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Posts Tagged ‘THE WALL STREET JOURNAL’

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WHY REGULAR JOBS PROGRAMS DON’T WORK

In Bureaucracy, Business, Politics, Self-Help, Social commentary on May 2, 2013 at 12:18 am

Imagine this: A future President seeks to disband the FBI—and offer bribes to career criminals to not rob, rape and murder. And to sell his proposal, he chooses as his slogan: “Let criminals be criminals.”

If that sounds impossible, consider this: Politicians on both the Right and Left have adopted just that mindset toward holding corporate employers accountable for their criminal greed and irresponsibility.

Case in point: The Obama administration has signaled that it may adopt a Georgia program that allows businesses to train jobless workers for two months without having to pay them.

Its supporters claim the program—Georgia Works—lets workers get their foot in the door and reduces businesses’ hiring risks. Unions assert that it exploits workers and violates federal labor laws.

The drawbacks to this program:

  • It’s only open to workers receiving unemployment insurance benefits.
  • Businesses have no obligation to hire participating workers.

Mississippi, in turn, has launched the Subsidized Transition Employment Program and Services. Funded with left-over stimulus dollars, it initially covers 100 percent of an employee’s wages, gradually reducing the subsidy for every 160 hours worked.

Its drawbacks:

  • It lasts only four months—from August to December, 2011.
  • Businesses will be excluded from the program if funds are exhausted or the September 30 enrollment deadline has passed.
  • Only 80 companies had signed up for the program by early September.

Then there’s the Minnesota solution. Instead of adopting Senator Al Franken’s proposal to use public monies to subsidize wages, Congress enacted the Hiring Incentives to Restore Employment Act. This gave businesses $13 billion worth of tax credits for hiring unemployed workers.

The drawbacks to this effort:

  • The measure has not been evaluated.
  • It does not require employers to hire.

In Connecticut, another jobs program, Platform to Employment, puts workers through a four-week training period followed by an eight-week tryout at a participating business.

During the tryouts, the employees’ wages are paid by The Workplace, Inc., a private company which raised enough funds to support 100 jobs starting this fall.

The drawbacks to this are:

  • Employers get, in effect, free labor.
  • Only those who have already exhausted 99 weeks of unemployment benefits are eligible.
  • Employers have no obligation to hire participating workers.
  • The funds will create only 100 jobs.
  • Employers are not required to participate in the program.

Meanwhile, the unemployment rate keeps steadily rising. In 2007, 228,000 people were unemployed for 99 weeks or longer, according to the Bureau of Labor Statistics.

Today more than 2 million Americans have been unemployed for at least 99 weeks—the cutoff point for unemployment insurance in the hardest-hit states.

And the longer a person is out of work, the less likely s/he is to find an employer willing to hire.

What all these “job creating” programs have in common is this: They apply plenty of carrots–but absolutely no sticks.

Bribes–in the form of tax credits or tax breaks–are liberally applied to entice employers to behave like patriots instead of parasites. But for employers whose refusal to hire condemns their country to economic catastrophe–there are no penalties whatsoever.

A policy based only on carrots is a policy of bribery. A policy based only on sticks is one of coercion. Some people can’t be bribed, and some can’t be coerced. But nearly everyone is open to a policy of rewards and punishments.

Thus, corporations across the country are now sitting atop $2 trillion in profits. But their CEOs are using those monies for:

  • Enriching themselves, their bought-off politicians, their families—and occasionally their mistresses.
  • Buying up other corporate rivals.
  • Creating or enlarging companies outside the United States.

In short, the one expense they refuse to underwrite is hiring their fellow Americans.

This is because:

  • They want to pay their un-American employees far lower wages than would be tolerated by employees within the United States.
  • They want to escape American employee-protection laws–such as those mandating worker’s compensation or forbidding sexual harassment.
  • They want to escape American consumer-protection laws–such as those banning the sale of lead-contaminated products (a hallmark of Chinese imports).
  • They want to escape American laws protecting the environment–such as those requiring safe storage of dangerous chemicals.

They want, in short, to enrich themselves at the direct expense of their country.

In decades past, this used to be called treason.

Yet no major political figure–on the Left or Right–has so far dared to blame employers for selling out their country and destroying its economic prosperity.

No job-seeker, however well-qualified and -motivated, can hire himself onto an employer who refuses to hire.

But corporate CEOs–and their paid political stooges–continue to blame the unemployed for being unable to find employers willing to honor their integrity, qualifications and initiative.

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Americans generally–and the unemployed and under-employed in particular–must hold corporate America accountable for its criminal greed and irresponsibility.

