May Day

International Workers' Day was celebrated May 1. It's a bank or national holiday in much of the world. - although not in the US or Canada where the contributions of workers are celebrated in September.

Across Europe and even here at home, May Day protests were held against austerity programs that aim to reduce deficits in a time of recession by cutting benefits for the less well off and decreasing government jobs. CNN's website has a series of photos and videos of the European protests.  NBC News has coverage of the Seattle and Los Angeles demonstration.

So where do the workers of the world and of the US stand 123 years after the first May Day was observed?

On the plus side:

• The eight-hour workday is fairly universal in the industrialized West. This was what workers in the late 19th century were struggling for: eight hours work, eight hours sleep, eight hours recreation.

• Discrimination against women and minorities in the workplace is ending. Here at home, we had to pass the Lily Ledbetter Fair Pay Act in 2009 to reverse a 2007 ruling by the conservative US Supreme Court that placed new time limits on when discriminatory pay complaints could be filed.

• In the US, the only Western industrialized nation without a single payer health care system, businesses over a certain size must now (starting in 2014) provide a health care plan for their full-time employees thanks to the Affordable Care Act. SCOTUS has already ruled on its constitutionality but Republicans continue to mount attacks against the act. We are not out of the woods yet on this one. Congressional legislators can affect the funding and Republican-controlled state legislatures can hamper implementation.

On the negative side:

- It still can be dangerous to be a worker.

• A recent explosion at a Texas fertilizer plant killed 15. Apparently the various agencies responsible for monitoring the safety of the plant (the agencies whose regulations Republicans abhor and try to defund) as well as the plant management failed to recognize the danger of storing large quantities of ammonium nitrate.

 

• A building collapse in Bangladesh killed more than 500 garment workers. [Huffington Post] These deaths occurred a day after a five-story crack opened in the building. The workers had been threatened with a loss of pay if they did not go to work the day of the collapse. If companies want to reap the benefits of globalization, they need to act morally. That is, they (or at the very least our government) should demand the same safety and health standards be applied in developing countries as in our own.   Saying that you contract out your work does not relieve you of the responsibility for the safety of the workers nor does it relieve you of the obligation to ensure that safety audits of contracted facilities are conducted competently.

- The global recession continues unabated throughout most of the world.

• Unemployment in the Eurozone (the 17 countries using the Euro) reached an overall record high of 12.1% in March. Greece and Spain are much worse than the average - at about 27% unemployment in each. Youth (15-24 years old) unemployment is staggering with Greece and Spain again the worst off (56% in Spain and 59% in Greece).
• The austerity nonsense (read this as "deficit reduction in the midst of a recession") that is in vogue in Europe and the US has clearly been unable to help countries recover economically. In Great Britain, which is not in the Eurozone, unemployment in February rose to 7.9%. In mid-April, after cutting its forecast for UK economic growth, even the IMF is asking Prime Minister David Cameron's governing coalition to "consider easing up on its austerity drive amid a weak economic recovery." As the WSJ reports: "The U.K. economy has barely grown since Mr. Cameron took office and is at risk of shrinking for the second consecutive quarter in the first three months of 2013, which would push it into its third recession in five years."
• Here at home, official unemployment stands at 7.5%, down slightly from March's 7.6%. 165,000 new jobs were created in April - which is about what is needed to absorb the new workers entering the US labor force each month.
• Some common sense is prevailing - in, of all places, Italy. Italy's new Prime Minister Letta has said growth policies must be urgently adopted to counter an austerity drive under which the country was "dying". "Italy is dying from austerity alone," he said. "Growth policies cannot wait."
• Unfortunately, no such common sense seems to exist in the US where economic ideologues, the so-called "deficit hawks" are driving the discussion towards the same measures that have failed to work in Europe. How Obama can be taken in by these right wing arguments is beyond my comprehension. Trying to reach a "Grand Bargain" with the proponents of the economic philosophy that drove us into this ditch and that has prevented us from emerging from it (supply side economics (aka trickle down); deregulation) - with the opponents still geared to denying him victories even as a lame duck president - is ludicrous. (See Senator Toomey's comments on the failure of gun legislation.) The shadows of Reagan and Thatcher continue to cast their palls on recovery in the US and UK. 

