Why Not End Homelessness Now?

by Dollars and Sense

Here is the press release for the 13th annual Homelessness Marathon, an annual overnight radio broadcast on homelessness and poverty. It is a truly amazing program--especially the moving testimony from homeless folks who call in or show up at the broadcast site. We encourage you to tune in for at least part of it. You can listen online or tune over the airwaves--it's carried on over a hundred radio stations across the United States and Canada. This year's marathon originate in Detroit. It starts in an hour and a half--tune in!

BROADCAST TO ASK, "WHY NOT END HOMELESSNESS NOW?"

13th Annual Homelessness Marathon begins 7 p.m., EST, Tues. Feb 23rd
and run for 14 hours until 9 a.m., EST, Wed. Feb. 24th

"We have a mindset in this country that homelessness is a problem that can wait," comments Jeremy Weir Alderson, founder of the Homelessness Marathon, "but it's a dire emergency for the people who are homeless, a drain on our economy, and a stain on our national honor. We ought to solve this problem, and we could if we would only turn our attention to it."

The Homelessness Marathon will address the problem of homelessness by speaking directly with homeless people, who will give their first-hand testimony on how they became homeless and the obstacles they face before they can be housed again.

Hundreds of homeless people will be brought by bus (in rotating shifts) so that they can participate in this event and speak directly to the nation. They will be brought by shelters, advocacy groups, and grass roots organizations formed by homeless people themselves.

The broadcast will feature, as well, such speakers as Senator Carl Levin; Ron Gettlefinger, president of the United Auto Workers; and two of America's most outstanding anti-poverty advocates, Cheri Honkala, director of the Poor Peoples' Economic Human Rights Campaign and Paul Boden, director of the Western Regional Advocacy Project.

Prominent advocates from Detroit will participate, including Rev. Faith Fowler, director of Cass Community Social Services and Maureen Taylor, the state chairperson of Michigan Welfare Rights Organization.

Experts from elsewhere in the country will also participate, including Kathleen Johnson, director of Katrina Relief in Mississippi and Mike Rhodes, editor of the Community Alliance newspaper in Fresno, California, arguably, the cruelest city in America towards its homeless citizens.

The broadcast will originate from 12025 Woodrow Wilson St., a "green gym" recently opened by Cass Community Social Services for the use of its homeless clients. Detroit area radio stations participating in the broadcast will include, WHFR in Dearborn, the broadcast's host station; WHPR in Highland Park and CJAM in Windsor, Ontario.

The Homelessness Marathon is a consciousness-raising not a fund-raising broadcast. There will be no on-air solicitations.

More information about the broadcast can be found here;

Acclaim for the broadcast can be found here;

To donate to the Homelessness Marathon go here.

Labels: affordable housing, homelessness, Homelessness Marathon, poverty

 

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2/23/2010 05:27:00 PM 2 comments

 

Greenspan Wins Dynamite Prize

by Dollars and Sense

From the folks at the Real-World Economics Review (formerly the Post-Autistic Economics Review); they initially called this the "Ignoble Prize in Economics," not knowing that that name had already been taken (much as they, ahem, kind of stole the name our textbook series--Real World Macro, Real World Micro--has had for more than twenty years, but we still like them). So glad Larry made the top three!

Alan Greenspan has been judged the economist most responsible for causing the Global Financial Crisis. He and 2nd and 3rd place finishers Milton Friedman and Larry Summers have won the first–and hopefully last—Dynamite Prize in Economics.

In awarding the Prize, Edward Fullbrook, editor of the Real World Economics Review, noted that "They have been judged to be the three economists most responsible for the Global Financial Crisis. More figuratively, they are the three economists most responsible for blowing up the global economy."

The prize was developed by the Real World Economics Review Blog in response to attempts by economists to evade responsibility for the crisis by calling it an unpredictable, "Black Swan" event. In reality, the public perception that economic theories and policies helped cause the crisis is correct.

The prize winners were determined by a poll in which over 7,500 people voted—most of whom were economists themselves from the 11,000 subscribers to the real-world economics review . Each voter could vote for a maximum of three economists. In total 18,531 votes were cast.

Fullbrook cautioned that not all economics and economists were bad. "Only ‘neoclassical’ economists caused the GFC. There are other approaches to economics that are more realistic—or at least less delusional—but these have been suppressed in universities and excluded from government policy making."

"Some of these rebels also did what neoclassical economists falsely claimed was impossible: they foresaw the Global Financial Crisis and warned the public of its approach. In their honour, I now call for nominations for the inaugural Revere Award in Economics, named in honour of Paul Revere and his famous ride. It will be awarded to the 3 economists who saw the GFC coming, and whose work is most likely to prevent another GFC in the future."

Dynamite Prize Citations

Alan Greenspan (5,061 votes): As Chairman of the Federal Reserve System from 1987 to 2006, Alan Greenspan both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation.

Milton Friedman (3,349 votes): Friedman propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of fantasy-based theories of economics and finance that facilitated the Global Financial Collapse.

Larry Summers (3,023 votes): As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), Summers worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also helped Greenspan and Wall Street torpedo efforts to regulate derivatives.

In total 18,531 votes were cast. The vote totals for the other finalists were:

Fischer Black and Myron Scholes 2,016

Eugene Fama 1,668

Paul Samuelson 1,291

Robert Lucas 912

Richard Portes 433

Edward Prescott and Finn E. Kydland 403

Assar Lindbeck 375

The poll was conducted by PollDaddy. Cookies were used to prevent repeat voting.

For further information and interviews email: pae_news@btinternet.com

Labels: Alan Greenspan, Dynamite Prize in Economics, larry Summers, Milton Friedman, Post-Autistic Economics Review, Real World Economics Review

 

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2/22/2010 04:18:00 PM 0 comments

 

Wall Street's Bailout Hustle (Matt Taibbi)

by Dollars and Sense

Matt Taibbi's latest at Rolling Stone; also check out a blog post by Taibbi in which he agrees with Bailout Nation author Barry Ritholtz that "we should have gone Swedish on their asses" (i.e. the U.S. gov't should have temporarily nationalized the banks the way the Swedes did in the early 90s); and check out an interesting post by Edward Harrison on that topic at Naked Capitalism.

Wall Street's Bailout Hustle

Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy—they're re-creating the conditions for another crash

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman's role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses—meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a "bailout tax" on banks. Maybe this wasn't the right time for Goldman to be throwing its annual Roman bonus orgy.

Not to worry, Blankfein reassured employees. "In a year that proved to have no shortage of story lines," he said, "I believe very strongly that performance is the ultimate narrative."

Translation: We made a shitload of money last year because we're so amazing at our jobs, so fuck all those people who want us to reduce our bonuses.

Goldman wasn't alone. The nation's six largest banks—all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry—set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry. But in reality, not much had changed. "What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?" asks Eliot Spitzer, who tried to hold Wall Street accountable during his own ill-fated stint as governor of New York.

Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America's populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what's the difference if some fat cat in New York pockets $20 million instead of $10 million?

Read the rest of the article.

Labels: bailout, financial crisis, Goldman Sachs, Lloyd Blankfein, Matt Taibbi, Sweden

 

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2/22/2010 04:06:00 PM 0 comments

 

Top Firms Cause $2.2 Trillion in Eco-Damage (UN)

by Dollars and Sense

From the Guardian; hat-tip to Larry P.

World's top firms cause $2.2tn of environmental damage, report estimates

Report for the UN into the activities of the world's 3,000 biggest companies estimates one-third of profits would be lost if firms were forced to pay for use, loss and damage of environment

Juliette Jowit | Thursday 18 February 2010 18.19 GMT

The cost of pollution and other damage to the natural environment caused by the world's biggest companies would wipe out more than one-third of their profits if they were held financially accountable, a major unpublished study for the United Nations has found.

The report comes amid growing concern that no one is made to pay for most of the use, loss and damage of the environment, which is reaching crisis proportions in the form of pollution and the rapid loss of freshwater, fisheries and fertile soils.

Later this year, another huge UN study - dubbed the "Stern for nature" after the influential report on the economics of climate change by Sir Nicholas Stern - will attempt to put a price on such global environmental damage, and suggest ways to prevent it. The report, led by economist Pavan Sukhdev, is likely to argue for abolition of billions of dollars of subsidies to harmful industries like agriculture, energy and transport, tougher regulations and more taxes on companies that cause the damage.

