Strait of Hormuz (Wikipedia)

Last year, the drums of war began to beat as a result of supposedly new findings suggesting Iran had initiated a program for building a nuclear weapon. I previously wrote on the topic at the time and specifically pointed out the lack of hard evidence supporting such a conclusion: all of Iran’s known nuclear material was accounted for by the International Atomic Energy Agency (IAEA) and none of our intelligence had produced unambiguous evidence that bomb construction was underway. Indeed, our own intelligence estimate as recently as 2010 concluded that Iran was not working on a bomb. Now it seems the Israelis have come to the same conclusion. An article published in Haaretz, a left-leaning Israeli newspaper, began with the following lead: “Israel believes Iran itself has not yet decided whether to make a nuclear bomb, according to intelligence assessment to be presented later this week to U.S. Joint Chiefs of Staff Dempsey.”

A good article summarizing the significance of this report can be found in Juan Cole’s Informed Comment.  When Iran responded to the new military threats and sanctions by threatening to close the Strait of Hormuz (through which 20% of the world’s oil supply flows) if conflict should break out, the Obama administration decided to ratchet down the threat level and perhaps the article in Haaretz reflects the Israeli willingness to do the same. Obama faces a very tight election this year and does not want to see the cost of oil go up by the Iranians following through with their threats. He also apparently expressed his deep dissatisfaction with the Israelis over the recent assassination of an Iranian nuclear scientist.  Now if we can get Mitt Romney to stop fanning the flames of war  against Iran and lower the tension by a couple of decibels, we might be able to have an election without starting a war in the Middle East. We are truly a gifted nation when it comes to starting wars–we don’t have a problem mobilizing the popular support needed to take us into war–but it’s ending them that seems to give us great difficulty. At least for now perhaps the tension between Iran and the United States/Israel can be lowered and the rhetoric of war eliminated.  Our departure from Iraq has served to reduce friction between the U.S. and Iran, but until we have a peace agreement among the Palestinians and the Israelis, the region will always be a flashpoint. The right wing Likud government in Israel is always sounding the alarm about Iran and we have the habit of believing their intelligence more than we do our own.  The full impact of the Arab Spring has yet to achieve a steady state in the region. But that event also reflects joblessness and economic hardship together with trends in food prices and this is a long and deep economic recession. Each time we increase the tension between the U.S. and Iran, we enhance the position of the hard-line ruling clerics and diminish the prospects of bringing the full-throated Arab Spring to that country. This is the same mechanism we used to prolong the Cold War.

Whenever we attach the word “war” to a conflict, like the “war on drugs” or the “war on terror (ism?)”, we tend to make them into a new version of a never-ending story. Imagine how different it would be if be used the label “skirmish on drugs” or “conflict against terror (ism?).” Wouldn’t those terminology examples make it easier to know when to quit? The word “war” seems to demand a winner and a loser, something we rarely achieve or if we achieved it in Iraq, for example, we did so by utterly destroying their culture and devastating millions of lives–all innocent victims of our shock and awe strategy of warfare. But, when confronted with a “skirmish,” it seems more like a cease fire until you can get the whole thing straightened out by some sort of agreement. I am in favor of any congressional act that would outlaw the use of “war” and reserve that for those circumstances where our nation is truly imperiled by circumstances we didn’t create for ourselves. That would mean we can’t have war against terrorism or a war on drugs or a war on obesity. Furthermore we should extend the ruling so that a President cannot make a judgement about whether a conflict should be viewed as “war.” Like the Constitution, only Congress can declare war. With those rules in hand, we might be able to bring to a much faster resolution the conflicts and wars we start by emphasizing that a war by any other name is a “skirmish,”  and if you lose, it will only be a blemish on your war record, nothing more serious.

RFM

Alberta Canada tar sand region before and after mining

This afternoon (Wednesday, January 18th, 2012), the Obama Administration announced that they are denying the permit for construction of the Keystone XL pipeline. This news represents a great victory for the environment and our planetary future. In the last Congressional budget action, approval for a two month extension of payroll tax reductions and unemployment insurance was adopted, with a provision tacked onto the bill which forced the President to decide within 60 days whether he would approve the Keystone XL pipeline, presumably feeling confident that putting him in such a box during an election year would increase the likelihood that the project would move forward. The Keystone XL pipeline proposal was designed to carry tar sand oil from Alberta Canada to the Gulf of Mexico, where it was to be refined.  Since big oil supports construction of this pipeline and is used to getting their way through lobbying and campaign donations, it would not have been surprising to anyone if Obama had yielded and approved the 1700 mile pipeline for construction.  But massive demonstrations, largely orchestrated by Bill McKibben’s 350.org, encircling at one point the White House with demonstrators linking arms (attended by arrests),  the environmental opposition beat out the oil lobby and encouraged Obama to deny the permit, an act for which he will face stiff opposition in a re-election year. It is worth noting that our most prominent climate scientist, James Hansen, has termed the Albert Sands project “game over” meaning that with the excessive carbon introduced by burning the dirty tar sands, we will reach a point of no-return on future climate change and very likely see large increases in sea levels as the polar and Greenland ice melts. Although we won the battle, the war isn’t over and it won’t be over until the environment and greenhouse gas emissions are finally recognized as the serious threat they pose to our future climate safety. You can bet that by tomorrow if not sooner, Mitt Romney will jump on this as a major job killer and announce he will reverse the decision once he’s elected to the Presidency. But let’s pause for a few minutes to express our gratitude to Obama for showing the courage necessary to reject the pipeline. It’s a major victory for environmentalists who worked hard to prevent the pipeline from becoming a reality. You can thank him by signing a petition at the NRDC site.

RFM

American Pad and Paper Company: A Bain Capital Story

Mitt Romney has already made my list for his dangerous, reckless attitudes towards Iran, for which he runs the risk of getting us into another war in the Middle East should he be elected President. But Romney also brings big baggage in his defense of our current casino economic model and that is the subject of this posting. Mitt Romney started and ran Bain Capital from 1984-1999; he still gets profits from the company. It has been estimated that 1/4 of the companies bought or managed by Bain during his tenure were driven into bankruptcy.  One of the companies purchased and managed by Bain Capital, under Romney’s leadership, was American Pad and Paper (AmPad), purchased by Bain in 1992.   The accompanying visual representation of the AmPad’s history under Bain is summarized in the elegant, detailed graphic, put together and available as a pdf by the Boston Globe: you can download it, put it on the wall and distribute as an educational blueprint for how private equity firms operate. The story of AmPad has a beginning, when Bain purchased AmPad in 1992 and it has an ending, when AmPad was forced into bankruptcy and liquidation in 2001. In between those bookends is the story of how private equity firms generate profits for their owners and investors, but fail the company that generated those profits and the workers who ran the business. It tells the story of how a private equity firm ran the company into bankruptcy by forcing it to carry a huge debt load  (measured by the negative numbers and the green line), compared to the company’s sales, indicted by the blue line. The management fees Bain collected are illustrated with bright green circles, while the “other payments” and their amounts are represented by the dark green circles. This graph is not an outlier of the performance of private equity firms and how they manage the companies they buy or control as the major share holder. Rather, this is a graphical template of how private equity firms operate. A decent American, someone who is committed to better equity in America’s income distribution, as well as good management practices for American businesses, should be shocked by this story, but the financial industry of America and the Republican Party as its political representative, celebrate this kind of predatory behavior, because it’s the free market economy at work! If they get their way, the future will be more of the same and then some. A huge failure of our own regulatory agencies, including the SEC,  led to the era of corporate raiding, which forms the basis of our failure to support American manufacturing and the jobs that were slowly created through this process. Private equity firms are a festering wound in America’s manufacturing integrity.

