Bacon's Rebellion

To answer the obvious question: Yes, I did see Tiger Woods. We camped out around the 11th hole yesterday, and we made a point of staying there until Woods played. As much as I have zero use for celebrity worship, I couldn’t come to the Master’s golf tournament and miss seeing him. And trust me, Woods is a massive celebrity, even among this crowd of mostly affluent, Southern, white, middle-aged men.

Woods wasn’t playing particularly impressively at that point in the afternoon. He had racked up a succession of par rounds, even as a legion of lesser talents were smoking past him. But when Woods showed up in the fairway behind us, all heads swiveled away from the mere mortals who were teeing off on the 12th hole back toward Woods, who was doing nothing, just leaning casually against his golf stick and waiting for the group ahead to finish. A whole sea of people — investment bankers, corporate attorneys, building contractors, the business elite — stood up from their seats just to get a better glimpse of the Mighty One.

Woods was cool — relaxed, almost nonchalant, showing no stress at falling three shots off the leadership pace. He played solid golf on the 11th hole, finishing up with another par. He had a chance at scoring a birdie, but he took a long putt that missed the hole by an inch or two. And then he was on to the next hole. No showmanship, no swagger. Very understated, very civilized. Woods, I would suggest, is one of the few celebrities who deserve the idolatry bestowed upon him.

That was my brush with Woods worship. Been there, done that, bought the t-shirt with the Master’s logo.

I get to stay in our guest house today, getting some work done, while my father-in-law, an avid golfer, uses my pass. The Master’s is a world-class event, and I’m pleased that I had a chance to witness it. The grounds were immaculate and beautiful. I soaked up impressions of a sub-culture to which I had never been exposed. But I’ll tell you this, as boring as golf is to watch on television, it’s even more excruciating to watch in person. At least the television cuts from player to player — no long waits between “action” sequences. In person, one must endure interminable intervals between golfing groups. Golf makes baseball look like a non-stop, fast-action thriller of a sport. On television, there is no trouble seeing where the golf ball travels. In person, you might be lucky enough to see the ball immediately after it’s hit, but you lose it in the sky and can’t see it again until it plunks down on the ground. Booooring.

But, hey, it would be a dull world if everybody liked the same thing. If people love golf, good for them. I’ve got other things to do with my life. … Like blog.

This post is about the Have Nots in the workplace in the Supercapitalist (Robert Reich’s term) economy.

Previously I posted about the conditions that frame the individual person’s economic condition. Those conditions can be improved substantially in Virginia by increasing capital. Lower taxes, personal and corporate, create Commonwealth Trust Accounts, reform health care (not addressed in detail), increase supply of energy, etc.

Now, what is a person, let’s call him or her – Miss Have Not, to do when there are very few opportunities to move up a notch on the economic ladder? And, the jump up several notches requires new skills, education or successful entrepreneurship. Furthermore, Miss Have Not’s employer is constantly squeezed to keep her labor costs down and to push her productivity up.

Let’s say the persons who feel trapped or left behind in this Have Not end of the normal curve – or economic ladder – are 40% of the citizens of Virginia. (I’m not including illegal aliens).

First, the personal savings posted earlier, created from existing taxes, build significant security for health care and retirement.

The next step is very hard to do. (It will likely undo many of the Republican Party credentials I’ve built over 16 years. What the hey, I was a Populist Christian the whole time – anyway. Still a Conservative)

You can find money for redistribution from corporate good works and in executive salaries. You can share profits in stock and stock options.

1. Corporate good works (the Breast Cancer ladies are going to hate this – and many others) come from the corporate bottom line. It is a zero sum game in the closed system of one business tally sheet, so corporate good works compete with wages.

Encourage corporations to stop doing good works, public service, community relations, etc. and put the money into wages. Or, tax good works heavily and put that tax money into individual Commonwealth Trust Funds for persons in the lower 40% of income.

