Machiavellian Economics

I was on a tourist bus in Tokyo when I heard the tour guide announce to us gullible American tourists: "We are passing some orange groves that supply Tokyo and the surrounding areas. Notice how carefully trimmed the trees are. The trees are small, but they are packed with fruit. It looks like the orange industry is doing very well. But the truth is orange growing in the country is living dangerously. It is under attack from American oranges. The government of Japan must step in and protect the oranges, otherwise the orange farmers in Japan will be wiped out."

It was 1982. I could not believe my ears. Japan had just successfully killed television and radio production as well as the textile industry in the U.S., was in the process of killing the larger electronics industry, was flooding America with Toyotas, Hondas and Nissans, and was running huge trade surpluses against the U.S. Yet, the Japanese were talking about the need to protect their orange growers.

In Machiavelli's the Prince, the genius of deception advises his prince, "The prince must, as already stated, avoid those things which will make him hated or despised, and whenever he succeeds in this, he will have done his part, and will find no danger in other vices. He will chiefly become hated, as I said, by being rapacious, and usurping the property and women of his subjects, which he must abstain from doing and whenever one does not attack the property or honour of the generality of men, they will be contented; and one will only have to combat the ambition of a few, who can be easily held in check in many ways."

Machiavelli knew that the prince must behave properly at all times. No minor kicks, no vices, especially not in front of his subjects. The prize, the North Star, is much bigger. If the prince behaves well in public, he can get almost anything from his subjects.

Machiavelli's book was of course written for the benefit of rulers and not businessmen, yet if we just substitute "Japanese businessmen" for prince and "consumers" for subjects, we can easily see that the above passage is applicable to Japan's hoodwinking of the American consumers.

Japan orchestrated the systematic destruction of the most important manufacturing sectors in the U.S. without seeming to have done so. The Japanese executives and trainees who were sent to the U.S. to manage Japanese interests here looked and lived like handicapped aliens. They all spoke broken English. They all needed help from their fellow American workers. They all humbly sat in their corners and never bothered anyone. They were neophytes who appeared lost in their new surroundings. Their incomes were only marginally more than those of the average American workers.

Americans were not tempted to envy or despise those Japanese because they appeared to be struggling economically, along with the Americans they employed.

They were generous, and they showed their employees a good time whenever the occasion called for it.

What Americans did not know was that the Japanese they worked with were paid two salaries: their salaries in America that allowed them to live modestly but comfortably and the salaries paid by their home offices, which depending on their positions in the home office hierarchy, could be substantial or puny.

The commercial relationship between Japan and the U.S. in the 1970s and 1980s can be characterized as that of the elephant and the mouse. The wily Japanese were supposedly the mouse and the American economy was allegedly the elephant. But, with one important twist: the mouse was spreading a virus that the elephant would not recover from for decades.

It was a virus that weakened America's economic muscle and turned the American economy into a consumer and service economy. We became subjects of the Japanese manufacturing Prince but were made to feel that we were the rulers. It was a virus that turned American macho men to wimps.

While we gladly opened our markets to Japanese products, the Japanese virtually closed their markets to ours. They dumped their excess production in the U.S. and brilliantly explained why their products were cheaper in the U.S. than in Japan. They explained to us that the Japanese market had - and still does - many distribution layers that had been erected over the centuries. There were relationships that had survived the generations, including the Hiroshima and Nagasaki nightmares. There were middlemen in every corner of Japan that added to the cost of Japanese products as they negotiated the complex marketing infrastructure. This marketing infrastructure, the Japanese told us, was responsible for making not only Japanese made products very expensive in Japan but also American products and rendered U.S. made products non-competitive in the Japanese market.

We looked with awe at the cost of living in Japan - one of the highest in the world. What we did not know was that this was by design. The Japanese were willing to pay exorbitant prices for their own products to assure that Japanese products could be marketed cheaply - even at a loss - in other countries. That was how the Japanese would destroy manufacturing in the Americas, in Asia and in Europe.

America's exports had no luck in Asian, European and South American markets either. U.S. manufactures competed with "dumped" Japanese exports and could not compete on price and eventually quality. The Japanese victory in its trade war with America was complete.

If the Japanese had not built factories in the U.S., the trade imbalance with Japan would be much, much larger than it is today. Japan currently is the second biggest creditor of the U.S., holding close to $900 billion in U.S. debt. America's number one creditor? You guessed it - China, with more than $1 trillion of U.S. debt.

Before we go to China, we must make mention of the South Koreans and other minor players. They too have been practicing Machiavellian Economics at our expense. South Korea has virtually closed its markets to American consumer products just as they attempt to replace Japan as the biggest source of cars, televisions and electronic products that are marketed in the U.S. President Obama wants a trade agreement signed with South Korea so bad that he was willing to go before the South Koreans, hat in hand, to convince them to sign on the dotted line. South Korea, which is benefiting greatly from the status quo, does not appear eager to sign a trade agreement which will grant American businessmen the right under the law to market goods in South Korea under most favored nation terms.

This brings us to the Chinese. When the current Chinese industrial revolution started, the Chinese burst on the scene as coolies who were merely trying to earn a buck - literally. Chinese workers were willing to work for $1 a day and were almost robotic in their efficiency. They were the hardest workers in the world. The Chinese have built, over the centuries, a veneration for artisanship. They can build the best and cheapest Nike shoes, day-in and day-out, for years and for decades. They don't complain of boredom. They have Confucian pride in their craftsmanship. They could build the best Nikes in the world, earn $1 a day, and never complain.

They became the darlings of American business. Even as Chinese wage rates increased exponentially over the years, Chinese labor still cost much less than American labor, both unionized and non-unionized. The Republicans are quick to blame unionized American labor for the disparity between Chinese and American wages, yet China's wages also beat non-unionized American wages by a mile.

The Chinese are quick learners, and they learned quickly from the Japanese. They adopted Machiavellian Economics from the Nipongos, but improved on the method. Instead of shipping Chinese brands from China, or manufacturing Chinese brands in the U.S. using parts manufactured in China, the Chinese merely negotiated with the American multinationals to either locate those multinationals' plants in China or to employ Chinese sub-contractors. The Chinese also manipulate their currency by virtually pegging the yuan to the dollar and adopting monetary policies that would keep the exchange rate virtually constant. This way, American products will not suddenly become cheap in China. The Chinese have our goose cooked.

Americans go to Wal-Mart, Target and other chain stores all over the 50 states and buy American brands, not knowing if those products are actually made in the U.S. or made elsewhere. The answer, of course, is simple. They are not made in the U.S. They are, most of them, made in China. Some, like tires, are made in Malaysia.

For the nearly two decades the deception went along with silky smoothness. Then one day Americans noticed. Where are the American manufacturing jobs? If we are buying record quantities of cell phones and computers, nearly all of them American brands, why can't we find neighbors who are employed in those factories?

Machiavelli will always outsmart his subjects and will never be found out. Machiavellian Economics, however, works only to a point. The subjects - American consumers - eventually find out that they have been duped.

Can we, American consumers, go to an all-out declared war with the princes? No, it's a war that we cannot win. What we need to do is to turn the tables on all of these international princes. We must create advantages where none exist. We must exploit our weakness and turn it to an advantage. We must engage in deceptive trade practices without the princes knowing what's up in our sleeve.

