The Meritocracy Myth: How The Super-Rich Really Make Their Money

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On April 21, 2014, Paul Buchheit writes on Nation Of Change:

Warren Buffett once claimed that the “genius of the American economy, our emphasis on a meritocracy and a market system and a rule of law has enabled generation after generation to live better than their parents did.” The Economist suggested that “people succeed through brains and hard work.” Economist Tyler Cowen believes in a “hyper-meritocracy” in which wealth is created by the most intelligent and motivated people.

That all sounds very inspirational. But the super-rich tend to make their money in less meritorious ways.

1. Betting on Food Prices to Rise

Chris Hedges noted that Goldman Sachs’ commodities index “is the most heavily traded in the world. The company hoards rice, wheat, corn, sugar and livestock and jacks up commodity prices around the globe so that poor families can no longer afford basic staples and literally starve.” Numerous sources agree that speculation drives up commodity prices. Wheat, for example, rose in price from $105 to $481 in just eight years.

2. Betting on Mortgages to Fail

In 2007 hedge fund manager John Paulson conspired with Goldman Sachs to create packages of risky subprime mortgages, so that in anticipation of a housing crash he could use other people’s money to bet against his personally designed sure-to-fail financial instruments. His successful bet against American households paid him $3.7 billion.

Adding to the insult is that much of a hedge fund manager’s income is considered carried interest, which is taxed at the lower capital gains rate. How do they merit this? They don’t. As Dean Baker explains, “Carried interest…has no economic rationale. With most other tax breaks there is at least an argument as to how it serves some socially useful purpose.”

3. Renting Houses Back to People Who Lost Them

Private equity firms like Blackstone are buying up foreclosures and renting them back at higher rates while waiting for home prices to rise. As absentee landlords they have little interest in long-term community issues.

They go for even bigger money by packaging the rental agreements into rental-backed securities, which are disturbingly similar to the mortgage-backed securities that brought down the economy in 2008.

4. Being a Banker

Almost all of the big names have participated. HSBC Bank laundered money for Mexican drug cartels. Countrywide and Wells Fargo targeted Blacks and Hispanics for unaffordable subprime loans. GE Capital skimmed billions of dollars from its customers.Bank of America and JP Morgan Chase hid billions of dollars of bonuses and losses and loans from investors. Banks fixed interest rates in the LIBOR scandal, and illegally foreclosed on millions of homeowners in the robo-signing scandal.

5. Making “Can’t Lose” Bets on Wall Street

With high-speed computer trading, programs can identify ‘buy’ orders, purchase the stock in a few nanoseconds, and then sell it to the identified buyer for a few pennies more. By doing this millions of times per hour, billions of dollars can be extracted from the stocks that make up our retirement accounts.

Some evidence of the strategy’s effectiveness comes from the astonishing performance of Virtu Financial, which made money in the stock market on 1,277 out of 1,278 days over a five year period. That is, only one bad day in five years.

6. Checking the Stock Portfolio Every Morning

In one year the Forbes 400 ’earned’ more than the total combined budget for SNAP, WIC (Women, Infants, children), Child Nutrition, Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, and Housing. These lucky 400 were the main beneficiaries of a stock market that grew by $4.7 trillion in just one year.

7. Having the Right Friends and Relatives

Like having Fred Koch or Sam Walton as your daddy. The authors of The Meritocracy Myth say it well: “In the race to get ahead, the effects of inheritance come first and merit second, not the other way around.” Much of the individual wealth in our country was taken by individuals who had the right connections. The CEOs of Silicon Valley, the alleged mecca of self-made tech visionaries, are no different. A Reuters analysis concluded that a prestigious degree and personal connections to power-brokers are “at least as important as a great idea” for Silicon Valley entrepreneurs.

None of these money-making methods are productive, or praiseworthy, or suggestive of a meritocracy. Perhaps demeritocracy is more apt.

Paul Buchheit hits the nail on the head when he concludes: “None of these money-making methods are productive, or praiseworthy, …”

Yet what is not stated or clarified is that the transactional key to wealth is the OWNERSHIP in the asset property rights of the corporate stock whose ownership is concentrated among an elite minority. The stock exchanges are really “gambling” casinos that gamblers (“investors”) use to manipulate stock values in order to benefit from capital gains.

