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economy

Book Review:

Mallaby, Sebastian, “MORE MONEY THAN GOD. Hedge Funds and the Making of a New Elite.” Illustrated. 482 pp. A Council on Foreign Relations Book/The Penguin Press, 2010. Downloadable from the Dallas Library

Financiers, and especially financial speculators, are among the darkest and most hated figures of today’s capitalism. This is a good book even for the great majority of Americans for whom “hedge fund manager” and “Satan” are perceived as close. It could be argued that Mitt Romney lost the presidency in 2012 mostly because he was associated with hedge funds.

The first question we may ask is, “Does anybody like them?” The answer is yes. Other obscenely rich people like them.

Journalist Sebastian Mallaby likes them, too. He provides a really good historical review of “hedged funds” from the 1940s to the great recession. There are lots of insights into the best-known figures of financial history and insights into how they operate(d). They piled up billions of dollars at one time or another, but several of them also went broke. Instead of being disgusting parasites, though, Mallaby sees hedge fund managers as beneficial.

One reason that they are so good for society is that they are not greatly regulated. They answer to no elected oversight group. That’s what makes them agile and strong, and it’s what makes them good at providing money liquidity in extreme situations. Regulation, Mallaby says, would be destructive to the world financial system.

Hedge fund managers are not the major players in high finance. That would be investment bankers. Mallaby shows that they’re the ones who caused the Great Recession, not hedge fund managers.

What Are They?

As I understand it, hedge fund speculators are characterized by the way they hedge their bets. In general, they buy and sell similar things at the same time. They may go “long” on a stock, a bond, a currency, an option, a derivative, etc while at the same time selling “short” on something similar. Their success depends on picking something profitable to buy and something risky to sell. Once they decide on their “long” and “short” positions, then they borrow a lot of money to do both. The borrowed money is called “leverage.”

If a hedge fund manager is really good at choosing, they make a little or a lot on each transaction. Either way, it quickly adds up. In case after case explained in this book, hedge fund managers started with a few million dollars and soon started managing billions. As the word of their success got around, thousands of new hedge funds were created, some by inspired entrepreneurs and some within the larger banks and financial institutions.

How Do They Do It?

Unfortunately, this book doesn’t tell us how to make a billion dollars overnight. It only tells us how others did it in the past. Some of them started out as stock or bond traders. Some of them were economists who could analyze long and short-term trends. More recently, some of them were simply mathematicians who could safely ignore markets and economics while simply looking for mathematical changes that, using advanced computer technology, could pay off a little or a lot.

What Does It Mean?

The book goes from one successful gambler to the next. Some of them made their biggest piles of money during market downturns; consequently, the historical context is not immediately evident. But for me, the historical context is the most important part because understanding what happened is the basis for figuring out what may happen next.

The entire period covered by the hedge fund phenomenon was one of United States domination of world finance. The entire period was one in which increasingly the most astounding wealth went to people who didn’t manufacture anything and provided no service that anyone could immediately request or even understand.

We live in a world of financialization.  The magnates of industry no longer control the governments of the world; their bankers do.

–Gene Lantz

I’m on KNON radio’s “Workers Beat” program at 9 AM central time every Saturday. If you are curious as to what I really think, check out my personal web site

I don’t tend to believe the mainstream media about Venezuela because the only people they quote are Trump Administration and a few former state department employees. I also received a few statements with a totally different take on what’s going on.

Today’s newspaper says the usual: “people in Venezuela are in revolt because their failed socialist system has wrecked the economy and, as of now, destroyed their power grid. The United States is for democracy.”

I tend to believe the interview in “Democracy Now,” which says that people on Trump’s side actually burned trucks full of humanitarian aid so they could blame it on the Venezuelan government. Here’s a quote from Pulitzer-Prize winner Glenn Greenwald: “Every time the U.S. wants to start a new war, it does it the same way, which is, it invents some really inflammatory, emotionally wrenching lie that gets people to hate the government they want to topple so much that they set their rationality aside and support the war. So, they claimed North Korea—or, North Vietnam attacked U.S. ships in the Gulf of Tonkin, which was a lie to start the Vietnam War. They claimed that Saddam had been ripping babies out of incubators in Kuwait, to start the Gulf War, which was a lie. They claimed weapons of mass destruction, which was a lie, to start the Iraq War.”

