Boom or Bust? We’re Always Wrong

My father taught me to go left.

Not politically. He was a right-wing Republican. At the movies.

“Most people choose the right entrance,” he told me. “There are usually more seats on the left side of the theater.” I’ve found that to be true.

He dressed like a conformist. But Dad was a contrarian. “If you don’t know what to do,” he said, “do the exact opposite of what everyone else is doing. On average, conventional wisdom is always wrong. Run away from the crowd–and you’ll come out ahead in the long run.”

Never has the wisdom of his words been more apparent than now. Acting like Chicken Little proven right–this time, the sky really is falling–government and business are making decisions that are the exact opposite of the right ones.

Which is nothing new. Politicians and businessmen also do the exact opposite of what they should do during boom times too.

Consider prison policy. Hit hard by the Depression that began in 2008, cash-strapped states are releasing prisoners early. California’s early-release bill even eliminated supervised parole. Because the average recidivism rate is 80 percent, “[unsupervised parole] is designed to reduce the number of parolees returned to prison, essentially because the state will not know if they are violating the terms of their parole,” reports The Contra Costa Times.

But facing a state underemployment rate of 23 percent, California parolees have no real chance of finding work. Most will commit more crimes. From the standpoint of social stability and public safety, it would make more sense to keep them locked up.

If anything, a better time for leniency would have been the 1980s and 1990s. Jobs were plentiful. Wages were steady. Some employers, dealing with a tight labor market, would have welcomed ex-cons. Criminals could have gone straight. But leniency is not what happened.

Instead, “tough on crime” politicians pushed through longer sentences, fueling a massive boom in prison construction. In 1975 there were fewer than 600 state prisons in the U.S. By 2000 there were over a thousand –a 70 percent increase.

Many of those prisons are now being closed due to budget cuts.

If the leaders of our government and major corporations were smart, they would respond to booms and busts the opposite of the way they do.

During a boom, salaries are high. Stock prices rise. State and federal tax revenues go up. Governments run a surplus. Soon we hear calls to “give back” the people’s money–by cutting their taxes. As a result, tax rates fall. So do government revenues.

This is stupid. During a period of economic growth and low unemployment, governments should increase taxes. After all, people can afford to pay more when they earn more. And booms eventually end. So some surplus should be set aside for a rainy day.

During a bust, salaries stagnate or decline. Securities markets seize up or crash. Governments run into fiscal trouble. So they raise taxes.

This is stupid too. People are broke. The last thing they can afford during a recession is higher taxes. Governments should cut taxes when the economy sucks. They should be drawing on that big nest egg they should have stashed away during the fat years to pay bills and stimulate recovery.

The Stupid Opposite Game has been in full effect since the mid-1990s. Bill Clinton, who presided over the largest and longest economic expansion in U.S. history, slashed income taxes. Barack Obama, dealing with the gravest economic catastrophe since the 19th century, is effectively increasing them. To Obama’s credit, he doesn’t have a choice. The cycle can only be broken during a boom. It has to begin with that nest egg.

Then there’s spending.

Obama is a typical victim of the fear reflex, proposing a budget that freezes federal spending for the rest of his term–except for the military. Hit especially hard would be the Army Corps of Engineers and NASA.

This is exactly the opposite of the budget he ought to be proposing.

The Army Corps of Engineers builds the massive public works projects that create a ripple effect through the economy, immediately employing thousands of workers and leaving a legacy of infrastructure that can promote future economic growth. As FDR did during the 1930s, Obama ought to increase spending on infrastructure. Funding for NASA ends up paying a lot of salaries for scientists–people we ought to be encouraging.

The military budget, on the other hand, ought to be slashed. True, wars stimulate the economy. But they cost more than they earn–in lives, subsequent foreign aid and international contempt.

If CEOs and government officials were smart, they would be hiring like crazy. Millions of smart people are out of work. They can be hired much more cheaply than in the late 1990s. Plus they’ll stay longer. Competitors real and imagined have vanished. There’s less pressure to expand too quickly.

Venture capitalists ought to be loosening, not tightening, their purse strings. After all, there’s no better time to start a new business. Eighteen of the top 30 Dow Jones index companies were founded during economic downturns, including Johnson & Johnson, Caterpillar, McDonald’s, Walt Disney, Adobe, Intel, Compaq and Microsoft.

So what is a good contrarian to do? Celebrate. Take chances. Because the sky really is falling–and that’s great.

