Jerri-Lynn Scofield — AOC Campaign Finance Primer Goes Viral

Wow. 16 million hits, and counting. Leave it to Representative Alexandria Ocasio-Cortez (AOC)  to show how to turn a campaign finance primer into a viral video.  Certainly the first time a congressional hearing on strengthening ethics rules for the executive branch  reached such a huge audience. 

This is a must-watch clip. I hesitate to add much commentary, as anything I write will likely not add all that much, and might instead only distract from the original.Nonetheless, full speed ahead, damn the torpedoes! I will hazard adding some commentary.

I only ask that you watch the clip first. It’ll only take five minutes of your time. Just something to ponder on what I hope for many readers is a lazy, relaxing Sunday. Please watch it, as my commentary will assume you’ve done so.

This is a big deal. I have often written previously that without overhauling campaign finance, lasting reform is not possible, if it is even possible to pass in the first place. Getting the money out of politics is a sine qua non of genuine change for the better. And that is just for starters.

If you haven't seen the clip yet (it's all over social media), watch it and you will see why AOC is the political force she is.

Then read the rest of the article. Jerri-Lynn Scofield is a lawyer. She understands this in depth.

Naked Capitalism
AOC Campaign Finance Primer Goes Viral

Jerri-Lynn Scofield

Pam and Russ Martens — A Private Citizen Would Be in Prison If He Had Citigroup’s Rap Sheet

Since its financial meltdown in 2008 and unprecedented bailout by the U.S. taxpayer, Citigroup (parent of Citibank) has been repeatedly charged by its Federal regulators with odious crimes against its pooled mortgage investors, credit card and banking customers, student loan borrowers, and for its foreclosure frauds. It has paid billions of dollars in fines for its past misdeeds while new charges pile up. In 2015, it became an admitted felon for participating in rigging foreign exchange markets. In short, Citigroup is a lawbreaking recidivist. If it were a mere human, it would be serving a long prison term. Instead, its fines for charges of egregious acts are getting smaller, not larger.

Last Tuesday, the Consumer Financial Protection Bureau (CFPB), which typically has a good track record of holding the big Wall Street banks accountable for their misdeeds, imposed an unusually feeble fine against Citibank for a litany of abuses against student loan borrowers. The CFPB ordered Citi to pay $3.75 million in restitution and to pay a $2.75 million fine. When combined with the fact that the CFPB did not make Citibank admit to the charges, this amounts to a slap on the wrist to a serial lawbreaker. (See Citigroup/Citibank’s history of misconduct below.)

Adding further insult to the American public, the Board of Directors of Citigroup has kept the same CEO in place for more than five years as these serial abuses of the public trust piled up. Michael Corbat has been CEO of Citigroup since October 2012.

Wall Street On Parade
A Private Citizen Would Be in Prison If He Had Citigroup’s Rap Sheet
Pam Martens and Russ Martens

Dirk Ehnts — The Atlantic on Adam Smith and inequality miss major quote

The Atlantic has an article named The Problem With Inequality, According to Adam Smith. One paragraph reads:

Yet there remains a broad consensus, even among scholars of the period, that Smith was concerned by poverty but not by economic inequality itself. According to this view, Smith hoped to ensure that all members of society could satisfy their basic needs, but he was untroubled by relative differences in income and wealth. As long as everyone has food on their tables, clothes on their backs, and a roof over their heads, the thinking goes, it does not matter if some have far more than others. Indeed, it is often claimed that Smith saw economic inequality as a manifestly good thing. 

I have pointed out in 2012 that the Prometheus edition of “The Wealth of Nations” is abridged and that a major quote from book 5, chapter 1 is missing:

Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.

This is only one sentence from some longer paragraphs that Smith has on the the sovereign….

People who quote others should actually read them.

econoblog 101
The Atlantic on Adam Smith and inequality miss major quote
Dirk Ehnts | Lecturer at Bard College Berlin

Zaid Jilani — Bernie Sanders Campaign Calls Out Hillary's College Plan: 'Disappointment'

The difference between the two plans seems to be the difference between Sanders' democratic socialist worldview and Clinton's neoliberal one. For Sanders, college is a right, just like K-12 education, or police and fire services. You will get it, fully subsidized, because it is an essential. For the Clinton campaign, college is still a privilege, something you have to pay for and work for, even while you are a student. It's a consumer good. The competing plans are a microcosm of the two candidates' approach to policy.