I like the anti-interventionist statement of the Dallas Peace and Justice Center. https://www.dpjc.org/our-messages/178-position-statement-no-u-s-intervention-in-venezuela

Veterans for Peace says, “Veterans For Peace is outraged at the unfolding coup d’etat in Venezuela, which is clearly being orchestrated by the U.S. government.”

Code Pink writes, “The U.S. is orchestrating a coup in Venezuela that is likely to lead to bloodshed — even civil war and U.S. liberal media are willing participants in the “humanitarian aid” PR stunt to make it happen.”

Seventy scholars and experts agreed on a statement calling for negotiations instead of intervention.

The Cuban government made a strong statement about the Venezuelan power failure. “The Revolutionary Government strongly condemns the sabotage perpetrated against the power supply system in Venezuela, which is a terrorist action intended to harm the defenseless population of an entire nation and turn it into a hostage of the non-conventional war launched by the government of the United States…” I wish it didn’t, but it makes sense to me.

As an American trade unionist, I’m most impressed by the long resolution that came from the Chicago Teachers Union. These are the brave and smart people who started today’s round of great labor successes for school workers. They point to the U.S. involvement, specifically Elliott Abrams, President Trump’s current Special Envoy to Venezuela, in the 2002 coup attempt. They continue: “WHEREAS, the U.S. has recently attempted to provoke a border incident with the Maduro government by moving $20 million worth of “aid” to Venezuela after it has frozen the foreign assets of that country, discouraged other countries from doing business with Venezuela, and imposed sanctions that increase the poverty and misery of the general population by costing the Venezuelan government billions  ever year; and

‘WHEREAS, the United Nations, the International Red Cross, and other international relief organizations refused to work with the U.S. on delivering this “aid” to Venezuela, which they say is politically motivated; and the Venezuelan government considers a Trojan Horse for an eventual military invasion’; and

‘WHEREAS, U.S. President Donald Trump, U.S. National Security Advisor John Bolden, and U.S. Secretary of State Mike Pompeo have all explicitly stated that U.S. corporations should control the oil resources in Venezuela, which implies that this will be a war for oil; and Secretary of State Mike Pompeo stated that the elected Venezuelan President, Nicolas Maduro’s “days in office are numbered”; and

‘WHEREAS, the world is still reeling from the war for oil in Iraq, which has left that country in shambles and continues to destabilize the middle east to this day; therefore, be it

‘RESOLVED, that the Chicago Teachers Union (CTU) publicly states its opposition to any military invasion of the sovereign state of Venezuela, and insists on dialogue, diplomacy, and negotiation as the means to resolve this crisis; and

‘RESOLVED, that the CTU advocate for the suspension of the current sanctions against Venezuela, and for the U.S. to cease all threats, military mobilization, and interference in the economic and internal politics and affairs of the Venezuelan people; and respect the right of self-determination of this sovereign nation in accordance with U.S. stated commitment to the rule of law; and be it finally

‘RESOLVED, the CTU stands in solidarity with the Venezuelan labor organizations Sindicato Nacional Fuerza Magisterial (SINAFUM)i , Colectivo Clasista de Trabajadores y Trabajadoras de la Educación.ii “Carmen Conzoño” y al Frente Nacional de Lucha de la Clase Trabajadora (FNLCT)iii , and other organizations that oppose the interference in Venezuela’s sovereign affairs and the consequent threat of military intervention.”

Will Democracy Result?

If and when the U.S. takeover is completed, does anybody really expect democracy? Did the Chileans get democracy when the U.S. overthrew their government? Did the Iranians get democracy when the CIA installed the Shah? If the present government of Venezuela is overthrown, you can expect a bloodbath. The way it’s looking right now, it may be a bloodbath either way. Unless we do something!

Take a Stand Before It’s Too Late

–Gene Lantz

I’m on KNON radio’s “Workers Beat” program every Saturday at 9 AM Central Time. If you want to know what I really think, check out my personal web site

If you haven’t heard Kenneth Williams explain the Republican attempt to rule America as a minority, you can watch the full 2-hour video at https://www.youtube.com/watch?v=qj5-yDxnXQY.

Kenneth Williams “Why Republicans are determined to rule as a minority!”

Williams explained it carefully to the College of Complexes free speech meeting in Dallas on February 23. He began by pointing out that popular American opinion and Republican Party dogma are growing more and more disparate every election cycle. While people want women’s rights, Republicans go against. While people want gay marriage, Republicans go against. People want health care, Etc etc etc

Willilams explains that democracy is ultimately doomed under the Republican’s plan. They have to impose values that the American public doesn’t want. That’s why they work so hard at voter deception and voter repression. If nothing changes, fascism is virtually inevitable.

