Jobs, Economics

OpEdNews - Article: Killing the Competition

2010-04-25T14:24:00.000-07:00

OpEdNews - Article: Killing the Competition

Golly, whatever happened to America's good ol', bold-and-brassy, can-do competitive drive?

To see a troubling sign for our nation's famed, free-enterprise frontier spirit, sneak a peek at the downward flight path of America's major airlines. These corporations have become no-can-do, anti-competition behemoths, whining that there are too many airlines, too many planes, too much competition.

"It's a jungle out there," wail top executives of the airlines. So, to enhance their "competitiveness," they are urging a rash of mergers that would consolidate the industry into fewer and even bigger corporations. Yes, in their alternate (and perverse) universe, airline CEOs say that the only way they can compete is to ... well, have less competition!

"The industry needs to evolve into a more rational structure," asserts a top official at American Airlines. "We have an industry that is too fragmented, with too many competitors and with different ideas of capacity, pricing and strategic activity."

Hmmm. Where have we heard that before? Oh yes, from Adam Smith, the 18th century Scotish economist who is considered a founding guru of the free enterprise system. The notion of "many competitors ... with different ideas of capacity, pricing and strategic activity" is precisely what Smith hailed as the proper model for free enterprise.

But the competitiveness that Smith celebrated as beneficial to society is what today's timorous airline leaders see as an irritating barrier that they simply can't hurdle. Better just to lower the competitive hurdle. As the former chairman of Continental Airlines put it: "I mean, do we really need 19 domestic airlines in the United States? I think three or four network airlines would still give you plenty of competition."

Plenty? What he and other executives mean by "a more rational structure" is one that allows a small club of gentlemen to divvy up the market, cut flights and raise ticket prices in unison -- without being challenged by pesky rivals. ...

Arianna Huffington: Guns vs. Butter 2010

2010-04-23T06:17:00.000-07:00

Arianna Huffington: Guns vs. Butter 2010

See if you can identify the bleeding heart liberal who said this:

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children."

Noam Chomsky? Michael Moore? Bernie Sanders?

Nope, it was that unrepentant lefty, five-star general Dwight Eisenhower, in 1953, just a few months after taking office -- a time when the economy was booming and unemployment was 2.7 percent.

Yet today, while America's economy sputters down the road to recovery and the middle class struggles to make ends meet -- with over 26 million people unemployed or underemployed and record numbers of homes being lost to foreclosure -- the "guns vs. butter" argument isn't even part of the national debate. Of course, today, the argument might be more accurately framed as "ICBM nukes, Predator drones, and missile defense shields vs. jobs, affordable college, decent schools, foreclosure prevention, and fixing the gaping holes in our social safety net."

We hear endless talk in Washington about belt-tightening and deficit reduction, but hardly a word about whether the $161 billion being spent this year to fight unnecessary wars of choice in Afghanistan and Iraq might be better spent helping embattled Americans here at home.

Indeed, during his State of the Union speech in January, President Obama proposed freezing all discretionary government spending for three years -- but exempted military spending, even though the defense budget has ballooned over the last ten years. According to defense analyst Lawrence Korb, who served as Assistant Secretary of Defense in the Reagan administration, the baseline defense budget has increased by 50 percent since 2000. Over that same period, non-defense discretionary spending increased less than half that much. ...

6 Myths About Poverty in America, Debunked - Democratic Underground

2010-04-21T05:26:00.000-07:00

6 Myths About Poverty in America, Debunked - Democratic Underground

...

For economists, policymakers, researchers and the like, the OECD is a goldmine of reliable information. It constantly collects data on every aspect of its member countries, developing comprehensive "factbooks" for public review. Using data from the 2009 Factbook, let's examine some of the common myths perpetuated, most often by conservatives, about poverty in America.

#1: The United States has one of the lowest poverty rates in the industrialized world.
Nope, sorry. At about 17 percent, the U.S. actually has the third-highest poverty rate of all the OECD countries, coming in only slightly ahead of Turkey and Mexico. Denmark boasts the lowest poverty rate, an inspiring five percent.

#2: Income inequality isn't a big problem in America.
Incorrect. Unfortunately, the U.S. still has above-average income inequality, joining the likes of Poland, Portugal, and, once again, Mexico and Turkey. Is this any surprise? After all, in 2006, CEOs of large U.S. companies made more money in a day than average American workers made throughout the year.

#3: Due to our exquisite health system, Americans live longer than residents of other countries.
Wrong, once again. The average life span of an American is below the OECD average, right above the Czech Republic. Of course, rich Americans can still expect to live to ripe old ages; an average wealthy white woman, for example, will enjoy 81.1 years of life. The average life expectancy for her poor, black, male counterpart, on the other hand, is only 66.9 years.

#4: Okay, well, due to our exquisite health system, the U.S. has a lower infant mortality rate than other countries.
No. In fact, out of all the OECD countries, we rank third to last in terms of infant mortality. But at least we get to hang out with our good friends, Mexico and Turkey, who once again join us at the losers' table.

#5: At least Americans don't have to spend as much money on health care as people from other countries ... right?
The truth is quite the opposite. Americans spend substantially more on their health than people from any other OECD country. Over 15 percent of the national GDP is spent on health care; Switzerland, the closest contender for most money spent on health care, only comes in at 11 percent.

#6: The U.S. spends more money on helping the poor than any other industrialized nation.
This is perhaps the biggest myth of all. At about 16 percent, the United States ranks fourth to last in public social expenditures as a percentage of GDP, beating only Turkey, Mexico and Korea. On the other end of the spectrum, Sweden spends about 29 percent of its GDP on public social expenditures.

� The Financial Terrorists Who Destroyed Our Economy Will Pay Zero in Taxes and Get $33 Billion in Refunds�� : Information Clearing House -� ICH

2010-04-20T21:43:00.000-07:00

� The Financial Terrorists Who Destroyed Our Economy Will Pay Zero in Taxes and Get $33 Billion in Refunds�� : Information Clearing House -� ICH

You and I are working our asses off, paying 30% of our limited income in taxes. Not the banks that triggered the financial crisis.

By David DeGraw

Journalist David DeGraw has put together a devastating report detailing how Wall Street continues to pillage the economy with the government's help. "The staggering level of theft continues unabated," writes DeGraw. "Our future is going up in flames and our government isn’t even making the slightest effort to put out the fire. In fact, they are purposely pouring gasoline all over it." DeGraw's investigation is a follow up to his previous report The Economic Elite Vs. The People of the United States of America

April 19, 2010 "Amped Status" -- The first thing people need to understand is that the economic crash wasn’t a crash for the people who caused it. In fact, these financial terrorists are now doing better than ever. In a recent report, titled “Social Inequality in America: Widening Income Disparities,” more evidence of the unprecedented transfer of wealth was revealed:

“As of late 2009, the number of billionaires soared from 793 to 1,011, and their total fortunes from $2.4 trillion to $3.6 trillion…. Despite the crisis, the list of billionaires has grown by 218 people and their aggregate capital has expanded by 50%. This may seem paradoxical, but only at first glance. This result was predictable, if we recall how governments all over the world have dealt with the economic crisis.”

The inequality of wealth in the United States between the economic top 0.5% and the remaining 99.5% of the population is now at an all-time high. The economic top 1% of the population now controls a record 70% of all financial assets. The point here is that while the economic crisis has been devastating for 99% of America, the Wall Street elite are awash in record breaking profits. The most profitable firm in Wall Street history, Goldman Sachs, just had their most profitable quarter in their 140-year history and Wall Street firms issued an all-time record breaking amount in bonuses.

All of this is occurring after giving these firms $14 TRILLION in taxpayer support - that works out to be $46,662 of your hard-earned money. That’s $46,662 for every man, woman and child in this country. If you have a family of four, sorry, your future just got robbed and you and your children just lost $186,648!

So what are all these firms doing with these record-breaking profits? Are they returning them into the tax system in which they came from, the tax system that was looted just to keep their scam running?

No!

Let’s start with Wells Fargo. After being bailed out with our money in 2008, their top five executives DOUBLED their compensation and each one of them made over $11 million in 2009. Wells Fargo CEO John Stumpf made off with a cool $21.3 million last year.

And now comes news that Bank of America and Wells Fargo will pay zero, yes ZERO in federal taxes for 2009. Bank of America will net a $3.6 BILLION benefit from the federal government in 2009. Wells Fargo, after $8 BILLION in earnings for 2009, will net $4 BILLION from the federal government.

So you and I are working our asses off just to make ends meet, paying 30% of our limited income in taxes, and gizillionaire John Stumpf’s company is paying ZERO in taxes so that he can personally swipe another $21.3 million of tax payer funds.

Al Capone is a dime store thief compared to this guy!

Well, to be fair, Mr. Stumpf is just a small-timer himself in this all-time greatest heist.

JP Morgan Chase made $12 BILLION in profit in 2009, as a direct result of our tax money - yes, I need to keep repeating this fact. These are profits that would not exist if it weren’t for our tax dollars.

It’s also important to point out that this is just the level of theft that has already occurred. However, as I also can’t stress enough, the theft still continues without any let-up.

Now comes news that JP Morgan is on the verge of getting a $1.4 BILLION tax refund! Yes, you heard me right, a $1.4 BILLION TAX REFUND. But JP is not alone in this latest theft. In total, the financial terrorists are due to receive $33 BILLION IN TAX REFUNDS!

Do you comprehend how depraved it is to give these people another $33 billion in tax refunds? I assume that they’re thinking that after stealing $14 TRILLION, another $33 billion really isn’t all that much. After all, last year, Goldman Sachs, the most profitable firm Wall Street history, only paid 1% in taxes, so what’s another $33 billion kickback among friends? ...

The National Interest

2010-04-20T21:40:00.000-07:00

The National Interest | Bankrupt Empire
by Doug Bandow | 04.19.2010

...

Unfortunately, a hyperactive foreign policy requires a big military. America accounts for roughly half of global military outlays. In real terms Washington spends more on “defense” today than it during the Cold War, Korean War and Vietnam War.

U.S. military expenditures are extraordinary by any measure. My Cato Institute colleagues Chris Preble and Charles Zakaib recently compared American and European military outlays. U.S. expenditures have been trending upward and now approach five percent of GDP. In contrast, European outlays have consistently fallen as a percentage of GDP, to an average of less than two percent.

The difference is even starker when comparing per capita GDP military expenditures. The U.S. is around $2,200. Most European states fall well below $1,000. Adding in non-Pentagon defense spending—Homeland Security, Veterans Affairs, and Department of Energy (nuclear weapons)—yields American military outlays of $835.1 billion in 2008, which represented 5.9 percent of GDP and $2,700 per capita.

...

The current national debt is $12.7 trillion. The Congressional Budget Office figures that current policy—unrealistically assuming no new spending increases—will run up $10 trillion in deficits over the coming decade. But more spending—a lot more spending—is on the way.

Fannie Mae and Freddie Mac remain as active as ever, underwriting $5.4 trillion worth of mortgages while running up additional losses. The Federal Housing Administration’s portfolio of insured mortgages continues to rise along with defaults. Exposure for Ginnie Mae, which issues guaranteed mortgage-backed securities, also is jumping skyward. The FDIC shut down a record 140 banks last year and is running low on cash. Last year the Pension Benefit Guaranty Corporation figured its fund was running a $34 billion deficit. Federal pensions are underfunded by $1 trillion. State and local retirement funds are short about $3 trillion.

Outlays for the Iraq war will persist decades after the troops return as the government cares for seriously injured military personnel; total expenditures will hit $2 trillion or more. Extending and expanding the war in Afghanistan will further bloat federal outlays.

Worst of all, last year the combined Social Security/Medicare unfunded liability was estimated to be $107 trillion. Social Security, originally expected to go negative in 2016, will spend more than it collects this year, and the “trust fund” is an accounting fiction. Medicaid, a joint federal-state program, also is breaking budgets. At their current growth rate, CBO says that by 2050 these three programs alone will consume virtually the entire federal budget. ...

TaxVox: the Tax Policy Center blog :: About Those 47 Percent Who Pay “No Taxes.”

2010-04-20T21:26:00.000-07:00

TaxVox: the Tax Policy Center blog :: About Those 47 Percent Who Pay “No Taxes.”

by Howard Gleckman on Thu 15 Apr 2010 04:44 PM EDT | Permanent Link

Last June, my colleague Bob Williams posted a TaxVox article that reported 47 percent of American households paid no federal income tax in 2009. Bob was exactly right, but rarely has a bit of data been so misunderstood, or so misused.

Let me explain—repeat actually—what this means: About half of taxpayers paid nofederal income tax last year. It does not mean they paid no tax at all. Many shelled out Social Security and Medicare payroll taxes. In fact, only 14 percent of Americans didn’t pay either income or payroll taxes. Some paid property taxes and, it is fair to say, just about all of them paid sales taxes of one kind or another. So to say they pay no taxes is flat wrong.

However, this class warfare-like rhetoric plays to a perception that the income tax is a chump tax: Only hard-working folks like us pay it. The welfare queens don’t. The super-rich don’t. It is a powerful emotional argument. It is also flat wrong.

So who are these folks who pay no federal income taxes? Mostly, they are people who don’t make very much money. Many are elderly: Think a widow living only on Social Security benefits. Others are parents earning less than $20,000. Only about 5 percent are non-elderly households making more than $20,000.

It is no accident, btw, that the number of people not paying income tax was so high in 2009. You may have noticed that we’ve had a recession lately. And here is a powerful insight: When people’s incomes decline so too does their income tax (at least most of the time). At the same time, many working families have benefited from temporary tax cuts aimed at boosting the economy, and as a result some did not pay income taxes last year. As the economy improves and those tax cuts expire, it should also be no surprise that the share of people who don't pay income taxes will likely shrink from half last year to less than 40 percent by 2012.

There is, however, another reason why some people don’t pay. For decades, both Democratic and Republican governments have made conscious policy decisions to remove low-income working families from the income tax rolls. And, guess what, sometimes government policy works exactly as intended. That’s what happened this time. ...

A Greater Threat Than Terrorism | Outsourcing the American Economy

2010-04-19T21:57:00.000-07:00

�� : Information Clearing House -� ICHA Greater Threat Than Terrorism | Outsourcing the American Economy| By Paul Craig Roberts

April 18, 2010 -- Is offshore outsourcing good or harmful for America? To convince Americans of outsourcing's benefits, corporate outsourcers sponsor misleading one-sided "studies."

Only a small handful of people have looked objectively at the issue. These few and the large number of Americans whose careers have been destroyed by outsourcing have a different view of outsourcing's impact. But so far there has been no debate, just a shouting down of skeptics as "protectionists."

Now comes an important new book, Outsourcing America, published by the American Management Association. The authors, two brothers, Ron and Anil Hira, are experts on the subject. One is a professor at the Rochester Institute of Technology, and the other is professor at Simon Fraser University.

The authors note that despite the enormity of the stakes for all Americans, a state of denial exists among policymakers and outsourcing's corporate champions about the adverse effects on the US. The Hira brothers succeed in their task of interjecting harsh reality where delusion has ruled.

In what might be an underestimate, a University of California study concludes that 14 million white-collar jobs are vulnerable to being outsourced offshore. These are not only call-center operators, customer service and back-office jobs, but also information technology, accounting, architecture, advanced engineering design, news reporting, stock analysis, and medical and legal services. The authors note that these are the jobs of the American Dream, the jobs of upward mobility that generate the bulk of the tax revenues that fund our education, health, infrastructure, and social security systems.

The loss of these jobs "is fool's gold for companies." Corporate America's short-term mentality, stemming from bonuses tied to quarterly results, is causing US companies to lose not only their best employees-their human capital-but also the consumers who buy their products. Employees displaced by foreigners and left unemployed or in lower paid work have a reduced presence in the consumer market. They provide fewer retirement savings for new investment.

Nothink economists assume that new, better jobs are on the way for displaced Americans, but no economists can identify these jobs. The authors point out that "the track record for the re-employment of displaced US workers is abysmal: "The Department of Labor reports that more than one in three workers who are displaced remains unemployed, and many of those who are lucky enough to find jobs take major pay cuts. Many former manufacturing workers who were displaced a decade ago because of manufacturing that went offshore took training courses and found jobs in the information technology sector. They are now facing the unenviable situation of having their second career disappear overseas."

American economists are so inattentive to outsourcing's perils that they fail to realize that the same incentive that leads to the outsourcing of one tradable good or service holds for all tradable goods and services. In the 21st century the US economy has only been able to create jobs in nontradable domestic services-the hallmark of a third world labor force.

Prior to the advent of offshore outsourcing, US employees were shielded against low wage foreign labor. Americans worked with more capital and better technology, and their higher productivity protected their higher wages.

Outsourcing forces Americans to "compete head-to-head with foreign workers" by "undermining US workers' primary competitive advantage over foreign workers: their physical presence in the US" and "by providing those overseas workers with the same technologies."

The result is a lose-lose situation for American employees, American businesses, and the American government. Outsourcing has brought about record unemployment in engineering fields and a major drop in university enrollments in technical and scientific disciplines. Even many of the remaining jobs are being filled by lower paid foreigners brought in on H-1b and L-1 visas. American employees are discharged after being forced to train their foreign replacements.

US corporations justify their offshore operations as essential to gain a foothold in emerging Asian markets. The Hira brothers believe this is self-delusion. "There is no evidence that they will be able to outcompete local Chinese and Indian companies, who are very rapidly assimilating the technology and know-how from the local US plants. In fact, studies show that Indian IT companies have been consistently outcompeting their US counterparts, even in US markets. Thus, it is time for CEOs to start thinking about whether they are fine with their own jobs being outsourced as well."

The authors note that the national security implications of outsourcing "have been largely ignored." ...

Social mobility and inequality: Upper bound | The Economist

2010-04-19T10:30:00.000-07:00

Social mobility and inequality: Upper bound | The Economist

...

... In early 2009, hardly a sunny period, 71% still agreed that hard work and personal skill are the main ingredients for success. A high degree of social mobility has always defined American culture, from the work of Alexis de Tocqueville and Horatio Alger to the remarkable story of Barack Obama himself.As the country recovers, two problems cloud its future. Rates of social mobility are unlikely to grow. Inequality, however, may widen even further.

These trends have been building up for years. In 1963 John Kennedy declared that a rising tide lifts all boats. Indeed, in 1963 this was true. Between 1947 and 1973, the typical American family’s income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age, according to Pew’s Economic Mobility Project. This has been blamed on everything from immigration to trade to declining rates of unionisation. But the driving factor, most economists agree, has been technological change and the consequent lowering of demand for middle-skilled workers.

The most highly skilled, meanwhile, have stuffed their pockets happily. Between 1970 and 2008 the Gini coefficient, a measure of income inequality, grew from 0.39 to 0.47. In mid-2008 the typical family’s income was lower than it had been in 2000. The richest 10% earned nearly half of all income, surpassing even their share in 1928, the year before the Great Crash.

Compared with people in other rich countries, Americans tend to accept relatively high levels of income inequality because they believe they may move up over time. The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.

Parental income is a better predictor of a child’s future in America than in much of Europe, implying that social mobility is less powerful. Different groups of Americans have different levels of opportunity. Those born to the middle class have about an equal chance of moving up or down the income ladder, according to the Economic Mobility Project. But those born to black middle-class families are much more likely than their white counterparts to fall in rank. The children of the rich and poor, meanwhile, are less mobile than the middle class’s. More than 40% of those Americans born in the bottom quintile remain stuck there as adults.

