• Protect corporations from litigation by victimized citizens and consumers, by capping limits and introducing regulations prohibiting lawsuits against some industries altogether. This is ‘justified’ by wildly exaggerating the prevalence of ‘frivolous’ lawsuits inititated by individuals.
• Enabling corporations to pursue litigation against aggrieved citizens by threatening to bankrupt or jail them for hurting the corporation’s reputation with their charges

Milchen points out that 80% of US lawsuits are now initiated by corporations, not individuals. And the large majority of legal actions thrown out by judges as ‘frivolous’ were initiated by corporations. The vast majority of large multi-million dollar ‘runaway’ lawsuit awards are also given to corporations, not individuals. Even litigation against pharmaceutical companies, blamed for driving up drug costs, is mostly launched by competing pharma companies to protect their patents. The principal effect of tiny litigation caps would be to discourage legitimate actions against corporate abuse, and that’s why corporatists, who have politicians in their back pockets, are working so hard to pressure for “tort reform”. Milchen says: “The attack on trial lawyers is really an attack on citizens’ ability to sue corporations, and it goes far beyond this election cycle; it’s part of a long-term assault on the rights of citizens and small business owners to hold corporations accountable via the courts. Having successfully undermined or dismantled regulations on big business in many realms, the next corporate agenda item is to regulate us  — to strip citizens of our right to punish corporate crime and criminals.”

As I mentioned before, I think the deceitful mantra of “tort reform” to prevent “frivolous litigation and runaway awards” is being jointly orchestrated and repeated by the Bush Administration (notably Cheney) and their corporatist donors to soften the public up for a major assault on citizen defense against corporate abuses, in a second Bush term.

And in other corporatist news, in an editorial in today’s NYT a doctor and executive with a major pharma company admits “Americans are dying without the appropriate drugs because my industry and Congress are more concerned about protecting astronomical profits for conglomerates than they are about protecting the health of Americans.” The author calls for legalizing and facilitating the re-importation of drugs from Canada and Europe for America’s poor.

I suspect he’ll be looking for a new job soon.

The graphics above are from Eminem’s amazing video Mosh. See it in quicktime here, or in realplayer or windows media player here.  Daily Kos has (no laughing, kids!) posted an interpretationof the video for older viewers that don’t get all the references. It’s extremely clever; watch it more than once to pick up all the metaphors. Now if we can only get musicians and Hollywood to realize that corporatism is the enemy, not just government, we could really start getting somewhere. Thanks to David M. for the links.

There was at first bi-partisan celebration of this ruling. Free-marketers saw this as the removal of an unnatural impediment to business, the end of interference in the establishment of rates that truly reflect the lending risk. Liberals saw this as an opportunity for middle-class Americans to finally buy their own homes — prior to the removal of the interest rate cap, most lenders would only lend money to the rich, people who really didn’t need money and used it principally for investments. At the time, inflation was rampant and even the rich were paying high rates of interest on borrowings, so the dangers of eliminating anti-usury laws was unforeseeable.

A quarter century later, the consequences of this ruling are clear. In their well-reasoned and thoroughly-documented book The Two Income Trap (the Salon review of which I covered last year), Harvard Professor Elizabeth Warren and her daughter outline what has happened since 1978:

• The proportion of Americans who own their own homes has risen a paltry 3%.
• 140 million (70%) of adult Americans now admit they are carrying so much debt it is making their lives difficult and unhappy.
• Bankruptcy rates for women have risen 662%. Foreclosure rates have risen 400%.
• Having a child is now the single biggest predictor that a woman will declare bankruptcy.
• One out of 7 families with children will declare bankruptcy this decade, and at least that many more should declare bankruptcy to make a fresh start but will instead out of ignorance or fear live with the constant horror of repossessions, hounding and threats from creditors.
• More Americans each year declare bankruptcy than have heart attacks, get diagnosed with cancer, graduate from college, or get divorced.
• Increased availability of credit has more than doubled the price of housing, to the point that after paying for housing and other essentials (and the other essentials have actually decreased in cost), the average two-income family has less disposable income than the average one-income family had a generation ago.
• Families with children have driven up the price of housing in many areas with desirable public schools by as much 600%, and a recent survey indicates proximity to good schools is now the single largest determinant of US residential housing price.
• Credit card debt balances have risen from $20 billion to nearly $800 billion, a forty-fold increase (see chart).
• The average interest rate on Citibank mortgages is nearly 16%, ten points above prime, and interest rates on ‘sub-prime’ mortgages are much higher than that (Citibank and other lenders don’t divulge the breakdown). On an average home with an average mortgage, the ‘sub-prime’ borrower is therefore paying $500,000 more over a 30-year mortgage life than a prime rate borrower.
• Visible minorities and those with limited education are twice as likely to be paying the high rates of ‘sub-prime’ mortgages as whites and college-educated people with the same incomes. The reason, according to one retired lender: Because the lenders know they can get away with the higher charges.
• Credit companies including Sears, AT&T, GE, Macy’s, JC Penney, Circuit City, Radio Shack and GM are just some of the companies that have paid millions of dollars in fines for illegally hounding people after bankruptcy, and for illegally hounding descendants of deceased customers, to repay credit card balances. Most of these companies now make more money from finance charges than they do from selling products.