Until they do, the United States will continue to sink further into decline–economically, socially and politically.

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TAXING CRIMINALS FOR REVENUES: PART TWO (END)

In Bureaucracy, Politics, Social commentary on April 19, 2013 at 12:19 am

Come visit San Francisco and you’ll see all the famous sights so beloved by tourists: Ghirardelli Square, the cable cars, the Golden Gate Bridge.

What you won’t see is one of the biggest blights facing the city: The behavior of predatory slumlords, who own both hotels and apartment buildings.

This behavior-–and the City’s steadfast refusal to change it-–poses a daily threat to the lives of San Francisco tenants. And it poses an equal threat to the City’s long-term ability to sustain its Number One source of revenues: The tourism industry.

To take one example: San Francisco is now facing an infestation of bedbugs. Everyone in the Department of Public Health (DPH) knows it. And everyone in DPH knows that many of the slumlords who own hotels plagued with these creatures refuse to do anything about them.

Bedbug

The reasons are twofold.

First, there’s a stigma attached to bedbugs that isn’t attached even to cockroaches. Roaches are filthy, but they don’t suck your blood. So when people learn that a hotel (including name-brand ones) has a bedbug infestation, they take their business elsewhere.

Second, combating bedbugs can be expensive. The most effective method involves a combination of poisons and heat treatments on a building-wide basis. Most landlords–-and certainly all slumlords––don’t want to take on that sort of expense.

San Francisco depends overwhelmingly on tourism for its revenues. A city whose hotels and apartment buildings are centers of contagion of any kind is a city destined to become a tourist ghost town, not a tourist mecca.

So, how to cope with this challenge? Here’s how:

  1. Greatly expand the Inspection Division at the Department of Public Health (DPH). This agency is legally charged with ensuring the health of San Francisco’s tenants-–both guests and residents.
  2. DPH should demand that a portion of those monies now directed toward entirely tourist-related issues be transferred to its Inspection Bureau. With those monies it can hire additional-–and badly-needed-–inspectors.
  3. Greatly expand the Inspection Division at the Department of Building Inspection–-and       make it independent of the agency. As matters now stand, too many high-ranking DBI officials tilt toward landlords because they are landlords themselves.
  4. End the culture of secrecy at DPH. The Department of Building Inspection is responsible for ensuring compliance with San Francisco building and housing codes. If a slumlord, for example, refuses to fix a tenant’s clogged bathtub drain or replace a window that’s about to fall out, the tenant calls DBI.
  5. DBI’s complaint records are immediately accessible at its website. Copies of its Notices of Violation–-ordering slumlords to correct problems-–can be obtained through the mails by request.  If a tenant wants to learn if other tenants have lodged complaints against his landlord, he can simply go online.
  6. By contrast, DPH offers nothing of this type of informational service.
  7. DPH should immediately make its records publicly available via the Internet, the same way DBI now does.
  8. DPH and DBI should order landlords to post their Notices of Violation in public areas of their buildings–-on pain of serious financial penalties for failing to do so.
  9. When DPH or DBI orders a slumlord to take corrective action, the only person who is notified of this is the landlord.   Thus, if that slumlord refuses to comply with those directives, s/he is the only one who knows about this. Given the pressing demands on DPH and DBI, weeks or months will pass before DPH/DBI learns about this violation of its orders.
  10. DPH and DBI should abandon their “gradual” approach to combating health/safety code violations in slumlord-owned apartments and hotels and hit the owner up-front with a heavy fine, payable immediately.  The landlord could recoup 75% to 80% of this money only if s/he could prove that the health threat had been totally eradicated within 30 days.
  11. If it were not, the slumlord would then be hit with a second fine twice the size of the last one and given another 30 days to correct the problem. So a slumlord hit with a $2,000 fine in January would face a $4,000 fine in February, and an $8,000 one in March.
  12. This would put the onus on the slumlord, not DBI/DPH.  These agencies now give landlords 30 days to correct a health/safety code violation. If the slumlord claims he needs more time, he’s automatically given another 30 days–minimum–to do so. This means the tenant must live with the discomfort–if not threat–of that violation until the slumlord finally decides to correct it.
  13. Inspectors for DPH and DBI should be armed with cross-jurisdiction authority. That is, if a DBI Inspector spots a health/safety violation covered by DPH, he should be able to cite the slumlord for this–and pass this information on to DPH for its own investigation. And the same should apply for Inspectors from DPH.
  14. This would instantly turn DBI and DPH into allies, not competitors. It would also make life far easier for tenants needing help. Whether a citizen called DBI or DPH, s/he could be assured of getting the assistance s/he needed. Currently, DPH and DBI Inspectors often tell citizens, “I’m sorry, that doesn’t lie within our jurisdiction. You’ll have to call—.”

