The New Deal plus Reaganomics equals too many luxury hotels.

Just saw that Bergamont Station is being plowed under to make way for, you guessed it, another luxury hotel. As if Santa Monica has a desperate need for another luxury hotel. It’s nothing but luxury hotels. But the thing about luxury hotels is that they provide enormous tax revenue for a city, and so the more the GOP cuts the federal budget of funds that would eventually (mostly via the state) make their way down to cities to pay for services, the more cities are reliant on big businesses like luxury hotels to provide local tax revenue. And the more city services and urban planning a city engages in, the more it needs the revenue of things like luxury hotels. Quality of life is expensive, and quality of life in a place like Santa Monica is very expensive. People who live there expect the city to provide very nice things. Which means a city like Santa Monica needs to come up with lots of tax revenue. To the City of Santa Monica, Bergamont Station was a big hole that didn’t make bring in much tax revenue. Fill that hole with a luxury hotel and revenue comes pouring in. So some of the worst offenders of tearing down small businesses and replacing them with mega developments are often progressive cities like Santa Monica that provide a wide array of city and social services. I watched Glendale do the same thing, tearing down all these little mom and pop places and replacing them with the then highly profitable shopping malls. What happens now that shopping malls are closing down I do not know. Nor do I know what will happen when there are not enough tourists and business groups to fill luxury hotels. But in the meantime mom and pop businesses and creative spaces like Bergamont Station are seized by eminent domain and leveled to make way for rich people spending lots of money. The city can pay its bills, provide social services, fix streets, build libraries and put on summer concert series. We’ve come to accept all this as necessary. A lot of people get hurt. More people get helped. The needs of the many outweigh the needs of the one. It’s all quite logical and very Vulcan. It’s a very mid-20th century sort of thinking that goes back to the New Deal, actually, the same sort of thinking that condemned whole neighborhoods and replaced them with shiny identical apartment towers with affordable rents. That is the justification for tearing down Bergamont Station, anyway. Leveling a popular art colony and cultural hang and replacing it with a hotel that can help Santa Monica pay its bills. But that need to tear it down, the reason that Santa Monica needs to tear beautiful spaces like Bergamont Station down and build a hotel is due to late 20th century Republican fiscal policy. Tax cutting Reaganomics. Cut taxes, cut the budget, reduce pay outs to state and local governments and voila, Santa Monica needs to find a revenue stream, quick. Every city in America, big and small, is facing the same problem. Combine New Deal social policy and Reaganomics fiscal policy and instead of affordable apartments you wind up with way too many luxury hotels none of us can afford to stay in. I wonder what Robert Moses would say. He might think Boss Tweed was running things again. He might be right.

Burn Baby Burn

(2014)

There’s a lot of white people yelling burn baby burn on Facebook and Twitter tonight, nice white people living in nice white neighborhoods a thousand miles away. It’s always easy to demand violent action when it’s not in your own neighborhood. And it’s always easy to demand neighborhoods burn when you think that property isn’t worth that much anyway. As long as it’s those people. Those people. Someone even plays the stereo too loud in your neighborhood and you call the police. But this isn’t about you, is it? It’s about those people. Sure there’s a riot goin’ on–I’ve seen that a few times tonight on Facebook, quoting Sly–but it’s not in your neighborhood. It’s so exciting, isn’t it, being a keyboard revolutionary.

I didn’t hear Michael Brown’s parents yelling burn baby burn. But then this isn’t about them. It’s about nice white people living vicariously through someone else’s broken windows and busted heads.

A public storage facility consumed in flames in Ferguson, Missouri, November 24, 2014.

A public storage facility consumed in flames in Ferguson, Missouri, November 24, 2014.       (Eric Thayer/Washington Post)

Outsourcing

(2014)

outsourcingNo freaking kidding. Corporate employees work in an environment with the constant real or perceived threat of having their jobs sent overseas. The insecurity is palpable. And that is on top of the outsourcing already being done to companies within the country. Not to mention having entire departments converted to outsourced companies, where you keep your job but are employed by a different firm. Or having your position turned into a contractor position, where you retain your job but are converted to a non-employee contractor. Then there are consultants brought in to take over entire projects–a consultant firm bringing in their own employees to do work regular employees used to do. And companies not filling open positions but instead filling them with a series of long term temps, many of whom are laid off employees of the same company now bringing them in as temps.

Or there’s having your position reduced from 40 to 30 hours so you no longer receive any benefits (though as often as not the position still has a 40 hour work load, meaning a thirty hour employee winds up working an hour or so a day unpaid.) Or having your position taken over by the management company who owns the building, who in turn lets you go or brings you on as a contractor, often through yet another company, so you have been outsourced twice but still keeping the same position–but with no benefits and less pay. Or seeing an incredible amount of work done by unpaid interns who have to work 40 hour weeks and meet all sorts of job requirements that people were once paid for. Or staff working from home, which eliminates the need for so much support staff in the office. Or services that can be accessed online or over the phone that do many of the tasks once performed by company employees.

