Bush the Lighter

If you can't tell already, I find Jeb Bush to be an intellectually contemptible person. I am not the only one to realize the "smart one" label was laughably misplaced. It's as if he doesn't bother to keep up and assumes his conservative instincts will see him through. Recently he went on record saying the Voting Rights Act of 1965 is no longer needed; specifically stating that a federal role was not needed to ensure voting access in certain states with a history of voting rights denial, e.g., Jim Crow. He said this with what should have the benefit of hindsight. It should have been as obvious to him as the rest of us that, because of the Court ruling, the states no longer bound by the VRA, primarily in the South, immediately began re-implementing voting restrictions, measures that would not have passed muster with the VRA- and all done by Republican-controlled states and municipalities because there was no longer VRA-mandated federal oversight.

This is precisely what what liberals warned would happen and precisely what the Supreme Court majority assured us would not happen.

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Speaking of pompous presidential candidates, those of a certain age remember how George Bush the Elder played the racial fear card with that infamous Willie Horton political attack ad, the one that attacked Democratic candidate Michael Dukakis because he, as Massachusetts governor, had allowed Mr. Horton, a felon, to have a weekend pass. You know the story; Willie stabbed and raped at the first opportunity. Bad call, Gov. You know why you remember it? Because Republicans played that Horton attack ad incessantly and made sure everyone had their primal fears rubbed raw. Republicans know fear helps them win elections; they stoke it every chance they get.

So it is interesting how Huckabee has largely avoided a similar fate. You do remember the incident, don't you? OK, most of us don't, nor did we hear much about it at the time, which is really my point. Fortunately, some have seen fit to remind us.  And yes, if Huckabee starts to climb in the polls, one or more of his Republican opponents may bring up his Willie Horton moment.

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Business Insider reports that economists are surprised that consumers are saving more than expected. This can be a problem in an economy where consumer spending plays such a dominant role. "Secular stagnation," they say. They shouldn't be surprised. As I have said more than once about job security; it has been stripped away for millions of us, and when people know they don't have job security, along with low wages and benefits, they do the rational thing and cut back on spending, especially when credit card debt is already high. It really should be obvious why households feel the need to save and pare down debt.

All that cheap plastic crap from China will sit on Walmart's shelves for a little longer, so there is a good side, I suppose.

Labor Day

Labor Day has come and gone, so I thought this would be a good time to remind readers of how this country treats unions and the working class. Given the disingenuous way unions are usually portrayed it the media, along with the incessant harangue from Republicans, many Americans have been convinced that unions are an unmitigated horror. The message has been so relentless for so long, millions of Americans have grown up hearing no other narrative except that unions are a blight. In turn, they have accepted the corporatist argument that slashing the pay, benefits, and job security of the working class is the way for America to move forward. That and another round of tax cuts for the wealthy.

Right-wing analysts, who have an agenda, talk endlessly of costs, corrupt union bosses, and how corporations' profits are hurt. Mainstream journalists, many of whom are feckless if not especially conservative, will parrot right-wing talking points uncritically. What they often leave out is what it means to families and neighborhood where workers have somewhat higher paychecks than they would otherwise. Small businesses, which Republicans claim to support, are happy for the extra business their neighbors' larger paychecks allow. Local and state tax revenues rise as well because workers have more disposable income, and thus put more back into the local economy. In other words, employees with cash to spend make good customers; those with minimal discretionary income make poor customers. And every employee is someone else's customer.

Closely related is the greater job security that unions have historically provided. Many Americans have been told inability to shed workers has been a costly burden, ignoring the fact that the American economy has consistently been among the most competitive and productive; our corporations are among the most profitable. We are now learning what citizens in less developed countries have always known: When you are underpaid and don't have job security, you hunker down. You focus on the most elemental needs and try to save money. There is, of course, little to save, whether it be for emergencies or retirement--and millions no longer have a pension like their fathers did. If you are scared of losing your job because your boss is a prick, and is constantly threatening you, just remember that non-unionized Americans, and that is most of us, now have little legal protection. Americans have some of the lowest job security in the OECD, a development that was entirely intended.

