Monday, April 15, 2019

my life as a functionless investor

I became a functionless investor without knowing it.

A bunch of decades ago, when I was a kid, my father, being wise to the way of the world, bought shares in two companies. One was a bank and the other an oil company. He held these shares in trust for me – meaning that they would become mine when I became an adult.

As I went through my cavity-prone years, then off to college, then into community organizing and writing, the two companies grew and split and sold themselves and changed their names. In fact, they grew far more impressively than I did.

When I turned 21, I started receiving checks every three months. These were dividends – the cash these companies paid me for the right to use this money that my father had shelled out so many years before. Over time, the payout approached $1,000 a month. Generally, without thinking, I spent it.

And every April 15th, I had to pay money I no longer had to cover the taxes on the money I did nothing to earn.

Then came the Bush tax cuts of 2003. Suddenly the dividends I had been receiving as a functionless investor got renamed. They were now called “qualified dividends.”

Qualified for what?


For the past ten years, if you, like me, are in the lower tax brackets – that is, if your taxable income is less than approximately $39,000 ($52,000 if you’re head of a household, $77,000 if you're married and filing jointly) – your qualified dividends go straight into your pocket, tax-free. If you’re a bigger earner, you pay only about half of what you would have paid if you had earned the same amount from your job. Long term capital gains – the money investors make if they sell shares they’ve owned for more than a year – get a similar tax reduction. Multi-millionaire hedge fund managers, too, exploit a parallel dodge to halve the taxes they pay.

So my functionless income is frictionless. It arrives in my bank account each quarter, free from any social responsibility.

Then I read John Maynard Keynes, the economist whose prescription for governmental investment in society led to the three and a half boom decades between the end of World War II and the election of Ronald Reagan in 1980. In his magnum opus, The General Theory of Employment Interest and Money, published in 1936, Keynes said some hard things about people like me. He called for “the euthanasia of the rentier, of the functionless investor.”

Why did Keynes want to kill off people like me? To break what he called “the cumulative oppressive power of the capitalist to exploit the scarcity value of capital.”

In today’s terminology, Keynes wanted to break up the big banks – or at least to break up their politically-enforced stranglehold on the availability of money. He wanted cash to be abundant and accessible at minimal rates of interest. This way, corporations would no longer need to pay idiots like me for the use of our cash and there would no longer be any reason for me to receive dividends for doing absolutely nothing. This, Keynes asserted, offered capitalism a lifeline – the possibility of revolution without a revolution, a chance to make society more equal without overthrowing the system.

Of course, we haven’t taken Keynes up on this challenge. Instead, over the years, the government decided to reward us functionless investors. When I write an article like this one, I have to pay full taxes on what I earn. When I invest in a bank, I don’t.

The tax deals for functionless investors don’t appear on the 1040 form that all American taxpayers file to determine how much they owe. Rather, there’s a bunch of worksheets hidden in the instructions. That’s right: the government trusts us functionless investors so much that it lets us determine our own savings without even reporting them on our tax returns.

The dance of the functionless investor is inequality at work. Most Americans don’t own any stocks at all. And those who do tend to be well-off: 90 percent of all the stock shares in the US are held by the fortunate people who can count themselves among the wealthiest 20 percent of the nation. This gift from Uncle Sam to the functionless investors of the nation is a direct subsidy to the rich.

It's hard to give up easy money. But it’s time to put the jackpot I received from my father into doing things in the world, things I believe in, things that leave a legacy that is not just tax-free cash.

It’s time to kill the functionless investor inside me.

Monday, September 10, 2018

Kavanaugh's tell


Politics is public poker and one of the highest-stakes games around is the contention over U.S. Supreme Court nominees.

Which is why we shouldn’t look to last week's hearings with Supreme Court nominee Brett Kavanaugh for any statements of principles or glosses on his legal thinking. Rather, his testimony shows the way he plays the game. And that he has a tell.


For the most part, Kavanaugh’s cogent and articulate. He speaks in complete sentences, and, when asked, backs up his decisions with thorough discussions of law and policy, even under hostile questioning.

Here’s Kavanaugh, answering a tough question from Sen. Cory Booker (day 2 hearing,, starting around 10:33:52) about his current thoughts about something he said in an interview in 1999: that racial discrimination would essentially disappear in 10 or 20 years.

I think that was, uh, Senator, an aspirational comment, and one, uh, that, uh, to your point, of course I’ve said in my decisions, as you and I have discussed, that, uh, the march for racial equality is not finished and we still have a lot of work to do as a country and as a people on that.