But Kenneth Williams predicts that something will change. In fact, it is already changing as witness the more robust turnout in the 2018 elections. People are waking up and taking a hand in things. Fascism cannot prevail against an enlightened and activated body politic. Kenneth Williams has great ideas, as you will see from the video, about how to grow democracy in our fair land.

Nevertheless, one can see from everyday politics that Williams is describing today’s situation accurately. On the immigration issue alone, the Republicans are varying further and further away from public opinion. Furthermore, they don’t seem to care!

Let’s figure it out

Our ability to fight against minority rule (fascism) is strengthened when we understand what we are up against. Here’s how to look at the two polarizing trends pulling away from each other:

  1. In the first trend, Americans are more and more enlightened. That’s because we are better educated. The internet has given us lifelong learning. As people understand more, especially about people they previously would never have contacted, they become kinder, more flexible,  and more forgiving. So people are getting smarter and, well, better.
  2. The second trend has to do with the distribution of wealth. Currently, wealth and income inequality are at all-time highs in all the rich nations and especially in the United States. Fewer and fewer people have more and more of the money. Those are the people that the Republicans are catering to. The only way to please them, and to keep on pleasing them, is with minority rule.

Kenneth Williams is a brilliant speaker and I recommend you have him at your meetings soon. Enlighten and activate Americans so that fascism, minority rule, won’t stand a chance!

–Gene Lantz

I’m on KNON radio’s “Workers Beat” program 89.3 FM in Dallas at 9 AM Central Time every Saturday. If you are curious about what I really think, check out my personal web site

Theater Review: “Sweat” Written by Lynn Nottage and Directed at the Dallas Theater Center by Tim Bond. Run ends Feb 10

When jobs disappear, do we disappear too?

My theater buddy and I couldn’t stop talking about “Sweat” after we saw it. The play covers a handful of workers who socialized together through the period 2000-2008. If you’re old enough to remember, those were hard times for factory workers who had made a decent living previously.

The background is layoffs. For these workers, and for millions of Americans, the layoffs and cutbacks seemed as meaningless as they were devastating. Lots of people were hit, hardly anybody knew why. Usually, we talk about these things with statistics and graphs, but this play talks about it in terms of people.

Layoffs and cutoffs created desperation, and desperation brought alienation. Alienation created hate. Many of us have seen it up close. It takes many forms such as: wife abuse, jealousy, divorce, estrangement, substance abuse, and all the ugly forms of chauvinism.

With a handful of friends, “Sweat” demonstrates several of the tragedies. Multiply it by millions and you’ll have America’s working class.

–Gene Lantz

I’m on KNON’s “Workers Beat” radio program at 9 AM every Saturday Central Time. They podcast it on Itunes. If you are curious about what I really think, see my personal web site

There are lots of on-line comments about the gig economy. WhatIs says, “A study by Intuit predicted that by 2020, 40% of American workers would be independent contractors.” There are higher and lower estimates here and there, depending on how they define the jobs that have no benefits, no rights, no dignity, and no guarantee that employment will last more than one day. It’s maybe one step above serfdom.

We’d have to be stupid to ignore the gig economy

But every article I saw said that the gig economy is growing and will keep on growing. The reasons they give are so inadequate that they almost constitute untruths: they attribute the growing gig economy to the changing nature of work. Unfortunately, that’s not what’s happening.

More and more people are working part-time, split shift, “independent contractor,” no-future jobs because that’s what the employers want. It’s what they have always wanted, but they never had such power over the government as they have now. The gig economy is growing because employers do not want workers with guaranteed jobs, workers with health care, workers with any kind of rights at all. In several levels of government, but especially in state legislatures, they are moving to reduce all of us into the gig economy.

Uber Drivers Rally

Last Saturday, a woman walked into the KNON studios and said “Hi, I’m Edith.” We greeted her and I tried to find out why she wanted to be on the “Workers Beat” talk show. She said she was a driver, so I assumed she was from the Amalgamated Transit Union and there to talk about management’s privatization scheme. They want to let Dallas’ disabled people get transported by Uber and Lyft temporary drivers instead of the professionals from ATU.

About 20 minutes into the program, Edith started talking about Uber management, and I finally realized that she was the woman I had exchanged e-mails with during the previous week. She wants to organize Uber and Lyft drivers. She had some compelling reasons.

