2nd Recommendation and NEWS -- about Union Card-check

Congress should pass the "card check" legislation to enable workers to vote to have a union without company pressure or threats.

With the added friction of a tax on financial trades making stock buybacks a bit less appealing, the card-check would help strengthen unions and then they can push for higher wages to pull money away from the markets and back to real economy activities.


NEWS

Just as I posted the recommendation, I saw a news article which is very good news.

Bloomberg: Trump signs order to help small companies offer retirement-plans

Pres. Trump signed an Executive Order which will help small companies offer retirement plans for their workers. This will enable many more workers in small companies to save money for retirement. That will make them feel a lot more secure and it will shift some capital from companies to workers.

This is excellent news!

Simple Visuals Indicating the Trend and Current Problem

Are the Rich Getting Richer?

It seems that since (about) 1978 things have changed and gotten quite bad for 99% of the people.

What is the current trend, after the 2017 Republican Tax Reform?

As of the 3rd quarter of 2017, things seem to have gotten crazy. Corporate profits (the blue line) are going way up, but worker's wages (the brown line) aren't going anywhere fast.

1st Recommendation -- about a Financial Transaction Tax

I've been reading and thinking about how to encourage companies to hire more, pay more, and/or reinvest more in their companies, rather than doing stock buy-backs or dividend pay-outs. I've looked at a handful of ideas and I've settled on one (after getting some ideas from government and banking) to make a recommendation. It isn't necessarily the only recommendation I will make. It's only the first one.


I recommend a financial transaction tax of .0075% -- .01% on stock or bond transactions in the secondary markets (not for IPOs).

This should automatically begin (turn on like a switch) when the federal government debt-to-GDP ratio is greater than a percentage chosen by Congress (I recommend 40%) and automatically stop when below that level. Therefore, it would not sunset, but it wouldn't brainlessly continue forever.

The revenue from this would be dedicated to paying federal government long-term debt.


It would achieve several goals at once:

• Add some cost to financial transactions, so that real investment and commerce are more attractive by comparison.

• Raise between $750 million and $1 billion per $1 trillion of transactions for the government to pay off long-term debt.

•  Make the use of stock buy-backs less appealing and therefore slowly turn off the spigot leading to corporate executives, while leaving the spigot on leading to real investments. This may help repair the long-term problem of the wealth gap.

• Require all who use our markets and who have benefited from our government stability and strength to help solve our indebtedness problem.

Are we at the end of the Reagan Revolution?

If Democrats can regain control of the House of Representatives and even the U.S. Senate, they will be able to create some important changes. Will this end the Reagan Revolution? Time will tell.

I've been studying stock buybacks and other things which have ruined The American Dream for most Americans. Much of the reason these things happened are ancient history, but the majority of the problems began with Ronald Reagan's presidency. He didn't invent the problem ideas, but they were instituted then.


Analyzing the problem:

First, why have the rich gotten so much richer and 99% of Americans have seen their wages stagnate for 38 years? There are many reasons: from more women in the workforce earning part-time minimum wage and fewer union employees and more non-union and off-shored work. But, one key thing was about the distribution of wealth at the spigot:  union busting and Rule 10b-18.

Let's start with rule 10b-18. Prior to Reagan, SEC rule 10b-18 maintained that corporate CEOs who did stock buybacks might be culpable of manipulation of the market, but when it was changed stock buybacks became much safer and more common. It was changed in 1982, without any public comment (most unusual). Here are the Chairmen and Commissioners of the SEC during the first Reagan term.

Reagan	*John Shad (R), Chairman	5/6/81	6/18/87	5/6/81	6/18/87
	Bevis Longstreth (D)	7/29/81	1/13/84
	James C. Treadway, Jr. (R)	9/13/82	4/17/85
	Charles C. Cox (R)	12/2/83	9/30/89

From this list it would appear John Shad and Bevis Longstreth and James C. Treadway, Jr were in charge. It's safe to say Longstreth was a carry-over from the Carter years. The very offensive Charles C. Cox had yet to arrive. But, when he arrived stock buybacks increased significantly.