Bain’s initial investment for AmPad was $ 5 million, after which they charged the company “advisory fees” for managerial services. As you can tell from their website describing the private equity branch of the firm, Bain specializes in “leveraged buyouts.” These buyouts are accomplished by putting very little money up front to purchase the company, financing the rest, either by using the companies assets if they have any or saddling the company with a substantial debt load, used to payoff the loan to purchase the company  and provide lucrative profits for the new managers–putting the company in debt is the primary means by which private equity firms generate short-term profit for their investors. Leveraged buyouts should be illegal!

The story of AmPad is hardly unique, but it encapsulates the mechanisms by which private equity firms extract money from the companies they purchase and ostensibly “manage.”  They are not interested in job creation. Their interest is purely in short-term profit-making. For Romney to talk about his work at Bain Capital as one of job creation is absurd–no one else in the private equity industry considers that as one of their motivations (see quote below from the LA Times below). The array of profit-making mechanisms imposed on companies is mind-boggling: no businessman committed to a sensible, strategic growth of their business would ever endanger his company with the kind of debt Bains put on AmPad: debt forms include leveraged buyout loans, management fees and when Bain decided to take the company public, the profits earned from the stock sale, as well as the administrative costs of issuing the IPO (Initial Public Offering) were derived from the stock sales or charged to the company. The purpose of the IPO was to was to generate stock with some value: shortly after AmPad went public Bain sold 40% of their shares, making even more money from their ownership. Private equity firms are also inclined to enhance the growth of the company through the purchase of other companies creating further debt and more job loss through additional downsizing, something usually associated with increased stock value. It should be evident that private equity firms manipulate manufacturing firms without any consideration about the future of the firm–instead they are only interested in short-term profit.

Perhaps the one thing that Texas Governor Rick Perry got right in his political campaign for the Presidency this year, was when he described private equity tactics as “vulture capitalism.” By forcing companies to run up huge debts and charging exorbitant “management fees,” companies lose their ability to make plant investments which would keep them more competitive and modernized. In its eagerness to provide a summary soundbite of private equity firms, the mainstream press is completely incapacitated. I watched on PBS news the other night as someone was trying to explain the value of private equity firms, based on whether they had created jobs or lost jobs. But that is only part of the problem–the major question is what are they doing to companies that secure their future and make them more competitive? What have they done to a company that couldn’t be done better by the ownership of the company and how stable was the company when acquired by the private equity firm?  It’s as if private equity firms and leveraged buyouts are an indication that financial institutions who make money through this sordid mechanism, have given up on American manufacturing and act as though it’s time to sell off the country’s assets and that is  a large part of what happened to the American manufacturing in the Neoliberal era (whose cloud hangs over us today). The first leveraged buyout took place in 1968, but gained momentum in the Reagan era. The practice could have been  stopped by the SEC and financial regulatory agencies, but they progressively proved to be emasculated by the frenzy of the corporate buyouts at the time. In addition, a hidden motivation for this strategy was the benefit of breaking the power of unions, whose presence made it more difficult to downsize companies and reduce wages. Wages, benefits and even whole retirement packages have been swallowed by the mechanisms that private equity firms have used to create wealth for a few investors.

Mitt Romney was hugely successful in running Bain Capital; during the time he ran the company, the investment return averaged 88 percent each year–phenomenal profit levels. These years were the fabulous growth years of our financial industry, which in the 1990s became the largest single sector of our economy and began to outpace manufacturing. In fact, the rise of financial America was created by buying, selling and destroying American manufacturing–that is how the financial sector grew–not by growing something new, but by tearing down what we already had built as a manufacturing economy. At one time America was the envy of the world for its manufacturing base. Where did it all go? And where is it written that a private equity company like Bain has people in their management structure that know how to run AmPad, better than the people running the firm in the first place? It is true that AmPad sales had a period of boom, accompanied by plant acquisitions and closures, but those kinds of performances are typically unsustainable: when a slowdown occurs or if good plant management doesn’t exist to make the appropriate investment decisions for maintaining productivity (and keeping the best people around that know what they’re doing), a company loaded with huge debts will show a drop in profits followed by a decline in the value of the stock, at which time it becomes more challenging for the company to stay afloat, something that AmPad couldn’t achieve. Many of the companies infected with the Bain virus were not new and had been around for a very long time. Take for example, Worldwide Grinding Systems (WGS), established in 1888; the went belly-up less than a decade after Bain became its majority stakeholder. Furthermore, WGS had to turn to a federal insurance agency to bailout its pension system, in large part because Bain  forced the company into a very heavy debt load.

A recent article in the Los Angeles Times describes Bain Capital as follows:

• Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.
• Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said.
• Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”

Private equity firms are predatory capitalists, willing to force the companies they buy or control to take long-term risks for short-term profits. In the process, part of the short-term profit involves down-sizing the companies they own, eliminating jobs, reducing wages and creating conditions that jeopardize the long-term future of the company. The financial interests who run companies into the ground have absolutely no interest in long-term outcomes, whether it’s related to profits way down the road or our planetary future. They are hooked on short-term profits like junkies in search of a new high. We live in a country turned upside down. Too many economists, those with whom we placed a certain level of confidence that they would be our watchdogs and make certain that the country had a healthy economy, vitalized by a concern for important issues like social stability, equitable income distribution, education opportunities and retirement pensions and programs, have abandoned the ship: our faith in them turned out to be completely misplaced. Most economists are completely supportive of the role that private equity firms play in improving the “efficiency” of companies. This word “efficiency” as derived from their vernacular equates to “downsizing” and increased corporate profitability. Few economists of today have a sufficiently broad enough view of their subject to clearly see the destructive social damage that financial investment organizations like private equity firms have created, not only in terms of our economic future,  but also for the future of our species on this planet. We are badly in need of a new discipline, one that fuses our economic future with the environmental crisis that we are in today. We are deeply in need of new kinds of experts for our badly needed new economy–a new compass that takes into account the needs of a shrinking planet. Where will these new experts come from? Not from economics departments–they had their chance and blew it. We need to build a new economy and put in the kinds of safeguards needed to prevent predatory capitalism from destroying these businesses, while at the same time investing appropriately in the infrastructure improvements needed to place the globe on a better trajectory for the future.

Perhaps we will eventually thank Mitt Romney for the social service he is about to perform as a candidate for the Presidency of the United States. By forcing the public as a whole to get better educated on the sinister motivations of greed that characterize companies like Bain Capital and how private equity firms create so much wealth for their investors, while actually diminishing the wealth of the Middle Class, Americans might finally wake up to the nature of the country we have become. Americans will also need to come to grip with their own naive trust of financial leaders and see the destructive swath that unfettered capitalism has reaped upon the stability of our society and the uncertain future we face as practicing humans trying to make it on this planet. We do not know how much of our manufacturing base was destroyed by the crazy leverage buyouts over the past thirty years and we can only imagine what kind of country we would have today if our government had intelligently stepped in and prevented these corporate disasters from ever taking place–they helped bring on the casino economy we have today.