How do we exploit our weaknesses and turn them into strengths? We must become the new Japan. We must create our own version of Japan's Ministry of Industry and Trade that will create strategies in international trade. The goal must be to become an export economy, not a consuming economy. The American Ministry of Industry and Trade will craft world distribution strategies, but will also help in the manufacturing end. Questions such as what is the right mix of robotics technology and American unionized and non-unionized labor will create the optimum advantage in final product cost must be answered - convincingly. How can the U.S. protect its manufacturing industries without appearing to be protecting them?

The American Ministry of Industry and Trade shall oversee the creation of giant American trading firms, patterned after Mitsubishi, Mitsui and others. These trading firms will have one overarching goal: the promotion of American manufactured products overseas.

A new marketing infrastructure will have to be created, assuring that products manufactured abroad will have a much harder time reaching the American consumers. We can justify this new infrastructure by announcing to the world that Americans need jobs and the only jobs American businesses can give them are the layers of distribution that must handle imports as those imports go through the pipeline.

We can do a lot of crafty and wily things, which I am not going to write about because such strategies must be kept a secret. We will of course be found out eventually, but by the time we are found out, it will be too late for the Chinese, the Japanese, the South Koreans and others who have been practicing Machiavellian Economics at our expense over the years.

We will be the new international princes, directing our invisible guided missiles at our unsuspecting targets - the Chinese, Japanese, South Koreans and Germans. We need to start this yesterday.

Aliens in the Mist

They might as well be aliens. They have nothing in common with us ordinary Americans. They cannot identify with us, they do not share our everyday concerns. They are the new aristocrats of the crumbling aristocratic world. They are the Marie Antoinettes.

How can you expect them to identify with regular folks when they make as much as 500 to 600 times what an average worker makes? I am talking about today's Chief Executive Officers.

Fifty years ago, CEOs made ten times what the average workers made. All the concerns, all the fears, all the feelings of insecurity that the average workers had, the CEOs also had. What happened to the workers impacted the lives of the CEOs too.

One reason Mad Men, the cable TV show, is such a hit is that people identify with the advertising executive characters in that show. Those advertising men had to watch their budgets, ran out of money like everybody else, scrimped and saved.

One reason Bill Clinton had such high approval ratings even in the midst of the Monica scandals was that Bill identified with ordinary Americans ("I feel your pain") and they with him. Americans knew that Clinton had financial problems, just like them. In order to raise the money to fund his legal defense, Clinton did not dig from a trust fund, or his stock options, he borrowed against his life insurance policies.

The CEOs today are immune from financial hardship. They would never outlive their finances if they lived a thousand years. They no longer have anything in common with the common man.

This, in my humble opinion, is at the heart of the destruction of the American middle class. The CEOs do not identify with the American middle class because they cannot fathom what ordinary folks are experiencing these days. The CEOs might as well be space aliens newly landed from outer space. They look at American labor and what they see is a factor of production. They do not see people, they see a class of people. They see a commodity.

This is why they would close plants in America and open factories in China, India, Singapore and Taiwan without so much as a sigh. Hitler and his fellow murderers looked at the Jews and saw only the letters J-E-W. They did not see them as Dr. Rosen, or Mr. Rosenthal, or Mrs. Graham, or Master Schultz. They saw them as a class of sub-humans. The CEOs do not see their employees as individual workers to whom they owe some loyalty. They are just workers who could be replaced by other workers in China, India, etc. at a fraction of the cost.

This behavior on the part of the CEOs has been rewarded by Wall Street. Multinationals that close plants in Ohio and Indiana and open new factories in Guandong and Mumbai have seen their stocks rise in multiples of three, four or five over the past few decades.

CEOs and their highly-paid staffs have broken way past the ceiling of reasonable compensation and are earning tens of millions in salaries and perks each year. The average worker makes do with $30, $40, $50 thou a year, while the CEOs and their entourage give each other salaries 200 to 600 times what their average worker makes.

Are these CEOs especially talented, like Tiger Woods, Michael Jordan, Celine Dion, Oprah Winfrey, Lebron James and other stars in the rare firmament of stars? No way, Jose. These CEOs are just ordinary blokes who have poor people skills and are of average intelligence, but by simply being at the right place at the right time, they are elected to the pinnacle of the corporations where they have made a living for a number of years. But wait, these blokes do have a talent. They are ruthless cost-cutters. They have developed a reputation as cost-cutters. Meaning, they have in the past closed a lot of factories in the U.S. and have either opened new ones in China, Malaysia, Singapore or India; or, they have engaged sub-contractors in those countries.

With that cost-cutting reputation in tow, plus a reputation as a heartless executive, these powerful bomb throwers eventually ascend to the position of Chief Executive Officer. Once in office as the new CEO, they continue cutting costs by closing plants in the U.S. and opening up new plants in China. And Wall Street rises to its feet and gives them a standing ovation.

Labor costs are so cheap in China, India and other emerging Asian countries, which more importantly have many highly educated, science-and-math-trained workers that to the CEOs, it's a no-brainer. These plants in China make the CEOs of American multinationals look like geniuses.

More like a hare-brained strategy to me. The destruction of the American middle class has a steep long-term cost. As the American standard of living declines, purchasing power drops precipitously, and in time the American market will no longer sustain the big multinationals. True, they can sell to the emerging Chinese market, but the Chinese are still years away from matching the fertile American market. Thus, there will come a point when the multinationals can no longer sell as much to the American market because of Americans' decreased purchasing power, while not being able to sell to the emerging markets because those markets are nowhere near the American market in purchasing power.

The net result is a contraction of the multi-nationals, their decline and eventual demise. A look at the Dow Jones component companies in 1900, compared to the Dow Jones components in 2000 reveals how American corporations have gone from being on top of the world to being nowhere to be found. Only one of the 30 Dow Jones companies in 1900 was still around in 2000 - General Electric. The twenty-nine others are gone.

These multinationals that close plants in America and open factories in China and India, if history is a guide, will not be around in 2100. They will have outsmarted themselves. Having destroyed the American middle class, they will eventually see their markets shrink. Their reduced business volume will make their scales of operation unsustainable and they will find it necessary to splinter and/or be gobbled up by the new emerging companies, some of which only exist in our imaginations today.

There is an important cross-current that may still save the day for the middle class. Some important multinationals, such as Texas Instruments and Global Foundaries, a spinoff of American Micro Devices, when confronted with the question of where to locate their new, very promising high-tech plants, decided to locate them in Richardson, Texas and upstate New York. The trend is powered by a desire on the part of American businesses to locate their plants near their customers. It is also fueled by a very intelligent long view. Chinese labor costs are compounding at the rate of 15% a year, while American labor costs are increasing at an average of 2% a year. Over the 20-year-life of a factory, Chinese labor may approach or even exceed the cost of American labor.

There are security concerns. There are concerns about knock-offs. There are concerns about quality. It used to be that Westinghouse refrigerators lasted almost a lifetime. Now the refrigerators that are made in China easily break down, need repair or replacement and are more costly in the long-run. Bicycles? Fuhgeddaboutit. Bicycles made in China last exactly one month.

There are concerns about keeping highly trained employees, with job-hopping becoming common in China as new companies are formed and good employees are pirated away.

Texas Instruments has a wealth of talent to tap because of so many closed factories in Texas, in the southwest region, and finally in the United States. By partnering with the University of Texas in Dallas, TI can assure itself of a steady stream of talent that is university-trained.

