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Red vs. Blue: Do Democrats subsidize Republicans?
07:02 pm

Class War



This is a guest editorial from Dangerous Minds reader Em, expanding on some pointed commentary he’s made elsewhere on this blog. Em—who’ll keep his last name to himself, thank you very much—works in the financial industry:

I guess in every country you can find large numbers of people that truly believe something that just isn’t true. The US is special, however, in that we seem quite capable of believing things that are not only directly contrary to the truth, but that would actually result in the self-destruction of the very proponents of those ideas if they were allowed to completely run amok in our social, economic or political policies. Worse than this, the proponents of those same self-destructive policies will often demonize those that oppose them, applying a host of labels that they often successfully get to “stick” with surprising tenacity. Thus, people concerned with global warming are “liberals,” those proposing that a public health option should be made available are “socialists,” and those wanting a better break for the unions are often just labeled out-and-out communists. Sometimes, the vitriol and rhetoric are just so damned ignorant and self-defeating that you are tempted to turn tail and head back to the UK or elsewhere in Europe where things may not be perfect… but at least they are on average rational.

Of all of the issues out there that have gotten turned around and completely distorted, there’s one issue that, the more you look at the numbers and the facts, the more quickly you’ll move from angry laughter through bitter rage and then into sheer seething disgust. In a nutshell, that issue is the impact that the unions have had on federal taxes and which states are net receivers of federal tax money, and which are net donators. Playing with some numbers, I stumbled upon a fact that I suppose some economist out there somewhere must know, but that I’ve never seen mentioned. It is in my mind, at least, shocking, but before I go there let me remind us of a few basics, hum?

One interesting fact that some people are aware of is that the Red States (ie, those that tend to vote Republican) are almost invariably debtor states or (as I like to call them) hobo states, in that they take more federal funds than they deliver in taxes each year. You know the states –Georgia, North and South Carolina, Virginia, Tennessee, New Mexico, Arizona and so on. These are the states always looking for (and getting!) a handout and yet where citizens are famous for declaring themselves “proud” and “self-reliant.” Conversely, the Blue or donor states (New York, California, Massachusetts, Illinois, Wisconsin, Minnesota, Oregon and so on), these are the states that pay more in taxes to the federal government that they receive. These states tend to vote Democrat in presidential elections.

On the surface, of course, it certainly looks like the Red States vote Republican in order to pump tax money out of the Blue States into the hobo states’ hungry coffers. That much has been commented on by many and analyzed in fascinating detail by sources such as this one.

But I got to asking myself: What precisely, is the real source of wealth in the Blue States? Why is it that these states have so much extra cash that they can afford to be net donators of federal money to the Red States? And why are the Red States invariably in need of a handout? One could, of course, do some complex analysis around the concentration of big industries in certain areas, or perhaps look at per capita wealth concentration and then try to piece together some larger picture out of countless details. A bigass computer simulation wouldn’t seem inappropriate in this context.

Or it could be something far simpler than that. Anyone who has read my pieces on Dangerous Minds will know that I’ve been ranting about how the middle class is actually the engine of job creation and that one critical means by which the middle class has in effect been “capitalized” is through the unions and union wages. Looking across the pond, it’s no mistake that some of the most highly unionized countries in the world (Germany and Sweden) were in effect able to fund the bailout of the near-collapse of the EU. In other words, in countries like Germany and Sweden the middle class actually have money, and this disposable income in the hands of the many has a multiplicative effect on wealth creation.

So the question becomes: Is it true here in the US? In other words, could it possibly be that the main reason the donor/Blue States have extra cash with which to provide the Hobo/Red States with what is in effect a perpetual bailout is that the Blue States are more heavily unionized? At this point, the answer shouldn’t come as a surprise, but what did come as a surprise to me at least, was just how extreme the differences are. Consider the following table I generated showing the top 11 states in descending order of union membership matched with their federal tax outlay ratio. In other words, New York State is the most highly unionized state in the lower 48, followed by Washington and California and so on.

See that column on the right? That’s the ratio of federal tax dollars received to those paid. In other words, for every dollar of Federal taxes paid by residents of New York, they receive a mere 79 cents. What is hilarious is that the top 11 most-Unionized states happen to be the states that receive the least in Federal tax benefit compared to what they pay. In other words, the union states are the wealthy donor states. That these states have a surplus is obviously due to the increased wages of the unionized themselves, but also because of all the additional spending driven by disposable income. Perhaps more importantly, new jobs will be created in the donor states as some union employees attempt to strike out on their own and become suppliers to the industries in which they were employed.

