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Nederlog

 April 15, 2016

Crisis: Microsoft, Clinton, Oxfam, Nuclear Obama, Black on Krugman
Sections                                                                     crisis index
Introduction

1.
Microsoft Says U.S. Is Abusing Secret Warrants
2. To Protect Hillary Clinton, Democrats Wage War on
     Their Own Core Citizens United Argument

3.
$1,400,000,000,000: Oxfam Exposes the Great Offshore
     Tax Scam of US Companies

4. Obama’s Trillion-Dollar Nuclear-Arms Train Wreck
5. Bill Black: “Liberal” Economists Cheered the New
     Democrats’ Deregulation of Finance
Introduction:

This is a Nederlog of Friday, April 15, 2016.


This is a crisis blog. There are 5 items with 5 dotted links: Item 1 is about the abuse of secret warrants, that is now attacked by Microsoft: I agree with Microsoft (though I dislike them): item 2 is about evident vast corruptions of politicians, that is - surprise, surprise! - vehemently denied by the same evident vastly corrupt politicians; item 3 is about the incredible riches that the very rich award to themselves, namely by very widespread tax scams, to the tune of 1,400,000,000,000 ($1.4 trillion); item 4 is about Honest Obama's trillion-dollar nuclear armaments plan; and item 5 is about how "liberal economists", and in particular Paul Krugman, helped or cheered Bill Clinton's deregulations of the banks (which led to the 2008 crisis, which still continues).

1.Microsoft Says U.S. Is Abusing Secret Warrants

The first item is b
y Jenna McLaughlin on The Intercept:
This starts as follows:

“WE APPRECIATE THAT there are times when secrecy around a government warrant is needed,” Microsoft President Brad Smith wrote in a blog post on Thursday. “But based on the many secrecy orders we have received, we question whether these orders are grounded in specific facts that truly demand secrecy. To the contrary, it appears that the issuance of secrecy orders has become too routine.”

With those words, Smith announced that Microsoft was suing the Department of Justice for the right to inform its customers when the government is reading their emails.

I say - which I do because I agree with Brad Smith, and because of course people have a right to know that the government is reading their private conversations when it is doing so - but I am a bit amazed to hear this from Microsoft.

There is also this:

This time, Microsoft is going on the offensive. The move is welcomed by privacy activists as a step forward for transparency — though it’s also for business reasons.

Secret government searches are eroding people’s trust in the cloud, Smith wrote — including large and small businesses now keeping massive amounts of records online. “The transition to the cloud does not alter people’s expectations of privacy and should not alter the fundamental constitutional requirement that the government must — with few exceptions — give notice when it searches and seizes private information or communications,” he wrote.

I agree with this as well, although I should say that I never used any cloud for the simple reason that putting your own private data on a public space - "the cloud" - never seemed to me to a good idea: I always distrusted it (and besides: memory these days is very cheap).

Finally, there is this, which is in a way the most amazing thing:

According to the complaint, Microsoft received 5,624 federal demands for customer information or data in the past 18 months. Almost half — 2,576 — came with gag orders, and almost half of those — 1,752 — had “no fixed end date” by which Microsoft would no longer be sworn to secrecy.

These requests, though signed off on by a judge, qualify as unconstitutional searches, the attorneys argue. It “violates both the Fourth Amendment, which affords people and businesses the right to know if the government searches or seizes their property, and the First Amendment, which enshrines Microsoft’s rights to talk to its customers and to discuss how the government conducts its investigations — subject only to restraints narrowly tailored to serve compelling government interests,” they wrote.

Precisely!

That second paragraph has it quite right - which also means, since I have always had the position the second paragraph states, that there have been a whole lot of false, misleading, misinformed, dishonest or simply cowardly arguments to the effects that the Fourth Amendment "doesn't apply anymore" or that the First Amendment only deserves reading and application with "money" replacing "speech".  [1]

So I agree with Microsoft - which is a bit odd (for me), so I hasten to add that it very probably acted for its own "business reasons".