There are CEOs who are so far ahead of the curve that they now see the U.S. as a destination of choice for the new factories that they are setting up to manufacture their new products. These are the CEOs who will be around for a long time and who will take their companies deep into the current century and perhaps onto the next.

If the CEOs of American multinationals do not reverse course - and soon - their days may be numbered. New, lean and mean American manufacturers are sure to sprout up and challenge the multinationals in the American market as China's and India's and other Asian countries' labor costs rise by double digit percentages each year and as the product quality differential bites the multinationals in the nose.

These aliens in the mist must emerge in daylight and learn how to be Americans again. One bright and glorious morning, most Americans will wake up and realize that the problem is not them - the canard is that Americans are under-educated and ill-trained; it is rather that aliens from outer space are running the multinationals and are decimating the middle class.

One bright and glorious morning, a responsible Board of Directors will cut back on executive compensations and bring CEOs and their sycophants down to earth, closer to their workers and become Americans again. When that day arrives, Wall Street will realize that it is not just the bottom line that predicts future success, long-term viability is conditional upon the protection of the American middle class. It is in the multinationals' self-interest to protect the American middle class, and I am confident the CEOs will eventually realize how important this goal is.

There's hope yet.

Meanwhile, some "facts" we have to live with (from the article, "American Manufacturing Going the Way of the Dodo Bird," found in Chip Hanlon's Red Country, a conservative website):

*The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.

*Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

*In 2008, 1.2 billion cell phones were sold worldwide. So how many of them were manufactured inside the United States? Zero.

*The United States has lost a total of about 5.5 million manufacturing jobs since October 2000. (Nykos2: George Bush was President when U.S. manufacturing lost 5.5 million jobs. Bush never commented to the country about this loss. Did he know? Did he approve? Of course he approved. Those space-alien CEOs were his base.)

*In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

*As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

Merry Christmas to us: Wall Street Bull, Cost-cutting CEOs and the politicized U.S. Supreme Court

The CEO's were not the only ones busily tightening the screws on us ordinary, gullible and dumped-on Americans. The new class of business aristocracy that had emerged starting in the 1960s from Harvard Business School, Wharton and other mass producers of financial whiz kids were emptying our pockets as we stood tied to a pole, ready to be cannibalized by savages dancing to the beat of a jungle (survival of the fittest and best connected) drummer.

We were overnight transformed from a producing society to a consuming society, overnight transformed to consumers of Wall Street's raging bull droppings. Instead of making things, we are now selling things made by others. But, there are not enough sales jobs in warehouses and retail stores to go around, so we sell each other financial products invented for us by the financial wizards in our midst. The financial whiz kids from Harvard and Wharton sold us a gargantuan Ponzi scheme that dwarfed even Bernie Madoff. They sold us securities consisting of worthless mortgages and products not the smartest among us could understand.

Wall Street icons sold us worthless securities knowing full well they were worthless, bet against the products they were selling us, effectively tanking their reputations by telling us those securities were opportunities of a lifetime. They were out for the quick buck, these gleaming cap-toothed suits, they were not concerned for their long-term reputations. "A horse, a horse, my reputation for a horse!"

Continuing with Robert Borosage's blog post, "Obama and the CEO's: Looking for Love in all the Wrong Places":

Financial Speculation and Soaring Insecurity

40 percent of American households have experienced unemployment, foreclosure, underwater homes or mortgage arrears in the financial collapse. Americans lost some $11 trillion in savings and home values, dashing retirement plans. At the height of the Bush economy, Wall Street was capturing fully 40 percent of corporate profits, as the housing bubble built on a tsunami of financial speculation. UBS and General Electric, whose CEOs met with the president, were among the financial institutions bailed out by the Federal Reserve and the Treasury.

This bubble-bust Wall Street economy was a product of deregulation, the growth of a shadow banking system, and the spread of leveraged speculation with other people's money. President Obama was right when he said Wall Street needs to be smaller and engaged more in real investment than in speculation. But the president's cautious reforms engendered a multimillion-dollar lobby reaction from Wall Street. The banks were rescued but not reformed, the casino has reopened, and Wall Street's back to paying record levels of million dollar bonuses. The pervasive fraud and abuse revealed in the housing bubble has resulting in shockingly few prosecutions.

(Nykos2: We as a country do not want to learn. We are split by ideology. Those in the right are getting hoarse, screaming into our ears that we must leave business alone. They are drilling into our cerebellums the notion that government is the problem, therefore, government cannot possibly have the solution. Our government, effectively neutered, has stepped back. Wall Street is back in business, selling us on their latest Ponzi schemes.)

The economy can't work well without major reforms that curb financial speculation and make banking boring again. That requires tighter control on leverage and activities, curbs on banker's compensation schemes, and, as even the IMF now supports, taxes on banks -- including a financial transaction tax that would dampen computer-driven speculation. Needless to say, America's financial barons and their lobbies will oppose these reforms fiercely.

(Nykos2: From the Washington insider bloggers' website, The Hill: "One idea for raising taxes to pay down the debt is the bill introduced this February by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock. Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.

"To reduce the impact of such a flat tax on the poor, Fattah’s bill provides for a 1 percent tax credit for couples earning $250,000 or less ($125,000 or less for individuals) and discretion by the Treasury Department to exempt certain transactions on which lower-income people disproportionately rely. Another idea would be to amend his bill to exempt all transactions below $500.

"Using 2008 numbers as an example: There was $755 trillion in total transactions that year. If you deduct the exempted $312 trillion in stock transactions, that leaves $443 trillion in revenues, minus the cost of the tax credit and other possible measures to soften the impact on the poor. This means that with Fattah’s transaction tax in place, there is a real chance for eliminating the national debt within the next 10 years..."

This is a great idea, and easily enforceable. Will the U.S. Congress pass this bill? Of course not. Many in the lower House and in the Senate are kangaroos in Wall Street's pockets.)

Top End Tax Cuts and a Collapsing Infrastructure

America is literally falling apart. Collapsing bridges, exploding water mains, crumbling levees are a deadly clear and present danger. Children go to schools that are dangerous to their health. Our declining infrastructure is also costly economically, with outmoded transport, crowded highways, slow and inadequate broadband impeding our ability to compete. As President Obama has suggested, we need to make significant investments in building a 21st-century infrastructure, in education and training, in research and development as a foundation for a revived American economy.

In theory, the business lobby supports these investments. But they also lobby hard for top end and corporate tax cuts, and for spending cuts that makes it impossible to finance them. A fruitful conversation with the CEOs might have focused on whether they would commit real resources in a drive to increase investment in areas vital to our future. Instead, reports are that the president promised to move directly from the egregious top-end tax cuts in December to cutting spending and reducing deficits in January. If the wealthiest Americans, like those around the table with the president, are going to continue to pay a lower effective tax rate than their secretaries -- as Warren Buffett has noted -- then America will continue to starve investments in the areas vital to our future.

(Nykos2: Why shouldn't America's secretaries pay a higher effective tax rate than their bosses? The secretaries are lucky to have jobs. Top executives, after all, no longer need secretaries. They can do all their communication themselves via the Internet, using their companies' sophisticated email. The filing work can and is being done in India by some outsourcing company at the fraction of the cost of America's secretaries.

Their coffees? The executives can designate one of them to be in charge of coffee for the day. Each executive from division manager on shall function as the coffee guy or gal to serve all the other executives. By installing such a system, the executives will be forced to communicate with their fellow executives, promoting inter-department, inter-division communication.

