Friday Reads: The NAZI Kleptocracy Pogrom brought to you by the Oligarchs and Trump-Billies

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Good!  Welcome to my basic economics history lesson on the relationship between privatization and the NAZI economics strategy of the 1930s as jetstreamed to the US in this century.  The lesson will be punctuated by the examples of absolute stupid Trump-Billy idiots that are about to find out that all markets do not necessary run better with billionaire corporate lackies in charge.  They are also finding out that extremely wealthy people are about to take over the White House and what ever economic security they ever had is headed for the pockets of the already obscenely wealthy.

Trump is not draining the swamp.  He’s making it radioactive.  One Trump-Billy woke up to that reality the day she found out that the new Treasury Secretary is the same dude that foreclosed on home sweet home.  Good decision making is not the hallmark of a Trump-Billy.

When Donald Trump named his Treasury secretary, Teena Colebrook felt her heart sink.

She had voted for the president-elect on the belief that he would knock the moneyed elites from their perch in Washington, D.C. And she knew Trump’s pick for Treasury Steven Mnuchin all too well.

OneWest, a bank formerly owned by a group of investors headed by Mnuchin, had foreclosed on her Los Angeles-area home in the aftermath of the Great Recession, stripping her of the two units she rented as a primary source of income.

“I just wish that I had not voted,” said Colebrook, 59. “I have no faith in our government anymore at all. They all promise you the world at the end of a stick and take it away once they get in.”

Less than a month after his presidential win, Trump’s populist appeal has started to clash with a Cabinet of billionaires and millionaires that he believes can energize economic growth.

The prospect of Mnuchin leading the Treasury Department drew plaudits from many in the financial sector. A former Goldman Sachs executive who pivoted in the early 2000s to hedge fund management and movie production, he seemed an ideal emissary to Wall Street.

When asked on Wednesday about his credentials to be Treasury secretary, Mnuchin emphasized his time running OneWest which not only foreclosed on Colebrook but also on thousands of others in the aftermath of the housing crisis caused by subprime mortgages.

“What I’ve really been focused on is being a regional banker for the last eight years,” Mnuchin said. “I know what it takes to make sure that we can make loans to small and midmarket companies and that’s going to be our big focus, making sure we scale back regulation so that we make sure the banks are lending.”

Yeah. We already know how well that went.  Too bad history is gonna repeat itself.

Let’s just stop for a moment of silence and think about what Hamilton really wanted the Electors of the Electoral college to do because stopping the ascent of a crazy person to the White House is exactly what needs to be done.  It’s also what Hamilton charged the Electors to do.  Electors should trump the Trumpbillies.  There are a few Electors that have this in mind.  This folks are from Washington state so it’s a very limited group.

The electors championing the Electoral College revolt say their effort is “in the spirit of” founding father Alexander Hamilton.

Hamilton, the first Secretary of the Treasury, once wrote the Electoral College is necessary to ensure “the office of the President will never fall to the lot of any man who is not in an eminent degree endowed with the requisite qualifications.”

One of Washington state’s most prominent Trump supporters, state Sen. Doug Ericksen, rebuked the Electoral College dissenters, calling the effort “irrelevant” and its supporters within the electoral system “a very small fringe element.”

“I think that those people should get together with Jill Stein and go hand-count ballots in Michigan,” said the Republican from Ferndale, referring to the Green Party candidate’s ongoing recount efforts.

Ericksen was Trump’s deputy campaign director in the state.

“The election is over — Mr. Trump won,” Ericksen said. “So they can be crazy like Jill Stein and drag this out or they can do their job and follow the will of the people.”

The “Hamilton Electors” face an uphill battle.

So, what we’re beginning to see is more and more unwinding of a democratic America in both the big D and little D sense of the word.  I’m about to get to what should be the canary in the coal mine which is the translation of an economic strategy used by the NAZIs to transfer public assets to their enablers and supporters,  This always upsets your libertarian friends and all those rewriters of history that say that NAZIs hated capitalism.  Au contraire, they are the very founders of kleptocracy and crony capitalism.  The Trump-Billies need to realize that they put fascists in the White House.

… the first use of the word “privatization” (or “reprivatization”) in English occurred in the 1930s, in the context of explaining economic policy in the Third Reich. Indeed, the English word was formulated as a translation of the German word “Reprivatisierung,” which had itself been newly minted under the Third Reich.

