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Wednesday: Fines, jobs and influence

Does this crown make me look fat?

Podcasts and things that I found interesting:

1.) Yesterday’s Brian Lehrer show on WNYC was the first media presence that I have heard that picked up on the success of Germany in retaining its important industrial and research infrastructure.  When the recession hit, instead of laying off thousands of people with important skills, who might otherwise be sitting around idle and losing their skills, Germany implemented a plan to bump workers and researchers to part time status and then the government stepped in to augment their salaries.  The effect of this plan is that when the economy recovers, these workers and researchers will be able to step back into the workforce with relatively little transition cost.  Their skills have been kept fresh and the economy hasn’t been hit with a deflationary cycle that threatens to take more businesses with it.  Germany used to be like France where the unions protected jobs to such an extent that the workforce was inflexible.  In France, it is almost impossible to lay anyone off.  But when business slows down, you have a lot of extra people cooling their jets doing nothing but still getting paid for it.  In contrast, Americans have zero protection from market forces.  They are completely at the mercy of the quarterly earnings report.  Germany seems to have bridged the two extremes.  Ramping down instead of out preserves their infrastructure for another day while still giving them the flexibility to take it down a notch when the business environment calls for it.

Another advantage that Germany has over the US is that more of their companies are family owned businesses that are not subject to the volatility of the stock market or the pressures of the finance industry to meet quarterly goals for the benefit of the shareholders.  That gives them the latitude to focus on long term goals and quality, which in turn allows them to command higher prices for their products.  This reinforces what I have said before that part of the problem with the demise of American labor is that there is too much reliance on the 401K.  When we all become shareholders, we expect ever increasing returns on our investments.  But this only hurts ourselves as we drive businesses to cut jobs to meet earnings expectations.  It’s a vicious cycle that must be broken and cutting back on social security is exactly the wrong strategy.  What we should be doing is encouraging people to get out of the 401K system.  But the business community and bonus class will never go along with that without a lot of pressure that they aren’t going to get with this president and his lame Democrats.

Nevertheless, if there are going to be any tax cuts in the budget, I would much prefer that they go to the unemployed who have a lot of their money tied up in their 401K accounts.  Right now, that money can’t be removed from the 401K until retirement, which at this point, may be never, especially if social security and medicare is pushed farther and farther out.  Actually, this 401K scheme is looking more and more like the worst possible deal for under 55 year olds.  If you can’t use your pre-tax 401K savings until you retire so you can get a break on taxes at a lower salary because you have to work longer, when the heck are you ever going to get a break on this money???

Anyway, as I was saying, if you need to take money out of your 401K and you have not reached retirement age, you pay a huge tax penalty.  So, no matter how much you need it, to pay your mortgage or your health insurance, buy a new car so you go out and find a job or just feed your kids, you get socked with this amazingly humongous tax.  It is a disincentive to take the money out, which normally wouldn’t be a problem if we were all gainfully employed.  But we’re in a “lost decade (or two)” and there looks to be little chance of a new stimulus package, Obama having blown his one chance to pass one that would have been big enough.  If we need to stimulate the economy, why not let workers do it with their 401K money?  And if we’re going to give people tax cuts, why not let the unemployed go first?  Let them remove that money without penalty so they can spend it and put it back into the economy.  If it’s true that the 401K is not contributing much to the financial market, then it shouldn’t be a problem.  But, you say, what will people live on when they get older?  I dunno, but I suspect I could live on a lot less if I didn’t have a mortgage and could afford to put more money away for a rainy day when I finally do get a job again.  Oo, Oo!  And let’s make this tax break available to the Unemployed who are 55 years of age or younger.  That way we’re not forcing anyone who is nearing retirement to take money out of their 401K.  {{smirk}}

I like my plan.  It cuts a break to the people who need it most while at the same time is sufficiently disconnected from reality to make me a “serious person”.

2.) BBC History Magazine used to be a once monthly podcast, which always left me craving more.  Now, it’s weekly and while the podcast is shorter, there are more of them.  Yessss!  This week’s podcast featured a segment on King Henry III’s Fine Lists.  Wow, that’s pretty obscure, you say.  Not really.  Henry III was the son of King John, aka Lackland.  He’s called Lackland because he was a phenomenally bad king who managed to lose or forfeit just about all of his foreign property.  He was so bad that subsequent kings never took “John” as their monarchical name.  And then there was that whole excessive taxation and tyrannical behavior and double jeopardy and not handing over the body and before you know it, he had a bunch of very hairy, very pissed barons breathing down his neck making him an offer he couldn’t refuse.  So, Henry III was the son of the king who signed Magna Carta.