But even so: Whatever the motives, the argument Microsoft gives seems quite correct to me - and so now both Apple and Microsoft, indeed probably to defend their own profit making, are stating the correct grounds why the American government is vastly overreaching the powers it should have, which are rightly described by the Fourth and First Amendments to the Constitution of the United States. [1]

2. To Protect Hillary Clinton, Democrats Wage War on Their Own Core Citizens United Argument

The second item is
by Glenn Greenwald on The Intercept:

This starts as follows:
FOR YEARS, THE Supreme Court’s 5-4 decision in Citizens United was depicted by Democrats as the root of all political evil. But now, the core argument embraced by the Court’s conservatives to justify their ruling has taken center stage in the Democratic primary between Hillary Clinton and Bernie Sanders — because Clinton supporters, to defend the huge amount of corporate cash on which their candidate is relying, frequently invoke that very same reasoning.
Yes, indeed - as Glenn Greenwald is going to explain. Here is the first and main step in the argument:
A primary argument of the Obama Justice Department and Democrats generally in order to uphold that campaign finance law was that corporate expenditures are so corrupting of the political process that limits are justified even if they infringe free speech. In rejecting that view, this was the key argument of Justice Anthony Kennedy, writing for the five-judge conservative majority (emphasis added):

For the reasons explained above, we now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.

Does that sound familiar? It should. That key argument of the right-wing justices in Citizens United has now become the key argument of the Clinton campaign and its media supporters to justify her personal and political receipt of millions upon millions of dollars in corporate money: “Expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption” — at least when the candidate in question is Hillary Clinton.

There are are several things I could discuss in the above quotation, but I restricht myself to the text of Anthony Kennedy, which is quite odd:

First, I grant that I do not have "the reasons" Kennedy appeals to [2], but I do not think I need to, for the conclusion Kennedy draws, that was quoted above,
is quite incoherent:

  • Corporations exist because they are profitable; they invest and "expend" in order to make profit, gain influence, or acquire power, which again are used to make or assure further profits, and thereby all their investments and expenditures have to be judged;
  • to spend money on politicians (by corporations) is very clearly the buying of influence, power or personal access to these politicians, and indeed cannot be rationally explained otherwise (that is: you don't give millions as a corporation to both influential political parties merely because you feel some sympathy for them); and
  • to give lots of money to politicians as a corporation is to corrupt them and it does "give rise to corruption or the appearance of corruption" - for as the CEO's of corporations tend to agree: "There is no free lunch". All "gifts" by corporations are made to serve the corporations, directly or indirectly.
Also, the above points need two additions: They hold completely independently from what the corporation trades in, whether it is oil, shares or medicines, and they also hold quite independently of how clean the corporation is or (at least) is supposed to be.

Once you pay lots of money to politicians as a corporatiom, it is to gain influence, acquire power for the corporation and/or get personal access to leading politicians for prominent spokespersons of corporations. And this is so everywhere.

There is one other argument that needs to be met:

Indeed, the Clinton argument actually goes well beyond the Court’s conservatives: In Citizens United, the right-wing justices merely denied the corrupting effect of independent
expenditures (i.e., ones not coordinated with the campaign). But Clinton supporters in 2016 are denying the corrupting effect of

direct campaign donations by large banks and corporations and, even worse, huge speaking fees paid to an individual               politician shortly before and after that person holds massive political power.

Quite so - and what Clinton supporters also are either denying or not discussing is that these enormous donations to Bill Clinton (at least) were in reward for his enormous deregulations of the banks while he was president: Clearly that enormously extended their powers and their profits; clearly he was rewarded for doing so after he had done it.

But all of this does not matter to Clinton supporters:

Incredibly, Clinton supporters, to defend their candidate, have resorted to denying what was once a core orthodoxy of Democratic politics: that big corporate donations (let alone being personally enriched by huge Wall Street speaking fees in between stints in public office) are corrupting.