Remember, they changed rule 10b-18 with NO PUBLIC COMMENT.

By 1997, when issuing stock options was a very big motivator for Silicon Valley companies, the use of stock buybacks had surpassed dividends as a way to distribute corporate wealth to the shareholders.

In 1981-'83 when the rule was first going into effect, corporations spent 4.3% of profits on buybacks and about 40% on dividends.

In 2014-'16 it was 59% of profits and still about 40% on dividends.

Clearly, the spigot feeding money back to employees and corporate investments had shrunk a lot. Why weren't companies interested in doing more investment and expansion? When the rules are changed, Wall St. used corporate raiders to claim companies were undervalued and should be bought. They would keep the stock price at a peak, so stock buybacks fed as much money as possible to the insiders. Many companies were laying-off workers by the thousands in the 1980s. I remember every Christmas Eve there would be news stories that horrified.

First companies laid-off workers, then with Reagan's help they moved to southern states to hire non-union workers, then they went further and moved to Mexico, and finally to all parts of the world where labor was cheaper. The American mid-west was devastated. their unionized industrial jobs were gone. The Republicans blamed NAFTA on Bill Clinton, though Republicans had written the original trade deals which became NAFTA.

Considering that about 40% of profits are disbursed as dividends and 59% as stock buybacks, there is pitiful little remaining to be reinvested into the companies. Yet, some companies have a lot of profits in the bank or held off-shore (for tax purposes). Even without so many American workers they have made a lot of profit with cheap off-shore labor. This is a major difference with American corporations which DIDN'T go off-shore. And the tax benefits to corporations with off-shore profits is clearly unfair to corporations not using off-shore labor. The incentive for corporations to hire off-shore is still there, still tying down the American economy. Yet, the American economy has grown in recent years and we have a record low unemployment rate. These are strange times.

Corporations have lots of money, labor is working, many corporations don't bother paying down debt, corporate tax rates are at near-record lows, yet the U.S. worker can't see a better future and the U.S. government has a huge debt -- TRILLIONs. Strange times indeed.


What to do?


There are many ideas. One is to take another look at SEC rule 10b-10. Another is to re-enable unions with something like card-check secrecy to let workers join unions without company pressures. But, there are some other ideas too.

First, I do not favor eliminating stock buybacks. It's a key way for companies to distribute their wealth to their stockholders and to manage their outstanding stock. But, as the recipients of the corporate money may be taxed at a much lower rate than the standard individual tax rate, it may be wise to reconsider the difference between the two.

Second, we might consider limiting the ability of corporations to do stock buybacks when they have debt of some level. Companies have real reasons to carry some debt, but it's possible we could improve corporate health by requiring them to pay down debt to some generally approved level before doing any stock buybacks.

Since stock buybacks and dividends both distribute corporate wealth, they are the spigot which directs wealth away from reinvestment in real projects or employees. So, limiting buybacks or dividends to some percentage of a company's profits and requiring real economic activity, may also be viable. Even if a corporation is doing business overseas, it makes sense for them to use capital for commerce and not to fill bank accounts. The American people didn't create corporations to sit on money.

This immediately raises the question of why there is so much wealth corporations want to distribute? Are there no good projects? What level of profit do they require to put their money to work? Perhaps better international trade deals will enable them to do more work abroad where they feel the return on investment will be sufficient.


But, what of the U.S. worker?

The first obvious thing is to fix the Affordable Care Act (ACA) (which Republicans have tried to destroy) or shift to the Medicare for All approach. This will help more people avoid bankruptcies and it will improve the health of workers. That improves corporations.

Another health-related idea is to make the use of marijuana legal for an alternative to opioids and for other medical purposes. This will reduce healthcare costs and help workers be more able to work in today's economy.

I think we need to help unions, raise the minimum wage and index it to inflation, and improve the participation rate for workers in their company's 401K plans (many can't seem to afford to on low wage jobs, even when the company offers good plans). We can also tax away more of the corporate excess wealth to make it clear to CEOs that they had better use it or lose it. A corporate tax rate more like 21% would help. This will help pay down government debt and push the economy along.


