Category: United States

The ‘Self-Made’ Myth and Our Hallucinating Rich

In real life, working hard only takes you so far. Those who go all the way — to grand fortune — typically get a substantial head start. So documents an entertaining, baseball-themed new analysis of the Forbes 400.

Let’s cut Mitt Romney some slack. Not every off-the-cuff comment the GOP White House hopeful made at that now infamous, secretly taped $50,000-a-plate fundraiser last May in Boca Raton reveals an utterly shocking personal failing. Take, for instance, Mitt’s remark that he has “inherited nothing.”

A variety of commentators have jumped on Romney for that line. They’ve pointed out that Mitt, the son of a wealthy corporate CEO, has enjoyed plenty of privilege, everything from an elite private school education to a rolodex full of rich family friends he could tap to start up his business career.

On top of all that, the young Mitt also enjoyed $1 million worth of stock his father threw his way to tide him over until big paydays started arriving.

Not quite “nothing.” But no reason to pick on Mitt either. Most really deep pockets, not just Mitt, consider themselves entirely “self-made.” The best evidence of this predilection to claim “self-made” status? The annual September release of the Forbes magazine list of America’s 400 richest.

Each and every year Forbes celebrates the billionaires who populate this list as paragons of entrepreneurial get-up-and-go. The latest top 400, Forbes pronounced last week, “instills confidence that the American dream is still very much alive.”

Of America’s current 400 richest, gushes Forbes, 70 percent “made their fortunes entirely from scratch.”

Forbes made the same observation last year, too, and most news outlets took that claim at face value. Researchers at United for a Fair Economy, a Boston-based group, did not. UFE analysts stepped back and took the time to investigate the actual backgrounds of last year’s Forbes 400. They released their findings last week, on the same day Forbes released its new 2012 top 400 list.

The basic conclusion from these findings: Forbes is spinning “a misleading tale of what it takes to become wealthy in America.” Most of the Forbes 400 have benefited from a level of privilege unknown to the vast majority of Americans.

In effect, as commentator Jim Hightower has aptly been noting for years, most of our super rich were born on third base and think they hit a triple.

In its just-released new report, United for a Fair Economy extends this baseball analogy to last year’s Forbes 400. UFE defines as “born in the batter’s box” those Forbes 400 rich who hail from poor to middle-class circumstances. Some had nothing growing up. Others had parents who ran small businesses.

About 95 percent of Americans, overall, currently live in these “batter’s box” situations. Just over a third, 35 percent, of the Forbes 400 come from these backgrounds.

Just over 3 percent of the Forbes 400, the United for a Fair Economy researchers found, have left no good paper trail on their actual economic backgrounds. Of the over 60 percent remaining, all grew up in substantial privilege.

Those “born on first base” — in upper-class families, with inheritances up to $1 million — make up 22 percent of the 400. On “second base,” households wealthy enough to run a business big enough to generate inheritances over $1 million, the new UFE study found another 11.5 percent.

On “third base,” with inherited wealth over $50 million, sit 7 percent of America’s 400 richest. Last but not least, the “born on home plate” crowd. These high-rollers, 21.25 percent of the total Forbes list, all inherited enough to “earn” their way into top 400 status.

Last year, a rich American had to be worth at least $1.05 billion to make the Forbes 400. This year’s entry threshold: $1.1 billion, the highest ever.


Forbes
, the United for a Fair Economy researchers sum up, has glamorized the myth of the “self-made man” and minimized “the many other factors that enable wealth,” most notably the tax breaks and other government policies that help the really rich get ever richer.

The narrative of wealth and achievement that Forbes is pushing, the new UFE study adds, “ignores the other side of the coin — namely, that the opportunity to build wealth is not equally or broadly shared in contemporary society.”

And many of those who do have that opportunity — like the mega millionaires in Boca Raton who applauded so warmly when Mitt Romney asserted he had “inherited nothing” — see absolutely no reason to turn that coin over.