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is publishing a new political manifesto for Fall 2010. His website is tedrall.com.)

Haiti News Coverage Turns Sublimely Ridiculous

Ah, “1984.” As the cartoonist Matt Bors says, it’s “the dystopian novel that keeps on giving.”

Orwell’s main character worked for a government ministry that controlled the future by changing the past. Its most effective tool: the Memory Hole. Pieces of history went in—poof!—never to be heard from again. Afterward, it was as if those particular events had never happened:

“The past was alterable. The past never had been altered. Oceania was at war with Eastasia. Oceania had always been at war with Eastasia.”

American news producers and editors have long been masters of the Memory Hole, purposefully omitting the most relevant information stories that would otherwise make the whatever the current regime is look bad. “President Hugo Chávez,” reported The Washington Post in a typical example of spin from 2005, “has recently accused President Bush of plotting to assassinate him.” Going on to slam Chávez’s supposed “bluster and anti-American showmanship,” the Post left something out: Chávez’s accusation was true.

Still, no one could have anticipated the soaring brazenness or the cynical linguistic savagery U.S. state-controlled media would deploy while “covering” the invasion of Haiti.

[Given that it took at least four days after the earthquake before the U.S. military permitted relief supplies to land at the Port-au-Prince airport, turned away planes from such NGOs as Doctors Without Borders, and that Defense Secretary Robert Gates refused to release aid until a full week had passed, one can hardly call the deployment of 10,000 troops a relief operation.]

Vanished from news accounts of Operation Haitian Freedom—poof!—was the United States’ century-long raping and pillaging of the country, including several CIA-backed coups that installed vicious dictators and a brutal occupation by U.S. Marines that lasted several decades.

There were hundreds of candidates to choose from in awarding this week’s Haiti Memory Hole Prize, but the winner is The Oregonian, the daily newspaper in Portland, Oregon. On January 15th the paper published an editorial titled “A muscular paternalism for Haiti” with an incredible thesis:

“If the nations of the world had devoted to Haiti only a fraction of the diplomatic and military energy they have spent over the past five decades on nearby Cuba, the country would be far more advanced and able to aid in its own recovery today.”

In other words, Haiti’s problem isn’t that the U.S. expropriated 40 percent of its GDP from 1915 to 1947. Or that the U.S. installed the father-and-son Duvalier team of “anti-Communist” dictators, who looted the Haitian treasury of more than $1 billion. Or that the CIA deposed Haiti’s popular, and only democratically-elected president, not once, but twice—because he had the gall to push through an increase in the minimum wage for Haitians who work in sweatshops owned by U.S. companies.

Those events couldn’t be responsible for Haiti’s plight. Not even a little bit. Because, if you rely on The Oregonian for your news, you’d never know that that stuff happened.

“Perhaps the scope of the current disaster will at last shock these countries, including the United States, to conduct a muscular intervention into Haitian affairs,” editorialized The Oregonian.

“At last”? What do they call a 20-year-long military occupation? Half a dozen military coups?

Like most of the world, Haiti would have been better off if we really had “neglected” them. How much of our “help” can these poor people stand?

At least The New York Times acknowledged “Haiti’s long history of foreign intervention, including an American occupation” in its coverage. But like other papers that ran sickening—and treacly cartoons falsely depicting a friendly (white) Uncle Sam patronizingly deigning to assist clueless dark-skinned Haitians in their time of need—the most pertinent details had disappeared into the Memory Hole.

Here’s an unexpurgated section of the Times’ background coverage:

“President Woodrow Wilson sent American Marines to Haiti in 1915 to restore public order after six different leaders ruled the country in quick succession, each killed or forced into exile. Opposition was intense, but it would be nearly two decades before the Marines would leave, in 1934.

“When President Bill Clinton ordered troops into the country in 1994 to restore Jean-Bertrand Aristide, who was ousted as president by a group of former soldiers, Haitian critics raised that earlier intervention.

“A decade later, Mr. Aristide was forced out of office, and he accused the United States of orchestrating his ouster.”

Wilson said he invaded Haiti to restore public order. The real reason, historians widely acknowledge, was to transform the country into an economic vassal state, a Caribbean colony.

It’s true that Clinton brought Aristide back to power. But his predecessor, George Herbert Walker Bush, had ordered a CIA coup that removed him in the first place.

