April 14, 2011
The Deficit America Has Forgotten -- And Is Eviscerating The Middle Class
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
We can service each other till the cows come home but if we don't start making more things here and selling them there more and more jobs will be lost, more and more communities devastated and our standard of living will continue to drop. Everyone is focused on the budget deficit. But here's the thing: the trade deficit is the jobs deficit and the jobs deficit is the budget deficit.
The Trade Deficit
Before "The Reagan Revolution" America made things and sold them to the rest of the world. Since Reagan America borrows money to buy things made somewhere else. And since Reagan we've seen the whole game play out: wages stagnate, savings plunge, debt soars, growth slows all while wealth concentrates at the very top.
And it just goes on. The trade deficit last month was above forecasts, and a big jump from last year:
The U.S. trade deficit with China widened to $18.8 billion in compared with $16.5 billion in the same month last year. The government also revised the deficit in January to $47 billion from $46.3 billion.
The February monthly trade deficit fell, but only because the decline in exports was less than the decline in imports.
The Big Change
In the early 80's conservative trade policies designed to pit American workers against low-paid, exploited workers in non-democratic countries transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then:
Democracy vs Thugocracy
America is supposed to be a democracy of We, the People. Democracies set up protections for their people that protect wages, rights, safety, dignity and the environment. Conservative "free trade" agreement allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all. This has created a "race to the bottom" for our wages and benefits. Of course our workers cannot compete against workers who are not able to fight for better pay and benefits. This is the reason we fought to build and preserve our democracy.
China
Instead of fixing our trade problems, we have gone back to the same old same old. Especially vis-a-vis China.
Alliance for American Manufacturing Statement on Latest Monthly Trade Figures
The monthly U.S. international trade deficit in goods and services was $45.8 billion in February. The goods trade deficit with China was $18.8 billion.--Year over year, the 2011 trade deficit is running far higher than 2010. January-February 2010 clocked in at $74.3 billion, while the first two months of 2011 have already reached $92.7 billion.
--Year over year, the goods trade deficit with China is also running ahead of 2010. January-February 2010 totaled $34.8 billion, while the first two months of 2011 have already reached $42.1 billion.
--Of particular note is that China ($18.8 billion) now accounts for 70% of our overall monthly non-oil goods deficit ($27.0 billion).
Said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM):
“Washington has focused a lot on budget deficits this year, but scant attention has been paid to the trade deficit. That must change. The trade deficit serves as a drag on GDP growth and requires financing, just like any other debt. While only 9.5% of our national debt is financed by China, that nation is responsible for fully 70% of our trade deficit in non-oil goods.”
China, China, China
Over and over our trade relationship with China demonstrates so many things we are doing wrong in the world competition. Among so many other problems:
- We let them manipulate their currency rate which means their goods have a cost advantage of as much as 40% going out the gate, before other factors come into account.
- Their government subsidizes and promotes key industries. We don't have an industrial policy.
- Their workers are not free to organize and push for better wages, benefits and working conditions. (Ours aren't either, but are more able than theirs.)
- They restrict and otherwise discourage imports
- They follow "Buy China" policies, we do not have "Buy America" policies
The Trade Deficit Is The Jobs Deficit
Our trade deficit is our jobs deficit. When you close the factory we can't make a living. When you move the jobs over there the jobs aren't here. And the people who could have those jobs are collecting unemployment instead of paying taxes and buying cars, houses, food, clothes, saving etc.
American Prospect, The Plight of American Manufacturing,
Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972). An additional 90,000 manufacturing companies are now at risk of going out of business.
Giant Sucking Sound
So we closed our factories (trade deficit) and shipped the jobs to other countries (jobs deficit) where they pay less and don't protect the environment. Again, from The Plight of American Manufacturing,
Long before the banking collapse of 2008, such important U.S. industries as machine tools, consumer electronics, auto parts, appliances, furniture, telecommunications equipment, and many others that had once dominated the global marketplace suffered their own economic collapse. Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000. The last time fewer than 12 million people worked in the manufacturing sector was in 1941. In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.
Millions and millions of good-paying jobs. Gone.
The Jobs Deficit IS The Budget Deficit
People with jobs pay taxes. People with jobs don't collect unemployment benefits. A huge component of our budget deficit is the result of unemployment, much of it caused by the trade deficit.
Of course there is the core component of the budget deficit that was caused by tax cuts for the wealthy, the huge increase in the military budget and the interest on the borrow for these. But the big increase since the financial crisis is due to the recession and restoring our manufacturing base addresses much of this. People with good manufacturing jobs pay mortgages and buy houses and cars and shop at stores and make the economy work. And when thrry buy things made in America the money stays in America.
What We Can Do
This is from a year ago -- yes, a year, with nothing done: It Is Time To Put Our Foot Down: Ten Steps We Can Take To Stop Closing Factories And Eliminating Jobs,
Here are just some steps that We, the People can take to start turning this around:- A border tariff on imports to remove the price advantage of goods produced by exploited, underpaid workers.
- A border tariff to remove the price advantage of goods produced in ways that harm the environment.
- A border tariff on goods from countries that are not democracies, to remove any pricing advantage gained from not allowing people to vote and set rules that benefit themselves.
- A border tariff on goods from countries that restrict workers from organizing to improve their wages and working conditions, to remove any pricing advantage gained from not allowing workers to bargain. (America currently doesn't meet this standard.)
- Remove tax benefits and instead impose tax penalties and fines on companies that close factories here. Don't let it be profitable to do this!
- Increase taxes on the big monopolistic companies to remove the advantages that help them destroy America's smaller, regional and local businesses -- the very job creators we need.
- Increase income taxes on high incomes to reduce the incentive to pursue short-term windfalls instead of long-term interests. Make it take a long time to accumulate a fortune. Making a fortune is great but it should be a reward for helping our economy and society, not destroying them.
- Break up the "too big to fail" Wall Street firms that wrecked the economy. And get the money back -- all of it.
- Explore the use of Eminent Domain to keep factories in communities and workers in the factories.
- Formulate and follow a national economic/industrial strategy to build a new green manufacturing economy
Those are just a few things we can do.
And, to close, Frank Sobotka:
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Posted by Dave Johnson at 4:06 PM | Comments (0) | Link Cosmos
March 25, 2011
Lobbyists Admit Corporate Tax "Holiday" Didn't Work, But Demand It Again
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
The usual suspects are trying to sell us on yet another scheme to keep from paying their taxes. This one is called a repatriation tax holiday—a huge cut in the tax rate on money companies are holding outside of the country. We did this before and it didn't work out so well for us, so of course they want to do it again.
Multinational corporations hide profits in offshore shell companies to avoid taxes. Here is how the scheme works:
One shell company manufactures in China or another low-cost country, sells the products to a shell company "based" in a tax-haven like the Cayman Islands at a low price so the manufacturer doesn't show much profit. The tax-haven company immediately sells it to their U.S. company at a very high price, so the tax-haven shell company gets most of the profits.
Then the products are sold here for not much above what was paid, so very little profit is made by the U.S. company. The tax-haven shell company reports all the profits as a result of selling TO but not IN the United States. Low profits here equals low taxes here.
As long as the actual money isn't brought into the U.S., they don't pay U.S. taxes on it. So after years of this scheme a ton of cash is sitting in these tax-haven countries, and the wealthy few want to be able to use it to buy even more jets, houses, Maybachs, etc. And, of course, they don't want to pay their taxes.
So of course, the inevitable "business groups" are trying to get Congress to pass a "repatriation tax holiday" on the profits they are holding outside of the country.
From The Hill, Business groups press Treasury to shift on corporate tax holiday:
The U.S. Chamber of Commerce and the WIN America Campaign, the business coalition ... flatly state that U.S. multinationals have little incentive now to bring what they say is roughly $1 trillion in revenues back home and that allowing them to do so at a reduced rate would help stimulate the American economy.
They Always Say It Creates Jobs
The "business groups" argue that bringing the money back would "stimulate the economy" and create jobs. They say everything that helps the rich get richer creates jobs. But then it doesn’t create jobs. Then they say the next thing will create jobs so we go fo it, and then that doesn’t either. Meanwhile they get richer and richer, and we get poorer and poorer and need even more jobs.
Been There, Done That
Here's the thing, we tried this in 2004. "Business groups" argued that bringing the money back would cause them to invest in the United States—and they got what they wanted. We allowed corporations to bring profits back to the U.S. at a tax rate of 5.25 percent, instead of the top corporate rate of 35 percent.
How did that work out for the economy and jobs? Not so well. Alain Sherter, in Sure, a “Tax Holiday” on Overseas Profits Is a Great Idea — If You Hate America, looked into this and writes,
The nonpartisan Congressional Research Service found that the companies that got the biggest tax breaks following the 2004 rate cut went on to eliminate jobs over the next two years. Instead of hiring, they mostly used the repatriated funds to repurchase stock or pay dividends — and to expand outside the U.S.
But it did provide a huge incentive to do even more offshoring of profits and jobs, because this scheme worked and the money came back in a tax holiday. So of course they are proposing to do it all over again. Bring the profits back untaxed, and then start the cycle again.
Sherter points out this really does benefit a very few at the expense of the rest of us, including other companies,
Repatriation holidays also favor a handful of huge corporations at the expense of other companies, especially businesses without operations around the globe. In 2004, a total of five companies reaped more than one-quarter of the benefits from the tax holiday, while 15 firms got more than 50 percent. To pay for such a cut without raising the deficit, meanwhile, the U.S. would have to increase taxes on other U.S. businesses or make even deeper cuts in already tight federal spending.
Tom Sullivan posted his own review of repatriation on OurFuture.org in 2009:
Washington Post business columnist Allan Sloan reacted to the [American Jobs Creation Act] in 2006, saying, “Companies don't add jobs based on one-time chances to repatriate money from overseas.”And they didn’t, according to Finance Committee Chairman, Sen. Max Baucus (D-MT), who argued against renewing the tax holiday. “The data shows that the last time we enacted something like this there were virtually no new jobs created in the United States. None.” Baucus continued, “Companies used this money for other purposes.”
North Dakota Democrat, Sen. Byron Dorgan rebranded the proposal: “There’s another phrase for repatriation; it’s called rewarding the outsourcing of jobs.”
The Cost
U.S. PIRG, in Tax Shell Game: The Taxpayer Cost of Offshore Corporate Havens says,
Key Findings• The cost to taxpayers due to the use of offshore tax havens is as high as $100 billion per year - $1 trillion over 10 years. U.S.-based individuals and corporations who pay taxes on their revenues must shoulder this burden for those who do not.
• Taxpayers must shoulder the burden – U.S. PIRG Education Fund calculated each state’s taxpayer contribution proportional to their yearly federal contribution to make up for the $100 billion lost. [For California taxpayers, that figure was $11,679,735,788; for Texas, $8,653,820,2590; for New York, $8,432,456,612; for Florida, $4,932,770,661.]
• Our allies in other nations are also calling for decisive action to reign in these abusive tax havens. The Group of 20 (G-20), which provides a forum for world financial leaders to promote global economic stability, recently issued a communique providing for sanctions against tax haven countries.
Business Groups - Or People?
Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about "corporate" holdings, think about this chart from the Working Group on Extreme Inequality:
So with this tax holiday proposal we're once again talking about benefits that go to the top few percent, at the expense of the rest of us. At the expense of schools, roads, police, firefighters, nurses, roads, rail, health care and all the things We, the People try to do for each other.
These days we seem to always be talking about benefit to the top few percent, at the expense of the rest of us. Funny how that works.
• Cut back on the things We, the People (government) do for each other, so the top few can have even more.
• Cut Social Security -- the money employees have set aside all their lives -- to preserve the tax cuts that went to the top few.
• Get rid of the retirement plans of state government employees so the top few don't have to pay state taxes.
• Get rid of unions so the top few don't have to pay good salaries or provide benefits.
• Cut back on etc. so the top few get more ...
• Cut back on etc. so the top few get more ...
• Cut back on etc. so the top few get more ...
• Cut back on etc. so the top few get more ...
Solutions
Citizens For Tax Justice has a report on this problem, Congress Should End "Deferral" Rather than Adopt a "Territorial" Tax System, and they offer a simple solution: tax it.
Some corporate leaders are pushing Congress to adopt a "territorial" tax system, which would exempt the offshore profits of U.S. corporations. Congress should move in the opposite direction and adopt a "pure worldwide" tax system, which taxes all profits of U.S. corporations the same while providing a credit to avoid double-taxation.
Believe Them
The other day I had a conversation with Bill Parks, who has written here about The Buffett Balanced-Trade Idea. He offered a practical modification of this idea. He proposed that we should just believe companies when they file their accounting reports that list where the sales are, then taxing the percentage of their profits according to that ratio of percentage of sales.
Here is how that would work in the tax -avoidance scheme described above. Remember, they are reporting that the tax-haven country pays a low price and the U.S. pays a high price. The result is high profit sales TO the U.S. but not IN the U.S. So fine, sales to the tax-haven country is a low-percentage of their profits, to the US a high percentage so the US then collects the same dollar ratio of taxes.
Tax-avoidance case: 90% of profits are reported to be made by selling from Cayman Islands shell company TO the U.S.
Tax-collection result: Therefore 90% of taxes on profits have to be paid to the U.S.
Putting American companies to work for us is a better solution than giving them a holiday.
Other resources:
Bloomberg: Tax Holiday for $1 Trillion May Lure Back Profits Without Growth
Center for American Progress: Tax Expenditure of the Week: Offshore Tax Deferral
Chuck Collins, Senior scholar, Institute for Policy Studies, Pay Up, Corporate Tax Dodgers
Phineas Baxandall and Nicole Tichon, PIRG & Tax Justice Network USA, In The Public Interest: A (Non)Taxing Issue
Nicholas Shaxson: Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens
US PIRG: Who Slows the Pace of Tax Reforms?
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Posted by Dave Johnson at 7:56 AM | Comments (0) | Link Cosmos
Why Move Jobs From Democracies To Thugocracies?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
"Free trade" treaties like NAFTA have wiped out entire regions of our country and left entire segments of our population without good-paying jobs -- or in so many cases with no jobs at all. And they have had similar results with our trade "partners." We can see that now. So why are we even talking about doing more of these treaties?
Democracy vs Thugocracy
Democracies set up protections for their people. Democracies protect wages, rights, safety, dignity and the environment. The so-called "free trade" agreements we have been getting into allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all.
But these treaties have brought vast wealth to a very few, and maybe that was the point all along. Now with the NAFTA and China trade record clear, the DC/corporate elite and Wall Street/Chamber of Commerce multinationals are pushing new trade treaties with South Korea, Columbia, Oman and Panama. Their goal seems to be to make the rich even richer while making things even worse for the rest of us.
NAFTA - "Case Study In Failure"
Ian Fletcher writing at Huffington Post in, More Free Trade Agreements? When NAFTA Failed?,
How have our past trade agreements worked out? Above all, how's the grand-daddy of them all, NAFTA, doing?Unfortunately, NAFTA is a veritable case study in failure.
How is NAFTA working out for us?
For the four years prior to NAFTA's implementation in 1994, America's annual deficit with Canada averaged a modest $8.1 billion. Twelve years later, it was up to $71 billion.Our trade with Mexico showed a $1.6 billion surplus in 1993 but by 2010, our deficit had reached $61.6 billion.
Fletcher cites the Economic Policy Institute to detail the dramatic loss of jobs we have suffered. But not just jobs, also wages.
NAFTA has eliminated some 766,000 job opportunities--primarily for non-college-educated workers in manufacturing. Contrary to what the American promoters of NAFTA promised U.S. workers, the agreement did not result in an increased trade surplus with Mexico, but the reverse. As manufacturing jobs disappeared, workers were down-scaled to lower-paying, less-secure services jobs. Within manufacturing, the threat of employers to move production to Mexico proved a powerful weapon for undercutting workers' bargaining power.
And how is NAFTA working out for Mexican workers? It turned low-wage workers into even-lower-wage workers.
In reality, the income gap between the United States and Mexico grew (by over 10 percent) in the first decade of the agreement. This doesn't mean America boomed; we didn't. But Mexico slumped terribly.In NAFTA's first decade, the Mexican economy averaged 1.8 percent real growth per capita. By contrast, under the protectionist economic policies of 1948-73, Mexico had averaged 3.2 percent growth.
... Mexican workers can often be hired for less than the taxes on American workers; the average maquiladora wage is $1.82/hr. The maquiladora sector is deliberately isolated from the rest of the Mexican economy and contributes little to it. Workers' rights, wages, and benefits are deliberately suppressed. Environmental laws are frequently just ignored.
Mexican agriculture hasn't benefited either: NAFTA turned Mexico from a food exporter to a food importer overnight and over a million farm jobs were wiped out by cheap American food exports, massively subsidized by our various farm programs.
[. . .] Between 1990 and 1999, Mexican manufacturing wages fell 21 percent.
How have our other free-trade agreements worked out? Fletcher again, (please go read his entire post, and take a look at his book, Free Trade Doesn't Work: What Should Replace it and Why, as well)
FTA is not America's only free trade agreement, of course. But our other agreements tell similar tales. We have signed 11 since 2000: with Australia, Bahrain, Chile, Colombia, Jordan, Korea, Oman, Morocco, Singapore, Panama, and Peru. (El Salvador, Nicaragua, Honduras, Guatemala, and the Dominican Republic were lumped together in the Central America Free Trade Agreement or CAFTA.) Every agreement but one has coincided with greater American deficits.
Not such a great record. Let's not do more of this.
A Better Way
Trade doesn't have to be used to pit people against each other. It can be used to lift each other up. We can instead negotiate treaties to demand that the thugocracies offer better wages and protections, or they can't sell to us. Or if they do sell to us as add a tariff that undoes any advantage they get from mistreating their people, and use the money to strengthen our infrastructure and competitiveness in world markets. We can use trade to lift the world for the benefit of all instead of to exploit the world for the benefit of a few.
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Posted by Dave Johnson at 7:53 AM | Comments (0) | Link Cosmos
March 18, 2011
Cutting Government Creates Jobs Like Cutting Taxes Increases Revenue
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
A "report" from Republican staff of the Joint Economic Committee says that the path to job creation is cutting ... the very things that create jobs. This is like saying that cutting taxes increases revenue. We know how that worked out, and the job-consequences of budget cuts are going to be just as disastrous.
Sometimes you can cut through ideology by looking at what actually happens in the real world. Reagan cut taxes: huge deficits resulted. Clinton raised taxes, the deficits went away. Bush cut taxes, we went back to huge deficits. And you can see the same thing when you look at government spending and jobs. England and Greece are trying austerity, and their economies are sinking as a result. In 1937 the United States learned this lesson, succumbing to deficit cutting which choked off the recovery from the depression. On the other hand, the "stimulus" boosted the economy, held off a depression and created millions of jobs -- but not enough jobs to overcome the Bush years. Here is the chart -- note the obvious effect of the stimulus and of the end of the stimulus on the jobs picture:
Cut Cut Cut To Grow Grow Grow?
Republicans say that cut cut cut leads to grow grow grow. Their prescription is to cut taxes to "reduce uncertainty" which they say will result in job creation. Never mind that Clinton raised taxes and then the economy boomed. Then Bush cut taxes and then gave us the worst job-creation record in decades, even before the recession started! From The Hill, GOP study backs 'cut and grow' but says new jobs could take time,
House Republican leaders on Tuesday released a study that they said shows their "cut and grow" strategy will boost the economy.The study argues that reducing uncertainty about future taxes will increase household spending and business investment, spurring growth and hiring.
House Majority Leader Eric Cantor (R-Va.) said the report shows "less government spending means more private sector jobs."
Just how will "certainty" about tax cuts create jobs?
The study argues that “non-Keynesian effects” result from government budget cuts. It says households expecting future taxes to pay for government spending will purchase more homes and durable consumer goods once uncertainty about future taxes is erased.
Right, knowing that taxes will be lower, people will go out an "purchase more homes." The people funding the Republicans will just go buy an 8th house with their tax savings. And maybe a Maybach or two. Plutonomy in action!
No Path To Jobs
Laying off teachers and firefighters is not the path to jobs. Cutting government cuts the very things that nurture the soil in which business can thrive. We need a modern infrastructure to compete in world markets, but they are cutting back on infrastructure spending. We need a well-educated population to grow the economy, but they are cutting back on education.
Cutting is clearly not the path to more people having better-paying jobs: Congress takes aim at jobs program,
Becky Thompson of Sioux Falls turns 72 next month, and she is quietly grateful that she has a job working in the computer lab at Experience Works, an agency that helps older workers find employment.. . . But now she and other older workers are worried that all this - the training, the support, the camaraderie - will disappear in the next round of budget cuts.
That's because more than 60 percent of Experience Works' budget comes from the Senior Community Service Employment Program, the only federally funded job training program for low-income seniors - and one of many programs targeted for reduction in the Republican spending bill that passed the House last month.
Economists, Analysts, Everyone Says Budget Cuts Will Kill Growth
Isaiah Poole summed it up in, More Than 300 Economists Repudiate Right-Wing "So Be It" Economics,
Today the Economic Policy Institute and the Center for American Progress jointly released a statement signed by nearly 320 economists from around the country, including Nobel Prize winners Kenneth Arrow and Eric Maskin, former Vice Chairman of the Board of Governors of the Federal Reserve System Alan Blinder, and former Chair of the President's Council of Economic Advisers and Director of the National Economic Council Laura Tyson.That comes a day after Mark Zandi of Moody's Analytics released a report that estimated the House budget cuts would result in a loss of 700,000 jobs by 2012. That finding evoked a "so what?" from House Majority Leader Eric Cantor that was remarkably in line with the dismissive "so be it" comment that House Speaker John Boehner made earlier in February in response to concerns that budget cuts would result in job losses.
If people had good jobs that paid well the deficit would be a heck of a lot lower than it is. People would be paying taxes instead of collecting unemployment. Cutting the things that create jobs is certainly not a path to creating jobs. England is learning this, our Congress is not.
No Job Creation Programs At All
Republicans have held the Congress for months but have not introduced a single job-creation program. In GOP Bait And Switch On Jobs, Anne Thompson lays it out,
,
The House Republicans have developed a track record of bait and switch when it comes to their approach to job creation. Last week, House Republican leadership released a PowerPoint by Congressman Paul Ryan that they are using to educate the Republican Caucus on their top policy priorities. Ryan laid out the “Jobs Deficit” as the number one challenge facing America in his very first slide. Yet he failed to focus on jobs until the very last slide, which reads: “Keep taxes low; spur job creation and growth.” Not quite the robust plan we need to put millions of Americans back to work.
Is There At Least A Secret Plan?
Is appears -- and this kook "study" confirms -- there is no real plan for jobs. But is there at least a secret plan in operation?
Secret plan? When they said that cutting taxes increases revenue they knew it wouldn't -- they had a hidden agenda. They knew better than to actually believe that cutting taxes would actually increase revenue to fund the government. They said so. The resulting deficits were the agenda. The plan was to "cut their allowance" and "starve the beast" to create a debt crisis, then demand that government cut back the things it does to protect and empower We, the People.
What is the agenda behind this job-destruction agenda? If there is a secret agenda behind destroying so many American jobs -- and the ability to create new jobs that pay well -- then what is it? They can't be crazy enough to destroy the economy just to increase their 2012 electoral odds, can they? On the other hand, no one has ever finished the sentence, "Republicans aren't crazy enough to ..." without being proven wrong.
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Posted by Dave Johnson at 7:25 AM | Comments (0) | Link Cosmos
March 15, 2011
What "Free Trade" Has Cost The World
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
If you take a job away from someone who is paid a reasonable wage because they enjoy the protections and prosperity of democratic government, move it across a border, and give it to someone living under a thugocracy, forced to work for pennies with no protections whatsoever, it should be just plain obvious that the worker on our side of the border and the worker on the other side of the border are not going to be better off. And when you do this on a massive scale it just stands to reason that most people on both sides of the border are going to be worse off.
But propaganda being what it is we were somehow convinced to try a worldwide experiment in taking good jobs from democracies and turning them into bad jobs in thugocracies. Now, of course, the experiment has run its course and we can see the results.
Worker Against Worker
Setting worker against worker enabled a few people to get really, really really wealthy and powerful and use that wealth to become even more wealthy and powerful. Our country is in decline, burdened by massive trade deficits because the ones with vested interests in cheap labor won't let us won't take on the mercantilists, burdened by budget deficits because those vested interests have bought low taxes and government subsidies, our infrastructure crumbles because multinational business leaders refuse to invest here, with no more need of us as workers, and the resulting hollowed-out middle class can't consume anymore. Other countries also suffer from similar stresses.
Out of this situation a new global elite has emerged, contemptuous of democracy and government and any power but the power of their own money. In country after country, these top few won't share the proceeds with their own, either, while they keep the world from approaching solutions.
In January's post, Establishment Realizing: When You Close The Factory We Can’t Make A Living, I wrote about how "the establishment," or as bloggers call it, "The Village" or "Versailles," are starting to realize that our trade policies just might not be working for us. Of course, they come to this realization only after our trade deficits approach the trillion mark, after we have lost millions of manufacturing jobs, after we have closed tens of thousands of factories, after we have lost the tech manufacturing industry, and after we have abandoned hopes of leading in green manufacturing as well...
(We're still waiting for them to realize that tax cuts do not increase revenue, that spending more on military than all other countries combined might contribute to deficits, that our too-big-to-fail financial sector is capable of causing problems, that the climate really is changing, that allowing corporations to pump money into politics means the end of democracy... but hey, a dollar spent by a vested interest on a politician apparently is a dollar very, very well spent.)
In the Washington Post, Steven Pearlstein recently reviewed Dani Rodrik’s “The Globalization Paradox,”
It is dogma among economists and right-thinking members of the political and business elite that globalization is good and more of it is even better. That is why they invariably view anyone who dissents from this orthodoxy as either ignorant of the logic of comparative advantage or selfishly protectionist.But what if it turns out that globalization is more of a boon to the members of the global elite than it is to the average Jose?
Right, what if?
In “The Globalization Paradox,” Dani Rodrik demonstrates that those questions are more than hypothetical — that they describe the world as it really is rather than as it exists in economic theory or in the imagination of free trade fundamentalists.. . . The starting point of Rodrik’s argument is that open markets succeed only when embedded within social, legal and political institutions that provide them legitimacy by ensuring that the benefits of capitalism are broadly shared.
And a unicorn. And a rainbow.
The paradox, as Rodrik sees it, is that globalization will work for everyone only if all countries abide by the same set of rules, hammered out and enforced by some form of technocratic global government. The reality is, however, that most countries are unwilling to give up their sovereignty, their distinctive institutions and their freedom to manage their economies in their own best interests. Not China. Not India. Not the members of the European Union, as they are now discovering. Not even the United States.In the real world, argues Rodrik, there is a fundamental incompatibility between hyper-globalization on the one hand, and democracy and national sovereignty on the other.
Clyde Prestowitz threw a one-two punch at free trade after Senator John McCain claimed that the iPhone and iPad are Made in America. In Why isn't the iPhone made in America? at Foreign Policy magazine, Prestowitz wrote,
John McCain provided some good laughs and made himself look stupid on a recent ABC news interview by telling Diane Sawyer that the iPhone and iPad are great examples of products that are made in America.They're not. And given the amount of high technology production in his state, McCain should certainly have known better. The fact that he didn't does make you wonder about what, if anything, they know in the U.S. Senate.
Prestowitz goes on to explain that while the iPhone is manufactured in China, parts, software, design and other components are made all around the world, not necessarily for low wages. He concludes,
So if America actually did produce the stuff it says it is good at producing, it wouldn't have a trade deficit with Asia for which China is the proxy at all. It would have a trade surplus and 20-40,000 more jobs than it has.
Prestowitz looks at a smaller picture here of the back-and-forth of trade with the US and China. Design, software and other capital and technology intensive components are not made in China. But the bulk of the jobs are in China. This could work for everyone if people there were paid enough -- and allowed by their government -- to buy things made here. That would be trade and everyone would be better off. But trade isn't really the point of "free trade."
Then, in It's not just the iPhone that America doesn't make, Prestowitz conitinues,
Okay, so yesterday I explained not only that John McCain was wrong to say the iPhone is made in America (as you already knew), but also that most of you were wrong to think it is made in China. I went on to show that the phone is only assembled in China from high-tech parts that are mostly made in Japan, South Korea, and Taiwan. I further explained that production of these parts is not labor intensive, but capital and technology intensive.In other words, these parts are just the kinds of products American economists, Silicon Valley venture capitalists and entrepreneurs, and Washington political leaders always say America is the best in the world at making. ... Then I left you with the question of why, if America is so good at making this stuff, it doesn't.
[. . .] it was believed that unilateral free trade (keeping one's markets open, even in the face of protectionism by one's trading partners) was a winning proposition. Thus, there was no need to be concerned about things like subsidization of key foreign industries or loss of capability in these fields, and hence no need for trade measures that might upset delicate geopolitical relationships.
This economic doctrine has been based upon the assumption of Anglo/American economics that economies of scale either don't exist in most traded products and industries or are relatively unimportant. That this assumption is dramatically and demonstrably wrong and not accepted by most of the non-Anglo world has not deterred its application to the making of much American and global trade policy.
In other words, it doesn't work. But we already knew that. We can see it all around us. And it is us who have to live with the results.
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Posted by Dave Johnson at 10:52 AM | Comments (0) | Link Cosmos
February 16, 2011
It's A Really Bad Time to Be Middle Class
It’s a really bad time to even be middle class in this country, and forget about being poor. The only way to be protected is to be very wealthy: then you are guaranteed that your house is safe, your medical care is covered, and your children will have a future. It’s that bad, and not one bit of this is subtle.
There is a class war underway in this country. The rich, or those that represent their interests, and corporations want control. Dave Johnson, blogger for the Campaign for America’s Future, nailed it when he wrote that: “This budget fight is about a stark choice: jobs and growth for We, the People, or going down the road of plutocracy -- rule by the super-rich and big corporations -- with little or nothing left over for the rest of us.”
This is the power grab of our generation playing out in Obama’s budget. It reflects true entitlement for the super wealthy. The government revitalization of the “too big to fail” banks was only the tipping point. Of course, the bankers deserved their bonuses. Remember that you heard it here. The battleground is not about the so-called entitlement programs espoused by the Democrats. Social Security, and other such programs are not the culprits; they are the scapegoat for the real agenda.
Obama is being forced to rip open the social fabric of this country to reduce the Bush generated debts. In the President’s proposed budget, most social programs will be ravaged left and right (no pun intended). Yes admittedly, this budget is a massive jobs creation machine. But watch out – don’t get sick folks or have an on-the-job accident because there will little if any safety net. Certainly, we all know about health care reform, yet if Speaker Boehner and his boys have their way -- that too will be reduced to a hill of beans and severely compromised. The fight for survival of the middle class and the poor has been ratcheted up a notch. Strap in folks, this is class warfare.
Note, this will also appear in the Huffington Post.
Posted by Michelle at 12:07 PM | Comments (0) | Link Cosmos
February 14, 2011
China Trade Gap Breaks Record, Destroys Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Did you see the Chrysler Super Bowl ad? Advertisers understand that Americans are hungry to be able to buy American-made goods again. And economists understand that the only way to truly recover from the economic doldrums is to expand our manufacturing base.
Compare that with today's news: US trade deficit widened by 33% in 2010, and especially: Record 2010 trade deficit with China,
The 2010 annual trade figures for the U.S. were released today. They show a $497 billion trade deficit in goods and services, including a new record $273 billion goods deficit with China.
Instead of getting the message and seeing the warning it's back to the same old same old as fast as we can.
Scott Paul, of Alliance for American Manufacturing, has this to say about that:
"A record trade deficit with China does not put us on a path to win the future. It will be hard to get our unemployment rate down if our trade deficit keeps going up. And while I am all in favor of doubling exports, it is a meaningless benchmark unless we also bring down our trade deficit. Instead, our global trade deficit is growing at an alarming and unsustainable rate.
"China now accounts for 75% of our overall non-petroleum goods deficit, yet I have seen little attention paid to it from this Administration, and even less from the new majority in the House of Representatives.
Washington talks about this but doesn't seem to be able to actually do anything about it. Last week: Treasury gives China a pass on currency manipulation.
The AFL-CIO blog says it plainly and clearly: Stopping Currency Manipulation Would Create U.S. Jobs,
Economists from across the spectrum agree that currency manipulation distorts trade and exacerbates our unsustainable trade deficits. Putting an end to currency manipulation is an issue that unites business and labor, farmers and ranchers and Republicans and Democrats. Action by our government to put an end to this destructive illegal activity is long overdue.
Once again, some in the Congress will try to do something about this: US lawmakers try again for China yuan bill,
A bipartisan group of 101 U.S. lawmakers in the House of Representatives launched a new bid on Thursday to pass legislation aimed at pressuring China to let its yuan currency rise in value.The same proposals cleared the House last year but died in the Senate. If approved this time, they would clear the way for the Commerce Department to treat currencies deemed to be undervalued as an illegal subsidy under U.S. trade law.
That would allow companies, on a case-by-case basis, to seek higher countervailing duties against imports from China that compete with U.S. production.
U.S. congressional anger at China over what lawmakers see as deliberate undervaluation of the yuan, also called the renminbi, was fanned anew last Friday by a Treasury Department decision not to declare China a currency manipulator.
Here is the Chrysler ad:
"This is the Motor City and this is what we do." "A know-how that runs generations deep in every last one of us."
OK I am from the Detroit area, and even worked at Ford for a while. My grandfather worked in the first GM offices in Flint. This ad made me tear up. Seriously. And I know that people all over Michigan feel that way. It's a stupid, manipulative commercial, but it taps into something that is very deep. People are saying, "finally corporate America (the America that counts) is talking about us instead of them."
Here is Toyota, trying to say the same thing:
People are hungry for a change. Washington needs to hear that.
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Free. $15 with lunch. Register here.
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Posted by Dave Johnson at 8:18 AM | Comments (1) | Link Cosmos
January 25, 2011
State Of The Union—Infrastructure And Jobs: Two Problems, One Solution
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Tonight, when President Obama gives his State of the Union address, he will be facing a nation that has millions of infrastructure jobs that need doing and millions of people out of work.
The President is planning to address these two problems with a proposal to modernize our infrastructure to bring our economy back to world-class competitiveness. Two problems, one solution. And, for good measure, we are hearing that he plans to throw in investment in education.
Last weekend, President Obama gave a preview of his State of the Union speech to Organizing For America:
A New Course
The idea of investing in our people is a new course after 30-plus years of cutbacks and lowered expectations. Since the Reagan tax cuts for the rich we have been told that there just isn't the money for government to involve itself in big projects, that we are on our own, government won't be there for us. So people fear that our economy in a long-term decline. All around us we see crumbling infrastructure, people out of work, people who work but had their pay cut or have not seen a raise in a long time.
A new course turns us away from the conservative on-our-own model and sees us as a nation again, concerned about protecting and empowering and investing in our people.
Investing in Our People -- Dividends For Decades
Investing in our people is an idea that got lost sometime back during the Reagan Revolution, and now this lack of investment has come home to roost. As a result of tax cuts and cutbacks we have fallen behind China and Germany and many others. The first-class competitiveness that we used to take for granted has fallen behind too much of the world. Fallen behind, fallen behind — we hear this again and again.
Investing in our people will pay dividends for decades. Investing in modernizing our infrastructure will pay for itself by restoring competitiveness.
Infrastructure work—the rail, bridges, roads, schools, courts, power systems and everything else that makes our way of life better and makes our economy stronger by providing the soil in which business thrives—needs to be maintained and modernized. We have fallen behind and have to do it anyway one of these days. Modernizing our infrastructure will put millions back to work and help our businesses in the world.
More To Do
But modernizing our infrastructure is just catching up. We need to go beyond that. Investment is great but is not enough. It is not just our fallen-behind infrastructure that is hampering competitiveness. There are other things that have to change. Our trade policies are also holding us back. We need to develop and follow a national economic/industrial strategy. We have to take on mercantilist nations, and move toward more balanced trade that actually trades rather than big-corporate schemes to pit workers against each other to destroy unions and drive down wages. We need to make China bring its currency up to market rates. We need to renegotiate all the NAFTA-style anti-worker "free trade" scams.
When you close the factory we can't make a living! Will we take the steps necessary to revive American manufacturing, and revive American wages? To lift the economy, lift wages. If we can bring back good jobs with good benefits and start to rebuild our middle class, we can start to have a good standard of living again, for all of us, not just a wealthy few.
Here are Scott Paul and Richard Florida discussing manufacturing and innovation on the Dylan Ratigan show today:
Conservative Austerity -- The Wrong Approach
On the other side of the aisle there are calls to cut back, to reduce investment in our people, to reduce education, to send even more to the wealthy few. This austerity is premature and unjust. It is just weeks since another round of huge tax cuts for the rich, and now they are arguing for slashing programs vital to the survival of the middle class and poor. The way to get out of the debt is to invest and grow out of the debt!
The President is taking us in the right direction tonight, and should be thanked and congratulated.
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Posted by Dave Johnson at 3:46 PM | Comments (0) | Link Cosmos
January 20, 2011
When You Close The Factory We Can’t Make A Living
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
In a signal of change in elite attitudes, Steven Pearlstein wrote a Washington Post op-ed, Chinese follow same old script (and they get the punch line), describing the cost-to-us of the business-as-usual game we have been playing with China. Pearlstein has seen the light: China has an industrial policy and it is working for them as a nation. We do not. We have a lassez-faire ideology that enables a few at the top of "Multinational Corp." to get really rich moving manufacturing infrastructure to China, leaving the rest of us with no way to make a living. Next week President Obama can announce that he is changing that.
"Enough!"
Pearlstein writes about China’s bullying mercantilism, how it benefits China, the cost to us, and says “Enough!” He makes a startling suggestion to address the problem: do unto them as they are doing unto us. He writes,
“The right response to these challenges would be for the president this week to laud China for the success of its economic policies and announce that the administration will begin forthwith to apply each and every one of them to Chinese exports into the United States. Subsidies and directed credit for local companies, buy-American provisions for government agencies and government contractors, currency manipulation, the rules on "conditional market access" and "indigenous innovation" - surely China could hardly complain if we were to pay them the highest compliment by embracing their economic model.”
Read that paragraph again.
Pearlstein goes on to describe how a national industrial policy brings advantages to China, while our everyone-in-it-for-themselves ideology hampers us,
“…China can strike deals that may provide short-term profits to one company and its shareholders but in the long run undermine the competitiveness of [our] economy. What's good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers."
The Establishment
This column is significant because Pearlstein is part of what you might call "the establishment," a DC opinion leader, not part of the labor movement or a social-justice non-profit or, worse yet, an advocate for the unemployed. But here he is joining with us on the “far left” to say that we can't keep going down this road -- that it is time to see ourselves as a country of people who are in this together, with common interests. He actually makes the far-left argument that, “What's good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers.”
Will he keep his job? Or will others join him and begin to see that this is all of a piece. Our trade deficit is part and parcel of our budget deficit and our terrible unemployment problem and our bank bailouts and our deteriorating infrastructure and our deregulation and our tax-cuts-for-the-rich and our on-your-own ideology and our corporate-financed elections and our slow economic growth.
Evergreen Solar
To illustrate the difference a national industrial policy makes Pearlstein uses the instructive example of Evergreen Solar, a solar panel manufacturer that made waves this month announcing it is closing down its US manufacturing and moving it to China. Solar panel prices are plunging because of Chinese-subsidized manufacturing, and "Evergreen can still make money in China because of the lower costs and considerable government subsidies offered by the government there." But not here.
The NY Times covered the Evergreen Solar story last week, in Solar Panel Maker Moves Work to China. These snippets tall the story,
... But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.. . . Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.
. . . In addition to solar energy, China just passed the United States as the world’s largest builder and installer of wind turbines.
The article includes a reminder that we are, after all, talking about China,
… Evergreen’s joint-venture factory in Wuhan occupies a long, warehouselike concrete building in an industrial park located in an inauspicious neighborhood. A local employee said the municipal police had used the site for mass executions into the 1980s.
Business As Usual
China cheats. We don't stop them. They manipulate currency. They restrict imports. They subsidize exports. They subsidize companies. They steal intellectual property. They coerce companies to give up proprietary technology. They do what it takes to win key strategic industries, regardless of treaties and laws. And why should they if we won't stand up to this cheating and stop them? They watch out for themselves, and we do not.
Yesterday, describing China's currency manipulation as part of an industrial policy, I wrote that China looks at the overall, longer-term picture, seeing themselves as a country of people with a common interest. We do not. They understand that attracting industries to China is good for China and its people in the long term. We do not.
We follow a corporate/conservative greed-is-good ideology that says that the interests of individual companies and a few wealthy people are the interests of the country-at-large, and if companies can make larger profits in the short term and a few people can get wealthy closing factories and moving them to China that's just fine, even if it means a loss of jobs and of the country's overall ability to make a living in the long term. This just doesn't work for us as a nation. Or, as Pearlstein put it, "What's good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers."
Obama's State Of The Union Opportunity
Next week the President delivers his State Of The Union speech. This is an opportunity to announce a new direction. He can lead us in a transition back to a nation that sees itself in this together as a people watching out and taking care of each other. He can reject the conservative vision of each of us on our own, following a greed-is-good ideology that enriches a few but just doesn't work for We, the People. He can announce the formation of a bold national industrial/economic policy where we again lead the world toward greater prosperity. And he can announce that we are going to, as Pearlstein writes, "pay [China] the highest compliment by embracing their economic model" -- meaning do unto China as China is doing unto us. Enough!
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Posted by Dave Johnson at 8:19 AM | Comments (0) | Link Cosmos
January 3, 2011
America Needs An Industrial Policy
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Over the weekend Daily Kos ran a front-page story, America needs an industrial policy, making the point that Germany is doing well because their government understands that a national policy of promoting manufacturing drives the economy and jobs.
There is a simple reason why Germany manufactures so many high-end goods, from the best watches to the finest grand pianos, all the way up to Porsches and highly complicated precision instruments: it is the policy of the German government.Well, it isn't exactly a policy. It is more of a framework. Germany's method of creating wealth is straightforward: 1. Produce a highly educated workforce. 2. Have that workforce create and make advanced, precision things for high wages. 3. Export the things at a high price and then re-invest that money back into item 1. This is why Germany is the Number 2 exporter in the world despite having only 27 percent of America's population and only 6 percent of Number 1 exporter China. The Germans realize they cannot beat either China or India based on cost. Advanced nations can't compete on cost. America could bust all the unions, get rid of the minimum wage, eliminate all social benefits and taxation and we would still lose jobs to low-wage nations. Germany decided to avoid going down the same path of downward spiral among its middle class that we are in. Instead, they invest in their people and in research.
Investing In People And Research Pays Off
As the Daily Kos story points out, Germany invests in their people and research. "America could bust all the unions, get rid of the minimum wage, eliminate all social benefits and taxation and we would still lose jobs to low-wage nations." And the results are there for all to see. Germany is recovering faster from the economic downturn with jobs returning. Manufacturing and exports lead the way.
Over the last 30 years, and the last 10 years in particular, America has conducted an experiment in letting "the markets" decide. Markets are a one-dollar-one-vote system, and of course those with the most dollars to begin with ended up deciding that they should be the primary beneficiaries from this experiment. Namely, them. Wall Street's share of profits jumped from around 16% to around 40% of all profits in the economy.
The "markets" experiment has failed for the rest of us. It is time for We, the People to realize that our government is us, and we need it to make decisions for us. Markets mean one-dollar-one-vote. When dollars decide those with the most dollars will decide to do things that benefit them. Democracy means one-person-one-vote, and that means making decisions that benefit We, the People. Our government - We, the People - must start deciding things that work for We, the People and not those who already have the most of everything. That means developing an industrial policy that invests in We, the People to pull us out of the mess that one-dollar-one-vote has put us in.
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Posted by Dave Johnson at 4:59 PM | Comments (0) | Link Cosmos
December 20, 2010
Investing
Everyone should read Terrance Heath's post An Investment Agenda for America | OurFuture.org,
"By failing to invest in direct job creation, our leaders are taking a 'do nothing' approach to shaping the new economy. Doing nothing — and yes, tax cuts amount to doing nothing, given their track record — will yield an economy in which the 'new normal' is a permanently lower standard of living for millions of Americans ... An infrastructure bank may be an idea whose time is has come ... Where an infrastructure bank leaves off, investment in preserving and creating local jobs can make a difference for millions of Americans ... An investment agenda for America must include incentives for corporations to invest again in an America that has been a long-term investor in their success — perhaps even asking them to be American corporations again ... President Obama recently hinted that reforming the tax code may next on his agenda. He would do well to consider that the tax code currently favors wealth over work."
Posted by Dave Johnson at 7:42 AM | Comments (0) | Link Cosmos
December 15, 2010
Germany's Economy Shows Government "Interference" Works
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Can we compete with China's wages? Does government interference and regulation hold us back? Are our unions keeping us from being competitive? Do we need to lower our standard of living in a race to the bottom? You might be surprised to learn that Germany pays higher wages, has strong unions, has much more government involvement and is doing better as a result. Conclusion: our wages, unions and government are not the problem, they are the solution.
In July I wrote about something Harold Meyerson wrote about Germany and China and manufacturing and recession.
Germany is NOT a low-wage country. But they weathered the recession. They value manufacturing and have national policies to bolster their manufacturers.
Today I want to write about something Harold Meyerson wrote about Germany and manufacturing and the recession. In Save the economy by keeping jobs at home, Meyerson writes,
Hourly manufacturing compensation (wages plus benefits) was $48 in Germany in 2008 - the most recent year surveyed by the Bureau of Labor Statistics - while it was $32 in the United States. Yet Germany is an export giant, while we are the colossus of imports.
Please go read Meyerson's entire piece.
In Germany, workers also get six weeks vacation - by law, federally mandated, a right. They get health care, university, child care and pensions and as a result they have higher productivity. In Germany, the government requires worker representatives to hold seats on the boards of directors of companies, depending on the number of workers. Government-funded research and vocational training, and policies to retain skilled workers bring another competitive advantage. Germany values manufacturing and the government has an industrial policy. The government is currently helping promote green manufacturing, for example.
The result of all this government interference is that Germany's export-oriented manufacturing economy recovered from the recession and is doing OK, and their workers are paid well and have great benefits.
Socialism?
Our government is supposed to be of, by and for the people. But today in the U.S. it is considered "socialistic" to talk about these things because it violates the dominant conservative "free market" ideology that is designed to enrich a few at the expense of the rest of us. If we try to talk about a national industrial/economic policy, it is derided with such slogans as "government interference" or "picking winners and losers." If the discussion is allowed it very quickly will move to the dominance of fossil fuels and the other industries that are holding us back but have a lock on influence over the government. If we talk about taking the burden of health care off of the people and businesses, the giant insurance companies beat it back, calling it "socialized medicine," to keep us from doing something about how their profits are draining the rest of the economy. And imagine the furor that would result if anyone even suggested mandating worker representatives on boards of directors so the companies take the interests of workers and communities into account!
Our adherence to conservative free-market ideology is clearly holding our country back. The ideology is designed to transfer wealth from the public to a very few, and hold the lead of the already-dominant. This is killing market innovation and it is destroying our competitiveness and standard of living. We should be looking at what works for the country instead of what keeps the few at the top at the top.
Just Who Is Interfering With Our System?
We need to develop a national economic/industrial policy to help us with our competitive position relative to the rest of the world. We need Medicare-For-All to lower the burden on our people and companies. We need to reorient our labor policies to bring better wages and benefits to our people. We need to restore a level playing field on which innovative smaller companies can complete with the giants—who are interfering with the system while complaining that the attempts by We, the People to stop them are interfering with our system.
Later we can talk about whether China's government interferes with its businesses, and how their economic growth is doing compared to ours.
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Posted by Dave Johnson at 5:27 PM | Comments (0) | Link Cosmos
December 3, 2010
9.8%: The Number That The Deficit Commission Left Out
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
9.8%! It’s still all about jobs. It's still an emergency. And the DC elite still don’t get it -- or don't care. They give us a "deficit commission" not a jobs commission. They've got it nice while the rest of us have it not-so-nice. Maybe we should move the Congress out of DC so they can see for themselves what is happening to America.
If you visit DC (and don’t go to the “wrong” areas) you see nice buildings, nice stores, nice houses, nice hotels, nice trains, nice cars and lots and lots of nice and very expensive restaurants. You see lots of nice nicely-dressed people walking in a hurry to their nice jobs. Lots of nice jobs. Nice, very expensive houses. Nice cars. Nice life. Nice fantasy.
But if you leave DC you see something very, very different. Congress clearly doesn't see what the rest of us see. If they did, how could they possibly do the things they are doing? There is an absolute emergency going on in the country and Congress refuses to even see it. With 9.8% of us jobless -- that is the official rate, not counting the people who have given up or are "under"employed or took pay cuts or whatever -- Congress is debating tax cuts for the rich and cutting back on programs for the rest of us.
Congress actually did act on jobs last week: with unemployment near 10% they killed unemployment benefits for people out of work more than 26 weeks!
What You See Outside Of DC
This fall I spent some time driving around Michigan, Ohio, Pennsylvania and West Virginia. I was covering some of the events on the Keep It Made In America Tour. I am from Silicon Valley, and it's still pretty nice right here, so the extent and breadth of the decline of our cities and towns was somewhat of a surprise to me. Of course I know what is going on, but when you actually come from somewhere that is still pretty nice and see it firsthand - and everywhere - the abrupt transition makes its point.
Here is what you see in town after town. As you approach the town the first thing you encounter is the vulture circle that surrounds it. This is the circle of Wall Street-owned chains emulating the Wal-Mart model of sucking cash out of the area, and sending it to the wealthy elites who own ... almost everything now. Nice stores near highway exits. National chains, all the same...
Next is the circle of home equity extraction, the newer houses with the big first and second Wall Street mortgages. These houses mostly look OK -- except the foreclosures with the brown lawns and grass growing in the cracks in the driveway. This area has the car dealers and strip malls that used to sell the nice cars or nice goods that feasted on those "take money out of your house" refinancings or second mortgages. Now they have nail and hair salons or are just "for lease."
Then you get to the areas of older houses, more of them boarded up than you want to see, boarded up stores on a few of the corners of the larger streets. Lots of the still-occupied houses have bars on the windows.
Then you get to the old, crumbling downtown where there are many empty storefronts, some boarded, a few government buildings here and there.
And somewhere is "the old plant." One or more closed-up, fenced-off, rusting old factories or mills with broken windows, maybe part of it falling down, where the people used to work, the jobs moved to Mexico or China.
Much of the country is like this now. So many of the older small towns, crumbling, the money sucked out by the Wall Street elite. The factories sold off, closed. The people can't make a living, the towns can't make a living, the country can't make a living, the Wall Street elite making a killing.
As I said, I am from Silicon Valley, and it's still pretty nice here, but you can see it starting here, too. One of every four or five office or light-industrial buildings has an "Available" sign. The region has the same number of manufacturing jobs as it had when the "tech revolution" began - the rest moved to China. Even exclusive Palo Alto has empty storefronts on the main drag. It is even happening here. It will get worse.
But it is not happening yet in the parts of New York and DC where the well-to-do elite spend their time. So they don't see or feel or care what is happening to the country. And these plutocrats control all of the levers of power, making it impossible for the rest of us to participate in the system to fix the situation. Which means that people are starting to talk about moving outside of the system. Tea Party, for example. Militias, for example. Nonvoting, for example.
Deficit Commission Instead of Jobs Commission?
The priorities of the plutocratic DC elite do not reflect America's problems. DC gives us a deficit commission instead of a jobs commission. Their deficit commission proposes to cut the lifeline of retirement. There is nothing about investing in our crumbling infrastructure or education or the new green industries that move us away from the oil/coal economy that is draining us and threatening our climate and coastlines. There is nothing about an economic/industrial policy to restore our competitiveness in the world economy.
Perhaps moving the Congress would help, so they can see the gap that has formed between the DC elite and the rest of us. I suggest Lorain, Ohio. Then after a month, Wheeling, West Virginia. Month after that, Canton, Ohio. Next, Erie, Pennsylvania. Then move it permanently to Flint, Michigan.
And, of course, the chart that no one in DC is able to understand:
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Posted by Dave Johnson at 5:08 PM | Comments (0) | Link Cosmos
November 23, 2010
Does It Matter What The Public Wants Or Needs?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Does it even matter what the public wants anymore?
I guess that's a rhetorical question these days because more and more obviously the answer is no. It matters what the plutocrats want, and they know how to get what they want. Public opinion is "engineered" or at least "managed." When it can't be managed it is ignored and the effort shifts to our elected officials, who are led to believe the public wants what the plutocrats want using elite opinion leaders, astroturf, front groups or flat out cash.
According to polls (and most of these by overwhelming margins):
Things the public doesn’t want:
Another poll shows support for ending Bush tax cuts for the wealthy. McClatchy:"...51 percent want to extend the tax cuts only for households making less than $250,000 a year, and 45 percent want to extend the tax cuts for all ... Those who want to extend all of the tax cuts, including for the wealthy, include Republicans, tea party supporters, conservatives, Southerners and Westerners, Independents were closely divided, with 49 percent for extending only the 'middle class' tax cuts, and 48 percent for extending all of them."
P.S. Campaign for America's Future and CREDO Action have a petition, Tell Congress: Don't extend the Bush tax cuts for the wealthy. Click the link, and add your voice.
A whopping 82% of respondents in the poll oppose Social Security cuts for the purpose of deficit reduction, while only 15% support cuts. What's particularly telling is the striking uniformity of opinion across the political spectrum: 83% of Democrats, 82% of Republicans, 78% of independents and 74% of Tea Party supporters.
P.S. Campaign for America's Future has a petition, Tell President Obama to Reject Social Security Cuts. Click the link and add your voice.
P.S. Strengthen Social Security is holding a National Call Congress Day on November 30. Click for details.
In a September poll by NBC News and the Wall Street Journal, 53 percent of Americans said so-called free trade agreements have injured the country. Only 17 percent said those trade schemes benefited the United States. Disgust with these deals spans party lines, including Tea Partiers, 61 percent of whom said they’re bad for America.
