QUOTE OF THE MONTH:
“Despite all the deregulation rhetoric, government grows ever bigger. The number of federal government workers shrinks, but the ranks of people who are hired on contract at much greater cost increases. In 2000, workers hired on contract cost our federal government $207 billion. By 2006, this had swelled to $400 billion -- rivaling the expense of either Social Security or interest on the federal government’s growing debt.”
David Cay Johnston
Free Lunch
SENSE AND NONSENSE – THE NEED FOR MAGICAL CRITICAL THINKING
From the editor: In this third part of our series on “Dangerous Lines,” we examine the difference between critical thinking skills and magical thinking and the need for both.
In its most productive and useful form, magical thinking is highly creative. “Alice in Wonderland,” “The Wizard of Oz,” and “Harry Potter” are classic examples of magical creative metaphors that delve into the peaks and valleys of human nature. “Alice,” “Dorothy,” and Harry” all fear evil in the world, but attack it with courage, intelligence, and selfless humility. Perhaps Shakespeare and J.R.R. Tolkien’s “Lord of the Rings” do the best job of exploring evil both within and beyond ourselves.
Magical thinking in its most useful formats can help us define problems, whereas critical thinking skills can actually help us solve problems. Conversely, abuse of magical thinking and critical thinking skills can create problems. Similarly, the profit motive can propel growth in our economy or create an abusive slippery slope into oblivion. Abuse of the profit motive such as we are now seeing in a market economy, where Exxon-Mobile and General Electric pay no income tax on record billions in revenue while receiving taxpayer dollars in incentives, creates an economic pool of quicksand.
Thinking Critically About Wealth
One hundred years ago (March 25, 1911), 146 women perished in the Triangle Shirtwaist Factory fire in New York’s Greenwich Village. The garment factory was located on the top three floors of a 10-story building. The building had no sprinklers, only one fire escape that did not reach the ground, and a locked door, apparently to prevent the young seamstresses from leaving the building undetected with stolen material. Fire Department ladders would only reach the sixth floor. The young victims were forced to make the cruel choice of either death from fire or death by jumping.
This tragedy fueled the legitimacy of a fledgling labor movement. It resulted in new safety and fire regulations, child labor laws, and workmen’s compensation. One witness to the fire, Frances Perkins, became FDR’s Secretary of Labor. Perkins called the fire “the day the New Deal began.”
This same labor movement is now under attack, especially in states such as Wisconsin, Ohio, Michigan, Indiana, and New Mexico. Those states are focusing upon public unions such as the American Federation of State and Municipal Employees (AFSME). The Triangle fire stands as Exhibit One in the need for government to prevent abuse of the profit motive through regulatory enforcement. The promise of profit is the fuel for growth in the economy. However, the price exacted by an abuse of the profit motive – exemplified by the Triangle fire – is too often the loss of human life and creative potential.
Thinking Magically About Wealth
Since Ronald Reagan was elected President in 1980, there has been an onslaught of conservative economic theory emanating, in large part, from the University of Chicago’s School of Economics led by Milton Friedman, the Federalist Society (including members John Roberts and Samuel Alito), and think tanks such as The Heritage Foundation, the American Enterprise Institute, and the Cato Institute. These tax-exempt organizations have given birth to the most insidious, reactionary economic policies in our country’s history, all while paying no income taxes. Their economic theories have been variously labeled as “Reaganomics,” “trickle-down economics,” “voodoo economics,” and more recently as “supply-side economics.”
The common denominator among these various labels is a systematic redistribution of wealth from the lowest 90 percent of income groups to the top 10 percent – from the working class to the super rich.
The super rich have installed an arsenal of rationalizations that justify (in their minds) the accumulation of wealth by the few at the expense of the many. These rationalizations range from a distortion of Andrew Carnegie’s “Gospel of Wealth” to a distortion of Adam Smith’s The Wealth of Nations. In his 2007 book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill), David Cay Johnston offers numerous examples of Smith’s warnings against the magical thinking of those who believe in the “invisible hand” of a free market system. For example, regarding government subsidies and loopholes, Smith observes in 1776:
“The bounty (subsidy) to the white-herring fishery is a tonnage bounty; and is proportioned to the burden (size) of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.”
Modern day subsidies, such as off-shore tax havens for large corporations, qualify as an exercise in “catching, not the fish, but the bounty.” Rep. Paul Ryan’s recently released draconian budget plan is the latest example of magical thinking. Economist Paul Krugman pulls back the curtain on “wizard” Ryan’s proposal. In his New York Times April 7 column, Krugman writes:
“A more sober assessment from the nonpartisan Congressional Budget Office tells a different story. It finds that a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts. In fact, the budget office finds that over the next decade the plan would lead to bigger deficits and more debt than current law.”