Sam Pizzigati edits Too Much, the online Institute for Policy Studiesweekly on excess and inequality. 

My yard, my candidate: the social psychology of lawn signs

As the November elections draw nearer, front yards across America are sprouting campaigns signs broadcasting their chosen political candidates.

These lawn signs have been a traditional part of politics in the United States for well over 60 years, and have remained commonplace even in the age of Facebook and other new media. Lawn signs can often feel ubiquitous in the build-up to major elections, yet in actuality most Americans don’t display them. However, more than enough voters are posting signs for Barack Obama and Mitt Romney on their front yards – and apartment balconies and businesses and dorm windows and roadsides – to keep the tradition alive and well.

Some communities seem to be a sea of signs all supporting the same candidate, perhaps with the odd sign here and there that defiantly displays a contrary opinion. Other communities are more divided politically, and in places such as these lawn signs are a critical way of showing just what side you stand on. Yet whether people live in an area that is strongly in favour of one party or one that is more contested, displaying a lawn sign is more than just campaigning for a specific politician, doing one’s civic duty, or even conforming to neighbourhood norms.

Lawn signs are also about communicating our group membership to others, something that fulfils some very basic psychological needs. People want to feel accepted, and putting up a lawn sign literally symbolises that they are part of a group. What’s more, they gain strength from their group memberships and symbols. For example, Chris Miller at the University of Minnesota found that after the 2008 election, signs supporting the victorious Obama stayed up longer than signs supporting his defeated opponent John McCain. This suggests that people use lawn signs to “bask in the reflected glory” of their group’s success and “cut off the reflected failure” of their group’s losses. Thus, lawn signs can help us feel accepted and feel good about ourselves.

Yet despite their widespread usage and the psychological advantages just described, whether or not lawn signs are effective in winning elections is not clear. For presidential campaigns, lawn signs are all about social influence: capturing the all-important swing voters and motivating supporters to actually turn up at the polls come Election Day. Unfortunately, there is little direct evidence supporting that lawn signs can achieve these goals. However, recent research from the Attitudes and Group Identity Lab at the University of California, Davis, indirectly suggests lawn signs can be an effective source of social influence, though that this effectiveness may depend upon how far away the election is.

With my collaborator Alison Ledgerwood, we found that temporal distance – whether something will happen in the near future versus distant future – influences the degree to which people are affected by majority opinions versus single individuals. In our experiments, undergraduate students read about proposed changes to a political issue that they were told would go into effect in the near or distant future, as well how the majority of other students ostensibly felt about these changes.

When the changes were expected to occur in the distant future, our participants’ own opinions on the issue were more influenced by group opinion; that is, they conformed to the majority. But when the changes were expected to occur in the near future, participants’ opinions were less susceptible to group influence. These results complement findings from an earlier paper by our lab that suggest as events draw nearer in time, people are more influenced by the opinion of a single individual.

But what does this mean for lawn signs? As the election is currently over a month away, a large bloc of signs for Obama is likely to have more of an effect on a person’s vote than a lone sign for Romney. However, as the weeks fly by and the election draws nearer, a single sign on a specific person’s yard may start to have more of an effect.

Of course, this doesn’t mean that large numbers of signs for one candidate will ever be meaningless, even if Election Day is close. Distance affects the information people attend to for a reason: distance can lead to abstract, big-picture thinking (“why”) whereas proximity can lead to concrete, fine-details thinking (“how”). Even as the election draws close, encouraging people to think about the big picture can put them in an abstract mindset that pays more attention to the majority of lawn signs.

Thus, there’s more to lawn signs than tradition and a candidate’s name. It’s not simply an issue of which side has more signs posted, but also the mindset of the person viewing the sign. And lawn signs may not only help the candidate, but also may help the person posting the sign meet some of their basic psychological needs.

Not bad for laminated cardboard.

Shannon Callahan is a Social Psychology PhD student at University of California, Davis

First published online at Online Opinion

 

The Unrepentant And Unreformed Bankers

By Phil Angelides

Money laundering. Price fixing. Bid rigging. Securities fraud. Talking about the mob? No, unfortunately. Wall Street.