Yes, I quite agree. Then again, I have one qualification. This is not about Glenn Greenwald's argument, which simply is correct, but about Hillary Clinton's supporters, who reject the - quite correct - argument just given:

They do remind me of something I first realized 50 years ago, in 1966 [3]:

A considerable majority of everyone who is seriously committed to specific kinds of politics are not interested in the truth, but only in moral judgements and factual assumptions that rhyme with their prejudices.

And this holds - in my experience and reading - for the majority of everyone who is seriously committed to any kind of politics, left, right or center, and it makes politics far more difficult than it would otherwise be.

3. $1,400,000,000,000: Oxfam Exposes the Great Offshore Tax Scam of US Companies

The third item is
by Andrea Germanos on Common Dreams:
This starts as follows:

Using an "opaque and secretive network" of subsidiaries in tax havens, top American corporations have stashed $1.4 trillion offshore, a new report from Oxfam shows.

With "a range of tricks, tools, and loopholes," for tax avoidance, the 50 largest U.S. companies, including well-known names like Goldman Sachs, Verizon Communications, Apple, Coca-Cola, IBM, and Chevron, raked in $4 trillion in profits globally between 2008 and 2014, are contributing to inequality, the anti-poverty group said.

Yes, indeed. Here is a small part of the evidence - and the report linked in the first line is very well worth downloading and reading:

The report, Broken at the Top (pdf), states that such tax dodging is one of the "profit-making strategies of many multinational corporations."

As noted in the report,

  • From 2008 – 2014 the 50 largest U.S. companies collectively received $27 in federal loans, loan guarantees and bailouts for every $1 they paid in federal taxes.
  • From 2008 – 2014 these 50 companies spent approximately $2.6 billion on lobbying while receiving nearly $11.2 trillion in federal loans, loan guarantees and bailouts.
In fact (I did download the report!) there are three more points in the same list that bear mentioning - and note that nearly all of the above happened under Obama's government. I quote:
  • Even as these 50 companies earned nearly $4 trillion in profits globally from 2008–2014, they used offshore tax havens to lower their effective overall tax rate to just 26.5%8, well below the statutory rate of 35% and even below average levels paid in other developed countries. Only 5 of 50 companies paid the full 35% corporate tax rate.
  • These companies relied on an opaque and secretive network of more than 1600 disclosed subsidiaries in tax havens to stash about $1.4 trillion offshore. In addition to the 1600 known subsidiaries, the companies may have failed to disclose thousands of additional subsidiaries to the Securities and Exchange Commission because of weak reporting requirements.
  • Their lobbying appears to have offered an incredible return on investment. For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
Note that corruption pays, and a lot: To receive $130 dollar in tax breaks and $ 4,000 in federal loans, loan guarantees and bailouts for $1 dollar spent is a lot more than they can expect from doing their ordinary business in the ordinary way.

The article ends as follows, and also draws attention to yet another consequence of this vast corruption:

As the report was released in the wake of the Panama Papers, a massive leak that exposed how the world's rich and powerful use tax havens to hide their wealth, Robbie Silverman, Senior Tax Advisor at Oxfam, said, "Yet again we have evidence of a massive systematic abuse of the global tax system."

"When corporations don't pay their fair share of taxes governments are forced to cut back on essential services or levy higher taxes on the rest of us. It's time governments stopped pandering to big business and started working for the good of their citizens.

"We can't go on with a situation where the rich and powerful are not paying their fair share of tax, leaving the rest of us to foot the bill. Governments across the globe must come together now to end the era of tax havens," Silverman said.

The consequence I meant is in the second paragraph:

You might not care that corporations, and the rich, and the powerful don't pay their fair share of tax, but - unless you are very rich and thereby can escape paying taxes - you will either have to pay higher taxes or loose some of the public services that helped you.

4. Obama’s Trillion-Dollar Nuclear-Arms Train Wreck

The fourth item i
by Amy Goodman and Denis Moynihan on Truthdig:

This starts as follows:

“Now I am become Death, the destroyer of worlds.” These were the words from the Hindu religious text, the Bhagavad-Gita, that flashed through the mind of the man credited with creating the first atomic bomb, J. Robert Oppenheimer, as the first nuclear explosion in history lit up the dark desert sky at the Trinity blast site in New Mexico on July 16, 1945.

