Obama Goes From White House to Wall Street in Less Than One Year [feedly]

Can someone come up with a progressive explanation  for this?

Obama Goes From White House to Wall Street in Less Than One Year

https://www.bloomberg.com/news/articles/2017-09-18/obama-goes-from-white-house-to-wall-street-in-less-than-one-year




Obama Goes From White House to Wall Street in Less Than One Year

By Max Abelson


September 18, 2017, 5:00 AM EDT
Ex-president speaks to Carlyle, Cantor, Northern Trust
'If someone is willing to pay him to give a speech, God bless'

Hillary Clinton says she made a mistake when she gave speeches on Wall Street after leaving government. Taking money from banks, she writes in her new memoir, created the impression she was in their pocket.

Her old boss doesn't seem to share her concern.

Last month, just before her book "What Happened" was published, Barack Obama spoke in New York to clients of Northern Trust Corp. for about $400,000, a person familiar with his appearance said. Last week, he reminisced about the White House for Carlyle Group LP, one of the world's biggest private equity firms, according to two people who were there. Next week, he'll give a keynote speech at investment bank Cantor Fitzgerald LP's health-care conference.


Obama is coming to Wall Street less than a year after leaving the White House, following a path that's well trod and well paid. While he can't run for president, he continues to be an influential voice in a party torn between celebrating and vilifying corporate power. His new work with banks might suggest which side of the debate he'll be on and disappoint anyone expecting him to avoid a trap that snared Clinton. Or, as some of his executive friends see it, he's just a private citizen giving a few paid speeches to other successful people while writing his next book.

"He was the president of the entire United States -- financial services are under that umbrella," said former UBS Group AG executive Robert Wolf, an early supporter who joined the Obama Foundation board this year. "He doesn't look at Wall Street like, 'Oh, these are individuals who don't want the best for the country.' He doesn't stereotype."
Fat Cats

Since leaving office, Obama has delivered public and private speeches that are "true to his values," Kevin Lewis, a spokesman for the former president, said in an email. "His paid speeches in part have allowed President Obama to contribute $2 million to Chicago programs offering job training and employment opportunities to low-income youth."

Obama's relationship with Wall Street hasn't always been good. Bankers still boil over with rage about him, wincing over his 2009 line about fat cats as if the wounds were fresh. But his Justice Department prosecuted no major bankers for their roles in the financial crisis, and he resisted calls to break up the biggest banks, signing a regulatory overhaul that annoyed them with new rules but didn't stop them from pulling in record profits.

The brokerage and investment bank Cantor Fitzgerald isn't one of those giants. S&P Global Ratings announced this year that the New York-based firm's debt grades could be cut to junk. Cantor's investment banking division is run by health-care specialist Sage Kelly, who left Jefferies Group after divorce-case accusations became salacious tabloid fodder in 2014. His ex-wife later apologized for the storm caused by the claims, which he had denied.

Cantor Chief Executive Officer Howard Lutnick, whose firm lost more than 600 people in the Sept. 11 attacks, said the former president will make remarks and take questions. The three-day conference for current and prospective clients begins Sept. 25. Obama will be paid about $400,000, according to a person familiar with the arrangement.

"Everybody would like to come," Lutnick said. "Hopefully, we will really talk about the Affordable Care Act in interesting and nuanced ways, which I think is really cool."
Private Island

Obama's appearance at the Carlyle conference in Washington was previously unreported. The private equity giant has enjoyed some of the best political connections in the world, with executives and advisers who have included former presidents, prime ministers and cabinet secretaries. Obama discussed his life and the decisions he made in the White House, the people who heard him said. A spokesman for the firm wouldn't comment.

The ex-president has been busy. His foundation is raising money for a library in Chicago, and he and his wife signed a book deal with Penguin Random House after an auction that went above $60 million, according to the Financial Times. He spoke about food in Milan, democracy in Jakarta and himself at an A&E Television Networks event in New York. He vacationed in California and Hawaii and on Richard Branson's Necker Island with its billionaire owner.

Obama has picked private equity, hedge fund, venture capital and banking veterans to oversee his foundation, and an alumnus of Goldman Sachs Group Inc. to advise him on investments.