Why shouldn't the executives eliminate the position of secretaries? They've eliminated their personnel managers, their data processing people, their accountants, their factory workers, their staff managers, etc. Every job that can be off-shored or outsourced to China, India and other countries is already either in China or other countries, or on a plane going to destinations suspected but officially unknown.

Their Boards of Directors are rewarding executives for shipping jobs overseas. Wall Street loves news about jobs going to China and making multinationals enormously profitable.

Secretaries who still have jobs should be eternally grateful that their jobs are not yet being outsourced to some heavily-accented Indian. So, yes, tax the secretaries more than their S.O.B. bosses.)

Regressive Tax Reforms and Record Poverty

More than 43 million Americans are in poverty, the highest number since they began keeping records. More than 42 million are on food stamps. Millions of homeowners are still facing foreclosure and loss of their homes. Mass unemployment continues, with more than 20 million Americans in need of full-time work. An entire generation of urban kids is essentially being written off, sentenced to crowded schools, broken families, dangerous streets, and joblessness. This is the tinder for social explosion.

Yet, programs for the poor will be on the chopping block from conservatives when the new Congress convenes. The politicians that the CEOs supported will be adding to, not subtracting from, the burdens of the "least of these." For there to be a serious effort to address poverty, to promise a fair start for every child, to provide the core elements of a real hand up that offers them the opportunity for a good education, a decent job, an affordable home and hope, we'll need costly new priorities that will have to be pursued largely without significant corporate support.

(Nykos2: The rich, the powerful, the well-connected are the new aristocracy in America. The outrageous compensations that they have packaged for each other have put them on a rocket ship to space. They no longer identify with ordinary, everyday Americans. "Americans are starving? Let them eat cake. I don't have time for them," they seemingly say to each other. "They are scum because they choose to be scum."

Listen to these new American aristocrats talk. Then, and only then, will you know if you still have a future in this country.)

Corporate Power and Corrupted Democracy

Corporate lobbies and corporate money are corrupting our politics. Over the last two years, we've witnessed graphic scenes in how powerful and entrenched corporate lobbies could fend off common sense reforms in health care, energy, finance and trade. The decision of the conservative Supreme Court gang of five in Citizen's United, overturning settled precedent to declare that corporations had the same free speech rights as people and could spend unlimited amounts in independent expenditure campaigns to influence elections, contributed to the flood of corporate money that helped to bring Republicans the majority in the House.

Washington can't work as an instrument of common purpose so long as corporate lobbies dominate the backrooms and corporate money dominates elections. Hundreds of billions of subsidies are now wasted on entrenched corporate complexes -- the military industrial complex, the drug and health care complex, the agribusiness and Big Oil complexes. Needless to say, the Obama CEOs aren't about to cut back their lobbying unilaterally and oppose bitterly any restrictions on their political activity. Yet, no reform agenda can survive unless the corporate hold on Washington is challenged.

This list can go on. Talking with CEOs makes much sense. Finding areas of agreement -- perhaps around infrastructure investment, education, R&D -- is useful. (It remains bizarre that corporate America so vociferously opposes single-payer health care that would remove from their balance sheets a major expense that harms their ability to compete). Making an alliance with the small businesses and national companies that actually want to prosper in America might be possible.

But the president should not use his "bully pulpit" to teach the wrong lesson. America can't succeed without prosperous companies, but global corporations now are prospering while America fails. They stand in the way of reforms vital to our economy and society. If Obama is at peace with America's corporate barons, he isn't doing his job. Embracing their agenda isn't "moving to the center," it is abandoning the fundamental reforms this country desperately needs.

(Nykos2: Obama has not completely capitulated to the business interests. I know, I was overly harsh on him in my past comments. Further reflection has convinced me that this guy may have the right stuff after all. He has allowed Big Business, Big Oil, Big Insurance, etc. to win this round. Hopefully, if he is re-elected in 2012, we will see the real fight between this administration and a business community that is drunk with power. The CEOs and their satellites and sycophants have, after all, most of the power centers, including the U.S. Supreme Court, seemingly in their pockets.)

Follow Robert L. Borosage on Twitter: www.twitter.com/borosage

Merry Christmas to us: American CEOs creating jobs in China

I can't get that old Christmas spirit this year. I remember waking up many times as I progressed from year to year in my childhood immersed in a serenity that I could never feel in adulthood. Childhood, to me, left when I could no longer genuinely feel and see the words of "Silent night, holy night. All is calm, all is bright."

I have a 14-foot Christmas tree in my house this year, yet I can barely sense the smell of pine. As a child, my family's Christmas trees were no more than six feet tall, yet each morning during the Christmas season I woke up to the sweet aroma of pine. If I knew tai-chi, I probably would have gone to the nearest fog-shrouded park and practiced that serene art of kung-fu in slow motion.

I know I'm in trouble because I can't smell the pine in my house, which now has a massive 14-foot Noble tree top straight from the rain forests in Oregon.

An Internet friend forwarded this Christmas message to me, which flummoxed me. Was I supposed to be offended, or was this a genuine Christmas wish full of hope and encouragement? You be the judge:

"To My Progressive Friends:

"Please accept with no obligation, implied or implicit, my best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasion and/or traditions of others, or their choice not to practice religious or secular traditions at all. I also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted calendar year 2011, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great. Nor is this to imply that America is necessarily greater than any other country nor the only America in the Western Hemisphere . Also, this wish is made without regard to the race, creed, color, age, physical ability, religious faith or sexual preference of the wishee.

"To My Traditional Friends:

"Merry Christmas and a Happy New Year"

I opened my mail this morning and lo and behold, I am getting excited again. A lifelong friend who lives in Australia emailed this piece from Huffington Post that puts into words exactly how I feel about my beloved America, only much better than I ever could.

Robert Borosage is the President of American Institute for America's Future and a regular blogger at Huffington Post. As I read his piece, which I am reprinting in my blog in two installments (with my commentary, of course) I was reminded of John F. Kennedy, who used all the moral suasion powers at his disposal to bring down the mighty U.S. steel industry to its knees. American power and hegemony was unquestioned in those days and what the President of the U.S. said was the law. No hemming and hawing, only universal respect for the Office of the Presidency.

Borosage, in his latest blog, noted that President Obama has met with the very people that he should be castigating. He led with an apology when he should be demanding one from the CEOs of the very corporations that are responsible for the gutting of American labor and the dismantling of the American middle class.

I do not believe that Obama owes any American CEO any apologies, so why did Obama apologize to them? I am an anti-conservative, yet I am being drawn closer and closer toward the conservative position that Obama is too humble. He bowed to the Emperor of Japan, to the Saudi prince, and who knows who else?

Obama must learn to project power, not humility. Especially not before the very people - the CEOs of the major multinational corporations - who have wrecked the American economy while building their multinationals. It is as though these CEOs have conspired to ruin America and partition the country into corporate serfdoms that are part and parcel of their empires which transcend national boundaries.

That's not OK by me, and should not be OK by Obama. He, after all, is the President of this country that is being partitioned by these multinationals for their personal gain and not for, by and of the American people.

From Robert Borosage"s "Obama and the CEOs: Looking for Love in all the wrong places":

The president kicked up his "corporate charm offensive," meeting for hours with 20 CEOs yesterday. Characteristically, he started with an apology for not "finding the right balance" in addressing business. "We want to be boosters," he said, because "when you do well, America does well." The president and the business leaders talked about free trade, fiscal discipline, and relief from regulation. The White House let it be known the president was considering a speaking gig at the board meeting of the Chamber of Commerce, the right-wing corporate lobby that had accused him of waging a "general attack on our free enterprise system."