Family background is not insurmountable, explain Isabel Sawhill and Ron Haskins of the Brookings Institution. In particular, earning a degree and marrying before having children can help someone climb to a higher rung. However, family background influences the likelihood of education and marriage (see article).

How rising inequality affects social mobility is still unclear. Those born since inequality started to rise sharply are only just now becoming adults. However there are some troubling signs according to two papers to be presented at the Tobin Project, an alliance of scholars, this month. Christopher Jencks of Harvard University finds that income inequality has been accompanied by a widening gap in college attendance. Ms Sawhill argues that a rising correlation between income levels, likelihood of marriage and level of education will make society more stagnant.

The recession, meanwhile, may have exacerbated trends in inequality. The capital markets, points out Timothy Smeeding of the University of Wisconsin, have recovered more quickly than the housing or labour markets. This is troubling for the poor and the middle class, since homes represent a greater share of their wealth. Unemployment has been concentrated in America’s lower ranks. As the rich recover, poor and middle-class people may lag behind. Young workers may fare badly, too. Those who graduate in recessions have lower incomes in the long term, according to Lisa Kahn of Yale University.

...

But the reality for most Americans is becoming more complicated. The recession came at the end of a period marked by record levels of inequality. ...

Why We Need To Revive American Manufacturing | OurFuture.org

2010-04-16T21:17:00.000-07:00

Why We Need To Revive American Manufacturing | OurFuture.org

Manufacturing jobs are the foundation of our economy. Manufacturing creates the goods that bring in the income that supports the service economy. We can’t just cut each other’s hair and sell each other hamburgers; the income to pay for those haircuts and burgers has to come from somewhere.

For more than three decades, we have been shedding factories and manufacturing jobs—as well as the suppliers, contractors, shippers, trainers, managers and other jobs that go along with them. Between 1970 and 2009, according to the Bureau of Labor Statistics, goods-producing jobs in America shrank from 39 percent of the private-sector workforce to 17 percent (a decline of more than 54 percent). Since 2000, we've lost one in three manufacturing jobs.

This has coincided with an increase in the share of Wall Street's portion of the economy, as we've sold off our manufacturing infrastructure and converted our goods economy into a paper (and debt) economy. In 2007, 40 percent of America’s corporate profits came from the financial sector. Meanwhile, we've had to sharply increase our borrowing to pay for things made elsewhere.

Middle-class workers have been the big losers. The service-sector jobs that replaced the manufacturing jobs that disappeared have an average weekly wage of $610, compared with $810 in the goods-producing sector, even when you include high-end professionals such as doctors, lawyers, and investment brokers. The disappearance of solid manufacturing jobs is a major reason why between 2000 and 2009 median household incomes dropped 4 percent.

At the same time, we've shortchanged our investment in our infrastructure and public facilities—from roads and bridges to water mains—as well as our people. According to the American Society of Civil Engineers, we need to spend $2.2 trillion during the next five years to restore our infrastructure—such as the one in four bridges that are today “structurally deficient or functionally obsolete—to just to minimal standards.

The result is that we are falling behind in the global economic race as other nations pass us in building the education systems, transportation networks and energy grids of a 21st-century economy. ...

Op-Ed Columnist - Dealing With a Recession That’s ‘a Different Creature’ - NYTimes.com

2010-04-14T11:12:00.000-07:00

Op-Ed Columnist - Dealing With a Recession That’s ‘a Different Creature’ - NYTimes.com

...

Ms. Pelosi acknowledged that “there is always a calibration” between concerns about deficit reduction and the spending that is necessary to substantially reduce unemployment. But she believes there are several fronts on which Congress and the Obama administration can — in fact, must — still move forward: on infrastructure and green energy initiatives, for example, and assistance to states hobbled with fiscal crises of their own.

The crippling nature of the joblessness that has moved through the society like a devastating virus has gotten neither the attention nor the response that it warrants. One of the more striking findings of the Pew study was that a college education has not been much of a defense against long-term unemployment.

“Twenty-one percent of unemployed workers with a bachelor’s degree have been without work for a year or longer,” the report found, “compared to 27 percent of unemployed high school graduates and 23 percent of unemployed high school dropouts.”

Whole segments of the U.S. population are being left behind, even as economists are touting modest improvements in some categories of economic data, like the creation of 162,000 jobs in March. Jobless workers who are 55 or older are having a brutal time of it. Thirty percent have been jobless for a year or more.

Blue-collar workers are suffering through a crisis characterized as a “depression” by the Center for Labor Market Studies at Northeastern University in Boston. Blue-collar job losses during the so-called Great Recession surpassed 5.5 million, and many of those jobs will never be seen again. This disastrous situation will not be corrected, as analysts at the center have noted, “by a modest recovery of the U.S. economy over the next few years.”

We need to pay less attention to the Tea Party yahoos and more attention to the very real suffering of individuals and families trapped in an employment crisis that is unprecedented in the post-Depression era. I’ve been in inner-city neighborhoods where residents will tell you that hardly anyone at all is working at a regular job.

The recession only worsened an employment picture that was already bleak. In a speech at the Harvard Kennedy School last week, the A.F.L.-C.I.O. President Richard Trumka spoke movingly about Americans “trying to hold on to a good job in a grim game of musical chairs where every time the music stopped, there were fewer good jobs and more people trying to get and keep one.”

More than eight million jobs vanished during the recession, a period during which three million new jobs would have been needed to keep up with the growth of the population. “That’s 11 million missing jobs,” said Mr. Trumka.

Right now there is no plan that can even remotely be expected to result in job creation strong enough to rescue the hard-core groups being left behind. These include: long-term unemployed workers who are older; blue-collar workers of all ages; and younger people in the big cities, in the rust belt and in rural areas who are jobless and not well educated.

It is not possible to put together a thriving, self-sustaining economy while so many are being left out. As Mr. Trumka noted, “President Obama’s economic recovery program has done a lot of good for working people — creating or saving more than two million jobs. But the reality is that two million jobs is just 18 percent of the hole in our labor market.” ...

Economist's View: Taxes over Time

2010-04-14T11:09:00.000-07:00

Economist's View: Taxes over Time

As the deficit hawks begin to make noise, this is worth remembering:

Taxing the Rich, Over Time, by David Leonhardt, Economix: My column this week notes that tax rates on the affluent have fallen more in recent decades than tax rates on other groups. Here are the details...
This chart, which goes through 2004, tells the story in graphical terms. ...

If we had good numbers on the distribution of state and local taxes, the picture would be even more pronounced. These taxes tend to be less progressive than federal taxes, in part because sales taxes are a larger part of state and local revenue. ...

With all this being said, it is also true — as you often hear — that the wealthy are paying more in taxes than they used to. ... So what’s the full story? In brief, tax rates for the wealthy have fallen more than for other income groups. Tax rates for the very wealthy have fallen more than they have for the merely wealthy. Incomes at the top have also increased much more quickly than incomes have for other groups. ...

Your Tax Dollars at War: More Than 53% of Your Tax Payment Goes to the Military | CommonDreams.org

2010-04-13T15:14:00.000-07:00

Your Tax Dollars at War: More Than 53% of Your Tax Payment Goes to the Military | CommonDreams.org

...

That figure includes the Pentagon budget request of $708 billion, plus an estimated $200 billion in supplemental funding, called "overseas contingency funding" in euphemistic White House-speak), to fund the wars in Afghanistan and Iraq, some $40 billion or more in "black box" intelligence agency funding, $94 billion in non-DOD military spending, $100 billion in veterans benefits and health care spending, and $400 billion in interest on debt raised to pay for prior wars and the standing military.

The 2011 military budget, by the way, is the largest in history, not just in actual dollars, but in inflation adjusted dollars, exceeding even the spending in World War II, when the nation was on an all-out military footing.

Military spending in all its myriad forms works out to represent 53.3% of total US federal spending.

It's also a budget that is rising at a faster pace than any other part of the budget (with the possible exception of bailing out crooked Wall Street financial firms and their managers). For the past decade, and continuing under the present administration, military budgets have been rising at a 9% annual clip, making health care inflation look tiny by comparison.

US military spending isn't just half of the US budget. It is also half of the entire global spending on war and weaponry. In 2009, according to the venerable War Resisters League, US military spending accounted for 47% of all money spent globally on war, weapons and military preparedness. What makes that staggering figure particularly ridiculous is that America's allies--countries like France, Britain, Germany, Italy, and Japan--account for another 21% of the world's military spending. Fully 12 of the top-spenders among big military-spending nations are either allies of the US, or are friendly countries like Brazil and India. That is to say, America and its friends and allies account for more than two-thirds of all military spending worldwide.

...

The Tax Clock Is Ticking | CommonDreams.org

2010-04-13T15:01:00.000-07:00

The Tax Clock Is Ticking | CommonDreams.org

...

Lapham points to a report by Citizens for Tax Justice that shows half of the Bush tax cuts went to the top 5% of income-earners, while the bottom 60% got less than 15% of the Bush tax cuts. That little gift to the rich translates into an estimated $2.5 trillion.

Looking to reverse course, Responsible Wealth members "recognize that their own prosperity and success would not be possible without the foundation of a strong public education system, an effective transportation network, a strong legal system and more," Lapham notes.

"Those are the kinds of foundational building blocks that we get through our tax system. Responsible Wealth members are more than happy to pay their share to support those public investments that they have benefited so greatly from."

Of course, whenever the case for raising taxes on the wealthy is made, the response -- even from the "liberal" media -- is predictably derisive.

After a telephone press conference last week, Dana Milbank, writing for The Washington Post, offered this straw-man sarcasm:

"Of course, if millionaires really want to pay higher taxes, there's nothing stopping them. The Treasury Department Web site even accepts contributions by credit card to pay the public debt. There's also nothing to stop the millionaires from paying the tax obligations of, say, Washington Post columnists. But then they wouldn't have the satisfaction of giving their tax-cut proceeds to the pro-tax movement."

Thankfully, The Economist rhetorically slapped Milbank upside his head for making such an embarrasing nonsensical argument.

"Taxes are not charity. It would be a bad idea for wealthy people (to) contribute large amounts of money voluntarily to reduce the national debt. The first, less important reason for this is that any individual's contributions would be meaninglessly small;" to say nothing about the "invitation to free-riding" it would create.

"Government spending is collective spending, and the taxes we pay for it are collective taxes. Like it or not, this is collective action, and the arguments we have about it have to be collective as well. It is perfectly legitimate to argue that we should be spending less on various things, or that the kind of taxes being proposed to pay for our spending are unfair or more economically damaging than some other kind of tax. But you have to make that argument at the level of what we should do as a country." ...

...

The poll results were released in conjunction with a Wealth for the Common Good study that details how tax breaks over the past 50 years have gone mostly to the affluent. The study also notes that by simply allowing the Bush tax cuts to expire it would generate about $450 billion in revenue.

Some will call this class warfare. And they're right, just like Warren Buffet said. "There's class warfare, all right," the celebrated billionaire noted, "but it's my class, the rich class, that's making war, and we're winning." ...

Economist's View: "What's Up With the Young Folks?"

2010-04-13T14:59:00.000-07:00

Economist's View: "What's Up With the Young Folks?"

What explains declining labor force participation of teens over the last decade? Any ideas beyond those given below?:

What's up with the young folks?, by John Robertson, macroblog: ...One important element in interpreting unemployment data is the trend in labor force participation, and it appears as if there are some significant open questions about what the trend looks like.

After growing during the 1980s and 1990s, the aggregate labor force participation rate (the percentage of the working-age population active in the labor market employed or looking for work) peaked in the late 1990s and is currently at levels last seen in the 1980s. But this change pales in comparison to changes in labor force participation among America's youth (those folks in the 16- to 24-year-old age range).

...
It also appears that the decline in youth participation is most dramatic among teenagers, and for that group it is an equally sized decline for both males and females (see the next two charts).

Because schooling is an important activity for young people, the changing pattern of school enrollment is an obvious potential source of change in the labor force attachment of youths. In fact, the proportion of those between 16 and 24 enrolled in school has risen from about 42 percent in the late 1980s to nearly 57 percent in 2008 (BLS, October supplement to the Current Population Survey). ...

Washington's Blog

2010-04-13T14:58:00.000-07:00

Washington's BlogTHURSDAY, APRIL 8, 2010

1.2 Million Households Disappear, Putting Downward Pressure on Home Prices and Rents

As Zack's Investment Research writes:
A smaller percentage of Americans owned their own homes in the 4th quarter of 2009 than at any time since 2000. In the 4th quarter 67.2% of Americans owned their own home, down from 67.6% in the third quarter and two full percentage points below the peak set in the fourth quarter of 2004.
As the first graph below shows (from Calculated Risk) ...:
So where have all these people gone who are no longer homeowners? It does not appear that they are moving into apartments or rental housing. As the second graph shows (also from Calculated Risk), the rental vacancy rate is now at 10.7%. While that is down from the record level of 11.1% in the third quarter, it is up from 10.1% a year ago, and the 7-8% range that was normal for most of the 1990s ...
***
It thus appears that many of the people who used to own their homes, and no longer do, are doubling up with friends and family. This is probably not their first choice of living arrangements, but they are doing so because they have no other choice economically.
In other words, the correlation between falling home prices and rising defaults, on the one hand, with increasing rental demand and higher rental prices, on the other hand, doesn't hold in a really tough economy.

Today, MSNBC adds some important details:

More than 1.2 million households [have been] lost to the recession, according to a report issued this week by the Mortgage Bankers Association that looked at data between 2005 and 2008. That number doesn’t include information from 2009, when job losses and foreclosures continued to rise.
So it's likely that the full impact of the 8.4 million jobs lost and nearly three million homes foreclosed on since the recession began has taken an even bigger toll on the number of American households.
“Given the depth of the downturn in 2009, and the ongoing weakness in the job market through the beginning of this year, this study gives no reason to expect that household formation has picked up at all," said Gary Painter, a professor at the University of Southern California who conducted the study.
The study also shed some light on what happens to the people in those "lost" households. It’s widely assumed that many who lose a home to foreclosure become renters. But since the recession began, there has been a five-fold increase in “overcrowding” of remaining households — defined as more than one person per room, according to the study.
That doubling-up is happening as families who lose their homes move in with friends or family. In other cases, younger people have delayed moving out on their own, instead staying with their parents until the economy improves. Others who fail to find work after graduating from college move back home. ...

Great Recession Not Over Yet, Though Data Suggests Expansion (CHARTS)

2010-04-13T07:38:00.000-07:00

Great Recession Not Over Yet, Though Data Suggests Expansion (CHARTS)

Source: A Year or More: The High Cost of Long-Term Unemployment, Pew Fiscal Analysis Initiative

comments(60)

Economic activity fell in half of the U.S. in the past three months.

Who Will Really Tackle The Debt? - The Daily Dish | By Andrew Sullivan

2010-04-12T15:32:00.000-07:00

Who Will Really Tackle The Debt? - | The Daily Dish | By Andrew Sullivan

12 APR 2010 02:41 PM

Bernstein claims that "for at least twenty years, and really more like thirty-five years, the Democrats are the party of fiscal responsibility and the Republicans are the party of deficits." His bottom line:

My guess? If Obama is reelected with solid Democratic majorities in Congress, and the economy is reasonably strong, there's a good chance that there will be a deficit reduction plan similar in spirit to the 1993 and 1990 packages, and it will pass without any Republican support. There's also a good chance of further deficit-reducing health care reform, including the deficit-reducing public option.

On the other hand, if Republicans win back Congress and the White House in 2012, I expect cosmetic spending cuts along with significant tax cuts, yielding larger deficits (and I wouldn't bet heavily on net spending cuts). As I've said before, I'm not advocating one way or another on this -- I'm not a deficit hawk, myself. But it seems clear to me that the path to deficit reduction for those who do care about it is Democratic control, rather than hoping for a grand bargain that in effect asks pro-deficit Republicans to surrender to anti-deficit Democrats.

Economist's View: Layoff, Hiring, and Unemployment Rates

2010-04-11T15:09:00.000-07:00

Economist's View: Layoff, Hiring, and Unemployment Rates

This is from a discussion of the Job Openings and Labor Turnover Survey (JOLTS) from the Atlanta Fed (much of the discussion is about the southern region; also, the unemployment rate is on the left-hand side, not the right-hand side as indicated in the graph).

Notice the crash in the hiring rate coinciding with changes in unemployment. The policies that were used to battle the recession didn't put enough emphasis on turning this around.

[I'm traveling - this should post automatically.] ...

Economist's View: Reblog: Wow! Cash for Clunkers Worked!!

2010-04-11T15:08:00.000-07:00

Economist's View: Reblog: Wow! Cash for Clunkers Worked!!

Reblogging Brad DeLong:

That surprises me. But Christy Romer and Chris Carroll have a graph: Did 'Cash-for-Clunkers' work as intended?:

via delong.typepad.com ...

The ‘mind-blowing’ surge of wealth inequality in America - Sahil Kapur - AntiPartisan - True/Slant

2010-04-10T20:39:00.000-07:00

The ‘mind-blowing’ surge of wealth inequality in America - Sahil Kapur - AntiPartisan - True/Slant By SAHIL KAPUR

One of the most understated issues in American political discourse is the surging inequality of income and wealth. The Nation has a chart that sheds light on what’s going on.

Notice that the level of inequality was higher by 2006 than even just before the Great Depression. You can bet that figure has risen after the ‘08 bailouts, which (necessary as it may have been to prevent a catastrophic financial plunge) essentially funneled money from poor and working people into the pockets of wealthy financial institutions that participated in the economy’s decline. Heads they win, tails we lose.

FDR’s Fed chairman Marriner S. Eccles explained in kitchen-table discourse why this matter is so damaging to the national economy: “As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped,” he said.

Business Insider has an excellent slide show that adds depth and breadth to this phenomenon. Here’s one graphic (via the Institute for Policy Studies) showing that in 2007 the top 1 percent owned over a third of the nation’s wealth while the bottom 50 percent had a measly 2.5 percent.

Here’s what Dennis Kucinich told me a couple months ago: “Every area of the economy is still about taking wealth from the great mass of people and putting it into the hands of a few. If you don’t have a economic democracy, you don’t have a political democracy.” ...

Why the Obama economics plan is working - BusinessWeek.com- msnbc.com

2010-04-09T21:05:00.000-07:00

Why the Obama economics plan is working - BusinessWeek.com- msnbc.com

By Mike Dorning

updated 11:58 a.m. CT, Fri., April 9, 2010

It's never easy to separate politics from policy, and the past 18 months have only increased the degree of difficulty. The U.S. has been through a historic financial crisis followed by a historic election and a series of historic federal gambles — from bailing out AIG and GM to passing a $787 billion stimulus and a $940 billion health-care reform bill. All that risk has made policy more complicated and politics more fraught ("You lie," "Baby killer").

A Bloomberg national poll in March found that Americans, by an almost 2-to-1 margin, believe the economy has gotten worse rather than better during the past year. The Market begs to differ. While President Obama's overall job approval rating has fallen to a new low of 44 percent, according to a CBS News Poll, down five points from late March, the judgment of the financial indexes has turned resoundingly positive. The Standard & Poor's 500-stock index is up more than 74 percent from its recessionary low in March 2009. Corporate bonds have been rallying for a year. Commodity prices have surged. International currency markets have been bullish on the dollar for months, raising it by almost 10 percent since Nov. 25 against a basket of six major currencies. Housing prices have stabilized. Mortgage rates are low. "We've had a phenomenal run in asset classes across the board," says Dan Greenhaus, chief economic strategist for Miller Tabak + Co., an institutional trading firm in New York. "If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President."

