Saturday, April 28, 2007

Reforming the IMF

Here's a thought-provoking article by journalist and international development expert Thomas Palley regarding the reforms that are necessary for the Bretton Woods institutions (i.e.: the World Bank and the IMF), and no, he's not referring to Paul Wolfowitz's high profile ethical lapses or weak human rights record as an ambassador.

Palley argues that the IMF's policies prejudice equitable global growth, a situation that has heretofore been impossible to change because initiating reform has been near impossible. The problem, as he diagnoses it is that "In times of economic crisis reform is viewed as too risky, while in good times the case for reform melts away on the grounds of why rock the boat."

But the silver lining is that the functioning of these institutions have become so compromised, its policies so antithetical to its mission to help stabilize the economies in the Developing Nations, that the for reform is now impossible to hide under the carpet. Or, as Palley argues: "Very occasionally an institution’s business model breaks down, creating an internally generated case for reform. This has now happened to the IMF."

Palley explains how and why the IMF's business model has finally collapsed: Because of growth of global capital markets, countries now have access to private capital at much lower interest rates without having to abide by rigid and counterproductive) IMF conditionalities. He also notes that huge U.S. trade deficits have enabled developing countries to run trade surpluses, lessening the amount of money they need to borrow to finance economic growth. This, im turn, has led to a falling demand for IMF loans, thereby undermining the Fund’s purpose and financial viability.

The article goes on to discuss some of the Fund's ongoing reforms that, while they are necessary and worthy, he argues don't go far enough. He also makes the case that the IMF's leadership still have not adequately addressed the challenges to international development policy wrought by globalization. He says:
The Fund refuses to recognize that globalization also creates adverse labor market spillovers. With the world increasingly one labor market owing to trade and outsourcing, labor conditions in one country can spillover and affect labor outcomes in another: hence, need for international labor standards also overseen by a global arbiter. . . .

Globalization is suffering from lack of attention to the social dimension. The IMF has resisted any responsibility for remedying this weakness, claiming it is not part of its mission. The reforms proposed by IMF management do nothing to change this stance. That should not be allowed.

Today’s global economic system was stitched together in the last quarter of the 20th century, a period of labor weakness and laissez-faire revival. Consequently, labor and social issues were left off the table. It is time to remedy that omission, and the reform process underway at the IMF provides a good place to start.

I agree that this is a key challenge that needs to be addressed by these multilaterals and the wealthy nations such as the US, Japan and others that provide the most funding to them. Read the whole article, it's well-written and presents, I believe, an effective case against the current trajectory of the IMF.

Friday, April 27, 2007

Yglesias asks a good question

Here's a good question from his blog regarding the Democratic Presidential debates late night (which I missed). Clinton is trying to sound all tough on terrorism and strong about homeland security, but this type of posturing by her is as shallow as it is stupid.

Right now, I'm leafing through the transcript and am surprised at how lame the questions and moderators Brian Williams and David Stanton were. The "debate" here was totally pathetic-I don't think eight candidates (two of whom are fringe) in ninety minutes is workable. When Williams had to start asking questions where the answer was a raised hand or a one-sentance answer, you had to realize there was no informational value whatsoever. Some entertainment value maybe, but I'm honestly glad I didn't waste my time watching this crap.

Here are some of what I consider to be the lamest questions tossed out to the candidates by Williams:

Brian Williams: Senator Clinton, your party's leader in the United States Senate, Harry Reid, recently said the war in Iraq is lost. A letter to today's USA Today calls his comments "treasonous" and says if General Patton were alive today, Patton would "wipe his boots" with Senator Reid. Do you agree with the position of your leader in the Senate?

Starting the debate with an egregiously leading question like this, Williams may as well have asked Biden if he still beats the shit out of his wife, and if not when he stopped. Yes, this was the first question, setting the tone for the next half hour.

Williams: Senator, thank you. Senator Edwards, you've spoken with great passion and energy and eloquence about the issue of poverty in the United States, your "two Americas" theme.

And yet I want to read you a quote from the political journalist Roger Simon: "Many people miss the point about the haircuts. The point is not the cost. John Edwards is a very rich man and could afford even a $4,000 haircut. But why did he pay for his haircuts out of campaign funds?" Senator?

Gotcha! What importance this has to the election is questionable, to be extremely charitable. No Democrat I know gives a shit about the Edwards Haircut Non-Scandal "Scandal" and even less about hack Roger Simon.

Williams follow-up is even stupider:

Williams: And, Senator, I have a follow-up for you. On modern day America, you've been of counsel to hedge funds. Do hedge funds make America any better in any way?

Edwards should have just answered the question "Yes, they create thousands of high paying jobs and hundreds of millions if not billions in tax revenue" and then allowed the audience to laugh at Williams for 30 seconds or so.

Finally, some local journalist named David Stanton asked candidates a series of questions prefaced by the disclaimer "he next question is a short-answer question; one sentence." So, what are some of these "short answer questions"?

"In comparison to countries like Japan, China and India, we have the least number of young people going for advanced degrees in science and engineering. How are you going to reverse this brain drain?"


"Concerning the astronomical windfall of major oil companies again in the first quarter. Why is gas still on the rise?"

Then, Williams has the gall to complain "I'm telling you, it's tough up here. There's no such thing as one sentence with this crowd." Hey, maybe it's because you're asking ridiculous questions that can't be answered intelligently in five or six words.

Also, be sure to check out Matt Taibbi's take on the debate. As always, it is hilarious and insightful. Here's a small sample:
There must be something to it -- it must be beneficial to the American power apparatus somehow to demean the individuals who seek to occupy its highest offices. Maybe it's because while dignified human beings are unpredictable, an old turned-out whore can be counted on to do anything for forty bucks -- and these are the kinds of people we need in the White House. Who knows what it is. Whatever the reason, they're starting the seal show earlier and earlier each cycle. And this year, the first round of the freak parade took place in Orangeburg, South Carolina, where the Democratic party unveiled its '08 team of craven auto-flagellants.

Update: The transcript from the GOP debate in Simi Valley, CA is here. I'm going to force myself to read through as much of this as I can, although considering the moderators are Tweety Matthews and two hacks from, I'm going to guess the questions/moderation are even lamer than the DNC debate. And, it goes without saying, the responses are going to be even more shameless and detatched from reality. (Update: Looks like I guessed right)

For example, we got this from former Secretary of Health and Human Services Tommy Thompson on why he should be the next President of the United States:

Tommy Thompson, a former governor of Wisconsin, said he would allow an employer to fire an employee solely for being gay. To the question, “If a private employer finds homosexuality immoral, should he be allowed to fire a gay worker?” Mr. Thompson replied, “I think that is left up to the individual business.” And when asked if that meant yes, he replied, “Yes.”

And then of course, we get the classic non-apology apology, with candidate Thompson later informing CNN that “I made a mistake," and the should have asked for the question to be repeated. “I didn’t hear, I didn’t hear the question properly, and I apologize,” he said.

This isn't the first time Thompson has made utterly ridiculous comments in a public forum; for example, who can forget this exchange when he said that making a lot of money is "part of the Jewish tradition"?

Wednesday, April 25, 2007

Congress calls for troop withdraw by October

And President Bush will smack it down. Tragically. the Democrats don't have the two thirds majority it needs to override Bush's promised veto.

Speaker of the House Hoyer summed up the obvious: "Our troops are mired in a civil war with no clear enemy and no clear strategy for success."

The key conditions of the bill, H.R. 1591: A non-binding goal of completing the troop pull out by April 1, 2008, and allowing for forces conducting certain noncombat missions, such as attacking terrorist networks or training Iraqi forces, to remain. if the Iraqi government does not meet certain "standards". In other words, showing progress which is utterly impossible given the violent, horrific nature of the occupation. According to the AP, the Senate will be sending the President a similar measure tomorrow, also demanding a withdrawal begin in October.

Update: The Senate narrowly passed the $124 billion war spending bill. It should get to Bush next week. Unfortunately, the final vote came down to 51-46, not even close to the 2/3 needed.

Update: TPM Election Central points out that this is Bush's war now. And Juan Cole lays out a strategy for ending the occupation.

Bill O'Reilly caught lying again

On the TV Monday night: Bill O'Reilly loses his sanity, claiming that George Soros is bankrolling Media Matters for America. except, he doesn't (not that there would be anything wrong with him doing so anyway).

O'Reilly is pretty big on tossing around some very serious accusations without even a shred of proof, except to say he has "proof beyond a reasonable doubt". It would be interesting to know what he bases this "proof" on, though.

Also, Sirota notes the irony of O'Reilly condemning Soros' role in influencing elections when his billionaire boss Rupert Murdoch does exactly that while owning the major news outlet Fox News.