Things the public wants:
In a poll released Monday, 73 percent of voters say it's too early to cut back benefits for those who are struggling to find work as unemployment rate hovers at 9.6 percent....
Eighty-nine percent of those surveyed agreed with the statement that "America is falling behind" in the global economy and that "we need a clear strategy to make things in America, make our economy competitive, and revive America's middle class."
Significant majorities in the poll also supported new investments in infrastructure through a national infrastructure bank, and a five-year strategy for reviving manufacturing in America
So there are things the public clearly wants and doesn't want. These things are significantly at odds with the things the plutocrats want. If we are still a democracy we will get the things the public wants. If we have completed the transformation to a plutocracy we will get the things the plutocrats want. That's the definition of the terms.
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Posted by Dave Johnson at 2:30 PM | Comments (0) | Link Cosmos
November 17, 2010
"Free Trade" By Any Other Name...
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
"Free trade" by any other name ... is still just a scam to pit workers against each other and evade the protections of democracy.
We, the People fought to build this democracy with its laws and institutions and protections. This fight brought us a middle class with weekends off, good wages, worker protections and some degree of protection of our environment. "Free trade" deals let companies move factories across a border to escape those protections and pit exploited workers with few rights and no means of improving their condition against us and the protections we fought for. This scam enriches a few while putting the rest of us in a race to the bottom.
Americans have come to realize just how much this scam is hurting us. Pollsters have found that the public hates what "free trade" treaties like NAFTA and letting China into the World Trade Organization have done to our economy and our jobs. So business and administration bigwigs are "re-branding" the hated words "free trade" into "rules-based trade." So expect to be hearing less and less about "free trade" and more and more about "rules-based trade." Don't be fooled.
This morning's Progressive Breakfast has the story, (by the way, you can get Progressive Breakfast sent to you every morning. Click the link and sign up at the bottom. It's free.)
Free Trade R.I.P."Corporate leaders bury "free trade" label," The Wall Street Journal: "They declared support for free trade—rebranded 'rules-based trade' after pollsters Peter Hart and Bill McInturff warned that the phrase 'free trade' had become toxic with voters."
As I said, don't be fooled. If trade agreements do not protect the rights that We, the People fought for, and allow companies to evade the protections brought by democracy -- good jobs, good wages, safe and fair working conditions, the right to organize workers, environmental protections and other "costly" things -- then our government has no businesses agreeing to them. We can negotiate treaties that open up trade without shooting ourselves in the foot, and giving up our good jobs and wages, in order to enrich an already-wealthy few.
Here is what has been going on. In a classic "playing the ref" move, the Chamber of Commerce has been pitching the idea that the Obama administration is "anti-business" because they don't give the big, monopolist, multi-national corporations everything they want. "Playing the ref" is a sports term, the idea being that if you complain enough about the calls a referee makes the referee will feel the need to give your team a few breaks in order to appear to be making fair calls.
So the Chamber, by complaining that Obama is "anti-business," is really trying to get Obama to be even more pro-business. (The same strategy is at work when you hear complaints about the "liberal media." After so may years of this accusation by right-wingers, newsroom editors are terrified of appearing to be left-leaning, resulting in so many right-leaning news stories.)
The WSJ story, Obama's Overture to Business Gets Wary Reception From CEOs, shows how well the Chamber is doing at getting the desired results from playing the administration like a fiddle,
A parade of administration officials—including Treasury Secretary Timothy Geithner, National Economic Council head Larry Summers, Education Secretary Arne Duncan and White House economic adviser Austan Goolsbee—sought to reassure about 100 corporate leaders gathered at The Wall Street Journal CEO Council in Washington that they were eager for business leaders' ideas to revive the economy.The administration officials continued, in various ways, the overture to business leaders that President Barack Obama launched himself after the bruising midterm election, in which Democrats criticized U.S. multinationals for failing to hire more Americans. They said business tax rates should be lowered. They declared support for free trade—rebranded "rules-based trade" after pollsters Peter Hart and Bill McInturff warned that the phrase "free trade" had become toxic with voters.
The CEOs, in a vote, said the government's top priority should be to foster global trade and create a more business-friendly environment. But CEOs also said uncertainty about government policy on taxes and regulation remained a barrier to unlocking $2 trillion in capital sitting in the treasuries of U.S. non-financial businesses.
The best part of the story is that even though the administration is going all out to be more and more and more and more and more "business-friendly," the CEO crowd wasn't satisfied at all, and wanted more (and more and more and more).
Let's see if this sounds familiar. A conservative-aligned group complains that the Obama administration isn't being fair to them, is asking for too much, is being too partisan, whatever. The Obama administration responds by giving them more of what they want. The conservative-aligned group complains that it isn't enough. The Obama administration gives more, saying, "No, you're wrong about me!" The complaints continue, even increase, and eventually the conservatives all blame Obama for the resulting failures of policy.
Hey, they're going to call you names. Get used to it. It's what they do.
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Posted by Dave Johnson at 1:36 PM | Comments (0) | Link Cosmos
November 12, 2010
Businesses Do Not Create Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Businesses do not create jobs. In fact, the way our economy is structured the incentive is for businesses to get rid of as many jobs as they can.
Demand Creates Jobs
A job is created when demand for goods or services is greater than the existing ability to provide them. When there is a demand, people will see the need and fill it. Either someone will start filling the demand alone, or form a new business to fill it or an existing provider of the good or service will add employees as needed. (Actually a job can be created by a business, a government, a non-profit organization or just a person doing the job, depending on the nature of the good or service that is required.)
So a demand creates a job. A person who sees that houses on a block need their lawns mowed might go door to door and say they will mow the lawn for $10. When houses start saying "Yes, I need my lawn mowed" a job has been created!
Demand also creates businesses. The person who is filling demand by mowing lawns for people might after a while have a regular circuit of houses that want their lawns mowed every week, and will buy a truck and a new mower and hire someone to help. A business is born!
Businesses Want To Kill Jobs, Not Create Them
Many people wrongly think that businesses create jobs. They see that a job is usually at a business, so they think that therefore the business "created" the job. This thinking leads to wrongheaded ideas like the current one that giving tax cuts to businesses will create jobs, because the businesses will have more money. But an efficiently-run business will already have the right number of employees. When a business sees that more people are coming in the door (demand) than there are employees to serve them, they hire people to serve the customers. When a business sees that not enough people are coming in the door and employees are sitting around reading the newspaper, they lay people off. Businesses want customers, not tax cuts.
Businesses have more incentives to eliminate jobs than to create them. Businesses in our economy exist to create profits, not jobs. This means the incentive is for a business to create as few jobs as possible at the lowest possible cost. They also constantly strive to reduce the number of people they employ by bringing in machines, outsourcing or finding other ways to reduce the payroll. This is called "cutting costs" which leads to higher profits. The same incentive also pushes the business to pay as little as possible when they do hire. (It also pushes businesses to cut worker safety protections, cut product quality, cut customer service, "externalize" costs by polluting, etc.)
This obviously works against the interests of the larger society, which wants lots of good jobs with good pay. And businesses, while working to cut jobs and pay less, need other businesses to hire lots of people and pay well, because that is what creates the demand that makes all the businesses work.
Government To The Rescue
This is where government comes in. Government is We, the People, working for that larger societal interest. In our current system -- when it works -- we use government to come up with ways to balance the effects of the profit motive -- which pushes for fewer jobs at lower pay -- with our larger need for more jobs at higher pay for us, and for the good of all the businesses. We, through our government, create and regulate the "playing field" on which businesses operate. We set minimum wages, limits on working hours, worker safety rules and other rules designed to keep that balance between profit incentive and demand, and that playing field level. (We also provide the infrastructure of roads, schools, courts, etc. that is what makes our businesses competetive with businesses in other countries. The individual interest in paying less taxes for this has to be balanced with the larger interest that we all pay more for this, but that is another post, titled, "Tax Cuts Are Theft.")
Corrupted
Obviously businesses in our system must be kept from having any ability whatsoever to influence government decision-making in any way, or the system breaks down. When businesses are able to influence government, they will influence government in ways that provide themselves - and only themselves - with more profits, meaning lower costs, meaning fewer jobs at worse pay and not protecting workers, the environment or other businesses. And, they will fight to keep their ability to influence government, using the resulting wealth gains to increase their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government ...
Unfortunately this is the system as it is today.
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Posted by Dave Johnson at 7:29 AM | Comments (1) | Link Cosmos
November 10, 2010
What's Next, Impeachment from the Republicans?
So much for making nice Mr. President, the gloves are off as the Republican leadership comes out swinging. These folks don’t want to work with you, or your minions or any of us. Just tune into FOX News at any random moment, and the disdain is visceral. And to be blunt, what’s to keep them from starting impeachment proceedings as a tactic to erode your precious time and focus? Not much, if you listen closely to the Senate Republican leadership, the soon to be Speaker of the House, and all the other hooligans over the last few days, and even on the Sunday morning talk shows. Senator Mitch McConnell’s words sure don’t sound like a lullaby to me. Do not be fooled, it may be more than making sure that Obama is a one-term President. These are fighting words: “The only way to do all these things is to put someone in the White House who won't veto...”
And if that’s not bad enough, there’s dissent and discontent (as usual) among our fellow Democrats. The so-called Blue Dog Democrats are acting out by attempting to distance themselves from the prevailing incumbent-rage by attacking now Speaker Pelosi. Have they no shame? This is self-serving hypocrisy at its worst. Not now kids. Go back to your corner and sing “Kumbaya” to keep from shooting off your big mouths at this fragile time. Enough of your ranks have been lost in this recent election. Stop with the posturing, and the “Anti-Pelosi Caucus.” These types of shenanigans only fuel the fires, and distract us from our goals. Please realize that we are under an unprecedented assault from the rabid Republican leadership. They will attempt to sink the Obama ship at any cost.
Democrats (Blue Dogs, Moderates, and Progressives) hunker down. Put a stop to the malarkey from the newly anointed Republicans. This “lame duck” session is vital. We have barely two months to protect Social Security for the elders, unwind Don’t Ask Don’t Tell, and fund many, many programs. Consider that the Congress may be deadlocked for two years with very little emerging from gridlock, and Pelosi's steam rolling machine has taken heavy artillery hits. If you feel compelled to beat up on someone or something, go after the bad guys. And pray that all attempts to bring impeachment proceedings against Obama are quashed. This would be a travesty filled with hate and racism from which this country might never recover. Don't let them take our President away.
Note: A version of this article was published earlier today in the Huffington Post.
Posted by Michelle at 8:46 AM | Comments (1) | Link Cosmos
November 5, 2010
Jobs: It's BOLD PLAN Time
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Today's jobs report showed that the economy added 151,000 jobs in October, the biggest rise since May. The 159,000 increase in private sector employment was the second-largest monthly rise of the "recovery." The official unemployment rate stayed at 9.6 percent. NY Times: U.S. Added Jobs Last Month for First Time Since May,
On many levels, the October report was much stronger than expected. Forecasters had been expecting a gain of only 60,000 jobs. The report also revised the numbers for August and September, showing 110,000 fewer jobs losses than previously estimated. Hourly wages were slightly higher, too.... A broader measure of unemployment, which includes people who are working part-time because they cannot find full-time jobs and people who have given up looking for work, ticked down slightly to 17 percent from 17.1 percent in September.
This might seem like good news -- until you think about it. We are so used to really bad news that new that just sort of OK sounds great. Dean Baker, writing at the Center for Economic and Policy Research,
At this rate it would take more than 15 years to make up the job shortfall from the downturn, but at least the economy is moving in the right direction.
Meanwhile, the Federal Reserve this week announced "quantitative easing," through which they will pump another $600 billion into the economy by purchasing US treasury bills, also known as "printing money." I guess the idea is to top off and overflow the coffers of the already-wealthy, thereby forcing up the price of stocks and other assets held by the already-wealthy, while keeping interest rates low on the savings of working and retired people. At the same time conservatives in Congress are demanding further extensions of tax cuts for the rich, which did so well stimulating jobs up to now. The thinking seems to be that at some point the really, really wealthy will have so astonishingly much extra cash on hand that they will hire a few more servants, which will then stimulate purchasing of necessities by said servants, which will then drive the economy.
It's time to call out this nonsense for what it is.
We Need A Bold Plan
It is time for the President to announce a BOLD PLAN for a job-creation agenda. (Actually, it was time for him to do this a year or two ago...) Here are three badly-needed 5-year plans:
* A 5-year plan to revive American manufacturing. This is how our country and our people can make a living again.
* A 5-year plan to bring America's infrastructure into the 21st century, making our economy competitive again.
* A 5-year plan to make our homes, buildings and electric grid energy efficient to lower our energy costs and reduce our imports of oil.
These are things that we have to do anyway. We have a lot of unemployed people, and any one of these three plans will put a huge dent in unemployment. Any one of these three revives our economy. Any one of these three restores American competitiveness. ALL THREE restore us as the economy leader in the world.
And, the politics will be good because it is what is needed and good for the country and everyone knows it.
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Posted by Dave Johnson at 11:04 AM | Comments (0) | Link Cosmos
November 4, 2010
Tea Party Test: Korea Free Trade Agreement
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The "Tea Party" will face many tests when the new Congress convenes next year. Everyone is asking, how long will it take before the Tea Party officeholders are co-opted by the big money insiders? "Free Trade" is one of those tests.
Tea Party members absolutely despise "free trade" agreements that have forced companies to close factories and ship jobs out of the country. They want to see "Made In America" in stores again. But the D.C. insiders, backed by big money from the big, monopolist, multinational corporations, insist on even more of these agreements. Which way will the Tea Party officeholders go?
Next up: the US-Korea Free Trade Agreement. The D.C. insiders want this one bad. Tea Party supporters do not want any more of these job-sucking one-sided agreements. Who will win? Negotiated by Bush, this is another one-sided agreement, letting Korea export like crazy to the U.S., but not addressing non-tariff barriers that Korea places on bringing U.S.-made goods into their country. (Korea places regulatory and tax barriers to limit imports along with tariff barriers that the trade agreement addresses. So in effect we would be removing our tariff barriers on Korean imports, while they keep their other barriers to our exports.)
The Ford Motor Company placed an ad in Washington news outlets today, opposing the Korea agreement:
Ford's concern is autos, but there are many other concerns as well. Take a look at what American beef producers say about this agreement.
This is one more one-sided trade agreement designed to let Wall Street-dominated firms outsource manufacturing and jobs, so they can further squeeze American workers and make short-term profits and bonuses from selling off American capacities and technologies. They are selling off our country's and our people's ability to make a living, to put a few quick bucks in their own pockets.
Trade is good. Honest, free and fair trade brings prosperity to everyone involved. Unfortunately, the kind of one-sided, exploitative trade deals that have been negotiated in the past might have made a few elites very rich in the short term but are impoverishing everyone else. The trick is negotiating better "We, the People" outcomes rather than the "shut up and take it or we'll move your job out of the country" outcomes that have allowed the wealthy elite to set working people here against working people there.
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Posted by Dave Johnson at 11:43 AM | Comments (0) | Link Cosmos
November 1, 2010
China's Goverment Helps Manufacturers, Economy Booms. Ours, Not So Much.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As an election strategy conservatives blocked or watered down everything they could that might help the economy, hoping voters would blame the President's party for job losses. Tomorrow we will learn if this strategy succeeded. But Wednesday can we start doing things to help the economy and the country again? Please?
Candidates on both sides are running ads asking for fixes to trade with China. Chinese manufacturers are starting to fight, claiming that (now jobless) Americans will have to pay more for goods if they have to adjust their currency toward market rates. But Chinese manufacturers are doing just fine, according to recent surveys, because their government is doing everything it can to stimulate their economy, their manufacturing and their jobs.
Where's our government?
Today’s Progressive Breakfast hilites two stories:
Chinese manufacturers, complaining that their government has adjusted currency too much, tell Americans Christmas will be more expensive. W. Post: "'If the renminbi keeps appreciating, our prices have no more room to drop,' said Cai Qin Liang, 38, who has been in the business making Christmas ornaments and handicrafts for more than a decade. 'We can just stop making these Christmas accessories, but foreigners still celebrate the Christmas holiday and need these things.' It is small manufacturers such as these that the Chinese government says it is worried about as it resists calls for a larger and more rapid appreciation of the currency."Yet Chinese manufacturing doing just fine, buoyed by stimulus. AP: "Chinese manufacturing accelerated in October with spending on infrastructure projects spurring a jump in new equipment orders even as export demand remained subdued, surveys showed Monday."
What kinds of things is the Chinese government doing to help its manufacturers? Earlier this year I wrote, in Lessons From China's Stimulus
China's stimulus brought them through the economic crisis, even as they lost some exports because of the slowdown. They made the leap into alternative energy technology, spent $100 billion just for high-speed rail, and showed the world how fiscal stimulus works. Their growth rate is currently 13%. Ours is currently ... nowhere near 13%.. . . So their stimulus totaled about 14% of their GDP. Our own stimulus was $862 billion in a $14 trillion economy, or about 6%. The differences between the priorities of the two plans are clear when seen on charts.
From a year ago: China's Stimulus Package: A Breakdown of Spending: (please click through for more)
. . . China focused on investment in public infrastructure, which leads to future economic growth. We are mired in conservative ideology so we focused on tax cuts, which do little more than increase our debt.
. . . Quick lessons:
- China spent serious money, quickly. It worked.
- China focused on infrastructure. It worked.
- China has a national economic/man manufacturing strategy and invests in R&D; and developing strategically important industries. We don't.
- Don't cut taxes, it only causes massive yearly deficits and accumulated debt.
Frank Sobatka describes one of the main reasons for the problem:
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Posted by Dave Johnson at 10:50 AM | Comments (0) | Link Cosmos
October 27, 2010
Winning The Race To The Bottom
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture I am a Fellow with CAF.
Conservative policies have propelled us into a global raced to the bottom. Conservatives can take pride: we're winning!
"Free trade" -- moving factories across borders to evade the protections of democracy that generations of Americans fought for -- pits exploited workers with few rights and no means of improving their condition against Americans who once had environmental and wage protections. But ideas like protecting the gains of democracy are out of favor. That is labeled "protectionism" and is thought for some reason to be a bad thing. Conservatives were able to break the unions and wages for working people have stagnated, while the amount going to the top few has soared.
Here is the future of American wages: From today's Washington Post: In its biggest foreign market, BMW gets skilled workers for less,
Among the applicants: a former manager of a major distribution center for Target; a consultant who oversaw construction projects in four Western states; a supervisor at a plastics recycling firm. Some held college degrees and resumes in other fields where they made more money.But they're all in the factory now making $15 an hour - about half of what the typical German autoworker makes.
. . . the price of having a more globally competitive workforce means more in the United States could fall well short of the middle-class living standards that manufacturing workers once could expect. Wages adjusted for inflation have declined for these workers since 2003.
That's right, German workers are now paid almost twice what American's can make. (And they get health care and an average of 35 paid vacation days, we get 13.)
Tea Party Wants To End Minimum Wage
The Tea Party has its sights set on the minimum wage. They say it is "unconstitutional" and want it "abolished."
Your Wages Are Next
If you still have a job, your wages are next. You can bet that executives in every company are wondering why they are paying their employees so much when there are so many hungry, unemployed people out there looking for work. Every dollar they can save on paying you goes into their pockets.
Isaiah Poole pointed out the other day, in Latest Reagan Revolution Price Tag: A $313 Billion Wage Cut, (Please click through an dread his whole post!)
New data compiled by the Social Security Administration reveals that the total wages earned by American workers fell by a total of $313 billion from 2007 to 2009, Johnston writes. That's a 5 percent cut, and is measured in 2009 dollars.In one year alone, from 2008 to 2009, wage income declined $215 billion.
What can you do about this? Terrance Heath writes in, Minimal Wages For All, (Please click through an dread his whole post, too!)
Here's another reason to vote in the mid-term elections this November: Conservatives think you need a pay cut. As I've said once or twice before, conservatives' bottom line message is simple: America has economic problems because too many people have had it good for too long; and when they're worse off again, the nation and its economy will be better off. The people they think had it too good for too long are you and me, and almost anyone who punches a clock to pull a paycheck.
The Answer
The answer is to insist that goods brought into this country are made by people who are paid a decent wage. That way they could make enough to buy things we make, too. That really could be called trade. And the other answer is to pay people here enough to have a decent standard of living, even if it means hedge fund manager could only make maybe $100-200 million a year instead of billions. That way we would all benefit from our economy, instead of everything going to the top at the expense of the rest of us.
Vote as if your standard f living depended on it.
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Posted by Dave Johnson at 10:26 AM | Comments (0) | Link Cosmos
October 19, 2010
Canton, Ohio Town Hall: We Can Make It, Build It, Grow It Here
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The Canton, Ohio "Keep It Made In America" Town Hall meeting was at the Kent State University Stark Campus this evening. Lieutenant Governor and Senate candidate Lee Fisher spoke. His opponent, Rob Portman, (U. S. Trade Representative under George W. Bush) was also invited to speak to this meeting discussing how to recover the 2.4 million manufacturing jobs that were lost to China in the Bush years, but had other commitments and was unable to attend.
The crowd was welcomed by Stark County Commissioner Steven Meeks, who let us know that "Stark State College is creating curriculum that addresses needs of unemployed, and is growing 30% every year. Just announced a $2.1 million grant plus $8 million from Stark State, creating a Wind Energy Research and Development Center to test wind turbines." This partnership will train employees but will also bring wind energy business to the area.
After Scott Paul of the Alliance for American Manufacturing introduced the organization and explained the town hall, Congressman John Boccieri, OH-16 spoke, saying, "We can make it, build it, grow it here." Later, "I thought the Chamber of commerce was supposed to protect jobs in the US not in Beijing. I fail to see how they believe that this is good policy for our country."
Next up was Senate candidate, Lt. Gov Lee Fisher. (Summarized from notes):
"Do we go back to the same people who gave tax breaks to large companies to send our jobs out of the country? To treaties that allowed these countries to dump cheap, unsafe unhealthy products, endanger our health and our economic health, put people out of work and companies out of business and industries vanished?
People think it’s OK the steel workers are upset, the auto workers are upset. It isn't. The key is to build alliances that go beyond steel, let’s talk about technology. The guy who founded Intel, Andy Grove, wrote recently that he no longer believes that free trade is the right way to go. In 1975 when first personal computer was invented, 125,000 people employed in the US. Today 125,000 are employed. This is the same but in Asia 1.5 million are employed in this business.
This is not just steel, glass auto, textiles, electronics, this is about solar panels, advanced batteries, wind turbines. We need to wake up the rest of America, you already get it that’s why you’re here, but the key to our victory is waking up the rest of American before it’s too late."
Interestingly, Fisher is running against Rob Portman, U. S. Trade Representative under George W. Bush. Portman was also invited to speak to this town hall discussing how to start recovering the 2.4 million manufacturing jobs that were lost to China in the Bush years but had other commitments and was unable to attend.
The Panel
Canton's town hall panel of local experts was Scott Paul of AAM moderating, with,
* Dave McCall District 1 Director for the United Steelworkers
* Athony Denoi, Plant Manager ATI Alegheny Ludlum (Stainless steel, other specialty steels)
* Max Blachman - Office of Ohio Senator Sherrod Brown
From notes:
Blachman – Sen Brown elected 92 to Congress, fighting for American manufacturing and workers ever since. Ran for Senate said let's make Ohio the Silicon Valley of manufacturing. Sen Brown had an op-ed in yesterday’s NY Times. (Note - a good read , it starts out, "TEN years ago this fall the Senate sold out American manufacturing.")
Steps to take – enforce trade laws, China created tremendous and unfair imbalance
McCall – We need a manufacturing policy. Level playing field. China currency. VAT – every country has a VAT except us. A company that makes something in India pays 20% tax, but when you ship the government gives the tax back, so companies in other countries get as much as a 20% break and China gets that break on top of currency manipulation and other schemes so that's now 60%. … Just try to get 1 pound of steel into China, you can’t. You can’t sell there, they are exporting their unemployment to us. … Why has this been going on for a decade, decade and a half? Because a whole lot of people have very short term thinking, don’t care, want to make their dollars now, want to get out. ... It’s time to give some protections to our American companies. They need to be profitable, so it is fair and balanced for companies and steelworkers as well.
DeNoi – We are in business because of specialty steel that goes into special places like nuke reactors, transformers. To make good steel you need: Good equipment good people know how to make it. China doesn’t have #3, intellectual property, if we lose that China can make it. Silicon Steel, best grade, now China says they can do. It's part of their energy strategy, for China to make their own. Titanium, we know how to make and others do not. Give us a level playing field we can compete globally. I keep on hearing industrial policy, it is a strategy, they are looking 5 10 20 years down the line. Has to be more than policy, has to be a serious strategy for long term/
McCall – on IP rights, I remember a guy testified before the China commission some years ago, who produced roof tiles for all KFC places in US. KFC got a contact from Chinese government to build 100 KFC stores in China. This guy, family business, invested in new technology, 40 employees. Business was good. KFC got this contract, the first load of shingles he sent got locked up on the dock and the government wouldn’t release it to be built on those restaurants until he gave them the formula and processes, KFC said we got to have these shingles, so he had to give up property rights. Now a company in China produces all those shingles, he is out of business.
Q from audience: “How do we get consumers to understand and support Buy American?”
McCall – Look what happens when we fight back. Cooper Tire built a plant in China, China said for 5 years you must export. So they have a price advantage, dump the tires here. So we filed a trade case and won, they put on a tariff, now they are dumping in Europe but not in US, so in Ohio now Cooper plant hires, 100 new jobs.
Q: “What is the government and manufacturers going to do to help put people 55 and older forced into retirement, back to work?”
Blachman – Sen Brown SECTOR act, labor grants to communities, allow labor an business and Community College or other anchor institution to come together with workforce investment board to fashion a curriculum to train for available jobs in new industries, fuel cells, advanced batteries, like what is happening at Stark Research Center on this campus. One-stop services often do not provide those specific skills needed to succeed in these industries.
This passed the House, Senate filibustered
DeNoi – challenge is to get a good educated workforce out there, we try to hire, give them tests, it is hard to get the skill set needed to work in steel. They have to have computer skills, math skills, problem-solving skills, we are having a difficult time finding it so we hire mature workers in this area because of that.
Paul – if you see a factory on TV it’s an action setting, abandoned factory, rusted chains coming from the ceiling, fire coming out of the floor and a dead bodies is thrown from the second floor, that’s what people see when they see factories. Now is clean, highly technological, exciting, and you have an opportunity
Q: "What three things if you could talk to the President."
DeNoi:
1) Level playing field
2) Long term strategy
3) Buy American
Silverware, it is not made here anymore. Gas grills.
So this was the last Town Hall I will be attending. There are more on the schedule and they are GREAT, and you learn a lot. Take a look at the schedule and see if you can make it to one. And I am sure there will be another round coming.
I will be thinking for a while and then writing a wrap-up post that take a bigger-picture look at what I learned this last week. So check back.
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Posted by Dave Johnson at 7:22 PM | Comments (0) | Link Cosmos
Erie, PA Town Hall: "No Country Ever Went Broke Investing In Its Own People"
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Last night's "Keep It Made In America" Town Hall meeting was at the Bayfront Convention Center in Erie, Pennsylvania. Kyle Foust, Chairman of the Erie County Council welcomed the attendees and led off the Town Hall meeting, quoting Hubert Humphrey: "No country ever went broke by investing in its own people."
I recently spoke with a Tea Party member who did not know that it is government that builds the roads, airports, sewer systems, etc. that make up the infrastructure that is the foundation of our country's ability to have companies at all. He actually thought that private companies do this, and that "government spending" just "takes money out of the economy." Maybe this is why so many candidates in this election say that "government spending" is bad but will not say, no matter how hard they are pressed, what spending they plan to cut in their quest for "smaller government."
The Town Hall
Following a Unitarian invocation by Rev Steve Aschmann, Scott Paul of the Alliance for American Manufacturing (AAM) -- the organization that is putting on these "Keep It Made In America" Town Hall events -- explained what AAM is about, strengthening manufacturing in this country. Scott gave the audience several facts about manufacturing:
- 74% of Tea Party supporters support more manufacturing, as do 82% of union members.
- 563,500 in Pennsylvania work in the manufacturing sector
- This is down from 864,000 in 2000
- And represents a 35% cut in manufacturing jobs.
Candidates Speak
Two local House candidates spoke at this meeting. Mike Kelley, Republican candidate for Congress spoke first.
"We can’t control unfair competition. Just make it fair, that’s all, make it fair. Enforce the rules. We play by the rules, other people don’t. Chinese currency."
Q: "Will you support buy American policies?" A: Who would not? Especially in taxpayer-funded projects.
Q: "Hold China accountable?" A: The world has been waiting for America to take the lead. China has to be held accountable when they break the rules.
Q: "Policies?" Competition, we never back away from competition. We need to get a national strategy in place. Taxes – need a VAT. Others all do it. (Note, Kelley's answer is good for manufacturing. Short explanation: Other countries use a VAT to boost their manufacturing sector. Their manufacturers get a VAT rebate, but goods imported from the US do not, so in effect a VAT is a either a subsidy of their companies or a tariff on imports from us.)
Next up was his opponent in the race, Congresswoman Kathy Dahlkemper:
We need to get back to a manufacturing economy, to provide that good family-sustaining wage.
How to keep it made in America, three points:
1) Close the loopholes, Republicans’s did not vote with us on this. My opponent has pledged, signed a pledge no to remove the tax advantages given to companies for moving factories out of the country and outsourcing American jobs. (Note see my post on this today.)
2) Stop China’s cheating. Everyone knows China cheats. The currency bill, voted for it, the Chamber of Commerce - that's the national Chamber which is a very different thing from the local Chambers -- is against it. We also have to stop China's illegal trade practices and dumping (selling below cost to capture markets).
3) Invest in our domestic manufacturing base. The COMPETES act has passed the House, but Senate… Education.
Raw materials – rare earth elements, China is saying they can get these IF they bring manufacturing t their country.
We can produce them here, but don’t. Because China subsidizes, it is not profitable to start production here.
The Panel
This Town Hall's panel of local experts:
• Kenneth Boothe Jr., General Manager, Donjon Ship Builders
• Reverend Jeffery Priscaro, St. Ann's church
• Ron Oliver, Community Labor Leader
• Tim Ryan President, Apex Offshore Wind.
• David J. Rosenberg, Head of Marketing, North America Gamesa Energy
• Hillary Bright, Blue/Green Alliance Field Organizer.
Priscaro – When people make things It create sjobsm, revenue, they buy houses, participate in economy.
Ryan – Windmills, local wind turbines on old steel mill site, made in the US. Sun Ray project in Texas used GE wind turbines, GE Transport made the gearboxes. Gemasa, of Sain, has set up manufacturing near here. The Export/Import bank financing requires high local content. We need a national Renewable Energy Standard, then there is a tremendous opportunity for American manufacturing in wind energy.
Oliver – the effect on people of losing job, moving, move in with mom, manufacturing is the heartbeat of America.
Boothe – Donjon has recently gone from 13 employees, in 10 months have 118. 125 by end of year, 150 then up to 250.
Bright – Labor and environmentalists share common goals Hadn’t recognized how intertwined manufacturing is with a healthy community, environment, wages, families, healthy communities. And healthy environment. The way we see America in future generations, manufacturing is key to recognizing that.
Q: "Where are we going to get jobs? We need the infrastructure rebuilt, everything reconstructed. How?"
Bright – AAM, others have recognized that one of the largest opportunities is in clean energy. The stimulus was a down payment. Opportunity at federal policy level like Renewable Energy Standard to create the market and the demand to get it going, otherwise we lose the race to countries like China.
Oliver – We need to create the jobs here, the stimulus was using money to buy windmills made in China.
Ryan – We need new power plants as well as wind energy power plants. National policy has been up and down up and down, industry can’t survive on federal programs that last 6 months or a year, we need national policy that looks at the next 20 years or so.
Priest, we lost jobs because of legislation, we can gina jobs by legislation.
Q: "What can we do to stop the leak of jobs from US?"
Scott Paul: Stop tax breaks to ship jobs overseas.
(Note - All pictures by Ike Gittlen, USW, with permission. Click any pic for enlargement, see the entire collection here.)
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Posted by Dave Johnson at 11:21 AM | Comments (0) | Link Cosmos
October 17, 2010
Wheeling Town Hall -- BIG Turnout -- Focus: Tax Breaks For Offshoring
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Driving across Ohio toward Wheeling you pass one small manufacturing company after another - but not too many with lots of cars in the employee parking lot. I stopped in a coffee shop in a small township. They offered me a cookie, and when I declined, the owner said, “We’re giving them away, it’s our last day.” After 14 years the shop and the restaurant next door are closing because the landlord is giving up, auctioning off the building, and they don’t see how they can reopen somewhere else and make it. Too many manufacturers in the area have had to close.
Every manufacturing job supports four or five other jobs in the economy. This is seven or eight more gone. The Cut Nail plant dominates a section of Wheeling. It closed last week, after 152 years in business. That's a lot more gone.
The Town Hall
Friday night I attended the Wheeling, WV "Keep It Made In America" Town Hall meeting. This was a BIG event – 600 attendees big
Many elected officials, starting with Governor Joe Manchi (now running for Senate) attended and spoke. Quite a few candidates for Congress attended and spoke as well. And there was a panel. The Intelligencer / Wheeling News-Register has a great writeup of the event.
The meeting began with a flag entrance presented by an honor guard of Young Marines:
This was a big event with a lot of speakers, so I'll only put up snippets of what was said. But the entire town hall was webcast live: see the recording of it here.
Alliance for American Manufacturing Executive Direct Scott Paul gave "manufacturing facts" between each speaker.
"Why should people care about manufacturing if they don’t work in a factory?
* Manufacturing provides 70 of all r&d;, 90% of all patents, so if you care about innovation, next best thing…
* Manufacturing largest purchasers of technology, so if you care about…
* Manufacturing still employs 12 million, sizable portion.
* Also manufacturing has a multiplier effect, each job supports 4 or 5 others in your community. More than any other.
* Finally manufacturing jobs pay 22% better."
Vice President of the United Steelworkers Tom Conway spoke first,
"Thanks for coming, having a discussion, about what we think is a crucial issue, and one that America has been struggling with for a while. We’ve lost 50-60,000 factories over the last few years and millions of jobs. Labor and management do not have the luxury of not being together on this. We need to be together on this. Doing it jointly, telling a common story.Trade is good but trade needs to be balanced, but now for 30 years we have had an imbalance that has gone on and one, and you can’t do that and expect to have a thriving economy, and think the country is going to exist off the growth in the financial services sector. Now 40% of our GDP comes from the financial services sector and you've all seen what’s happened.
You’ve got to have an economy that is based on something. You can’t keep having your best and brightest go to wall street.
It used to be there were two tickets into the middle class, get a union card or get a college degree.
Governor, Senate candidate Joe Mansion:
First question is will you support buy America policies? Made in America, even better.There is not one thing in free trade that talks about fair trade. We can compete with any workforce in the world as long as it is on a level playing field.
Currency manipulation 40%, no rules or regulations on environment, and then we give tat incentives to companies to move jobs offshore.
Charlie Wilson OH-6, which borders on Wheeling:
We all have common interest, returing to economic security, returning our neighbors back to work and returning our communities to prosperity is a priority for all of us.We shouldn’t be looking to advance new trade deals if the ones we have aren’t working. I’m proud to be a co-sponsor of Repeal NAFTA. Trade is important but it has to be fair trade and we have not had fair trade.
We have been outsourcing jobs, crippling thing in our economy, voted 2 times in last few weeks to close tax loopholes that encourage companies to outsource. How can we possibly justify rewarding people with tax breaks who send our jobs to other countries. Come here I’ll show you what has happened to our economy from jobs lost to trade deals.
The Conservative Tax Pledge
One speaker said something I want to hilight: Mike Oliverio, Congressional Candidate, WV-1, said something about the "Norquist No New Taxes Pledge" that I think was significant. Oliverio called it a pledge to keep those tax incentives for closing factories and outsourcing jobs.
I support legislation that prevent outsourcing of jobs, these tax giveaways have to stop, my opponent signed a tax pledge to continue these giveaways to corporations. I just can’t imagine how you can sign that kind of pledge in today’s world.
His opponent David McKinley:
The stimulus failed, only added debt to the government. We’re driving business away by overtaxing and overregulating. National Association of Manufacturers, Chamber of Congress, Tea Party backs me, Right to Life back me.I want to freeze tax rates where they are now to remove uncertainty. Create confidence what our tax structure is going to look like they will start hiring again. Eliminate overregulation of business.
Nancy Pelosi is toxic to our political environment.
About 3-400 other candidates spoke. The Libertarian Party, the Mountain Party, the Constitution Party, others.
The Panel
After approx 28,245 more candidates spoke there was an excellent panel discussion, moderated by Scott Paul, with
* Tom Conway, VP USW
* Kenny Perdue, AFL-CIO West VA
* Beri Fox, CEO of the Marble King Company
Note: About Marble King. Wheeling and WV have been hit hard by imported glass. Glass used to be a very big industry in West Virginia. There were 240 glass manufacturing companies in WV 30 years ago. Marble King is one of only 6 remaining companies.
Berri – Marble King is a 75-year-old company. We want to help keep the American dream alive,. Glass business in WV second only to coal, 240 companies 30 years ago, today 6. The obstacles are substantial. Something has to be done.
We did kids’ toys, supplied game companies. All moved to China, NONE manufactured in US now. This created huge stresses on what was our market share, so we bagan to diversify our product into other areas, creative innovative. Now, you buy spray paint, aerosol, shake it, that sound is our marbles.
Question from audience: Tax Breaks for offshoring?
Conway - companies getting tax breaks are also the companies that have taken control of our government, big multinational companies, they leave American workers and communities behind and we can’t tolerate it any longer.
I think that is the best line to close with. If you need a reason to vote, there it is.
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Posted by Dave Johnson at 7:15 AM | Comments (0) | Link Cosmos
October 15, 2010
Lorain, OH Keep It Made In America Town Hall Meeting
Thursday evening I attended the "Keep It Made In America" Town Hall in the John Spitzer Conference Center at Lorain County Community College, an impressive, large campus. Lorain, Ohio is another town with closed factories, boarded-up houses, high unemployment, and ringed by the national big-box vulture chains whose business model is to suck the remaining funds away to Wall Street.
Driving into Lorain
As you drive from town to town in Michigan and Ohio you see one after another a ring of the "big box" stores and national chain stores around each city. You also see the "brownfields" of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.
You used to hear about how Wal-Mart was predatory, how it would show up in an area and after a while the downtowns would dry up, local business-owners would go broke, local business employees would be laid off, and the local people would have to work for low wages at Wal-Mart, while the region's spending money would go off to the wealthy few who run these things.
Well a juicy story of devastation like that one gets around, and there are those who hear it and say, "Hey, that's a great idea, I wanna get me some of that." So the Wal-Mart business model has taken off and now there are any number of these vultures, ringing the cities and towns around the country, so often private-equity owned. They are draining away the lifeblood of the downtowns, fighting off the unions to keep wages down, even demanding tax breaks to move in and "create jobs." You see all the same stores circling every town now, running all of the local and regional businesses unto the ground.
Here are some pictures from the inner Lorain area but you see it all around: (click for large)
The Lorain Town Hall Meeting
As I said, the meeting was at Lorain County Community College. The turnout was good, a number of candidates, local officials, and people from the community.
The opening speaker was Congresswoman Betty Sutton. “Manufacturing is the backbone of our economy. It’s the backbone of our nation. We’re aware here in Northeast Ohio that it created and promises to support the idea of a middle class.”
Sutton talked about the bill passed recently by the house that confronts Chinese currency manipulation. She hopes the Senate will also pass this, but we all know how difficult it is to get anything through the Senate. She also said that unlike Wall Street shuffling paper money around, what creates real value is the manufacturing of goods, which supports four surrounding jobs in the economy for every manufacturing job.
Following the opening remarks Scott Paul of the Alliance for Ameican Manufacturing presented a number of facts about manufacturing in Ohio and the country. 624,700 people work in manufacturing in Ohio, down from 1,021,000 in 2000. 39% of Ohio's manufacturing jobs were lost in the last decade. For the country the last decade was the worst ever, worse than great depression. We lost 1/3 of all manufacturing jobs with 50,000 manufacturing facilities closed.
“When I grow up will there be jobs in America?”
Next came a panel, moderated by Scott Paul, with
- Larry Taylor, Plant Manager, US Steel Corp’s works in Lorain
- Dave MaCall, Director of District 1 for the United Steelworkers, USW in Ohio
- Kelly Zelesnik, Dean of engineering technologies at LCCC Elyria
A video of a question from a young person in Lorain: “When I grow up will there be jobs in America?” was asked of the panel.
MaCall: there will be jobs, because we have to take action, have to level the playing field. Things we need to do. Not be protectionists, have fair and balanced trade. But we need net exports. That’s how we grow. Every other country has a value-added tax so when someone makes a product that country writes a value-added check, so it is a subsidy on them and a tariff for us. America’s Visa card has run out.
We have 100 million tons of demand for steel in the US, has been for decades, last year demand was 60 million tons. Huge numbers of people laid off, from lack of demand, lack of consumption, and illegal trade.
Kelly, LCCC is partnering with manufacturing. LCCC invested in needs of community, 2 of 4 cornerstones of the college are education and economic development. LCCC is helping grow local economy with a new sensor center to develop and commercialize sensor technology. Industry and educational partners and entrepreneurs to access the center to develop and test prototypes and shorten the time to send products to the market as well as train employees. The center is an attractant to new businesses.
MaCall: We need national policies like every other country has. Businesses need to know there is a policy in America that will make sure there is access to capital, etc. For green startups, it is hard for companies to make investment when other countries helping their industry and we are not. Wall Street gets refinanced, now they’re holding it back, won’t let small businesses have access at reasonable rates.
Paul Q: What is the role in trade laws to keep steel competitive and on level playing field?
Taylor – We need strong trade policies that are strictly enforced. If they are not enforced they do no good, if we have this there will be jobs in future, level playing field. We stopped China on the steel tubes, but now other countries are producing subsidized product, we don’t get government subsidies, they do, we must have strong policies that we enforce.
Concluding
Over and over I am hearing these themes emerge: trade is good but stop illegal trade practices, level the playing field to enable us to compete, put together a national policy, improve trade education and training, invest in our future.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
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Posted by Dave Johnson at 8:24 PM | Comments (0) | Link Cosmos
Tonite's Wheeling WV Town Hall Will Be Webcast 5:15 EST
I have just learned that tonite's "Keep It Made In America" Town Hall in Wheeling, West Virginia will be webcast live starting at 5:15PM EST.
Visit the Wheeling Town Hall - Live page for the webcast.
From their page:
With the election less than three weeks away, West Virginia Senate candidates will address the issue of creating jobs and reinvigorating manufacturing at a “Keep it Made in America” Town Hall Meeting in Wheeling, WV. More than 700 voters are expected at the Town Hall Meeting, which is part of a 10-state tour sponsored by the Alliance for American Manufacturing (AAM). The voters will have a chance to directly question candidates and elected officials - from West Virginia and Ohio - on such key issues as rebuilding U.S. manufacturing for the global economy and balancing trade with China.You can watch the town hall here live starting at 5:15pm ET today (Friday, Oct. 15th).
On Twitter? Follow us @KeepItMadeinUSA and use the Town Hall hashtag: #aamtht10
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October 14, 2010
Jackson Mich Keep It Made In America Town Hall -- An Energized Event
Yesterday I was in Jackson Michigan to attend the 2010 "Keep it Made in America" Town Hall Tour meeting. It was a very well-attended event, and everyone I spoke with seemed energized because someone is out there talking about what they consider an important issue, and thought that manufacturing is vitally important to the country, for jobs, and so we can pay our bills.
Jackson
Jackson, for your information, makes a claim to be the city where the Republican Party was founded in 1854. One thing is for sure, it was a very, very, very different party then.
I last visited Jackson three years ago. The downtown was dreary, and I remember walking around trying to find a place to buy a sandwich, giving up and ending up at a dreary fast-food place outside of town. Like Flint, things appear to be changing. In Flint is has been public/private government/business partnerships that has helped revive the downtown and the area. The University of Michigan has opened a Flint campus right downtown and you can feel the difference. I'm moving fast on this road trip so I didn't have time to investigate what is behind the different feeling in Jackson. But I had trouble getting to flint because I kept passing all these highway construction zones with ARRA (stimulus) signs. The official U-3 unemployment rate is down to 12.8% from 15.2 earlier this year.
The Town Hall
The meeting was in the Commonwealth Community Center, downtown. The large room was full, approx 275-300 attendees. I asked around and things were getting started and people were getting seated and it was a diverse audience politically, including some Tea Party supporters. Everyone I spoke with seemed energized because someone is out there talking about what they consider an important issue, and thought that manufacturing is vitally important to the country, for jobs, and so we can pay our bills. A recent poll found that 74% of tea party supporters want government strategy for manufacturing
The format was speakers, a brief PowerPoint presentation, buffet dinner and a panel on manufacturing featuring local business, labor and others. Following is a brief summary trying to catch the essence of what some of the speakers said.
Jackson's Mayor Karen Dunigan gave a very short welcoming talk, saying “Every day politicians speak about jobs, and yet we are still losing jobs.”
Next, Lansing Michigan's Mayor and candidate for Governor Virg Bernero spoke, saying that when they say we are done with manufacturing, that it is a thing of the past, they are saying we are done with America being a great country. You can’t just have consumption, you have to make things. It isn’t gross domestic consumption, it is gross domestic product, with "product" being a key word.
Congressman Mark Schauer, MI-7, “Cash for Clunkers invested in auto industry, got our steel plant to reopen, 3 shifts of workers now here in Jackson, we need to do more of that, fight for jobs in Michigan,” and he had a debate in an hour gotta go. "We need to make decisions about educating our workforce, trade, make sure our dollars are not stimulating jobs in China… We were the arsenal of democracy, and China is spending twice what we are spending on renewable energy technology."
The Panel
From notes:
The Shop Rat Foundation offers hands-on skilled trade education to kids, creating the next generation of proud skilled workers and citizens (shop rats).
Rayl: The federal government needs to step up in this country and realize that the gloves are off on the global playing field, it’s not a playing field it’s a war field, they’re cleaning up, free trade is one thing fair trade is another. We need government to help us out, to fight these trade practices.
We need to be able to go out there and compete. We want ot do it. China has a big market for us when we can play fair but they hamstring us, one hand tied behind our back, Chinese government is fighting us all the time.
Scott: There may be difference between business and labor on a lot of issues but on American manufacturing there is very little disagreement, especially on holding China actable, R&D; tax credit, there is a lot of support for doing all of it.
Rayl: Manufacturing is not a Democrat or Republican issue, it’s an American issue, we can make anything you throw at us, we have great skilled workers out there, companies that want to keep those people in good paying jobs, give health care and all that stuff, but we can’t do it if we can’t compete on an even playing field.
Gaffney: A trade agreement that lets a company just pack up a factory and move it to another country just because wages are lower, leaving behind a devastated community and unemployment, is just bad policy.
As the country tries to get out of bad economic times hopefully the people in Washington figure out that manufacturing is the way to help. IF there aren’t good-paying jobs for people to go back to, what are we going to do?
Amanda:
Q) Filling a need, do you think what we have now with our high schools and Community Colleges is enough?
A) Definitely some great programs out there. Lot of great but definitely not enough, we’re trying to push, we need to focus on education more than we are. A lot of people don’t think it’s not worth the time to train a 6th grader, don’t think that far back, but I want to stress you've got to get them young, get them interested, without middle and high school programs going on anymore kids don’t know about trade skills, they’re afraid of tools, but get them doing that, they are more confident, they will go out get a job or go on to vocational schools.
Manufacturing In Michigan
I guess I don't have to tell you that Michigan is known for automobiles. But manufacturing in Michigan was wiped out in the 2000-2008 period. There were 897,100 people working in manufacturing in Michigan in 2000. There are 466,400 people working in manufacturing in Michigan now.
Other Jackson Town Hall Resources
MLive.com covered Virg Bernero speaking at the rally.
Steve Capozolla was live-blogging Jackson's town hall event last night.
A local radio station has posted some audio from the event here.
Details of the Keep It Made In America Town Hall Tour
And this: American Made Shopper had a display at the meeting. They only sell items that are Made In America.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
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Posted by Dave Johnson at 8:07 PM | Comments (0) | Link Cosmos
October 13, 2010
Flint, Michigan: A City Ahead Of The Rest Of Us
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I am in Flint, Michigan today, getting ready to drive down to Jackson for this evening's "Keep It Made In America" Town Hall. Flint has been through it and has come out the other end. Now the rest of us are going through what Flint has been going through.
Many people know about Flint from the 1989 movie Roger & Me. In the documentary General Motors had closed factories in its home town, outsourced the jobs, and left the community behind. This sort of corporate behavior was becoming common by 1989 but it was still shocking that an American company would do this to Americans and America. The movie focused on the effect this had on Flint and its people. You might remember seeing block after block of boarded-up homes and people talking about how the try to get by.
This has now been a familiar story for decades, companies closing factories, outsourcing the jobs, abandoning the communities, a few at the top pocketing the money and leaving absolute devastation in their wake.
I was last in Flint three years ago, visiting relatives. Twenty years after the movie Flint was still struggling, in depression, its downtown full of closed stores and many of the blocks of boarded-up homes were worse, if anything. There were "For Sale" signs everywhere, and this was before the national housing bust. But there were many signs of people learning to cope. The Farmer's Market was going strong. The University of Michigan was working on a new campus, the Mott Foundation and others were working on various approaches to try to help the community...
So here I am again. You can see three years worth of progress here. Revival is clearly occurring. The new U of M Campus is open and clearly making a difference. Part of the downtown is clearly revived, including the Durant Hotel restoration, while other parts are under construction. The Farmer's Market was named one of the best in the nation. There are fewer "For Sales" signs around. All around there is a better mood. Crime is still bad, there are still abandoned buildings, but a corner is turned.
Flint Farmer's Market:
Flint Ahead Of Nation
So Flint has been through it and has come out the other end. Now the rest of us are going through what Flint has been going through. And the rest of the country has a ways to go before we will see the other end of this. Roger & Me was 1989 and now it is 2010. The same crap is still going on, and more so. As I said, in 1989 it was still shocking that American corporations would treat Americans and America the way they did. But now we have been through another two decades of the few at the top closing factories, outsourcing the jobs, devastating the communities, pocketing the money and then using their financial power to demand tax breaks to further defund government. The difference is that now we all live with the effects, not just Flint.
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October 12, 2010
Reminder: I'm On The “Keep It Made In America” Town Hall Tour
I am joining and writing about the "Keep It Made In America" Town Hall tour. (Click through for more info and a map.) The tour is from October 12-29 and I will be joining from October 13-19, starting tomorrow in Jackson, Michigan.
The official tour announcement:
Creating Jobs Takes Center Stage at "Keep it Made in America" Fall Tour Town Hall Meetings in 10 States Ask Political Candidates, "How Will You Create Manufacturing Jobs?" October 12th-29th WASHINGTON, DC. Oct. 4, 2010 - With the midterm election less than five weeks away and all polls showing the economy and jobs topping the list of voter concerns, the Alliance for American Manufacturing (AAM) has announced its 2010 "Keep it Made in America" Tour. The non-partisan group will hold Town Hall meetings in 10 states to help voters directly question their candidates and elected officials on such key issues as unbalanced trade with China and rebuilding U.S. manufacturing for the global economy. "A majority of likely voters say the U.S. no longer has the world's strongest economy and that Washington isn't doing enough to rebuild manufacturing," said AAM Executive Director Scott Paul. "People are greatly concerned about our lost standing. They know China is overtaking us, and they want the United States to be number one again. "We are providing voters with a chance to ask their candidates directly, 'What are you going to do about restoring manufacturing and the millions of jobs we've lost to China,'" Paul said. "We've invited the candidates. Let's see if they'll face the voters." The Town Hall meetings, which will include a panel of local business, labor, and civic leaders, as well as remarks by various federal and statewide elected officials and candidates, will focus on: · The need to create good jobs for the 21st Century; · The importance of fighting for manufacturing as the key to any economic recovery; and · Leveling the playing field for American workers and businesses in the global marketplace. "The voters get it," said Paul. "Will the candidates?"
Here is the tour schedule. I will be joining from Jackson, Michigan on October 13, through Canton, Ohio on October 19.
- Oct. 12: Hartford, Conn., 6 p.m.
- Oct. 13: Jackson, Mich., 5:30 p.m.
- Oct. 14: Lorain, Ohio, 5 p.m.
- Oct. 15: Wheeling, W.Va., 5 p.m.
- Oct. 18: Erie, Pa., 5:30 p.m.
- Oct. 19: Canton, Ohio, 5 p.m.
- Oct. 20: Wayne, Pa., 6 p.m.
- Oct. 20: Merrillville, Ind., 5 p.m.
- Oct. 21: Asheville, N.C., 5 p.m.
- Oct. 27: St. Louis, 5 p.m.
- Oct. 28: Concord, N.H., 6 p.m.
- Oct. 29: Wausau, Wis., 5 p.m.
Please come if you can! If you are going to be in one of those towns please come to the Town Hall. Please RSVP here.
Posted by Dave Johnson at 2:33 PM | Comments (0) | Link Cosmos
October 8, 2010
Conservative Policy = Bad Jobs Report
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The September jobs report is out and conservatives got exactly what they wanted: less government, less stimulus, less aid to states, less help for small businesses, less infrastructure investment, less help for the unemployed and ... a bad jobs report. Conservatives successfully watered down the first stimulus, defeated further stimulus, fought aid to state governments, fought unemployment benefits, defeated help for small businesses, etc., etc. Here are the results, just in time for the election.
NY Times, Employment Picture Dims as Government Cuts Back:
... over all, the economy shed 95,000 nonfarm jobs in September, the result of a 159,000 decline in government jobs at all levels. Local governments in particular cut jobs at the fastest rate in almost 30 years.“We need to wake up to the fact that the end of the stimulus has really hit hard on local governments,” said Andrew Stettner, deputy director of the National Employment Law Project.