If we are to transform the system into a just system whereby EVERY citizen has an equal opportunity to acquire wealth-creating, income-generating productive capital assets then we need to reform the system to empower ordinary Americans, without “gambling” “past savings” or equities, with equal access to interest-free insured capital credit loans to create new productive capital assets repayable with the FUTURE earnings of capital. Without such economic democracy there will continue to be severe economic inequality and concentrated capital ownership.

http://www.nationofchange.org/meritocracy-myth-how-super-rich-really-make-their-money-1398088864

The Middle Class Is Not “Normal”

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On April 20, 2014, Thom Hartmann writes on Nation Of Change:

There’s nothing “normal” about having a middle class. Having a middle class is a choice that a society has to make, and it’s a choice we need to make again in this generation, if we want to stop the destruction of the remnants of the last generation’s middle class. Despite what you might read in the Wall Street Journal or see on Fox News, capitalism is not an economic system that produces a middle class. In fact, if left to its own devices, capitalism tends towards vast levels of inequality and monopoly. The natural and most stable state of capitalism actually looks a lot like the Victorian England depicted in Charles Dickens’ novels.

At the top there is a very small class of superrich. Below them, there is a slightly larger, but still very small, “middle” class of professionals and mercantilists – doctor, lawyers, shop-owners – who help keep things running for the superrich and supply the working poor with their needs. And at the very bottom there is the great mass of people – typically over 90 percent of the population – who make up the working poor. They have no wealth – in fact they’re typically in debt most of their lives – and can barely survive on what little money they make.

So, for average working people, there is no such thing as a middle class in “normal” capitalism.  Wealth accumulates at the very top among the elites, not among everyday working people. Inequality is the default option.

You can see this trend today in America.  When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today’s dollars, about $50 an hour with benefits.  Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical “raw capitalism,” what we call “Reaganomics,” or “supply side economics,” our nation’s largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed – this huge change was done in less than 35 years.  The only ways a working-class “middle class” can come about in a capitalist society are by massive social upheaval – a middle class emerged after the Black Plague in Europe in the 14th century – or by heavily taxing the rich.

French economist Thomas Piketty has talked about this at great length in his groundbreaking new book, Capital in the Twenty-First Century. He argues that the middle class that came about in Western Europe and the United States during the mid-twentieth was the direct result of a peculiar set of historical events. According to Piketty, the post-World War II middle class was created by two major things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war.  This brought wealth and income at the top down, and raised working people up into a middle class.

Piketty is right, especially about the importance of high marginal tax rates and inheritance taxes being necessary for the creation of a middle class that includes working-class people. Progressive taxation, when done correctly, pushes wages down to working people and reduces the incentives for the very rich to pillage their companies or rip off their workers.  After all, why take another billion when 91 percent of it just going to be paid in taxes?

This is the main reason why, when GM was our largest employer and our working class were also in the middle class, CEOs only took home 30 times what working people did.  The top tax rate for all the time America’s middle class was created was between 74 and 91 percent.  Until, of course, Reagan dropped it to 28 percent and working people moved from the middle class to becoming the working poor.

Other policies, like protective tariffs and strong labor laws also help build a middle class, but progressive taxation is the most important because it is the most direct way to transfer money from the rich to the working poor, and to create a disincentive to theft or monopoly by those at the top.

History shows how important high taxes on the rich are for creating a strong middle class. If you compare a chart showing the historical top income tax rate over the course of the twentieth century with a chart of income inequality in the United States over roughly the same time period, you’ll see that the period with the highest taxes on the rich – the period between the Roosevelt and Reagan administrations – was also the period with the lowest levels of economic inequality.

You’ll also notice that since marginal tax rates started to plummet during the Reagan years, income inequality has skyrocketed.

Even more striking, during those same 33 years since Reagan took office and started cutting taxes on the rich, income levels for the top 1 percent have ballooned while income levels for everyone else have stayed pretty much flat. Coincidence? I think not.

Creating a middle class is always a choice, and by embracing Reaganomics and cutting taxes on the rich, we decided back in 1980 not to have a middle class within a generation or two.  George H.W. Bush saw this, and correctly called it “Voodoo Economics.”  And we’re still in the era of Reaganomics – as President Obama recently pointed out, Reagan was a successful revolutionary.