As for those retirement plans, especially the public sector ones that turn Republicans apoplectic, one should ask, even if few in the media do, why there is so much willingness to scaremonger the costs and so little effort to account for the ways people benefit because someone in the household has a retirement check; a check that contributes to the family and the neighborhood.

I recall some sneering comments made on Face Book a while back by a man who supported Tea Party policies. I recall that he was incensed over California's state employee retirement obligations. The figure he threw out I no longer recall. He may have been correct; it certainly seemed like a lot of money. But what I do recall is there was no context; it was just assumed to be an outrageous amount. All cost and no benefit.

It should be obvious, but apparently isn't, that the dollar amount means little if the number of retirees, and their dependents, are not accounted for. Or the number of years the total obligation is spread over. Or how many other family members benefit from the relatively large retirement checks. Or how many are able to stay off welfare as a result. Multiplier effect, anyone? Dollars spent by unionized civil servants, active or retired, go back into local economies where they act as a far better economic stimulus than austerity or tax cuts, both conservative favorites.

California state retirees, who are mostly middle-class, also pay taxes on that income, which the state and the feds are very good at collecting, unlike that of the very wealthiest, who are very good at avoiding taxes, even if it means putting their extra billions, or even trillions, in offshore tax havens. When is the last time you read, not some polemic from the Left, but a fair analysis in your favorite news source, of how the very wealthiest duck taxes and what it means for the rest of us?

These are simple economic principles; low wages are a drag on any economy, but especially one dependent on consumer spending. What do you honestly think will happen if, for decades on end, wages are suppressed for most of the working and middle classes, pensions are eliminated, job security and benefits are reduced, and millions have become compliant, overworked, and scared because they cannot risk losing their shitty jobs?

Silly me, you blame the victims, of course.

Insecure By Design

Question: What has been a defining feature of American socio-economic life for nearly all of its history, faded substantially for roughly two generations, and now has come back with a vengeance in the last two or three decades?

An insecure and vulnerable workforce. One that is compliant, scared, and with few workplace rights.

It is no accident that employee insecurity, those subject to dismissal without cause, has coincided with flat wage growth, a decline in union membership, the gradual disappearance of pensions, and the rise of the cynically-named "right-to-work" legislation.

Some will tell you that it is the inevitable result of globalization; it's a tough, competitive world out there, and hey, China. OECD data on worker protections in member countries belies this assertion. According to recent OECD publications, the United States has become unusually hostile to workers. As Les Leopold reports:

The Organization for Economic Cooperation and Development (OECD) ranks 43 nations by the degree of employee protection provided by government. The 21 indicators used include such items as laws and regulations governing unfair dismissals, notifications and protections during mass layoffs, the use and abuse of temporary workers, and the provision of severance based on seniority. Countries are ranked on a scale of 0 to 6 with 6 going to those who provide the most legal protections for employees and 0 for those with the least. We're ranked #42 out of 43, meaning that we have among the fewest regulations to protect employees -- union, non-union, management, full-time and temporary workers alike.

The low level of worker security has always been the objective of most of those on the Right, whether they espouse neo-liberalism, laissez faire policies, or free trade. Enthusiastic support from the corporate world for cheap, compliant labor has varied over the generations, but has been especially strong in recent decades.

Through it all are those who may not be rich themselves, or may not run a corporation, or have well-developed views on economic doctrine, but still show a remarkable hostility to the "other": those not in the same tribe, religion, or race; those who are unacceptably different in thought, world view, and sexuality. A hostility that is directed against those who do not know their place and thus threaten the hierarchy.

This has been with us since colonial days. Both David Hackett Fischer, in Albion's Seed, and Colin Woodard, in American Nations, vividly reveal the brutal treatment that for centuries was meted out to the powerless; slaves, immigrants, indigenous Americans, indentured servants, sharecroppers, women, political subversives, the lower class in general.

The nature of employment, and of insecurity, have changed over the generations, though the working class remains the object of contempt. Workers are increasingly compelled to pursue jobs that not only offer low pay and no benefits, but are further away from home, are at odd hours, or, and this is the big one, are seasonal, temporary, or part-time. The result is a dystopian nightmare for millions of workers, some of them highly educated, who spend an inordinate amount of time, money and gas, to get to one part-time job, then must hustle off to another one. And you better not complain, because the boss does not need a good reason to fire you.