Conclusion: conservative policies kill jobs. They got what they wanted, and most of all they wanted bad job news, right now. Now, some if this was strategic, using obstruction to intentionally cause a bad jobs report in time for the election in order to turn voters against the governing party. But this jobs report clearly demonstrates what the results will be if conservatives get what they want: less government = fewer jobs. Less state government = fewer jobs. Less stimulus = fewer jobs. Fewer jobs = more people fighting for what jobs there are = lower wages. Lower wages = more stress on workers = angry electorate. Angry electorate = people divided, set against each other, not thinking long term, not thinking about the greater good, not seeing the bigger picture = conservative paradise.
Less government: Government payrolls shrank by 159,000.
Less help for the states: Local governments reduced payrolls by 76,000, 50,000 of those in education.
Less stimulus: The stimulus obviously turned things around, halting the freefall of job losses, but is running out. The chart below shows this Conservative have blocked more stimulus. Keep in mind, conservatives want to go back to the policies of the left side of this chart, the part that is in red. They want to stop government from stimulating demand in the economy.
Lower labor costs for businesses: "Flat hourly wages, now at $22.67, also threaten what fragile confidence American families may have in their household budgets."
Less help for the unemployed: Conservatives say helping the unemployed makes people lazy. They follow a dehumanizing "If you feed them they will breed" philosophy. There are nearly 15 million unemployed, 42% of them out of work longer than half a year. At the end of November help for those unemployed more than 26 weeks runs out.
Desperate workers: "In September, the typical unemployed worker had been searching for a job for 33.3 weeks."
Chad Stone, Chief Economist at the Economic Policy Institute, on the jobs report,
Today’s jobs report shows that the economy still faces a long and difficult climb out of the jobs hole created by the recent recession. The private sector has created, on average, fewer than 100,000 jobs a month this year — not enough to keep up with population growth and not nearly enough to reduce the unemployment rate. Worse, the pace of job creation is slowing as the economy slows, with only 64,000 private-sector jobs created in September.
Today’s jobs report shows our private sector continues to lead our economic recovery. We lost more than 800,000 private sector jobs the last month of the Bush Administration, but America’s business owners and entrepreneurs have added more jobs this year than the Bush Administration and its Republican allies did in eight years. Democrats are moving our country forward, and we will and we must do more to strengthen our economy and put people back to work.The American people face a clear choice: Democrats fighting for the middle class or Republicans standing up for special interests. They know Democrats want to ‘Make It in America,’ cut taxes for small business, and create good-paying jobs here at home. Republicans want to protect Wall Street and corporations that ship jobs overseas. Democrats want to cut taxes for the middle class, and Republicans want to give a break to millionaires and billionaires, and blow an even larger hole in our deficit. Democrats will preserve Social Security and Medicare; Republicans promise to privatize and cut benefits.
Americans can’t afford a return to the ‘exact same’ failed policies that produced the worst recession in generations. We will keep moving forward to create more jobs, growth, and prosperity for our workers and our families.
The "underemployed" - people who can only find part-time jobs, or have had hours cut, is up to 17.1%. See this chart:
And, finally, here is Calculated Risk's "scariest jobs chart," updated:
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Posted by Dave Johnson at 10:02 AM | Comments (0) | Link Cosmos
Infrastructure Jobs, Repeat And Amplify
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Just a short note here, to repeat and amplify what Krugman said:
And right now, by any rational calculation, would be an especially good time to improve the nation’s infrastructure. We have the need: our roads, our rail lines, our water and sewer systems are antiquated and increasingly inadequate. We have the resources: a million-and-a-half construction workers are sitting idle, and putting them to work would help the economy as a whole recover from its slump. And the price is right: with interest rates on federal debt at near-record lows, there has never been a better time to borrow for long-term investment.
Amplifying:
We have: Work that really, really needs doing. People that really, really need work. Borrowing money is really, really cheap.
Now, repeating and saying it a different way. We have:
- Work that really, really needs doing.
- People that really, really need work.
- Borrowing money is really, really cheap.
Elaborating: All this infrastructure work needs to be done anyway. Since Reagan we have fallen waaayyyy behind on maintaining and modernizing our infrastructure. This lowers our quality of life and makes us less competitive in the world.
Repeat: We are going to have to do this work anyway -- it has to be done. Right now money costs less to borrow than ever before. There are millions of people who need work.
Repeating a different way:
- We are going to have to do this work anyway -- it has to be done.
- Right now money costs less to borrow than ever before.
- There are millions of people who need work.
Infrastructure work - the rail, bridges, roads, schools, courts, power systems and everything else that makes our way of life better and makes our economy stronger by providing the soil in which business thrives - needs to be maintained and modernized. We have fallen behind and have to do it anyway one of these days. And right now there are millions of people who need work. Finally, it has never been cheaper because money costs less than ever before.
- Work that really, really needs doing.
- People that really, really need work.
- Borrowing money is really, really cheap.
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Posted by Dave Johnson at 7:45 AM | Comments (0) | Link Cosmos
October 7, 2010
I'll Be On The “Keep It Made In America” Town Hall Tour Next Week
I will be joining and writing about the "Keep It Made In America" Town Hall tour. (Click through for more info and a map.) The tour is from October 12-29 and I will be joining from October 12-19.
The official tour announcement:
Creating Jobs Takes Center Stage at "Keep it Made in America" Fall Tour Town Hall Meetings in 10 States Ask Political Candidates, "How Will You Create Manufacturing Jobs?" October 12th-29th WASHINGTON, DC. Oct. 4, 2010 - With the midterm election less than five weeks away and all polls showing the economy and jobs topping the list of voter concerns, the Alliance for American Manufacturing (AAM) has announced its 2010 "Keep it Made in America" Tour. The non-partisan group will hold Town Hall meetings in 10 states to help voters directly question their candidates and elected officials on such key issues as unbalanced trade with China and rebuilding U.S. manufacturing for the global economy."A majority of likely voters say the U.S. no longer has the world's strongest economy and that Washington isn't doing enough to rebuild manufacturing," said AAM Executive Director Scott Paul. "People are greatly concerned about our lost standing. They know China is overtaking us, and they want the United States to be number one again.
"We are providing voters with a chance to ask their candidates directly, 'What are you going to do about restoring manufacturing and the millions of jobs we've lost to China,'" Paul said. "We've invited the candidates. Let's see if they'll face the voters."
The Town Hall meetings, which will include a panel of local business, labor, and civic leaders, as well as remarks by various federal and statewide elected officials and candidates, will focus on:
· The need to create good jobs for the 21st Century;
· The importance of fighting for manufacturing as the key to any economic recovery; and
· Leveling the playing field for American workers and businesses in the global marketplace."The voters get it," said Paul. "Will the candidates?"
Here is a Business News Daily story about the tour, Advocates of U.S. Manufacturing Prepare Pre-Election Tour,
Preparing for the elections, the Alliance for American Manufacturing, a nonpartisan, nonprofit trade group, is launching its “Keep it Made in America” tour, a series of town hall meetings in 10 states where local business, labor and civic leaders will help voters question candidates on issues, particularly the state of manufacturing jobs in the United States.... In each of the 12 cities, the group has scheduled a panel of local leaders and invited federal and statewide elected officials and candidates to discuss job creation, manufacturing’s importance in economic recovery and “leveling the playing field for American workers and businesses in the global marketplace.”
Here is the tour schedule. I will be joining from Jackson, Michigan on October 13, through Canton, Ohio on October 19.
- Oct. 12: Hartford, Conn., 6 p.m.
- Oct. 13: Jackson, Mich., 5:30 p.m.
- Oct. 14: Lorain, Ohio, 5 p.m.
- Oct. 15: Wheeling, W.Va., 5 p.m.
- Oct. 18: Erie, Pa., 5:30 p.m.
- Oct. 19: Canton, Ohio, 5 p.m.
- Oct. 20: Wayne, Pa., 6 p.m.
- Oct. 20: Merrillville, Ind., 5 p.m.
- Oct. 21: Asheville, N.C., 5 p.m.
- Oct. 27: St. Louis, 5 p.m.
- Oct. 28: Concord, N.H., 6 p.m.
- Oct. 29: Wausau, Wis., 5 p.m.
If you are going to be in one of those towns please come to the Town Hall. Please RSVP here.
Posted by Dave Johnson at 11:12 AM | Comments (0) | Link Cosmos
October 6, 2010
How "Free Trade" Led To Currency War
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Lyndon Johnson is said to have commented that the press is like birds sitting on a telephone line. When one flies away, they all fly away. This week they are all flying around squawking "currency war!" But the world has been in a currency/trade war for some time, with only one side fighting and the rest losing. Now the world, on the edge of defeat in that war, sees that China is not "trading" they are taking. So, how to fight back, without (further) blowing up the world's economy?
The world can’t get to full recovery from this terrible recession without more balanced trade. That is a huge part of the equation. Our trade deficits started with Reagan when "free trade" was used to force concessions from labor by threatening to move the factories to non-democracies, away from the wage and environmental protections We, the People fought so hard to achieve. The wage squeeze resulted in unprecedented concentration of wealth - and loss of buying power for the rest of the population. Under 'W' Bush, Wall Street used China for short-term profits and bonuses and China used the power that brought to buy advantage around the world. So now the rest of us are living with the long-term consequences of race-to-the-bottom policies. Namely, the bottom.
That loss of buying power -- lack of demand -- is holding back recovery. To lift the economy we need to lift wages. We can’t get there without challenging current arrangements with China.
Yves Smith sums up this "full boil," in Currency War Threats Escalating, at naked capitalism,
Last week, the simmering threat of trade disputes erupted into a full boil when Brazil’s finance minister Guido Mantega said that national governments around the world were weakening their currencies in an “international currency war” to gain competitive advantage. Mantega stressed that Brazil was prepared to back his words with action to lower the value of the Brazilian real. Yesterday, IMF chief Dominique Struass-Kahn warned that countries were beginning to use their currencies as “a policy weapon” in a Financial Times interview.
So does the world now go into a full-on, chaotic currency/trade war? Martin Wolf weighs in at the Financial Times, How to fight the currency wars with stubborn China, (Click through to see the charts)
Has the time for a currency war with China arrived? The answer looks increasingly to be yes. The politics and economics of an assault on Chinese exchange rate policy are increasingly convincing. The idea is, of course, deeply disturbing. But I no longer believe there is an alternative.
Wolf runs down the issues.
Currency manipulation? "If a decision to invest half a country’s gross domestic product in currency reserves is not exchange rate manipulation, what is?"
Does it matter? "By keeping its real exchange rate down, China subsidises production of its exports and import substitutes. Since China is now the world’s biggest exporter, this has to be a significant distortion of world trade."
What might China reasonably be asked to do? Stop the manipulation and increase domestic demand. "[T]he menu of possible options for the Chinese authorities could include a cap on the intervention, an end to sterilisation of the monetary consequences and targets for real domestic demand, household consumption and the current account."
Can other countries shift China’s policies, with limited collateral damage?
Negotiation remains a hope. The rest of Group of 20 leading countries should unite in calling for these changes. But if negotiation continues to fail, alternatives must be considered. Import surcharges are one possibility. ... countervailing currency intervention ... affected countries could prevent other countries from purchasing their financial instruments, unless the latter offered reciprocal access to their financial markets.
OK, about that "without (further) blowing up the world's economy" I mentioned at the top. Instead of tariffs and other trade sanctions Wolf suggests currency-rate counter-policies,
"I find ideas for intervention in capital markets far more attractive than those involving action against trade. ... A trade war would be very dangerous. Insisting that China stop purchasing the liabilities of other countries so long as it operates tight controls on capital inflows is, instead, direct and proportionate and, above all, moves the world towards market opening."
Will China retaliate by ceasing to buy US bonds? If they do, that would be a good thing.
Some fear that a cessation of Chinese purchases of US government bonds would lead to a collapse. Nothing is less likely, given the massive financial surpluses of the private sectors of the world and the continuing role of the dollar. If it weakened the dollar, however, that would be helpful, not damaging.
Yves Smith weighs in on Wolf's recommendations,
Yves here. I see the odds of things going Wolf’s way as close to zero. China has no intention of “opening” its markets to investment bankers; it is not about to have its capital markets colonized, and it lacks the domestic finance skills to cope. China has made a close study of the errors Japan made in its peak years, in the 1980s, and one was the overly rapid deregulation of its financial sector….in response to US pressure.Similarly, the impetus to put pressure on China IS coming from the trade front, due to high unemployment. Action on the trade/tariff front looks like a more direct remedy, even if, as Auerback points out, the lags in trade are long. And with more economists lining up behind the crowd-pleasing idea of getting tough with China, the pressures and the intellectual cover, are in place.
Even though no one wants a trade war with China, it is not beyond the real of possibility that we wind up there. ... he odds of miscalculation have to be magnified when operating across a large cultural divide.
I wrote the other day, and want to repeat: There are always winners and losers. Right now in China there are currently winners and losers from the manipulated currency rate. If rates adjust to where they should be China might lose some jobs, but Chinese workers will immediately be higher-paid relative to the world than they had been, and Chinese consumers will also be more able to buy things made elsewhere.
Right now those in control of industries that are moving to China are winners and those in China who want higher pay and want to import are losers. And as is the way of the world the winners in China are fighting to keep their advantages, while the losers want change to occur. And outside of China the winners are fighting to keep their advantages, while the losers want change to occur.
But if China starts bringing its currency to market rates the world's winners and losers will be the winners and losers for the right reasons. It is time for China to move on from currency manipulation.
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Posted by Dave Johnson at 10:42 AM | Comments (1) | Link Cosmos
September 27, 2010
Consensus Grows: Confront China On Trade
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the day-to-day news about trade problems with China the bigger picture can get lost. America is giving up its competitive position in industries of the present and future and it is costing us. Even the people you would think would defend "free trade" are coming to understand that America is losing its vital ability to invent, keep and create industries and jobs and to keep a modern economy humming.
Robert J Samuelson has a significant op-ed today in the Washington Post, The makings of a trade war with China in which he says we need to confront China's illegal trade manipulations. You should read the whole thing but here are excerpts,
... Confronting China's export subsidies risks a similar tit-for-tat cycle at a time when the global economic recovery is weak. This is a risk, unfortunately, we need to take.... The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't.
... China's worst abuse involves its undervalued currency and its promotion of export-led economic growth.
Samuelson concludes,
The collision is between two concepts of the world order. As the old order's main architect and guardian, the United States faces a dreadful choice: resist Chinese ambitions and risk a trade war in which everyone loses; or do nothing and let China remake the trading system. The first would be dangerous; the second, potentially disastrous.
It's not just Samuelson concluding that we need to confront China's cheating on trade. Many others have been weighing in that we are losing too much and have to take steps. For example, in July Andy Grove, Intel's influential former CEO published a very important opinion piece on a similar topic, How to Make an American Job Before It's Too Late. Grove wrote that we are not just losing jobs to China, we are losing the "chain of experience" that enables new companies and industries to form and to create new jobs and argues for a national economic strategy to preserve our manufacturing and technology base. (These are excerpts but Grove's entire piece is an absolute must-read.)
You could say, as many do, that shipping jobs overseas is no big deal because the high-value work -- and much of the profits -- remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work -- and masses of unemployed?...evidence stares at us from the performance of several Asian countries in the past few decades. These countries seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.
Grove also says that we need to fix this and fix the unemployment problem for other reasons as well,
Unemployment is corrosive. If what I’m suggesting sounds protectionist, so be it.
One after another our business leaders and economists are realizing that the "free trade" ideology has not worked out very well for us. We were told by the "experts" that moving our factories out of the country was a good idea, that new jobs would replace those lost. They didn't. We were told that we don't need or want a national strategy to be competitive in the world because an invisible hand would guide us. It didn't. We were told that trade "partners" would reciprocate by buying from us equally. They didn't. We were told that we would invent new industries to replace ones we lost. We did, but the new industries moved or are moving out of the country, too.
Now that we are in the midst of the resulting crisis even the "experts" are realizing that trade needs to be a two-way street for it to work, and it hasn't been. "Free trade" was supposed to be a panacea, bringing us a prosperous future. The reality was different. A few corporate leaders (the ones who promoted these ideas) have gotten really, really rich at the expense of the rest of us (and that includes other corporations and corporate leaders). Now that the beneficiaries of the "free trade' bamboozlement are off to their private islands in their private jets or private yachts the rest of us are looking around at the devastation of our economy and standard of living, wondering what to do and finally becoming aware that rigid ideologies and their enforcers have kept us from looking for practical solutions that actually work for all of us as a country and community.
So finally from the depth of the resulting crisis a rational national discussion may be beginning, one in which people on the "free trade' side are not able to just shut down different opinions by shouting "protectionist" or other slogans. As this discussion gets underway here are three principles to help guide us:
1) Let's drop ideological preconceptions and look at what has worked in history and what is working for other countries today. Science is supposed to DEscribe, but economics has too often been about "if only people would do such-and-such, so-and-so would result." That is PREscribing and is not science.
2) We have to talk about how we handle mercantilist nations like China who are not playing by the trade rules and what we, together as a nation, can do about it. Let's also talk about and multinational reactions to the mercantilists. We can join with countries interested in lifting each other with fair trade, interested in trade models that help us mutually lift each other, and together take on those who want it all for themselves.
3) Ultimately we can't all export our way out of this mess. And ultimately we can't return to unsustainable old economic models that have failed us over and over. We can't continue with a few taking as much as they can get at the expense of the rest of us. As machines and technology solve more of our problems and do more of our work our overpopulated, undereducated world has to come to grips with equitable models for who gets what for what and how to take care of our planet and each other. That is the only thing that will work in the long run.
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Posted by Dave Johnson at 3:03 PM | Comments (0) | Link Cosmos
September 24, 2010
House Committee Approves China Currency Bill
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The House Ways and Means Committee just approved a bill that pushes China to raise the value of its currency. It looks like the bill will go to a vote on the House floor next week. This is a very big deal because it is a "second front" pushing China to bring its currency to market rates. President Obama met with Chinese Premier Wen yesterday and most of their 2-hour meeting was taken up discussing this issue, and today he gets backing from the House. This tells China that we are serious, that it is more than just the administration talking, and they have to start doing the right thing.
China has been manipulating its currency to keep it low, which means goods made in China cost less in world markets. This, combined with other trade manipulations, has created a huge imbalance in world markets. It moves industries, jobs, expertise, money and power to China, and has created a huge "bubble" of imbalance that threatens the world's economy. Currently the interests in China and elsewhere, including here, that benefit from the imbalance have the upper hand. But this vote demonstrates that the rest of us, here, in China and around the world, that would benefit from a rebalancing are rallying and challenging the current policies.
Bloomberg: China Currency Measure Heads for House Vote After Panel Approval
The measure would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency. President Barack Obama “does not take a position on this specific legislation,” Jeff Bader, his director of Asian affairs, said yesterday.“China’s exchange-rate policy has a major impact on American businesses, and American jobs, which is what this is all about,” Levin said before the vote.
The U.S. trade deficit with China widened to $145 billion in the first seven months of this year, from $123 billion for the same period in 2009. The expanding deficit, the unemployment rate lingering at almost 10 percent and polls showing Democrats’ seats at risk heading into the elections have added support for the bill, which has been discussed since 2005.
China had agreed to start rebalancing its currency, but the currency has moved only 1 percent since the agreement - nothing near the 40% some claim it needs to move. Meanwhile our trade deficit with China has increased. China's Wen claims that China is still a poor country and needs this protection to help it build the industries that will help its people rise out of poverty,
China might now be the second largest economy in the world, but Premier Wen insisted at the UN General Assembly that the "real China" was still in the "primary stage of socialism" and remains a developing country.Pointing out that 150 million Chinese people still live in poverty, Wen said many regions in central and western China were still very poor and this is the "real China".
"Taken as a whole, China is still in the primary stage of socialism and remains a developing country... These are our basic national conditions. This is the real China," he said.
The way to bring China, now the second largest manufacturer in the world, out of poverty is to trade fairly and work with its trade partners, not to manipulate the rules and create a huge imbalance that threatens the economy of the entire world.
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Posted by Dave Johnson at 3:40 PM | Comments (0) | Link Cosmos
September 23, 2010
China Currency Bill Moves -- Why Some Corporate Interests Oppose
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As President Obama meets with Chinese Premier Wen, the House Ways and Means Committee announces it will vote tomorrow on a bill to take action if China does not bring its currency to market rates. This sends a loud and clear signal to China that action is coming, one way or another, and they are going to have to make adjustments. This has every appearance of a smart, coordinated strategy between the administration and the leadership of the Congress.
WaPo: Bill combating China currency to advance,
House leaders are moving forward with legislation to combat China's currency policies, adding to pressure from the Obama administration and giving lawmakers an election-year chance to vote on a sensitive trade matter.The House Ways and Means Committee plans to vote Friday on a bill that would expand the Commerce Department's power to impose duties on Chinese imports in response to that country's currency being undervalued on world markets.
But there is opposition from inside our own country.
Some business groups oppose the bill, arguing that it could backfire if it raises trade tensions with China and prompts the Chinese government to use the many tools at its disposal to interfere with American companies. China is a major destination for U.S. exports - about $70 billion a year - although the United States runs a trade deficit of about $200 billion a year with that country. Duties on Chinese imports might also raise prices for U.S. consumers.
There are competing interests at work. Robert Reich wrote about this a week ago in The Two Categories of American Corporation — And Their Politics and Harold Meyerson picks up the theme today in The real un-Americans.
Reich points out that some giant companies sell to Americans, and therefore want us strong and prosperous, and want policies that stimulate our economy, provide jobs with good pay and generally boost the middle class. Others, not so much.
The first group includes national telecoms like Verizon and AT&T; that need a prosperous America because most of their sales are here. Same with finance companies like Bank of America and Travelers Insurance whose business strategy has been built around U.S. consumers. Ditto certain giant chains like Home Depot. Naturally, all these companies were especially hard hit by the Great Depression and its devastating impact on American consumers.The second group includes companies like Coca Cola, Exxon-Mobil, Hewlett-Packard, Intel, and McDonalds, that get substantial revenues from their overseas operations. Increasingly this means China, India, and Brazil. Ford and GM are still largely dependent on US sales but becoming less so. ...
What does this mean for Main Street? Reich says,
Large American corporations are going global as fast as they can. That’s good for their shareholders. But in a Washington ever more susceptible to their money and influence, that’s not necessarily good for most Americans.
Meyerson picks up on this today,
Consider the debate in Congress about whether to impose tariffs on Chinese imports if China continues to depress the value of its currency. ... Unions and some domestic manufacturers support the bill. But a large number of American businesses, in a campaign coordinated by the U.S.-China Business Council, oppose it.... The question here is whether the 220 corporations that belong to the council ... are already so deeply invested in China as manufacturers, marketers or retailers that buy goods there to sell them here that their interests are more closely aligned with China's than with America's. [emphasis added]
It is important to understand that some of the country's most powerful entrenched, wealthy interests no longer depend on the success of America's economy and the prosperity of our people. They have a lot of power and money, and use it to influence our country's politics to increase their own wealth and power. But their interests are not our interests. They want low taxes and don't care whether we have good jobs, good schools, modern infrastructure and an economy that works for We, the People. They just don't care about that. And they are willing to say and spend what it takes to set us against each other, poison our politics, and anything else they need to do to get us to act in their interests not ours. "Globalization" and "free trade' policies work for them, because they enable them to evade the protections that our democracy gives us. But allowing them to just move factories and jobs out of the country and then bring the goods back here with no penalty does not work for the rest of us.
Keep this in mind when you hear the different arguments over taxes, infrastructure, education and government in general.
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Posted by Dave Johnson at 10:15 AM | Comments (0) | Link Cosmos
September 16, 2010
Welcome Home, Tire Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Today the US Trade Representative (USTR) Ron Kirk filed two complaints with the World Trade Organization (WTO). The first alleges that China is keeping American credit and debit card companies out of their electronic payment market. The second is a "dumping" (selling under cost) complaint on steel products.
"We are concerned that China is breaking its trade commitments to the United States and other WTO partners," Kirk said in announcing the two cases.
This is a big deal, because it tells China that we are willing to fight back. But Sen. Charles Grassley said this was not enough,
"The administration should go one step further and bring a case against China's unfair currency manipulation at the WTO. Everyone knows China is manipulating its currency to gain an unfair advantage in international trade," Grassley said.
Almost exactly a year ago I wrote a post, President Obama Enforces Trade Law In China Tire Case!, celebrating President Obama's decision to enforce the ITC's recommendation to impose tariffs on Chinese tire imports.
What was the result of that decision to actually enforce trade laws? Did the world end? Did it start a "trade war" with China? No, the result was that jobs started to return.
The Alliance for American Manufacturing is running this full page ad in a few newspapers today:
(Click for large pdf)
AAM explains: (click through for links)
Why did we do it? To make sure lawmakers understand just what is at stake today.First, Treasury Secretary will be appearing at not one but two hearings today to examine China’s currency policies. We suspect he’ll get grilled by lawmakers for not doing more.
Second, the International Trade Commission is examining today a trade case filed by several domestic paper companies and the United Steelworkers on coated paper from China and Indonesia. Here’s the witness list. We want to remind folks that trade enforcement works.
Finally, some in Congress want the Obama Administration to remove tariffs imposed last year some imported Chinese tires that were causing market disruptions in the U.S. The Alliance for American Manufacturing has already set the record straight on this issue. It’s important to counter these false claims.
The BIG issue, of course, is China's currency manipulation. Congress is holding hearings on this and Treasury Secretary Geithner testified this morning that the administration is reluctant to formally declare that China is doing what it is doing. A WSJ report puts it this way:
While the Treasury secretary feels the yuan is "significantly undervalued," a formal designation would "not be a particularly effective tool" for achieving U.S. goals.
Congress needs to act because the administration won't. Pushing this is in China's best interests as well. Entrenched and powerful interests on both sides of this dispute are keeping their governments from acting in the broader interest. This is causing a huge bubble of imbalance to expend, threatening the world's economy. Passing a bill mandating tariffs to force China to bring its currency to market levels is the way around the standoff for both countries.
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Posted by Dave Johnson at 11:12 AM | Comments (1) | Link Cosmos
September 15, 2010
China Currency Battle Heating Up
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Since China joined the World Trade Organization (WTO) our country's balance of trade has gotten worse and worse and we have lost jobs and jobs (and money and money). Between 2001 and 2008 we lost 2.4 million jobs just to China. Normally a situation like this balances out because China's currency would rise, making goods made here competitive and helping China's workers be able to buy things we make. So we would benefit from the gains they make. That's why trade can be a win-win when parties play fair.
But China isn't playing fair. They manipulate their currency, "pegging" it to the dollar, so goods made there continue to have a lower price in world markets. Some say that they have a 40% pricing advantage just from the currency manipulation. And after that you can take into account the many other ways that China is cheating on trade. So we have a huge problem and a huge imbalance, both growing to extremes.
Japan got tired of waiting for China to stop cheating. Financial Times: Japan intervenes to weaken yen,
Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, sending it nearly Y3 lower against the dollar to mitigate the threat its strength posed to Japan’s export-reliant economy.
Note that this means we now have both China and Japan weakening their currencies against ours, giving both pricing advantages against our goods, which will add to the pressures on us.
Congress is looking into China's currency manipulation with hearings beginning today, and may act soon. The Hill: Punishing China becomes issue for Democrats in midterm election,
Ryan’s bill would allow the Commerce Department to consider currency manipulation in calculating countervailing and antidumping duties on any imports from countries manipulating their currencies to lower the cost of their exports. ... Many rank-and-file Democrats are frustrated with China, which promised in June to allow its currency to follow market trends. Since that announcement, China’s currency has increased by less than 1 percent.
Action by Congress would be politically popular. Harold Meyerson writes in the Wash. Post about this today, in Time to stand up to China on trade
There's little dispute that the Chinese government controls such strategic industries as alternative energy and that it subsidizes that industry massively, in clear violation of WTO rules. Politically, the American public plainly supports policies that boost American industry and curtail offshoring. A Heartland Monitor poll, sponsored by Allstate Insurance and the National Journal, released last week, asked Americans to choose one of three options for how America should deal with the global economy. Thirty-six percent backed a program that instituted tariffs on imports and penalized companies for offshoring jobs. Thirty-two percent supported governmental programs to help strategic domestic industries. Just 23 percent backed a laissez-faire free-trade policy.
Business groups representing the huge multinationals are fighting on China's side on this. Reuters, US groups urge Congress not pass China currency bill,
Thirty-six U.S. farm and business groups urged Congress on Tuesday not to pass legislation threatening China with duties on some of its goods if Beijing does not revalue its currency.
Meyerson again,
Consider what this says about contemporary American capitalism. American big business is now so inextricably invested in China that it won't defend or promote American-based manufacturing. Those tasks have fallen to our largest manufacturing union. By any dispassionate measure, it's our labor movement, not our leading businesses, that deserves the term "American."
If China would play by the rules, this would balance itself and turn into a win-win. If the administration would insist that China plays by the rules, backed up with a strong tariff if they don't, China would likely start coming around. And if nothing else works, a strong tariff on Chinese goods is needed. It is time for Congress to act.
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Posted by Dave Johnson at 9:59 AM | Comments (0) | Link Cosmos
September 9, 2010
To Fix The Economy Raise Wages
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
To fix the economy we have to fix wages. Increased wages will restore demand. The changes that will increase wages will help restore democracy.
The social contract used to be that citizens in our democracy share the benefits of our economy through increased wages that come from increases in productivity. This broke down and working people's incomes have been stagnant since the Reagan Revolution. (Yes, I'm telling the same story again. It needs to be told, over and over so people can understand what is happening to us. We are feeling the effects of the Reagan Revolution coming home to roost.)
Reagan and the conservatives weakened the government and broke the unions. Government and organized labor were the forces in our society that had stood up for the interests of regular people against the "moneyed interests" and weakening them fundamentally changed the fairness equation of our economy. After the Reagan Revolution working people's share of the benefits from increased productivity turned down:
All of the benefits of improvements in our economy now flow to a few at the top. This results in intense concentration of wealth:
With more and more of the income and wealth going to a top few, We, the People are thought of less and less as citizens and more and more as "the help." But who is our economy for, anyway? Our economy can operate for the benefit of We, the People, or it can operate for the benefit of a wealthy few at the expense of the rest of us. This is the ongoing battle. And history has shown over and over that when economies operate for the few, they don't work.
This is not just about sharing the economy, it is about sharing the decision-making power. In our form of government We, the People are supposed to make the decisions. When Reagan said, "Government is the problem" he was really saying that decision-making by We, the People is a bad thing. When conservatives complain about "big government" they are complaining about We, the People having a big share in decision-making. When they call for "less government" they are calling for less of a share of the decisions-making by us. This means the wealthy and powerful have more of a share -- of everything.
With the income, wealth and benefits of the economy increasingly flowing to a top few, working families tried to compensate for the loss in various ways. Women entered the workforce. Former Labor Secretary Robert Reich explains, "By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did)." (Please read his whole post if you have time.)
Then, still not getting by on stagnant wages with rising prices, people worked more hours or added second jobs. Then they started using up their savings.
Finally they resorted to adding debt.
This all finally broke down, demand slowed, and the economy has slowed to a crawl. The 90s financialization and "dot com" bubbles obscured the way things were headed, and then the housing bubble of the 2000s continued the illusion. But debt just kept rising people kept working longer and harder to get by, while the richest few kept getting richer. Finally it all crashed and current attempts to prop it up by helping the wealthy and big businesses are not succeeding. Bailing out big banks and their executives and shareholders and not holding anyone accountable, while letting predatory corporations continue their economy-draining practices has not only kept the worst parts of the "share of the wealth" problem in place, it has undermined people's faith in government and demcoracy. Changes need to be made.
Most people pay for things with income from jobs. If we want demand to rise, then we need to raise incomes. But things are still going in the wrong direction. As CAF's Robert Borosage writes today,
"Over the last decade, we lost one in three manufacturing jobs. Inequality reached Gilded Age extremes. CEOs and bankers pocketed million dollar bonuses while cooking the books and gambling on exotic securities, inflating the housing bubble until it burst. Health insurance companies kept a strangle hold on a health care system that costs twice as much as those in other industrial countries, leaves millions uninsured and provides worse health care."
Who Gets What For What?
This bad economy situation is going to drag on until we make real changes in the structure of who gets what for what in this country. Every incentive in the economy is to try to reduce wages, cut benefits and eliminate jobs. Think about that. People get bonuses and raises and owners get richer if they eliminate YOUR job or at least cut back your pay and benefits. For example, by replacing a worker with a machine, the owner of the machine gets more money, the worker gets nothing. But in the larger economy each time this happens it means there are fewer people in a position to buy whatever goods or services the same companies that eliminated the jobs are in business to provide. And it means that a few wealthy people become more wealthy and powerful.
This is where government comes in. Government is supposed to be the force that speaks for and protects the interests of the people, empowers people through education and rules, set conditions to keep wages high, lay down the infrastructure in which businesses thrive, and coordinates the international competition for industries and jobs. But the Reagan Revolution broke that. We need to restore it.
There are so many things that government could be doing to get the economy working again for working people, small and medium businesses and big corporations that want to make an honest living. Boost the minimum wage, modernize the infrastructure, provide health care, provide free education through graduate level, increase Social Security, help unions organize, impose a democracy tariff so imports don't get around the protections provided by our democracy, and return to taxing the rich who reap the dividends and payout of all the past investment that We, the People made to make business thrive.
And there are larger structural changes we can make. Just brainstorming but what if workers replaced by machines directly got some of the income generated by the machine. Workers laid off this way several times might then have enough income to get by without working! Or what if we cut the workweek from 40 hours to, say, 35 before overtime kicks in. Maybe that would increase hiring, while giving regular people more leisure time. (And keep cutting the workweek as machines and computers do more of the work.)
And, of course, to have wages at all people have to have jobs. One would think this would go without saying but these days it seems there is a need to point out that people are hurting for jobs, because the DC elite seem to have moved on from that. We badly need government programs to directly hire people to do things that help the people of the country. We would have all of this if the Reagan Revolution hadn't weakened government of, by and for We, the People.
Other posts in the Reagan Revolution Home To Roost series:
Tax Cuts Are Theft
Reagan Revolution Home To Roost -- In Charts
Reagan Revolution Home To Roost: America Drowning In Debt
Reagan Revolution Home To Roost: America Is Crumbling
Finance, Mine, Oil & Debt Disasters: THIS Is Deregulation
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Posted by Dave Johnson at 11:52 AM | Comments (0) | Link Cosmos
September 4, 2010
American Jobs Tragedy
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The stimulus worked but was not enough. Here is the result:
This is known as "the scariest jobs chart," from Calculated Risk.
Robert Reich: The Great Jobs Depression Worsens, and the Choice Ahead Grows Starker
The number of Americans willing and able to work but who cannot find a job hasn't stopped growing since the start of 2008. All told, about 22 million Americans are now jobless. Add in those who are working part-time who'd rather be working full time, and we're up to 25 million.And because most families depend on two paychecks, the practical impact is almost double.
The DC and business elite don't feel it. They explain the problem by blaming the people they put out of work, saying the unemployed are just lazy, and unemployment checks keep them from looking for work. They're doing just fine and taking good care of each other.
Frank Sobatka describes one of the main reasons for the problem:
Frank's right. Our choice is to manufacture or borrow (until we can't.) Other countries are being smart on trade. Why aren't we? We really, really need an industrial policy to guide us back to growth. We can build a new economy from old roots. I mean, what were we thinking? We turned our companies into buy-sell commodities with our country and people as "costs." So we ended up caught in a machine that grinds us up. This has led to and attitude that citizens are an infestation, if you feed them they breed, like "the help" -- you have to make them work, certainly no longer as the people in charge.
We thought moving a factory was "trade," when it is really about evading democracy's protections of We, the People. We didn't see that Wall Street was at war with the real economy and We, the People, paying out $140 billion for bonuses but zero for America's future. We thought getting back to "normal" was an option. But really, It's The Economic Paradigm, Stupid!
Here's another part of the problem: Tax cuts are theft. Our investment in infrastructure created the conditions that enable commerce to prosper – the bounty of democracy. In return we ask those who benefit most from the enterprise we enabled to share the return on our investment with all of us – through good wages, benefits and taxes.
What Can We Do?
Here are parts of the solution: We need a democracy tariff at the border to stop greedy employers from stepping around the wage, safety and environmental protections that We, the People fought to build. We need to tax the wealthy and Wall Street to pay to fix up the infrastructure and public structures that enabled their wealth. Tax Cuts Leave Nothing Behind -- Infrastructure Investment Leaves Behind Infrastructure. Not only that, Tax Cuts Caused The Deficits, Therefore...
Where Are The Jobs, Jobs, Jobs, Jobs, Jobs, Jobs? It's The JOBS, Stupid! Why DC Elites Don't See This?
P.S. if you have time, please click the links.
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Posted by Dave Johnson at 1:07 PM | Comments (1) | Link Cosmos
September 3, 2010
Labor Day: Labor Got It Right -- Who Could Have Known?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
"Who could have known?" That's the cry from the big-corporate and DC elite as the economy and the environment and so many imporant things crash around us. (Around us, not them, they're doing just fine and taking good care of each other.)
Who could have known that 25%-per-year house price increases was a bubble?
Who could have known that a housing bubble could burst?
Who could have known that deregulating the financial industry could lead to a financial meltdown?
Who could have known that concentration of wealth could cause consumer demand to dry up?
Who could have known that huge tax cuts for the rich combined with huge military spending increases could cause massive budget deficits?
Who could have known that the Social Security trust fund needed a "lockbox" so it wouldn't be given away as tax cuts?
Who could have known a deregulated deep-water well could cause a massive, destructive, uncontrolled underwater gusher?
Who could have known that continuing to put carbon into the air would cause problems for the climate?
Who could have known that moving our factories out of the country would lead to high unemployment and structural trade deficits?
Who could have known that invading Iraq was wrong and a deadly, disastrous, costly, long-term mistake?
Who could have known that a too-small stimulus that focused on tax cuts wouldn't turn the economy completely around and then conservatives would claim that the stimulus "killed the recovery?"
(List continues into infinity...)
Add organized labor to the list of those who got it right, time after time.
Organized labor was right about the 40-hour workweek.
They were right about the middle class.
They were right about the weekend.
They were right about paid vacations.
They were right about paid holidays.
They were right about paid sick leave.
They were right about providing good, secure retirement plans for everyone.
They were right about providing unemployment benefits to tide people over.
They were right about providing maternity leave, child care and family leave for families.
They were right that trade agreements like NAFTA and letting China into the WTO would lead to massive trade deficits and job losses.
They were right about workplace and consumer safety.
They were right about keeping manufacturing in America.
They were right about fighting discrimination in the workplace.
They were right about raising the minimum wage and the effect that low-wage policies would have on the economy.
They were right about the effect of excessive CEO pay on the economy.
They were right about the devastating effect of the Bush tax cuts.
They were right about the need to maintain and modernize our country's infrastructure.
They were right about going green.
They were right ab out the dangers of Wall Street's financialization of the economy.
They were right about providing good health care to everyone.
They were right about strengthening, not cutting Social Security.
They were right about democratizing corporate governance.
They were right about fighting privatization.
They were right about fighting deregulation.
They were right about providing good education opportunities to everyone.
They were and are right that we need a national jobs agenda
Labor was right about people joining together instead of being on our own.
(List continues into infinity...) They were right and they continue to be right.
And unions have been fighting for these things for all of us, not just for their members.
Please add to these lists in the comments! What other things could nobody have known, and what other things did labor get right?
Enjoy Labor Day. In fact, for those of you that still have jobs after the decades of conservative policies, enjoy having weekends off, the 40-hour week, paid vacations, sick pay, health care, etc. And if you have a job but don't have those things ... JOIN A UNION!
P.S. Here's an example of being right:
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Posted by Dave Johnson at 12:12 PM | Comments (0) | Link Cosmos
August 30, 2010
America Is Strong When Our Unions Are Strong
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
America was formed as a government of, by and for We, the People. It says so right in the first words of our Constitution. To get that Constitution we rebelled against the King and England's aristocracy and their corporations, with their concentrated wealth and power. And we continued that fight and over time we extended our system of one-person-one-vote, adding women and minorities to that equation.
The fight has gone back and forth. When our democratic government works, it pushes for increasing the protections and benefits of a strong economy for We, the People. This has included, for example, the mandated 40-hour workweek and minimum wages to fight exploitation, both pushed by labor. But at other times our government was "captured" by the power of concentrated wealth and working people are not well-represented. Even then we're still not necessarily each on our own. During those times we have depended on labor unions to push back against that power of concentrated wealth. Working people can organize into labor unions to bargain for higher wages and better treatment than workers could obtain individually.
What difference can unions make? In 1945 labor unions represented about 1/3 of all workers. When American unions were strong working people got the minimum wage, the 40-hour week, weekends off, paid vacations, health insurance, pensions, dignity and respect. This was when America built the middle class that everyone has been taking for granted since. Even the wealthy benefited greatly over the long run as more consumers with more money to spend lifted the whole economy.
But what has happened to us since the Reagan Revolution, when concentrated power of the big corporations weakened America's unions? Since the days of FDR membership in unions has fallen, but in 1980 unions still represented 24% of American workers. The Reagan administration famously launched an all-out assault on organized labor, resulting in membership falling to 16.4% by 1989. And the trend continued: by 1998 union membership fell to 13.9 percent. By 2009 that had decreased to 12.3%, but only 7.6% in the private sector. And here are the results:
This is a chart of working people's share of the benefits from our economy. Note the brief return to normal under Clinton, erased by Bush II. But the assault on working people has recently been bipartisan. Clinton pushed to pass the Bush I-negotiated NAFTA treaty which hammered the bargaining position of workers, while Bush II consolidated the practice of "outsourcing" labor competition from non-democratic countries where workers didn't have rights or protections.
As we all know, since the Reagan Revolution weakened the negotiating power of working people, wealth and income have concentrated at the top, our country's debt has massively increased, household debt as well, the country is crumbling and everyone except the wealthy few and big corporations is generally worse off.
Unions still make a difference. According to the Bureau of Labor Statistics, "In 2009, among full-time wage and salary workers, union members had median usual weekly earnings of $908, while those who were not represented by unions had median weekly earnings of $710." Union members also often have paid vacation, paid sick leave, health insurance and other benefits that non-union workers do not. The difference is dramatic. In March 2009, 78 percent of union workers were covered by health insurance through their jobs, compared with only 51 percent of nonunion workers. Seventy-seven percent of union workers participate in defined-benefit pension plans, compared with 20 percent of nonunion workers.
When you hear someone complain about unions and complain that people in unions are paid better than the rest of us, let them know that they are reaching the wrongest conclusion. They shouldn't resent union members and complain about their pay, they should join a union and support unions, so they they and everyone else can come out ahead.
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Posted by Dave Johnson at 5:40 PM | Comments (0) | Link Cosmos
August 27, 2010
GDP Revised Down -- Conservative Trade Policies Exporting Our Growth And Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
When we pack up a factory here -- and all of its jobs and supply chain and its support/.maintenance structure -- and send it all over there to a country that doesn't have the wage and safety and environmental protections we have, just to save a bit of money today we are also sending them the ability to make money in the future. And that future is here now.
The country's second-quarter GDP was revised down sharply to 1.6%. So the "stimulus," by raising GDP somewhere between 1.7% and 4.5%, is the only thing that has kept us from falling completely over the cliff. But we can't just get by on stimulus forever (especially when we waste one-third of it on tax cuts that leave nothing behind but debt). We have to fix the causes of the problems.
One big reason we are having so much trouble is that we haven't solved the trade problem and our efforts to get growth going are just being used to help other countries grow.
In The Washington Post today, Flow of imports drags down economic growth:
The government said the trade deficit subtracted almost 3.4 percentage points from second-quarter GDP - the largest hit from trade in 63 years.
Corporate conservatives talked us into sending our manufacturing out of the country. In the short term some executives got huge bonuses as assets and capacity were sold off and payrolls reduced. But in the long term the ability for the country to earn money has been sent "over there."
I recently came across this talk by Ian Fletcher, author of Free Trade Doesn't Work, given at the Heritage Foundation. I recommend watching, and clicking through to order his book. Ian doesn't come from the left or right (watch him make this clear in the video) but instead just looks at trade with a scientific, fact-based, analytical approach.
Comparative Advantage?
Here is the most important point he makes, 20 minutes in (use that slider bar), in regards to the problem of moving factories to cheap labor countries. Comparative statics: Free-trade economists argue that cheap labor is a "comparative advantage." Fletcher explains that this means that if they are already making something more efficiently, today, then our best move today is to buy it from them. But it doesn't make sense to just pack up an industry and reassemble it in a different country with low wages because then you are doing nothing more then sending away your ability to earn a living.
Yes, as I said, some people make a bunch of money in the short term doing that. But "it's obviously going to cause a decline in our capacity to produce goods and services in the future."
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Posted by Dave Johnson at 1:49 PM | Comments (0) | Link Cosmos
August 25, 2010
Boehner Trade Plan: Go Back To Disaster
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party's positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it.
I write about the specifics of Boehner's call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an "economy stalled by ‘stimulus’ spending." But according to FOX News' Wall Street Journal, yesterday the CBO reported that "the impact of the stimulus program estimated ... the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points." In addition, the Washington Post reported, "The CBO said the act also increased the nation's gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy."
Boehner also said that "each dollar the government collects is taken directly out of the private sector." This is the old "taxes take money out of the economy" argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country's prosperity. If you think that President Eisenhower's spending on the Interstate Highway System "took money out of the economy" you really need to see someone about your problems and not take them out of the rest of us.
Taking direct shots at democracy, Boehner complained about "big government" -- namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us -- and said, "As Mitch Daniels, the governor of Indiana, recently said, "You'd really be amazed at how much government you'd never miss." Boehner really has a problem with this whole "We, the People" thing.
Boehner on Trade
Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration's record:
This is bad enough, but these "free trade" agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower.
These "free trade" agreements need to be reviewed and reformed, so they protect wages, the environment., worker's rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can't Buy Refrigerators! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner's trade ideas everyone just gets poorer and eventually the economy stops.
Oh, wait, we DID follow Boehner's trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that.
This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter, sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make.
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Posted by Dave Johnson at 9:50 AM | Comments (0) | Link Cosmos
August 23, 2010
DC Elites Pushing Korea Trade Pact
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The way a lobbyist argues for or against anything today is to say it will create or cost jobs.
Prohibiting lawsuits against giant corporations that harm people creates jobs. Making oil drilling safer costs jobs. Tax cuts for the rich creates jobs. Just getting rid of government will create jobs.
So, of course, we hear now that passing the South Korea trade pact will create jobs. From the Washington Post today.
...administration officials estimate the deal could mean more than $10 billion annually in increased U.S. exports to Seoul and tens of thousands of new U.S. jobs.
Maybe, and maybe not. South Korea currently has high tariffs and other restrictions on American goods, so a trade pact that gets rid of these tariffs would increase American exports, creating American jobs. As the story says,
[South Korea] remains in some ways a closed shop with extensive tariffs, a paltry share of its large auto market devoted to imports, and a notorious set of non-tariff barriers that has prompted companies such as Peoria-based Caterpillar to complain that their products are routinely excluded for minor regulatory problems.But ...
Skeptics of the proposed agreement include some major corporate interests such as Ford Motor Co., which argues that the pact isn't aggressive enough in trying to open the South Korean market. Ford officials, for instance, noted that imports now represent less than 5 percent of South Korea's auto market.Unions, environmental advocacy groups and other organizations, meanwhile, are urging Obama to keep his campaign promises and stiffen the terms for South Korean access to the U.S. market.
Meanwhile, Pork Magazine writes,
The latest supporter is South Korean Ambassador Han Duk-soo, who has assumed the unusual role of a foreign official promoting U.S. jobs. "This is an opportunity to stimulate the U.S. economy at no cost to U.S. taxpayers,” he says.The Koreans are telling us how good this pact will be for us? That is a warning sign. Their job is to take care of (certain interests in) Korea. Our government's job should be to take care of our interests - meaning ours - We, the People - not the interests of a few wealthy executives and major owners of a few big, multinational corporations.
There are jobs and then there are jobs. There are good jobs that raise living standards and enable people to buy things others make, and there are low-paying jobs that companies use to extort concessions from workers and communities that create a worldwide race to the bottom. And there are trade deals and then there are trade deals. There are trade deals that help working people on both sides of a trade boundary. And there are trade deals that allow companies to ship jobs overseas and evade the protections our democracy has fought so hard to build.
This trade deal was negotiated by the George W. Bush administration. This (along with the South Korean ambassador pushing this treaty as good for America) is a warning flag if every there was one. The Center for Economic and Policy Research writes,
The trade agenda of the United States had been about reducing barriers to trade in manufactured goods with the purpose of putting non-college educated workers in direct competition with much lower paid workers in other countries. The predicted and actual result of this policy is to reduce the pay of non-college educated workers, thereby increasing inequality in the United States. This is a policy of one-sided protectionism. It has nothing to do with "free trade."
As I wrote last month: This is a test and an opportunity. Does the accord show a path to a new way of relating to trade that will help us and our partners? This Korean trade deal should be revised into a model for how we change our trade relations with countries like Korea and China. We can trade in ways that benefit both sides, not just one side.
I'll be following this debate as it continues.
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Posted by Dave Johnson at 11:20 AM | Comments (0) | Link Cosmos
August 11, 2010
Our Growth Is Outsourced, Like Our Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the news today, a familiar story: imports increased, exports declined. About $50 billion in one month alone. The trade gap isn't just costing jobs, it's a significant factor in the slow recovery as well. See below.
In 2005, when we were halfway down to where we went, I wrote a post at my own blog titled, The Trade Problem. With (my) permission, here is the entire post:
View of San Francisco from Sausalito. See how this ship is riding high off the water? This ship is loaded with empty containers, bound for China. Ships come into the port loaded with goods that we buy from China. But China doesn't buy very much from us. So we have to send ships back loaded with empty containers. (Well almost empty, they're actually filled with dollars, and jobs, and the future.)
June 2010 Trade Numbers: We're Back To Terrible
That was 2005, And now we're importing shiploads of stuff again, and sending the ships back filled with cash - and what's left of our future. The trade deficit widened to $49.9 billion in June,
The trade deficit in the U.S. unexpectedly widened in June to the highest level since October 2008 as consumer goods imports rose to a record and exports declined.[. . .] Exports from the U.S. decreased to $150.5 billion from $152.4 billion, reflecting fewer shipments abroad of semiconductors, computers and steelmaking materials. Imports increased in June to $200.3 billion from $194.4 billion, led by telecommunications equipment, automobiles and consumer goods such as pharmaceutical preparations, televisions and furniture.
The quantity of imported petroleum increased, while the price per barrel fell to $72.44 from $76.93 the prior month, according to today’s report.
Trade Deficit Cuts Jobs And GDP
We are not just outsourcing jobs, we are outsourcing our own economic growth to others! Charles McMillion of MBG Information Services writes that, "the worsening trade deficit cut the Q2 GDP growth rate by -2.8%."
That is, if trade and production losses in Q2 had remained at Q1 levels, all other things equal, GDP would have risen at a 5.2% rate in Q2 rather than the actual estimate of meager 2.4% growth. Today’s report suggests BEA must now revise its estimate which could show the worsening trade deficit lowering the Q2 growth rate by a full -3.0% leaving growth at just 2.2% with, apparently, worse to come.A lot of people think it's just "old stuff" like steel that is losing out. But look at this chart:
Note how the chart has to be extra tall to fit the huge decline in exports of advanced products. There are more charts with more bad news. (PDF)
Congress And The President's New "Make It In America" Initiative
Congress and the President are trying to do something about it, with the new "Make It In America" initiative. CAF's Bob Borosage in Politico today, Save American manufacturing,
More than 75 percent of Americans support a “national manufacturing strategy to make sure that economic, tax, labor and trade policies work together to help support manufacturing in the U.S.”Not surprisingly, the Democrats’ lead initiative now is the National Manufacturing Strategy Act ... It calls for quadrennial review of U.S. manufacturing policy — including assessing strategic industries, reviewing tax and trade subsidies and requiring agencies to coordinate strategies.
. . . Obama’s “new foundation” for the economy offers first steps: public investment in 21st-century infrastructure, in education and training, in research and development. Yet these, slighted in years of conservative control, are necessary but not sufficient.
To ensure products are “made in America” requires hardheaded steps to balance trade and challenging the mercantilist countries, starting with China.
AAM: "Wrong Direction" and "Giving China Benefit of Doubt on Currency Falls Short
Alliance for American Manufacturing (AAM) Executive Director Scott Paul on this morning's latest monthly U.S. trade figures:
"The trade deficit is headed in the wrong direction, and that's bad news for American workers. ..."The White House strategy of giving China the benefit of the doubt on currency has fallen short. The House and Senate must now step in and pass strong legislation to penalize China's currency manipulation and bring down our trade deficit. Over the longer term, we're encouraged that the recent focus by Congress and the Administration on 'Made in America' solutions to revitalize our manufacturing base and create jobs will bear fruit ...
"The drop in exports is also an enormous blow to the Administration's efforts to double American exports. ... The biggest internal obstacle is the lack of an aggressive strategy to boost American manufacturing. ...."
Are we right back to the "new normal" with even more jobs and industries being shipped overseas? Or are we going to learn from the past and do something about it this time? Conservative "free trade" and "free market" nonsense just doesn't work. It's time to leave that stuff behind instead of trying to accommodate and appease, and all the resulting backup that brought us, keeping us from moving forwards: We need "Buy American" in procurement. We need high-speed rail and local mass transit projects. We need a huge infrastructure rebuilding and modernization effort. We need the Local Jobs for America Act. We need a national Renewable Energy Standard. We need to set a high price on carbon. We need to build out the smart electrical grid. We need to address Chinese currency manipulation and trade violations. We need to restore taxation of the wealthy. We need free education for our people. We need to extend unemployment and COBRA subsidies for the "99ers." We need to increase the minimum wage. We need to pass the Employee Free Choice Act. We need Immigration Reform.