- Income inequality is growing - particularly in the United States.

 

 

 

• The gap between the very wealthy and the rest of us in this country continues to grow. It is no coincidence that this gap has grown as the influence of unions and union membership have declined.  In the graph above (taken from the Center on Budget and Policy Prioities website), the influence of Reaganomics and the policies promoted by the Chicago School can be clearly seen.  Until about 1980, all income levels were sharing in the growing prosperity.  Afterwards the slope of the curve for the wealthiest begins to deviate significantly from the slope of the curves for the rest of us.  Trickle down?  I don't think so.

• Per the Global Post webpage on the income gap and the Gini methodolgy used by social scientists to measure inequality: "Income inequality is surging, and there are few countries where it is rising faster than the United States. The distance between rich and poor is greater in America than nearly all other developed countries, making the US a leader in a trend that economists warn has dire consequences."   In the Gini methodology, 0 represents perfect equality and 1 represents a state where everything is owned by one person.  Among the member nations of the OECD, only Mexico and Chile have greater inequality than exists in the US.

 

Other Stuff

May Day

International Worker's Day is celebrated on May 1. It is a national holiday in more than 80 countries and celebrated unofficially in many others. It originally started as a commemoration of the Haymarket Affair, which began as a peaceful rally in Chicago in 1886 in support of workers striking for an eight-hour day. An unknown person threw a dynamite bomb at police as they acted to disperse the public meeting. The bomb blast and ensuing gunfire resulted in the deaths of seven police officers and at least four civilians; scores of others were wounded. [Wikipedia]

 

 

 

Union Membership

In January, the NYTimes reported that the percentage of unionized US workers had dropped to its lowest level in 97 years.  In spite of a gain of 2.4 million jobs in 2012, union membership dropped by 400,000.  The percentage of unionized workers is down from 32-35% in the post WWII years.  It bears repeating: the exponentially widening income gap in the United States is partly due to the weakening of unions in this country.  The other part of the equation is the shifting of manufacturing jobs overseas.  Manufacturing jobs are being replaced by less-well-paid jobs in the services industries. 

So I guess I'll close with Paul Robeson's fantastic rendition of the worker's song Joe Hill.  And a hope for a rebirth in the validity of the American Dream for our upcoming generations.

 

 

 

It's the Economy, Stupid(s)

As we lurch to our Citizens United-fueled 2012 election, President Obama has lost his lead among registered voters and trails Romney handily among likely voters by 6 points, according to the latest Gallup Poll.   Obama dug himself into a huge hole in the first debate and apparently is not climbing out of it.  Amazingly, even after this Tuesday's debate, Romney is considered to be the person most capable of handling the economy.  As the occasionally sage Bill Clinton once said, "It's the economy, stupid."  No other issue resonates more with the American voter.

The prevailing attitude among those favoring Romney appears to be "Well, Obama has had long enough to fix the mess."  They totally fail to understand the causes of the Great Recession, rooted as it is in Republican deregulation ideology and in the supply-side economics to which Romney will return us  (aka, "trickle down").  They totally fail to grasp the obstructionist role of the Republicans in Congress in preventing a more rapid recovery - in the neighborhood of 2 million jobs not created due to their inaction.  The Administration has not hammered on (or even articulated) these misconceptions for the past several years and it is likely a case of "too little, too late" in the closing weeks of this campaign. 

What other factors will be affecting the outcome? 