Booker followed pointedly, asking what could conceivably have motivated him to say that, particularly as the 90s were noted for growing racial inequities, as evidenced by, say, the massive increase in the incarceration rate of African Americans. And here's where Kavanaugh gave a one-word answer that seemed like an improvised moment of brilliance:

Hope.

His tell crops up when he’s drawn outside the ambit of the law. That’s when he starts talking like he’s “mentally retarded” and “couldn’t even be a one-person country lawyer down in Alabama.”

Take, for instance, when Sen. Kamala Harris asked a series of questions that spiraled around whether he had ever talked with anyone, and more specifically with anyone from Kasowitz, Benson & Torres, the firm run by Marc Kasowitz, President Trump’s personal lawyer, about Special Counsel Robert Mueller’s investigation into Russian meddling in the 2016 election.

Here’s what Kavanaugh said (same link as previous, starting at approx. 11:45:15, with ellipses for moments when Sen. Harris interrupted with follow-ups):

Well, it’s, uh, in the news every day, I … Uh, with other judges, I know…. Ah. … Well, I’m not remembering, but if you have something you wanna … I said I, Kazowitz? Spensen? … Well, is there a person you’re talking about?... I need to know the, um, I’m not sure I know everyone who works at that law firm. … I don’t think I, I’m not remembering but I’m happy to be refreshed or if you wanna tell me who you’re thinking of that worked … I don’t know … I’m not sure I. Do I? I’m just trying to think: do I know anyone who works at that firm? I might know. Maybe. … I would like to know the person you’re thinking of cause what if there’s … I have, I’m not going to go … I don’t know everyone who works at that law firm, Senator …. So you said Bob Mueller or, so have I ever had a discussion about Bob Mueller. I used to work in the administration with Bob Mueller. … I’m sure I’ve talked to fellow judges. … About Bob Mueller? … But … The fact that it’s ongoing. It’s a topic in the news every day. I’m. I’ve talked to. It’s. I’ve talked to fellow judges about it. It’s in our court. It’s in the courthouse in uh the District of Columbia. So I guess, uh, the answer to that is yes. So the answer is yes. … You asked me that. I need to know who works there. … Well actually I can’t. I …. Because I don’t know who works there. … Right. I’d be surprised. But I don’t know anyone, I don’t know if the. I don’t know everyone that works at that law firm. So I just want to be careful because your question was and/or, so I want to be very literal. … I’m not remembering anything like that but I wanna know a roster of people and I wanna know more. …. Well, I said I don’t remember anything like that.

And here’s what he said to Sen. Patrick Leahy, when asked about his receipt of emails from a Republican staffer who had infiltrated an online directory of more than 4,000 Democratic party documents – Leahy called that staffer a mole -- during Kavanaugh’s tenure as staff secretary for President George W. Bush (1:54:40):

I don’t recall the reference to a mole, uh, which sounds highly specific, but certainly it is common – again, the people behind ya can probably refer to this – but it’s common, I think, for everyone to talk to each other, at times, and share information. At least this was my experience, this is 20 years ago almost, where you would talk to people on the committee … I don’t re … uh … I’m not gonna rule anything out, Senator, uh, but if I did I wouldn’t have thought that anything other, I wouldn’t have thought that the literal, uh, meaning of that.

“I don’t live in a bubble,” Kavanaugh told Sen. Dianne Feinstein (49:55), when asked about Roe v. Wade and reproductive rights. “I understand—I live in the real world.”

But that’s not really true. Brett Kavanaugh’s bubble is inside the beltway, where he has lived and worked for most of his life, and is further enclosed by the rarified world of constitutional exegesis. Whenever a Senator asked what he felt, what he believed, where his passions were, Kavanaugh responded with fulsome analyses of Supreme Court cases and decisions he had issued as a judge.

I suppose that legal analysis can serve as a calming retreat from the messiness of our hyper-gesticulating world. Unfortunately, it’s all too easy to pretend that the law is inherently evenhanded and that its arc, too, bends towards justice. Because the arc only bends when judges are human beings and understand the cases before them as involving real human beings and real human consequences.

Kavanaugh’s tell emerges when he’s nudged out of his bland world of legal cycles and epicycles. That’s what seems to have happened, for instance, when Fred Guttenberg, whose daughter Jaime died in the Parkland mass shooting in February, came forward to shake his hand. Kavanaugh – whether he was ushered away or didn’t recall who Guttenberg was or simply wanted to make the most of his break – didn’t take up Guttenberg’s proffer. For sure, Guttenberg had already revealed that he was against Kavanaugh’s nomination. Both Kavanaugh and his minders undoubtedly understood that if he clasped Guttenberg’s hand, if he acknowledged Guttenberg’s loss, it would become the day’s viral image. The presence of this grieving victim threatened to wrench him out of his secure moot court bubble.