Specific legislation:

At present, Sen. Tammy Baldwin has a bill to fix the SEC rule 10b-18. I don't know the details, but that should be discussed seriously.

The recent tax reform of the Trump administration was not "revenue neutral" and if left as is, will cause a massive increase in our government debt. That has to be fixed very soon.

Individual tax rates are relatively low and I would rather see a significant tax rate with a rather larger individual deduction. I think the recent reform wasn't wrong in structure, just magnitude. Democrats suggested the larger individual deduction, but Republicans said "No". We need to fix those numbers and begin regaining proper balance in our annual budgets & revenues and find a long-term path forward which will get us out of this hole.


Conclusion:

These ideas are the result of only a little research. Congress has access to far better data and experts for advice.


The public attitude toward the problems is that government doesn't work, the egg-heads are idiots, and "this problem will get solved right after Wall St. is burned to the ground and the 1% is hunted like game" (so says "gene"). Another comment was "fewer outstanding shares at higher prices, concentrated in fewer hands, does not translate into real economic growth" (so says Bud). I'll go with Bud's advice, though gene's may appeal to some people too.

Desperate Republicans in Georgia Decide to Remove Polling Places for Blacks

https://crooksandliars.com/2018/08/georgia-elections-board-close-75-black

https://www.huffingtonpost.com/entry/randolph-county-polling-places_us_5b77115ce4b0a5b1febb04fc

Election officials in Georgia have decided that letting Black people vote is too dangerous, so they decided to close polling places which don't meet the standards for people with disabilities. Of course, these same polling places have been used in the past, despite not meeting the standards. And, of course, they've waited until August to close them for the November elections. Yes, these tricky Republicans have covered all their bases and hope to steal a few more elections before anyone notices.

Oops.

Trade War: Clarified Standards and Goals

I've read several articles about the views of the Chinese after their leadership meeting. I think it was a very good idea for them to produce a unified view of their national policies and standards. It will not only help everyone to understand them, but it will help them to stay on course when moving forward into concrete negotiations.

The first thing it brought to mind was discussions recently about Brexit between the U.K. and the EU. Repeatedly the EU representatives have mentioned their four goals for the freedom of movement of people, capital, goods, and services within the EU. This makes it clear how you must relate to them. It's very useful.

Today NAFTA, the EU, the TPP, China, and some other groups are attempting to improve trade relations in some major ways. Knowing where each nation or group stands is very good.

The NAFTA nations tend to believe the previous concept of negotiating about individual products or sectors of the economy was useful, but that we can do better. Each speaks of modernizing the trade deal. In recent years in America there has been discussion of moving to "free trade" or "fair trade" and I believe the recent idea of Zero-Zero (wherein each side of a trade deal would seek to find all product areas or services where tariffs, subsidies, and other market impediments can be reduced to Zero) is worth attempting.

So now, the question is how we can match one trade bloc to the others to move us closer to the Zero-Zero goal, but without 'breaking' the standards of the EU or the Chinese or of other trade blocs.

I won't go into detail in this post. I want to leave this one short. But, I shall attempt to discuss these relationships in other posts very soon.

Briefly: National Security and Economics

Since World War II there has been one existential threat to America and that is the atomic bomb. We and the Soviet Union held them over one another's heads and it dominated all other policy decisions.

After the fall of the Soviet Union the nuclear threat receded and terrorism became a major issue. It certainly wasn't an existential problem, but it was significant. Now, al Qaeda and Islamic State have dissipated or disappeared and we have fewer major security issues to consider.

First, Russia and some other nations still have nuclear weapons. The "new kid on the block" is North Korea. If our hopes for them succeed, they will develop to become more like Singapore and South Korea and be relatively peaceful. Time will tell.

Next, the plans of Vladimir Putin to conquer certain European nations means America needs to help Europe become stronger and more united, so it will be less of a target for Russia.