These days, the business sections of newspapers read like rap sheets. GE Capital, JPMorgan Chase, UBS, Wells Fargo and Bank of America [2] tied to a bid-rigging scheme to bilk cities and towns out of interest earnings. ING Direct , HSBC and Standard Chartered Bank  facing charges of money laundering. Barclays caught manipulating a key interest rate, costing savers and investors dearly, with a raft of other big banks also under investigation. Not to speak of the unprecedented wrongdoing that precipitated the financial crisis of 2008.

Evidence gathered by the Financial Crisis Inquiry Commission clearly demonstrated that the financial crisis was avoidable and due, in no small part, to recklessness and ethical breaches on Wall Street. Yet, it’s clear that the unrepentant and the unreformed are still all too present within our banking system.

A June survey of 500 senior financial services executives in the United States and Britain turned up stunning results. Some 24 percent said that they believed that financial services professionals may need to engage in illegal or unethical conduct to succeed, 26 percent said that they had observed or had firsthand knowledge of wrongdoing in the workplace, and 16 percent said they would engage in insider trading if they could get away with it.

That too much of Wall Street remains unchanged is not surprising. Simply stated, the banks and their leaders have paid no real economic, legal or political price for their wrongdoing and thus have not felt compelled to change.

On the economic front, the financial sector has rebounded nicely from its brush with death, thanks to an enormous taxpayer bailout. By 2010, compensation at publicly traded Wall Street firms had hit a record $135 billion.

Last year, the profits of the nation’s five biggest banks exceeded $51 billion, with their chief executives all enjoying pay increases. By 2011, the 10 biggest U.S. banks held 77 percent of the nation’s banking assets.

On the legal front, enforcement has been woefully inadequate. Federal criminal financial fraud prosecutions have fallen to a two-decade low. Violations are settled for pennies on the dollar – the mere cost of doing business, with no admission of wrongdoing and with the bill invariably picked up by insurers or shareholders. (When it’s shareholders, that’s not someone else far away, that’s your 401(k), pension fund or mutual fund.)

When Goldman Sachs was charged with failing to set policies to prevent insider trading, it was fined $22 million, an amount the bank collects in about seven hours of trading. Goldman’s record $550 million penalty for securities fraud in 2010 amounted to less than 2 percent of that year’s revenue.

On the political front, after a brief stint in the penalty box, the big banks have resumed the political muscling that got them two decades of deregulation.

To block reform, the financial industry has spent more than $317 million on lobbying in Washington over the past two years and more than $230 million in federal political contributions in the 2010 and 2012 election cycles.

It’s been to good effect. Two-thirds of the regulations called for in the financial reform law passed two years ago are still not in place. And the House Republicans, the banks’ sturdiest allies, have slashed at the budgets of the Securities and Exchange Commission and theCommodities Futures Trading Commission to impede their ability to investigate wrongdoing.

Clearly, the present order is unsustainable. We need to demand fundamental changes now, breaking up the big banks to snap their stranglehold on our markets and our democracy, ensuring that the newly minted financial reform laws are implemented, and wringing out rampant speculation.

But true reform can only occur if we root out the corruption that has distorted our banking system and undermined the productive work of the many good people in the financial sector.

The system of financial law enforcement is clearly broken. Think of it this way: If someone robbed a 7-Eleven of $1,000 but could settle a few days later for $25 and no admission of guilt, would they do it again?

Only enforcement with real consequences will work. That means vigorous pursuit of criminal cases against individuals involved in wrongdoing, the surest method to deter malfeasance.

It means enforcement agencies eschewing weak settlements in civil cases and seeking remedies with teeth such as civil penalties, restitution and executives forfeiting their jobs. And, it means tougher financial fraud laws. In that regard, the bipartisan proposal by Sens. Jack Reed, D-R.I., and Charles Grassley, R-Iowa, to increase fines for securities fraud is a place to start.