Uber has recently cut the percentage of fares that the drivers get, Edith said. Worse than that, they manipulate the hiring process so that newer drivers get more fares. That way the newer drivers will be more likely to stay with Uber until their other options have disappeared. Then they’re stuck.

I’m for organizing all workers, no exceptions, so we got right into the problems and solutions. Edith said there would be a demonstration at Dallas City Hall today.

After the program, I posted an “event” on Facebook for the Uber/Lyft rally. At noon today, I hurried down there. Nobody else showed up, not even Edith. She told me by email that she had gotten discouraged because nobody else would commit to come. I told Edith that the proof of a good activist in the period we live in is not how successful they are, but whether or not they give up. So we’re going to try again on the 2nd Monday next month, or at least I hope so.

What Do We Learn?

First of all, a job with absolutely no guarantees can change at management’s whim. That’s why management likes them so much. Thousands of out-of-work government employees are, right now, applying to go to work for Uber or Lyft. It may seem like a good option, or perhaps the only option, but it will change when management wants it changed, and they never willingly change things for the betterment of the employees.

Gig jobs will just get worse as more people depend on them.

Second of all, gig workers are extremely difficult to organize. It’s one of those impossible things that has to happen. That’s why Edith couldn’t get anybody to the rally. It’s also why the established unions aren’t trying very hard to organize gig workers.

But it has to happen because the gig economy will keep on growing as long as bosses are running “our” government. One might pretend to be “objective” and say it doesn’t have to happen because there are other alternatives like fascism. That’s not an alternative, it’s a disaster!

–Gene Lantz

I’m on KNON’s “Workers Beat” program 89.3 FM in Dallas at 9 AM Central Time every Saturday. They podcast on Itunes. If you are curious about what I really think, check out my personal web site

Working people in other nations must be simply amazed that the Americans would let 800,000 workers get locked out while everybody else goes to work as if nothing was happening. After all, if we so much as shut down one airport, one railroad, one highway, or one city for half a day, we’d get whatever we wanted.

Call Congress. Then what?

Without making any excuses, one can look back in American labor history for some of the reasons that nobody has walked out in solidarity. The biggest one is that everybody waits for the unions to do it and, as the saying goes, it ain’t going to happen!

Unions have power, and because they have power, they have tremendous government supervision. Most union contracts have a “no strike” provision. Management would love to see a union violate their contract, because they would then be free to do almost anything they wanted, and the government would happily assist.

In the old days, unions got what they wanted primarily by striking. The Industrial Workers of the World had hardly any other tactics. At the same time, their legal status was about the same as bank robbers. Some of the most powerful unions, mostly in transportation, gained some legal status with the passage of the Railway Labor Act in the 1920s. In the 1930s, the Roosevelt Administration gave us the National Labor Relations Act. It set up the supposedly neutral National Labor Relations Board to referee disputes between management and labor. Legal at last, the unions went on the biggest organizing drive in history.

But there was a price. With government arbitration came a lot of government supervision. In 1947, Republicans came down hard on labor laws. That’s when the vicious “right to scab” laws were legalized in the infamous Taft-Hartley bill. Texas led the way. Republicans have made sure that labor laws worsened.

It may sound innocent to say that “secondary boycotts are outlawed,” but what it means is that unions cannot stop work in solidarity with other unions. Our fundamental principle, “An injury to one is the concern of all” is quoted a lot more than it is used, and it can’t legally be used at for major work stoppage.

Unions are calling for an all-out lobbying effort. A few unions, including one in Dallas, are hitting the streets, and that is a big step forward. But it’s not likely that they will go further.

Why doesn’t someone else do it?

Why is everybody waiting for unions to call walkouts? It’s because our solidarity with the rest of the working class is still fairly weak. From 1947’s Taft-Hartley Act to 1995, America’s unions did very little to promote their relations with churches, community groups, civil rights people, and protest organizations. They accepted their isolation.

With the AFL-CIO elections of 1995, unions began to get back on track. But it’s a long road from a national labor convention to a grass roots coalition at the local level. I’m very proud that my own AFL-CIO Council in Dallas has made giant strides, but not every council has and, even in Dallas, these coalitions are still quite young.

Most of the individuals with enough personal following to call a major action are politicians. If they called a walkout, or even spoke in favor of walkouts, their campaign funds would rupture. So don’t expect any of them, not even Bernie Sanders, to call for walkouts.

Maybe a rock star will.

Some impossible things happen

If Mr Trump really tries to keep the government shutdown going for an extended period, as he says he will, there will be work stoppages. They will succeed, too.

