The Horse Chronicles - Interactive Ezine: December 2009

This holiday shopping season, more than ever, mature men and women really are joining fan pages on Facebook and following their favorite brands and stores on Twitter.

They're jumping on a retailing trend that's not here just for today's Cyber Monday online shopping sprees, and not just for this year's holidays - but for good.

• Find CyberMonday deals on our SavingsCentral blog
• Check out travel deals on CyberMonday
• Cyber Monday changing workplace

Over the past six months, retailers have upped their presence on social media, the various Internet-based programs that allow people to quickly communicate with large groups of "friends" or "followers" using text, video and other multimedia.

This year, the retailers have used Facebook, Twitter and other Web-based tools to offer exclusive deals and contests to their fans and followers, people they consider their most loyal customers.

That's meant free stays at the Marriott's Hawaiian hotels, free Kroger brand ice cream, free tickets to University of Cincinnati football games. It's meant sneak peeks at Black Friday deals, like Cincinnati Bell's bargains on handsets.

Social media is different from the e-mail offers, television commercials and newspaper circulars.

It isn't necessarily about generating sales for the retailer.

It's about creating buzz and engaging the customer, for good or bad. That in turn, helps sales.

"In some ways, it circumvents traditional advertising and takes a retailer directly to the customer without the cost of direct mail or even e-mail," said Ellen Davis, vice president of the National Retail Federation.

A recent holiday survey by Deloitte found that 14 percent of Ohio consumers expect to use social media as part of their shopping strategy this year.

Most will use it to find discounts, coupons and sales, or to research gift ideas.

It's impossible to compare social-media use to past years because 2009 is really the first year it's played a role in holiday shopping, said Ed Bentley, Deloitte's north-central regional leader for its retail practice.

"This year is just a building block for the future," he said.

"It's become a way of creating that anticipation and interest level by reaching people in new ways."

Sophistication varies
Retailers typically fall in three camps as far as the sophistication of their social-media strategy, Davis said.

Some, like Best Buy, Dick's Sporting Goods, Kroger Co. and Cincinnati Bell, have developed a strategy that includes customer interaction, incentives and quick support.

Others, like many big-box stores, have set up accounts that mostly drive visits to their Web sites rather than interact with customers.

Still others, like many luxury retailers, don't see the need.

For Cincinnati Bell, it was about joining an online conversation that already was happening around its products and services, said Jane Weiler, the company's senior interactive marketing manager. She recently hired a full-time representative to respond to customers via Facebook and Twitter seven days a week.

"People might be surprised we're not doing this to drive traffic to our stores. It's all about the customer, the conversation and the relationship we're building," she said. "That's what social media is about."

Cincinnati Bell launched contests on its Facebook and Twitter pages for Black Friday, entering fans and followers into a drawing for tickets to the day's UC football game.

"The thing we've learned is to keep it simple," Weiler said. "Create contests that they can do instantly while out on our page."

Kroger Co. set up multiple Twitter pages earlier this summer to reach different interest groups. @KrogerWorks informs job seekers of hiring news and job fairs at stores around the nation. @KrogerDeals earned followers throughout August and September for its Deluxe Ice Cream giveaways. @SharingCourage lets Twitter followers know about Kroger's breast cancer awareness efforts. Kroger utilized its Facebook page to push visitors back and forth between the two mediums.

Making fast friends
Mike Deininger created a Twitter page for his Over-the-Rhine boutique, Mica 12/v, about three months ago (www.twitter.com/mica12v). He also runs the account that promotes all of the businesses in the neighborhood's Gateway Quarter, www.twitter.com/otrgateway.

Deininger had followed several Findlay Market businesses, like Taste of Belgium and Dojo Gelato, through his personal Twitter account and noticed, inadvertently, that he was visiting those merchants more often.

"It reminded me to get up there on Saturday when I go to buy my Blue Oven bread," he said. "I'm hoping the same is true for me."

He's not seeing immediate sales generation. If anything, Twitter and Facebook take more of his time and attention. But he's finding new ways to draw his most loyal fans into his store and into the Gateway Quarter more often. And they're the ones that bring friends, too.

"It can't be ignored, because you are reaching your most enthusiastic crowd," he said.

If Michael Harrington, author of “The Other America: Poverty in the United States,” were alive today and writing an update of his 1962 classic, he would probably not need to change a word of the following observation from that book:

“...(T)he poor are politically invisible. It is one of the cruelest ironies of social life in advanced countries that the dispossessed at the bottom of society are unable to speak for themselves. The people of the other America do not, by and large, belong to unions, to fraternal organizations, or to political parties. They are without lobbies of their own; they put forward no legislative program. As a group, they are atomized. They have no face; they have no voice....”