To make any of this a reality, the U.S. Department of Justice and the federal regulators must have the will and the resources to do the job. President Obama has asked for additional funds for the Department of Justice, the SEC and the Commodities Futures Trading Commission.

Giving these agencies the tools to detect and prosecute wrongdoing will more than pay for itself – the Commodities Futures Trading Commission’s fine against Barclays for interest rate manipulation alone will pay for almost an entire year of that agency’s budget.

None of these changes will come easily, but this much is clear: We cannot allow Wall Street to continually flout our sense of right and wrong, to erode faith in our legal and political systems, and to put our financial system and economy in jeopardy.

Originally published in The San Francisco Chronicle.

Strange bedfellows: Julian Assange and Ecuador

by Erin Fitz-Henry

Julian Assange’s appearance on the balcony of the Ecuadorian embassy in London to hold forth on his current situation, and President Obama, added a bizarre new chapter to the long-running Wikileaks saga.

It remains to be seen whether Assange will indeed be able to take up asylum in Ecuador as British police maintain they will arrest him as soon as he leaves the Ecuadorian embassy, and may even move to seize him inside the building.

But how is it that Assange has come to see a small South American country as his saviour? And what does Ecuador have to gain from confronting the UK, and by extension the US, over Assange?

A new South American reality

On Saturday, August 18th, the socialist and social-democratic leaders of ALBA (The Bolivarian Alliance for the Peoples of Our America) convened in the coastal city of Guayaquil, Ecuador to debate whether and how to support Ecuador’s decision to grant asylum to WikiLeaks editor, Julian Assange.

The decision? Perhaps not surprisingly, a full-scale denunciation of the threats by the United Kingdom to “storm” the Ecuadorian embassy if Assange were not released and a renewed commitment to honouring Ecuadorian sovereignty and international law. As representative after representative underscored, Latin America will no longer tolerate the “colonial” incursions of either the UK or the United States, the latter of which is seen by growing numbers in the region to be ultimately behind the most recent “witchhunt” against Assange.

As Minister of Foreign Affairs, Ricardo Patino, put it with characteristic bluntness on August 15th:

“Colonial times are over, but through its behaviour, the United Kingdom and its allies have shown they retain the same imperial condescension toward the ideals of liberal governance and the rule of law that they have held in the past, applying or discarding them whenever it’s convenient…The fact that such a mentality exists at the highest levels of government shows why people like Julian Assange are necessary to keep official excesses in check – and why people like him are so ruthlessly pursued when they speak out.”

By late in the weekend of 18-19 August, the “anti-colonial,” “pro-sovereignty” rallying cry of the Correa administration seemed only to be growing in force – as supporters descended on the embassy in Quito and Evo Morales of neighboring Bolivia underscored that it was not just Ecuador’s sovereignty, but that of the whole region that was at stake: “Britain … is wrong,” he said decisively on Friday, August 15th: “The threat is not only an aggression to Ecuador, it’s against Bolivia, it’s against South America, against the whole of Latin America.”

 

The banana republic mistake

For observers unfamiliar with Ecuadorian politics, the investment of this small Andean country in the well-being and safe passage of an Australian national wanted by the United States, the UK, and Sweden for crimes ranging from attacks on national security via the release of classified State Department documents to sexual assault, seems baffling at best and little more than outdated, “banana-republic” hyperbole at worst.

After all, with important trade relations with the UK and the U.S. hanging in the balance, there is apparently far more to lose than to gain – especially when the actual extradition of Assange is not only unlikely, but near-impossible.

To most observers, it seems that Correa is engaged in a kind of political grandstanding – more symbolic than pragmatic – that will likely consolidate his bid for re-election in early 2013 and position him squarely as a charismatic, front-line participant in the “Bolivarian Revolution.”

