Puget Sound Liberals Weekly Newsletter #209
Enhancing Freedom, Opportunity and Cooperation in
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Our Website Our Editor To Unsubscribe Table of
Contents * Featured
Articles Calendars of Events Communication with Our Members Opportunities Petitions Commentaries from Our Members Mary Lindquist: Education Reform Begins with Funding Liberals and Democrats Links to the Beef Which Seats Vacated by Republicans are Vulnerable?* State and Local Links
to the Beef KC Democrats Legislative
Action Committee Agenda* Climate of
Resentment May Stimulate Attacks on Officers Initiative Proposed to Legalize
Marijuana in Washington Nation and World Links to the Beef Featured Advocacy Group: Council for a Livable World European
Social Democracy Works as Well as Ours Increasing Oil Prices Will Hurt Recovery Some Progress Is Occurring in Afghanistan Our Liberal Spirit Coping with Poor Freedoms and Opportunities* Our
Political Priorities ·
Fair Clean
Elections and Open Government ·
Fair Taxes and
Competent Spending ·
Investment for
Productivity ·
Quality
Health, Education, Jobs, Income ·
Environmental
Protection and Energy Independence ·
Security and
Equal Rights ·
Justice and
Peace Everywhere ·
International
Cooperation and Leadership Conservatives oppose all of these Let’s
End Our National Nightmare
Let’s
Restore Our American Dream More on Conservative opposition to our
American Dream Washington State’s 5 Major Needs · Federal Funding for Health and Education · Substituting
a Progressive Income Tax · Replacing
Conservative Legislators Quote of the Week Hitting bottom is
necessary before deciding to painfully reform. Alcoholism
Maxim
Calendar of Events
Friday, January 15 at 9:30 AM at Clark Park (2400
Lombard Avenue, Everett) - Walk to Congressman Rick Larsen’s Office to urge him
to support fair and just immigration reform.
Monday, January 18 at 8:30 AM at The Capitol Theater (206 5th Ave SE, Olympia) - Peoples Summit and March on our Capitol. To Register.
Communication
with Our Members
As our congress members and state
legislators return to work following our holidays, we can expect more
news. I predict that by the end of March,
the politics of the rest of the year will be much clearer.
Opportunities
Useful
Websites: contacts, maps, community organizing tools, and more.
Petitions
Sign
a petition to reduce nuclear arms.
Tell
President Obama to continue his promotion of nuclear disarmament.
Tell
your congress members to support using the Clean Air Act to reduce carbon
emissions.
Tell
your house member to support protecting wilderness areas from off road
vehicles.
Tell your senators to
support clean energy legislation.
Tell
your senators to support immigration reform.
Commentaries
From Our Members
Mary Lindquist: Education Reform Begins with
Funding
Published by Seattle Times on 1/8/2010
EDUCATORS in Washington couldn't agree more with The
Seattle Times on one major issue raised in a Dec. 30 editorial,
"Education: Looking backward, moving forward" — the cost of educating
Washington students has far outpaced state and federal funding. We also believe
that education reform must continue to move forward, in bad economic times as
well as good. That's why the Washington
Education Association has spent the past several months working with Gov. Chris
Gregoire on creative and collaborative, but realistic, ways to enhance our
education system, including promoting innovation and an effective evaluation
system.
While The Times editorial singles out merit pay and
charter schools as the yellow brick road to reform, we have a more basic
solution: Fix state funding inequities first and only then explore other
options to make an adequately funded system even better. In Washington today, despite a clear
constitutional mandate to "amply fund basic education for all
students," the state is failing miserably in that duty. Discounting
undependable and fluctuating federal funds, state funding barely even covers
the costs of classroom teaching on average statewide. That forces local
districts to rely on levies to pay for textbooks, utilities, technology, school
lunches and more — all pretty "basic" elements of a 21st-century
education. As this chronic underfunding
worsens year by year, and decade by decade, children get further behind as they
sit in overcrowded classrooms, read from aging textbooks, and work on scarce or
outdated computers. And each day, the gap gets wider between what it really
costs to educate children and what the state chooses to pay.
Legislators should not be allowed to drag their feet
in hopes the problem will be solved by HB 2261, the education-reform bill
passed in 2009 with no funding mechanism and a timeline stretching to 2018.
Washington's education-funding inequities demand action now.