Also, check out Lewis Lapham's article in Harper's "Tentacles of Rage: The Republican propaganda mill, a brief history" from September 2004.

Comparing health care systems

An interesting article in today's American Prospect by Ezra Klein comparing the public health care systems of the US (the VA), France, Germany, UK and Canada.

A fairly lengthy read as well, and I admit I've just kind of skimmed through it. As soon as I finish the freelance article I've been working on this week, I plan on looking a little more closely at the specific facts and figures.

Update: Well, I'm still not finished my article, but I have some more thoughts on Ezra's piece, which I think is pretty strong overall. Keep in mind I am not by any means a "health care pundit", though I did take a grad school class on Health Policy at NYU's Wagner School - supposedly the top school in the country in that field.

Tuesday, April 24, 2007

The passing of an icon of journalism

I found out last night after getting home for dinner that one of my heroes, Pulitzer-prize winner David Halberstam had been killed in a car accident. I was a huge fan of his writing and approach to journalism and he, probably more than any other public figure, made me want to become a journalist and writer. In High School and college, I devoured "The Fifties", "The Best and the Brightest", "War in a Time of Peace", "The Powers That Be" and many other of his brilliant works.

There were a couple of things that drew me to Halberstam. First, he didn't hit the reader over the head with what he thought was the significance or problem with various world events or leaders - rather, using rigorous reporting and research, he drew a compelling picture for the reader to draw his or her own conclusions. He was less of a polemicist about matters of war and peace, civil rights or foreign policy in general, but rather more of a meticulous fact-gatherer and compiler of statements made by the men and women who shaped the path of modern history.

Second, his work and approach embodied to me the noble calling of journalism as a watchdog for the public interest: To afflict the comfortable and comfort the afflicted. He didn't take history as a fixed narrative but rather cast it in a new framework. He was opposed to the Vietnam War, as were many of his colleagues, but rather than just pennin an angry call for protest, he documented the lies, incompetence and vanity that led to the spectacular failure in America's foreign policy and the deaths of hundreds of thousands (or millions if you look to Cambodia's killing fields).

And that is what good journalism should be: Not just to advocate, not just to inform, not just to document, but to explain things in a way that future generations can learn from this country's successes and failures (and hopefully not repeat the former).

Finally, Halberstam was just a damn good, entertaining writer. I had next to no interest in Michael Jordan or his life, but I remember being stuck in an airport back in 2000 and picking up his book "Playing for Keeps". He managed to write a truly compelling narrative about this man, exploring his contributions and contradictions, in a way that would be engaging for a casual sports fan.

According to the Times, he was working on a new book on the Korean War that was to be published this Fall. I'm sure it would have been a fascinating read. One complaint I do have is that he seemed totally disengaged in the ongoing crisis of the Iraq War, the biggest policy disaster of this decade (so far). If he has written on the topic, feel free to correct me, but to my knowledge he didn't really break any scoops in this area. Perhaps he was tired of covering wars, which he had been doing for the past four decades, and just didn't have it in him to deal with such depressing matters.

The Times has a great quote on his view of what he saw his job as: "A writer should be like a playwright — putting people on stage, putting ideas on stage, making the reader become the audience,”

Update:: Todd Gitlin has some good Halberstam quotes on Vietnam, Iraq and having your patriotism questioned by the President here.

Update #2 (7/13): Apparently, Halberstam had penned an article on the Bush administration's failed Iraq policy for Vanity Fair; see this post from IraqSlogger for the details.

It's about health care costs, stupid!

Ezra Klein, writing at his eponymous blog, tries to interject some common sense into the health care debate, and he provides us with some nifty charts as well! Citing fiscal analysis published in the recently released Social Security and Medicare Trustees' Report, Klein basically makes the point that despite most people's concerns about the sustainability of Social Security, the threat of the Medicare program's collapse is much, much more likely, and the dollar costs are exponentially larger than they are in the case of Social Security.

The bottom line is that both the Social Security and the Medicare/Medicade programs are examples of really great entitlements from the federal government that will cease to exist unless some policy (funding) changes are put in order. Social Security does not need to be privatized, even though that would make Wall Street investment houses billions of dollars; all it needs are some modest increases in funding via taxes.

Medicare, on the other hand, is a whole different ball of wax. The amount of money needed to rescue it from oblivion, and the catastrophic consequences that would result from such a meltdown, make this a much more challenging, and pressing concern on Capitol Hill.

On "Social Inclusion" and the lack of poverty measurement in the US

A new report was published by The Center for Economic and Policy Research on the European concept of social inclusion and why it should be considered here in the US by economic policymakers:
Poverty divides us. Social inclusion can unite us. Whenever too many fall too far behind the rest, our whole society is diminished. Inclusion demands goals and polices that avoid separating us. Inclusion calls on us to strive for a nation in which everyone lives with purpose, dignity, and satisfaction. Inclusion describes what Robert Kennedy called our desired “bond of common fate.”

Indicators based on social inclusion would assess the extent to which low-paid workers fall behind the rest of the workforce, not only in terms of wages and income, but in a variety of dimensions, including health, education, housing, skills, advancement, and opportunity. Unlike poverty, social inclusion is something positive to support, not something negative to oppose.

Social inclusion has considerable potential to improve our understanding of social issues and policies. A serious effort should be made to introduce the concept in the United States.

As way of background, the report explains thst the poverty indicators adopted in the UK measure both income and social
inclusion. Political leaders there knew where they wanted to end up and designed a set of measures to match. When deciding how to address and measure income poverty, they chose a relative or inequality based measure. Under the UK measure, a family is considered to be "poor" if their income is below 60% of median income, (less housing costs). The importance of this measure recognizes the importance of income inequality as both a cause and consequence of social exclusion.

But in the UK, there is also recognition that measuring poverty involves more than just looking at income: Poverty also encompasses “neighborhood environments, lack of opportunities to gather knowledge and skills, housing quality, access to mainstream financial services, and inequalities in health.”

On the other hand, the US does not have a useful poverty measure. It relies only on a measure of income deprivation, not a measure of inclusion or economic mobility.

As the authors note: "The official U.S. poverty guidelines are based on life as it was in the 1950s, when housing costs represented a smaller part of household budgets than today, one worker could support most families, and child care costs
weren’t much of a factor."

Underscoring the importance of looking at poverty holistically, the authors explain that:
This is not our current economic reality. Forty-four million jobs in the United States—one in three—pay less than $11.11 an hour. Most of these jobs do not provide the employment benefits other workers take for granted: health
insurance, paid time off, and retirement plans. Middle-class families have a hard time affording health care, child care, and other necessities.

We could end “official poverty” in the United States, nudging families slightly above the $20,000 a year or so they need to earn to not be considered officially poor. But if we fail to build an economy that works for all, providing upward mobility, a decent standard of living, and economic security, we will merely consign millions to a lifetime of exclusion without opportunity.

Update: This is exactly the type of measurement this UN study that I recently wrote about neglects to take into account.

Sunday, April 22, 2007

Bill Moyers, the Iraq war and the failure of the media

Just finished watching Bill Moyer's incredible PBS Special Buying The War (link to video), and I can truly say it is one of the most depressing, disturbing, nauseating and well-done documentaries I have ever seen. Here's a promotional quote from Moyer's website:

How did the mainstream press get it so wrong? How did the evidence disputing the existence of weapons of mass destruction and the link between Saddam Hussein to 9-11 continue to go largely unreported? "What the conservative media did was easy to fathom; they had been cheerleaders for the White House from the beginning and were simply continuing to rally the public behind the President — no questions asked. How mainstream journalists suspended skepticism and scrutiny remains an issue of significance that the media has not satisfactorily explored," says Moyers. "How the administration marketed the war to the American people has been well covered, but critical questions remain: How and why did the press buy it, and what does it say about the role of journalists in helping the public sort out fact from propaganda?"

Although this article by Greg Mitchell over at Editor & Publisher is a bit old, as it was written in advance of the special being aired on the night of the 26th, it provides a nicely written description of just how serious the breakdown in te US's mainstream media's coverage leading up to the Iraq was really was. Ans more frighteningly, the media still doesn't realize how poor of a job they have done, and still don't seem to have made progress in correcting for the many institutional errors present.

Mitchell notes: "The war continues today, now in its fifth year, with the death toll for Americans and Iraqis rising again -- yet Moyers points out, "the press has yet to come to terms with its role in enabling the Bush Administration to go to war on false pretenses."

He also mentions Moyers' interview with former CNN chief Walter Isaacson, and the bombshell that Isaacson had sent a memo to staff, leaked to the Washington Post, in which he declared, "It seems perverse to focus too much on the casualties or hardship in Afghanistan" and ordered them to balance any such images with reminders of 9/11.

