Social Issues

The unimaginable catastrophe of World War I

Posted on by j.giglio

A century ago, on June 28, 1914, Archduke Franz Ferdinand, heir to the throne of the multi-ethnic Austro-Hungarian Empire, made an official state visit with his wife, Duchess Sophie, to the Bosnian city of Sarajevo, which the empire then occupied.

Late that morning, the cars in their imperial procession made a wrong tum on the unfamiliar streets of Sarajevo and halted to get their bearings. At that moment, Gavrilo Princip, a young Bosnian freedom fighter (or terrorist, take your pick) stepped out of the crowd and fired two shots into the back seat of the open car carrying the Archduke and Duchess. Both died within minutes.

And Europe proceeded to come apart at the seams.

Less than six weeks later, on Aug. 3, Kaiser Wilhelm’s Germany invaded Belgium as the first step in their longstanding Schlieffen Plan to score a quick military victory over Republican France.

France had a military alliance with Tsarist Russia, which had already begun mobilizing its huge army in support of its client Balkan state of Serbia, the “spiritual leader” of occupied Balkan states like Bosnia. Serbia was being threatened with invasion by the Austro-Hungarian Empire (with the support of its German ally) for “refusing to cooperate fully” in the investigation of Archduke Ferdinand’s assassination.

Germany regarded Russian mobilization as a threat against its eastern provinces and assumed Russia’s French allies would attack from the west, so it decided to mount a preemptive invasion of France through neutral Belgium.

However, the constitutional monarch of Great Britain had guaranteed the territorial integrity of Belgium. The British declared war against rampaging Germany on Aug. 4 and began landing contingents of its small but highly trained army in France on Aug. 7 to support the French and Belgian armies.

By the middle of August, the major league lineup was basically set: The alliance of Britain, France, and Russia was at war with Germany and Austria-Hungary.

Clear? I thought not. But the parties plunged ahead with great enthusiasm into the five local wars that broke out during August in different parts of Europe. Austria-Hungary was fighting Serbia in the Balkans and Russia in southern Poland and Galicia. Russia was fighting Germany in East Prussia. France squared off against Germany in Alsace-Lorraine and Germany fought Belgium, France and Britain in Belgium and northern France.

All confidently expected the war to be over by Christmas. They got the Christmas part right, but not the year.

The unimaginable catastrophe of World War I, which would remake the world, dragged on with maximum mismanagement by all parties until November 1918. It destroyed the remains of 19th-century European society and wouldn’t really be settled until the end of World War II, when the western allies and the Soviet Union finally smashed the resurgent monster Germany had become in the wake of the 1918 Armistice and established a new Europe amid the ruins.

World War I may have been inconclusive, but its cost was staggering. All told, the 16 nations that ultimately ended up fighting spent the equivalent of some $3,000 trillion (in inflation-adjusted dollars) on the war. They mobilized 65 million troops, 12 percent of whom were killed and another 33 percent wounded.

The Austro-Hungarian Empire collapsed and was replaced by some half-a-dozen ethnically based nations, most of which were overrun by Germany in World War II and later became puppet states of the Soviet Union.

The people of Europe, having borne the brunt of the suffering, lost all confidence in the so-called “ideals of western civilization” they had taken for granted before 1914. They also lost faith in their governments, which they were convinced had persistently lied to them, protected their elites at the cost of everyone else and squandered millions of lives by mismanaging the war.

Virtually everyone, victor and vanquished alike, was left bankrupt and owing more money to the United States (which sat out most of the war and became the world’s leading creditor nation) than they could ever possibly repay.

It was quite a scorecard for a war that settled virtually nothing.

originally published: August 9, 2014

The slide of the ‘average’

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Much more has been written than read about the divisive subject of income and wealth inequality in America over the last decade. It is the reading equivalent of a dance marathon, painting a gloomy picture of American society. If we are to address it successfully, we must start by enacting policies that recognize the importance of the middle class rather than simply relying on the invisible hand of the free market.

Earlier this year, the number one book on the Amazon bestseller list was “Capital in the Twenty-First Century” by French economist Thomas Piketty. Its central message is a call for wealth redistribution to reduce inequality, an approach that has never been popular in America, a country where economic growth comes first and distribution last.

Despite President Obama’s repeated statements that inequality is the “defining challenge of our time,” things continue to slide for the average American. For those living close to the ground, inequality is alive and well in America.

