Monday Links: Rihanna, Baltimore, Jean Tirole, Private Equity

by Chris Sturr | May 05, 2015

(1) Rihanna, American OxygenThe video for this song from mega-pop-star Rihanna’s new album R8 is pretty interesting–with lyrics that seem to be about the so-called “American Dream,” and which could *almost* be a patriotic anthem, but with at least one line in some tension with that: “We sweat for a nickel and a dime, turn it into an empire.” This could be interpreted as the rags-to-riches hope for an “empire” of personal wealth (much like Rihanna’s, who is an immigrant from Barbados), but in the video, the word “empire” is accompanied by images of militarism and Wall Street. And although the video is festooned with American flags, they are deployed in so many ways and alongside video clips of police beatings, protest (Occupy Wall Street, Mike Brown signs, “I can’t breathe” signs), militarism, the burning Twin Towers, etc., that it is hard to take them as pure patriotism. The faux-patriotic-anthem aspect reminds me of Springsteen’s “Born in the USA,” and the use of historical footage is a great antidote to Billy Joel’s catchy but insipid “We Didn’t Start the Fire” (see a non-official video here, with a similar collage of historical images), which presents U.S. history as a series of famous figures, and something for which “we” are not responsible. I have seen mixed critical reactions to the Rihanna video on the Interwebs (and interpretations in the comments section on Youtube are all over the place), but at least you can say that the very short clip of an Occupy Wall Street banner might be the best promo that Occupy has gotten in many years, maybe ever.

(2) Baltimore links:  Here are some of the pieces I’ve come across that are worth checking out (hat -tip to TM for many of these):

(3) Nobel Prize Winner Jen Tirole and Takeover of French Economics:  Ann Markusen, University of Minnesota economics professor, sent along this:

I’m forwarding a disturbing essay that Evan Jones, my grad school colleague and Political Economy professor at the University of Sydney, forwarded about the recent movement for heterodoxy in the French Economics academy and the powerful pushback.

Explains Evan:
An online daily Mediapart has a small English language section where they put up the odd translation, including this one  – a jaundiced view of the recent second French big shot (after Piketty) to appear on the world stage.

Tirole’s Toulouse school is known at the most orthodox (in the American sense) department in France.  Unfortunately, economics teaching in French universities is apparently rather pedestrian everywhere. The handful of assertive dissident economics (Frédéric Lordon, Jacques Sapir) I think are mostly in research outfits. And they rarely get invited onto the mainstream French media, which is full of flunkeys.

Here is the article, by Laurent Mauduit of Mediapart: How Nobel prize-winner Jean Tirole led the private sector takeover of French economic studies.

(4) Private Equity and Pension Funds:  I am slowly working my way through a book I should have read right when it came out a couple of years ago, Private Equity at Work: When Wall Street Manages Main Street, by Eileen Appelbaum and (D&S associate) Rosemary Batt. It’s great.  There’s lots in there about the huge irony of how public pension funds–“labor’s capital,” as former D&S co-editor Adria Scharf called it in a 2005 D&S article–are the biggest funders of private equity, but private equity is all about slashing jobs, outsourcing, “deunionization,” and all kinds of other worker-unfriendly activities.

I thought of this when I saw a recent piece in Fortune: Public pensions own payday lender that is illegal in their own states, about how New York and New Jersey public pension funds have become indirect owners of the nation’s second largest payday lender, ACE Cash Express Inc., as limited partners in an investment fund of the private equity firm JLL Partners. But, as the Fortune piece points out, payday lending is illegal in New York and New Jersey. Pension funds in Montana and California are also investors. Here’s a good quote from the article:

“From a business perspective, these deals can be brilliant because they are cash-flow positive, have return customers, and the government [is] always trying to catch up on regulation,” says James Zhang, a former private equity investor who is now an executive with consumer finance education website NerdWallet (which argues that there are better loan alternatives for the unbanked). “But not if you have a moral compass. Imagine teachers in low-income areas learning that they’re funding a company that profits off the backs of their students or their students’ parents.”

(Or imagine workers’ pension funds funding companies that profit from layoffs, union-busting, outsourcing… But of course we don’t have to imagine that.) As the Fortune piece points out, though, it’s not clear that the JLL Partners fund that includes ACE Cash Express will even turn out to have been a good investment for the pension funds, moral (and political) issues aside. And that’s often the case with private equity, especially since the financial crisis, according to Appelbaum and Batt.

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Thursday Links: Buffett, Chicago/Illinois, Atlanta Teachers

by Chris Sturr | April 09, 2015

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Here are today’s topics, in no particular order:

(1) Warren Buffett, the Greedy Grandfather of Omaha:  Joe Nocera had a puff piece in the New York Times last March invitingly called  How Warren Buffett Does It, discussing the magic of Buffett’s “value investing.” Thankfully, lots of the online comments called b.s. on Nocera, pointing out the unseemly sources of some of Buffett’s wealth. Several comments mentioned the great work of David Cay Johnston, in whose 2012 book The Fine Print: How Big Companies Use “Plain English” and Other Tricks to Rob You Blind Buffett makes several appearances. (Find Steve Pressman’s review of The Fine Print from our Nov/Dec 2012 issue here; check out DCJ’s 2011 Tax Analysts piece, Warren Buffett Wants Your Taxes, on Buffett’s tendency to divert tax dollars into his own pocket; read Dean Baker and David Cay Johnston, in an October 2012 FDL Book Salon on The Fine Print).