And finally finding all kinds of tasks once done by human beings that are now being performed by websites and apps, a process that increases by the day and has all by itself eliminated millions of jobs. And will continue to eliminate millions of jobs. The internet, by taking over tasks that once required people, has annihilated the middle class and reduced the working class to penury all by itself, more than all the others things I listed here put together.

Upper management is doing well, however. With pay, bonuses and promotion based on the quarterly report and share price, it’s all about saving money, cutting corners, reducing employee costs and cutting out benefits. That is how you get into the top twenty per cent of US income earners. And that is why that top twenty per cent has over 80% of all the wealth, and over 90% of the available cash in this country. You drive around the vast well off stretches of any American city–the westside of L.A., parts of the San Gabriel Valley, my own neighborhood of Silver Lake–and you’ll see areas that had once been middle class neighborhoods and are now upper class. One out of every five Americans lives in those neighborhoods. The rest of us don’t. People rail against the top one per cent as if the rest of the 99% are the victims. But it’s more than the top one or two per cent, it’s the entire fifth of Americans who inhabit the upper class. They are the money class, the wealthy class. The ruling class. They are the ones who didn’t get outsourced or laid off or have their benefits slashed. They are the ones who won the class war that was declared in 1980.

Dollar Shave Club

Dollar Shave Club sold for a billion dollars. Hard to fathom how that could possibly be worth a billion dollars. I suppose the buyer thinks he can use their model to create dollar whatever clubs? Still, even then I can’t figure on the billion dollar tag. A microbrewery in San Diego went for a cool billion too. I know start ups in Silicon Valley have been going for ridiculous prices. Perhaps it’s flowing over into other consumer goods? Definitely a sign of just how much cash there is up there in the 2% that throwing a billion at a place that sells razor blades cheap is not considered a ridiculous expenditure. I recall the early 2000’s and this kind of madness sweeping the internet industry–as it was called then–till everything came crashing down in a cloud of dust and worthless stocks. People dreaming of millions of dollars looking for a few thousand to make the mortgage. I knew literally hundreds of people who were put of work in a matter of months.
Anyway, this essay can be bought for considerably less than a billion dollars. As can I.

Living Wage

(2013)

The Huffington Post continues its strong coverage of the campaign to get fast food workers a livable wage while not giving its own writers a livable wage, or any wage at all. Of  course when you dominate the progressive media, no one will ever notice.

The CEO of McDonald’s makes a ridiculous 14 million dollars a year while Arianna makes a paltry 4 million.  McDonald employees make $7.66 an hour. That’s about $16K per year. So the CEO of McDonald’s makes 875 times more per year than the person who prepares your hamburgers.

Arianna Huffington makes four million times more than most of the people who write for her website.

Which might just be the single most egregious example of income inequality you will find in America. Even in the most outrageously crooked Wall Street firms the bosses don’t make four million times more money than their basic employees.

Muckraking journalists used to call these kind of executives robber barons. I don’t know what to call it when the muckrakers have become robber barons themselves. Ironic, I guess.

We are becoming a nation of interns. Incidentally, some interns pay the Huffington Post to work for the Huffington Post. And I can’t figure that one out at all. But then one of the saddest facts about income inequality in America is that it doesn’t appear to bother Americans that greatly. Perhaps they all know, in their heart of hearts, that they too will be rich someday. This is the land of opportunity, after all. And that same psychology is prevalent among bloggers, many of whom see no reason why anybody should pay them to write. Every blogger in America thinks they are just a few blogs away from being a best selling author. That’s the dream. Then they’ll be rich and famous and never have to eat or even work at McDonald’s again.

Timing is everything

(2014)

A friend posted:

Just saw that people in America living at or below the “poverty level” has doubled in the past 5 years! Good times!!!!!

Well, when this last recession ended companies did not respond by rehiring but instead did the opposite. So the returning profits went into executive bonuses and shareholders (often those same executives) instead of labor force. Wages also stayed depressed, benefits have been cut back, and changes in the tax code made during the Reagan Administration gave financial incentive to ship American jobs overseas where wages are a fraction of ours (in India, a tenth of ours). Weakening labor protections have allowed permanent employees to be replaced by temps, and in a trend that makes one wonder if anyone is enforcing labor laws at all, many entry level positions in companies are filled by unpaid interns. It’s very likely that you if you are over fifty then you are making one third to one half less than you were making even a decade ago. Worse yet, chances are good that you are now making, when inflation and loss of benefits are factored in, about the same as you were making when you got your first real job. Your entire working life has left you where you started.

There is a logic at work here. It’s the logic of Wall Street and is inexplicable unless you read how executive bonuses are tied to the profit margin in the annual reports. If you can’t increase the price of your stocks, you are not a successful business. The mission of businesses is now to serve the big shareholders, instead of shareholders providing capital to improve the business which in turn will raise the value of the shares. T Boone Pickens turned the model inside out. The people who master the art of accumulating the most shares of stock and then selling them at a profit now run the economy. It makes no sense. We try to survive at their whim. It’s capitalism gone utterly mad, turned into something as warped and destructive a socio-economic philosophy as its arch-enemy communism.