Educators promise to do our part, too. We do not
intransigently oppose any reforms that are aimed in good faith at improving
student learning. Do merit pay and charter schools do that? We remain
unconvinced, but open to dialogue. Paying teachers for higher student test
scores ignores the wide variance in levels of parent involvement, school
resources and other types of student support.
Charter schools may have the potential to provoke experimentation, but
many of our students already attend creative and innovative public schools.
However, improving our schools across the board depends upon myriad factors,
most important funding. Until public
schools are adequately funded, these ideas should be shelved.
We applaud The Times for opposing efforts to decrease
critical levy-equalization funding for property-poor school districts. But we
look to our state's largest daily newspaper for leadership in advocating for
education funding that at least adequately, if not amply, provides all our
children with the education they need to live, work and succeed in today's
world. On behalf of educators, parents
and students across Washington, we ask The Times and its readers to join us in
advocating for a new and stable source of revenue to fund our public schools.
Now is not the time to cut still more from state education funding. Our
children — and the future economic vitality of our state — are depending on us.
Mary
Lindquist, president, Washington Education
Association
Liberals
and Democrats
Government Watch
Also go to Whitehouse.gov.
Changing the Cloture Rule
When they have
been in the minority, both Republicans and Democrats have supported the 60%
rule to stop filibusters. When in the
majority, both have opposed it. But confronted
by continuous filibuster threats, Democrats led by Senator Tom Harkin are now
proposing that the rule
be reduced. This would allow many
needed reforms to proceed.
Discouraging Speculation
With public
opinion outraged at Wall Street bonuses, President
Obama is considering various ways to reduce Wall Street speculation and fund
needed reforms. One possibility is a
fee on large financial firms to reimburse taxpayers for the bailouts. Another possibility is a transaction tax
(perhaps 0.2 or 0.25%) to increase the cost of stock market speculation. A third possibility is a tax on large
bonuses, as England has done. Several of
all of these may be imposed to make it more difficult for Wall Street to avoid
them.
Jobs Stimulus
Lower
demand and scared banks result in fewer loans, harming job creation. Senate
Democrats are considering a jobs bill.
President
Obama will promote a jobs bill in his February state of the union
speech. Health care reform may leave
employers with more money that they can use to create
more jobs. Immigration reform will
produce more jobs.
Health Care Reform
Under
pressure to produce health care reform, senate-house
compromises will occur easily and quickly. Medicaid funding given to Nebraska in senate bill may be
extended to all states.
Which Seats Vacated by Republicans are
Vulnerable?
Five Democratic
Senators Roland Burris (IL), Chris Dodd (CN), Byron Dorgan (ND) and Ted Kaufman
(DL) and Paul Kirk (MA) are not running for re-election. Of these, all but Byron Dorgan are from
Liberal States and may be replaced by other Democrats. Six Republican Senators Sam Brownback (KS),
Kit Bond (MO), Jim Bunning (KY), Judd Gregg (NH), George Voinovich (OH) and Mel
Martinez (FL) are not running for re-election.
Of these, some are from Liberal States and races to succeed them may be
contested between Tea Bag and more flexible Conservatives, such that they could
be replaced by Democrats. So Missouri, New
Hampshire, Ohio and Florida, might each change from a Republican to a
Democratic Senator. If the result is one
or two more Democratic Senators, it will be much easier to obtain 60 votes to
stop filibusters. For
more.
In the House,
Republican retirements exceed Democratic retirements. So it is possible that Democrats will also
gain House seats. For
more. For
more.
Here’s the Beef
Senate-house
health care reform negotiations are on a fast track.
Some
house health care reform provisions which might be accepted by the senate.
AFL-CIO
Chief Richard Trumka predicts that Labor’s agenda will be passed.
12
Ways to quit enabling Wall Street speculators.
Some financial regulatory
reform possibilities.
State
and Local
King County Democrats Legislative
Action Committee Agenda
Adopted
12/13/2009
Revenue
·
Repeal
I-960 and raise revenue to provide adequate funding for vital state services -
repeal provisions requiring supermajority votes to approve tax and revenue
issues, raise at least 2/3 of shortfall via new revenue and repealing tax
exemptions
Tax Reform
·
Repeal
non-performing corporate tax breaks, sunset tax exemptions every 5 to10 years
·
Require
Tax Expenditure Reports as part of state budget process, prioritize exemptions,
require approval as part of budget process
·
Implement
a state income tax on high income earners over $250,000
·
Tax
reduction for low income households and small businesses - Homestead Exemption
or circuit breaker legislation
Banking, Foreclosure and Predatory
Lending Reform
·
Establish
a public Washington State Bank similar to North Dakota's for infrastructure
·
Require
lenders to use mediation, require proper maintenance of foreclosed homes, give
homeowners right to rent former homes, increase state enforcement powers,
extend initial timeline to respond to foreclosure to 90 days from 30 days, and
give whistle-blower protections to employees at lending institutions.