Voter suppression laws will have less than their desired effect due to a couple of recent court victories.  Pennsylvania voter ID won't take effect before this election and Ohio was ordered to allow early voting the weekend before Election Day.  On the other hand, I spoke to a Florida voter who was concerned that he had not received his absentee ballot yet.  In Ohio, anonymous groups have launched a voter-intimidation billboard campaign to scare people across Columbus and Cleveland—two Democratic strongholds—out of voting. It's a "saturation-level" advertising campaign that goes both deep and wide, promising prison time and a $10,000 fine for "voter fraud." Let's not forget Ohio 2004 election night when what appeared to be a victory for Kerry was turned around in the wee hours of the morning.  Or Florida 2000 when the Republican-controlled Supreme Court prevented a recount and crowned George Bush President.  (Now, there's something to think about - 4 SCOTUS justices will be in their late 70's or early 80's by the end of the next President's term.)

Democrats are mounting strong get-out-the-vote (GOTV) efforts in swing states.   But here we have to be cautious.   The formidable grassroots GOTV effort in the Wisconsin recall election could not overcome the huge money advantage of the Republican incumbent Scott Walker.  In a money neutral race with an informed citizenry, Democratic Congrssional candidates should win in a landslide - Republican Congressional approval rating was down to as low as 7% earlier this year.  But Democrats will be lucky if they can hold onto the Senate and make modest gains in the House thanks to the money pouring into Republican coffers.  For just one example, Republicans have so far spent more than $20 million in an attempt to defeat Ohio Senator Sherrod Brown.

As the French philosopher, writer and diplomat Joseph De Maistre wrote in 1811, "Every nation has the government it deserves."  (The more common "Every country gets the government it deserves" is often wrongly attributed to Alexis de Tocqueville or Abraham Lincoln.)  So to the willfully ignorant and to the artfully misinformed, if you elect Romney-Ryan and a Republican congress, you will have the government you deserve.  Unfortunately, for the rest of us, we will also have the same government and the social safety net that has protected the vulnerable will be shredded.

The Price of Inequality

The Price of Inequality by Nobel Economist Joseph Stiglitz is a book filled with insight into the workings (or non-workings) of the markets and on the roles of government and of central banks in the economy. A major theme of the book is that “inequality is as much the result of political forces as of economic ones.” He explodes prevailing myths about the “free” market place, globalization, the effectiveness of austerity programs, GDP as an indicator of economic performance, and government vs. private efficiency. He also exposes the policies enacted since the 1980’s that brought about the Great Recession and the current state of inequality in this country. This historic inequality has potentially serious consequences as the book’s subtitle states: “How Today’s Divided Society Endangers Our Future”.

Let’s face it. It is not a level playing field. The rules of the game have been shaped by the powerful. One concept that Stiglitz introduces and that is at the heart of inequality is what economists call rent seeking. Broadly defined, rent seeking occurs when those at the top get income “not as a reward [for] creating wealth but by grabbing a larger share of the wealth that would otherwise have been produced without their effort.” Some examples of rent-seeking include sale of natural resource leases on public lands at below market value, statutes that allow corporations to pass costs on to the rest of society, government subsidies and noncompetitive procurement practices (e.g., private contracting for wars in Afghanistan and Iraq). Basically, it’s the corporate welfare that is so engrained in our tax codes and government policies.

In the section on “history of the deficit“, Stiglitz reviews how the country went from the large surpluses of the Clinton years to the seemingly out-of-control deficits of today. He lays the blame squarely where it belongs: the Bush tax cuts (about 1/5 of the 2012 deficit; $3.3 trillion dollars if extended for 2011-2020), the expenses incurred in the wars in Iraq and Afghanistan (long-term this will exceed $2-3 trillion), the provision that the Federal government, the largest buyer of drugs in the world, couldn’t negotiate price with drug companies as part of the Medicare Drug Benefit (worth “by some estimates, a half trillion dollars over ten years”) and, of course, the biggest contributor by far - The Great Recession brought about by the collapse of the housing bubble and the deregulated financial environment so dear to those on the Right. As Stiglitz states, “16 percent of the deficit was for measures to stimulate the economy…but almost half (48 percent) of the entire deficit was a result of underperformance of the economy.” The latter, he explains, “led to lower tax revenues and higher expenditures on unemployment insurance, food stamps, and other social protection programs.”

