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October 25 2013

"The Triumph Of The Right" by Robert Reich

robert-reichConservative Republicans have lost their fight over the shutdown and debt ceiling, and they probably won’t get major spending cuts in upcoming negotiations over the budget. But they’re winning the big one: How the nation understands our biggest domestic problem.

They say the biggest problem is the size of government and the budget deficit. In fact our biggest problem is the decline of the middle class and increasing ranks of the poor, while almost all the economic gains go to the top. The Labor Department reported Tuesday that only 148,000 jobs were created in September — way down from the average of 207,000 new jobs a month in the first quarter of the year.

Many Americans have stopped looking for work. The official unemployment rate of 7.2 percent reflects only those who are still looking. If the same percentage of Americans were in the workforce today as when Barack Obama took office, today’s unemployment rate would be 10.8 percent.

Meanwhile, 95 percent of the economic gains since the recovery began in 2009 have gone to the top 1 percent. The real median household income continues to drop, and the number of Americans in poverty continues to rise.

So what’s Washington doing about this? Nothing. Instead, it’s back to debating how to cut the federal budget deficit.

The deficit shouldn’t even be an issue because it’s now almost down to the same share of the economy as it’s averaged over the last thirty years.

The triumph of right-wing Republicanism extends further. Failure to reach a budget agreement will restart the so-called “sequester” — automatic, across-the-board spending cuts that were passed in 2011 as a result of Congress’s last failure to agree on a budget.

These automatic cuts get tighter and tighter, year by year — squeezing almost everything the federal government does except for Social Security and Medicare. While about half the cuts come out of the defense budget, much of the rest come out of programs designed to help Americans in need: extended unemployment benefits; supplemental nutrition for women, infants and children; educational funding for schools in poor communities; Head Start; special education for students with learning disabilities; child-care subsidies for working families; heating assistance for poor families. The list goes on.

The biggest debate in Washington over the next few months will be whether to whack the federal budget deficit by cutting future entitlement spending and closing some tax loopholes, or go back to the sequester. Some choice.

The real triumph of the right has come in shaping the national conversation around the size of government and the budget deficit – thereby distracting attention from what’s really going on:  the increasing concentration of the nation’s income and wealth at the very top, while most Americans fall further and further behind.

Continuing cuts in the budget deficit – through the sequester or a deficit agreement — will only worsen this by reducing total demand for goods and services and by eliminating programs that hard-pressed Americans depend on.

The President and Democrats should re-frame the national conversation around widening inequality. They could start by demanding an increase in the minimum wage and a larger Earned Income Tax Credit. (The President doesn’t’ even have to wait for Congress to act. He can raise the minimum wage for government contractors through an executive order.)

Framing the central issue around jobs and inequality would make clear why it’s necessary to raise taxes on the wealthy and close tax loopholes (such as “carried interest,” which enables hedge-fund and private-equity managers to treat their taxable income as capital gains).

It would explain why we need to invest more in education – including early-childhood as well as affordable higher education.

This framework would even make the Affordable Care Act more understandable – as a means for helping working families whose jobs are paying less or disappearing altogether, and therefore in constant danger of losing health insurance.

The central issue of our time is the reality of widening inequality of income and wealth. Everything else — the government shutdown, the fight over the debt ceiling, the continuing negotiations over the budget deficit — is a dangerous distraction. The Right’s success in generating this distraction is its greatest, and most insidious, triumph.

This post was first published on Robert Reich’s Blog

Reposted by02mydafsoup-01 02mydafsoup-01

June 11 2013

What We Need Now: A National Economic Strategy For Better Jobs

Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that...

March 14 2013

"The Contest Over The Real Economic Problem" by Robert Reich

robert-reich“Our biggest problems over the next ten years are not deficits,” the President told House Republicans Wednesday, according to those who attended the meeting.

The President needs to deliver the same message to the public, loudly and clearly. The biggest problems we face are unemployment, stagnant wages, slow growth, and widening inequality — not deficits. The major goal must be to get jobs and wages back, not balance the budget.