Ahead of changes which would have a profound effect - not just on companies' profits but also their customers and pension funds and other investors - the UN-backed Principles for Responsible Investment initiative and the United Nations Environment Programme jointly ordered a report into the activities of the 3,000 biggest public companies in the world, which includes household names from the UK's FTSE 100 and other major stockmarkets.

The study, conducted by London-based consultancy Trucost and due to be published this summer, found the estimated combined damage was worth US$2.2 trillion (£1.4tn) in 2008 - a figure bigger than the national economies of all but seven countries in the world that year.

The figure equates to 6-7% of the companies' combined turnover, or an average of one-third of their profits, though some businesses would be much harder hit than others.

"What we're talking about is a completely new paradigm," said Richard Mattison, Trucost's chief operating officer and leader of the report team. "Externalities of this scale and nature pose a major risk to the global economy and markets are not fully aware of these risks, nor do they know how to deal with them."

The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major "costs" were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater.

The true figure is likely to be even higher because the $2.2tn does not include damage caused by household and government consumption of goods and services, such as energy used to power appliances or waste; the "social impacts" such as the migration of people driven out of affected areas, or the long-term effects of any damage other than that from climate change. The final report will also include a higher total estimate which includes those long-term effects of problems such as toxic waste.

Trucost did not want to comment before the final report on which sectors incurred the highest "costs" of environmental damage, but they are likely to include power companies and heavy energy users like aluminium producers because of the greenhouse gases that result from burning fossil fuels. Heavy water users like food, drink and clothing companies are also likely to feature high up on the list.

Sukhdev said the heads of the major companies at this year's annual economic summit in Davos, Switzerland, were increasingly concerned about the impact on their business if they were stopped or forced to pay for the damage.

"It can make the difference between profit and loss," Sukhdev told the annual Earthwatch Oxford lecture last week. "That sense of foreboding is there with many, many [chief executives], and that potential is a good thing because it leads to solutions."

The aim of the study is to encourage and help investors lobby companies to reduce their environmental impact before concerned governments act to restrict them through taxes or regulations, said Mattison.

"It's going to be a significant proportion of a lot of companies' profit margins," Mattison told the Guardian. "Whether they actually have to pay for these costs will be determined by the appetite for policy makers to enforce the 'polluter pays' principle. We should be seeking ways to fix the system, rather than waiting for the economy to adapt. Continued inefficient use of natural resources will cause significant impacts on [national economies] overall, and a massive problem for governments to fix."

Another major concern is the risk that companies simply run out of resources they need to operate, said Andrea Moffat, of the US-based investor lobby group Ceres, whose members include more than 80 funds with assets worth more than US$8tn. An example was the estimated loss of 20,000 jobs and $1bn last year for agricultural companies because of water shortages in California, said Moffat.

Read the original article. (There's a great set of graphs.)

Labels: climate change, enviromental crisis, Environment, externalities, global warming, pollution

 

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2/19/2010 04:04:00 PM 0 comments

 

Commercial Real Estate: 'Extend and Pretend'

by Dollars and Sense

I have been meaning to post this for a while--interesting post from the Financial Times' Money Supply blog:

Subprime 2.0 strategy: "Extend and pretend"
February 11, 2010 5:06pm
by Emma Saunders

Between 2010 and 2014, $1,400bn US commercial real estate loans will reach the end of their terms. Nearly half of them are currently in negative equity—that is, the borrower owes more than the property is worth. And banks are reducing the number of loans in the sector, and have been doing so throughout 2009.

More shocking is that banks and their auditors are typically well aware of the problem, but have not written down the value of property as prices have fallen. Instead they are "extending and pretending"—or "delaying and praying": holding property values steady and assisting the borrowers where possible. They need to. If banks were accurately to record property values, they would write down assets on their own balance sheets and jeopardise their business (see example to right).

A very thorough report just released from the Congressional Oversight Panel expects many banks to go under when the pretence comes to an end. The report concludes: "There is a commercial real estate crisis on the horizon, and there are no easy solutions to the risks commercial real estate may pose to the financial system and the public."

When a government body admits things are at crisis proportions, you have to take notice. This isn't journalistic hyperbole. It is hard to overstate the impact of the coming second subprime, hitting, as it will, a very fragile economic recovery.


So, who will be most affected? In a nutshell, banks, and mostly the smaller ones. "Large loan losses and the failure of some small and regional banks appear to some experienced analysts to be inevitable," says the report. But it is by no means only banks affected (see pie, right): 54 per cent of exposure sits throughout the financial system.

Read the rest of the post.

Labels: Commercial Real Estate, financial crisis, real estate market, subprime crisis

 

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2/18/2010 03:38:00 PM 0 comments

 

Vancouver Olympics--At What Price?

by Dollars and Sense

For good alternative Olympics coverage, check out a three-part radio series entitled The Winter Olympics Comes to the Northwest...But at What Price? on KBCS community radio in Bellevue, Wash. (Part of this was rebroadcast on Boston's own Radio With a View this past Sunday--hat-tip to Mark and Dave for alerting us to this series. You can hear last Sunday's show for the next two weeks by clicking here, scrolling down, and clicking on the Feb. 14th link under the RWAV listing.)

Also check out the No 2010 Olympics on Stolen Native Land website and the Vancouver Media Co-op website for updates on the excellent activism going on to disrupt the Olympics.

Meanwhile, we bring you more satire about Canada from Maurice Dufour, professor of political science at Marianopolis College in Montreal: Arctic Power ... With Added Cleansers. If you like Maurice's satire, check out two of his earlier pieces for us: Shovel-Ready in Canada, about the supposed superiority of the Canadian banking system, and How to Make Mud Cookies, about famine in Haiti in the midst of the commodity crisis of 2008. One of his funniest for us, Hooked on Hydrocarbons, about the Alberta oil sands, is available only in the print edition. But email us and maybe we can send you a pdf (and try to convince you to subscribe).

Labels: Canada, Maurice Dufour, Olympics, Stephen Harper, Vancouver, Vancouver Olympics

 

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2/17/2010 03:37:00 PM 0 comments

 

Kwak on Mankiw on the Deficit

by Dollars and Sense

From Baseline Scenario; hat-tip to LF. James Kwak and Simon Johnson have a new book, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, which will be available on March 30th.

Greg Mankiw on the Deficit

By James Kwak

Broken record alert: Another post on the deficit ahead. Wouldn't you rather look at funny pictures of cats? Why do I keep writing these? (Hint: The other side keeps writing them.) You have been warned.

Greg Mankiw, noted economics textbook author and former chair of Bush 43's Council of Economic Advisers, has an op-ed on the deficit that is relatively sensible by the standards of recent debate. He points out that modest deficits can be sustainable, that taxes will probably need to go up, and that a value-added tax is a plausible option. He also points out that Obama's projections are based on optimistic economic forecasts that very plausibly may not pan out, and that Obama's main deficit-reduction strategy is to kick the problem over to a deficit-reduction commission, which are valid criticisms.

Unfortunately, his bottom line seems to be throwing more rocks at President Obama, under the general Republican principle that since he's the president, everything is his fault:

"But unless the president revises his spending plans substantially, he will have no choice but to find some major source of government revenue. Ms. Pelosi's suggestion of a VAT may be the best of a bunch of bad alternatives. Unfortunately, in this new era of responsibility, the president is not ready to face up to the long-term fiscal challenge."

Mankiw, not I, brings up the comparison between Bush 43 and Obama:

"From 2005 to 2007, before the recession and financial crisis, the federal government ran budget deficits, but they averaged less than 2 percent of gross domestic product. Because this borrowing was moderate in magnitude and the economy was growing at about its normal rate, the federal debt held by the public fell from 36.8 percent of gross domestic product at the end of the 2004 fiscal year to 36.2 percent three years later. . . .

"[Mr. Obama's budget] fails to return the federal government to manageable budget deficits, even as the wars wind down and the economy recovers from the recession. According to the administration's own numbers, the budget deficit under the president's proposed policies will never fall below 3.6 percent of G.D.P. By 2020, the end of the planning horizon, it will be 4.2 percent and rising."

What's missing from this comparison? First, the economic growth of 2005-2007 was at best a mixed blessing, as we now know, driven by an unsustainable and ultimately catastrophic credit bubble. Second, and more importantly, the comparison leaves out the long-term trend . . . wait for it . . . Medicare.

Here's my favorite chart again, from the 2008 CBO Budget and Economic Outlook.