And this is just some of what we need. And these all just buy time until we can figure out how to restructure the economy by reforming who gets what for what and ideas of what "ownership" means, so that we can all move into a prosperous, progressive future.
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Posted by Dave Johnson at 11:17 AM | Comments (0) | Link Cosmos
August 6, 2010
Where Are The Jobs, Jobs, Jobs, Jobs, Jobs, Jobs?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The economy is stuck. We need jobs, jobs, jobs, jobs, jobs, jobs jobs, jobs, jobs, jobs. Not tax cuts.
The government released the July Employment Situation Summary and it isn't great.
First, in context, before the stimulus we were losing around 800,000 jobs a month. The problem is that the stimulus is fading and structural changes were not made in how the economy operates. So there is no special reason to point to that makes people think that this stagnation won't continue or even get worse again.
Eric Lotke sums up the numbers,
Unemployment remains unchanged at 9.5 percent, with 14.6 million people out of work. In July, we lost 202,000 jobs in the government sector as the census winds down, and we gained 71,000 jobs in the private sector. African American unemployment grew fractionally worse to 15.6 percent, and teenagers to 26.1 percent.
The "scariest" jobs chart sums it up with a picture, from Calculated Risk: (click for full-size)
Solutions?
Eric Lotke has one that involves work that needs to be done and people out of work,
We know what we need to do. Put people to work rebuilding our crumbling infrastructure. Fix our potholed roads, our overcrowded schools and our bursting water mains. Create new infrastructure like wind turbines and solar cells. Lay the tracks for high speed rail, the 21st century parallel to the interstate highways of the 20th century and the transcontinental railroads of the 19th. And make the parts in America! Put us to work building our economy of the future, like our grandparents did for us.Yes, it will cost money. But don’t worry, money is out there. Those top-end Bush tax cuts are worth $43 billion annually. Restoring the estate tax for multi-millionaires brings in $50 billion. A financial transaction tax brings in $177 billion annually, and stabilizes our financial system to boot. Draw down our troops and rein in Pentagon procurements gives us another $100 billion every year for productive endeavors. That’s without even trying bold new sources of revenue. More progressive taxation at the top end. Confronting corporate power and redirecting subsidies that go to agriculture, oil and pharmaceutical giants. Ferreting out the rest of those tax subsidies for moving production offshore. We can do this.
What, you say? Give people government jobs fixing up infrastructure? Yes, because infrastructure is government's job. As Atrios says today,
I'm not going to deny the importance of private sector job growth, but there's no reason to see private sector jobs as somehow superior to public sector jobs. More than that, plenty of private sector jobs really are "government jobs," from contractors in the military-intelligence industrial complex to private highway construction workers. Plenty of jobs and companies wouldn't exist without government spending, however they're technically classified.
It's The JOBS, Stupid! Why DC Elites Don't See This? Come on, people, the jobs answer is right in front of you. There is work that needs doing, and there are people out of work. There are Ten Million Jobs Needed - Ten Million Jobs That Need Doing!
Tax the wealthy and Wall Street to pay to fix up our infrastructure. Tax Cuts Leave Nothing Behind -- Infrastructure Investment Leaves Behind Infrastructure. Not only that, Tax Cuts Caused The Deficits, Therefore...
Connect the dots.
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Posted by Dave Johnson at 8:49 AM | Comments (0) | Link Cosmos
August 4, 2010
President Obama Says ‘Made In America’ At Heart Of US Recovery
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Addressing the AFL-CIO Executive Council today, President Obama signaled support for the new Congressional "Make It In America" initiative, saying, (full transcript here)
"As long as I'm president, I'm going to keep fighting night and day to make sure that we win those jobs, that those are jobs that are created right here in the United States of America -- (applause) -- and that your members are put to work.So the message I want to deliver to our competitors and to those in Washington who've tried to block our progress at every step of the way is that we are going to rebuild this economy stronger than before. And at the heart of it are going to be three powerful words: Made in America. (Applause.) Made in America."
A Washington Post story today, New Democratic strategy for creating jobs focuses on a boost in manufacturing, explains,
President Obama and congressional Democrats -- out of options for another quick shot of stimulus spending to revive the sluggish economy -- are shifting toward a longer-term strategy that promises to tackle persistently high unemployment by engineering a renaissance in American manufacturing.That approach, heralded by Obama last week in Detroit and sketched out in a memo to House Democrats as they headed home for the August break, is still evolving and so far focuses primarily on raising taxes on multinational corporations that Democrats accuse of shipping jobs overseas.
The strategy also repackages policies long pursued by the White House -- such as investing in clean energy, roads, bridges and broadband service -- with more than two dozen legislative proposals aimed at developing a plan for promoting domestic manufacturing.
CAF's Eric Lotke has further details of the Congressional initiative in his post today, Made In America: The Good And Bad News For A Jobs Recovery.
This new initiative was triggered in part by the results of a poll conducted by Mark Mellman and Whit Ayres for the Alliance for American Manufacturing (AAM). According to AAM,
When asked about prospective economic solutions, pro-manufacturing policies won overwhelming support across demographics including non-union households, independents, union households and Tea Party supporters. ...Other highlights from the poll include:
• A majority believe the U.S. no longer has the world’s strongest economy—a title they want to regain
• Voters are anxious about the economy—specifically China debt, spending and loss of manufacturing
• 86% of voters want Washington to focus on manufacturing, and 63% feel working people who make things are being forgotten while Wall Street and banks get bailouts
• Two-thirds of voters believe manufacturing is central to our economic strength, and 57% believe manufacturing is more central to our economic strength than high-tech, knowledge or financial service sectors
The AFL-CIO blog has more on the President's address in the post, Obama Says ‘Made in America’ at Heart of US Recovery, (yes, I flat-out stole the title of this post from them)
Speaking on his 49th birthday at the Washington (D.C) Convention Center, the president told the council that this fall’s election is a choice betweenpolices that encourage job creation here in America or encourage jobs to go elsewhere…The choice is whether we want to go forward or we want to go backwards to the same policies that got us into this mess in the first place.He spoke about the need to invest in clean technology, like solar panels, wind turbines, nuclear plants, clean coal and new car batteries.
Instead of giving tax breaks to corporations that want to ship jobs overseas, we want to give tax breaks to companies that are investing right here in the United States of America.
Note - the President also said, "And we are going to keep on fighting to pass the Employee Free Choice Act."
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Posted by Dave Johnson at 5:42 PM | Comments (0) | Link Cosmos
August 3, 2010
Do We Need A Democracy Tariff?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
We need a Democracy Tariff, imposed at the border on goods that are brought in from countries where the people have not been able to build a strong democracy that protects their workers, wages and environment.
Yesterday in Exporting Jobs Is Not “Trade.” It Evades Democracy's Protections I wrote that ... well ... exporting jobs is not "trade." Packing up a factory here to send the jobs there, and then bringing the same goods that factory was making back here to sell is done for one and only one reason. It is done to get around the wage, safety and environmental protections that We, the People fought to build.
We formed this country and we fought to build protections that brought us a reasonably good life, and a middle class, and some security - social security - so we don't always have to be struggling and living on the edge of a cliff, surviving only at the whim of a wealthy few with all the power. We fought a revolution against government by a wealthy and powerful few, and we fought again and again to keep and protect government of the people, by the people and for the people.
Our wage, safety and environmental protections are the result of our democracy. We, the People fought and built a government to empower and protect us, to provide good wages and provide some security and that involves rules that limit what the owners of companies can do -- regulations. We build up a system of public structures like courts, laws, schools, roads, bridges -- spending -- that enable commerce to prosper. And we ask those who benefit from that commerce we enabled to share the return on our investment with us -- taxes and wages.
Democracy, government, regulations, spending, taxes. The stronger each of these are, the better We, the People do. The weaker they are, the worse off we are.
Lately wealthy corporate owners -- who benefit from the commerce that our democracy, government, regulations, spending and taxes enabled -- have found another way to get around these protections that We, the People built for ourselves. They move manufacturing and jobs to countries where the people have not been able to build strong democracies to protect their interests, and then bring the goods made by the exploited workers there back here to sell. They call that "trade" when really it is just a way to get around the borders that we are able to protect. As I wrote yesterday,
These workers make the same products that had been made here, sell them in the same stores here, but make them outside of the boundaries of our democratically-won protections. And to make things worse, the companies then demand wage and benefit cuts from the workers who are still here, claiming that "globalization" means they now have to compete with workers with no rights, so they must accept less.
There is a solution to this problem. These protections that we built brought us prosperity. And that means we have a strong market. Everyone in the world wants to be able to sell to us, and we can use that power to set the rules for access to our markets.
A Democracy Tariff
We should not let exploitation of workers and the environment be a competitive advantage that is used against the democratic protections we have built for ourselves. We can and should set a "Democracy Tariff" on goods that come from countries that do not protect their workers and/or environment. This tariff should be enough to offset the competitive advantage that comes from exploiting workers and the environment. If those countries do not change we can use the revenue from the tariff to build our infrastructure and strengthen our competitive position. If those countries do change, all the better, because as democracy strengthens there, the people will prosper and can trade fairly with us to buy things we make here. Everyone is better off when trade is free and fair.
There are degrees of democracy and there can be degrees of Democracy Tariff. For example, some countries might protect workers but not the environment. The tariff on goods from those countries should be enough to offset the advantage gained from exploiting the environment but not as high as for countries that exploit both workers and the environment. Other countries might have some degree of protections but not allow unionization. The tariff should be enough to offset whatever degree of exploitation is at work.
If a Democracy Tariff is called "protectionism" so be it. We have learned the hard way that democracy is fragile and must be protected.
We must not allow exploitation of workers and the environment to be a "comparative advantage" used against our democracy -- government of the people, by the people and for the people -- and the protections and prosperity it has brought us.
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Posted by Dave Johnson at 11:19 AM | Comments (1) | Link Cosmos
August 2, 2010
Exporting Jobs Is Not “Trade,” It Evades Democracy's Protections
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
We, the People have fought hard to build and strengthen our democracy. We built up laws and institutions and protections. It has been a particularly hard fight to build a middle class with weekends off, good wages, worker protections and some degree of protection of our environment. Step by step we fought and built, fought and built, and a prosperous democracy with a strong middle class developed.
But this has been changing. Beginning under President Reagan our government has allowed companies to bypass the strong rules that we fought to implement. Companies have been allowed - even encouraged - to pack up and move factories to low-wage, low-protection, non-democracy countries where the workers have no choice but to do what they are told if they want to feed their families and stay out of jail. These workers make the same products that had been made here, sell them in the same stores here, but make them outside of the boundaries of our democratically-won protections. And to make things worse, the companies then demand wage and benefit cuts from the workers who are still here, claiming that "globalization" means they now have to compete with workers with no rights, so they must accept less.
This is not "trade." This is evasion of our democratically-won protections. Moving a factory across a border to evade the protections that good governments bring to their people is not “trading with other countries” it is evasion of the rules that We, the People placed on the once-level playing field of business.
The results of these anti-democratic policies have been profoundly destructive. What is called free trade has helped bring about an intense concentration of wealth, because poor people without even the benefit of our minimum wage laws are used to threaten or just replace union workers who had fought just to get a piece of the pie.
The globalization argument says that all of this destruction of rights and protections is inevitable. The people are there, they are desperate, they will accept less, so there is nothing we can do about it. Economists even argue that economic theory says this is the correct way to do business. They say that different countries have different "comparative advantages" -- some unique ability to produce something better that other countries. Central and South America are better at producing bananas and our Midwest is better at producing grain, so these items should be traded.
It is correct that they grow bananas and we grow grain, but it is not correct to say that countries with democracy, where workers can demand wage, safety and environmental protections as well as protection of the public's common resources should be pitted against desperate and exploited people, living under repressive governments that they do not have control over. We must now allow lack of democracy and lack of worker or environmental protections to be an advantage, used against us!
We can and must stop this. We have fought this fight before and we can fight it again. We need a democracy tariff at our border that protects us and protects the democracy and its protections that we have fought so hard to build. I will write more about this in my next post.
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Posted by Dave Johnson at 12:03 PM | Comments (0) | Link Cosmos
Tax Cuts Leave Nothing Behind -- Infrastructure Investment Leaves Behind Infrastructure
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Actually, the title kind of says it all, no?
If we spend money on tax cuts, the next year we only have debt and pay interest on the debt. For a clear example, just look at the damage the Bush tax cuts have done to the country. They left behind worse than nothing -- we had years of slow growth, and the cuts caused a massive deficit and debt that plagues us now. And, because we didn't have the money to use to maintain the infrastructure we are that much further behind on that task now.
If we spend money on improving the country's infrastructure, we get all the job creation that comes from that work, and the next year you have that infrastructure there to help drive the economy. For a clear example, how did all that government spending on the Interstate Highway System work out for the economy? For a clear example, look at China's investment in high-speed rail. They can now move people and goods so much more efficiently and faster between their cities, and they developed an industry that is now selling its expertise to the rest of the world.
Our country has a huge, huge infrastructure deficit. After the Reagan tax cuts started draining the government's ability to be a government we slowed down or stopped maintenance of the country's roads, bridges, water and sewer systems, transit systems, schools, dams & levees and everything else that didn't blow someone up. Our rail system is not last-century, it is century-before-last! The American Society of Civil Engineers calculates that we are $2.2 trillion behind where we need to be. As a result we have fallen behind the rest of the world in competitiveness, efficiency, and of course job creation.
Connect the dots: We have about 10% unemployment and we have a huge, huge backlog of work that needs doing. And after that work gets done the economy will run much more smoothly and will be much more competitive.
To me it's a no-brainer. Everyone benefits when we invest in jobs and infrastructure. We can see all around us that tax cuts leave nothing behind, and in fact make our problems worse.
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Posted by Dave Johnson at 12:01 PM | Comments (0) | Link Cosmos
July 28, 2010
Bravo To Congress' Making It In America Push -- What It Still Needs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
House leaders deserve praise for fighting for working people by launching a "Make It In America" initiative which they officially unveiled today. The country still badly needs an immediate job-creation effort, but this is a very important longer-term initiative for reviving America's manufacturing base and restoring our competitiveness in the world economy. Good work!
Manufacturing is the core of our country's income. Making things that we sell is how we earn money to buy things that others make. This is why it is so important to restore America's manufacturing base and the infrastructure that supports it. People want to go into a store and have a choice to buy things that are made here.
This week these important bills made it to the House floor: (click through for details)
As the Congress rolls out this initiative here are important components it should include:
Buy American
Public money should be going to our people. This is what other countries, like China, are doing with domestic preferences and "indigenous innovation" policies.
Trade policies
(Is "trade" even the right word for making the same things in other countries that we used to make here.)
We are doing very little to combat the mercantilist nations, in particular China and Germany. China manipulates its currency and will not match its exports with imports. Germany is limiting domestic consumption -- the resulting trade surplus is out of balance.
Encourage the "Green Economy"
Stimulate American manufacture of wind turbines, solar panels, biofuels, etc. This creates jobs and makes us competitive in the new green economy that will replace the carbon economy.
Infrastructure
Our roads, bridges, rail, water and electrical systems, etc. are the backbone of a competitive economy. The infrastructure enables business to thrive. If it is not kept in good working order and up-to-date (and it has not been), businesses do not thrive (and they aren't).
This is a brief outline of some of the needed components in a Make It In America strategy. These are things that Congress can do. Congress must not back away from bold reforms in the face of resistance from the right-wing monopolist business lobbyists, who speak for the job exporters, and their "free-trade ideologue" allies.
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Posted by Dave Johnson at 12:24 PM | Comments (0) | Link Cosmos
July 24, 2010
Pelosi: Congress' Coming 'Making It In America' Initiative
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
At the Netroots Nation convention today in Las Vegas, Speaker Nancy Pelosi talked about an upcoming Congressional initiative to help restore American manufacturing. The initiative, called “Making It In America” will include a series of bills to be introduced after the summer recess.
A few days ago Politico wrote about the upcoming initiative,
Democrats are priming the House floor for a manufacturing agenda they hope will bolster the economy, produce easy bipartisan votes and boost their chances in the midterm elections — at least if the polls they’re using are on target.Speaker Nancy Pelosi (D-Calif.) teased the plan — sometimes dubbed “Making It in America” — after a White House meeting with President Barack Obama last week. The agenda appears to be the Democrats’ final pre-election push to clear the deck of jobs-related bills that have been sitting around for months.
Democrats plan to present the agenda as a means of creating jobs, promoting green manufacturing through tax credits and grants and enhancing national security by rebuilding the domestic manufacturing sector at a time when many Americans are worried about China’s strength, according to aides.
The Politico story referred to the impact made on members of Congress by a new poll from the Alliance for American Manufacturing. According to the poll,
A majority believe the U.S. no longer has the world’s strongest economy—a title they want to regain Voters are anxious about the economy—specifically China debt, spending and loss of manufacturing 86% of voters want Washington to focus on manufacturing, and 63% feel working people who make things are being forgotten while Wall Street and banks get bailouts Two-thirds of voters believe manufacturing is central to our economic strength, and 57% believe manufacturing is more central to our economic strength than high-tech, knowledge or financial service sectors Across all demographics, voters’ economic solutions center on trade enforcement, clean energy, tax credits for U.S. manufacturing and replacing aging infrastructure using American materials, a surprising overlap between Tea Party supporters, independents, non-union households and union households.
Wednesday the House passed the first bill of the initiative, H.R. 4380, the U.S. Manufacturing Enhancement Act, to help American manufacturers by temporarily suspending or reducing duties on materials these companies use that are made abroad or opposed by domestic producers.
California Rep. John Garamendi has introduced three bills to close corporate tax loopholes that reward the off-shoring of jobs and end taxpayer subsidies for foreign-produced clean energy technology, buses, railcars, and ferries.
Garamendi says "I want to walk into Target and see "Made in America" throughout the store. We can make it in America,"
At Netroots Nation Speaker Pelosi also said that Congress is looking at addressing the China currency problem, where China is manipulating its currency to give goods made there a huge pricing advantage. She also pointed out that China imposes many other barriers to free trade, including not allowing American companies to bid on government procurement, even when the goods are made in China.
I will be writing more on this, but it is a breaking story and I want to get the news out.
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Posted by Dave Johnson at 1:03 PM | Comments (0) | Link Cosmos
July 19, 2010
Netroots Nation Panel: The 2010 Elections: Channeling The Power Of Jobs, Populism And The Angry Voter
Will you be at Netroots Nation in Las Vegas later this week? I will be on a panel, The 2010 Elections: Channeling the Power of Jobs, Populism and the Angry Voter, Thursday at 10:30am. Come on by and attend the panel!
Here is the complete description:
The 2010 Elections: Channeling the Power of Jobs, Populism and the Angry Voter
THURSDAY, JULY 22ND 10:30 AM - 11:45 AM, PANEL, BRASILIA 6
"The rising tide of populist anger in the face of Wall Street bailouts and continued high unemployment threatens to take an ugly reactionary turn unless it is channeled to more progressive policies of job growth. This panel will address current public attitudes and ideas for steering opinion and action more progressively."
Also on the panel will be:
Posted by Dave Johnson at 7:48 PM | Comments (0) | Link Cosmos
July 14, 2010
Against All Odds: Save the Middle Class and the American Dream
The American Dream is what is at stake for the Obama Administration, and they know it. This is the dirty, little secret that can longer be contained -- it is escalating, cannot remain hidden, and may have significant political ramifications for the 2010 elections. The atrocity of the past years is this broken promise with the people, and it is deeply affecting the way they think, behave, vote and live. Moreover, it could begin to explain the groundswell response to candidate Barack Obama in 2008. The power of his words helped them believe that the dream was recoverable. He exemplified what was possible through education and hard work in his meteoric rise through American politics to the Oval Office. Further and more importantly, it also explains why we are now suffering such profound political despair reflected in the dropping poll numbers.
The middle class, for its survival, needs life to return to a semblance of "normalcy" - a time when they didn't know how to spell the word "deficit" and didn't have to care. They want their retirement savings back so they don't have to work until they drop. They want a bank account that makes more then one percent interest. They want to know what their health insurance premiums will be this year and in ten. They want to know if their kids study, and if they save and sacrifice, that their lives will be better. They want their kids to get good jobs, and they want to hold onto our own jobs. And with despair and anger they realize that despite the heroic work of the Congress with this President in passing landmark legislation in all of these areas -- they still are not safe. Economic ruin may still be right around the corner, and makes it hard to sleep at night.
You know we've all been hoodwinked and sold a bill of goods about the sanctity of the middle class in this country. It is a basic tenet of our lives, and made us different from other countries. The ranks swelled over the last decades after FDR to the present. But now for the first time since the Great Depression, the middle class is at risk of tipping over once and for all. They are not coming out of the financial, housing and environmental crises intact. Interest rates have ratcheted up on the family home, maybe there's a balloon payment on the mortgage and its impossible to refinance under the "new" programs; savings have virtually no interest and are drying up; pensions have evaporated; health insurance premiums are basically unaffordable until 2014 if then; schools are overcrowded and on the decline; there are no jobs except in China and they don't speak Mandarin; and unemployment is still at 9.5% -- higher in key areas throughout the country. The new legislation is riddled with loopholes, as all legislation can be after laborious compromises and extensive details. What is different is that each of these loopholes is flagrantly being exploited by the banks, the credit card companies and the health insurance companies. For example, many of the unemployed cannot qualify for COBRA because their companies failed which is code for closed their doors. COBRA is not available when a company terminates their health insurance plan, and 2014 is a long way off when you need health insurance coverage now.
Frankly, this is not what the middle class signed up for. It was not part of the implicit promise made to them. As a result, they are angry (enter stage right the Tea Party to exploit this vulnerability), and depressed (evidenced in the lackluster June election voter turnout). This is a deadly combination that could seal the deal on the November elections for the big, bad guys. Yet somehow the middle class and its Democrats must rally again and rise above the collective depression (no pun intended). We cannot let the brilliant and effective message machine of the Republican Party lull them into universal amnesia -- forgetting all the wrongs of the past. Remember these are the same guys (Bush and Cheney) that put the nails in the coffin cementing the potential extermination of the middle class. These same guys two weeks ago even blocked the extension of unemployment benefits while they frolicked on vacation. How could they do that to working families in this country? The extension passed the House before the break, but was filibustered in the Senate. And given all that, imagine life when we essentially give away the House because we are too depressed to vote or disorganized to keep these seats.
I will take liberal Speaker Nancy Pelosi any day over anti-choice, sanctimonious Republican Representative John Boehner as Speaker of the House. That would be a bad dream that just keeps on giving. This threat should be enough for the White House to saddle up and come out with a plan, a message (remember "hope and change"), and leadership to deliver - not the White House Press Secretary Gibbs message yesterday. David Gregory of Meet the Press has gotten so very good and Gibbs just walked into a fiasco announcing the potential lose of seats in the House. It was as bad as giving away candy instead of feeding the homeless, and maybe that's why White House Special Advisor, David Axelrod, was so snarky with CNN's Candy Crowley during the next hour on the Sunday morning political shows because it sure didn't make any sense.
Snarky or not, we all know Obama and his team are awful busy with the economy, the oil spill and a few dozen Russian spies, but we need them to reach out to that disenfranchised middle class again, aka big voting block. After all, Obama is the master communicator and we know that he can do it because he has done it before to win in 2008. And now the stakes may even be higher. If we allow 40 seats in the House to go asunder and a few more in the US Senate -- we can start waving bye-bye to the American Dream, the middle class, economic recovery, and maybe the Supreme Court for the next couple of decades.
Please see my Pearltree for some of the reference materials with more to come. This is a new tool to organize and share materials on the web. In full disclosure, I advise them as they build out the new features of this platform.
Note, an earlier version of this article appeared this week on the Huffington Post.
Posted by Michelle at 1:32 PM | Comments (0) | Link Cosmos
July 6, 2010
If You Feed Them They Breed -- And Other Dehumanizing Conservative Idiocy We Should Ignore
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
The country is in an economic emergency. Unemployment -- especially long-term unemployment -- is at extremely high levels and the recovery is faltering. Conservatives are obstructing efforts to solve this because they believe it helps them in the November election. To this end conservatives are throwing out every possible argument against helping the economy to see if any of them stick, and to provide cover for opposing taking any action that might help matters.
The latest nonsense they are spreading is that helping the unemployed keeps them from finding jobs. Good Lord! This is basically the old "if you feed them they just breed" storyline. They say "it makes them dependent" as if hard-working people laid off because of Wall Street's scams are squirrels. Or, to hear the nasty way conservatives talk about these human beings, they are like rats. "Hobos," one Congressman called the unemployed! And the DC elite listen, chuckle and repeat.
But while they say unemployment assistance keeps these lazy parasites from finding jobs, they also obstruct bills that create jobs by maintaining and modernizing our infrastructure. This tells you it's just something they say, to cover for what they do. And what they do is obstruct any effort to fix the problem because they believe they will benefit if it is not fixed.
For example, the big DC drumbeat right now is against "spending." They claim that government spending caused the crisis, ignoring and passing the buck on everything that actually caused it, especially their deregulation and their lack of oversight. They blame government for everything, so why should this be different.
Along these lines they claim that the stimulus didn't work, or even that spending made the problem worse, because there are still people out of work. But look at the following chart. The right side of the chart shows the effect of the stimulus. (Source, Jed Lewison and Karina Newton)
A conservative, anti-government myth that is everywhere now is that "Government forced banks to give loans to people who couldn't pay them back, and this caused the financial collapse" -- and its variant that it was about forcing banks to "help minorities. This is an example of the tactic of repeating a lie over and over until enough people believe it. To deflect people from understanding what really caused the crisis and from seeing that they are obstructing the effort to reform the financial system they made this one up" Unfortunately this has become what bloggers call a "zombie lie" -- no matter how many times you prove it is just a lie, it comes back from the dead.
The Zombie Lie Problem
The "zombie lie" problem shows that it is a mistake to think that just arguing facts is a way to shoot this stuff down. Spending your time arguing facts with people who are trying to mislead misses the point. The lie is not about the facts, it is cover for the obstruction. When you try to argue a fact they will make up something else to throw you off track. Facts are not what this is about, feeding a narrative of no action is what this is about, because they understand that a bad economy helps them in the Fall.
Listening to this stuff at all, and trying to argue facts just contributes to the lack of action. There comes a point when you have to stop llsteneing and getting bogged down by intentional distractions and get something done for the economy and the public.
It Is Time To Stop Listening To This Stuff And ACT
Enough with these stupid, heartless, dehumanizing right wing "if you feed them they breed" arguments that are preventing action. People are out of work and the recovery is faltering. It is time to push aside the nay-sayers, and get something done. The government simply has to step in and act. First, do the minimal, obvious things:
1) Pass the unemployment extension, because people can't find jobs.
2) Continue COBRA subsidies, because so many of the long-term unemployed are older people who cannot get or afford insurance any other way. This is simple humanity, people! And, by the way, COBRA itself is running out for many people, never mind subsidies.
3) Send aid to the states. 900,000 jobs in the states are riding on this help.
At a minimum do this. Don't get lost in the weeds of what bill to attach it to. Just do it. Bring it out by itself for an up or down vote so the public can clearly see who is helping and who is voting against jobs and help for the unemployed.
But what Congress really ought to be doing is passing the George Miller "Local Jobs for America Act." .
As economists like Paul Krugman keep saying we risk going into a serious depression. At the least we are entering a pattern of slight recovery, slight decline for a decade. Look at what happened to Ireland when they tried "austerity."
Here is an undeniable fact about government spending. Government spending on infrastructure creates the conditions that enable businesses to prosper. Tax cuts leave nothing behind, but the roads, transit systems, ports, electric grid, Internet, courts, schools, universities, research, and all the rest that government spending creates make us competitive and are needed by businesses
Do it. Ignore the obstructors who are trying to set the stage for November. Put people to work. Help the long-term unemployed. Pass jobs bills.. And spend on modernizing our infrastructure so American can be competitive again.
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Posted by Dave Johnson at 11:47 AM | Comments (1) | Link Cosmos
June 30, 2010
Chinese Paper Subsidies: Boring? Jobs: Not Boring!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China is cheating again. Yawn... China is subsidizing its paper industry ($33 billion 2002-09) and has tripled their production, and now is the largest producer of paper and paper products. Yawn.
This has cost jobs and approximately 400,000 remaining American jobs are at risk. And the companies they work for. NOT so yawn!
The Economic Policy Institute has released a briefing paper, titled, No Paper Tiger. This paper documents the different government subsidies behind the surge of Chinese paper imports, and look at its implications for the American paper industry.
Some of the subsidies that government provides,
This Briefing Paper estimates that in China’s paper industry, subsidies for electricity amounted to $778 million • (from 2002 to 2009); subsidies for coal, $3 billion (from 2002 to 2009); subsidies for pulp $25 billion (from 2004 to 2009); subsidies for recycled paper, $1.7 billion (from 2004 to 2008); subsidy income reported by companies, $442 million (from 2002 to 2009); and loan-interest subsidies, $2 billion (from 2002 to 2009). Missing data prevented calculation of pulp or recycled-paper subsidies in 2002, 2003, and 2009.
Implications for our own industry,
Cheap, subsidized Chinese paper exports have affected the U.S. paper industry. Despite comparable cost structures, high efficiencies, and plentiful natural resources, U.S. paper companies have failed to compete globally or nationally on price against much-cheaper Chinese imports. In 2010, the United States remains a net importer of paper and paper products. Imports from China are rising faster than those of any other country for this industry, with the value of U.S. imports from China growing at an annualized rate of 22%.
“From 2002 through the end of 2009, U.S. employment in the paper and paper products sector dropped 29 percent, from roughly 557,000 workers to 398,000.”
As the paper shows, China has no competitive advantage or cost advantage that would lead to the lower prices that are powering this surge. Labor is only 4% of the cost, and they import much of the pulp for the paper. They don't have economy of scale. It is only the government subsidies that enable them to take over the industry.
From the Alliance for American Manufacturing, (See press release here.)
China’s massive subsidies to its paper sector are doing severe damage to the U.S. paper industry, its workers and their families,” said Scott Paul, executive director of the Alliance for American Manufacturing (AAM). “The only way to stop the bleeding is for U.S. policymakers to take action against China’s blatant violations of trade laws, including sweeping subsidies to paper and many other industries.”
The manufacturethis blog lets you look up how many jobs this costs in your state and Congressional district.
We need better trade law enforcement.
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Posted by Dave Johnson at 11:14 AM | Comments (1) | Link Cosmos
June 29, 2010
The Real Deficit Is Jobs!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
The real deficit is jobs. That is one more of those things that everyone can see in front of their faces, but we're told it isn't what it is. There aren't enough jobs, and we're being told this is our fault because we wanted pensions and good wages and vacations and respect and dignity and please, sir, just a little slice of the pie.
In case you haven't noticed, the world's economy is suddenly undergoing a classic "Shock Doctrine"-style, coordinated propaganda attack. The wealthy and powerful, having insisted that countries cut their taxes and run up debt, now insist that the middle class and poor must work harder, have their pensions reduced, sell off (to them) their publicly-held resources, and take other "austerity" steps to pay off the debt that these lazy, parasitic peasants dared to run up.
The excuse is that "the markets" will “lose confidence” in us. Apparently we aren't working the salt mines hard enough. "The markets" -- that's the crowd who got in trouble and insisted that the world would end unless we immediately handed over to them all the rest of the money in the world -- will "lose confidence" in our ability to work the mines hard enough, and will cut us off, unless we cut our pensions, sell off (to them) our resources, and promise never to be lazy and make demands for better wages, pensions, workplace safety, and do it now.
The real deficit is jobs.
History teaches that the way out of an economic slowdown is to invest in infrastructure, education and modernizing manufacturing.
Slactivist said it best the other day,
This calls to mind an old story:But knowing their hypocrisy, he said unto them, "Why are you putting me to the test? Bring me a dime and let me see it."And they brought one. Then he said to them, "Whose head is this -- FDR's or Herbert Hoover's?"
They answered, "Roosevelt's."
And he said unto them, "Right. So shut up. Have you morons already forgotten the 20th Century? When the choice is between imitating what worked and what really, really didn't work, why are you pretending it's terribly complicated?"
And after that, no one dared to ask him any question.
I'm not an economist, but we've got five applicants for every single job opening. If you tell me that the best response to that situation is to lay off hundreds of thousands of teachers, I will not accept that this means that you're smarter and more expert than I am. I will instead conclude -- regardless of your prestige or position or years of study -- that you're a moral imbecile.
According to the Labor Department,
By the end of 2009, the jobless rate stood at 10.0 percent and the number of unemployed persons at 15.3 million. Among the unemployed, 4 in 10 (6.1 million) had been jobless for 27 weeks or more, by far the highest proportion of long-term unemployment on record, with data back to 1948.
That's right, it was the policies of austerity that created a depression, and the policies of job-creation, infrastructure investment and taxing the wealthy to pay for it that got us out. But that was back when We, the People were still in charge.
In other news:
Number Of Millionaires Grew Amid Recession.
The rich grew richer last year, even as the world endured the worst recession in decades.
Top 1 Percent of Americans Reaped Two-Thirds of Income Gains in Last Economic Expansion, Income Concentration in 2007 Was at Highest Level Since 1928, New Analysis Shows,
Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.During those years, the Piketty-Saez data also show, the inflation-adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households.
Top 1% Increased Their Share of Wealth in Financial Crisis,
According to his analysis, the top 1% held 34.6% of all national wealth in 2007. By Dec. 31, 2009, they held 35.6%.Meanwhile, share of national wealth held by the bottom 90% fell to 25% from 27%.
Corporate Wealth Share Rises for Top-Income Americans
In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data.. . . For every group below the top 1 percent, shares of corporate wealth have declined since 1991.
. . . Long-term capital gains were taxed at 28 percent until 1997, and at 20 percent until 2003, when rates were cut to 15 percent. The top rate on dividends was cut to 15 percent from 35 percent that year.
See if you can make the connection. They want us to cut back our pensions, cut our wages, sell off our resources and work harder, to pay back the money that was borrowed and handed to them.
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Posted by Dave Johnson at 11:14 AM | Comments (1) | Link Cosmos
June 16, 2010
Obama: We've Been Outflanked, Cap & Trade Dead
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
The headline of my local paper today is Obama: Act on clean energy. (But a different headline online - do they do that just to mess up bloggers?)
In the speech the President paid homage to President Carter's efforts to change America's energy policies, saying,
For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked -- not only by oil industry lobbyists, but also by a lack of political courage and candor.
Outflanked
Then the President said we have been outflanked on the coming green manufacturing revolution by countries like China,
The consequences of our inaction are now in plain sight. Countries like China are investing in clean energy jobs and industries that should be right here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil. And today, as we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude.
Cap And Trade Dead
In the Huffington Post today, Teryn Norris, Director of Americans for Energy Leadership writes that the President also signaled the death of cap and trade legislation,
Instead of using last night's prime-time opportunity to push cap and trade ... President Obama pressed the reset button on energy and climate policy, saying he was "happy to look at other ideas and approaches from either party, as long they seriously tackle our addiction to fossil fuels." He made no mention of setting a price on carbon or establishing an emissions cap and trade system.
Others are trying to get things done on this front. Norris discusses the emerging Innovation Consensus,
The energy innovation consensus currently includes dozens of Nobel Laureates, Breakthrough Institute, Brookings Institution, National Commission on Energy Policy, Third Way, Association of American Universities, Clean Air Task Force, Information Technology & Innovation Foundation, Google, and Americans for Energy Leadership, among others. The latest group to join is the American Energy Innovation Council (AEIC), made up of several of the nation's top business leaders: Bill Gates, Jeff Immelt, John Doerr, Chad Holliday, Norm Augustine, Ursula Burns, and Tim Solso. Last week, these leaders released a new report, "A Business Plan for America's Energy Future," calling for major new federal investment in clean energy technology RD&D; -- at least $16 billion annually, more than triple the current level (see our news roundup).
Here is the problem. Action on energy requires direct government action and rejection of deficit hysteria to do it. But every single initiative of the Obama Presidency has been blocked by powerful interests, playing on the use of the filibuster on almost every major bill in the Senate. Health care reform was severely weakened by the pharmaceutical and insurance lobbies. Financial reform has been severely weakened by the financial lobbies. Jobs measures and further stimulus have been blocked by a strategic lobbying campaign to make people think the Bush-created deficit must be cut first. Now cap and trade may have been killed by the oil and gas lobbies.
We are in a direct confrontation between the big corporations and We, the People over who will run things and control the resources of the United States, and We, the People are losing. There is time to turn it around, but only if we recognize this battle for what it is.
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Posted by Dave Johnson at 10:15 AM | Comments (0) | Link Cosmos
June 10, 2010
Conservatives Call For Massive Deficit Spending To Create JOBS
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Saying that the Obama "stimulus" was not big enough, conservatives are demanding that the government massively increase deficit spending to create badly-needed jobs. Newt Gingrich, at the conservative media outlet Human Events, calls for an Economic Freedom Act that includes,
• Reducing the payroll tax by half for 2010...;• Eliminating the capital gains tax ...;
• Reducing the corporate tax rate to 12.5% ...;
• Permanently eliminating the death tax ... ; [note - what he refers to as a "death tax" is an income tax on wealthy children - DJ]
Each of these tax cuts demanded by conservatives would greatly increase the deficit. Many other conservative organizations and politicians are joining this demand for massive deficit spending to create jobs.
In the article, Gingrich also criticized the size of the Obama stimulus because it did not create enough jobs, writing, "The Obama stimulus has clearly failed. It’s time to get back to what we know works for job creation. 2+2=4."
Gingrich was right that the stimulus was insufficient. The CBO recently reported that the stimulus put up to 2.8 million people to work, lowered the unemployment rate by up to 1.5% and boosted the GDP by up to 4.2%. But the conservative-created job and recession crisis is much, much worse than that. We need emergency action to create 10 million jobs!
Tax cuts are the wrong approach because they would also reduce the country's ability to maintain and modernize the infrastructure while increasing the problem of extreme concentration of wealth. Economists say that tax cuts are not effective at creating jobs (and create structural deficit problems), while directly creating jobs through infrastructure investment also leaves behind ... badly-needed infrastructure.
Posted by Dave Johnson at 7:28 AM | Comments (0) | Link Cosmos
June 3, 2010
Tomorrow's Jobs Report Will Look Great But Includes Census Hires
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Today ADP reported that private-sector jobs may have increased by 55,000 last month. (ADP is able to make this estimate because the company processes 1 of every 6 paychecks nationwide.) Meanwhile the Labor Department reported that initial claims for unemployment dropped 10,000 to 453,000 for the week ended May 29. Note that this drop brings the level "down" to what was nearly the peak number of layoffs in the last recession.
Tomorrow the Bureau of Labor Statistics will release its May jobs report. The report is expected to show that as many as 4-500,000 jobs were created last month. That 55,000 increase in the ADP report is private-sector jobs, while tomorrow's jobs report includes government hiring, and this could include as many as 400,000 temporary census workers.
But while one hand gives, the other takes away. Over at Firedoglake, David Dayen warns in Pre-Gaming the Jobs Report,
The other factor here is that, while temporary federal government jobs are rising because of the Census, permanent local government jobs are going away. State budget cuts could lead to as many as 900,000 jobs lost in 2010. And Congress decided last week to do nothing about that, cutting money in a jobs bill for the states to balance their Medicaid budgets.
A report showing 4-500,000 new jobs is always a great thing. But let's not get ahead of ourselves. We need to see reports like that continue for a year just to catch up to the jobs lost due to conservative policies of the previous administration!
The danger is that deficits hawks will cite this report and say it is time to turn to deficit reduction instead of investing in our economy and our people. But deficit reduction comes from investing in our economy and our people. Cutting back on unemployment checks, health care, infrastructure, education and all the things conservatives want us to cut back on means a worse economy in future years.
Another danger is that conservatives will misrepresent the report (imagine that!) and say that the economy is not creating real jobs, only temporary "government jobs." Jobs are jobs and temporary government paychecks still buy food at local groceries, clothes at local retailers, etc. Conservatives also say the stimulus "didn't work" or even claim the stimulus is the reason unemployment is high. Actually the CBO recently reported that the stimulus put as many as 2.8 million people to work, lowered the unemployment rate by as much as 1.5% and boosted the GDP by as much as 4.2%.
Calculated Risk has its own prediction on the unemployment report tomorrow, that it will be reported badly.
Finally, a reminder of where we are:
Posted by Dave Johnson at 1:50 PM | Comments (0) | Link Cosmos
High Unemployment Used To Be A National Emergency
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
In Does Washington care about unemployment? economist Brad DeLong asks the question,
In 1983, Ronald Reagan's Washington regarded high unemployment as a national emergency. Today, with unemployment kissing 10 percent, Barack Obama's Washington scarcely seems perturbed. Why?
In 1983, when unemployment hit 10.5%, Washington was in a panic and it was considered a "genuine national emergency." Unemployment is just about as high today. But, DeLong points out, "Yet, unlike 1983, there is no sense of urgency in Washington. ... Instead, deliberations within the Federal Open Market Committee appear preoccupied with how best to apply the brakes."
He says that D.C. insiders he knows tell him to calm down, that things are getting better. He thinks the problem is something else.
But whenever I wander the halls of Washington these days, I can’t help but think that something else is going on—that a deep and wide gulf has grown between the economic hardships of Americans and the seeming incomprehension, or indifference, of courtiers in the imperial city.Have decades of widening wealth inequality created a chattering class of reporters, pundits and lobbyists who’ve lost their connection to mainstream America? Has the collapse of the union movement removed not only labor’s political muscle but its beating heart from the consciousness of the powerful? Has this recession, which has reduced hiring more than it has increased layoffs, left the kind of people who converse with the powerful in Washington secure in their jobs and thus communicating calm while the unemployed are engulfed in panic? Are we passively watching an unrepresented underclass of the long-term unemployed created before our eyes?
The price of Treasury bonds is up, which means demand is high -- and that investors are not-at-all worried about our deficit. But D.C. is focused on reducing the deficit. This reflects more concern for the interests of the wealthy of Wall Street than of the working people on Main Street. This division is similar to the division between those who wanted more money circulating in the 1890, and were calling for us to move from a gold standard to a bimetal gold/silver standard so there could be more money circulating.
If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.
But crucifying the jobless on cross of stock certificates is OK?
The way to reduce the deficits is invest in the economy and to get people working again.
Posted by Dave Johnson at 1:23 PM | Comments (0) | Link Cosmos
June 1, 2010
Why The Deficit Dominates DC Thinking
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Washington politicians are convinced that the public is demanding cuts in spending, even over creating jobs and restoring the economy. This pressure comes because much of the public believes that "Obama tripled the deficit." This has been the right's drumbeat for over a year and the public has not heard any response. You can barely turn on the radio or TV, or go on the Internet, or read the letters-to-the-editor in your local paper without hearing one or another form of this message repeated.
Fact: Bush's 2009 budget-year deficit was $1.4 trillion. 2009 was President Bush's last budget and included the Wall Street bailouts, unemployment benefits and other costs of the incoming recession, plus Iraq and Afghanistan. This massive deficit was just one more conservative failure.
But the right's propaganda campaign telling the public that this was Obama's deficit, not Bush's has gone unanswered. The Obama administration and their allies are not reaching the public with the truth or any message that counters the lies the right is putting out.
Charts that make it appear that the huge deficit was Obama's doing are an example of how the public is being conned:
The well-funded Heritage Foundation is one leader of the effort to convince the public of this. Bush Deficit vs. Obama Deficit in Pictures demonstrates an effort to mislead the public into blaming Obama for Bush's massive deficits.
FOX News had this headline: Obama Triples Budget Deficit to $1.4 Trillion (they have since changed the headline but here is it as it appeared:)
On the radio the drumbeat continues with people like Rush Limbaugh, saying, President Obama Lies About His Massive Deficits and Tax Increases,
People are fed up with this spending. They're scared to death of it. They know full well what it portends. It portends massive tax increases for years on us, our kids and grandkids. It weakens the country. This is just an abomination. Nine years ago we were attacked. Barack Obama cannot tell the truth. Constitutionally, he's not capable of telling the truth. He has increased the deficit, not by twice, not by three times, but by four times... Last year's deficit surged to $1.42 trillion, more than three times the record of the previous year. An imbalance of $454.8 billion in 2008. So Bush's last year budget deficit was $454.8 billion. Obama's budget deficit last year was $1.42 trillion. That's nearly $1 trillion more that he added to it in fiscal 2009.Here is Sean Hannity claiming Obama "quadrupled the deficit",
This is why the deficit dominates the agenda in DC. This dishonest propaganda campaign is the source of the political pressure to cut spending. Fine. What else would you expect from the right? It's what they do. But why has this campaign gone unanswered? Why haven't the forces allied with the President reached out with the facts? Why have they let themselves be put into this box?
A bigger question, why does the Obama administration still not seem to get it that this is what they do? The right has a coordinated, funded propaganda machine that just lies, and smears, belittles and humiliates people, makes the public afraid, stirs up division - even encourages sedition, all to get their way.
The right is well-funded because there is a monetary payoff to the big corporations and wealthy individuals who fund campaigns like this one. Their anti-government campaign is buying tax cuts, subsidies, deregulation or just non-enforcement of regulations, waivers or just lack of enforcement of anti-trust rules, military contracts, and a long list of other financial benefits.
Meanwhile people interested in democracy and good government are largely unfunded. They are largely shut out of TV and radio. For example, you rarely see a representative of labor on TV, radio or in the news. Bloggers reach a lot of people, but nothing like the talk radio/TV empire of the right. So how can we do this better?
We will be talking about this Tuesday afternoon at the Americas Future Now conference session, Can Bloggers Bring Populism To The Potomac? with Digby, Sara Robinson, Zach Carter, Terrance Heath, RJ Eskow and myself.
Posted by Dave Johnson at 1:54 PM | Comments (0) | Link Cosmos
May 26, 2010
Teacher Layoffs Loom Nationwide, DC Restaurants Humming
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Some say that "government can't create jobs." Others respond "unemployed people can't create votes." Meanwhile, conservatives, whose policies put so many people out of work, now say unemployed people are lazy and should not be collecting unemployment benefits.
Washington, DC is the center of a strange Information Deficit Disorder. The restaurants in DC are humming, the median income is really high, the Pentagon contracts are flowing. Seriously, pick a DC-area zip code, say 22314, and go to this site: "Dollar Amount of Defense Contracts Awarded to Contractors in this Zip Code from 2000 to 2009: $7,086,397,848." Even better, scroll down the page and look at some of the contracts and amounts awarded. So-and-so Consulting, $54,024, 204. So-and-so Associates, $1,698,274. Even better, see how many have the same address. This is just one zip code. There are pages and pages and pages like this for DC-area zip code after zip code. Clearly it is really, really good to be part of the military industry.
So from DC's viewpoint things are doing mighty fine. One Representative from Pennsylvania actually said the other day, "businesses back home complain that they want to start hiring but are getting few applicants because Congress has repeatedly extended unemployment benefits." Her district has 10% unemployment. There appear to be 14,900 people unemployed just in the city of Erie, which is in her district. Here are ALL 99 jobs advertised in the local paper.
Maybe this strange DC Information Deficit Disorder explains why hundreds of thousands of teachers are about to be laid off around the country because Congress isn't interested in acting. Republicans, who want schools privatized, call it a "bailout." Fox News, Teachers Seek $23b- Lifeline or Bailout?,
Education analyst Lindsey Burke of the Heritage Foundation ... questions the wisdom of funneling federal taxpayer funds, in any amount, to the public school system as it is presently structured. [. . .] they dont need another bailout from Washington for public education.
Sen. Harkin's $23 Billion Teacher Bailout Stalls
Iowa Sen. Tom Harkin's $23 billion amendment to bailout 300,000 teachers who will otherwise lose their jobs has stalled. “I have no Republicans who want to vote for it," he told Capitol News Connection. Meanwhile, in the House today, the Secretary of Education and top Democrats in the House struggle to drum up support for the same measure.
It isn't so good to be part of the teaching profession right now. Or a parent, for that matter. In fact, these days it isn't so good to be part of almost any profession except military or Wall Street.
I have been attaching the following paragraph to several posts about the jobs emergency:
President Obama has talked about a bold, large scale vision for a new direction for the country. But Congress and the President are getting trapped in austerity budget thinking that won’t allow them to go in the direction of stimulus and helping regular people. If there is to be no money because of an austerity budget then American competitiveness, the economy and the mood of the public can only get worse. Do the DC elites actually believe the public is going to reward this with votes?
NOTE: Part of the America's Future Now conference in Washington D.C. from June 7-9 will be devoted to strategy on how the progressive movement can fight the deficit cutters. Speakers such as Van Jones, House Speaker Nancy Pelosi, Howard Dean, AFL CIO President Richard Trumka, Arianna Huffington will offer a build vision for how the progressive movement can rebuild America's economy and put people back to work. Click here to attend.
Posted by Dave Johnson at 11:20 AM | Comments (0) | Link Cosmos
May 24, 2010
Are You Unemployed Because You Are Lazy?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Are you still unemployed? Obviously it is because you are lazy. At least, many members of Congress think so, anyway.
And besides, cutting the deficit -- caused by tax cuts for the rich and massive military spending increases -- is much more important than paychecks for Americans. The solution to the deficit -- caused by tax cuts for the rich and massive military spending increases -- is to cut back on things that help the American public.
Here is Senator Gregg on CNBC (Senate salary $174,000, see benefits below**), saying that unemployment checks mean people are "encouraged not to go look for work" and "don't want to go look for work":
And this in the news today, In Congress, spending measures meet bipartisan resistance,
"It's time to start paying for things," said Rep. Kathy Dahlkemper (D-Pa.), a freshman who voted for last year's economic stimulus bill but said she is likely to oppose the next spending package, scheduled to hit the House floor Tuesday. "We've done some good things, but one of the best things we could do right now is get control of our fiscal house.". . . Dahlkemper, facing a well-funded Republican car dealer in the blue-collar district she seized from the GOP in 2008, said businesses back home complain that they want to start hiring but are getting few applicants because Congress has repeatedly extended unemployment benefits.
and
"At some point we have to pivot" away from saving the economy and start reducing the deficit, said Sen. Robert P. Casey Jr. (D-Pa.).
So remember, the deficit -- caused by tax cuts for the rich and massive military spending increases -- has to be brought down and the way to bring down the deficit -- caused by tax cuts for the rich and massive military spending increases -- is to cut back on things that help the American public, and cut back on the investments in infrastructure (the seed corn) that bring future economic growth. But not to do anything about the cause of the deficits: tax cuts for the rich and massive military spending increases.
So if you are unemployed, just remember, in Washington the people who put $13.89 trillion at risk to bail out the big Wall Street firms, $4.71 trillion disbursed with $2.01 trillion still outstanding, think this is because you are lazy.
Along with earning salaries, senators receive retirement and health benefits that are identical to other federal employees, and are fully vested after five years of service. Senators are covered by the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS). As it is for federal employees, congressional retirement is funded through taxes and the participants' contributions. Under FERS, senators contribute 1.3% of their salary into the FERS retirement plan and pay 6.2% of their salary in Social Security taxes. The amount of a senator's pension depends on the years of service and the average of the highest 3 years of their salary. The starting amount of a senator's retirement annuity may not exceed 80% of their final salary. In 2006, the average annual pension for retired senators and representatives under CSRS was $60,972, while those who retired under FERS, or in combination with CSRS, was $35,952.
NOTE: Part of the America's Future Now conference in Washington D.C. from June 7-9 will be devoted to strategy on how the progressive movement can fight the deficit cutters. Speakers such as Van Jones, House Speaker Nancy Pelosi, Howard Dean, AFL CIO President Richard Trumka, Arianna Huffington will offer a build vision for how the progressive movement can rebuild America's economy and put people back to work. Click here to attend.
Posted by Dave Johnson at 3:22 PM | Comments (0) | Link Cosmos
Video Interview: Scott Paul Of AAM On China Dialogue
Today I was able to conduct a short webcam interview with Scott Paul, Executive Director of the Alliance for American Manufacturing. The occasion is this week's Us-China Strategic and Economic Dialogue taking place in Beijing. This dialog is a series of meetings between top-level officials of both governments on a number of issues. Secretaries Geithner and Clinton are leading the US delegtation. The trade imbalance between the US and China is one of the top issues being discussed.
Scott has posted a video at the AAM manufacturethis blog, titled THE 15 NUMBERS YOU NEED TO KNOW, which discusses AAM's 15 Numbers You Need to Know before the U.S.-China Strategic and Economic Dialogue in Beijing next week. (Example: 2.4 million: Number of U.S. jobs lost or displaced due to U.S.-China trade imbalance, 2001-2008.)
Here is our interview with Scott Paul:
Scott will be speaking on Making It In America at the America’s Future NOW! Conference in Washington, DC, June 7-9. Click here to register for the conference.
Posted by Dave Johnson at 2:55 PM | Comments (0) | Link Cosmos
May 21, 2010
Week Of Action On Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
On the one side there are millions of people needing jobs and millions more "underemployed," the economy is still mired in a very, very slow recovery that is a recovery only in the technical sense, an increasing wave of foreclosures that has reached into the "prime" loans and 1 out of every 7 mortgages has at least missed a payment and has at worst stopped paying.
Foreclosures continue to rise.
Businesses are not hiring. People need jobs that only government programs can provide. The reason only government can is because of the spending gap created by the economic crisis.
The Spending Gap
This chart from Brad DeLong explains why and by how much government needs to make up the difference:
Deficit Hawks Following The Plan
On the other side are the "deficit hawks," driven by anti-government ideology, following The Plan of the Reagan Revolution:
- Step 1: Cut taxes to "cut the allowance" of government so that it can't function on the side of We, the People. Intentionally force the government into greater and greater debt.
- Step 2: Use the debt as a reason to cut the things government does for We, the People.. When the resulting deficits pile up scare people that the government is "going bankrupt" so they'll let you sell off the people's assets and "privatize" the functions of government. Of course, insist that putting taxes back where they were will "harm the economy."
- Step 3: Blame liberals for the disastrous effects of spending cutbacks.