Paul Ryan’s budget plan — essentially, the House Republican plan — is designed to lure the White House and Democrats, and the American public, into a debate over how to balance the federal budget in ten years, not over whether it’s worth doing.

“This is an invitation,” Ryan explained when he unveiled the plan Tuesday. “Show us how to balance the budget. If you don’t like the way we’re proposing to balance our budget, how do you propose to balance the budget?”

Until now the President has seemed all too willing to engage in that debate. His ongoing talk of a “grand bargain” to reduce the budget deficit has played directly into Republican hands.

As has his repeated use of the Republican analogy comparing the government’s finances to a household’s. “Just as families and businesses must tighten their belts to live within their means,” he said of his 2013 budget, “so must the Federal Government.”

Hopefully, he’s now shifting the debate.

The government’s finances are not at all like a household’s. In fact, it’s when American families can’t spend enough to keep the economy going, because too many of them are unemployed or underemployed and have run out of money, that government has to step in as spender of last resort — even if that means taking on more debt. If government doesn’t fill the spending gap, an economy can collapse into deeper recession or depression, pushing unemployment far higher. Look at what austerity economics has done to Europe.

In addition, it’s perfectly fine for government to borrow and continue to borrow in order to invest in new roads or other infrastructure, or education, or basic research — when those investments pay off in higher rates of economic growth.

The notion that government spending “crowds out” private investment, keeping interest rates higher than otherwise, is obsolete in a global economy where capital sloshes across national borders, seeking the highest returns from anywhere.

Societies that invest in the productivity of their people attract global capital and create high-paying jobs. And since most big corporations are no longer dependent on the productivity of any one nation, the responsibility for making such  investments increasingly falls to government.

Not that we should disregard the debt altogether, but the best way to deal with it is to do so gradually, through economic growth. That’s how we reduced the giant debt Franklin D. Roosevelt bequeathed America, and it’s how the Clinton Administration (of which I am proud to have been a member) achieved a balanced budget in 1996.

Republicans want Americans to believe government budgets are like family budgets that must be balanced because the analogy helps their ideological aim to “drown the government in a bathtub,” in the memorable words of their guru, Grover Norquist. As long as there’s a debt and balance is the goal, shrinkage is the only option — if tax increases are ruled out.

At last the President wants to change the debate and focus on the real economic problem. In a Tuesday interview with George Stephanopoulos that got less attention than it deserved, he said “my goal is not to chase a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue.”

Let the real contest begin.

This blog was first published on Robert Reich’s Blog. More info about Robert Reich’s recent books

See also:

Why the US Minimum Wage should be raised

February 18 2013

"The Minimum Wage, Guns, Healthcare, And The Meaning of a Decent Society" by Robert Reich

robert-reichRaising the minimum wage from $7.25 to $9 should be a no-brainer. Republicans say it will cause employers to shed jobs, but that’s baloney. Employers won’t outsource the jobs abroad or substitute machines for them because jobs at this low level of pay are all in the local personal service sector (retail, restaurant, hotel, and so on), where employers pass on any small wage hikes to customers as pennies more on their bills. States that have a minimum wage closer to $9 than the current federal minimum don’t have higher rates of unemployment than do states still at the federal minimum.

A mere $9 an hour translates into about $18,000 a year — still under the poverty line. When you add in the Earned Income Tax Credit and food stamps it’s possible to barely rise above poverty at this wage, but even the poverty line of about $23,000 understates the true cost of living in most areas of the country.

Besides, the proposed increase would put more money into the hands of families that desperately need it, allowing them to buy a bit more and thereby keep others working.

A decent society should do no less.

 Some conservatives say “decency” has nothing to do with it. Who has the right to decide what’s decent? We should let the “market” decide what people are paid.

 This is one of the oldest conservative canards in existence, based on the false claim that there’s something called a “market” that exists separate from society. But there’s no “market” in a state of nature, just survival of the fittest.

A society necessarily determines how the “market” is to be organized. Standards of morality and decency play a large role in those decisions.

We set minimum standards for worker safety and consumer protection. We decide young children shouldn’t be in the labor force.