How about at the bottom? You got it. Here’s a table of the least unionized states in the US, with their corresponding federal tax ratio:

With the notable (though marginal) exception of Texas, 10 of the 11 least unionized states in the lower 48 happen to be those that eat the most in federal tax money compared to what they pay.  Is this surprising? Maybe. But if you’ve paid any attention to all of the anti-Union rhetoric that has always flown around, then you will not only be surprised but disgusted. Some of these hobo states are precisely the ones that have launched persistent, long-term attacks on their unions.

More than the rhetoric, though, are the implications. The right has always proclaimed that unions kill wealth by pulling capital out of the hands of the wealthy, who have some innate and God-given talent to create more wealth and jobs. But what we see here is precisely the opposite: By pulling wealth out of the middle classes that they receive in the form of union wages, the rich inhabitants of those Hobo states have by no means made up the tax difference. In fact, they have converted their state into a hobo state, that the working unionized people in the Blue States must be taxed to support. Put in another way, every time a union is disbanded or disempowered in one of the hobo states, those of us living in the Blue States must in effect shell out more in order to cover their increasing tax gap.

At this juncture it may be worth comparing union membership to the other method of redistributing wealth: Taxation schemes. While in the short run increasing taxes on the wealthy will almost certainly be necessary in order to make a dent in the huge national deficit, what this analysis points to is that the real, “private” method of income redistribution is through the unions, where there is no Federal middleman. In other words, if we consider middle class capitalization as a necessary prerequisite for wealth creation, then the “left wing” method would be through taxation, but the right should consider union membership as the “private” non-governmental solution to the same problem.

An easy solution, therefore, presents itself: Examining the data across all 48 states, we can fairly easily assert that the breakeven level of union membership in a state (ie, for them to convert from a hobo state to a donor state) is somewhere between 10% to 15% of union membership. So how about this: Let’s push for a law that prohibits net Federal money from flowing into states with anything less than 10% union membership. Problem solved. Any state with union membership lower than this level is welcome to keep their federal tax proceeds but no more blue state money will be poured into their bottomless troughs.

The notable exceptions to this analysis are, of course, Alaska and Hawaii, both with high levels of union membership (with 23 and 22 percent union membership respectively). The additional costs associated with geographically remote and/or vast stretches of unpopulated territory are high enough that even high levels of union membership don’t push them into the black. But as long as they remain states of the US, it will probably be necessary to pump in federal funds, though care should be taken to encourage high levels of union participation less the drain on federal money becomes far greater than it is today.

So if federal money is generated directly or indirectly by the unions in the donor states, what form does the aid take as it goes into the hobo states? Ah, that’s a question better answered elsewhere, but the answer is fairly easy to guess. I’ll give you two hints, though: Hint number one is ‘Afghanistan’, and hint number two is ‘Iraq’.

About the author: Em was a founding member (with John Cale and others) of the New York punk band Doppler Effect in the early 1980s. After living in China in the late 80s, Em worked in the physics and electrical engineering space until 2002, at which time he moved into the financial world. In July, Em returned to the US after having lived in London since 2006 and is a member of the UMOUR art/event collective. He blogs at The Magic Lantern, his"litterbox of the soul.”

Previously on Dangerous Minds:
Occupy Wall Street: A Banker Explains What Really Happened to America

Mad Max in America: Our Republican Future?

Posted by Richard Metzger | Leave a comment
‘Pure Hatred’: Lawrence O’Donnell’s epic take-down of Rush Limbaugh

Imagine a version of It’s A Wonderful Life, but it’s about Rush Limbaugh. Quite a pathetic thought isn’t it? Still, nothing would make me pity him. When Rush Limbaugh finally has a heart attack and keels over and dies, the world will be a better place without him.

Rush Limbaugh has gotten away with so much shit in his career that it’s a real pleasure to see him so thoroughly pissed on by Lawrence O’Donnell in the following clip. It’s about time people stood up to this bully and really let him have it. Repeatedly. What does Rush Limbaugh bring to the party except poison? Good for O’Donnell, he’s a terrific moral compass for this country right now.

I look forward to the next installment of this one!

Visit for breaking news, world news, and news about the economy

Posted by Richard Metzger | Leave a comment
Burn Wall Street, burn!