This, of course, is exactly what conservatives always push for. When wealth is spread more equally among all parts of society, people start to expect more from society and start demanding more rights.  That leads to social instability, which is feared and hated by conservatives, even though revolutionaries and liberals like Thomas Jefferson welcome it.

And, as Kirk and Buckley predicted back in the 1950s, this is exactly what happened in the 1960s and ’70s when taxes on the rich were at their highest. The Civil Rights movement, the women’s movement, the consumer movement, the anti-war movement, and the environmental movement – social movements that grew out of the wealth and rising expectations of the post-World War II era’s middle class – these all terrified conservatives.  Which is why ever since they took power in 1980, they’ve made gutting working people out of the middle class their number one goal.

We now have a choice in this country. We can either continue going down the road to oligarchy, the road we’ve been on since the Reagan years, or we can choose to go on the road to a more pluralistic society with working class people able to make it into the middle class.  We can’t have both.

And if we want to go down the road to letting working people back into the middle class, it all starts with taxing the rich. The time is long past due for us to roll back the Reagan tax cuts.

 

http://www.nationofchange.org/middle-class-not-normal-1397997553

Antitrust In The New Gilded Age

On April 18, 2014, Robert Reich writes on Nation Of Change:

We’re in a new gilded age of wealth and power similar to the first gilded age when the nation’s antitrust laws were enacted. Those laws should prevent or bust up concentrations of economic power that not only harm consumers but also undermine our democracy — such as the pending Comcast acquisition of Time-Warner.

In 1890, when Republican Senator John Sherman of Ohio urged his congressional colleagues to act against the centralized industrial powers that threatened America, he did not distinguish between economic and political power because they were one and the same. The field of economics was then called “political economy,” and inordinate power could undermine both. “If we will not endure a king as a political power,” Sherman thundered, “we should not endure a king over the production, transportation, and sale of any of the necessaries of life.”

Shortly thereafter, the Sherman Antitrust Act was passed by the Senate 52 to 1, and moved quickly through the House without dissent. President Harrison signed it into law July 2, 1890.

In many respects America is back to the same giant concentrations of wealth and economic power that endangered democracy a century ago. The floodgates of big money have been opened even wider in the wake of the Supreme Court’s 2010 decision in “Citizen’s United vs. FEC” and its recent “McCutcheon” decision.

Seen in this light, Comcast’s proposed acquisition of Time-Warner for $45 billion is especially troublesome — and not just because it may be bad for consumers. Comcast is the nation’s biggest provider of cable television and high-speed Internet service; Time Warner is the second biggest.

Last week, Comcast’s executives descended on Washington to persuade regulators and elected officials that the combination will be good for consumers. They say it will allow Comcast to increase its investments in cable and high-speed Internet, and encourage rivals to do so as well.

Opponents argue the combination will give consumers fewer choices, resulting in higher cable and Internet bills. And any company relying on Comcast’s pipes to get its content to consumers (think Netflix, Amazon, YouTube, or any distributor competing with Comcast’s own television network, NBCUniversal) also will have to pay more — charges that will also be passed on to consumers.

I think the opponents have the better argument. Internet service providers in America are already too concentrated, which is why Americans pay more for Internet access than the citizens of almost any other advanced nation.

Some argue that the broadband market already has been carved up into a cartel, so blocking the acquisition would do little to bring down prices. One response would be for the Federal Communications Commission to declare broadband service a public utility and regulate prices.

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But Washington should also examine a larger question beyond whether the deal is good or bad for consumers: Is it good for our democracy?

We haven’t needed to ask this question for more than a century because America hasn’t experienced the present concentration of economic wealth and power in more than a century.

But were Senator John Sherman were alive today he’d note that Comcast is already is a huge political player, contributing $1,822,395 so far in the 2013-2014 election cycle, according to data collected by the Center for Responsive Politics — ranking it 18th of all 13,457 corporations and organizations that have donated to campaigns since the cycle began.

Of that total, $1,346,410 has gone individual candidates, including John Boehner, Mitch McConnell, and Harry Reid; $323,000 to Leadership PACs; $278,235 to party organizations; and $261,250 to super PACs.