We do our best to prevent certain things from being bought and sold — such as slaves, dangerous narcotics, babies, votes, sex with children, machine guns, nuclear material.

We decide citizens shouldn’t have to buy certain things that should instead be available to everyone free of charge (paid in effect by all of us through our taxes) – such as clean drinking water, K-12 schools, safe bridges, protection from violence, public parks.

Opinions may differ about what decency requires, and we hash it out in a democracy. We might decide certain minimum standards are too costly or inefficient, or can’t be enforced, or impose unwarranted constraints on our freedoms.

Different societies come up with different answers. Handguns are banned in most other advanced nations, for example. Workers have more protections than they do in the United States. Minimum wages are higher. Taxes on the wealthy are higher. Healthcare is more universally available.

Every society must necessarily decide for itself what decency requires. That’s the very meaning of a “society.”

Don’t fall for the mindless assertion that “markets” know best. Markets are human creations, requiring human beings to decide how they are structured and maintained.

The questions we face – whether to raise the minimum wage, restrict the availability of guns, expand healthcare coverage, and countless other decisions – inevitably require us to define what we mean by a decent society.

This blog was first published on Robert Reich’s Blog

Reposted by02mydafsoup-01 02mydafsoup-01

February 01 2013

The Jobs Report, and Why the Recovery Has Stalled

We are in the most anemic recovery in modern history, yet our political leaders in Washington aren’t...

January 22 2013

"Why David Cameron is wrong on Europe" by Ed Miliband

ed milibandTomorrow’s speech by David Cameron will define him as a weak Prime Minister, being driven by his party, not by the national economic interest.

In October 2011, he opposed committing to an in/out referendum because of the uncertainty it would create for the country. The only thing that has changed since then is he has lost control of his party and is too weak to do what is right for the country.

Everyone knows that the priority for Britain is the jobs and growth that we need. We have had warning after warning from British business about the dangers of creating years of uncertainty for Britain.

This speech will do nothing for a young person looking for work, for a small business worried about a loan, for the family whose living standards are squeezed.

Britain needs a Prime Minister who is making change happen now in Europe, ensuring that we put jobs and growth ahead of austerity and unemployment.

January 04 2013

Why Jobs Must Be Our Goal Now, Not Deficit Reduction

The news today from the Bureau of Labor Statistics is that the U.S. job market is treading water....

November 21 2012

"Why We Should Stop Obsessing About The Federal Budget Deficit" by Robert Reich

I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both.

Deficit reduction leads us in the opposite direction — away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know – it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy.

But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected — bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink.

The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low – or become even lower – on the middle class.

(Higher taxes on the rich won’t slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes won’t reduce their incentive to save and invest because they’re already doing as much saving and investing as they want. Remember: they’re taking home a near record share of the nation’s total income and have a record share of total wealth.)

Why don’t our politicians and media get this? Because an entire deficit-cutting political industry has grown up in recent years – starting with Ross Perot’s third party in the 1992 election, extending through Peter Petersen’s Institute and other think-tanks funded by Wall Street and big business, embracing the eat-your-spinach deficit hawk crowd in the Democratic Party, and culminating in the Simpson-Bowles Commission that President Obama created in order to appease the hawks but which only legitimized them further.

Most of the media have bought into the narrative that our economic problems stem from an out-of-control budget deficit. They’re repeating this hokum even now, when we’re staring at a fiscal cliff that illustrates just how dangerous deficit reduction can be.

Deficit hawks routinely warn unless the deficit is trimmed we’ll fall prey to inflation and rising interest rates. But there’s no sign of inflation anywhere. The world is awash in underutilized capacity As for interest rates, the yield on the ten-year Treasury bill is now around 1.26 percent – lower than it’s been in living memory.

In fact, if there was ever a time for America to borrow more in order to put our people back to work repairing our crumbling infrastructure and rebuilding our schools, it’s now.