A good write-up on the piece from the Washington Post.

Related: Chomsky and Zinn interviewed by Democracy Now on patriotism and dissent in America in a time of war.

Saturday, April 21, 2007

The failure of deregulation

AP reports that electric deregulation, which Congress pushed through based on claims that increased competition would miraculously reduce prices for US consumers. Those claims, we now know, were totally wrong.

According to the report: "Not one of the 16 states plus the District of Columbia that have pushed forward with deregulation since the late 1990s can call it a success. In fact, consumers in those states fared worse than residents in states that stuck with a policy of regulating their power industries. An Associated Press analysis of federal data shows consumers in the 17 deregulated areas paid an average of 30% more for power in 2006 than their counterparts in regulated states. That's up from a 24% gap in 1990."

In addition, consumers in deregulated states also have suffered from "bigger price swings, as rate caps in place when deregulation began in the late 1990s were lifted in the last couple of years."

The culprit? Instead of competition producing lower rates, the choices are between high or higher prices. In some states such as Illinois, residents have no choice but to get their power from one or two mega-utilities, who are passing on soaring costs for the power they're buying.

The utilities and their Washington lobbyists, of course, are punting and asking Americans to just wait a few more Friedman Units for things to get better, because, you know, the Free Market always works best without pesky government interference.

From the article: "Utilities and their advocates are urging caution for states considering dumping deregulation. They say competition couldn't thrive under rate caps but should now that many of those caps have been lifted and the market is determining rates."

See also Robert Kuttner's New York Times editorial "An Industry Trapped in a Theory" on why electric deregulation doesn't work and this post on SirotaBlog discussing how both Democrats and Republicans are dishonestly blaming over-regulation for Middle Class economic insecurity - a truly mind-boggling lie.

Wednesday, April 18, 2007

Meanwhile, in Iraq

The International Council of Voluntary Agencies (ICVA) released a statement this month on the humanitarian crisis that is unfolding like a slow-motion car crash in occupied Iraq.

From the public document via ReliefWeb:
Iraq is facing a humanitarian crisis with up to an estimated eight million people in need of immediate assistance and protection. The affected population faces escalating violence, ongoing military operations, human rights violations, and a crisis of protection. At the same time, the increase in violence has severely constrained humanitarian space and relief provisions have become very limited. The humanitarian situation is further exacerbated by the combination of degraded basic services, loss of livelihoods, and rampant inflation, which have increased the vulnerability of the people.

While horrific violence dominates the lives of millions of ordinary people inside Iraq, the displacement, malnutrition, chronic poverty, and illness that have been increasing over the last four years are crippling the lives of hundreds of thousands more. The protection vacuum that characterises much of Iraq has resulted in huge unmet needs and a denial of fundamental rights. The people of Iraq have a right to humanitarian assistance, but this right is being neglected.

Understanding the Crisis

The humanitarian crisis in Iraq has not yet been adequately acknowledged, fully assessed, or properly understood. While donors and the UN system have been pre-occupied with reconstruction, development, and political benchmarks, they, and the Iraqi government itself, are only just starting to acknowledge the existence of humanitarian needs. This conference is a welcome step.

As UNHCR has estimated, there are 1.9 million internally displaced persons in Iraq, a figure increasing by some 50,000 each month, in addition to the 40,000 to 50,000 fleeing from Iraq on a monthly basis. While the situation is particularly severe in the centre of the country and to a slightly lesser degree in the South, authorities and host populations also struggle to provide for displaced populations in the more stable and developed areas of the North.

The situation may be further evolving with the authorities in some districts or governorates reportedly denying permission to people to settle within their boundaries and even threatening to expel them. While the course of displacement in 2004-2005 was assessed as a short-term phenomenon, the new displacement reality is shaping up to be a long-term trend. The overwhelming volume of internal displacement has been concentrated in a short time period. The ensuing needs have been exacerbated by ongoing violence, dismal security conditions and declining living standards for IDPs and their host communities alike. These need to be addressed as a matter of urgency through a collaborative and coordinated response.

Certainly the refugee and IDP caseloads are in immediate need of humanitarian relief, as are the “hidden” affected people inside Iraq who suffer the impact of violence on their daily lives: shortfalls in basic services, inefficient functioning of the Public Distribution System (PDS), loss of livelihoods and uncontrolled inflation. As a major proportion of IDPs in Iraq are living with communities, families, and friends it is important that humanitarian assistance focus on the coping mechanisms of whole communities by improving water supplies, electricity, shelters, schools, and income generation activities and not focus on building camps and emergency latrines. The constant pressure faced by Iraqi citizens has steadily eroded their coping mechanisms and traditional forms of solidarity that are extended in times of crises, with the result that they require external sources of relief assistance.

Special Protection Needs

Many groups continue to suffer persecution in Iraq, particularly professionals; women; Iraqis employed by foreign contractors, the UN or other international organisations including NGOs; and ethnic and religious minorities. Internally displaced persons (IDPs) are frequently victims of human rights violations originating from ethno-religious differences or of a political and criminal order. The security of third-country nationals, stateless persons, and particularly the Palestinian refugees and thousands of refugees from Turkey, Iran and Syria in Iraq has drastically deteriorated.

Based on 2005 figures, nearly 5.6 million Iraqis were living below the poverty line and over 4 million people are food insecure and in dire need of different types of humanitarian assistance. Twenty-eight percent of Iraqi children suffer from malnutrition: the chronic malnutrition rate of children in food insecure households is 23%. One child in 10 suffers from chronic disease or illness. Children in Iraq have more chance of dying before the age of five than children in any other Middle Eastern country. Women are suffering because of unjust policies and from the militancy of intolerant groups. Special consideration should be given to single-headed households and youth, who are the most vulnerable.

Four years of daily violence and a high level of psychological trauma, following 20 years of wars and sanctions has inflicted enormous damage on the mental and physical health of tens of thousands of direct victims, including tortured people, as well as their families and society at large. Assistance to strengthen medical and psychological rehabilitation services is needed to enable victims to regain their capacity to effectively contribute to the development of their society.

The Challenges of Working in Iraq

International and national NGOs working in Iraq have become some of the very few key humanitarian implementers on the ground, yet they face multiple obstacles in responding to the numerous needs. NGOs have met with success and failures compounded by the problems faced by all stakeholders involved in delivering aid and assistance. However the main comparative advantages that NGOs, especially national NGOs, have are their flexible approaches and their ability to react quickly to develop strategies and responses. NGOs are able to adapt their structures and activities to the volatile context and newly emerging needs, build relative trust and acceptance in the communities in which they operate, adhere to an impartial and neutral approach in their service delivery within the limitations of keeping a low profile, and help correct some of the misperceptions the population may have about NGOs, their affiliations and objectives. NGOs delivering humanitarian aid distinguish themselves from other types of agencies, and especially from the military, by emphasising their neutrality and impartiality through their actions, and putting the humanitarian imperative as an absolute first.

Responding Better

These efforts have allowed INGOs to maintain their own capacities and to extend their services and assistance at a national level, particularly by building upon the capacity of national NGOs. Of critical importance, they are still able to access communities and represent one of the very few humanitarian actors and witnesses on the ground. However, the conflicts in Iraq are saturated with multiple stakeholders’ strategic interests and agendas, politicising the context and compromising humanitarian access conditions. The result is that NGOs often face obstacles in accessing the most vulnerable. There is a need to review access options and obstacles, make use of the comparative advantages and experiences that NGOs have, and to identify viable solutions and the supports needed for their implementation.

The clear implication is that more humanitarian assistance is needed in Iraq, both immediately and for the foreseeable future. Recognition of, and actions to assist, vulnerable communities are in place, but as conditions have worsened, assistance has not been able to keep pace. It is essential that humanitarian space is maintained and expanded for relief to be provided. The main constraints to increased assistance are determining how to get the job done in an adverse security environment, and having sufficient and adequately flexible financial and human resources in place to address the most serious unmet needs.

The ability to respond is often constrained by a lack of flexible funding that can adapt to the changing humanitarian needs. Furthermore, the withdrawal of some donors is limiting the amount of funding available for humanitarian programmes from countries that are not parties to the conflict. Some NGOs feel that taking funds from parties involved in the conflict jeopardises their neutrality and impartiality, in addition to increasing the risk taken by their teams in the field. This decrease in funds from other sources undermines the humanitarian response in the field, even as the needs have escalated.

An International Response to the Situation

Despite the current security challenges facing humanitarian work in Iraq, there are a number of areas where more can be done to address humanitarian needs. This conference is one way of acknowledging the humanitarian crisis, but in order to improve the ability of NGOs to respond in a neutral and impartial manner, donors and UN agencies need to provide greater, more readily accessible, long-term, flexible emergency humanitarian funds. The necessary mechanisms must be put in place to ensure that NGOs, including Iraqi NGOs, can receive funds in a timely manner, building on discussions underway to better operationalise remote programming mechanisms for monitoring and evaluation.