AlterNet
Bernie Sanders Campaign Calls Out Hillary's College Plan: 'Disappointment'

Zaid Jilani

John Amato — America's Most Wealthy Believe The Poors Have It Easy

Ideology aka confirmation bias. Just deserts and all that.

A new Pew Poll has given us some more conclusive evidence that the very wealthy in this country have no clue what goes on in most of America households and are completely influenced by fictitious right wing talking points. It's a very sad statement to see made visible since many of the very wealthy are fairly well educated.
Most of America’s rich think the poor have it easy

There is little empathy at the top. 

Most of America's richest think poor people have it easy in this country,according to a new report released by the Pew Research Center. The center surveyed a nationally representative group of people this past fall, and found that the majority of the country's most financially secure citizens (54 percent at the very top, and 57 percent just below) believe the "poor have it easy because they can get government benefits without doing anything in return." America's least financially secure, meanwhile, vehemently disagree — nearly 70 percent say the poor have hard lives because the benefits "don't go far enough." Nationally, the population is almost evenly split.

Actually it is worse. Many of the "job creators" think that workers should get down on the knees and thanks them that they don't have to poke sticks in the ground to grow beans.

Crooks and Liars
America's Most Wealthy Believe The Poors Have It Easy
John Amato

Natasha Hakimi Zapata — Russell Brand on How Capitalism Silences the Inherent Human Desire for Fairness

Man on fire. 

It's really about undeserved privilege.

Truthout
Russell Brand on How Capitalism Silences the Inherent Human Desire for Fairness

Natasha Hakimi Zapata

Andrew Gelman — Meritocracy won’t happen: the problem’s with the ‘ocracy’

In a meritocracy, the whole point of having “merit” is that you can run things (“ocracy”), and one of the points of running things is that you can get nice things for your family and friends. 

So I think Reich’s argument would be stronger if he would go directly to the social, economic, and political consequences of inherited wealth and skip the bit where he idealizes meritocracy.

The Washington Post
Meritocracy won’t happen: the problem’s with the ‘ocracy’
Andrew Gelman | Professor of statistics and political science and director of the Applied Statistics Center at Columbia University

(h/t Mark Thoma at Economist's View)

James Surowiecki — Moaning Moguls

Schwarzman isn’t alone. In the past year, the venture capitalist Tom Perkins and Kenneth Langone, the co-founder of Home Depot, both compared populist attacks on the wealthy to the Nazis’ attacks on the Jews. All three eventually apologized, but the basic sentiment is surprisingly common. Although the Obama years have been boom times for America’s super-rich—recent work by the economists Emmanuel Saez and Thomas Piketty showed that ninety-five per cent of income gains in the first three years of the recovery went to the top one per cent—a lot of them believe that they’re a persecuted minority. As Mark Mizruchi, a sociologist at the University of Michigan and the author of a book called “The Fracturing of the American Corporate Elite,” told me, “These guys think, We’re the job creators, we keep the markets running, and yet the public doesn’t like us. How can that be?” Business leaders were upset at the criticism that followed the financial crisis and, for many of them, it’s an article of faith that people succeed or fail because that’s what they deserve. Schwarzman recently said that Americans “always like to blame somebody other than themselves for a failure.” If you believe that net worth is a reflection of merit, then any attempt to curb inequality looks unfair.…

If today’s corporate kvetchers are more concerned with the state of their egos than with the state of the nation, it’s in part because their own fortunes aren’t tied to those of the nation the way they once were. In the postwar years, American companies depended largely on American consumers. Globalization has changed that—foreign sales account for almost half the revenue of the S&P 500—as has the rise of financial services (where the most important clients are the wealthy and other corporations). The well-being of the American middle class just doesn’t matter as much to companies’ bottom lines. And there’s another change. Early in the past century, there was a true socialist movement in the United States, and in the postwar years the Soviet Union seemed to offer the possibility of a meaningful alternative to capitalism. Small wonder that the tycoons of those days were so eager to channel populist agitation into reform. Today, by contrast, corporate chieftains have little to fear, other than mildly higher taxes and the complaints of people who have read Thomas Piketty. Moguls complain about their feelings because that’s all anyone can really threaten.