By standing up to predatory slumlords, San Francisco can achieve three goals at once:

  1. Protect its residents and all-important tourist industry from predatory slumlords.
  2. Create new and popular sources of revenue for its cash-strapped public services.
  3. Set a shining example for other cities and states for how they can do the same.

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TAXING CRIMINALS FOR REVENUES: PART ONE (OF TWO)

In Bureaucracy, Politics, Social commentary on April 18, 2013 at 12:00 am

The power of slumlords throughout the Nation calls to mind the scene in the 1987 movie, The Untouchables, where Sean Connery’s veteran cop tells Eliot Ness: “Everybody knows where the liquor is. It’s just a question of: Who wants to cross Capone?”

This holds true even in San Francisco, the so-called “renters paradise.” The files of the City’s Department of Public Health (DPH) and Department of Building Inspection (DBI) are filled with the names of slumlords whose buildings pose real dangers to those living in them.

All that the City needs to do is find the courage to enforce its own laws protecting tenants.

By refusing to do so, the City is losing millions of dollars in revenues that it could be collecting every year from slumlords violating its health/safety laws.

Here’s the way DBI and DPH now work: A landlord is given 30 days to correct a health/safety violation. If he drags his feet on the matter, the tenant must live with that continuing problem until it’s resolved.

If the landlord claims for any reason that he can’t fix the problem within one month, DBI and DPH automatically give him another month.

A slumlord has to really work at being hit with a fine—and that means letting a problem go uncorrected for three to six months. And even then the slumlord may well avoid the fine by pleading for leniency.

Many tenants have lived with rotting floors, nonworking toilets, chipping lead-based paint and other outrages for not simply months but years.

The City could vastly improve life for its thousands of renters—and bring millions of desperately-needed dollars’ worth of revenues into its cash-strapped coffers—by making the following reforms:

  1. Hit slumlord violators up-front with a fine—payable immediately—for at least $2,000 to $5,000 for each health/safety code violation.
  2. The slumlord would be told he can reclaim most of this money only if he fully corrected the violation within 30 days.
  3. If he fails to correct the problem within that time, he should be hit again with a fine that’s at least twice the amount of the first one. The fine should increase twice as much for each month the violation goes uncorrected. Thus, if it’s $2,000 in January, it should be $4,000 in February, and $8,000 in March. And so on.
  4. The slumlord would be allowed to reclaim 75% to 80% of the fine levied against him. This appeal to his greed would ensure his willingness to comply with the ordered actions. The other portion would go directly into the city coffers to maintain needed services.
  5. If he fails to comply with the actions ordered, the entire fine should go into the City’s coffers.
  6. Inspectors for DPH and DBI should be armed with cross-jurisdiction authority. Thus, if a DBI Inspector spots a health/safety violation covered by DPH, he should be able to cite the slumlord for this—and pass this information on to DPH for its own investigation. And the same would apply for Inspectors from DPH.
  7. This would instantly turn DBI and DPH into allies, not competitors—and would mean that whether a citizen called DBI or DPH, s/he could be assured of getting the assistance s/he needed. (Currently, DPH and DBI Inspectors often tell citizens, “I’m sorry, that doesn’t lie within our jurisdiction. You’ll have to call—.”)
  8. DPH and DBI should have their Inspectors divisions greatly expanded.  Cutting back these units is a no-win situation for San Francisco renters–and for desperately-needed City revenues.
  9. Turning these agencies into revenue-producing ones would enable the City to raise desperately-needed revenues—in a highly popular way. Fining delinquent slumlords would be as unpopular as raising taxes on tobacco companies. Only slumlords and their hired lackey allies would object.
  10. Slumlords, unlike drug-dealers, can’t move their operations from one street or city to another.  Landlords aren’t going to demolish their buildings and rebuild them somewhere else. So they have to stay put.
  11. Landlords should be legally required to give each tenant a list of the major city agencies (such as DBI, DPH and the Rent Board) that exist to help tenants resolve problems with their housing. 
  12. Landlords should be legally required to rehabilitate a unit every time a new tenant moves in, or at least have it examined by a DBI inspector every two years.  A tenant can occupy a unit for ten or more years, then die or move out, and the landlord immediately rents the unit to the first person who comes along, without any repairs or upgrades whatsoever.
  13. Landlords should be required to bring all the units in a building up to existing building codes, and not just those in need of immediate repair.
  14. Landlords should be legally required to hire a certified-expert contractor to perform building repairs.  Many landlords insist on making such repairs despite their not being trained or experienced in doing so, thereby risking the lives of their tenants. 