Even the FDIC, the government body that insures the banks, has expressed alarm at the unforeseen and, in human terms, tragic consequences of unregulated interest rates and credit. They acknowledge the direct correlation between the hawking of massive amounts of credit to everyone in the country at outrageous interest rate, and the rate of personal bankruptcies (see chart above — the blue line, left scale is the bankruptcy rate; the yellow line, right scale, is credit card debt). They even make it clear that it is the aggressiveness of lenders, more than interest rates per se, that leads to bankruptcies: In Canada, which has never had anti-usury laws, bankruptcy rates were always significantly lower than in the US, except for the brief period in the 1970s, when VISA and MasterCard and their agents began aggressively pushing credit cards in Canada for the first time, when the bankruptcy rate in Canada surged and briefly surpassed the US rate. After the Marquette decision, US bankruptcy rates surged back ahead, and rates in both countries continue to soar.

The authors take great pains to demolish the myth, perpetrated to this day by neocons like William Buckley Jr., that it is consumers’ inability to budget and restrain themselves from making reckless purchases that is behind the skyrocketing bankruptcy rate, and that a lot of people just declare bankruptcy to discharge their personal responsibility for undisciplined spending behaviour. Compared to 1978, the average American family spends (inflation-adjusted) 21% less on clothing today, 22% less on food (grocery & restaurant combined), and 44% less on furniture and major appliances than they did, although their (mostly-two-income) family take-home has risen 70% relative to the (mostly-one-income) take-home of the early 1970s. Where has the extra money gone? First and foremost to skyrocketing housing costs (up 100% on average, up to 600% in areas close to the best schools). What else is way up in cost? Health insurance, transportation (to and from two jobs instead of one), pre-school, after-school-care and college tuition are all up from 100% to 500% in cost since the 1970s. Over 90% of all personal bankruptcies are due to three causes: job loss, medical problems, and divorce. The pervasive myths of reckless overconsumption and the immoral debtor are not only untrue, they are cruel deceptions perpetrated by corporatists to mask the real cause of skyrocketing debts and bankruptcies: Reckless lending, usurious and unconscionable interest rates, and cynical mortgage consolidations designed to facilitate foreclosure and expropriation of homes for corporate profit.

One lending analyst has broken the 18% annual charge commonly charged today on credit cards into these four components:

• 7% for true interest, the cost of borrowing in a low-inflation world
• 5% for administration costs (which are much higher than for mortgages because of the volume of transactions) and fraud costs (which the credit card companies are legally bound to pay, and which are soaring)
• 3% for defaults — the cost of people who skip town, die or declare bankruptcy before paying their balance (did you know that if you die, your beneficiaries are under no obligation to pay off your credit card debt?)
• 3% for ‘the opportunity cost of the early payment period’ (the losses the lender incurs when people pay off their cards on time)

So when you carry a balance on these cards, you are subsidizing three groups — card defrauders and identity thieves, bankrupts, and those who pay their balances in full each month. It is easier and cheaper for credit card companies to get you to pay for these costs than to improve security over credit card abuse, exercise more discretion in lending to those who can’t afford to repay, and get early-payers to pay their share of the administrative burden of credit card management. And that doesn’t include the other unregulated add-on costs: late-payment fees, balance transfer fees, transaction charges and other service charges, which a recent study showed are increasing by 20% every year. Late payment fees (charges when you don’t pay a specified minimum of your credit balance each month) alone are up 300% in the last decade.