Further, Harrington wrote, “society is creating a new kind of blindness about poverty. It is increasingly slipping out of the very experience and consciousness of the nation.”

And so it is for the most part today: Invisible in our political discourse. Invisible in the press. Invisible in current discussions of solutions to our Great Recession but all too real for growing numbers of millions of Americans. The mainstream news media should acknowledge an obligation to make these invisible Americans more visible. Perhaps they could devote to the nation’s poor – and to solutions to poverty – even 10 percent of the news space and broadcast news time they give week in and week out to the tiniest ups and downs of the stock market, consumer spending, professional sports, and celebrities famous for being famous.

“It’s not only the news media” that generally ignore poverty in the United States, said Columbia University economics Professor Jeffrey D. Sachs, in a wide-ranging interview with Nieman Watchdog. “It is not on the political agenda. I doubt if President Obama has said much about it. The word ‘poverty’ itself is hardly ever used. Sometimes political leaders refer to the unemployed or low-income wage earners or struggling families, but not poverty. We have no activism around poverty. The political rhetoric is always built around ‘the hard-working taxpayer’ and not poor people.”

While there may be some spot-news and feature coverage of poverty-related issues in the mainstream press from time to time – and exceptional op-ed pieces from New York Times columnist Bob Herbert – Sachs, shown at right, said he sees little comprehensive news-page focus on “the systematic realities of poverty and the tax and spending policies” that need to be reformed to reduce poverty and income inequality. “They zero it out,” he said. (See an example of good recent press coverage of food stamps by Jason DeParle and Robert Gebeloff in The New York Times.)

Sachs, director of Columbia’s Earth Institute and special adviser to United Nations Secretary-General Ban Ki-moon on the Millennium Development Goals to fight global poverty, said the mainstream press generally takes its cues from the presidential administration and Congress in reporting issues. If an issue isn’t being promoted by an administration or by prominent members of Congress, then the press tends to ignore it.

There was a brief, recent exception to the decades-long neglect of the poverty issue when the since-disgraced Democratic presidential candidate John Edwards made class and poverty the centerpiece of his unsuccessful 2007-2008 campaign. Edwards’s positions forced Barack Obama and other candidates to seriously discuss poverty for the first time since Lyndon Johnson’s “Great Society” and “war on poverty” of the 1960s. The discussion ended when the Edwards candidacy ceased.

In an article for Scientific American last March, Sachs wrote: “Indeed, our political discourse tends to focus on the middle class and neglect the poor, while our actual tax and spending policies are often directed to the benefit of the wealthy. As a result, the U.S. has the highest poverty rates, greatest income inequality, highest per capita prison population and worst health conditions of all high-income countries.”

Let’s look at some recent developments that point to the precarious circumstances that tens of millions of Americans – some in poverty, some in near-poverty, some falling out of the middle-class into near-poverty – have found themselves in during the recession:

POVERTY: The U.S. Census Bureau announced in September that the poverty rate for 2008 “hit its highest level in 11 years” at 13.2 percent, with poverty highest among African-Americans and Latinos, Reuters reported. This marked an increase from 37.3 million people in 2007 to 39.8 million people the previous year who were living in poverty. The government defines poverty as an annual income of $22,025 for a family of four, $17,163 for a family of three, and $14,051 for a family of two. Of the 2008 number, 14.1 million were children under the age of 18. The Economic Policy Institute projected that the 2009 figures would show increased overall poverty and with “a quarter of all children...living in poverty.”

HUNGER: Some 49 million people, one in about every six Americans, last year experienced food insecurity – actual hunger or not enough food for an active, healthy lifestyle – the U.S. Department of Agriculture (USDA) reported this fall. The number of children classified as food insecure was 16.7 million – 4.3 million more than in 2007. USDA officials projected that the hunger figure would be even higher in 2009. Alleviating what could be an even greater hunger problem is the federal food stamp program, which helps cover the cost of groceries. The program has had record numbers of recipients every month this year, with one in every eight Americans (more than 36 million) currently receiving food stamps.

UNEMPLOYMENT: The October jobless figures showed 10.2 percent unemployment and 17.5 percent underemployment for American workers. Unemployment for African-American workers stood at 17.1 percent. The Washington Post reported recently that unemployment for 16-to-24-year-old African-American men “had reached Great Depression proportions – 34.5 percent in October.” Young black women had a 26.5 percent jobless rate.