In closing, I want to quote from a book by Walter Adams and James W. Brock, “Dangerous Pursuits: Mergers and Acquisitions in the Age of Wall Street” published in 1989, reflecting on the impact of leveraged buyout and the absurdity of the practice:

• “In 1983, Esmark, marketer of Swift meats, Butterball turkeys, Playtex products, and STP oil treatments, spent $1 billion to acquire Norton Simon, producer of Hunt’s tomato products, Wesson oil, Reddi-wip, Orville Redenbacher’s popcorn, Johnny Walker Scotch, the Avis car retinal service, and Max Factor cosmetics. The next year, Esmark-Noton Simon was acquired by Beatrice Foods, maker of La Choy, Rosarita, Tropicana fruits drinks, Jolly Rancher candies, Milk Duds, Air Stream motor homes, Samsonite luggage, Stiffel lamps and Culligan water softeners. Two years later, in 1986, Beatrice-Norton Simon-Esmark (which now ranked as the nations’s 26th largest industrial concern) was bought out by Kohlberg Kravis Roberts in a $6.2 billion deal. And for what purpose? To sell off the various Beatrice-Norton Simon-Esmark divisions that had just been consolidated.”

Leveraged buyouts and corporate merger mania made no rational sense for building continuity in manufacturing experience and expertise. The government under Ronald Reagan helped to issue a new gaming license for a new kind of sport: corporate raiding. The new sport was aided by Reagan’s abandonment of antitrust enforcement, his corporate tax cuts and his relaxation of securities regulation. Reagan followed through with his political slogan that “government was the problem, not the solution.” These forces accelerated a reduced motivation to invest in America for fear of corporate takeover. The financial industry of America  had no problem adapting to this new gaming license and showed no concern for jobs lost, companies shattered or assets sold off for profit. The original corporate raiders and arbitrageurs had names like Ivan Boesky, T. Boone Pickens and Carl Icahn, who became the new robber barons preying on companies whose stock had been devalued by economic hard times and foreign competition, some of which was induced by the actions of these robber barons themselves. Bain capital is simply another version of the corporate raiders from an earlier era. We can’t afford to allow the continuation of this silly, but destructive behavior. Too much of our future depends on eliminating this disastrous “free-market” childish behavior and getting serious about human survival and our own economic well-being.

If you want to see how private equity funds have endangered the Danish Economy see my article “Borrowing From Denmark”

RFM

Mitt Romney (from Massimo Prandi)

Perhaps nothing can stop Mitt Romney’s destiny as the Republican nominee to face Barack Obama in this year’s run for the Presidency of the United States. After his victory in New Hampshire, it seems unlikely that anyone can put up a competitive race against him and by now the Republican aficionados  are meeting and making phone calls to smooth the pathway for a less confrontational nomination process to keep their powder dry for the general election.  In other words the message will go out to Newt Gingrich: stop bringing up Bain Capital and we will go out and buy several hundred thousand copies of your books–isn’t that why you were running in the first place, as a book salesman? But, no matter who the Republicans nominate, this will be a tense election year in which we have to recognize the possibility that the Republican Party could gain control of all three bodies of our national government and further push the agenda of right-wing fanatics, a step that I believe, could put us on the road to an American version of Nazism, through the invention of new enemies galore: think of global climate change theorists and scientists as terrorists. These people are scary, not because they are innately violent (though they certainly approve of violence against people they don’t like and very few disapproved of Sarah Palin putting gun-sight images on electoral maps of Democratic opponents such as Gabrielle Giffords of Arizona in the 2010 election), but because they are extremely naive ideologues, which means they are susceptible to being co-opted and exploited  by the corporate elites–those forces that more directly control Congress and the Presidency than the voters do–people like the Koch Brothers.  This year, the SuperPacs seem to be in charge of primaries and were apparently responsible for shooting down Newt Gingrich’s brief political resurgence in Iowa.  While Obama has often displayed corporatist leanings in many of his decisions and initiatives, including his healthcare bill (which offers a huge subsidy to the for-profit health care industry), his continuation of the Patriot Act and more recently his willingness, through signing the National Defense Authorization Act, to expose American citizens to the possibility that they can be arrested and detained without access to our Constitutionally guaranteed protections (Obama did issue a “signing statement,” but it’s unclear what that really means because the clause about indefinite suspension of citizen’s rights is now written into law; it is one more step along the pathway of confusing war and terrorism, which are two different things and should always be handled in two different ways–to fuse them is to place us on a path of further erosion of our civilization).

You only have to look what happened to the Tea Party movement, which was initially hostile to corporate complicity in our fiscal meltdown, to see how easily that mistrust of corporate greed got re-channeled into a new cause in which Tea Party members now favor gutting the limited oversight of financial institutions provided by the Dodd-Frank bill. The Tea Party members should be supporters of the Occupy Wall Street Movement, but they can’t find the right door to open. The Millennials need to open it for them and perhaps in time they will.

While virtually any Republican candidate can be competitive with Obama for the Presidency (now that Michelle Bachman is out of the race, with Rick Perry soon to follow), it is Mitt Romney that bothers me the most. I believe that if elected,  Romney is capable of promptly sending our country into war against Iran, because he faces the world as a Mormon  ideologue. In my experience (having been a Mormon myself), Mormon ideologues belong to a special class of believers, so inundated with an ideological interpretation of the world, combined with deep suspicions about government, that they coalesce around a belief system that verges on religious hysteria, a mental state that, quite uncharacteristic of the human species in general,  readily accepts the complete absence of any concept of verifiable truth, particularly in their construct of the outside world–they capitulate too easily to their leaders.  I have long accepted the insights of many historical judgements on how naive Presidents have taken us into wars that we had no chance of winning, but, like a child first getting hold of the steering wheel of a super sports car and stepping on the gas pedal, America went zooming into wars that still divide us as a nation and have made an indelible contribution to the polarization of our society. As an indication of the perpetuity of Vietnam into the fabric of American culture, who can forget how John Kerry’s Presidential candidacy was destroyed by the Swift Boat ad campaign that resulted in a majority of voters on election day believing that Kerry did not deserve his Vietnam Medals.

Historian Geoffrey Perret’s book “Commander in Chief: How Truman, Johnson and Bush Turned Presidential Power into a Threat to America’s Future” was the subject of two previous postings here and here. In Perret’s excellent book, he describes how Truman, Johnson and Bush shared a completely naive view of the world and, as a result, failed to understand the nature of the conflicts in which they got us involved (without following our Constitution, which says that only Congress can declare war) and under-estimated the deep cultural divide that controversial wars would create within our society. This was especially true of the Vietnam War, when we had a draft and most young males were vulnerable. But our invasion of Iraq, which was perpetrated purely by propaganda for oil and profit, was equally divided along the American political chasm, whose dimensions now deepen and widen because of more fundamental issues, such as the survival of our species on the planet. America seems a binary country on that single dimension–divided into climate change proponents who accept the science and climate change deniers who support the corporatist interpretation of the world: few seem to be on the fence.