As I mentioned at the end of my last economic post, one fourth of all new mortgages are now debt consolidation loans, mostly at high rates. These diabolical schemes often make things worse, and they’re being falsely sold as the panacea for families in financial trouble. They complete the cycle that is wiping out the American middle class, which looks like this:

1. You want to put your children in a good school, so they won’t have to struggle like you did. So you pay the outrageous price, inflated by all the other parents with the same aspirations, for a home in the ‘right’ area.
2. To pay for it, you both need to work, and one of you has to work two jobs. The ‘right’ area is not near your work, so now you need two cars, day-care, and a lot of other new expenses.
3. You just qualify for the huge mortgage, but because of the risk you have to pay a much higher-than-prime rate: Citibank’s average 16%.
4. You can just barely make the payments. And with tuition for university going up by double-digits for the 5th straight year, and youth unemployment through the roof, the dream of putting your kids through college is starting to look out of reach.
5. Suddenly, one of you loses their job. Or gets sick. Or one of your parents gets sick, or children gets sick, so one of you has to stay at home to look after them. Or the stress breaks up your marriage and now you have two households to pay for.
6. With the drop in income and/or increase in costs, you max out your credit cards, and the effective interest rate with penalties goes from 18% to 28%. You miss a mortgage payment and late fees and charges push its effective cost above 20% as well.
7. In desperation, you consolidate your debts with a new mortgage, taking advantage of the increase in the value of your home. You end up with a mortgage larger than what you paid for the house, at a higher interest rate, but at least the credit cards are clear.
8. You swear you’ll tear up the credit cards, but the only way you can pay for the medical bills, the transit pass, the gasoline bills, is on credit. You have no cash for heat, phone and electricity, so you draw cash on your credit cards to pay them, too. Some of the things you bought for a house on a ‘no payments until 2004′ basis are coming due, so they get rotated right back onto the credit cards. Soon they’re maxed out again.
9. Ashamed and afraid and too ignorant to declare bankruptcy, you borrow from family and friends to pay creditors. You stop paying for life insurance, and sell family heirlooms in garage sales or on eBay. You’re crying all the time. The phone rings with creditors non-stop, threatening to take back your Sears Posturepedic, the kids’ Christmas toys. They even talk to your kids and tell them in condescending tones that their parents are bad people.
10. And finally, you become one of the statistics on the blue (or if you’re a Canadian, the red) line on the chart above. You’ve probably lost your home, your marriage, the respect of your children, your friends (who you never repaid), your health. Everything. And all you were trying to do was put your kids in a good school.

So what are the answers? As the authors explain, they’re very simple: Congress needs to reinstate anti-usury laws, capping interest rates at a uniform rate, closely tied to the prime rate, across the country. Any and all fees would be added to the interest rate and the total would have to stay below the cap. And consumers need to look before they leap, and keep their debt-load below the level that would allow them to handle that debt if they were suddenly hit with a job loss, a sick or injured family member, or a divorce.

What are the chances of it happening? In the US, at least, it’s remote. The financial services industry is one of the largest campaign contributors to political candidates, and they are fiercely opposed to any re-regulation, which would have a catastrophic effect on their profits. They are, in effect, legally stealing from the poor and middle-class of America. The authors show how powerful this lobby is with a story about Hillary Clinton. Because America’s unconscionable lenders want to keep the screws on their poorest and most profitable customers, they have twice tried to ram through Congress a bill that would make bankruptcy declarations much harder to make, allow secured creditors to circumvent bankruptcy protection entirely, reduce the priority of family support payments over credit card debts, and require credit cards to be paid off along with mortgages, thereby making it easier for foreclosure before bankruptcy. These lenders contributed $60 million to various politicians to get their support. The authors, and other groups representing the poor, were able to convince Hillary to get her husband to veto the bill. But with MBNA bank the largest contributor to the Bush campaign, the bill was reintroduced, and now-Senator Hillary Clinton, beholden to bankers who contributed $140,000 to her campaign, supported it the second time. Only a fierce lobby, some of whose members were opposed not to the bill but rather to riders that had nothing to do with bankruptcy, managed to block it again — for now. Both John Kerry and John Edwards opposed the bill, and have promised to pay more attention to bankruptcy law if they are elected, so there is some room for hope.

