Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Global Food FightsA great commentary on the crisis in global food security from the Americas Program."For the first time since widespread famines devastated whole populations, serious doubts about global food supply have gripped societies throughout the world. The problem this time is not so much the quantity of food produced (if it ever was), but what productive land will be used for, who will feed us, and who will eat." Read the rest here. Labels: Americas Program, economic meltdown, food crisis, food security, Inequality, Laura Carlsen, rising food prices Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Opportunity Costs of WarRep. Dave Obey (D-WI), the chair of the Appropriations Committee, has put out a nice list of what economists refer to as opportunity costs of the United States war in Iraq.WAR COSTS: OPPORTUNITIES LOST WASHINGTON - The war in Iraq is costing our country $339 million every day.Every day we spend in Iraq means missed opportunities to invest in important priorities here at home. For $339 million:
For D&S coverage of these issues, see this analysis of the true cost of the war, Arthur MacEwan's discussion of the role of oil at the start of the war, and Monique Morrissey's comparison of military and non-military spending as a share of GDP. How would you spend the estimated $3 trillion that the United States will spend on the war? Fill up your shopping cart at 3trillion.org. Labels: $3 trillion, costs of war, iraq war, opportunity costs Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Born on Third Base?Peter Wagner of the Prison Policy Initiative sent us this link to a recent article in Slate magazine. The article cites the curious phenomenon that professional baseball players are much more likely to be born in August than July. The author theorizes that August babies aren't naturally better at baseball -- they're just older than their peers, because Aug. 1 is the normal cut-off date for youth baseball leagues.The author concludes that this structural benefit for the August-born is a "small advantage can have an impact that lasts a lifetime." We'd like to see more sports commentary -- or any commentary -- that looks at the lifelong impacts of big advantages, like economic security, well-funded schools, racial justice, or gender equality. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). UMass Research on the Changing Retail WorkforceResearchers at the University of Massachusetts, including Dollars & Sense associate Chris Tilly, have completed a national study, "The Changing World of Work in US Retail Trade." The researchers conducted 18 case studies of employees in food and consumer electronics retail businesses, focusing on recent transformations in the retail sector and their consequences for the low-wage workforce.You can read more about the research at the Center for Industrial Competitiveness at UMass Lowell. If you're in the Boston area, the authors of the study will be discussing their research on April 30 at UMass Boston. Details below: Center for Industrial Competitiveness -UMass Lowell Center for Social Policy - UMass Boston A panel discussion of findings from a national study Wednesday April 30, 2008 8:30 a.m. to 10:30 a.m. University of Massachusetts Boston Campus Center - 3rd Floor - Ballroom C As a sector, retail trade exemplifies the central dilemma of low wage work in modern economies. Giant retailer Wal-Mart is the largest US employer, and overall, retail is one of the largest employment sectors in the country. What happens to jobs in this industry, which is a major provider of entry-level jobs, is a key element of the broader picture of low wage employment nationwide. Retail work is undergoing significant change in the United States. To explore these changes, and their impacts in terms of turnover, skill levels, and other key workforce variables, the authors conducted 18 case studies of food and consumer electronics retail businesses. They spoke to employees from top corporate executives to frontline employees, visited stores, and reviewed HR statistics. The two study authors will present selected findings: Françoise Carré, Ph.D. Center for Social Policy, McCormack Graduate School, University of Massachusetts Boston and Chris Tilly, Ph.D. Department of Regional Economic and Social Development, University of Massachusetts Lowell. Discussants of the study findings will include: Prof. David Weil¸ School of Management, Boston University; and Joel Boone, Vice President for Labor Relations, Stop and Shop Supermarkets. Event sponsored by the Center for Social Policy, J. W. McCormack Graduate School at UMass-Boston; and the Center for Industrial Competitiveness and Department of Regional Economic and Social Development at UMass-Lowell. For more information, contact: UMass Lowell: Center for Industrial Competitiveness / 978 934-2796 / UMass Boston: Center for Social Policy / 617 287-5550 / Labels: low-wage