Before GWBush was elected President, we didn’t hear from him on the campaign trail about how he wanted to go to war. It was after his election that we learned about his proclivity for making war and his plans  for invading Iraq. But Romney has consistently beaten the drums of war as he promises a more confrontational policy towards Iran; keep in mind that our own government’s best assessment from the National Intelligence Estimate (a summary of all our intelligence information) is that Iran is not making a bomb. But Romney’s advisers are hawks that want to push this issue and Romney promises to raise the military budget over the projections of Obama’s budget. Never mind that Obama’s military budget will still be larger than that of GW Bush. Romney has no experience with war–he never served in the military (neither did Obama, but we know Obama hates war).  So Romney will be more inclined to listen to his advisers, among whom are hawks who promote this more confrontational stance towards Iran and do not want to see America become a shrinking power.  Any war with Iran would lead to an immediate closure of the Strait of Hormuz and very likely would lead to a much wider war, to say nothing about running the risk of collapse in the global economy. Every day 20% of the world’s oil supply, or 17 million barrels of oil moves through the Strait of Hormuz, making it, economically, one of the most important passageways on the planet. As Michael Klare points out, we are entering the Geo-Energy-Era in which energy demands are escalating and easy access to oil is diminishing, with fever-pitch efforts by countries and companies to secure more oil contracts. Some analysts claim that blocking the Strait of Hormuz for any significant length of time could dramatically increase the cost of oil by 50% and trigger a global recession or depression.  It probably no longer matters whether there is a glut of oil on the market as the futures trading in oil seems permanently hyped into the perception that, as a planet, we are running out of oil at a time of skyrocketing demands needed to serve the exploding economies of China, India and other parts of Asia. Can we afford to elect a President who is so naive that he  is willing to go to war based on false premises about Iran’s nuclear weapons program? This is what I mean about a President that has no clue about the principle of verifiable truth. Of course it doesn’t help that the Obama administration seems to be hyping the Iran/nuclear bomb threat as well: is that for election purposes, like Kennedy’s famous “missile-gap” charge when running for the Presidency against Nixon in 1960?

If there is any advantage in having Mitt Romney run for President, it will be that finally, the American electorate, will get to know what a private equity firm is and how Mitt Romney, as the head of Bain Capital, managed to destroy many companies for the sake of profit.  Private equity firms, while bringing huge profits to the investors, destroy companies by saddling them with debt used to pay off the buyout of the company or give resources back to the investors and managers of the firm. If a company needs to buy plant equipment to improve their productivity, they cannot do it if saddled with debt, forced on them by their new owners. If you believe that Bain Capital has been good for our economy and jobs, then you should read the Think Progress article on Mitt Romney Job Killer. When Romney ran against Ted Kennedy for his Senate seat in 1994, just as in today’s campaign, he advocated his record of job creation and his business experience to challenge Kennedy. But Kennedy won that race by illustrating one of Romney’s “success stories” using the example of American Pad and Paper or AMPAD, a company that under Bain’s ownership, cut jobs and reduced wages. Kennedy played television ads featuring interviews with laid-off AMPAD employees and won the race at a time when Romney might have more easily unseated Kennedy.The AMPAD story continued after the election and according to the data presented in Think Progress, Bain invested $ 10 million in  AMPAD, but pulled $100 million out of the company. AMPAD had to cut 385 jobs and with $392 million in debt in 1999, filed for bankruptcy in 2000.  In our current depressed economy, with millions out of work, shedding light on predatory, private equity firms will not enhance Romney’s chances of unseating Obama, but it may help educate voters on whether it’s more important to have good-paying jobs or highly profitable investment firms that form one of the mechanisms by which the middle class shrinks as the wealthy get richer. Today more than ever before in our consumer-based economy, it is important to have good paying jobs in order for people to maintain consumption, create demand and grow the economy. Right now the imbalance of income distribution is slanted in such a way that consumer demand cannot get off the ground and Mitt Romney has no clue on how to fix the problem, unless of course he takes us into war.

RFM

Aftermath of Joplin MO Tornado 2011

It is innately human for us to recall and assess this past year’s major events and review the memories, as the end of the year winds down to the last few days. After that, the new year starts up and we supposedly have something to look forward to, as we turn our heads and point to the future, though not quite putting last year’s memories in a lock box. Whether this transition is cultural or more subtly linked to the events like the Winter Solstice, the transition we make on or about New Year’s day is a change from looking in the rear view mirror for a few moments, to catch a few fading memories and then switching to focus our eyes on the road ahead. Barack Obama will have to do that as he prepares for his re-election campaign. Right now, resting in Hawaii, he is probably soaking up the impact of his recent speech in Osawatomie, Kansas and trying to estimate how effectively it went down with the Millennial crowd, those for whom it was designed. I agree with other assessments that he will benefit more from the Millennial generation in the coming election compared to any other age group and that’s why his Osawatomie speech was so important. He currently holds a 25 point lead over Romney among Millennials–they alone will hold the key to his re-election and I think he finally knows this–they are strongly in support of the Occupy Wall Street Movement, but he will have to make a few more left turns in order to convince them and keep his big margin, enough so that the millennials will massively get out and vote in November 2012: they went missing in 2010.  This is an historic election coming up. Let’s hope that this election proves to be the year that we put the Republican Party, at least this iteration of it, in our rear view mirror on a more permanent basis.  On the other hand, for the older crowd, those that are in the pre-Baby Boomer generation, many of whom are members of the Tea party,  Obama trails Mitt Romney by a 54-41 margin, a very wide gap. Perhaps he can whittle away and gain a few points with this group, because as soon as Romney gets the nomination, he will shift his focus towards cutting benefits for Social Security and Medicare and eliminating the new healthcare bill he refers to as “Obamacare.” Those are issues that touch many of the Tea Party members–what they are actually mad about is not their benefits, but the idea that illegal immigrants and lazy young people will step in to get a share of the American pie while their own is increasingly at risk–that’s why they are conflicted with Romney’s candidacy. At the very moment Romney gets the nomination, many Tea Party members might be uttering “Hell hath no fury like a former private equity manager running for President.”

Not only do we as individuals assess the recent past, but it makes sense that our government agencies  try to do the same; one assessment among the U.S. government agencies stands out: the National Oceanic and Atmospheric Administration (NOAA) has tallied the cost of the many weather disasters we have been through in the past year. Justin Gillis reports on this in the New York Times: as he describes it, a typical year in this country for weather disasters usually has three or four incidents which reach the threshold of $1 billion or more each. But this year NOAA has done the math and, while the agency has not yet finished adding it all up, the final cost is likely to exceed $ 50 billion. It includes wildfires, floods, heat waves, dust storms and several deadly tornadoes, the likes of which have not been seen before.  According to  a weather expert who co-founded the website called “Weather Underground,” a search of the historical weather patterns going back to the late 1800s did not reveal anything comparable to 2011 for weather disasters. Though most climate scientists are certain that the heating of the earth from greenhouse gases accounts for many of these catastrophic events, right now it isn’t possible to say which events are global-climate-change-related and which are not. Climate scientists know that we are changing the scale of atmospheric events, because we are putting more energy into the atmosphere. This additional energy has to be dissipated in some way and more frequent and violent interactions with the Earth’s surface, whether over water or land, are about the only options. But things like tornadoes are hard to pinpoint in terms of their genesis because they are relatively small on a global scale and seem random. However, less random is the fact that funnels in some of the recent tornadoes, like that in Joplin Missouri, were a mile wide and touched down for much longer stretches than one’s experience would indicate. This was a violent tornado, destroying virtually everything in its path. Right now climate scientists are retooling climate models to deal with smaller regions and study more effectively the impact that global climate change has on these events. But there is some doubt about the accuracy with which these more refined models can be predictive and with public interest in global climate change at such a low ebb, and the economy in the tank, needed research resources to address these kinds of problems are not available.