As stated earlier, the IDP situation in Iraq is going to be long-term and the numbers will likely grow the longer the crisis lasts. Therefore, emergency relief is not enough. International donors have to give more generously so that the needs of the IDP population for temporary housing that offers protection from cold and heat, water and sanitation, and temporary schools for IDP children can be adequately addressed. To meet these needs it will be essential to cooperate with Iraqi national and local NGOs. At the same time, involving Iraqi NGOs and building upon their capacities will contribute to a strong civil society in the future.

The primary responsibility to assist IDPs lies with the Iraqi authorities. There is a need to support the capacities of the Government of Iraq to enable them to make funds, goods, and facilities available to NGOs, facilitate the movement of aid workers, and ensure the delivery of humanitarian aid.

The UN, NGOs, and other humanitarian actors on the ground need to illustrate that despite the challenging situation, it is still possible to address humanitarian needs inside Iraq, if the necessary resources are made available, by increasing their communication and exchanges of information with other humanitarian actors. The UN particularly needs to revisit the way in which it is working in Iraq by overhauling its security procedures. NGOs are able to work with international staff in many parts of Iraq. It is time for the UN humanitarian agencies to find similar means of working in the country to respond to humanitarian needs. The UN needs to play a greater role in protection, coordination, and information-sharing through a significantly increased presence throughout Iraq.

There is a need to work better together to develop indicators and a verification mechanism to identify priority needs and an early warning mechanism, as well as to continue developing capacity building programmes with Iraqi aid workers and local communities so that they can better respond to humanitarian needs.

In today’s closely connected world it is not possible to turn a blind eye to a humanitarian crisis anywhere in the world, however great the challenges. To meet needs in Iraq, UN agencies, governments, international donors and international, national and local NGOs must cooperate to develop innovative approaches that make it possible to work even in the most adverse security environment.

It was no coincidence that I posted the entire statement -- all of the language is of the upmost importance and ought to be required reading for anyone purporting to be interested in what the 2003 illegal overthrow of Iraq has wrought.

Next, we learn from Gary Lanager, ABC News' Polling Director that the latest ABC News/Washington Post poll reveals that "51% [of respondents] think U.S. will lose war, 66 percent think Iraq was not worth fighting.

The major conclusion drawn from the polling data is that a bare majority of Americans for the first time believe the United States will lose the war in Iraq, and a new high -- two-thirds -- say the war was not worth fighting. Yet frustratingly, there is still no clear consensus from the American people as to setting a timetable for withdrawal (something the Administration and its Neocon military planners have no intention of doing for years to come) - even though the logical if painful reponse to a military scenario where more individuals think we cannot win would be to form some sort of plan for an exit. But the occupation has quite unfortunateky taken on a life and momentum of its own now, and I doubt we'll see anything resembling a significant pullback of US troops from Iraq for four or five years.

And perhaps that's a case of me being optimistic and naive?

So in the meantime, we get to sit back and digest news stories like this: AP reporting on a massive bombing campaign in Baghdad that has murdered hundreds in a matter of days. And there does not appear to be any end in sight for this sustained campaign of bloody chaos.

World Bank and IMF's influence in Latin America continues to decline

I've previously written about the external threats to the US-dominated World Bank and IMF and its waning influence in the Global South (see here, here and here). One of the key factors is the fact that pretty much everyone who works for a living in these countries now realizes that Washington's Neoliberal economic policy perscriptions have been a complete disaster for these countries' working-class, although these arrangements have benefitted investors in the US quite spectacularly by knocking down those pesky barriers to natural resources and cheap labor.

But another reason these multilaterals are continuing to lose their clout in setting the agenda, particularly in Latin America, is because popularly-elected politicians - who campaigned and won office based on promises to follow a populist anti-Neoliberal economic agenda - are starting to push back hard.

In an excellent post over at Daily Kos titled "The World Bank's Problem", blogger londonbear explains why the Neocons hate Hugo Chavez so much. Chavez has used Venezuela's enormous oil revenues to purchase bonds from other South American countries, thus giving them a cheaper source of loans than the IMF/International Development Bank to improve their own infrastructure and social services. He is also proposing to set up a "Banco del Sud" (BdS to challenge the other international lenders currently in the area.

Quoting from a report last month in the Financial Times:
(W)ith backing from Argentina, Bolivia, Ecuador, Paraguay, and possibly Nicaragua and Brazil, traditional multilateral lenders are facing up to the possibility of a competitor.

Venezuela and Argentina have long bridled against what they see as US domination of the western hemisphere’s multilateral lending institutions, and want more control over the region’s development.

"The south needs to take care of its own problems," said one senior Argentine banker.

Officially both its potential rivals, the Inter-American Development Bank – in which the US has a 30 per cent stake – and the smaller Andean Development Corporation, have welcomed the development, arguing that with plenty of money around and many pressing infrastructure and social needs, there would be plenty of business.

But privately there are concerns. One insider at the IDB said the bank could reinforce regional divisions that have arisen as a result of the radicalisation of Venezuela and the growth of an anti-American camp – backed since last year by elections in Bolivia, Ecuador and Nicaragua.

He says the Bank of the South, especially if Brazil were to join, would represent the biggest threat to the IDB since Latin America suffered a series of debt defaults in the 1980s. "With the money of Venezuela and political will of Argentina and Brazil, this is a bank that could have lots of money and a different political approach. No one will say this publicly but we don’t like it."

He fears the Washington-based multilateral could, in a worst-case scenario, be reduced to an institution backed mainly by the US and its closest regional allies, Mexico and Colombia.

Londonbear posits - correctly I think - that this is the principle reason beind the NeoCons' hatred of Chavez. It is not really his threat of withholding oil supplies they fear, rather it is his using the income his country gets from it to free his allies from the dominance of US foreign policy and economic control through IMF and World Bank loans.

For more background on Neoliberalism, be sure to check out this report by Josh Bivens at the Economic Policy Institute titled "Reclaiming an economic future through democracy"

Update (5/3): Another nail in the coffin? Venezuela has announced it is dumping the World Bank and IMF.

Tuesday, April 17, 2007

From the midst of tragedy, a hero emerges

A truly incredible story. From the Jerusalem Post:
As Jews worldwide honored on Monday the memory of those who were murdered in the Holocaust, a 76-year-old survivor sacrificed his life to save his students in Monday's shooting at Virginia Tech College that left 33 dead and over two dozen wounded.

Professor Liviu Librescu, 76, threw himself in front of the shooter when the man attempted to enter his classroom. The Israeli mechanics and engineering lecturer was shot to death, "but all the students lived - because of him," Virginia Tech student Asael Arad - also an Israeli - told Army Radio.

Heartbreaking, and an inspiration for all of us.

Monday, April 16, 2007

SEC considers further weakening shareholder rights

From today's Wall Street Journal (subscription required), we learn that the SEC staff is considering "an option to require shareholders to arbitrate their disputes with corporations instead of bringing litigation," one of the recommendations pushed in the recent studies urging deregulation of the capital markets. According to the Journal, this would "realign" the balance of power between shareholders and managememt "at a time when that balance has tipped increasingly toward shareholders."

Such a reevaluation of corporate governnce practices is being considered in order to ensure US-listed public corporations and exchanges remain "competitive" with those from other jurisdictions. Of course, it's hard for me to understand how undermining the rights of those individuals who actually own the companies in question will help encourage further investment.

According to the article, SEC chairman Christophen Cox has a history of seeking to limit what he sees as excessive securities litigation. But critics say that the proposed three-member arbitration panel tend to favor industry as opposed to consumers (i.e. investors). Some consumer groups are worried that "by curbing shareholder litigation, the nation will lose a powerful deterrent to corporate wrongdoing."

It's also questionable whether such s shift toward arbitration is even compatible with securities law, which presents the remedy to shareholders to join in on class action lawsuits.

New book making Big Business and Washington reconsider globalization Conventional Wisdom?

In his article "The Establishment Rethinks Globalization" appearing in April 30 issue of The Nation, William Greider explains the wisdom of mathematician Ralph Gomory. Greider compares him with none other than Martin Luther, claiming him to be a 21st Century reformer challenging the economic establishment's conventional understanding of globalization, "free" trade, outsourcing of labor and the impact of unregulated capitalism on the sovereignty and economic health of nations.