A “Beat Kidz” reporter (from Wonder Showzen) attempts to get to the bottom of this whole Wall Street exploitation thing... and succeeds better than a barrel of Steeve Doocys!

“When did you sell your conscience? You can’t run away from a child! Your money doesn’t make you better than me!”


Thank you Chris Campion of Berlin, Germany!/Via PFFR

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General Strike in Oakland tomorrow


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Breaking Bad’s Walter White: I am the 99%
03:26 pm

Class War
Current Events


(via BuzzFeed )

Posted by Tara McGinley | Leave a comment
Noam Chomsky: Occupy The Future

In These Times published an essay adapted from Noam Chomsky’s talk at Occupy Boston on Oct. 22. Chomsky’s speech was part of the Howard Zinn Memorial Lecture Series sponsored by the encampment. It’s a must read:

Delivering a Howard Zinn lecture is a bittersweet experience for me. I regret that he’s not here to take part in and invigorate a movement that would have been the dream of his life. Indeed, he laid a lot of the groundwork for it.

If the bonds and associations being established in these remarkable events can be sustained through a long, hard period ahead, victories don’t come quickly, the Occupy protests could mark a significant moment in American history.

I’ve never seen anything quite like the Occupy movement in scale and character, here and worldwide. The Occupy outposts are trying to create cooperative communities that just might be the basis for the kinds of lasting organizations necessary to overcome the barriers ahead and the backlash that’s already coming.

That the Occupy movement is unprecedented seems appropriate because this is an unprecedented era, not just at this moment but since the 1970s.

The 1970s marked a turning point for the United States. Since the country began, it had been a developing society, not always in very pretty ways, but with general progress toward industrialization and wealth.

Even in dark times, the expectation was that the progress would continue. I’m just old enough to remember the Great Depression. By the mid-1930s, even though the situation was objectively much harsher than today, the spirit was quite different.

A militant labor movement was organizing, the CIO (Congress of Industrial Organizations) and others, and workers were staging sit-down strikes, just one step from taking over the factories and running them themselves.

Under popular pressure, New Deal legislation was passed. The prevailing sense was that we would get out of the hard times.

Now there’s a sense of hopelessness, sometimes despair. This is quite new in our history. During the 1930s, working people could anticipate that the jobs would come back. Today, if you’re a worker in manufacturing, with unemployment practically at Depression levels, you know that those jobs may be gone forever if current policies persist.

That change in the American outlook has evolved since the 1970s. In a reversal, several centuries of industrialization turned to de-industrialization. Of course manufacturing continued, but overseas, very profitable, though harmful to the workforce.

The economy shifted to financialization. Financial institutions expanded enormously. A vicious cycle between finance and politics accelerated. Increasingly, wealth concentrated in the financial sector. Politicians, faced with the rising cost of campaigns, were driven ever deeper into the pockets of wealthy backers.

And the politicians rewarded them with policies favorable to Wall Street: deregulation, tax changes, relaxation of rules of corporate governance, which intensified the vicious cycle. Collapse was inevitable. In 2008, the government once again came to the rescue of Wall Street firms presumably too big to fail, with leaders too big to jail.

Today, for the one-tenth of 1 percent of the population who benefited most from these decades of greed and deceit, everything is fine.

In 2005, Citigroup, which, by the way, has repeatedly been saved by government bailouts, saw the wealthy as a growth opportunity. The bank released a brochure for investors that urged them to put their money into something called the Plutonomy Index, which identified stocks in companies that cater to the luxury market.

“The world is dividing into two blocs, the plutonomy and the rest,” Citigroup summarized. “The U.S., U.K. and Canada are the key plutonomies, economies powered by the wealthy.”

As for the non-rich, they’re sometimes called the precariat, people who live a precarious existence at the periphery of society. The “periphery” however, has become a substantial proportion of the population in the U.S. and elsewhere.

So we have the plutonomy and the precariat: the 1 percent and the 99 percent, as Occupy sees it, not literal numbers, but the right picture.

The historic reversal in people’s confidence about the future is a reflection of tendencies that could become irreversible. The Occupy protests are the first major popular reaction that could change the dynamic.

Continue reading Chomsky’s analysis of the international arena at In These Times

Part II and Part III of Noam Chomsky at Occupy Boston

Posted by Richard Metzger | Leave a comment
Undercover cops outed at Occupy Oakland

Ouch. I’m curious if these guys were in uniform or not when the rock throwing started, aren’t you?