Little more than a year ago, financial markets were in turmoil, major auto companies were on the verge of collapse and economists such as Paul Krugman were worried about the U.S. slumbering through a Japan-like Lost Decade. While no one would claim that all the pain is past or the danger gone, the economy is growing again, jumping to a 5.6 percent annualized growth rate in the fourth quarter of 2009 as businesses finally restocked their inventories. The consensus view now calls for 3 percent growth this year, significantly higher than the 2.1 percent estimate for 2010 that economists surveyed by Bloomberg News saw coming when Obama first moved into the Oval Office. ...

�� America: The Grim Truth: Information Clearing House -� ICH

2010-04-08T20:25:00.000-07:00

�� America: The Grim Truth: Information Clearing House -� ICH

By Lance Freeman

April 08, 2010 "Information Clearing House" -- Americans, I have some bad news for you:

You have the worst quality of life in the developed world – by a wide margin.

If you had any idea of how people really lived in Western Europe, Australia, New Zealand, Canada and many parts of Asia, you’d be rioting in the streets calling for a better life. In fact, the average Australian or Singaporean taxi driver has a much better standard of living than the typical American white-collar worker.

I know this because I am an American, and I escaped from the prison you call home.

I have lived all around the world, in wealthy countries and poor ones, and there is only one country I would never consider living in again: The United States of America. The mere thought of it fills me with dread.

Consider this: you are the only people in the developed world without a single-payer health system. Everyone in Western Europe, Japan, Canada, Australia, Singapore and New Zealand has a single-payer system. If they get sick, they can devote all their energies to getting well. If you get sick, you have to battle two things at once: your illness and the fear of financial ruin. Millions of Americans go bankrupt every year due to medical bills, and tens of thousands die each year because they have no insurance or insufficient insurance. And don’t believe for a second that rot about America having the world’s best medical care or the shortest waiting lists: I’ve been to hospitals in Australia, New Zealand, Europe, Singapore, and Thailand, and every one was better than the “good” hospital I used to go to back home. The waits were shorter, the facilities more comfortable, and the doctors just as good.

This is ironic, because you need a good health system more than anyone else in the world. Why? Because your lifestyle is almost designed to make you sick.

Let’s start with your diet: Much of the beef you eat has been exposed to fecal matter in processing. Your chicken is contaminated with salmonella. Your stock animals and poultry are pumped full of growth hormones and antibiotics. In most other countries, the government would act to protect consumers from this sort of thing; in the United States, the government is bought off by industry to prevent any effective regulations or inspections. ...

...

I’ll let you in on little secret: if you go to the beaches of Thailand, the mountains of Nepal, or the coral reefs of Australia, you’ll probably be the only American in sight. And you’ll be surrounded crowds of happy Germans, French, Italians, Israelis, Scandinavians and wealthy Asians. Why? Because they’re paid well enough to afford to visit these places AND they can take vacations long enough to do so. Even if you could scrape together enough money to go to one of these incredible places, by the time you recovered from your jetlag, it would time to get on a plane and rush back to your job.

If you think I’m making this up, check the stats on average annual vacation days by country:

Finland: 44
Italy: 42
France: 39
Germany: 35
UK: 25
Japan: 18
USA: 12

The fact is, they work you like dogs in the United States. This should come as no surprise: the United States never got away from the plantation/sweat shop labor model and any real labor movement was brutally suppressed. Unless you happen to be a member of the ownership class, your options are pretty much limited to barely surviving on service-sector wages or playing musical chairs for a spot in a cubicle (a spot that will be outsourced to India next week anyway). ...

...

... In most countries in the developed world, higher education is either free or heavily subsidized; in the United States, a university degree can set you back over US$100,000. Thus, you enter the working world with a crushing debt. Forget about taking a year off to travel the world and find yourself – you’ve got to start working or watch your credit rating plummet....

...

If the people cannot make a change, how about the media? Not a chance. From Fox News to the New York Times, the mass media in the United States is nothing but the public relations wing of the corporatocracy, primarily the military industrial complex. At least the citizens of the former Soviet Union knew that their news was bullshit. In America, you grow up thinking you’ve got a free media, which makes the propaganda doubly effective. If you don’t think American media is mere corporate propaganda, ask yourself the following question: have you ever heard a major American news outlet suggest that the country could fund a single-payer health system by cutting military spending?

...

Robert L. Borosage: The Showdown with Chermany

2010-04-08T12:49:00.000-07:00

Robert L. Borosage: The Showdown with Chermany

Where will the jobs come from? Double exports in five years, says President Obama. That offers a ray of hope in a bleak landscape -- the recovery act spending is winding down, states and localities are laying off employees, banks still are not making loans, and consumers are reeling from unemployment, stagnant wages, and losses in home values and retirement plans, Moreover, the US can't go back to the old economy where trade deficits reached 6% of GDP, and we were borrowing over $2 billion a day from abroad to pay for goods made elsewhere.

But if the US is to sell more abroad and borrow less, countries with trade surpluses -- notably Germany and China -- will have to spend more, buy more, save less and export less. That is the only way to reduce the dangerous and unsustainable imbalances in the global system that the G-20, governments, representing the leading economies in the world, agreed was essential to a secure recovery.

Only China and Germany clearly haven't got the message. The Chinese continue to manipulate their currency, now starkly undervalued against the dollar. This is a centerpiece of a comprehensive mercantilist policy to grow by dominating export markets. Germany, the world's second greatest surplus country, continues to restrain demand at home, while subsidizing its high end export engines.

Both countries reject any change of course. China's Premier Wen Jiabao scorned US pressure on the Chinese to revalue its currency, summoning up the wondrous gall to accuse the US and other countries of "protectionism" for seeking to depreciate their currencies. Germany's government similarly has spurned calls led by the French to increase demand domestically to help fuel European recovery.

Martin Wolf of the Financial Times, coins the neologism Chermany to describe these trading giants and highlights the absurdity of their position. The Germans are insisting that its trading partners in Europe - dramatized by the Greeks but truly represented by the French with deficits at about 9% GDP -embrace austerity to reduce their deficits rapidly. But if Europe is to avoid a deep recession and is to play its part in a global recovery, then Germany will have to buy more from its partners. It will have to kick up domestic demand and save less. By rejecting this course, the Germans could well push Europe back into recession.

Similarly, the Chinese demand that the US bolster the dollar by rolling back deficits and raising interest rates. And they want to sustain their export markets in the US. But the only result of this impossible combination would be crippling high unemployment here, and the export of a global recession. This isn't an acceptable outcome. ...

What The Top U.S. Companies Pay In Taxes

2010-04-05T17:49:00.000-07:00

Forbes.com - Magazine Article
What The Top U.S. Companies Pay In Taxes
Christopher Helman, 04.01.10, 3:00 PM ETHOUSTON -

As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.

...

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).

"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Schackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."

Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil paid more income taxes than any other U.S. company last year, some $15 billion, or 47% of pretax earnings. Exxon's peers Chevron and ConocoPhillips likewise paid out more than half their earnings in income taxes. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations." ...

In Pictures: What The 25 Top U.S. Companies Pay In Taxes

Flat Unemployment Rate Masks the Race Gap | CommonDreams.org

2010-04-04T19:04:00.000-07:00

Flat Unemployment Rate Masks the Race Gap | CommonDreams.org

The U.S. economy added 162,000 jobs in March, but the unemployment rate held steady at 9.7 percent, according to new figures released by the Labor Department Friday.

On the whole, the economic news was mixed, but for African Americans, it was particularly troubling. The unemployment rate for whites held steady at 8.8 percent compared to February and went down for Asians from 8.4 percent to 7.5 percent. But it rose to 16.5 percent for blacks from 15.8 percent. Hispanics showed a slight increase as well from 12.4 percent to 12.6 percent.

"It's very disappointing," said Peter Edelman, a former Clinton administration official who directs the Center on Poverty, Inequality, and Public Policy at the Georgetown University.

While there have long been disparities in white and minority employment, Edelman said, the latest unemployment numbers from the Labor Department show that while "some white people got jobs, some black people and Latinos actually fell behind more."

"We're seeing a whole set of things happening in the recession that are making the inequity worse," said Seth Wessler, a researcher at the Applied Research Center, a racial justice think tank in Oakland.

Chief among those factors are the massive cuts meted out to public services on the state and local level, particularly to public transportation.

"If the bus line you depend on is cut, it's impossible to look for a job or even hold onto the one you have," Wessler said, "and we know that across the country - from New York to Los Angeles - bus service is being cut and fares are increasing."

"We know that people of color are much more likely to depend on public transportation," he added. "White people are not being impacted in quite the same way." ....

Corporate America Squeals About Welfare Cuts

2010-03-31T14:05:00.000-07:00

Corporate America Squeals About Welfare Cuts

The Republican Party and major corporations have joined forces in the first major rearguard attack on health care reform, charging that the cost of complying with "Obamacare" is resulting in hundreds of millions of dollars in added business expenses.

The crime that reform is guilty of: Slashing corporate welfare.

Under the previous system, major corporations were subsidized by the government to provide prescription drug coverage to their employees. At the same time, corporations could claim on their tax returns that it was they -- not the taxpayers -- who paid for the drug coverage, and could write the expense off as a tax deduction.

Health care reform cuts out that fat. The corporations still get taxpayer money to help pay for their employees' drug coverage, but they can no longer continue the fiction that they're using their own money to do it.

Being forced to operate on a diet of leaner corporate welfare benefits will make U.S. companies less able to compete, Republicans argue. The charge-offs play into the line that Republicans are pushing -- namely that health care reform is a "job killer."

So far, Boeing, AT&T, AK Steel, 3M, Caterpillar, Deere, Prudential and Valero Energy have all said that reform is forcing them to take significant charge-offs on their balance sheet. The welfare cuts don't go into effect for several years, but accounting rules require the reduction to be taken in the year the law is passed.

"A jobs narrative is emerging in the wake of the CAT, John Deere, Verizon (and many other) announcements as it is becoming clear that the health care bill is having an immediate and negative effect on the economy," said Ken Spain, spokesman for the National Republican Congressional Committee. "In short, the bill is a job-killer." ...

Globalization Marches On | CommonDreams.org

2010-03-31T14:01:00.000-07:00

Globalization Marches On | CommonDreams.org

Growing popular outrage has not challenged corporate power.

by Noam Chomsky

Shifts in global power, ongoing or potential, are a lively topic among policy makers and observers. One question is whether (or when) China will displace the United States as the dominant global player, perhaps along with India.

Such a shift would return the global system to something like it was before the European conquests. Economic growth in China and India has been rapid, and because they rejected the West's policies of financial deregulation, they survived the recession better than most. Nonetheless, questions arise.

...

Economist and China specialist Martin Hart-Landsberg explores the dynamic in a recentMonthly Review article. China has become an assembly plant for a regional production system. Japan, Taiwan and other advanced Asian economies export high-tech parts and components to China, which assembles and exports the finished products.

The Spoils of Power

The growing U.S. trade deficit with China has aroused concern. Less noticed is that the U.S. trade deficit with Japan and the rest of Asia has sharply declined as this new regional production system takes shape. U.S. manufacturers are following the same course, providing parts and components for China to assemble and export, mostly back to the United States. For the financial institutions, retail giants, and the owners and managers of manufacturing industries closely related to this nexus of power, these developments are heaven sent.

And well understood. In 2007, Ralph Gomory, head of the Alfred P. Sloan Foundation, testified before Congress, "In this new era of globalization, the interests of companies and countries have diverged. In contrast with the past, what is good for America's global corporations is no longer necessarily good for the American people."

Consider IBM. According to Business Week, by the end of 2008, more than 70 percent of IBM's work force of 400,000 was abroad. In 2009 IBM reduced its U.S. employment by another 8 percent.

For the work force, the outcome may be "grievous," in accordance with Smith's maxim, but it is fine for the principal architects of policy. Current research indicates that about one-fourth of U.S. jobs will be "offshorable" within two decades, and for those jobs that remain, security and decent pay will decline because of the increased competition from replaced workers.

This pattern follows 30 years of stagnation or decline for the majority as wealth poured into few pockets, leading to what has probably become the greatest inequality between the haves and the have-nots since the end of American slavery.

While China is becoming the world's assembly plant and export platform, Chinese workers are suffering along with the rest of the global work force. This is an unsurprising outcome of a system designed to concentrate wealth and power and to set working people in competition with one another worldwide.

Globally, workers' share in national income has declined in many countries-dramatically so in China, leading to growing unrest in that highly inegalitarian society. ...

Robert L. Borosage: Jobs, Focus, Jobs, Focus

2010-03-31T10:51:00.000-07:00

Robert L. Borosage: Jobs, Focus, Jobs, Focus

The economy is said to be recovering, but the people are not. The jobs are gone, and haven't started to come back. 25 million people are in need of full time work. Incomes are stagnant; more and more are losing health care. Even the uptick in jobs that will be reported on Friday is misleading, reflecting temporary hiring for the census and recovery from snow bound February.

So what is the strategy? Obama initially got the big things right. A big recovery plan -- featuring deficit financed investment in infrastructure, aid to states and localities, a boost to new energy -- would stem the collapse and put people to work. The bank rescue would get the financial system lending again. Investments in new energy -- and in education, research and development and infrastructure -- would rebuild the economy on a new foundation, while capturing a leading role in the new green industrial revolution.

....

First, the president needs to explain to Americans where we are. That we can't wait for a recovery to create jobs, because there is no recovery to the old economy. That economy was based on debt financed bubbles that burst. We can't go back there and should not want to.

That requires we dig out of a very deep hole. This will take time. In the short term, the president should get back in front of the jobs debate in Washington. He put some $260 billion in his budget for jobs creation and unemployment support -- but has said little about it since. It is time to champion measures big enough to deal with the scope of the challenge. 105 co-sponsors have joined Rep. George Miller on legislation calling for $100 billion to go to localities and non-profits for jobs. Estimates are that it could save or generate over a million jobs. Conservatives in both parties scorn spending more money on jobs, even as layoffs of teachers and police and fire fighters increase. The president should take this on and champion the bill as one part of the response, calling for paying for it by reviving his tax on the banks to get our money back.

Then the White House should turn tax day, April 15, into trade day. On that date, the Treasury must decide whether to recognize reality and name China, among others, as a country that is manipulating its currency to gain trade advantage. Do it. Speak truth. Enlist allies to join. Declare that the US will no longer simply ignore the reality that some countries are playing by a different set of rules. While the president takes the issue to the G-20, the Congress will start hearing s on tariffs to counter the effect of undervalued currencies. The labor movement could launch a drive across the country to pass buy America standards for public procurement at the state and local level. The common sense proposition - that taxpayer dollars should be spent to create maximum jobs here, not abroad - is popular across the political divides.

The point of all of this is simple and necessary. China and the mercantilist nations have to be confronted with the reality that we are not going back to the old economy -- where the US borrows money to serve as the consumer of last resort to the world and they can depend totally on export led growth.

...

Arianna Huffington: When It Comes to Innovation, Is America Becoming a Third World Country?

2010-03-31T08:44:00.000-07:00

Arianna Huffington: When It Comes to Innovation, Is America Becoming a Third World Country?

Is America turning into a third world country? That was the provocative topic of a panel I took part in last week at a conference sponsored by The Economist entitled "Innovation: Fresh Thinking For The Ideas Economy."

Once upon a time, the United States was the world's dominant innovator -- partly because we didn't have much competition. As a result of the destruction wreaked by WWII, the massive migration of brainpower to the U.S. caused by the war, and huge amounts of government spending, America had the innovation playing field largely to itself. None of these factors exist as we enter the second decade of the 21st century.

America now has plenty of countries it's competing with -- many of which are much more serious about innovation than we are. Just look at the numbers:

A report by the Information Technology and Innovation Foundation looked at the progress made over the last decade in the area of innovation. Out of the 40 countries and regions it examined, the U.S. ranked dead last.

A study on innovation by the Boston Consulting Group concluded that America is "disadvantaged in several key areas, including work force quality and economic, immigration, and infrastructure policies."

In 2009, patents issued to American applicants dropped by 2.3 percent. Those granted to foreign-based applicants increased by over 6 percent.

Why are we falling behind like this? For one thing, we've lost our educational edge. America once led the world in high school graduation rates. We are now ranked 18th out of 24 industrialized countries.

And the percentage of 15-year-olds performing at the highest levels of math is among the lowest. South Korea, Belgium and the Czech Republic, among others, have at least five times the number the U.S. does.

Plus, we are no longer investing in innovation. Until 1979, around 50 percent of all research and development funds were provided by the federal government. That number has fallen to 27 percent. And, during the 1990s, the bottom fell out of U.S. funding for applied science,dropping by 40 percent.

The economic crisis is also taking a toll on innovation. Venture capital investment in the U.S. for the first three quarters of 2009 was $12 billion. Over the first three quarters of 2008, it was $22 billion.

These numbers may not place us in the third world ... yet. But the trend is not a good one.

....

For starters, we need to kick our high-speed Internet plans into high gear. A robust, broadband-charged, countrywide information superhighway is going to be key to staying ahead of the innovation curve.

As FCC Chair Julius Genachowski explains, broadband isn't just important for faster email and video games -- it's the central nervous system for democracies and economies of the future:

Broadband is indispensable infrastructure for the 21st century. It is already becoming the foundation for our economy and democracy in the 21st century... [and] will be our central platform for innovation in the 21st century.

How indispensable is it? In a study of 120 countries, researchers found that every 10 percent increase in broadband adoption increased a country's GDP by 1.3 percent.

Unfortunately, when it comes to broadband, America is also falling behind.

In 2001, the United States ranked 4th among industrialized countries in broadband access. By last year, we had dropped to 15th. As for average broadband download speed, we rank19th.

Nearly 93 million Americans still don't have broadband in their homes. And while 82 percent of those who attend college in the U.S. have access to broadband, only 46 percent of high school graduates do.

To help close the widening gap between us and the rest of the digitally connected world, the Obama administration has proposed a National Broadband Plan, with the goal of increasing broadband access from around 65 percent currently to 90 percent by 2020. ...

Arianna Huffington: The Imperative Need for America to Become an Innovation Nation

2010-03-31T06:07:00.000-07:00

On Monday, I wrote about the troubling state of America's commitment to innovation, spurred by a panel discussion I'd taken part in.

After the panel, I found myself having a fascinating follow-up discussion with a Harvard professor, a psychiatrist, a Broadway producer, a biotech entrepreneur, a business consultant, a film producer, an author, and a jazz musician.

It wasn't as crowded as it sounds since my conversation was with one person, John Kao. In his polymath career, Kao has taken on each of these roles. He now spends most of his time writing, lecturing, and advising governments and corporations on innovation.

Our talk about the importance of developing a "national innovation agenda" and having governments act as "impresarios" creating the conditions that allow a society to move forward in smarter, faster ways, was interrupted when Kao had to put on his jazz musician hat and go on stage to play. In keeping with the innovation theme, he and his fellow musician ended up improvising, to the delight of the crowd.

On my flight home, I started reading Kao's book, Innovation Nation, which he gave me as I was leaving the conference. It was both frightening and inspiring. Frightening because of the details it provides about the ways America is falling behind the rest of the world; inspiring because Kao imbues it with a sense of optimism and great possibility.