While there is disagreement about how to measure inequality, most studies focus on income, wages and wealth. For example, the bottom quarter of American households have seen almost no increase in real income for the last 25 years.

The top one percent of Americans, however, seems to be getting on quite well. They have seen their real incomes almost triple during the same period. Their share of national income has reached 20 percent and they own nearly 35 percent of the country’s wealth, figures not seen since the Roaring Twenties. The rich are running up the score.

As few as 16,000 families have a combined wealth equal to 5 percent of America’s gross domestic product, a level of concentration reminiscent of business monopolies. There’s also the legitimate concern that as the economic power of the richest one percent increases, their political power increases with it and they shape the rules governing our economy and society. Can you imagine this group raising taxes on themselves to finance new investments in education, job retraining and infrastructure that are routinely suggested as solutions to the inequality problem.

Americans are witnessing the Matthew effect. To paraphrase Matthew 25:29 in the King James version of the bible: “that to those who have, more will be given, while to those who have less, even that will be taken away.” Or in popular parlance, the rich get richer and the poor get poorer.

This widening gap between the rich and the poor brings with it all kinds of bad implications. Rising income and wealth inequality and the lack of opportunity to move up the income ladder threaten the nation’s economic growth and fundamental values; the middle class is growing thinner and thinner.

A strict free-market capitalist, the economic equivalent of a religious fundamentalist, argues that because inequality puts more resources into the hands of capitalists, it promotes savings and investment that in tum generate economic growth and increase the size of the economic pie. Just lower taxes on rich folks, cut the federal deficit, and deregulate and they will invest in the economy, creating millions of new jobs and lifting the unemployed out of poverty. This holds a grain of truth, but just.

While the issue of what is to be done about economic inequality is not one that lends itself to easy answers, especially in our politically polarized environment, we must start with policies that recognize the important role the middle class plays in driving economic growth.

originally published: July 19, 2014

Corporations, integrity and dead customers

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These days, saying that no one much likes captains of industry is to exaggerate very little. It is as American as pizza, unwed mothers, cheating on your taxes and hating the Yankees.

But the actions of one corporate titan more than 30 years ago stand out from the crowd and prove that it doesn’t need to be that way.

On Sept. 29, 1982, Johnson & Johnson executives learned that seven people from the Chicago-area died after swallowing Tylenol capsules laced with cyanide. Nothing of this sort had ever happened in the industry.

That summer, J&J’s Tylenol pain medication was by far the country’s leading analgesic with a 35 percent market share. The brand seemed unstoppable, until the unimaginable happened.

J&J’s handling of the crisis was a textbook example of doing the right thing and putting the customer first. The firm took immediate steps to recall and destroy the 31 million bottles on American shelves and it developed the first tamper-resistant packaging. The moves cost over $100 million, and that doesn’t include the effects of plummeting sales in the wake of the recall.

But the firm was ultimately rewarded for putting customer safety first. A year later, Tylenol was once again the nation’s top-selling analgesic. After two years. Tylenol was back to capturing 33 percent of the analgesic market.

Acting to protect customers in the earliest stages of the crisis was consistent with the first stanza of J&J’s corporate statement of purpose: “We believe that our first responsibility is to the doctors, nurses , and patients , to mothers and all others who use our products and services.” Senior managers understood that you protect the brand by protecting the customer. If you put the customer first, employees, stockholders and other stakeholders all do better in the long run; it’s about customer trust.

General Motors is the latest example of bad corporate behavior. We recently learned that GM waited over a decade to recall 1.6 million compact cars with faulty ignition switches that contributed to more than a dozen deaths across the country. When they finally did act, it was by sending technical service bulletins to dealers instead of immediately recalling cars. GM’s current CEO Mary Barra called the firm’s slow response an “extraordinary” situation and said she didn’t know why it took so long to fix the ignition.

To make matters worse, this comes just five years after the federal government became the de facto owner of General Motors when it invested more than $100 billion in taxpayer money to bail out the troubled automaker. The feds of course swear on a stack of bibles that the bailout was a rousing success, resulting in more than a million jobs being saved and GM again becoming the number one automaker in the world.

Barra must have felt something go dead inside her as she realized she was saying so little and saying it so late. After all, this is the new GM, a far different company today than before bankruptcy. We know this because GM keeps telling us, even though there’s no evidence to back it up. One can only assume if they say it often enough, it will be true.