Change the laws to tax non-profit organizations incomes as income or tax their distributions. It is capital that has avoided the ‘tax once’ rule. Recycle the tax money to the individual Commonwealth Trust Funds of the lower 40%. (I am okay with taxing my tithe to my church or taxing my church’s distributions – if it doesn’t cross the first Amendment line of establishing or prohibiting religion and I’d like to know the legal precedents back to the Roman Empire on what the ability to tax means – really)

2. Encourage corporations to share their profits in company stock, stock options, or direct profit-sharing for small business that comes directly off corporate taxes. Or if we actually have a zero corporate tax rate, then make those corporations that don’t share profits pay corporate tax – which increases their risk and reduces their competitiveness.

3. (Deep breath) I actually thought of this in the early 90s. Look at the maximum ratio of the highest paid person to the lowest paid person. Is it, or in your mind, should it be, 7:1, 10:1, 100:1 or 1000:1 or what? I call that ratio the “Greedcap”.

The rationale is this. The CEO or management, (and I am paid a management salary), reflects how much money, value-added, the persons add to profit. (I’ve made my companies far more money than they have paid me – like a professional athlete… just not as well!). Yet, at some point the increased profit of a corporation is the result of everyone’s better work. I don’t know that number empirically. But, I know it exists.

Enter labor unions or shareholders. Leverage must be brought to bear when the highest pay is over the Greedcap. Every dollar paid over the Greedcap should be split (say 50:50) with 50 cents going to a person and 50 cents going to the stock, stock options, profit sharing, health benefits or retirement fund, whatever, shared by all employees. Note, if the Government, Federal or Commonwealth, establish the Greedcap and try to regulate this it will be a screaming disaster. It falls to unions, non-union workers and shareholders and moral suasion to make this work. A key point here is that you aren’t taking capital from corporations but redistributing capital allocation within the corporation or small business. (And don’t forget anyone – medical professionals, lawyers, authors, movie stars, athletes, university presidents, non-profit management, union leaders, etc. They all make their money in a community of co-workers or employees)

Next installment…dealing with the restructured economy, or… what about Walmart?

Well, Baconauts, I find myself in sunny Augusta, Ga. — except it’s not very sunny around 8 a.m. this morning: The town is covered with a thick fog. Anyway, I’m here to observe what has become one of the nation’s largest sporting events. At its peak, up to 150,000 people will crowd the fairways to watch a procession of middled-aged white guys — plus Tiger Woods — swing long sticks at little balls.

I’ve never played a single round of golf, and at 55 years old, I don’t intend to begin. I’m here because my wife likes golf and in a fit of madness bid on some tickets at the Collegiate school auction — and won. As ignorant as I am of the sport, I doubt I will have anything useful to say. If you want insight into the tournament, turn on the television!

In the first installment of Supercapitalism Redux I listed what I thought were Robert Reich’s key correct findings. Here are my suggestions on what we should do in Virginia about those findings for the common good in the Commonwealth.

Everyone has more money and stuff than 30 years ago. Our American poor are richer, materially, than they were three decades ago. They are considerably poorer, spiritually and in quality of life, than the poor from the 70 years ago – because of the destruction of the family.

Yet, the middle class has thinned out considerably. The squeeze increased the number of upper middle class and wealthy (is rich a better term?) folks. Likewise, the number of lower middle class people increased. If these folks don’t get new competitive skills or go into business, successfully, for themselves, they will not progress to the middle class. Ever.

What to do for the people at the bottom economically?

First, don’t destroy capital. Reich agreed (p. 4) that “Capitalism’s role is to enlarge the economic pie.” Build capital. Build capital as fast as it can – grow the economy just shy of cross-over point of inflation. Tax capital once – period.

The 3% growth in total tax burden in Virginia since the 70s means about $157 a month for the median family (earning $51k in ROVa and more in NoVa). Lower personal taxes.

Expand the supply of energy, as much as Virginia can, to lower the price. The cost of rising oil prices destroys the discretionary income – and even pushes into mortgage failure – too many working families. Build the double refinery capacity at Yorktown, build new nukes, build sea-based tide and windmills, etc.