Yes, there is much to be concerned about -- evidence that we are heading in the wrong direction ("We are rapidly becoming the fat, complacent Detroit of nations," he writes). But Kao reminds us of all the times in the past America has rallied, marshalling its forces to innovate and rise to meet great challenges.

After Pearl Harbor, America's naval force was decimated. But, Kao points out, just three years later "America had a hundred aircraft carriers fully armed with new planes, pilots, tactics, and escort ships, backed by new approaches to logistics, training methods, aircraft plants, shipyards, and women workers" along with "such game changing innovations as the B-29... and nuclear fission."

Same with our reaction to the Soviet's launch of Sputnik, when "we responded with massive funding for education, revamped school curricula in science and math, and launched a flurry of federal initiatives that eventually put Neil Armstrong in position to make his 'giant leap for mankind.'"

So, even though we currently find ourselves "basking in our faded glory," Kao believes "America has the potential to become the first [Innovation Nation], a blend of enlightened self-interest and outward-reaching altruism." ...

...

Heartland hurt has many asking: Is China worth it? | McClatchy

2010-03-26T20:03:00.000-07:00

Heartland hurt has many asking: Is China worth it? | McClatchy

By Kevin G. Hall | McClatchy Newspapers

SHARON, Pennsylvania — With a heavy heart, Wheatland Tube Co. President Bill Kerins surveys an empty lot where just a few years ago, a massive steel-pipe plant that employed hundreds of workers stood.

Needing to expand production, Wheatland purchased that plant in 2002. Within a few years, however, cheap imports of standard pipe from China surged from a meager 10 tons to more than 750,000 tons by 2007.

"It came in at prices we couldn't even consider competing with," Kerins said. "Finished product was brought in at less than our cost of raw materials."

Wheatland Tube sought relief through trade laws, but by the time the Bush administration acted, it was too late. The plant closed in 2007, and more than 200 jobs were lost.

The woes where western Pennsylvania meets northeast Ohio are the back story to the growing tension over China's trade policy and currency manipulation.

By April 15, the Treasury Department must declare whether it thinks that China manipulates its currency, the yuan, to give its own manufacturers a leg up on American competitors such as Wheatland Tube.

This fight over China's currency blossoms every spring in Washington, about the same time the cherry trees that ring the Tidal Basin do. This year, however, the U.S. economy's struggling to create jobs and reduce a high unemployment rate. That puts greater focus on what trade with China, now second only to Canada, means to U.S. jobs.

...

Another source of anger in the U.S. business community is China's "indigenous innovation policy," where state-owned companies are encouraged to "Buy China." A survey by the American Chamber of Commerce in China, published March 21, found that 37 percent of its members reported a drop in sales even before the policy took effect. The Buy China policy further disadvantages U.S. companies operating there.
...
"The yuan is undervalued by at least 25 (percent) to 40 percent," said Fred Bergsten, head of the Peterson Institute for International Economics, the leading free-trade voice among policy research organizations.

Unless China revalues its currency, he said, U.S. exports — a job-creation priority for the Obama administration — will continue to suffer from China's "blatant protectionism." He estimated that China's artificial exchange rate is costing the U.S. in the range of 1.5 million jobs.
...
China's now the third-largest market for U.S. exports behind Canada and Mexico, and is one of the most important destinations for U.S. agricultural products and a beacon for U.S. service providers. Restricting China trade isn't an option, Kirk suggested.

"Where do we think we will replace that $300 billion in exports if we unilaterally pull out of China?" he asked. "I think it's much more worth the effort to try to engage them, and try to get them to reform some of their manufacturing policies, not only to our benefit but to their benefit, which is the case President (Barack) Obama is making."
...

Read more: http://www.mcclatchydc.com/2010/03/25/91084/heartland-hurt-has-many-asking.html#storylink=omni_popular#ixzz0jLI74zcl

Tight job market is squeezing out young workers | McClatchy

2010-03-25T20:57:00.000-07:00

Tight job market is squeezing out young workers | McClatchy

By Tony Pugh | McClatchy Newspapers

WASHINGTON — Teens and young adults, short on experience and skills, have been giving up the job search at higher rates than other workers are during this great recession.

Frustrated by a lean job market, nearly 1.3 million workers ages 16 to 24 have left the labor force since the recession hit in December 2007. That's about 6 percent of them, and it's nearly three and a half times the exodus rate of workers ages 25 to 54.

With a jobless rate of 18.5 percent for 16- to 24-year-olds, some have gone back to school, some are volunteering, some are joining the military and some are just chilling at home until the economy heats up again.

FT.com / UK - Recovery depends on Main Street

2010-03-24T22:07:00.000-07:00

FT.com / UK - Recovery depends on Main Street

By Robert Reich

Published: March 24 2010 02:00 | Last updated: March 24 2010 02:00

Can the American economy recover if only its big global companies, Wall Street and high-income Americans are doing better, but its small businesses and middle and lower-income Americans are not? The short answer is no.

The earnings of companies in the Standard & Poor's 500 stock index tripled in the fourth quarter, but this does not mean the rest of the US economy is doing well. Much of their sales were into fast-growing markets in places like India, China and Brazil. Meanwhile, they continued to slash jobs and cut costs at home.

Alcoa, for example, had $1.5bn in cash at the end of 2009, double what it had on hand at the end of 2008. Sounds terrific until you realise how it did it. By cutting 28,000 jobs - 32 per cent of its workforce - and slashing capital expenditures 43 per cent.

Nor does the fact that big US companies have lots of cash signal a broader recovery. The S&P 500 are now holding $932bn in cash and short-term investments and can borrow cheaply. So far in 2010, big US corporations have issued $195.2bn of debt, excluding government-guaranteed bonds. But this cash is not going into new investment. Much is being used to buy other companies, which usually leads to more job losses.

Much of the rest is being used to buy back their own stock in order to boost their share prices. There were 62 such buy-backs in February, valued at $40.1bn - the biggest share buy-back since September 2008. The major beneficiaries are shareholders, including top executives, whose pay is linked to share prices. But the buy-backs do nothing for most Americans.

None of this is stopping supply-side fanatics from arguing government needs to cut taxes on big corporations to spur the recovery. Their argument is absurd. Big companies do not know what to do with all the cash they have as it is. They are not investing it in new plant or jobs. So why should the government cut their taxes and enlarge their cash hoards even more?

The picture on Main Street is the opposite. Small businesses are not selling much as they have to rely on American consumers and Americans still are not buying much.

Small businesses are also finding it hard to get credit. In a credit survey in February from the National Federation of Independent Businesses, only 34 per cent of small businesses reported normal and adequate access to credit. Not incidentally, the NFIB's Small Business Optimism Index fell 1.3 points last month.

While big companies are finding it easy to borrow in the bond markets, smaller companies depend on bank credit, whose supply remains limited. Last year, total bank lending fell 7.4 per cent, the biggest decline in almost 60 years, and there is no sign of a turnround. To the contrary, a rising number of commercial loans are going bad. Banks still face further losses on mortgages and commercial loans so lack the reserves to increase lending.

This is a problem because companies with fewer than 100 employees accounted for almost half of net job growth during the last two recoveries, according to the US Labor Department's Bureau of Labor Statistics. ,,,

Craig D. Rose: On to the Unemployment Crisis

2010-03-23T06:43:00.000-07:00

Craig D. Rose: On to the Unemployment Crisis

Okay, health care is done, now a quick deep breath and on to a bigger crisis: how to get millions of Americans back to work.

The gross numbers alone are daunting:

- Nearly 15 million people flat out unemployed.
- Almost 9 million working part-time because they can’t find full-time work

Millions more marginally attached workers or so-called discouraged and not counted as unemployed.

The bottom line is that America needs more than 10 million jobs just to get back to where we were two years ago. That would be difficult enough if we had at least begun adding jobs. But the U.S. economy continues to lose jobs.

The problem is so deep that even those with jobs are affected. That’s because that vast army of the unemployed is depressing incomes for those who do have jobs, according the Bureau of Labor Statistics, which pegs the decline in income at 1 percent for year ending February.

If the unemployment is rightfully deemed a crisis, the future offers little prospect of relief.

This past week the Obama administration’s economic team, led by Treasury Secretary Timothy Geithner, told Congress it expects the economy to generate about 100,000 per month for the remainder of this year. That’s better than losing jobs but 100,000 jobs monthly is barely what’s needed to keep pace with new workers entering the job market.

In other words, 100,000 jobs monthly would hold lock things at the status quo.

Further ahead, Geithner and company predict the unemployment rate – now 9.7 percent nationally and 12.5 percent in California – will edge down to 8.9 percent by the close of 2011. I don’t think I’ll hold either my breath or the Champagne for that prospect.

What should make this all the more scary is that none of the plans being offered for dealing with unemployment even pretend to deal with the scope of the problem.

...

Rather than a credit crunch, we have a debt crisis at nearly every level - personal, state, federal and financial. (Oh, that’s right; we took care of the debt problem on Wall Street. What a load off my mind.)

Think American innovation will bail us out?

Well, while the U.S. was inventing synthetic collateralized debt obligations (don’t ask, but as Counterpunch readers now we all own them since taxpayers bailed out AIG), China was blowing past us in the manufacture of wind turbines and photovoltaic panels.

Oh, our engineers can beat their engineers?

Maybe, but will our engineers work for $9,000 annually – that’s going rate for these technical workers in China. With a master’s degree, no less.

Think training will get America? We’ve all heard that one and it’s true that employment in certain technical niches has increased (though not for electrical engineers and computer programmers). But there’s no way these technical occupations can absorb the millions who need work.

And keep this in mind: This past week the top scientist at Advanced Materials, a Silicon Valley company which is the world’s largest supplier of equipment to make semiconductors and photovoltaic, said he was moving to China. According to the New York Times, “companies are concluding their researchers need to be close to factories and consumers.”

Factories – remember those? What we forgot as we watched a third of America’s manufacturing move abroad is that this sector employs more scientists and technical workers than any other.

There’s ample evidence that things would have been much worse without the stimulus package passed last year. Most estimates are that we’d have roughly two million fewer jobs now without that program.

But for those looking for a plausible plan to get back to a reasonable level of employment, there’s little on the table now but despair.

Of course, many with a deep-seated faith in the ability of the US economy to renew itself, to come up with the latest widget, and to generate jobs may believe the absence of serious programs for unemployment is a good thing. Government tinkering will only cause harm, they say. Let the free market reign.

Well, if you believe that one, AIG has got a deal for you: billions of dollars in synthetic collateralized debt obligations. And there are thousands of financial wizards who can tell you how they work.

What they can’t explain is how to get America back to work.

Craig D. Rose is a San Diego-based journalist who writes about energy and the economy.

Massive Change in US Student Loans Slipped in to Bill | CommonDreams.org

2010-03-22T07:01:00.000-07:00

Massive Change in US Student Loans Slipped in to Bill | CommonDreams.org

The Democratic-led U.S. House of Representatives Sunday approved President Barack Obama’s bid to implement what would be the biggest overhaul in decades of the federal student loan program.

Under the legislation, federal subsidies to private student loan lenders would stop and the government’s role in lending would increase – creating billions of dollars in projected savings that would go largely in grants to needy students.

The measure, opposed by private lenders and critics of an expanding federal government, was included in a package of proposed changes to an overhaul of the U.S. health care system.

The House passed the package after giving final approval to the health care bill that is ready for Mr. Obama to sign into law.

...

Mostly Republican critics complain the action would amount to an unwarranted government takeover of the program and reduce students’ options in securing a loan.

But primarily Democratic backers argue it would eliminate the middle men – private lenders – from the process, allowing the government to save billions of dollars.

The measure would cut banks and student loan giant Sallie Mae out of most of the $92-billion (U.S.) college student loan business and require that all federal students loans originate with the government.

Private lenders would still have a role in servicing loans, such as helping collect them. Direct federal loans, unlike loans by banks, must be serviced by U.S. workers.

“This is good for students, taxpayers and American jobs,” said House Education Committee Chairman George Miller, a Democrat.

Non-partisan congressional budget analysts project that the measure would save about $61-billion over 10 years. Savings would go increased federal grants to the neediest students as well as to other education programs, including funding of community and historically black colleges.

While the House approved the measure last year, it stalled in the Senate in the face of a threatened Republican procedural hurdle that take 60 votes in the 100-member chamber to clear.

Democrats, however, now plan to bring up the measure in a manner that would require only a simply majority, 51 votes, to pass....

Op-Ed Columnist - Taking On China and Its Currency - NYTimes.com

2010-03-20T05:14:00.000-07:00

Op-Ed Columnist - Taking On China and Its Currency - NYTimes.com

Published: March 14, 2010

Tensions are rising over Chinese economic policy, and rightly so: China’s policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery. Something must be done.

To give you a sense of the problem: Widespread complaints that China was manipulating its currency — selling renminbi and buying foreign currencies, so as to keep the renminbi weak and China’s exports artificially competitive — began around 2003. At that point China was adding about $10 billion a month to its reserves, and in 2003 it ran an overall surplus on its current account — a broad measure of the trade balance — of $46 billion.

Today, China is adding more than $30 billion a month to its $2.4 trillion hoard of reserves. The International Monetary Fund expects China to have a 2010 current surplus of more than $450 billion — 10 times the 2003 figure. This is the most distortionary exchange rate policy any major nation has ever followed.

And it’s a policy that seriously damages the rest of the world. Most of the world’s large economies are stuck in a liquidity trap — deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can’t offset.

So how should we respond? First of all, the U.S. Treasury Department must stop fudging and obfuscating. ....

Economist's View: "US Sprawl is not a Market Outcome"

2010-03-20T05:13:00.000-07:00

Economist's View: "US Sprawl is not a Market Outcome"

I think John Stossel should be ignored when it comes to economics, he either doesn't know what he is talking about or he is willing to mislead people. For example, he was still claiming that tax cuts pay for themselves long after it should have been clear to any decent journalist that this was a false claim (he went so far as as late as 2007 -- long after the "Bush tax cuts paid for themselves" myth had been thoroughly debunked -- to say he wasn't sure the Bush tax cuts were desirable since the extra revenue the tax cuts generated will allow government to grow larger).

But whether I think John Stossel and his predictable libertarian views should be ignored or not, people are responding to his latest column claiming that urban sprawl is good (because, to a libertarian, it is very rare that government can improve upon market outcomes no matter how bad the market outcome might be). Richard Green explains how zoning laws discourage mixed use development and promote urban sprawl, and how zoning laws are used to keep the poor from locating in certain areas:

US sprawl is not a market outcome, by Richard Green: A discussion is going around the internet about John Stossel's "libertarian" piece on the virtues of sprawl. John Norquist, on the other hand, labels sprawl a "communist plot," and Matthew Yglesias notes how bulk zoning requirements promote sprawl.

A point John likes to make is sprawl is at least in part the result of government housing finance policy. The New York Times this morning:
I.R.S. requirement keeps the agency from acquiring mortgages made in buildings where more than 20 percent of the square footage is commercial — space that is used for, say, a hotel or a doctor’s office.
Mixed use development is not going to happen if it can't get financed. Most of Paris, London, large swaths of San Francisco (i.e., some of our best urban places) would not qualify for US housing finance rules. And of course, single use zoning would ban them all.

But most insidious is that zoning is used as a tool to keep low-to-moderate income people out of suburbs. The town next door to mine--San Marino--has zoning requirements so onerous that it is not possible to build small housing there. Even my town, Pasadena, which at least has a bunch of apartments, prevents construction of granny flats on lots smaller than 15,000 square feet. These rules keep out the poor, which reduces expenditures on social services, which makes property values higher, which keeps out the poor, which...

Of course poor people must live somewhere, and so they live in cities with old housing stock that was built before the era of stringent zoning. So cities with old housing stock are placed at a fiscal disadvantage, which induces people with means to leave, which puts them at a greater fiscal disadvantage, etc...

OpEdNews - Article: The Offshored Economy

2010-03-17T10:53:00.000-07:00

OpEdNews - Article: The Offshored Economy
By Paul Craig Roberts (about the author)

In the 20th century, Detroit, Michigan, symbolized American industrial might. Today it symbolizes the off-shored economy.

Detroit's population has declined by half. A quarter of the city -- 35 square miles -- is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be.

President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them?

Some very discouraging reports have been issued this month from the Bureau of Labor Statistics. There have been record declines in both jobs and hours worked. At the end of last year, the U.S. economy had fewer jobs than at the end of 1997, 12 years ago. Hours worked at the end of last year were less than at the end of 1995, 14 years ago.

The average work week is falling and currently stands at 33.1 hours for non-supervisory workers.

In a major problem for economic theory, labor productivity or output per man hour and labor compensation have diverged markedly over the last decade. Wages are not rising with productivity. Perhaps the explanation lies in the productivity data. Susan Houseman found that U.S. labor productivity statistics might actually be reflecting the low wages paid to off-shored labor. An American company with production in the U.S. and China, for example, produces aggregate results in labor output and labor compensation. The productivity statistics thus measure the labor productivity of global corporations, not that of U.S. labor.

Charles McMillion has pointed out that unit labor costs actually fell during 2009, but that non-labor costs have been rising throughout the decade. The rise in non-labor costs perhaps reflects the decline in the dollar's foreign exchange value and the increased dependence on imported factors of production.

Economists and policymakers tend to blame auto management and unions for Detroit's fall. However, American manufacturing has declined across the board. Evergreen Solar recently announced that it is shifting its production of solar fabrication and assembly from Massachusetts to China.

A U.S. Department of Commerce study of the precision machine tool industry has found that the U.S. comes in last. The U.S. industry has a shrinking market share and the smallest increase in export value. The Commerce Department surveyed American end-users of precision machine tools and found that imports accounted for 70 percent of purchases. Some U.S. distributors of precision machine tools do not even carry U.S. brands.

The financial economy which was to replace the industrial economy is nowhere in sight. The U.S. has only five banks in the world's top 50 by size of assets. The largest U.S. bank, JPMorgan Chase ranks seventh. Germany has seven banks in the top 50, and the United Kingdom and France each have six. Japan and China each have five banks in the top 50, and together the small countries of Switzerland and the Netherlands have six with combined assets $1.185 trillion more than the five largest U.S. banks.

Moreover, after the derivative fraud perpetrated on the world's banks by the U.S. investment banks, there is no prospect of any country trusting American financial leadership.

The American economic and political leadership has used its power to serve its own interests at the expense of the American people and their economic prospects. By enriching themselves in the short-run, they have driven the U.S. economy into the ground. The U.S. is on a path to becoming a Third World economy.

The Disemboweling of America - Yahoo! News

2010-03-14T19:49:00.000-07:00

The Disemboweling of America - Yahoo! News

Creators Syndicate – Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.

Globalists all, they rejected any federal measure to protect America's industrial base, economic independence or the wages of U.S. workers.

Together they rammed through NAFTA, brought America under the World Trade Organization, abolished tariffs and granted Chinese-made goods unrestricted access to the immense U.S. market.

Charles McMillion of MBG Information Services has compiled, in 44 pages of charts and graphs, the results of two decades of this Bush-Clinton experiment in globalization. His compilation might be titled, "Indices of the Industrial Decline and Fall of the United States."

From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.

In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.

Things that we once made in America — indeed, we made everything — we now buy from abroad with money that we borrow from abroad.

Over this Lost Decade, 5.8 million manufacturing jobs, one of every three we had in Y2K, disappeared. That unprecedented job loss was partly made up by adding 1.9 million government workers.