His relatively obscure book, "Global Trade and Conflicting National Interests" which he co-authored with economist William Baumol, was his equivalent to Luther's 95 Theses but failed to make a change perceptions among his fellow colleagues in management. Nevertheless, Greider insists that "Gomory's critique has great political potential because it provides what the opponents of corporate-led globalization have generally lacked: a comprehensive intellectual platform for arguing that the US approach to globalization must be transformed to defend the national interest. Still, it will take politicians of courage to embrace his ideas and act on them. Gomory's political solutions are as heretical as his economic analysis."

From the article:
China's industrial transformation is no longer about making shirts and shoes, as some free-trade cheerleaders still seem to believe. It is about capturing the most advanced processes and products.

The multinationals' overseas deployment of capital and technology, Gomory explains, is the core of how some very poor developing nations are able to ratchet up their technological prowess, take over advanced industrial sectors and rapidly expand their share in global trade--all with the help of US companies and finance, as they roam the world in search of better returns.

The Gomory-Baumol book describes this as "a divergence of interests" between multinational firms and their home country. "This overseas investment decision may then prove to be very good for that multinational firm," they write. "But there remains the question: Is the decision good for its own country?" In many cases, yes. If the firm is locating low-skilled industrial production in a very poor country, Americans get cheaper goods, trade expands for both sides and the result is "mutual gain." But the trading partners enter a "zone of conflict" if the poor nation develops greater capabilities and assumes the production of more advanced goods. Then, the authors explain, "the newly developing partner becomes harmful to the more industrialized country." The firm's self-interested success "can constitute an actual loss of national income for the company's home country."

American multinationals, as principal actors in this transfer of wealth-generating productive capacity, are distinctively free to make the decisions for themselves without interference from government. They want profit and future consumer markets. Their home country wants to maintain a highly productive high-wage economy. Without recognizing it, the two are pulling in opposite directions--the "divergence of interests" most US politicians ignore, evidently believing church doctrine over visible reality.

The Gomory-Baumol book explains the dynamics with charts and equations for economists to study. For the rest of us, it is easier to follow Gomory's personal explanation of changing fortunes among trading nations. "What made America much wealthier than the Asian nations in the first place?" Gomory asks. "We invested alongside our workers. Our workers dug ditches with backhoes. The workers in underdeveloped countries dug ditches with shovels. We had great big plants with a few people in them, which is the same thing. We knew how, through technology and investment, to make our workers highly productive. It wasn't that they went to better schools, then or now, and I don't know how much schooling it takes to run a backhoe.

"The situation today is that the companies have discovered that using modern technology they can do all that overseas and pay less for labor and then import product and services back into the United States. So what we're doing now is competing shovel to shovel. The people in many countries are being equipped with as good a shovel or backhoe as our people have. Very often we are helping them make the transition. We're making it person-to-person competition, which it never was before and which we cannot win. Because their people will be paid a third, a quarter of what our people are paid. And it's unreasonable to think you can educate our people so well that they can produce four times as much in the United States."

As this shift of productive assets progresses, the downward pressure on US wages will thus continue and intensify. Free-trade believers insist US workers can defend themselves by getting better educated, but Gomory suggests these believers simply don't understand the economics. "Better education can only help," he explains. "The question is where do you put your technology and knowledge and investment? These other countries understand that. They have understood the following divergence: What countries want and what companies want are different."

The implication is this: If nothing changes in how globalization currently works, Americans will be increasingly exposed to downward pressure on incomes and living standards. "Yes," says Gomory. "There are many ways to look at it, all of which reach the same conclusion."

The central thesis of his book, in fact, seems to be a repudiation of the "Free trade offers a win-win scenario between all trading partners" mantra, exposing the reality that some countries, including the US, can in fact be losers under the complex trading system as it is presently arranged. In fact:
[T]he terms of trade have changed as more and more value-added production has shifted from the United States to its poorer trading partners. America, he explains, becomes increasingly dependent, buying from abroad more and more of what its citizens consume and producing relatively less at home. US incomes stagnate as the high-wage jobs disappear and US exports become a smaller share of the world total.

The persistent offshoring of domestic production is leading to a perverse consequence: The United States finds itself paying more for imports. The production that originally moved offshore to get low-wage labor and cheaper goods is now claiming a larger and larger share of national income, as the growing trade deficits literally subtract from US domestic growth. "All the stuff you were already importing from them becomes more expensive," Gomory explains. "That's why you can start going downhill--because you pay more for what you were previously getting." Put another way, one hour of US work no longer buys as many hours of Chinese work as it once did. China can suppress its domestic wages to keep selling more of its stuff, but that does not alter the fundamental imbalance in productive strength.

Gomery's solution would include a combination of government intervention in capping the US's historically-high trade deficit and force it to shrink until balanced trade is achieved with its trading partners, as well as providing tighter regulation and tax policies in order to influence the incentive structure - and behavior - of US multinationals. By making it more expensive via tax policy for corporations to outsource the high-tech aspects of its operations to countries like China and India, for example, the currently unsustainable offshoring and outsourcing practices might be cut back.

How taxes are disproportionately hurting the Middle Class

When most people think about taxes or tax policy, their eyes glaze over. It's not unfair to say that tax policy can appear on the surface to be one of the most boring subjects on the face of the earth - perhaps other than celebrity gossip. But make no mistake, as my grad school class in public finance and economics impressed upon me, nothing is more important in terms of determining what type of society we live in and how committed our system is to ensuring an economy that presents opportunities and security for the working poor and the Middle Class.

And after four years of a GOP-led Congress and six years of the Bush administration's control of the Executive Branch, our tax system has become extremely regressive and detrimental to the average American's prospects for upward financial mobility.

David Sirota explores how despite conservatives' claims to the contrary, our tax system is currently skewed primarily to benefit the wealthiest Americans - of course at the direct expense of everyone else. He also correctly frames this as being yet another front the Right Wing is waging against the Middle Class.

He notes that while conservatives are fond of complaining around this time of year about the fact that lower and middle income individuals don't have enough "skin in the game" (i.e. don't pay enough in taxes) in order to have a stake in the tax system or efforts to improve it, such an argument is patently ridiculous. That's because the reason they don't pay as much in taxes is that they don't make as much income as the wealthiest Americans. Citing studies from the Economic Policy Institute and the Center for Budget Policy and Priorities, he notes:
[T]he top decile of the population now owns more national wealth than at any time since the Great Depression. According to the government’s own data, the share of wealth going to workers wages is at an all-time low, and the share going to corporate profits at an all-time high.

Yet, the “rich pay too much in taxes” myth justifies a wide array of assaults on the middle class. For example, as the Center on Budget and Policy Priorities shows, the tax code has been made much less progressive in recent years thanks to regressive tax cuts. To pay for the budget deficits brought on by such tax cuts, the Bush administration has increased its audits of the middle-class, while refusing to do the same for large corporations (even though, as noted above, far more of the revenues that could be recovered are going to large corporations and far less is going to the middle-class). {Emphasis added)

As if the regressive tax system wasn't bad enough, economist Max Sawicky explains how the IRS's utter lack of enforcement on tax cheats is hurting the Middle Class and exposes the justifications for the agency's continuing to lok the other way as morally and intellectually bankrupt.

Sawicky notes:
"The biggest disconnect in tax enforcement is the scrutiny on wage-earners and those who claim the Earned Income Tax Credit (low-income wage-earners with children), on the one hand, and those whose income is derived from interest, dividends, and capital gains. There is no reason all of the latter income should not be reported by the relevant institutions and taxes withheld on all of it, just like your wages. There is not even any extra compliance burden on the taxpayer, since it is third-party reporting. The only burden is the heightened need to pay what is owed.

The other measure that would not involve the overwhelming majority of taxpayers would be serious enforcement resources to go after the biggest fish, who currently outgun the IRS in their ability to command high-priced legal and accounting expertise.

It is true that the cheat rate among unincorporated businesses, proprietors, and the self-employed is very high. They deserve more scrutiny as well, of the more costly, labor-intensive variety.

But the truth is we could do with a heap of added enforcement that would never touch the financial lives of the vast majority of taxpayers."

The sad reality is that it's probably going to take several more election cycles with progressive Democratic victories to start to turn this crisis around and have our tax code working for the majority of working Americans, as opposed to corporations and the super-wealthy.

Update: The great David Cay Johnson reports in the New York Times that the IRS is attempting to cope with its recent downsizing of revenue agents by focusing its attention on auditing Middle Class Americans:
Since 2000, authorities at the Internal Revenue Service have nearly tripled audits of tax returns filed by people making $25,000 to $100,000 as part of a broad change in audit strategy.

Audits of these middle-class taxpayers rose to nearly 436,000 last year, up from about 147,000 returns in 2000. For these 61 million individuals and married couples, who make up nearly half of all taxpayers, the odds of being audited rose from 1 in 377 to 1 in 140.