In case you were thinking about serious mountain climbing this coming year, you might want to check out what has been happening to the large mountains on the planet, those with glaciers on top, most of which are in full retreat. One climber even reported seeing running water near the top of Mt. Everest, something never reported before. You might want to visit Mount Kilimanjaro in Africa before its glacier completely disappears, perhaps as early as 2015. Glaciers on major mountain tops have had serious erosion during the past few decades and because snow and ice have been the glue that keeps loose rocks and boulders bound together, hiking in many places has become more dangerous. While some climbing can be more accessible, it is often longer and more treacherous. To top it all off, a new report indicates that emissions of carbon dioxide into the atmosphere had the largest increase ever recorded, with an increase of 5.9 percent in 2010.  This contrasts with  the 1.4 percent drop in emissions in 2009, the year the recession generated a significant drop in the economy and greenhouse gas emissions. Most climate scientists agree that we have reached a tipping point in the sense that we will have to live through a significant period of  impact from global climate change and that our planet is likely to change in irreversible ways as this century progresses. Here’s hoping that our fondest memories each year are not related to the weather patterns we enjoyed, but may never see again.

RFM

Carbon Sequestration in Permafrost (right) by "Cryoturbination" from Charles Tarnocai

Permafrost (permanently frozen ground) has not been on the radar screen very often in the national conversation about global climate change (GCC). When I started reading about the science underlying GCC a few years ago, I came across brief, scattered descriptions about permafrost; my tendency then was to skip over the pages describing the problem, which wasn’t difficult, as there were few in number and fewer still were the number of scientists who considered the issue to be an emergency situation or a major component of GCC. Indeed, until recently, it was widely assumed that the warming of the permafrost would stimulate new plant growth, such that the net impact would be a sink for carbon, not a source and hence, a protective mechanism for absorbing the carbon hiccups of GCC.  The 2007 report from the Intergovernmental Panel on Climate Change (IPCC; Fourth Report: working group I: The Physical Science Basis, p 340) stated “The maximum extent of seasonally frozen ground has decreased by about 7% in the NH from 1901 to 2002, with a decrease in spring of up to 15%. Its maximum depth has decreased about 0.3 m in Eurasia since the mid-20th century. In addition, maximum seasonal thaw depth over permafrost has increased about 0.2 m in the Russian Arctic from 1956 to 1990. Onset dates of thaw in spring and freeze in autumn advanced five to seven days in Eurasia from 1988 to 2002, leading to an earlier growing season but no change in duration:” there was little hint from the report that permafrost was a serious, hidden threat anymore than that attributed to greenhouse gas emissions in general. Thus, until very recently, any special reference to permafrost as a problem seemed to be traveling under the radar screen.  Observers and scientists alike have all been rightly focused on the more significant issue of coal-burning power plants, the number one polluter and green house gas emitter and the single biggest danger to our planetary future.  But in the last few years, reports started to appear which suggested that permafrost could no longer be ignored in calculations and models about climate change, because more extensive measurements suggested that it is potentially a major source of greenhouse gases, including carbon dioxide and methane and that permafrost may be a storage source for huge quantities of carbon, in the form of plant material that got buried long ago in the layers of permafrost–a source that is now in the process of being “liberated” through exposure to planetary warming. One of the revelations that changed our views on this topic came from recent studies that measured permafrost carbon content at soil depths deeper than 100 cm, revealing that for some permafrost regions, up to 2/3 of the carbon deposits in the soil were deeper than the 100 cm limit used in many previous studies. More measurements and additional studies of this problem are acutely needed to evaluate the significance of this newly revealed, potentially dangerous source of carbon. It could form another positive feedback mechanism for GCC, at a time when we have a hard time dealing with coal-burning power plants.

Recently, Justin Gillis wrote an article in the New York timeswhich provided  an excellent, fairly detailed front page story on permafrost, together with information about ongoing studies in Alaska, Canada and other parts of the Northern Hemisphere. These studies are alarming because they indicate that the Northern Hemisphere could become a source of carbon rather than a sink (indeed, it may be there already, though we don’t know this with certainty), created by warming conditions which stimulate bacterial breakdown of dormant sources of carbon.

Permafrost of Circumpolar Region (from Charles Tarnocai)

When oxygen is plentiful, as in the bacterial breakdown of plant material in air,  the stored permafrost vegetation is generally broken down into carbon dioxide, but when the region is oxygen-poor, usually when it is submerged in water, bacteria can generate methane gas from this carbon source, which forms bubbles in lakes and ponds as it rises to the surface and ultimately into the atmosphere. Methane gas has been reported in locations in Alaska: once in the atmosphere, it is 33 times more potent than carbon dioxide as a greenhouse gas when measured over a 100 year period. It is far better to burn it off into carbon dioxide than let it reach the atmosphere as methane, even though its half life in the atmosphere is less than that of carbon dioxide.  Recent estimates of the amount of carbon that currently exists in the permafrost is about twice the amount that’s in the atmosphere already and could eventually constitute up to 35 percent of today’s annual human emissions. The danger of this source, is that once the process of degradation begins, though it may take 100 years or more to biodegrade its way through the available sources of carbon, it will be impossible to stop. Now is the time to alertly invest in research to evaluate with more certainty the true impact of this new addition to the GCC orchestra. Is it a single instrument or a new section of the band!

The first question of interest of course is what is permafrost? A dictionary definition is that of a subsurface material that remains below zero degrees Centigrade (32 degrees Fahrenheit) for a least two consecutive years. More practically, it’s the area in the Northern Hemisphere that is largely frozen, but some regions of the permafrost have a surface layer which has seasonal plant growth. The permafrost areas, like the rest of the planet, are beginning to warm and there is new cause for concern about the consequences. The earth is heating up more rapidly in the Northern Hemisphere than any other region of the planet. As the reflective glaciers (albedo effect) retreat, the area exposes itself as a less reflective environment, in the form of water and land, and more of the sun ‘s energy is absorbed and accelerates the warming trend; this constitutes a positive feedback system which further accelerates the loss of snow and ice in the region–>more heat–>less ice–>more heat absorbed–>more melting of ice–>where will it all end?  Thus, GCC is already generating one positive feedback system in the form of the albedo effect, especially evident in the Northern Hemisphere. Though permafrost also exists within the Antarctic region, it has been less well studied. As glaciers and ice pack formation retreat, more  permafrost gets exposed, but the warming of the exposed permafrost appears to be adding another source of carbon that we should seriously worry about. This issue has become of interest lately because studies have shown that permafrost is a rich source of sequestered carbon that has been trapped in the soil for hundreds to thousands of years.