For a modern analysis of how the wealthy are currently reshaping the lives of the working poor and, increasingly, the middle class, read Jeff Faux's The Servant Economy, or Robert Reich's analysis of "the sharing economy," Faux focuses on how so many of the jobs now appearing are designed to serve the wealthy; day care--for the very young and the very old--dog walking, auto detailing, pool and lawn care, and many more. The pay is low, the benefits mostly non-existent.  No unions, no protection; you serve at the pleasure of the rich. Reich describes an economy where "human beings do the work that’s unpredictable – odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours – and patch together barely enough to live on."

No slavery, not technically, but highly constrained conditions, along with wages that are no longer coupled with productivity, mean that America, a country that once had high social mobility compared to other industrialized economies, now has among the worst. We are returning to the rigid, stultifying hierarchy of class, low wages, and pervasive, and often aggressive, religiosity that has long characterized the American South.

We are becoming Dixie.

Wall Street Should Reconsider Its Allies

By now it should be clear that Wall Street money was behind the rise of the Tea Party, a loose ragtag collection that felt empowered enough to attend rallies and hold misspelled signs as they vented and raged. Call them Wall Street's shock troops. It was a deft move; convince the middle class, at least enough of it- the white, disaffected, conservative, Republican-voting, mostly Southern portion, to howl against President Obama and how his radical Marxism was going to destroy the economy. But by all means ignore what Wall Street banks had been doing to the economy and how relentlessly wealth trickled upwards--out of the middle class communities, including those in reliably Republican Red states, and into the hands of banks and the investor class. That the investor class has been able to shield huge amounts of money from taxation, often sending it abroad where it did no good for the middle class communities that once held it, and how this is the primary driver of government debt; its all several dots that teabaggers refuse to connect.

Wall Street appears to be reassessing its strategy. It was never the investor class's intention that a right-wing, pseudo-populist Tea Party would actually win more than a token few seats in Congress. The intention was to deflect government from doing anything to rein in Wall Street's gravy train and to make sure rank and file Republican voters didn't start caring that Wall Street is corrupt and reckless. A couple more dots not connected.

Instead, we are now witnessing, once again, what happens when right-wing extremists, the perpetually-aggrieved sons of the South, actively undermine that which they cannot control. The South with its deeply undemocratic instincts on full display, has proven to us once again that this country has never truly been a united states.

Wall Street may have seriously misjudged Southern animosity towards government, the one that feeds and protects the investor class, but it also misjudged Barack Obama. The instinctive reaction to Democratic presidents, one that is seriously at odds with reality, and one that even the moneyed class makes, is that they are bad for business: They raise taxes and impose regulations. And everyone knows that doing that slows growth and kills jobs. "You can't tax your way to prosperity." "Government just gets in the way." The bromides are endless.

Sorting out whether such boiler-plate corporate talking points are actually true will have to wait for another post (Actually, the data is compelling: Wall Street is a blight on the US and Democrats have a better record on growth, job creation, and the budget). The point here is that corporate America, and especially Wall Street, have much for which to be thankful. In a more just and equitable world, one that believes that equal application of the law is not a mere slogan, many bankers and traders would be doing hard time and not printing their own "get-out-of-for-free" cards.

But prison terms and inadequate legal representation are for the poor and working class. White shoe lawyers, fines, and no admission of guilt are the quite acceptable cost of doing business for the wealthy. This is an arrangement that Obama need not have tolerated, but he did. And the re-imposition of regulations proven to be highly effective in the past, the ones that brought us decades of banking stability? Obama didn't go there either, to the utter dismay of many banking experts.

I don't expect teabaggers to figure it out, but Wall Street should know that energy production in the US has increased dramatically since Obama took office. Remember how Republicans told America that Obama would cave to environmentalists and implement job-killing energy legislation, all because of that hoax called global warming? How we would have $10/gal gasoline, and how it was all part of his socialist plan? The reality is this: "US oil output hit its highest level in 20 years in July in a power shift with big geopolitical consequences." And this: "U.S. To Become World's Largest Oil Producer, Overtaking Russia."