Human
Services
·
"Disability
Lifeline"--Protect poverty programs: Temporary Assistance for Needy
Families (TANF), Apple Health for kids, Basic Health, Emergency Food
Assistance, Medicaid, mental health, substance abuse treatment and General
Assistance for people with disabilities
·
Prohibit
source of income (e.g., Sec. 8) as a means to discriminate
·
Pass
Fair Tenant Screening Act to regulate screeners and make reports valid for 60
days
Housing
·
Promote
State Housing Trust Fund at 50% of previous level of effort (or $50 million) as
a shovel-ready jobs bill
·
Workforce
Housing Fund Construct or purchase 25,000 rental units through housing
authorities for working families at or below 80% of median income
·
Homebuilding
Revitalization Act -give homeowners recourse to remedy defects in new homes
that need repair
Environmental
Priorities:
·
Invest
in Clean Water Bill (HB 1640) raise funds for clean water infrastructure and
storm water control by imposing a per-barrel fee on petroleum products.
·
Safe
Baby Bottle Act will phase out harmful bisphenol-A (BPA) in baby bottles, etc.
·
Oppose
budget cuts to environmental programs
·
Create
recycling program for fluorescent lights - require lighting producers to
provide a convenient statewide recycling program for fluorescent lights to
prevent exposure to and release of toxic mercury
Public
Health and Safety
Secure Medicine Return - require drug producers to provide secure
collection and environmentally sound disposal of unwanted, unused, or expired
medicines, as they do in other countries.
Election
and Initiative Reform
·
Public
Financing of campaigns for Washington State Supreme Court - optional public
financing for campaigns, providing adequate sums to run competitive campaigns
·
Universal
Voter Registration - opt out, not opt in, legislation for motor voter
registration
·
Same-day
voter registration
·
Increase
initiative filing fee to $100; $25 when file with Secretary of State, $75 when
re-file for ballot title and summary; alt - $100 or 500 signatures
·
Require
signature gatherers to be Washington State residents
·
Set
up Citizen's Initiative Review Process like recent Oregon legislation.
Support initiative signatures being public
L&I
"Retro Reform"
·
Greater
regulation and transparency of L&I insurance pool refunds(S 6035)
Labor
·
Collective
bargaining for musicians, early childhood educators, 2-year college faculty,
lecturers and interpreters
·
Require
prevailing wages to be paid on all public private partnerships and projects
involving public or private land
Education
·
Redefining
funding formula for basic education
·
More
options for helping underperforming schools
·
Levy
Equalization
·
Include
early learning education for at risk children in definition of basic education
Criminal Justice
·
Revise
three strikes and sentencing guidelines
·
Change
how juveniles are sentenced as adults
Climate of Resentment May Stimulate
Attacks on Officers
As reported in the Seattle PI, the King
County Sheriff’s Department spokesman says that people will not
be arrested for giving a law enforcement officer the finger. This is because it is not against the law to
show disrespect for a law enforcement officer.
But people who show disrespect to an officer may be illegally beaten or
even killed, with the complicity of other officers.
For
only one example. Note that kicking
a shoe at someone is more akin to uplifting a finger than it is to an act of
violence. Note
that Deputy Paul Schene’s colleague Travis Brunner was an accomplice to the
brutality. Their appropriate action
would have been to simply leave and lock the cell.
As reported
in the Seattle Times, this creates a climate of resentment which may
stimulate crazy people to attack law enforcement officers: “Investigators believe that
anger about the beating might have motivated Christopher Monfort who is accused
of killing a Seattle police officer on Halloween.”
Note that Deputy Paul Schene’s
attorney Peter Offenbecher stated that Paul Schene’s actions were in accordance
with his training, which indicates that at least some law enforcement officers
are trained to behave illegally. How can
Offenbecher defend his statement that the shoe was aimed at Schene’s genitals,
instead of his ear or just kicked as a gesture of disrespect? I also find it difficult to imagine that a
kicked shoe, whether an athletic shoe kicked by a teenage girl or a boot kicked
by a logger could inflict a wound on anyone.