The last decade was the first in history where government employed more workers than manufacturing, a stunning development to those of us who remember an America where nearly one-third of the U.S. labor force was producing almost all of our goods and much of the world's, as well.

Not to worry, we hear, the foreign products we buy are toys and low-tech goods. We keep the high-tech jobs here in the U.S.A.

Sorry. U.S. trade surpluses in advanced technology products ended in Bush's first term. The last three years we have run annual trade deficits in ATP of nearly $70 billion with China alone.

About our dependency on Mideast oil we hear endless wailing.

Yet most of our imported oil comes from Canada, Mexico, Venezuela, Nigeria and Angola. And for every dollar we send abroad for oil or gas, we send $4.20 abroad for manufactured goods. Why is a dependency on the Persian Gulf for a fraction of the oil we consume more of a danger than a huge growing dependency on China for the necessities of our national life?

How great is that dependency?

China accounts for 83 percent of the U.S. global trade deficit in manufactures and 84 percent of our global trade deficit in electronics and machinery.

Over the last decade, our total trade deficit with China in manufactured goods was $1.75 trillion, which explains why China, its cash reserves approaching $3 trillion, holds the mortgage on America. ...

When Conservatives Are Right... | OurFuture.org

2010-03-14T19:47:00.000-07:00

When Conservatives Are Right... | OurFuture.org

Pat Buchanan has a column today on manufacturing, The Disemboweling of America, that hits the nail on the head. In fact, if I fairly excerpt enough of the column and send you over to read it, my work here is done. For today.

Buchanan begins by outlining just how much our country has lost by allowing others, particularly China, to take over manufacturing.

Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.

Globalists all, they rejected any federal measure to protect America's industrial base, economic independence or the wages of U.S. workers.

. . . From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.

In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.

And what are the implication of this loss of manufacturing?

. . . for every dollar we send abroad for oil or gas, we send $4.20 abroad for manufactured goods. Why is a dependency on the Persian Gulf for a fraction of the oil we consume more of a danger than a huge growing dependency on China for the necessities of our national life?

... How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base...

. . . No nation rose to world power on free trade. ...

Nations rise on economic nationalism; they descend on free trade.
[emphasis added]

Buchanan wrote an excellent, important column today and I encourage readers to click through and read the whole thing.

So, this "free trade" stuff has worked out for us about we well as the "free market" stuff worked out for the economy. Free market and deregulation ideology destroyed the economy. Free trade has destroyed our ability to earn money and recover from the destruction of the economy.

It is time to formulate a national industrial policy/economic strategy, impose tariffs as necessary to balance trade - especially in the case of Chinese currency manipulation - and set up taxes and penalties to stop companies from moving any more manufacturing out of the country.

Too small to succeed? Firms still can't get loans they need | McClatchy

2010-03-14T17:53:00.000-07:00

Too small to succeed? Firms still can't get loans they need | McClatchy

Capital is the oxygen that a small business needs to survive and thrive, yet across the country, the air's pretty thin, as business owners from coast to coast complain of huge hurdles to getting badly needed loans.

Jim Collins, co-owner with his wife Arlene of Quantum Energy Solutions, has been in business in Sacramento, Calif., since 1974. He has a $50,000 line of credit, backed by the U.S. Small Business Administration, through US Bank, owned by US Bancorp. He has a solid credit history and $30,000 in untapped credit.

..."There's a big gap in access to credit for small firms now, and it's a huge problem," Karen Mills, the head of the Small Business Administration, told McClatchy. "We have a sense that the banks are not back to lending the way that they need to be, going forward."

Small businesses account for 65 percent of U.S. employment, so it's a serious matter that the credit is crunch squeezing these firms.

"If we're going to come out of this recession and get people back working, it's going to because we give small businesses the support that they need," said Mills, whose agency has guaranteed more than $22 billion in loans to small firms since early last year.

Blame for the crunch doesn't fall on banks alone. Large banks had $4.4 trillion in unused credit lines outstanding in 2009, as consumers and businesses shunned borrowing to pay down debt. A 32 percent increase in U.S. bankruptcy filings last year suggests that plenty of borrowers simply aren't creditworthy. FDIC data show through December that lenders in three major banking cities — Chicago, Kansas City and San Francisco — had more than 5 percent of outstanding loans late 90 days or longer.

"Lenders aren't saying we don't want to lend. Lenders are saying we'd like to lend, but loan requests are down, and also the bank regulatory agencies are scrutinizing loans at a much higher level than they have been in the past," said James Ballentine, the senior vice president of government relations for the American Bankers Association. "That, too, is understandable, because you want to make sure that all guidelines are being followed and the collateral is there, and that's a problem for many businesses as well."

Obama's ambitious export plan may rekindle free-trade battle - washingtonpost.com

2010-03-14T16:40:00.000-07:00

Obama's ambitious export plan may rekindle free-trade battle - washingtonpost.com

President Obama unveiled plans Thursday to double U.S. exports over the next five years in hopes of spurring job growth, an ambitious goal that may rekindle the battle over free-trade policy.

The U.S. economy has gone through spurts in which exports have doubled -- or nearly so -- within five years, most recently from 2002 to 2007, when a cheap dollar gave American products and services a competitive edge. But a repeat may be tougher in the current global climate, with the dollar strengthening against some key currencies.

The president may also face domestic opposition over a renewed emphasis on free-trade policies that some argue have helped shift U.S. manufacturing jobs overseas -- a sensitive issue at a time when unemployment remains at nearly 10 percent. Predicting such an argument, Obama said Thursday that although he sympathized with communities that have lost factories and livelihoods to overseas labor, the country needs to recommit to free trade in a way that ensures Americans benefit through the opening of new markets for their goods and services.

"There is no question that as we compete in that global marketplace, we've got to look out for our workers," Obama said. "But to look out for our workers, we've got to be able to compete in the global marketplace." ...

OpEdNews - Article: Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction"

2010-03-08T20:31:00.000-08:00

OpEdNews - Article: Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction"
By Stephen Lendman

Barry C. Lynn's "Cornered: The New Monopoly Capitalism and the Economics of Destruction" - by Stephen Lendman

Lynn is director of the Markets, Enterprise, and Resiliency Initiative, a senior fellow at the New America Foundation, and author of "Too Big to Fail" about the dangers of monopoly capitalism.

He expands on the threat in his newest book titled, "Cornered: The New Monopoly Capitalism and the Economics of Destruction," explaining today's peril given the power of predatory giants.

They control governments, the courts, war and peace, dominant information sources, and essential services, including health care, air and water, what we eat and drink, where we live, what we wear, and school curricula to the highest levels. They own genetic code patents, basic human life elements to be commodified the same as toothpaste, tomatoes or toilet paper.

Omnipotent, they plunder recklessly, ruthlessly at our expense. They're private tryannies, endangering humanity, basic freedoms, environmental sustainability, and planetary survival. Without exaggeration, they're unaccountable, unchecked "weapons of mass destruction."

...

Lynn calls his book "a sort of tour of monopoly in all its many guises, in the United States today....how monopolists rip us off as consumers, raising the prices we must pay" for everything including essentials becoming more unaffordable. He covers new monopoly forms and others thought long ago vanished. Understanding them is key to knowing the dangers, from phenomena including:

-- problems launching and successfully running a small business;

-- good jobs disappearing, replaced by low-paying service ones with few benefits;

-- the destruction of organized labor, aided by corrupted union bosses;

-- skyrocketing medical costs;

-- blocking efficient, low cost technologies that hurt profits;

-- low quality food, drugs and other products;

-- the burgeoning national debt and current account deficit; and

...

Without antitrust enforcement, monopoly options include:

-- home-based ones to build a power base to capture global markets;

-- pincer ones - "One of the oldest techniques for capturing and protecting monopoly positions" by controlling related activities, then using them to consolidate and crush competition;

-- trading ones that rely on offshore suppliers, investing instead in marketing and strategic alliances for greater market share;

-- middleman ones to build power positions between producers and end users;

-- privatized public monopolies - the simplest, fastest way to create private ones;

-- leapfrog ones by repackaging old businesses in new technologies to escape government oversight;

-- futures ones so financiers can dominate trading markets for commodities, financial instruments and currencies, etc.;

....

Unpaid overtime soars to 'extreme' levels, says TUC | Money | guardian.co.uk

2010-03-08T20:27:00.000-08:00

Unpaid overtime soars to 'extreme' levels, says TUC | Money | guardian.co.uk

The number of people working "extreme" levels of unpaid overtime soared to almost 900,000 last year, with teachers and lawyers the most likely to put in hours of extra work, the TUC said today.

Its annual survey of working hours showed that the number of people doing more than 10 hours of unpaid overtime a week rose by 14,000 last year. Among teachers and lawyers one in five clocked up an extra 17 hours of free work a week.

One in four public sector employees worked unpaid overtime in 2009, worth almost £9bn a year, compared with one in six in private firms.

As in previous years, single women were found to be most likely to do unpaid overtime, with more than one in four women putting in an average of 7 hours 42 minutes free work a week.

The report noted that unpaid overtime increased despite a rise in the number of people classed as underemployed, which counted those wanting to work longer hours.

The TUC said there was "an obvious mismatch" between the kind of hours people want to work and the kind of hours they are getting.

It has designated that today be Work Your Proper Hours Day after calculating that the average person putting in unpaid overtime would only start being paid from today if they did all the unpaid work at the start of the year. However those clocking up over 10 hours a week wouldn't start being paid until 26 April. ...

Part II: The Rise of the Economic Elite — Economic Elite Vs. The People | Amped Status

2010-03-08T20:24:00.000-08:00

Part II: The Rise of the Economic Elite — Economic Elite Vs. The People | Amped Status

This is the second-part of a six-part report. Click on the links below to read other parts.

——-I: Casualties of of Economic Terrorism, Surveying the Damage
——-II: The Rise of the Economic Elite
——-III: Exposing Our Enemy: Meet the Economic Elite
——-IV: The Financial Coup d’Etat
——-V: Overcoming the Divide and Conquer Strategy
——-VI: How to Fight Back and Win: Common Ground Issues That Must Be Won

II: The Rise of the Economic Elite

“The war against working people should be understood to be a real war…. Specifically in the U.S., which happens to have a highly class-conscious business class…. And they have long seen themselves as fighting a bitter class war, except they don’t want anybody else to know about it.” — Noam Chomsky

As a record number of US citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEOs are receiving record-breaking bonuses. How could this be happening; how did we get to this point?

The Economic Elite have escalated their attack on US workers over the past few years; however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970 - 2000. With the lion’s share of increased profits going to the CEOs, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.

As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.

Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three quarters of all the economy’s growth was captured by the top 1%.”

Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the US population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all-time record.

As mentioned before, just look at the first full year of the crisis when workers lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans increased by $30 billion, bringing their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the US population. Just to make this point clear, 400 people have more wealth than 155 million people combined.

Meanwhile, 2009 was a record-breaking year for Wall Street bonuses, as firms issued $150 billion to their executives. 100% of these bonuses are a direct result of our tax dollars, so if we used this money to create jobs, instead of giving it to a handful of top executives, we could have paid an annual salary of $30,000 to 5 million people.

So while US workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite.

If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000?

So it should come as no surprise to see that we now have the highest inequality of wealth in the industrialized world and the highest inequality of wealth in our nation’s history. The backbone of America, a hard-working middle class that has made our country a world leader, has been devastated. ....

College Education, Good Jobs: Why Degrees Are Overrated - TIME

2010-03-08T20:22:00.000-08:00

College Education, Good Jobs: Why Degrees Are Overrated - TIME

President Obama echoed the words of countless high school guidance counselors around the country: "In this economy, a high school diploma no longer guarantees a good job." Virginia Governor Bob McDonnell, who gave the Republican response, concurred: "All Americans agree that a young person needs a world-class education to compete in the global economy."

The statistics seem to bear him out. People with college degrees make a lot more than people without them, and that difference has been growing. But does that mean that we should help more kids go to college — or that we should make it easier for people who didn't go to college to make a living? (See the 10 best college presidents.)

We may be close to maxing out on the first strategy. Our high college drop-out rate — 40% of kids who enroll in college don't get a degree within six years — may be a sign that we're trying to push too many people who aren't suited for college to enroll. It has been estimated that, in 2007, most people in their 20s who had college degrees were not in jobs that required them: another sign that we are pushing kids into college who will not get much out of it but debt.

The benefits of putting more people in college are also oversold. Part of the college wage premium is an illusion. People who go to college are, on average, smarter than people who don't. In an economy that increasingly rewards intelligence, you'd expect college grads to pull ahead of the pack even if their diplomas signified nothing but their smarts. College must make many students more productive workers. But at least some of the apparent value of a college degree, and maybe a lot of it, reflects the fact that employers can use it as a rough measure of job applicants' intelligence and willingness to work hard.

We could probably increase the number of high school seniors who are ready to go to college — and likely to make it to graduation — if we made the K-12 system more academically rigorous. But let's face it: college isn't for everyone, especially if it takes the form of four years of going to classes on a campus. (See pictures of the college dorm's evolution.)

It is absurd that people have to get college degrees to be considered for good jobs in hotel management or accounting — or journalism. It is inefficient, both because it wastes a lot of money and because it locks people who would have done good work out of some jobs. The tight connection between college degrees and economic success may be a nearly unquestioned part of our social order. Future generations may look back and shudder at the cruelty of it.

Les Leopold: Why are We Afraid to Create the Jobs We Need?

2010-03-08T19:55:00.000-08:00

Les Leopold: Why are We Afraid to Create the Jobs We Need?

...

Our government has all the money and power (and yes, borrowing capacity) it needs to hire these workers directly or fund contractors and state governments to hire them. Either way, workers would get the jobs, and we would get safer bridges and roads, a greener environment, better schools, and a brighter future all around. So what are we waiting for?

Here's what I've heard:

1. The private sector will create enough jobs, if the government gets out of the way.Possibly, but when? Right now more than 2.7 percent of our entire population has been unemployed for more than 26 weeks -- an all time-record since the government began compiling that data in 1948. No one is predicting that the private sector is about to go on a hiring spree. In fact, many analysts think it'll take more than a decade for the labor market to fully recover. You can't tell the unemployed to wait ten years.

Counting on a private sector market miracle is an exercise in faith-based economics. There simply is no evidence that the private sector can create on its own the colossal number of jobs we need. If we wanted to go down to a real unemployment rate of 5% ("full employment"), we'd have to create about 22.4 million jobs. (See Leo Hindery's excellent accounting.) We'd need over 100,000 new jobs every month just to keep up with population growth. It's not fair to the unemployed to pray for private sector jobs that might never come through.

2. We can't afford it. Funding public sector jobs will explode the deficit and the country will go broke: This argument always makes intuitive sense because most of us think of the federal budget as a giant version of our household budget - we've got to balance the books, right?

I'd suggest we leave that analogy behind. Governments just don't work the same way as families do. We have to look at the hard realities of unemployment, taxes and deficits.

...

3. Private sector jobs are better that public sector jobs.
Why is that? There is a widely shared perception that having a public job is like being on the dole, while having a private sector job is righteous. Maybe people sense that in the private sector you are competing to sell your goods and services in the rough and tumble of the marketplace--and so you must be producing items that buyers want and need. Government jobs are shielded from market forces.

But think about some of our greatest public employment efforts. Was there anything wrong with the government workers at NASA who landed us on the moon? Or with the public sector workers in the Manhattan project charged with winning World War II? Are teachers at public universities somehow less worthy than those in private universities? Let's be honest: a good job is one that contributes to the well-being of society and that provides a fair wage and benefits. During an employment crisis, those jobs might best come directly from federal employment or indirectly through federal contracts and grants to state governments.

This myth also includes the notion that the private sector is more efficient than the public sector. Sometimes it is, but mostly it isn't. Take health care, which accounts for nearly 17 percent of our entire economy. Medicare is a relative model of efficiency, with much lower administrative costs than private health insurers. The average private insurance company worker is far less productive and efficient than an equivalent federal employee working for Medicare. (See study by Himmelstein, Woolhandler and Wolfe)

4. Big government suffocates our freedom. The smaller the central government, the better -- period, the end. This is the hardest argument to refute because it is about ideology not facts. Simply put, many Americans believe that the federal government is bad by definition. Some don't like any government at all. Others think power should reside mostly with state governments. This idea goes all the way back to the anti-federalists led by Thomas Jefferson, who feared that yeomen farmers would be ruled (and feasted upon) by far-away economic elites who controlled the nation's money and wealth.

...

Unfortunately, none of our political leaders have the nerve to declare an employment emergency and get busy creating millions of new jobs. Maybe it's because so many of them got elected with money from the financial industry, and Wall Street doesn't give a damn about jobs. The bankers are happy to continue their taxpayer-financed gambling spree, secure in the knowledge that they are still too big to fail. The Tea Party, instead of focusing its ire on these rapacious bankers, prefers to skewer big government and taxes, giving politicians one more reason to sit on their hands instead of creating jobs now.

Meanwhile, the unemployed are still out in the cold. Maybe the new Coffee Party will provide something more than warm drinks to those without jobs. But you heard it here first: We're going to have big trouble in this country if we don't create jobs for the unemployed in a hurry. They need them. They deserve them. We need to build a movement to demand them. ...

Daily Kos: State of the Nation

2010-03-08T19:30:00.000-08:00

Daily Kos: State of the Nation | Jobless Report Tends to Confirm Tepid Recovery

by Meteor Blades

Fri Mar 05, 2010 at 06:03:31 AM PST

It was the same story as last month in the lead up to today's release of the Bureau of Labor Statisticsjobs report: A couple of weeks of mixed economic news. The report clocked in this morning with the jobless numbers well below the consensus predicted by experts surveyed by Bloomberg and The Wall Street Journal: a seasonally adjusted loss of 36,000 nonfarm jobs for February. The headline unemployment rate held steady at 9.7%. U6, the alternative measure that counts underemployed workers and a portion of those out of work Americans too discouraged to look for a job, rose to 16.8%.

^{Click for larger version of this now iconic Calculated Risk graphic}

Employment fell in construction, the information industry, transportation and warehousing. Temporary help services, health care and the retail trade added jobs. Severe winter weather may have affected the job statistics, leaving some workers uncounted, but quantifying exactly how many was not possible, the BLS stated. Economists at Macroeconomic Advisers LLC in St. Louis said the bad weather might reduce the payroll count by anywhere from 150,000 to 220,000 workers, according to Bloomberg. That undercount will probably be reversed this month, they said.

Revisions ~~raised~~ lowered the job losses in December from the 150,000 reported last month to 109,000 and boosted the job losses for January from 20,000 to 26,000.

The tally of officially unemployed rose slightly to nearly 14.9 million, with the U6 population of unemployed and underemployed still clocking in at nearly 26 million. The civilian labor force participation rate rose slightly to 64.8 percent in February. The employment-population ratio went from to 58.4 percent in January to 58.5% in February. ...

NUMMI Closing Highlights Need for U.S. Manufacturing Policy | OurFuture.org

2010-03-06T08:02:00.000-08:00

NUMMI Closing Highlights Need for U.S. Manufacturing Policy | OurFuture.org

Closing the New United Motors Manufacturing Inc. automotive plant in California will eliminate 25,000 jobs in the state and cost taxpayers $2.3 billion to replace the jobs lost, according to a March 3 report by University of California professor Harley Shaiken. The Daily Labor Report (subscription required) notes:

California and municipalities near the Fremont, Calif., plant will lose nearly a billion dollars of revenue in the decade after the plant closes, according to a blue-ribbon panel formed by state Treasurer Bill Lockyer (D). Using estimates by the President's Council of Economic Advisers, the report found that "just creating 4,700 jobs--the number lost at NUMMI itself--would cost $433 million."