Public investments that spur future job-growth and productivity shouldn’t even be included in measures of government spending to begin with. They’re justifiable as long as the return on those investments – a more educated and productive workforce, and a more efficient infrastructure, both generating more and better goods and services with fewer scarce resources – is higher than the cost of those investments.

In fact, we’d be nuts not to make these investments under these circumstances. No sane family equates spending on vacations with investing in their kids’ education. Yet that’s what we do in our federal budget.

Finally, the biggest driver of future deficits is overstated — rising health-care costs that underlie projections for Medicare and Medicaid spending. The rate of growth of health-care costs is slowing because of the Affordable Care Act and increasing pressures on health providers to hold down costs. Yet projections of future budget deficits haven’t yet factored in this slowdown.

So can we please stop obsessing about future budget deficits? They’re distracting our attention from what we should be obsessing about — jobs and growth.

This blog was first published on Robert Reich’s Blog

November 02 2012

More Jobs, Lousy Wages, and the Desertion of Non-College White Men From the Democratic Party

The two most important trends, confirmed in today’s jobs report from the Bureau of Labor Statistics,...

March 17 2012

[ Episode #38 // Hard Times ]

Debt is placing a stranglehold on the global economy, restricting the ability for growth to occur at a rate fast enough to prevent the monetary system from unraveling. To delay a massive deleveraging, governments are turning on the central bank taps to fill the system with liquidity. With severe structural issues that continue to avoid inclusion in the political discourse, can ordinary people prepare to maintain control over their assets to ensure success of future decentralization initiatives? How is preparing for this world different for our generation than for our parents?

In Extraenvironmentalist #38 we talk about living in hard times with Nicole Foss of The Automatic Earth. Nicole tells us about the Canadian housing bubble and why the initial collapse might just be faster than the one America experienced in 2005. Seth and I ask about what life was like in the Great Depression and how the process of labor exploitation may continue into the near future. We ask Nicole if misunderstandings about economic collapse could have us preparing for the wrong thing.

Also, we get to meet our blog editor Louisa Clarence-Smith who tells us about WWOOFing and her experiences working on farms in Scotland and Italy.

For more from The Automatic Earth, check out our interview with TAE writer Ashvin Pandurangi back in XE #13.


 

// Music (in order of appearance)
St. Lucia – All Eyes on You via Soundcloud
Cody ChestnuTT – Under the Spell of the Handout via Indieshuffle
Phil Collins – In The Air Tonight (Cosmo Black Remix)  via Hard Candy
Alpine – Hands (Goldroom Remix) via Fader
ANDREYA TRIANA – Lost Where I Belong (Banks Remix) via Aerial Noise

// Extended Clips (in order of appearance)
[First Break]
Sunshine and Eclipse
Rioting Across America During the Great Depression
Stories From the Great Depression
[Second Break]
Making a Difference: Rebuilding From a Tornado
Bill McKibben: Rebuilding Community
[End]
Jiddu Krishnamurti – Fear

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March 09 2012

The Precarious Jobs Recovery

February’s  227,000 net new jobs – the third month in a row of job gains well in excess of 200,000 – is good news for President Obama and bad news for Mitt Romney.

Jobs are coming back fast enough to blunt Republican attacks against Obama on the economy and to rob Romney of the issue he’d prefer to be talking about in his primary battle against social conservatives in the GOP.

But jobs aren’t coming back fast enough to significantly reduce the nation’s backlog of 10 million jobs. That backlog consists of 5.3 million lost during the recession and another 4.7 million that needed to have been added just to keep up with the growth of the working-age population since the recession began.

If the American economy continues to produce jobs at the good rate it’s maintained over the last three months, averaging 245,000 per month, the backlog won’t be whittled down for another five years — long after Barack Obama finishes his second term, should voters grant him another.

But whether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.

American consumers have replaced worn-out cars and appliances, but little else. They haven’t had the dough. Their wages are still falling, adjusted for inflation. The value of their homes – most consumers’ single biggest asset – continues to drop.

Home values are down by an average of a third from their 2006 peak. Consumers understandably feel far poorer as a result. Declining home prices also mean consumers can’t use their homes as collateral for new loans, as they did before 2008. And even with low interest rates, refinancing is difficult.