It is counter-intuitive to imagine that permafrost might be a type of soil that holds rich deposits of carbon. One’s first impression is that soils exposed to frozen conditions will  be poor in nutritional value and contain less vegetation than that of more temperate soils. But extensive measurements from many different regions of the permafrost indicate that overall, the permafrost can contain higher levels of carbon than more temperate soils and that deep down in the soil, rich carbon deposits can exist.  The first figure illustrates how the permafrost becomes increasingly carbonized by a process referred to as  “crytoturbination,” (right figure) as if a giant Hobart machine circulated plant deposits  (and a few dead animals) from near the surface deeper into the soil, such that very deep layers contain high levels of carbon when compared to soils from more temperate regions (left figure). This process of permafrost carbonation has been going on for thousands of years but it is still surprising that they contain such high levels and deep layers of carbon deposits.  The second figure shows, in a color-coded map, the areas of permafrost that presently exist in the Northern Circumpolar regions, based on carbon soil content derived from borehole analysis.  If the permafrost source of carbon dioxide/methane gains momentum, it will become another positive feedback mechanism with sufficient potential power to make a big contribution to global warming. Whereas climatologists and plant biologists once considered the exposure of the permafrost to have a positive influence through carbon sequestration, with the new higher estimates of the permafrost carbon content, the process may well have started and whatever benefit we might have derived may be turning into an additional problem for the future of the planet. When you look at it in the following way, you can appreciate the problem: for hundreds of millions of years, the earth accumulated carbon in the form of coal, oil and natural gas. Through man’s ingenious nature, a portion of this carbon  has been put into the atmosphere as carbon dioxide and other greenhouse gases, but on a time scale of a few centuries. Since we now understand that the planet is in a delicate balance of carbon dioxide and other greenhouse gases, with the Earth’s ice and snow content, shouldn’t it alarm all of us when we imagine that our actions cannot do anything other than change our planetary weather? What new philosophical form of inquiry is required for man to properly gaze into the future that he has created for himself? Scientific inquiry so far doesn’t seem to work.

RFM

Apart from all that, Happy Holidays!

Zucotti (Liberty) Park Before the Deluge

RFM

Christopher Hitchens (From The Guardian)

Writer Christopher Hitchens has died at age 62 from esophageal cancer. Roy Gleenslade comments on his life in The Guardian. Doubtless many others will weigh-in on Hitchens’  life in the next few days. Most news sources have obituaries for famous people prepared ahead of time.  At one time or another Hitchens alienated just about everyone.  But he went through several iterations of self-rescue. What has always struck me about him is the remarkable range of subjects in which he could find comfort and display at least the veneer of competence.  He appeared to be a quick study. I appreciated his views on religion, perhaps his most enduring contribution, and, provided that he had enough alcohol on board, either with him or in him, his interviews on television could be a delight: Rapid fire responses interspersed with little escape vignettes of reliable composition and always guaranteed to offend someone.  I stopped listening to Hitchens when he got the war in Iraq wrong and tried to excuse water boarding as non-torture. Anyone who wants to defend the American invasion of Iraq is going to have to explain why so many Iraqis died or got dispersed to the countryside or wound up in other neighboring countries. These are the people that Iraq needs to build a functional society. Then too there is the issue of how so many museums and rich discoveries of past civilizations are now buried under American cement and asphalt.  Scholars tried to warn Rumsfeld about the rich archeological sites in and around Baghdad, but Rumsfeld was only interested in where the ministry of oil was located.  I think of Hitchens as an essayist and a writer–a good one. But it was hard to take him all that seriously.

RFM

Derek Boogaard (from the NYT)

No doubt many of you have already read the New York Times articles on the short life of Canadian hockey enforcer Derek Boogaard who was initially drafted into the NHL by the Minnesota Wild.  In May of this year (2011) he was found dead by his brothers in his Minneapolis apartment,  after a night of consuming pain pills and alcohol.  He was 28 years old, an age at which a professional hockey player normally expects to be in the prime of his career as a player. But at the time of his death, Boogaard’s mental health had deteriorated; he showed signs of emotional instability and depression. Several months after his death, the results of his brain postmortem analysis came back: it revealed serious signs of brain degeneration with extensive deposits of “Tau” protein in many different brain regions: he was suffering from severe Chronic Traumatic Encephalopathy  (CTE).  Dr. Ann McKee, the Boston expert in CTE, who carried out the analysis of Boogaard’s brain,  informed Derek’s parents of the diagnosis and said that had he lived, he very likely would have suffered from mid-life dementia.   Thus,  it was  more than alcohol and drugs that caused Derek’s problems. Friends and family all noticed that he had gone through significant changes in personality before his death and it now seems clear that his brain had been traumatized into an emerging state of dementia.

After more than six months pursuing Derek’s past history, including extensive interviews with members of his family, doctors and NHL officials, reporter John Branch published a three part series in the New York Times on Derek Boogaard’s rise and fall as a hockey enforcer.  Derek’s role as a hockey enforcer meant that his job was to fight the other team’s enforcer. He was not drafted into the NHL for his skating skills or goal scoring. In fact during his entire NHL career he scored only three goals. He was drafted for one role only–his ability to hit others, while being hit at the same time. The National Hockey League, which claims that fighting is against the rules (after each brawl, both fighters must go to the penalty box for five minutes); they also argue that the enforcer arrangement helps keep violence on the ice minimized, because if players know they might have to face the other team’s enforcer, someone that might deliver a blow that could break a nose or a jaw, they themselves are less likely to start a fight on their own. If you have ever been to an NHL hockey game and sit close to the plastic partitions at either end of the rink, you quickly learn how violent the sport is, even without an enforcer.

Every Canadian boy who plays hockey wants to make it to the NHL as a goal-scoring standout. But for those who don’t make it that way, if you are big and tough and willing to fight, you can get to the NHL through the side door as an enforcer. Derek was drafted in 2001 by the Minnesota Wild  for his success as an enforcer while playing in the Western Hockey League for several years. Team enforcers must always be ready to assume their role: as tensions and rough play of a hockey game escalate, the likelihood that the enforcers from each team will  square off in the rink, with gloves dropped and fists flying, becomes all but inevitable, even though a fight does not take place in every game.  Once a member of an NHL team, Derek quickly fulfilled his role as an enforcer and became the single most feared player in hockey. As a result, he was one of the most popular, widely recognized players on the Minnesota Wild hockey team.

Most players and fans believe that fighting is part of an NHL hockey game and everyone who profits from the sport believes that fighting is essential to maintain fan interest and attendance.  By the time Derek died, his performance as a skater and fighter had badly deteriorated. He was addicted to pain killers and alcohol, but in addition, he was confused and depressed, as he faced an uncertain future. Though he was seemingly addicted to pain medication, he probably had no idea that his addiction and consumption of Oxycontin could not relieve him from the confusion and depression he felt as a result of  the brain damage he suffered from his life as an enforcer.