While in recent years Hugo Chavez and Evo Morales have occupied international center-stage as the outspoken leaders of the “Bolivarian revolution” – engaging in sweeping reforms that include the nationalization of formerly foreign-dominated industries, the institutionalization of broad-ranging social welfare programs that target the poorest of the poor, and the re-writing of national constitutions to ensure novel sets of indigenous and environmental rights, it may be that Rafael Correa is now making a play for greater visibility as a new kind of leader of the global Left.

The new socialism

At a time when the regional turn toward “the socialism of the 21st century” is increasingly volatile (since the administration is alienating large segments of its indigenous constituency by opening the country to large-scale mining and other extractive projects in partnership with the Chinese – who, perhaps not incidentally, nominated Assange for the Nobel Peace Prize in 2010), there is a need for precisely the sort of anti-colonial, anti-imperial rallying cry that brought Correa so decisively into office in 2007.

A protestor outside the Ecuadorean embassy in London. EPA/Karel Prinsloo

 

For some on the ground in Ecuador, however, the ironies surrounding this power play are great. While the country has been exalted from afar for its radical environmental rights legislation, and it is unquestionable that it has achieved impressive gains in fighting illiteracy, improving access to primary school, and increasing cash transfers to single women and low-income families, the administration that now claims to be defending Assange on the grounds of protecting “freedom of the press,” has been involved in repeated and aggressive attacks on its own national media.

As highlighted by groups like Human Rights Watch and the Inter-American Commission on Human Rights, Correa has gone violently after mainstream newspapers, like the Guayaquil-based El Universo, whose opinion editor was sued by the administration in 2011 for defamation of character and subsequently sentenced to 3 years in prison and a $40 million dollar fine (subsequently rescinded).

While such ironies anger those who are losing faith in “the citizen’s revolution” overseen by Correa’s Alianza Pais, it should not be forgotten that Correa has good reason to both fear the duplicities of the United States and to support those – anywhere, of any nationality – who seek to expose them.

For more than four years after the signing of the agreement for the U.S. military base in Manta in 1999, the U.S. military allegedly sunk eight Ecuadorian-flagged fishing vessels in Ecuadorian territorial waters in flagrant violation of the terms of the agreement. In 2008, when Colombian forces violated Ecuadorian sovereignty by killing Raul Reyes – a lead commander of the Revolutionary Armed Forces of Colombia (FARC) – in the northern province of Sucumbios, it was believed that they had done so with information provided by the U.S. government. And as Correa himself recognises, the U.S. has for a long time been actively funding anti-progressive police forces within the country.

Since he took office in 2007, he has worked hard to eradicate such influence from Ecuadorian politics – and as a result, he is perhaps excessively sympathetic to the sorts of revelations made public by Julian Assange.

While the desire to step into a clearly defined leadership position within the Bolivarian Revolution is doubtless at play here, there is also no reason to doubt Correa’s well-founded concerns about the assaults on Ecuadorian sovereignty in which the U.S. has long been engaged.

Erin Fitz-Henry is a Lecturer in Anthropology at the University of Melbourne. Her current research focuses on the rights of nature in Ecuador. She teaches courses in political anthropology, the anthropology of religion, and development studies.

This article was originally published at “http://theconversation.edu.au”

US 2012 – The Ryan Choice

by Robert Reich

Paul Ryan is the reverse of Sarah Palin. She was all right-wing flash without much substance. He’s all right-wing substance without much flash.

Ryan is not a firebrand. He’s not smarmy. He doesn’t ooze contempt for opponents or ridicule those who disagree with him. In style and tone, he doesn’t even sound like an ideologue – until you listen to what he has to say.

It’s here — in Ryan’s views and policy judgments — we find the true ideologue. More than any other politician today, Paul Ryan exemplifies the social Darwinism at the core of today’s Republican Party: Reward the rich, penalize the poor, let everyone else fend for themselves. Dog eat dog.

Ryan’s views are crystallized in the budget he produced for House Republicans last March as chairman of the House Budget committee. That budget would cut $3.3 trillion from low-income programs over the next decade. The biggest cuts would be in Medicaid, which provides healthcare for the nation’s poor – forcing states to drop coverage for an estimated 14 million to 28 million low-income people, according to the non-partisan Center for Budget and Policy Priorities.