Corporate profits are up but the money isn’t flowing to American workers. The ratio of profits to wages is the highest on record – since the government began keeping track in 1947. Not only has the median wage continued to drop, adjusted for inflation, but a far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today’s employment-to-population ratio isn’t much higher than it was at its lowest point last summer, when it dropped to 58.2 percent.

The major driver of the U.S. economy over the past several months hasn’t been consumer spending. It’s been businesses rebuilding depleted inventories. Wholesalers increased their stockpiles again in February, bringing them up almost a quarter from their low in September 2009.

But businesses won’t continue to rebuild inventories unless consumers start buying again. big-time. And consumers won’t resume spending as they did before the recession until they’re far better off financially.

Yet how can they be sufficiently better off when their major asset has shrunk so much and when so few of the economic gains are going to them?

This is the central paradox at the heart of the American economy today. If it’s not resolved, the jobs recovery will stall, as it did last spring.

A year ago, remember, we had another three-month run of good job numbers. Last February, March, and April saw net gains of more than 200,000 jobs a month. But that job boomlet abruptly ended.

At the time most observers blamed the stall on external events – the Japanese earthquake, Europe’s gathering debt woes, and higher gas prices. In reality, it stalled because of the shallow pockets of American consumers.

Another stall this time might be blamed on any number of external events – slower growth in China and India, the unraveling of Europe’s debt-crisis deal, and higher gas prices.

But if another stall occurs, the real reason will be Americans once again ran out of money.

 

 

 

 

 

 

 

 

 

 

February 16 2012

[ Episode #36 // Art Into Action ]

With an educational system that trains artists to develop their talents into commercial skills, our culture is missing out on the ability for art to disrupt normalcy. Why should we hope for systemic reform when the vast majority of water cooler conversations turn to American Idol and the fashion at awards shows? Will concerted efforts from artists allow us to breach difficult topics and address the economic elephant in the room? Can we use art to support behavior change, moving deeper than simply building awareness?

In Extraenvironmentalist #36 we discuss art and activism with Steve Lambert. Steve describes how his work as an artist has allowed him to create temporary utopias that prompt people to question the fundamental assumptions of society. We ask Steve how his varied work experience has helped him understand our education system and barriers to reform. What if the people around us aren’t lazy and are just optimizing where their agency can have an effect?

Give Steve a follow on Twitter to keep track of his thoughts… and jokes.


 

// Music (in order of appearance)
Active Child – Johnny Belinda (White Arrows Remix) via Tell All Your Friends
Django Django – Storm via Music That Isn’t Bad
Talking Heads – Road to Nowhere (Rosebuds Cover)  via The Rosebuds Bandcamp
Ra Ra Riot – Oh, La (Submarines Remix) via The Burning Ear
Bonobo – The Keeper (Banks Remix) via The Music Ninja

// Extended Clips (in order of appearance)
[First Break]
Cuts and Chaos – Desperation Drives Greek Clashes
Occupy the Dream – From Wall Street to Congress
US Economic Collapse – Dmitry Orlov + Max Keiser
[Second Break]
The Secret World of Shoplifting
Bill Moyers Interview with David Stockman
[End]
Meeting an awakened person – Thomas Hübl

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"A New European Growth Agenda" by Philippe Legrain

Austerity alone cannot solve Europe’s economic and financial crisis. Growth and jobs need to be promoted with equal zeal. European Union leaders now recognize this: kick-starting growth in 2012 was high on the agenda at the European Council’s meeting on January 30. But the big question remains: How?

The need for immediate action is clear. The eurozone’s economy contracted in the last three months of 2011; even Germany’s shrank. The new year is looking grim. France is flat-lining (as is Britain). Italy and Spain have sunk into deep recession. Greece is in its fifth year of a slump. And eurozone unemployment is at record highs, with nearly one in two young people jobless in Spain and Greece.

The economic headwinds are formidable: fiscal austerity, high interest rates outside AAA-rated countries, credit cutting by banks, deleveraging households, weak private-sector investment, and declining exports as the global slowdown undermines demand.