Northern Trust is a bank that specializes in wealth management for rich families and services for big funds. The event had gone unreported, but a program accessible on the firm's website lists Obama alongside executives from Microsoft Corp., IBM and Michael Bloomberg, majority owner of Bloomberg LP.

Northern Trust, based in Chicago, gave Obama a discount on a $1.32 million loan for a mansion in that city in 2005, after he was elected to the Senate, the Washington Post reported. The rate was changed to account for an offer from another lender, a spokesman for Obama said three years later. Doug Holt, a spokesman for Northern Trust, wouldn't comment for this story.
Imperial Ballroom

Obama is getting advice on investments from Robbie Robinson, who's on leave from BDT & Co., according to a person familiar with the arrangement. That Chicago-based firm works with wealthy families and is run by Byron Trott. Both bankers worked for Goldman Sachs.

Obama has known executives there for more than a decade. He spoke at the 2006 Goldman Sachs partners' meeting in Chicago. Then a senator, he appeared between Hank Paulson and Warren Buffett in the Fairmont hotel's Imperial Ballroom, an event program shows.

Both Bernie Sanders and Donald Trump blasted Clinton for her lucrative Goldman Sachs speeches, and the issue is still raw. Sanders and fellow Senator Elizabeth Warren have tried to pry the Democratic Party away from its coziness with Wall Street. If Obama is hoping the party will be a big tent with room for corporate giants, they may stand in his way.

Obama's donor friends tend to mention the same reason when they defend his Wall Street speeches, saying he's no longer president and not running for office. Morgan Stanley Vice Chairman Tom Nides is one of them.

"I love Barack Obama, and if someone is willing to pay him to give a speech, God bless America," said Nides, a deputy secretary of state under Clinton in Obama's administration.
Revolving Door

But Jeff Hauser, who studies political corruption as head of the Revolving Door Project in Washington, said Obama should play by the same rules as other politicians because of his ongoing work with the Democratic Party.

"He's continuing to exercise the authority," Hauser said, citing Obama's support for the party's redistricting committee and the push he gave Tom Perez in the race to head the Democratic National Committee. If he wants to play a role, "he ought to forgo a few hundred thousand here and maybe a half-million there."

Few leaders have left the top of the U.S. government recently and resisted the lure of corporate money. Former Vice President Al Gore is a director at Apple Inc. and a senior partner at Kleiner Perkins Caufield & Byers, the venture capital firm whose chairman, John Doerr, is on the Obama Foundation's board. Dan Quayle, another ex-vice president, has spent almost two decades with private equity firm Cerberus Capital Management LP. Trump's White House has lost officials so quickly that Sean Spicer has already made arrangements to speak to a financial firm this year.

"Not everyone's going to be a Jimmy Carter, who does purely good works after he gets out," said Sean Coffey, a Democratic donor who chairs the complex litigation group at corporate law firm Kramer Levin Naftalis & Frankel LLP. Obama is used to being criticized, the attorney added. "I don't think getting any grief for doing this is going to bother him at all."

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Paul Krugman: Complacency Could Kill Health Care [feedly]

Paul Krugman: Complacency Could Kill Health Care
http://economistsview.typepad.com/economistsview/2017/09/paul-krugman-complacency-could-kill-health-care.html

"there is a real chance that Graham-Cassidy ... will ... become law, because not enough people are taking it seriously":

Complacency Could Kill Health Care, by Paul Krugman, NY Times: ...last year far too many people were complacent; they assumed that Trump couldn't possibly become president, so they felt free to engage in trivial pursuits. Then they woke up to find that the inconceivable had happened.

Is something similar about to go down with health care?

Republican attempts to destroy Obamacare have repeatedly failed, and for very good reason. Their attacks on the Affordable Care Act were always based on lies, and they have never come up with a decent alternative. ...

The sponsors of the Graham-Cassidy bill now working its way toward a Senate vote claim to be offering a moderate approach that preserves the good things about Obamacare. In other words, they are maintaining the G.O.P. norm of lying both about the content of Obamacare and about what would replace it.

In reality, Graham-Cassidy is the opposite of moderate. It contains, in exaggerated and almost caricature form, all the elements that made previous Republican proposals so cruel and destructive. ... It would eliminate the individual mandate, undermine if not effectively eliminate protection for people with pre-existing conditions, and slash funding for subsidies and Medicaid. There are a few additional twists, but they're all bad...