A demonstration would be justified.
As is frequently the case with defending attorneys, Offenbecher’s
statements indicate a commitment to defending his client that includes
lying. Dave Thomas.
Initiative Proposed to Legalize Marijuana
in Washington
As reported
in the Seattle Times, five activists filed a ballot initiative Monday that
would legalize all adult marijuana possession, manufacturing and sales under
Washington state law - one of the most sweeping efforts at marijuana reform
playing out around the country this year.
New Jersey will soon be the 14th
State to legalize marijuana used for medical purposes.
Here’s the Beef
Court rules that
Washington state felons allowed to vote.
Obesity may lessen if
convenience stores sell produce instead of only sweet or fat foods.
Nation
and World
Featured Advocacy Group
--------------------------------Council for a Livable
World --------------------------
Council
for a Livable World is a Washington, D.C.-based non-profit, non-partisan
advocacy organization dedicated to reducing the danger of nuclear weapons and
increasing national security. Our mission is to advocate for sensible national
security policies and to help elect congressional candidates who support them.
We believe that security
in the 21st century requires not just the exercise of military might, but the
active use of diplomacy to solve emerging security threats. We believe that new
international challenges require new approaches. It is short-sighted and
counter-productive to continue relying on Cold War measures, such as
overwhelming nuclear arsenals that could destroy the world many times over, for
our nation's security. As Council Chairman Sen. Gary Hart said, "you must
properly understand what security is and how it is to be achieved, or all the
military spending in the world will not make you more secure."
In advocating for sensible national
security policies, the Council provides Members of Congress
with sophisticated technical and scientific information that helps them make
intelligent decisions about weapons of mass destruction (nuclear, chemical,
biological), nuclear non-proliferation, and other national security priorities.
Through legislation,
lobbying, seminars, media, online outreach, and collaborative projects with
fellow advocacy organizations, the Council works toward its ultimate goals:
deeply reducing and eventually eliminating weapons of mass destruction;
stopping the proliferation of dangerous nuclear, chemical, and biological
weapons and technologies; and finding non-military solutions to international
conflict.
The Council’s
Candidate Fund is unique because one hundred percent of contributions go
directly to our candidates. Over the past 44 years, the Council has helped
elect 113
U.S. Senators and 150 Members of the U.S. House of Representatives. Find
out more about why giving through our Candidate Fund is the best investment in
progressive national security you can make.
-------------------------------------------------------------------------------------------------------------------
European Social Democracy Works as Well as Ours
Since 1980, real per capital
GDP has grown at about the same rate in Europe (1.83%) as in our U.S.
(1.95%). Broadband is equally widespread,
but faster and cheaper in Europe. About
80% of both Europeans and Americans aged 25-54 are employed. Both younger and older people are less likely
to work in Europe than in the United States.
Europeans work fewer hours, with about the same productivity per hour
worked. Compared to 28% of GDP in the
United States, taxes in Europe range from 36-44%, but such higher taxes don’t
inhibit the motivation of Europeans to work, invest and innovate. On most environmental, health, educational
and other social measures, Europeans rank better than the United States. For
more.
Increasing Oil Prices Will Hurt Recovery
Oil prices usually increase as a result of a weaker dollar. But oil prices are now increasing in spite of
the strengthening of our dollar. Perhaps
oil prices are increasing due to greater demand for heating oil in response to
a severely cold winter. If so, oil
prices may decrease again after the weather warms.
But if our dollar becomes weaker again, we can expect oil prices to
continue to increase. This will have the
benefit of making non-carbon produced energy more competitive. But by draining dollars from our economy to
those who supply us oil, it will reduce the demand we need to provide more
jobs.
Some Positive Foreign Events
Young Iranians continue to protest against undemocratic
leadership. In spite of internet
censoring, Chinese
are expressing some of their political opinions. North Korea has agreed to meet with the 6
nation denuclearization group to discuss a peace
treaty with South Korea. While none
of these events provides the outcomes that we want, they each indicate that
they are more likely to occur.