So, we can discuss how totally awful voucher systems have been for schools and how expensive and inefficient private prisons, and private guards for embassies, and private food providers for the military have been. There is research out the wazoo on all of that.  

But privatization practice is often a disaster. An inefficient government monopoly is replaced by an even more inefficient private monopoly that is more expensive, wasteful and lacking in accountability or responsibility for serving the public good.

The selection of private contractors is often rife with the corruption of political sweetheart deals. The profit motive consistently trumps public interest And shareholders and executives benefit at public expense, while public services deteriorate.

We can also discussion how Bobby Jindal bankrupted Louisiana doing exactly what Trump and Pence rallied around last night.  A program of giving huge amounts of money to private industry that held a few jobs hostage and still wants its $7 billion defense contracts left alone.  The Indiana Carrier deal is a wonderful example of how to waste public funds and transfer the hard earned cashed of working and middle people into corporate profits.  Here’s a back of the envelop analysis from Paul Krugman via twitter.

Another metric: Trump would have to do one Carrier-sized deal a week for 30 years to save as many jobs as Obama’s auto bailout

But, before I go full throttle medieval on that, let me just point out that Voter Suppression laws in this country give Trump a very very very skinny electoral college win.  We’re on our way to getting more of them.  Here’s a back of the envelop analysis from my friend Lamar White, Jr.

Hillary Clinton now has a popular vote lead of 2.5 million.

Donald Trump won the electoral college, however, by less than 80,000 votes.

To put this into perspective, if Toledo were in Michigan and not Ohio, Clinton would be the next President, elected with the same popular vote margin as Obama in 2012.

A new study shows that Voter ID laws suppress minority and Democratic voters.  So, it’s working just as it was planned.  Here’s your 2016 reduction in turnout explanation.

Researchers from the University of California San Diego have created a new statistical model indicating that voter identification laws do what detractors claim — reduce turnout for minorities and those on the political left.

Overall, the researchers found, strict ID laws cause a reduction in Democratic turnout by 8.8 percentage points, compared to a reduction of 3.6 percentage points for Republicans.

The study focused on the 11 states with the strictest voter ID laws, generally requiring photo identification to cast a ballot. Researchers used a large voter survey database to compare turnout in those states to those in states with lesser or no ID requirements.

Several states have passed less strict ID laws. But in 17 states including California, New York and Illinois, a more traditional honor system still applies at the ballot box.

We also have some righteous calls to the White House asking the President to declassify the evidence that Russian influenced and hacked our election.  

Seven members of the Senate Intelligence Committee wrote to President Obamathis week asking him to declassify and make public “additional information concerning the Russian government and the U.S. election” that committee members apparently have learned about in confidential briefings. The president should take their advice.

Cynics might be tempted to view their letter — which was signed only by Democrats and an independent senator who caucuses with them — as a partisan ploy designed to buttress the argument that Donald Trump’s victory was rendered illegitimate by Russian meddling on his behalf.

But seeking information about possible Russian meddling in the election shouldn’t be a partisan issue. If the Russian government indeed attempted to influence, disrupt or subvert the outcome by stealing and publicizing the emails of senior Democratic officials or promoting the dissemination on social media of “fake news” damaging to Hillary Clinton, that should outrage Americans regardless of whom they supported on Nov. 8. The public has a right to know as much about any such operation as can be made public without compromising intelligence sources and methods.

Then, there’s the Michigan AG who is trying to stop the recount there.

Michigan Attorney General Bill Schuette wants the Michigan Supreme Court to halt a presidential recount in Michigan before it begins.

In a court action filed today, Schuette echoes arguments made for President-elect Donald Trump, arguing Green Party candidate Jill Stein, who received just over 1% of the vote in Michigan, is not an “aggrieved” candidate entitled to a recount, and there isn’t time to complete a recount, even if Stein was entitled to one.

“If allowed to proceed, the statewide hand recount could cost Michigan taxpayers millions of dollars and would put Michigan voters at risk of being disenfranchised in the electoral college,” Schuette, in a filing signed by Chief Legal Counsel Matthew Schneider, said in asking the Michigan Supreme Court for immediate consideration of his petition barring a recount.

