ARTS & FARCES internet

Those who fail to learn from history are doomed to repeat it. I think George Santayana said that or something close. But he actually stole it from Hegel, who wrote, “What experience and history teach is this—that people and governments never have learned anything from history.” But leave it to Kurt Vonnegut to really drive it home: “History is merely a list of surprises. It can only prepare us to be surprised again.”

So it should be merely surprising that the banks appear to be up to some sort of shell game again. My wife and I bank at a smallish local bank for the sole reason that most of the money stays in the community. Earlier this week, I found the following atop my checking account statement:

EFFECTIVE 10/14/04: FOR REGULATORY AND ACCOUNTING PURPOSES, WE ARE CHANGING THE METHOD IN WHICH OUR RESERVE REQUIREMENTS ARE MAINTAINED WITH THE FEDERAL RESERVE BANK. YOUR ACCOUNT WILL CONSIST OF TWO SUB-ACCOUNTS AND WE MAY TRANSFER FUNDS BETWEEN THEM. THE RESTRUCTURE WILL OCCUR SOLELY ON OUR BOOKS AND WILL NOT AFFECT YOUR BALANCE, INTEREST, FEES, STATEMENT OR USAGE IN ANY WAY. AS REQUIRED BY REGULATION D, WE RESERVE THE RIGHT TO REQUIRE 7 DAYS NOTICE BEFORE PERMITTING WITHDRAWALS; HOWEVER, WE DO NOT PRESENTLY EXERCISE SUCH RIGHT. FOR DETAILS CALL XXX-XXX-XXXX.

Okay, I’ve seen scams like this on the television and I don’t want to play.

I’ve looked at Regulation D and I can’t find anything resembling a requirement that restricts customer withdrawals.

If the IRS is ready and willing to retrieve improper gains from executives of alleged non-profit credit counseling agencies, it seems only fair that they be prepared to also retrieve improper gains from executives of the for-profit businesses that defaulted on the promise of retirees’ pensions and employees’ healthcare while managing to sometimes rape the natural resources of the communities in which they conduct business. “Preparation” on the part of the IRS however, requires public funding.

Meanwhile, as the airline industry lines up to join the steel industry to access the US Pension Benefit Guaranty Fund as a handy bail-out tool, House Speaker Dennis Hastert‘s (R-Illinois) new book advocates further dismantling the one government agency even remotely qualified to pursue such gains in the public interest. It’s almost funny to see a Republican lauding the flat tax formerly labeled “highly radical” when it was presented not so very long ago by one of California’s former Democratic governor’s, Jerry Brown.

Any current version of a flat tax would be at risk, however, for being computed against “net” income and exclusive of assets for the privileged, but against simple “gross wages” for wage-earners. As for any sales tax, we’ve all seen them diverted from the purpose for which they were collected only to further depress economic recoveries. Value-added taxes have the potential to become an accounting nightmare that creates more problems than it solves. Of course, that could be the point. Given the obviously systemic and heavy presence of special interests in and among policy makers on the hill, almost any other turn of Hastert’s suggested tax events would be surprising.

Assuming the IRS is funded to meet the challenge, the cookie crumbs of the aftermath would still be preferable to realizing little to nothing for the nation’s treasury.

United Airlines claims it’s necessary for it to shed some US$13 billion of its pension obligations to emerge from bankruptcy. Some experts are beginning to say that United’s and other business failures are going to result in a multi-billion dollar taxpayer bailout similar to that of the savings and loan debacle of the 1980s. According to Mary Williams Walsh in this morning’s New York Times, “If every airline with a traditional pension plan were ultimately to default, the government would be on the hook for an estimated $31 billion. Its insurance coverage is limited, so some employees would have their benefits reduced. ‘The pension insurance program is there to protect workers’ benefits,’ said Mr. Belt, who took over the agency [Pension Benefit Guaranty Corporation] in April. ‘It shouldn’t be used as a piggy bank to help companies restructure.’”

Assuming we actually learned something from the savings and loan collapse, this one should be a slam-dunk litmus test for the progressivity of John Kerry. Progressives mistakenly endorsed John Kerry last week and should press Kerry for his position on this issue, assessing his response carefully. With the Pension Benefit Guaranty Corporation in debt up to its eyeballs from the more than 3,000 pension plans that have already failed, and new failures rising sharply, it’s time for drastic—perhaps even draconian—measures.

After all, Congress already took the steps necessary to prevent this from happening. Thirty years ago, laws were passed requiring companies that promise worker pensions to set aside enough money to cover that liability. The problem, as it turns out, is that the laws allowed companies to fund pensions with assets other than cash including, you guessed it, stocks and even junk bonds. To make matters worse, the current Republican Congress has loosened the laws governing pension funding to favor the industries in deepest trouble.

Because the airlines’ employees are, in effect, unsecured creditors for the airlines and because the other major airlines will almost certainly follow United’s lead in this pension shedding, the United States government should immediately offer failing businesses a binding choice. They can either fully fund the worker pensions or face immediate supervised liquidation and recapture of management salaries and severance packages with the worker pensions going to the head of the line of the secured creditors. In the case of the major airlines, recapture of assets and nationalization may be the only option. In any case, Congress must immediately tighten the pension laws by requiring pension obligations be secured with cash or cash equivalents.

I haven’t followed major party political conventions for more than 30 years, although I’m watching the watchers fairly closely this cycle because I’m editing the stories of two journalists on the ground in Boston for my day job.

David Weinberger had the best snapshot of the convention I’ve seen, when he described what it was like to view the opening proceedings from seven stories up in the Fleet Center:

At 4 o’clock, when the Convention is gaveled to order by Terry MacAuliffe—a man so clean and well groomed that you want to take him home and dress his anatomically incorrect body in lots of fun outfits—the hall is more empty than full.

The second best observation goes to my wife who’s a C-SPAN junkie:

Fox News must not have a lot of fans among Democratic Convention delegates. When the network’s delegate wrangler repeated her requests to turn and face a particular camera “for Fox News,” the delegates responded with resounding “boos.”

I’m really glad to see Jerry Michalski regularly writing online again. Even his throw-away stuff is full of valuable insight.

In “Again: what’s so difficult about abundance?” he makes the fine point that sustainable businesses can be created around abundance rather than the artificial scarcity taught in business schools.

It drives me nuts that scarcity is seen as such a fundamental requirement for creating a business. Sure, there are plenty of businesses built around scarce resources, and sure, Dave’s time and my time are scarce, but that’s no proof that businesses can’t cruise along profitably creating voluntary loyalty by knowing their customers better, never betraying them, always being available and fixing problems, responding more quickly than others…. you get the picture. But go to business school and what they teach you is how to create artificial scarcity. That’s the kind of thinking that got us into the present mess.

One of the things that impresses me deeply about working at Utne is that everyone—the business side, the editorial side, everyone—goes out of their way to help our readers whenever we can.

Unlike almost all publications, Utne‘s editorial product is based on abundance. We wouldn’t exist without the alternative, non-corporate media and we revel in that, never forgetting it. And we spend a lot of time nurturing that seedbed where we can (we’ll start discussing our nominees for this year’s Utne Independent Press Awards next week).