GM remains unwilling to admit the company made mistakes. The automaker recently filed a motion asking a federal bankruptcy court to enforce a provision that shields the “new GM” from liability for incidents that took place before it emerged from its whirlwind Chapter 11 bankruptcy in July 2009.

GM could have learned a thing or two from J&J, whose response to the 1982 Tylenol poisonings did justice to the company’s stakeholders. Though the person or persons responsible for tampering with the pills has never been found, J&J’s reputation wasn’t lost.

It is not surprising that in the weeks and months following the crisis, J&J was praised in the court of public opinion for demonstrating that doing the right thing matters and that making the customer the first priority is good business. It’s a lesson GM’s top executives never learned.

originally published: May 10, 2014

‘Too big to fail’ GM already has

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General Motors waited more than a decade to recall 1.6 million defective Chevy Cobalts, Saturns and Pontiac G-Ss with faulty ignition switches that could cut off engine power and electrical systems, disabling the air bag and leaving occupants vulnerable to serious injury. Thus far, the defect has been linked to 13 deaths.

GM’s corporate delinquency and callous disregard for persistent quality control problems are so disturbing that many find it difficult to reconcile them with company leaders’ constant claims that the company has a different organizational culture than the one that was in place when these lapses occurred. GM has reinvented itself, the story goes, and now builds the safest and best cars in the world.

The coming months will tell us a lot about whether those claims are just talking points or if new CEO Mary T. Barra, a 33-year veteran of the company, has truly transformed GM.

Last month Barra told a congressional hearing about the overhaul of GM’s corporate culture. These days, “creating a new culture” is one of the phrases CEOs need to wield to make their way in corporate America. The new CEO is going to push middle management and old timers to think and act differently, shedding its hidebound culture and putting the customer first.

After dominating the U.S. car market for most of the 20th century, the glory days of GM and the American auto industry began to unravel in the early 1970s. GM, for example, had a majority of the U.S. market in 1962 and was the undisputed leader in global car sales between 1931 and 2008. By 2009, this great American icon’s market share had fallen to less than 20 percent.

One reason GM and other American automakers lost their way is because senior management built strategies around the flawed assumptions that oil would be readily available and cheap, and American drivers would continue to buy large vehicles. Given their inflated cost structures, these were the only vehicles American car manufacturers could sell at a profit. On average, GM spent about $1,600 per car more than their foreign counterparts on pension, health, life insurance and other worker and retiree benefits.

The 2008 financial crisis hit the industry hard. U.S. auto sales declined by 18 percent from 16.1 million units in 2007 to 13.2 million units in 2008. Meanwhile, the price of a gallon of gas rose to over $4 in the summer of2008, up from about $2 in 2005. In 2009, the credit crisis, coupled with an already-declining market share, redundant product offerings, huge legacy costs and customer perceptions of poor quality pushed GM into bankruptcy court protection.

By handing GM close to $58 billion under the Troubled Asset Relief Program, the feds became the company’s de facto owner. Washington provided additional help by waiving the payment of $45.4  billion in taxes on future company profits, offering a $7,500 tax credit to consumers who bought the Chevy Volt, the Cash for Clunkers program, and an exemption from product liability on cars sold before the bailout.

In November 2010, GM returned to private ownership by launching a successful initial public offering.

But just as people have distinct personalities, so too do organizations. Transformation takes time.  Culture is the product of the firm’s organizational structure, the system used to reward senior management and motivate and shape employee behavior. Old loyalties, behaviors and identities are hard to change. They produce a massive amount of inertia which has to be overcome.

Does Mary Barra’s long tenure at GM doom her to repeat past strategies and traditions such as the slow response to safety issues? Can a company lifer drive the kind of major change Ford saw after it recruited Alan Mulally from Boeing in 2006 and he pulled the company back from the brink of collapse just two years later?

General Motors again faces the risk of years of costly litigation and a significant loss of brand equity and market share. Hey, no problem. GM is too big to fail.

originally published: May 3, 2014

How an immigrant helped save an American ideal

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At 5:12 on the morning of Wednesday, April 18,  1906, San Francisco was struck by a severe earthquake estimated at 7.8 on the Richter scale. The San Francisco quake devastated a great many of the city’s buildings and generated fires that burned for four days.