Derek had been drafted by the Minnesota Wild, not because of his skating ability, but because of his fighting skills. At 6 feet 8 inches he was an imposing opponent and quickly gained a reputation as the best enforcer in the league. His parents had sent him for additional training as a boxer to hone his fighting skills in hockey. Fans in Minnesota loved him and he always attracted a lot of attention in the bars he went to in Minneapolis.

Reporter John Branch has provided an intimate account of Derek Boogaard’s rise to prominence as a hockey enforcer and his decline in performance, at least part of which can be attributed to the brain damage he suffered from numerous fights and many concussions. No one knows with certainty how many concussions Derek suffered during his hockey career, but then too, no one knows if simply adding up the number of concussions a player has increases his risk of CTE. Does merely getting hit hard without an ensuing concussion also contribute to the development of CTE? The three parts of the published articles include “Derek Boogaard: A Boy Learns to Brawl“, “Derek Boogaard: Blood on the Ice“  and  “Derek Boogaard: A Brain ‘Going Bad’“; these articles appeared on December 3-5 of this year. A video that covers Boogaard’s  life and the postmortem diagnosis is part of the supporting material associated with the publication. Numerous other links are available that reveal more about the pathology of the brain in CTE, and the likely etiology of the disorder, though the details of the disease remain poorly understood. The figure below shows the dark staining material based on immunostaining techniques that reveal the tau protein for different sections of the cerebral cortex obtained from three different individuals (A-C), while the figures below (D-F) are higher magnification microscopic sections revealing the dark neurofibrillary tangles characteristic of CTE and other degenerative disorders. These regions of the brain are associated with nerve cell destruction and glial reaction. To a pathologist, these images reflect serious brain damage and functional incapacity.

From McKee (J Neuropathol Exp Neurol, V 68, July 2009, Fig. 2)

Perhaps contributing to the rapid decline in Derek’s mental state, was the manner in which he fought [from another player about Derek's fighting]: “Derek would take two or three punches to land one good one. He wasn’t a defensive fighter. I remember he said: ‘I hate guys that hide. When I fight, I’m going to throw, and I’m going to throw hard. I don’t have an off switch.’ Anytime a fight didn’t go his way — a draw or maybe he thought he lost — that would eat at him.”  As an indication of Boogaard’s mental deterioration, at one point during Derek’s career (quote from the article), “in the fall of 2009, a team doctor asked Boogaard to name every word he could think of that began with the letter R. He could not come up with any.”

When his brain was examined in the laboratory of  Dr. Ann McKee she was shocked to see such an advanced level of CTE in a person so young. The “tau” protein has numerous functions, including  its service as an important envelope protein for microtubules, one of the main transport highway systems for moving material from the soma into the axon and back. If that system is damaged, nerve cells are at increased risk of cell death.  The “Tau” protein is also abnormally present in Alzheimer’s disease and other degenerative disease states, including some cases of Amyotrophic Lateral Sclerosis (ALS or Lou Gerhig’s Disease–the acquired not the genetic form)  that are referred to as “Tauopathies.” When Dr. McKee talked with Derek’s parents and conveyed her diagnosis, Derek’s father found it somewhat reassuring that his son’s brain deterioration was so advanced that, had he survived, he very likely would have become senile in middle age.

Ann McKee, a neuropathologist, runs the Center for the Study of Traumatic Encephalopathy at Boston University School of Medicine. Her collection of brains from athletes now includes 80 and while each of them suffered from some level of CTE, Boogaard’s brain revealed the most significant level of damage she has seen, quite shocking for someone so young. The study of traumatic brain disease first began with boxers, then moved to football players and more recently has focused on hockey players. Unfortunately, at the present time, the disease can only be diagnosed at autopsy and not during the life of the athlete. Although the Center has only four brains from deceased hockey players, each of them showed signs of tau pathology.  Initially the NFL was suspcious about the connection between brain trauma from football injuries and degenerative brain disease, but they now support studies of the Center and force players to sit out at least one game if they experience a concussion.  Currently the NHL has rejected the idea that hockey is associated with CTE, although awareness is increasingly focused on preventing players from playing after experiencing a concussion. The trouble with this rule is that every enforcer realizes their special vulnerability: if they shows signs of weakness, the will soon be traded. Boogaard was let go by the Minnesota Wild in 2010 and wound up playing a few games with the New York Rangers so pressure exists among enforcers not to reveal the depth of their injuries and to keep playing when hurt.

Vertebrate evolution, with an increasing emphasis on expansion of the brain cavity and its support for enhanced cerebral function,  developed a marvelous fluid encasement  and meningeal system for protecting the brain and preventing acute injury from violent, sudden movements. As sports were introduced and became more violent, helmets were developed to enhance the protection of the brain, but we now realize that this additional protective method does not work effectively when someone is holding the shirt of an opposing player and trying to drive their fist through his jaw. Ejection of the helmets during a fight usually happens, even though it is against the rules to play without a helmet. Both boxing and hockey celebrate and promote the contact sport of a fist from one opponent meeting the jaw of another. The emerging analysis of traumatic brain injury from such collisions means that to continue on with these sports without dramatically improving the protection for athletes engaged in them will put our culture back to the era of Rome and the coliseum events where human destruction was a sport.  Perhaps we are there already.

Minnesota, right next door to Canada, is a hockey state. When we moved to Minneapolis from St. Louis  in 1988, our two sons were 11 and 8 years of age. They were both eager to try and play hockey. So we signed them up for skating lessons during the summer. In many ways, I was relieved to see that they were so far behind their peers in terms of skating skills, such that they had very little chance of catching up, without putting in some extraordinary additional effort. Nevertheless, both played “neighborhood hockey” which was a much milder form of the game and more suitably tuned for transient interest. We had neighbors whose sons were more serious about hockey, some of whom wound up playing for the high school team. At that level, many young hockey players in Minnesota, like their Canadian counterparts, harbor a strong desire to play in the NHL and the quality of ice hockey at the high school level in Minnesota is quite impressive. But one of our neighbor’s sons experienced several concussions as a star of the high school hockey team, which seemed to permanently change his mental state to one in which he showed signs of confusion. I was grateful that neither of my sons took up hockey or football in any serious way. What outweighed any passion they had for sports, was a passion for reading and learning. I believe that my wife’s constant reading to them while they were evolving in the womb was an important element in creating their strong bond for literature and their pursuit of English Literature as a major focus in their lives. Now, if we only had a culture that was strong enough to support such interests.

RFM

Poster in Osawatomie Kansas

E.J. Dionne, a columnist for the Washington Post, has written an excellent article in TheNationalMemo, based on Obama’s speech earlier this week in Osawatomie, Kansas, the site of Theodore Roosevelt’s legendary “New Nationalism” speech 101 years ago. It was in that speech on August 31, 1910 that Roosevelt laid out a plan for the Federal government to initiate radical changes in the services they offered to all citizens, including national healthcare service, social insurance, limited injunctions in strikes, a minimum wage law for women, an eight hour work day, farm relief, injured workers compensation, the introduction of a Federal income tax, women’s suffrage, an inheritance tax and the direct election of Senators. What Roosevelt was really about in that speech was his opposition to the control that big business had in politics, government and unfair labor practices.

