Tuesday, December 27, 2016

Our Family’s White Christmas

We had a white upper-middle-class Christmas this weekend. I don’t mean that we did the same things as all the other white upper-middle-class families, or that there exists a single model for a white Christmas in our tax bracket. I mean that our Christmas is shaped by the facts of our economic status and racial privileges.

As thirteen of us gathered around the dinner table, our commonalities were striking. Everyone around the table has a college degree, with quite a few advanced degrees. We all have good and interesting jobs or had them before we retired. Although we all are anxious about money some of the time, none of us worry about where the next meal is coming from or paying the rent. In fact, nearly all of us live in our own homes. Our celebration was determined by benefits accumulated over generations.

So there was nothing unusual for us when we exchanged more than 40 books, with lots of exclamations of “I’ve read that,” “Her other books are great,” and “Can I have that book after you?”

Although none of us are artists, we value artistic creation. We gave each other paintings, prints, ceramic tiles, and framed photographs, passing them around the circle, admiring the skill and vision behind them. All those gifts will be displayed in our homes, adding beauty to our daily lives.

The phrase “artisan foods” labels the contemporary desire for individually designed and carefully crafted foods of all kinds. We exchanged dried Michigan cherries and artistically decorated chocolates. “Homemade” hardly does justice to the foods created by my relatives: I got spicy coated nuts and mustards from my niece, sauces from my sister-in-law, and jam from my brother-in-law’s mother.

Food is always central to life, and modern American culture has radically transformed eating conventions in ways that showed up on our table. A staple of our Christmas breakfast had long been chipped beef on toast, what my father and father-in-law would have called SOS from their WWII days. Now that and the Christmas turkey are only memories. Our meals were meatless and much more imaginative and varied than the famous Norman Rockwell image of a holiday meal.

The new foods exemplify the gradual changes in our family Christmases each year. We remain comfortable with the familiar, but over many years small changes accumulate. Some are voluntary, like the abandonment of tomato aspic after years of mocking complaints by children. Others represent the inevitable passing of family time. Forty years ago, I was brought into this family’s Christmas by marriage, adding a bit of eastern European heritage to a northern European gathering. Now all the younger generation around the table have partners. A new generation has just made its appearance, although this year only virtually by instantly transmitted pictures.

Generations arrive and others pass. My family’s Christmas has long been defined by the December 24th birthday and grand personality of my father-in-law. A long struggle with Alzheimer’s that took away his personality now nears its end. He gave many gifts to all of us. We have given him the collective love and care that only family can offer. Around our table, hope for peaceful endings surrounded by family was a universal Christmas wish.

In our world, that is a luxury. Everything I’ve described is a luxury. We are so lucky to need nothing and be able to give everything.

We all recognize our good fortune. We worked hard for what we have, and owe much to previous generations who paid for our educations and could afford to help us financially at crucial moments. A new element in our family Christmas is the explicit recognition that we should use this occasion collectively to share our good fortune with others who have more unfulfilled needs. Many gifts were made to organizations who use our money to provide food for the hungry, medicine for the sick, and legal protection for the unjustly targeted. The dozen 30-somethings in my children’s generation decided that their gifts to each other would be charitable donations to causes they shared. That new idea makes a parent proud.

What’s white about our Christmas? I can’t be sure, because I have never experienced Christmas with a black family. I imagine that many minority families have celebrations like I have described. So our white privileges can seem invisible and thus easily overlooked.

But I know that our whiteness has made certain things much more likely for us in America. Our families could buy and grow up in homes in good neighborhoods. Grandparents and parents and children could get good jobs, earn good salaries, pay for fine educations, and then get another set of good jobs. None of us has been harassed by authorities, been passed over for promotions, been ignored or insulted or humiliated or threatened for being the wrong color.

My penniless immigrant father could move past Americans who had been here for centuries because he was white. Nobody challenged my right to succeed because of the way I looked.

I’m lucky, but I’m not thankful for that. It’s just what I, and everyone else, deserve.