Last year, Comcast also spent $18,810,000 on lobbying, the seventh highest amount of any corporation or organization reporting lobbying expenditures, as required by law.

Comcast is also one of the nation’s biggest revolving doors. Of its 107 lobbyists, 86 worked in government before lobbying for Comcast. Its in-house lobbyists include several former chiefs of staff  to Senate and House Democrats and Republicans as well as a former commissioner of the Federal Communications Commission.

Nor is Time-Warner a slouch when it comes to political donations, lobbyists, and revolving doors. It also ranks near the top.

When any large corporation wields this degree of political influence it drowns out the voices of the rest of us, including small businesses. The danger is greater when such power is wielded by media giants because they can potentially control the marketplace of ideas on which a democracy is based.

When two such media giants merge, the threat is extreme. If film-makers, television producers, directors, and news organizations have to rely on Comcast to get their content to the public, Comcast is able to exercise a stranglehold on what Americans see and hear.

Remember, this is occurring in America’s new gilded age — similar to the first one in which a young Teddy Roosevelt castigated the “malefactors of great wealth, who were “equally careless of the working men, whom they oppress, and of the State, whose existence they imperil.”

It’s that same equal carelessness toward average Americans and toward our democracy that ought to be of primary concern to us now. Big money that engulfs government makes government incapable of protecting the rest of us against the further depredations of big money.

After becoming President in 1901, Roosevelt used the Sherman Act against forty-five giant companies, including the giant Northern Securities Company that threatened to dominate transportation in the Northwest. William Howard Taft continued to use it, busting up the Standard Oil Trust in 1911.

In this new gilded age, we should remind ourselves of a central guiding purpose of America’s original antitrust law, and use it no less boldly.

Robert Reich hits the nail on the head when he states that “any large corporation wields this degree of political influence it drowns out the voices of the rest of us, including small businesses. The danger is greater when such power is wielded by media giants because they can potentially control the marketplace of ideas on which a democracy is based. Big money that engulfs government makes government incapable of protecting the rest of us against the further depredations of big money.”

Yet when it comes to solutions Reich remains limited to advocating  the minimum wage in a world where wage slavery, welfare slavery, charity slavery, consumer debt slavery keeps increasing the power of the plutocrats and the politicians owned by the plutocrats.  Why not address the plutocratic system directly by offering a new system — the JUST Third Way––that will decentralize economic power directly to every citizen as a fundamental human right?  Power follows property, as John Adams, George Mason, Lincoln and other truly revolutionary thinkers understood.  If there was wisdom in the words of Adams, Mason and Lincoln, you should not be chaining the 99 percent to the wage slave system.

You should begin advocating the empowerment of the majority of American citizens who represent  the 99 percent, proposing “Minimum Ownership” or “Equal Ownership Opportunities” for all citizens.  Where Reich and others now target the plutocrats, why not target the system that perpetuates monopoly capitalism?

Reich and others should advocate the enactment of the proposed“Capital Homestead Act”––a comprehensive “JUST Third Way” restructuring of the tax system, the Federal Reserve system and the inheritance system that will empower the 99 percent through equalization of FUTURE ownership opportunities, create millions of new jobs for decades, and continue to finance Social Security, Medicare and all other existing entitlements until their ownership incomes exceed the entitlements and the entitlements are no longer necessary.  And the top plutocrats, including the Koch brothers and the other wealthy owners of the Comcast/Time Warners of the world, cannot convincingly oppose the changes based on principle because it would take no property rights over their existing assets, at least until they die.

Lincoln signed the Homestead Act,  which created widespread land ownership in a time when land was the most productive capital asset.  Ordinary Americans need justice advocates such as Reich and others  to advance the signage of the Capital Homestead Act. We need to raise support among good and justice-motivated people across the political spectrum who would be willing to support the Just Third Way and Capital Homesteading.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/,  Monetary Justice at http://capitalhomestead.org/page/monetary-justice and the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.

http://www.nationofchange.org/antitrust-new-gilded-age-1397829754

U.S. Policies Favor The Wealthy, Interest Groups, Study Shows

Republican Odds Of U.S. Senate Takeover Rise As Turnout Shrinks

On April 15, 2014, Sara Bondloll writes on The Huffington Post:

U.S. government policies reflect the desires of the wealthy and interest groups more than the average citizen, according to researchers at Princeton University and Northwestern University.