Critical thinking skills are rapidly disappearing from our educational landscape. The vacuum created by this loss has been filled, for the last three decades, with destructive magical thinking rather than creativity and innovation. The first step toward reversing that trend is to demand the “three C’s” of problem solving – truthful CONTEXT, accurate and complete COST-BENEFIT analysis, and assignment of actual CAUSE to its effect (e.g., tax cuts as a causal factor of national deficits).
Maynard Chapman, Editor
The Compass Newsletter
THE ALARMING DEMISE OF CRITICAL THINKING SKILLS
From Publishers’ Auxiliary Newspaper: Following are excerpts from an article by The Hechinger Report and reviewed by Publishers’ Auxiliary in their March, 2011 issue. The review was written by Sara Rimer. The Hechinger Report is a non-profit news outlet affiliated with Teachers College, Columbia University.
“An unprecedented study that followed several thousand undergraduates through four years of college found that large numbers didn’t learn the critical thinking, complex reasoning and written communication skills that are widely assumed to be at the core of a college education.”
“Many of the 2,322 students moved through four years of studying, working, volunteering and socializing without learning how to sift fact from opinion, make a clear written argument or objectively review conflicting reports of a situation or event.”
“Combining the hours spent studying and in class, students devoted less than one-fifth of their time each week to academic pursuits. By contrast, students spent 51 percent of their time -- or 85 hours a week -- socializing or in extracurricular activities.”
“Students who majored in the traditional liberal arts -- including the social sciences, humanities, natural sciences and mathematics -- showed significantly greater gains over time than other students in critical thinking, complex reasoning and writing skills.”
A CRITICAL OPINION
From The Washington Post: Self-described “democratic socialist” and Washington Post columnist Harold Meyerson has written two recent columns that focus on dangerous human and social impulses such as “greed, denial, and hubris.”
In a March 15 column, he writes, “Consider, for a moment, all the systems that the experts said had been rendered safe, foolproof and immune to disaster, and that nonetheless crashed during the past three years. There was the financial system, an assemblage of immense wagers on all manner of things, which an array of mathematicians and economists assured us could not possibly come tumbling down. There was deep-water oil drilling, which the oil companies’ geologists, among others, insisted could not possibly result in a cataclysmic spill. And today, there are nuclear power plants, safeguarded, their engineers have told us, against the oh-so-remote possibilities of meltdowns.”
“And yet,” Meyerson continues, “the war on regulation in America -- backed by Wall Street and such energy industry leaders as the Koch brothers -- rolls on. Before last week’s quake, House Republicans cut funding for training first responders to radiation disasters….We haven’t engineered the glitches out of the system. We need some rules, some regs, and a government willing to devise and enforce them.”
In a subsequent column, dated March 22, on the Triangle fire, Meyerson concludes, “A century after Triangle, greed encased in libertarianism remains a fixture of -- and danger to -- American life.”\
TAX EVADERS
From the editor: The following information was gathered from multiple sources including Senator Bernie Sanders’ website at www.sanders.senate.gov and The New York Times.
Sen. Sanders said, “Maybe we have to reduce that deficit not simply on the backs of working families, low-income people, the children, the sick, the elderly. Maybe, maybe we might want to call for shared sacrifice. Maybe Exxon-Mobil and some of the large oil companies might be asked to pay something in taxes.”
The following large corporations paid very little or no income taxes in 2009:
- Exxon Mobil made $19 billion in profits in 2009 and paid no federal income taxes according to SEC filings. In addition, it received a $156 million rebate.
- In 2010, General Electric, the nation’s largest corporation reported worldwide profits of $14.2 billion, $5.1 billion of which came from operations in the U.S. And it paid $0.00 taxes in America, plus it claimed a tax write-off of $3.2 billion, according to The New York Times (March 24, 2011).
- Bank of America received a $1.9 billion tax refund in 2009, although it made $4.4 billion in profits.
- Chevron received a $19 million tax refund after it made $10 billion in profits in 2009.
- Goldman Sachs paid 1.1 percent of its income in federal taxes in 2008 even though it earned profits of $2.3 billion.
- Citigroup made more than $4 billion in profits, but paid no federal income taxes.
- Conoco Phillips made $16 billion in profits from 2007 through 2009, and still received $451 million in tax breaks through the oil and gas manufacturing deduction.
- Carnival Cruise Lines made more than $11 billion in profits over the past five years, but its federal income tax rate during those years was 1.1 percent.
Copyright © 2011, The Compass Society
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