Andrew Jackson once said: “One man with courage makes a majority.” And one city—acting with courage—can ensure protection for its tenants and general revenues for vitally-needed services.

If San Francisco can do this, so can California. And then so can the rest of the Nation.

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CORPORATIONS ARE GREEDY PEOPLE, TOO

In Bureaucracy, Business, Law, Politics, Social commentary on April 10, 2013 at 12:02 am

“How many men ever went to a barbecue and would let one man take off the table what’s intended for nine-tenths of the people to eat? The only way you’ll ever be able to feed the balance of the people is to make that man come back and bring back some of that grub that he ain’t got no business with!”
– Louisiana Senator Huey P. Long, 1934

Campaigning for the Presidency, Mitt Romney was speaking to a crowd of hundreds at the Iowa State Fair. He was being pressed about raising taxes to help cover entitlement spending. Suddenly, a heckler suggested raising corporate tax rates.

Romney responded: “Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets. Human beings, my friend.”

The line earned him a sustained round of applause from the crowd.

If it’s true that corporations are people, then they are exceptionally greedy and selfish people.

A December, 2011 report by Public Campaign, highlighting corporate abuses of the tax laws, makes this all too clear.

Public Campaign is a national nonpartisan organization dedicated to reforming campaign finance laws and holding elected officials accountable.

Summarizing its conclusions, the report’s author writes:

“Amidst a growing federal deficit and widespread economic insecurity for most Americans, some of the largest corporations in the country have avoided paying their fair share in taxes while spending millions to lobby Congress and influence elections.”

Its key findings:

  • The thirty big corporations analyzed in this report paid more to lobby Congress than they paid in federal income taxes between 2008 and 2010, despite being profitable.
  • Despite making combined profits totaling $164 billion in that three-year period, the 30 companies combined received tax rebates totaling nearly $11 billion.
  • Altogether, these companies spent nearly half a billion dollars ($476 million) over three years to lobby Congress. That’s about $400,000 each day, including weekends.
  • In the three-year period beginning in 2009 through most of 2011, these large firms spent over $22 million altogether on federal campaigns.
  • These corporations have also spent lavishly on compensatng their top executives ($706 million altogether in 2010).

Among those corporations whose tax-dodging and influence-buying were analyzed:

  • General Electric
  • Verizon
  • PG&E
  • Wells Fargo
  • Duke Energy
  • Boeing
  • Consolidated Edison
  • DuPont
  • Honeywell International
  • Mattel
  • Corning
  • FedEx
  • Tenet Healthcare
  • Wisconsin Energy
  • Con-way

The report bluntly cites the growing disparity between the relatively few rich and the vast majority of poor and middle-class citizens:

“Over the past few months, a growing protest movement has shifted the debate about economic inequality in this country.

“The American people wonder why members of Congress suggest cuts to Medicare and Social Security but won’t require millionaires to pay their fair share in taxes.

“They want to know why they are struggling to find jobs and put food on the the table while the country’s largest corporations get tax breaks and sweetheart deals, then use that extra cash to pay bloated bonuses to CEOs or ship jobs overseas.

“….At a time when millions of Americans are still unemployed and millions more make tough choices to get by, these companies are enriching their top executives and spending millions of dollars on Washington lobbyists to stave off higher taxes or regulations.”

Assessing the results of corporate tax-dodging, the report states:

  • Using various tax dodging techniques, including stashing profits in overseas tax havens and tax loopholes, 29 out of 30 companies featured in this study succeeded in paying no federal income taxes from 2008 through 2010.
  • These 29 companies received tax rebates over those three years, ranging from $4 million for Corning to nearly $5 billion for General Electric and totally nearly $11 billion altogether.
  • The only corporation that paid taxes in that three-year period, FedEx, paid a three-year tax rate of 1%, far less than the statutory rate of 35%.

The report bluntly notes the hypocrisy of corporate executives who call themselves “job creators” while enriching themselves by laying off thousands of employees:

“Another area where these corporations have decided to spend lavishly is compensation for their top executives ($706 million altogether in 2010).

“Executives doing particularly well work for General Electric ($76 million in total compensation in 2010), Honeywell International ($54 million), and Wells Fargo ($50 million).