Until growth resumes, any tentative financial stabilization will be extremely fragile. Recession will hit banks’ and governments’ already-weak balance sheets, increasing pressure for faster deleveraging. But, while gradual adjustment is essential, faster and deeper cuts are largely self-defeating: big reductions in private credit and government spending will cause a sharper slowdown – and thus a vicious downward spiral. A big new push for growth is therefore vital.

So far, the growth agenda has consisted largely of structural reforms, which are essential for boosting future productivity and flexibility. The crisis does provide a political opportunity for bold moves on this front in many countries; but structural reforms generally will not generate growth and jobs immediately (one exception is permitting shops to open longer).

On the contrary, a shakeout of less productive jobs, for example, would at first raise unemployment, increase government outlays, and reduce private spending. And, because demand is depressed, credit is in short supply, and barriers to enterprise are often high, it will take longer than usual for businesses to create more productive jobs. In short, structural reforms alone cannot be relied upon to stimulate growth in 2012.

Instead, the immediate focus needs to be on boosting investment and exports in economies with a current-account deficit – such as France, Italy, and Spain (and the United Kingdom) – and stimulating consumption in surplus countries such as Germany and the Netherlands.

The European Central Bank has acted decisively to prop up European banks; now it needs to support the real economy, too. While official interest rates are only 1%, solvent sovereigns such as Spain pay more than 5% to borrow for ten years, while creditworthy businesses in Italy can borrow only at punitive rates, if at all. So the ECB should do more to unblock the transmission mechanism for monetary policy; the European Banking Authority should discourage excessive deleveraging by insisting that banks raise specific capital amounts rather than hit a uniform 9% ratio; and, where necessary, national governments should provide guarantees for bank lending to small and medium-size businesses.

While improving access to finance is vital, governments also need to do more to boost investment. They should prioritize measures to make it easier to start a business, lift barriers to venture capital, and introduce temporary 100% capital allowances to encourage businesses to bring forward investment. At the EU level, the (callable) capital of the European Investment Bank should be greatly increased, as European Commission President José Manuel Barroso suggested in his State of the Union speech last September, so that the EIB can finance a big wave of pan-European investment, notably in infrastructure.

Boosting exports is also essential. Deficit countries need to become more competitive, increasing productivity while cutting costs. A more competitive currency would be welcome: just as the sterling’s collapse since 2008 has lifted UK exports, a weaker euro would help Mediterranean economies regain competitiveness for price-sensitive exports. A fiscal devaluation – slashing payroll taxes and replacing the revenues with a higher VAT – would also help.

Surplus countries, too, must do their part, which is in their own interest. Just as China needs to allow the renminbi to rise, so Germany – whose current-account surplus exceeds China’s both as a share of GDP and in absolute terms – needs a higher real exchange rate. That means that Germans need to earn higher wages, commensurate with their increased productivity, so that they can afford more Greek and Spanish holidays. If businesses will not oblige, an income-tax cut would do the trick.

That brings us to fiscal policy. Governments that cannot borrow cheaply (or at all) from markets have no option but to tighten their belts. But they should pursue smart consolidation rather than unthinking austerity. So they should maintain investment in skills and infrastructure, while cutting subsidies and transfer payments. They should also legislate now for future reforms, notably to encourage people to work longer.

Last but not least, governments that can borrow at unprecedentedly low rates – 0% in real terms over 10 years in the case of Germany – must play their role in supporting demand. Would it be really be so difficult to see VAT coming down ahead of the German election next year?

Copyright Project Syndicate, the world’s pre-eminent source of original opinion commentaries. (Follow PS on Facebook and Twitter)

February 07 2012

"Revitalising European Industry" by Frank-Walter Steinmeier

Europe is debilitated with the effects of two years of desperate crisis management. The prescribed treatment resembles the old practice of bloodletting on ailing patients. Growing debts are paid with...

January 23 2012

Will Austerity be ended in Davos?