Wall Street knows this and benefits from it. Instead, it feared that Obama would raise their taxes to a level that still would have been lower than that under Reagan, implement sensible regulations that had been in place under Reagan, and, I don't know, uphold the law.

So right wing operatives, financed by Wall Street and others, told a gullible and poorly-informed America that Barack Obama was radically anti-business and therefore anti-American. Two easy marks: Teabaggers, who are predictable prey to fear, uncertainty, and doubt. And President Obama himself, who should have done more to put an end to Wall Street's plunder. If Wall Street were more honest, and if teabaggers were more educated, they would realize Barack Obama has governed like a moderate Republican. 

Avoiding the Real Issues

As America continues to struggle, many have reminded us of the value of innovation-- in technology and commerce, mostly, --but also in education and government. President Obama himself has often stressed the importance of innovation; how we once had it in abundance, how it now is eroding, and what we must do to get it back. The value of innovation would seem to be something that progressives and conservatives could mostly agree on, and that helps explain why the President talks about it. There is, of course, less agreement on just how innovation should be enhanced, and what the proper role of government should be.

When President Obama talks about the importance of innovation, he has often, inadvertently or not, draped it in conservative talking points. We need to "work harder", "stay in school", --or go back to school-- and get that degree or those credentials. It's a competitive world out there; if you can't get the job you want, it's because you are not properly trained and credentialed. And, of course, you cannot blame corporate America if you don't have the proper skills. We must not let down them down; work harder and prove your value to the job creators.

This storyline is not so wrong as it is incomplete. Obviously, there is much to be said for staying is school, seeking additional training, or more broadly, the role of innovation. American commerce still provides sundry example of where hard work and innovation can take you; they are the twin edges we must sharpen if we are to meet future challenges.

Every speech devoted to either of these takes the focus away from the underlying causes of US difficulty; jobs, to be sure, but also wage levels for the jobs we still have. Most people are in fact employed, and most jobs have not been outsourced or lost to foreign competition. What is not being acknowledged is that a disproportionate number of the jobs Americans now have face little foreign competition. That's the good part; the bad part is modest wages, benefits, and skill requirements for so many of these jobs. You don't need a degree to work fast food, retailing, and the like. And what about that other more technical job you went to back to school for, got a degree in, and now are heavily in debt for? Sorry, that job has been filled.

The problem of our sluggish economic growth is not a lack of innovation. We have bought into an economic doctrine that sanctifies free trade, financial deregulation, including unfettered flow of capital, and an obsession with credit and debt. It is a system designed by and for banks and the investor class, with little regard for main street or the middle class. The result is an indifference to massive trade deficits, dangerously leveraged banks, and an increasingly ability of the wealthy to avoid taxation and accountability.

Employees are seen as a mere input in this profit model. Low wages are good since they improve the bottom line. If workers are recalcitrant and actually want a living wage, management should be free to outsource production to low wage countries. To hear some tell it, management is virtually obligated to fire its American workers and seek cheap unregulated workers abroad, for improving the bottom line is management's only real responsibility. It's what the investors want, you know.

And the people who work for the company? That's labor, an input. Lower input costs mean higher profits. Why pay more? Any manager who does not seek to maximize profits is doing a disservice to investors, just like they were all taught in American business schools. It's all very rational and efficient, don't you see?

Innovation does not directly address any of this. We have innovated like crazy and what are the results? Entire industries have been shipped overseas. Because we have allowed our industrial base and concomitant skills to erode, seeking out overseas producers has become a default position. A generation has grown up assuming that American reliance on foreign manufacturers is the natural order of things.

Nor do the calls for greater innovation say who will benefit from the results. Asia is a huge beneficiary of US economic policy. For generations our tax dollars have poured into basic R&D, much of it going to public universities. It has been a great success story, and it has played a key role in America's development. And like the recent round of stimulus spending, much of those tax dollars ends up in Asia. Working harder, as even Obama has exhorted, does nothing to change the imbalances. US corporations already have what they always want; cheap labor, huge profits. The investor class took a hit in 2008, but they have recovered nicely, and have fat dividends and lightly-taxed capital gains to show for it.