Finally, Aristide wasn’t “forced out of office” by some mysterious random power. The Times’ editors knew that. After all, their own newspaper ran a page-one story on March 1, 2004 titled: “Aristide Flees After a Shove From the U.S.” So when Aristide “accused the United States of orchestrating his ouster,” he was “accusing” the U.S. of doing what The New York Times reported that it did.

True, this information is available to anyone who cares to spend a few minutes Googling it. The point is, few people have the time, energy or inclination to second-guess everything they read. Like Winston Smith in “1984,” they start to wonder whether they misremembered events as they were originally reported. Maybe we really have always been at war with Eurasia. Maybe we really did invade Haiti in 1915 merely to “restore order.” Or maybe, if you live in Portland, this is the first time the U.S. or any other country has ever bothered to pay attention to Haiti. Who knows?

What I want to know is: Why do editors and producers do it? Why do they leave out the basic facts? It’s not like they get a call from Big Brother ordering them to spin or delete historical facts from their coverage. They do it voluntarily.

What are they afraid of?

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is also the author of the Gen X manifesto “Revenge of the Latchkey Kids.” His website is tedrall.com.)

Obama Will Drag Down Democrats in November

I’m a bit late, but this is the time of year when pundits issue their predictions for the coming year. Normally I stay out of the political prognostication racket. It’s as thankless as writing for Arianna Huffington.

Like when I predicted that Howard Dean had the Democratic nomination all sewn up. Nicely played. It’ll be in my obit.

I dare not die.

Do readers remember that I was the only one to call the Afghanistan War lost back in 2001? That I was the first to note that Bush’s handling of Katrina would mark the beginning of the end for his presidency? That I was the first American pundit to criticize Bush after 9/11? Nope.

Anyway…

2010 could end up being a big year politically. So, with nothing more than my already wounded pride at stake (damn you, Howard Dean, you coulda been a contender!), I’m placing my bets.

First and foremost, the economy will continue to sour. There may be small, brief up-ticks from time to time. But the overall picture will keep trending downward. Credit markets won’t loosen. There will be more bankruptcies. More foreclosures. Higher unemployment, both official and real.

I’m a pessimist for one simple reason: none of the structural problems have been addressed. No one has done anything to put more money into the pockets of consumers or businesses. More bailouts and stimulus might help, but Congress won’t approve them after the last time, when bankers used the loot to buy new yachts. Not that they would have signed on during an election year anyway.

Things won’t get better because they can’t get better.

Obama’s job approval rating, which has already fallen faster than any president’s in the history of opinion polling, is tied to the unfolding fiscal apocalypse. Unless there’s another 9/11, his numbers will plunge toward the Dick Cheney Zone.

It’s fair, mostly. Obama could have done a lot to ease the economic pain: direct federal assistance to distressed homeowners, nationalize insolvent banks rather than bail them out, giant New Deal-style federal employment projects, all funded by immediate withdrawal from Afghanistan and Iraq. Instead, he kept Bush’s policies (and personnel). After the voters had rejected them.

Turns out we were wrong about Obama. He’s not smart. He’s not wise.

He’s just calm.

There’s also a racist component to Obama’s problems with the electorate. Obama is much like David Dinkins, elected in 1989 as New York City’s first black mayor. Dinkins, an affable Democrat, made the mistake of thinking that African-Americans were his political base. They weren’t. White liberals were.

At the time I overheard many variants of the following conversation: “New York has a lot of blacks. They’ve never had a mayor. Why not give them a chance to run the city?” Dinkins screwed up—not spectacularly—but he made a lot of boneheaded moves, such as ordering that white teachers be laid off first during the recession.

Hell hath no fury like a white person scorned.

“Never again,” I heard countless white liberals say after that. “They [blacks] had their chance.” White anger at Dinkins was out of proportion in response to his poor performance; if he’d been the same lousy mayor—but with white skin—he wouldn’t have been as reviled.

We’re seeing that now. Obama is a terrible president, just another Bill Clinton, one unwilling to seize the opportunities afforded by the global economic meltdown. White voter remorse, however, is a bitch. Americans hate Obama more than they would hate Clinton (for example)—because he’s black.

Racist buyer’s remorse will hurt Obama in the polls…and lead to Democratic losses in the midterm elections.