What are the chances that Americans will follow the authors’ advice and rein in their spending, not on luxuries, but on the home they raise their children in, and allow for a contingency like loss of a job, a serious illness or injury, or divorce when they do up the family budget? Pretty remote. It’s like asking people to give up the American Dream. Even if, for many, it is destined to become a nightmare.

• The extraordinary joint endorsement of John Kerry by all the editors of the New Yorker, in an essay called The Choice that brilliantly recaps all the reasons not to vote for Bush, and all the reasons to vote for Kerry,
• A powerful essay called Promises to Keep from Truthout, revisiting the litany of Bush lies, deceptions and failures [thanks to Susan Hales of the wonderful Doubly Gifted blog for this link],
• A hilarious satire called Believe from The Gadflyer, poking fun at those who can’t or won’t see through what Bush has done to America [thanks to my friend David Jones for this link], and
• A stirring new song called Unamerican from Ian Rhett, with an equally remarkable accompanying video, free online [thanks to R. Dale Asberry for this link].

If you haven’t read/heard all four of these masterpieces, you’re in for a treat. Check them out. Pass them on.

While I’m acknowledging the source of links, thanks to Steve Raker and Jon Husband for several of the links in last weekend’s Remainders post.

PR-STV is a little known voting system used in Ireland, Malta and parts of Australia that combines elements of two other voting systems: Proportional Representation with Closed Party List (PR-CPL), the system used in much of Europe in which citizens vote for a party, and the top names on each party’s slate are elected in proportion to the percentage of votes each party receives; and Instant Runoff (or Alternative) Voting, in which citizens rank the candidates for office in their constituency, the candidate with the lowest votes is dropped off and that candidate’s votes are transferred to their voters’ second choice, continuing until one candidate accumulates a clear majority of the votes.

PR-STV is an attempt to accomplish three things reasonably well; and while other systems accomplish each better, no other system even attempts to achieve them all:

• Elected candidates are representative of and responsible to specific geographic constituencies
• Parties receive seats in government proportional to their share of overall popular vote
• Small, new parties have a reasonable chance of electing at least one candidate

This is a difficult balancing act. PR-STV requires larger constituencies than the first-past-the-post system we in North America are accustomed to. It isn’t fully proportional: A party with a plurality (more than any other party) but minority (<50%) of the popular vote can still end up with a small majority of seats, and new parties must have significant support (at least 20%) if they hope to get candidates elected. Still, PR-STV does get much closer to the ‘perfect compromise‘ of the three objectives above, than any other system. In a recent study for the Blair government in the UK, whose fragile majority would disappear under PR-STV, the commission clearly recognized the superiority of this system over any other (and in the UK, at various levels, there are many options to choose from). More importantly, the commission’s report shows that PR-STV works in practice, and does so with a ballot for voters that’s ‘as easy as 1-2-3′.

Here’s how it works:

1. The country, state or province is broken up into logical urban and rural agglomerations, with homogeneous economic characteristics and conforming to existing municipal boundaries (no gerrymandering allowed). The population of each agglomeration is computed and each is assigned a number of seats proportional to its percentage of the total number of eligible voters, so that the total number of seats remains unchanged. Any agglomeration with fewer than three seats by this calculation is combined with the closest similar agglomeration, and any agglomeration with more than seven seats by this calculation is split into two or more agglomerations, consistent with existing municipal boundaries, until each agglomeration has between 3 and 7 seats, These agglomerations become the electoral constituencies for PR-STV.
2. Each party can nominate candidates up to the number of seats for grabs in each constituency. The ballot looks something like the picture above: candidates of each party in a column, with both the candidates of each party and the parties printed in random order from ballot to ballot (easy for printers to do in this day and age). The instructions on the PR-STV ballot are shown on the example above.
3. Voters enter a 1 in the circle for their top choice, 2 for their second choice etc. They can rank all candidates in order, or rank fewer, or even just one, if they wish.
4. Here’s where it gets complicated, and fair. The quota for election is the number of ballots cast, divided by (the number of seats to be filled +1). For example, if 180,000 ballots are cast in the constituency, and 5 candidates are to be elected from the 15 on the ballot above, the quota is 180,000/6 = 30,000 votes. Any candidate who achieves the quota in first-choice (’1′) votes is declared elected.
5. Next, the second choice votes of those candidates who exceeded the quota are tabulated, and reallocated to the remaining candidates in proportion to the number of votes in excess of the quota. So if a candidate gets 45,000 ’1′ votes, each of that candidate’s second choices receive 1/3 of a vote for each ’2′ vote they received, and the total of these 15,000 transferred votes are subtracted from that candidate, reducing his total to exactly the quota.
6. Once all votes in excess of the quota have been transferred in this manner, if there still aren’t enough candidates who have reached the quota (five in our example), then one by one, the candidates with the lowest accumulated votes are dropped off, and their second (or third, fourth etc. if their second choice has already been elected or eliminated) choices are reallocated to the remaining candidates.