“Executives who have seen the greatest increase work for DuPont (188% increase), Wells Fargo (180% increase) and Verizon (167% increase).

Despite being profitable, some of these corporations have actually laid off workers.

Since 2008, seven of the corporations have reported laying off American workers. The worst offenders are Verizon, which laid off 21,308 workers, and Boeing, which fired 14,862 employees.

Insisting that “corporations are people” wins applause from the wealthiest 1% and their Right-wing supporters. But it does nothing to better the lives of the poor and middle-class.

If the nation is to avoid economic and moral bankruptcy, Americans must demand that powerful corporations be held accountable–and punished harshly when they behave irresponsibly.

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A NEW APPROACH TO GANGBUSTING: PART TWO (END)

In Bureaucracy, Law, Law Enforcement, Politics, Social commentary on April 4, 2013 at 12:01 am

There is a phrase that’s well-known south of the border: “Pan, o palo.”  Or, in English: “Bread or  stick.”

And this, in turn, comes down to: Behave well and you’ll get this nice reward.  Behave badly and you’ll get your head beaten in.

In my last column I discussed the need for brandishing the stick when dealing with powerful street gangs such as the Aryan Brotherhood.

It’s the Brotherhood that’s suspected of being responsible for murdering two Texas prosecutors since February.

In this column I want to discuss creatively using the carrot to at least partially control gang violence.

It’s essential to remember the following:

  • Some 33,000 violent street gangs, motorcycle gangs, and prison gangs with about 1.4 million members are criminally active in the U.S. today.
  • Gangs are responsible for an average of 48 percent of violent crime in most jurisdictions and up to 90%  in several others.
  • Many are sophisticated and well organized; all use violence to control neighborhoods and boost their illegal money-making activities, which include robbery, drug- and gun-trafficking, fraud, extortion, and prostitution rings.

These gangs aren’t going to disappear, no matter how many of their members die or wind up in prison.

For decades, the rhetoric of the Cold War has carried over into the debate over policing.

“Hawks” on the Right have demanded a “hard” approach to law enforcement, emphasizing punishment.  “Doves” on the Left have pursued a “soft” line, stressing social programs and rehabilitation.

But it isn’t enough to be “hard” or “soft” in pursuing the goal of a safe, law-abiding society.  It’s necessary to be “smart” above all.

If you can’t eradicate evil, then you should try to direct at least some of its elements into a safer path.  Thus:

  • Each state should invite its resident gang members to take part in a series of competition for the title of “State Gang Champion.”
  • These would be modeled on competitions now existing within the National Football League–a series of playoffs to determine which two gangs will duke it out in the “Super Rumble.”

vs.

  • These competitions would be completely voluntary, thus eliminating any charges of State coersion.
  • They would be modeled on the country’s current mania for “Ultimate Warrior” contests for kickboxers and bare-kunckled fighters.
  • Contestants–as many as a score or more from at least two opposing gangs–would meet in a football-sized arena.

A modern-day Coliseum

  • No firearms would be allowed.
  • Contestants could otherwise arm themselves with whatever weapons they desired–such as baseball bats, swords, axes, spears or chains.
  • Everyone who agreed to participate would automatically be granted immunity for whatever carnage they inflicted.
  • The object of these contests would be to officially determine which State gang was the “baddest” for the year.
  • Tickets could be purchased by fans looking for an afternoon’s festival of gore.
  • Television networks could–and no doubt would–vie for rights to film the events, just as they now do for “pay-for-view” wrestling or boxing matches.

But would hard-core gangs even consider participating in such a series of contests?

Yes–most gangs would want to do so.  Here’s why:

  1. They would be able to eliminate members of rival gangs without risk of prosecution and imprisonment.
  2. They would be able to gauge–through the heat of combat–the toughness of their own associates.
  3. They would gain at least temporary stardom–just as successful gladiators did under the Roman Empire.
  4. The winning gang would gain official status as “The Baddest” gang in the State.

On the last point: Napoleon Bonaparte created the Order of the Legion of Honor, distributed 15,000 crosses to his soldiers and called his troops the “Grand Army.”  When someone criticized him for giving “toys” to his war-hardened veterans, Napoleon replied: “Men are ruled by toys.”

And for the State there would be gains as well:

  1. These contests would literally eliminate a great many gang members who cannot be removed any other way.
  2. Police and prosecutors could concentrate their limited resources on gangs that refused to participate or were deemed to pose a threat.
  3. Millions of dollars in State revenues would be generated through ticket sales and the buying of pay-per-view rights.