Conventional wisdom says that the Democrats will lose seats in the House and Senate in November. But no one is predicting a 1994 bloodbath. The GOP, goes the thinking, is too disorganized and fractured to wipe the floor with incumbent Dems. Also, writes Nancy Cohen in The Los Angeles Times, “what was most important about 1994 politically won’t make or break the 2010 elections. Congress changed hands in 1994 because the Christian right recruited new voters and white Southerners shifted en masse to the GOP.” That won’t happen in 2010, she says. “Neither evangelicals nor white Southerners can swing this year’s election, because they are the Republican Party.”

Generally, I agree with Cohen’s take. But I think Democratic losses will be more severe than the experts expect. Voters are being forced to flop back and forth between two parties they hate, but their contempt for the Democrats will be particularly toxic. Republicans don’t (and didn’t) promise anything more than the same old tax cuts for the rich.

Obama’s Democrats, on the other hand, ran as agents of hope and change. It wouldn’t be as bad for them if their party’s standard bearer hadn’t failed so spectacularly, managing to live down to John McCain’s denigrating portrayal of him as an empty suit.

Nothing pisses people off more than being promised the big and then failing to receive even the small.

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is also the author of the Gen X manifesto “Revenge of the Latchkey Kids.” His website is tedrall.com.)

COPYRIGHT 2010 TED RALL

Why the Blood Is On Our Hands

As grim accounts of the earthquake in Haiti came in, the accounts in U.S.-controlled state media all carried the same descriptive sentence: “Haiti is the poorest country in the Western hemisphere…”

Gee, I wonder how that happened?

You’d think Haiti would be loaded. After all, it made a lot of people rich.

How did Haiti get so poor? Despite a century of American colonialism, occupation, and propping up corrupt dictators? Even though the CIA staged coups d’état against every democratically elected president they ever had?

It’s an important question. An earthquake isn’t just an earthquake. The same 7.0 tremor hitting San Francisco wouldn’t kill nearly as many people as in Port-au-Prince.

“Looking at the pictures, essentially it looks as if (the buildings are of) breezeblock or cinderblock construction, and what you need in an earthquake zone is metal bars that connect the blocks so that they stay together when they get shaken,” notes Sandy Steacey, director of the Environmental Science Research Institute at the University of Ulster in Northern Ireland. “In a wealthy country with good seismic building codes that are enforced, you would have some damage, but not very much.”

When a pile of cinderblocks falls on you, your odds of survival are long. Even if you miraculously survive, a poor country like Haiti doesn’t have the equipment, communications infrastructure or emergency service personnel to pull you out of the rubble in time. And if your neighbors get you out, there’s no ambulance to take you to the hospital—or doctor to treat you once you get there.

Earthquakes are random events. How many people they kill is predetermined. In Haiti this week, don’t blame tectonic plates. Ninety-nine percent of the death toll is attributable to poverty.

So the question is relevant. How’d Haiti become so poor?

The story begins in 1910, when a U.S. State Department-National City Bank of New York (now called Citibank) consortium bought the Banque National d’Haïti—Haiti’s only commercial bank and its national treasury—in effect transferring Haiti’s debts to the Americans. Five years later, President Woodrow Wilson ordered troops to occupy the country in order to keep tabs on “our” investment.

From 1915 to 1934, the U.S. Marines imposed harsh military occupation, murdered Haitians patriots and diverted 40 percent of Haiti’s gross domestic product to U.S. bankers. Haitians were banned from government jobs. Ambitious Haitians were shunted into the puppet military, setting the stage for a half-century of U.S.-backed military dictatorship.

The U.S. kept control of Haiti’s finances until 1947.

Still—why should Haitians complain? Sure, we stole 40 percent of Haiti’s national wealth for 32 years. But we let them keep 60 percent.

Whiners.

Despite having been bled dry by American bankers and generals, civil disorder prevailed until 1957, when the CIA installed President-for-Life François “Papa Doc” Duvalier. Duvalier’s brutal Tonton Macoutes paramilitary goon squads murdered at least 30,000 Haitians and drove educated people to flee into exile. But think of the cup as half-full: fewer people in the population means fewer people competing for the same jobs!

Upon Papa Doc’s death in 1971, the torch passed to his even more dissolute 19-year-old son, Jean-Claude “Baby Doc” Duvalier. The U.S., cool to Papa Doc in his later years, quickly warmed back up to his kleptomaniacal playboy heir. As the U.S. poured in arms and trained his army as a supposed anti-communist bulwark against Castro’s Cuba, Baby Doc stole an estimated $300 to $800 million from the national treasury, according to Transparency International. The money was placed in personal accounts in Switzerland and elsewhere.