You can't fault the president for showing a little love to America's corporate leaders, but there is one small problem here: The entire premise of the meeting is wrong. The reality is that the corporations are doing extraordinarily well -- and America is in trouble. US corporations recorded the highest profits on record last quarter, while more than 20 million people were in need of full-time work, and poverty is at record heights. What is good for General Motors or General Electric or IBM is no longer necessarily good for America.

In fact, these executives and their companies are more part of the problem than part of the solution for this country. They've been making out like bandits, but Americans are less and less the beneficiaries of their success. As President Obama has stated, if we are to revive an America with a vibrant middle class and a widely shared prosperity, we need fundamental reforms to build a new foundation for growth and prosperity -- an agenda the country needs and the CEOs he met with largely oppose.

Consider:

Unsustainable Trade Deficits and Massive Job Loss to Offshoring.

America was running a trade deficit of more than $2 billion a day when the economy collapsed, borrowing that sum from abroad, largely from Chinese and Japanese bankers. We've been hemorrhaging manufacturing jobs for years. Now the big companies are offshoring information technology and back office jobs in large numbers. We're running a growing deficit in high technology goods with China. The CEOs the president met with -- from General Electric, IBM, Cisco, Intel , Boeing -- have been at the front of this trend. As Andy Grove, the former head of Intel,warned, there are now fewer manufacturing jobs in the US computer business than there were when the first PC was assembled in 1975.

(Nykos2: I remember 1975. I remember when the first IBM PCs came out. They were 16 kilobytes in capacity. Now my PC has 326 gigabytes. I was one of the few lucky ones who had access to those PCs. Ninety percent of Americans were unfamiliar with the PCs, yet astonishingly, we had more employees in U.S. computer manufacturing then than we do now. These computer manufacturing companies are saturating the American market with computers made in foreign countries, using coolie labor trained by genius American trainers.)

The president rightly made balancing our trade central to his economic agenda. That requires pressure on China, Germany, Japan and the surplus nations -- not more trade accords that allow them to play by a different set of rules. And it requires making things in America once more, with companies committed to exporting goods, not jobs.

(Nykos2: Exporting jobs is almost as dastardly as the Philippine policy under former President Arroyo of exporting people.)

Yet, the CEOs the president met with have fought hard against reforms that would end tax breaks companies collect for moving jobs abroad. They champion trade accords that have helped disembowel manufacturing in this country. They support lobbies like the Chamber and Business Roundtable that oppose bold industrial initiatives that might help American manufacturing revive. Their increasing ability to run up profits while moving jobs abroad and using the threat of doing so to lower wages at home undermines America's prospects.

Gilded Age Inequality and a Declining Middle Class

In the five years before the financial collapse, when the economy was growing, the wealthiest 1 percent of Americans captured a staggering 2/3 of all income growth. Household income for the typical family actually lost ground over the course of the decade. Corporate and Wall Street executive compensation practices allowed the top executives to capture excessive rewards, while workers were facing lay-offs, wage and benefit cutbacks, and greater insecurity.

(Nykos2: The wealthiest 1 percent of Americans captured a staggering 2/3 of all income growth? How did this happen? This is like in old Europe, when the kings and the royal family, relatives and friends of the court lived lavish lifestyles while 99% of the population lived in abject poverty.)

The CEOs the president met with are perfect examples. Kenneth Chennault, the CEO and Chairman of American Express, pocketed $17.3 million during 2009 when the economy tanked, about 542 times what the average worker makes. Jeffrey Immelt, Chair and CEO of General Electric, took home about $9.8 million, 308 times a worker's pay. Paul S. Otellini, the CEO of Intel, was paid about $14.5 million, making more in a day than the average worker in a year.

(Nykos2: I remember reading this classic novel about American business in the 1950s, called The Executive Suite. The main character in the book was the CEO of a major food manufacturer whose salary was $50,000 a year. That was 10 times what the average worker in his company earned. Ten times, not 542 times, which is what the Amex Chairman and CEO makes today, compared to the average Amex employee.)

A prosperous middle class economy cannot survive if the wealthiest are capturing this proportion of the rewards. In the US, we've never done much redistribution through taxes. The only successful strategy -- the core of the post-World War II economy that built America's middle class -- has been a strong labor movement in a full-employment or near-full-employment economy. When labor was 35 percent of the private workforce, it not only lifted the wages of its members, but its wage and benefit packages set a standard that non-union employers had to respond to. And a strong labor movement provided an internal check on executive excess. A full employment economy lifts the demand for labor, making it easier for workers to make wage demands, as demonstrated most recently in the dot.com economy of Clinton's last years. Reforms are also needed to limit current executive compensation schemes, which hide the full cost of pay packages through stock options, give perverse short-term incentives that have little to do with relative performance, and rely on board compensation committees that are controlled by executives.

(Nykos2: No wonder these executives cry "socialist," "commie," "hippie" every time their outrageous compensation packages are mentioned in polite and impolite company.)

Needless to say, the CEOs that the president met with are unlikely trumpets for these reforms. Business lobbies warned that labor law reform would bring down Armageddon on the administration. Curbing excessive executive pay meets fierce resistance. But it is hard to imagine how we rebuild a broad middle class unless workers can once again capture a fair share of the productivity increases that they help to generate and executives are limited in how much they can plunder the companies that they head.

(Nykos2: I know you can absorb only so much in one sitting, so I want you to think about what you have read so far, toss it around in your head, and I will pick it up from here in my next blog. It only gets better.)

Dear Santa

Dear Santa,

I'm sorry I doubted you it's just that some kids at my school made fun of me for believing in you.

Here is a list of the item(s) I would like for you to give to me.

* Skate 3 (Xbox 360)
* Castel Crashers (Xbox 360)
* Star War Force Unleashed 2 (Xbox 360)
* Ghost Busters (Xbox 360)
* Batman Arkham Asylum (Xbox 360)

If you cannot fulfill a certain one of my wishes please do not buy an alternative like if you can't make Skate 3 do not make skate 2 as an alternative and even if it's the same game for a different console like the wii or ps3 do not use that as an alternative

Sincerely,
Paul Lumba

"Mom," my then 9-year-old son Paul asked his mom in 2008, "I'm upset with Santa. He never gets me what I want. I asked him for an Xbox 360 and all he gave me are these stupid things that are made in China. I thought his dwarfs make toys in the North Pole. Why are these things made in China?"

His mom replied, "Paul, Santa ran out of Xbox 360s because so many poor kids in Africa want them. Those poor kids get nothing else for Christmas, and it's very important for them to get their wish."

"But those kids don't even have TV. How can they play with their XBox 360?"

My wife looked at me, suppressing her laughter.

I chimed in. "Oh, but their tribal leaders have TV sets, and electricity. The kids just take their XBox 360s to their leaders' houses so they can play their favorite games on them."

"I hate Santa," Paul said. "He never gives me what I want, only these stupid stuffs from China. His dwarfs don't even make these things."

"There are so many kids nowadays," his mom tells him, "and the dwarfs cannot make enough toys for everybody. So Santa is now buying toys made in China, like everybody else."

Fast forward to today. "Dad," Paul, now eleven, tells me. "Santa never gives me what I want, that is why I am asking him for only small things."