Schuette, a Republican who is expected to run for governor in 2018, chaired the presidential campaign of former Florida Gov. Jeb Bush before supporting Trump as the party nominee.

 So, all of this so we can have our public assets looted by the kleptocracy. The Carrier deal is probably the first sign that it’s about to get worse.  Especially given we were treated to a Trumpapalooza trying to convince folks in Indiana that $7 million dollars for less than 1000 jobs when more are still leaving the country is a damned fine deal.  It’s corporate welfare and its far more expensive than creating jobs for teachers, firefighters, and police.

Carrier’s announcement that it would indeed keep 1,000 jobs at its Indianapolis furnace factory (which Trump identified in a tweet as an air-conditioner factory) cited “very productive conversations” with Trump and Vice President-elect Mike Pence, but also mentioned Trump’s supposed “commitment to support the business community.”

That “support,” we later learned, came in the form of “incentives offered by the state (Indiana),” where Pence is still governor, by the way.

And here’s the man behind the curtain that the Wizard of Oz doesn’t want you paying attention to: Carrier isn’t staying because of its supposed secret negotiations with Trump and Pence, but because Indiana pols gave the company a tax break — a taxpayer-backed incentive that has a long and, at best, mixed history of success. (State officials have not revealed which tax incentive Carrier will get, though the Wall Street Journal reported that the deal will hand Carrier $7 million over 10 years; my email to the Indiana Economic Development Corp. has still not been answered.)

Indiana’s own economic development people put out a report last year that reveals that since 2009, job growth among all private sector firms in the state is much stronger than job growth in firms that got what Indiana calls the Economic Development for a Growing Economy subsidy. In 2014 (the last year studied), firms getting the subsidy actually lost jobs and firms not getting the subsidy added jobs.

Plus, the benefits do not trickle down to the communities.  

Economists who testified in Indiana last year offered state officials an analysisof how various tax incentive programs are doing in other states:

“The MEGA tax credit (that’s what Michigan calls its program) failed to have a discernible impact on employment in the manufacturing or wholesale sectors even though the credits are targeted to businesses in these sectors,” the report said.

“These grants (now referring to EDGE in Indiana) fail to have a discernible impact on manufacturing employment and that the Hoosier Business Investment credit fails to impact either employment measure.”

“The estimation results suggest that the tax incentives (speaking about Ohio now) failed to have a positive impact on employment by incentive recipients. In fact, the estimates suggest that the incentives may have dampened the employment growth of firms receiving the incentives in the first two years of an expansion.”

I find facts like this really interesting because they reveal the bottom line about corporate welfare: sometimes it works, sometimes it doesn’t. States give away millions of dollars a year on “corporate retention” deals. The loss to taxpayers is also millions of dollars a year.

Unlike giving money to corporations where money can roll off to out of state salaries, sources of materials, and stock and management dividends and bonuses,  spending money directly on things like state roads and state employees goes directly into the economy of the communities.  There’s a difference in the percentage of tax subsidies that basically does not benefit local communities at all.  Tax money spent directly in local economies building roads, schools, and hiring employees goes in much bigger magnitude into the pockets of the local businesses.  In other words, you can subsidize Hollywood a lot, but if it’s the salary of Tom Cruise, then it’s going to not stay in New Orleans.  It leaks back to where Tom Cruise spends his money.

More than a month after Louisiana Governor Bobby Jindal “parked” his widely-panned proposal to repeal the state’s income tax, state policymakers now are returning to what should be a more straightforward tax reform issue. A new report (PDF) from the Louisiana Legislative Auditor critically evaluates the workings of the state’s film tax credit, which gives Louisiana-based film productions a tax credit to offset part of their expenses when they hire Louisiana workers or spend money on production expenses locally.

From a cost perspective alone, it makes sense to take a hard look at this provision: the state has spent over $1 billion on these Hollywood handouts in the past decade.

But the Auditor’s report is also a good reminder of just how little the state is getting in return for this massive outlay. The report estimates that after doling out almost $200 million in film tax breaks in 2010, the state enjoyed just $27 million in increased tax revenue from the film-related economic activity supposedly encouraged by this tax break.

This means a net loss to the state of about $170 million in just one year.

So, let me go back to the purpose of the NAZI economic strategy of “Reprivatisierung”.  You can read the journal article because it’s fascinating and it’s economic history so it’s not the wonkiest of economic analysis.