By the time the fires were out, more than 80 percent of the city’s built-up area had been destroyed, more than 3,000 people lay dead and half of the city’s 400,000 residents were homeless. It was a catastrophe equal (in relative terms) to the five B-29 fire raids in 1945 that destroyed Tokyo, which had been the world’s third largest city.

As a result, the West Coast’s most important ocean shipping port and commercial center ceased to function. Or so it seemed.

But while the fires were still burning, Amadeo P. Giannini was aggressively seeking out his Bank of Italy’s small-business customers whose firms had been wiped out by the disaster, even though his bank’s storefront headquarters in the city’s North Beach section had also been devastated by the quake and fire. Giannini is surely one of the nation’s capitalist heroes, whose influence on the take charge actions by New York City’s J.P. Morgan during the Panic of 1907, is greater than most people realize. Yet his  name is largely unknown to most Americans.

Working from a salvaged plank placed across two barrels in the middle of a North Beach street,  Giannini helped each of his customers estimate how much it would cost to restart his business. He noted the amounts next to each business owner’s name in his black pocket notebook and told each one that the Bank of Italy was granting him a loan for the full amount, which he could begin drawing on the next morning.

Giannini’s gutsy entrepreneurial actions (which soon extended to small-business owners who had not previously  been Bank of ltaly customers) effectively shamed the leaders of San Francisco’s larger and more aristocratic banks to cease their paralyzed hand-wringing and get to work making increasing numbers of new loans to their own business customers.

The result was a massive expansion in San Francisco’s money supply. This free-flowing liquidity fueled a burst of new business activity. San Francisco’s homeless were hired to clear away the debris and virtually non-stop construction began on new buildings to house the city’s people and businesses.

By the opening of San Francisco’s Panama-Pacific International Exhibition (and world’s fair) in 1915, the city had been rebuilt and few signs remained of the 1906 disaster.

San Francisco’s quick-march reconstruction shows what intelligent management of a society’s money supply can accomplish when the chips are really down. Especially under the leadership of a savvy banker like that son of Italian immigrants who wasn’t afraid to roll his sleeves up and get to work and whose Bank of Italy grew into the modern giant (and recent recipient of a federal bailout) Bank of America.

Books on the history of organized crime often go out of their way to remind readers that the ultimate mental befuddlement of people like Chicago’s AI Capone and New Jersey’s Willie Moretti can be attributed to syphilis, a classic symbol of southern Europeans’ moral weakness and presumed inability to control their sexual desire. We can be forgiven for wondering if their mental deteriorations would be attributed, more politely, to Alzheimer’s disease or senile dementia had they not been of ltalian descent.

As a nation, we continue to be imprisoned by foolish myths and enchantment tales about immigrants,” “foreigners,” and others, like Giannini, who lack the names and physical features of “good Americans.” In the process, we rob ourselves of their talents and drive, which we desperately need and which inevitably costs us -big time.

originally published: April 5, 2014

Balancing technology with need

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Back in 1954, when Elia Kazan celebrated the tradition-bound world of intercontinental goods movement in his Oscar-winning film “On the Waterfront,” few could have imagined that the world he depicted was on the verge of becoming as obsolete as the Marlon Brando character’s career. Today, surface transportation is in a similar place, thanks to an explosion of new technologies.

Two years after “On the Waterfront,” an entrepreneurial trucking magnate named Malcom McLean first arranged to pack hundreds of individual crates of goods into a few large steel containers that could quickly and efficiently be transferred by mechanical cranes between ocean-going ships and land-based trailer trucks without disturbing their contents. It was quite a change from the age-old tradition of having large crews of dockworkers slowly move each crate by hand from shops to trucks and vice versa.

This marked the birth of what we now call “containerization.” By slashing the costs of moving goods, it made possible the huge growth in global trade. Today, a person in Kansas City can buy consumer goods mass-produced in China for a fraction of what his or her grandparents paid. In the process, containerization totally transformed the infrastructure and operations of the shipping and port industries. It also accelerated global competition and technological change.

The same forces that allow American families to buy cheap goods make them fearful that their jobs will be eliminated by technology or performed more cheaply by armies of high-skilled, low-cost foreign workers. Consumers benefit from the low-cost products and services global competition provides, but that same competition may reduce both wages and buying power.