The New Yorker
Moaning Moguls

James Surowiecki

(h/t Mark Thoma at Economist's View)

James Kwak — Why Is Credit Suisse Still Allowed to Do Business in the United States?

The conventional wisdom is that revoking a large bank’s license can trigger potential systemic consequences. But that's not the case here.

Credit Suisse, the gigantic Swiss bank, is clearly a criminal organization. In its guilty plea yesterday, Credit Suisse admitted that it has been actively helping Americans (and no doubt people from all around the world) evade taxes for years:

For decades prior to and through in or about 2009, . . . Credit Suisse did unlawfully, voluntary, intentionally, and knowingly conspire, combine, confederate, and agree together with others . . . to willfully aid, assist in, procure, counsel, and advise the preparation and presentation of false income tax returns and other documents to the Internal Revenue Service.

The Justice Department is crowing about its newfound willingness to convict major financial institutions, with Eric Holder claiming, “This case shows that no financial institution, no matter its size or global reach, is above the law.” The guilty plea certainly seems like a step forward from the neither-admit-nor-deny settlements that banks have counted on for the past decade. But there is a risk that the Credit Suisse deal—the guilty plea coupled with ample assurances that the admitted criminal will be allowed to remain in business—could become the new version of the deferred prosecution agreement: an outcome that makes everyone happy, yet punishes no one, and ultimately becomes just another cost of doing business.

There are two main ways to really punish criminals and deter wrongdoing in the future. One is criminal prosecutions of the individuals involved, ideally getting lower-level employees to cooperate and gathering evidence as far up the management hierarchy as possible. (There are ongoing prosecutions against several Credit Suisse employees.) The other is putting a bank out of business by revoking its license. Even if he escapes jail, no CEO wants that on his résumé. And it seems entirely appropriate for a bank that engages in a decades-long criminal conspiracy that costs U.S. taxpayers billions of dollars.

The Atlantic
Why Is Credit Suisse Still Allowed to Do Business in the United States?
James Kwak

Democracy Now! — Too Big To Jail? Credit Suisse Bank Pleads Guilty to Decades of Tax Evasion, But Execs Avoid Prison

European banking giant Credit Suisse has pleaded guilty to helping American clients avoid paying taxes by concealing assets in illegal, undeclared bank accounts — becoming the largest bank to plead guilty to a criminal charge in 20 years. As part of the plea deal, Credit Suisse will pay about $2.6 billion in penalties and hire an independent monitor. But the bank will not be required to turn over the names of the Americans who used the bank to evade taxes. In addition, no senior Credit Suisse executives will face jail time, and the bank will be allowed to continue operating in the United States. According to The New York Times, the Securities and Exchange Commission voted last week to grant Credit Suisse a temporary exemption from a federal law that requires a bank to hand over its investment-adviser license in the event of a guilty plea. We speak to James Henry, former chief economist at McKinsey & Co., now a senior adviser to the Tax Justice Network and senior fellow at the Vale Columbia Center on Sustainable International Investment.

Democracy Now!
Too Big To Jail? Credit Suisse Bank Pleads Guilty to Decades of Tax Evasion, But Execs Avoid Prison 

Peter Radford — Equality

Peter Radford investigates equality and comes up with some economic insights. But in my view his analysis underplays the key point that equality is essentially a legal concept based on liberal political theory, namely, absence of power-based privilege guaranteed by a single standard of justice in which the rule of law is determined by all those subject to the law having a voice of the same weight.

To my knowledge the only political theory to put forward a concept of economic equality is Marxism, and that is not mathematically determined but rather determine by potential and need:  "From each according to ability and to each according to need."

Social liberalism, developed in reaction to the economic liberalism characteristic of Dickensian times, emphasizes social justice rather than economic equality. It's concern is with adjusting for the failure of markets to distribute goods and services adequately for the needs of all to be met. The objective here, however, is not economic equality. Economic inequality is accepted as part and parcel of  investment-driven production and market-driven distribution.

Social liberalism is opposed by economic liberalism, called Libertarianism, and a scaled-down form of social liberalism, now called neoliberalism.