Though maybe a bit shy of Roosevelt’s sweeping, revolutionary hopes for a more expansive role of government, I found Obama’s speech highly significant and, as Dionne points out, it “was the Inaugural address Obama never gave”;  its obvious link to Teddy Roosevelt’s speech on progressivism gave Obama a platform to launch his 2012 campaign and, during that speech, he denounced neoliberalism without using that word, but nevertheless cited the failure of the economics of the neoliberal system, including terms like the “free market” economy and “supply-side” economics both still rigidly doctrinaire for Republicans.  The success of the Occupy Wall Street (OWS) movement had a lot to do with shaping Obama’s speech. He finally looked comfortable moving to the left and, at least in his speech content, he effectively  converted to a more progressive shift in his campaign strategy.

With the disintegration of the Republican Party leadership,  and the success of the OWS movement, Obama had little choice but to move towards a more progressive campaign image. He can no longer attempt to triangulate between the Republicans and Democrats–he tried that for nearly three years and what did it get him–he further angered his own base and got zero Republican support. Now he needs to hammer the points he raised in his speech again and again using redundancy as one of the new weapons in the toolbox. In Minnesota, where the Republicans took both the state Senate and the House in 2010 and came within a whisker of winning the governorship, the Chair of the state Republican Party just stepped down, leaving the party in disarray, with as much as $ 2 million  in debt, while they are having a very difficult time raising money–all in less than a year after steamrolling into political power. The rise and fall of Minnesota Congresswoman Michele Bachmann probably had a lot do with the party’s downward projection. Her story has been a meteoric rise and fall and her projection into the future seems to have an unlimited bottom; for now it seems her fortunes have been mirrored by those of the state Republican Party. The state of Minnesota is also feeling the remnants of the disastrous leadership of Tim Pawlenty.

With the rise of Newt Gingrich as at least a temporary star in the Republican Presidential nomination process, he will unavoidably defend Neoliberalism (Reaganism) and hopefully that will lead to the national discussion we never had on the subject. Perhaps in the long run, we can rename Ronald Reagan National Airport in Washington back to just plain National Airport. I will personally feel a lot safer flying into Washington with a return to the previous name. But, naturally, you are all asking why Roosevelt give a speech in Osawatomie, Kansas?  I looked into that. From the Kansas Historical Society:

• “ON AUGUST 31, 1910, Theodore Roosevelt delivered what was perhaps the most important speech ever given in Kansas. Surrounded by 30,000 enthusiastic listeners at Osawatomie, he developed a political creed which became a milestone along the road to the modern all-powerful state. This speech, later called the “New Nationalism Address,” evoked a wide variety of responses. It was labeled “Communistic,” “Socialistic,” and “Anarchistic” in various quarters; while others hailed it “the greatest oration ever given on American soil.” What then were the circumstances surrounding the address? What was the Kansas role in the drama at Osawatomie? Why was that town chosen for such an auspicious moment in history? And why did an ex-President devise a comprehensive political program such as the “New Nationalism?“”

You might ask why Osawatomie, Kansas for Roosevelt’s speech–that is also addressed in the same article from the Kansas Historical Society and hinted at with the speech poster image–he was commemorating a park dedicated to the anti-slavery actions of John Brown.

• “The ostensible occasion for the speech was the two-day dedicatory ceremonies at the John Brown Memorial Park. The park, located at the southwestern edge of Osawatomie in the vicinity of a well-remembered skirmish between Proslavery forces and the men led by Brown during the “Battle of Osawatomie,” was a gift to the state from the G.A.R.’s feminine auxiliary, the Women’s Relief Corps. It was the brain child of Anna Heacock, Cora Deputy, and the property’s former owner, Maj. John B. Remington. Remington, allegedly John Brown’s nephew by marriage, had induced Deputy and Heacock to buy the land for their organization and then donate the 22-1/2 acres to the state for the memorial. Not all the ladies supported the proposal as zealously as Commanders Heacock and Deputy. For example, Minnie D. Morgan objected to the way money was subscribed by the corps’ leadership without formal approval from the W.R.C. She also argued against the project since the place had “never been owned by John Brown. He never lived on it. The John Brown cabin…[was] not there, and …while Brown and his men fired upon the gang of pro-slavery men from…[the] locality, no Free State men were injured and no blood was spilled” there. [1] But, these details did not deter Heacock. Long before the $1,800 was raised to purchase the site, she, with the help of Gov. Walter Roscoe Stubbs, had secured formal acceptance of the area from the legislature. [2]“

I found Obama’s speech in Osawatomie was especially strong when he criticized the “supply-side” economic idea that Reagan introduced, from which we have never recovered   [referring to the supply-side argument] they said “if we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. But here’s the problem. It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade.” When was the last time you heard a Democratic Presidential candidate denounce supply-side economics with such a strong voice? Hubert Humphrey (who came before Reagan of course) would have done something like that, but that was a very different time and place. Obama has denounced one of the pillars of Republicanism–one of their Holy Grail issues and it will be interesting to see if the press picks up on this and whether it becomes an issue in the next Republican debate.

The best thing Obama can do for his own Presidential candidacy is help the Occupy movement grow and borrow from its well-known lines. It would help immensely if he had the courage to denounce the police brutality that has existed in several OWS encampments and also denounce the use of weapons grade pepper spray because it was never developed for application against non-violent First Amendment rights demonstrators. But you don’t have to blame the one percent as sinful practitioners of an evil system–they are operating with a system that got started decades before they arrived. As we went from manufacturing to a financialized country in the 1990s, we allowed the creation of a system that works against our own interests and continues to put our economy at risk of another meltdown. Obama will also benefit from getting more involved in bringing the banking system to account for not renegotiating mortgages instead of foreclosing and making people homeless. He should have taken over the banks when he was elected, but with that opportunity seemingly gone, he needs to revisit the problem and face it for what it is–a major drag on our economic development. As I have said before, I never met a homeless person until Ronald Reagan became President. And I have characterized the Reagan Presidency as the worst in our history because of the more successful system (New Deal) he began to destroy in the stealth manner known to all Republican politicians. We have an immense amount of repair work to do to our economy and our social fabric, but Obama now has some wind at his back and if he continues with this more liberal strategy, his sails will be full and he can move more progressively to the left, reminiscent of what FDR did when he accepted his party’s nomination for a second term, as described in E.J. Dionne’s article.

Of course, we all know what happened to Teddy Roosevelt. Out of office as President, where he served from 1901 to 1909, he was disenchanted with his replacement, William Howard Taft. Roosevelt wanted to see a much more progressive country develop along the lines of his speech in Osawatomie. He tried to take the nomination away from Taft in 1912 and when he failed, he launched the Bull Moose Party. Although Roosevelt lost the election to Woodrow Wilson in 1912, he was the only third-party candidate in history to come in second place, as he got more votes than Taft. So, let’s hope Obama’s electoral future turns out to be different than that of Roosevelt after his Osawatomie speech.  But Roosevelt crystallized the progressive movement that had been going on for years before his speech and he is generally considered to be one of our finest Presidents; that is why his image has been chiseled into Mount Rushmore. You can read more about Roosevelt’s progressive nationalism proposal here.

RFM