Now, true to the plan, Bush leaves behind a $1.4 trillion deficit and the corporate/conservative opinion-shapers are saturating us with warnings that the government is going to go bankrupt if we don't cut back. Typical of the debate, Jobs Bill Funded by Higher Buyout Tax Faces Friction on Deficit
A jobs bill containing a proposal to more than double taxes on managers of buyout firms is running into resistance from House and Senate lawmakers worried that the legislation will widen the U.S. budget deficit.
Facing A Lost Decade
Paul Krugman warns that we face a "Lost Decade" if we listen to the deficit cutters now,
But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.
Don't Fall For It
President Obama has talked about a bold, large scale vision for a new direction for the country. But Congress and the President are getting trapped in austerity budget thinking that won’t allow them to go in direction of stimulus and helping regular people. If there is to be no money because of an austerity budget then American competitiveness, the economy and the mood of the public can only get worse. Do the DC elites actually believe the public is going to reward this with votes?
The corporate conservatives know darn well that government job-creating programs will help and that is why they are trying to block them. See what one of the top anti-government, anti-spending conservatives has to say in Gingrich: Obama a One-Term President Because Team Can't Create Jobs. From the video: "No ability to craft positive programs that work. ... You don't have anything like an appropriate level of focus on job creation in this administration."
The only way to realistically cut the deficit is to invest in our economic future.
This means maintaining and modernizing our infrastructure, increasing educational opportunities for our people, investing in the new Green Manufacturing Revolution and government programs to create jobs now. Common-sense changes in taxes can help pay for jobs programs. For example, what about getting rid of the amazing tax break for hedge fund managers? At the same time it makes sense to bring taxes on the wealthy and corporations back to pre-Reagan/pre-borrowing levels to fight the deficits (that the tax cuts created in the first place) and decrease the concentration of wealth that is killing our democracy.
WEEK OF ACTION
The Jobs For America NOW coalition is organizing a Week Of Action next week, around the country. Please see Week Of Action Events. Also, see the resources on the Jobs for America now site including the click to call feature at Finish the Job on State Aid, Unemployment insurance and COBRA Health Subsidies NOW
More JOBS resources:
Citizens for Tax Justice has a report on The American Jobs and Closing Tax Loopholes Act of 2010.
The American Federation of Teachers is organizing a “Pink Hearts, Not Pink Slips” campaign. "Schools throughout America are facing devastating cuts. Our children’s future hangs in the balance."
Our government didn’t walk away from Wall Street. We should demand no less from them when it comes to saving our children’s future. We must voice our support for federal legislation that will provide $23 billion to help school districts avoid layoffs and cuts in vital services for children. Help us preserve the education lifeline our students deserve.
NOTE: Part of the America's Future Now conference in Washington D.C. from June 7-9 will be devoted to strategy on how the progressive movement can fight the deficit cutters. Speakers such as Van Jones, House Speaker Nancy Pelosi, Howard Dean, AFL CIO President Richard Trumka, Arianna Huffington will offer a build vision for how the progressive movement can rebuild America's economy and put people back to work. Click here to attend.
Posted by Dave Johnson at 12:57 PM | Comments (0) | Link Cosmos
May 14, 2010
Congress FAILs On Jobs AGAIN!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
It is hard to imagine out here in the real world, but there seem to be people in the Congress who think they can get (or deserve to be) re-elected when they are failing to do anything about jobs or extending unemployment and COBRA with unemployment at 10%, underemployment at 17%,and forecasts that say this will go one for years.
The public certainly is well aware of the disconnect:
This billboard was put up by a local Buffalo group representing young people, and I recommend clicking through to see their site. Especially if you are a member of Congress.
Failing is the wrong word this time. Maybe "disgusting" better fits the lack of seriousness of our representatives. Childish and spineless are the words that come to mind. Anti-porn provision sinks Dem jobs bill,
House Democrats had to scrap their only substantive bill of the week Thursday after Republicans won a procedural vote that substantively altered the legislation with an anti-porn clause.
Quick backstory: Bush's SEC, the people who were supposed to be regulating Bernie Madoff and Wall Street banksters were instead spending days surfing for porn on their computers. Republicans -- the people who put the porn-surfers into the SEC -- offered an "anti-porn" amendment to the jobs bill.
That provision scared dozens of Democrats into voting with Republicans to approve the motion to recommit. After it became clear the GOP motion was going to pass, dozens of additional Democrats changed their votes from "no" to "yes." In the end, 121 Democrats voted with Republicans -- only four fewer than the number of Democrats who voted with their party.
Because of idiocy like this,and a few other killing provisions they had to set aside the bill. The unemployed sit and wait for news. Playing games and posturing when we have a serious set of problems to solve, and real people out here in the real world are facing the worst crisis since the Great Depression. You can try to blame this on the obvious conservative obstruction strategy to stop the government from working, but spineless Democrats were stampeded into going along with it! Who's "not serious" now? If there are disruptive kids in the back of the class snickering and giggling, you aren't supposed to join them.
A new WSJ/NBC poll came out yesterday. 72% disapproval of Congress. (I wonder why?) Highest priority: Job creation and economic growth 35%, Deficit and government spending 20%. (Guess which one the out-of-touch DC elite are concentrating on.)
Listen, Congress, in DC you are employed, or you wouldn't be there. And the people you know are probably all employed. The lobbyists swarming you are employed. The people in the nice restaurants you enjoy are employed. But out here where I live the "official" unemployment rate is 13%. People we all KNOW are out of work and getting desperate. People in our families are out of work and getting desperate. 10% is NOT OK!
Trillions given to Wall Street, used to pay bonuses, FAIL on jobs. Do they think the public doesn't see that? What is the matter with these people?
Lesson: It's the jobs, stupid. JOBS FOR MAIN STREET!
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Update I got fooled by that billboard. The group behind it is just another right-wing front group. Sorry.
Posted by Dave Johnson at 10:53 AM | Comments (1) | Link Cosmos
May 12, 2010
Govt Spending: JOBS Today, Payoffs For Years To Come
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The commute between Baltimore and DC is the 4th-most congested route in the country. But a high-speed rail line would make this trip an 18-minute breeze (and also free up some of that congestion). They have been talking about building this rail line since 1994. Meanwhile other countries have been doing.
Japan, Europe and now China are known for their efficient, high-speed rail transportation systems.
By 2012, just four years after it began its first high-speed passenger service, China will have more high-speed train tracks than the rest of the world combined.
Why is China inveswting so heavily in high-speed rail infrastructure? What does this investment bring to China?
...designed to boost exports and revolutionize the flow of people and goods in the world's fastest-rising economic powerhouses."Just like our investment in the highway system in the 1950s and the rail system in the late 1800s, this will pay huge dividends for China to years to come,"
Governement spending pays dividends for years to come
That's right. Government spending is investment that pays off. It pays off in jobs today, and it pays dividends for years to come. As I wrote the other day in China's Stimulus Payoff "because China's government has invested heavily internally in high-speed rail, China is now in a position to bid on our own high-speed rail projects."
Japan also invested heavily in high-speed rail, and they are also bidding on our (talked about) rail projects. In the news: LaHood Rides 502 KPH Maglev Train as Japan Seeks U.S. Sales
Transportation Secretary Ray LaHood rode on a 502 kilometer-per-hour (312 mph) magnetic- levitation train in Japan, stoking optimism that the Asian nation may be able to sell the technology overseas.
...
Japan’s government has pledged to support JR Central’s bid to build the Washington-Baltimore line, possibly including loans from a state-owned bank. Maglev trains float above the tracks and are propelled along by magnetic currents.
Other countries understand that investing in infrastructure creates jobs today and enables economic growth later. Other countries understand that having a coordinated nation industrial/economic policy helps their businesses compete in the world's economy. Other countries are swooping down on us, bidding for our minuscule projects and selling us their green energy systems. Meanwhile we are mired in this weird "free market" anti-government ideology that keeps us from taking control of our destiny and our economic future.
Instead of talking about cutting back on spending, we should instead be investing heavily in our people and our infrastructure.
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Posted by Dave Johnson at 9:43 AM | Comments (0) | Link Cosmos
May 11, 2010
It's The JOBS, Stupid! Why DC Elites Don't See This
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project, and the "Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck The Economy." I am a Fellow with CAF.
People care about jobs. They still care about jobs. And politicians who don't care about jobs will lose their jobs, because that is what motivates voters.
Polling at Pollingreport.com proves that people are much more concerned about jobs than deficits. (Note there are some polls that show equal concern, no polls that show deficit with a higher concern)
* FOX News/Opinion Dynamics Poll. May 4-5 Economy and jobs 47% Deficit, spending %15
* BS News/New York Times Poll. April 5-12 Economy/Jobs 49% Budget deficit/National debt 5%
* CNN/Opinion Research Corporation Poll. March 19-21 The economy 43% The federal budget deficit 8%
Lesson: Spending and deficits matter, but jobs matter more. When Dick Cheney said, "Reagan proved deficits don't matter" he meant that voters didn't vote against politicians like Reagan and Bush for running up huge deficits. Bush's tax cuts and military spending increases left us with a $1.4 trillion deficit, but that isn't the reason people voted for Obama. The biggest reason was that we were losing millions of jobs.
Why don't DC elites see this?
It is obvious that people vote on jobs, not deficits. But for some odd reason the DC politicians don't seem to grasp that. I think I know part of the reason why they don't. If you are in DC the "information environment" is making it look as though the public is clamoring about deficits and don't care that much about jobs.
DC is a manufactured information environment
People in DC see things differently because there is a manufactured environment there. The one time when lobbyists do care about manufacturing is when they are manufacturing the appearance of public support for their issue.
If you are trying to influence national policy you influence DC. You spend a lot of money to make the DC opinion leaders think that your issue is urgent and the public is demanding action. You create "astroturf" which is a name for a lobbyist-manufactured appearance of grassroots support. You get your stories into the morning Politico, which every DC staffer reads on the train into the capital, but no one outside of DC cares about. You get the cable news show producers to book your talking heads. You wine and dine (and get lucrative speaking engagements for) the DC punditocracy so they'll talk urgently about your issue. You put ads on the DC radio stations.
After a while everyone in the DC area thinks your issue is the only thing voters are concerned about, while outside of DC everyone wonders why DC people are talking about something so idiotic and unimportant to regular people.
Deficits: a manufactured drumbeat
There is a well-funded effort to stampede Congress into thinking there is an urgent voter concern about deficits. One source of the manufactured concern is a Wall Street billionaire named Peter G. Peterson, who has for years been trying to get the Congress to cut the Social Security benefits that people paid for all of their working lives. Recently, for example, he made a deal with the Washington Post to print stories for the DC elite to read, about how the deficit needs to be cut and that "entitlements" like Social Security are the problem that needs fixing. There are numerous other examples of the deficit drumbeat manufacturing process..
Tea Party vs real grassroots concerns
Example: The other day there were mass rallies all around the country, by people who want the government to act on immigration. Hundreds of thousands of people turned out in cities from LA to New York. But if you are in DC, this barely registered. In DC it is "Tea Party, Tea Party, Tea Party." A few hundred people turn out (also here, here, here,here) for Tea Party rallies, and "the Tea Parties" are just about the only thing in the news, and the discussion topic on the cable news shows for weeks. (And never mind the Coffee Party, with more members and more events than the Tea Party.)
Politicians should remember the bailouts
These were just a few examples of how it works. And, for sure, it works. The process is so well-tuned that DC politicians can be stampeded easier and faster than Wal-Mart shoppers promised $100 flat-screen TVs on Black Friday.
Remember the Wall Street bailouts, with the Bush administration demanding they be passed in just 48 hours, or the entire world would end? (Remember "non-reviewable by any court or any agency?")
So how is it working out for politicians who were stampeded into voting for bailouts for Wall Street instead of jobs for Main Street?
Lesson: It's the jobs, stupid. JOBS FOR MAIN STREET!
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Posted by Dave Johnson at 12:10 PM | Comments (0) | Link Cosmos
May 3, 2010
We Need Jobs, Jobs, Jobs. And Jobs.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Things are good for the plutocrats. Stock market soaring, bonuses are big... Things are going mighty fine. So fine, in fact, that the urgency of extending unemployment, COBRA and programs to help the people harmed by the financial disaster is moving off the table.
But out here on Main Street we need jobs, jobs, jobs. And we need jobs, too. You just hear people say this over and over, and it's like we're told in response, "OK go to bed now, children."
Here's the deal: Say what you want about bailing out Goldman Sachs and AIG pass-throughs, and letting the FASB suspend "mark to market" accounting, it was unemployment benefits and the FDIC and the stimulus' job-creation that kept this economic crisis from turning int a full-blown depression. And it is still unemployment benefits and FDIC and the stimulus' job creation that are preventing it from happening. They may have hidden the bad assets on the banks' books by using a "mark to model" trick, but the bad assets are still there. The private-sector jobs are not.
We need a real economy, and real jobs for real people. If the plutocrats think they can have an economy without all of those people who are right now losing their benefits, losing their homes, losing their dignity, then we might all be in for a surprise. We need jobs. And that requires government action. If the available money goes instead to deficit reduction, you can't create the jobs. You can't create the green jobs that will drive the economy of the future, you can't keep the teaching jobs, and you won't keep the stimulus jobs.
Why isn't the Local Jobs For America bill on the front burner of the Congress?
We need a new WPA program to directly create jobs.
We need unemployment benefits and COBRA extended -- both the subsidies and COBRA itself.
What is the matter with these people? Do they really think an economy of, by and for the rich and only the rich can really work? It's been tried, and the results aren't usually pleasant:
Oh, did I mention that we need jobs, and we need government action to create jobs, and in the meantime we need unemployment and COBRA extended?
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Posted by Dave Johnson at 11:59 AM | Comments (0) | Link Cosmos
April 16, 2010
A Tax Trick That Forces Companies To Close Factories
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Yesterday was April 15, so I wrote about Tax Tricks. Here's a tax trick to talk about: Offshore Tax Havens for corporations.
Here's one way that offshore tax havens work. You make an item in one country, and sell it at cost to a subsidiary that is based (post office box) in a tax haven country with no or low taxes. So there is no profit to report in the country that it was made in. Then, your company or another subsidiary buys it for import in the US, for a price near to the amount the product will be sold for here. So when it sells, there is no profit to be taxed here. All the profit occurs in the low-or-no tax country. We, the People collect no taxes with which to pay for the schools and roads that make our economy competitive.
This tax trick encourages companies to move offshore, closing factories, laying off workers, kill the local suppliers and force costs onto the community. So not only are we losing the tax base and suffering the loss of the jobs and factory, we're picking up many of the costs. When a company like Whirlpool says they have to close a plant and destroy a community for competitive reasons, it's because they can do it, and if they don't their competitors will. If their competitors do and they don't respond they lose out, even to the possible point of going out of business (and closing factories and destroying communities.)
Don't blame the companies. Companies do what we let them do. If you don't take advantage of this your competitors will. If your competitors gain enough advantage and you don't you even face going out of business -- and closing factories, destroying communities, putting the costs on the public etc. So by allowing this, Congress forces companies to do this. The word you hear is "encourages" but really, in a competitive environment, allowing it at all forces not encourages.
It is OUR job to set up the playing field on which these companies compete and to define the rules they will use. Zach Carter writes in 10 Ways to Force the Stinking Rich to Share Their Wealth,
According to the Government Accountability Office, 83 of the 100 largest American corporations (pdf) engage in this kind of tax evasion. All of those companies have lobbyists.These companies do it because we let them, which means we make them do it.
Congress: FIX IT!
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Posted by Dave Johnson at 10:06 AM | Comments (0) | Link Cosmos
April 14, 2010
A Wealthy Few Pick Up The Cash, We Pay The Costs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
A few weeks back I wrote about Whirlpool closing their Evansville, Indiana plant and moving the work to Mexico. I wrote about the lunacy of an economic system that encourages companies to destroy lives, communities and the very economy that the Whirlpools depend on. This company was taking stimulus dollars with one hand and laying people off with the other.
Whirlpool did this because they could do it, making a wealthy few a bit more wealthy, and because you and I - not Whirlpool - have to pick up all the costs. This is called externalizing costs. It means you and I pick up the costs and an already-wealthy, connected few pick up the cash. It's the way our system currently is designed.
A step toward a solution to this problem would be to require companies to start estimating the externalized effects of their actions. What is the cost of cleaning up all the discarded cigarette butts? What is the cost of cleaning up the trash near a McDonald's? What are the costs from the health effects of added salt or sugar? So how about requiring companies to just estimate externalized costs so that We, the People can start getting a handle on this problem. Just start Is that too much to ask?
Now there is a study of the ripple effects of the Evansville plant closing. The full study, Layoff at Whirlpool: Costs to the Evansville Metro Area and Indiana Taxpayers, written by Greg LeRoy, executive director of Good Jobs First, concludes that direct costs to the community (us) will include:
- An additional 1,536 “ripple effect” jobs, for a total loss of 2,502 jobs;
- The loss of $138 million in income, including about 90 cents in additional income lost for every dollar lost by a Whirlpool employee; and
- A decline in tax revenues of $17.7 million, especially property, sales and both personal and corporate income taxes.
But that's not all.
This taxpayer-cost estimate... does not include substantial lost federal revenues... Nor does it include social safety-net programs to assist the dislocated workers. However, for one such program alone we conservatively estimate that: - Unemployment Insurance Benefits for the dislocated Indiana Whirlpool workers will cost more than $4.15 million....Combining tax losses with Unemployment Insurance costs generates a conservative taxpayer-cost estimate of more than $21.8 million—or $22,588 per worker dislocated in Indiana.
WE pick up those costs. A wealthy few get a bit wealthier. Welcome to the system.
But that's not all.
The surrounding retail stores, gas stations, and all other places these workers spend will see a drop in sales. Teachers, police, etc. will be under pressure as the local economy dries up. Homes will be foreclosed and property values for all will drop. The costs of those foreclosures will fall on others. Etc. All so a few already-wealthy will get a bit wealthier.
At least skim through the study to see all the ways the rest of us will be affected.
WE pick up those costs. A wealthy few get a bit wealthier. WE CAN CHANGE THE SYSTEM.
Past posts on Whirlpool's Evansville plant closing:
Whirlpool: Mexican Workers Paid $70/Week Can't Buy Refrigerators
Whirlpool Tells Callers: Call Congress. They're Right!
Whirlpool Exec Responds: The System Made Us Do It
Whirlpool Bites Hands Of American Taxpayers That Feed It
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Posted by Dave Johnson at 10:51 AM | Comments (1) | Link Cosmos
April 12, 2010
China Shocks World With Trade Deficit Claim. Heh.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
"China posted a $7.24-billion trade deficit in March, its first in almost six years"
The world is shocked by the announcement!
Last month I wrote that China was expected to report a trade deficit right about now, just before the Obama administration was scheduled to make a declaration on whether China is manipulating its currency or not, China's Coming Surprise Announcement And My Bridge On EBay,
On April 15 the Obama administration is required to officially declare whether China is manipulating its currency. SInce China is manipulating its currency there is a great deal of pressure on the administration to say so.Surprise! On April 12 China is now said to be preparing to announce a trade deficit.
[. . .] Oh, by the way, I wanted to let everyone know that I will be selling a bridge on eBay, and invite you to bid. It's just coincidentally going to be auctioned just before the Chinese announcement.
And here we are, with the surprise announcement, and the statement that it means China doesn't need to adjust its currency, exactly as the administration takes the currency manipulation case to the G-20. China Says Trade Data Justify Its Yuan Policy
China ran its first monthly trade deficit in six years in March, data issued Saturday show, a development that, while likely temporary, was quickly seized on by the nation's commerce ministry to argue against the need to revalue the country's currency.With imports of commodities surging last month, China swung to a trade deficit of $7.24 billion in March from a surplus of $7.61 billion in February, according to figures issued by China's Customs agency. Overall, imports were up 66% from a year earlier in March, with purchases of crude oil and copper at near-record levels in volume terms.
Note that the deficit comes after "[v]irtually all Chinese export factories closed for the last two weeks of February in observance of the Lunar New Year, which was unusually late this year" and is also because China's imports of raw materials surged. Raw materials. See if you can guess what a surge in imports of raw materials to a manufacturing engine means is about to happen? (Hint: it means a surge in manufactured goods is about to hit us.)
Of course, the Obama administration has put off their declaration. And China has hinted that they will increase the value of their currency a bit, so that their current pricing advantage of up to 40% will, in a year, be maybe ... 42%.
So things will get worse more slowly, just like the jobs situation. I guess everything is OK now.
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Posted by Dave Johnson at 11:38 AM | Comments (0) | Link Cosmos
April 9, 2010
China Currency Shift: Getting Worse More Slowly
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
There are rumors that China will let its currency start to rise a tiny bit. China's currency undervalued by up to 40%, which means goods made there have as much as a 40% advantage coming out of the gate, even before their other rulebreaking trade schemes kick in. Since their currency should appreciate quite a bit from where it is now over the next year anyway a small rise in their currency actually does less than nothing. So for example, if they appreciate their currency 3% that means they start with a 40% advantage out the gate, and a year form now they’ll be at maybe 42%! It just means the situation will get worse more slowly.
From a NY Times story today, China Seems Set to Loosen Hold on Its Currency
The Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly and vary more from day to day, people with knowledge of the emerging consensus in Beijing said on Thursday. The move would help ease tension with the Obama administration about the United States’ huge trade deficit with China.
China, of course, has no intention of changing its mercantilist policies. Unfair advantages are bringing home the bacon (and cost us 2.4 million manufacturing jobs) and they want to keep it that way. Commerce Secretary Gary Locke says that their trade barriers might undercut any currency shift.
U.S. Commerce Secretary Gary Locke said China should allow the yuan to float, even though import barriers may undercut any boost for American exporters from a revaluation.“Sometimes it’s like two steps forward and one step backwards, or two steps sideways” when dealing with China, Locke said in a Bloomberg Television interview. “They can revalue their currency, but if they still have market barriers or if they favor their domestic companies, then that revaluation of the currency will not make much of a difference."
Even this small currency change is is only being done to ease internal pressures, not to help ease the tremendous imbalances their policies are causing. From the NY Times story,
The move is being made for domestic policy reasons in China, primarily as an inflation-fighting tool, people with knowledge of the emerging consensus in Beijing said on Thursday. While any announcement could still be delayed, China’s central bank appears to have prevailed with its arguments within the Chinese leadership for a stronger but more flexible currency, these people said.
The internal pressure are rising because China is devoting a huge share of its GDP just to currency manipulation,
Holding down the value of the renminbi through huge currency market intervention has become an enormous expense for China. The central bank spent 9.2 percent of the country’s economic output last year on the purchase of foreign reserves, mainly Treasuries that are now paying low interest.
The NY Times asked a few economists to weigh in, in What China’s Currency Shift Could Mean. Take a look.
Call your representatives and tell them you demand that they take steps to fight Chinese trade rulebreaking. Keep up the pressure.
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Posted by Dave Johnson at 5:04 PM | Comments (1) | Link Cosmos
April 8, 2010
Is China Trading Fair? CAF V. CATO On CNBC
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I appeared on CNBC's Power Lunch today to discuss the trade imbalance with China. I was taking the position that we should be pushing for China to bring its currency into balance, and start following the trade rules, so that we can have a balanced and mutually beneficial relationship. Dan Ikenson, associate director of the Cato Institute's Center for Trade Policy Studies was on the show to argue the opposing view.
I was only on for about a minute, but here are the notes I had prepared:
The trade imbalance with China is huge. This imbalance is the result of rulebreaking that has created a bubble that is expanding beyond all safe margins. If we let it get worse it could lead to another worldwide economic disaster.
A study by the Alliance for American Manufacturing and the Economic Policy Institute found that 2.4 million (oops I said 2.8 on the show) American manufacturing jobs were lost between 2001 and 2008 due to unfair trade with China. The biggest share of those job losses was in technology by the way.
The solution – the way to bring the trade relationship back into balance – is actual free trade. That is trade that follows and enforces the rules and is not manipulated and is not exploitative. Actual free and fair trade lets companies and countries compete in a free, unmanipulated market that is on a level playing field with clear rules that benefit everyone.
But right now China is manipulating its currency to bring themselves a pricing advantage, some say by as much as 40%. This is NOT a level playing field, is NOT free trade, and is not following the rules of a FREE market! If they adjust their currtency by 5% over the next year, as rumored, they will start up and end up about 40% undervalued.
Some say we should be afraid to confront China. But China needs our market and they should be worried about taking this too far and the American public demanding action. And if China dumps their dollar holdings they would do it by selling dollars instead of buying them. Since buying dollars is how they have been forcing their currency down, selling them accomplishes the rebalancing we need. The dollar would drop against theirs, and our goods would be competitive. This is what we want to happen, not something to be afraid of.
Free Trade economists are also complaining about this manipulation. Here is Fred Bergsten, director of the Peterson Institute for International Economics:
“They clearly are manipulating. They're keeping their currency undervalued, somewhere between 25 to 40 percent. That has huge effects on the world economy, huge adverse effects on lots of other countries.”
Paul Krugman says it’s knocking 1.5% off our GDP, and "This is the most distortionary exchange rate policy any major nation has ever followed."
We want a level playing field, not manipulation of the rules. True free trade works for everyone and lifts everyone.
The main unfair and manipulated tactics China uses to its advantage are:
1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
The mission of Campaign for America’s Future is to build an economy that works for everyone. An unbalanced trade relationship creates an unsustainable global economy that works for the few.
Here is the segment. Let's see how those notes translate into a live segment:
So, I guess I told them a thing or two!
Well, at least they used a low-def camera for me. Things are generally better for everyone when they do that.
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On CNBC Today
I will be on CNBC's Power Lunch today at approx. 1:15 Eastern, 10:15 Pacific, discussing trade with China.
I am told they're using a standard def camera, not a high def, so you don't need to keep the children away.
Update - Here is the segment:
Posted by Dave Johnson at 7:17 AM | Comments (0) | Link Cosmos
April 5, 2010
Big Weekend News On China Currency Problem
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
While publicly saying that China is manipulating its currency -- a very big deal -- Treasury Secretary Geithner announced over the weekend the administration is getting around the problem of an April 15 deadline for declaring that China is a currency manipulator by ... pushing back the deadline. They are instead taking the issue to the G-20, beginning with meetings later this month in DC.
Geithner's official statement makes it clear,
China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention. Additionally, China's inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate. A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing.So there we have it: China is manipulating its currency and this is harming us and blocking badly-needed global rebalancing. Acknowledging the problem is the first step toward dealing with the problem.
Senator Grassley pointed out that story teaches us we just have to face up to it and deal with this. Grassley criticizes delay of Treasury report regarding China,
Sen. Chuck Grassley (R-Iowa) criticized Treasury Secretary Timothy Geithner for delaying the release of the Department's exchange rate report because it might strain relations with China.But this time the problem isn't denial it is action. Geither did cite China as a currency manipulator in his statement, but is not taking the official action of formally declaring them a currency manipulator.. . . "If we want the Chinese to take us seriously, we need to be willing to say so in public," he said in prepared remarks. "The past few years have proven that denying the problem doesn't solve anything. The Treasury Department should cite China as a currency manipulator."
Fox News' take on it is different: "caving",White House Denies Charges of Caving to China on Currency. (Note that the story in no way mentions "caving", only the spin in the headline.)
The Way Forward
This is success. America's manufacturers, economists, unions and Main Street applied pressure demanding relief from China's assault on our economic base, and with this public acknowledgement have had some success. But not enough. The administration could not continue the pattern of years of denial.
So the question now is, what are we going to do about it?
News reports suggest that China is going to let its currency appreciate just a bit, maybe 5% over a year as a sop to placate the rest of the world. But this is an unacceptably small offering that does not even begin to address the magnitude of the problem and the damage being done. China currently enjoys a trade advantage of up to 40% because of their currency manipulation and continues to drain factories (and the accompanying knowledge and supply chains), jobs, markets, money and hope from the rest of the world. Productivity alone is rising enough to easily offset a 5% move. If this is the extent of China's response the imbalances and resulting tensions will only continue to worsen.
This is exactly the time to expand the challenge to the administration. The Graham-Schumer bill, S. 295, intends to "level the playing field" with China,
Specifically, the amendment allows for a 180 day negotiation period between the US and China to revalue its currency, if the negotiations are not successful, a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States - a penalty that corresponds to their estimated currency advantage.
Beyond this one issue, there is a larger problem. What is America's strategy going to be, in a world that is half-mercantilist? Almost every other industrialized country is pursuing a national strategy. How are we responding? Until we have a national industrial/economic policy we remain at the mercy of "free markets" that are not free but are actually rigged against the American Main Street's economic interests.
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April 2, 2010
"Re-shoring," "On-shoring" and "Insourcing" - The Coming New Era Of American Manufacturing
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
What will it mean to American businesses if - I should say when - Chinese imports cost as much as they should cost?
A currency and trade rebalancing is going to happen sooner or later because it has to. We can't run a trade deficit forever. If something is unsustainable it can't be sustained. Eventually we have to earn the money to pay off what we are borrowing and the only way to do that is with exports. The first step to that is to stop importing so much and at least make things to sell to ourselves.
This rebalancing could happen because China lets its currency approach market levels. Or, if China refuses to stop unfairly subsidizing their exports (their currency manipulation is just one piece of that) our government will have to impose tariffs on imports from China. There are other things that could change the current trade imbalance. The only thing that is for sure is that the current situation can't just continue. We can't just keep sending factories, supply chains, jobs, and dollars away. It's a bubble that has to pop. And it will. American business should be planning for this approaching new era of American manufacturing.
Once the Chinese import bubble pops new phrases will enter the lexicon, so start getting used to them. "Re-shoring," "on-shoring" and "insourcing" will replace "offshoring" and "outsourcing."
A week ago I wrote about a CNBC segment on this,
For many years we've been hearing about outsourcing and offshoring. President Obama has started taking steps to rebalance world trade and the pendulum is about to start swinging the other way. More and more often you'll be hearing new words: "insourcing," "on-shoring" and "re-shoring."Watch this CNBC segment from Friday, Made in America Making a Comeback.
American businesses -- are you ready? It's coming.
P.S. Here's a stock tip: machine tools.
Update and P.S. --
Re-Shore at the NTMA/PMA Contract Manufacturing Purchasing Fair
Help bring manufacturing back to the U.S.!Click through!
At last somebody is doing something: the May 12, 2010 NTMA/PMA Purchasing Fair focuses on re-shoring. The $ is down vs. many currencies. JIT and R&D; are best supported, and carbon footprint minimized, by local sourcing. The time is right for this effort to succeed.
Customers bring your off-shored work! Vendors bring your best technical ideas and sharp pencils! Learn More
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April 1, 2010
Pressure On Wages As Well As Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Our economy is not structured to produce enough jobs. Tomorrow's jobs report is expected to show as many as 200,000 jobs created in March, but a lot of that is temporary Census hires, and even 200,000 jobs created is still 2-300,000 fewer jobs than number of new entrants into the job market each month! So even a "good" report of 200,000 will be just another "economy still getting worse more slowly" story.
We need jobs, jobs, jobs and jobs, and we need them to pay people enough.
It's not just trade pressures that are keeping job growth from occurring, but trade pressures are a very big and very immediate part of the problem. Fixing the trade imbalances will be a great start and will give us a small bit of breathing room in which we will hopefully address larger structural problems.
Those trade pressures are not just destroying jobs, they are destroying wages and benefits, too. It's the way of the world; a business owner can't help but look at the legacy wages that built up and up and up during the competitive good times, and wonder why they're still paying those high wages during the bad times. If you have a company full of people making $80,000 or $100,000 and you see people accepting work in similar positions for $40,000 you are going to wonder how to reduce the amount you are paying people. One way is to make them work more for the same pay.
In yesterday's Washington Post, Holding back job growth? Workers' awesome output,
One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.That means high-level gains in productivity -- which in the long run is the key to a higher standard of living but in the short run contributes to sky-high unemployment. So long as employers can squeeze dramatically higher output from every worker, they won't need to hire again despite the growing economy.
[. . .] Fearful of losing their jobs, people seem to have become more willing to stretch themselves to the limit to get more done in any given hour of work. And they have been tolerant of furloughs and cutbacks in hours, which in better times would drive them to find a new employer. This has given companies the leeway to cut back without the fear of losing valuable employees for good.
It's not "awesome output" it is workers being squeezed to death. And it's the way our system is designed.
In Fixing Jobs: Normal Isn’t An Option I wrote that the way our current system is structured employers have every incentive to figure out how to eliminate your job or at least cut your pay,
The core of what needs to be restructured is that we have a system where people with power and wealth benefit when they figure out how to cause other people to receive lower pay and benefits -- or just lose their jobs. The incentives come down to this: if someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing. If you don't own the company you're out of luck.
Returning to "normal" is not an option now and it just isn't going to happen. We have hit the wall of the old economic paradigm. We need to start looking at new models for a sustainable, people-friendly economy that works for all of us, not just a lucky few.
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March 31, 2010
G-20 Standing Up To China, Now It’s Your Turn
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As the manufacturing infrastructure of suppliers, technology knowledge, etc., moves to China, dependence follows. China appears to be ready to answer, "So what are you going to do about it?"
The world is starting to realize this. Financial Times, yesterday, China reprimanded by G20 leaders
Five prominent members of the Group of 20 leading economies, including the US and UK, sent a coded rebuke to China on Tuesday against backsliding on economic agreements.In a letter to the rest of the G20 that shows frustration at slow progress this year, the leaders warned: “Without co-operative action to make the necessary adjustments to achieve [strong and sustainable growth], the risk of future crises and low growth remain.”
The letter was signed by U.S. President Barack Obama, Canadian Prime Minister Stephen Harper, French President Nicolas Sarkozy, South Korean President Lee Myung-bak and UK Prime Minister Gordon Brown.
Meanwhile Business Week looks at China, in China: Closing for Business? (turn your sound off before clicking)
Nearly a decade after China's entry into the World Trade Organization, many foreign companies say the warm reception they once received has turned frosty. ... A new government procurement program known as "indigenous innovation" features rules favoring local firms: It could block sales worth billions of dollars a year. ... Beijing has written strict standards for everything from cell phones to cars, often couching them in a way that gives an advantage to domestic producers.
Summary, China used the promise of access to its huge market to grab control of much of the world's manufacturing. "You want to sell to us, you have to build your factories here." Now that they have it they are no longer as interested in sharing. And while they subsidize manufacturing in various ways - including currency manipulation - to lure companies to move factories and jobs to China, they are not letting those companies sell inside China. So the huge trade imbalance continues to grow.
China pursued an effective industrial policy. Meanwhile, we don't even have one.
What are we going to do about that?
Here is something you can do today: Click here to tell Washington: Tell the truth. China is manipulating its currency and playing by its own set of rules.
The Treasury Department must report twice a year which countries are practicing unfair trade by artificially lowering the value of their currencies, making their imports cheaper and our exports pricier.The next Treasury report on currency manipulation comes on April 15. The Chinese government is spending an unprecedented $30 billion a month buying dollars and selling yuan to keep its currency low and its exports cheap.
Yet regardless of who is in charge of the White House, the US has yet to follow the law and state the truth.
To share this:
Direct Twitter share link (click on this, don’t copy it): http://bit.ly/dAKD4P
Direct Facebook share link (click on this, don’t copy it): http://bit.ly/clpBmC
And then, after you have done these, demand that our government formulate and follow a national industrial policy so we can start bringing the jobs back home.
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March 30, 2010
Chinese Currency Manipulation Is Just One Piece
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I've been focusing on the Chinese currency manipulation problem because the Obama administration is supposed to make it's twice-a-year declaration on this on April 15. But even if this problem is addressed as it needs to be, keep in mind that it is just one piece of the larger problem of Chinese trade policies.
In a post the other day I listed the main unfair advantages China uses to its advantage:
1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
It is necessary to bring their currency to market rates, but this is not all that must be done to bring trade into balance. It helps, it doesn’t fix it.
All of these things that China is doing are collectively called a national industrial policy. China has one. We don't. China's share of the world's business has grown exponentially because they have and follow a national industrial policy. Ours has declined dramatically because we don't. I'm trying to drop a hint here, but for those in Washington who aren't following let me spell it out more clearly: America needs to develop and follow a national industrial policy.
One more thing, Senators Graham and Schumer have introduced a bill, S. 295, that will "level the playing field" with China.
Specifically, the amendment allows for a 180 day negotiation period between the US and China to revalue its currency, if the negotiations are not successful, a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States - a penalty that corresponds to their estimated currency advantage.
It's time to call the President and your member of Congress, and tell them to let the Treasury Department know that they need to declare China a currency manipulator. And ask them to support the Graham-Schumer bill.
When you call, you can use info from this report by The Alliance for American Manufacturing and Economic Policy Institute titled, “Unfair China Trade Costs Local Jobs.” Accompanying the report is a website with an interactive map that shows job losses to by state and Congressional District:
Also, look at CAF's breakout page on the China trade problem: On Jobs, China Has Us In The Red
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March 26, 2010
Even Chinese Officials Understand -- Their Currency Must Rise
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
When a policy is just wrong it's just wrong. I have written about how Chinese CEOs and Chinese economists have been making the case for China to bring its currency up to market rates.
Even Chinese government officials are making the case for a stronger currency. In a must-read NY Times story, China Officials Wrestle Publicly Over Currency,
The current drama began on March 6 when the governor of China’s central bank stunned analysts by saying that the bank’s policy of keeping the renminbi at a constant exchange rate against the dollar was a “special” response to the global financial crisis.The new description suggested to many economists that the current value of the renminbi was temporary and that the central banker, Zhou Xiaochuan, was preparing the Chinese public for a stronger renminbi.
Why is all of this discussion about Chinese currency coming to a head now?
The debate is far from academic. In the coming weeks, the Obama administration faces a series of politically charged deadlines set by Congress to decide whether to continue negotiating with China over currency and trade issues or to take a more confrontational stance and name China a currency manipulator.If the administration labels China a currency manipulator, it would face further Congressional pressure to impose punitive tariffs on many Chinese goods.
Please read the entire NY Time story for its explanation of some of China's internal tensions over the currency-rate problem. The Commerce Ministry is close to exporters who have been enjoying this manipulated advantage, and fights for their interests. The central bank has accumulated a vast store of foreign currency and would be blamed for the value drop of this pile of foreign cash as their own currency gets stronger. But the pile also means that the central bank cannot easily raise interest rates to fight rising inflation. Because of this inflation companies are starting to import and stockpile commodities. Etc. It's a tense mess with the highest of stakes. (Yes, I feel the excitement of a thriller when I read about economics. My wife rolls her eyes.)
The Chinese government is trying to just manage all of these market forces instead of letting them operate as markets. The resulting imbalances are causing tremendous pressures - and bubbles - to build up both inside and outside of China. If China won't resolve this as the danger to the world's economy grows, the rest of the world must step in. On April 15 President Obama has an opportunity to start restoring balance to the world's economy by declaring China a currency manipulator and taking steps designed to force them into balance with the rest of the world. Think of it as an intervention for their own good.
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March 25, 2010
Pressure Rises For China Currency Fix -- Yesterday Chinese CEOs, Today Chinese Economists
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Yesterday I wrote about Chinese CEOs calling for China to bring its currency up to market rates. Today Chinese economists are joining the call.
Chinese economist Gong Shengli, in his book, China is Very Happy, calls for a strong yuan,
"In order for China to survive and to continue developing, it is imperative that the renminbi goes global," says Mr Gong. "That means it is absolutely necessary and inevitable that the currency should appreciate."
From the Financial Times story,
A small but prominent group of economists at the Chinese Academy of Social Sciences has been pushing in recent months for a sizeable appreciation of the currency. In an article published this year, Zhang Bin called for a 10 per cent rise and greater flexibility in daily trading limits in order to give the authorities more control over monetary policy and to restrain inflation."There is a very urgent need" for reform of the currency system, he wrote.
Zhang Shuguang, another Cass researcher, said a stronger currency was needed to boost China's services sector and reduce the emphasis on exports.
The fact is that this currency imbalance distorts everything in the world economy. Chinese consumers face a barrier of up to 40% keeping them from being able to buy goods produced outside of China. Chinese businesses face the same problem. Meanwhile the rest of the world continues to lose jobs, factories and purchasing power.
On April 15 the President must declare China a currency manipulator and take the necessary steps to being to remedy the problem.
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March 24, 2010
Even Chinese CEOS Call For Chinese Currency Fix
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The pressure from the huge Chinese currency imbalance shows up in surprising places. Even Chinese CEOs are calling for China to increase the value of its currency to market rates.
China CEOs Join Obama in Supporting Yuan Appreciation
Yang Yuanqing, chief executive officer of Beijing-based computer maker Lenovo Group Ltd., said gains would boost consumers’ purchasing power. Qin Xiao, chairman of China Merchants Bank Co., said an end to the yuan’s 20-month peg to the dollar would let lenders set market-based interest rates. Chen Daifu, chairman of Hunan Lengshuijiang Iron & Steel Group Co., said a stronger currency would cut import costs.[. . .] Chinese banking executives blame the yuan peg for disrupting money markets. China’s dollar purchases to maintain the link have driven currency reserves to $2.4 trillion and flooded the financial system with yuan.
By pegging its currency to the dollar the Chinese government is distorting the entire world's economy. This has negative effects for the Chinese as well as positive effects, and as the imbalance becomes greater those affected negatively are going to apply more pressure. In this case it is Chinese people and companies who want to buy from outside of China who are feeling the pain.
Chinese currency is only one part of the trade imbalance equation -- but it is a very big part. It accounts for a price differential of as much as 40%! Another part of the equation is China's suppression of labor rights. Chinese workers would be calling for a currency revaluation -- if they could. If workers were allowed to organize they would apply pressure on the government to ... revalue its currency so they could afford things made elsewhere. And they would certainly apply pressure on the government to clean up its environmental act - one more area where China is distorting the natural balance.
P.S. In case you missed it yesterday, see this interactive map showing just how many jobs have been lost to China since 2001.
Everyone knows that we have lost a lot of jobs to China since 2001. Now you can find out exactly how many, and where.
The Alliance for American Manufacturing and Economic Policy Institute released a report titled, “Unfair China Trade Costs Local Jobs” by EPI's Robert Scott. Along with the report AAM has set up a website with an interactive map that shows job losses to by state and Congressional District.
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March 23, 2010
Find Out How MANY Jobs Have Been Lost To China Where YOU Live
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Everyone knows that we have lost a lot of jobs to China since 2001. Now you can find out exactly how many, and where.
The Alliance for American Manufacturing and Economic Policy Institute released a report today titled, “Unfair China Trade Costs Local Jobs” by EPI's Robert Scott. Along with the report AAM has set up a website with an interactive map that shows job losses to by state and Congressional District.
It's bad. According to the report, between 2001 and 2008, 2.4 million jobs were lost or displaced with losses occurring in every Congressional district. (Note - This report does not track service industry job losses, and does not track indirect job losses.)
Here's the surprise: since 2001 we have lost more tech jobs than manufacturing jobs! -- We lost 628,000 tech jobs -26 percent of all jobs displaced by trade- between 2001 and 2008.
The main unfair advantages China uses to its advantage are:
1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
I joined a press conference call announcing this report, with Senators Charles Shumer (D-NY) and Lindsey Graham (R-SC).
Senators Schumer and Graham are introducing legislation in which "the wiggle room will be gone" and the Treasury Department must cite the Chinese for currency manipulation if currency is misaligned without having to say there is "intent," and impose additional penalties. Schumer:
"In the past Dem and Rep admins turned a blind eye to this problem. We are tired of the Chinese not playing by the rules that everyone else has to play by.
Later on the call Senator Schumer said,
Imagine if you had two stores across the street and one had a 40% price advantage – could charge 40% less than the other, where do you think people would shop?[. . .] Every day we wait is a day we lose wealth, we lose economic advantage, we lose jobs.
Sen. Graham,
It is hard for American political leaders to keep their head in the sand any longer. ... To ignore China''s currency manipulation is to ignore economic reality and the way economics works. ... I am hopeful they [the Treasury Dept.] will go ahead and speak truth to power and the truth is that China's currency is misaligned.
Previous administrations allowed all of this to continue with impunity. It is time to do something about it and bring the world's trade back toward some kind of balance.
To help you read the report:
“Unfair China Trade Costs Local Jobs” by Robert Scott of Economic Policy Institute.
- 1 Introduction
- 2 Currency Manipulation/li>
- 3 Failed Expectations
- 4 Growing Trade Deficits and Job Losses
- Trade and jobs, industry details
- Trade, jobs, and the states
- Job loss by Congressional district
- 8 Conclusion
- 9 Methodology
- 10 Estimation and Data Sources
- Data requirements
- Analysis
- 13 Endnotes
- 14 References
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March 22, 2010
Ten Million Jobs Needed - Ten Million Jobs That Need Doing
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Dot: No net job gains since 2000. 8 million jobs lost in the recession. Never mind jobs for the 86,000 new people entering the labor force every month...
Dot: According to the American Society of Civil Engineers (ASCE)
“congested highways, overflowing sewers, and corroding bridges” were creating a “looming crisis that jeopardizes our nation’s prosperity and our quality of life.”
Dot: From a recent NY Times story on our country's water systems,
Today, a significant water line bursts on average every two minutes somewhere in the country, according to a New York Times analysis of Environmental Protection Agency data.. . . State and federal studies indicate that thousands of water and sewer systems may be too old to function properly.
[. . .] “There’s a lot of evidence that people are getting sick,” he added. “But because everything is out of sight, no one really understands how bad things have become.”
Connect the dots.
Ten million jobs needed. Ten million jobs that need doing.
It's called the infrastructure deficit. Right around 1981 we stopped improving the country's infrastructure and even started to defer maintaining it. We started "living off the seed corn." Now it is all catching up to us.
I'll be writing about infrastructure. Boring. Until it isn't.
Workers were repairing corroded joints on Minnesota's busiest bridge when it collapsed into the Mississippi River yesterday, killing at least four people and leaving more than 20 missing, state officials said.... As many as 50 cars plunged into the river along with the six-story structure, authorities and eyewitnesses said.
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March 18, 2010
China's Currency Manipulation Manipulates The World
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China's currency manipulation is a worldwide problem, not just a job-killer here.
U.S. Ambassador Calls China’s Currency Stance ‘a Real Concern’,
In a speech to students at Beijing’s Tsinghua University, the ambassador, Jon Huntsman, said that economic problems in the United States had increased pressure there for a change in the value of the renminbi, which China currently ties to the value of the dollar. That has kept Chinese exports comparatively cheap and, critics say, hampered other nations’ recovery from the global recession.“My Chinese friends like to pitch this as just an American issue. I like to say that there are many countries that feel the same way,” Mr. Huntsman said. But he focused on the growing political backlash from Americans who feel the currency policy is hurting them. [emphasis added]
The managing director of the IMF - the 'I' stands for "International" - agrees. IMF Head Says Yuan Remains Undervalued
International Monetary Fund Managing Director Dominique Strauss-Kahn said Wednesday that China's currency remains undervalued.
The resulting huge trade imbalance is hurting the entire world. From the NY Times editorial that I linked to yesterday, Will China Listen?,
China’s decision to base its economic growth on exporting deliberately undervalued goods is threatening economies around the world. It is fueling huge trade deficits in the United States and Europe. Even worse, it is crowding out exports from other developing countries, threatening their hopes of recovery.
In the Financial Times, Martin Wolf writes in China and Germany unite to impose global deflation,
[. . .] Surplus countries insist on continuing just as before. But they refuse to accept that their reliance on export surpluses must rebound upon themselves, once their customers go broke. Indeed, that is just what is happening. Meanwhile, countries that ran huge external deficits in the past can cut the massive fiscal deficits that result from post-bubble deleveraging by their private sectors only via a big surge in their net exports. If surplus countries fail to offset that shift, through expansion in aggregate demand, the world is inevitably caught in a “beggar-my-neighbour” battle: everybody seeks desperately to foist excess supplies on to their trading partners. That was a big part of the catastrophe of the 1930s, too.
The United States is not alone here. If the United States takes a stand the world will be behind us. We need to do what is right. On April 15 the President should declare China to be the currency manipulator that it is. Then trade can start to rebalance.
Posted by Dave Johnson at 10:48 AM | Comments (3) | Link Cosmos
March 17, 2010
Chinese Currency Manipulation: "Not A Small Issue"
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The Chinese currency manipulation issue continues to make news.
Economist Paul Krugman lays out the stakes,
China is in effect imposing an anti-stimulus of that magnitude — which plausibly means 1.5 percent of GDP. This is not a small issue.
Senators Schumer, Graham and Brown revive legislation to push China: Schumer, Graham Push Bill to Pressure China on Yuan
Senators Charles Schumer, Lindsey Graham and Sherrod Brown revived U.S. legislation that would increase pressure on China to raise the value of its currency.. . . “President Obama has outlined a plan to double exports but you simply can’t do that if you don’t address the currency issue,” Brown, an Ohio Democrat, said at a news conference in Washington today. “China’s current policy is out-and-out protectionism.”
130 Members of Congress call on the President to act,
Today a bipartisan group of 130 members of Congress, ranging from Dennis Kucinich on the left to Joe Wilson on the right, wrote to President Obama asking him to stop Chinese currency manipulation.. . . The crisis has gotten so severe that economists who have long fought for conservative ideology and against tariffs are saying we need them to correct the imbalance.
NY Times editorial shows that establishment opinion is moving against China, Will China Listen?,
China’s decision to base its economic growth on exporting deliberately undervalued goods is threatening economies around the world. It is fueling huge trade deficits in the United States and Europe. Even worse, it is crowding out exports from other developing countries, threatening their hopes of recovery.[. . . ] The world’s battered economy is certainly in no shape to keep absorbing China’s exports, subsidized through a cheap currency policy. The more countries that say this, the more likely Beijing will consider changing course — and the less likely this disagreement will escalate into a fight that no one can win.
China says this is all just "scapegoating": Senior Chinese diplomat rejects currency move,
"I don't think the call by over 100 congressmen from the U.S. is well founded on facts. They should not blame the problems they have by finding a scapegoat in China," He Yafei, China's new ambassador to the United Nations in Geneva, told a briefing.
Wall Street takes China's side: Congress Is Playing ‘Football’ on China Currency, O’Neill Says,
U.S. lawmakers are playing political football by pressing China to boost the value of its currency, which isn’t particularly undervalued, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said.. . . The concern in Congress “is sort of understandable but it misses the point,” O’Neill said today at a press conference in London. It’s “the equivalent of a football” and is part of “the usual hobby of bashing China,” he said.
CAF's Bob Borosage discusses the Showdown With "Chermany",
... The Chinese continue unprecedented measures to manipulate their currency, now starkly undervalued against the dollar. This is a centerpiece of a comprehensive mercantilist policy to grow by dominating export markets.. . . China’s Premier Wen Jiabao scorned US pressure on the Chinese to revalue its currency, summoning up the wondrous gall to accuse the US and other countries of “protectionism” for seeking to depreciate their currencies.
. . . The Chinese, meanwhile, are openly recruiting US companies with subsidiaries in China to lobby against any US action. The China lobby – think tanks, multinational companies and banks – will unleash a howl about US protectionism, warn of trade wars, discount the importance of Chinese mercantilism, and remind us of the benefits of a cheap yuan. Chinese threats to dump dollars from their $2.4 trillion cache will rattle financial markets (even though a declining dollar will cost the Chinese bigtime).
This could easily get out of hand, but the showdown with Chermany can’t be avoided. We can’t go back to a world in which the US is the consumer of last resort, borrowing $2 billion a day to buy goods from abroad. ... Rebalancing is best done cooperatively but it must be done. And it can no longer be delayed.
The Alliance for American Manufacturing issued the following statement:
“The Alliance for American Manufacturing (AAM) strongly supports efforts designed to end China’s ongoing currency manipulation, which is harming American manufacturing and its workers. In the last week, a bipartisan group of Senators have introduced legislation, and more than 130 Members of Congress have signed a letter urging the Obama Administration to take action, strong indications that the mood in Congress is growing more proactive.“The United States has lost 5.5 million manufacturing jobs in the past decade. Tackling the currency issue is imperative in saving America’s industrial sector. Economists of all backgrounds agree that an undervalued Yuan continues to make Chinese imports cheaper and American exports more expensive.
“The next step is for the U.S. Treasury Department to list China as a currency manipulator in its semi-annual report on currency exchange, due by April 15. Naming China as a currency manipulator, and taking further steps to hold them accountable, would be an important first step toward stopping the systematic dismantling of our industrial base.”
Posted by Dave Johnson at 11:05 AM | Comments (0) | Link Cosmos
March 16, 2010
China's American Enablers
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China argues that some American companies will suffer if China stops subsidizing manufacturing and adjusts their currency to market levels. They're right. The fight over Chinese violations of trade rules is also another story about Wall Street and big, monopolistic corporations vs Main Street and American workers.
A China Daily story says China's huge export surplus is being "misread." The Chinese government says that US companies -- the ones who close US factories, lay off workers, devastate communities and throw the costs onto the government -- are also beneficiaries of China's government subsidies. From the story,
China's large trade surplus is often used by the United States to argue why China should allow its currency to rise.Yet most US officials ignore a very important fact: a majority of China's exports to the US are produced by US-funded companies and huge profits go back into American pockets. . . .
"China's cheap labor helps foreign companies cut wage costs and increase their profits. Ironically, the rising profits go into foreign bosses' pockets and China is left to take the blame for the trade imbalance," said Tan Yaling, an expert at the China Institute for Financial Derivatives at Peking University.
This story is correct. SOME Americans do benefit from closing our factories. Actually, "benefit" might even be the wrong word here. SOME Americans are getting fabulously wealthy from these policies, beyond anything seen before in history, with the rest of us falling further and further behind as a result. Wal-Mart, for example, with their stores full of Chinese goods, has for decades been wiping out regional and local retailers and lowering the local wage and tax base.
So yes, SOME Americans are doing very well, thank you, from these policies. They gain a quick buck today, the rest of us pay the costs later. In Wall Street's War Against The Real Economy & We, The People, I wrote,
Over and over again we see the consequences of conservative economics and Wall Street domination: Short-term profits for a very few with devastating long-term consequences for the rest of us.