So the middle class needs to work harder? For them? Because the job creators need help? Americans are already working harder than elsewhere in the OECD; we also have, in recent decades, relatively little to show for it. Wages have been suppressed, union membership has plummeted, and pensions and benefits have become even more rarefied. All of this is the direct result of flawed policies made in response to legitimate economic challenges.

Innovation will help; it always has. But the role of innovation has been undermined for the same reason our techno-industrial base has. Economic history is very clear on this: Nations that vigorously promote and defend their industrial and technical base have thrived. Those that didn't, and let their financial sector dominate, have crumbled.

America will not be an exception.

Labor Just Needs to be Flexible

US corporations pay some of the highest dividends in the capitalist world. That sounds pretty good; corporations sharing their profits, giving back to their communities, right? I mean, all those orphans and grandmothers cashing in those fat dividend checks.

There are two problems with this. The first is that dividends mostly don't go back to the communities where the profits were made, they tend to consolidate wealth for the one percent. The vast majority of dividends actually paid go to America's wealthiest. Those individuals mostly live somewhere else, i.e., profits are made in middle class communities--think Walmart, Starbucks, or your local utility--and then end up as dividends for the investor class concentrated in  relatively few neighborhoods; the Hamptons, Beverly Hills, Zurich.

And then they pay 15% tax on it, tops. This, of course, is what Warren Buffet means when he says his secretary pays a higher tax rate than he does.The result is that corporate dividends are yet another way to ensure a steady stream of cash away from the middle class and to the investor class. That's true in a demographic sense, but also geographically; money, and the control of that money, shifts away from communities that need it the most. When some of it does come back, it is on the investor class's terms.

The middle class, in turn, is subjected to endless scolding. How many times have we heard that labor needs to be flexible? What with all the foreign competition, working families cannot expect wage increases; "times are tough," and we all must "tighten our belts" and other nonsense. These assertions are made in the face of record profits, record executive compensation, and continuing tax breaks for both the companies and those that run them.

It's always about how labor must be flexible. Don't be a sap, be flexible and go where the jobs are. And retrain yourself along the way. See? It's easy. Now run along and show me that work ethic that compels you to tolerate the crap I heap on you.

The reality is that an increasing number of Americans are expected to become nomadic laborers. Don't settle down and establish roots. Corporate America paid politicians good money for the right to close down factories with minimal cost to them even if it means massive layoffs for employees. But you can just pull yourself up by your bootstraps and get another job, one in the next county, 50 miles away, and lower pay. Night shift only. And you'll be on probationary status as a newbie. Too bad about that commute; the extra gas money comes out of your pocket. Your seniority at the old job? Get real, you're starting all over again. At the bottom, with few benefits. And your lunch hour is now half an hour. Don't like it? There are 200 other applicants behind you. We hire those who don't complain.

Perhaps you have to move across country. That's where the work is, so pack up. And pull your kids out of the only school they have known. It was a pretty good school, too. Kind of ironic, because that's the reason you moved into the neighborhood in the first place. And settled down, so you, your spouse, and the kids could contribute and be part of the community. The company health plan was pretty decent. You put up with a lot because you didn't want to forfeit it.

No matter now; say goodbye to it, and to the neighbors you won't see again. Your spouse will also have to abandon that part-time job. That's gotta hurt; (s)he won't likely find a better job where you're headed.  But if (s)he does, it's almost guaranteed to be at low pay and no benefits, just like nearly all part-time jobs in the US.

You'll just have to tighten your belts some more. Too bad about jerking your kids out in the middle of the school year. Just tell them that labor flexibility is the new American Dream.

Hanauer Ruffles Some Feathers

Here is an interesting video of Nick Hanauer at TED. Hanauer is a wealthy venture capitalist who dares to say what some of his class do not want to hear; the wealthy are not the prime job creators and that nothing matters without a healthy middle class. This apparently offended the operatives at TED so much that they refused to post, as is customary, the video at their website.