There’s no sign we can yet see that any of this will reverse. I’m not saying it is irreversible, but we can’t  see how it will change, not yet. It’s a trend that began 40 years ago and really went into overdrive during George W. Bush’s two terms which pretty much validated pure greed as a positive social force. Much as happened in the decades immediately following the American Civil War in the age of the Robber Baron. As a result, today most of the former working and middle classes have been pushed into poverty or near poverty. Hence the doubling of that poverty rate in the last five years. The recession knocked middle class people over like nine pins, wiping them out, leaving them with nothing.

However, about 20% of the US is doing really well, and continue only to do better. People who focus on the top two or even top one per cent miss that point. It’s not just a tiny few but an entire class that dominates the US economically. This is a true class war, the top twenty per cent versus the rest of us, and we have lost. That upper twenty per cent have achieved total victory. In 2008 figures the top 20% held 85% of the total wealth in the country.  Eight five per cent. And over 90% of the cash money. Over ninety per cent. It has not been like this since the end of the twenties. The FDR social revolution was completely reversed by the Reagan Revolution. 1980 was the beginning of the end. We lay vanquished now beneath the feet of that top twenty per cent. If you want to see how vanquished, take a drive through the Westside of Los Angeles, or up in the Hollywood Hills, or through the vast swathes of the San Gabriel Valley where they live, segregated from the rest of us. Wealth segregation has long surpassed racial segregation in this country. It’s a de facto apartheid. Park your beat up old car on a quiet Beverly Hills street for an hour or so and read the paper. See how long it is before the cops show up and tell you to get out of there. Doesn’t even necessarily matter what color you are. If you aren’t rich, you are not supposed to be there.

The Reagan Revolution, though, has burned itself out. It is held in power only by clever gerrymandering, and the fact that rural districts and small state are over represented in Congress, or by the aging populations of small states that have more elderly voters than do the larger, growing states. Elderly voters are Reagan voters. In 1980 the elderly were FDR voters. But they died out and the Reagan voters took over and what a mess they made of things. But they are disappearing now, taking their party with them. Their blatantly restrictive voting laws just show how terrified they are. Change is coming. Slowly, the wealth of the country will even out more. Greed will return to its rightful place amid the seven deadly sins. Too late for those of us in our fifties, but your kids will benefit.

Here’s a cycle for you….the 1890’s was economically catastrophic. the 1930’s were catastrophic. The 1970’s were catastrophic. And the 2010’s are proving catastrophic as well. The economic system that was put in place by the American Civil War (which completely replaced the pre-Civil War system in which slaves accounted for more dollar value than all the assets in the North combined) seems to have these forty years cycles. People our age–I am 56–were born at just the right time to begin and end our working lives right at the low points. Timing, they  say, is everything.

Class war

(I wrote this back in 2012.)

From the Harper’s Index in the Sept 2012 Harper’s magazine:

Percentage change since 1970 of metropolitan American families residing in affluent neighborhoods: +121
Residing in poor neighborhoods: +108
Residing in Middle Class neighborhoods:  -34

The math is brutal. There are more than twice as many–almost two and a half times as many–affluent households now than there were in 1970. There are over twice as many poor households as they were in 1970. And the number of middle class households is down a whole third. If you consider that the country’s total household wealth is fairly fixed over time, you can see how this happened. The upper class has increased their share by taking it from the middle class. Their increased wealth didn’t come out of nothing. It’s not like there was a Gold Rush that increased the money supply several fold over night. Nope. It’s just that the salary structure and profit taking and were fundamentally altered so that most of that cash went to the rich and upper middle classes (who are now the lowest rung of the affluent  class.) They’ve locked in this bias, too–when the recession hit, a catastrophe that they themselves brought about, the upper class–the top 20%–suffered almost not at all. All the pain was born by the middle and lower classes, especially the middle class, who have been so stripped of cash that they can no longer even afford to be middle class. That’s what has made this downturn so devastating, and why the middle class can’t seem to recover: there’s no money for us. Almost all of the benefits of the recovery have gone to the top twenty percent.

The redistribution of wealth in this country has been profound–one of the greatest economic shifts in our history. The recession made that gulf even wider, and hardened it–a process that continues. There can’t be a reversal of this trend for a generation or two, it has been too profound a transfer for a quick fix. The middle class of even twenty years ago will not regain their position, not in their lifetimes. Our best years are long behind us. So we’ve adapted. We live poorer, spend less. We live in a totally separate world from the top twenty per cent. The businesses that succeed nowadays are ones that cater to the twenty percent. Businesses that cater to the middle class are prone to failure.

I don’t see a way out. We’ve lost the class war. Got our asses whipped before we even realized that there was a class war.