Wall Street firms have been making vast fortunes from this game,
The private equity company-buyout game works like this: buy a company, borrow against the company name and assets and put the proceeds straight into your pocket, sell off assets, outsource jobs, lay people off, cut pay and benefits for the rest, close facilities and factories, externalize costs onto the community, cheapen whatever the company makes or does, run up the debt some more, squeeze money out and pocket it and then sell. Hopefully you make off with the pension fund in the process.
They have been backed by American conservatives who have have long argued in favor of these "free market" and "free trade" scam that, close US factories, instead importing goods subsidized by China's government. A few get fabulously wealthy at the expense of the rest of us. To persuade people to support this nonsense they say that adjusting China's currency to market rates would "punish" consumers. Typical of this line is this from the Heritage Foundation a couple of years ago, China's Undervalued Currency Benefits Americans,
To the extent that the renminbi is undervalued ... the benefit goes to U.S. consumers and businesses, which pay lower prices for Chinese goods imported into the United States.. . . U.S. consumers have the most to lose by congressional efforts to force revaluation of the renminbi. Chinese goods in the U.S. are cheap because the renminbi is cheap. Revaluation will weaken the purchasing power of the American consumers, mostly from the middle and lower economic strata, who depend on Chinese products to maintain their standard of life.
So here we are at a crossroads. April 15 the President has to officially declare that China is manipulating its currency and impose tariffs that will start to bring back factories and jobs to America. There is going to be tremendous pressure from the usual suspects to do the wrong thing, but the wrong thing has been going on long enough.
Posted by Dave Johnson at 10:11 AM | Comments (0) | Link Cosmos
March 15, 2010
Chinese Currency Showdown
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China is holding down the value of its currency, which means goods made there cost less everywhere else. This undercuts American companies that make things, so they close factories here and buy from there. This costs us jobs, forces down our wages and savings rate, and forces the country to borrow heavily. This imbalance has built up to a breaking point. It is past time to face facts and something about it.
Just how much is China undervaluing their currency? Paul Krugman today: "This is the most distortionary exchange rate policy any major nation has ever followed." Yes, that much. And the result? Krugman says: "And it’s a policy that seriously damages the rest of the world."
A NY Times story yesterday explained how it works,
China buys dollars and other foreign currencies — worth several hundred billion dollars a year — by selling more of its own currency, which then depresses its value. That intervention helped Chinese exports to surge 46 percent in February compared with a year earlier.
This creates a huge, huge -- and growing -- imbalance. China undercuts everyone else so they can't afford to manufacture and have to buy things made there instead. Of course, that means China is sitting on massive piles of foreign cash. This is a bubble that grows and grows and grows. Everyone is worried, and it just gets worse.
But China won't change policies. They are worried that the value of that pile will drop if their currency rate rises. In Pledge to China's Leaders: You Will Lose Money on Government Bonds Dean Baker writes about why this would be great for us,
The logic is very simple. At the current exchange rate, the United States is running a massive trade deficit. ...This is of course unsustainable. The only way that this deficit can be corrected is by reducing the value of the dollar. ...
. . . We should beg them to become unhappy with our fiscal and monetary policies and stop investing in Treasury bonds. The improvement in the trade deficit that will result from the fall in the dollar will create ten times as many jobs as any "jobs bill" that President Obama can possibly get through Congress.
Does all of this cash give China enormous power? In Is China's Politburo spoiling for a showdown with America? Ambrose Evans-Pritchard writes,
Michael Pettis from Beijing University argues that China's reserves of $2.4 trillion - arguably $3 trillion - are a sign of weakness, not strength. Only twice before in modern history has a country amassed such a stash equal to 5pc-6pc of global GDP: the US in the 1920s, and Japan in the 1980s. Each time preceeded depression.The reserves cannot be used internally to support China's economy. They are dead weight, beyond any level needed for macro-credibility. Indeed, they are the ultimate indictment of China's dysfunctional strategy, which is to buy $30bn to $40bn of foreign bonds every month to hold down the yuan, refusing to let the economy adjust to trade realities. The result is over-investment in plant, flooding the world with goods at wafer-thin export margins. China's over-capacity in steel is now greater than Europe's output.
Change is in the air. The establishment is moving – recognizing that we will have to confront this. Dealing with this currency manipulation is the bipartisan solution that creates 3 milion jobs and costs us nothing. How bipartisan is it? Last Week conservative Pat Buchanan wrote about what he called China's "disemboweling of America" and I agreed. I wrote,
So, this "free trade" stuff has worked out for us about as well as the "free market" stuff worked out for the economy. Free market and deregulation ideology destroyed the economy. Free trade has destroyed our ability to earn money and recover from the destruction of the economy.
The lesson to learn is if you want more jobs and don't think we should have so much debt then you want a China to raise the value of its currency against the dollar. America has avoided formally labeling China a currency manipulator and taking appropriate steps, so things continue to get worse. We can't keep hiding from reality forever. When something is unsustainable it can't be sustained.
Next month the administration is going to have to change directions. A lot of air will come out of that Chinese currency bubble that was allowed to build up over the past several years, but the result will be a world starting to return to balance -- and jobs here.
Posted by Dave Johnson at 11:06 AM | Comments (0) | Link Cosmos
March 12, 2010
When Conservatives Are Right...
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Pat Buchanan has a column today on manufacturing, The Disemboweling of America, that hits the nail on the head. In fact, if I fairly excerpt enough of the column and send you over to read it, my work here is done. For today.
Buchanan begins by outlining just how much our country has lost by allowing others, particularly China, to take over manufacturing.
Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.Globalists all, they rejected any federal measure to protect America's industrial base, economic independence or the wages of U.S. workers.
. . . From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.
In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.
And what are the implication of this loss of manufacturing?
. . . for every dollar we send abroad for oil or gas, we send $4.20 abroad for manufactured goods. Why is a dependency on the Persian Gulf for a fraction of the oil we consume more of a danger than a huge growing dependency on China for the necessities of our national life?... How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base...
. . . No nation rose to world power on free trade. ...
Nations rise on economic nationalism; they descend on free trade.
[emphasis added]
Buchanan wrote an excellent, important column today and I encourage readers to click through and read the whole thing.
So, this "free trade" stuff has worked out for us about as well as the "free market" stuff worked out for the economy. Free market and deregulation ideology destroyed the economy. Free trade has destroyed our ability to earn money and recover from the destruction of the economy.
It is time to formulate a national industrial policy/economic strategy, impose tariffs as necessary to balance trade - especially in the case of Chinese currency manipulation - and set up taxes and penalties to stop companies from moving any more manufacturing out of the country.
Posted by Dave Johnson at 11:27 AM | Comments (1) | Link Cosmos
March 11, 2010
Why Won't Obama Label China A Currency Manipulator?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
There is a great deal of pressure on the Obama administration to declare China as a currency manipulator, and with very good reason: they are manipulating their currency. This manipulation gives goods made in China a huge price advantage over goods made in other countries, and is a large part of the reason so many of our companies move manufacturing and jobs from here to there. This is, of course, not "free trade" it is a stacked deck.
In What Chinese Currency Manipulation Looks Like, Eric Lotke shows how China gains this trade advantage,
The dollar exchange with China “defies the laws of monetary physics.” During this U.S.-led global recession, dollars aren’t worth as much as they once were. The natural physics of exchange makes U.S. goods relatively less expensive for others to buy, but makes foreign goods more expensive for Americans to buy. In a free market for currency, that would help bring accounts back into balance.[. . .] In the American heartland the issue isn’t exchange rates, of course. The issue is jobs. American workers can compete dollar for dollar against Chinese workers. They can’t compete dollars against manipulated Yuans.
Many say the resulting price advantage is 25% or more. The Peterson Institute for International Economics in Washington has estimated that the yuan is undervalued by about 40 percent against the U.S. dollar. So before any other factors in the competition for goods, Chinese-made goods have a 25-40% advantage out the door. That's hard to compete with and a trip through any Wal-Mart will demonstrate the results - as does a look at any chart of American manufacturing job losses. This job-devastation has occurred since the conservative "free traders" got their hands on US policymaking.
Last month in Our Great Recession is China and Southeast Asia's Great Opportunity Leo Hindrey wrote,
In just the last year, China's share of our nation's trade deficit in manufactured goods jumped from 69% to an almost unbelievable 80% today, while its share of U.S. imports overall, non-resources and resources combined, increased 20%. In dollars, China right now is exporting about $330 billion annually to the United States, while purchasing less than $90 billion here.Please read the whole post, there is much more to learn.. . . Something on the order of 90% of China's domination in manufactured goods vis-à-vis the U.S. is due to its subsidies to domestic and foreign-owned manufacturers alike - subsidies based around plant sitings and financings, taxes and of course currency - and to its extremely low environmental standards. And the sad reality is that after years of accumulating market share and building the infrastructure it needed in order to dominate much of the global marketplace, all with the help of massive (often illegal) subsidies and a massively undervalued currency, China's trade advantages in many vital industries are now so embedded that they will exist for years to come even if President Obama is successful in confronting China's manipulated exchange rate, which of course is far from assured.
The Obama administration has twice declined to state the obvious and declare China a currency manipulator. Of course we don't know what is going on behind the scenes leading to these decisions. Perhaps there are threats to dump the bonds the hold. Or perhaps previous administrations have tied our hands with secret deals. But our government is supposed to be transparent and we are supposed to be informed and in charge, so these are not excuses. And, if we are ever going to pay off those bonds, we have to regain manufacturing so we can earn the money to do it with.
Next month the President again must decide whether to label China as a manipulator. If he does this regulations require that we enter into negotiations that could end up with trade sanctions.
It is time to state the obvious. The Obama administration is starting to look like Ben Bernanke did when he said there was no housing bubble and that it wouldn't hurt the economy when it popped.
Last month 15 senators, including an astonishing 6 Republicans wrote a letter to Commerce Secretary Gary Locke "expressing serious concerns about the department's failure to conclude that China's currency manipulation is in fact a "countervailable subsidy" to its domestic exporters." So the pressure is on for the President to put it on the record that China is doing what everyone knows they are doing, and start the process of readjusting and rebalancing, so we can get things back on track.
Tomorrow (Friday) there is an all-day Economic Policy Institute forum, Currency manipulation: how should the US respond? Panelists include Paul Krugman and Steelworkers union President Leo W. Gerard. Click through for details. The forum will start at 9 AM at The Mayflower Room in the East Room.
If you can't make it to the forum be sure to watch the live webcast here.
Posted by Dave Johnson at 4:42 PM | Comments (0) | Link Cosmos
March 10, 2010
It Is Time To Put Our Foot Down: Ten Steps We Can Take To Stop Closing Factories And Eliminating Jobs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The economy is still getting worse more slowly. We lost "only" 36,000 jobs last month. We need to create 11 million new jobs just to get back to where we were before "free-market" conservatives took over our government and dismanted the protections and regulations that had protected us from this.
Jobs lost, communities devastated, lives destroyed. Over and over again. Yet with all of this going on companies like Whirlpool and Toyota are still closing factories, laying of American workers, and moving manufacturing out of the country! Toyota is closing the NUMMI plant in Fremont, California, which could lose up to 50,000 jobs across California. Whirlpool -- recipient of stimulus dollars from the government -- is closing a factory in Evansville, Indiana and moving the jobs to Mexico where people will be paid $70 a week and certainly won't be buying anything made in America.
It's the system. While the executives collect bonuses and tax breaks for their destructive actions We, the People have to pick up the tab. We pay the unemployment, the stimulus, etc. Our communities pay the cost of losing the jobs and the tax base, our economy pays the cost of losing the manufacturing capability. And the executives and private equity firms and Wall Street get rich. So of course they do more of it.
How crazy is this? In the middle of this terrible jobs crisis companies are still closing factories here and shipping the jobs out of the country. Why do we allow this?
Whirlpool and Toyota (and Wall Street's $140 billion bonus pool this year) ought to be the last straw. It is time for We, the People to put our foot down and say not one more factory closed, not one more job sent out of the country! In fact, it is time to start bringing jobs BACK.
It is time to stop letting goods into the country that are made by exploited workers in areas with no environmental protections without a tariff to take away the price advantage gained from going around the protections that We, the People have fought so hard for.
There is only one way the country can earn the money to pay back what we borrowed from China, Japan and others. That is to make and sell things to others!!! THAT is what "trade" means. "Trade" does not mean allowing greedy executives to sidestep the laws and regulations and protections that We, the People fought so hard to get.
Look around us. Jobs lost, communities devastated, homes foreclosed, lives destroyed, governments going broke. All because of a runaway system that encourages the destruction of our economy. Our system actually encourages executives to close factories and lay people off! Executives make profits and get bonuses (that benefit from tax cuts) if they can figure out how to eliminate YOUR job or close a factory or cheapen a product or keep you from talking to customer support or make you pay an extra fee, etc.
Wall Street and executives benefit from this -- and get tax cuts, tax breaks and subsidies for doing it. But the economy-at-large is destroyed by these same actions when they are widespread. On top of that, we know that when we lose the factories we have to borrow money to buy the things we used to make. But we give tax breaks instead of penalties to companies that do this.
Here are just some steps that We, the People can take to start turning this around:
- A border tariff on imports to remove the price advantage of goods produced by exploited, underpaid workers.
- A border tariff to remove the price advantage of goods produced in ways that harm the environment.
- A border tariff on goods from countries that are not democracies, to remove any pricing advantage gained from not allowing people to vote and set rules that benefit themselves.
- A border tariff on goods from countries that restrict workers from organizing to improve their wages and working conditions, to remove any pricing advantage gained from not allowing workers to bargain. (America currently doesn't meet this standard.)
- Remove tax benefits and instead impose tax penalties and fines on companies that close factories here. Don't let it be profitable to do this!
- Increase taxes on the big monopolistic companies to remove the advantages that help them destroy America's smaller, regional and local businesses -- the very job creators we need.
- Increase income taxes on high incomes to reduce the incentive to pursue short-term windfalls instead of long-term interests. Make it take a long time to accumulate a fortune. Making a fortune is great but it should be a reward for helping our economy and society, not destroying them.
- Break up the "too big to fail" Wall Street firms that wrecked the economy. And get the money back -- all of it.
- Explore the use of Eminent Domain to keep factories in communities and workers in the factories.
- Formulate and follow a national economic/industrial strategy to build a new green manufacturing economy
Please add some ideas in the comments. I will have more to say on all of this.
Posted by Dave Johnson at 12:20 PM | Comments (1) | Link Cosmos
March 4, 2010
California Factory Closing - HUGE Impact - Steps You Can Take
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Toyota is planning on closing the New United Motor Manufacturing, Inc. NUMMI auto-manufacturing plant in Fremont, CA on March 31. The immediate effect is a loss of 5,000 jobs. But, as with any factory closing, the effects ripple out well beyond the immediately obvious. The public has put up a lot of money to have the plant here, and the costs this closing will put on the public will be enormous.
Toyota takes off with a ton of cash, we pay the costs, it's the way the system is set up -- by us.
The effect? From The California Labor Federation, Toyota NUMMI Closure Would Kill Jobs, Destroy Communities,
...more than 5,000 autoworkers at the plant will be out of work, and another 1,500 Teamsters who transport the cars from the NUMMI plant to the dealerships will also be jobless. Additionally, as many as 50,000 workers at hundreds of businesses in California are completely dependant on NUMMI to stay afloat, from the suppliers that manufacture car parts to the restaurants where the NUMMI workers go for lunch and even the shoe stores where the plant workers buy their specialized work boots.
Toyota has benefited tremendously from this plant, as well as receiving state and federal money. A study released yesterday by the NUMMI Blue Ribbon Commission says,
The United States is Toyota’s largest market in the world. California accounted for almost 18 percent of Toyota’s U.S. sales and 5 percent of the automaker’s global sales in 2007. Toyota led California sales with a quarter of the market, more than the combined share of General Motors and Ford in 2009.. . . Toyota has benefitted considerably from federal and state programs over the years. ... the automaker captured first place in “Cash for Clunkers” sales ... In a similar program in Japan at about the same time, U.S.-based automakers were excluded initially.
California has invested heavily in NUMMI ... The state has given NUMMI more than $18 million for training
since the plant’s inception... Millions more have gone to NUMMI suppliers for training. Major infrastructure improvements have been done explicitly for the plant and to meet its needs. The Port of Oakland, for example,
was dredged 12 years ago to accommodate the kinds of cargo ships the plant requires at a cost of $410 million.
When the plant closes the public takes up the costs -- paying unemployment, for example, for the up-to-50,000 people expected to become unemployed. The Federal Government will pick up the costs of the workers' pensions.
The Pension Benefit Guaranty Corporation (PBGC) announced yesterday it will assume responsibility for the underfunded pension plan of the 5,800 employees and retirees of New United Motor Manufacturing (NUMMI), pending the plant's liquidation by the end of the month.
Just as I wrote this week about Whirlpool, this is the way WE have chosen to make the system work. We can and must change the way the system works.
This is what companies today do. It is just the way the game is played, the way the system works. ... There aren't "good" or "bad" companies; ANY company will do these things because if they don't they lose out to the companies that do. BECAUSE WE LET THEM. In fact, by letting this happen we make it happen because, as I just wrote, if one company doesn't the next will, and the company that doesn't loses out. The system.So here is what we have to do. We have to change the rules to stop these jobs from leaving the country.
We are going to have to put our foot down, as a people, and take control of the system to make it work for us. This is not only something we can do, it is our responsibility to do this.
Call Congress and demand that they stop companies -- ALL companies -- from closing factories in the US and moving the jobs out of the country.
I have more coming about this.
Here is one immediate action you can take. American Rights At Work has an action page with a petition: Take Action: Tell Toyota: Don't Abandon Your Workers
Toyota got its start in America 25 years ago when it opened a plant in Fremont, CA. But on March 31, Toyota plans to close the plant.Laying off 5,000 people will only be the beginning. 50,000 workers, vendors, and suppliers – and the families who depend on them – could immediately lose their livelihoods. And hundreds of thousands more will be affected by the loss of tax revenue and consumer spending.
Will you help us demand Toyota do right by the workers who helped it get a foothold in America?
Posted by Dave Johnson at 10:14 PM | Comments (0) | Link Cosmos
March 3, 2010
Friedman On Competitiveness: Identifies Problem, Offers Exactly Wrong Solution
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Americans who travel out of the country will tell you about how the US is so visibly falling further and further behind the rest of the world. This hurts our ability to compete economically. The cause of the problem was tax cuts. The solution is certainly not more tax cuts.
Thomas Friedman, in A Word From the Wise flies in from Asia and, using LAX as an example, observes how the US infrastructure is starting to fall apart because of deferred maintenance. He writes,
Walking through its faded, cramped domestic terminal, I got the feeling of a place that once thought of itself as modern but has had one too many face-lifts and simply can’t hide the wrinkles anymore.
Like so many problems we have today this one traces directly to failed conservative policies. Conservatives cut taxes for the rich, which forced the country to defer maintenance and borrow money. So we don't keep things in good shape and we certainly don't invest in new 21st-century infrastructure. Friedman writes,
We are the United States of Deferred Maintenance. China is the People’s Republic of Deferred Gratification. They save, invest and build. We spend, borrow and patch.
The problem goes beyond crumbling buildings, slow trains, and potholes. The long-term cost is that we fall behind the rest of the world in our ability to compete economically. Other governments are investing in 21st-century infrastructure, and we are not, because of our tax cuts:
"... a 2009 study ... measured ... ‘the rate of change in innovation capacity’ over the last decade — in effect, how much countries were doing to make themselves more innovative for the future. The study relied on 16 different metrics of human capital — I.T. infrastructure, economic performance and so on. On this scale, the U.S. ranked dead last out of the same 40 nations. ... When you take a hard look at the things that make any country competitive. ... we are slipping.” (emphasis added)
So what is the solution? The column advocates engaging in a race to the bottom by lowering corporate tax rates even more! So Friedman (a billionaire) and the CEO of Intel identify the problem and then get the solution exactly wrong (in a way that enriches billionaires, CEOs and big companies at the expense of the rest of us). He starts by saying we have been deferring maintaining our infrastructure (which is the result of tax cuts) and then says we need to CUT corporate taxes!
Tax cuts are the reason we are not maintaining our infrastructure and reducing our country's competitiveness -- so let's do it more? What is the matter with this guy? How are we ever going to bring our country's infrastructure and education up to 21st-century standards if we further weaken our financial position with even more tax cuts?
Another way that we are falling behind other countries in the global economic competition is that other countries have strategies to take our factories and jobs but we have no strategy for fighting back. Again, this is the result of our slavery to conservative policies. Conservatives say it is wrong for our government to get involved. They say "free markets" will come up with the solution.
How is this "free-market" keep-government-out-of-it approach working out? Friedman interviews Intel CEO Paul Otellini on the advantages of building new manufacturing facilities in other countries,
... If I build [a] factory in almost any other country in the world, where they have significant incentive programs, I could save $1 billion,” because of all the tax breaks these governments throw in. ... “And it wasn’t because the labor costs are lower. ... when you look at it after tax was substantially lower and you have local market access.”
In other words, in order to seize the manufacturing capacity from us these countries lose money on the deal, with their governments putting up subsidies in the form of tax breaks. isn't this "dumping" -- selling below cost, paid for by government subsidies -- which is illegal under trade laws? The idea is to seize the manufacturing capacity today, make us pay later.
The right solution is to fight back - not further weaken ourselves. When other countries are cheating we have to fight back. It is time to develop a national economic/industrial strategy.
Countries that use tax breaks to subsidize products are already fighting a trade war with us - and winning because we refuse to engage. If other countries want to play the game that way then we should play the same game back.
The US is still a huge market and companies want to sell things here. Let's use that. If they want to subsidize goods to cost less here, let's make their goods cost more here instead. Impose a border tariff that compensates for subsidies, cheap labor, lax environmental standards, etc., so their goods do not cost less here. This way we capture the revenue that other governments are pumping into subsidies. Then we use that revenue to 1) modernize our own infrastructure and maybe even 2) subsidize our own exports.
We need to stop weakening ourselves. Increase taxes so we can stop borrowing, start building a 21st-century infrastructure, and make our country competitive again.
Posted by Dave Johnson at 12:12 PM | Comments (1) | Link Cosmos
March 2, 2010
Whirlpool Tells Callers: Call Congress. They're Right!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the middle of this terrible jobs crisis Whirlpool is closing a factory in the US and sending the jobs to Mexico. Their Mexican workers will be paid $70 a week. As I wrote the other day,
Our system is broken when "the market" encourages companies like Whirlpool to close factories, destroy the lives of American workers, devastate the surrounding communities and ultimately destroy the very economy that the Whirlpools depend on.No one getting $70 per week is going to buy any refrigerators from Whirlpool. That is the bigger picture here. When American companies close down a factory and lay off workers they are also eliminating customers. Ultimately, as we are seeing, the economy breaks down.
So I received this email today:
One of my coworkers just got off the phone with Whirlpool. She called the number that the AFL or ARAW is providing for folks to complain to the company.Her call was shuffled around till she ended up talking with someone at HR who identified herself as "Security". The woman at Whirlpool told her "My boss told me to tell you guys to contact congress about it and not call us"
Wow. Can you believe it? I guess Whirlpool wants us to change trade policy so they aren't allowed to close their plant and move it to mexico?!?! Yeah right.
I love how they take NO responsibility for the situation.
Here's the thing: I think Whirlpool is right -- we need to call Congress.
It isn't entirely Whirlpool's fault that "the market" and "the system" is forcing companies like Whirlpool to destroy workers' lives, the surrounding communities and the economy. The system itself is broken and Congress must address the core issues here.
It has become crystal clear that "free markets" don't exist, "free trade" doesn't work, and deregulation doesn't lead to positive results. Because of the failed "free market" and "free trade" and "deregulation" nonsense all we are doing is sending our manufacturing capacity and our jobs out of the country, killing our economy and borrowing more and more to make up for the losses. (And with no national economic/industrial strategy in a world of countries that do have strategies, it just keeps getting worse.)
Things Companies Do These Days
Whirlpool is closing factories, even while receiving millions of dollars from our Federal Government stimulus dollars. And they get government contracts. And when they lay people off our government steps in and provides unemployment, etc. And our local governments also are put on the spot with lost taxes, while providing local services. And, of course, Whirlpool pits states against each other for tax breaks and subsidies just to keep a few jobs, like what they are doing with Indiana vs Iowa. This is called socializing the costs and privatizing the profits.
This is what companies today do. It is just the way the game is played, the way the system works, the way the incentives are structured, the way the ball bounces, the way the cookie crumbles...(someone stop me, please)... There aren't "good" or "bad" companies; ANY company will do these things because if they don't they lose out to the companies that do. BECAUSE WE LET THEM. In fact, by letting this happen we make it happen because, as I just wrote, if one company doesn't the next will, and the company that doesn't loses out. The system.
So here is what we have to do. We have to change the rules to stop these jobs from leaving the country.
We have to write into Federal contracts that companies that get these contracts can't close factories here and move the jobs there.
We have to write into Federal tax breaks that companies receiving the break can't close factories here and move the jobs there.
We have to write into Federal stimulus bills that companies receiving the stimulus money can't close factories here and move the jobs there.
We have to write trade treaties that respect pay and benefits and workers' rights and communities and the environment. We have to set up a tariff structure that respects our own workers' democratically-obtained pay and benefits, and the environmental protections that we fought for.
These are just a few of the things we have to start doing.
Whirlpool asked us to call Congress, not them. This is partly right. Call Congress and demand that they stop companies -- ALL companies -- from closing factories in the US and moving the jobs out of the country. AND keep the pressure on Whirlpool.
I have more coming about this.
Posted by Dave Johnson at 5:17 PM | Comments (0) | Link Cosmos
March 1, 2010
Green Jobs Are NOT A Myth!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Last week the Washington Post ran an op-ed with the curious headline, “The Green Jobs Myth.”
Oil and coal lobbyists everywhere, well-aware that most people only read headlines and a few paragraphs at most, were giving each other high-fives. You see, a headline like this “propels the propaganda” that anything remotely environmentally-conscious “costs jobs.” And being in the Washington Post, it signals that the “powers-that-be” are officially poo-pooing the concept.
The op-ed begins by setting up a straw man to knock down. It claims that the Obama administration has the “assumption that a "clean-energy" economy will generate enough jobs to mitigate today's high level of unemployment … and to meet the needs of future generations”, But seriously, has anyone, anywhere, ever said that new green jobs alone will solve the jobs crisis? Just asking.
The basis for the headline’s premise that green jobs are a myth was that installing smart electric meters means there will be fewer meter-readers employed. Well duh! But this op-ed -- with its curious headline -- uses some curious math to reach its conclusion that automating meters means fewer meter-readers will be employed. It claims that only 400 installation jobs would be created to install 20 million meters, 1600 if the rate of installation is increased. Huh? Then it gets better. To calculate how many meter-reader jobs will be lost it claims that meter-readers only read 30 meters an hour, causing 28,000 meter-reading jobs to be lost.
Now, I was already sold on the idea that automating meters means fewer meter-readers would be employed, but come on! Clearly the Post is betting that most people don't read past the first few paragraphs if they're thinking this kind of "let's play tricks with math" will just slip by.
Curiously, the op-ed doesn’t mention that people will be employed to manufacture these 20 million smart-meters! How many jobs will be created to manufacture 20 million smart meters? The op-ed doesn't say. perhaps saying how many would negate the curious title.
How Many Green Jobs Are There?
But never mind smart meters. If we’re going to talk about green jobs we need to talk about the jobs that would be created by:
- retrofitting every building and home in America to be energy efficient, and the management, supply chain, transportation, tools, etc.
- manufacturing, installing and maintaining wind turbines
- manufacturing, installing and maintaining rooftop solar installations
- manufacturing, installing and maintaining solar power generation facilities
- everything associated with biofuels, geothermal power generation, nuclear power, advanced batteries, hydro power, carbon sequestration, carbon credit trading and transportation alternatives including building an advanced high-speed rail system connecting every major city in the country.
Think about the huge number of jobs all of this involves – and the huge payoff to our economy. And remember, these will all be in addition to the existing energy infrastructure, for now.
I suspect that the reason we see curiously misleading op-eds like this one in outlets like the Washington Post is that all of these coming technologies mean lower profits for the big, monopolistic oil and coal giants.
They can try to stop the green manufacturing revolution but it is coming. The question is, do we let op-eds like this one stop it from being Made in America?
Posted by Dave Johnson at 8:34 AM | Comments (0) | Link Cosmos
February 25, 2010
Now Whirlpool Threatens Workers Who Protest Plant Closing
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The other day I posted Whirlpool Bites Hands Of American Taxpayers That Feed It saying, in summary,
• Whirlpool closes a plant in Evansville
• Taxpayers will shoulder the unemployment and other costs.
• All the local supplier, transportation and other third-party jobs are destroyed.
• Even more home foreclosures in the area as a result.
• Local businesses are stressed or have to go out of business.
• They are playing nearby Iowa against Indiana for tax breaks and subsidies to keep just a few of the jobs.
• Whirlpool is profiting from making all this someone else's problem.
• And, of course, Wall Street celebrates the move.
A Whirlpool spokesperson responded, leading to the post, Whirlpool Exec Responds: The System Made Us Do It, taking a look at the bigger picture that forces our companies like Whirlpool to do these things that destroy people, communities and our economy,
"The spokesperson for Whirlpool is exactly right. It is the system that makes them do this. They are only following the market’s orders."
I thought that was the end of it, but whoa, what's this? Whirlpool Threatens Workers: Protesting Plant Closure Risks 'Future Jobs'
A major corporation planning to shut down a factory in Indiana has warned its union workers that they'll endanger their future job prospects if they protest the plant's closing.. . . Activists planned a high-profile protest for this Friday, with AFL-CIO president Richard Trumka visiting the plant for the first time. But Whirlpool says the effort is futile -- they are fully committed to shutting the plant down. The company, however, still seems quite wary of the potential for bad publicity. In a memo sent to its employees and passed along to the Huffington Post, Paul Coburn, division vice president for Whirlpool's Evansville Division, offers a fairly explicit warning to his workers: If they join Trumka's protest they would seriously risk future employment opportunity.
Threatening workers who show up at the protest that they risk future employment? Click through to read the entire report and to see Whirlpool's letter.
And take action: Tell Whirlpool: Keep It Made in America and Save Our Jobs.
Posted by Dave Johnson at 8:12 AM | Comments (0) | Link Cosmos
February 23, 2010
Jobs: Bail Out States, Yes Or No?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In Big Push Needed For Win 60 Votes For State Aid ... And More Private Sector Jobs, Bill Scher writes of the need for,
...a major grassroots push to secure critical aid for fiscally distressed state governments and help tackle the jobs crisis.
There is good reason for this. The warnings are dire. Just yesterday, for example: Recession Tightens Grip on State Tax Revenues,
The recession can now claim another troublesome record: state tax collections shrank at the end of 2009 for a fifth consecutive quarter, the longest period of continuing state revenue declines since at least the Great Depression...
How dire? States and localities face a 3-year, $469 billion shortfall,
Ethan Pollack, a policy analyst at the Economic Policy Institute, .. estimates the combined shortfalls for state and local governments at $469 billion over the next three fiscal years. "At the best, that can lead to a protracted, slow, jobless recovery, and at the worst, a double-dip recession."
Here is the problem. In this recession shortfalls at the state level - and resulting job cuts - can cancel out federal job-creation efforts. If we want to get out of the recession, we need those jobs! This is why the "stimulus' gave aid to the states. A lot of last year's "stimulus" money - about $87 billion - went to states through the Federal Medical Assistance Percentages (FAMP).
And, of course, now the states are asking for more. Jobs Bill Missing Medicaid Money For States, Governors Call For Change
The $15 billion jobs bill that passed the Senate Monday does not include additional matching funds for state Medicaid programs, but governors are continuing to ask for its inclusion as they look for other ways to plus state budget holes made from Medicaid liabilities.
As I said above: If we want to get out of the recession, we need those jobs!
BUT
There are some problems with "bailing out" states. Let me explain.
I live in California. We, the People of California, in our wisdom, have decided through ballot initiatives to make it impossible to fix our budget problems. We have a "2/3 rule" allowing a minority of legislators to block budgets from passing. So a small extremist minority that hates government is able to block everything, and is trying to force the state into bankruptcy. They insist on cutting the budget but refuse to specify what to cut, all the while insisting on tax cut after tax cut. (Does that sound strangely familiar?)
Did you know that last year, in the middle of our state budget crisis (caused by a revenue shortfall), while firing teachers and gutting essential government services, California gave a big tax CUT to large corporations? Did you know that California won't tax oil companies for the oil they take to sell back to us?
Should the federal government be sending billions of taxpayer dollars to states like California so they can cut taxes on big corporations and keep from raising taxes on the wealthy?
So there are some problems with assisting states during this crisis.
* What if, like California, they use that money to pass tax cuts or give subsidies to a favored few?
* What about states that give breaks and subsidies to big corporations to move jobs there from other states. Should federal tax dollars be sent to these states?
* What about states that act responsibly, like Oregon. Oregon voters recently passed tax increases on the wealthy and corporations. So they have less of a budget shortfall than other states. Should they receive less federal tax dollar assistance because they did this?
Any aid to states should be passed with oversight, conditions and restrictions. They should be required to raise taxes to cover the shortfall in future years. States that act responsibly should receive cash consistent with states that have budget shortfalls. States that give tax breaks and subsidies to lure jobs from other states should not receive this aid. States that refuse to sufficiently tax corporations and the wealthy should not receive this assistance.
Posted by Dave Johnson at 12:06 PM | Comments (0) | Link Cosmos
February 22, 2010
Whirlpool Exec Responds: The System Made Us Do It
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In last week’s post, Whirlpool Bites Hands Of American Taxpayers That Feed It, I wrote about Whirlpool closing a factory in Evansville, Indiana. In summary,
• Whirlpool closes a plant in Evansville
• Taxpayers will shoulder the unemployment and other costs.
• All the local supplier, transportation and other third-party jobs are destroyed.
• Even more home foreclosures in the area as a result.
• Local businesses are stressed or have to go out of business.
• They are playing nearby Iowa against Indiana for tax breaks and subsidies to keep just a few of the jobs.
• Whirlpool is profiting from making all this someone else's problem.
• And, of course, Wall Street celebrates the move.
This would be just one more “dog bites man” story – a company closes a plant and moves production out of the country, destroys workers’ lives, devastates communities and small businesses, sets states against each other, increases their profit margin, and Wall Street cheers. We read the same story over and over again for decades now, and the economy and the country of course have reached a limit of what can be lost. So what? What else is new?
But at Huffington Post a Whirlpool spokesperson responded, saying the post is “based on misinformation that’s floating around the Internet.” He wrote that their decision was based on “competitive factors.” In other words, Whirlpool says that the system made us do it. (The response in full is at the end of this post)
The spokesperson for Whirlpool is exactly right. It is the system that makes them do this. They are only following the market’s orders.
Set aside for a minute the lack of humanity in Whirlpool's response, the lack of patriotism, the placing of market values (privatize the profits, socialize the costs) above human values, and the lack of concern for the destructive effect of their moves on the larger American economy. The system - the market - lets Whirlpool plead that those things are not Whirlpool’s job or concern. They are only trapped in the rules of the playing field and it is the job of We, the People to set those rules. It's OUR fault, not theirs...
So to the extent that we are upset that Whirlpool moves jobs to Mexico, devastates surrounding communities, sets Indiana and Iowa bidding against each other for a few scraps and killing off the supplier and other businesses it isn’t Whirlpool’s fault, “WE” have fallen down on the job. WE have allowed a few large monopolistic corporate giants to take over the job of defining national policy. And of course those monopolist giants set the rules to their own advantage and against the interests of the rest of us, including all of the Whirlpools (unless Whirlpool becomes lucky enough to be the biggest, then THEY get to set the rules.) A few monopolistic giants benefit greatly from keeping this system the way it is, so their lobbying power keeps the country from changing the rules to benefit anyone else.
The rules are what they are. Yes, that’s a huge part of the problem.
BUT while Whirlpool pleads a “competitive factors” case, let’s look at Whirlpool’s competitor GE. GE isn’t perfect, but they are finding ways to move jobs BACK to the US. For example, look at this recent news report,
General Electric announces new product coming to Appliance Park
GE announced Appliance Park will get a new product - a "hybrid" or energy efficient water heater. The product line will arrive in 2011 and bring with it 400 new jobs.
How was GE was able to make Louisville work for producing durable goods, when Whirlpool is not able to make Evansville work? Is it a lack of corporate imagination on Whirlpool’s part? Why isn’t Whirlpool inspired to go the extra mile to find ways to keep jobs here, to help the communities that surround them and to help the workers who build their products for so many years? Are Whirlpool's executives just happy enough with their profit margins, and this is all that matters? Will Whirlpool work to change the system that makes them do the things they do?
And more importantly in the big picture, I conclude this post with the same question as the previous post concluded: Will Congress listen?
Here is the Whirlpool spokesperson’s response:
Dear Dave Johnson and readers of the Huffington Post:In reviewing your blog post, I noticed it appears to be based on misinformation that’s floating around the Internet. I’d like to contribute the following facts for the sake of context and clarity.
• Whirlpool has approximately 17,000 U.S.-based manufacturing employees - more than any of our competitors.
• We produce the majority of our major appliances in the U.S., while some of our competitors do not produce any of their major appliances in the U.S.
• The economic downturn and other factors lead us to expect lower demand for the refrigerators produced by our plants in Evansville, Indiana and Apodaca, Mexico, and we therefore decided to consolidate their manufacturing in one location.
• We based our decision to consolidate in Apodaca on a full analysis of all the competitive factors between the two plants.
• We worked with Indiana state and local officials to keep the company’s Product Development Center of 300 design engineers in Evansville.
• As a recipient of $19 million in stimulus funds from the Department of Energy’s (DOE) Smart Grid Investment Grant program, we are required to match that amount with an investment of equal value in the development of new smart products. The grant and related investment are completely unrelated to the manufacturing of existing product lines such as these refrigerators.
• We have honored the Union and others’ requests for meetings to discuss the decision, but given the competitive nature of the industry and the state of the markets, no combination of changes proposed at those meetings could make the plant competitive.We appreciate the support shown for our Evansville employees, and hope that this message helps clarify the facts.
Thank you,
Christopher Wyse
Corporate Director
Communications and Public Affairs
Whirlpool Corporation
Posted by Dave Johnson at 12:13 PM | Comments (0) | Link Cosmos
February 21, 2010
Create Real Jobs That Pay Off: Update Our 1970'S Infrastructure
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
One legacy of the Reagan tax cuts is that we stopped maintaining - and never mind modernizing - our infrastructure. As a result there is a LOT of work that needs doing. And there are a very, very large number of unemployed people. Hmmm...
There are so many more ways our economy suffers as the consequences of Reagan-era choices come home to roost. The current economic doldrums are in great part the result of Reagan-era choices:
* The deferred infrastructure maintenance and modernization that resulted from the tax cuts mean that our economy is no longer world-class. Bob Herbert has been writing about this problem for a while. From his most recent,
Schools, highways, the electric grid, water systems, ports, dams, levees — the list can seem endless — have to be maintained, upgraded, rebuilt or replaced if the U.S. is to remain a first-class nation with a first-class economy over the next several decades. And some entirely new infrastructure systems will have to be developed.So here we are with a massive infrastructure deficit that is harming our ability to compete economically in the world. Just one example: China has 42 high-speed rail lines coming into operation connecting their major cities, and we are just starting our first one connecting ... Tampa to Orlando?
* The education cutbacks then are really hurting now.
* Energy. Cancelling all of Carter's efforts to solve our energy problems has left the economy dependent on last century's expensive and polluting energy sources and the monopolistic giants that control them.
* Debt. Tax cuts creating "structural deficits" have built up tremendous debt and the accompanying burden of paying interest on that debt and dependence on those who fund our borrowing habit.
* Militarization. We spend more on military than every other country on earth combined. The big defense corporations keep us from doing anything about it. Historically this kind of military spending and the resulting debt has ruined empires and kingdoms, and here we are.
* Government. Outsourcing/cutting/destroying/hating government and the commons has left us ill-equipped to catch up with China and others, and deal with monopolistic multinational corporate giants.
Schools, highways, power grid, ... everything. And all this work needs to be done on top of the need to retrofit all of our country's buildings to be energy efficient. Or we will just continue to fall forther behind. There is so much work that needs to be done. I wonder how the cost compares to the amounts that have been transferred to the very rich since the tax cuts started.
Hmmm... Let's see ... high unemployment ... lots of work that needs doing ... massive wealth accumulated at the very top ... hmmm... dot. dot. dot. And on top of that, there is all that evidence that past investment in infrastructure leads to great prosperity in the years following the investment ... dot. dot. dot. hmmm... Ideas are forming... connections are being made...
I can hear the shrieking from the "free market" conservative bunch now, just for thinking such thoughts: "But ... but .. that would be just WRONG to just ... give people jobs doing what needs to be done!!! and taxing the RICH -- the very beneficiaries of past infrastructure investment -- to pay for it? How can you even dare suggest such a thing???!!!"
Public works projects -- infrastructure. Example: In the 1950s, with top tax rates at 90%, we started the massive public works project that is the Interstate Highway System. How did that investment work out for our economy? How many companies benefitted from the ability to deliver trucked goods across the country in a short time? How did those top taxpayers do economically as a result of such investments?
Hmmm...
Posted by Dave Johnson at 12:12 PM | Comments (0) | Link Cosmos
February 19, 2010
Whirlpool Bites Hands Of American Taxpayers That Feed It
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Whirlpool, recipient of federal stimulus "smart grid" dollars, is closing an Evansville, Indiana freezer-topped refrigerator and icemaker production plant and moving the 1,100 jobs to Mexico.
Whirlpool knows that taxpayers will shoulder the unemployment and other costs. Closing a plant like this also means all the supplier, transportation and other third-party jobs go away. For example, 100+ Disabled Workers Could Lose Jobs
Whirlpool employees aren't the only ones losing their jobs when the plant closes. More than 100 blind or disabled individuals could also be left jobless. The Evansville Association for the Blind has issued a public plea, asking businesses to consider using their employees.
There will be more home foreclosures, and local businesses are stressed or have to go out of business. Whirlpool is profiting from making all this someone else's problem.
Whirlpool is even playing nearby Iowa against Indiana, shaking the state down for millions to move just 60 of the 1,100 jobs there.
So, of course, Wall Street celebrates the move, the setting states against each other, the cost-shifting and the resulting "increase in margins."
The workers are still trying to do something about this. Inside Indiana Business writes about a rally on February 26,
Organizers have invited guests including AFL/CIO President Richard Trumka and Jim Clark, president of the IUE-CWA union with which Local 808 is affiliated.Employees with the least seniority are expected to lose their jobs first, March 26. The remaining workers will be let go until production ceases in early summer.
Richard Trumka, AFL-CIO President, writes:
The Whirlpool Corp. is closing a refrigerator manufacturing plant in Evansville, Ind., putting more than 1,100 people out of work. Even worse, Whirlpool will continue to produce these refrigerators, but not in Evansville and not anywhere else in America. They are planning to manufacture them in Mexico, where weaker labor and environmental laws make them “cheaper” for Whirlpool to produce.This is outrageous and unacceptable, especially in light of Whirlpool’s profitability and the $19 million dollars in economic recovery money Whirlpool recently received from the federal government as a part of the American Recovery and Reinvestment Act. Those are OUR economic recovery funds, not Mexico’s.
You can sign their Whirlpool: Keep It Made in America petition here.
Will Congress listen?
Posted by Dave Johnson at 11:32 AM | Comments (3) | Link Cosmos
February 18, 2010
Yes, Nuclear
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I believe that global warming is the most serious threat humanity faces. So we need to use every possible technology we can to replace energy sources that put greenhouse gases into the air. This includes nuclear energy.
One big problem with nuclear is figuring out what to do with the dangerous radioactive waste. But here's the thing, when we burn coal and oil we're just putting the dangerous waste product into the air and it is destroying the planet. So we can't make the perfect the enemy of the good -- nuclear waste is not destroying the planet and fossil-fuel waste is. We simply have to replace coal and oil as our energy source.
Climate change is an emergency. We need to do everything we can. This means we need to put up every windmill we can, every solar panel we can, every solar power plant, biofuel and geothermal facility that we can. We need to retrofit every building to be energy efficient, switch to electric cars, stop eating meat that is not grass-fed. We need to do research into finding ways to sequester carbon from coal. And we need to build nuclear power plants. What part of "everything we can" did I miss?
Please, let's make this a discussion. Please join the discussion and leave a comment with your thoughts on this.
BUT
As we proceed with this, we need to learn some lessons from the past. As we build a new generation of reactors there are some things that need to be clear from the outset.
Make them safe. This means a highly regulated effort, not a free-for-all for profits. Tax dollars are involved, and even if they were not public safety must be the primary focus. Newer reactor designs eliminate Chernobyl-style "meltdown" fears but we need close supervision by government. We need the government "meddling" and "interfering" and "snooping" every step of the way. We, the People need to be sure that every best practice is followed and no corners are cut to make a buck.
Buy American. If we are building nuclear power plants we should regulate that they create American jobs, not offshore in China or anywhere else. There are federal funds guaranteeing loans for these projects and they should specify that we Buy American. Use American –made components, right down to the steel. China's and other country's governments are helping their own economies, let's us help our own economy this time.
There are also safety concerns for Buy American. We need very close inspection of every component and material that is used in these plants. How would we monitor the manufacturing of the components and the quality of the steel if it is done outside the US? Do you remember the faulty welds in the Chinese components that shut down San Francisco's Bay Bridge last year?
Protect the environment. There is also the environmental impact of making steel in China and then shipping it versus making it here -- in our highly productive steel industry. China creates three times the greenhouse emissions when they make steel that our own steel plants create. This is one reason their steel costs less. What is the point of building nuclear to lower greenhouse gas emissions and using greenhouse gas-creating processes?
So I say Yes, Nuclear, and make sure that we use Big Government oversight to keep it safe, create American jobs and mostly to protect the environment.
Posted by Dave Johnson at 1:06 PM | Comments (2) | Link Cosmos
February 15, 2010
News Flash: Nations Compete
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I have a regular spot on the radio show, The Fairness Doctrine, currently in Massachusetts but going national. The show has a liberal and a conservative host and they present and discuss differing viewpoints -- without shouting.
On the show today we talked about my post from last week, With Washington Stalled, China and Others Race Past Us. In that post I wrote,
One party in Washington is following a strategy of obstructing everything, believing that the public will blame the other party for nothing getting done. The other party refuses to use the powers it has to act on the nation's agenda, fearing that the public will thing they're being mean or something. So we're stuck, standing still, getting nothing done. And the rest of the world moves forward with the green manufacturing revolution, taking the jobs, taking the industries, taking the momentum, taking the future.
Here is my point: We're standing still, and other nations are moving ahead. Literally. High-speed rail is an example of this difference. Compare China's investment in public infrastructure like high-speed rail with our own.
At Open Left Saturday, Paul Rosenberg wrote a post about China's wonderful new high-speed rail system, Whose near future is our far future: Europe, China or California?, saying,
"It's really amazing how much rail they're going to have built within the next two years, 42 lines including connections between China's most important cities. ... The US, in contrast, will have one line built in four years, connecting Tampa and Orlando. Tampa and Orlando? That's not so much a high-speed rail line, more an overgrown Disney ride."
China has a national strategy of massive investment in public infrastructure to create jobs and stimulate manufacturing. This investment then leaves behind a modernized manufacturing infrastructure as well as a much more efficient transportation system. This is part of a larger strategy to develop an economy that is much more energy efficient than their competitors, which means they will be better able as a nation to compete economically.
President Obama has been trying to get our own country to invest strategic projects like this. If we can invest in a more efficient economy then WE will be more competitive in the future than we are today. This means more jobs and a higher standard of living in the future, as these investments pay off. But his efforts meet resistance every step of the way. Just one example of this is how the entrenched oil and coal interests take advantage of the corruption of Washington, especially the Senate, to block these efforts. They also invest heavily in poisoning the information that reaches the public, like funding "climate skeptics" and think tanks that pump out "ideology" that isn't really ideas but is propaganda that serves their own financial interests. They and others are doing everything they can to block us from investing in the green manufacturing revolution while the rest of the world is moving ahead.
America is stuck in this weird ideology that says government is bad, and it is wrong for government to help the people by planning and investing in our future. There is a "market fundamentalism" that says that markets must decide things, not democracy. They say our people through our government will make bad decisions, that companies are much more efficient at making decisions, so we should instead let the people who run the largest companies decide how to use our country's resources, labor force, and capital. They say this is much more "efficient" than letting democracy make decisions.
Here is a fact: nations compete. You might believe this is an outmoded concept. It might not fit with the business model of multinational corporations. But we still have countries that see themselves as unified nations with a shared identity, and these nations compete. They compete with US. China is competing with US and the rest of the world, to bring manufacturing to itself, and using national strategies. We are not responding as a nation.
When someone is in a fight with you, you have a much better chance of winning if you at least understand that you are in a fight and get yourself organized to do something about it! How hard is that to understand? China and other countries are in a fight with us for economic dominance. Manufacturing is the key to economic power, and they are fighting to win manufacturing business away from us.
I don't say this to particularly criticize China. The Chinese don't owe me a job. China is just taking care of its own. It should. That is what nations are supposed to do. So to the extent that we still see ourselves as a NATION, we need to take care of OUR own. We need a national economic/industrial strategy, where we say THIS is how WE are going to compete.
If America is still a nation with a democracy we're going to have to step up to the plate and compete as a country and as a people.
Posted by Dave Johnson at 4:58 PM | Comments (0) | Link Cosmos
February 13, 2010
With Washington Stalled, China And Others Race Past Us
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Bob Herbert has a column today, Watching China Run, asking our country's leaders to get moving on the country's problems,
Our esteemed leaders in Washington can’t figure out how to do anything more difficult than line up for a group photo. Put Americans back to work? You must be kidding. Health care? We’ve been working on it for three-quarters of a century. Infrastructure? Don’t ask.
Meanwhile China and other competitors are moving ahead with their national plans. (We don't even have a national economic/industrial plan to move ahead with.)
“China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines and is poised to expand even further this year.”China also has become the world’s largest manufacturer of solar panels and is pushing hard on other clean energy advances. ... “These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.”
We’re in the throes of an awful and seemingly endless employment crisis, and China is the country moving full speed ahead on the development of the world’s most important new industries.
One party in Washington is following a strategy of obstructing everything, believing that the public will blame the other party for nothing getting done. The other party refuses to use the powers it has to act on the nation's agenda, fearing that the public will thing they're being mean or something. So we're stuck, standing still, getting nothing done. And the rest of the world moves forward with the green manufacturing revolution, taking the jobs, taking the industries, taking the momentum, taking the future.
Mr. Herbert concludes,
And what’s at stake is the future of the American economy. The low-carbon era is coming. We can be dragged into that newer, greener world by leading countries like China; or we can take up the challenge and become the world’s leader ourselves.
Posted by Dave Johnson at 9:15 AM | Comments (0) | Link Cosmos
February 10, 2010
Who Is Really "Anti-Business"?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the Bloomberg story today, Obama Doesn’t ‘Begrudge’ Bonuses for Blankfein, Dimon, President Obama, spoke up about the huge Wall Street bonuses handed out this year,
“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”
Free-market system? These huge bonuses are for the Wall Street robber-barons that caused the financial collapse, took taxpayer dollars to prop up their fortunes, and get free money from the Federal Reserve with which to "trade" -- speculate, gamble, call it what you want. Meanwhile they spend hundreds of millions of dollars "lobbying" (bribery) to fight any kind of financial reforms or consumer protections from enactment, and to make sure that no such think as a "free market" with honest competition never threatens their dominance of business and government.
So why is the President talking like this [note: see update below], at a time when so many Americans are out of work, losing their homes, and falling into poverty? Because he doesn't want to be perceived as "anti-business." From the story,
Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.
Meanwhile a Senate filibuster blocked the President's great nominee, Craig Becker, from serving on the National Labor Relations Board. So the Labor Board remains non-functional. The filibuster kept workers from being fairly represented, and the Board itself from having a tie-breaking vote so they can resolve labor disputes so the "free market" can function as it should, with workers able to bargain for better wages, benefits and working conditions.
These two stories this week present quite a contrast, and send mixed and demoralizing signals to the country. President Obama doesn't want to "appear" to be "anti-business." Meanwhile giant, monopolistic corporations and Wall Street are chewing up Main Street and keeping smaller businesses from competing, while their lobbyists keep the legislature from getting anything done at all.
Let's talk about this "anti-business" label and how it is used.
I wrote a post the other day titled, Tax Cuts HURT Small And Medium Businesses, championing small and medium businesses in their struggle to survive against the giant monopolistic corporations that are crushing them. Summary: struggling businesses don't pay taxes, so tax cuts only give more ammunition to the giants that are crushing them. In the comments at one of the places it was posted I was accused to being “anti-business.”
Apparently championing small and medium businesses - America's job-creating, innovative engine - is "anti-business." If you look around, being anything but a servant to Wall Street and the giant monopolistic corporations earns you the label, "anti-business."
The Power Of Words
This got me thinking about the ways this label, "anti-business," gets used. It is always used by corporate/conservative types, against anyone who questions the power of Wall Street and the giant monopolistic corporations that are strangling smaller businesses, workers and democracy.
The President nominates a great candidate for the Labor Board, then worries that he is perceived as "anti-business." Labels like "anti-business" are powerful accusations and come from very, very powerful people. (Like this or this.)
Last year, in the post Misuse Of The Words Protectionism And Trade Is Making Us Poorer I wrote,
Language has tremendous power. People like George Lakoff and Drew Westin, who study the use of language in political discussion, say that our choice of words has the power to actually affect the “wiring” or neuron circuits that our brains use to think.The corporate marketers and political persuaders have certainly learned the power of language to influence us. It has even gotten to the point where “neuromarketing” uses MRI and EEG to study how our brains react to certain stimuli so they can be used to market and persuade.
In politics I think that we have even reached a point where we give words more power and importance even than the ideas the words represent. In the Bush years we learned that the persuaders believed they could “create their own reality.”
