of subsistence, which the workman receives per day, but also by the number of days in which he is employed; for it is by such a calculation alone, that we can find out what he has for each day. Is it not evident, that he who should be paid at the rate of forty pence a day, and should fail of obtaining work half the year, would really have but twenty pence to subsist upon, and that he would be less advantageously situated than the man, who, receiving but thirty pence, could yet be supplied with work every day? Thus the Americans, occasioning in Europe an increased demand and necessity for labor, would also necessarily cause there an augmentation of wages, even supposing the price of the day's work to remain at the same rate.

....Better days may come, when, the true principles of the happiness of nations better understood, there will be some sovereign sufficiently enlightened and just to put them in operation. The causes, which tend continually to accumulate concentrate landed property and wealth in a few hands, may be diminished. The remains of the feudal system may be abolished, or, at least, rendered less oppressive. The mode of taxation may be changed, and its moderated. And, lastly bad commercial regulations may be amended. The tendency of all these improvements will be, to enable the working classes to by the favorable change, which the American Revolution must naturally produce.
The government "should intermeddle"
Some thoughts on Franklin's ideas as they pertain to today:

Note that Franklin explicitly states that the wages of the great mass of people is an issue in which the government "should intermeddle." What else can this mean than direct government interference in the "free workings" of the labor market? Franklin's wisdom was unfortunately lost, and the country suffered thorough what has been called the Lochner Era of the US Supreme Court, when any attempt to protect the interests of workers was ruled by the justices to involve an unconstitutional infringement on the "property rights" of employers. See, for example, how the Court struck down a federally mandated minimum wage for the District of Columbia in Adkins v. Children's Hospital 261 U.S. 525 (1923). Or Hammer v. Dagenhart 247 U.S. 351 (1918), striking down laws prohibiting child labor.

The Lochner Era finally came to an end with the 1937 Supreme Court decision to uphold the minimum wage laws of the state of Washington, West Coast Hotel Co. v. Parrish 300 U.S. 379 (1937). The Parrish ruling at the time was seen to be the Court backing down in the face of President Franklin Roosevelt's plan to "pack the Court." Pundits at the time quickly dubbed the Parrish decision "the switch in time that saved nine." But it is important to remember the wider historical context: the enormous economic and social damage caused by the Great Depression made it impossible to ignore any longer the need for governments to curb the supposed "rights" of speculators, usurers, and exploitative employers. More specifically, there was widespread public outrage and revulsion over the Court's decision just under a year earlier to strike down the minimum wage law of the state of New York, Morehead v. New York Ex Rel. Tipaldo 298 U.S. 587. In his diary Secretary of the Interior Harold Ickes wrote that the Tipaldo ruling was "Positively medieval... The sacred right of liberty of contract again--the right of an immature child or a helpless woman to drive a bargain with a great corporation." The Knickerbocker Press in Albany, NY editorialized that "the law that would jail any laundryman for having an underfed horse should jail him for having an underfed girl employee." The public had had enough: it was clear that the problem was not the Constitution, but the nine old men in robes who insisted government had no power to protect the General Welfare by imposing limitations on the worst abuses and depredations of capitalists and financiers. In a book published a few months later, Storm Over the Constitution, Irving Brant, author of a monumental biography of James Madison, wrote that "A judiciary out of sympathy with the striving of the people for well-being does not constitute a restraint upon the turbulence and follies of democracy. It is a frustration of government; the negation of democracy; a stimulus to fascist or communist revolt." (Jeff Shesol, Supreme Power: Franklin Roosevelt vs. the Supreme Court, pages 221-230.)

Ever since, conservatives, libertarians, and neo-liberals have searched and schemed for ways to restore to the USA legal system the extreme "property rights" doctrines of the Lochner era. On the Heritage Foundation website, conservative propagandists  Economic Liberty and the Constitution: An Introduction, Paul J. Larkin, Jr., David E. Bernstein and others write "modern conservative and libertarian thinkers, especially the originalists among them, have taken great strides toward rebuilding traditional limited-government conservative constitutionalism. Part of that progress has involved recapturing some of the wisdom of pre–New Deal constitutional doctrine." It will be interesting one day to tally the billions of dollars that rich wannabe oligarchs poured into the Heritage Foundation and the other institutions of the conservative and neo-liberal movements such as the Mont Pelerin Society, to research and refine their incessant attacks on the concepts of the General Welfare and the common good.