“[W]e believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened,” write Martin Gilens and Benjamin I. Page in an April 9 article posted on the Princeton website and scheduled for fall publication in the journal Perspectives on Politics.

Gilens and Page analyzed 1,779 policy issues from 1981 to 2002 and compared changes to the preferences of median-income Americans, the top-earning 10 percent, and organized interest groups and industries.

“Not only do ordinary citizens not have uniquely substantial power over policy decisions; they have little or no independent influence on policy at all,” the researchers write in the article titled, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.”

Affluent Americans, however, “have a quite substantial, highly significant, independent impact on policy,” Gilens and Page write. Organized interest groups also “have a large, positive, highly significant impact upon public policy.”

The research supports the theories of Economic Elite Domination, which says policy outcomes are influenced by those with wealth who often own businesses, and Biased Pluralism, which says policy outcomes “tend to tilt towards the wishes of corporations and business and professional associations.”

“The estimated impact of average citizens’ preferences drops precipitously, to a non-significant, near-zero level,” the researchers write. “Clearly the median citizen or ‘median voter’ at the heart of theories of Majoritarian Electoral Democracy does not do well when put up against economic elites and organized interest groups.”

The study found that average citizens and the wealthy often seek the same policy changes. As Gawker notes, the researchers say this is a mere coincidence, noting the average American’s interests will be represented if they are in line with the interests of the wealthy.

Interest groups would seemingly represent the interests of the average citizen – and some do, the study says. But, “all mass-based groups taken together simply do not add up, in aggregate, to good representatives of the citizenry as a whole,” researchers write.

 

http://www.huffingtonpost.com/2014/04/15/government-wealthy-study_n_5154879.html?ncid=fcbklnkushpmg00000013

JP Morgan Admits Trickle Down Economics Has Completely Failed

On April 18, 2014, Wes Williams writes on Addicting Info:

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This chart shows the changes in wealth distribution over the last 40 years. Courtesy of Mother Jones.

Remember how the country was sold the idea of “trickle down” economics? “Oh, if we just give the wealthy more, they will create wealth for the poor and middle classes by increasing spending, investing in new factories, hiring more workers, etc, etc, etc.” In reality, after over 30 years of trickle down, or “supply side” economics, we are looking at just the opposite: the rich have gotten richer, and middle class incomes have stagnated. Now, even some in the financial community are admitting that trickle down economics is a failure.

According to an April 17 story on Bloomberg.com,

“While the wealth of American households has jumped more than $25 trillion since early 2009 amid rising equity and home prices, the pass-through to consumer spending is lagging the $1 trillion fillip that would have been anticipated historically,” according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.

Feroli’s numbers show that since the end of the recession, households have spent only 1.7¢ of each extra dollar they earned in wealth. That compares to an average of 3.8¢ for the years from 1952 to 2009. Simon Kennedy, the author of the Bloomberg story, offers a possible explanation for the difference:

“One reason for the adjustment may be that those enjoying gains in wealth are already rich, so have less propensity to increase spending incrementally.”

That’s a polite way of saying, “The rich are getting richer, but they already have everything they want and need, so they’re not spending much of their new wealth.”

This past February, Harvard Business Review blogger Andrew O’Connell made the following observation:

“Since the end of the recession in 2009, inflation-adjusted spending by the top 5% of U.S. earners has risen 17%, compared with just a 1% average rise for everyone else in the country,” according to The New York Times.

So you might be thinking, “Doesn’t that prove that trickle down works, if the wealthy are spending more?” The answer is “no,” and here’s why.

The wealthy can’t spend enough for trickle down to work.

Of course wealthy people buy more things, and more expensive things, than the rest of us do. But there’s still a limit to what they buy. And there just aren’t enough of the wealthy out there for the things they buy to make a difference when it comes to boosting the economy through consumer spending. Take the example of a toaster.