"You kidding?" I asked Paul, feigning incredulity. "I saw the list you sent to Santa. That's a lot of stuff you're asking from him. And, by the way, you are not using the correct punctuations. You have run-on sentences. Maybe we should revise your letter."

"Forget the letter, Dad," Paul says. "Here's what I want you to buy for me."

He told me what he wanted me to buy, something that costs $200. That's all that stuck in my head, that it would cost me 200 bucks. I didn't really hear what it was that he wanted. All I knew was that it would cost 200 bucks. And it was not just $200, of course, because the small items he wants from Santa all add up.

I'm a smiling Scrooge. Especially when it comes to buying things for myself and my wife.

"Paulits," I usually told her in Christmases past, "Let's not get each other big gifts. We both go out throughout the year and buy whatever we need. I can't think of anything that you and I don't already have. Every day, it seems, is Christmas day for you, with all the compulsive shopping that you do."

I hate shopping. Rarely do I go with Paulita shopping. And when I do, I always manage to disappear into a corner of the mall, sit and wait until I get tired of waiting. That's when I start to look for her. Usually that's a major production. Whenever Paulita is in the mall, she vanishes into thin air. I can never find her. Sometimes I suspect she hides from me. As soon as she sees me coming, she ducks into the women's fitting room.

Instead of relaxing on a comfy seat in the mall, I spend 90% of my time looking for her. Usually, I remember that I need something for myself, like batteries or a Just for Men hair dye. So I go to one of the stores that I know carries the stuff that I need, plus two cans of cocktail peanuts perched on a shelf near the checkout counter. I go in, pay for my stuff, and come out. I head for the seat in the mall where I was sitting just a few minutes ago.

Still no Paulita.

I think I have a theory that partly explains why the American economy is now dependent almost exclusively on the American consumer. Most American consumers are women. And they are a patsy for the store displays and merchandising that retailers have now reduced to a science. My daughter is graduating next year from the Fashion Institute of Design and Merchandising in LA, the same school where the internationally famous Filipina designer Monique Lhuillier studied and was some sort of a legend in. I'm going to ask my daughter if my theory is correct: that because of the science of merchandising which is aimed at women shoppers, women simply cannot resist going shopping and feeling like it's Christmas everyday, thereby fueling the American economy.

The empowered American woman shopper is a relatively recent phenomenon. In the old days, women were on strict budgets from their husbands. The husbands worked while wives took care of the kids and made the home and themselves pretty. Now, women occupy important positions in society and many out-earn their husbands. The woman shopper has become empowered. She buys what she wants, when she wants. Her husband has very little input in the shopping process.

Many of Paul's classmates are being cared for by their fathers. The moms work while the dads stay home. I can't say for sure that the phenomenon of the working wife and the stay-at-home dad is prevalent here in Las Vegas, but if it is, there's a reason for it.

Male employment in Vegas has dried up. The construction trades, the real estate field, the casino dealers jobs - all male dominated employment sectors - have laid off tens of thousands of workers and have not rehired the laid-off workers. So the men stay home.

Luckily for most of these families, women's jobs are not hit as hard. The nurses, other hospital workers, secretaries, retail clerks, hairstylists, etc. continue to work in droves. On top of that, traditionally male fields like sales are also employing a lot of women. Women are generally better salespersons because they are capable of more empathy than men.

After more than two years of lopsided male unemployment, the women's liberation movement is now complete.

Like I said, I don't know if most of the male parents of my children's classmates are stay-at-home dads. The kids that my son hangs out with, however, almost without exception have stay-at-home dads. Maybe it's because Paul is attracted to those kids, since he himself has a stay-at-home dad. I've been retired since 2004 and have been taking care of Paul 24/7 all this time.

While long-term unemployments is really bad for the dads' psyches, I can see that the kids themselves are flourishing. Dads make their sons like sports more. Dads teach their sons how to grow up and be a man. Dads teach their sons at an early age how to fight off bullies and assert their rights on the playgrounds.

Paul, taking his cue from me, also hates shopping. Sometimes I think he hates shopping even more than I do.

Going back to this business of Santa. I'm waiting until the stores run out of merchandise so I can tell Paul he can't have everything on his Santa list. I know that I have to buy the big item that he wants me, not Santa, to get for him. There's just no escaping that. But I don't want him to get everything that's on his list, which incidentally, will probably grow as Christmas fast approaches.

I want him to know that he is not going to get everything he wants out of life, and I want him to get used to that idea. That is an important life's lesson that he should be learning now, not when he's 30 years old.

In my own family, the younger children who were born shortly before my father entered politics and the family got wiped out financially, have done very well in later life. Better than most of us older kids, who got used to the good life when we were young. The younger kids knew at a very young age the value of money, hard work and grit and determination. They were more focused on their career objectives in later life than us older kids.

Having tasted hardship at a young age turned out to be the best thing that ever happened to them.

And now this letter from me to Santa:

Dear Santa,

Please don't give Paul everything he asks for. Leave out one or two of the items, just so he knows that in life he cannot get everything that he wants. It will be the most important lesson you will teach him.

Yours sincerely,
You

This is your moment, Mr. President

Just before the then Senator Obama clinched the Democratic Party nomination for President in June, 2008, his primary opponent and major headache, Senator Hillary Clinton, went into an all-out attack, unleashing devastating ads that portrayed Obama as un-ready for the Presidency. Clinton's missives hit the mark and Obama failed to win a single big state that still had to vote in the primary contest. Clinton won New York, Pennsylvania, Ohio, Texas, California and other big states.

Obama had won most of the small states and nearly all of the caucus states (the states that selected their presidential candidate in caucuses and not by direct vote.) Clinton no longer had a mathematical chance to overtake Obama through the primary process. The only avenue left for Clinton was the at-large primary voters consisting of the "super delegates" - the Senators, congressmen and other Democrats elected to public office.

If Clinton could convince the still-undecided super delegates to dump Obama because he could not win the big states, an argument could then be made at the convention floor to un-select Obama and throw the convention in the hands of all the delegates attending. Clinton's hope was that the delegates would negate the result of the primary process and select her in the end.

The super delegates refused to reverse the judgment of the primary process and lined up behind Obama. That was how Obama won the Democratic nomination for the Presidency.

The lesson that may be learned from this now seemingly insignificant episode is what many now feel is that Clinton may have been right all along. Obama may in fact not have been ready to be President when he became the 44th President of the U.S. And not because Obama was not qualified to take the 3:00 a.m. call, but rather the other calls that may come along in the rest of the 24-hour day.

Consider this: while Clinton was on the attack, getting Obama's nose bloodied in the process, Obama chose to be "above the fray," calling Clinton's attacks an indication that the campaign had entered "the silly season."

By dismissing the attacks lobbed at him by Clinton as silly, Obama never did address people's reservations about him. He dismissed them as silly and just walked away, thinking that the criticisms would all die on the vine.

And so it came to pass that during the nearly first two years of his presidency, Obama refused to engage those who questioned his citizenship at birth, those who maligned and smeared the health care bill, those who questioned his resolve because the stimulus bill that passed Congress was not large enough to put America back to work, those who complained that the Wall Street reforms did not reform Wall Street.

Obama seemed to trust the American people to come to the conclusion on their own that what he had done was actually good for the country. He assumed that, like his students at the University of Chicago, the American people would do their homework and conclude that everything that he had done as President was good for the American people.