The issue of a minimum wage
Franklin specifies that “wages under consideration ought not to be estimated by their amount in money,
but by the quantity of provisions, clothing, and other commodities” This is the proper way, in a republic with a healthy functioning political economy, to determine issues such as: What should be the minimum wage? (We brush aside as oligarchical panegyrics the answer of many conservatives and libertarians that there should not even be a minimum wage.) This is the essence of statecraft. Politics is the machinations and gyrations required to bring the answers of statecraft to fruition as actual policy.

In March 2011, Wider Opportunities for Women issued a report based on its Basic Economic Security Tables, developed in conjunction with the Center for Social Development at Washington University in St. Louis. Mo. The table below is from WOW's 2012 annual report (pdf).
Income needed, US, by type of household, from Wider Opportunities for Women 2012 annual report.

As New York Times correspondent Motoko Rich summarized the WOW report when it was released:
...a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour. A single worker with two young children needs an annual income of $57,756, or just over $27 an hour, to attain economic stability, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker.
Oligarchs' economic rent versus the capital intensity of a republic
We should be troubled that so much of Franklin’s essay can serve as a strong rebuke to U.S. economic and labor policies today – both government and corporate. Most especially, corporate. In February 2007, McKinsey & Co., the world's largest business consulting firm, was surprisingly forthright in a report entitled The new metrics of corporate performance: Profit per employee:
If a company’s capital intensity doesn’t increase, profit per employee is a pretty good proxy for the return on intangibles. The hallmark of financial performance in today’s digital age is an expanded ability to earn “rents” from intangibles. Profit per employee is one measure of these rents. ROIC is another. If a company boosts its profit per employee without increasing its capital intensity, management will increase its rents, just as raising ROIC above the cost of capital would. The difference is that viewing profit per employee as the primary metric puts the emphasis on the return on talent. This approach focuses the minds of managers on increasing profit relative to the number of people a company employs. It suggests that the most valuable use of an organization’s talent is the creation and use of intangibles.
McKinsey's "new" metric is actually just a return to the political economy of the slave- and opium-trading British East India Company. As I will show in a future post, the very notion of "rent" was repudiated by First Secretary of the Treasury Alexander Hamilton. The USA economy as Hamilton designed it, is supposed to become ever more capital intensive. Franklin's vision is the same as Hamilton; recall Franklin writing in the excerpt above: "The perfection of machinery in all the arts is owing, in a great degree, to the workmen." Further on in the his essay, Franklin writes (not quoted in excerpt above), that the "price of labor in the arts, and even in agriculture, is wonderfully diminished by the perfection of the machinery employed in them, by the intelligence and activity of the workmen, and by the judicious division of labor." In the political economy of a republic, the capital intensity of the economy should always be increasing. If it is not, it is a sure sign that usury, speculation, and economic rent-seeking have come to occupy too large a part of the economy. I shall revisit this theme often in future posts.

From Will capex come back? UBS Investment Research, by Andrew Cates, January, 10, 2013, page 3.


It is important to ask: How did we get from Franklin to Epps? Is the calamity and horror of human slavery a direct result of Franklin’s ideas, and actions, in creating the United States? Or is there another force? Another force that intervenes in the course of events to obstruct the flow of Franklin’s humanistic ideas and ideals, and thus prevent the more appealing and generous future Franklin’s essay seems to promise?

I contend there is. And moreover, that malevolent force continues at work today, and has achieved domination over the US  economic and political systems. That force has been open and explicit in attacking the concepts of the general welfare and the common good, and insisting that government is always the problem.

HAWB - Introduction - How America Was Built
The Introduction to this series, HAWB - How America Was Built, is here. The DailyKos version, which includes some good comments, including a preview of how computers were based on the various scientific research programs of the United States during World War Two, is here.