Yet there is a real chance that Graham-Cassidy ... will nonetheless become law, because not enough people are taking it seriously. ...

The main reason Republican leaders couldn't do that on previous health bills was public outrage and activism. Letters and phone calls, demonstrators and crowds at town halls, made it clear that many Americans were aware of the stakes, and that politicians who voted to take health care away from millions would be held accountable.

Now, however, the news cycle has moved on, taking public attention with it. Many progressives have already begun taking Obamacare's achievements for granted, and are moving on from protest against right-wing schemes to dreams of single-payer. Unfortunately, that's exactly the kind of environment in which swing senators, no longer in the spotlight, might be bribed or bullied into voting for a truly terrible bill.

The good news is that for technical reasons of parliamentary procedure, Graham-Cassidy has to pass by the end of this month, or not at all. The bad news is that such passage is a real possibility.

So if you care about preserving the huge gains the A.C.A. has brought, make your voice heard. Otherwise we may wake up to another terrible morning after.

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Dan Little: Worker Owned Enterprises as a social solution

Worker-owned enterprises as a social solution

image: Mondragon headquarters, Arrasate-Mondragon, Spain

Consider some of the most intractable problems we face in contemporary society: rising inequalities between rich and poor, rapid degradation of the environment, loss of control of their lives by the majority of citizens. It might be observed that these problems are the result of a classic conundrum that Marx identified 150 years ago: the separation of society into owners of the means of production and owners of labor power that capitalism depends upon has a logic that leads to bad outcomes. Marx referred to these bad outcomes as "immiseration". The label isn't completely accurate because it implies that workers are materially worse off from decade to decade. But what it gets right is the fact of "relative immiseration" -- the fact that in almost all dimensions of quality of life the bottom 50% of the population in contemporary capitalism lags further and further from the quality of life enjoyed by the top 10%. And this kind of immiseration is getting worse. 

A particularly urgent contemporary version of these problems is the increasing pace of automation of various fields, leading to dramatic reduction for the demand for labor. Intelligent machines replace human workers. 

The central insight of Marx's diagnosis of capitalism is couched in terms of property and power. There is a logic to private ownership of the means of production that predictably leads to certain kinds of outcomes, dynamics that Marx outlined in Capital in fine detail: impersonalization of work relations, squeezing of wages and benefits, replacement of labor with machines, and -- Marx's ultimate accusation -- the creation of periodic crises. Marx anticipated crises of over-production and under-consumption; financial crises; and, if we layer in subsequent thinkers like Lenin, crises of war and imperialism.

At various times in the past century or two social reformers have looked to cooperatives and worker-owned enterprises as a solution for the problems of immiseration created by capitalism. Workers create value through their labor; they understand the technical processes of production; and it makes sense for them to share in the profits created through ownership of the enterprise. (A contemporary example is the Mondragon group of cooperatives in the Basque region of Spain.) The reasoning is that if workers own a share of the means of production, and if they organize the labor process through some kind of democratic organization, then we might predict that workers' lives would be better, there would be less inequality, and people would have more control over the major institutions affecting their lives -- including the workplace. Stephen Marglin's 1974 article "What do bosses do?" lays out the logic of private versus worker ownership of enterprises (link). Marglin's The Dismal Science: How Thinking Like an Economist Undermines Community explores the topic of worker ownership and management from the point of view of reinvigorating the bonds of community in contemporary society.

The logic is pretty clear. When an enterprise is owned by private individuals, their interest is in organizing the enterprise in such a way as to maximize private profits. This means choosing products that will find a large market at a favorable price, organizing the process efficiently, and reducing costs in inputs and labor. Further, the private owner has full authority to organize the labor process in ways that disempower workers. (Think Fordism versus the Volvo team-based production system.) This implies a downward pressure on wages and a preference for labor-saving technology, and it implies a more authoritarian workplace. So capitalist management implies stagnant wages, stagnant demand for labor, rising inequalities, and disagreeable conditions of work. 

When workers own the enterprise the incentives work differently. Workers have an interest in efficiency because their incomes are determined by the overall efficiency of the enterprise. Further, they have a wealth of practical and technical knowledge about production that promises to enhance effectiveness of the production process. Workers will deploy their resources and knowledge intelligently to bring products to the market. And they will organize the labor process in such a way that conforms to the ideal of humanly satisfying work.