Provide individual supported by community, not government, opportunities for the big expenses – health, retirement, job insecurity, and education – that will break marginal income families. I wrote in Bacon’s Rebellion about Commonwealth Trust Accounts for lifelong individual savings. Return the bogus $1.5 B sales tax increase (2004) into individual accounts ($200 @)) for all 7 million Virginians. Give generous tax cuts for folks who contribute to other folks’ accounts.

Elect Representatives and Senators to the Federal government who will morph Social Security into individual, personal accounts. Elect politicians who will morph Medicare, Medicaid and the drug benefits into sustainable health insurance accounts. But, don’t wait for the Federal government to reform to take action in Virginia.

The social pathologies that plague families of every income can’t be solved by government. Government shouldn’t promote the pathologies, like welfare did.

Coming up next…what to do about corporate excesses.

Norfolk Southern wants to build a $35.5 million intermodal facility in Montgomery County to transfer shipping containers from trucks to rail in an initiative that could remove 150,000 trucks a year from Virginia’s highways. Not only that, but the project could create as many as 2,900 jobs over a 14-locality area from Radford to Lynchburg, generate hundreds of millions of dollars in economic activity, and plunk down between $17 million and $71 million in taxes.

Wow, sounds like a winner. The project relieves traffic congestion. It’s good for the environment. It creates jobs in a section of the state where unemployment is still a problem. And it adds to the tax base. What’s not to like?

Well, apparently residents of the Elliston area, where the transfer center would be located, are worried that the project will adversely impact their quality of life by increasing traffic and noise, and degrading air and water quality. Now, Montgomery County, which endorsed the project in 2006, opposes it. (See coverage in the Roanoke Times and Times-Dispatch.)

There are two ways to approach problems like this. One way is to fight bitterly, refusing to yield an inch. The other way is to seek reasonable compromises in pursuit of the common good. I don’t know which path the people of Elliston will follow, but the situation does not look positive. Maybe Gov. Timothy M. Kaine, who is trying to organize a regional meeting, can pull off a deal that makes everyone happy.

The residents of Montgomery County would do well to talk to the Piedmont Environmental Council, which backs the construction of new railroad sidings in Fauquier County. The rail link between Manassas and Front Royal is “the major chokepoint” on Norfolk Southern’s New York-to-Texas corridor, according to an article in the Spring 2008 Piedmont View. The residents of Fauquier are just as concerned about the impact of increased rail traffic as the residents of Montgomery County — this is the region, remember, where citizens are fighting a proposed high-voltage transmission line tooth and nail — but they are displaying a very different attitude.

The PEC acknowledges the public benefits of shifting container traffic from truck to rail. A train can haul one ton of freight up to five times further than a truck on the same amount of fuel, while emitting only a third as much carbon dioxide. Additionally, as the Piedmont View quotes The Plains resident Megan Gallagher, rail yards are “so much less destructive than a 500-foot roadbed with hundreds of thousands of vehicles.”

Accordingly, PEC has chosen to work with Norfolk Southern to craft an outcome acceptable to piedmont residents. Priorities include:

• Helping landowners get a fair deal in negotiations with the railroad
• Reducing noise by adding gates at road crossings so that trains don’t have to blow their whistles
• Diverting construction away from land under conservation easement, where possible
• Offsetting the loss of conserved land through the protection of nearby properties of comparable size

Let us all hope that the residents of Elliston take such a constructive approach.

Update: The Roanoke Times reports that the state might have to contribute more money than originally thought to the project: an additional $10 million to $15 million to build the “Ironto Connector” between the rail yard and Interstate 81.

(Map credit: Adapted from “Answers.com.” Blue dots show approximate location of proposed Montgomery County and Fauquier Count facilities.)

Re: Supercapitalism: The Transformation of Business, Democracy and Everyday Life by Robert B. Reich.

Jim Bacon asked his writers to read and report on this book by former Clinton cabinet official, Robert B. Reich. Here is my homework in several installments.