Then, there is Israel and its neighbors. Over the course of many decades they have managed to find relative peace with their Egyptian, Jordanian, and Saudi neighbors. Iraq has changed and Syria has been ravaged by war. Only Iran stands as a major opponent. The smaller Gulf states are not major military powers. How will Iran continue and how will America and Israel dissuade them or change them to being more benign? That remains to be seen.

After those issues, the discussion has to quickly move to economic things. So, I have to say that the next decades may be very peaceful for America and we should take that time to repair our economy and work with other world economic powers to create an economic system which is good for everyone.

There are several assessments of the current U.S. economy and the one most average may be that "the economy isn't collapsing, but it may before long". That is an indication the economists don't exactly trust the politicians to NOT ruin it. I see it as giving us some time to make improvements. It may not be raining, but this is the time to repair the roof.

The first big economic issue is in flux because the current trade policy of Pres. Trump hasn't been resolved. The trade war is still being waged. This too shall pass.

Another major economic issue is our energy supply and distribution system. America has become a major energy producer with our oil and natural gas (which Europe would like to buy) and scientists are working hard to produce a variety of new technologies to harness and use the sun's energy and wind energy. The more we can depend upon "green" energy the more we can be free from the world's oil nations. That makes us more flexible and economically stable. Oil may have its ups and downs, but sunlight and wind seem to be steady.

That leaves one important thing to improve, how our economic system works and is regulated by government. Currently we have a very large government debt and we pay interest on that debt. We have a very low unemployment rate, but wages are not going up very fast. We have large corporations, and perhaps other financial institutions, which aren't utilizing their capital reserves in the usual aggressive commercial ways. We have universities charging exorbitant prices for education which is so essential in our current business world. And, we have the Baby Boomer generation entering retirement.

We need to utilize our computer technologies to improve our educational system. We have the computers and still children are reading paper books. We can educate the world cheaply if we want.

We need cheaper, even free, higher education or apprenticeships for our young people who will need tremendous knowledge and skills to participate in the economy of today and tomorrow. How can they afford it? Government must act in some way to make it possible.

We need a commercial world where capital is utilized in the appropriate way or it is either taxed away or required to be paid as dividends to stock-holders. Corporations do not exist for the benefit of the 1%, they are allowed, so that everyone can benefit. The distribution of wealth from corporations today is not being distributed very evenly to stockholders, bondholders, and all the employees. Thus, we need to change the rules and regulations affecting corporate executives, in order to influence or (in some extreme cases) to control their decisions about use of capital.

In order to limit price inflation it may be necessary to ensure corporations and/or government provide to families non-cash benefits such as the Affordable Care Act subsidies and regulations. If we can maintain a low unemployment rate for a sustained period of time, then we should be able to justify more benefits such as paid or unpaid days off, family leave, or vacations. Something to benefit workers and companies, such as advanced seminars and other training, can benefit and lengthen a worker's productivity and career.

Everyone wants to live in a more beautiful place, whether urban, suburban, or rural. More contributions to community improvements could be made by corporations and other organizations on behalf of their employees and for the benefit of everyone. In days-gone-by this was called corporate citizenship. We don't need to institutionalize that concept again, but we do need ways for the real economy to continue working with a good growth rate, but no destructive price inflation, while the workers benefit more and more.

While I argue we need rising wages, the group most in need has very little bargaining power, even when the unemployment rate is low. The working poor need a minimum wage increase on a more regular basis to ensure price inflation doesn't destroy families.

Our Liberal social programs such as the Veterans Administration, Medicare, Medicaid, Food Stamps (now debit cards), Social Security, the ACA, and the like, are often in need of financial repair. If we can reduce the debt (and deficit) and make the economy work better, then we should be able to maintain those programs as necessary.

Our military shouldn't require a lot of growth, so that may be one place we can maintain size and readiness and adjust to new technologies as they arrive. We always watch for developments from other nations and there's no reason for that to change. But, we don't need to increase military spending at a very rapid pace. If worker pay is barely increasing, then we can hardly justify a rapidly growing military and defense establishment unless there is a very real problem which would deplete our forces which today are already being funded very very well.