Containerization was conceived and developed by a visionary outsider who imposed it on reluctant ocean-shipping and port-operating firms that would have much preferred to keep doing the same old things in the same old ways. In other words, it became part of the external environment within which those tradition-bound industries had to function. They were forced to understand its implications for their businesses. We must do the same when it comes to the external environment within which transportation functions.

Surface transportation is awash with new technology that is transforming it just as containerization transformed ocean shipping and port operations. We already have technologies for collecting tolls without requiring motorists to slow down, for measuring the average speeds and densities of traffic flows on roadway lanes at any given moment, and for pinpointing the location of buses and other public transportation vehicles.

Just over the horizon are technologies that have the potential to make transportation much safer, more efficient and friendlier to the environment by providing instant communication between roadway operators and motor vehicles about bottlenecks; alternate routes; preventing accidents; minimizing deaths, injuries and collateral damage in accidents that can’t be avoided; and monitoring the contents of containers moving by road, rail and air without disrupting traffic flows.

But these new technologies will be as much a curse as a blessing unless we learn how to properly manage their transfer from the laboratory to the marketplace.

For example, we face the prospect of having to evaluate the pros and cons of implementing tolls on limited-access highways, and of entering into agreements with private firms to operate such highways. But how can we realistically do this if we don’t understand what the long-term impact of new technologies will be on these highways?

And let’s not forget that the design of any technological innovations must be customer-driven, not provider-driven- a fact that is so obvious, but so often overlooked.

Technology is as much a part of our lives today as eating and breathing. But in transportation as well as other areas, we need as much information as possible about what new technologies are, how they work, what they can do and what problems they pose so we can use it in devising policies that spur job creation, increase competitiveness and cushion the economic pain to workers by minimizing dislocation.

originally published: January 11, 2014

 

 

Extreme wealth inequality threatens the nation

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One of the salient characteristics of the last 20 years has been the unprecedented growth in income and wealth inequality, and the extent to which both have flowed to the proverbial1-percenters.

Market capitalism has generated enormous wealth, but the distribution of the spoils of capitalism has gone awry. While there are many ways to measure inequality, consider that in today’ s Gilded Age, the wealthiest 1 percent of American households enjoy a higher total net worth than the bottom 90 percent and the top 1 percent of income earners receive more pretax income than the entire bottom half.

Since 1979, 36 percent of all after-tax gains went to the 1-percenters; over 20 percent of those gains went to the top one-tenth of 1 percent of the income distribution.

The increasingly unequal distribution of income and wealth threatens not only the social fabric of American society but the economy as well. The mega-rich cannot spend enough to offset the lost demand that results from a shrinking middle class, which slows economic growth.

Growing inequality is making a lie of the American promise that this is a country where if you work hard, you can make it into the middle class. We are witnessing the hollowing out of the middle class; it is being mothballed like an old Navy ship. The last time that income inequality in the land of plenty was as profound as it is now was immediately before the 1929 stock market crash.

Right now, more than 8.4 million Americans are collecting either state or federal unemployment benefits and one out of every seven depend on food stamps, the highest share of the population ever to do so. A shrinking few claim a disproportionate share of the nation’s wealth at the expense of everyone else.

If we could identify a single culprit to blame for this mess, it would make for a good television drama. But the story of rising income inequality is more complex. None of the major explanations are exhaustive or definitive, and making sense of them is no easy task.

Some blame globalization, a process of closer integration between different countries and peoples made possible by falling trade and investment barriers, tremendous advances in telecommunications and  drastic reductions in transportation costs that have forced American workers to compete against the huge supply of low-cost labor in the developing world and contributed to the declining influence of labor unwns.

Others point to new labor-replacing technologies that threaten both unskilled and skilled workers, while they increase demand for a select few with highly specialized skills. They argue that American public education does not provide children with the advanced skills they need to compete in this new world.

Stated differently, the pace of technological advance has outstripped the educational system’s ability to supply students with the skills they need to utilize this technology, leading to outsized earnings gains for those who have such skill. This is the so-called college wage premium.

Over the past few decades, people in developed economies who were educated enough to take advantage of the technological advances won higher wages. Others got left behind.

Finally, there are those who contend that immigration policy worsens inequality. The mass influx of low-wage workers probably reduces global inequality at the same time it increases inequality within America by reducing the wages of hard-working, semi-skilled Americans.

Many pundits contend that we can reverse the deterioration of the middle class with a series of policies such as revising the tax code, making free trade fair, investing in America’s infrastructure, rethinking training and education and strengthening labor unions.