Reich describes the changes in America, and across the world, caused by the transformation from the Industrial Era to the Information Era. And, for the Third World from the Agrarian Era to the Industrial and Information Era at the same time. His findings of economic trends and facts, believe it or not, were the basic same things predicted by the long range study (the last of the Army 21 studies) I lead in 1990-92 for the period 2005-2015.

Interestingly enough, our study said the key to the future, domestically and abroad, was “the political perception of economic change.” And, that a “Gandhi with guns” could articulate the grievances of the Have Nots as a cultural identity issue.

Consequently, I reject Reich’s dichotomy of Democracy vs. Supercapitalism (Reich’s name for the new phase of economics). Every ‘government’ that makes rules, executes rules and adjudicates rules from the tiniest tribe to the greatest civilization – ever – has its hands in the economy.

One of the best courses I took in grad school #1 was “Government and Business in a Mixed Economy” taught by the late Dick Darman and Roger Porter. The course showed how intertwined government and the business are. Was, are, is and will be – forever. So, I reject Reich’s basic assumption. Yet, many of his findings were spot on. Those that weren’t, I’ll just ignore for now.

His findings include the following items I’d agree are valid:
• Widening inequality in incomes
• Reduced job security
• Plethora of products and services appealing to our basest desires
• Large companies spend on lobbyists, lawyers, experts, public relations specialists and donations to ‘drown’ out the voices and values of citizens

The result is “Americans are losing confidence in democracy” (Reich’s word for our government).

Also, the GDP grew threefold (300%) from 1973 to 2006 – adjusted for inflation.

Productivity grew by 80%.

CEO incomes went from 66 times the ‘typical’ worker (1968) to 900 times the ‘typical’ worker (2005).

And, ta da, the gains in real income from 1974 to 2004 are by quintile

Lowest 5th – 2.8%, 2nd lowest – 12.9%, middle – 23.3%, 2nd highest – 34.9%, and highest – 61.6%.

Chew on those finding fellow Virginians. I’ll post in another installment what I think are better answers of “what must be done” than Reich’s. IMHO.

The Bacon’s Rebellion e-zine publishes again. The April 7, 2008, edition skewers the forces of ignorance and lethargy. Check it out at db4.dev.baconsrebellion.com. Don’t miss a single issue — sign up for your free subscription here.

We’ve got a great line-up this week:

First, Shoot All The Cars

While Virginians seem hell bent upon raising taxes and building roads, Ameri-kiwi Claude Lewenz envisions a different path to a superior quality of life: Auto-free villages.

by James A. Bacon

Newseum
The D.C. attraction opening this week celebrates freedom of the press, the rise of the news and the decline of the newspaper.

by Doug Koelemay

Space to Drive and Park

Cars consume huge amounts of space for roads and parking, which disaggregates human settlement patterns, co-opts transportation alternatives, and… increases dependence upon cars.

by EM Risse

Two Spheres of Fraud

While the media salivates over the subprime lending fiasco, journalists are overlooking the main reason why Americans can’t afford housing: the building of the wrong kind of housing in the wrong places.

by EM Risse

How to Save $1 Billion Without Even Trying

Think Virginia lawmakers are serious about restraining state government spending? Consider this: Simply freezing 7,627 vacant positions could have saved $1 billion in the next two-year budget!

by Mike Thompson

You Call This Conservative?

A self-proclaimed “conservative” transportation plan appears to be animated by the conviction that Virginians really don’t know what’s good for them. When did conservatives become central planners?

by Norm Leahy

Creating a New Segregation

When Richmond combined Jim Crow with urban planning in the 1940s, the result was expressways, the destruction of African-American neighborhoods and white flight.

by Peter Galuszka

Reaching the Promised Land

In his lifetime, Martin Luther King empowered African-Americans. By his death, he stimulated Southern, evangelical whites to search their hearts and embrace all children of God.

by James Atticus Bowden

Nice & Curious Questions

Bottled Poetry: Wine Trails of Virginia

by Edwin S. Clay III and Patricia Bangs