In 2007, Medicare, Social Security, and Medicaid cost 8.9 percent of GDP (see Table 3-1). By 2018, they were already projected to grow to 10.8 percent of GDP; extrapolating forward at constant growth rates, by 2020 they would grow to about 11.3 percent—an increase of 2.4 percentage points over 2007. That, in one number, is the difference between Bush 43 and Obama. (Ongoing patches to the AMT—something that Obama includes in his projections that Bush did not—also grow to $150 billion by 2018, or another 0.7 percent of GDP.)

Did Bush 43 do anything about this looming problem? No, because one conservative aspiration since Ronald Reagan has been to crimp government by crippling its finances ("starving the beast"). If Bush had actually reduced the size of government to match his tax cuts, in true conservative fashion, we would face less of a long-term deficit problem now.* But whether by accident or design, it turned out to be politically advantageous to kick the problem down the road and therefore make it harder for his successor to govern.

Now, this doesn't change the fact that it's Obama's problem now, and it's his responsibility to do something about it. But Obama realized that the long-term deficit is a health care problem, while Mankiw doesn't even use the word "health" in his op-ed on the deficit. If we don't slow the growth of health care costs, there is no real solution to the deficit problem; the only way out from the budget perspective will be slashing Medicare, but that doesn't solve the problem—it just shifts it onto individuals. And Obama spent much of the last year pushing for health care reform with major cost-cutting components,** attracting support from some Republican health experts (though not from any Republican Congressmen). Now, it would be meaningful to criticize Obama for having the wrong ideas about how to control health care spending, as a few Republicans have done. But to say he's not up to the challenge without mentioning health care misses the real point.

Still, it's true that Obama could put forward a more aggressive deficit reduction plan. If I were king, my plan would include modest increases in the Medicare eligibility age, a whole bevy of health care cost reduction initiatives, modest tax increases (pushed out into the future and made contingent on economic recovery) such as eliminating the cap on the Social Security tax and reinstating the estate tax, and bigger tax increases that would kick in if health care cost savings failed to materialize. But in our current political climate, that would be political suicide for any president and would have zero chance of passage. I'm skeptical about the deficit commission, too, but we have collectively backed ourselves into a position where neither party can afford to even propose the necessary steps on its own.

The political problem is that there's no politically palatable way to solve the long-term deficit problem. The Republican strategy, after (almost) killing health care reform, is to attack Obama for not having a long-term solution, daring him to propose one so they can then attack him for raising taxes. Yes, that's the way the game is played. That doesn't change the fact that it's a game.

* Bush did make an attempt to reform Social Security. But even if we assume he had managed to stop the growth of Social Security completely, the growth in Medicare, Medicaid, and the AMT fix would by themselves account for the difference between the 2005-2007 deficits and the projected 2020 deficit.

** The Senate health care bill only reduces the deficit by a little by year ten, because the CBO gives it very little credit for its cost-cutting measures, particularly the delivery system reforms. It is fair for the CBO to give those reforms little credit, since they are unproven. But it is also important to remember that there is no proven way to reduce health care costs (Paul Ryan's plan reduces government expenditures reliably, but it is no more proven to reduce actual health care costs), so the only way to have any chance to reduce health care costs is to undertake the kind of experimentation proposed by the Senate bill.

Read the original post.

Labels: deficit, deficit hawks, Greg Mankiw, James Kwak, recession, Simon Johnson, value added tax

 

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2/16/2010 03:01:00 PM 0 comments

 

What to Do About Housing Foreclosures?

by Dollars and Sense

Dollars & Sense and the Boston chapter of Democratic Socialists of America are co-sponsoring a forum on the housing foreclosure crisis, on Wednesday, March 3, 2010, in Boston. We hope to see our Boston-area friends and supporters there! Here are the details:

We are facing a crisis of housing foreclosures in Massachusetts. In November 2009 alone, there were 76% more foreclosures than in the same month a year ago. This wave of foreclosures is decimating whole communities, leaving buildings empty and people without homes. Big banks get bailed out, but our government has done little to help working people tricked into bad loans, who are now losing their homes to foreclosure. Is this fair?

Our forum will look at the way the greedy and unethical actions of the big
financial institutions help caused the global economic crisis, of which the
foreclosure crisis is only a part. We will learn about efforts to pass legislation to help people facing foreclosure, as well as the way people are organizing in their communities to help themselves. And we will learn what we can do to help!

Speakers:
Grace Ross – Former Green Party gubernatorial candidate, now challenging Gov. Patrick in the Democratic Party Primary. Currently a staffer for the Massachusetts Alliance Against Predatory Lending (MAAPL), and author of the forthcoming book, "Main Street Smarts: Who got us into this economic mess and how we get through it."

Melonie Griffiths – Tenant and Economy Project Organizer for City Life/Vida
Urbana, the Jamaica Plain-based social justice organization which has been
organizing community members to resist evictions and save their homes.

Senator Sonia Chang-Diaz (D-Boston) – Co-sponsor of SB1609, one of the MAAPL-supported bills, which would protect tenants from eviction in foreclosed properties.

Wednesday, March 3, 2010, 7:00 P.M., at Encuentro 5, 33 Harrison Ave., 5th floor, Chinatown (Boston). For directions to 33 Harrison Ave., visit www.encuentro5.org

Labels: affordable housing, Democratic Socialists of America, foreclosures, housing crisis

 

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2/16/2010 12:52:00 PM 0 comments

 

Rethinking Poverty today

by Dollars and Sense

United Nations University (UNU) Office at the United Nations in New York will present a book launch this afternoon to discuss issues raised in Rethinking Poverty: Report on the World Social Situation 2010, published by the United Nations Department of Economic and Social Affairs.

If you're in NYC, you're invited to attend, from 3-4:30 p.m. in Conference Room C, Temporary North Lawn Building (TNLB), UN Headquarters.

If you can't make it to the UN today, the event will include a simultaneous live, interactive webcast. To receive instructions on how to participate in the webcast, please register. The webcast will also be archived online in a few days.

Here's a brief synopsis of the book and the event:

The negative economic and social impacts of the recent food and energy crises, combined with the threats posed by climate change, challenges the assumption of the sustainability of poverty reduction. Rethinking Poverty: Report on the World Social Situation 2010 disputes the current technocratic vision of poverty reduction and affirms that eradicating poverty requires actions leading to sustainable economic growth, productive employment creation and social development as part of an integrated framework of economic and social policies for the benefit of all citizens.

The event will feature Dr. Jomo Kwame Sundaram, United Nations Assistant Secretary-General for Economic Development in the UN Department of Economic and Social Affairs (DESA), and (Honorary) Research Coordinator for the G-24 Intergovernmental Group on International Monetary Affairs and Development. The Q&A session following the presentation will be moderated by UNU's Director Dr. Jean-Marc Coicaud.

Read more about the event and the book. [Hat tip to Lynn Fries.]

Labels: global imbalances, poverty, United Nations

 

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2/16/2010 12:11:00 PM 0 comments

 

Security and Order Not the Issue in Haiti (Alternet)

by Dollars and Sense

Excellent piece on Haiti by Arun Gupta at Alternet.

More Pain for Devastated Haiti: Under the Pretense of Disaster Relief, U.S. Running a Military Occupation

The rapid mobilization of U.S troops in Haiti was not primarily done for humanitarian reasons; we're likely to see a neoliberal economic plan imposed, at gunpoint if necessary.

By Arun Gupta | February 12, 2010

Official denials aside, the United States has embarked on a new military occupation of Haiti thinly cloaked as disaster relief. While both the Pentagon and the United Nations claimed more troops were needed to provide "security and stability" to bring in aid, according to nearly all independent observers in the field, violence was never an issue. in

Instead, there appears to be cruder motives for the military response. With Haiti's government "all but invisible" and its repressive security forces collapsed, popular organizations were starting to fill the void. But the Western powers rushing in envision sweatshops and tourism as the foundation of a rebuilt Haiti. This is opposed by the popular organizations, which draw their strength from Haiti's overwhelmingly poor majority. Thus, if a neoliberal plan is going to be imposed on a devastated Haiti it will be done at gunpoint.

The rapid mobilization of thousands of U.S troops was not for humanitarian reasons; in fact it crowded out much of the arriving aid into the Port-au-Prince airport, forcing lengthy delays. Doctors Without Borders said five of its cargo flights carrying 85 tons of medical and relief supplies were turned away during the first week while flights from the World Food Program were delayed up to two days. One WFP official said of the 200 flights going in and out of Haiti daily "most...are for the U.S. military." Nineteen days into the crisis, only 32 percent of Haitians in need had received any food (even if just a single meal), three-quarters were without clean water, the government had received only two percent of the tents it had requested and hospitals in the capital reported they were running "dangerously low" on basic medical supplies like antibiotics and painkillers. On Feb. 9, the Washington Post reported that food aid was little more than rice, and "Every day, tens of thousands of Haitians face a grueling quest to find food, any food. A nutritious diet is out of the question."