The issue of equality as to do with political liberalism rather than economics, and economics enters largely as a source of power asymmetry leading to political and legal privilege, a double standard of justice, and asymmetrical social, political and economic power leading to a hierarchical class structure of wide disparity in distributional effects.

The Radford Free Press
Equality
Peter Radford

Elias Isquith — “It’s total moral surrender”: Matt Taibbi unloads on Wall Street, inequality and our broken justice system

Matt Taibbi, author of "The Divide," tells Salon about Geithner's excuses, Piketty's success and Nixon's cronies

His relentless coverage of Wall Street malfeasance turned him into one of the most influential journalists of his generation, but in his new book, “The Divide: American Injustice in the Age of the Wealth Gap,” Matt Taibbi takes a close and dispiriting look at how inequality and government dysfunction have created a two-tiered justice system in which most Americans are guilty until proven innocent, while a select few operate with no accountability whatsoever....

MT: The book is really just about why some people go to jail and why some people don’t go to jail, and “the divide” is the term I came up with to describe this phenomenon we have where there are essentially two different criminal justice systems, one that works one way for people who are either very rich or working within the confines of a giant systemically important institution, and then one that works in another way for people who are without means. And that’s what the book is about....

Bureaucracies organically flow toward the easier result, and the easier result is always a smaller company, an undefended person, a low-level drug dealer. They hesitate before it decides to proceed against a well-heeled, well-defended company [against which] they’re going to have to fight for years and years and years just to get the case in court … It’s not just about the poor, it’s more about how there’s a class that enjoys impunity and then there’s everybody else....

Morally, it doesn’t work anymore. You just cannot have a society where people instinctively know that certain people are above the law, because it will create total disrespect for authority among everybody else. And that’s completely corrosive. You need to have people believing in the system to some degree — even if it’s just an illusion, you need to have them believing.

EI: You know, with your comment about how people need to believe in the system to some degree, it occurs to me that in a fundamental way, you’re actually making a small-c conservative argument. You’re not saying we need to burn everything to the ground and start over, you’re saying we need to stick with the principles we supposedly all believe in.

MT: People forget that all my sources come from Wall Street. They’re all capitalists, they’re all ardent capitalists. They grew up, their passion in life was reading Adam Smith and believing in that whole world. And I came into this story six years ago, whatever it was, not really knowing a whole lot about it, but certainly I never would have described myself as an ardent capitalist … When people ask me what the solutions are to these problems, for me, the fastest shortcut to everything being cleaned up is disentangling the government from its unnatural support of these too-big-to-fail institutions, forcing them to sink or swim on their own in the real free market. I never would have imagined myself making that argument five or six years ago, but that’s the argument … These people, not only are they not being prosecuted, but they’re not subject to the normal forces of the market anymore, and in a way that enables them even more … If you were to force these companies to sink or swim on their own they’d be vaporized instantly. We see this every time there’s any hint the government is going to stop bailing these companies out or may consider not doing it in the future — they lose billions of dollars in market capitalization overnight …

Salon
“It’s total moral surrender”: Matt Taibbi unloads on Wall Street, inequality and our broken justice system
Elias Isquith | Assistant Editor, Salon

Peter Dorman — The Two Inequalities

In the wake of Piketty, “inequality” is in. But it comes marinated in confusion.

There is really only one inequality that is significant, and it is not economic, although its root in modern society are heavily influenced by economic asymmetries. The only actual inequality is political, as in, "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights...."

 This states that no one is privileged over another politically or legally. It does not question or deny social and economic asymmetry in status and wealth. The equality guaranteed by liberal democracy as government of the people, by the people and for the people is political and not economic. Poltical and legal equality are simple to define and not difficult to achieve, if and only if government is truly of the people, for the people and by the people, even if there are social and economic asymmetries in status and wealth. However, these must not lead to institutional power that creates political and legal privilege.

The question is whether any conditions result in institutional power that entails political or legal privilege. Economic asymmetry seems to do just that, and this is the actual problem that needs to be address in a liberal democracy since it threatens the basis of liberal democracy.

If this were addressed effectively, economic asymmetries would take care of themselves since they depend on asymmetrical institutional power and the economic rent that power imbalance leading to political and legal privilege generates. Externality is also form of rent.