The World Economic Forum 2012 is held again in Davos this week. It is the ‘Glastonbury of Globalisation‘ as Larry Elliott of The Guardian aptly put it; but the preparation for this...

December 22 2011

"The G20 and Jobs: Time for Plan B" by John Evans

When the economic crisis broke following the collapse of Lehman Brothers in September 2008 and the global banking system seized up, workers began to be laid off, families saw their houses repossessed...

September 26 2011

"Why This is Exactly the Time to Rebuild America’s Infrastructure" by Robert Reich

Seems like only yesterday conservative nabobs of negativity predicted America’s ballooning budget deficit would generate soaring inflation and crippling costs of additional federal borrowing....
Reposted by02mydafsoup-01 02mydafsoup-01

September 19 2011

"Obama flicks Jobs Switch" by John Quiggin

That’s the title of my most recent Fin column, over the fold. Responding to US President Obama’s announcement of his proposed American Jobs Act, Republican Presidential candidate Mitt Romney tartly...

September 14 2011

How to Create More Jobs By Lowering Wages: Texas and America

Perry and Romney can duke it out over who created the most jobs, but governors have as much influence over job growth in their states as roosters do over sunrises.

States don’t have their own monetary policies so they can’t lower interest rates to spur job growth. They can’t spur demand through fiscal policies because state budgets are small, and 49 out of 50 are barred by their constitutions from running deficits.

States can cut corporate taxes and regulations, and dole out corporate welfare, in efforts to improve the states’ “business climate.” But studies show these strategies have little or no effect on where companies locate. Location decisions are driven by much larger factors — where customers are, transportation links, and energy costs.

If governors try hard enough, though, they can create lots of lousy jobs. They can drive out unions, attract low-wage immigrants, and turn a blind eye to businesses that fail to protect worker health and safety.

Rick Perry seems to have done exactly this. While Texas leads the nation in job growth, a majority of Texas’s workforce is paid hourly wages rather than salaries. And the median hourly wage there was $11.20, compared to the national median of $12.50 an hour.

Texas has also been specializing in minimum-wage jobs. From 2007 to 2010, the number of minimum wage workers there rose from 221,000 to 550,000 – that’s an increase of nearly 150 percent. And 9.5 percent of Texas workers earn the minimum wage or below – compared to about 6 percent for the rest of the nation, according to the Bureau of Labor Statistics. The state also has the lowest percentage of workers without health insurance. Texas schools rank 44th in the nation in per-pupil spending.

The Perry model of creating more jobs through low wages seems to be catching on around America.

According to a report out today from the Commerce Department, the median income of U.S. households fell 2.3 percent last year – to the lowest level in fifteen years (adjusted for inflation). That’s the third straight year of declining household incomes. Part of this is loss of jobs. Part is loss of earnings.  

More and more Americans are retaining their jobs by settling for lower wages and benefits, or going without cost-of-living increases. Or they’ve lost a higher-paying job and have taken one that pays less. Or they’ve joined the great army of contingent workers, self-employed “consultants,” temps, and contract workers – without healthcare benefits, without pensions, without job security, without decent wages.  

It’s no great feat to create lots of lousy jobs. A few years ago Michele Bachmann remarked that if the minimum wage were repealed “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.”

I keep on hearing conservative economists say Americans have priced themselves out of the global high-tech labor market. That’s baloney. The productivity of American workers continues to soar. The problem is fewer and fewer Americans are sharing the gains. The ratio of corporate profits to wages is the highest it’s been since before the Great Depression.

Besides, how can lower incomes possibly be an answer to America’s economic problem? Lower incomes mean less overall demand for goods and services — which translates into even fewer jobs and even lower wages.

In short, the Perry (and Bachmann) model of job growth condemns Americans to lower and lower living standards. That’s nothing to crow about.

Reposted by02mydafsoup-01santaprecaria

September 09 2011

"Two Cheers and One Jeer for the American Jobs Act" by Robert Reich

Two cheers for the President and his America’s Jobs Act. Cheer Number One: In presenting it to a joint session of Congress, he sounded as passionate and determined as he’s ever sounded. Second cheer:...
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