Obama did not answer the passion of the opposition with his own passion during much of his first two years as President. He did so only in the last few months of the 2010 campaign, when the die had been cast. It was too little, too late.

Fast forward to today. After the drubbing the Democrats took in the last elections, during which the Republicans vowed to repeal the health care reform law, to investigate Obama's alleged attempts to offer Joe Sestak incentives to pull away from a fight for the Senate seat in Pennsylvania in favor of incumbent Senator Arlen Specter, to investigate Obama's natural-born citizenship status, to frustrate all efforts by Obama to solve the unemployment problem, Obama's first response was to offer an olive branch to the Republicans.

The Republicans do not want the olive branch. They want his head. The far-right's hatred for Obama is visceral. They don't like him as a human being, they will never cooperate with him if their life depended on that cooperation.

Obama obviously thinks it's the silly season redux. Professor Obama rationalizes this visceral hatred for him and acts as though it would all disappear if he looked in control, cool and above the fray.

My unsolicited advice to President Obama:

Mr. President, many of these people don't consider you their President. They see you as a black man who has desecrated the Office of the Presidency.

The American people want you to fight for them and fight your enemies hard if that is the only way you can defend the interests of the American people against the pro-Big Business, pro-rich, pro-Big Oil, pro-Health Insurance companies, pro-China, pro-Wall Street enemies of the people.

If you will not stand up to a Republican Party that clearly is not interested in the welfare of middle class Americans, a political party that has thrown its lot with the Mr. and Mrs. Bigs in America, then we grass-roots Democrats, the youth, the hopeful independents who put you in the Oval Office may have made a colossal mistake.

We expect you to fight for us, to take a stand, to show backbone. That backbone is very important to win the fight. It is not for bending backwards.

Your first major stand must be on the extension of tax cuts for the top 2% of Americans. Most Americans do not want to extend the tax cut for the top 2%. The tax cut has done nothing for Americans except increase our debt. We borrowed from other countries - China mainly - over the past ten years more than $1 trillion to finance the tax cut. We have been paying interest on that $1 trillion and will continue to pay interest on it till hell freezes over. Now, you are going to compromise and extend the tax cut for the top 2% to the tune of another $700 billion over ten years?

We middle-class Americans and - get this - many of the rich people themselves have drawn that line in the sand. Why do you not join us and be on our side? You know that it is wrong to extend that tax cut for the top 2%, yet, incredibly you are willing to extend it for perhaps two or three years, knowing that if you do that it probably will become permanent because the Republicans will not allow it to expire when the two or three years are up.

Please read this analysis published by Bloomberg News just last September:

"Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.

"Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.

"The findings may weaken arguments by Republicans and some Democrats in Congress who say allowing the Bush-era tax cuts for the wealthiest Americans to lapse will prompt them to reduce their spending, harming the economy. President Barack Obama wants to extend the cuts for individuals earning less than $200,000 and couples earning less than $250,000 while ending them for those who earn more.

“ 'I would tend to wonder how much the tax cut actually influences spending behavior,' said Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. 'Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.'

"The Moody’s research covering couples earning more than $210,000 found that spending by the wealthy is more likely to be influenced by the ups and downs of the stock market than changes in income-tax rates."

This is not the Silly Season, Mr. President. This is not a game either. This is the season for demonstrating your allegiance to the American people. You are our leader and we expect you to fight our battles for us. There is a massive and long-term transfer of wealth from the middle class to the rich that has been going on since President Reagan sat in the Oval Office. We in the middle class are fighting back. We do not want to be impoverished in order to please those in the higher income brackets. We expect you to be our leader in this fight.

The American people do not want you to compromise on the tax cuts for the rich. They want those cuts to end on December 31, 2010. Period. And, if middle class taxes rise because all of the Bush tax cuts expire at the stroke of midnight on December 31, so be it.

You are a great orator. Go before the American people and explain to them why their taxes are going up. You should trust yourself and your ability to convince Americans that their tax rates are going up because Republicans have decided to play games. You have to have faith in the American people. You must learn from Bill Clinton.

President Clinton took a principled stand against the Republicans even to the extent of seeing the Federal government be in lockdown. The lights went out in the White House and most federal buildings, federal employees were furloughed and except for emergency services, the Federal government completely shut down. Eventually Americans turned their fury on the Republicans and Gingrich and his Republican cohorts caved.

This is the moment, Mr. President. The American people are behind you all the way on this. The American people are waiting for an opportunity to make shared sacrifices for the sake of the country, for the sake of their children and their children's children who will end up paying for the deficits to be created by the tax cuts for the top 2%.

They hear echoes of President Kennedy's speech that famously included a call to sacrifice. The American people are asking what they can do for their country. If their taxes have to rise to prevent the continuation of the scandalous tax cuts for the top 2% of society, they are willing to make that sacrifice.

And another thing, Mr. President. Do not walk like a lone basketball player when you alight from your presidential helicopter and across the White House grounds. Walk deliberately and powerfully, the way a Boss like the late Mayor Richard Daley would. And always have two or three VIPs walking with you. Do not appear on television again walking by yourself. It reinforces people's assessment of you as some kind of elitist and indecisive Hamlet.

Show that important people in this country are walking side by side with you. Biden, Hillary, Bill, Reid, Pelosi, Durbin and Schumer. Those people represent us in every way and have earned our trust. Those are people who are willing to do the right thing even if it means that they will lose an election.

When they walk with you, we are walking with you. Just remember that. As long as you are fighting for us, we will back you up. If you refuse to fight for us, we will find someone who will.

Your humble servant,
Cesar F. Lumba

Who do we shoot?

In a scene from the John Ford adaptation of the John Steinbeck classic, Grapes of Wrath, the farmer Muley was evicted by an agent of a shadowy organization from the farm that his family had worked for three generations.

MULEY: You mean get off my own land?
THE MAN: Now don’t go blaming me. It ain’t my fault.
MULEY’S SON: Whose fault is it?
THE MAN: You know who owns the land — the Shawnee Land and Cattle Company.
MULEY: Who’s the Shawnee Land and Cattle Comp’ny?
THE MAN: It ain’t nobody. It’s a company.
SON: They got a pres’dent, ain’t they? They got somebody that knows what a shotgun’s for, ain’t they?
THE MAN: But it ain’t his fault, because the bank tells him what to do.
SON: All right. Where’s the bank?
THE MAN: Tulsa. But what’s the use of picking on him? He ain’t anything but the manager, and half crazy hisself, trying to keep up with his orders from the east!
MULEY: (bewildered) Then who do we shoot?

In the recent elections, the American electorate was farmer Muley. But it was a different farmer Muley, one who was infinitely more determined to shoot. That electorate rampaged on the streets looking for people to shoot, people deemed responsible for their miseries. Except that now in 2010, those going postal pick off their managers.

The American people knew exactly who to shoot. It was the managers. And that meant the Democrats.

One by one, Democratic congressmen and women were picked off, downed by marauding mobs brandishing hunting rifles and shooting wildly into the air just to make sure their weapons were loaded and firing.

It was a massacre. Some of the best and brightest went down, along with the new ones who entered Congress only two years ago, men and women who clearly had nothing to do with the Great Recession that started in 2007, when the absentee President, George Bush, Jr., was still President.

The people are still jobless, their homes, their farms, their businesses have not been returned to them, but at least the American Muleys had found their revenge.