Stiglitz is well aware that the major problem now is not the deficit but the joblessness and lack of demand in the economy. Companies are not investing in capital or labor - not because they are unprofitable or lack confidence in the government but because there is a lack of demand brought about by the Great Recession. This lack of demand could be alleviated by government spending (for example, on infrastructure and education) and by benefits to those that would spend the money and put it back into the economy (e.g., unemployment insurance, food stamps, etc.) There is a multiplicative return to the economy on these expenditures - exactly the expenditures demonized by those on the Right.

In addition to discussions on the history of austerity program failures from the time of Hoover to the current European economic crisis, the deleterious effects of central bank policies on real wages, the evisceration of our democracy and the causes for the loss of American leadership abroad, the author throws out an occasional gem such as the Lockheed Martin F-35 Joint Striker Fighter project. This weapon that we don’t need for a type of conflict we will not be fighting, at $382 billion, “costs half of the entire Obama stimulus program.”

The book is not about the politics of envy but, as Stiglitz states in his concluding chapter, it is “instead about the politics of efficiency and fairness.” After reading more than 250 pages on how the system was rigged for inequality, I was beginning to lose hope. Is there any way out of this mess? Is there any way to restore upward mobility to the 99%?

In the last chapter, the author presents a well thought out program of economic reform. Among the reforms that would make a big difference are curbing the financial sector (“Dodd Frank is a start but only a start”), stronger and more effectively enforced competition laws, improved corporate governance, comprehensive bankruptcy law reform, ending government giveaways in the disposition of public assets and in procurement, ending corporate welfare including hidden subsidies, and comprehensive legal reform to democratize access to justice. In addition, he proposes two significant tax reforms - a more progressive income and corporate tax system with fewer loopholes and a more effective estate tax system. Several additional actions “would make a big difference in the plight of the 99 percent”: improving access to education, helping ordinary Americans save (“say, a matching grant or expansion of first-time home owner programs”), universal health care, and strengthening other social protection programs.

There are additional proposals on tempering globalization (“ending the race to the bottom” as Stiglitz phrases it), fiscal and monetary policies to restore and maintain full employment, and a growth agenda based on public investment. He also addresses “immediate issues” - fixing the mortgage problem by restructuring mortgages, more aggressive stimulation of the economy to increase employment and more active labor market policies to train workers for new jobs.

Citizens United has ensured the dominance of the 1% agenda in national politics for the foreseeable future. Without major political reforms, it is doubtful that the political process would allow even the “barest elements of this agenda.” So we are probably looking at a long-term thing. It has taken the Right 30 years of relentless propagandizing of a failed economic theory and policies to bring us to the inequality and economic crisis that we see today. Perhaps it will take as long for the country to regain its senses.

In light of this, “Is There Hope?” - as the concluding section of the book asks. Stiglitz sees two routes by which reform might happen. “Those in the 99 percent could come to realize that they have been duped by the 1 percent: that what is in the interests of the 1 percent is not in their interests…and…the second way that reform could happen [is that] the 1 percent could realize that what’s been happening in the United States is not only inconsistent with our values but not even in the 1 percent’s own interest.”

He then presents two visions for America a half century from now. One is of a society even more divided between the haves in gated communities and have-nots with ever decreasing opportunity for advancement. We would devolve to a plutocracy.

The other is a vision of a society of “shared destiny and a common commitment to opportunity and fairness, where the words ‘liberty and justice for all’ actually mean what they seem to mean…This second vision is the only one consistent with our heritage and our values.”

So is there hope? Stiglitz concludes that yes, there is hope but time is running out. “Four years ago there was a moment where most Americans had the audacity to hope. Trends more than a quarter century in the making might have been reversed…Today, that hope is flickering.”

If Obama does win a second term, this book should be required reading both for him and for his entire economic policy team. They really need to be better informed. Better yet, he should bring in Joseph Stiglitz to head up and reorganize his team. (See #4 on the October 24, 2011 post: Obama Short(falls) List.)  Of course, if the 1% wins in November and Republicans control Congress, the Supreme Court, and the Presidency, we will lose any chance to even begin implementing the slightest of the necessary reforms for at least four years.