Admittedly, many law-abiding citizens would be repulsed by the carnage that would result from implemting this proposal.   But these are generally the people who disdain boxing or wrestling contests anyway.

But given our increasingly jaded and violence-prone society, most of them would eventually tolerate it as an effective way to simultaneously raise badly-needed tax revenues and reduce the size of criminal gangs.

Republican politicians would find this an especially attractive proposal, since it adheres to the two concepts dear to the hearts of all Right-wingers: Killing people and making money.

In short: With sufficient creativity and ruthlessness, it should be possible to reclaim control of our streets from the evils of gang violence.

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A NEW APPROACH TO GANGBUSTING: PART ONE (OF TWO)

In Bureaucracy, Law, Law Enforcement, Politics, Social commentary on April 3, 2013 at 12:00 am

A Federal prosecutor has withdrawn from a large racketeering case involving members of the Aryan Brotherhood, citing “security concerns.”

The Dallas Morning News reported that Houston-based assistant U.S. attorney Jay Hileman announced his withdrawal in an email.

The news comes days after Kaufman County District Attorney Mike McLelland and his wife, Cynthia, were shot and killed during Easter weekend in their home near Dallas.

Mike McLelland

In February, Mark Hasse, an assistant prosecutor in McLelland’s office, was gunned down in a parking lot about a block from his office at the Kaufman County Courthouse.  Hasse was a veteran prosecutor of organized crime cases.

Although no suspects have been positively identified, state and Federal investigators believe that the Aryan Brotherhood might be responsible for these attacks on prosecutors.

Such attacks–and the withdrawal of a federal prosecutor for fear of becoming a target–are unprecedented.  And clearly law enforcement needs to take a new and creative approach to attacking street gangs.

According to the FBI:

  • Some 33,000 violent street gangs, motorcycle gangs, and prison gangs with about 1.4 million members are criminally active in the U.S. today.
  • Many are sophisticated and well organized; all use violence to control neighborhoods and boost their illegal money-making activities, which include robbery, drug- and gun-trafficking, fraud, extortion, and prostitution rings.
  • The FBI is redoubling its efforts to dismantle gangs through intelligence-driven investigations and new initiatives and partnerships.

Obtaining timely and accurate intelligence about gang activities is, of course, an absolute necessity.  But there are two approaches the FBI and other law enforcement agencies should be applying.

These amount to using both the stick and the carrot.

First, the stick: An all-out declaration of war on any criminal foolhardy enough to directly attack law enforcement authorities.

Consider these past two examples:

In April, 1963, FBI agent John Foley was conducting surveillance at the Brooklyn funeral of Carmine “The Doctor” Lombardozzi, a capo in the Gambino Mafia Family.

Suddenly, four mobsters knocked Foley to the ground, then severely beat and kicked him.

For the FBI, this was unprecedented: It had long been known that organized crime was too smart to attack or kill law enforcement officers–especially Federal ones.  The resulting heat would simply be too great.

The FBI retaliated by launching an all-out war against the Gambinos.  Agents leaned heavily on the cartel’s boss, underboss, counselor and lieutenants.

The Bureau also intensified its use of illegal electronic surveillance against the mobsters.   Even law-abiding relatives of the Gambinos—one of these a nun, the other a priest—found themselves interrogated.

Angelo Bruno, the boss of the Philadelphia crime syndicate, unwittingly informed a hidden microphone on how the FBI brutally drove home the message to “boss of all bosses” Carlo Gambino:

BRUNO: They [the FBI] went to Carlo and named all his capos to him….The FBI asked him: “Did you change the laws in your family, that you could hit FBI men, punch and kick them? 

“Well, this is the test—that if you change the laws, and now you are going to hit FBI men, every time we pick up one of your people we are going to break their heads for them.”  

And, really, they picked up our guy, they almost killed him, the FBI.  They don’t do that, you know.  But they picked up one of his fellows and crippled him. 

They said, “This is an example.  Now, the next time anyone lays a hand on an FBI man, that’s just a warning.  There’s nothing else we have got to tell you.”  And they went away.  

Word traveled quickly through the nationwide organized crime network—and its leaders decreed there should be no further assaults on FBI agents.

Still, some mobsters apparently didn’t get the word.

During the 1960s or early 1970s, FBI agents monitoring a wiretap on a mob family in Youngstown, Ohio, heard something truly disturbing.

Several Mafia members were discussing putting out a contract on a local FBI agent they especially disliked.

“How many hit men do we have?” asked one.

“Three,” said another.

They made arrangements to meet and discuss the matter again the next day.

