on why US working class does not act in its own best interest … by following right wing nuts

some economists still follow the idea that in the end the market self-regulates and that consumers always make decisions in their best self-interest. i think both of those have been proven wrong in reality many times over, but those economists that still believe in those principles should maybe take a look at the american working class. certainly a large part of this segment of the US population (mostly in the industrialized areas of the country) are card carrying unionists and democrats. but an equally large segment more in the south and mid-west, as well as south west seem to be hard hitting republicans.

it has always been a mystery to me how these people who are usually lower middle class to middle class can even entertain the thought of voting for republicans, because if they would vote on the basis of what is best for themselves democratic ideas like higher minimum pay, better healthcare for everyone, more accessible schools, higher taxing of the rich … would be directly beneficial to them. but it seems that a slew of so called “value issues” like abortion and gay marriage (and maybe just general fear of the future and change) are trumping issues that would impact their economic situation. in addition i guess that the idea of the “american dream” has so much power over this segment of the population that they think that by hard work they might very soon end up rich and at that point will not need the benefits provided by democratic policies … even though the chances of this economic ascent are fairly slim.

the recent health care debate has brought out many demonstrators against the reforms … most of them from the lower middle classes, exactly those that would benefit the most from the reforms. i thought it was so interesting to see all the tea party demonstrators here in DC last week most of them active consumers of medicare (or other government plans) demonstrating against big government that they themselves directly benefit from … and there i am on the other side, likely to have to pay more post reform and i am all in favor of it. a strange world it is. but the ny times, specifically timothy egan wrote a superb piece yesterday on his nyt blog about this paradox in US politics: working class zero

he perfectly sums up this paradox early on in his post:

Harvard economist Lawrence Katz called it “a plutocratic boom.” If anything comes close to defining the era, that would be my nomination. President Bush cut $1.3 trillion in taxes — and the biggest beneficiaries by far were the top 1 percent of earners. At the same time, Wall Street was inflated by the helium of a regulation-free economy that eventually gave us Bernie Madoff and banks begging for bailouts.

Now consider the people who showed up in a state of generalized rage in Washington over the weekend. They have no leaders, save a self-described rodeo clown — Glenn Beck of Fox News — and some well-funded Astroturf outfits from the permanent lobbying class inside the Beltway. They are loosely organized under a Tea Party movement, but these people are closer to British Tories than 18th century patriots with a love of equality.

and then he goes on to ask exactly the right question:

Where was the Tea Party movement when the tax burden was shifted from the high end to the middle? Where were the patriots when Wall Street, backed in Congress by Senator Phil Gramm of Texas, rewrote securities laws so that the wonder boys of Lehman and A.I.G. could reduce home mortgages to poker chips at a trillion-dollar table?

Where were the angry “stiffs” when the banking industry rolled the 2005 Congress into rewriting bankruptcy law, making it easier to keep people in permanent credit card hock?

Where were they when President Bush started the bailouts, with $700 billion that had to be paid on a few days’ notice — with no debate — to save global capitalism?

They were nowhere, because they were clueless, just as most journalists were.

as i was walking through DC last weekend with the tea party demonstrators making their way through a city largely alien to them i was thinking about exactly those questions — and couldn’t come up with any answers.

what is in an apology? — in the case of joe wilson i think very little

so the story has been noodled over a fair bit and it is probably time to move on. but one thing that i had to keep thinking about ever since the morning after the “you lie” incident was not so much what would the right wing media have said if an african american congress man (or woman) would have yelled “you lie” during one of the state of the union speeches by bush, but rather what is an apology worth these days? and what does an apology mean? after all, joe wilson as maureen dowd mentions in her great sunday times column boy, oh boy belonged to the group sons of confederate veterans and he also actively pushed for keeping the confederate flag on top of the south carolina capitol. and i have to agree with her conclusion

Wilson clearly did not like being lectured and even rebuked by the brainy black president presiding over the majestic chamber.