The effect of worker-owned enterprises on economic inequalities is complicated. Within the firm the situation is fairly clear: the range of inequalities of income within the firm will depend on a democratic process, and this process will put a brake on excessive salary and wage differentials. And all members of the enterprise are owners; so wealth inequalities are reduced as well. In a mixed economy of private and worker-owned firms, however, the inequalities that exist will depend on both sectors; and the dynamics leading to extensive inequalities in today's world would be found in the mixed economy as well. Moreover, some high-income sectors like finance seem ill suited to being organized as worker-owned enterprises. So it is unclear whether the creation of a meaningful sector of worker-owned enterprises would have a measurable effect on overall wage and wealth inequalities.

There are several ways in which cooperatives might fail as an instrument for progressive reform. First, it might be the case that cooperative management is inherently less efficient, effective, or innovative than capitalism management; so the returns to workers would potentially be lower in an inefficient cooperative than a highly efficient capitalist enterprise. Marglin's arguments in "What do bosses do?" give reasons to doubt this concern as a general feature of cooperatives; he argues that private management does not generally beat worker management at efficiency and innovation. Second, it might be that cooperatives are feasible at a small and medium scale of enterprise, but not feasible for large enterprises like a steel company or IBM. Greater size might magnify the difficulties of coordination and decision-making that are evident in even medium-size worker-owned enterprises. Third, it might be argued that cooperatives themselves are labor-expelling: cooperative members may have an economic incentive to refrain from adding workers to the process in order to keep their own income and wealth shares higher. It would only make economic sense to add a worker when the product of the next worker is greater than the average product; whereas a private owner will add workers at a lower wage when the new worker's product is greater than the marginal product. So an economy in which there is a high proportion of worker-owned cooperatives may produce a high rate of unemployment among non-cooperative members. Finally, worker-owned enterprises will need access to capital; but this means that an uncontrollable portion of the surplus will flow out of the enterprise to the financial sector -- itself a major cause of current rising inequalities. Profits will be jointly owned; but interest and finance costs will flow out of the enterprise to privately owned financial institutions.

And what about automation? Would worker-owned cooperatives invest in substantial labor-replacing automation? Here there are several different scenarios to consider. The key economic fact is that automation reduces per-unit cost. This implies that in a situation of fixed market demand, automation of an enterprise implies reduction of the wage or reduction of the size of the workforce. There appear to be only a few ways out of this box. If it is possible to expand the market for the product at a lower unit price, then it is possible for an equal number of workers to be employed at an equal or higher individual return. If it is not possible to expand the market sufficiently, then the enterprise must either lower the wage or reduce the workforce. Since the enterprise is democratically organized, neither choice is palatable, and per-worker returns will fall. On this scenario, either the work force shrinks or the per-worker return falls.

Worker management has implications for automation in a different way as well. Private owners will select forms of automation based solely on their overall effect on private profits; whereas worker-owned firms will select a form of automation taking the value of a satisfying workplace into account. So we can expect that the pathway of technical change and automation would be different in worker-owned firms than in privately owned firms.

In short, the economic and institutional realities of worker-owned enterprises are not entirely clear. But the concept is promising enough, and there are enough successful real-world examples, to encourage progressive thinkers to reconsider this form of economic organization.

(Here are several earlier posts on issues of institutional design that confront worker-owned enterprises (link, link). Noam Chomsky and Richard Wolff discuss the value of worker-owned cooperatives within capitalism here; link, link. And here is an interesting article by Henry Hansmann on the economics of worker-owned firms in the Yale Law Journal; link.)