There are, according to the LA Times, 132,000 American households with a net worth of at least $25 million, excluding the value of their homes. Let’s assume, for the sake of  using round numbers, that each of those families owns ten houses, and in each house they have two kitchens. Now suppose that they all decide to buy top of the line toasters for each of their kitchens. They will purchase 2,640,000 toasters. A nice temporary bump for toaster production. But those families are not going to buy 20 new toasters every few months, even though they can.

In 2010, there were 63 million American households that earned between $25,000 and $100,000. Many of those households may need new toasters, but their money is already tight, so they make due with their old toasters. But suppose that, through a different tax structure or an increase in wages, those households all saw increases in income. If even half of them took some of their new income and used it to buy toasters, then toaster producers would see a 31.5 million unit increase in toaster sales. That makes the 2.6 million toasters purchased by the rich pale in comparison. When you consider that not all of those households will buy new toasters at the same time, what you wind up with is sustained growth in toaster sales, leading to increased production, leading to more jobs, and so on. So, who are really the “job creators?”

That example is very simple, but it illustrates the buying power of the middle class — IF they have the money to spend. That buying power has been steadily eroded over the past 30 plus years of Reagan’s trickle down economics. Add to the mix the offshoring of jobs, a move from a manufacturing economy to a service economy, and a tax structure that favors the wealthy. The middle class has watched the failure of trickle down from the time it started. Now at least some in the financial sector are starting to see it as a failure as well. When will Republican politicians stop worshiping at the alter of trickle down? Don’t hold your breath while waiting.

Bill Moyers Warns Of Mad Dash, ‘Drift Toward Oligarchy’ In The U.S.

On April 18, 2014, Josh Feldman writes on Media ITE:

Bill Moyers took on income inequality on Moyers & Company Friday, citing statistics on the income gap and studies on the subject to warn that the United States is drifting closer and closer to an oligarchic state where a small group of wealthy people wield massive control over the political system. He blamed an “obliging Congress of both parties” for allowing this to happen, and mockedJohn Roberts for taking what some would view as politicians doing favors for fundraisers as “gratitude” for donors.

Moyers mockingly noted how it seems like more than gratitude when politicians work to directly impact the finances of the people who give them money at the expense of the middle class.

Moyers declared that “inequality is what has turned Washington into a protection racket for the one percent,” and warned that the claims the U.S. makes to being a democracy are “seriously threatened.”

He concluded that “the drift toward oligarchy that Thomas Pinckeney described in his formidable book has become a mad dash, and it will overrun us and overwhelm us unless we stop it.”

Watch the video below, via Moyers & Company:

 

http://www.mediaite.com/online/bill-moyers-warns-of-mad-dash-drift-toward-oligarchy-in-the-u-s/

Four-Day Work Week Success

On April 19, 2014, Bryce Covert writs on Nation Of Change:

The 70 people who work at Treehouse, an online education company that teaches people about technology, only work four days a week at the same full salary as other tech workers. Yet the company’s revenue has grown 120 percent, it generates more than $10 million a year in sales, and it responds to more than 70,000 customers, according to a post in Quartz by CEO Ryan Carson.

Carson has been working four-day weeks since 2006, when he founded his first company with his wife, he told ThinkProgress. He quit his job to start it, only to find that they both put in seven days a week. “I remember distinctly my wife and I were on the couch one evening,” he recalled, “and she said something like, ‘What are we doing? I thought that starting a company means you have more time and more control, but it seems like we have less time and less control and we’re more stressed out.’” They decided to cut back by not working Fridays, and after they hired their first employee, “we decided to officially enact [a four-day week] and we never looked back.”

 

Carson has since started three other companies at which he’s instituted this rule, Treehouse being the latest. While it’s hard to quantify, he believes his company benefits from better output and morale. “The quality of the work, I believe, is higher,” he said. “Thirty-two hours of higher quality work is better than 40 hours of lower quality work.” The impact on his employees’ outlook is also “massive,” he said. “I find I just can’t wait to get back to work” after the weekend, and he suspects the same is true for others. On Mondays, “everyone’s invigorated and excited.” He recounted a time when a developer told him that his hope was to work at the company for 20 years. In the Quartz article, he noted that a team member gets recruitment emails from Facebook, but that his response is always, “Do you work a four-day week yet?”