I would typically make an argument for Civil Rights and other ways to improve our social cohesion. At this time that seems like a somewhat distant dream. All I can suggest is that leaders speak to the benefits of acceptance of others and how our diversity makes us better.

Another thing which doesn't fit any of the categories listed above is the state of our Democracy. I think there are a lot of things we can do to improve it, to adhere more closely to the moral and legal code of America. Perhaps more schools need to teach about the Declaration of Independence and the Constitution. We were handed some tremendous ideas from European theorists and the Founders of the United States, pragmatic Americans that they were, turned them into something special. It has withstood the test of time and we have to recognize that, teach that to children, and continue to work to achieve its ideals.

To that end, we should use computer technology to improve our voting system; reduce gerrymandering; reduce or eliminate the criminal penalties for personal possession of marijuana; improve our Justice system fairness and reasonableness; reduce the number of situations where police officers have felt the need to use deadly force and regulate possession of handguns at least as well as we regulate the entry of terrorists into America or the privilege to drive a car on the highway. We should protect children from guns by requiring trigger locks on all guns in households with children. These are a few of the important ideas to improve the Life, Liberty, and Pursuit of Happiness of all Americans.

How Good are Solar Cells Today?

BBC article: Organic Solar Cells

"Commercial solar photovoltaics usually covert 15-22% of sunlight, with a world record for a silicon cell of 27.3% reached in this summer in the UK

Organics have long lingered at around half this rate, but this year has seen some major leaps forward

In April researchers were able to reach 15% in tests. Now this new study pushes that beyond 17% with the authors saying that up to 25% is possible.

This is important because according to estimates, with a 15% efficiency and a 20 year lifetime, organic solar cells could produce electricity at a cost of less than 7 cents per kilowatt-hour.

In 2017, the average cost of electricity in the US was 10.5 cents per kilowatt-hour, according to the US Energy Information Administration."

This doesn't look great, but we've only been at this Green Energy project for about 20 years. Think where we'll be after another 20 years.

Where do the Republicans stand?

There is an important issue which the Republicans regularly face and they stand firmly on three sides of a fence. It's untenable, but their voters haven't notice and don't care.

When it appears Democrats are coming to power the first argument we begin to hear is that the DEFICIT is far too high and growing and the Democrats have to be responsible to control it. Of course, it was Republicans who gave us the federal debt and deficit problem. Of course, the Republicans don't want the Democrats to be free to do anything but clean up the Republican messes. Pres. Obama spent a big part of his eight years as president fixing the problems they created.

Okay, that's simple. Where do the other two stances come from?

How do the Republicans propose fixing the problem? Cutting spending all across the Liberal social program they say they don't support. They make this argument to convince their voters they have a solution. But, the fact is they won't touch those programs because their own voters are very big users of Social Security, Medicare, Medicaid, and many others. On the other hand, they claim the Democrats are going to raise taxes to solve the deficit gap and their voters hate higher taxes. They often go even further and claim the Democrats are Socialists who will spend more and more and more and create even bigger problems. This, despite the record which shows Jimmy Carter, Bill Clinton, and Barack Obama (with full support of Democrats) kept deficits low or decreasing.

Democrats ARE the party of fiscal sanity.

During the Clinton presidency the economy boomed, despite ZERO support from the Republicans at the beginning and they brought down the deficit to reach a BALANCED BUDGET. The next Republican presidency and Congress immediately destroyed that progress.

During the Obama presidency there was a huge recession at the beginning (2007-2010) and yet the Democrats stopped the recession, brought down the deficit faster and more than ever before and still fought a war and passed the ACA and did financial industry reform regulations.

Of course, when Pres. Trump came into power the first thing they decided to do was to spend more on the military AND do a tax reform which would blow up the debt by several trillion dollars

Republicans are completely irresponsible with the budget.

Now the record is clear, how do the Republicans explain themselves during campaigns? They are currently discussing everything else and ignoring it. What else could they do?

It's up to Democrats to remind the voters that Republicans destroy the fiscally responsible budgets and Democrats immediately work to fix our problems instead of making them worse.