At the same time, the United States had assumed control of Haiti's airspace, landed 6,500 soldiers on the ground, with another 15,000 troops offshore at one point, dispatched an armada of naval vessels and nine coast guard cutters to patrol the waters, and the U.S. embassy was issuing orders on behalf of the Haitian government. In a telling account, the New York Times described a press conference in Haiti at which "the American ambassador and the American general in charge of the United States troops deployed here" were "seated at center stage," while Haitian President René Préval stood in the back "half-listening" and eventually "wandered away without a word."

Read the rest of the article.

Labels: Disaster Capitalism, Haiti, Haiti earthquake, neoliberalism

 

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2/15/2010 09:55:00 AM 0 comments

 

CEO-As-Hero on CBS (Labor Notes)

by Dollars and Sense

Excellent piece from Labor Notes. The best bit is about how the CEO blathers on this "reality" TV show about his commitment to safety, while in reality at this union-free company, "workers are three times more likely to get killed on the job than firemen, and 60 percent more likely than police officers," and one worker "was cut in half two years ago by a malfunctioning hydraulic arm on a garbage truck." Get out the pitchforks.

Reality TV Gives Corporate America a Big Wet Kiss
by Mark Brenner | Thu, 02/11/2010 - 4:26pm

Want to know what chutzpah means? Look no further than TV's newest reality show, "Undercover Boss." Apparently the titans of industry aren't satisfied that they burned our economy to the ground and got nothing but a slap on the wrist from Washington. They want us to like them, too.

"Undercover Boss," which debuted on CBS after Sunday's Superbowl, is a corporate charm offensive. For one week the CEO of a major company goes "undercover," performing a variety of jobs at the bottom of the corporate ladder.

CEO-AS-HERO

Over the course of an hour we discover that the CEO is really a nice guy. We see just how ready top brass is to reward hard-working employees and to clean up problems on the front lines.

It's a blast from the Reagan-era past: CEO-as-hero.

The first episode features Larry O'Donnell, president of Waste Management, the nation's largest trash and recycling company.

In fine superhero tradition, O'Donnell adopts an alter ego (that sounds strangely like a porn star)—Randy Lawrence—and spends a day each doing various jobs at Waste Management: sorting recycling; picking up trash at a landfill; cleaning port-a-potties in an amusement park; shadowing the manager of a landfill; and riding shotgun on a residential garbage truck route.

Read the rest of the article.

Labels: Labor Notes, Larry O'Donnell, Mark Brenner, Undercover Boss, unions, Waste Management

 

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2/15/2010 09:36:00 AM 0 comments

 

Break Up With Your Big Bank (Bankster)

by Dollars and Sense

Here, from Bankster, is another example of anti-big-bank activism, albeit of the PC consumerist sort, that *might* be able to send the biggest banks the message that We Don't Like Them. Here are the details:

FOR VALENTINE'S DAY - BREAK UP WITH YOUR BIG BANK!

This Valentine's Day is the perfect time to end your abusive relationship with the big banks that have a stranglehold on our country. They've been lying, gambling, cheating and they seem to think they can just keep getting away with it forever. Now's the time to tell them you want to bank with someone who actually cares about you and whose interest rates don't exceed their actual interest.

That's the message that our partners and friends A New Way Forward are sending to the big banks this Valentine's Day. They are asking people to start moving their money away from the largest banks to smaller local banks and credit unions and boycott big-bank credit cards as well. Then, they are asking people to help spread the word in a coordinated fashion at 400 events around the country. They have a flyer that can be printed out and photo-copied, and they're asking people to distribute it at job fairs and other events.

Americans are drowning in $700 billion in credit card debt because of the big banks' dangerous interest rates. Ninety percent of all credit cards are from the four big banks, Bank of America, Chase, Citi and Wells Fargo. They are using their market dominance to charge interest rates that are, on average, 20 percent higher than the rates of local bank and credit union cards.

Now I know that most BanksterUSA subscribers may already have their savings at local credit unions (or under their mattress), but if you have a friend in an abusive banking relationship, please forward this email and tell them there is help at Bankbreakup.org.

There is also a handy page of tips to make breaking up with your bank simple. Click here to learn more!

Thanks for all your support and Happy Valentine's Day from BanksterUSA!

I got into a bit of trouble the last time I posted this kind of thing—about the Move Your Money campaign, which was co-sponsored by Arianna Huffington. First of all, blog visitor Michael E. responded thusly: "Doug Henwood, the intrepid, articulate, and clear-headed editor of the Left Business Observer, asserts that "Move Your Money" is a delusional waste of time and effort based on false assumptions about the banking system. His argument is very convincing. Check out his article in the current issue."

Once I'd read the LBO article, which I liked quite a bit, I posted the bulk of the argument from it, with a link urging people to subscribe to LBO. I guess no good deed goes unpunished—within an hour or so we got an email from Doug saying he was annoyed that we had posted "the entirety" of the piece (which we had not), even though he intended to post the full text of the article on his own site that very day. Sigh. Of course I trimmed down the re-post immediately.

We again urge you to subscribe to LBO (it's Doug's livelihood!), and listen to Doug's excellent radio program. (Subscribe to D&S while you're at it—it's our livelihood! E-subscriptions are now available—a full-color pdf delivered to your Inbox six times a year.)

And if you still have money in one of the big banks, put it in a credit union! But needless to say, don't expect that to bring down capitalism or even to make it appreciably less nasty, except maybe with respect to your own overdraft fees.

—Chris Sturr, D&S co-editor.

Labels: Bankster, big banks, Doug Henwood, Move Your Money, Valentines Day

 

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2/12/2010 04:42:00 PM 1 comments

 

Obama's Junk Economics (Michael Hudson)

by Dollars and Sense

From Counterpunch:

Obama's Junk Economics

Democrats Say "Bye" to Populist Option

In a dress rehearsal for this November’s mid-term election, Democrats and Republicans vied last week for who could denounce the banks and blame the other party the most for the giveaways to Wall Street that have swollen the public debt since September 2008, pushing the federal budget into deficit and the economy into a slump.

The Republicans are winning the populist war. On the weekend before his State of the Union address on Wednesday, Obama strong-armed Democratic senators to re-appoint Ben Bernanke as Federal Reserve Chairman. His Wednesday speech did not mention this act (happily applauded by Wall Street). The President sought to defuse voter opposition by acknowledging that nobody likes the banks. But he claimed that unemployment would be much higher if they hadn’t been bailed out. So the giveaway of public funds was all for the workers. The $13 trillion that has created a new power elite was just an incidental byproduct. Unpleasant, perhaps, as American democracy slips into oligarchy. But the least bad option. People might not like it, but Main Street simply cannot prosper without creating hundreds of Wall Street billionaires—without enabling them to increase their bonuses and capital gains as bank stock prices quadruple. It’s all to get credit flowing again (at 30 percent for credit card users, to be sure.)

So the rest of us must wait for wealth to trickle down. The cover story is that, like it or not, this is how the world works. At least this is the argument of the lobbyists who are drafting and censoring laws and signing off on just who is acceptable to run the Federal Reserve, Treasury and other public-subsidy agencies. The working assumption is that the economy cannot recover without enriching Wall Street.

In fact what the economy needs is to recover from the Bush-Obama supposed cure, i.e., from the mushrooming debt overhead. It needs to recover from the enrichment of Wall Street. It doesn’t need more credit, but a write-down for the unpayably high debts that the banks have imposed on American families, businesses, states and localities, real estate, and the federal government itself.

Instead of helping debtors, Obama has moved to heal the creditors, at public expense. If debtors cannot pay, the Treasury and Fed will take their IOUs and bad casino gambles onto the public sector’s balance sheet. The financial winners must come first—and it seems second and third, too. The rationale is that unless the government gives the large financial institutions what they want and saves them from taking a loss, their “incentive” to protect the economy from devastation will be gone.

Read the rest of the article.