Jobs lost. Lives destroyed. Communities weakened. Billions of dollars down the drain. All because companies can only improve their bottom line by going after the cheaper labor they can find in other countries, right? Not so, writes Ralph Gomory, president emeritus at the Alfred P. Sloan Foundation and former IBM senior vice-president of science and technology (h/t Alliance for American Manufacturing).

Cheap labor abroad is cited as the incurable handicap that explains why the United States cannot compete. But cheap labor doesn't explain the fact that Japan and Germany, both high-wage countries, are successful in the automobile industry. Nor does it explain how semiconductors, a model of a high investment, low-labor content industry, are mainly made in Asia. The premise that the inescapable burden of competing against low wages means failure is simply not correct.

Even more disturbing than this big lie, says Gomory, is the unwillingness of our nation's leaders to address the consequences of not competing.

Today our companies are motivated to take innovations abroad, produce there and import the goods into the United States. Increasingly we can expect services also to go overseas. We must produce here in the U.S.A., to employ the people of this country, and we must keep their activities effective by a steady stream of innovations in design and production. While other countries roll out a welcome mat of tax breaks and subsidies for our companies because their common sense tells them that their people being employed in productive work is the road to being a rich country, we provide no incentive for U.S. companies to produce here.

Good move, then, by Sen. Sherrod Brown (D-Ohio), who led a bipartisan group of 10 senators in sending a letter to President Obama urging the adoption of a national manufacturing policy. The letter states, in part:

The loss of manufacturing plants and jobs has stifled economic opportunity for middle class families and compromised our ability to compete in the 21st century economy. Indeed, for the last several decades, administrations have passed up critical opportunities to formulate a rational and comprehensive manufacturing policy. Continued apathy will undermine our country's ability to achieve energy independence and place our military readiness at risk.

Jobs by Sector Tell a Bleaker Story | OurFuture.org

2010-03-06T07:57:00.000-08:00

Jobs by Sector Tell a Bleaker Story | OurFuture.org

The Department of Labor’s employment data released this morning indicates that we are continuing to lose jobs, 36,000 in February alone, although at a much slower pace than this time last year. The danger now is that with the leveling off of unemployment, policymakers and those in Congress will fixate on month-to-month job numbers rather than taking a holistic look at the entire health of the job market.

When looking at the numbers more closely by sector, the picture remains anemic, particularly for the construction and manufacturing industries.

Of the roughly 4.8 million jobs lost since January 2009, the construction and manufacturing sectors combined have shouldered half of all job losses. On the other hand, the retail and leisure/hospitality industries represent about 15 percent of total job losses.

Attention now has turned to the House passage of a $15 billion jobs bill yesterday. Unfortunately, this legislation is woefully inadequate to meet the magnitude of jobs that must be created across any sector, let alone to plug the entire gap of 8.5 million total job losses since the recession began in 2008. This is why a larger jobs bill is needed, and why the U.S. should take on measures such as Germany’s short-time working program that has successfully saved over one million jobs in the country.

These policies are not just good for the here and now though, they set a good foundation so our industries keep valuable, skilled workers as we look to rebuild our economy with greater investment and a strong industrial policy.

For Older Workers, a Longer Job Search - Economix Blog - NYTimes.com

2010-03-06T07:52:00.000-08:00

For Older Workers, a Longer Job Search - Economix Blog - NYTimes.com

By CATHERINE RAMPELL

Older workers are much less likely to be unemployed than younger workers. But when old people do lose their jobs, they’re likely to be out of work for much longer than their spring-chicken counterparts.

We have written before about the extraordinarily high unemployment rates facing America’s teenagers. In February, for example, the jobless rate among 16- to 19-year-olds was a whopping 25 percent on a seasonally adjusted basis, whereas for workers over all it was 9.7 percent. For workers over age 55, it was just 7.1 percent.

...

Here’s a chart showing the average duration of unemployment for jobless workers in seven different age groups. (Note: The Labor Department does not adjust these numbers for seasonality, so I’ve plotted a 12-month moving average for each age group.)

Source: Bureau of Labor Statistics

In the chart you can see that the average unemployed person over age 65 has been out of work about 70 percent longer than the average teenager.

That gap in duration of joblessness has also been growing over the past year:

Source: Bureau of Labor Statistics

Why are older workers spending so much more time unemployed than their younger counterparts?

A few possible reasons:

1) Younger people are more likely to drop out of the labor force entirely if they can’t find work. Perhaps they can rely on parents or other relatives to support them. Whatever the rationale, if they’ve dropped out of the labor force, they no longer count as unemployed, and so they stop racking up weeks of unemployment.

2) Older workers may be more likely to have been laid off from industries that were in permanent (not just cyclical) decline, such as manufacturing or (gulp) journalism. These industries have in recent years been shrinking through attrition — i.e., not replacing their older workers when they retire — so they have been gradually getting grayer. Once the recession hit, some of their relatively older employees got the ax, and there are few similar job opportunities for them to turn to.

3) Related to #2, older workers may be less open to retraining for a new career, or to taking a job below the status and pay of the job they had lost, than younger workers. It’s one thing to be told you have to work your way up from minimum wage when you’re 25. It’s a different thing when you’re 65.

4) Employers might discriminate against older workers, perhaps because they falsely assume that #3 is true or that you can’t teach an old dog new tricks.

5) Younger workers may also be more likely to move to a new place for a job since they are less likely to own their homes. This gives them more flexibility in what jobs they can apply for.

Economist's View: "The Chicago Boys and the Chilean Earthquake"

2010-03-05T11:46:00.000-08:00

Economist's View: "The Chicago Boys and the Chilean Earthquake"

Andrew Leonard takes on an op-ed in the WSJ lauding the Chicago Boys:

The Chicago boys and the Chilean earthquake, by Andrew Leonard: The ghost of Milton Friedman, writes Bret Stephens in the Wall Street Journal, "was surely hovering protectively over Chile in the early morning hours of Saturday."

Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.

Stephens' logic is simple. After the U.S.-backed coup in 1973, in which Gen. Pinochet seized power from the democratically elected president Salvador Allende, a group of Chilean economists mentored by Friedman, and known to history as "the Chicago boys," instituted a series of radical free market reforms. Since that point, averaged over the decades, Chile has experienced the strongest sustained economic growth in South America. Rich countries, argues Stephens, are more likely to institute and enforce building codes. Q.E.D. Milton Friedman saved lives.

Some might find it intellectually provocative to cite Milton Friedman's authority in an argument that depends on the foundation of successfully enforced government-mandated building code regulations. The building inspector is not exactly a libertarian hero. Others might wonder if a more important factor in Chile's relatively tough building codes might be the devastating 9.5 earthquake the country endured in 1960. Haiti hadn't experienced an earthquake as bad as the one this January in 240 years. Earthquake resistant building codes tend to be taken more seriously in regions that are accustomed to regular bouts of annihilation.

But the earthquake is just a side show for the opinion page of the Wall Street Journal -- just another opportunity, however shameless, to push free market fundamentalism. One ... pertinent question might be to ask just how much credit really is due Chicago-school economics for Chile's current relative prosperity? Mining alone accounts for 20 percent of Chile's GDP, and it is very much worth noting that the country's crown jewel, the copper industry, is completely dominated by one state-ownedcompany, Codelco. Ponder that, for a second: Latin America's poster child for Chicago school economics features state control of the single most important economic resource. Huh.

Chile also suffers from some of worst income inequality in the world...

The part where the op-ed said that we should be thankful that Milton Friedman caused more regulation, isn't Milton Friedman great for doing that, caught my attention as well. After all, from a Chicago perspective, markets don't need external guidance, they're are almost always self-regulating. Markets create the incentives needed to ensure that nobody would ever build unsafe financial assets cars buildings.

Fantasies of the Chicago Boys - Paul Krugman Blog - NYTimes.com

2010-03-05T11:34:00.000-08:00

Fantasies of the Chicago Boys - Paul Krugman Blog - NYTimes.com

Ah, Chile. Remember how, during the Social Security debate, Chile’s retirement system was held up as an ideal — except it turned out that it actually yielded very poor results for many people, and the Chileans themselves hated it? Now we have the usual suspects claiming that Chile’s relatively low death toll in the quake proves that — you guessed it — Milton Friedman was right. You see, the Chicago Boys made Chile rich, and that’s what did it.

...

Actually, as you can see from the chart above, what happened was this: Chile had a huge economic crisis in the early 70s, which was, yes, partly due to Allende and the accompanying turmoil. Then the country experienced a recovery driven in large part by massive capital inflows, which mostly consisted of making up the lost ground. Then there was a huge crisis again in the early 1980s — part of the broader Latin debt crisis, but Chile was hit much worse than other major players. It wasn’t until the late 1980s, by which time the hard-line free-market policies had been considerably softened, that Chile finally moved definitively ahead of where it had been in the early 70s.

So: free-market policies are applied, and presto! prosperity follows — fifteen years later.

But remember, Obamanomics has definitely failed after 13 months.

Economist's View: "A New Age of Monopolies"

2010-03-05T11:13:00.000-08:00

Economist's View: "A New Age of Monopolies"

Monopoly power was a much bigger concern in the past than it is today. Why aren't people more concerned about this?:

A New Age of Monopolies, by Thomas frank, Commentary, WSJ: ...Barry C. Lynn's recent book ... arises directly from the old antitrust tradition, and it presents us with an amazing catalogue of present-day monopolies, oligopolies and economic combinations. Its subjects are, by definition, some of the largest and most powerful organizations in the world. And yet almost none of it was familiar to me.

Mr. Lynn tells us, for example, about the power of single companies or small groups of companies over such disparate fields as eyeglasses, certain categories of pet food, washer-dryer sales, auto parts, many aspects of food processing, surfboards, medical syringes...

Nor had I ever heard about what Mr. Lynn calls "the vitamin cartel," or the "nearly complete roll-up" of advertising agencies, or that the "key industrial legacy" of now-imprisoned business executive Dennis Kozlowski was a company "that specialized in forging monopolies over U.S. marketplaces for everything from catheters to fire sprinklers to clothes hangers," or that a recent management book encourages readers to see monopoly power as the main goal of business strategy.

Mr. Lynn is a senior fellow at the New America Foundation in Washington; he first came to my attention with a memorable 2006 essay in Harper's Magazine in which he described the power Wal-Mart exerted over its suppliers...
Mr. Lynn ... describes companies that swallow their rivals and then, with competitive pressure diminished, set about "destroying product variety and diversity." ... We learn of entire industries where competitors have grown so close to one another that a collapse at one company would probably bring down many of the others as well.

This is, we are often reminded, a populist age, with fresh flare-ups of fury every time Wall Street bonuses hit the headlines. ...Mr. Lynn's anger at the Wall Street bailout, his fondness for small business, and his frequent homages to the nation's founders may seem superficially similar to the attitudes of the tea party protesters. But Mr. Lynn also takes pains to demonstrate that the economic "freedom" so beloved by the snake-flag set has actually yielded the opposite of freedom: a "neofeudal" system of "private corporate governments" answerable to no one. ...

Baffler -�Let Them Eat Dogma

2010-03-05T09:03:00.000-08:00

Baffler -�Let Them Eat Dogma

...

... The Republicans ruled the policy world as “the party of ideas,” President George W. Bush famously pronounced, and all sorts of his erstwhile enthusiasts on the right, from tax-cutting think tank impresario Grover Norquist to Weekly StandardWarmonger-in-Chief William Kristol, lustily seconded the notion.

But then a funny thing happened: The conservative utopia of shrinking government, financial deregulation and upward income distribution became a hulking disaster. Major investment banks teetered on the brink of oblivion in the catastrophic Panic of 2008; pension funds spiraled into free-fall; the auto industry went on federal life support; and home foreclosure after home foreclosure has rendered many onetime boomtowns virtual diorama showcases for the wreckage bequeathed by alchemical works of market triumphalism, such as credit default swaps, mortgage-backed securities and the efficient market hypothesis.

And just like that, the idea-intoxicated American right vanished. As the federal government stirred out of its decades-long regulatory slumber and started to meet the financial calamity with urgently needed deficit spending, conservatives of the Gingrich vintage, who had long advertised their fealty to the high-tech, low-tax future, morphed seemingly overnight into the intellectual equivalent of historical re-enactors. Much as the Mormon faithful trek annually to the upstate New York festival in Palmyra to see their faith’s creation myth in a lavishly produced pageant, so have the conservative faithful repaired en masse back to the musty site of their modern genesis, the 1930s New Deal.

But this pageant of faith is a disorienting spectacle indeed. Instead of reckoning with a starkly transformed global economy, or the crucial ways in which their core precepts have been rudely upended, conservative thinkers are reviving 70-odd-year-old talking points from the Liberty League—the network of rock-ribbed Roosevelt haters who clustered in corporate boardrooms and Chamber of Commerce lobbies during the Thirties—thereby, one supposes, to finish the job their ancestors started: discrediting the New Deal and its legacy once and for all.

...

Letting the free market administer its mystic remedies—reallocating capital and labor in more efficient fashion—is the de facto position of all right-wing Thirties revisionists, from the impressionistic Shlaes to the various von Mises hardliners. But nothing like that outcome would ensue in a laissez-faire approach—then or now—for the simple reason that laissez-faire conditions are what eroded demand and pumped up speculation in the first place. It’s very much like trying to cure pneumonia by standing out in the rain.

Free market shibboleth remains serenely oblivious to such considerations, however. After all, Shlaes counsels, “the market had its own natural laws.” And it’s the law, evidently, that business interests should never be molested—for they, and they alone, dictate the course of the common good. Hence the 1937-38 recession—which most students of the era attribute to Treasury Secretary Henry Morgenthau’s abrupt call to slash federal spending as demand still faltered—was actually caused, in Shlaes’ judgment, by artificially high wages, frightening investors (of course) and driving up unemployment. Which means the FDR-empowered labor movement was a principal culprit.

By this reasoning, the labor movement itself, like the socialist outlook it recklessly foments, is a thing of perversity, which did not, in the case of the more militant Congress of Industrial Organizations “necessarily, represent the average worker.” What’s more, as unions secured stronger footholds in American workplaces, their success “only seemed to make them more bellicose.” As for the Wagner Act, which legalized collective bargaining, thereby triggering these manifold disasters, it “was continuing to hurt profitability” at U.S. corporations. Even as General Motors, for instance, saw its sales rise in the wake of the historic 1937 sit-down strikes that marked the founding of the United Auto Workers, its earnings declined: “The new wages and the costs of the strikes had made the companies less valuable.” Never mind that by any honest reckoning of the Flint sit-down strikes, GM executives bore at least as much responsibility for their costs as the striking workers—especially since their basic strategy was to starve out the UAW organizers. Never mind, in addition, that those same “new wages” helped make generations of autoworkers—many of them recent African-American transplants from the Jim Crow South—relatively prosperous members of a middle class whose wages stoked broader consumer demand. No, if companies are made less valuable, then any social movement or incremental progress toward industrial democracy reflects perverse “belligerence” and must be judged a miserable failure.

Of course, as Shlaes has admitted elsewhere, blaming wage increases for chronic unemployment through the Depression requires a critical bit of number-fudging: She uses figures that count WPA and other work-relief employees as unemployed, since, you know, everything the government does is by definition illegitimate. This trick allows Shlaes to omit fully a third of American workers drawing government pay from her tallies— and contend that unemployment during the 1937-38 downturn “was again hitting a full two in ten.” ...

A Country of Serfs Ruled By Oligarchs by Paul Craig Roberts on Creators.com - A Syndicate Of Talent

2010-03-05T08:59:00.000-08:00

A Country of Serfs Ruled By Oligarchs by Paul Craig Roberts on Creators.com - A Syndicate Of Talent

...

The problems of the American economy are too great to be reached by traditional policies. Large numbers of middle class American jobs have been moved offshore: manufacturing, industrial and professional service jobs. When the jobs are moved offshore, consumer incomes and U.S. GDP go with them. So many jobs have been moved abroad that there has been no growth in U.S. real incomes in the 21st century, except for the incomes of the super rich who collect multi-million dollar bonuses for moving U.S. jobs offshore.

Without growth in consumer incomes, the economy can go nowhere. Washington policymakers substituted debt growth for income growth. Instead of growing richer, consumers grew more indebted. Federal Reserve chairman Alan Greenspan accomplished this with his low interest rate policy, which drove up housing prices, producing home equity that consumers could tap and spend by refinancing their homes.

Unable to maintain their accustomed living standards with income alone, Americans spent their equity in their homes and ran up credit card debts, maxing out credit cards in anticipation that rising asset prices would cover the debts. When the bubble burst, the debts strangled consumer demand, and the economy died.

As I write about the economic hardships created for Americans by Wall Street and corporate greed and by indifferent and bribed political representatives, I get many letters from former middle class families who are being driven into penury. Here is one recently arrived:

"Thank you for your continued truthful commentary on the 'New Economy.' My husband and I could be it's poster children. Nine years ago when we married, we were both working good paying, secure jobs in the semiconductor manufacturing sector. Our combined income topped $100,000 a year. We were living the dream. Then the nightmare began. I lost my job in the great tech bubble of 2003, and decided to leave the labor force to care for our infant son.

...

Policymakers who are banking on stimulus programs are thinking in terms of an economy that no longer exists. Post-war U.S. recessions and recoveries followed Federal Reserve policy. When the economy heated up and inflation became a problem, the Federal Reserve would raise interest rates and reduce the growth of money and credit. Sales would fall. Inventories would build up. Companies would lay off workers.

Inflation cooled, and unemployment became the problem. Then the Federal Reserve would reverse course. Interest rates would fall, and money and credit would expand. As the jobs were still there, the work force would be called back, and the process would continue.

It is a different situation today. Layoffs result from the jobs being moved offshore and from corporations replacing their domestic work forces with foreigners brought in on H-1B, L-1 and other work visas. The U.S. labor force is being separated from the incomes associated with the goods and services that it consumes. With the rise of offshoring, layoffs are not only due to restrictive monetary policy and inventory buildup. They are also the result of the substitution of cheaper foreign labor for U.S. labor by American corporations. Americans cannot be called back to work to jobs that have been moved abroad. In the New Economy, layoffs can continue despite low interest rates and government stimulus programs.

To the extent that monetary and fiscal policy can stimulate U.S. consumer demand, much of the demand flows to the goods and services that are produced offshore for U.S. markets. China, for example, benefits from the stimulation of U.S. consumer demand. The rise in China's GDP is financed by a rise in the U.S. public debt burden.

Another barrier to the success of stimulus programs is the high debt levels of Americans. The banks are being criticized for a failure to lend, but much of the problem is that there are no consumers to whom to lend. Most Americans already have more debt than they can handle.

Hapless Americans, unrepresented and betrayed, are in store for a greater crisis to come. President Bush's war deficits were financed by America's trade deficit. China, Japan, and OPEC, with whom the U.S. runs trade deficits, used their trade surpluses to purchase U.S. Treasury debt, thus financing the U.S. government budget deficit.

The problem now is that the U.S. budget deficits have suddenly grown immensely from wars, bankster bailouts, jobs stimulus programs, and lower tax revenues as a result of the serious recession. Budget deficits are now three times the size of the trade deficit. Thus, the surpluses of China, Japan, and OPEC are insufficient to take the newly issued U.S. government debt off the market. ...