Weeks after that, the atomic bombing of Hiroshima, then Nagasaki, killed hundreds of thousands of civilians, and thrust the world into the atomic age. Since then, humanity has lived with the terrible prospect of nuclear war and mass annihilation. Conventional wisdom holds that the likelihood that these unconventional weapons will be used has decreased since the end of the so-called Cold War. That perception has been challenged lately, especially since President Barack Obama announced a 30-year, $1 trillion program to modernize the U.S. nuclear-weapon arsenal.

I might have made several remarks on this, but I forego them, and merely draw your attention to the last part of the quotation: A $1,000,000,000,000 program - with all the zeroes written out - started by Honest Obama "to modernize the U.S. nuclear-weapon arsenal", over the course of the next thirty years.

Here is some more:

The U.S. nuclear arsenal, and all the expense, nuclear waste and immense danger it continuously poses, has received almost no attention in the U.S. presidential debates. The day after he launched his campaign in late May 2015, Sen. Bernie Sanders was asked about the trillion-dollar nuclear-arsenal upgrade at a town hall in New Hampshire. “What all of this is about is our national priorities,” he replied. “Who are we as a people? Does Congress listen to the military-industrial complex, who has never seen a war that they didn’t like? Or do we listen to the people of this country who are hurting?”

In 1946, the year after Trinity, after Hiroshima and Nagasaki, Albert Einstein, whose theory of relativity gave birth to the atomic bomb, offered a warning to the world that remains starkly relevant today: “The unleashed power of the atom has changed everything save our modes of thinking and we thus drift toward unparalleled catastrophe.”

I agree with Einstein (and point to the fact - as I think it is - that atomic power changed everything on earth, "save our modes of thinking").

5. Bill Black: “Liberal” Economists Cheered the New Democrats’ Deregulation of Finance

The fifth item iby Bill Black (<-Wikipedia) on Naked Capitalism:

This is a bit technical but should be required reading.

First, there is this on the "New Democrat" (see: Third Way) politicians Clinton and Gore, who changed the Democratic Party from faintly leftish to firmly rightish (as also did the Brit Blair and the Dutchman Kok, both also prime ministers in the 1990ies, both also with the - totally false - pretense of having once been "socialists") - but who did not change their leftish sounding propaganda talk (which confused very many, as they indeed hoped):

Readers are unlikely to understand how ultra-right wing the economic policies were of the Clinton administration.  Bill Clinton and Al Gore were two of the most powerful leaders of the “New Democrats” – a group of Democrats determined to move the party strongly to the right on economics, budget, national security, regulation, and crime.  The New Democrats’ policy apparatus was funded overwhelmingly by Wall Street but its ideological support came from economists who were “liberal” on some social issues.  The Clintons and Gore delivered for Wall Street by embracing the three “de’s” – deregulation, desupervision, and de facto decriminalization that encouraged and allowed twin bubble to rapidly expand.  The “dot com” bubble was the first bubble to burst.  The housing bubble burst in late 2006, leading to the financial crises of 2008 and the Great Recession that began in 2007.
Note the d's: deregulation, desupervision, and de facto decriminalization,
and also note that all of this was motivated by two things only: More profits
and more powers for the big corporations, and all of that was done quite
consciously and on purpose.

That it did happen all on purpose can be seen from the treatment Brooksley Born (<- Wikipedia) received, who merely tried to regulate some of the problems that financial derivatives posed - which would within ten years collapse the global economy.  But she was blocked, in 1998-1999:

The Clinton administration had already shown its intense hostility to financial regulation at the SEC, working with Republicans to block key reform efforts by SEC Chair Arthur Levitt.  Beginning in 1998 and continuing in spring 1999 the administration successfully blocked the efforts of Brooksley Born to protect the global economy from coming problems involving financial derivatives – and later in 1999 passed an act that forbade any future regulator from providing such protection.  The Clinton administration was working with the most conservative Republicans in Congress to effectively repeal the Glass-Steagall Act. In 1999, Citigroup and Travelers Insurance agreed to the largest merger in financial history – in open defiance of the Glass-Steagall Act in order to successfully extort Congress to repeal the Act.  Robert Rubin, the former CEO of Goldman Sachs, the government leader in destroying Glass-Steagall, announced that he was stepping down as Clinton’s Treasury Secretary.  He promptly joined Citigroup.