While tangible signs like these that the IRS is starting to take enforcement more seriously seems to be a positive development, it will be interesting to see just how seriously the agency goes after corporations.

Thursday, April 12, 2007

Stiglitz, Weisbrot and others discuss global imbalances, power shifts and the future of multilateralism

Check out the video and audio from what seems to have been a fascinating event organized by the Center for Economic and Policy Research on the future of multinational financial institutions like the World Trade Organization and the International Monetary Fund here.

Here's the description from CEPR: "Multilateral economic institutions are facing a period of unprecedented challenges — among these are large macroeconomic imbalances (including the US current account deficit), stalled negotiations at the WTO, and a much-reduced IMF. Three economists discussed some of these current challenges and their implications for economic growth and development. The panel discussion was followed by a brief question and answer period."

Some of the panelists were CEPR economist and Latin American expert Mark Weisbrot, Columbia University economics professor and Nobel Laureate Joseph Stiglitz and United Nations Under-Secretary-General for Economic and Social Affairs Dr. José Antonio Ocampo.

Go check out the whole conference here if you get a chance. It clocks in at just under two hours.

Wednesday, April 11, 2007

FBI signals white-collar crime no longer a priority

ThinkProgress links to a report from the Seattle Post-Intelligencer detailing how the FBI has "shifted away" from prosecuting white-collar crimes. This follows from the massive re-structuring of the agency in the aftermath of 9/11.

As reported by TPM Muckraker, in the wake of 9/11, the administration ordered the FBI to reorganize with a heavy influence on counterterrorism. Hundreds of agents were reassigned, and many who weren't were put on the beat anyway. Far fewer agents were left to handle other investigations.

Here's the fallout from this "change in priorities" from the SPI article:
Overall, the number of criminal cases investigated by the FBI nationally has steadily declined. In 2005, the bureau brought slightly more than 20,000 cases to federal prosecutors, compared with about 31,000 in 2000 -- a 34 percent drop.

White-collar crime investigations by the bureau have plummeted in recent years. In 2005, the FBI sent prosecutors 3,500 cases -- a fraction of the more than 10,000 cases assigned to agents in 2000.

Civil rights investigations, which include hate crimes and police abuse, have continued a steady decline since the late 1990s. FBI agents pursued 65 percent fewer cases in 2005 than they did in 2000.

The loss from financial frauds less than $150,000 amounts to billions of dollars a year to the US economy due to these criminals not being prosecuted. It would be interesting to know just how much additional personnel and resources the bureau would have access to if not for the billions being wasted on the occupation of Iraq.

New study: Richest 2% own half of world wealth

The United Nation's World Institute for Development Economics Research has a relatively new (December 2006) report (.pdf) that confirms the unthinkable, but perhaps not all that surprising fact that the richest two percent of adults in the world own more than half of the global household wealth.

The study, titled "The World Distribution of Household Wealth", is supposedly the most comprehensive study of personal wealth ever completed and is also the first to cover all the countries of the world. Importantly, it also covers all major components of household wealth, including financial assets and debts, land, buildings and other tangible property. It does not include "social" wealth or other intangible, hard to quantify measures.

According to the report, the wealthiest 1% of adults owned 40% of global assets in the year 2000, and even more startling, that the top decile (10%) owned 85% of the world total. The world's bottom 50% of the adult population owned barely 1% of global wealth.

To give you a sense of proportion, the wealthiest 10% of adults in the world have net assets starting at $61,000 - a healthy chunk of change but by no means solely the provenance of millionaires or billionaires. More than $500,000 in assets is required for someone to belong to the top 1% - a group composed of about 37 million individuals (several million of which are probably residents of New York City).

Global household wealth amounted to $125 trillion in 2000, or about $20,500 per person (this is, of course, the mean not the median value). No surprise: Wealth is heavily concentrated in North America, Europe and parts of Asia.

Probably the most interesting part of the study, however, is its analysis of major international differences in the composition of assets, resulting from influences on behavior such as market structure, regulation and cultural preferences. The importance of robust market structures and regulation are underscored by the fact that in poor countries, average household debt is not as big of a cause of poverty as one might expect; indeed it is these poor individuals' inability to take on large mortgages and household debt (i.e. credit) due to the absence of the necessary financial laws and institutions.

Go skim through the report if you get a chance, or at least the Conclusion section which explains the significance of the findings. It's about 30+ pages.

Is public opinion irrelevant in matters of war and peace?

Right wing blogger Dean Barnett, writing at Hugh Hewitt's blog, seems to think so when it comes to the Iraqi occupation. His argument has some merit in the most superficial sense, but I really question whether he would feel the same way if the politician in question was a Democrat and the policy under the microscope was something he was not in favor of.

According to Barnett, Sen. John McCain is correct to ignore the fact that most Americans oppose the continued US military occupation of Iraq (without setting any timetable or benchmarks for progress), because he was elected by his constituents to represent them, we live in a representative democracy, not a pure democracy, and politicians must be "leaders" who make decisions based on what they think is right - not vote based on how the political winds are blowing on any given day.

OK, fair enough. I would argue that in a matter as serious as war or occupation of a foreign country, an occupation we can't afford to continue, an occupation and war that was based on lies and is creating a breeding ground for terrorism in the Middle East, the public should have some vehicle for influencing what their tax dollars go toward besides elections every two years. But in practical terms, Barnett is correct: It is through elections that these type of enormously important decisions ultimately get decided, and the bottom line is that the anti-war Democrats and the Progressive Caucus don't appear to have the votes necessary in Congress to wrap up this slow-moving disaster in Iraq.

Update: David Sirota addressed this issue last month in his article "Democracy Haters" here.

Tuesday, April 10, 2007

To reform corporate governance reform, first take foxes out of the henhouse

Kudos to Chuck Collins and the Institute for Policy Studies for addressing head-on the critically important and unfortunately overlooked problem of excessive executive compensation in the US, and proposing some worthwhile and common-sense reforms. Writing at TomPaine, Collins explains: "When it comes to the exorbitant pay of America’s corporate chief executive officers, everyone likes to quote Louis Brandeis, who said 'sunshine is the best disinfectant.' But if you still have an infection after sitting in the sun for 15 years, maybe it’s time for some stronger medicine." If anything, this is an understatement.

He notes that the SEC's new regulations issued last summer requiring corporations to disclose compensation of their top executives don't seem to be doing much of anything.

Collins argues that "Disclosure alone is simply not doing the job. CEOs in the United States seem beyond shame and embarrassment. Would you discipline an exhibitionist by making them disrobe in the town square?"

He then deftly diagnoses the problem underlying (and encouraging) runaway executive compensation and proposes a solution:
The problem is not lack of a good view: Anyone can see the system is off-kilter. Nor is the problem apathy. Investors, workers and the public are clamoring for reform. When the SEC asked for comments on their draft CEO pay guidelines last year, they got over 20,000 responses, more than any other issue in SEC history.

The real problem is a power imbalance. There is no one with the power to rein in pay. Chairman Cox and the “sunshine” crowd seem to think that armed with a candid camera, shareholders will take action.

The shareholders? Excuse me, but have you been to a shareholder meeting lately? Most of them resemble the old Supreme Soviet. A self-selected board sits imperially on a stage. If a lowly shareholder wants to say something, they get their 60 seconds at the mike. Shareholder resolutions are treated like pestilence. And when was the last time you saw an independent candidate run for a corporation’s board of directors?

If the SEC thinks shareholders hold the key, then give us some real power. Give us the vote! Require that shareholders approve compensation plans and retirement packages, as they do in England. Trust us, shareholders know good performance when we see it. Barney Frank, Chairman of the House Financial Services Committee, is putting forth just this proposal.

But runaway CEO pay is more than a shareholder issue. As taxpayers, we subsidize excessive compensation because these pay packages are 100 percent tax deductible corporate expenses. It’s another nifty way that corporate America shifts their tax responsibility back onto everyone else.

Here’s a simple proposition: Any pay package over $1 million should not be deductible. Companies can pay whatever they want, but taxpayers should not be forced to subsidize excessive greed.

If Congress could pass these two reforms, it would help bring sky-high CEO pay back to earth. But without more power for other shareholders and taxpayers, additional disclosure is just more undressing in public.

In particular, I support the idea of requiring shareholders to sign off on compensation packages, as well as other steps to strengthen the hand of shareholders, but one thing I think Collins misses is the importance of diversifying the makeup of corporate boards in the first place. In many other countries, for example, Boards are comprised of not only independent directors, but often times even have business professors and labor representatives as well. And many European countries (such as Austria, Denmark, Finland, Germany, Luxembourg, Norway and Sweden) require by law that representatives of non-management employees must sit on the Board as well.