Some Progress Is Occurring in Afghanistan
Afghan
lawmakers have rejected many of Afghan President Hamid Karzai’s most corrupt
cabinet choices. Marine Major
General Richard Mills reports that Taliban
have been driven from most towns and villages in Helmand Province, leaving
incoming troops with the mission of holding key areas, so local economies can
be rebuilt. With additional troops, the
emphasis will be upon producing the same result in the more populated area near
Kandahar. A
recent survey finds that almost 70% of Afghans support the continued
presence of foreign U.S. Troops and over 60% support the foreign troop
increases. More
Afghans die from poverty than from warfare.
Once Afghan villages are protected from Taliban, our emphasis is upon
improving their economy instead of insisting on our military presence. Especially upon assisting
farmers to grow and sell wheat instead of opium poppies.
Here’s the Beef
Meters
that report electrical use may stimulate energy conservation. Or may not.
Children
are suffering due to state government budget decreases.
Our
Liberal Spirit
Coping with Poor Freedoms and Opportunities
When reforms are difficult,
they may not be implemented until freedoms and opportunities have reached a
bottom. Until the pain of poor freedoms
and opportunities is worse that the pain of implementing reform. The good news is that we will soon have
passed a health care reform bill. Almost
all the other news at both our federal and state levels is bad. At our federal level, positive signs of
reform are now appearing. Such signs of
reform have not appeared at our Washington state level. So apparently things will have to become
worse yet.
Federal News
Health Care Reform
Due to our senate’s rule that
filibusters can only be stopped by a vote for cloture by 60% of senators, our
health care reform bill is badly flawed.
It may not provide enough competition to constrain private insurers from
continuing to divert billions of dollars to their managers and
shareholders. It may not place enough
emphasis upon substituting payment for coordinated health care instead of
paying for wasteful treatments. It may
not place enough emphasis upon stimulating healthier habits.
Changing the Cloture Rule
When they have
been in the minority, both Republicans and Democrats have supported the 60%
rule to stop filibusters. When in the
majority, both have opposed it. But
confronted by continuous filibuster threats, Democrats led by Senator Tom
Harkin are now proposing that the rule
be reduced. This would allow many
needed reforms to proceed.
Unregulated Speculation
More than one year after the
collapse of our housing-credit bubble, there are still no regulations in place
to prevent the creation of another one.
‘Too big to fail’ large financial companies have become larger than ever
and are continuing their speculative activities. Controlled by private banking interests, our
Federal Reserve is oriented less to Main Street people than to Wall Street
Interests. Most Main Street people are
continuing to speculate in stocks, borrow, spend, and work in ways which
support the creation of another bubble instead of supporting the credit needed
to sustain Main Street jobs.
Discouraging Speculation
With public
opinion outraged at Wall Street bonuses, President
Obama is considering various ways to reduce Wall Street speculation and fund
needed reforms. One possibility is a
fee on large financial firms to reimburse taxpayers for the bailouts. Another possibility is a transaction tax
(perhaps 0.2 or 0.25%) to increase the cost of stock market speculation. A third possibility is a tax on large
bonuses, as England has done. Several of
all of these may be imposed to make it more difficult for Wall Street to avoid
them.
Favoring Wall Street
speculation, all Republican and many Democrat congress members have been
elected due to their support from Wall Street lobbyists. This results from corporations being legally
considered to have the same civil rights as people and from the lack of public
campaign financing. Our Supreme Court
may soon make it easier for corporations to assist the election of candidates
who support their special interests.
There isn’t the will so far to substitute public campaign financing for
private campaign financing.
High Unemployment
High unemployment has
stimulated the passage of a stimulus-recovery package (which has saved
1.5 million jobs) and is stimulating consideration of other stimulus-recovery
measures. Yet employment may not
increase very much in 2010, such that many voters may be unhappy with our
Democratic congress members. Unless
Liberals including young people, Hispanics, labor union members and GLBT people
vote for Democratic congress members this fall, we may be unable to implement
more necessary reforms. But President
Obama has demonstrated his ability to win elections and pass legislation within
the constraints of our political system.
So steps can be anticipated to pass legislation that appeals to these
voters.
Foreign Events
Iran, China and North Korea all restrict the political freedoms of
their people in ways that allow them to be uncooperative with global peace and
environmental initiatives. But perhaps
due to President Obama’s foreign policy, some positive events are occurring.
Young Iranians continue to protest against undemocratic
leadership. In spite of internet
censoring, Chinese
are expressing some of their political opinions. North Korea has agreed to meet with the 6
nation denuclearization group to discuss a peace
treaty with South Korea. While none
of these events provides the outcomes that we want, they each indicate that
they are more likely to occur.