labor, retail Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Tax Day Thoughts on Social SecurityOn Tax Day, we recommend to you a recently-posted article from our March/April issue, Go Ahead and Lift the Cap, in which economist and D&S collective member John Miller responds to a Clinton campaign flyer claim about Obama's proposal to raise the cap on income subject to Social Security taxes. To her credit, Hillary Clinton has publicly questioned the very idea of a "Social Security crisis" (as we have repeatedly in the pages of D&S, e.g. here and here). But her criticism of Obama's proposed reform is off target.We also recommend this item, from Craig Jennings of OMB Watch: Social Security: Its Long-Term Outlook Is Still Just Peachy Labels: hillary clinton, John Miller, Obama, OMB Watch, Social Security, taxes Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Conference-Goers Push for Labor Solidarity, Rebound From DisruptionThis from the staff of Labor Notes: a report on their annual conference, which was held this past weekend in Dearborn, Mich. D&S co-editor Amy Gluckman was in attendance.More than 1,000 union activists and supporters met at the Labor Notes conference April 11-13 to strategize and debate how to rebuild the labor movement's power. Media attention has been given to the attempted disruption of the conference by several hundred staffers and members of the Service Employees International Union (SEIU)—some of whom became violent when conference participants refused to allow the chanting protesters to enter the hotel’s banquet hall (See full story). The fact is, however, that the business of the conference went on as planned. With the exception of a handful of earlier workshops in which speakers were shouted down by SEIU staffers, participants gathered in 110 meetings with members of their own unions and across unions, learned nuts-and-bolts tactics, debated grand strategies, networked, agreed, disagreed, and inspired each other. A few highlights: * About 250 participants swelled the American Axle workers’ picket line in Detroit during the Saturday lunch break. A half-dozen amazed American Axle workers, who have been on strike for seven weeks, later came to the conference to be presented with Labor Notes’ “Troublemaker” award. * Rail workers from seven different unions founded Railroad Workers United, a cross-union solidarity caucus aiming to counter the frequent feuding and disunity among rail unions. * Participants came from 21 countries, including Vietnam, Sri Lanka, Mexico, Brazil, and China. * Telecom workers held a special half-day meeting to strategize over upcoming contract expirations and restructuring changes in the their industry. * A linked set of workshops on Chinese labor issues drew new participants who debated how to relate to the world’s largest workforce. * Another set of meetings on Black workers’ issues drew African American labor activists into a unique cross-union dialogue. * A reception for the Freightliner Five—union officers fired last year in Cleveland, North Carolina, for leading a one-day strike—drew both fellow UAW members and those concerned about organizing in the South. * A workshop titled “Neutrality Agreements and Organizing Deals: Salvation or Sell-Out?” drew more than a hundred to debate both principles and practical results. * The percentage of the conference made up of young people was much larger than in recent years. In the Bay Area and Portland, local support committees organized ahead of time to enable big crews of hotel workers and building trades apprentices to attend. * "Troublemaker" awards were given to John Sferazo, an Ironworker and 9/11 responder who fought for compensation for workers disabled by their work at Ground Zero; the United Workers, a scrappy group that won a living wage for the day laborers who clean Camden Yards in Baltimore; the Taxi Workers Alliance, which organizes New York City’s immigrant cabbie workforce; and American Axle strikers. The conference was dedicated to Santiago Rafael Cruz, an organizer for the Farm Labor Organizing Committee in Mexico, who was murdered by employer-paid thugs. Perhaps surprising, given the weakened state of the labor movement, is the fact that this was the largest Labor Notes conference since 1997, with more than 1,000 registrants. Although discussions were sober, participants still found inspiration in encountering so many others who were, as one session was titled, "troublemaking for the long haul." Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Finance, Imperialism, and the Hegemony of the DollarEconomist and D&S collective member Ramaa Vasudevan has an article in the current (April) issue of Monthly Review. It appears to be available only in the print edition; here is the abstract:
The article explores the U.S. dollar's "role in the mechanisms of U.S. imperialist hegemony," and the growth of financialization ("the growing political and economic power of finance along with the explosion of financial trading that facilitates a pattern of accumulation where profit-making is engineered increasingly through financial channels." (MR editor John Bellamy Foster has an article on financialization in the current issue; that one is posted to the MR site.) Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Microfinance’s Success Sets Off a Debate in MexicoFrom Saturday's New York Times:Microfinance’s Success Sets Off a Debate in Mexico For a critique of microcredit, see Microcredit and Women's Poverty, by economists Susan Feiner and Drucilla Barker. The article was included in a volume edited by Farooque Chowdhury, Microcredit: Myth Manufactured (with a preface by Doug Henwood of the Left Business Observer). Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). March unemployment numbersThe Bureau of Labor Statistics released its March unemployment numbers on Friday, and the news is grim:The unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm payroll employment continued to trend down (-80,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the past 3 months, payroll employment has declined by 232,000. In March, employment continued to fall in construction, manufacturing, and employment services, while health care, food services, and mining added jobs. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month. The full BLS summary is here.  A feature article in the current issue of D&S, A New WPA?, describes "employer of last resort" full-employment schemes—a big-picture policy proposal that the left can get behind. There are nifty WPA-era graphics, too. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). A New Deal for the 21st CenturyAn upcoming conference, related to Ryan Dodd's feature article in the current issue of D&S, A New WPA?, which addresses "employer of last resort" policies for full employment.A New Deal for the 21st Century As income and wealth inequality approach levels not seen since the dawn of the Great Depression, we invite you to participate in a one-day conference on April 9: A New Deal for the 21st Century. Our partners at the Roosevelt Institution are marking the 75th anniversary of the New Deal by exploring policy ideas that will make up a new social contract for future generations, and EPI is honored to be among the event's co-sponsors. The lineup of speakers is impressive and includes our President, Dr. Lawrence Mishel. Best of all, registration is free! Join us on April 9 and spread the word to all who would be interested. Christian Dorsey EPI Outreach Coordinator A New Deal for the 21st Century One-Day Conference Speakers include: Rep. Rosa DeLauro (D-CT) Rep. Paul Kanjorski (D-PA) Sen. Bernie Sanders (D-VT) William Leuchtenberg Katrina vanden Heuvel Jonathan Alter Robert Borosage Eric Alterman Registration and agenda available here. Following the conference, the Franklin and Eleanor Roosevelt Institute presents the FDR Distinguished Public Service Award to Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid at a gala dinner. Contact: Marianne Sherow, msherow--at--feri.org. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Employment Road to Economic Recovery in ArgentinaThe announcement below is related to Ryan Dodd's feature article in the current issue of D&S, A New WPA?, which addresses "employer of last resort" policies like Argentina's Jefes de Hogar program.The Employment Road to Economic Recovery in Argentina A lecture by Daniel Kostzer (UNDP Buenos Aires, Argentina) Monday, April 7, 2008 4:15 PM Media Resource Center Room LC 28 Drew University 36 Madison Avenue Madison NJ 07940 Daniel Kostzer is currently coordinator of the Social Development Cluster at the UNDP's Buenos Aires office. He was director of research and macroeconomic coordination of the Ministry of Labor, Employment, and Social Security of Argentina. While at the Ministry of Employment, Kostzer was responsible for the creation and implementation of Jefes de Hogar, a program that created nearly two million jobs after the economic crisis of 2001. He has been a consultant for the ILO, ECLAC, and UNDP on issues related to employment, income distribution, and employment policies, and is a member of the knowledge networks of the World Commission on the Social Dimension of Globalization, ILO. Kostzer has been a lecturer on Argentinean social structure at the University of Buenos Aires, a visiting professor of labor economics at the University of Missouri Kansas City, a research associate at the Center for Full Employment and Price Stability, and a member of the editorial committee of the journal Estudios del Trabajo of ASET (Association of Labor Studies Experts of Argentina). Formerly, he was also an advisor of the National Parliament Lower Chamber and director of the CEDENOA (Center of Studies of the Argentinean Northern Region). His graduate studies were at the Institute of Social Studies, The Hague, Netherlands. Event co-sponsored by the Spanish Department, Latin American