Of course there is is also economic power. However, on a level playing field this can be dealt with politically in a liberal democracy.  Then the level of economics asymmetry is up to the electorate in that they have the political power to address it through economic policy, legislation, and regulation.

Unless institutional power and power asymmetry is addressed, it will not be possible to address economic asymmetries effectively and efficiently other than temporarily, in that a power structure will remain in place to mitigate and then reverse reform.

The issue is that neoliberalism is a political theory that is incompatible with liberal democracy because its assumption of methodological individualism based on ontological individualism is used in a purely economic context that ignores institutional power, resulting in not only social and economic asymmetry but also political privilege. Unless political liberalism is placed above economic liberalism, money and machines will continue to dominate over people, since that is the way the capitalism is structured as a system that favors capital formation.

 Piketty's work shows that in this sense, capitalism is working exactly as it is supposed to. As capital formation increases so does wealth asymmetry and along with it political power and privilege.

Econospeak
The Two Inequalities
Peter Dorman | Professor of Economics, Evergreen State College.

Mark Pascal on MMT

I will return to Modern Monetary Theory (MMT) for the masochists on TMV. There are important points I wish to repeat with respect to MMT. It may describe the underlying operations of monetarily sovereign nations but when a political/economic system is so corrupt, fraudulent, manipulated and criminal, it doesn’t matter what the underlying policies and principles are when those entrusted with running the system cannot do so honestly or competently. In a country where the “rule of law” only applies to the non-elite, non-wealthy and powerless, then anything goes and nothing matters.

The Moderate Voice
On My Writing...
Mark Pascal

(h/t Charles Hayden)

Matt Taibbi — Outrageous HSBC Settlement Proves the Drug War is a Joke

Matt is on the case.

If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows.

Rolling Stone
Outrageous HSBC Settlement Proves the Drug War is a Joke
Matt Taibbi

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You'll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it's a joke. Some of the penalties involved will literally make you laugh out loud.

Jessica Luther — Affluenza: Just the latest excuse for the wealthy to do whatever they want

Talk about over the top double standard and privilege. More like "influenca" than "affulenza." Liberal democracy morphing into plutocratic oligarchy. Inequality of income and wealthy results in social and political and legal inequality.


The Raw Story
Affluenza: Just the latest excuse for the wealthy to do whatever they want
Jessica Luther, The Guardian

Peter Radford — When is a contract a contract?

It used to be comforting to think that the saying “one rule for the rich, another for the poor” was just that: a saying. We could all pretend that America was a land of equal laws, even though we all knew deep down that rich folk can always get away with stuff we can’t.

Now, in these years of crisis, we are exposed to the ugly truth far too frequently. Big business and rich people have one set of laws. The rest of us another. In their laws a contract is inviolate. To break it you have to have extreme extenuating circumstances and/or a well paid lawyer. In our laws a contract is a suggestion. To break it you have to be a creditor who has friends amongst the elite and/or a well paid lawyer.

Real-World Economics Review Blog
When is a contract a contract?
Peter Radford

Lynn Stuart Parramore — Global Elites Getting Nervous About Skyrocketing Inequality (But Won't Spare a Nickel to Fix It)

Caught between the horns of privilege and anxiety.

AlterNet
Global Elites Getting Nervous About Skyrocketing Inequality (But Won't Spare a Nickel to Fix It)
Lynn Stuart Parramore

Deniz Kellecioglu — Two concept proposals: from neoclassical economics to neoliberal economics and from neoliberalism to plutocratism

Rectification of names

Real-World Economics Review Blog
Two concept proposals: from neoclassical economics to neoliberal economics and from neoliberalism to plutocratism
Deniz Kellecioglu

Agree.

Mahilena — When conservatives talk about Constitution they mean the Confederate Constitution

"One grave weakness in the U.S. Constitution is the "general welfare" clause, which the Confederate Constitution eliminated." http://mises.org/freemarket_detail.aspx?control=353

Mahilena's Debunking Libertarianism/Conservatism ...

When conservatives talk about Constitution they mean the Confederate Constitution

That is the sticking point, isn't it? Again, economic liberalism — now neoliberalism — is incompatible with political liberalism — government of the people, by the people and for the people.