The project to translate Henry III’s fine lists has uncovered some interesting trends that followed Magna Carta.  A fine is not a punishment for illegal behavior in this context.  A fine was a payment made to the king for certain privileges or protections.  For example, if a town wanted to have a market day or fair, it would apply to the king for a license to hold one.  Or if a lord’s tennants needed protections from that lord’s mismanagement, they could also apply to the king for that.  Or for changes to an inheritance or a number of other things.  What historians have discovered is that during King John’s reign, the payments for the fines were extremely high, ungodly high, which probably partially lead to the baron’s rebellion.  But in Henry III’s day, the fines became much more reasonable.  Speculation is that this was a direct result of the signing of the Magna Carta.  The institution and standardization of common law and gradual introduction of a check on the King’s authority lead to less autocracy at the top.  And who would say there is a problem with that?  It took several more centuries for the king to be thoroughly reined in by Parliament but while the pace of change may have been slow, the evolution towards democracy from monarchy and the rentiers is rooted in the ability of a people to force accountability, laws and standards on their leaders and wealthy.  That’s something we tend to forget.  It’s not rocket science.

3.) Jay Rosen wrote a piece picked up in the Guardian about what Rupert Murdoch’s empire was really built to obtain- influence.  Here’s the money quotes:

Here’s my little theory: News Corp is not a news company at all, but a global media empire that employs its newspapers – and in the US, Fox News – as a lobbying arm. The logic of holding these “press” properties is to wield influence on behalf of the rest of the (much bigger and more profitable) media business and also to satisfy Murdoch’s own power urges.

However, this fact, fairly obvious to outside observers, is actually concealed from the company by its own culture. So here we find the source for the river of denial that runs through News Corp.

Fox News and the newspapers Murdoch owns are described by News Corp, and understood by most who work there as “normal” news organisations. But they aren’t, really. What makes them different is not that they have a more conservative take on the world – that’s the fiction in which opponents and supporters join – but rather: news is not their first business. Wielding influence is.

Scaring politicians into going along with News Corp’s plans. Building up an atmosphere of fear and paranoia, which then admits Rupert into the back door of 10 Downing Street.

But none of these facts can be admitted into company psychology, because the flag that its news-related properties fly, the legend on the licence, doesn’t say “lobbying arm of the Murdoch empire.” No. It says “First Amendment” or “Journalism” or “Public Service” or “news and information.”

In this sense the company is built on a lie, but a necessary lie to preserve certain fictions that matter to Murdoch and his heirs. And that, I believe, explains how it got itself into this phone hacking mess. All the other lies follow from that big one.

Rosen goes on to suggest that Murdoch and his heirs (and presumably other media moguls) know that the reason they’re in the news business is to influence governments but that the rank and file is still under the impression that they’re working for a news business.  While I’m pretty sure Rosen has it nailed about the influence motivation, I’m not sure the minions didn’t know what Murdoch and his crew were up to.  In a way, Murdoch’s “news” organization reminds me of how the Nazis operated in Germany in the years before World War II as described in Eric Larsen’s book In the Garden of Beasts.  Hitler kept getting away with stuff because no one called him on it but the minions were more than happy to go along with it because for many of the rising players in the Third Reich, they had power for the first time in their lives.  They weren’t motivated by their altruistic desire to save the Republic from the ravages of a punitive war reparations schedule.  They did what they did because they could and they liked the idea that they could.  Rebekah Brooks is reported to have adopted the culture and accoutrements of the English “Creative Class” when Tony Blair was in office and then ditched that garb for the Jodphurs and boots of the Horsey Set when David Cameron came into office.  She knew that what she was doing wasn’t news.  And what about Juan Williams?  If he wanted to do “news” and real journalism, he would have stayed with NPR (yes, yes, I know they’ve gone downhill in the past decade but don’t get distracted).  But no, Juan Williams jumped ship for Fox and permanently soiled his reputation as a journalist. And why was that?  Well, you get to reach and influence a lot more people through Fox than through NPR and the money is probably much better for doing it.  Some people are into power.  That’s what motivates them more than anything else.  I suspect that the journalists who flock to Fox and News Corp are those kinds of people just as the finance industry attracts compulsive gamblers and people who value money above everything else.

If pandering to the public’s baser instincts were not so rewarding and didn’t result in greater influence, these people wouldn’t be doing what they do.  The reason they are so successful at it is that there are very few rules in place to make them accountable for their actions.  There is no “fairness doctrine”, no penalties for lying and misleading the public and our laws to keep one person from owning as many media outlets as they like are laughable.

“Ohhhh”, the politicians cry, “There’s too much money in politics. We need to run campaigns constantly.  If we don’t solicit funding, whatever shall we do?  Bad, BAD corporations!”

Blaming the candy for being sweet is no excuse for indulging.

And if you don’t like the rules the rulemakers are writing, change the rulemakers.  It’s the only thing that has ever worked.  Ask the English.

4.) Now THIS is interesting.  Barack Obama is the number one recipient of News Corp donations of all time.  Hmmm, what are we to make of that?  Anyone got any ideas?  Raise your hands, don’t be shy.

5.) I found this at Freerangekids.com from The Onion.  If you ever wonder why Americans are overly fearful of everything and can’t estimate risk, you can blame news organizations like FOX that cranks irrational fear up to 11.  This clip is hillarious.

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17 Responses

  1. does that prove he is a pub? 😆

    • No, it merely proves that he will adopt the values of the entities that gives him the most money. By now, the idea that he gets most of his campaign funds from small donors (define “small”) should be put to rest.