Afghanistan
To the dismay of many
Liberals, the United States is increasing its military presence in
Afghanistan. But the increasing military
presence is oriented to a new more peaceful strategy of assisting Afghan
villages to become more self sufficient, such that they have the ability to
resist the intrusion of both Taliban and corrupt Afghan officials.
Afghan
lawmakers have rejected many of Afghan President Hamid Karzai’s most corrupt
cabinet choices. Marine Major
General Richard Mills reports that Taliban
have been driven from most towns and villages in Helmand Province, leaving
incoming troops with the mission of holding key areas, so local economies can
be rebuilt. With additional troops, the
emphasis will be upon producing the same result in the more populated area near
Kandahar.
A
recent survey finds that almost 70% of Afghans support the continued
presence of foreign U.S. Troops and over 60% support the foreign troop
increases. More
Afghans die from poverty than from warfare.
Once Afghan villages are protected from Taliban, our emphasis is upon
improving their economy instead of insisting on our military presence.
Washington State News
In Washington State, our
revenue decline may be more prolonged that is being presently assumed, but
in agreement with David
Spring’s assessment. We are now
failing to meet constitutional requirements for funding education. Other needed infrastructure and safety net
services have been decimated with even more decimation to come. In spite of our great need for more revenue,
our highest income people are paying much less than their fair share of
taxes. And many tax breaks are being
allowed which cost our state much more than any benefits that they bring.
As at our federal level, our
lack of public campaign financing allows the election of legislators who oppose
the interests of Main Street people due to their attraction of private campaign
financing. Our legislature lacks the
ability or the will to correct our unfair tax system. Most of our Liberals whose leadership and
support for tax reforms are necessary are passive.
Apparently the pain of the
declining ability of our government to obtain revenue necessary to provide
needed infrastructure and safety net services is not enough to motivate
necessary tax and other reforms.
So What Should We Do?
Federal Level
Since we appear to have
reached our bottom with many federal freedoms and opportunities, we can join
with others to support attempts to reform the obstacles to more freedoms and
opportunities. Most important is to promote
the change from our Borrow, Consume and
Speculate mindset and practices to an Earn,
Conserve and Invest mindset and practices.
Individually, we can reduce our Wall Street footprint, by shifting our
assets and actions from Wall Street to Main Street companies. Collectively, we can act politically to
empower Main Street while weakening Wall Street.
More specifically, I suggest
the following priorities:
·
Disengage from
all activities which support speculation, putting your savings instead into
local and regional financial institutions which support Main Street employment,
investment and appropriate consumption.
·
Identify likely
Democratic voters in the several hundred homes nearest yours and work with
Democratic candidates to stimulate them to vote.
·
Donate to Washington
Public Campaigns so they can maintain staff necessary to organizing to pass
public campaign financing.
·
Refuse to vote
for or support Democratic congress members or state legislators who support
Wall Street interests at the expense of Main Street people.
Washington State Level
Since we haven’t reached
bottom at the state level yet, there are few reforms to support. We should instead indicate how bad things
are, in hopes that more people will view our situation as a bottom. We can easily point out the failure of our
education system, such that a whole generation of students will become adults
with perhaps half unqualified to hold a job necessary to support a family. These unqualified adults will become an
economic liability instead of asset to our society. Our social welfare safety net and penal
system are also failing. We are becoming
more like a southern red state, in our inability to serve our people and in
their resulting suffering.
I
believe that besides canvassing to identify likely Democratic voters and
stimulating them to vote, the most effective action that our Liberals can take
is to support Washington Public Campaigns.
To make
arrangements for an automatic monthly donation, email Craig Salins. To make a one time donation, mail a check to
Washington Public Campaigns, P.O. Box 70452, Seattle, WA 98127-0452. Dave Thomas
Recommended Books – See our list of books for liberals
Joseph Stiglitz, 2010, Freefall:
America, Free Markets, and the Sinking of the World Economy
The following is included in a commentary by Robert Kuttner:
“The financial crisis has already produced
dozens of books, and they generally fall into two categories. One is insider
reporting, told with novelistic flourishes, of the day-to-day drama as the
crisis unfolded. The value of these books to the readers is that major players
tell their stories, the reporter pieces them together, and the narrative
fleshes out details of what was known only in outline as events were breaking.