There is such a thing as “historical imperative.” It says that some things will happen, not because they are likely or even possible, but because they have to happen. Maybe Americans don’t understand our own labor history, and maybe we’re easily divided. Maybe we’re ignorant, but we’re not stupid.

–Gene Lantz

I’m on KNON radio’s “Workers Beat” program at 9 AM Central Time every Saturday. They podcast it on Itunes. If you are curious about what I really think, look at my personal web site

Today I posted a prologue and Chapter One of “Commissioner Torres and the New Government” on http://lilleskole.us, my personal web site. It’s actually my 4th book-length effort. One of them is autobiographical and covers just about everything I’ve learned so far.

What would your revolution look like?

The other three are speculative fiction about a guy named Leo Torres who gets involved with revolutionaries just when the old order of things has fallen apart. Leo gets in on the revolution from the ground floor.

Why?

You may wonder why I write and post these things. Obviously, I’m not going to make any money. They aren’t even copyrighted. It’s not because of the silly old shibboleth “Writers write because they have to.”

I’m one of many people who would like to see a better world, but I’m one of the very few who have tried to describe it. For decades I’ve dodged the question the same way almost every activist does by saying, “I don’t know what the world I’m fighting for would look like, because it’s up to those people living in that world to decide for themselves.” It may be true, but it’s still a dodge.

If we’re fighting for a better world, we ought to be able to describe it. Or at least we ought to try.

I decided on speculative fiction as my way of initiating a discussion on what might happen and what we might do about it. After all, does anybody think that we’ll just wake up one day in a better world?

Nearly all of our sci-fi is dystopian. Just about the only exception is the Star Trek series. They didn’t even have a revolution to get into their wonderful world. They just listened to the Vulcans. In one episode, Mister Spock hints that the Vulcans had to go through some very trying times before they became so civil, but he doesn’t tell us much about it. So we actually have no pattern to follow.

For a long time, American activists tried to copy the Russian revolution. When it imploded, a lot of them were disgusted and demoralized. Some others have tried to follow Chairman Mao. Some followed Nkrumah, Ho Chi Minh, and some followed Castro. I think we could learn from all of them, but we couldn’t learn enough. We have to do a lot of our own thinking.

So, we speculate.

The World I Made

Looking toward the future, especially in the Donald Trump era, one can see disaster ahead. It’s not a matter of whether or not the planet will become inhabitable and wealth inequality will make economic life impossible. It’s only a matter of when.

But I have great faith in myself and other people. Sooner or later we will give up on the people who are destroying the economy and the ecology. We will embrace new leaders and new ways of running things. In the world I create in my sci-fi novels, people have just recently done that. Following the advice of revolutionaries, civilized people have disbanded their armies and their police. They formed local militias to keep order while respected and capable leaders are elected to make economic and social decisions.

The revolutionaries at the center help coordinate activities and continue to advise the localities. As you might imagine, there is very little continuity between one locality and another. There are a tremendous number of problems to be resolved. What will people eat? How will they get it? How will trade continue? How will people get from one place to the next?

Because the air and water are almost undrinkable and unbreathable, something drastic has to be done about the burning of fossil fuels. Because all systems are down, there is no electricity. Without electricity and transportation, there is no long-distance communication. Without transportation, people will not be able to get the goods and services they need to stay alive. What would you do about those things?

The first two novels take the easy way out. They only deal with some of the smaller questions.

My first novel deals with whether or not revolution is possible and worthwhile. It’s common to hear it said that humanity isn’t worth saving, that people will never learn to live without war, that people are essentially greedy and incapable of cooperation, and that every revolution has failed because people are basically just no damned good!

My second novel is more specific. It tries to deal with the fact that certain sectors of the population will not cooperate in building a better world. Hardened drug addicts, for example, are unlikely to cooperate in civil society. What would you do with them?

The third novel is by far the most ambitious. It recognizes that government is necessary and begins to discuss the ins and outs of setting up and running such a government. Is democracy the answer? If so, what would be the machinery of democracy? Here’s a really thorny question, “How could a society avoid the tyranny of the majority?”

I don’t know if you can answer these questions, but I know that I can’t. But I’m inviting you to join me in trying to find out.

–Gene Lantz

I’m on KNON radio’s “Workers Beat” talk show 89.3 FM in Dallas at 9 AM every Saturday. Call in 972-647-1893 with your ideas. They podcast it on Itunes. If you are curious about what I really think, check out my personal web site at http://lilleskole.us