Finally, this is about a "leftish" economist who was much in favour of Clinton, and "freedom" and "free markets" and deregulations (and seems to be still):

The economist then explained what made possible this brave new world that he wrote to champion – deregulation.  He explained that deregulation was driven by “a change in ideology.”  He explained to his readers that “Adam Smith” was right.  The problem – the bloated, bureaucratic corporation – was caused by the government interfering with the markets through regulation.  With deregulation, Enron was leading the way and “making freewheeling markets possible.”

But probably the biggest force has been a change in ideology, the shift to pro-market policies. It’s not that government has vanished from the marketplace. It’s still a good guess that in a completely unregulated phone market, long-distance companies would buy up local-access companies and deny their customers the right to connect to rivals, and that the evil empire–or at least monopoly capitalism–would rise again. However, what we have instead in a growing number of markets–phones, gas, electricity today, probably computer operating systems and high-speed Net access tomorrow–is a combination of deregulation that lets new competitors enter and “common carrier” regulation that prevents middlemen from playing favorites, making freewheeling markets possible.

Who would have thunk it? The millennial economy turns out to look more like Adam Smith’s vision–or better yet, that of the Victorian economist Alfred Marshall–than the corporatist future predicted by generations of corporate pundits. Get those old textbooks out of the attic: they’re more relevant than ever.

The economist who authored the April and May 1999 columns is, of course Paul Krugman.

I say - and yes, I read "the April and May 1999 columns" in Fortune Magazine.

First this, in case you might want to get "those old textbooks" - of the 1890ies - "out of the attic" or the library: If so, also get a fair amount of texts on the atrocious salaries and working conditions of the British working class in the 19th century. For mrs. Rubin, Summers, Clinton and Krugman also want to see these return, it seems to me, although indeed they don't speak of it: Greater profits for and less control of the rich, always mean greater poverty and more control of the non-rich.
 
And I have said before that I have now for nearly three years read a daily dose of Krugman, while this almost never produced anything useful. I think the
above mostly explains it: He is merely a pretense leftist, who speaks the language of propaganda, but who really roots for the rich. And this also explains
Krugman's recent lies about Bernie Sanders.

--------------------------
Notes
[1] In case you missed it: The First Amendment is this:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
And what I was objecting to is the - very crazy - reading of this by the majority of the Supreme Court, who insist that "freedom of speech" covers money (?!?!) and next insisted that this implies (?!?!) that people or corporations with a lot of money can and may use that money for their own political purposes (which means that the very rich were given vastly more powers to manipulate the non-rich).

And in case you didn't know: The Fourth Amendment is this:
The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
[2] But they are given, in part at least, by the previous note.

[3] I was 16 at the time, and my parents were communists. By then I had heard about George Orwell (<- Wikipedia), and notably about "Nineteen Eighty-Four" (<- Wikipedia) but I had not read anything by him. My parents also had not read him, and did not say anything else, but quite a few persons whom I asked about Orwell, who were all either, like me, sons or daughters of communist parents, or else were themselves communists of roughly my parents' age, told me "You should not read Orwell, because Orwell was a traitor". And when I asked how they knew, they told me that they knew because somebody else had told them so, and that they had - therefore - never read Orwell...

This was also the first time that I consciously ran into attitudes that I could only describe (also at 16) as totalitarian. (For - in case you missed it - it is neither  honest nor decent nor indeed intelligent to describe someone as a traitor merely because of what he wrote, if one did not read anything by him.)


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