New York Times columnist Bob Herbert reported in August that research by the Center for Labor Market Studies at Northeastern University in Boston had found that the percentage of American men under 35 who are actually working “is the lowest it has been in the 61 years of record-keeping.”

HOMELESSNESS: Although accurate homeless figures are difficult to compile, individual cities and advocates for the homeless report an upsurge in homelessness over the last year. One organization estimated that over the course of a year some 3 million people nationwide are homeless at one time or another. In Los Angeles, the fastest growing segment of the homeless population is families with children, with some 17,000 parents and children reportedly homeless in that city on any given night.

FORECLOSURES: CNNMoney.com reported in mid-October that the number of foreclosure filings hit a record high of 937,840 homes in the third quarter, according to a report by RealtyTrac, an online marketer of foreclosed homes. RealtyTrac called the just-ended three-month period “the worst three months of all time" for foreclosures. So far this year, lenders have taken back 623,852 homes.

BANKRUPTCIES: Some 1.4 million bankruptcies are projected to be filed by the end of this year, up from the 1.1 million filed in 2008, according to the American Bankruptcy Institute (ABI). There were 135,913 consumer bankruptcy filings in October, an 8.9 percent increase over the September filings, and a 27.9 percent increase over October 2008, the ABI reported.

HEALTH INSURANCE: The U.S. Census Bureau in September reported 46.3 million Americans lacked health insurance in 2008, compared to 45.7 million in 2007, with the poor and unemployed highly represented in the categories of uninsured and underinsured.

Sachs noted in his Scientific American article last March that government spending and tax policy affect the distribution of income “across different income classes at a point of time, and across generations.” Needless to say, these spending and tax policies do not benefit the poor and also squeeze the near-poor and middle class. Sachs has attributed this widening income disparity and favoritism of the government toward the super-rich to “the ruthless penetration of big money into national politics.”

As a result of these policies, Sachs wrote, “America ranks 22nd out of 23 high-income countries in public social outlays as a percent of national income (ahead only of Ireland), for health, pensions, income support, and other social services.”

How pronounced is inequality in the United States today? History Professor Tony Judt, director of the Remarque Institute at New York University and author of several books including “Postwar: A History of Europe Since 1945,” characterized it this way in the December 17, 2009, issue of The New York Review of Books:

“In the U.S. today, the ‘Gini coefficient’ – a measure of the distance separating rich and poor – is comparable to that of China. When we consider that China is a developing country where huge gaps will inevitably open up between the wealthy few and the impoverished many, the fact that here in the U.S. we have a similar inequality coefficient says much about how far we have fallen behind our earlier aspirations [of a more equal society].”

A zero Gini rating would indicate a society in which everyone had equal income, while a score of 100 would indicate absolute inequality. The higher the number the more unequal the society. The most recent figures for the United States and China, as compiled by the United Nations and the Central Intelligence Agency, were 45.0 and 46.9, respectively. Iraq was at 42. U.S. neighbors Cuba, Canada and Mexico were 30, 32.1 and 46.1, respectively. The countries with the most equitable income distribution were mainly social-welfare or mixed economy countries with Sweden at 23, Denmark 24, Iceland 25, Luxembourg and Bosnia-Herzegovina at 26, and Norway, Germany and France at 28. The United Kingdom was at 34. The most unequal societies were Namibia 70.2, Equatorial Guinea 65, Lesotho 63.2, Sierra Leone 62.9, Angola 62, Central African Republic 61.3, Afghanistan and Gabon 60.

The Economist magazine reported in October 2009 that the richest 1 percent of Americans in 2007 “increased their share of the country’s income to 23 percent,” according to analyses of tax returns by economists Emmanuel Saez and Thomas Piketty. This marked the highest level since 1928 of the concentration of income earned by the top 1 percent. The article added that two-thirds “of the country’s total gains in the five years to 2007 accrued to the top 1 percent, whereas the bottom 90th percentile saw only 12 percent of the extra income.”

To reduce U.S. income inequality and poverty, Sachs said it is vital to increase the U.S. tax base. Tax collections have remained steady at 17 percent of the gross national product (GNP) for the last 15 years. State and local government spending has increased some as a percentage of GNP, but when you add federal, state and local spending together you get a figure of 30 percent of GNP. In the social-welfare countries of Europe, the figure is between 45 and 50 percent, he said.

“The gap between the United States and Europe is of great significance,” Sachs said, “because, unlike those European countries, this country has crumbling infrastructure, increasing numbers of children living in poverty, a deteriorating education system with alarming dropout rates, an inability to face up to climate change...”