Is our System of Funding Corporations Broken?

https://qz.com/1351355/tesla-and-spotify-say-public-markets-are-flawed-are-they-right/

Tesla and Spotify say that doing an IPO isn't worth the effort. The regulations, the short-sellers, and the fact institutional investors get a discount all work against new corporations. Others seem to agree, as the article says there are far fewer IPOs these days.

Another issue which has been around a long time is how corporations with extra cash would rather do stock buybacks or buy other corporations (called mergers). Why can't they just invest in their own company? Who profits from mergers besides the brokers and lawyers?

It's worth considering issues such as these from time to time. Our economy and the world economy are not fixed never-changing things. We also want the money in our economy to be used most appropriately and if all the incentives are for short-term raping and pillaging of corporate bank accounts, then we have a problem.

Netanyahu: "Hitler didn't want to exterminate the Jews..."

https://www.haaretz.com/israel-news/netanyahu-absolves-hitler-of-guilt-1.5411578

With a view such as this it's no wonder he wouldn't negotiate with the Palestinians (the PLO) to find a peace deal.

Are Our Voting Systems Working Yet?

In Georgia they had a 243% turnout! Way to go GA.

https://arstechnica.com/tech-policy/2018/08/georgia-defends-voting-system-despite-243-percent-turnout-in-one-precinct/?comments=1&start=40

Many say the federal government is terrible. But, they authorized money to fix voting machines and

many states TURNED IT DOWN.

https://gizmodo.com/just-13-states-have-requested-funds-congress-set-aside-1826148816

A new bill might help fix some of the problems by banning PAPERLESS voting machines altogether..

https://arstechnica.com/tech-policy/2018/01/new-bill-could-finally-get-rid-of-paperless-voting-machines/

With paper, maybe Georgians can finally learn to count!

Politicians, Asbestos, and Other Dangerous Things

Why is it possible, for any amount of money in the world, that a politician would make it possible to develop dangerous toxins or to use asbestos in products?

https://www.nytimes.com/2017/12/19/health/lethal-viruses-nih.html?_r=0

https://www.usatoday.com/story/money/nation-now/2018/08/07/back-school-beware-school-supplies/929964002/

I don't understand people who would do such a thing.

Why Don't Corporations Give More Pay Raises?

I've been thinking about how our (America's) economy works and why worker pay hasn't been increasing at a faster rate since about 1980. One thing which stands out is that when there was a repatriation of corporate profits held off-shore, most of the money went to stock buybacks. Why buybacks? Because they increase the value of the stock owned by corporate executives. It's a pay raise for them.

Just today I read an article about the corporate giant Apple which recently passed a major marker, becoming the first corporation with capitalization over $1 trillion. Here's a link:

     https://newrepublic.com/article/150382/apples-stock-market-scam

Here are a couple of links from within the Apple article:

     https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans

     http://rooseveltinstitute.org/curbing-stock-buybacks-crucial-step/

So, presuming you are NOT an executive of a big company, what should be done to improve the situation (meaning to reduce buybacks and increase normal investments in plant and workers)?

Well, the simple idea of increasing the time period after a buyback before an executive may execute a stock sale may give the market time to adjust and to eliminate some of the advantages to the executives -- thereby reducing the incentive to do a buyback with NO personal gain.

This won't guarantee they won't try to find another way to distribute the money to themselves rather than to improve their company, but if a way cannot be found to force them to distribute held profits to their stockholders via earnings distributions or to reinvest in the company, then it means there is something fundamentally wrong with corporations. They only exist to benefit the people (workers who are paid, consumers who get good products), not just a handful of already rich executives.

Syria, Post-War

I read that the Russians are interested in having America work with them to resettle Syrians and to get Syria back up on its feet. But, I thought Russia wanted to be in charge of Syria. Take control, take responsibility.

I wonder if Assad is interested in changing his position on working with others in the region to help Israel and the Palestinians to find a real peace agreement. Perhaps something offered from him would earn a little help from America.