Steve Hochstadt
Minneapolis, Minnesota
Published in the Jacksonville Journal-Courier, December 27, 2016

Tuesday, December 20, 2016

Rich and Poor at Christmas

We think a lot about the poor at Christmas. Salvation Army bell ringers remind us when we’re shopping that many Americans have nothing to shop with. Newspapers tell us where to bring toys for those who otherwise might get nothing for Christmas. The spirit of giving mingles with public appeals to help the poor more than at any other time of the year.

15% of American families, 1 in 7, are poor. Nearly 25% of our children live in poverty. Why are there so many poor people in such a rich country? On that issue, the US does very poorly in comparison with the other rich nations in the world. The UN Children’s Fund found that among 35 developed nations, the US had the second highest children’s poverty rate. Countries that we think of as enjoying similar economies to ours have less than half as many poor children.

One cause of high poverty in our rich country is the inequality of income distribution. Although a huge amount of money comes into American families every year, a few families get most of the income and many get very little. Compared to our developed peer nations, the US has the highest levels of inequality, more like Saudi Arabia and China than like Germany or Belgium.

That inequality is getting much worse. In the good old days, perhaps when America was “great”, the richest 1% of Americans earned about 10% of the total income. That lasted from the 1950s through the early 1980s. Since then the “1%” have doubled their share to over 20%, while the rest get less. In the 1960s, CEO’s made about 20 times the wages of typical workers. Now CEO’s make 300 times what workers make. CEO income has multiplied about 1000% over the past 40 years, while workers have gained only 11%.

The conservative argument about economics has always been some version of “a rising tide lifts all boats.” Let the rich get even more, but everyone will gain. Their argument that money flowing into the bank accounts of the richest Americans would eventually trickle down to the rest of us through economic growth sounds nice, but it hasn’t happened. As the American economy has expanded over the past decades, the rich have been getting richer by keeping all of the growth for themselves. The biggest boats float away on oceans of income, while the little boats have gone nowhere. Now the Republican proposals to lower taxes on the rich would make this inequality even worse.

There’s another reason why poverty remains a problem in America, a reason that was a carefully guarded secret until April of this year: the very rich in America and across the world cheat their own countries by hiding their income. The most significant hack of the year was not the Russian break-in to the records of the Democratic Party or the burglary of the records of the World Anti-Doping Agency, but the revelation of 11 million documents from the Panamanian law firm Mossack Fonseca, labeled the Panama Papers. Mossack Fonseca helped create over 200,000 shell companies to allow the world’s richest people to hide their money from taxation in places like Luxembourg or the Cayman Islands.

The economist Gabriel Zucman, an expert in worldwide tax avoidance, estimates that American individuals escape $30 billion in taxes every year by not reporting their offshore assets, while US multinational corporations avoid $120 billion annually. Together that’s about one third of the projected 2017 federal deficit or about the same as all Americans making under $60,000 pay in federal taxes.

Oxfam reports that the 50 largest American corporations dodge about $111 billion in taxes every year. These corporations have received $27 in federal loans, loan guarantees and bailouts for every $1 they paid in federal taxes. They spend a huge amount on lobbying, but the return is much greater than for any investment normal people could dream of. For every $1 spent on lobbying, they received $130 in tax breaks and more than $4,000 worth of federal funds.

Yes, the system is rigged. But it’s rigged in the way that Bernie Sanders talked about, not what Donald Trump said. The media is not dishonest, it’s our only hope of finding out what the rich are up to. The poor don’t give illegal votes to the Democrats; the very rich buy influence from both parties to make sure that they get back much more than they pay in taxes, which is much less than they ought to pay.

So the poor stay where they are, listening to the rich tell them to work harder. Maybe the billionaires in Trump’s cabinet will change that. But don’t bet on it.

Merry Christmas.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, December 20, 2016

Tuesday, December 13, 2016

We Need Help Fighting The Banks

The other day I got a letter from my credit card bank, Citibank. It began, “We’re replacing your existing Card Agreement with a new version, which is enclosed.” They claimed that “It’s designed with you in mind,” but I doubt that.