The Myth of the manufacturing recovery | OurFuture.org

2010-03-04T11:04:00.000-08:00

The Myth of the manufacturing recovery | OurFuture.org

This post originally appeared at The Huffington Post, Robert Scott is Senior International Economist and Director of International Programs, Economic Policy Institute. It is posted as part of our series, Is Manufacturing Making It?

Some bloggers have suggested that manufacturing is doing well, just because output has grown for the past few months. One sets up a straw man in a piece title "No, Virginia, U.S. Manufacturing isn't dead," but no serious economist claims that manufacturing is dead. Manufacturing employed 11.5 million workers in January, 2010, 8.9% of U.S. non-farm employment. However, nearly 6 million manufacturing jobs have disappeared since 1998, and manufacturing's share of GDP has fallen by a similar share in that time. The Bonddag blog and many others claim that productivity growth is responsible for manufacturing job loss, but they've got it wrong. Growing manufacturing trade deficits from 1998 to 2006, and the worst recession since the 1930s are responsible for the vast majority of all manufacturing job loss. We can reclaim a large share of these jobs by shrinking the trade deficit and putting this recession behind us.

I explained the relationship between manufacturing output, productivity growth, trade deficits and job loss in my Snapshot on Manufacturing Job Loss: Productivity is not the culprit. It shows that productivity has always grown rapidly in manufacturing--there was no big upsurge in the past decade. The recent uptick in productivity occurred in other sectors of the economy, which does help explain why job growth economy-wide was so terrible in the Bush era, but that's another story. With manufacturing, the story is simple.

In the past, we had high growth in real output and high output growth in manufacturing leading to stable employment. Then, after 2000, productivity growth continued but output growth flat-lined and manufacturing employment collapsed. The reason: a soaring trade deficit in manufacturing products. People kept buying more manufactured goods; they just bought them from China and other exporters, not from U.S. manufacturers. Josh Bivens reviewed this history in his earlier Snapshot on Trade Deficits and Manufacturing Employment.

In the past, employment and the trade deficit in manufacturing were roughly stable for 30 years from the late 60s through the late 90s.* Then the Asian financial crisis hit in 1998. The value of the dollar soared along with the manufacturing trade deficit. Manufacturing employment fell like a rock, with a lag of about 2 years, as shown in the graph below. The manufacturing trade balance did start to improve in 2007, but the big drop in the deficit came in 2008 and 2009, and was caused by the recession. The recession was also responsible for the loss of about 2 million of the 5.7 million manufacturing jobs lost since 1998.

US Manufacturing -- Losing Out? | OurFuture.org

2010-03-04T11:02:00.000-08:00

US Manufacturing -- Losing Out? | OurFuture.org | By Clyde Prestowitz | March 2, 2010 - 2:01pm ET

Clyde Prestowitz is founder and President of the Economic Strategy Institute. It is posted as part of our series, Is Manufacturing Making It?

Since manufacturing is about 11 percent of U.S. GDP, anyone who has been saying it’s dead has obviously been engaging in hyperbole. But few if any serious observers have been saying this. Rather, what they have been saying is that U.S. manufacturing has been declining unnecessarily and at an unnatural rate that is harmful to the American standard of living. Production index statistics that show rising output do not disprove this.

A large portion of U.S. manufacturing output is of non-tradable or not easily tradable goods, things like toilet tissue, ply-wood, soap, catalogues, and the like. This is the core of our manufacturing base and it will always be with us. It’s not dead and it’s not going to die. Indeed, as the overall economy grows, this production of non-tradable or not easily tradable goods will grow along with it. If we did not produce any tradable goods at all, our manufacturing output would still show an increase when the economy grew.

For most of its history, America has also been a major producer of tradable goods – things like steel, airplanes, semiconductors, machinery, appliances, and so forth. Indeed, we still produce some of these things, but far fewer than we used to. As a result, manufacturing as a percent of GDP has been in steady decline from about 25 percent in the early 1980s to today’s roughly 11 percent. This decline has been particularly precipitate in the past decade during which there has been about a 6 percentage point plunge.

To some extent, this decline is natural and inevitable. Manufacturing as a percent of GDP tends naturally to decline in all economies as they develop and mature. This is even happening to China’s economy now despite its having become the workshop of the world. But the decline in the manufacturing share of the U.S. economy has been far more dramatic than in any other industrialized economy. Even in the UK which has long emphasized services as the core of its economy, manufacturing is nearly 13 percent of GDP. For Germany, Japan, France, Italy, and most other OECD countries the shares range from 15 to 25 percent. Since America has roughly the same or better manufacturing oriented resource endowments as these countries, one would expect its manufacturing share of output to be as high or higher. ...

...
This is not at all a pretty or reassuring picture. And it is clearly the result of mercantilist international trade reducing what under normal market conditions would be the expected level of U.S. tradable goods output and of U.S. manufacturing employment.

The Mismeasure of Manufacturing | OurFuture.org

2010-03-04T11:00:00.000-08:00

The Mismeasure of Manufacturing | OurFuture.org

This post is part of our series, Is Manufacturing Making It?

Using statistics primarily sourced from the Federal Reserve, we are repeatedly told that manufacturing isn't dead, just manufacturing employment, due to all our productivity gains. I must disagree that it's all about productivity, as did a group of economists who met last November to discuss government productivity measures, Louis Uchitelle of the New York Times reporting (via Curious Cat:

... The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.

American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics. ...

This is a problem that even extends, as the article goes on to explain, to the service industry. If your accountant is outsourcing some of their tax processing work to India on the cheap, this also boosts US productivity statistics. Tracking the real impact of that imported carburetor, or any other imported intermediate input (say that three times fast,) in the productivity statistics is presumed to require years of work and congressional funding.

Imported Intermediate Inputs

Courtesy also of the Curious Cat blog, some of the economists who realize that manufacturing productivity measurements are distorted do work at the Federal Reserve and wrote about it in a paper entitled, "Offshoring Bias: The Effect of Import Price Mismeasurement on Manufacturing Productivity" (pdf), by Susan Houseman (Upjohn Institute), Christopher Kurz (Federal Reserve Board), Paul Lengermann (Federal Reserve Board), and Benjamin Mandel (Federal Reserve Board). Emphasis mine:

... [We document] the rapid rise in both the levels and share of materials used by U.S. manufactures that are sourced from abroad. Over the ten year period from 1997 to 2007, the import share of total materials jumped roughly 50 percent, as the fraction of materials used climbed from 17 to 25 percent.

...

... Although preliminary, our analysis presents evidence that offshoring bias has been substantial in recent years. We find that the growth rate of imported intermediate input prices may have been biased upwards by between 16 to 35 percentage points, which in turn has led the average annual growth rate in manufacturing productivity to be overstated by 0.1 to 0.3 percentage point or by between 9 and 20 percent over the entire period from 1997 - 2007. These numbers are significant, as 0.1 percent average annual growth rate for multifactor productivity is roughly equal to the average annual contribution of capital to manufacturing growth from 1997 to 2007. ...

...

US manufacturing is losing its footing in consumer markets both at home and abroad, and while the losses aren't total, they're serious. This has been ignored because the financial sector that's been funding the offshoring craze was doing well, and because many observers don't consider job losses to be that big a deal. Now that the finance industry isn't doing well and job losses have been revealed to be a very big deal, now that free trade has been revealed as a unilateral disarmament, can we start caring about this again, please?

The Vicious Cycle

As my colleague Dave Johnson recently pointed out, workers who make $70/week can't buy Whirlpool refrigerators. Nor, for that matter, can they buy new Ford cars. They can't afford mortgages or unsecured lines of credit at the mass consumer levels that would support a robust financial services industry. They can't go out to eat at sit-down restaurants, or afford to patronize other businesses that comprise a strong service sector economy.

Who, in other words, are $70/week workers in Mexico going to be making those refrigerators for? Sure as blazes, it isn't going to be for laid off manufacturing workers in the US who've been pushed into bankruptcy and defaulting on their mortgages in the wake of yet another jobless 'recovery'.

Because the big problem with the declining fortunes of US manufacturing employment is that Wall Street profits become the only thing that recovers after recessions, which seem to be coming thick and fast these days. If that's the kind of future we want, we should keep our eyes fixed firmly on outdated productivity statistics. If it isn't, we should start looking at having a sensible industrial strategy that creates a lot of jobs.

Leo Hindery, Jr.: America's Dirty Little Secret: Who's Really Poor in America?

2010-03-03T13:34:00.000-08:00

Leo Hindery, Jr.: America's Dirty Little Secret: Who's Really Poor in America?
...

To help make their point, they referred me to poverty activist Marsha Timpson, who describes today's poor as "America's dirty little secret, hidden in the backyards of America's shining homes, the hollows, the reservations, the border towns and the dark ghettos of the city where they are the lie of the American dream."

I agree with my friends, and with Ms. Timpson's view, and everyone else should as well, for right now in America:

At least 50 million people are ill-fed -- up from 37 million just a year ago -- including 17 million children. Hunger in America is now at an all-time high, and there are currently entire national geographic regions -- the very large 15-state 'South' being one of them -- where more than half of all public school students are poor and ill-fed.

Although I myself grew up in a fairly hardscrabble environment, as the father of a daughter who was in fact able to create a successful life from the opportunities her mother and I could give her, it is hard for me to imagine what it must be like to have your child needy and hungry. Yet all of us need to 'imagine' this, because each night in America millions of children do in fact go to bed hungry and under-nourished, while also lacking proper housing, needed clothing, and the basic education required to develop and ultimately find gainful employment. And while I wholeheartedly support the First Lady's new "Let's Move" effort to improve the nutrition of America's children, we must first react to basic hunger rather than to food quality.

30% of the nation's 50 million homeowners own a home whose value is below its mortgage balance, and this number could rise to an almost unbelievable 50% by year-end 2011. It would cost about $745 billion, more than the size of the original 2008 bank bailout, to restore these borrowers to the point where they were breaking even, which there is no obvious political will to find right now.

Despite the truly dismal 'real unemployment' figures with which most everyone now agrees -- a staggering 30 million workers and 19% of the labor force -- very little attention is being paid to the particularly adverse effects the recession is having on people of color, recent immigrants, and out-of school youth. And almost no one is acknowledging the sad reality that even the nation's 130 million full-time workers have had an average economic loss of 15% just since December 2007 -- an average effective work week of 34 hours rather than 40 -- which means that the number of unemployed workers, measured economically, is actually as high as 50 million.

The overwhelming problem today for most workers isn't this recession, as horrible as it is -- it's the fact that for every earned income level except the top 10%, average household income hasn't changed a bit for 10 years, and that for the bottom 60% of wage earners it hasn't changed for more than 20 years. Through economic expansions and recessions -- and bull and bear markets -- alike, 90% of workers in America have been standing still earnings-wise.

And 100 million people, fully one-third of the entire U.S. population, are at or below "200% of the federal poverty line of $21,834 for a family of four", which is a needs-measure made lame by the fact that no family of four can actually comfortably live on such a low annual income.

********** ...

Recession has more moms entering workforce - washingtonpost.com

2010-03-03T13:25:00.000-08:00

Recession has more moms entering workforce - washingtonpost.com

At the start of the Great Recession, Lisa Blaker was a stay-at-home mom. Less than a year later, she wasn't. Instead, she became one of hundreds of thousands of women across the country who joined the workforce -- or added hours, or became a sole breadwinner -- amid the nation's most severe economic downturn in generations.

The mothers and wives of this recession have bought groceries, paid mortgages, kept away debt collectors -- stepping in as financial necessity has increasingly altered the eternal struggle between work and home.

Blaker went back to her career in information systems after eight years at home in Gaithersburg. In Silver Spring, musician Alison Crockett continues to work three part-time jobs, even though she had hoped to be with her infant daughter. In Takoma Park, Pamela Fields ratcheted up from part-time to full-time hours, forgoing afternoons with her school-age children.

Recent census data and other figures reflect this reordering of family life: As the recession set in, fewer married women stayed home to raise their children. Wives with jobs worked more. More wives were sole wage-earners. These changes came as men took a bigger hit in the employment market, experiencing three-quarters of all job losses in a gender gap that has led some observers to dub this downturn a "mancession." ...

...
The gender gap shows up in the unemployment rate, which is 10 percent for men and 7.9 percent for women. Experts say male-dominated industries such as construction and manufacturing have been severely affected by the recession, but several fields dominated by women, such as health care and education, have actually added jobs. ...

OpEdNews - Article: America's tenth decile, the "sitting around guys."

2010-03-03T13:23:00.000-08:00

OpEdNews - Article: America's tenth decile, the "sitting around guys."
..
Hebert's column spoke directly to a problem that has been, and continues to be, one we have either intentionally or unintentionally ignored: The peril to the core of our civil society that this Great Recession has created; a combined total un- and underemployment in Northeastern University's Center for Labor Market Studies lowest decile, those households with annual incomes less than $12,499, of 51.4 percent! (A "tile" or "cile" is a population division under a bell curve. For example, the "normal" bell curve is typically divided into five groups, or quintiles. A bell curve with ten such division is called a decile.)

The unemployment rate within this decile is 30.8 percent. The underemployment rate is 20.6 percent. Underemployment is quite as vicious as unemployment. It includes those who are working part-time, when they'd much prefer/need full-time, but cannot get it, are in jobs they are overqualified for, or have given up looking for work because there simply do not exist a sufficient number of jobs they may be qualified for at rates of pay that warrant continued looking.

Before any of us holier-than-thou jump down the throats of those who have given up the chase on the presumption that "any job is better than none," let me introduce the idea that a very real Fortune 500 business decision is being made by those who have given up. For example, if a single mother has no dependable relatives with whom she can leave a preschool child, while the mother is at work, she will have to find and pay for child care. Then arises the business expense of transportation; getting her child(ren) to the day care facility, and then herself to and from the place of employment. One way or another, those compose expenses that must be significantly lower than the net income (gross wages less all taxes and deductions from pay) derived through the employment. Regardless how any of the rest of us might want to feel, it would be an utterly foolish business proposition for that mother to take a job that did not meet those minimum criteria, and were any CEO to engage a similar business opportunity decision similarly, he or she would be rightfully fired. ...

Econbrowser: What Are These Three Numbers?

2010-03-02T18:39:00.000-08:00

Econbrowser: What Are These Three Numbers?

These numbers are expressed in billions of FY2010 dollars.

Figure 1, in billions of FY2010 dollars.

The first bar is the impact on the unified budget balance of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. The second is the impact on the budget balance of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003. The third bar is the CBO estimated impact on the deficit of the Patient Protection and Affordable Care Act proposed in the Senate on November 19, for 2010-2019. ..

The American economy: Almost a lost decade | The Economist

2010-03-02T18:30:00.000-08:00

The American economy: Almost a lost decade | The Economist Almost a lost decade

Mar 1st 2010, 17:45 by S.D. | LONDON

For those of you who missed it: a piece in this week's issue looks at the performance of the American economy in the years 2000-2009 on several dimensions, and compares it to previous decades. It's built around the following charts, which, I think, more or less speak for themselves. Perhaps not quite a lost decade, but the worst, on these measures, since the 1930s (or the 1940s).

...

States may ban credit checks on job applicants - Democratic Underground

2010-03-02T11:59:00.000-08:00

States may ban credit checks on job applicants - Democratic Underground

It's hard enough to find a job in this economy, and now some people are facing another hurdle: Potential employers are holding their credit histories against them.

Sixty percent of employers recently surveyed by the Society for Human Resources Management said they run credit checks on at least some job applicants, compared with 42 percent in a somewhat similar survey in 2006.

Employers say such checks give them valuable information about an applicant's honesty and sense of responsibility. But lawmakers in at least 16 states from South Carolina to Oregon have proposed outlawing most credit checks, saying the practice traps people in debt because their past financial problems prevent them from finding work.

More

How, indeed, can people ever correct their bad credit if they can't get jobs in the first place because of previous bad credit?

The labor movement was the principal force that transformed misery and despair into hope and progress ... captains of industry ... resisted ...

2010-03-01T10:33:00.000-08:00

Quote for Today (Smart People Will get the Point) - Democratic Underground

"The labor movement was the principal force that transformed misery and despair into hope and progress. Out of its bold strugges, economic and social reform gave birth to unemployment insurance, old age pensions, government relief for the destitute and above all new wage levels that meant not mere survival, but a tolerable life. The captains of industry did not lead this transformation; they resisted it until they were overcome.

- Dr. Martin Luther King, Jr. 1965

January home sales fall 7.2 percent - washingtonpost.com

2010-03-01T08:21:00.000-08:00

January home sales fall 7.2 percent - washingtonpost.com

By Dina ElBoghdady | Washington Post Staff Writer | Friday, February 26, 2010; 12:05 PM

The sales of previously owned homes slumped in January for the second month in a row, raising fresh concerns about the housing market's potential for rebound, according to industry statistics released on Friday.

Sales of existing houses, townhouses, condominiums and cooperatives fell 7.2 percent to a seasonally adjusted annual rate of 5.05 million in January from December, the National Association of Realtors reported.

The sales are 11.5 percent higher than they were a year earlier, but the monthly trend is "not encouraging," the group's chief economist, Lawrence Yun, said in a statement. The group has set its sights on spring, when more people are expected to take advantage of a recently renewed tax credit for first-time buyers and some current homeowners.

The sales figures come just days after the federal government reported that sales of newly built homes fell to their lowest level since 1963, when the government first started tracking those numbers. In both cases, many economists had expected a less-drastic drop in sales activity. January's existing home sales were at their weakest point since June. ...

On The Hill: In The 'Back Seat' No More: New Legislation Would Protect Workers, Retirees When Their Employers Go Bankrupt

2010-02-25T16:57:00.000-08:00

On The Hill: In The 'Back Seat' No More: New Legislation Would Protect Workers, Retirees When Their Employers Go Bankrupt
...
“Workers of distressed companies are frequently asked to save their companies by sacrificing their wages, benefits and right to collective bargaining while executives are rewarded with bonuses and golden parachutes,” said Conyers. “Our bill establishes that sacrifice should be spread evenly among all employees when companies face bankruptcy.”

Lawmakers say that the Protecting Employees and Retirees in Business Bankruptcies Act would protect workers from losing out by:

Improving Recoveries for Employees and Retirees:
· Doubles the maximum value of wage claims entitled to priority payment for each worker to $20,000
· Allows a second claim of up to $20,000 for contributions to employee benefit plans
· Eliminates the restriction that wage and benefit claims must be earned within 180 days of the bankruptcy filing in order to be entitled to priority payment
· Allows workers to assert claims for losses in certain defined contribution plans when such losses result from employer fraud or breach of fiduciary duty
· Establishes a new priority administrative expense for workers’ severance pay
· Clarifies that back pay awarded via WARN Act damages are entitled to the same priority as back pay for other legal violations

Reducing Employees’ and Retirees’ Losses:
· Restricts the situations in which collective bargaining agreements can be rejected, tightens the criteria by which collective bargaining agreements can be amended, and encourages negotiated settlements
· Toughens the procedures through which retiree benefits can be reduced or eliminated, including preventing companies seeking retiree health benefit reductions from singling out non-management retirees for concessions
· Requires the court to consider the impact of a bidder’s offer to purchase a company’s assets would have on maintaining existing jobs and preserving retiree pension and health benefits
· Clarifies that the principal purpose of Chapter 11 bankruptcy is the preservation of jobs to the maximum extent possible

Restricting Executive Compensation Programs:
· Requires disclosure and court approval of executive compensation for firms in bankruptcy
· Prohibits the payment of bonuses and other forms of incentive compensation to senior officers and others
· Ensures that insiders cannot receive retiree benefits if workers have lost their retirement or health benefits

Durbin and Conyers say that their bill enjoys strong labor support.