Maybe they were just protesting when they were off work? Yeah right….

It’s like they didn’t even try…

Thank you kindly, Frank!

Posted by Richard Metzger | Leave a comment
If U.S. land were divided like U.S. wealth
06:18 pm

Class War


Not much to comment on here is there?

Via Crooks and Liars

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Help keep Wall Street occupied from your own home
03:22 pm

Class War


No reason to miss out on the anti-capitalist fun anymore if you don’t live near New York! Here’a a way to combine getting rid of junk mail with political activism, it takes just 5 minutes a day and you don’t have to leave home to do it.

It’s simple: Keep Wall Street occupied by sending all those junk mail credit card and loan offers right back to banks that sent them at their expense! Bankrupt the bankers one piece of junk mail at a time… Here are some tips:

Posted by Richard Metzger | Leave a comment
Would Jesus Occupy Wall Street?

There’s a fascinating article at Michigan Live about the faith community’s efforts to connect to the burgeoning Occupy Wall Street movement. I must say (and I’m as secular as they come) I did actually describe my three recent visits to Occupy Wall Street to several people as being like “Going to a new church and EVERYONE you meet is friendly and very WELCOMING.” There’s something special going on at Zuccotti Park and if you think otherwise you are… wrong.

It makes sense that a state as hard hit economically as Michigan has been would have clergy so supportive of the anti-capitalist protests. It’s because they know what post-capitalism looks like in Michigan! The clergy truly cater to the poor there, it’s not a joke to them. The support for Occupy Wall Street is even coming directly from the pulpit as the (appropriate) question is asked:

If Jesus were alive today, would he be at Occupy Wall Street movement?

As senior pastor of the nondenominational Fountain Street Church, [Rev. Fred] Wooden delivered a sermon this month which highlighted the similarities between the Occupy movement’s cry for economic equality and the gospel story of Jesus cleansing the temple by casting out the money changers.

But Wooden didn’t stop at words when it came to expressing solidarity with the Occupy movement. The church has allowed the Occupy Grand Rapids protesters to camp in its parking lot at night and is providing other support measures.

It appears the movement has found an ally in the faith community due to their cry for social and economic justice. On Monday, the Vatican’s call for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions was seen immediately as a measure of support for Occupy Wall Street.

“The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” the Vatican’s Justice and Peace document said.


Although some have criticized the movement’s message as muddled and diluted by fringe elements taking rhetorical refuge under the Occupy umbrella, Belief Watch columnist Lisa Miller points out that the Jesus of history would have loved them all.

Jesus gave preferential treatment to society’s outcasts, wrote Miller recently in the Washington Post. “Lepers, tax collectors, prostitutes — all would attain heaven before the ordained elites.” And, she argues, Jesus says in the Gospels that the meek will inherit the Earth.
“There would be no Wall Street if Jesus and Mohammad had their way,” said Ghazala Munir, one of the founders of the Interfaith Dialogue Association in West Michigan, during the Oct. 19 panel discussion at Fountain Street Church.

Jim Wallis, founder of Sojourners and current chair of the Global Agenda Council on Faith for the World Economic Forum, recently wrote a new book called “Rediscovering Values: On Wall Street, Main Street, and Your Street — A Moral Compass for the New Economy.”
“Don’t expect the Occupy protesters to produce a list of policy demands, Wallis said. That’s not their purpose. Rather, they are creating space for the fundamental questions about social justice that weren’t being asked before this fall.”

Wallis said Washington, D.C., is not a place where change originates, but where change arrives. If nothing else, the movement has been successful in refocusing the media and politicians on the problem of inequality, he said.

“The Bible says you see the truth of a society more clearly from the bottom and the edges than from the top.”

It’s interesting to read this brain-damaged comments thread at NewsBusters for the opposite side of this issue, including who Jesus would hate, using nukes on OWS, etc, etc.

For more of the flipside of things, rightwing radio fuckwit Michael Savage pukes up some bile on the “Would Jesus Occupy Wall Street?” question: “Jesus was not a communist, that I can tell you!” sez Savage. What kind of bitter, mean old white guys would listen to a radio show like this every day? A few minutes of Michael Savage is enough to be mildly upsetting. He’s a humorless, witless creep who makes Rush Limbaugh seem like a master showman by comparison. Enjoy!

Posted by Richard Metzger | Leave a comment
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