Wednesday, April 25, 2012

Our Low-Wage Recovery

There has been lots of talk in the air about what this country needs. Republican presidential candidates have been almost unanimous about the value of cutting taxes, by which they mean the top tax rate, the one that affects the wealthy. And we must get the corporate tax rate down as well; it tops out at 35% and that must surely be why American corporations are having trouble competing, except that they aren't. The premise for lowering the top corporate tax rate is that corporations actually pay the current rate. They don't. What they do pay are the most obscene compensation packages in the world.

And let's not forget to cut spending, lots of it. Please tell me you find it odd --in a simple math that doesn't add up kind of odd-- that proponents of spending cuts, meaning nearly every conservative member of congress, simultaneously insist on budget-destroying tax cuts for the wealthy, those who have already enjoyed a generation of such largess, even as they yelp about the deficits those tax cuts created. The national debt is so horrible that we must gut spending on society's most vulnerable to save the republic, but apparently not so horrible that we can't give more tax breaks for our most privileged.

So why has our recession lasted so long? It isn't because taxes are too high, or because we have a large budget deficit.

The reason is that we are turning into a low-wage country. Look at chart below. It shows the share of employees in low-wage work. Hey, we are number one. Yes, I know, having a crappy job is better than no job at all. But this is a long ways from the can-do spirit that this country once had, back when it was an unambiguous economic superpower, back when its tax rates were much higher and wages grew along with productivity. I've discussed the wage-productivity divergence here and here.  


As Tavis Smiley and Cornel West have shown, many of the newly created jobs are " the restaurant, retail, temporary service, social assistance and hospitality sectors. In other words, low-wage jobs, most without health benefits or paid sick leave."  Additional analysis of the significance of the chart above, including America's growing wage polarization, is at "Economist's View."

In other words, low wages means marginalized families with low consumption. Not only can they not save, provide for their children's education, and pay for health care simultaneously, they simply cannot buy much of the products that both corporations and merchants need them to buy. The inability to consume more, regardless of how one feels about materialism, prolongs the weak recovery because everything is predicated on sales, not low taxes. Businesses, especially the smaller ones on Main Street America that do not have foreign sales, do not want lower taxes or cheaper workers. They want more customers.

“It is to the real advantage of every producer, every manufacturer and every merchant to cooperate in the improvement of working conditions, because the best customer of American industry is the well-paid worker.” FDR

Tuesday, April 17, 2012

Single Payer

This is a short story of a psychiatrist named Carol Paris, who is leaving her practice in the US and is relocating to New Zealand. She is fed up with a market-based system that jerks around both physicians and their patients in an effort to extract profits. As I have written before, US health care is compelled to offer a hybrid system of care for those who cannot afford the ghastly fees, especially insurance premiums, combined with those same insurance companies out to maximize profits. It may make sense to a free-market ideologue, but in practice, it is clearly a mess. It creates profits for shareholders by refusing coverage for those who cannot afford the premiums. The federal government pays for those not profitable to the private sector. Health care in America is, after all, a profit center. The Affordable Care Act has changed only some of the most egregious practices. Below is a partial transcript originally from Common Dreams.
Dr. Carol Paris is a psychiatrist. She’s practiced for 13 years in southern Maryland. And she’s fought hard for a single payer system. She’s even been arrested in Congress for speaking out for single payer. But now, she’s had enough. She’s closing her practice. And moving it to New Zealand. 
“I’m so tired and weary of trying to practice sane, passionate, good medicine in this insane health care system in the United States,” Paris said last month in an interview at Union Station before walking over to protest in front of the Supreme Court against the Obama health care law and for single payer. “It impairs my ability to practice in a way that is ethical and passionate. I have a few years left in me to practice. And I’ve decided see what it is like in another country. I have a couple of friends who are psychiatrists who have done a sabbatical in New Zealand. And they said they are so sad to be back in the United States practicing because it was so much more sane and caring in New Zealand. I’m going to see what it is like for my own mental health.” 
“The insanity here is that we have a system of financing health care in this country that is all about profit for corporate America and not about the health care of the people,” Dr. Paris said. “It is opposed to the health care of the people of America. You can’t be about profit and be about a social service.” 
“Every day, I spend more time helping my patients figure out how to game the system, how to maneuver the system of health care insurance,” Dr. Paris said. “Maybe they can afford to see me and maybe afford medicine, but they can’t afford therapy. So, I’m robbing Peter to pay Paul.” 
“Any recommendations I make for my new patients is based on the assumption that they will have no health insurance tomorrow...."
For visual learners I have included the video below.

Good luck, Doc. Can't say that I blame you.

Wednesday, April 4, 2012

The Romney Standard

On March 23 I posted a story on the abject willingness of many, including Mitt Romney and Rick Santorum, to misrepresent the actions and policies of President Obama. One takeaway from this is that a willingness to lie, with the belief that one will not be held accountable, has escalated in recent years. And yes, it has coincided strongly with the Republican party's jaw-dropping turn to the right. Lying, in other words, has become a calculated risk, part and parcel of campaign strategies, embedded in speech, spin, and soundbites.

Lying and the overall bullshit factor are on the increase in part because the media lets it happen. More fundamentally, we see a political party that is desperately trying to discredit a remarkably scandal-free sitting president, and has resorted to demeaning and hateful rhetoric known to work with a voter base that scores low on information but generally high on authoritarian personality scales.

And of course, Republicans know they are facing unfavorable demographic trends. A rational person would think the party would want to embrace a wider swath of voters and give them compelling reasons to vote Republican. Instead, that party's politicians and operatives resort to strident and inflammatory rhetoric. They do not know what else to do because they are scared of the future, and they have embraced an inflexible and unsustainable ideology that has boxed them in. They cannot offer up real solutions without violating party dogma. In such an environment, it is no surprise that the candidates feel they are justified in lying, slandering, and misrepresenting opponents. If you want to win, you can't be squeamish.

Take Mitt Romney, who, despite everything, is still likely to be the Republican nominee. It would be an understatement to say I have a problem with this class warrior, the choice of oligarchs everywhere. It isn't the Mormon thing, per se, even if that makes some Republicans squirm. After all, Romney's acceptance of magic underwear or Joseph Smith's inane story of the golden plates is not any less credible than Santorum's belief in transubstantiation or papal infallibility.

It is mostly because Romney has the interests of the one percent at heart; a Wall Street First kind of guy who thinks gutting social programs and further shifting wealth to the very top is viable policy.    

But on a more personal level I am offended by a man who now feels the lying is an acceptable campaign tactic. Adultery and divorce no longer carry the social stigma they once did, much to Newt's relief, so why should bald-faced lying? 

The video below shows Rachel Maddow discussing Romney's honesty issue. As she says, "there is something different" about Romney and his campaign, well beyond the usual twisting and distorting we find with most candidates, the kind we long accepted as the nature of hard-ball politics. Maddow gives specific, undeniable, calculated lies, and then notes the indifference the Romney camp shows when it is caught.

These examples are not mistakes or gaffs; everyone makes those and everyone deserves to be cut at least a little slack when they make them, especially during an exhausting primary race. Maddow's very reasonable question is to ask whether Romney's chronic, almost pathological willingness to lie, even when he knows fact-checkers can easily call him out, is now a leading indicator of where American politics is headed, a new standard of cynicism and calculated manipulation.