Sachs said the biggest single difference between the United States and the social-welfare countries is our tax systems.

“Europe has had a value added tax (VAT) since 1970, and my own recommendation is that the United States adopt this tax to raise our level of government spending by several percentage points of GNP,” Sachs told Nieman Watchdog. By doing so, “we will be able to spend more on job training for the poor, education, climate change, contributions to international development, paying down the debt” and other problems that the country is not dealing with adequately. “I don’t see how we can close the inequality gap without a value added tax,” Sachs said.

A value added tax is like a sales tax on goods and services, but with the difference that the tax is calculated at each step of production and distribution, so it becomes “embedded” in the final price of the goods paid by a consumer, rather than added on at the time of purchase.

Sachs, a self-described liberal, noted that a VAT also has the support of some conservative “deficit hawks” such as Peter G. Peterson, the Commerce Secretary under President Nixon and cofounder of the private equity firm, the Blackstone Group, who regularly calls for reining in Medicare and Social Security costs. On the more liberal side, House Speaker Nancy Pelosi (D-California) in October declared a VAT would be “on the table” as part of a future discussion of a larger revamping of the tax code after the health insurance debate is resolved.

In a report focused on U.S. national debt-to-gross-domestic-product ratio issued in September, the moderate Brookings Institution said that a VAT of 15-20 percent may be needed to help close the national fiscal debt.

On the conservative side, Forbes.com columnist Bruce Bartlett wrote in October in support of a VAT, saying that if the United States adopted Europe’s average VAT rate of 20 percent, “we could raise $1 trillion per year in U.S. dollars.” Bartlett clearly does not have the same social program spending goals as Sachs, as Bartlett sees the VAT as a possible replacement for the corporate tax. Anticipating objections to the VAT as being a regressive tax, Bartlett said food could be taxed at a lower rate or exempted, “while higher rates may apply to goods thought to be consumed primarily by the rich.”

(Progressive economists Dean Baker of the Center for Economic and Policy Research and New York Times columnist Paul Krugman favor instead a financial transactions tax. Baker said a tax of 0.25 percent on stocks, futures, and credit default swaps would produce $140 billion annually, about one percent of GDP.)

In addition to a VAT to produce more revenues, Sachs favors deep cuts in the military budget to increase development assistance to impoverished countries, as well as boost spending for a variety of underfunded domestic programs. As a critic of U.S. wars in Iraq and Afghanistan, Sachs called for withdrawing all U.S. troops from those two countries for $150 billion-$200 billion in savings, while slashing another $100 billion from spending for nuclear weapons development and unnecessary weapons systems.

Sachs said the social-welfare countries of Sweden, Norway and Denmark offer many positive examples for the United States to emulate to deal with our growing poverty problem. Those countries, he said, are not only good at providing generous health care and other social insurance programs, but also have systems of government that emphasize “public values” and a sense of shared citizenship embodying a deeply-held belief that no citizen should be left behind.

In his 2008 book “Common Wealth: Economics for A Crowded Planet,” Sachs presented a host of statistics and examples that show in virtually every category social-welfare countries are far better than mixed economy countries – and both kinds of countries are far better than free-market countries such as the United States – “in reducing poverty and inequality and in promoting health and prosperity,” as well as fostering a greater degree of social harmony and confidence in public institutions. Poverty at the time of the book’s 2008 publication stood at 5.6% of the population in social-welfare countries, and at 9 percent in mixed economies, far below the aforementioned U.S. poverty rate of 13.2 percent.

Sachs acknowledged that a new tax and increased funding for social programs with the aim of reducing poverty will be a tough sell because, “We’re stuck in this country in a sterile discussion led by ideologues who yell that we’re ‘turning socialist’.”

With the debate at this level largely framed by right-wing politicians and broadcasters, majority party Democratic leaders today shy away from discussing U.S. poverty and inequality, or calling for programs that smack of the New Deal or the Great Society. But, Sachs said, the press can help change the terms of debate by focusing on the tragic human stories of U.S. poverty and showing the great successes European social-welfare countries and others have had in limiting poverty.

In “Common Wealth,” Sachs wrote that U.S. policies pursue “a constricted notion of social insurance,” thereby fostering “a society of fear and vulnerability” that causes mainstream Americans to “feel increasingly unnerved by widening income inequality.” Americans need to be informed, Sachs said, that the United States “does not have to accept continued high rates of poverty as the price to pay for a vibrant market economy, since social insurance can be combined with a high-productivity market economy.”

Tuesday, December 1, 2009

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Poverty in the US, via John Hanrahhan

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