Studies, and the Economics Department at Drew University. For Info Contact: Dr. Fadhel Kaboub, 973-408-3764, fkaboub--at--drew.edu Labels: argentina, Daniel Kostar, Employer of Last Resort, full employment, Jefes de Hogar, Ryan Dodd, unemployment, WPA Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Peas in a PodThis from Mike Allen's Playbook at politico.com, via Doug Henwood at the Left Business Observer's lbo-talk:REPUBLICANS ARE JAZZED ABOUT the news from USA Today's A4 that both Democratic presidential candidates "rely on close advisers who had oversight roles at financial institutions that went bust because of subprime loans. Clinton's campaign manager, Maggie Williams, earned at least $175,000 serving from 2000-07 on the board of Long Island-based Delta Financial, which filed for bankruptcy last year after a history of high-cost loans to low-income borrowers, according to public records. Obama's national finance chairwoman, Penny Pritzker, was chairwoman of the board of a Chicago-area bank in 1993 when it adopted a subprime business strategy that regulators say ultimately led it to collapse in 2001. Labels: Delta Financial, Doug Henwood, Left Business Observer, Maggie Williams, Mike Allen, Penny Pritzker, politico.com, Republicans, subprime crisis, subprime lending Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Collapsing Housing Bubble and Resulting Financial FalloutThis policy memo is from Dean Baker of the Center for Economic and Policy Research.The Collapsing Housing Bubble and Resulting Financial Fallout In the decade from 1996 to 2006, the United States developed an enormous housing bubble that had no precedent in the country's history. During this decade, house prices rose in excess of 70 percent of their historic trend rate of growth, creating more than $8 trillion in housing bubble wealth. This bubble is now collapsing. Its collapse is throwing the economy into a recession and threatening the stability of financial markets. In assessing the various proposals and measures being put forward to address this situation, there are several important factors to keep in mind: • the housing bubble cannot be sustained - prices must be allowed to return to trend levels; 1. The bubble must be allowed to deflate. It is important to recognize that the housing market experienced an unsustainable bubble. There were no changes in the fundamental supply or demand factors in the housing market that could explain the unprecedented run-up in prices over the last decade. There was also no unusual increase in rents during this period, which would have been predicted if the run-up in house sale prices was explained by market fundamentals. This means that prices must fall back towards their trend level. This fact must inform housing policy. In cities in which house prices are still out of line with trend levels, government programs to buy up or guarantee mortgages will lead to large losses for the government, and will also cause homeowners to pay far more in ownership costs than they would pay to rent a comparable unit. Furthermore, since prices are still falling, homeowners who receive "assistance" will almost certainly acquire no equity in their houses. Under such circumstances, government support really only helps current institutional mortgage holders, since it pays them a price for their mortgage that is almost certainly much larger than what it would be worth in the absence of government intervention. 2. Government policy should be tailored to help homeowners. It is possible to structure a housing guarantee plan that would help homeowners. The key would be to set the purchase/guarantee price at a multiple to appraised rent (a sale-to-rent ratio of approximately 15 would be reasonable and in line with historic trends). This would ensure that the government doesn't step into the middle of a collapsing bubble. An alternative mechanism for protecting homeowners would be to temporarily change the rules on foreclosure. If homeowners facing foreclosure temporarily had the option to remain in their house as long-term renters, paying the fair market rent, this would provide an important element of security to homeowners, and would stabilize neighborhoods facing large numbers of foreclosures. More importantly, since banks do not want to become landlords, it would give mortgage holders a very powerful incentive to renegotiate the terms of loans in ways that allow homeowners to remain in their homes (outlined here). This proposal would cost the government nothing. It can also be targeted to ensure that it only benefits low- and moderate-income families by setting a cap restricting the rule change to homes that sold at less than the median house price in an area, or some comparable cutoff. Such a cutoff could ensure that only relatively low-income people benefit from this rule change. 