if that is the case though, then the apology was nothing but a phony apology. let me clarify this. there were two things to apologize  for obviously. one, the inappropriate act of calling a sitting president a liar in congress, and second to call someone a liar even though the person is not a liar. now the first part is a formality (although if one watched fox news coverage from 4, 5, 6, 7 years back treating a president un-presidential was close to treason, at least back then), but the second part is part of how to debate among each other and in part shows your actual respect for the other. with wilson’s background and the way that he apologized hastily by phone i can only think that he barely if at all wanted to apologize for the interruption, but not the content. and if that is the case, who cares, he could have saved his time, because that kind of apology is worthless, what does it really mean? it means i acted inappropriately but honestly i don’t feel sorry about anything. in a way it is the same type of apology that kanye west provided after his stupid outburst at the mtv event.

it is unfortunate that the public apology has become just another public event that means nothing. it doesn’t make people think about what they did wrong, it is just part of the discourse and the apology in a way seems to ok the bad behavior. once someone apologized we are supposed to be ok with the initial bad behavior that caused the apology. it is even as though one can plan bad behavior and just build in an apology. because the beauty of this is that the apology will be quickly forgotten, but the initial act will live on, especially in the target constituencies — in the case of joe these are the right wing fringes that feel threatened by a president that is not only of a different race than they are, but that also proves to be superior to them, and shows them how their own little world is changing, and they don’t like change.

joe wilson, “you lie” yelling republican, lying on his web site?

ok so last night joe wilson had his 10 seconds of fame … after all who had ever heard of this guy before last night? and in typical republican fashion he had his outburst first, got all the media attention, and then quietly apologized later. this has been standard practice for years now … i don’t know if it started during the build up for the iraq war but back then it was probably most clear.

but then after last night and his couple of seconds of fame, people wanted to know more about this guy called joe wilson. so in this day and age his web site is a good starting point to find out more. but what do you find there this morning? the site is down for “maintenance” … ??? … that sounds a bit strange. so the very day after joey steps on the national stage his web site is down for maintenance. makes me wonder if this is just a lie to take the site offline rather than have people who are maybe equally emotionally like he was last night leave a nice message on his publicly funded web site.

ted kennedy arrived in arlington

Ted Kennedy’s Grave at Arlington Cemetary, originally uploaded by schmiddi.

i went to arlington cemetery yesterday and while there passed ted kennedy’s grave. i love the simplicity of the white cross.

charging stations for city dwellers seem to be key obstacle for electric car

the economist has an interesting briefing on the state of and future of the electric car. driving ranges of these electric cars vary from 80km to a couple of hundred km. the reasons for the differences are the number of batteries by car and the use (or non-use) of additional petrol generators to create electricity on the road. due to the range limitations it seems that a key market of these cars will be people living in cities. but here is where the article indirectly points out a key problem for city dwellers:

Only for garageless owners does recharging become complicated. They will need street-based electrical infrastructure, and a lack of this will limit the spread of electric vehicles to start with.

it seems to me that garageless car owners exist more in cities than in the suburbs. but at the same time companies like mitsubishi with its I-MiEV and daimler with its upcoming electric smart are targeting city dwellers. and while the better place solution envisioned by shai agassi seems a good way to address power needs during large trips, it doesn’t fully address the need for overnight charging for garageless car owners. because of higher land prices in cities gas stations usually are a rare commodity in city centers (well and because neighbors don’t want to see their housing prices drop because of living next to the gas fumes) this will probably mostly true for better places too.

so i guess that to make these electric cars attractive to city dwellers the car industry in combination with companies like better place need to find a way to get overnight charging options to the garageless. parking meters (even though a dying breed) might find a resurrection with the coming of the electric car.

tech announcement wednesday — nokia and panasonic on a roll

i am barely awake and nokia and panasonic have already announced twice as many product as apple has developed in the last 10 years. on the panasonic the announcements seem to have been fairly focused around the new compact semi-dslr midget gf1 and a couple of lenses that go with it. from what i can tell this is a camera fairly close to the olympus e-p1 (seems like these kind of cameras require a snappy two letter one number combination as a name). both seem to be fine cameras, but i feel that prices are still to high … and i would like to see panasonic extend its partnership with leica to build lenses for the gfi.

on the nokia side announcements have been a bit more numerous. there are a bunch of new phones, there is the official announcement of the netbook that we have all already known from weeks past and then stuff around its ovi service. the phone seem to be all design adjustments to make nokia’s media phones a little bit more attractive (from a visual and functionality point) in an iphone world. i am not sure if they have succeeded in this. the slide and music phone are a bit plasticey for me, and then they keep repackaging their big keyboard slider into all new slightly different phone packages all with the same bulkiness. I have never been a fan of these big key sliders that nokia has made since they are just unnecessarily thick, but nokia seems to love them.