Perhaps America can deal finally with the divisive issue of inequality after having spent decades ignoring it, but hope is not a strategy. The only thing we can be certain of is that there are no quick fixes or easy solutions, and the longer it takes to address the problem, the more painful the cure will be.

originally published: November 30, 2013

The offshoring of the American Dream

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By all accounts, Americans continue to experience the worst economy since the Great Depression. Unemployment remains unacceptably high, many of the jobs that produce real income have been offshored and the middle-class earnings are stagnant. Looking ahead, it’s likely to get worse before it gets better.

Yet corporate profits are doing just fine, thank you. Today they make up about 12.5 percent of  America’s gross domestic product. Just two years ago, they reached their largest percentage of GDP since the 1950s. On the other hand, wages and salaries, which accounted for 47 percent of GDP in 1985, are currently at around 42 percent.

Among the reasons for the combination of lower wages and high corporate profits in a weak economy is that American firms have discovered the advantages of exporting manufacturing and service jobs to countries with an abundance of productive, low-wage workers. Firms substitute cheap foreign labor for American workers. All the while, those Americans are told that offshoring is part of free trade and globalization.

Early offshoring was focused on manufacturing, but in recent years, U.S. firms have taken advantage of modem communication technology to outsource service activities. This trend cuts across all industries and occupations, ranging from lower-skilled manufacturing jobs to those requiring more skill and education, including those in the information technology sector. Put bluntly, they are exporting jobs to countries where wage rates are low, causing higher unemployment and lower living standards in the U.S.

Cheerleaders for offshoring argue that the money companies save will, in the long term, create new and better domestic jobs. These jobs must be disguised in the employment statistics; very well disguised, indeed. Moreover, they argue that when firms save money, consumers benefit from lower prices. So while free trade causes some dislocation, the benefits outweigh the costs. This pitch has become a totem of belief among free-trade advocates but it’s cold comfort for those whose jobs have been exported.

It was reported last month that IBM now employs more people in India than it does in the U.S. Its Indian workforce has grown from 3,000 in 2002 to about 112,000 last year. The reason is simple: The cost of labor in India is only a fraction of what it costs to employ the equivalent workers in the U.S. The average annual salary for an IBM employee in India is $17,000 compared with $100,000 for a senior American IT specialist.

Given such wage differentials, it’s not surprising that we are now witnessing the great migration of white-collar American service jobs. While India is the largest destination, the jobs have also gone to Eastern Europe, the Philippines, China and Mexico.

The offshoring of jobs may be one of the underlying reasons why Great Recession job losses look quite different from those of past recessions. American unemployment is becoming structural rather than cyclical and may worsen over time no matter how much public stimulus is provided.

So we have finally figured out how to make income redistribution happen on a global scale: American workers have to be less rich so their overseas counterparts can be less poor. Offshoring increases income levels in developing countries and the theory is that with greater wealth, those people will be able to demand and receive better treatment. The question is whether these interests should outweigh the interests of American workers.

Maybe jobs will return when American wages are as low as those of our foreign competitors and corporations decide to come home to exploit cheap labor. But it seems they first have to impoverish domestic workers so those workers can become rich again in the future.

originally published: November 6, 2013

America’s so-called Golden Age

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Visit any bookstore and your eyes are assaulted by scores of books explaining the meltdown that plunged America into a major economic crisis, and prescribing what must be done to return to the glory days from the end of World War II through the early-1970s, when the United States enjoyed the greatest boom in modem history.

The economy grew at an annual rate of over 3 percent, and the median family income almost doubled. But the circumstances that produced that growth were an historical aberration.

World War II destroyed the industrial capacity of the main belligerents. It was not fought on American soil, however. Here, the war ended the Depression and put everyone back to work.

It also produced wartime savings that helped fuel the boom when those savings turned into post-war consumer spending. For example, the automobile industry exploded after years of producing military hardware, and new industries such as aviation and electronics grew by leaps and bounds. At the same time, the post-war “baby boom” increased the number of consumers, and more Americans joined the middle class.

A number of programs were enacted that also contributed to the economic boom and enabled American business to exploit the lack of global competition. These would include:

The GI Bill: This gave millions of veterans the opportunity to enjoy middle-class living standards thanks to things like free college educations, the ability to buy their own homes with low-cost mortgages, and capital to start businesses. This expanding American middle class created an ever-growing market for consumer products and provided businesses with trained managers and professionals.