[. . .] words are used as weapons by professionals who wish to distract us from things that are in front of our own faces.
So how do we fight this? One way is to recognize our own power as citizens in a democracy. In America the people – Main Street – are supposed to be in charge of things, and the purpose of business and finance is supposed to be to serve our interests and needs, not the other way around. Why else would We, the People have set this system up, anyway? So we need to internalize this understanding, and believe in it. We are supposed to be in charge. We, the People are supposed to be telling businesses how they are supposed to operate, setting the rules and regulations, defining the playing field on which they operate. We need to have a sense that it is improper for businesses to be involved at all in the decision-making about the rules under which businesses operate. It must be this way because business interests will always, always try to tilt the rules against the free market and in their own favor, giving them advantages over other businesses.
This isn't about being "anti-business" at all, it is about being in favor of a level playing field, where the innovative small and medium companies have a fair chance to compete. It is the giant monopolistic corporations that are "anti-business."
Believe it.
Update - Greg Sargent looked at the transcript and has a more nuanced interpretation.
Posted by Dave Johnson at 1:09 PM | Comments (1) | Link Cosmos
February 5, 2010
Senator Shelby's "Holds" Show Need For National Industrial Policy
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Senator Shelby is placing "holds" (filibusters) on ALL OF the President's nominees, all by himself
Richard Shelby puts hold on President Obama's nominees
Shelby is frustrated over the Pentagon’s bidding process for air-to-air refueling tankers, which could lead to the creation of jobs in Mobile, Ala.
Over at firedoglake, emptywheel writes,
The key issue is that Shelby wants the Air Force to tweak an RFP for refueling tankers so that Airbus (partnered with Northrup Grumman) would win the bid again over Boeing. ... Airbus calculated that it would not win the new bid, and started complaining.Essentially, then, Shelby’s threat is primarily about gaming this bidding process to make sure Airbus–and not Boeing–wins the contract (... this is the truly huge potential bounty for his state).
. . . But underlying the refueling contract is the question of whether the US military ought to spend what may amount to $100 billion over the life of the contract with a foreign company, Airbus. Particularly a company that the WTO found preliminarily to be illegally benefiting from subsidies from European governments.
$100 billion contract to build air to air tankers -- that's a lot of jobs and lots of them in Alabama.
This shows why we need a national industrial policy. The country has no policy to promote jobs and manufacturing so members of Congress are forced to do things like this to try to keep manufacturing in their district or state - competing with every other district or state. And in this case, even fighting to lose the contract for an American company!
Senator Shelby is fighting for jobs in his state, because the country is not. It is time for a coordinated national economic/industrial strategy -- just like every other country has -- so we're all working together instead of fighting over the scraps that are left behind.
Posted by Dave Johnson at 8:40 AM | Comments (0) | Link Cosmos
February 1, 2010
SOTU - A List Not a Vision
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In last week’s State of the Union speech President Obama talked about jobs. It was a great speech. It was SO satisfying to see him scold the Supreme Court for enabling monopoly corporatocracy to replace democracy, scold the Republicans for obstructing every single bill, and scold Democrats for being chickens**ts and running for the hills. But in the end he presented a laundry list – a good list, but a list – instead of a vision for a new economic structure.
First, he summarized the effects of the “stimulus,”
“Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. Two hundred thousand work in construction and clean energy; 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, first responders.”
Then the jobs list:
- “I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.”
- “I'm also proposing a new small business tax credit-– one that will go to over one million small businesses who hire new workers or raise wages.”
- “let's also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.”
- “put Americans to work today building the infrastructure of tomorrow . ... There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.”
- “put more Americans to work building clean energy facilities…”
- “and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs.”
- “it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.”
On Exports - Also A List
- “we need to export more of our goods”
- “a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America.”
- “launching a National Export Initiative that will help farmers and small businesses increase their exports”
- “seek new markets aggressively, just as our competitors are”
- “enforcing those agreements so our trading partners play by the rules”
What’s missing?
The most important jobs item missing from the President's speech was aid to states. The problem is that the states are cutting their budgets, which means layoffs and cutbacks from maintaining their infrastructure and investing in new infrastructure. With this happening in many of the 50 states, the scale threatens to undo the positive effect of the stimulus.
But President Obama faces two problems when considering aid to the states. First, helping the states would mean even more borrowing, on top of the borrowing forced on us by the years of conservative policies. Second, many of the troubled states are in their predicament because of their own conservative anti-tax policies. California, for example, is cutting jobs because the conservative minority is able to block any revenue-raising measures, and last year was even able to force even more corporate tax cuts in exchange for letting the state pass any budget at all.
But maybe Oregon is showing other states the way out of this trap. Last week voters raised taxes on corporations and the wealthy. Oregon voters pass tax increasing measures by big margin,
Oregon voters bucked decades of anti-tax and anti-[government] sentiment Tuesday, raising taxes on corporations and the wealthy to prevent further erosion of public schools and other state services.
If the people in the states rise up and start demanding that the wealthy and corporations pay their fair share, they can dig themselves out of this mess.
Buy American
Another path out of the jobs mess is to include Buy American procurement clauses in stimulus, infrastructure and jobs bills. A report by Alliance for American Manufacturing, titled, Buy America Works: Longstanding United States Policy Enhances the Job Creating Effect of Government Spending argues for a strong “Buy American” clause in the new jobs bill.
“Including domestic sourcing requirements in job creating legislation would be the most effective way to ensure taxpayer dollars are used to create and maintain jobs and manufacturing capacity to the maximum extent possible, thereby vastly improving the stimulative effect of government spending.[. . .] Given the dire problems the economy has experienced and continues to experience, the inclusion of domestic sourcing requirements in an upcoming job creation bill is the smart thing to do.”
Reinforcing this, a recent Gallup poll finds that Americans think the “best way to address the problem of growing unemployment in the United States [is] … to keep manufacturing jobs in the U.S.”
Keep Jobs Here
Bloggers have pointed out that the job-creation tax credit doesn’t prohibit offshore outsourcing of the jobs that receive the tax credit! Come on people, this is pretty basic.
Finally, Tell The Senate: JOBS NOW!
Campaign for America's Future is reaching out the 27 million Americans who have lost their jobs and are scrambling to get by – and the rest of us who know them and stand with them – to contact their Senators and say: Tell the Senate: We need action on jobs NOW! Click here to take action.
Posted by Dave Johnson at 11:39 AM | Comments (0) | Link Cosmos
January 29, 2010
America's Competitors Will Use Supreme Court Ruling To Block Our Green Jobs Effort And Close Our Factories
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
It's not personal, it's business.
The Supreme Court recently ruled 5-4 that George Bush will be President corporations can spend unlimited amounts to support or oppose candidates. Corporations! Since there are no restrictions on the citizenship of the owners of corporations foreign companies and governments now have a direct way to manipulate our laws and regulations.
Outside interests have been influencing American opinion for decades, but have not before this been able to directly support or oppose candidates. The Washington Times, Fox News, and other corporations with significant foreign ownership already work full-time to turn American public opinion against our own government. "Free trade" advocacy groups with funding from outside our borders work to get us to open our markets to imports that close our factories, outsource our jobs, lower our standard of living and drive us into ever-increasing debt. We have seen this with "grassroots" lobbying on important issues like climate change, trying to make people think that the science is a "hoax": see Grassroots’ Opposition to Clean Energy Reform Bankrolled by Foreign Oil, Petro-Governments.
But this new ability to directly support or oppose candidates offers a vastly more effective and immediate way for America's competitors to achieve their goals. What will they go after first? Of course a top goal of our competitors is to take down our manufacturing capacity -- the foundation of a country's economic power.
And, of course, this is exactly what is happening. Oil countries are already planning strategies to use this ruling to block our alternative energy and green jobs efforts. According to Think Progress:
For instance, Saudi Arabia has already signaled that the progressive effort to build a clean energy American economy is its “biggest threat”:Saudi Arabia’s economy depends on oil exports so stands to be one of the biggest losers in any pact that curbs oil demand by penalizing carbon emissions. “It’s one of the biggest threats that we are facing,” said Muhammed al-Sabban, head of the Saudi delegation to U.N. talks on climate change and a senior economic adviser to the Saudi oil ministry. [...] Climate talks posed a bigger threat, Sabban said, and subsidies for the development of renewable energy were distorting market economics in the sector, he said."Presumably because of the Citizens United ruling, Saudi Arabian-owned subsidiaries operating in the United States can now spend unlimited amounts advocating the defeat of candidates who support clean energy legislation. According to a ThinkProgress investigation, foreign-oil backed lobbyists in America are already instigating efforts to kill clean energy legislation.
What are we doing about it? What is our plan? Every other country has economic/industrial policies, but for one reason or another the American public has been persuaded that America should not have an economic/industrial policy of our own. We're bombarded with propaganda that says having a plan would be government - that We, the People thing - "interfering" with "the market." This ideology is like an anchor on our country, holding us back from progress.
We must rally and take back control of our democracy and our future. This Supreme Court decision must be countered with immediate legislation or it means the loss of so many things that we value. And we must develop an economic/manufacturing policy for our country's future. This time it's personal.
Posted by Dave Johnson at 10:28 AM | Comments (0) | Link Cosmos
January 14, 2010
Another Jobs Disappointment With No Clear Path Forward
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
On top of last week's bad news on unemployment, with 85,000 more jobs lost in December, today's initial claims for unemployment insurance benefits report was 444,000, an increase of 11,000 from the previous week's revised figure of 433,000
The "rule of thumb" break-even point for this number is said to be 425,000. This means as many people are hired as laid off in a given week. (Even now new people get hired in our vast economy -- somewhere.) So the conventional wisdom is that when this number is 425,000 it is break-even and the economy is not losing or gaining jobs.
BUT what happens when the economy is not only laying people off, but also is not hiring at the usual rate? Then 425,000 layoffs isn't going to be breakeven, and this is what appears to be our situation now. Calculated Risk, BLS: Near Record Low Job Openings in November,
Openings near a series low can't be a positive sign. Separations [layoffs] have declined sharply, but hiring has not picked up. This also suggests that eventually (possibly when the March 2010 benchmark revision is announced in Feb 2011), the November net change in employment will be revised down.
Whether or not 425,000 people are still being hired every week this week 444,000 people were laid off, so we are clearly still losing jobs.
Government is the only positive force in the economy right now. President Obama's "stimulus" saved or created about 2 million jobs. Imagine where we would be without the stimulus. It would not just be worse by 2 million jobs, it is possible the panic that was happening might have continued or even increased. And imagine if we didn't have the FDIC insuring people's bank accounts. Every bank would have failed, and people who didn't get their money out in time would be flat broke. And imagine if we didn't have unemployment benefits, COBRA subsidies for the unemployed, Food Stamps, etc. Just imagine.
But what we don't have is a clear path out of this, triggering the rest of the economy to perform for us again. (and never mind doing so in a way that is sustainable, environmentally sound, healthy, etc.) We have government assistance until the economy gets better but we do not have a clear government plan to make the economy get better. We still have this failed conservative "free market" thinking standing in the way of We, the People working together to get things going again. This used to be called "industrial policy." Of course, not having an industrial policy is an industrial policy -- a really, really bad one -- especially when almost every competing country does have policies they are acting on.
China, for example, has very strong government policies for promoting Chinese companies and industries. And as a result China's economy is said to be strongly recovering, even as our own continues to stagnate. China's policies include holding their currency artificially low and otherwise subsidizing companies to gain market share at the expense of the rest of the world.
But a policy to help our economy doesn't have to be at the expense of others. It can be a policy to help bring workers in other countries up to our standards, so they can become customers for our own products and services. This lifts the economy in our country as well as for our trading partners (not competitors). We can apply tariffs at the border on products that are made by people who are not fairly paid, or who are not allowed to organize unions, or who are not allowed to vote for government officials who would protect their safety, wages, environment, etc.
So let's start thinking about how our government can work with us to help us, instead of this weird, failed conservative "everyone on your own" free-market approach that led to collapse, please.
Posted by Dave Johnson at 12:12 PM | Comments (0) | Link Cosmos
January 12, 2010
Right Wing Catches On That Conservative Trade Policies Hurt Us
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Be afraid. Over at The Drudge Report, under a photo of a Chinese soldier (but no siren), are three headlines:
CHINA ENDS AMERICA'S REIGN AS LARGEST AUTO MARKET...
Becomes biggest exporter, edging out Germany...
China banks eclipse American rivals...
So OK, conservatives seem to be FINALLY starting to notice that their so-called "free trade" policies caused a problem!
When Ronald Reagan took office we had a trade surplus with China - we exported to China more than we imported from China. But the conservative "free market" ideologues said that "the market" must determine everything instead of the people in our democracy, that government is bad, that "free trade" lifts all boats, etc. -- even though there is no such thing as "free" trade or "free" markets... They negotiated trade agreements guaranteed to give away our strong trade position, stopped enforcing old or new trade laws, and got rid of any idea of having a national industrial policy.
By the time Bill Clinton took office instead of a trade surplus we had a trade deficit with China of almost $23 billion - importing from China much, much more than we exported to them. Under President Clinton, influenced by conservative "free trade" arguments, this trade deficit grew to $83 billion.
Then, under George W. Bush this trade deficit grew to $268 billion in a single year! Time after time Bush refused to enforce trade agreements and the imbalance just got worse and worse.
(WSJ)By last year the trade imbalance with China was 69% of our entire trade deficit.
(EPI)So NOW the conservatives are looking at what they have done, and they are very afraid. They borrowed from China year after year, and now they are afraid that China will use all that borrowed money to collapse the dollar. If you are on any right-wing mail lists half of the emails you receive are saying that dollar could collapse any minute.
So a big headline at Drudge! I guess even they are ready to admit that their policies were bad for the country.
Posted by Dave Johnson at 7:29 PM | Comments (0) | Link Cosmos
January 7, 2010
Why Is Moving A Factory Called "Trade"?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I have a simple question: Why is moving a factory across a border called "trade"?
The process of building up a country is long and difficult. People over time unite and engage in a long, hard struggle to form a democratic government for themselves and build strong public structures -- a system of laws, environmental protections, wage and hour rules, worker protections, product safety standards, etc. -- all of which work to raise the standard of living for everyone. These strong public structures enable economic growth and empower the people and companies to prosper while protecting the investment that built it all. So people return a portion of the resulting prosperity as taxes to invest in building and maintaining this infrastructure.
That is how good, solid self-government should work. The people build the public structures that enable each other to prosper and that protect the investment. And it worked for us.
But then, along come the quick-buck artists, looking to grab what they can for themselves, as fast as they can, without doing their part or sharing their gains or leaving anything but a mess behind. And they found a way to accomplish this. They found places outside of our borders where the people had not yet built up the solid, democratic governmental institutions that protect people and the environment as ours do. They fired the workers who had built up the companies and communities, packed up the machines that made the products, closed the factories, and opened factories on the other side of those borders.
Moving factories across borders is just a way of evading our laws and our protections, that we have fought so hard to get in place. So why do we let them bring the same products that we used to make here, back across those borders to sell in the prosperous market that our hard-won public structures enabled?
People fought and died so we could maintain our own strong government that protected us and enabled our prosperity. We built up our prosperity over time and with many hard fights, and that is what has made our county the market that everyone wants access to. We should use that market power to set the terms of what can be brought in to this country. We should help the people in countries that have not yet build up the kind of strong, democratic governments that can protect them from the quick-buck artists and exploiters instead of letting those manipulative consters wipe out our jobs and tear down our own government and rules. We should say that before products get access into our market the workers that make them should be paid well, and the environment they are made in is protected. Maybe we shouldn't allow goods from undemocratic countries in at all. What do you think?
We worked hard to build what we have, and we are letting that be taken away from us. It is time to stop allowing our factories to be closed and moved across borders as a way to get around the rules and standards we fought so hard to put in place.
Posted by Dave Johnson at 4:11 PM | Comments (1) | Link Cosmos
December 2, 2009
Fixing Jobs: Normal Isn’t An Option
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The “Jobs Summit” is Thursday. Are they going to try to get things back to normal? I hope not!
“Normal” isn’t an option anymore, because it is what led to where we are.
The financial sector bailout is based on the idea that things will get back to “normal” if the credit machine is restarted and consumers and businesses are able to borrow more. The stimulus is based on the idea that the economy is an engine that runs smoothly and just needs to be restarted and things will get back to “normal.” While we wait for “normal” to return the government is stepping in to make up the slack in demand, and to help those hit hardest by the downturn. (Never mind that COBRA subsidies start expiring as you read this and unemployment has been extended and extended.)
The idea that you can get the financial sector and the economy back to “normal” desperately assumes that a sustainable “normal” existed in the structure of the 20th-century western economy. It assumes that there really is an “invisible hand” that takes care of things without human intervention. It assumes that perpetual growth of consumers and their incomes and of consumables could just go on and on.
This all assumes that “normal” was OK. This is such a nice, comforting idea. It is wrong.
What if that “normal” system really was unsustainable and that is what led to its collapse? What if there was a limit to how many jobs can be outsourced, wages cut, factories closed, people born, trees cut down, fish taken from the sea, nutrients taken from the soil, water taken from the aquifers? And, of course, the big one: what if there is a limit to how much carbon can be put into the atmosphere?
If people and nature and markets finally reached a limit, and things broke down -- what then? What then is we need to give up on returning to that “comfortable” dream and get to work designing a sustainable system that benefits and respects all of us and the planet we rode in on.
We need a restructuring, a redesign, a new direction. Our "normal" system has turned into a low-wage, everything-to-the-top economy and this must be restructured.
The Restructuring
The core of what needs to be restructured is that we have a system where people with power and wealth benefit when they figure out how to cause other people to receive lower pay and benefits -- or just lose their jobs. The incentives come down to this: if someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing. If you don't own the company you're out of luck.
Now that is a perverse incentive if there ever was one. (Another perverse incentive: People with power and wealth benefit when they "externalize" costs like environmental or health damages. If they figure out how to hurt you or the planet without having to pay the costs of healing those harms, they get to pocket the savings.)
In the past this perverse incentive was mitigated by people banding together in governments and/or unions and forcing the wealthy and powerful to share. But modern marketing science has been successful at making people believe that government and unions are bad for them.
This was also mitigated by the ongoing need to find people to do the jobs that needed to get done. But with continual improvements in technology this need is reduced. For example, here is a story about a factory that builds large-screen TVs without any employees.
Also, this perverse incentive assumes an infinite pool of customers to sell to, ignoring that the transaction of benefiting from eliminating a job also eliminates a customer. But modern business has become so efficient at job elimination that this comes into play. Who will be able to buy theTVs that the employee-eliminating factory makes, if all the employees are eliminated and have no income?
Three decades ago productivity and wages decoupled. Where wages used to always increase along with productivity Reagan initiated an era where that increase was no longer shared, and the benefits of our economy now increasingly flow to the few at the top. Now they have all the money, and everyone else is loaded with debt from just trying to keep things "normal."
You might be lucky enough to still have a job today but you probably haven’t had a raise for a long time. And if you did rising costs of health care, etc. took it back. But even if you are ahead, what about tomorrow? Do you have a job that absolutely can't be outsourced or replaced by technology? If you think so I have news for you, millions of newly-unemployed can see that you have a rare necessary job, and they're all going to try to get it from you.
So good luck with the Jobs Summit. But if we don't hear about a fundamental restructuring that involves changing basic ideas of what work means and who "owns" the companies and shares the wealth in a technologically advanced, overpopulated and overproducing world, well, I won't think we're hearing the answers we need to hear. Put more simply, my example of the employee-eliminating TV factory is becoming more and more real. But certainly something can be done with a situation where there are plenty of TVs being made, and everyone has a lot of free time because there aren't enough jobs. How obvious is the answer to that?
Yes, I'll be posting ideas so check back for future posts on this. In the meantime please leave a comment with your ideas.
Posted by Dave Johnson at 7:57 AM | Comments (0) | Link Cosmos
November 30, 2009
Obama Enforced Trade Agreement - Jobs Already Returning
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In September, President Obama Enforces Trade Law In China Tire Case!
President Obama signaled a new direction in America's trade policies by deciding to enforce the ITC's recommendation to impose tariffs on Chinese tire imports.
In November, Findlay's Cooper Tire will add 100 new jobs,
“Last year at this time we were worried about losing Cooper,” said Sehnert.Now the company has announced a $10 million dollar investment in the plant, mostly in automation.
With the company's expansion comes the real good news for Findlay residents, 9.1% of whom are unemployed.
The plant will need to fill 100 new jobs.
“That's 100 more people working. That's 100 more people spending their money in our community, paying their bills, paying their taxes so it means a lot,” said Sehnert.
“Looks like business is picking up,” said Larry Williams, a sales forecaster at Cooper's Findlay headquarters.
The background is that China was flooding the US market with cheap tires, costing thousands of American jobs and forcing factories to close. Our agreement when China joined the WTO was that we could impose a tariff when "disruptions" occurred, and this was a disruption. President Bush refused to enforce trade agreements and we suffered 8 years of job loss and factory closings, but President Obama enforced it, and we are already seeing jobs return.
Posted by Dave Johnson at 9:05 PM | Comments (0) | Link Cosmos
November 18, 2009
The Problem With A Jobs Bill – And With Everything Else
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The country needs a jobs program and needs it right now. Cash for Caulkers would be a good start. A new Civilian Conservation Corps would be another. But let's not allow a jobs program to cover over the need for real changes in the structure and core principles of our economy.
Yes, an effective jobs program can help people hold out a while longer - until necessary changes are made. It can make the unemployment rate will look better, for a while, and maybe the GDP will climb a little bit. But our low-wage, everything-to-the-top economy is not sustainable and needs to be redesigned and reregulated. The economy has to be changed so that it works for all of us, instead of just a few.
What if the government passes a jobs bill, and these new jobs follow the current American job model of paying too little with no benefits? What if the government uses contractors, as they now do for so many government functions, and the contractors “reduce costs” by paying very low wages and no benefits, sending the rest of the cash to a few at the top? Does it really help the economy and the country to provide a bunch of low-paying jobs with no benefits, and make a few wealthy executives even wealthier? Or suppose the government starts a massive infrastructure modernization project? Does it help the economy if they hire construction firms that pay as little as possible or use Chinese steel?
Even if a government jobs effort provides good-paying jobs with good benefits, this still won’t change the need to restructure the rest of our economy so that it, too, provides good pay and benefits to all of us instead of concentrating all wealth and income at the top.
As long as our economy is structured to pass everything up to a few at the top, stimulus can’t work well, jobs bills can't work well. Either can anything else. In the end things will just revert to the old ways and we'll need more bailouts, stimulus and jobs programs.
The problem is that there are two economies now. There is an economy for the top few and an economy for the rest of us. And this problem is global. The world’s economy is structured to send almost everything to a global top few.
Everything just goes to the top now. Companies are structured that way, jobs are structured that way, taxes are structured that way and now even our government is structured that way. Our economy has been turned into a machine that sends every dollar to an already-wealthy few. So efforts to stimulate economic recovery using traditional methods cannot work. It will just make a few at the top even richer.
We need a jobs bill because the economic system has broken down. We needed a stimulus package because the economic system has broken down. All the bailouts and jobs bills and stimulus are just one more stopgap effort to keep a broken system going, for the continued benfit of the few at the top. Changes must be made.
One barrier to fixing our broken economy problem is the structural corruption of our Congress. Every effort to help the people seems to get hijacked - and never mind working on the needed reregulating and restructuring. The recent extension of unemployment insurance, for example, included only $2.4 billion for the unemployed, but had more than $20 billion tacked on, going directly or indirectly to (owners of) big homebuilding companies. Another example, the health care reform bill is turning into a law ordering people to buy insurance from the big insurance companies. This year’s big stimulus package was watered down with even more tax cuts for the few, like getting rid of the Alternative Minimum Tax.
The biggest example, of course, was last year’s financial sector bailout. Taxpayer dollars saved the asses of the companies that caused the collapse and are now serving up $140 billion for financial-sector bonuses but 10% unemployment for the rest of us!
If we want to get out of this mess we have to restructure and reregulate the whole system. We have to change the structure of our economy so that regular people receive the benefits. It is time. There is no more getting around it.
Next post: some of the structural problems that must be changed.
Posted by Dave Johnson at 1:32 PM | Comments (1) | Link Cosmos
November 16, 2009
Washington Times Against Protectionism Before They Were For It
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
President Obama is visiting Asia, and is blasted over and over about America's supposedly "protectionist" policies.
"China on Monday accused the United States of increasing protectionism..."Think about it, the country with the massive trade surplus accuses the country with the massive trade deficit of being "protectionist." Call it The Audacity Of Projection.
Our trade opponents have learned that all they have to do is shout the word “protectionist” and their American enablers will quickly run from doing anything that might help American companies and workers. But what happens later, when the consequences start hitting home? Do the "free trade" shouting, foreign-competition enablers take the blame and accept responsibility when Amercan dollars are spent overseas and American workers lose jobs and American factories close? Who could have known that they would point the finger at the President instead of themselves?
Here is what I am talking about:
On February 8, 2009, during the debate over the stimulus package, the conservative Washington Times joined the "free trade" chorus, denouncing the package's proposed "Buy American" requirements as the same kind of "protectionism" that conservative mythology says caused the Great Depression: EDITORIAL: How to cause a depression,
...Tucked within the economic stimulus bill the House passed last week was a clause requiring state and local public works agencies to buy American iron and steel for their reconstruction projects, and the Senate expanded it to all manufactured goods.Conservative free-traders got what they demanded. In response to these and other cries of “protectionism!” the Senate backed away from the Buy American clause, changing it to vague language requiring that the money be spent in ways consistent with existing treaties.[. . .] The stimulus bill has a way to go before it reaches Mr. Obama's desk, but if strong "buy American" mandates are present at that time, he will have no choice but to veto the bill. Otherwise, he will be forever known as Barack H. (Hoover or Hawley) Obama.
Since this wording gives the President some discretion in how the money is spent conservatives started demanding the President spend it ... outside of the country. For example, a Washington Times editorial on March 24, EDITORIAL: The Mexican-American War of 2009, ended by blasting President Obama for wanting American stimulus dollars to stimulate America's economy:
"Wasn't Mr. Obama going to be the "international" president who was going to get the rest of the world to love us? The path to improving relations does not involve destroying jobs in other countries as well as in our own."So now it turns out that many stimulus dollars are being spent according to the wishes of the "free trade" conservatives, with money to purchase wind turbines creating jobs in Europe and China, and who could have known, the very same free-trade conservatives are JUST OUTRAGED that President Obama is sending American stimulus dollars out of the country! For example, a Washington Times editorial on November 13, EDITORIAL: Stimulus creates jobs in China, begins,
Of the $1 billion in clean-energy stimulus money spent since the beginning of September, $850 million has gone to foreign wind companies. It doesn't take a bunch of experts at a hastily planned "jobs summit" to discover this isn't the way to bolster employment in America.Yes, how DARE they not require that American stimulus dollars be spent in America! This from the very same Washington Times editors who earlier in the year demanded exactly that.Indeed, the 11 U.S. wind farms that received stimulus money from the Treasury have imported 695 of the 982 wind turbines to be installed, creating 4,500 jobs overseas. That's far more overseas work than the stimulus money has created in the United States.
Who could have known that conservatives would attack President Obama for the consequences of giving in to conservative demands??!! The Washington Times was against protectionism before they were for it. Call it The Audacity Of Hypocrisy.
The lesson to be learned here is to stop listening to these conservative, "free trade" clowns. They are only interested in making the rich richer at the expense of the rest of us and will say whatever advances that goal. We should start just doing what is right for the country, our workers, our factories, our companies and our jobs.
Posted by Dave Johnson at 3:30 PM | Comments (3) | Link Cosmos
November 11, 2009
$140 Billion for Bonuses, Zero for America’s Future
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Here is another story about Wall Street’s war on the real economy.
US Steel was planning to invest $1 billion in building an environmentally-friendly new “coke battery” plant in Clairton, PA. The new battery would dramatically reduce the emissions used in the process, and use the gases to produce electricity. According to the Pittsburgh Post-Gazette,
The strategic investment would build two new coke batteries at Clairton, install top-flight environmental controls and add a cogeneration plant that would make electricity from gas produced by coke-making, which will help power all three U.S. Steel sites.
Another Post-gazette story explains,
Coke is a baked coal that is used to fuel blast furnaces at the company's Edgar Thomson plant in Braddock and U.S. Steel's other North American operations. The Clairton plant can produce 4.7 million tons of coke annually and just under 1 million tons are consumed at the Braddock plant.
U.S. Steel broke ground on the project on October 22, 2008. Along came the financial crisis, and financing for the plant dried up. They had to suspend work in April, 2009. U.S. Steel puts hold on $1B Clairton project.
U.S. Steel is suspending indefinitely the $1 billion modernization of its Clairton coke plant, a massive, multi-year project that was expected to create more than 600 construction jobs.The Pittsburgh steel producer said it was forced to make the "difficult but necessary decision" because of the economic slowdown that has prompted it to lay off about 7,000 union workers in recent months.
When the financial crisis hit, George W. Bush and Henry Paulson came up with – and Congress approved – the massive bailout scheme that has rewarded Wall Street for the actions that collapsed the economy. We gave the financial sector of the economy – commonly called “Wall Street” – hundreds of billions of direct dollars and trillions in guarantees, supposedly to fix the credit crisis and get the financial sector working again as the sector of the economy that provides financing for projects like the US Steel Clairton Coke Battery.
This is November and US Steel still has not found financing at reasonable rates to get back to work building this plant. They need $1 billion and this project is good for America's industrial capability, workers and environment. But, apparently, Wall Street needs to pay out $140 billion in bonuses this year, speculate on life insurance plans, do “flash trading” on stocks, etc. instead.
What Wall Street Is Supposed To Be Doing
Wall Street and the financial economy are supposed to be to supporting the real economy by playing the role of middleman, connecting sources of money with companies needing that money to allocate capital where it is needed. This is supposed to be a constructive process that helps We, the People fund innovative startup companies, build factories and schools,allocate capital for company expansion and fund other large-scale projects that require a pooling of resources and dilution of risk. That is their essential role in the economy.
But there is a problem with the way Wall Street has been and is operating. Instead of playing a background role supporting the real economy Wall Street has been dominating the economy, influencing the government and running quick-buck schemes, creating bubbles, speculating up prices on commodities and generally running wild. Before the financial meltdown Wall Street was not allocating capital productively, it was allocating capital destructively. In the companies-as-buy/sell-commodities posts I have been exploring how Wall Street's practices has been destroying companies, eliminating jobs and generally wrecking our economy while making a very few vastly wealthy. The company-buyout game turns good companies into debt-ridden, job-shedding shells. The greed-based drive for ever-higher returns tries to destroy companies like Costco because they are “overly generous” to their customers and employees. Wall Street has turned into a machine that grinds up jobs and communities, forcing wage cuts, dehumanization of workplaces, and corruption of our democracy.
When the financial sector broke down as a result of quick-buck risky investments (that didn’t allocate capital), massive leveraging (that didn’t allocate capital), Ponzi-like scams (that didn’t allocate capital), outright but not-yet-prosecuted fraud (that didn’t allocate capital), etc., our government stepped in to rescue the sector. But instead of fixing the system, Wall Street still is not allocating capital where it is needed. They are, however, taking huge profits and giving out huge bonuses.
Let’s make finance the servant of the real economy again, rather than its master. Let's invest our money in our industry, not bailouts and bonuses for a few. There are so many incentives for Wall Street to destroy factories, etc, and so few incentives to build the economy. Let's develop a strategy to build a new, sustainable economy that respects the environment and us as workers, customers and citizens. Let's develop a national economic/industrial strategy/policy -- call it what you want -- so our country has a plan to create jobs, invest in research and development and solve our problems. Other countries do this but our policy and strategy is to not have a policy and strategy and just let things continue in the wrong directions. I'm tired of that. What about you?
Posted by Dave Johnson at 7:46 AM | Comments (1) | Link Cosmos
November 4, 2009
Wall Street's War Against the Real Economy & We, the People
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
At a meeting with bloggers before last week's Building The New Economy conference, AFL-CIO President Rich Trumka talked about how we have developed two economies, one real and one financial. As he said, originally the financial sector was designed to support the real economy by providing capital as needed for building manufacturing facilities, public infrastructure, etc. But in recent decades the power of Wall Street has twisted that relationship until the real economy now feeds the financial economy.
As I have been writing about, for decades the real economy has been "financialized" by the Wall Street types -- sold off piece by piece providing short term profits for a very few. We lost more than 50,000 manufacturing facilities in just the last decade! If you sell your house you might have some cash in your own pocket for a while but your family doesn't have a place to live and the present state of our economy demonstrates the long term cost of this kind of short-term thinking: a few Wall Street types have a bunch of cash and the rest of us don't have an economy anymore.
As each factory closes and its jobs are eliminated the companies that supplied machines, parts and supplies also go away. The effect on those of us still employed (for now) has been profound as we work longer hours for less pay and fewer benefits with ever-higher stress levels. A few get ever richer, the rest of us have ever-lower standards of living and quality of life. And our country's ability to bounce back becomes ever more compromised.
Along with others at CAF I have been exploring how We, the People became the servants of Wall Street and what to do about it. The post Companies As Buy-And-Sell Commodities - Workers, Customers and Country As Costs laid out the pattern of company buyouts and takeovers since Reagan. Here is the company-buyout pattern that has turned into a machine with no human concerns:
buying up good companies, shedding and outsourcing the workers, cutting their pay and benefits, outsourcing and cheapening the product or service, fleecing and mistreating the customers, closing the offices and factories and running up debt.
The post Caught In A Machine That Grinds Us Up talked about the incentives that created this inhuman machine:
I have described here a destructive, unsustainable system that creates company- and society-breaking machines. These exist because of the economic and social incentives that our government has set up and we allow to stay in place. Breaking unions, stealing pensions, outsourcing jobs and squeezing customers all depend on government not enforcing laws and regulations – especially labor, consumer and environmental rules. …Certainly there is no incentive at the top to stop this. This system helps a wealthy few get ever wealthier and not feel the consequences. The people who do this are celebrated as "successful." And if they don’t like the resulting devastation to the economy, community, country and world they can just hop into their private jet or yacht to retire to their private island or tax haven.
This is conservative economics and the long-term consequences. Since Reagan supposedly stopped government from "picking winners and losers" our government has indeed been picking winners and losers with Wall Street winning and the rest of us losing. This brought about a concentration of wealth so severe that a very few now control almost all of the wealth of the country.
Over and over again we see the consequences of conservative economics and Wall Street domination: Short-term profits for a very few with devastating long-term consequences for the rest of us.
We see these consequences now as the economy supposedly enters “recovery” – Wall Street is reaping vast profits and paying astonishing bonuses – enabled by taxpayer dollars – while the taxpayers themselves face loss of houses, raises or jobs, pensions, health care, etc. Gains for a few at the expense of the rest of us.
Wall Street vs Costco
Just as with the private equity game, Wall Street and market ideology has been at war with any part of our economy that benefits customers or workers. For example, in 2005 the NY Times took a look at Wall Street’s war against Costco, How Costco Became the Anti-Wal-Mart. The complaint? Costco treats its customers and workers well. The article quotes one after another Wall Street “analyst” complaining that Costco is “altruistic” or “overly generous.” One makes it clear, saying the company “could force employees to pick up a little more of the burden.” In their eyes a business serving customers or employees is wrong. From the article,
Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco's customers but to its workers as well.Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."
The head of Costco explained that they take a longer-term view:
Mr. Sinegal, whose father was a coal miner and steelworker, gave a simple explanation. "On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."
And how does he do for himself?
Despite Costco's impressive record, Mr. Sinegal's salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies."I've been very well rewarded," said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings.
So in 2005 Wall Street’s short-term view of how Costco should operate was to squeeze the workers, cheapen the products, fleece the customers and grossly overpay the CEO. Costco did none of that, and now it is 2009 – the long term. How is Costco doing? I looked over their annual report and they are going just fine. According to The Motley Fool,
The retailer of pianos, coffins, and, yes, 30-pound jars of mayonnaise -- along with hundreds of other goods in bulk -- has managed to continue growing during the recession, impressively avoiding any layoffs in the process.
By the way, last year Sinegal’s salary was still $350,000. And a week ago US News and World Report wrote about Sinegal that he still “has a habit, which sometimes irks stockholders and almost certainly annoys his competitors, of taking excellent care of his employees.”
So Costco, a real company, was under attack from Wall Street for providing actual service to customers and actual pay and benefits to employees who were actually in the United States. And Costco came out OK through the 2008 financial crisis and aftermath.
But then, what we call Wall Street came out of this OK as well. Thanks to their stranglehold on our political and economic systems Wall Street came out of all this enriched and emboldened, using taxpayer dollars to pay bonuses and increase their lobbying. Many of the individuals who might have looted and destroyed companies and communities are rich and gone, others are still collecting bonuses. As far as the public sees, few of them have faced negative consequences for what they did -- virtually guaranteeing that such activities will continue.
Lessons
What lesson should we take away from this? Costco is a rare exception to the new rules. How many companies can get away with ignoring the demands of Wall Street that they cheapen the products, squeeze the employees and drain their surrounding communities? Why do we allow a system that enriches a very few in the short term while harming the rest of us, and how do we change this? Why do we tolerate IBG-YBG, the "I'll be gone - you'll be gone" take-the-money-and-run attitude that understands that there are no consequences when you take as much as you can from everyone else?
Now that Wall Street and short-term, unsustainable profit-taking have brought us to inevitable collapse, where do we go from here? Well obviously too-big-to-fail is just too big and that is a starting point. We were forced by their size to bail out these institutions, actually making them even bigger, and now they use our money to lobby against taxpayer interests, lobby for more bailout dollars, lobby against compensation curbs and taxes, lobby against politicians who want to change things, against rules to protect consumers, and anything that might change the short-term destructive approach. Using our dollars to do this - did I mention? We should break them up, like England is doing. But our government is, for whatever reasons, not doing so.
The recent Building The New Economy conference provided some guidelines that we can follow as we look for paths out of this. Take a look at the blog posts from conference participants that try to tackle these questions. (There is also a highlights video and should be more video when available.) The themes from the conference included the need for the Obama administration to develop a national industrial/economic policy, a rebalancing of trade, increasing the manufacturing that we do IN the U.S., a new emphasis on increasing research and development, modernizing and maintaining our infrastructure, an infrastructure bank to finance public projects, improving education and access to education including vocational education, and passing the financial reforms currently before Congress.
And how about using taxpayer stimulus dollars to actually stimulate OUR economy?
So how do we reign in Wall Street? Leave a comment.
Posted by Dave Johnson at 7:29 AM | Comments (0) | Link Cosmos
October 29, 2009
Wall Street Pukes On Our Shoes
At the New Economy Conference, Leo Gerard of the United Steelworkers just said that deregulating Wall Street was like leaving a 3 year old in a candy store unsupervised for a day. When you come back the kid is stuffed full of candy, candy falling out of the pockets -- but when you are driving home the kid pukes on your shoes. It's time to stop Wall Street from puking on our shoes.
Posted by Dave Johnson at 12:24 PM | Comments (3) | Link Cosmos
Building The New Economy
I am in DC at the Building The New Economy conference. There is a Listen Live button at that site, so you can attend as well. My computer clock says 5:40am as I type this so California readers are discovering this half way through the conference. :-0
Yesterday I attended a blogger roundtable with Rich Trumka, President of the AFL-CIO. I'll write about this later.
Speakers:
Gov. Ed Rendell, Commonwealth of Pennsylvania
Sen. Sherrod Brown, D-Ohio
Rep. Rosa DeLauro, D-Conn.
Rich Trumka, President, AFL-CIO
Leo Gerard, President, United Steelworkers
Prof. Suzanne Berger, director of the MIT International Science and Technology Initiatives
Jeff Madrick, author, "The Case For Big Government"
Robert Kuttner, author, "The Squandering Of America"
Kate Gordon, Apollo Alliance
Conference agenda (times are EST):
LESSONS OF THE FALL
9:30 a.m. There Is No Way Back: A New Strategy is Essential
BUILDING THE NEW ECONOMY
10:10 a.m. A New Foundation: Strategic Public Investment
11 a.m. Making It In America: Manufacturing in a Global Economy
12:05 p.m. Luncheon Keynote: Towards a New Economic Strategy
1:30 p.m. Global Challenge: A Sustainable Balance for Growth
2:30 p.m. Getting There: The Next Steps
Posted by Dave Johnson at 5:37 AM | Comments (0) | Link Cosmos
October 25, 2009
Building The New Economy
Bill Scher interviews me on Building The New Economy:
Building The New Economy: The Interview | OurFuture.org
Posted by Dave Johnson at 7:52 PM | Comments (2) | Link Cosmos
October 23, 2009
Palin vs Krugman On The Dollar -- Who Is Right?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The other day I wrote about how the dollar is falling - but not against the Chinese Yuan. A falling, or "weak" dollar is great for American manufacturers, and therefore American jobs, because it makes American goods cost less everywhere else. This means our exports should rise, reducing our trade deficit and helping us pay off the huge amounts decades of conservative budget policies forced us to borrow from other countries.
Conservatives, though, are trying to use the complexities of the relative value of the dollar in currency markets as an anti-Obama political issue. They must have polling that shows people reacting to way the words "strong" and "weak" are used. This misunderstanding of "strong" and "weak" reminds me of how I used to be confused by "debit" and "credit" when I learned double-entry accounting. (Sorry, I probably shouldn't mix corporate finance humor with blog posts.)
For example, earlier this month Sarah Palin (or someone) wrote on her Facebook page that a falling dollar makes us "vulnerable." This is a brilliant play on the "weak" theme, and is used to further scare people. (Republicans like to scare people - remember how Iraq was going to spread smallpox?) She earns her Exxon check, writing that we need to "Drill, baby, drill" for energy independence to solve this. She writes nothing about conservation, alternative energy sources like wind or solar, or about smart grids, or developing a 21st century economy -- Exxon wouldn't like that.
Palin's ghostwriter confuses several issues at the same time. This is brilliant agitprop but terrible, terrible policy.
Paul Krugman, America's other master economist, writes in the NY Times today that the problem is China, not Obama. China "pegs" their currency to the dollar so when the dollar drops the Yuan drops along with it. This keeps goods made in China at a nice, low price relative to everyone else, reducing any advantage we might gain from market forces. Krugman writes,
If supply and demand had been allowed to prevail, the value of China’s currency would have risen sharply. But Chinese authorities didn’t let it rise. They kept it down by selling vast quantities of the currency, acquiring in return an enormous hoard of foreign assets, mostly in dollars, currently worth about $2.1 trillion.Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now.
Krugman says it is no time to be timid. We have to confront China on this manipulation.
The thing is, right now this caution makes little sense. Suppose the Chinese were to do what Wall Street and Washington seem to fear and start selling some of their dollar hoard. Under current conditions, this would actually help the U.S. economy by making our exports more competitive.
A a Bloomberg today story demonstrates why we need to bring the dollar down relative to the Yuan,
“The stable yuan helped us increase sales by about 20 percent this year,” Cody Hu, a sales manager at the Yongkang- based company, said at the China Sourcing Fair in Hong Kong.I'm with Paul, not Palin. A lower dollar means JOBS.. . . “Competitors in China are doing good,” said Suresh Sranavasan, a distribution manager at the company. “They have pricing advantages from the government’s stable yuan policy.”
---
Take a look at the agenda for the Building the New Economy conference, Thursday, October 29, 2009 -- 9:30 a.m.-3:30 p.m. at the Washington Court Hotel in Washington, D.C.
This conference sounds the call for the new economy we must build out of the ruins of the old. It focuses on the need for a new agenda to revive manufacturing in America. It's free. But you have to RSVP.
Posted by Dave Johnson at 9:09 AM | Comments (0) | Link Cosmos
October 21, 2009
Caught In A Machine That Grinds Us Up
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
This is Part II of Companies As Buy-And-Sell Commodities. See Part I, Companies As Buy-And-Sell Commodities - Workers, Customers and Country As Costs.
In Part I I wrote about a pattern we see over and over again: buying up good companies, shedding and outsourcing the workers, cutting their pay and benefits, outsourcing and cheapening the product or service, fleecing and mistreating the customers, closing the offices and factories and running up debt. If you want to make a few hundred million, here is the game:
- Find a good company that still respects its workers, paying decent wages and benefits, still respects its customers and produces a quality product or service, still respects and has ties to its community and keeps a plant open, maybe sponsors a little league team, etc. These are all "costs" to cut.
- Use other people's money: Work with an investment bank to finance the buyout, with the company itself as collateral, and pay the banking fees from the financing.
- Cut. Cut costs, including the quality of the product or service and customer support operations. Externalize environmental costs onto the community. Wait for the union contract to expire and offer wage cuts and elimination of benefits and refuse to negotiate (where are they going to get other jobs?), fire union organizers, threaten to close the operations and move them overseas, and don't worry about labor laws - they aren't enforced anymore.
- After breaking the union and cutting costs, close the plant. outsource production to China.
- Now the books look better because of reduced costs, so take on new financing and pocket it.
- Further stoke up the books for a couple of quarters using gimmicks like pushing product into distribution channels to make sales look better than they are, find another buyer and pass what’s left to them to repeat the cycle – there are always more costs to cut.
- Pocket your millions, then go back to step 1 and repeat the process with another company.
This is the buyout game and it is part of the story of what has happened to our economy, our jobs, our communities and our country. It has become a machine, with profits fueled by tax and social incentives. These incentives create a formula that follows the steps described above, with an inevitability to the consequences. Because it CAN be done, of course it IS done. It is a great game for short-term profits for a few. It is justified as "finding efficiencies" and the ideology behind it insists that the profits prove the market demands the behavior.
Machines do not have human concerns, they just do what they are designed to do. Their engines burn the fuel that powers them, their gears turn. As an example of what I mean take a look at what happens when this machine encounters companies that provide assisted living for the elderly A year ago I was helping the SEIU get the word out about the private equity game and especially the firm Lazard, which had been purchasing assisted living, retirement and nursing homes and putting them through the machine. I wrote then, in When Seniors Are the Product. Look at how they were treating our most vulnerable people,
OK, we have the perfect combination here. We have elderly, frail, sick, vulnerable, and they have some money. They are a captive audience, too, because people in this situation are not people who can pack up and move somewhere else. Senior care is a big business. You're talking about chains with hundreds of facilities each with dozens or even hundreds of living units you're talking REAL money. So in today's economy you're talking about a perfect target for exploitation.[. . .] Atria was set up by Lazard LLC., a "financial advisory and asset management firm." Lazard is a private equity, or "buyout" firm. Yep, one of those big Wall Street outfits that you are reading more and more about. Lazard is supposedly based in Bermuda even though it lists [pdf] its "principal offices" as New York, London, Paris and Milan. (Its website doesn’t even list Bermuda on its "global presence" map. Wink, wink, nod, nod.) On their website they say that a core value is Citizenship,
[. . .] Here is what is going on: Atria has been reducing services, raising rates, cutting wages, and generally treating the residents and employees like money trees that exist to be squeezed.
In Extreme Wealth Just Isn't Enough, I looked at what could be motivating the people who do this,
Already extremely wealthy, it just isn't enough. It's never enough and it seems the more you get the more you need. You need it bad enough to squeeze more and more money out of old people too frail to even shower without help. You need to so bad that you keep the wages of people as low as you can and you do everything in your power to keep them from forming a union. You need that money. You need that money. You need that money. And you do what you have to do to get even more.
In Living and Working at Atria, I described how the machine turns people into nothing more than economic units
We are people, not economic units, and there is a difference. This may be a difficult concept to grasp after three or four decades of constant corporate-funded "free market" propaganda. But people make decisions for higher reasons than just making or saving a buck or two. Most people, anyway.[. . .] The caregivers at Atria, at every level, deserve to be treated with respect and compensated fairly for their work.
But they're not. Of course.Of course, this is all exactly what Atria and Lazard and Bruce Wasserstein are counting on. This is what the people and pension funds and others who park their money at Lazard are counting on. To them the seniors and the workers are just economic units, revenue streams and costs to cut, to be replaced if they don't perform efficiently.
And in Gouging Vulnerable Seniors -- What Can Be Done? I looked at the effect over time as this machine grinds on,
Many people and organizations recognize that such a system is not sustainable, harms the people who work for the companies, the communities around them, the customers and the economies in which they operate. Sure, a few executives make out like bandits for a while, but over time it doesn't do the rest of us any good, not even their companies. (Lazard and the Lazard fund that owns Atria, for example, have not been performing all that well. Meanwhile Wasserstein personally took home $42 million last year - even as Lazard stock lost 14%.)
More recently we saw the same pattern play out with the company Stella D’oro. The company went through the same buy-and-sell pattern. Stella D’oro was bought by Nabisco in 1992. Then Nabisco became part of Kraft in 2000. In 2006 Kraft sold the company to Brynwood Partners - a private-equity company. Brynwood bought the company with a plan to break the union and then drastically cut wages and slash benefits to lower costs and then resell. (Just like "flipping" a house.)
From last year, No Sweets When Striking the Cookie Factory,
The workers ... say there has been no effort to negotiate in good faith. They accuse Brynwood of having a plan to force them out of their jobs, noting that replacement workers were lined up before they even went on strike.. . . “The financiers and speculators have brought the American economy to its knees,” they wrote. “The financiers at Brynwood Partners are trying to bring 135 workers to their knees, hiring scabs to do their work. The Stella D’Oro workers are taking a stand against the wrecking of our economy.”
But the union sued the company for unfair labor practices and won, so Brynwood “pulled a Wal-Mart,” closed the plant in retaliation, laid off the workers, and sold the remains to yet another company,
While Stella D'oro isn't in bankruptcy, its owner, Greenwich, Conn., private equity firm Brynwood Partners, in September announced that it would be shutting the company's doors and putting the company up for sale. Brynwood reportedly decided to sell the Bronx, N.Y.-based cookie company after a National Labor Relations Board judge had ruled in July that it had negotiated employee wages and benefits with the union that represents them in bad faith. That ruling apparently prompted the PE firm to make the sale, which has left 138 employees out of work.Company, jobs, factory gone, surrounding community devastated. As the pattern repeats itself, the rest of us worry that it could happen to us, that our own employer could be next. What many of us take from this is not to fight this, but to keep our heads down. We learn that we are a cost. We can be replaced. Don't ask for raises. Don't even think about joining a union. Keep your head down or they’ll single YOU out and cut your pay or “eliminate your position.” Across the economy the pressure builds, hours and workloads are increased while wages and benefits decline. Workers burn out and families are destroyed by the psychological fallout.
I have described here a destructive, unsustainable system that creates company- and society-breaking machines. These exist because of the economic and social incentives that our government has set up and we allow to stay in place. Breaking unions, stealing pensions, outsourcing jobs and squeezing customers all depend on government not enforcing laws and regulations – especially labor, consumer and environmental rules. (The last administration’s Labor Dept actually gave advice on how to break unions.) As long as we let the economic incentives call us "costs" and getting rid of us "efficiency" this will continue.
Certainly there is no incentive at the top to stop this. This system helps a wealthy few get ever wealthier and do not feel the consequences. The people who do this are celebrated as "successful." And if they don’t like the resulting devastation to the economy, community, country and world they can just hop into their private jet or yacht to retire to their private island or tax haven.
Of course, in the last year we have seen that this was not a sustainable system. The economy collapsed because everyone in the system – the workers, consumers, companies, banks, Wall Street – all hit the limits of how much debt you could pile on our backs. But we haven’t started to make any changes in the design of the system, or in the machines that unsustainably grind up our companies, workers, customers and country. And we haven't changed the ideology and rationalizations used to justify destroying lives and companies and our long-term prospects for short-term profits for a few.
But imagine if instead we put in place economic and social incentives that set up a sustainable system with company-making machines that direct all of this capital and energy toward building good companies that serve all of our interests. Call them "green machines." What if we set things up so people could get rich doing this instead? Then people would create green machines that would grind through the economy, finding companies and transforming them into businesses that serve their customers and communities, creating rewarding and fulfilling jobs in stimulating and enjoyable work environments, and building a better future for all of us.
On that note: Take a look at the agenda for the Building the New Economy conference, Thursday, October 29, 2009 — 9:30 a.m.-3:30 p.m. at the Washington Court Hotel in Washington, D.C.
This conference sounds the call for the new economy we must build out of the ruins of the old. It focuses on the need for a new agenda to revive manufacturing in America. It's free. But you have to RSVP.
Posted by Dave Johnson at 2:07 PM | Comments (0) | Link Cosmos
Dollar Weak? Not Against Yuan!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Conservatives are blasting President Obama, saying he is causing a "weak" dollar. The Drudge Report has a headline or a story pretty much every day blasting this message out. Republican e-mails warn that the dollar is "collapsing" under Obama. Blogs and talk show hosts declare that civilization will cease, urging listeners to buy as much gold as they can.
But conservatives should know that the dollar is steady where it counts - against the Chinese Yuan. Yesterday, October 20, the exchange rate was 6.82653. On May 6 it reached a low of 6.82157 and on June 17 a high of 6.83743.
Conservatives react intensely to words like "strong" and "weak" without understanding the meaning. Here is what it means: Things made in America cost less when the dollar is lower, or "weak." A lower dollar creates an incentive for others to purchase things made in America, which means factories are busy, new factories can open, and jobs are created.
But while the dollar drops against every other currency the Chinese Yuan remains the same, and Chinese goods don't get more expensive - at least here. So our factories are not busier, the import/export imbalance stays the same and American jobs are not created.
One might ask, "How is this possible in a free market?" Indeed.
-----
Take a look at the agenda for the Building the New Economy conference, Thursday, October 29, 2009 — 9:30 a.m.-3:30 p.m. at the Washington Court Hotel in Washington, D.C.
This conference sounds the call for the new economy we must build out of the ruins of the old. It focuses on the need for a new agenda to revive manufacturing in America.
-- Oh, it's free. But you have to RSVP.
Posted by Dave Johnson at 10:04 AM | Comments (0) | Link Cosmos
October 16, 2009
Companies As Buy-And-Sell Commodities - Workers, Customers and Country As Costs
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As we consider what we need to do to get our economy working again it is useful to look back at the things that went wrong.
