Our Insular Rulers

Found on Mark Thoma's blog:

Via Kevin Drum, John Judis says the greatest unreported story of last year is the return of telemarketers:

The Subversion of the Do Not Call Registry, by John Judis: The great under- or, better, un-covered story of the year: Cardholder Services and the Do Not Call Registry. You don’t know what I’m talking about? That’s because you don’t work at home. George W. Bush’s administration invaded Iraq and let Bernie Madoff run wild; but to its credit, it established the Do Not Call Registry to block telemarketers from flooding our telephones with unwanted offers. After I registered my phone number on the Federal Trade Commission’s web site in 2004, the phone calls virtually stopped. But guess what? Under the Obama administration, which claims to understand the power and wisdom of government regulation, they’ve begun again. I get seven or eight a day now (mostly I don’t answer them), including to my cell phone, where I get charged for them. ... I have already filed complaints with the FTC twice this year... So the Obama administration has not followed through on the one thing that the Bush administration did right.

Kevin Drum has the answer:

I get these calls too, but luckily I have a solution! Remember a couple of years ago when you used to get three or four robocalls a day offering you a chance to extend your auto warranty? It was pretty annoying. But the FTC finally put these scammers out of business. I'll let the Wall Street Journal explain how it happened:

The Federal Trade Commission filed complaints on Thursday against two companies that were behind an automated telemarketing campaign that enraged Senator Charles E. Schumer and, authorities say, deceived thousands of people across the country.

Mr. Schumer, Democrat of New York, was in a meeting on Capitol Hill last week when he picked up his cellphone, triggering a phony, prerecorded sales pitch, ostensibly for an extended vehicle warranty.

Irate, Mr. Schumer became one of an estimated 30,000 Americans to make complaints about the robocalls with consumer protection authorities. He held a press conference to rail against the “robo-dialed harassment.”

Did you get that? 30,000 Americans had already complained about these calls and the FTC did bupkis. They obviously Do Not Care about ordinary non-powerful Americans like you and me and 29,998 others.

But then Chuck Schumer got one call on his cell phone, called a press conference, and probably threatened the FTC with complete defunding if they didn't shut down the bastards tomorrow. And guess what? The FTC shut the bastards down.

The moral of the story here is that the FTC may not care about us ordinary schlubs, but they do care about pissed-off senators. So I recommend that Judis make a recording of the Cardholder Services robocall, get the private cell phone number of some senator (he must have contacts that can help him with this), and then call the senator and play back the call. Voila! A high-level complaint will be registered from one of the princes of Washington, and the FTC will spring into action.

You may thank me later.

I think there's another lesson to be drawn from this. It's helpful when the people representing us have the same experiences -- and the same frustrations -- as the rest of us. When the people making our laws live in a different world from the typical household -- as is more and more the case in our increasingly two-tiered society -- they are much less likely to share common experiences, and hence much less likely to effectively represent of their constituents. The amount of wealth required just to enter the political fray pretty much guarantees a disconnect between representatives and their constituents (and, to connect it to the previous post, this can affect their attitudes about whether deficits or unemployment is our biggest problem).

In other words - a problem only exists in this country if it affects members of the elite. If the elites can insulate themselves from it, then there is no problem. And the elites can insulate themselves more and more, thanks to economics and technology. Thus, unemployment is not, nor will ever be a problem. Corporations and the wealthy continue to get richer, so where is the problem? The stock market is going up, profits are being made, and the little people are paying their taxes. And the "higher" our representatives are, the better they can insulate themselves. The president lives in a gated mansion and flies around on a private airliner, all paid for by taxpayers. Lawmakers make their homes in exclusive neighborhoods in Washington D.C., send their kids to elite colleges and boarding schools, and are driven around by chauffeurs. For a glimpse into the lives of the elites, see this post from last year.

Put another way, only when our problems become so bad that they start affecting elites like our imperial senators, will things start to improve. But the wealthy are so good at insulating themselves from the rest of society that this may never happen. Ever. Jared Diamond, author of Collapse: How Societies Choose To Fail or Succeed, has stated that he believes that the degree to which elites can insulate themselves from the problems of their respective societies is a major  factor between societies that succeed and those that collapse. Read his book for more details.

Last year, I noted the following - Net Worth of Lawmakers Up 25 Percent in Two Years, Analysis Demonstrates:

Members of Congress had a collective net worth of more than $2 billion in 2010, a nearly 25 percent increase over the 2008 total, according to a Roll Call analysis of Members' financial disclosure forms.

Nearly 90 percent of that increase is concentrated in the 50 richest Members of Congress.

Two years ago, Roll Call found that the minimum net worth of House Members was slightly more than $1 billion; Senators had a combined minimum worth of $651 million for a Congressional total of $1.65 billion. Roll Call calculates minimum net worth by adding the minimum values of all reported assets and subtracting the minimum values of all reported liabilities.

Thanks to suburban sprawl and gentrification, the rich are isolated geographically too - Middle-Class Areas Shrink as Income Gap Grows, New Report Finds:

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.