what is even more interesting though is how nokia is trying to push its ovi services. i used them, or better i tried to use them, when i had my e71 but they were back then (four months ago) nothing more than a nicer looking PC sync suite of services. they didn’t work with all phones, or only partly. look and feel on the phones differed. it was just a mess … which was even furthered by the start of the ovi app store. now the big thing of the ovi platform seems to be its move into the social space. nokia doesn’t do this alone, they are integrating facebook into the ovi experience here it seems. now i have said before that nokia should have bought facebook and a partnership would make sense for both sides. but that was more than a year ago. pushing facebook today seems a tiny bit late to me. the word seems to have moved on to twitter and nokia gets all hyped up about facebook. well, things move a bit slower up in espoo. the problem with the nokia announcements is again that as a company they have to please so many constituents that in the end everything they have looks and feels like it came out of a design committee — which is probably does. the common platform of their phones are becoming more and more visible and are no longer a sign of smart supply chain management and product design, but a sign of cost control and design control. what nokia should focus on in the next couple of months, unless it wants to become an also run in the mobile phone business just cranking out utility phones, is a wow phone. something that is better than the iphone, and not just a cheap, platform agnostic copy. something that makes people want the phone. something that would be worthy of a being THE phone for a remake of the matrix (not that i would like a remake). and i have to say this new netbook is not what i was looking for.

reality is not all that new … and the future will live by the same truths that we have been for ages

i am no fan of all these “new economy” or “the new world we live in” kind of stories. we had tons of them in the late ’90s and it turned out that things were not all that different from before … in the end companies actually still needed to make money, good business plans were good indicators of start up success, and no the internet did not solve all human ills. so after talk about everything being different back during the days of the internet boom — remember the book “the long boom”? — we are now entering the days of everything is different, only now the book will probably be called “the long decline.” and this is no joke, since last year’s economic melt-down tv news, magazines, and newspapers have been packed with headlines about how we live in a new world, how everything we believed in during the last 50 boom years is gone, not relevant anymore, in these new new times of today and the coming years.

what most of these writers forget is that nothing has really changed. all that has happened is that some of the rules that we all lived by during the last 50 years were ignored by us. that doesn’t mean there weren’t part of our world, it is just that we forgot to remember them and live by them. and reality caught up with us. we always knew that if you don’t make something, but instead just borrow money to buy stuff that that wouldn’t work forever. but we didn’t care. but then when reality caught up with us we needed something to protect us from looking stupid. if we would have all said “yes, this was supposed to happen, we all knew it” then we would have looked quite foolish … even stupid. and we certainly don’t want news outlets to tell us we are stupid. so they catered to our needs, and told us it wasn’t really our stupidity, but a “new” set up rules that is responsible for all this. and how were we supposed to know about those rules? but now that the rules have supposedly changed, we have to adopt to them. and that is what we are doing — hopefully.

so i have to say that i was quiet delighted to see oimco’s bill gross headline his current outlook column “the new normal” … yes, he adds the word “new” but he makes an important point in the column, and that is:

We are heading into what we call the New Normal, which is a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the consumer stops shopping until he drops and begins, as they do in Japan (to be a little ghoulish), starts saving to the grave.

the reason i like this is that this idea is not really groundbreaking. or new. a slowdown (even a longer one) is something that was part of our frameworks from day one. the idea that things would only grow, indefinitely is something that evolution should have tough us is just not sustainable and because of that growth takes breaks.

gross lays out key drivers for the coming years that will define our world and they look quiet plausible and should be good north-stars for any investment decision:

American-style capitalism and the making of paper instead of things

Private vs. public-driven growth

Global economic leadership

United States housing and employment

in the column he goes into detail on how each of those four drivers will impact US and global economies. and even though gross keeps talking about the “new” all of these truths are not really new, they are just long standing truths that we have forgotten about over the years. after all, i bet your grandmother has always told you to save money.