And recruiting people in the first place is also easier thanks to the shorter week. “We regularly have new employees choose Treehouse over Facebook, Twitter and other top-tier tech companies,” he writes. And the company is able to still pull in high sales and even $13 million in venture capital thanks to instituting higher efficiency, by, for example, strictly limiting the use of email.

Carson believes plenty of other companies could follow his example. “We have 70,000 customers, and I think if we can do it… couldn’t more people do that?” he said. Some businesses will still need to be open on Fridays, but he suggests “rolling employment,” where some people work Monday through Thursday while others work Tuesday through Friday. “Is it possible for everybody? No,” he concedes. “But I bet some huge percentage of companies can do it that just aren’t.”

There are some drawbacks. Not working on Friday, he said, means no day of slowdown before the weekend. “It’s kind of like 100 miles per hour until Thursday at 6 p.m.” And he acknowledges that less work may get done with one day off.

But there is some social science to back up the practice of limiting how much people put in at work each week. Research has found that putting in long hours, or more than 60 hours a week, produces a small productivity boost at first. But after three or four weeks of working at that level, it will actually declineOther studies have similarly found that long hours produce a short term bump but have negative ramifications over the long run. Thisplays out on the global stage: countries where workers put in less time tend to be the most productive. For example, Greek workers put in 2,000 hours a year, on average, while German workers put in about 1,400, yet German productivity is about 70 percent higher.

The dominant work culture in the United States is one of overwork, though. We rank at number 11 out of 33 developed countries in how many hours we work each week. For professionals, nearly everyone is working more than 50 hours a week and nearly half are putting in more than 65.

Carson isn’t the only one experimenting with shorter hours. Municipal workers in Sweden’s second-largest city will soon work six-hour days to see whether it boosts efficiency and reduces costs if they need fewer sick days. Six of the ten most competitive countries, including Germany, have banned working more than 48 hours a week.

 

http://www.nationofchange.org/company-has-four-day-work-week-pays-its-workers-full-salary-and-super-successful-1397916947

Study Says US Is Becoming An Oligarchy

AMERICA THE VOICELESS: VOTERS CAN’T COMPETE WITH BIG CAMPAIGN CASH

On April 16, 2014, Wilson Dizard writes on Al Jazeera America:

It’s not just your imagination: The influence of money in politics has indeed drowned out the voices of American voters, a new analysis shows, with runaway corporate lobbying and a lack of campaign finance reform to blame for giving much more political weight to the wealthy.

Researchers at Princeton University and Northwestern University compared the public’s influence on 1,779 policy issues between 1981 and 2002, finding that more often than not, the interests of wealthy groups and individuals won out over the demands of the general public. For instance, when 80 percent of the public asked for a change of some sort, they got their way only about 43 percent of the time.

The study, its authors say, points to the overwhelming power of wealthy lobbying groups and individuals backing certain interests in American politics, and the marginalization of voters and public advocacy groups.

“I expected to find that ordinary Americans had a modest degree of influence over government policy and that mass-based interest groups would serve to promote those interests,” Martin Gilens, a political scientist at Princeton and a co-author of the study, wrote in an email to Al Jazeera.

“What we found instead was that ordinary Americans have virtually no influence over government policy and that mass-based interest groups as a whole do not reliably side with the wishes of the average citizen.”

Co-author Ben Page described an oligarchy as “rule by a small number of wealthy people,” citing the definition of political scientist Jeffrey Winter. But Page cautioned against declaring the country an “oligarchy” just yet.

“Our findings are consistent with the U.S. being an oligarchy but don’t prove that to be so,” Page said, adding that “oligarchy is increasing as economic inequality increases and Congress and the Supreme Court dismantle regulations.”

Although it seems like common sense that money has an outsize impact on American political life, observers of campaign donations say this study, due out in full form this fall, has captured in hard numbers the disparity between the power of people and that of special-interest groups.

“I don’t think the finding is that surprising,” said Alexander Furnas, a research fellow at the Sunlight Foundation, a Washington, D.C.–based nonprofit group that tracks political donations. “What is really fantastic about it, however, is that it provides systematic empirical support to theories of political influence that were previously supported by mostly anecdote.”