And it's also worth noting that Washington D.C. has the highest per-capita income in the nation:

Washington, D.C., nosed out San Jose, Calif., as the nation's highest-income metropolitan region, fueled mainly by its army of attorneys, consultants, lobbyists and outside government contractors. Census data for 2010 show median household income was $84,523 in the D.C. area, compared with $83,944 for the San Jose region, the epicenter of Silicon Valley. Both numbers are well above the median income of about $50,000 for the nation as a whole.

This article from the Washington Post makes exactly the same case: Growing wealth widens distance between lawmakers and constituents. (you can read a couple of pages before you hit a paywall):

When Myers entered Congress, in 1975, it wasn’t nearly so unusual for a person with few assets besides a home to win and serve in Congress. Though lawmakers on Capitol Hill have long been more prosperous than other Americans, others of that time included a barber, a pipe fitter and a house painter. A handful had even organized into what was called the “Blue Collar Caucus.”

But the financial gap between Americans and their representatives in Congress has widened considerably since then, according to an analysis of financial disclosures by The Washington Post. Between 1984 and 2009, the median net worth of a member of the House more than doubled, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

The comparisons exclude home equity because it is not included in congressional reporting, and 1984 was chosen because it is the earliest year for which consistent wealth statistics are available. The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers.

“My mother and I used to joke we were like the Beverly Hillbillies when we rolled into McLean, and we really were,” said Michele ­Myers, the congressman’s daughter, now 46. “My dad was driving this awful lime-green Ford Maverick, and I bought my clothes at Kmart.”

I find the cultural difference elucidated in the article interesting: the "winners" simply blame the losers for not being winners like them. Anyone who has not clawed their way up the ladder by luck and pluck is "lazy", and the rich did it all by themselves. As the Archdruid put it recently, the poor will increasingly be blamed for their plight. Here's the story of Mike Kelly, a right-wing Republican who "pulled himself up by his bootstraps", married into money, and now believes that the rich are entitled to everything they get and the poor are responsible for their own plight:

Today, this area of Pennsylvania just north of Pittsburgh is represented in Congress by another Republican, Mike Kelly, a wealthy car dealer elected for the first time in 2010. Kelly, as it happens, grew up just a few houses down the street from the Myers family, in a larger brick home.

Kelly’s dad owned the local Chevrolet-Cadillac dealership in Butler, and Kelly, an affable former football recruit to Notre Dame, had worked there since he was a kid. Three years after graduating from college, he married Victoria Phillips, an heir to the Phillips oil fortune. He eventually bought and took control of the family car business, and today, the net worth of Kelly and his wife runs in the millions of dollars, according to financial disclosure forms.

Both men refer to their personal life experiences in explaining their political outlook.

Myers, the son of a bricklayer, had worked his way through college to a bachelor’s degree in mechanical engineering, and he looked at issues of work and security at least partly through the lens of his own experience. For example, he bucked other Republicans to vote to raise the minimum wage and favored expanding a program to aid workers affected by foreign imports. He said he understood the need for what was then called “the safety net.”

It would be hard to argue that the work in the steel mill didn’t give me a different perspective,” said Myers, now 74 and retired in Florida. “I think everybody’s history has an impact on them.”

Kelly, on the other hand, focuses on the hard work he and his family have done to build the dealership. He thinks that the government should be run more like a business, and that laws must be fair to people who strive and succeed. He opposes the estate tax, the inheritance tax levied on the wealthy, because, among other things, he feels he has been overtaxed already. He says unemployment checks make some less willing to go back to work. And asked about tax breaks for oil companies, he notes that when corporations profit, people with pensions and portfolios do, too.

Moreover, he favors the budget plan advanced by Rep. Paul Ryan (R-Wis.), which seeks to eliminate tax loopholes and lowers the income tax on the highest earners from 35 percent to 25 percent.

The original intent of the founding fathers was citizen representatives who were common people, and understood common people's problems. Hasn't worked out so well, has it?

The growing financial comfort of Congress relative to most Americans is consistent with the general trends in the United States toward inequality of wealth: Members of Congress have long been wealthier than average Americans, and in recent decades the wealth of the wealthiest Americans has outpaced that of the average.

In 1984, the 90th percentile of U.S. families had holdings worth six times the median family’s; by 2009, the 90th percentile was worth 12 times the median family, according to the University of Michigan study, a longitudinal panel survey. These figures include home equity.

This growing inequality, not surprisingly, is seen in Congress. Not only has the median wealth increased, but the proportion of representatives who have little besides a home has shrunk. In 1984, one in five House members had zero or negative net worth excluding home equity, according to the disclosures; by 2009, that number had dropped to one in 12.

Another possible reason for the growing wealth of Congress is that running a campaign has become much, much more expensive, making it more likely that wealthy people, who can donate substantially to their own campaigns, gain office.