Labels: bailout, Barack Obama, Counterpunch, debtors, Michael Hudson, populism

 

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2/11/2010 02:57:00 PM 0 comments

 

The New Deal in Reverse (Steve Fraser)

by Dollars and Sense

From TomDispatch, a piece by Steve Fraser criticizin' Obama's populist droppin' of g's and his inadequate jobs "surge." Here's Tom E.'s intro to the piece:

From TomDispatch today, a canny and striking comparison between Franklin D. Roosevelt and Barack Obama that shows how, by the end of their first year in office, they were heading in mirror-opposite directions: Steve Fraser, The New Deal in Reverse, How the Obama Administration Ended Up Where Franklin D. Roosevelt Began. (An accompanying TomDispatch audio interview discussing why Obama has ignored the jobs model Roosevelt pioneered.)

Franklin D. Roosevelt came into office with far less expected of him than Barack Obama. He was, on arrival, wedded to the traditional idea of a balanced budget, like his predecessor Herbert Hoover, determined not to alienate high finance or corporate power, and eager to create jobs and restart the Great Depression economic engines of the country indirectly through the business community. That was Roosevelt, the New Deal president, on day one; that, as TomDispatch regular and New Deal historian Steve Fraser indicates, is Barack Obama at the end of year one. Their rhetoric was similar. How did they end up in such different places, going in such different directions as their first year in office ended? Why did one president take an historic and extraordinary path and the other head into the quagmire?

This is a remarkable tale which Steve Fraser tells in his usual striking fashion, examining three key steps Roosevelt took: separating commercial and investment banking (while Obama simply shored up Wall Street), creating the Tennesee Valley Administration which competed successfully with private utility companies (while Obama's public health option went down the tubes and the insurance companies emerged triumphant), and creating millions of jobs through direct government intervention (while Obama's jobs plan relies on funneling tax relief to business).

The upshot was one historic presidency and another heading into the swamps of disappointment -- and a tale of two presidencies not to be forgotten.

As ever, Fraser offers a stimulating take on today's headlines in the long view of history.

Read The New Deal in Reverse.

Labels: Barack Obama, FDR, jobs, New Deal, unemployment

 

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2/11/2010 12:00:00 PM 0 comments

 

Elizabeth Warren Calls Out Wall Street

by Dollars and Sense

From James Kwak at Baseline Scenario; hat-tip to LF.

Although the Consumer Financial Protection Agency made it through the House more or less intact, the banking lobby is taking another, better shot at killing it in the Senate, and is planning to use the magic words: "big government" and "bureaucracy." Elizabeth Warren wrote an op-ed for Tuesday's Wall Street Journal that lays out the confrontation. For most of the past two decades, many Americans trusted the banking industry—not necessarily to be moral exemplars, but they trusted that the banks were basically doing what was right for customers and for the economy. Then in 2007-2008 that mood abruptly reversed, as it became apparent that unscrupulous mortgage lenders, the Wall Street banks that backed them, and the credit rating agencies had been ripping off mortgage borrowers on the one hand and investors on the other.

The big banks face a choice. They can agree to sensible reforms that protect consumers and rein in the excesses of the past decades. Or they can simply decide to screw customers, but do it openly this time, since they have so much market share it almost doesn't matter what customers think. How else do you explain, say, Citigroup's concocting a new credit card "feature" explicitly to get around a new requirement of the Credit CARD Act? Or Jamie Dimon saying that financial crises are something to be expected every five to seven years, so we should just get over it?

A year ago, it might have been possible to twist the banks' arms hard enough to get them to agree to new ways of doing business (such as a CFPA), because they needed government support so badly. Now it's too late. So the solution has to come from the other kind of arm-twisting—pressure from the president, the administration (that means you, Tim Geithner), and ordinary voters. If people feel screwed by the financial sector—and many of them should after the past decade—then they should want the CFPA.

But last month, Republican political consultant Frank Luntz wrote a memo laying out how Republicans could kill financial regulatory reform. "Ordinarily, calling for a new government program ‘to protect consumers' would be extraordinary popular," he wrote. "But these are not ordinary times. The American people are not just saying ‘no.' They are saying ‘hell no' to more government agencies, more bureaucrats, and more legislation crafted by special interests." The goal is simple: to make Americans think that the CFPA is their enemy, because it's part of the government, and that the banks are nice cuddly ewoks by comparison.

This is absurd.

We like to make fun of government in this country, but really, what are you and a few of your buddies going to do to fight JPMorgan Chase on your own? For all of our beloved rugged individualism (and our individual right to handguns), it doesn't do much good when you're up against your credit card issuer. There is no Chicago-school free market solution to an oligopoly that, on top of all its other advantages, has an implicit government guarantee that gives it a major funding cost advantage over its competitors. One of the purposes of government is to protect ordinary people from forces (hurricanes, terrorists, monopolies) against which free market forces do not provide adequate protection. This is why we need a Consumer Financial Protection Agency. And this is what Frank Luntz wants to trick people into forgetting.

Read the original post.

Labels: Baseline Scenario, CFPA, Elizabeth Warren, James Kwak

 

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2/09/2010 09:59:00 AM 0 comments

 

Why Aren't There More Radicals at Work?

by Dollars and Sense

From the (new?) website, radicalsatwork.org:

Works sucks and it's been getting worse in the U.S. for decades.

So why aren't there more radicals at work?

For the first part in a series about radicals and labor today, we asked a dozen radical workplace organizers—teachers, Teamsters, telephone technicians, union organizers, and more—that question. Read what they had to say.

The activists we talked to blamed the American Dream, persistent racism, and a feeling that struggle and collective won't do any good. They also laid some of the blame on radicals themselves, for failing to connect with working people.

It hasn't always been this way. Before World War II, radicals in the United States had much deeper roots in the working class. Employers, the government, and even union officials purged those Reds after the war.

If we want to rebuild those connections, we have to understand the barriers that hold us back.

American Dreams

For over a century, historians and organizers have said that American prosperity—and the hope of getting a slice of the pie—explained why there was "no socialism in America."

Millions of workers still see the path to success through individual hard-work, not collective struggle.

"There's a sense among some—not all—that ‘I got to where I am by hard work, and other people should be able to as well,'" said a telephone technician in New York.

That hope doesn't just apply to people who've "made it" and are living the American Dream.

"Most of the folks that I worked with in the Army, construction and restaurant industries, ended up in those low-wage jobs because of a lack of resources and education," said a union organizer in Pennsylvania. "A good percentage still subscribed to the whole ‘pull your self up by the bootstraps' bit, even though they were clearly struggling with no end in sight."

The same is true for jobs with a lot of prestige—even though many of those jobs are getting worse.

Take college professors. There are way more Ph.D.s looking for work than tenure-track positions. Many are getting by cobbling together part-time adjunct work.

But that doesn't stop many Ph.D.s from hoping. "In grad school TAs think: ‘I don't need a union, I'm going to get a cushy job,'" said a college professor in New York. "That's just not really the reality anymore."

"Then when someone lands a full-time position, they think, ‘I realized my goal and compared to most people I have it good, so no there's no need to rock the boat,'" she said.

American Nightmares

For years, many white workers achieved their own American Dream by keeping workers of color out of "white" jobs, "white" neighborhoods, and "white" schools.

Competition over jobs, housing, and schools has led many white workers to identify as white first, workers second—if at all.

And that's still true today. "A lot of the white folks I work with are really drawn to the Tea Party movement," said a telephone operator in the South. "Part of it is backlash against having a Black president. Part of it is backlash against immigrant workers in their communities."

"White workers often respond to exploitation by pushing others downwards rather than attempting to tear down those at the top," said a union organizer out West.

Today, those fears are played up by the right-wing press. "A lot of my co-workers get almost all of their news of the world from the New York Post or other tabloid papers, supplemented by the local news or CNN," said a telephone technician we interviewed. "There's almost no counter-weight to the conservative B.S. they hear on the radio, the TV news, the tabloid papers," she said.

Historically, many unions have helped to confront working-class racism. Unions formed in the great upsurge of the 1930s brought together workers across the color line, promoted the leadership of workers of color, and challenged white racism.

But historian and activist Bill Fletcher points out that many U.S. unions have followed a different strategy: rather than including all workers, some unions have reserved jobs for white men by excluding workers of color and women.

That practice goes back to the nineteenth century, when craft unions kept Black workers out of skilled trades, and unions promoted legislation to exclude Chinese workers from the U.S. And that's why white males still dominate the construction trades to this day.

We're Getting Our Butts Kicked

It's hard for most workers to imagine an alternative to those individual survival strategies offered by the American Dream and racism. Why?

Being a radical means that you think ordinary people can improve our lives and change the world when we work together. But the organizers we talked to said that most workers feel alone, isolated, and powerless.