3. The Fed should help the financial system, not the financial sector. On the issue of financial bailouts, it is important to distinguish between actions that protect financial institutions, and actions that protect the financial system. The government's policy should rightly be focused on preventing the collapse of a major financial institution that could lead to a chain reaction within the industry. The model for such intervention should be the takeover of the Northern Rock bank by the British government. The bank was essentially bankrupt, even after being given special low-interest loans from the Bank of England. To prevent a chain of collapses, the government took over the bank and replaced the management. The immediate task of this new management is to get the books in order, at which point the bank will be resold to the private sector. The original stockholders will be entitled to any money from the stock sale, net of government infusions into the bank. The Northern Rock takeover is a model because it sustained the stability of the financial system while getting rid of the management who had driven the bank into bankruptcy, and did not give any taxpayer money to shareholders. 4. Investors and the public deserve transparency. The current actions of the Fed do not look good by comparison. First, the creation of the Term Auction Facility (TAF) allowed banks to borrow large amounts of reserves from the Fed without any public record. If a bank is in a situation where it finds it necessary to borrow large amounts of reserve, this information should be known to investors and the general public. The terms of Bear Stearns' takeover also raise important concerns, especially with the increase in the takeover price. It is not clear whether J.P. Morgan is paying $1.3 billion for Bear Stearns, or for a $30 billion guarantee from the Fed. If J.P. Morgan is actually interested in buying Bear Stearns and paying a substantial price to its shareholders, then there is no obvious reason for the Fed to get involved. The current terms make it appear as though Bear Stearns shareholders are profiting at taxpayer expense. Finally, the Fed has implicitly (almost explicitly) indicated that it will guarantee the loans, credit default swaps and other commitments of the major investment banks. In addition, it has made them eligible to borrow hundreds of billions of dollars at low-cost through the Fed's discount window. 5. No free rides. Under the circumstances, this may be good policy, but the public should demand some return for the Fed's generosity. As a first and necessary step, the Fed should regulate investment banks. The primary goal of this regulation would be greater transparency in investment bank dealings, such as full disclosure of the volume of their credit default swaps and other liabilities. This step would be completely voluntary for the financial institutions. If they do not want to take advantage of the Fed's implicit guarantee or have access to the discount window, they can operate outside the Fed's purview. Of course, they may find it much more difficult to get customers once it is known that the Fed is not concerned if the bank fails. The second part of the quid pro quo could be in the form of either a share in the company, a social policy commitment, or both. It is important to remember that the discount window is in effect providing banks with access to loans at below the market rate of interest. Even more important, the Fed's guarantee is effectively allowing banks to sell credit default swaps that are backed up by the government—not by the banks themselves, since they lack sufficient capital. In effect, the banks are selling the Fed's good credit, not their own. It is entirely reasonable for the taxpayers to get something in return for providing enormously valuable credit guarantees to the investment banks. One option would be for the government or the Fed to get some amount of stock options each year, so that it would share in any gains incurred by the bank. A second option would be for the Fed to charge a fee for providing this guarantee that would be proportionate to the bank's capital. On the social policy side, the government could impose limits on executive compensation at the institutions they assist with guarantees. For example, it could prohibit the annual total compensation for any executive from exceeding $5 million. These limits would ensure that taxpayers are not subsidizing exorbitant salaries and bonuses. Since the exorbitant salaries on Wall Street have been guideposts for other high-paying occupations, bringing these salaries down to earth could go far toward reducing inequality in our society. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). 20,000 Vietnamese Workers Go On Strike At Nike Contract FactoryFrom the Associated Press:HANOI, Vietnam: More than 20,000 Vietnamese workers have walked off the job at a Taiwanese-owned plant that makes shoes for Nike Inc., demanding higher pay to keep pace with skyrocketing prices, officials said Tuesday. Read more Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