Alex Pareene provides some perspective, noting first that TED is a self-indulgent, over-hyped organization funded by and for wealthy Silicon Valley types who love to congratulate themselves on what they fancy is their proper position in the pantheon of money and privilege. As Pareene puts it:

In case you’re unfamiliar with TED, it is a series of short lectures on a variety of subjects that stream on the Internet, for free. That’s it, really, or at least that is all that TED is to most of the people who have even heard of it. For an elite few, though, TED is something more: a lifestyle, an ethos, a bunch of overpriced networking events featuring live entertainment from smart and occasionally famous people...Strip away the hype and you’re left with a reasonably good video podcast with delusions of grandeur. For most of the millions of people who watch TED videos at the office, it’s a middlebrow diversion and a source of factoids to use on your friends. Except TED thinks it’s changing the world, like if “This American Life” suddenly mistook itself for Doctors Without Borders.

TED has a lot riding on its continued success and it doesn't want anyone, including a fellow rich guy, screwing things up by speaking too plainly. Attendees shell out big time to have their egos stroked, not to hear a presentation that was inappropriately "political". That, at least, is how TED was spinning it. My own view is that many in the crowd are not indifferent to Hanauer's argument. Many even share it, including his point that growing inequality will hurt us all, and the wealthy need to pay more taxes.

Low Wages are Crippling Us

Since posting on the problem of suppressed wages on April 25, I've noticed others have posted on the subject and the problems the US* has created for itself by squeezing the incomes of the middle and working class. Nice to know they got my memo. The paste-up below is from Morgan Housel at Motley Fool. Nice write up, Morgan.

Nearly every recent survey asking Americans about their most pressing concern points to the same answer: a job. People are upset about taxes, politics, deficits, and wars, but until you can clock in five days a week and get a paycheck every other Friday, almost nothing else matters.

The good news: Jobs are starting to come back. About 3.3 million more Americans are working today than were just two years ago. That's great from a social perspective. People are going back to work and regaining dignity. Let's hope it lasts. 

But even if it does, it might not be enough to fuel a strong recovery. What drives the economy isn't necessarily jobs -- it's people's ability to save and spend money. And even though jobs are coming back, average weekly hours and wages, by and large, are not. More people have jobs than did a year or two ago, but we're working fewer hours, for barely more money, than before the recession began.

The average private-sector employee worked 34.3 hours per week this year, according to the Bureau of Labor Statistics. Five years ago, the average workweek was 34.7 hours long. That might sound like a small difference, but it adds up fast. Working more hours means bigger paychecks, which means more saving and spending, which drives economic growth -- just like adding new jobs would. According to UBS economist Sam Coffin, every one-tenth of an hour increase in an average private-sector workweek is the equivalent of adding 320,000 jobs. So if employees were working the same number of hours today as they were five years ago, the increase in spending would be like having an additional 1.3 million people employed -- enough to push the unemployment rate well under 8%. 

Then there are wages. From the end of World War II through the late 1990s, average real (after inflation) hourly earnings increased 1.8% a year, and growth coming out of recessions was usually stronger than that. Not this time. Average real hourly earnings have been essentially flat over the last several years. If wage growth followed its historic growth rate from 2009 through today, the average worker would be earning almost $1 an hour more than they are now. The additional spending that would generate is the equivalent of some 2 million new jobs in today's economy. 

All of this underlines something important about today's jobs market: A disproportionate number of jobs being created are for low-wage, part-time work. According to a recent Bloomberg Briefing, 41% of jobs created since 2010 are from "low-wage" sectors like retail and hospitality, even though such sectors only make up 29% of the total labor force. When government job losses are factored in, 70% of all job gains in the last six months came from low-wage sectors. In March, the notoriously low-wage restaurant and food-service industry added 37,000 of the 120,000 total jobs created for the month. "Administrative and waste services" made up another 15,000 of the total (though month-to-month figures can be murky). 

Measured by the number of jobs alone, our employment recovery has been extraordinarily weak. But, when you factor in the quality and pay of the jobs that are bouncing back, it's been downright abysmal. When it comes to spending and stimulating the economy, creating 3.3 million new jobs today might be the equivalent of several hundred thousand jobs in years past. That's a dark thought when thinking about our future.....

*Actually, it can be problematic to use "country" or "nation" as the unit of analysis; the United States is an abstract concept.The decision to promote policies that benefit the rich is not done by a country, or even a government, but by certain specific individuals within the government and others who support them. Using expressions such as "the US believes" or "the American people demand" are clumsy but often effective simplifications. People who conflate the two parties and claim that "politicians" got us in this mess have a perverse devotion to symmetry and are intellectually lazy.   