"People don't feel empowered in life. Their entire life they've been socialized to defer to authority," said a UPS part-timer in Pennsylvania. "People aren't sure they deserve better. People have never seen collective action."

A big part of that powerlessness is the weakness of the labor movement. Factory closings. Lockouts and permanent replacements. Tough anti-union employers: Organized labor has been getting its butt kicked since the 1980s. Only 12.3 percent of workers in the U.S. were in unions in 2009.

Even when workers are in unions, many don't feel the power.
A New York nurse sums up the problem: "Nurses feel powerless and vulnerable. Management has managed to structure things in a way that reinforces that feeling, and there is no history of recent collective struggle and solidarity to chip away at that overwhelming feeling."

For decades, officials treated their unions like a business—not a social movement. When employers went on the attack in the 1980s, they were caught off guard, and the union movement is still scrambling to respond today.

That's not to say that there isn't fightback on the job. But the barriers to collective action are high: Most workers don't have any experience in fighting back. And most aren't in unions. And many unions have given up challenging "management's right" to run their business—even when workers pay the price.

Sometimes workers who speak out are sidelined—either by the employer, or even by their own union officials: "When anyone speaks out about some injustice on the job, they are called a troublemaker and harassed until they learn their lesson: just do your job and shut up," said a union dissident in the longshore industry.

Given all that, it's no wonder most workers choose individual, not collective, solutions to their problems.

Freaks and Geeks

Even if they are open to alternative ideas, most workers in the United States have never met a radical.

"There is very little exposure to radical culture: arts and literature that is motivated by radical politics, news analysis of the effects of capitalism on our lives, a sense of history of radical struggles, a familiarity of leaders of radical movements," said a former hotel worker on the West Coast.

Many people associate radicals with the mistakes and tragedies of Russia under Stalin. "They think that's Stalin's Russia was real socialism—and that socialism is doomed to failure. Totalitarian Communism couldn't be more different than grassroots, bottom-up socialism," said a web designer in New York.

But without contact with real radicals, most people don't make that distinction.

Even when they have met a radical, that experience isn't always that good. For many, their first experience meeting a radical is someone trying to sell them a newspaper, or getting in an argument with them.

Let's face it—we're partly to blame for our isolation because so often we fail to meet workers where they're at.

All that doesn't mean that people don't have some radical ideas. Here's what one teacher in a small town in the mountain states said: "One reason that people who have left views on a wide range of issues don't identify as radicals is because they don't know what it means to be a radical, or all the self-professed radicals they've met have been off-putting in some way."

"In my case, this was definitely true until I met radicals who seemed smart, relatable and sane," she said. "Once I met them, and they exposed me to more radical ideas and perspectives, I was ready to join!"

Breaking Through the Isolation

Radicals haven't always been so isolated.

Scratch a union struggle before World War II in the United States, and you'd find some Reds. Anarchists at the Haymarket. Socialists in the garment industry. Communists in the auto union. Trotskyists in the Teamsters. Reds inspired and led some of the greatest organizing drives and union battles in our history.

Socialists, Communists, and Trostkyists were on the frontlines of building the CIO during the thirties and helped build big industrial unions in meatpacking, auto, steel, and transportation.

But in the Red Scare after World War II, the union leadership purged these Reds—and since then, most radicals have done a pretty poor job of re-connecting those roots.

Here's what socialist activist and theorist Kim Moody had to say about that:

At no time since the 1950s has the isolation of socialists from the working class been greater. Socialist organizations in the U.S., including Solidarity, remain small and largely populated by people with an educated middle class background. Many socialist groups' connection with the working class is limited to support work for various strikes. The gap between the socialist organizations and the active sections of the working class who are the organizers of much of the resistance to the employers and rebellions within the unions is too great. The gap has many facets: some arise from different class origins, others from the habit of defeat on the left and the proclivity for symbolic actions and campaigns that flows from it. Most of the gap, however, is one of consciousness. The left with its highly theorized, often moralistic politics, and the worker activists with an un-theorized pragmatic outlook are often like trains passing in the night. This can be true even where left groups or individuals work within the unions. (Kim Moody. The Rank-and-File Strategy for Building a Socialist Movement in the United States. Solidarity. 2000)

Some radicals are trying to break through that isolation—including all of the activists we talked to. You'll hear about what they're doing differently in future articles in this series.

Now tell us what you think.

Why do you think that there aren't there more radicals at work? Share your ideas and your stories in the comments.

Visit radicalsatwork.org.

Labels: anarchism, communism, labor, labor movement, Radicals at Work, socialism, workers, workplace democracy

 

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2/09/2010 09:32:00 AM 0 comments

 

Deficit Hawk, Progressive Style, Part II

by Polly Cleveland

As I wrote in Part I (Feb 3), the deficit hawks legitimately claim that huge deficits will hinder investment and kill jobs. But their solutions would make matters worse. What are those solutions? What are alternatives? A leading hawk, C. Fred Bergsten of the Peterson Institute for International Economics, proposes three control measures: containing Medicare and Medicaid costs, "comprehensive Social Security reform, including gradual increases in the retirement age and an alteration of the benefits formula" and a national consumption tax.

The hawks are right that we need to control all--not just public--health care spending, but only as part of national health reform. They are wrong about Social Security, which does just fine under any reasonable projections. They're especially wrong about a consumption tax.

A consumption tax is essentially a national sales tax. Why a consumption tax? Because, the argument goes, it will encourage more saving. More saving will engender more investment. Of course, as even proponents recognize, a consumption tax hits poorer people harder, because they consume proportionately more of their income.

There's little evidence a consumption tax will encourage saving and investment, let alone productive investment. To see why, consider the main reason that U.S. saving and investment fell so low in recent years: the real estate bubble. Middle class homeowners thought they were saving through the appreciation of the land under their houses. So why put aside a portion of their wages? Banks and other investors thought they were investing by buying up high-yield mortgage-based securities. So why lend at lower returns to productive businesses? In fact, real estate bubble investments closely resemble investment in government debt: both are passive investments, parasites on the real economy.

Here are three alternatives to the conservative hawks' program of entitlement-cutting and consumption taxes: 1. Cut military spending. 2. Restore progressivity of federal taxes and raise rates, and 3. At state and local levels, rediscover the original wealth tax--the property tax.


1. Cut military spending. Dollar for dollar, military spending generates the fewest jobs and creates the most waste. Even strong advocates of a second "stimulus" wouldn’t demand more military pork. Chart III (click to enlarge) shows military spending from 1940 to 2013, in 2005 dollars and as a percentage of GDP. Cutting military spending both absolutely and relative to GDP helped Clinton lower debt and stimulate the economy. Obama seems headed the other way.

2. Restore the progressive income tax system. Since World War II, the federal income tax system has both declined as a proportion of GDP, and grown steadily less progressive. Top rates of the official income tax have fallen from over 90% to 35%, and unearned income like capital gains gets special low rates or disappears into loopholes. Meanwhile the other income tax--the payroll tax supporting Social Security and Medicare--has grown larger than the official income tax itself! The payroll tax hits all earned income up to a cap, now $106,800. The payroll tax rate, 2% in 1937 at the start of Social Security, has risen to 15.3%. Some two thirds of American families pay more payroll tax than income tax. Chart IV (click to enlarge) shows how the payroll tax has overtaken the official income tax as a source of federal revenue.

Conservative economist Greg Mankiw wrote in a recent New York Times op-ed that "Higher tax rates mean reduced work incentives and lower potential output." That's true, but only at the lower end of the income scale, not the upper. (Can you imagine a CEO saying, "If you cut my pay by $1 million, I'll go home early on Friday"?) The payroll tax has become the ultimate killer of small business and low-wage jobs.

Federal taxes as a percentage of GDP have hit a historic low, well under 20%. There's plenty of room to raise taxes and make the system much more progressive. To do so, we should: a. Reinstate high progressive rates for the regular income tax. b. Cut or eliminate payroll taxes at the lower end, and remove the cap.

3. At state and local levels, rediscover the property tax. The property tax? Despite much rhetoric to the contrary, the property tax really is a tax on property--including corporate property (about 50% of the base). It's a wealth tax, intrinsically the most progressive tax we have. Until World War II, it was the most important tax in the US. Since then, as Chart V (click to enlarge) shows, sales and income taxes have substantially displaced the property tax. But as also evident in Chart V, the property tax doesn't fall off in recessions as do income and sales taxes--if states had stuck with the property tax, as has New Hampshire, they wouldn't be in their present fiscal jam. As an added bonus, because the property tax hits land values, it checks the false savings of real estate bubbles--encouraging real saving!