The risk is of a whitewash because the reporter is tempted to play a kind of
confidence game in which he trades access for kind treatment. (Bob Woodward is
the master of this technique.)
One of the better earlier books in this
genre is David Wessel's In Fed We Trust, which draws heavily on the
world as seen by Hank Paulson, Tim Geithner, and Ben Bernanke. The latest entry
is Andrew Ross Sorkin's Too Big to Fail. Both books provide tell-all
accounts of the deals brokered by the same crisis team in the fall of 2008,
when the economy was on the brink of collapse. Sorkin goes far deeper than
Wessel because he somehow got all of the major players, public and private, to
go on the record.
The other sort of book doesn't include the
juicy reporting detail but offers a serious analysis and critique of what
occurred. Two of the best recent works in this category are Joseph Stiglitz's Freefall
and John Cassidy's How Markets Fail. The two kinds of books complement
each other. The novelistic treatment leavens the heavier stuff with human
interest, and the serious analysis provides context and helps keep the
tick-tock books honest.
Stiglitz is the world's leading scholarly
expert on market failure, and this crisis vindicates his life's work. There
have been other broad-spectrum books on the genesis and dynamics of the
collapse, but Freefall is the most comprehensive to date, grounded in
both theory and factual detail. Stiglitz also offers one-stop shopping if you
are seeking an alternative set of remedies to the ones embraced by the Bush and
Obama economic teams.
Stiglitz begins by thinking hard about what
banks are supposed to do and what they actually did. "America's financial
markets had failed to perform their essential societal functions of managing
risk, allocating capital, and mobilizing savings while keeping transaction
costs low," he writes. "Instead, they had created risk, misallocated
capital, and encouraged excessive indebtedness while imposing high transaction
costs."
Stiglitz usefully takes on the free-market
myths that attempt to deflect responsibility for the crisis from the
deregulation that allowed banks to behave like casinos. Along the way, he
demolishes what's left of laissez-faire theory, explaining in detail how the
expected "market discipline" failed to prevent speculative bubbles
and mispricing of risk. Some of what he tells us, such as his description of
the mortgage meltdown, is not new. But the book is a nice mix of the
descriptive and prescriptive and offers several innovative policy proposals to
solve the foreclosure crisis.
In an especially forceful chapter, Stiglitz
eviscerates the Paulson-Geithner-Bernanke ad hoc rescues of September 2008 for
their lack of transparency, consistency, and concern for the larger public
interest -- and bemoans the policy continuity of the Paulson team with the
Summers team. In Stiglitz's view, it will take stringent regulatory reform to
get banks back to their appropriate mission as well as an ultra-Keynesian
program of social investment to compensate for the collapse in asset prices and
the decline of consumer and business demand. On both counts, Stiglitz contends,
the administration's blueprint falls far short, and his book is the definitive
critique to date of how the Summer-Geithner strategy fails, both as economics
and as politics.
As a military metaphor, he invokes the
Powell doctrine -- "attacking with decisive force." He writes,
"There should be something analogous in economics, perhaps the
Krugman-Stiglitz doctrine. When an economy is weak, very weak as the world
economy appeared in early 2009, attack with overwhelming force." The real
problem, though, was not the total amount of ammunition but where it was fired:
too much on the banks and far too little on stimulating the economy and helping
homeowners.
Stiglitz's view of the crisis describes a
possible road -- a better road -- than the one taken by the Obama
administration. And his book concludes with broader proposals for a better
balance between market and civil society, domestically and globally. What makes
Stiglitz special is that, along with Paul Krugman, he is the rare progressive
in a profession whose norms resist tampering with the verdicts of markets or
the power of private capital and also one of the few world-class technical
economists who can write lucidly for a lay audience. The tone of this book is good-humored
and public-minded.
One of the reasons why this crisis has resisted reform
is that so many of the details are esoteric and difficult for the public to
grasp. How many ordinary Americans can explain a credit-default swap? Books
such as Freefall can increase general economic literacy, which in turn
can increase the popular constituency for New Deal-scale reform.”
Dave Thomas Responds
I am in agreement with Joe Stiglitz’s analysis of the appropriate response to our credit bubble and its collapse. I believe we would be in much better shape if President Obama could have appointed him to a position with the authority to implement his suggestions to restrain the large financial companies from continuing their bubble-stimulating activities. I also agree that a larger stimulus recovery package is needed, but can understand that it is politically impossible.