The FBI agents monitoring the wiretap immediately flashed an urgent warning to the Bureau’s headquarters in Washington, D.C.

No less an authority than J. Edgar Hoover, the legendary director of the FBI since 1924, ordered that a “message’ be sent to the mobsters.

That night, about 20 large, heavily-armed FBI agents barged into the penthouse of the local Mafia boss.  Some agents tipped over vases, others dropped lit matches on the luxurious carpeting, and one of them even urinated in a potted plant.

“You may have three hitmen,” one of them told the mob boss, “but Mr. Hoover has thousands.”

The FBI agent thought to be the target for a rubout was never bothered.

In my next column I will discuss the option of the carrot.

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MACHIAVELLI WAS RIGHT

In Business, History, Law, Social commentary on March 1, 2013 at 12:37 am

In 1513, Niccolo Machiavelli, the Florentine statesman who has been called the father of modern political science, published his best-known work: The Prince.

Niccolo Machiavelli

Among the issues he confronted was how to preserve liberty within a republic.  And key to this was mediating the eternal struggle between the wealthy and the poor and middle class.

Machiavelli deeply distrusted the nobility because they stood above the law.  He saw them as a major source of corruption because they could buy influence through patronage, favors or nepotism.

Successful political leaders must attain the support of the nobility or general populace.  But since these groups have conflicting interests, the safest course is to choose the latter.

…He who becomes prince by help of the [wealthy] has greater difficulty in maintaining his power than he who is raised by the populace.  He is surrounded by those who think themselves his equals, and is thus unable to direct or command as he pleases. 

But one who is raised to leadership by popular favor finds himself alone, and has no one, or very few, who are not ready to obey him.   [And] it is impossible to satisfy the [wealthy] by fair dealing and without inflicting injury upon others, whereas it is very easy to satisfy the mass of the people in this way. 

For the aim of the people is more honest than that of the [wealthy], the latter desiring to oppress, and the former merely to avoid oppression.  [And] the prince can never insure himself against a hostile population on account of their numbers, but he can against the hostility of the great, as they are but few.

The worst that a prince has to expect from a hostile people is to be abandoned, but from hostile nobles he has to fear not only desertion but their active opposition.  And as they are more far seeing and more cunning, they are always in time to save themselves and take sides with the one who they expect will conquer. 

The prince is, moreover, obliged to live always with the same people, but he can easily do without the same nobility, being able to make and unmake them at any time, and improve their position or deprive them of it as he pleases.

Unfortunately, political leaders throughout the world–including the United States–have ignored this sage advice.

The results of this wholesale favoring of the wealth and powerful have been brilliantly documented in a recent investigation of tax evasion by the world’s rich.

In 2012, Tax Justice Network, which campaigns to abolish tax havens, commissioned a study of their effect on the world’s economy.

The study was entitled, “The Price of Offshore Revisited: New Estimates for ‘Missing’ Global Private Wealth, Income, Inequality and Lost Taxes.”

http://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf

The research was carried out by James Henry, former chief economist at consultants McKinsey & Co.  Among its findings:

  • By 2010, at least $21 to $32 trillion of the world’s private financial wealth had been invested virtually tax-­free through more than 80 offshore secrecy jurisdictions.
  • Since the 1970s, with eager (and often aggressive and illegal) assistance from the international private banking industry, private elites in 139 countries had accumulated $7.3 to $9.3 trillion of unrecorded offshore wealth by 2010.
  • This happened while many of those countries’ public sectors were borrowing themselves into bankruptcy, suffering painful adjustment and low growth, and holding fire sales of public assets.
  • The assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments.
  • The offshore industry is protected by pivate bankers, lawyers and accountants, who get paid handsomely to hide their clients’ assets and identities.
  • Bank regulators and central banks of most countries allow the world’s top tax havens and banks to hide the origins and ownership of assets under their supervision.
  • Although multilateral institutions like the Bank for International Settlements (BIS), the IMF and the World Bank are supposedly insulated from politics, they have been highly compromised by the collective interests of Wall Street.
  • These regulatory bodies have never required financial institutions to fully report their cross-­border customer liabilities, deposits, customer assets under management or under custody.
  • Less than 100,000 people, .001% of the world’s population, now control over 30% of the world’s financial wealth.
  • Assuming that global offshore financial wealth of $21 trillion earns a total return of just 3% a year, and would have been taxed an average of 30% in the home country, this unrecorded wealth might have generated tax revenues of $189 billion per year.