Amazon will soon feel ebook heat from Sony

I love ebooks. Most of my reading these days happens on an ebook reader. I started with the Sony ebook reader but then earlier this year switched to the second generation Kindle for three main reasons:
1) Amazon had improved to design to make the Kindle a device that looked ok enough to use in a Starbucks
2) Amazon had a larger and more interesting book catalog
3) Newspapers and magazines. I won’t give up the paper version of the Sunday Times but having te FT and the Economist beamed up onto my eReader each morning is just unbeatable

One additional feature is also the way the Kindle syncs with the iPhone which is certainly a major plus.

Sony on the other hand lacks in the number of books available for it’s devices (yea, I know about all the Google books but new books are a rare commodity on the Sony ebook store). Cross platform integration is also no strength of the Sony device. While I am happy they ported their ebook store to the Mac it is amazing that it took so long for this to happen — I won’t even expect any iPhone integration. Where Sony will have to do most of the catch up though I think is in getting newspapers and magazines onto their platform — those two content segments are probably the most important ones for ebook readers in my oppinion.

Sony’s strengths? Design. Their readers look and feel way better than any other ebook reader device I have seen. Their odd embrace of more open formats is also welcome, but it will be interesting to see if they stick with it if they become more popular. Lastly, the integration of their books with libraries. This I think is way more interesting than their Google collaboration.

One more Sony strength is that they have a nice collection of differently pricd devices. Not just one size fitting all.

So while I think Amazon’s strengths outweigh Sony’s I also think that if both companies stay on the trajectory they are on right now Sony should get the upper hand pretty soon. Amazon is slow and digging itself into it’s propriotary whole while Sony is expanding quite interestingly, opening up a whole slew of new opportunities. Once they solve their newspaper and magazine content whole they should be stiff competition for amazon. And then Sony could also benefit from picking a GSM based networking chip set, making their new wireless reader a global product rather than a US centric one.

where are the strings that should be attached to the bailout?

i am all for the wall street bailout since it will hopefully off-set some extreme pain to the average american who should not have to suffer for mistakes that were made on the top floors on wall street. so whatever needs to be done should be done, quickly. but so far there has been a lot of talk about how to rid banks of bad loans and mortgages and that i guess is needed to solved the current crisis. but what people are not talking about are the strings that need to be attached to this mega-bail out. after all wall street fucked up, big time, and while doing so they made billions in profits. 

what is needed are direct strings attached to the bail out that hurt those responsible for this mess. bankers have to feel the pain, there can't be golden parachutes, there can't be any bonuses. pay has to be dramatically cut for anyone who is bailed out. the same goes for the share holders of these companies, they were quite as owners, they benefited over the years, there can't be any of that if an institution is bailed out. 

long term the bail out needs to include dramatic regulatory rewrites. and i use rewrite instead of new ones since we have regulations, but they have to be more clearly defined and then also enacted. the SEC needs to have more staff and needs to monitor more closely the financial industry. there have been be walls between the different actors in the financial space, and talk about deregulations has to be banned from these conversations. 

without these short term and long term strings any bail out will be useless since nothing will change on wall street. 

in just eight years bush destroyed everything that the US stood for

eight years ago bush was voted president. back then the economy was creating job, the US budget was positive, and especially after 9/11 the world stood behind the US on foreign policy. people around the wold, while at point disagreeing with US policy did have respect for this country. but within just a couple of years bush destroyed

1. … america's moral high-ground by lying to the world community to start a war of choice, and by shredding the geneva convention in order to torture in some cases even innocent people and rendering the legal foundation of democracy irrelevant. 
2. … america's  military might by fighting a war in iraq that strained resources and had little chance to be won, en-bolding countries like iran and north-korea. 
3. … america's economic/free-market dominance by eroding the country's financial soundness through an explosion of debt and jitteriness in the financial market that is going to probably have a longer impact than a lot of people will think, eroding trust in the US economy as well as its financial institutions. 

  what the impact of this will be is still a bit unclear, but i think one thing is already clear, other countries are not looking for the US anymore for help (both economically and/or militarily). and by losing the moral high ground, US is becoming less of a last refuge for people around the world, who might prefer the EU now. the US still has a great higher education machine going for it, but it will be interesting to see if the EU is going to try to challenge the US on this in the mid term as well as maybe china. 

but for the new president there will be a lot of things to make up for if the US plans to stay a superpower, with the main problem that money will be harder to get for the US.