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 "...in 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

American Tax Dodgers

On January 12, I posted some comments about Les Leopold's recent article on tricks the corporate use to hoard wealth. I referred to economic productivity and how the gains are no longer being shared with the middle class.

He also highlighted how large corporations, despite the endless bleating about high corporate taxes, often pay little or no taxes. Specifically he noted how low state and local corporate taxes have become. As Leopold says:

Large corporations pay next to nothing in state and local taxes. As a result of the Wall Street-created crash, state and local governments are struggling to make up for lost revenues and rising costs to care for the jobless and the destitute. In a fair society we would be asking Wall Street to pay for the damage it created. Instead, Wall Street has used its enormous lobbying muscle to make sure politicians are asking states to cut back public services of all kinds. Meanwhile, large corporations use every trick in the book to avoid paying state and local taxes. A recent joint report by the Institute on Taxation and Economic Policy and Citizens for Tax Justice reveals that 265 large corporations avoided $42.7 billion in taxes from 2008 to 2010. That’s enough money to hire more than one million teachers! Instead, we are firing teachers in the name of fiscal austerity.

 The full report to which Leopold refers is at The Institute for Taxation and Economic Policy.  The reports should make clear that whatever other problems ail the US, overtaxed corporations isn't one of them. Citizens for Tax Justice also offers a compendium of how America's most profitable companies pay taxes dramatically lower than the advertised rate; for many, the US tax code has become a profit center, one more way to privatize benefits and socialize costs.


The idea, which every Republican presidential candidate has made at one time or another, that America's high corporate tax rate of 35% is killing the economy should be put to rest by a simple observation at the next debate followed up by a blunt question: 

"You do realize that corporate profits have grown enormously, along with executive compensation?" 


"Are you so naive that you actually believe corporations pay a 35% tax rate?" 

It really is no different at the state level. They game the system at the federal level and at the state level. A more detailed analysis of how corporations avoid taxes while they capture subsidies and other benefits paid by taxpayers, in particular how they play one state or municipality off against another, can be found in Greg LeRoy's well-researched book: The Great American Job Scam: Corporate Tax Dodging and the Myth of Job Creation.

It'll Ruin Us, I Tell You

Yep, it is the most contemptible, onerous regulation you could possibly impose upon commerce. Just ask the business organizations quoted in the video below.

What is this horror? An August 30 ruling by the National Labor Relations Board that requires businesses to display a single poster reminding their employees of their rights.

We can't have employees knowing what their rights are. Better get that black man out of the White House. More analysis at Crooks and Liars.

Wasn't the Last Texas Governor Bad Enough?

Rick Perry has announced he is running for President, to the delight of some, and the horror and disgust of others. So it looks like we are going to be hearing a lot more about this guy. Democrats, and his Republican opponents, will need to get out in front on Perry and his Texas Mirage. Don't wait for Obama to make the case.

Lets do a quick review of the Perry's record as Governor; the one he has already set about to distort. First, the folks at The American Dream, hardly a far-left bastion, offer 14 reasons why Perry would be a "really really bad President." Among them: Texas has the highest percentage of workers at the minimum wage of all 50 states. The site's main complaint is that Perry has raised taxes even while the state has increased its debt and failed to address unemployment, poverty, and poor educational achievement. The takeaway is that most Republicans are going to hesitate when they see his record.

Jason Cherkis writes that the "Texas Miracle" includes low-wage jobs, crowded homeless shelters, and budget shortfalls. Joshua Holland echoes this sentiment, warning us to get ready for a "boat-load of spin" as Perry's campaign strategy will be to distort his "abysmal economic record."

Finally, Paul Krugman notes a beggar-thy-neighbor element to Texas economic policy. Offering an appealing mix of jobs, low taxes, low wages, and cheap housing will attract both corporations and desperate workers.  As Krugman puts it:

What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.

We are only in the middle of 2011; the election is not until next year, ferchristsake. We'll be seeing Perry strut and swagger from here on out. He is a combination (as in the worst) of Michelle Bachmann and Mitt Romney.