Kavanaugh’s tell comes at those moments like this, when his legal exertions fall away and the real world -- beyond the beltway and the comfortable confines of the court -- threatens to enter. It makes you wonder just what he finds so scary about life here on the outside.

Friday, August 24, 2018

Let's Put Schools in Guns


Betsy DeVos has it backwards.

DeVos, President Trump's Secretary of Education, has signaled that her department is considering allocating grant money for schools to purchase guns so they can arm teachers and other school employees.

Rather, she should consider the opposite: we should be putting schools in guns.

That’s right: a mini-curriculum with every firearm. Collect them all: Berettas will come with American and European History handbooks. Smith & Wesson will tutor French and Spanish. Sturm, Ruger and SIG Sauer will handle the STEM subjects – Science, Technology, Engineering and Math. And you can pick up all these self-improvement courses at your friendly local firearm dealer, reseller, or gun show.

This is a proposal that could unite the congress in bipartisan action and bring the NRA and teachers’ unions across America closer together.

Creation of these mini-courses would, of course, be out-sourced to experienced educators – like the appropriately named mercenary outfit Academi (once called Blackwater, it was – NO COLLUSION – founded by DeVos’s brother, Erik Prince.) The big defense contractors – Lockheed Martin, Boeing, Raytheon, and the others – will undoubtedly line up for some money (to be honest, they've already written the book on this practice). Rudy Giuliani will pen a crash-course on the philosophy of law (strange factoid: try saying “Truth isn’t truth” ten times fast. I guarantee that by the time you’re done you’ll sound as addled as the former New York City Mayor.) American Media head David Pecker will write an instructional manual on the ins and outs of Catch-and-Kill, immunity deals, and other stormy issues of journalistic ethics.

And hey, it'd be great if Ryan Zinke’s old high school football buddy, who’s reviewing scientific papers about climate change for the Department of the Interior though he has no expertise in the subject, would be willing to moonlight for the Department of Education, too.

Of course the gun companies would want a piece of the educational action as well. Instead of being known for mass casualties, Bushmaster could become famous for its texts on Mass Media. Colt would be better known for foreign language learning than for its infamous .45. And the Brownells, owners of a major Iowa gun supplies store, could sleep more peacefully at night knowing that they are funding fine arts education as well as dealing firearms and their accoutrements.

Heck, Bernie Sanders could join the party, too. He's been running around the country since before the 2016 election promoting his plan for free tuition for American colleges. With the Schools-In-Guns Initiative for National Training (SIGINT), this would be a natural, as the Education Department could set aside funds so a full set of college course handguns, rifles, and semi-automatics would be given FREE to every American who hits the age of 18 (those over 18 can enroll in the SIGINT continuing education package.)

Already, $1 billion's been allocated through the Every Student Succeeds Act. Now, this program will be renamed the Guns and Rifles Impress as Fine Teachers act (GRIFT). Imagine how much money the tea-party and anti-deep-state conservatives in Congress will ante up when the National Rifle Association starts pushing for GRIFT, to bring more money to schools. Surely, that's a public option everyone can get behind.

SIGINT and GRIFT funding would also guarantee that all schools that want them (this would be a prerequisite for receiving SIGINT or GRIFT monies) would install a firing range.

This would create an opportunity for a new progressive moment in education because SIGINT/GRIFT funding would bring an end to stigmatizing realities like detention and study hall. In SIGINT/GRIFT schools, students who misbehave or are antisocial would be sentenced to hours at home on the range -- the shooting range -- with drill sergeants organized along principles of instruction and mentoring designed by famed NYU professor Avital Ronell. Upon graduation, in addition to a diploma, all students would receive an official SIGINT I Attended School in the U.S. and Avoided Getting Shot T-shirt and a GRIFT lapel pin -- all ABSOLUTELY FREE.

The Schools-in-Guns Initiative for National Training can guarantee one thing for sure: it will provide a better education than Trump University ever did. 

So whaddaya say, America? Every firearm a mini-school! Every box of ammo a lesson plan! Every assault weapon an advanced degree! Every bump-stock a teaching moment! The future of our children depends on it.

This program is absolutely imperative for restoring America's competitiveness in the world. After all, in the factories, fields and farms that some politicians and many newspapers seem to think are the only places that make up real America, schooling has long been less important than shooting. SIGINT and GRIFT will restore the link between these two American values.

And remember our catchy new slogan: Guns don't kill people. Schools do.