Don't get me wrong, continental European corporate governance practices aren't perfect, but I think this type of approach goes a lot further in ensuring reasonable executive compensation packages compared with the US or UK practices.

Collins and the Institute for Policy Studies also just released a groundbreaking new study on executive compensation - and how the de facto lobbying group for America's most powerful corporations are trying to block meaningful reform taking place in Congress - that can be read here (.pdf). Here are the key findings from the study:

Chief executives in the Business Roundtable, who are leading the fight to block CEO pay reforms in the U.S. Congress, would have much to lose from real compensation reform.

• In 2006, the Wall Street Journal reports, the typical big-time CEO in the United States received $6,548,000 in direct compensation. The comparable median direct compensation total for the 83 CEOs in the Journal sample who serve on the powerful Business Roundtable: $9,863,700.

• Pay for Business Roundtable CEOs is rising much faster than for American workers overall. In 2006, the CEOs in the Business Roundtable saw their pay jump 10.6 percent, nearly three times more than the average wage increase of 3.7 percent that went to typical U.S. white collar workers.

• Five CEOs in the Business Roundtable collected pay increases over 85 percent last year. Michael Ward, the top exec at railway giant CSX led the pack with a 336 percent pay hike.

• Merck & Company, the third-largest American drug manufacturer, last year led the American corporate world in “worker pain, CEO gain.” Merck CEO Richard Clark pocketed a 167 percent pay increase in 2006 after announcing, in November 2005, over 7,000 job cuts.

• Perks continue to figure prominently in CEO pay packages. The Business Roundtable chief executive with the most lucrative collection of perks in 2006 — Boeing CEO James McNerney — collected $1.1 million for moving expenses last year. McNerney moved all of 400 miles, from his former job at the Minnesota-based 3M to the Chicago-based Boeing.

• Many Business Roundtable CEOs appear to be wildly over-compensated, even by the narrow definition of “performance” usually employed in corporate circles. Anadarko Petroleum CEO James Hackett’s 2006 total direct compensation rose 78 percent in 2006, despite a 7.4 point drop in total shareholder return, a measure that combines stock appreciation and dividends.

The Business Roundtable and other corporate interests are mounting a vigorous effort to persuade Congress not to meddle in the CEO pay system. Instead, elected officials should see through the self-interest and give careful consideration to the whole range of legislative options related to executive pay.

Update: See this from Charlie Cray, for more on this story.

The compromise shuffle

Atrios explains how it works. . .

Saturday, April 07, 2007

The disconnect between US public opinion and foreign policy

Noam Chomsky has a must-read editorial in CommonDreams discussing the radical disconnect between US public opinion and US government policy in the foreign policy arena, and what steps need to be taken in order to prevent this country from becoming even more of a "failed state".

Friday, April 06, 2007

Dick Cheney, Syria and the dangerous hypocrisy of US foreign policy

Blogger Andrew Sullivan is a conservative and while I completely disagree with his right-wing, faux "libertarian" economic policy leanings, he is nevertheless right on the money with his recent post at The Atlantic "The Logic of Cheney".

One of the reasons I admit I like Sullivan is that he has the intestinal fortitute to actually read through the transcript of Sith Lord Darth Cheney's recent interview with Rush Limbaugh. And Sully came to the correct conclusion, in my opinion, as to the significance of this interview, specifically regarding the Bush administration's plans for long-term or perhaps permanent military occupation of the entire Middle East.

Here's Sully quoting Cheney from the interview (original link can be found in the blog post):
[The Democrats] seem to think that we can withdraw from Iraq and walk away from it. They ignore the lessons of the past. Remember what happened in Afghanistan. We'd been involved in Afghanistan in the eighties, supporting the Mujahideen against the Soviets and prevailed. We won. Everybody walked away, and in the nineties, Afghanistan became a safe haven for terrorists, an area for training camps where Al-Qaeda trained 20,000 terrorists in the late nineties, and the base from which they launched attacks on the United States on 9/11. So those are very real problems, and to advocate withdrawal from Iraq at this point, it seems to me, simply would play right into the hands of Al-Qaeda.

Sully goes on to make exactly the right judgement regarding this illogical rhetoric, expressed by the man a heartbeat away from control of the US military:

So what would be the feasible conditions for withdrawal? I see none. Even if we were to "win," as in Afghanistan in the 1980s, Cheney sees that as a reason to stay. If there is any chance of "losing," we also have to stay. The same logic applies to Pakistan were Musharraf to fall. And Saudi Arabia if that autocracy were to collapse. If the criterion is now space for Islamist terrorists to return, then we don;t so much have mission creep as mission explosion. We're talking empire here - for ever. At least that's the logical conclusion of Cheney's control-fixation. And, of course, as these occupations create more terrorists, Cheney uses that as more reason to keep fighting. There is no end to this strategy - just permanent war, occupation and terror.

All I can say to that is: Yep.

Update: Apparently, Matthew Yglesias is on to something regarding Bush's policy vis-a-vis Syria (or lack thereof):
The other thing about the Pelosi story is that I don't even understand which Syria policy Pelosi is supposed to have violated. We have diplomatic relations with Syria. Bush has not sought to change that fact. Nor has he sought new sanctions against Syria. He ordered our ambassador to come home, he ordered the State Department to cease contacts with Syria's ambassador in the US, and proclaimed there would be no high-level executive branch contacts. This policy has accomplished nothing in terms of Syrian behavior vis-a-vis Iraq, nothing in terms of Syrian behavior vis-a-vis Lebanon, and nothing in terms of Syrian behavior vis-a-vis Iran. It's a stupid, pointless policy.

But that's the policy. If Bush wants to institute a new policy wherein members of congress or members of the press can't go to Syria -- or can go, but can't speak to officials of the Syrian government -- he needs to ask congress to pass such a law, since the president isn't a God-King who gets to just arbitarily decide where people can go or who they can talk to.

Again, the only thing I can think to say is: Yep.

Actually, Yglesias makes a very good point here that ought to be more seriously explored in policy circles. Namely, if the Right Wing / Neoconservative foreign policy cabal in Washington is so convinced that Syria is aiding and abetting terrorism in the Middle East via Hezbollah, and interfering the the US occupation of Iraq, why doesn't the President call for Congress to pass a law banning members of Congress from visiting the offending country?

I don't think the real reason he is not going to contemplate such a move in the near-term is not in order to provide cover to the few GOP members of Congress currently in Syria. I think the reason is that Bush needs to keep back channels open to conduct diplomacy with one of Iraq's neighbors regarding regional security matters. Just as the administration is unable to completely rule out diplomacy with Iran despite protestations to the contrary, it also cannot shut off diplomatic channels with Syria, either. In fact, just a few weeks ago Secretary of State Condoleeza Rice invited both states to participate in negotiations with the US on ways to stabilize Iraq - a complete reversal of the administration's previous policy of disengagement..

So what's really happening here is the administration is trying to have its cake and eat it too: Blasting Syria as a state sponsor of terror and demagoging the issue while trying to paint the new Democratic Speaker of the House as some sort of Hanoi Jane traitor. And as expected, the press is only too happy to accept these criticisms at face value without giving any consideration to the blatent hypocrisy involved.

Corporate governance watch: Targeting outrageous executive compensation

Corporate governance reform, specifically tackling excessive executive compensation, is featured prominently in two important articles in the Los Angeles Times. First, we learn that the AFL-CIO is being forced to step in as one of the corporations it has an ownership stake in is throwing money at its CEO despite poor financial performance. The labor group is targeting Verizon and its CEO Ivan Seidenberg, noting that he has received $109 million in compensation over the last five years — at the same time, Trumka notes that Verizon shareholders got a negative 0.5% return on their investment.

The LAT reports: "At New York-based Verizon's annual meeting May 3, the federation will ask shareholders to vote off the board those directors who approved Seidenberg's compensation and will push for investors to have a formal say in executive pay and "golden-parachute" severance packages at the company."

Not surprisingly, Verizon corporate mouthpieces are claiming that Verizon is totally transparent and that the outrageous pay package is justified. Unfortunately, the highly respected, independent research firm The Corporate Library ranked the company as "one of the "10 worst" among 1,700 companies in 2003 for excessive pay", as reported by USA Today.

As recently as 2002, The Corporate Library and USA Today reported that Verizon's Board of Directors is also frought with interlocks, in other words, conflicts of intest with directors of public companies that affect their independence when determining executive compensation packages.

So Verizon shareholders, including not just the AFL-CIO but also many of the company's retirees, are going to battle with the company this month, over executive pay and limiting corporate directorships in an effort to protect their pensions and benefits.

The Executive Compensation proxy proposed asks the Verizon Board of Directors to include, as a voting item at future annual meetings, "an advisory resolution allowing shareholders to approve or disapprove the executive compensation package of the company's senior executive, officers.