Here’s an example of how the ballot counting under PR-STV would work, courtesy of the UK Electoral Reform Society (another organization that speaks highly of PR-STV). If you want to play around with it, there’s a computer program that registers all your test votes and does all the calculations for you here. I’ve tried it, and it works, as long as you have a reasonalbly large number of voters in your test. And it’s really hard to explot to a party’s advantage: If a major party publishes lists telling party members what order to list its 3-7 candidates in, that can backfire and put the lower-ranking candidates on their list out of contention before the second and third-place votes get counted.

What are the drawbacks of this system? Other than the less-than-perfect way it addresses each of the three objectives bulleted above, these are the criticisms and challenges:

• Elected officials need to be more focused on the needs of their constituency; a major party nomination isn’t enough to ensure a win. As far as I’m concerned, if they have to neglect their constituency to focus on ‘larger’ issues, they don’t deserve to be elected.
• Under PR-STV, majority governments are rare, so coalitions are needed to pass legislation. Experience indicates, however, that minority governments are more responsive and responsible to voters, less likely to take extreme positions, and just as able to act decisively when an emergency arises.
• Politicians hate it, and politicians with safe seats under the current system will probably do everything they can to sabotage its introduction. They’d actually have to work to be re-elected.
• There are concerns that the ballot is too complicated for voters to understand. I don’t get this concern — if a voter can’t write 1, 2, 3… in order of preference then they probably aren’t capable of voting. I have greater concerns that the tabulation algorithm, or any machine-readable ballot, could be tampered with: It would be essential to use paper ballots and take the time to count them manually. If it takes an extra day, so be it — better than taking an extra month or two to deal with disputes over irregularities. I’m sure the areas that have been using PR-STV for years can give us some pointers. Canada uses manually-counted paper ballots, and election results here come out faster than they do in the US.
• One concern I have is that wingnuts with a hard core of 15-20% support in their constituency could end up being elected under PR-STV, and even holding the balance of power in a coalition, but I guess that’s the cost of true democracy; I’m sure some people would have the same concerns about my friends in the Green Party.

If this summer’s Canadian election had been conducted using PR-STV, the Liberal minority would have been even smaller than it was, but the separatist Bloc QuÈbecois would have won many fewer seats, and the Liberals and NDP, along with a handful of Green Party electees, would be able to govern as a coalition without the need for support from either the anti-federalist Conservatives or Bloc QuÈbecois. The opposition parties all favour some form of electoral reform for Canada, and the NDP has made a referendum on reform a condition of its continued support for the Liberals. The BC report is likely to give this national initiative tremendous momentum, and make PR-STV the preferred alternative for consideration for the country as a whole.

If the 2000 US election had been conducted using PR-STV, Gore would be president (there’s no room for an anachronistic electoral college under PR-STV), since he would have received the lion’s share of second-place votes when Nader was eliminated. Democrats would probably also have won more seats than Republicans in Congress (which under PR-STV would be combined into a single ‘House’), though it’s possible that some third parties and independents would have held the balance of power, reining in the House from some of its more flagrantly partisan and pork-barrelling actions. What’s more important, a lot of the old hacks would have been turfed out in favour of more moderate, competent candidates from their own party, bringing new ideas, youth and collaboration to the House.