The power of money in politics became even more apparent during the Great Recession of the late 2000s, when corporate lobbyists for financial institutions were able to fend off banking regulations.

“The failure to hold financial institutions accountable, the feeble nature of the regulatory reforms that were adopted, and the extremely uneven recovery (in which corporations and affluent Americans have done quite well, but middle-class and poor Americans are still suffering) all show the extent to which government tilts toward the interests of the rich and powerful,” Gilens wrote.

Sometimes, Gilens said, the public wins out by accident, when its interests happen to sync with the interests of elites, such as Medicare benefits imposed under the Bush administration. That move found support from the pharmaceutical industry, which benefited from the law.

As a more recent example, House Minority Leader Nancy Pelosi, D-Calif., a staunch proponent of the Affordable Care Act, has received $75,000 from health-professional political action committees in the 2013–14 election cycle, according to the Center for Responsive Politics, a D.C.-based transparency organization. 

What specific influence that cash could have had on Pelosi’s decisions, if any, is unclear, but it suggests health care professionals want to have a say in Congress and are able to pay for the privilege.

And moving to a different state where money might have less influence doesn’t mitigate the effect either.

“In federal elections, many, many candidates take in more money from outside of their home states than they do from within them. The most popular places from which money flows are those you would expect: California, New York City, and Washington D.C.,” said Sarah Bryner, research director at the Center for Responsive Politics, in an email.

Bryner added that individual voters might have more power in local elections, where “the people who make decisions about potholes and noise regulations are not subject to the same pressures from industry and unions that members of Congress are.”

The solution for the outsize power of cash in federal politics, according to Gilens and Page, would be campaign finance reform, perhaps made more difficult by a recent Supreme Court decision that determined that vast amounts of campaign cash equal speech. And the privilege of that kind of free speech belongs overwhelmingly to rich white men, who make up a large portion of the wealthy elite in the U.S.

“Meaningful campaign finance reform would seem to be the most important step we can take to make government more responsive to the needs and preferences of ordinary citizens,” Gilens said.

Page agrees on the necessity of campaign finance reform, along with “full disclosure of money in politics.”

“Most important: reduce inequality of wealth to reduce inequality of power,” Page said.

But their bleak findings don’t offer much hope for any kind of quick change. Why write your congressional representative when campaign cash speaks so much louder?

Furnas at the Sunlight Foundation recognizes this as a challenge to public engagement, but he said the problem isn’t insurmountable. He also said public knowledge of special interest lobbying is key.

“For example, even if I write my congressperson they will still listen to the coal lobbyist, so why should I go to the trouble of writing my congressperson? So then no one writes. But if literally every constituent wrote their congressperson, that would, in fact, get noticed.”

It’s Time To Fix The System!

On April 18, 2014, Thom Hartmann posts on the Thom Hartmann Program:

Last year, median CEO pay jumped to $10.5 million dollars – an increase of about 13 percent. However, most workers didn’t see their paychecks go up by a single dime. According to an analysis by USA Today, corporate executives scored huge pay bumps thanks to big gains in the stock market. But, earnings for average workers stayed pretty much stagnant – only increasing 1.4 percent in all of 2012. According to the myth of Reaganomics, when those at the top make tons of money, some of that wealth should trickle down to the rest of us. But, for more than three decades, we’ve seen how that could not be farther from the truth.

Last year, degenerate gamblers on Wall Street made 20 billionaires $81 billion dollars richer, but that did nothing to boost our real economy, or provide more financial security for the average American. Our economy is so rigged that the very banksters who crashed our economy – and the CEOs who pay workers poverty wages – continue to be rewarded, while hard-working Americans can’t even keep up with the cost of living. If we don’t change this system, the billionaires will keep raking in hoards of cash, and we can kiss the American Dream goodbye forever.

As it stands, the middle class is shrinking day by day, and the super-rich control the very lawmakers who should be working to protect us. We need to get money out of politics. We need to ensure that workers share in our nation’s prosperity. We need to stop rewarding the very folks who’ve rigged the system. That’s why we need progressive policies that will strengthen the middle class, stand up to the banksters, and rebuild the American Dream.

 

http://www.thomhartmann.com/blog/2014/04/its-time-fix-system