When was the last time you saw a representative at church or at your local grocery store? Maybe a local one, but a national one? Forget about it. I doubt you're going to see a senator living in a tent city anytime soon. And they can give their family members elite educations and social connections to make sure they never have to deal with the same reality of skyrocketing medical, housing and education costs and declining job opportunities as the rest of us plebeians. We experienced this first-hand in Wisconsin, where one of the poorest members of congress, relatively speaking, was defeated by a Tea-Party backed plastics millionaire (whose employees had to rely on state aid for health care). Ron Johnson was heavily backed by out-of-state money as well. Since elected, he has pretty much been an empty suit rubber-stamp for the Republican party (he also claimed Ayn rand as his inspiration to run).

About a decade ago, academics studying the effect of income inequality on politics noticed a striking fact: The growth of income inequality has tracked very closely with measures of political polarization, which has been gauged using the average difference ­between the liberal/conservative scores for Republican and Democratic members of the House. The scores come from a database widely used by academics.

“The proximity of these trends is uncanny,” researchers Nolan McCar­ty, Keith T. Poole and Howard Rosenthal wrote in a a 2003 paper. “Remarkably, the trends of economic inequality and elite political polarization have moved almost in tandem for the past half-century.”

Exactly why this should be is a matter of ongoing research. Likewise, it is probably impossible to pinpoint the effects that the growing wealth gap may have on members of Congress — too many different factors, including party affiliation and district leanings, come to bear when a member of Congress casts a vote.

But a person’s financial circumstances certainly affect a person’s political outlook. For example, people identified as lower or middle class have been more likely to see income inequality as a problem and to favor redistribution of income, according to figures from the General Social Survey.

Moreover, there is at least some research that shows that members of Congress bring their life experiences to bear when they vote. Members of Congress with a higher proportion of daughters, for example, are more likely to take liberal positions on women’s issues, according to a 2006 working paper for the National Bureau of Economic Research by Ebonya Washington.

A representative’s occupation before being elected influences how liberal or conservative he or she is in voting, according to an analysis of more than 50 years of congressional votes by Duke University professor Nick Carnes.

In order from most conservative to most liberal: farm owners; businesspeople such as bankers or insurance executives; private-sector professionals such as doctors, engineers and architects; lawyers; service-based professionals such as teachers and social workers; politicians; and blue-collar workers, according to the analysis, which is being published in Legislative Studies Quarterly.

Carnes said that while party affiliation is the strongest determinant of voting records, “the differences between legislators of different occupational backgrounds are pretty striking. People tend to bring the worldview that comes with their occupation with them into office,” he said.

Interesting takeaways: as wealth becomes more stratified and we move into a two-tier society of haves and have-nots, politics becomes more polarized. That polarization prevents achieving real solutions to pressing problems, causing the wealth gap to accelerate even more. It's a feedback loop. And I think we know where that feedback loop is heading. Again we've seen this in Wisconsin, where union workers have been played against non-union workers, and a phony "crisis' has been invented by a Koch brothers-backed governor to defund the state. I found this note interesting, from the rich car-dealer representative:

On Washington, the wealthy, and the private sector: “Let’s stop railing against the really wealthy because I got to tell you something, as a guy who has had to pay his own way his whole life, I am greatly offended by the idea that somehow someone in Washington knows how to spend my money better than I do,” Kelly said during emotional remarks during a committee markup in June that attracted lots of attention through YouTube.

Kelly has been critical of the bank bailouts, too. But he declined to say whether he favored the government’s $50 billion bailout of General Motors, which benefited his auto dealership. Had GM gone out of business, it would have deprived Kelly of cars to sell at his Chevrolet-Cadillac dealership, reducing his inventory to Hyundais, Kias and used cars. The government’s “Cash for Clunkers” program, which offered financial incentives for consumers to trade in old cars, also helped Kelly sell $2.9 million worth of cars.

As the automaker neared the brink of collapse in December 2008, didn’t he hope the government would offer a lifeline?

“I thought about making my payroll every two weeks,” he said.

Classic. Government is bad, except when it helps me personally. If he were a banker instead of a car shuyster, I'm sure he would have favored that too. And I'm sure he believes he did it all himself. What he did, was collect enough money, exploit a market and marry well. The rich and privileged have been getting that way using these same methods since ancient times. Did he not have salesmen working for him? Did he not have mechanics who were trained in technical schools working for him? Did he not have a country with taxpayer-funded roads and a million government incentives to get people to drive, including suppressing public transport? Yeah, he did it all by himself all right.

The problem is, the Ayn-Rand derived attitudes of our millionaire class are incompatible with the complex, interrelated, specialized, technological society that we live in now. Thus that society is undergoing catabolic collapse - it is decaying and falling apart. We've never been more interconnected, yet we have this attitude of "every man for himself". the problem is, it becomes a self-fulfilling prophesy, as "every man for himself" destroys the very society that made people rich in the first place. Customers eventually become too poor to purchase cars, because their jobs are gone and their paychecks too meager. Car companies go under because of competition. Loans are not available because credit dries up. Roads are not maintained and crumble. Gas prices soar due to peak oil. Supply chains are disrupted by natural disasters due to climate change. Technicians cannot be found to service cars because the schools have shut down and public education has been defunded. Of course, by the time the rich start being affected by all this, it will be too late.