The study for the Blair government looked at the entire history of various PR voting around the world. Here’s what they found:

• 94% of PR-STV voters voted for more than one candidate; 8% ranked all the candidates
• 81% ‘split’ their vote, voting for candidates of more than one party; 49% voted for candidates of three or more parties
• PR-STV did foment some intra-party feuds, with older, established candidates objecting to having to run against younger candidates with new ideas from their own party (heh, heh, poor guys)
• Contrary to expectations, alas, PR-STV had no significant impact on voter turnout

I know it’s hard for Americans to think about electoral reform with the critical election pending next week. But I predict that, whoever is ultimately declared the winner in that election, controversy, litigation and acrimony will ensue for months, even years. The sad truth is that the US electoral system is simply incapable of accurately reflecting the will of the electorate, either in the vote for president or the votes for Congress. If Americans finally wake up after a second consecutive electoral debacle and vow “never again”, modern electoral systems like PR-STV that are immune to most of the abuses that have destroyed the credibility of the American system, might merit a closer look.

Every vote counts in this election. Even if you have only an hour to spare, please do what you can to get out the vote. After November 2nd, there is no tomorrow.

S

Spacecrafts Powered by Thunder: Good news and bad news from the space research front. Scientists have invented a new engine that is four times as efficient as existing spacecraft engines, and which uses sound waves to move the pistons that power the engine, allowing longer trips when solar energy won’t do the job. But like existing space engines it’s a nuclear technology based on radioactive plutonium, a toxic substance that outlasts the spacecraft itself by centuries. Remember those Sci-Fi movies where the crippled alien spacecraft turns out to be a deadly booby-trap? That’s what NASA produces, and a dozen Soviet and American spacecraft have already discharged large amounts of radioactive plutonium and uranium into Earth’s atmosphere. Longer trips, bigger engines, greater risk. The legacy of the human race is that wherever we go, we leave a poison trail.

Citizens Assembly to bring Proportional Representation and/or Instant Runoff Voting to Canada?: The minority government in Canada is turning out even better than I’d hoped. There’s a lot of jockeying going on by the opposition parties for continued support of the Liberal government. One of the demands is for a Citizens Assembly, a group of people selected at random from voters’ lists, to create a referendum question on reform of the electoral process, results of which would be binding on the government. Leading proposals for reform are European-style proportional representation and instant runoff voting. Twenty-first century, here we come.

Bush Envoy Baker Plays Both Ends Against the Middle in Carlyle Group Scandal: James Baker, Bush’s special envoy to Iraq, has taken conflict of interest to a new height. While his job as envoy is to convince other countries to forgive Iraq’s crushing foreign debts so that country can make a clean start (assuming it can solve its non-financial problems), the company of which he is a senior partner, Carlyle Group, is selling their members’ influence and pull with the Iraq government to these same foreign governments as a collection agency. In other words, please forgive my debts, but if you can’t, grease the palm of my buddies here and I’ll get you your money before I declare bankruptcy. Disgraceful. The guy has a great future with Halliburton.

US ‘Productivity’ Mostly a Function of Longer Hours, More Two-Income Families: A recent productivity study by the OECD indicates that the superior productivity that made the US dollar so strong for so long until the Bush debt undermined it, was the result not of working smarter but working harder. Americans now are up there with the Japanese working fierce hours, often in more than one job, and usually with both parents working, to make the same income that a European makes in a 35-hour week with 7 weeks’ paid vacation. (thanks to JR Mooneyham for the links)

WWF Confirms Resource Use at 120% of Sustainable and Increasing Fast: A recent study by the WWF determines that we are currently using resources at a rate 20% greater than Earth’s ability to replenish them. This is consistent with the results of previous studies, which I have documented in the chart that has appeared often on these pages.

Jon Schell: ‘Unconquerable’ World Degraded by Bush/Corporatist Propaganda, Greed: The optimist Jonathan Schell, whose inspiring book Unconquerable World I reviewed on these pages, is becoming a little less so. Here’s a sample passage from the recent essay that shows what’s getting him down:

Brooke’s Story: Sister of US Soldier Killed in Iraq Speaks Out: A new website tells the moving story of how the family of a US soldier who died in Iraq are coping, and what they think of the lies and the liars that needlessly cost Ryan Campbell his life.

(The picture at top has nothing to do with the seven stories, but wouldn’t it be a great subject for a photo caption contest?)