Let the pushback begin.

Only a Republican Could Catch Osama, Right?

Jed Lewison's post at Daily Kos helps explain what is so contemptible about the Teabagger mindset; facts don't matter --not when they interfere with ideology.

When George W. Bush took office in Jan 2001 there were 111,634,000 private sector jobs. When he left office in Jan 2009 there were 110,981,000 private sector jobs.

When Bush took office in Jan 2001 there were 20,835,000 government sector jobs. When he left office in Jan 2009 there were 22,582,000 government sector jobs.

That means during Bush's eight years in office, we lost 653,000 private sector jobs and gained 1,747,000 government sector jobs.

Moral of the story: Barack Obama is a Kenyan socialist fuckstick.

And George W. Bush saved capitalism. Plus, he got bin Laden too.

They just can't stand that the guy they hate keeps messin' with their identity, their worldview, and their authoritarian personalities. Isn't Obama supposed to be a weak, feckless, immoral Democrat who wants to destroy America?

No, assholes. You're wrong again.

In your face, bitches

Jobs Up, Boehner Complains

The US Labor Department has just released its December employment data. As the Labor Dept.'s website says, "The number of unemployed persons decreased by 556,000 to 14.5 million in December, and the unemployment rate dropped to 9.4 percent. Over the year, these measures were down from 15.2 million and 9.9 percent, respectively."

Not bad. Many remain jobless, but the drop in the unemployment rate was substantial, the biggest one-month drop since 1998 (also under a Democrat). The still-high figure of 9.4% is the lowest since July 2009.  According to Nancy Pelosi, now the House Minority Leader, President Obama and the Democratic Congress created more jobs in 2010 than George Bush did in all of his eight years. The new Speaker of the House, John Boehner, from whom I have yet to hear a single statement or sound bite that is both substantive and coherent, replied that the data shows the need to cut spending in order to grow the economy.

Boehner pulled that positively Hooveresque conclusion from his ass.  He, Cantor, and the rest of his crowd just cannot accept that federal spending has a stimulative effect. To be more precise, they happily spend when they are in power and when the money goes to their districts. Spending, and the deficit, become problems only when Democrats are in control.

Did you notice how Republicans, primarily Boehner, railed against the federal deficit ever since Obama took office, but changed their tune late last year when it looked like they were going to score a victory for their richest benefactors by getting Democrats to agree to Bush-era tax cuts for all (by holding the unemployed hostage, no less). Then, for several weeks Republicans laid off the deficit rhetoric and instead insisted that we should never raise taxes in a week economy, as if the richest 2% of America would suffer. Now that they secured the tax cuts for the rich, Republicans are back to inveighing against the deficit.  

As for those jobs, Boehner should get an eyeful of the chart below. It's from the Bureau of Labor Statistics. Obama has done remarkably well given the catastrophe handed to him by Bush and Wall Street.

ThinkProgress has a nice summary of Bush's record of job creation:

As the Wall Street Journal noted in the last month of Bush’s term, the former president had the “worst track record for job creation since the government began keeping records.” And job creation under Bush was anemic long before the recession began. Bush’s supply-side economics “fostered the weakest jobs and income growth in more than six decades,” along with “sluggish business investment and weak gross domestic product growth,” the Center for American Progress’ Joshua Picker explained. “On every major measurement” of income and employment, “the country lost ground during Bush’s two terms,” the National Journal’s Ron Brownstein observed, parsing Census data.

Weekend Linkage II

Chris Hedges, as always, is able to encapsulate the core issues confronting us. He reaches back into time to show that the forces arrayed against democracy never really go away. Read "How Democracy Dies: Lessons From A Master."

Here is a little something that many will find depressing, or perhaps perversely amusing. Working America has a jobtracker feature in which you supply a zip code, and it tells you which companies in that area are exporting jobs abroad, have warned of layoffs, or are in violation of various federal labor/health/safety laws. Very revealing.

The video below is one more reason Bill O'Reilly is an asshole. After watching a McDonald's ad in France, he compares gays to Al Qaeda. I guess he just can't get comfortable with people who are different than himself.

You stay classy, Bill.