  2. Your idea about making withdrawals from 401k’s tax free if someone is unemployed (say for a certain period of time) is great. It might help keep some in their homes and tide them over until they can gain employment again (if the economy ever kicks in).

    Small quibble with King John. He was called Lackland because while his older brother Henry was expected to inherit the English throne, Richard (the Lionhearted) was to get his mother’s lands, and Geoffrey got Brittany through marriage, John was not expected to get much. Of course, his brothers all dying, he eventually became King of England. (He lost certain lands while King, but that’s another story.)

    djmm

    • Oh, I thought it had to do with him losing Normandy when he picked a fight with some locals and refused to appear before king Phillip when he was summoned. But you may be right. Being the baby in the family in a country that runs on primogeniture must suck. Er, be of low quality.

      Is it hot in NJ or what? I’m hanging out in the basement. Blissfully cool.

  3. Klondike bar washed down with diet ginger ale iced tea. There has to be an equation that shows how the law of conservation of mass was not violated.

  4. If you can’t use your pre-tax 401K savings until you retire so you can get a break on taxes at a lower salary because you have to work longer, when the heck are you ever going to get a break on this money???

    That’s not quite true. You can start withdrawals at age 59 1/2 without penalty – just like an IRA. Your employment status doesn’t matter. Whether that’s necessarily a wise choice is another matter entirely – I suspect an awful lot of our generation (I’m a little older than you) are going to outlive our meager savings.

    Unemployment is grounds for a “hardship withdrawal” from most plans – but you’ll still get whacked with the 10% penalty.

    • This is my point. You shouldn’t get whacked with a 10% penalty if you withdraw due to hardship. IMHO, unemployment is hardship. As to whether we are saving enough, I’m starting to rethink that. I could pay off my mortgage and live debt free if I had access to those funds. I’m still a long way from retirement. Why shouldn’t I try to cash in, have a house that *I* own and rebuild my savings when I get another job? In any case, because I am in the younger cohort of the baby boom generation, my 401k is going to be subject to the market and the withdrawal of money from the 401ks of older baby boomers. Maybe it doesn’t matter to the 30-40 year olds but to people like me, the cost of maintaining a pool of money I can’t access may not be worth it if I lose my house.
      No, I don’t think we should pay any penalty for withdrawal and I am sick to death of bailing out everyone but us.

  5. Here’s my little theory: News Corp is not a news company at all, but a global media empire that employs its newspapers – and in the US, Fox News – as a lobbying arm.

    Let’s not forget the publishing arm that offered a significant book advance (~$4.5 million) to a certain former Speaker of the House – an event that was inexplicably followed by the passage of a targeted tax break and changes to laws regarding foreign ownership of broadcast outlets.

    • There’s no doubt News Corp has been the upper crust’s brown shirts for 30 years.and very effective too….but even brown shirts got fired .Oh and btw, the upper crust wants us dead. That’s why they won’t give us jobs or heath care.

  6. My heart freezes every time I see a mention of the Gang of Six. How did their thieving plan become acceptable?

    From Bernie Sander’s site:

    Provides major tax cuts to the wealthy and large corporations.

    • * The Gang of Six plan reduces the top marginal income tax rate for the wealthiest Americans and most profitable corporations from 35% to as low as 23% (about 34% lower than the top tax rates under Bush).
    • * Instead of reforming the Alternative Minimum Tax, it abolishes it altogether providing a major tax cut for the wealthiest Americans.
    • * It reduces the deficit by about $3.7 trillion over 10 years, while providing a net tax cut of $1.5 trillion that will mainly go to the wealthiest Americans and most profitable corporations.
    • * In other words, 100% of the deficit reduction achieved by the Gang of Six plan is through spending cuts to programs like Medicare, Medicaid, education, child care, Head Start, LIHEAP, environmental protection, and other programs that the sick, the elderly, the children, and working families need.
    • * Any tax revenue that is raised by closing tax loopholes for large corporations must be used to lower tax rates.
    • * Revenue raisers can not be used to increase spending at all. Revenue raisers can only be used to lower tax rates or reduce the deficit.
    • * By moving to a territorial tax system, the Gang of Six plan will allow large corporations to avoid paying federal income taxes by outsourcing jobs overseas.
  7. I knew it couldn’t be good when Tom Coburn signed onto it.

  8. Thanks for your post and nifty analysis. I wanted to comment on one part: “While I’m pretty sure Rosen has it nailed about the influence motivation, I’m not sure the minions didn’t know what Murdoch and his crew were up to.”

    This is why I used the construct of denial. Isn’t it the nature of denial that you both know and don’t know?

    • Oh, Wow! I’m flattered that you even bothered to read my bit of drivel. (seriously)
      Yes, I do agree that denial is an important component of what consitutes “journalism” at Fox. But such is the nature of employment everywhere these days. Your job is not what you thought it was going to be. What is unspoken is that you are part of a power struggle up and down the ranks. What you do at your desk has very little to do with how you earn your pay.

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