The Marshall Plan: Over five years during the late 1940s, the federal government invested nearly $13 billion to rebuild the devastated economies of Europe and Asia. This was a deliberate Cold War strategy aimed at strengthening the economies of the non-communist world and binding them to the U.S. It is a form of vendor financing that the Chinese have successfully copied.

The Federal Government/Fortune 500 Compact: During the late 1940s and 1950s, the federal government effectively subsidized corporate America with tax benefits, lucrative defense contracts, and various kinds of market protection. In return, Fortune 500 companies diverted some profits from shareholders to employees by giving them steadily rising purchasing power, free medical coverage, generous pensions, and other welfare benefits that Europe depended on government to provide. In the immediate post-war era, the view was that corporations had responsibilities to employees and the local and national community as well as to shareholders.

Things began to change when the oil crises of the 1970s hit.

By the late 1960s, our allies’ economies had recovered from World War II. Initially, those countries’ exports only penetrated low-end industries, giving us foreign goods on the cheap while leaving our high­ value industrial sectors unharmed. But intensifying global competition brought excess capacity and reduced profit margins. Steadily rising real wages gave way to a business model focused on  “maximizing shareholder value ,”under which firms were run solely to serve their owners’ interests.

A confluence of circumstances allowed the United States economy to emerge from World War II with no real global competition. Those circumstances, which resulted in decades of prosperity, were not sustainable. As they fell away, so did assurances that each generation of Americans would enjoy a better standard of living than the one that preceded it.

originally published: July 20, 2013

The salacious relationship between a man and his gun

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In April, a series of gun control bills, including bipartisan legislation designed to expand background checks, were euthanized in the U.S. Senate after each failed to receive the 60-vote supermajority needed to pass. The votes by the world’s greatest deliberative body were a body blow to the campaign to pass legislation to curb gun violence.

Maybe it’s time to admit what the gun debate is really all about, even though it’s a topic not discussed in polite society.

The gun control bills would have banned the sale of certain military-style assault weapons, outlawed high-capacity magazines and expanded criminal background checks on gun buyers. This latter provision is supported by 91 percent of Americans, according to a Gallup poll.

Guns are pervasive in America. The FBI estimates that about 60 million Americans own over 300 million guns and the number is climbing. More than ever, guns are in. There is practically a gun for every man, woman, and child in the country.

Nearly all of the mass shootings in recent years- Aurora, Tucson, Columbine and most recently Newtown, Conn., where a one-man army tragically abbreviated the lives of 20 children, were committed by deranged white males. These bloodbaths, which could happen again any day, were not sufficient to make firearm possession more difficult or even enforce existing laws more faithfully. In the end, they have changed nothing.

The subjects of guns and violence always elicit emotional responses from gun haters and gun lovers and generate heated debates among well-meaning people for whom democracy is a burning faith rather than a belief based on reason. The main arguments are stale by now.

Let’s get beyond what philosophers call the “habit of abbreviated thinking.” What is the fight over guns really about? Maybe it is time to consider the association between firearms and phallic (Freudian) symbolism.

Back in the late 1960s, Mad magazine did a hilarious article based on the idea of combining a gun magazine with a hot romance magazine. The result was called “Passionate Gun Love.” One of the articles was titled “Field-Stripping the M-1 Rifle.” The content and writing style is left to your imagination.

The point, of course, was to emphasize the enormous amount of aggressive sexual sublimation there is in the emotional involvement with firearms of the average American gun enthusiast, which only seems to have become more intense over the years and rules the psyche in an effort to overcome a sense of lost virility or “shooting blanks.” Yes, sublimation between guns and sex, more phallic symbolism.

Some gun owners do seem to get a little too much fun out of fondling and firing guns. Obviously inanimate objects such as the business end of a long-barreled assault weapon have agency that may compensate for just average manhood. And when you have something that large, you are right to be concerned that the government may want to nationalize it.

Does this suggest that the only feasible way to pass serious gun control legislation is to first pass legislation fully legalizing every variety of sexual activity involving consenting adults and rebrand guns as sex toys as well as intellectual companions? Call this Freudian psychobabble if you want. But American men – and the legislators who represent them – are proving that Freud was right.

originally published: June 29. 2013