“Workers and retirees throughout American industry have seen hard-won benefits stripped away by a deadly combination of American bankruptcy laws and other governmental policies that have for years been aligned against their interests,” ....

OpEdNews - Article: The Least Productive People in the World

2010-02-25T06:07:00.000-08:00

OpEdNews - Article: The Least Productive People in the World

Income and Productivity Charts

Productivity, as determined by labor output, has been measured for decades, or longer.But, while it's important to look at who, or what, is the most productive person or enterprise, shouldn't we also look at the least productive people, that is, the least effective laborers? Perhaps by understanding who the least productive people are, we can learn how to make them more productive. This would help them, and help society.

So, who are the least productive people?

...

Pandit didn't create the mess Citi is in, but"when Pandit took over, Citi was already on track to report write-downs and increased credit costs of $20 billion. Today, the banking supermarket is propped up by $45 billion in bailouts and is, in effect, owned by the U.S. government.

THE STAT: Although Pandit's currently earning $1 a year, his pay package was valued at $38.2 million for 2008, a year when taxpayers kept the firm in business.

Carly Fiorina Hewlett-Packard

A consummate self-promoter, Fiorina was busy pontificating on the lecture circuit and posing for magazine covers while her company floundered. She paid herself handsome bonuses and perks while laying off thousands of employees to cut costs. The merger Fiorina orchestrated with Compaq in 2002 was widely seen as a failure. She was ousted in 2005.

THE STAT: HP stock lost half its value during Fiorina's tenure.

Stanley O'Neal Merrill Lynch

Stanley O'Neal's abrasive personality and ruthless cost cutting earned him many enemies, but his push toward riskier bets and subprime exposure led to his ouster. After Merrill posted the biggest quarterly loss in its 93-year history--and O'Neal was caught approaching Wachovia about a merger without the board's approval--he was finally fired.

THE STAT: O'Neal walked out the door with $161.5 million in severance.

Gerald Levin Time-Warner

Levin's failure comes down to one colossal mistake: In his desperate eagerness to become a new-media CEO, he orchestrated a megamerger between Time Warner and a vastly overvalued AOL--one of the worst acquisition deals ever. "He had the largest midlife crisis in the history of American capitalism," one of our panelists quipped.

THE STAT: The AOL deal destroyed over $200 billion in Time Warner shareholder value.

...

Roger Smith General Motors

The CEO's job is often thankless, and no one was ever thanked less than Roger Smith, General Motors chairman from 1981 to 1990 and the unwitting stooge of Michael Moore's mockumentary Roger and Me.

He started his career at the company in 1949 as a green-eyeshade guy, a lowly accounting clerk. His 1984 reorganization attempted to streamline GM's back-of-the-house operations but was, in a word, a disaster. It sowed confusion and disorder that practically idled the automaker for months. Current CEO Rick Wagoner has said, "We've been 12 to 14 years digging out from that."

Al Dunlap Scott Paper/Sunbeam Corporation

Picked by the board of Scott Paper Co. as the man to turn the struggling company around, Dunlap earned his nickname "Chainsaw Al" by slicing 11,000 employees. When Scott merged with Kimberly-Clark, Dunlap's payoff was estimated at more than $100 million.

Dunlap's memoir/manifesto, Mean Business, roughly coincided with his next CEO star turn, which was also to be his last. Sunbeam's stock surged on the news that the Chainsaw was coming; massive workforce reductions and factory closures followed within months.

Unable to flip Sunbeam to a new buyer, as he'd done with Scott, Dunlap was stuck actually running the company. He failed spectacularly. Within two miserable years, the board fired him. The tactics he'd used to stave off losses--the company overstated its net income by $60 million, which was real money back (in 1998)--earned him a civil suit from the SEC and a class-action suit by shareholders. Dunlap eventually settled both and was barred from serving as an officer or director of any public company.

Bernie Ebbers - Worldcom

The ultimate corporate shopaholic, Ebbers bought an obscure telephone carrier in the 1980s and went on a 17-year acquisition binge that turned it into the world's largest telecom company. Alas, his passion for dealmaking didn't translate into the savvy necessary for running the complex business. When telecom stocks went south in 2000, the company's massive debt was exposed. Ebbers tried to disguise it through fraudulent accounting. In 2005, three years after WorldCom filed for bankruptcy, he was convicted of overseeing $11 billion worth of accounting fraud. He's now serving a 25-year prison term.

THE STAT: When Ebbers resigned, in 2002, WorldCom stock had fallen to $1.79 from a peak of $64.50 in 1999.

Ken Lay - Enron

...

OpEdNews - Article: Smaller federal government equals bigger corporate government

2010-02-25T05:57:00.000-08:00

OpEdNews - Article: Smaller federal government equals bigger corporate government

...

America's workers became a vibrant middle-class, not only by providing society with necessary services, but also because the federal government protected their living standards against the power of financial interests to control the labor market.

For much of the past century our national political leaders passed laws that minimized the destructive competition that could occur between states as they lowered their labor standards in order to attract industry. They could go only so far in the race to the bottom when it came to hourly wages, safe working conditions, the 40-hour workweek, child labor, and so on. As a result, the U.S.--as a unified nation--developed the strongest and most vibrant middle class in history.

However, conservative politicians gradually reversed the process that made the U.S. the most powerful and economically successful country in the world. Instead of preventing destructive competition between states, they encouraged it. When the federal government allowed states to enact "right-to-work" laws, anti-union states attracted industry by offering corporations a relatively union-free environment, compared to states that still respected workers' right to organize. Anti-labor states also increased their competitiveness by barely meeting federal standards for wages and working conditions, thus undercutting states that had higher than federal standards.

The trend continues today, as corporations pit states against each other in bidding for new industry. The state that can give a corporation the biggest tax breaks and can assure a union-free environment, the fewest worker protections, and the greatest government handouts (such as road and rail construction, free fire and police protections, lower utility costs)--is the state that gets to reduce its ruinous unemployment rate.

This same principle works on a global level, and is the reason globalization (trade based on corporations' freedom to locate in those countries with the lowest wages and fewest worker protections) will be a disaster for our country if not reversed. There is no central world government to limit the extent to which desperate countries can compete for industry by offering the best tax breaks, free government services and a defenseless workforce.

Weakening the federal government and encouraging outsourcing to foreign countries are deliberate political strategies for ensuring a roaring U.S. stock market and rapid increases in investor wealth--and chronic, low-wage employment for everyone who actually has to work for a living.

To gain support for corporations' power to pit states against each other, some politicians are trying to prove that a strong federal government is bad and should be emasculated. A way to do that is to make sure it can't successfully address the growing problems everyone is complaining about: chronic unemployment, a broken healthcare system, declining infrastructure, and stagnant wages. And they're succeeding simply by saying "no."

Sure, a central government can be overreaching and can make terrible decisions, but the solution for a bad federal government isn't less federal government, it's good federal government.

OpEdNews - Article: Real, Uglier American Unemployment

2010-02-25T05:21:00.000-08:00

OpEdNews - Article: Real, Uglier American Unemployment

Can you trust national averages? As bad as the jobless data you hear are, you have not been told the whole truth. If you think the terrible impact of America's Great Recession is shown by an official unemployment rate of about 10 percent, think again.

Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at NortheasternUniversity in Boston. The report noted: "What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets." The researchers found a correlation between household income and unemployment rate in the last quarter of 2009: Look carefully at these numbers and see how unemployment rises as income drops:

$150,000 or more, 3.2 percent

$100,000 to 149,999, 8 percent

$75,000 to $99,999, 5 percent

$60,000 to $75,000, 6.4 percent

$50,000 to $59,000, 7.8 percent

$40,000 to $49,000, 9 percent

$30,000 to $39,999, 12.2 percent

$20,000 to $29,999, 19.7 percent

$12,500 to $20,000, 19.1 percent

$12,499 or less, 30.8 percent

Ten times worse unemployment in the lowest class than in the highest class! ...

The report summed up the situation: "A true labor market depression faced those in the bottom"of the income distribution; a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top." People at the top remain winners no matter how bad the whole economy. Why?The wealthy Upper Class controls so much of the political system and benefit from countless government policies. They may lose something in an economic meltdown but not enough to suffer significantly.

Conversely, those at the bottom of the economic system with no political power are experiencing something as bad as the Great Depression, with no end in sight.

...

Wait; there is even more bad news. When underemployment is factored in -- part time workers that want to work full time, and those who have stopped looking but want a job -- the picture gets even worse. In the lowest group, the underemployment rate was 20.6 percent, compared with just 1.6 percent in the highest group. So the total in the lowest class is 51.4 percent (3.7 million people) compared to 4.8 percent in the wealthy class (530,000 people). Also consider that last November nearly 20 percent of all men between 25 and 54 did not have jobs, the highest figure since the labor bureau began counting in 1948.

Now you know why the constantly noted official jobless rate for the nation of 10 percent and 17 percent when underemployment is counted are a joke, or is it a purposeful deception, like a truth bubble? ....

US super-rich get five times more income than in 1995

2010-02-22T11:29:00.001-08:00

US super-rich get five times more income than in 1995 By Andre Damon | 20 February 2010

The incomes of the very rich in the US grew phenomenally between 1992 and 2007, while their tax rates plummeted, according to recently uncovered IRS statistics.

The figures were published on the IRS web site in December of 2009, but received little notice because they were not announced. The report only became widely known when Tax Analysts, a news outlet for tax information, discovered the document and wrote about it on its web site, tax.com, on Thursday.

The report shows that the average income for the top-earning 400 families, denominated in 1990 dollars, grew from $17 million to $87 million, representing a five-fold increase in real terms. During this time, the percentage of the total national income that went to the top 400 families tripled, from .52 percent in 1992 to 1.59 in 2007.

The data shows that these families saw their incomes increase by 31 percent between 2006 and 2007 alone, while the average income of each family reached $345 million. ...

Top 1%: Lower Tax Rate Than Their Secretaries | OurFuture.org

2010-02-22T11:29:00.000-08:00

Top 1%: Lower Tax Rate Than Their Secretaries | OurFuture.org

Yes, there is a class war, Warren Buffett once said, and my class is winning. The IRS study of taxes paid in 2007 makes his point. The top 1% of taxpayers averaged about $138 million in income, and paid taxes at a rate of 16.6%.

As Buffett says, their secretaries pay a higher rate. No wonder Republicans and conservaDems like the much regretted Evan Bayh are fighting to lower the estate tax rate as part of a "jobs" bill. These folks will have a lot to put in the estate that's never been taxed as income.

Ah, for the extremist liberal days of Ronald Reagan when capital gains were taxed at the same rate as income.

For a report on the IRS study, here's the WSJ David Wessel on the IRS Study

The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007, according to their tax returns, three times the slice they got in the 1990s, according to the Internal Revenue Service. They paid 2.05% of all individual income taxes in that year.

In its annual update of the taxes paid by the 400 best-off taxpayers, who aren’t identified, the IRS also said that only 220 of the top 400 were in the top marginal tax bracket. The 400 best-off taxpayers paid an average tax rate of 16.6%, lower than in any year since the IRS began making the reports in 1992.

...

About 81.3% of the income of the top 400 households came in the form of capital gains, dividends or interest, the IRS data show. Only 6.5% came in the form of salaries and wages. ...

Super-Rich Got 31% Richer in 2007 | Drudge Retort

2010-02-20T04:59:00.000-08:00

Super-Rich Got 31% Richer in 2007 | Drudge Retort

The 400 highest-earning U.S. households reported an average of $345 million in income in 2007, up 31 percent from a year earlier, IRS statistics show. "Income at the very top has exploded and their taxes have been cut dramatically," said Chuck Marr, director of federal tax policy at the Center on Budget and Policy.

Arianna Huffington: Band-Aids, Bipartisanship and Baby-Steps: How Not to Deal With a Jobs Crisis

2010-02-18T11:27:00.000-08:00

Arianna Huffington: Band-Aids, Bipartisanship and Baby-Steps: How Not to Deal With a Jobs Crisis
...

Less than a month ago, during his State of the Union speech, President Obama declared, "jobs must be our No. 1 focus in 2010." So why is there no sense of urgency coming out of Washington?

Perhaps the reason can be found in the stunning results of a study conducted by Northeastern University's Center for Labor Studies that broke down the unemployment rate by income. Unemployment for those making $150,000 a year, the study found, was only 3 percent in the last quarter of 2009. The rate for those in the middle income range was 9 percent -- not far off the national average. The rate for those in the bottom 10 percent of income was a staggering 31 percent.

These numbers, according to the Wall Street Journal's Robert Frank, "raise questions about the theory behind what is informally known as 'trickle down' economics, since full employment at the top doesn't seem to be translating into more jobs below.'"

In fact, these numbers do more than raise questions -- they also supply the answers.

Does anyone believe that the sense of urgency coming out of Washington wouldn't be wildly different if it was the unemployment rate in the top ten percent that was 31 percent? If one-third of television news producers, pundits, bankers, and lobbyists were unemployed, would the measures being proposed by the White House and Congress still be this pathetic? Of course not -- the sense of national emergency would be so great you'd practically be hearing air raid sirens howling.

Instead we get baby steps, bipartisanship, and band-aids -- timid moves that, given the seriousness of the crisis, threaten to change the very fabric of our society. For much of our history, America was known for its upward mobility -- and the promise that hard work would be rewarded with your children being able to do better than you. That promise has been called into question over the last three decades, and an extended run of high unemployment could be its death knell.

"These are the kinds of jobless rates that push families already struggling on meager incomes into destitution," wrote Bob Herbert. "And such gruesome gaps in the condition of groups at the top and bottom of the economic ladder are unmistakable signs of impending societal instability. This is dangerous stuff."

So dangerous, in fact, that when it comes to jobs we can't afford a repeat of the health care reform fiasco, in which the president decided to sit out the debate, emerging only to give vague statements of encouragement and cryptic pronouncements about what he actually favored (does anyone, even at this late date, have a clue what that was, by the way?).

Jobs, Economics

OpEdNews - Article: Killing the Competition

Arianna Huffington: Guns vs. Butter 2010

6 Myths About Poverty in America, Debunked - Democratic Underground

� The Financial Terrorists Who Destroyed Our Economy Will Pay Zero in Taxes and Get $33 Billion in Refunds������ : Information Clearing House -� ICH

The National Interest

TaxVox: the Tax Policy Center blog :: About Those 47 Percent Who Pay “No Taxes.”

A Greater Threat Than Terrorism | Outsourcing the American Economy

Social mobility and inequality: Upper bound | The Economist

Why We Need To Revive American Manufacturing | OurFuture.org

Op-Ed Columnist - Dealing With a Recession That’s ‘a Different Creature’ - NYTimes.com

Economist's View: Taxes over Time

Your Tax Dollars at War: More Than 53% of Your Tax Payment Goes to the Military | CommonDreams.org

The Tax Clock Is Ticking | CommonDreams.org

Economist's View: "What's Up With the Young Folks?"

Washington's Blog

Great Recession Not Over Yet, Though Data Suggests Expansion (CHARTS)

Who Will Really Tackle The Debt? - The Daily Dish | By Andrew Sullivan

Economist's View: Layoff, Hiring, and Unemployment Rates

Economist's View: Reblog: Wow! Cash for Clunkers Worked!!

The ‘mind-blowing’ surge of wealth inequality in America - Sahil Kapur - AntiPartisan - True/Slant

Why the Obama economics plan is working - BusinessWeek.com- msnbc.com

�� America: The Grim Truth: Information Clearing House -� ICH

Robert L. Borosage: The Showdown with Chermany

What The Top U.S. Companies Pay In Taxes

In Pictures: What The 25 Top U.S. Companies Pay In Taxes

Flat Unemployment Rate Masks the Race Gap | CommonDreams.org

Corporate America Squeals About Welfare Cuts

Globalization Marches On | CommonDreams.org

Growing popular outrage has not challenged corporate power.

The Spoils of Power

Robert L. Borosage: Jobs, Focus, Jobs, Focus

Arianna Huffington: When It Comes to Innovation, Is America Becoming a Third World Country?

Arianna Huffington: The Imperative Need for America to Become an Innovation Nation

Heartland hurt has many asking: Is China worth it? | McClatchy

By Kevin G. Hall | McClatchy Newspapers

Tight job market is squeezing out young workers | McClatchy

FT.com / UK - Recovery depends on Main Street

Craig D. Rose: On to the Unemployment Crisis

Massive Change in US Student Loans Slipped in to Bill | CommonDreams.org

Op-Ed Columnist - Taking On China and Its Currency - NYTimes.com

Economist's View: "US Sprawl is not a Market Outcome"

OpEdNews - Article: The Offshored Economy

The Disemboweling of America - Yahoo! News

When Conservatives Are Right... | OurFuture.org

Too small to succeed? Firms still can't get loans they need | McClatchy

Obama's ambitious export plan may rekindle free-trade battle - washingtonpost.com

OpEdNews - Article: Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction"

Unpaid overtime soars to 'extreme' levels, says TUC | Money | guardian.co.uk

Part II: The Rise of the Economic Elite — Economic Elite Vs. The People | Amped Status

College Education, Good Jobs: Why Degrees Are Overrated - TIME

Les Leopold: Why are We Afraid to Create the Jobs We Need?

Daily Kos: State of the Nation

by Meteor Blades

Fri Mar 05, 2010 at 06:03:31 AM PST

NUMMI Closing Highlights Need for U.S. Manufacturing Policy | OurFuture.org

Jobs by Sector Tell a Bleaker Story | OurFuture.org

For Older Workers, a Longer Job Search - Economix Blog - NYTimes.com

Economist's View: "The Chicago Boys and the Chilean Earthquake"

Fantasies of the Chicago Boys - Paul Krugman Blog - NYTimes.com

Economist's View: "A New Age of Monopolies"

Baffler -�Let Them Eat Dogma

A Country of Serfs Ruled By Oligarchs by Paul Craig Roberts on Creators.com - A Syndicate Of Talent

The Myth of the manufacturing recovery | OurFuture.org

US Manufacturing -- Losing Out? | OurFuture.org

The Mismeasure of Manufacturing | OurFuture.org

Leo Hindery, Jr.: America's Dirty Little Secret: Who's Really Poor in America?

Recession has more moms entering workforce - washingtonpost.com

OpEdNews - Article: America's tenth decile, the "sitting around guys."

Econbrowser: What Are These Three Numbers?

The American economy: Almost a lost decade | The Economist

States may ban credit checks on job applicants - Democratic Underground

The labor movement was the principal force that transformed misery and despair into hope and progress ... captains of industry ... resisted ...

January home sales fall 7.2 percent - washingtonpost.com

On The Hill: In The 'Back Seat' No More: New Legislation Would Protect Workers, Retirees When Their Employers Go Bankrupt

OpEdNews - Article: The Least Productive People in the World

OpEdNews - Article: Smaller federal government equals bigger corporate government

OpEdNews - Article: Real, Uglier American Unemployment

US super-rich get five times more income than in 1995

Top 1%: Lower Tax Rate Than Their Secretaries | OurFuture.org

� The Financial Terrorists Who Destroyed Our Economy Will Pay Zero in Taxes and Get $33 Billion in Refunds�� : Information Clearing House -� ICH