Privatization of large parts of the public sector was one of the defining policies of the last quarter of the twentieth century. Most scholars have understood privatization as the transfer of government-owned firms and assets to the private sector,2 as well as the delegation to the private sector of the delivery of services previously delivered by the public sector.3 Other scholars have adopted a much broader meaning of privatization, including (besides transfer of public assets and delegation of public services) deregulation, as well as the private funding of services previously delivered without charging the users.4 In any case, modern privatization has been usually accompanied by the removal of state direction and a reliance on the free market. Thus, privatization and market liberalization have usually gone together.

Privatizations in Chile and the UK, which began to be implemented in the 1970s and 1980s, are usually considered the first privatization policies in modern history.5 A few researchers have found earlier instances. Some economic analyses of privatization identify partial sales of state-owned firms implemented in Adenauer’s Germany in the late 1950s and early 1960s as the first large-scale priva-tization programme,6 and others argue that, although confined to just one sector, the denationalization of steel in the UK in the early 1950s should be considered the first privatization.7

None of the contemporary economic analyses of privatization takes into account an important, earlier case: the privatization policy implemented by the National Socialist (Nazi) Party in Germany. Nonetheless, there were a number of studies on German privatization in the mid- and late 1930s and in the early 1940s, when many academic analyses of Nazi economic policy discussed privatization policies in Germany.8 International interest was reflected in a change in the English language: in 1936 the German term ‘reprivatisierung’, and the associated concept, were brought into English in the term ‘reprivatization’, and soon the term ‘privatization’ began to be used in the literature.9 Surprisingly, modern literature on privatization, and recent literature on the twentieth-century German economy10 and the history of Germany’s publicly owned enterprises, all ignore this early privatization experience.11 Some authors occasionally mention the privatization of banks, but offer no further comment or analysis.12 Other works mention the sale of state ownership in Nazi Germany, but only to support the idea that the Nazi government opposed widespread state ownership of firms, and no analysis of these privatizations is undertaken.13

It is a fact that the Nazi government sold off public ownership in several state-owned firms in the mid-1930s. These firms belonged to a wide range of sectors; for example, steel, mining, banking, shipyard, ship-lines, and railways.

I think you’ll find these points most interesting.

But Germany was alone in developing a policy of privatization in the mid-1930s.Therefore a central question remains: why did the Nazi regime depart from mainstream policies regarding stateownership of firms? Why did Germany’s government transfer firms to the private sector while the other western countries did not?

Answering these questions requires an analysis of the objectives of Nazi privatization. While some of the analyses carried out in the 1930s and 1940s are valuable, their authors lacked the theories, concepts, and tools that are available to us today. Recent economic literature has shown the multiplicity of objectives usually targeted by privatization policies.28 In addition, modern theoretical developments have provided valuable insights into the motives of politicians in choosing between public ownership and privatization29 and the consequences of each option on political rent seeking, through either excess employment or corruption and financial support.30 The theoretical literature has provided interesting results concerning the use of privatization to obtain political support.31

In addition, international evidence shows that financial motivations have been important in recent privatization, although the relevance of sales receipts in motivating privatization has varied over time and between countries. By providing an analysis of privatization in Nazi Germany, this article seeks to fill a gap in the economic literature. The article extensively documents the course of privatization in the period from the Nazi takeover of government until 1937.32 These limits are sensible because all of the relevant reprivatization operations had been concluded before the end of 1937. Some of the privatization operations explained in this paper have not been previously noted in the literature (the sale of state-owned shares inVereinigte Oberschleschische Hüttenwerke AG and in Hansa Dampf, both in 1937).33 Analysing Nazi privatization using modern tools and concepts allows us to conclude that the objectives pursued by the Nazi government were multiple, with their aim of increasing political support being especially noteworthy. Besides this, an additional motivation can be seen in obtaining increased revenue for the German Treasury within a context of growing financial restrictions since 1934/5, mainly because of the armament programme.

So, you can read the finer details in the article which was published in a very prestigious journal.

I’ve given you a lot to read and think on and I know you may not be able to wade through all of it.  But, I think you’ll see that I’m beginning to document exactly what the march to Fascism in America will look like.   We’re here.

Stay vigilant and defiant.

Don’t feed the Trump-Billies.

What’s on your reading and blogging list today?