According to the press release by the shareholders:
The Associated Press reports say that according to a company filing, Verizon Chairman and CEO Ivan Seidenberg's 2006 compensation was valued at $20.2 million, including salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. Over the five fiscal years through 2005, Mr. Seidenberg received $75.1 million in total expected compensation, while total shareholder return was negative 26.8%, according to the Corporate Library. [Note that the total compensation, as noted above, is actually $109 million!]

According to Institutional Shareholder Services, in the U.K. the required shareholder advisory vote on compensation policies, "has proven a valuable tool in encouraging companies to improve their practices...[and] has contributed to a significant increase in constructive dialogue between companies and directors."

There is also a proposal listed on the proxy to limit the number of corporate boards a Verizon director can serve on. It would require the company to adopt a policy prohibiting the nomination of a candidate for director who is employed full-time and serves on the board of more than three for-profit corporations, including Verizon. Along with the executive compensation proposal, this would serve the long-term interests of Verizon's shareholders (in my humble opinion).

The other LA Times article reports that sickeningly, new Ford Motor Company CEO Alan Mullaly was granted nearly $40 million in compensation for working just four months.

From the article:
The nation's second-biggest automaker [Ford[ lost $12.7 billion in 2006, the largest loss in its 103-year history, largely because of a massive restructuring plan undertaken amid a withering assault by Asian automakers, which have taken an increasing share of the U.S. auto market. Ford expects more losses this year and in 2008 but expects to return to profitability in 2009.

Oh, and by "restructuring", the LAT is euphamistically referring to the record layoffs of its employees.

So let get this straight: Ford won't return to profitability for two years (it lost $1.4 billion in the first half of FY06 alone) and just axed a large chunk of its workers, but it can pay its new CEO $40 million just for working at the company for four months?

And by the way, doesn't Mullaly's "The Way Forward" restructring plan sound a little too much like Mao Zedong's "Great Leap Forward"?

Thursday, April 05, 2007

Roundup: US continues to violate international law

The Associated Press reports that US agents hunting for Al Qaeda militants in the Horn of Africa have been "interrogating terrorism suspects from several countries held at prisons in Ethiopia", a fact confirmed to the AP by American officials. Human rights groups, such as Human Rights Watch, as well as lawyers and several Western diplomats assert hundreds of prisoners, who include women and children, have been transferred illegally in recent months from Kenya and Somalia to Ethiopia, where they are kept without charge or access to lawyers and families.

Oh, in case you were wondering, Ethiopia, which denies holding prisoners in secret, has a long history of human rights abuses. According to a representative of HRW, the covert transfers of these "suspects" to Ethiopia violated international law. "Each of these governments has played a shameful role in mistreating people fleeing a war zone," said Georgette Gagnon of Human Rights Watch. "Kenya has secretly expelled people, the Ethiopians have caused dozens to disappear, and US security agents have routinely interrogated people held incommunicado."

For more background on these secret interrogations, as well as the human rights record of Ethopia, see this report from Human Rights Watch.

Next, the BBC reports that "Conditions for detainees at the US military jail at Guantanamo Bay are deteriorating, with the majority held in solitary confinement." Many of the 385 inmates have been held for five years or more, unable to mount a legal challenge to their detention. According to Amnesty International, detainees "ere reportedly confined to windowless cells for 22 hours a day, only allowed to exercise at night and could go for days without seeing daylight," and again, many of these "suspects" haven't been charged with a crime.

Thanks again to the the US Federal Appeals Court and Congress for indefinately suspending the right of Habeus Corpus through the Military Commissions Act and allowing the indefinite detention of people as "enemy combatants".

More background on Guantanamo Bay from Amnesty International here.

Next, Greg Elich reports at that the the Bush administration is using CIA assets to covertly fomenting war in Iran, in part by funding separatist groups such as the MEK that clearly engage in terrorism. Bush Doctrine, indeed.

According to The Telegraph (UK): "Funding for their separatist causes comes directly from the CIA's classified budget but is now "no great secret", according to one former high-ranking CIA official."

According to the Telegraph:
America is secretly funding militant ethnic separatist groups in Iran in an attempt to pile pressure on the Islamic regime to give up its nuclear programme.

In a move that reflects Washington's growing concern with the failure of diplomatic initiatives, CIA officials are understood to be helping opposition militias among the numerous ethnic minority groups clustered in Iran's border regions.

The operations are controversial because they involve dealing with movements that resort to terrorist methods in pursuit of their grievances against the Iranian regime.

The paper also claims that "[these] claims were backed by Fred Burton, a former US state department counter-terrorism agent".

Finally, Mark Weisbrot from the Center for Economic Policy Research writes that in light of recent declassified documents showing State Department and CIA involvement in the 2002 Venezuelan coup to overthrow Hugo Chavez - as well as tacitly supported a devastating oil strike that tried to topple the government in 2002-2003, and funded opposition groups through the 2004 failed recall attempt and beyond - the Bush administration should stop claiming that country's democratically-elected president is a threat to "regional security" and stop "pour[ing] millions of dollars into Venezuela, Bolivia, and other countries for activities and recipients that it will not divulge."

In other words, the US should stop financing coups in South America and instead address Washington's role in the long period of failed economic reform policies in the region known as “neoliberalism”.

Sebastian Mallaby's latest ode to "free" trade gives me "pause"

No one is better qualified to lay the smack down on Washington Post columnist and CFR tool Sebastian Mallaby's latest paeon to the virtues of "free" trade - in writing at least - than economist Dean Baker over at his blog.

If you don't have the inclination to read Mallaby's latest obnoxious screed, creatively titled "Free Trade: Pause of Fast Forward?" (and I wouldn't blame you if you aren't so inclined), here's the short version. People who want to ensure environmental, labor and human rights standards are enshrined in future trade deals the US signs with Third World nations, and want to pause to ensure such protections can be put in place, are isolationist and want to cost America to lose $500 billion a year due to the erection of new trade barriers (at least according to the corporate-funded Peterson Institute).

According to Mallaby, who never met a Central Banker he didn't worship (see his recent book "The World's Banker" on former World Bank president Sebastian Wolfensohn for example), "If the United States refuses to do new trade deals, its partners will push ahead with agreements among themselves, reducing tariffs for each other's products while shutting out American ones. And if they are denied a chance to gain access to U.S. markets via negotiation, foreigners will seek it via litigation."

I knew as soon as a read these two sentences that Mallaby was trying to pull a fast one, and fortunately Baker was eager to set the record straight on this red herring:
"Okay, what does trade theory say about this scenario? Well, according to most trade models, if other countries work out deals that make their economies stronger, while the U.S. is sitting on the sidelines, then the United States is better off than if they didn't work out deals. In general, standard trade implies that the United States economy is helped by anything that helps the economies of our trading partners.

In other words, if Mallaby understood his own religion better, he would know that he is actually weakening the argument against a "strategic pause." We should be more concerned if the withdrawal of the United States as an active participant in international trade negotiations meant that all such deals would grind to a halt. Mr. Mallaby assures us that this will not be the case, therefore any possible damage from a "strategic pause" will be more limited."

I think Mallaby is correct when he argues that multilateral trade agreements via the WTO are far preferable to unilateral trade deals between industrialized nations and their trading partners in the Global South. But for him to characterize respected economists, politicians and policymakers who want to take a "strategic pause" to reevaluate the language used to codify these important trade deals as "protectionists" is as much a slander and distortion as the Swift Boat Vets labeling John Kerry a "traitor".

No one wants to end international trade, the debate is whether future trade laws will ensure a future race to the bottom in wages and working conditions, or whether the same protections afforded multinational corporations with regard to their intellectual property and patents can be provided to workers as well.

Also, Mallaby argues that Congress must "extend fast track [to Bush], which is essential for the completion of the far more important Doha round of global trade talks," without spending even a sentence explaining why the Doha round collapsed in the first place. That's probably because he doesn't really doesn't care, he just wants to use this threat to somehow make his case more compelling. Unfortunately, scaring his readership with distortion and lies doesn't make his argument more persuasive.

Update:The Washington Post has a must-read report that should give any advocate of extending trade deals to developing nations without labor, environmental and human rights protections.

Basically, a trade pact Bush is hot to sign with Colombia is "in danger: because paramilitary death squads are “collaborat[ing] with the country’s intelligence service to liquidate union activists” - and by “liquidate” it means “gunmen pump[ing] three bullets into [activists’] head.”

So there you have it: Bush, with the help of Republicans and “free” trade Democrats in Congress, is hoping to sign a trade deal with a government that openly colludes with paramilitary death squads to hunt down and execute workers trying to form unions.

(h/t Sirotablog)