Under U.S. influence, Baby Doc virtually eliminated import tariffs for U.S. goods. Soon Haiti was awash predatory agricultural imports dumped by American firms. Domestic rice farmers went bankrupt. A nation that had been agriculturally self-sustaining collapsed. Farms were abandoned. Hundreds of thousands of farmers migrated to the teeming slums of Port-au-Prince.

The Duvalier era, 29 years in all, came to an end in 1986 when President Ronald Reagan ordered U.S. forces to whisk Baby Doc to exile in France, saving him from a popular uprising.

Once again, Haitians should thank Americans. Duvalierism was “tough love.” Forcing Haitians to make do without their national treasury was our nice way or encouraging them to work harder, to lift themselves up by their bootstraps. Or, in this case, flipflops.

Anyway.

The U.S. has been all about tough love ever since. We twice deposed the populist and popular democratically-elected president Jean-Bertrand Aristide. The second time, in 2004, we even gave him a free flight to the Central African Republic! (He says the CIA kidnapped him, but whatever.) Hey, he needed a rest. And it was kind of us to support a new government formed by former Tonton Macoutes.

Yet, despite everything we’ve done for Haiti, they’re still a fourth-world failed state on a fault line.

And still, we haven’t given up. American companies like Disney generously pay wages to their sweatshop workers of 28 cents an hour.

What more do these ingrates want?

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is also the author of the Gen X manifesto “Revenge of the Latchkey Kids.” His website is tedrall.com.)

COPYRIGHT 2010 TED RALL

Lost Your Job? The IRS Thinks You’re Loaded

My friend was a survivor. Until she wasn’t. She’d made it through 14 rounds of layoffs at her accounting firm. Then came number 15: “I was a telecommuter. When my boss told me to come into the office for a meeting, I knew I was done for. I told her to cut the crap, save me the trip, and fire me over the phone.”

I told her how to file for unemployment benefits. In New York, you can get up to $405 a week plus $25 in extra “Obama bucks” approved by the feds back during the hope and change days. (Most states pay less.) Then I warned her: “Remember, set some of that aside. Unemployment benefits are taxable.” In New York, that means roughly 40 percent.

She was shocked.

You probably are too.

When people lose their jobs, they spend their savings. They take out loans against their house. They’re poor—but that’s not how the federal government sees them. The IRS sees them as big, fat cash cows. Hey, someone has to pay for those missiles we shoot at Afghan wedding parties—not to mention those bonuses for executives at AIG and Goldman Sachs. Why not people a couple of months away from foreclosure? The unemployed are living phat!

The bizarre unemployment tax goes back to 1985, while the Reagan Administration was busily waging class war against the poor and middle class.

It was Reagan’s idea, marketed as an easy way to raise $2.3 billion over five years. But it was Congressional Democrats, exhibiting their characteristic cowardice, who pushed through the measure. “This is a real step back from a traditional Democratic position,” said Rep. Brian Donnelly (D-MA) at the time. “Under the guise of tax reform, we agreed to raise $2.3 billion from people who don’t have jobs.”

It was also hypocritical for Republicans, who rail against “double taxation” when they argue for the repeal of taxes on the estates of the wealthy. Unemployment benefits, after all, were already taxed once; while employed, workers pay into the federal and state unemployment compensation systems. When they get downsized, they’re merely getting back what they put in.

The official the unemployment rate is over 10 percent and rising. With lots of folks out of work for at least a year, savings are running out. Tight credit and the housing bust means they can’t subsist on home equity loans. And there’s no recovery in sight. In other words, if you’re not out of work yet, you could be soon.

As banks and insurance firms wallow in hundreds of billions of federal bailout dollars, it seems unbelievably churlish to tax unemployment checks, which are the only “income” received by millions of people—and are keeping many of them just barely afloat. It’s also utterly absurd. Why should the government send out money to the jobless, then take it right back?

The Obama Administration should repeal the Reagan Tax on the unemployed, and it should do so this instant. Call your Congressman (it’s more effective than email) and demand that he or she take action on the Unemployment Benefit Tax Suspension Act of 2009 (S. 155), currently stuck in committee because Congress cares more about bankers than struggling unemployed Americans. You can find contact information for your representative and senators here.

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is also the author of the Gen X manifesto “Revenge of the Latchkey Kids.” His website is tedrall.com.)

COPYRIGHT 2010 TED RALL