Summing up this situation, the report notes: “We are up against one of society’s most well-­entrenched interest groups. After all, there’s no interest group more rich and powerful than the rich and powerful.”

Fortunately, Machiavelli has supplied a timeless remedy to this increasingly dangerous situation:

  • Assume evil among men–and most especially among those who possess the greatest concentration of wealth and power.
  • Carefully monitor their activities–the way the FBI now regularly monitors those of the Mafia and major terrorist groups.
  • Ruthlessly prosecute the treasonous crimes of the rich and powerful–and, upon their conviction, impose severe punishment.

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THE REAL “TAKERS”: THE RICH

In Business, History, Politics, Social commentary on February 26, 2013 at 1:08 am

Ann Coulter, the Republican version of the Miss America Nazi, was devastated by the November 6 defeat of Mitt Romney.

“People are suffering,” she whined. “The country is in disarray. If Mitt Romney cannot win in this economy, then the tipping point has been reached. We have more takers than makers and it’s over. There is no hope.”

Actually, Coulter was right–but not in the way she thought she was.

The “takers” are not the “have-nots” who depend on government for assistance.  They are the “more-than-haves” who cheat the government of billions in lost tax revenues.

In 2012, Tax Justice Network, which campaigns to abolish tax havens, commissioned a study of their effect on the world’s economy.

The study was entitled, “The Price of Offshore Revisited: New Estimates for ‘Missing’ Global Private Wealth, Income, Inequality and Lost Taxes.”

http://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf

The research was carried out by James Henry, former chief economist at consultants McKinsey & Co.  Among its findings:

  • By 2010, at least $21 to $32 trillion of the world’s private financial wealth had been invested virtually tax-­free through more than 80 offshore secrecy jurisdictions.
  • Since the 1970s, with eager (and often aggressive and illegal) assistance from the international private banking industry, private elites in 139 countries had accumulated $7.3 to $9.3 trillion of unrecorded offshore wealth by 2010.
  • This happened while many of those countries’ public sectors were borrowing themselves into bankruptcy, suffering painful adjustment and low growth, and holding fire sales of public assets.
  • The assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments.
  • Local elites continue to vote with their financial feet while their public sectors borrow heavily abroad.
  • First World countries do most of the borrowing.
  • Of the $7.3–$9.3 trillion of offshore wealth belonging to residents of these 139 countries, the top 10 countries account for 61% and the top 20 for 81%.
  • The offshore industry has many levels of protection: Private bankers, lawyers and accountants get paid handsomely to hide their clients assets and identities.  These groups also maintain influential lobbies.
  • Bank regulators and central banks of most individual countries typically view private banks as key clients.  They have long permitted the world’s top tax havens and banks to conceal the ultimate origins and ownership of assets under their supervision, especially those held in off-balance sheet trusts and
    fiduciary accounts.
  • Although multilateral institutions like the Bank for International Settlements (BIS), the IMF and the World Bank are supposedly insulated from politics, they have been highly compromised by the collective interests of Wall Street.
  • These regulatory bodies have never required financial institutions to fully report their cross-­border customer liabilities, deposits, customer assets under management or under custody.
  • All conventional measures of inequality sharply understate the levels of income and wealth inequality at both the country and global level.
  • Less than 100,000 people, .001% of the world’s population, now control over 30% of the world’s financial wealth.
  • The impact on lost tax revenue may be huge–large enough to make a significant difference to the finances of nations.
  • Assuming that global offshore financial wealth of $21 trillion earns a total return of just 3% a year, and would have been taxed an average of 30% in the home country, this unrecorded wealth might have generated tax revenues of $189 billion per year.

Summing up this situation, the report notes: “We are up against one of society’s most well-­entrenched interest groups. After all, there’s no interest group more rich and powerful than the rich and powerful.”

Yet the study reveals two bright spots for countries fed up with being bled dry by those parasites whose allegiance runs only to their wallets.

  1. A huge pile at least $21 trillion of untapped financial wealth has been discovered–monies that can be called upon to help solve the most pressing global problems.
  2. A substantial fraction of this wealth is being managed by the top 50 players in the global private banking industry.

As a result, these findings allow nations’ leaders to:

  • Prevent the abuses that have lead to off-the-books wealth accumulation in the future.
  • Make use of the huge stock of accumulated, untaxed wealth that is already there, as well as the steady stream of untaxed earnings that it generates.

It was Stephen Decatur, the naval hero of the War of 1812, who famously said: “Our country, right or wrong.”

Billionaire tax-cheats like those uncovered in the above-cited report have coined their own motto: “My wallet–first and always.”