Conclusion: If we want to reduce debt, lessen inequality, stimulate small business investment and create jobs, here's how to do it: cut military spending; restore progressivity and raise rates in the income tax system; and resurrect the property tax. Politically impossible? Only if it's unthinkable!

Labels: deficit, deficit hawks, Fred Bergsten, Greg Mankiw, income tax, military spending, payroll taxes

 

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2/07/2010 05:52:00 PM 0 comments

 

Mixed Jobs Report for January (BLS)

by Dollars and Sense

The Bureau of Labor Statistics has released its employment numbers for January. It is a mixed report: the official unemployment rate fell from 10.0% to 9.7%, yet the economy lost 20,000 non-farm jobs. This means that the decline in the rate of unemployment has to do with people who aren't (fully) employed but aren't counted as unemployed (i.e. they have become discouraged or marginally attached). The BLS also revised upward its estimate of the number of jobs that were lost in Dec. 2009, from 80,000 up to 150,000. Here are the basics from the BLS:

THE EMPLOYMENT SITUATION -- JANUARY 2010

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.

Household Survey Data

In January, the number of unemployed persons decreased to 14.8 million, and the unemployment rate fell by 0.3 percentage point to 9.7 percent.

In January, unemployment rates for most major worker groups--adult men (10.0 percent), teenagers (26.4 percent), blacks (16.5 percent), and Hispanics (12.6 percent)--showed little change. The jobless rate for adult women fell to 7.9 percent, and the rate for whites declined to 8.7 percent. The jobless rate for Asians was 8.4 percent, not seasonally adjusted.

This release includes new household survey tables with information about employment and unemployment of veterans, persons with a disability, and the foreign born. In January, the unemployment rate of veterans from Gulf War era II (September 2001 to the present) was 12.6 percent, compared with 10.4 percent for nonveterans. Persons with a disability had a higher jobless rate than persons with no disability--15.2 versus 10.4 percent. In addition, the labor force participation rate of persons with a disability was 21.8 percent, compared with 70.1 percent for those without a disability. The unemployment rate for the foreign born was 11.8 percent, and the rate for the native born was 10.3 percent. (The data in these new tables are not seasonally adjusted.)

In January, the number of persons unemployed due to job loss decreased by 378,000 to 9.3 million. Nearly all of this decline occurred among permanent job losers.

The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million. Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million.

In January, the civilian labor force participation rate was little changed at 64.7 percent. The employment-population ratio rose from 58.2 to 58.4 percent.

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Read the full report.

Labels: Bureau of Labor Statistics, jobs, unemployment

 

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2/05/2010 01:00:00 PM 1 comments

 

Deficit Hawk, Progressive Style, Part I

by Polly Cleveland

 

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2/03/2010 10:37:00 PM 0 comments

 

The Obama Budget and the Deficit Chorus

by Dollars and Sense

Get ready for "the deficit chorus," as James K. Galbraith put it to us today.

I was happy to see that David E. Sanger quoted Galbraith in his news analysis of Obama's budget in today's New York Times.

But I was puzzled by the way he was quoted, in an article that makes this claim: "For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors." There is some wiggle room here—virtually no room for new domestic initiatives, unless there are no miraculous political compromises; and I suppose it would take a miraculous political compromise for Congress to change its priorities away from ever-increasing military spending and refusal to raise marginal tax rates on the wealthy, and toward health care, education, jobs programs, etc. But the effect is to suggest that domestic spending is just not possible.

Well—judge for yourself; here's the beginning of the article:

Deficits May Alter U.S. Politics and Global Power

By DAVID E. SANGER | February 1, 2010

WASHINGTON—In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.

The first is the projected deficit in the coming year, nearly 11 percent of the country's entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.

But the second number, buried deeper in the budget's projections, is the one that really commands attention: By President Obama's own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020—years after Mr. Obama has left the political scene, even if he serves two terms—they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.

For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country's influence around the world eroded.

And this would be a bad thing?

Here's the bit quoting Jamie Galbraith:

[Obama's chief economic advisor Lawrence] Summers, in an interview on Monday afternoon, said, “The budget recognizes the imperatives of job creation and growth in the short run, and takes significant measures to increase confidence in the medium term.”

He was referring to the freeze on domestic, non-national-security-related spending, the troubled effort to cut health care costs, and the decision to let expire Bush-era tax cuts for corporations and families earning more than $250,000.

But Mr. Summers said that “through the budget and fiscal commission, the president has sought to provide maximum room for making further adjustments as necessary before any kind of crisis arrives.”

Turning that thought into political action, however, has proved harder and harder for the Washington establishment. Republicans stayed largely silent about the debt during the Bush years. Democrats have described it as a necessary evil during the economic crisis that defined Mr. Obama’s first year. Interest in a long-term solution seems limited. Or, as Isabel V. Sawhill of the Brookings Institution put it Monday on MSNBC, “The problem here is not honesty, but political will.”

One source of that absence of will is that the political warnings are contradicted by the market signals. The Treasury has borrowed money to finance the government’s deficits at remarkably low rates, the strongest indicator that the markets believe they will be paid back on time and in full.

The absence of political will is also facilitated by the fact that, as Prof. James K. Galbraith of the University of Texas puts it, "Forecasts 10 years out have no credibility."

He is right. In the early years of the Clinton administration, government projections indicated huge deficits—over the "sustainable" level of 3 percent—by 2000. But by then, Mr. Clinton was running a modest surplus of about $200 billion, a point Mr. Obama made Monday as he tried anew to remind the country that the moment was squandered when "the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of it."

But with this budget, Mr. Obama now owns this deficit. And as Mr. Galbraith pointed out, it is possible that the gloomy projections for 2020 are equally flawed.

Simply projecting that health care costs will rise unabated is dangerous business.

"Much may depend on whether we put in place the financial reforms that can rebuild a functional financial system," Mr. Galbraith said, to finance growth in the private sector—the kind of growth that ultimately saved Mr. Clinton from his own deficit projections.

His greatest hope, Mr. Galbraith said, was Stein's law, named for Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard M. Nixon and Gerald R. Ford.

Stein's law has been recited in many different versions. But all have a common theme: If a trend cannot continue, it will stop.

When I asked Jamie Galbraith whether he was misquoted, here's what he told us:

The press is indulging in a vast wave of hysteria.

Of course the deficit chorus has an agenda, which is to block jobs programs, prevent public investment, and to trim and privatize Social Security and Medicare.

I'm not normally an oracle of the markets. But the markets are sending a very clear signal: they don't believe a word of the hysteria. If they did, the 20 year Treasury bond rate would not be under 4.4 percent. In fact, the US government can borrow what it needs, at historically low interest rates, and so there is no financial barrier to funding the jobs, social programs and public investments that the country actually needs.

It's case of who you gonna believe, them or your lying wallet?

Not quite what showed up in Sanger's analysis, alas. (Otherwise wouldn't the headline have been: "There is no financial barrier to funding the jobs, social programs and public investments that the country actually needs"?) I'm still glad he contacts Galbraith for his articles, though...

Labels: Barack Obama, budget, deficit, James K. Galbraith, jobs

 

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2/02/2010 07:41:00 PM 0 comments

 

The Ignoble Prize for Economics

by Dollars and Sense

The Real-World Economics Review (formerly the Post-Autistic Economics Review), has opened voting for what they are calling the Ignoble Prize for Economics, for "the three economists who contributed most to enabling the Global Financial Collapse." Here are the details:

Twenty-two economists were nominated for the prize. Through consultation with contributors to the Real-World Economics Review Blog, the following short list of ten, including two pairs of economists, has been selected for the ballot.

Dossiers of short-listed of nominees for the Ignoble Prize for Economics:

Fischer Black and Myron Scholes
They jointly developed the Black-Scholes model which led to the explosive growth of financial derivatives. The importance given to their hypothetical calculation of derivative prices was baneful not just because it was bogus, but also because it meant that relevant and often urgent real-world economic research was widely neglected by the profession.

Eugene Fama
His "efficient market theory" provided the moral umbrella for all sorts of greed, predatory behaviour and incompetent corporate management. It also provided the rationale for deregulation. And his theory’s widespread acceptance meant that "discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse." In these three ways Fama’s work created the environment which made possible the GFC.

Milton Friedman
He propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of the financial theories with unrealistic assumptions that facilitated the GFC. In short, he opened the door for everyone subsequently to theorize without fear of having to be attached to reality.