The new Agreement is described in detail, without any indication of what is new, so I don’t know what they have changed. What hasn’t changed is the tilt of the Agreement toward Citibank. Interest rates for loans are very low these days. Rates for mortgages range between 2.5% and 4%. Auto loans are even cheaper, between 2% and 3%. My home equity loan from my local bank is 3.5%. When big banks borrow money, they pay close to zero interest.

But don’t borrow money from your credit card bank. My new Agreement, like the old Agreement, lists huge rates for money I “borrow” from Citibank. If I owe money on my card, the rate is 14.24%. If I get a cash advance, the rate is 25.49%, beginning the moment I get the money. There are also fees. A cash advance costs 5% of the amount, in addition to the interest.

These are the costs of having a credit card. We might think they are unreasonable, but getting a card means agreeing to one-sided Agreements like this one. If I didn’t like any of the changes to my Agreement, whatever they were, I could close my account.

But on one new provision in my new Agreement, I was given a choice. Citibank wants any disputes about my account to be subject to arbitration, meaning that the dispute is settled by an arbitrator, without recourse to the courts. Here’s why Citibank and other credit card companies like this idea.

An arbitration is an individual case, so consumers can’t band together in a class action suit. The result is purely monetary, so if the dispute is caused by fraud or other illegal action by the bank, they are not subject to legal penalty. The cost of arbitration is picked up by the bank and they typically select the arbitrator (do you know one?), steering lots of business to arbitrators who deliver verdicts they like. One big arbitration service, the National Arbitration Forum, had to get out of the business of consumer arbitration because it was so cozy with the banks that it was being sued by many city and state attorneys.

Wells Fargo, the current Dishonest Bank of the Year, defrauded countless customers by creating millions of fake accounts in their names. Now it is killing lawsuits filed by its customers by moving the disputes to arbitration. If successful, the bank might have to repay fees they charged to the customers, but would not be liable for penalties due to fraud. Although some judges have ruled that Wells Fargo’s fraud should be adjudicated in court, other judges have forced customers to go to arbitration.

The dishonesty of Wells Fargo over many years, cheating millions of customers for many years, and thus far escaping with no jail time for any employee, shows how insignificant we consumers are when we come up against giant corporations. Even well known people, like the Los Angeles music star Ana Bárbara, get crushed by their power. A Wells Fargo employee created sham accounts and credit lines in her name, took out more than $400,000 of her money, then regularly went to her house to steal her Wells Fargo statements from her mailbox. She had to cancel appearances, costing her hundreds of thousands of dollars. Instead of her day in court, Bárbara will have to go to arbitration.

Protection for the consumer can only come from the government. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 takes its name seriously. Dodd-Frank does not let banks force consumers into arbitration for the biggest loans we take out, mortgage and home equity loans. It created the Consumer Financial Protection Bureau to write regulations to implement that change. It also asked the CFPB to study credit card arbitration agreements and report to Congress.

The government effort to examine credit card “agreements” about arbitration is why my bank offered me the chance to opt out of arbitration. All I had to do was write a letter to them saying I rejected the arbitration provision of my “updated Card Agreement”. I did that. Thank you, Dodd-Frank.

Republicans have fought against Dodd-Frank since it was first discussed in Congress. They tried to prevent the CFPB from ever being formed. Donald Trump has said he would dismantle Dodd-Frank, saying, ““Dodd-Frank has made it impossible for bankers to function.” Trump’s selection for Secretary of the Treasury, who will oversee banking regulations, is Steven Mnuchin. Mnuchin worked for Goldman Sachs, a financial firm that got a $10 billion bailout from the federal government in 2008. He made billions by foreclosing on homeowners during that financial collapse. His main qualifications for running Treasury is that he was Trump’s campaign finance chairman.

Dodd-Frank makes it less possible for the big banks to push us into tilted arbitration when the banks act like Wells Fargo. It’s an equalizer for the little consumer dealing with the big banks. Without it, we’re at their mercy.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, December 13, 2016