--

John Case
Harpers Ferry, WV

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Most families are nearly back to 2007 income levels, but inequality continues to grow in 2016 [feedly]

Most families are nearly back to 2007 income levels, but inequality continues to grow in 2016
http://www.epi.org/blog/most-families-are-nearly-back-to-2007-income-levels-but-inequality-continues-to-grow-in-2016/

In recent decades, the vast majority of Americans have experienced disappointing growth in their living standards—despite economic growth that could have easily generated faster gains in their living standards had it been broadly shared. Tuesday's relatively good news on family income growth over the past year doesn't make up for this long legacy of rising inequality. This year's growth is encouraging though not as strong as the previous year in part due to near zero inflation between 2014 and 2015. Unfortunately, the growth in 2016 was also not as broadly shared as it was in 2015. Families in the top fifth of the income distribution grew faster than in 2015, while the bottom 80 percent of families saw slower growth. Another year of decent across-the-board growth should more than fully restore the income losses suffered during the Great Recession for most American families. But, it will barely put a dent in the generation of losses suffered as the incomes for the vast majority lagged far behind the economy's potential.

As with most economic analysis, meaningful assessments of growth of living standards for the vast majority requires specifying benchmarks against which to measure actual performance. We offer up two reasonable benchmarks. The first is how income growth differs for families at different parts of the income distribution. What we have seen since the last business cycle peak in 2007, before the Great Recession hit, is growing income inequality. This week's news that income growth in 2016 was positive across the board but does not overturn the general pattern of unequal growth that we have seen since 2007. The second benchmark we posit is income growth relative to that of earlier historical epochs. This benchmark shows that in the three decades following World War II, income growth was both much faster as well as more broadly shared than it has been since 1979.

Read more

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Little to no gain in median annual earnings in the 2000s, while significant wage gaps remain [feedly]

Little to no gain in median annual earnings in the 2000s, while significant wage gaps remain
http://www.epi.org/blog/little-to-no-gain-in-median-annual-earnings-in-the-2000s-while-significant-wage-gaps-remain/

This week, the Census Bureau released its report on incomes, earnings, and poverty rates for 2016. Most analysis paid particular attention to the changes between 2015 and 2016. We wanted to take a deeper look at earnings by race and gender over a longer period of time—since 2000—to paint a more complete picture of what has happened over the last full business cycle (2000-2007) plus the most recent recession and recovery (2007-2016). Since 2000, wages have been generally stagnant, and large gaps persist by race and gender. This longer-term trend might at least partially explain the less-than-rosy outlook many working people seem to have about the economy and their personal economic security—despite ongoing progress toward a full economic recovery.

To a great extent, trends in annual earnings since 2000 resemble the overall wage stagnation we've seen since the mid-1970s. (Here, we discuss annual full time earnings, but the long-run trends are consistent with the hourly wage data. For an extensive discussion of hourly wage trends, see The State of American Wages 2016.) Between 2015 and 2016, men's earnings fell slightly, and are still 0.6 percent below their 2000 level. Meanwhile, women's earnings increased slightly, and are now 8.5 percent higher than in 2000. Because of these divergent trends, the overall gender wage gap narrowed between 2000 and 2016, though at a slower rate than in the previous two decades.

These patterns in men's and women's full-time median annual earnings can be further broken down by race. As you can see in the figure below, real median earnings of full-time workers—male and female, black and white—have been relatively flat since 2000. While all four groups experienced an increase between 2014 and 2015, along with impressive gains across-the-board in 2015, only white women saw their median wages rise between 2015 and 2016. For the most part (except for white women), median wages were flat or falling in the full business cycle of 2000–2007, and have yet to significantly grow past their 2000 levels.

Read more

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NYTimes: Our Constitution Wasn’t Built for This

Our Constitution Wasn't Built for This https://nyti.ms/2y5UDEK

The Right Wing Has a Vast, Secret Plot to Destroy Unions for Good. Here’s How to Fight Back. [feedly]

....not so secret

The Right Wing Has a Vast, Secret Plot to Destroy Unions for Good. Here's How to Fight Back.
http://inthesetimes.com/working/entry/20525/right-wing-plot-unions-labor-ALEC/

The vast right-wing network of Koch brother-funded "think tanks" is now plotting to finish off the public sector labor movement once and for all.

In a series of fundraising documents obtained by the Center for Media and Democracy of Madison, Wis., and published in the Guardian, the CEO of a cartel of 66 well-funded arch-conservative state capitol lobbying outfits promises funders a "once-in-a-lifetime chance to reverse the failed policies of the American left."

Tracie Sharp, the leader of the States Policy Network (SPN), goes on to explain that the pathway to permanent right-wing victory is to "defund and defang" unions that rely on the legal protections of state labor law.