Now the Republicans are in charge of the House of Representatives, and they have two years to prove that they can do a better job than the Democrats in the area of job creation. The people want jobs, jobs, jobs. They are not interested in the ideological warfare that is going on between progressives and conservatives, between liberals and libertarians. They just want to work again. Is that too much to ask?

A lot of Americans - especially those 50 or over - who lost their jobs in the Great Recession just past, a recession that is officially over but is for most people still going strong, may never work again. Unless some drastic, even draconian steps are taken by the U.S. government. And what steps may those be?

Oh, please. Don't give me this tax cuts for the rich thing that Republicans Boehner and McConnell are trying to sell to the American people like snake oil. Reagan and Bush, Jr. slashed taxes for Americans in dramatic fashion and few jobs were created. Bush, Sr. and Clinton raised taxes and the economy boomed, with 22 million jobs created in the 1990s during the Clinton presidency. Were the jobs created because of the tax increases? Of course not. But this proves that tax cuts do not create jobs, while tax increases do not lead to job losses.

What actually created jobs in the 1990s? It was American ingenuity and entrepreneurship. There were so many start-ups that were created by the high-technology boom during the Clinton years. Those start-ups were formed in kitchens and garages, employing one person plus the partners. They quickly grew and soon they were employing hundreds and relocating to Silicon Valley, Manhattan, Northern Virginia, Boston and other centers of high-technology. A lot of Americans were known to have day jobs and night jobs, some of them my nurse clients who worked in hospitals for three days and in nursing homes the rest of the week. Money was easy during the Clinton years.

America must start making things again in this country. All these American companies that pay their CEOs and top managers salaries and bonuses in the tens of millions while laying off American workers and transferring manufacturing and back-office operations to other countries, must be discouraged from doing so through punitive taxes. These companies must be encouraged to relocate plants and operations back in the U.S. or forced to pay punitive taxes. What? These companies will simply relocate to other countries to escape U.S. taxes? The U.S. Congress will know exactly what to do with such companies.

The challenge for these companies that relocate manufacturing plants in the U.S. is to remain competitive in the global markets, since American-made products will tend to be more expensive than goods manufactured in, say, China. How will American business accomplish this? By increasing productivity. We can put a man on the moon, we can explore the universe with our probes. We should be able to increase productivity enough to compete with any country.

The process will take time, over at least a ten-year period. In the meantime, the U.S. must impose tariffs on goods coming from countries that have a lopsided balance of trade with the U.S. If a country exports to the U.S. lopsidedly more than it imports from us, there will be tariffs imposed on their products that are exported to the U.S. We want trading partners, but we want partners who will buy from us, not just sell to us.

Think China. Of course this legislation would be aimed at China. Serves them right. Many economists, notably Nobel prize winner Paul Krugman, believe that China manipulates its currency to make the dollar more expensive than it should be, rendering American goods uncompetitive in the Chinese market. The tariffs against Chinese products will level the playing field and encourage American manufacturers to relocate back to the U.S. Chinese companies may also be encouraged to manufacture products intended for the U.S. market to be manufactured on our shores.

There is a widely held doomsday scenario that features a China retaliating and taking the world to the brink of a trade war between the world's biggest trading "partners." Fine. Let there be a declared trade war. There is currently an undeclared trade war being waged by China against the U.S. and other countries such as Japan and Brazil through its currency manipulations. In a declared trade war the American people will be on the same page, and on the same side.

In a trade war, the American market will be virtually closed to Chinese goods but will be open to Canadian, Mexican, European, Australian and Asian manufacturers. Most countries will be on notice that if they exploit the American market through predatory practices, they too will suffer China's fate. China, in such a hypothetical, will be forced to sell goods normally sold to the U.S. market in other countries, but this avenue appears closed to China because China has also manipulated its currency vis-a-vis other currencies. The result is that non-U.S. markets will not absorb the excess Chinese capacities resulting from the closure of the U.S. market.

In fact, other countries such as Japan, Brazil and Europe would likely be emboldened to confront the Chinese and join the U.S.-initiated trade war.

It is an Armageddon that China would rather not face. China will try to avoid this Armageddon from ever starting. However, if the world moves inexorably towards a trade war, the most likely scenario that will unfold is that China will dramatically ease its controls on its currency and allow it (yuan) to float to its true value vis-a-vis world currencies such as the dollar and the yen. The rise in value of the yuan, will of course happen gradually and the U.S. must not consider this as a cure-all.

The U.S. must insist that the multinationals that have access to the world's biggest and most reliable market - the American consumer - must go back to manufacturing in the U.S. once again. At minimum, the U.S. government must insist that the multinationals manufacture products intended for the U.S. market on U.S. territory.

Americans must have jobs again. The continued high unemployment in the U.S. will eventually result in the collapse of the American consumer market, which will not be good for China, Japan, India, Europe and all exporters to the U.S.

Besides, continued high unemployment will further stoke the fires of anger and angst in the U.S. and marauding mobs will no longer be just active during the election season but will be active year-round, year in and year out. Institutions will collapse and nihilists and anarchists will rule the streets, the airwaves and the academic communities.

American manufacturing must be revived, and quick.

Meanwhile, as China sees the error in its ways, the rest of the world will probably look upon the U.S. with admiration and gratitude because most of China's trading partners have suffered the same fate as the U.S. Especially hit hard, in fact, are some of the European countries. China's march towards world dominance will be slowed and to an extent reversed.

China will someday be the biggest and most important economy in the world. Only a fool would deny its inevitability. But it must be slowed to allow other countries, especially the U.S., to make structural changes that will ensure the viability of their consumer markets, which is important for an orderly globalization of the world's economies.

A word on the Chinese threat to stop buying U.S. treasuries. The additional revenues generated by our resurgent manufacturing will expand the U.S. economy, which in turn will be able to absorb the shock of a closed Chinese market for our treasuries. If that proves insufficient, we can print more money, causing a measured devaluation of the dollar, making us more competitive. The Fed has in fact done this recently, when it bought $600 billion worth of U.S. treasuries. U.S. short-term interest rates would go down further, causing an uptick in economic activity. The resulting inflation will also cause an increase in the value of U.S. assets, especially houses, rescuing homeowners from their upside-down (houses worth less than the mortgages on them) financial condition.

Consumer items will cost more, but the unemployment rate will drop dramatically and people will actually have money to buy the more expensive goods. The President and other political leaders will have to be on TV almost daily, explaining why higher prices are actually good for the American worker. Higher prices will mean lower unemployment in the U.S. in the long-run and a less reliance on a predatory Chinese economy in the short-run.

When normal trade resumes with China, the U.S. trade deficit with that country will be dramatically down. U.S. manufacturing will be healthy and strong and the relationship between China and the U.S. will be mutually beneficial, not one-way as it decidedly is now.

A new high-tech industry in the field of alternative energy, a long-range program of upgrading U.S. infrastructure to the 21st century standards being set by China and other modern countries will parallel efforts to bring back lost manufacturing industries to the U.S. Tax revenues will increase and Clinton-style surpluses may soon appear on the horizon, finally breaking the back of the monster that dumps mountains of debt on American taxpayers.

You wonder how the world will change for our children and their children? The answer lies in the political will of our leaders. If they act decisively and smartly, there is no reason why our children and their children must live in a humbled, timorous and self-doubting America.

There is no reason why future generations must adjust to a standard of living that is down significantly from ours.

(Pictures used are from Glorious Opposition and Media Matters for America blogs.)