Now two more bits of evidence about how Warren Buffett really does it:  First, Naked Capitalism republished Raúl Ilargi Meijer’s Automatic Earth piece, Warren Buffett Is Everything That’s Wrong with America, about Buffett’s plan with Brazilian 3G Capital to merge the food giants Heinz, Kraft, and Oscar Mayer. Here is the money quote: “Buffett, the supposed genius, can only do these deals because nobody demands anybody to pay for the externalities that arise as a result of Warren pushing crap posing as food upon the American people. And then when he’s done getting even richer off of poisoning your kids, he’ll donate billions to their well-being.”

The more shocking recent piece comes from Daniel Wagner and Mike Baker, written for the Center for Public Integrity and the Seattle TimesWarren Buffett’s mobile home empire preys on the poor, with the subtitle “Billionaire profits at every step, from building to selling to high cost lending.” This investigative report is about how Clayton Homes, which is owned by Buffett’s Berkshire Hathaway, and which in turn owns a chain of mobile home companies with different names, helps push people into high-priced mobile-home mortgages through predatory lenders also owned by Clayton itself. And Berkshire Hathaway has its hand in the mobile-home manufacturing business too, so the whole predatory web funnels profits from people of modest means into the billionaire’s pockets.

I think it’s time to take to Twitter and ask @WarrenBuffett and @claytonhomes how they respond to the charges made in Daniel Wagner and Mike Baker’s piece Warren Buffett’s mobile home empire preys on the poor.

(2) Chicago and Illinois:  The main election result in Chicago, Rahm “Mayor 1%” Emanuel winning re-election (spending some ten times what his run-off opponent, Jesús “Chuy” García, did) was super-depressing, but even worse, for me, was the fact that Chicago’s UNITE-HERE Local 1 endorsed Emanuel (though with some laudable push-back from other unions in the city, who gleefully mocked the #RahmLove hashtag on Twitter, and by former UNITE-HERE staffers, according to Micah Uetricht’s post, Over 40 Former UNITE HERE Staff, Volunteers Rebuke Union for Endorsing Rahm Emanuel, at Working In These Times.

Just before the elections, Naked Capitalism’s Lambert Strether had a post, Rahm Emanuel and Rick Perry Hold Public in Bipartisan Contempt, about how Chicago’s Emanuel and Texas’s Perry have figured out how to dole out multi-millions of dollars to companies (campaign donors, surely) with no bidding process, no transparency, and no accountability (e.g., about whether the companies create jobs they are supposed to create.

There was at least one (possible) positive outcome to the elections in Chicago, as Kari Lydersen reported, also at Working In These Times: On Chicago’s Southeast Side, Union-backed Sue Sadlowski Garza May Have Defeated a Rahm Emanuel Ally.  Sue Sadlowski Garza was one of several teachers to challenge pro-Rahm incumbents, but I think the only one to get to the run-offs, and she was just a few votes ahead last I checked, but hopefully she will prevail.

And Chicagoans also have to worry about Governor 1%: Bruce Rauner. In great interview from a while ago on Doug Henwood’s Behind the News, longtime lefty union organizer Jane McAlevey talks about Gov. Bruce Rauner’s attack on public-sector unions in Illinois, and about how the reactionaries like Rauner have an analysis of power that they pursue with precision, and the left needs to get one instead of floundering around. She made similar arguments in a piece in The NationWe Need Syriza in Illinois.

There was a lot of fuss on The Facebook among progressives about the so-called “religious freedom” law in Indiana, and rightly so. Mainstream and right-wing commentators claimed that the Indiana law was the same as the federal law and the law in a bunch of other states–but they were wrong. (David Brooks, unsurprisingly, was one of those to get it wrong (here).) The two best pieces I saw on this were from Garrett Epps in The Atlantic (What Makes Indiana’s Religious-Freedom Law Different?), and from Bill Black at New Economic Perspectives (The Homophobic Law and the Indiana Governor Who Dares Not Speak Its Purpose, plus this post responding to criticisms). Indiana has no LGBT anti-discrimination law, for one thing; but Bill very usefully points out how the Indiana law pointedly drafted to be extreme. (What I thought was the really wacky part of the law was the provision that allows you to make up your own religion: “Sec. 5. As used in this chapter, ‘exercise of religion’ includes any exercise of religion, whether or not compelled by, or central to, a system of religious belief.”

But once you listen to Jane McAlevey on Rauner’s coup in Illinois, you’ll wish there were as much of an uproar on social media about what’s going on in Illinois as there has been about what’s going on in Indiana.

(3) Atlanta Teachers vs. Wall Street Bankers:  Bill Black had a great post on New Economic Perspectives (cross-posted on Naked Capitalism) about the recent sentencing to prison of teachers who changed their students’ high-stakes test scores: We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers? Bill focuses on all the investigative and prosecutorial resources that went into the cheating scandal, when massive bank fraud is considered too difficult to prosecute. David Dayen made similar points at The Fiscal Times (The Biggest Outrage in Atlanta’s Crazy Teacher Cheating Case), but he emphasizes (what I’m betting Bill would agree with) that it’s not obvious the teachers should have been prosecuted at all.

And there was this really wonderful unsigned (as far as I could tell) post at the Crunk Feminist Collective website: Teachers Are Not Magical Negroes–an homage to teachers who encourage Black students to succeed, connecting their struggles to the Atlanta cheating scandal (or the scandal of the harsh punishment those teachers received). Money quote: “We treat smart Black kids and dedicated Black teachers like magical Negro unicorns that can individually save the world when the truth is that we need massive dedicated resources and structures to support us. We put students and teachers in impossible positions, berate them daily, and then wonder why our school systems are struggling. If we really believe that black lives matter, they need to matter in the classroom and in the schoolhouse too.” (For an explanation of the “Magical Negro” trope, see this entry at the wonderful and often radical TV Tropes site, or this Wikipedia entry.)

–Chris Sturr

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