Ryan’s budget would also reduce food stamps for poor families by 17 percent ($135 billion) over the decade, leading to a significant increase in hunger – particularly among children. It would also reduce housing assistance, job training, and Pell grants for college tuition.

In all, 62 percent of the budget cuts proposed by Ryan would come from low-income programs.

The Ryan plan would also turn Medicare into vouchers whose value won’t possibly keep up with rising health-care costs – thereby shifting those costs on to seniors.

At the same time, Ryan would provide a substantial tax cut to the very rich – who are already taking home an almost unprecedented share of the nation’s total income. Today’s 400 richest Americans have more wealth than the bottom 150 million of us put together.

Ryan’s views are pure social Darwinism. As William Graham Sumner, the progenitor of social Darwinism in America, put it in the 1880s: “Civilization has a simple choice.” It’s either “liberty, inequality, survival of the fittest” or “not-liberty, equality, survival of the unfittest. The former carries society forward and favors all its best members; the latter carries society downwards and favors all its worst members.”

Is this Mitt Romney’s view as well?

Some believe Romney chose Ryan solely in order to drum up enthusiasm on the right. Since most Americans have already made up their minds about whom they’ll vote for, and the polls show Americans highly polarized – with an almost equal number supporting Romney as Obama — the winner will be determined by how many on either side take the trouble to vote. So in picking Ryan, Romney is motivating his rightwing base to get to the polls, and pull everyone else they can along with them.

But there’s reason to believe Romney also agrees with Ryan’s social Darwinism. Romney accuses President Obama of creating an “entitlement society” and thinks government shouldn’t help distressed homeowners but instead let the market “hit the bottom.” And although Romney has carefully avoided specifics in his own economic plan, he has said he’s “very supportive” of Ryan’s budget plan. “It’s a bold and exciting effort, an excellent piece of work, very much needed … very consistent with what I put out earlier.”

Romney hasn’t put out much but the budget he’s proposed would, according to the Center on Budget and Policy Priorities, throw ten million low-income people off the benefits rolls for food stamps or cut benefits by thousands of dollars a year, or both.

At the same time, Romney wants to permanently extend the Bush tax cuts to the wealthy, reduce corporate income taxes, and eliminate the estate tax. These tax reductions would increase the incomes of people earning more than $1 million a year by an average of $295,874 annually, according to the non-partisan Tax Policy Center.

Oh, did I say that Romney and Ryan also want to repeal President Obama’s healthcare law, thereby leaving fifty million Americans without health insurance?

Social Darwinism offered a moral justification for the wild inequities and social cruelties of the late nineteenth century. It allowed John D. Rockefeller, for example, to claim the fortune he accumulated through his giant Standard Oil Trust was “merely a survival of the fittest… the working out of a law of nature and of God.”

The social Darwinism of that era also undermined all efforts to build a more broadly based prosperity and rescue our democracy from the tight grip of a very few at the top. It was used by the privileged and powerful to convince everyone else that government shouldn’t do much of anything.

Not until the twentieth century did America reject social Darwinism. We created a large middle class that became the engine of our economy and our democracy. We built safety nets to catch Americans who fell downward, often through no fault of their own.

We designed regulations to protect against the inevitable excesses of free-market greed. We taxed the rich and invested in public goods – public schools, public universities, public transportation, public parks, public health – that made us all better off.

In short, we rejected the notion that each of us is on our own in a competitive contest for survival.

But choosing Ryan, Romney has raised for the nation the starkest of choices: Do we want to return to that earlier time, or are we willing and able to move forward — toward a democracy and an economy that works for us all?

This column first appeared on Robert Reich’s Blog.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as Secretary of Labor under President Bill Clinton. His new book ‘AFTERSHOCK: The Next Economy and America’s Future’, was published in September 2010 by Alfred Knopf.


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