Alan Greenspan
As Chairman of the Federal Reserve System from 1987 to 2006, he both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation. Before a Congressional committee on 28 October 2008 Greenspan confessed that his theoretical beliefs of 40 years were now proven to be without foundation, hence his total confusion and failure at his job.

Assar Lindbeck
By working to make the Riksbank Prize in Economic Sciences ("Nobel Prize in Economics") almost exclusively a prize for neoclassical economists, this Swedish economist has contributed significantly to the conversion of the economics profession and of world public opinion to market fundamentalism.

Robert Lucas
His development of the rational expectations hypothesis, which defined rationality as the capacity to accurately predict the future, both served to maintain Friedman's proposition that monetary factors do not affect the real economy and, in the name of "rigor", distanced economics even further from reality than Friedman had thought possible.

Richard Portes
As Secretary-General of the Royal Economic Society from 1992-2008, he helped suppress worries expressed by non-mainstream economists about developments in the financial sector. In 2007 he wrote a Report for the Icelandic Chamber of Commerce giving a clean bill of health to Icelandic banks only a few months before they collapsed. When investigators called attention to the real state of Icelandic banking, he wrote a series of letters to the Financial Times defending the soundness of Icelandic banks and imputing professional incompetence to those who doubted it.

Edward Prescott and Finn Kydland
For jointly developing and popularizing "Real Business Cycle" theory, which by omitting the role of credit greatly diminished the economics profession’s understanding of dynamic macroeconomic processes.

Paul Samuelson
Through his textbook Economics: An Introductory Analysis (19 English language editions and translated into 40 languages), he popularized neoclassical economics, contributing more than any other economist to its diffusion and thereby to the deregulation of financial markets which made possible the GFC.

Larry Summers
As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), he worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives.

Procedures
The voting is being conducted using PollDaddy. Its system uses cookies to prevent repeat voting. A voting box showing the short-listed candidates and a link to their dossiers will remain till voting closes near the top of the right-hand column on the home page of the Real-World Economics Review Blog. Voting is open to all interested parties. Each voter can vote for up to three of the listed candidates. The ballots are secret. Voting will remain open for several weeks. No results will be announced before closing the poll.

Labels: Alan Greenspan, Edward Presscott, Eugene Fama, larry Summers, Milton Friedman, Paul Samuelson, Real-World Economics Review, Robert Lucas

 

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2/02/2010 11:20:00 AM 0 comments

 

Move Your Money? (Doug Henwood)

by Dollars and Sense

Hat-tip to reader Michael E. for pointing us to the lead story in the January issue of Left Business Observer (which I hadn't gotten around to reading yet), where Doug Henwood skewers the "Move Your Money" campaign that we posted on yesterday. Our introductory note to that post expressed some mild skepticism by observing that you have to *have* some savings to participate in the campaign. And we certainly should have gone on to criticize the individualism of the campaign, the limits of PC consumerism, etc.

Doug usefully points out that the strategy behind the campaign is flawed because of the fungibility and mobility of money. You can't ensure that your money will be put to good, local uses by picking a local bank; at any rate, the banks that the campaign's zip-code-based locator suggests are not necessarily good ones or insulated from big banks and global capital.

I did check my zip code in humble East Boston and found East Boston Savings Bank and some credit unions—maybe Doug's Brooklyn neighborhood is tonier than mine and has not only more banks, but slimier ones. I wouldn't want to face trying to be a PC financial consumer in New York City, even if I had any money to park.

Doug's crack about HuffPo is on the money, but it's even worse than he says. HuffPo thrives on the paid labor of interns, in the sense that the interns pay for the privilege of interning at HuffPo, as widely reported last spring.

Anyway, here's part of Doug's take; I strongly encourage everyone to subscribe to LBO and/or purchase the January issue go get the full article:

The latest populist spasm is Arianna Huffington's "Move Your Money" campaign, which would have those of us with money in large banks move it to small ones. This touches on another foundational populist fantasy: that virtue and size are inversely related. Her website, which thrives on the unpaid labor of hundreds of eager contributors, even provides a helpful list of convenient local banks if you enter your zip code.

What's wrong with this scheme? Several things. First, many small banks have more money than they can profitably invest locally. As Barbara Garson shows in her wonderful book, Money Makes the World Go Around, the portion of her book advance she deposited in tiny upstate New York bank was probably lent via the fed funds market to Chase, where it entered the global circuit of capital. This is not at all uncommon. Money is fungible, protean, and highly mobile even when it looks locally rooted. That very mutability is part of what makes money so valuable: it's the ideal form of general wealth that can instantly be turned into caviar, lodging, Swedish massage, or shares of Google.

Read the whole article.

Subscribe to LBO.

Labels: Arianna Huffington, Doug Henwood, Huffington Post, Move Your Money

 

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2/02/2010 10:59:00 AM 3 comments

 

Move Your Money

by Dollars and Sense

This is from the Feb. 1st issue of The Nation; here's the link to the Move Your Money campaign, which Arianna Huffington and Rob Johnson of the Roosevelt Institute started. It sounds like a worthy campaign; if I had any savings I would move them (except I have never given the big banks my business, at least when I've been able to avoid it).

Are you angry about Wall Street's reckless excesses? Are you disappointed with President Obama's limp approach to reform? You can change this, acting individually and collectively. Withdraw your deposit and savings accounts from the large banks that brought the system to ruin and were subsequently rescued with billions in government bailouts. Put your money instead in smaller, safer banks or credit unions closer to home--the thousands of community institutions that do not harvest their profits from greed and recklessness.

"Move Your Money" is an electrifying slogan that's lighting up the Internet because it shows people how they can push back against the big dogs of banking. The concept is simple, but this is a big idea that could alter the timid direction of financial reform.

This campaign is potentially more than a feel-good gesture. If coordinated with institutional reform efforts, it could lead to a broad rebellion against the financial system, with citizens reclaiming the power to act directly when politicians are too intimidated by moneyed interests to act in the public interest. Economist Jane D'Arista put it crisply: "We are not a nation of widows and orphans. We have quite a lot of money, and people control some of it. They might ask why they don't control more of it."

The campaign was launched just before New Year's Eve by Arianna Huffington of the Huffington Post and Rob Johnson of the Roosevelt Institute. An influential bank-rating firm, Institutional Risk Analytics, donated a website window (moveyourmoney.info/find-a-bank), where citizens can find banks in their ZIP code that IRA certifies as safe and sound.

In the first forty-eight hours more than 100,000 responded with inquiries. Within a week, people had searched for good banks in 16,631 ZIP codes--nearly 40 percent of the nation. The search tool is now getting 45,000 users a day. Naturally, the corporate media promptly assured readers that "ordinary Americans lack the power to hurt the big banks," as a Washington Post headline put it.

Wrong. The cynics either do not understand banking or misunderstand the widespread public anger. Dennis Santiago, IRA's CEO and managing director, explained that banks compete fiercely for the "core deposits" provided by individual and small business accounts--this stable money is their preferred base for profitable lending. Take away core deposits, and bankers feel immediate balance-sheet stress. Expand the account base for community banks, and they gain greater stability and greater lending power. "Will moving your money have an effect?" Santiago asked. "And by effect, I don't mean making a momentary political statement. I mean making a structural difference to the country's financial system. The answer is yes."

Structural change ought to be the primary goal of financial reform--breaking up the concentrated power held by mega-banks and creating a balanced system of smaller, more diverse lending institutions that thrive by serving local credit needs. Alas, the Obama administration and Congress are pursuing the opposite goal--rescuing the behemoths that failed and encouraging even greater financial concentration. This will lead to more reckless adventures, more "too big to fail" bailouts.

"Move Your Money" is an important model for teaching people how to change a dysfunctional system. The same principle of taking control of your own money is at work in related reform movements. A campaign launched by faith-based community organizations associated with the Industrial Areas Foundation identifies sky-high interest rates on credit cards and other lending as the ancient sin of usury. IAF groups are asking churches, foundations and local governments to withdraw funds from the usurious banks that profit by destroying borrowers. Organized labor, likewise, has launched an aggressive movement to insist on responsible investing values for the pension-fund wealth of working people, urging state treasurers and fund managers to invest for society's interests as well as good returns.

Changing the nature of finance capitalism is a long road, to be sure, and the industry will resist change every step of the way. But the fight begins in earnest when people decide to move their money.

Labels: Arianna Huffington, Bank of America, banking industry, banking system, Move Your Money, Too Big to Fail

 

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2/01/2010 12:46:00 PM 3 comments