The way people used to think about why you start a business was to make a product or provide a service. The business provides something that people need and if you do a good job and serve your customers well over time they will reward you for it. The better you do at that, the better you do for yourself. Right?
It's a pretty basic business model: a business does what it is in business to do, and people like it or don't, and the people who run the business do well or not accordingly.
For example, you would think that a mattress company was in the business of making mattresses, and a bakery was in the business of baking. You would think that an assisted living facility or nursing home company was in the business of caring for the people who came to them for care.
Maybe not – at least not for the owners and even managers of many of these companies. It turns out they’re not in those businesses. Sometimes, they’re not even there. Either way, they certainly don't care about mattresses or nursing homes or baking cookies. This is because of the rise of Wall Street dominance of American business. For the Wall Street crowd business models are something else entirely, and making something and serving customers is just not in the picture. In fact those things are in they way -- between the Wall Streeter banksters and their bonuses.
I’m talking about the private equity business, where the model is not unlike house-flipping during the insane housing boom. The model for them is get in, cut everything, grab all the cash you can and get out, never mind what it does to the companies, the customers, the employees or the country – that’s the new business model.
I wrote the other day about the Wall Street way of doing business:
Short-term gains for a few. Long-term harm to the rest of us.… Our country let this happen because a wealthy few benefited in the short term from policies that harmed the rest of us over the long term. The wealthy few used some of the $$ gained to buy off lobby and contribute to campaigns of politicians who let them get away with it.
. . . The short-term benefits-to-a-few that were exchanged for long-term harm to the rest of us are now harming the rest of us here in the long term. We owe the rest of the world huge amounts of money. The economy has fallen apart because so many of us can't afford anything - like paying back the debts we had to take on to get by. Now the government can't do anything important because We, the People don't have the funds.
This is another story of a wealthy few selling off the country’s people and future, treating companies and people as commodities to be bought and sold for a quick short-term profit, with long-term harm done to the rest of us. The private equity company-buyout game works like this: buy a company, borrow against the company name and assets and put the proceeds straight into your pocket, sell off assets, outsource jobs, lay people off, cut pay and benefits for the rest, close facilities and factories, externalize costs onto the community, cheapen whatever the company makes or does, run up the debt some more, squeeze money out and pocket it and then sell. Hopefully you make off with the pension fund in the process.
Take a look at a recent NY Times story by Julie Creswell, about the destruction of Simmons Bedding, the mattress company, Profits for Buyout Firms as Company Debt Soared
Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.
Bought and sold by a parade of investment groups,
For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.
People wiped out,
But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined.. . . Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private equity owners have made around $750 million in profits from Simmons over the years.
While a few made out like bandits.
They didn’t care about the employees. They didn’t care about the company. They didn’t care about the customer. They didn’t care about the country.
There were not in the business of making mattresses. And now America loses another company that made something.
Simmons is one of hundreds of companies swept up by private equity firms in the early part of this decade, during the greatest burst of corporate takeovers the world has ever seen.
Please read the entire story if you can. It’s the story of America since Reagan. The company was systematically plundered, slashing “costs” (aka the company’s future), cutting jobs and stealing pensions. (Bonus, read about how the CEO, while making $40 million, rarely showed up at headquarters, running the company from his yacht, with the company even paying the captain’s $92,000 salary. )
He didn't even bother to come in to company headquarters!
The chain of Simmons owners starts with William E. Simon, one of the architects of the modern conservative movement, buying the company, looting it. Then,
“A succession of private equity buyers came and went. Merrill Lynch Capital Partners bought Simmons in 1991 for … Merrill sold it to Investcorp, an investment group based in Bahrain, ... Two years later, Investcorp sold the company to Fenway ...
Then Thomas H. Lee Partners, known for Snapple, Rush Limbaugh’s early big advertiser, bought the company, and engaged in some financial magic. They:
“… created a holding company that it used to issue $300 million more in debt, which paid an additional $238 million dividend to the private equity firm. With that, THL had recouped its entire $327 million equity investment in Simmons.”
Yes, they borrowed against the company, paid themselves back what they paid for the company, sticking the lenders with the tab. And, of course, like the Wall Street bonuses from taxpayer bailous they get to keep that money, because … well just because.
THL was hardly alone in undertaking this sort of financial engineering, known as a dividend recapitalization. From 2003 to 2007, 188 companies controlled by private equity firms issued more than $75 billion in debt that was used to pay dividends to the buyout firms.
That was the story of one company destroyed by this private equity/hedge fund/ Wall Street game. Here is another, from May (also by Julie Creswell): Oh, No! What Happened to Archway?
Longstanding cookie makers with an extremely loyal fan base, Archway and its sister company, Mother’s, had their share of troubles in recent years as the once-family-controlled business that owned both brands was passed along from buyer to buyer — first to an Italian company, Parmalat, in 2000, and then, after an accounting scandal at Parmalat, to Catterton Partners in 2005.
The company was passed from buyer to buyer …
[. . .] “Those guys were stepping over quarters to pick up pennies,” he said. “They cut here and cut there and some of the things they needed to do. But, in my opinion, they threw away a lot of profits by a lot of bad decisions.”After Catterton took over, Archway began ratcheting back spending on in-store promotions, which distributors contended made their cookies less competitive in stores. Catterton also abruptly shut a bakery and distribution plant in Oakland, Calif., which had made Mother’s Cookies for several decades. Operations were shifted elsewhere.
The product cheapened …
Besides putting 230 of the Oakland plant’s employees out of work, the closure had another negative effect. It lengthened the time between when the cookies were baked and when they hit store shelves around the country.Some also believe that Archway altered its recipes or ingredients. Mr. Gallagher, the distributor, said that as time went on, he ended up having to eat a lot of cookies that he couldn’t sell. “I noticed, over time, they were getting worse and worse.”
Mr. Zinzer is more blunt: “Our cookies turned to crap. They were nowhere near as good as they used to be.”
A former employee inside the headquarters, who declined to be identified because of continuing litigation, said that as the company’s troubles worsened, the company began using less expensive ingredients in its cookies.
Customers treated like ATM machines,
When Mr. Pfeifer called Archway, however, to get a credit for the opened cookies, rather than simply filling out a form as he had done in the past, he said he was told he had to cut the individual seals on all of the wrappers on the pallet.“Clearly that was meant to deter me from asking for credit. I said, ‘Forget it,’ ” Mr. Pfeifer said. “I took it all to the dump.”
Inevitably the story ends with this in the news last week: Mother's Cookies abruptly shut down
Mother's Cookies, an Oakland institution for 92 years, has been shuttered, its owner seeking bankruptcy protection for the company.The ending was abrupt: Workers for the company, which shifted its baking and distribution operations to plants in Ohio and Canada in 2006, told workers Friday that operations would cease and cookies would no longer be made as of Monday.
. . . The owners did not comply with the federal law that requires a 60-day notification of any layoffs
Another plant shut down. More people laid off. Some very rich people pocketed a lot of money...
Notes -
SEIU's Behind the Buyouts site.
Flipped. How Private Equity Dealmakers Can Win While Their Companies Lose -- NYT Videos on the private equity game.
Also -
Take a look at the agenda for the Building the New Economy conference, Thursday, October 29, 2009 — 9:30 a.m.-3:30 p.m. at the Washington Court Hotel in Washington, D.C.
This conference sounds the call for the new economy we must build out of the ruins of the old. It focuses on the need for a new agenda to revive manufacturing in America.
-- Oh, it's free. But you have to RSVP.
Posted by Dave Johnson at 7:49 AM | Comments (0) | Link Cosmos
October 11, 2009
Manufacturing And Outsourcing -- What Were We Thinking?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I'm reading a a review of"Capitalism: A Love Story" at naked capitalism, and came across this,
"I grew up in small towns dominated by manufacturing plants, and I remember that they were prosperous, optimistic, and stable. People who had good jobs at the local mill were not the top of the social order; that was reserved for businessmen and successful professionals, like doctors and lawyers. But they could afford decent homes, creature comforts, vacations, and send their kids to college (not the fanciest, often a state school unless they got a scholarship, but their children could nevertheless hope to do better than their parents). But that had started fading by the 1970s as America’s economic dominance started to slip. Moore clearly is pained at the loss of the America that was (while pointing out it depended on the special circumstances of our post World War II political and manufacturing dominance) and our naivete in trusting in an economic model that has been been turned against the common man."
Remind me, why did we think it was a good idea to stop manufacturing things in America? Why did we outsource the jobs? Why doesn't our government have an industrial policy -- a plan to keep us economically strong?
Looking back at the past few decades I'm not really clear on this. I feel like we are waking up from that scene in Moore's movie where the hypnotists are mesmerizing their victims, looking around at the economic devastation that is the aftermath of decades of conservative economic rule and wondering, What were we thinking?
Posted by Dave Johnson at 10:19 AM | Comments (0) | Link Cosmos
October 9, 2009
Here We Go Again - American Glass Industry Losing Jobs And Factories To Chinese Subsidies
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Short-term gains for a few. Long-term harm to the rest of us.
Again and again we have seen American industries exported, the plants closed, the jobs lost, and government officials just letting it happen. The workers in the other countries are almost always paid less than workers here, sometimes dramatically less, which means they can't afford to buy things made in America. They often suffer from dangerous working conditions and the factories they work in often spread pollution that that harms people there and even affects us here.
Our country let this happen because a wealthy few benefited in the short term from policies that harmed the rest of us over the long term. The wealthy few used some of the $$ gained to buy off lobby and contribute to campaigns of politicians who let them get away with it. Often the very politicians and their staffs were soon bribed hired by these wealthy few, for very high amounts. (Look at the sources of money raised by the Bush presidential campaigns, and the places where administration trade officials are employed since Bush left office for examples of what I am talking about.)
The result of these trade policies has been a huge and ever-increasing balance-of-trade deficit, year after year, which means America has to borrow more and more money to buy things we used to make here, or to buy things that we could have traded for if we still made things here. Yes, a wealthy few benefited greatly, many becoming billionaires many times over. Vast amounts of wealth have concentrated at the top in recent years. Short-term gains for a few. Many of the rest of us suffered dramatic pay cuts or lost jobs, lost houses, lost our health insurance, lost our pensions, etc. Long-term harms for the rest of us.
The short-term benefits-to-a-few that were exchanged for long-term harm to the rest of us are now harming the rest of us here in the long term. We owe the rest of the world huge amounts of money. The economy has fallen apart because so many of us can't afford anything - like paying back the debts we had to take on to get by. Now the government can't do anything important because We, the People don't have the funds.
So here is just the latest outrage. The Economic Policy Institute released a report yesterday, Through China’s looking glass—Subsidies to the Chinese glass industry from 2004-08,
Data and calculations in this report reveal that China’s glass industry received total subsidies approximating at least $30.3 billion from 2004 to 2008.
The accompanying press release tells us about the effect of this on American jobs,
The rapid growth of the Chinese glass industry, despite ongoing product quality issues, has already been felt keenly in the U.S. industry, which has contracted by about 30 percent (nearly 40,000 jobs) since 2001. States such as Arkansas, California, Florida, Illinois, Indiana, Massachusetts, Michigan, North Carolina, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia have lost at least one out of four – or many more – of their glass industry jobs since 2001.
President Obama made the right decision when he enforced the trade laws in the case of Chinese tires by imposing a tariff on imports. In this case he can let China know that America is determined to keep our factories and jobs and will trade on a fair, even-handed basis from now on.
It is time to get angry about these policies that benefit a few in the short term but harm the rest of us in the long term. We need to reform our trade and manufacturing policies. We need to insist on two-way trade and a strong American manufacturing base.
Posted by Dave Johnson at 7:00 PM | Comments (0) | Link Cosmos
September 30, 2009
A New Economy from Old Roots?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
How do we build a new economy out of the collapse of the old economy? How do we start fresh to begin creating jobs again, while building in economic and environmental sustainability, as well as workplaces that respect human needs and rights? How do we change things so that we all get to share the benefits of the economy rather than just contributing to the increasing wealth of a few vastly wealthy people?
While we look for a vision for a new economy, we should examine what has worked in the past. America had periods in which regular people enjoyed sustained increases in their standard of living. For a long time it was a conventional wisdom that each American generation would do better than the previous generation, more people would receive good educations, medical care would get better, the middle class would grow, leisure time would increase, poverty rates would decrease, retirement would be easier, etc.
But this pattern stopped. Beginning in the late 1970s and especially in the 1980s incomes began to stagnate, wealth increasingly concentrated at the top, working hours and workplace pressures steadily increased, availability of good health care started to decrease, etc. The standard of living of most Americans began to and continues to decline. At the same time corporations became more predatory as consumer protections vanished. Meanwhile outsourcing, deunionization and other anti-worker policies led to increasingly unpleasant, stressful and unrewarding worklives for more and more people.
Many of today's problems are traceable directly to the policy results of anti-government propaganda that was blasted out from well-funded conservative think tanks starting in the 1970s. The anti-government campaign led to defunding of many national, state and local government programs that improved education, helped the poor or enriched people's lives. We suffered deregulation in many areas where the government had protected consumers, workers, investors and the environment. Huge reductions in taxes for the wealthy were either offset by tax increases for the rest of us or government borrowing. And that borrowing has led to increasing problems of paying the interest and threats to funding even basic programs like Social Security and education.
So what worked, before the conservatives trashed the place?
Regulation
One thing we know for sure now, learned the hardest way thanks to the financial crisis: regulation worked. Regulation was necessary, it worked, it kept firms from taking risks that could bring down the economy. And we can also see now how regulations protected consumers from predatory corporate activities, workers from wage theft or unsafe working conditions, and the environment from exploitation and destruction.
Taxes
Before Reagan the tax rates at the top were very high. After you reached - and took home - a certain very high income you paid a high percentage of the rest in taxes. This had many beneficial results – even for the people who paid higher taxes. Government could afford to keep the physical, education and legal infrastructure in good condition without borrowing. Government could afford to invest in programs that improved our standard of living, health, knowledge and technology, which helped businesses grow. Businesses thrived in such well-watered soil.
The high tax rates also kept the bad side of human nature in check. When it took years to build up a fortune businesspeople had to rely on the health of the greater community to nurture their own wealth-building enterprises and keep them thriving over a long period. They had to think and act long-term. The roads needed to be kept in repair, the schools needed to provide excellent education to potential employees, the courts needed to be functional to enforce contracts, and they wanted the communities they were going to have to stay in to be pleasant places to live.
But once taxes were lowered vast windfalls could be realized from a single event and it made more sense to try to fleece the community with quick-buck schemes than to rely on it. We began to see corporate raiders break up solid, ongoing companies, steal pension funds, etc., while encouraging communities to cut spending on schools, roads, etc. It became more profitable sell off or outsource our manufacturing capacity. And then, as things fell apart, the few who benefited could just fly away in their private jets or sail away in their huge yachts. The greater community was no longer any use to them except as crops to be harvested. Vulnerable consumers are the only crop that is coming up in this economy.
Big Government
Government is We, the People making the decisions. "Big government" is simply another way of saying that more of the important decisions are made by the people. Shrinking government means handing the decisions over to big corporations. In the real world this is the choice. And in the real world big corporations make decisions that benefit them, and only them. Before you badmouth government think carefully about what the alternative is.
Old-Fashioned Government Planning
As I said in a post a few months ago,
The phrase “industrial policy” sounds so Walter Mondale, 1970s, smokestacks and brick factory old-fashioned. I suspect the subject turns people off, eyes glaze over, hands reach under the table for iPhones and Blackberries…But here we are without an industrial policy. How’s that working out for us? Every other country has one. China seriously has one. We instead have huge trade deficits. We don't make things here so we have to borrow money to buy things made elsewhere.
To add insult to injury, recently Deutsche Bank released a research note advising investors that the U.S. was not a good investment because of our lack of a government industrial policy. See Deutsche Bank: Absence of US Clean Energy Policy Will Send Global Capital Elsewhere.
While we envision a new direction for our economy, maybe we should also be looking at returning to a few old-fashioned ways of doing things, too.
Posted by Dave Johnson at 4:09 PM | Comments (0) | Link Cosmos
September 23, 2009
Enforcing Trade Rules Shocks "The Village"
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The New York Times business section has this today, With a Receptive White House, Labor Begins to Line Up Battles. Oddly this "news" story incorrectly casts enforcement of trade agreements as opposing "free trade." From the story,
While labor’s opposition to free trade is nothing new, having an ear in the White House is. The Obama administration, though it says it supports free trade, has so far seemed more aligned with labor’s trade agenda than has any administration in decades.Here's the thing. This is not about opposition to free trade. This is about enforcement of existing agreements. This is nothing more than a request to the proper enforcement authorities to investigate if agreements are being violated, and to take the agreed-upon steps to remedy that if they are. But in recent years it because the expectation that the White House made decisions that were not based on rule of law, but rather on ... something else. From the article,What has alarmed America’s trading partners is the steelworkers’ victory when the president imposed a 35 percent tariff on Chinese tires under special trade rules that allow punitive measures without a finding of illegal trade practices.
... The president’s move has stirred worries that other unions and industries will rush to seek similar relief.
In four safeguard cases, President George W. Bush declined to impose penalties even though the United States International Trade Commission, a bipartisan panel, had found that Chinese imports hurt particular industries.THAT should have been the shocking news, not the current news that agreements are going to have to be lived up to! A President of the United States sided with other countries, against American companies and workers, even after the trade enforcement bodies found clear violations of the agreements!
It seems that after eight years of general lawlessness we're at a point where it is expected that those with power can do anything they want regardless of agreements or laws. So now "the Village" (blogger term for comfortable "inside-the-beltway" Washington DC insiders) is shocked and offended when the rabble -- the rest of us -- actually wants the authorities to enforce the rules instead of deferring to power -- even when, as in this case, that power is being used against America. For example, when Attorney General Holder was looking into investigating whether laws against torture were broken, "the Village' was all atwitter and scandalized over the audacity of President Obama letting such a thing happen -- as if it was in any way appropriate for a President to make a political decision to keep the Justice Department from an investigation.
Under the previous administration it was expected that such decisions would be decided politically, based on who was donating the most to The Party or its supporting infrastructure of think tanks, etc., on any given day. Now we are seeing a return to rule of law. It's the same thing with this request to see if trade agreements are being honored.
The Village owes the concept of rule of law an apology.
Posted by Dave Johnson at 11:02 AM | Comments (0) | Link Cosmos
September 22, 2009
I Will be Blogging From The Pittsburgh G20 JOBS Summit
I am flying to Pittsburgh tomorrow and will be blogging Thursday and Friday from the G20 summit, at the Blog for OurFuture as part of the Campaign for America's Future's Making It In America project.
The G20 is a meeting of the Group of Twenty (G-20) Finance Ministers and Central Bank Governors of "systemically important industrialized and developing economies to discuss key issues in the global economy."
From their website,
The G-20 is made up of the finance ministers and central bank governors of 19 countries: Argentina,Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States of America [See, since Bush we are last on every list! - DJ]The European Union, who is represented by the rotating Council presidency and the European Central Bank, is the 20th member of the G-20. To ensure global economic fora and institutions work together, the Managing Director of the International Monetary Fund (IMF) and the President of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate in G-20 meetings on an ex-officio basis. The G-20 thus brings together important industrial and emerging-market countries from all regions of the world. Together, member countries represent around 90 per cent of global gross national product, 80 per cent of world trade (including EU intra-trade) as well as two-thirds of the world's population. The G-20's economic weight and broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system.
We should call it the JOBS summit because that is what this is really about. How will the world restructure the economic system after the financial crisis? How can we change things to regular people share the wealth? Of course Wall Street wants everything kept just the way it is. But the rest of the world is demanding that we make changes.
Then there will be a lot of talk about "protectionism," because President Obama actually enforced a trade agreement! Here's the thing, agreements are not agreements unless they are enforced. By enforcing this agreement with China, it means we might start having fair, honest, balanced trade again.
Anyway, I look forward to this trip and to writing about the G20 Summit. Check in at Blog for OurFuture over the next few days. I think we're going to solve the world's problems -- don't miss out!
Posted by Dave Johnson at 3:21 PM | Comments (0) | Link Cosmos
September 18, 2009
Myths Of Protectionism Are Spread To Exploit Workers and the Environment
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
“Protectionism” is a very powerful word. In fact, simply evoking the word is capable of ending debate on any subject related to trade. Invoking the magic words, “You can’t do that, it would be protectionist,” settles all arguments.
Why, exactly, is protectionism so bad? Why can't we have fair trade that lifts workers and protects the environment instead of unregulated free trade that exploits workers and the environment? Well, after spending time looking for evidence to support the "protection is bad" arguments what I find boils down to, basically: "Because it is. Shut up."
Here is how it works, in the current discussions of how to fix the problems that led to the financial crisis there are established discussion-enders. Often the 1930s depression is invoked. For example, if you want to bail out big financial corporations and executives (and their bonuses) you say it was a “credit crunch” that caused the depression so we have to prevent another credit crunch. Booga-booga, end of discussion (even though lending is still declining even a year after the huge bailouts...) If you want to maintain low-cost import pressures to force low wages you say "protectionism caused the depression." For other arguments, you can say it was unions that caused the depression, or perhaps government regulations, or perhaps taxes. You get the picture. Booga-booga, end of discussion.
By the same magical mystique, current trade and economic discussion rules prohibit ever, ever suggesting that the depression and hence the current economic problems (because of course they are exactly the same thing, just as Vietnam was exactly like World War II) happened because of:
• extreme concentration of wealth at the top,
• monopolistic and predatory corporate practices,
• wages and compensation that are too low for regular people to participate in the economy,
• insufficient taxation of the wealthy,
• exporting manufacturing capacity,
• overconsumption,
• unsustainable practices,
• encouraging people and businesses to borrow too much,
• coziness between government and wealthy special interests,
• insufficient regulation of corporations,
• or any argument that might result in people thinking that regular people should participate fairly in the economy or have a degree of control over the government and corporate practices.
So with these rules in mind I would like to address a few of the myths about protectionism that have grown into a “conventional wisdom” that always serves the interests of the wealthiest few.
Myth: Protectionism caused the depression or made it worse. Thom Hartmann addresses this very well, so I’ll leave it to him. In 2004's, Democracy - Not "The Free Market" - Will Save America's Middle Class, Thom wrote,
When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.Smoot-Hawley "protectionist" legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy ("1.4 percent at most" according to many historians) its long-term effect was to bring American jobs back to America. [emphasis added]
Myth: Protectionists are “against trade,” and the similar argument protectionism is about creating barriers or just keeping out foreign goods. This is a way to short-circuit the actual arguments that trade should be fair to both sides instead of just unregulated and exploitative. Fair traders want trade to be conducted in ways that are fair and respectful of working people on both sides of the transaction. They want people to be paid fairly and their working conditions to be safe and they want the environment to be protected. When trade is conducted this way everyone benefits in the long run.
Myth: Protectionism costs jobs. This scare-tactic is used by opponents of almost every policy that benefits working people. "Raising the minimum wage costs jobs." "Taxing corporations costs jobs." Etc. Fair trade policies would increase the number of jobs because the workers making the goods that we import would be paid enough to buy the things we make here.
Myth: Protectionism ties up manufacturing resources in outdated uses. This is a valid criticism of protectionist trade policies if those policies were enacted as the result of lobbying by interests seeking to protect themselves from competition that is based on innovation and increased efficiencies. This is a key point and I want to repeat it. Fair trade advocates oppose exploitation of workers or the environment. Fair traders do not oppose fair competition, and it is important that trade regulations reflect this.
There is no question, as I pointed out earlier this week in Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case that protectionism can be misused by wealthy interests to feather their own bed in ways that harm the rest of us such as by companies that protect their franchise from fair competition. I wrote,
As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties ... So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country's markets expand - as does the competition.
We always have to protect against wealthy and powerful interests seizing the government's decision-making processes to further their own interests. That is just human nature. It is not an argument against the idea of having government and law, it is the reason it is necessary for us to be eternally vigilant of powerful interests and have systems and procedures in place to protect the rest of us. As with anything trade can be beneficial or harmful depending on how it is managed.
Fair traders want trade managed in ways that lift people and the environment up, increasing our standard of living and protecting the environment. Yes, we want to protect our workers and our manufacturing capacity but this is the key to prosperity and economic power. Wealthy interests are using trade as a way to pressure us to force lower wages, loss of benefits and removal of restrictions on polluting the environment.
Posted by Dave Johnson at 11:52 AM | Comments (0) | Link Cosmos
September 14, 2009
Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
President Obama has decided to enforce our trade laws and imposed a 3-year tariff on Chinese tires. I suspect the country is about to witness a corporate hissy fit that will surely rival any righteous teabagger’s demands to see the President’s birth certificate.
Here is what is going on: when the US endorsed China entering the World Trade Organization the agreement was that if any of our industries were significantly disrupted, we could call “time out” and give those industries 3 years to adjust. In case after case President Bush refused to enforce this agreement as China took over one industry after another. Since we then had to buy what we used to make, our balance of trade deteriorated and we now owe China vast sums.
In this case the U.S. International Trade Commission found that America’s tire industry was, to say the least, disrupted by a surge of imports of cheap tires. As with so many industries, cheap Chinese imports quickly dominated the market, American factories closed, American workers were laid off, American communities were devastated and instead of having to pay wages and maintain factories, American CEOs and Wall Street executives pocketed more and more short-term profits at the long-term expense of their own companies and our country's economy.
So this time President Obama is enforcing the agreement and applying tariffs. In fact he is applying a lower tariff than the 55% that was recommended, but the tariff of 35% is still substantial and may save jobs, preserve some manufacturing capacity, and hold the trade deficit down just a bit.
The corporate hissy fit is beginning right on schedule. The word being shouted loudest is “protectionism” and there are threats that this will lead to a trade war.
The headline at the Drudge Report screams: “CLASH OF THE TIRES LEADS TO TRADE WAR,” linking to a Financial Times story that doesn’t actually say anything about a “trade war.” In the story China’s minister of commerce Chen Deming says, “This is a grave act of trade protectionism,” and Eswar Prasad, professor of trade economics at Cornell University, calls the enforcement of the agreement “protectionist measures” while at the same time saying the tariffs are not “substantive restraints on trade.”
The Washington Post, rather than lead with the pro-American viewpoint, chose to lead with China's, “China blasts US tire duties as protectionist blow.” Many other corporate-dominated media outlets followed in a similar vein, arguing how this is a bad decision. Wall Street Journal, “A Protectionist Wave” and "Tariff on Tires to Cost Consumers". Others, like Business Week, just reported the news: “In China Tires Case, Obama Strikes Middle Ground.” (Forbes, to its credit, led with a neutral pun, “China and US: Tire-d of Fighting.”)
So what is “protectionism” and why is it supposed to be wrong for a government to protect a country’s manufacturing interests? Isn’t America borrowing so much money from other countries because we don’t manufacture enough goods here anymore to sell and thereby pay for the things we buy?
In the past a major portion of America’s tax revenue came from collecting tariffs on imported goods. This helped fund development of our competitive infrastructure while maintaining internal markets that encouraged development of industry to make goods here both for use in the country and for export. This led to manufacturing jobs. Every country that has built up a manufacturing base has done so by restricting competitive imports.
But there were problems with this “mercantalistic” approach. As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties and discourage others from importing our domestically-made goods. So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country's markets expand - as does the competition.
Unfair competition led to the idea of protecting our standard of living. Unfair labor costs, kept low by use of child or prison labor, exploitive wages in non-democratic countries, even use of forced labor or slaves undercuts our own companies’ ability to compete. Failing to provide worker safety protections, or allowing pollution also provide trade advantages to offshore competitors. So to protect ourselves we imposed tariffs that raised the store price on those goods to prevent them from undermining our own standard of living and safety and pollution standards. We protected our national interest.
The idea of these "protection" policies is to encourage these competitors to pay better wages, improve worker safety and/or stop polluting. This way their own economy and environment could improve and their workers would be able to buy the things that we make. Used this way, the policy of protectionism improves living standards for workers everywhere, while growing our economy and improving our standard of living in the process.
The idea of “free trade” theorizes that without “government” involvement these disadvantages will disappear and prices will eventually reflect supply and demand instead of tariffs and regulations. Of course, this ignores that government as constituted in democracies is a banding together of the citizens for mutual protection, empowerment and benefit. The result of "free trade' is a downward spiral of wages, benefits, worker protection and environmental standards as countries race to the bottom in competition.
Expansion of trade is beneficial to all parties if done fairly. Of course, “fairly” is a difficult state to attain when powerful interests compete for dominance in rule-making. In this case we have the competing interests of American workers and manufacturers pitted against Chinese manufacturers. There are also the powerful interests of distributors and retailers who make a percentage off a sale, whatever the source of the goods, and Wall Streeters who buy up companies and demand short-term profits, and profit from debt.
This is where the opposition comes from. Certain powerful interests are doing just fine without any of this goody-goody do-gooder stuff, thank you, and they want things kept that way. So they will fight against changed in the status quo, no matter how necessary or beneficial to the rest of us. We see this so clearly in the health care reform fight and soon we will be hearing some outrageous lie on the order of "death panels" and "government takeover" to try to scare people away from fighting for their own jobs, wages and benefits by asking for reasonable trade and manufacturing policies.
Their primary scare word in use today is "protectionism."
Part II will examine some of the specific myths surrounding the mystical and powerful word “protectionism.”
Posted by Dave Johnson at 3:16 PM | Comments (2) | Link Cosmos
September 9, 2009
"China Tire Case": Obama Trade Policy Decision Nears
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
President Obama faces a tough decision soon that will signal how his administration will tackle the problem of balancing our trade policies. This is the upcoming "Section 421 Tire Case" decision. Summary: American has been importing more and more tires from China while closing tire plants here. The surge in imports violates an agreement known as "Section 421" that we made with China when they entered the World Trade Organization. The US International Trade Commission has ruled that China is violating Section 421 and recommended tariffs on tire imports. Obama has until September 17 to choose to implement this remedy, ignore it or do something in between. (Click through to a post with a number of links to background information on this decisions.)
When these trade issues came up in the past President Bush always decided against American manufacturers, allowing China and others to capture one industry after another, forcing more and more American factories to close and building up the huge trade deficit that forces us to borrow ... from China. The resulting trade deficit meant that we had to borrow more and more money to buy things that we used to just make for ourselves.
And this meant fewer and fewer well-paying jobs for our citizens. This also meant that the American consumer, the “engine” of the world economy, finally ran out of shopping power. The economic collapse shows that trade policies that make the American people poorer just make everyone else poorer, too.
So this case is part of a bigger picture. The real issue goes beyond trade. The real issue is getting America's economy back in balance for the long term with real jobs that are not dependent on financial or housing or stock market bubbles. The issue is the larger economic paradigm, not the resulting slowdown. To get there America needs a real industrial policy that takes a national view of the importance of manufacturing and supports it through: investment, education, R&D;, etc. as well as trade policy.
One trade ruling doesn't do that, but it will signal whether President Obama is ready to take on a tough fight and tackle this problem. The appointment of Ron Bloom as Senior Counselor for Manufacturing Policy is a solid beginning in the right direction. According to the White House Bloom will assist with “the President’s agenda to revitalize the manufacturing sector.” Just having an agenda to revitalize the manufacturing sector is an important and and promising step!
Of course, at the same time, this is a tough challenge. Obama's predecessor dug the country into a deep hole. Thanks to the "free trade" policies that got us where we are today, China is our banker and it is very difficult to go against your banker's wishes. However, our trade partners would do well to recognize that the American consumer is the engine of economic growth, and well-paying jobs are the engine of that consumption. Trade policies based on raising living standards on both sides of the border solves this problem.
Bob Borosage writes today, in Obama's Next Speech: Telling Our Banker We Want Out of Debt,
Next week, the president will address the convention of the labor federation, the AFLCIO ... That same week, he must decide what to do about the ruling of the International Trade Commission recommending that he slap tariffs of up to 55% on rubber tires being dumped in the U.S. market by the Chinese.[. . .] We can't recover the old economy -- and shouldn't want to. … We were shipping jobs, not goods abroad, losing three million manufacturing jobs under Bush before the crash while the economy was growing. Not surprisingly, wages stagnated, family incomes lost ground, debts soared. And that was in the good times.
[. . .] [China] lends us the money to buy the goods that American companies make with jobs and technology they sent there. It does so because it pursues what has been a remarkably successful mercantilist policy designed to make it the dominant global center of manufacturing, a 21st century version of what the U.S. did in the late 1800s and early part of the 20th century.
. . . China has to be weaned of its export addiction, just as America has to revive its ability to make things in America. This is best done cooperatively, with a grand bargain revaluing the Chinese currency, while both nations join others in creating a more balanced global economy. But at the end of the day, it won't happen unless the U.S. is ready to stand up and act to protect its interests.
Some predict Obama will take the middle ground. From The Hill today,
“The deadline for his decision comes on the eve of the G-20 heads-of-state meeting in the Steel City on Sept. 24-25. G-20 leaders have pledged to avoid protectionism, and just last week Treasury Secretary Timothy Geithner joined other finance ministers in the group to reaffirm the U.S. commitment to fight all forms of protectionism.[. . .] The best option for Obama might be to find middle ground. He can go along with the ITC’s recommendation, and he may also reject it completely. He can also impose tariffs somewhat smaller that those proposed by the commission, which might make both sides unhappy but allow the president to say he has found a middle ground.”
From U.S. Steel Pushes Obama to Choose Workers Over Trade,
“The one thing that is on the line here is the president’s credibility,” said Scott Paul, executive director of the Alliance for American Manufacturing, a coalition of steel companies such as Pittsburgh, Pennsylvania-based U.S. Steel and the steelworkers union. “If they want to pursue an activist trade agenda, they need to pursue an active enforcement agenda, and this is the first thing on their plate.”On April 14, 2008, candidate Obama spoke to the United Steelworkers in Pittsburgh, a week before the contested Democratic primary in Pennsylvania.
“I have consistently supported in the Senate going after China,” Obama said then, after embracing union President Leo Gerard. “Here’s the thing that people don’t understand: China needs our market. Their economy is dependent on exports to the United States. We have bargaining power.”
Keep an eye on this. It is not just about tire imports, it will signal the direction that the Obama administration will take.
Posted by Dave Johnson at 10:18 AM | Comments (0) | Link Cosmos
September 8, 2009
Who Else is Against American Manufacturing?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
"A country’s economic power comes from manufacturing. But while other countries have industrial policies, America has a de-inustrialization policy. We have handed our country’s manufacturing capacity over to other countries, and as a result we have to borrow more and more to be able to buy the things that we used to make. How did this come to be? Who would be against American manufacturing?"
In Who Would Be Against American Manufacturing? I wrote about,
“representatives of foreign interests lobbying in the US for trade policies that benefit companies in other countries at the expense of America’s factories, workers, companies, communities and economic power. It is to be expected that a country will work to increase manufacturing within its borders – even if we don’t – and these firms helping the efforts of other countries are required to register with the Department of Justice as “foreign agents.” I traced an anonymous comment left at my own blog back to one of these ...”
Of course other countries have an interest in taking the business away from us to have for themselves.
In Part II, Who Opposes American Manufacturing? II I wrote about Cato Institute, a conservative “ideological” think tank that opposes manufacturing in America. But they receive funding from interests outside of America – the very interests who do the very kind of fighting for trade policies that the Cato Institute opposes for us.
"WHY would Cato Institute advocate this? Is it just weird libertarian cult ideology? Perhaps a look at who is paying for this advocacy will provide a clue. While mostly funded by individuals, Cato’s funders include many of the usual right-wing funding suspects: Koch, Scaife, tobacco companies, Exxon and other oil companies, Wall Street… But one sponsor jumped out at me: the Korea International Trade Association. (Honda, Mazda, Mitsubishi, Toyota and Volkswagon are sponsors as well.) Dots connected: Cato is receiving funding from the Korea International Trade Association, and then turning around and advocating that American hand over its manufacturing capacity to other countries!So I checked, and did not find that Cato Institute registered as a “Registered Foreign Agent.” Why not?"
Beyond explicitly foreign interests and possible foreign-interest-funded lobbying, are there other reasons that Americans would advocate that we just hand over our manufacturing capacity and instead just borrow to get by? There are domestic interests that benefit from America giving up our manufacturing capacity because there are domestic interests that benefit when the rest of us borrow.
Part III – Americans Opposing American Manufacturing
Our beloved-and-bailed-out financial sector has done very well for itself in the decades since we embarked on the great “free market” and “free trade” experiment. Wall Street has greatly increased its share of our economy. While finance expanded the manufacturing sector shrank until just before the crash the financial sector had risen to 40% of all corporate profits.
Kevin Philips wrote in 2008’s post, The Destructive Rise of Big Finance,
Over the last five years, financial services has reached a swollen 20-21% of U.S. GDP -- the largest sector of the private economy.Manufacturing led financial services by 2:1 back in the 1970s, but by 2006 beaten goods production had shrunk to just 12% of GDP.
As Wall Street doubled, manufacturing declined.
Profits incentivize corporate behavior and these giant Wall Street corporations profit from our ever-increasing levels of debt. They profit from the transactions that occur when companies move their operations out of the United States. They profit from convincing communities to privatize infrastructure. They profits when companies externalize costs onto the larger community. They profit from the transaction involved when the country borrows to fund our government and trade deficits.
Wall Street profits from debt. So they have an incentive to encourage debt. Who do you think it was that convinced Americans it is normal and even preferable to carry debt and to use credit cards? Marketing works, and the following is based on marketing we have all been exposed to:
- Making minimum payments on credit card debt? $250 a month.
- Making car payments for five or six years? $400 a month.
- Being in debt for the rest of your life, forever making interest payments and being forced to work at corporate jobs? Priceless!
Phillips again,
During Greenspan's 1987-2005 tenure, the sum of public and private debt in the United States quadrupled from just over $10 trillion to $43 trillion. Finance became the industry that was not allowed to fail but was permitted to enlarge and metastasize its behavior almost at will.
In the movie Wall Street, based on actual events and people in the news at the time, the greedy corporate raider Gordon Gecko buys companies, chops them up, steals the workers’ pensions, destroys people’s lives and their communities, etc. and pockets the profits. Gecko claims that because he can profit from doing these things, “the market” wants it done, demands it in fact, and therefore he plays an important economic role of making things more “efficient.”
To Gordon Gecko and market fundamentalists the fact that they can profit from something is proof that it should be done. “The Market” is for them a God that takes responsibility and ethics and morality and humanity out of their hands. “The Market - God - says it must be this way and who are you to question?” (Convenient for them.)
Of course, a large part of why Gordon Gecko could pocket such a profit so fast was because un President Reagan the country had just changed the tax laws. Before Reagan there was a very high top tax rate that prevented people from amassing a vast fortune in a short time (usually at the expense of the rest of us). This tax policy encouraged long-term thinking and planning instead of short-term greed, and encouraged business to maintain interdependency with the larger community and its interests. If it takes ten or twenty years to amass a huge fortune you and your business rely on other businesses and on the community’s infrastructure to be maintained and modernized so it will support your business activities. And you want a thriving, educated community surrounding you
But in a quick-buck scenario you are incentivized to feed off of rather than rely on the greater community. If you can defer infrastructure maintenance and pocket the savings then that is what you will demand. If you can chop up the supply chain and pock the proceeds that is what you will demand. If you can profit from exploiting and abusing skilled workers who would otherwise be needed in coming years, that is what you will demand. and if the community around you deteriorates it doesn't matter because you'll be cashing in big soon, and flying away in your private jet to your tax-haven privatized island. It is no coincidence that pensions started being stolen, companies started outsourcing, communities started privatizing, etc. right after top tax rates and regulations were cut.
Wall Street has an interest in helping dismantle manufacturing in America. (pun intended)
Posted by Dave Johnson at 7:32 AM | Comments (0) | Link Cosmos
September 3, 2009
Who Opposes American Manufacturing? II
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
A country’s economic power comes from manufacturing. But while other countries have industrial policies, America has a de-industrialization policy. We have handed our country’s manufacturing capacity over to other countries, and as a result we have to borrow more and more to be able to buy the things that we used to make. How did this come to be? Who would be against American manufacturing?
The other day, in the first Who Would Be Against American Manufacturing? post I wrote about representatives of foreign interests lobbying in the US for trade policies that benefit companies in other countries at the expense of America’s factories, workers, companies, communities and economic power. It is to be expected that a country will work to increase manufacturing within its borders – even if we don’t – and these firms helping the efforts of other countries are required to register with the Department of Justice as “foreign agents.” I traced an anonymous comment left at my own blog back to one of these, after I wrote about President Obama's upcoming "China tire case" trade decision.
But are all foreign agents registering, as they are supposed to? The other day I came across an interesting example of an organization that is working to convince Americans to hand over our manufacturing capacity to other countries. In my post, National Association Of Manufacturers Blasts … American Manufacturing? I wrote,
“Why is the NAM blasting Meyerson for writing a column promoting American manufacturing? ... They quote Daniel J. Ikenson of the Cato Institute. . . . Cato receives a great deal of financial support from non-manufacturing interests including commodities and securities traders, tobacco companies, communications companies, software companies and oil companies. They also receive support from non-American manufacturing interests, including the Korea International Trade Association.”
Let’s connect the dots. For some reason NAM blasts a writer for supporting American manufacturing, and quotes the Cato Institute for support. The mission statement of the Cato Institute Center for Trade Policy Studies promotes “open markets. They claim that “open markets mean wider choices and lower prices for businesses and consumers.” They advocate that the United States open its markets to anyone, no matter what, even advocating American policies that “are not contingent upon reciprocal policies in other countries.” They say, “Studies by Trade Center scholars have found benefits in the elimination of U.S. trade barriers regardless of what other countries choose to do.”
Got that? They are saying we should allow other countries to cheat and like it, that free trade as a one-way street where we only buy and they only sell is just fine, and basically that we should just give up our manufacturing capacity and let other countries have it without a fight. Just let them take it from us – and by the way anything else is “protectionism” and “politicization of trade.” America should not “dictate marketplace results, or increase bureaucratic interference in the economy as a condition of market access.” The mission statement goes on about how the United States should lead by example and just open our markets, etc… It’s just amazingly anti-American. Go read it.
WHY would Cato Institute advocate this? Is it just weird libertarian cult ideology? Perhaps a look at who is paying for this advocacy will provide a clue. While mostly funded by individuals, Cato’s funders include many of the usual right-wing funding suspects: Koch, Scaife, tobacco companies, Exxon and other oil companies, Wall Street… But one sponsor jumped out at me: the Korea International Trade Association. (Honda, Mazda, Mitsubishi, Toyota and Volkswagon are sponsors as well.) Dots connected: Cato is receiving funding from the Korea International Trade Association, and then turning around and advocating that American hand over its manufacturing capacity to other countries!
So I checked, and did not find that Cato Institute registered as a “Registered Foreign Agent.” Why not?
Also, according to SourceWatch, Cato provides “substantial” funds to several other “like-minded” think tanks. It would be interesting to see how many of those think tanks also advocate that America hand its manufacturing capacity over to other countries, and I am certainly interested in finding out whether Cato possibly serves as a “pass-through” for funds from outside of the United States. Is there “intellectual money-laundering” going on here?
Is funding from non-American sources reaching into our internal trade-policy discussion without disclosure? If so, we need to know about it. Let me be more specific: Is the Justice Department enforcing the Foreign Agent Registration Act, and investigating potential violations? Is there a public-interest group that will investigate potential “intellectual money-laundering”?
More Funny Business
In the previous Who Would Be Against American Manufacturing? post I brought attention to the American Coalition for Free Trade in Tires, which had commissioned a “Rutgers economist” to come up with some rather fascinating numbers claiming that if we don’t turn our tire manufacturing over to China it would cost 12 to 25 jobs for every manufacturing job we lose if we do. Good one! Scary!
While researching the story I came across an interesting article about American government officials leaving and taking lobbying jobs selling out American manufacturers, Chinese Tire Producers Hire Top Former U.S. Government Trade Officials In '421' Dumping Case
It didn't take long for a handful of the Bush administration's top trade officials to start representing foreign business interests. … five recently departed senior trade officials at the Department of Commerce who are representing Chinese tire companies in the "Section 421" case that was recently brought before the International Trade Commission ... have been hired by the "American Coalition for Free Trade in Tires"...
This is serious stuff and they are getting serious money cashing in from the jobs they did for the government, to sell out the country. Go look at who these people are, and who they worked for in the government. Clearly there was a culture of helping the other side for cash during the Bush years. Look at what these people are doing! Perhaps things like this helps explain why President Bush never followed through with remedies each time the ITC found that China was taking over another American industry with low prices.
Next Post: Who Else is Against American Manufacturing?
So in the previous post I found actual foreign agents working to undermine American manufacturing capacity. In this post I looked at some American groups who are working very closely, perhaps too closely, with foreign interests while they work to undermine American manufacturing capacity. In the next post I will look at how some purely American interests profit from undermining American manufacturing capacity.
Wealth comes from making things. Economic power comes from manufacturing. Every other country knows this. It’s time we remembered it.
Posted by Dave Johnson at 9:20 AM | Comments (0) | Link Cosmos
September 1, 2009
Who Would Be Against American Manufacturing?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The definition of “anti-American” might be up for grabs after so many years of conservatives using the label like a club, but can we all agree that when other countries are working against the interests of America, that it is fair to call that “anti-American?” I discovered something truly anti-American when I caught a registered foreign agent posting a comment on my blog.
We are all used to hearing lobbyists argue against the broad public interest for their various clients. Often some big corporation is trying to get a rule changed to give them an advantage over their competitors or otherwise line their CEO’s pockets. Other times it is wealthy people trying to get tax breaks. All too often it is some representative of Wall Street trying to convince us that our wages are too high, we shouldn’t receive health or retirement benefits, taking on more debt is good or schemes that externalize costs onto the community while privatizing the profits…
For example, Wells Fargo, recipient of $25 billion of bailout funds from taxpayers, is cutting off credit and forcing a plant that is one more component of America’s manufacturing supply chain to close because the too-big-to-fail bank would make themselves a few dollars today, rather than allowing the company to sell or stay open and maintain America’s manufacturing infrastructure. It costs only $1.6 million to keep the plant open, but will cost the community $6.1 million in jobs, tax revenue etc. to close it. Wells Fargo doesn’t care, they aren’t losing the $6.1 million – they won’t even accept offers to buy the plant, because they get a little bit more from closing it. Never mind the harm done to American companies, workers and communities. This is not a "buggy whip" factory, it is an active business.
We are used to this kind of bad – really bad – antisocial, economically destructive behavior from self-interested American companies, organizations and people. And for some reason we seem to tolerate it because we are so inured to it. But is this kind of lobbying always just done for the usual terrible reasons -- profits at the expense of the rest of us? Maybe not. Maybe sometimes it is from a source with a different kind of agenda that we just don’t expect.
Let me tell you a story:
Last week I wrote a post explaining the details of a trade decision that President Obama will soon make, “President Obama's Upcoming "Section 421 Tire Case" Trade Enforcement Decision” and cross-posted it at my own blog, Seeing the Forest. Someone calling themselves “TheFacts” left a comment there. The comment begins, “This is absolute drivel. Let me count the ways” and ends by saying I am advancing “a union-driven agenda.”
Bloggers know that posts on current issues affecting big corporations are frequently swarmed with people presenting the corporate viewpoint. Sometimes when we trace them (when the source is not well-masked) we find these comments originate at corporate-funded firms paid to lobby on the issue. I traced the IP address of the person who posted this comment to the DC office of the international law firm White & Case, a large firm representing clients on international trade issues, among other things.
This got me thinking. The Foreign Agents Registration Act (FARA) of 1938 requires those “acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities.”
I checked at the Department of Justice database, and White & Case is registered as a “foreign agent.”
White & Case is registered with the Justice Department as a foreign agent because White & Case represents foreign interests. This registration is required so that Americans can make judgments based on the knowledge that they are hearing from sources that do not represent America’s interests and instead represent interests that might be opposed to America's interests.
So what does it mean when someone from a firm that is registered with the Justice Department as representing foreign interests posts arguments anonymously at blogs like mine -- arguing that we should allow American factories to close, and instead import goods from other countries? Was this done for a client? Was it an employee acting without authority?.
How were the readers of this anonymous post supposed to know that they were hearing from someone at a firm that is registered as a foreign agent? Was this anonymous posting part of an effort to subvert the intent of the Foreign Agents Registration Act? Is this part of a larger effort by this firm, and if so how much is being done in ways intended to get around the Foreign Agents Registration Act?
What this foreign-interest representative is advocating is that Americans close factories and borrow money to buy imports from countries that take over the business that we give up. We have to borrow the money because America has given up so much of its manufacturing capacity already – to companies in other countries – that we aren’t earning our own money anymore with which to buy imports. This is not only not in our country’s interests, it is often being advocated by the paid representatives of the countries that benefit from this at our expense! And, of course, the other countries involved aren't giving up any of their manufacturing to us.
By the way, one of the arguments the foreign-agent commenter made was,
“According to Rutgers economist Thomas J. Prusa, the proposed tire tariffs would ripple through the U.S. economy. Prusa calculates that each job “saved” by the ITC’s tariffs would come at the cost of at least 12 jobs lost, and possibly more than 25.”
While checking out the aggressively hyperbolic statistic (already refuted by the ITC) that saving each job would cost 12 to 25 jobs I located the source in a Wall Street Journal piece, followed by this:
“Prusa’s research was commissioned by a group called the American Coalition for Free Trade in Tires.”
The American Coalition for Free Trade in Tires is a coalition of six tire importing companies – one is even named “Foreign Tire Sales Inc.” And by the way again we find the term “free trade” used as a club to try to shut down discussion of merits of closing factories and wiping out American jobs, industries and communities. "Free trade" is an ideological label for a theory that seems only to apply to the US, certainly not to the industry-subsidizing, tire-dumping China that the tire case is about. So the authority cited in the foreign agent's comment, while not a foreign agent himself, was not as represented either. He may be a “Rutgers economist” but in this capacity he was commissioned by the American Coalition for Free Trade in Tires to say this. (Rutgers allows that? Ouch.) So much for the 12 or 25 jobs statistic – and for the aura of independence and credibility that comes from citing a “Rutgers economist.”
I will have more on the American Coalition for Free Trade in Tires in the next post.
So here is what it comes down to. It is one thing to hear from American interests who are trying to convince us to give up America’s manufacturing capacity, just so they can make a quick buck at everyone else's expense. We’re used to that these days. But would you feel differently and consider the opinions in a different light if you knew that you were hearing from a Greek or Korean or Chinese manufacturer, trying to convince you that it is a good thing for America to give up our manufacturing capacity and let them do it, and let them make the money and have the jobs instead? Perhaps you would. If you knew.
NEXT: What about when you are hearing from lobbyists and organizations that are funded from other countries, but are not registering as “foreign agents?” Also I will tell you about the “revolving door” of American officials who leave the government and immediately go to work for interests who lobby the very offices where they worked, asking us to close factories, lay people off, etc.
Posted by Dave Johnson at 1:10 PM | Comments (0) | Link Cosmos
August 28, 2009
President Obama's Upcoming "Section 421 Tire Case" Trade Enforcement Decision
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
When China was accepted into the World Trade Organization, they agreed that if we experienced import surges of Chinese goods that caused "market disruption," we would be allowed to limit the import of those goods. The particular section of the agreement is called "Section 421."
When the U.S. International Trade Commission (ITC) determines that the level of imports from China cause or threaten to cause market disruption to American producers of competitive products, it proposes a remedy that can include quotas or other relief. The President of the United States then makes a decision whether to enforce that recommendation.
President Bush repeatedly (seven times) refused to enforce Section 421 even when our own ITC found that American companies, factories and jobs were being lost. Bush claimed at the time that the destructive effects of dramatic, sudden increases in Chinese imports that Section 421 was meant to mitigate were actually good for the U.S. economy. Bush's policy was the opposite of "protectionism" -- it actually favored China's companies over our own! (I think we've seen how that has worked out.)
Very soon we will have an opportunity to see where President Obama comes down on this issue. The ITC has decided by a 4-2 vote that the U.S. tire industry has been harmed by a large increase in imports. They have recommended increasing tariffs starting at 55%, falling to 35% over three years. The Office of the U.S. Trade Representative now has to give its recommendation on this to the White House by Sept. 2.
President Obama has until Sept. 17 to make a decision. This is just one week before the upcoming G-20 summit in Pittsburgh. There is considerable pressure on him to to signal that the US will restore trade balance and help manufacturing in America, by following the rules of the WTO that China agreed to.
According to the United Steel Workers, which represents workers in the tire industry, thousands of jobs are being lost and tire plans in the US are shutting down. Also at this page is a chart from the ITC showing that the benefits of enforcing remedies "are two-and-a-half times greater than the costs" to consumers.
Mike Elk wrote the other day at the Campaign for America's Future blog,
President Obama stands at a crossroads in the fight to rebuild the American economy.President Obama has made a commitment in the past to uphold previously signed trade agreements. China, however, is violating these agreements by flooding the market with a massive 300 percent increase in tire imports in an attempt to wipe out American tire manufacturers. In 2004, China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.
Mike also points out,
Chinese importers, in conjunction with the Chinese Chamber of Commerce, have ironically formed a lobbying front group ironically named American Coalition for Free Trade in Tires. The coalition is run by Jochum, Shore & Trossevin, a Washington D.C. lobby firm run by former Bush trade officials who are cashing in on their years of U.S. government service to advise foreign competitors.
Jim Wansley, former USW Goodyear local president, testified about the impact of the closing of the Goodyear plant in Tyler, Texas where he had worked for 39 1/2 years:
The closure put hundreds of workers, many of whom had given decades of service to the plant, out of work. The closure was devastating to the workers and their families, but it is also being felt throughout the community of Tyler, Texas. Tyler has a population of about 100,000. Like many small and medium-sized towns that depend on manufacturing for middle class jobs, the loss of these jobs has taken its toll. The Goodyear plant directly benefitted the local economy by supporting local small businesses who served as its suppliers and service providers.The plant also provided enormous indirect benefits. Jobs at the plant paid good wages and benefits, enabling workers to lead decent middle class lives, buy homes, send their kids to college, and save for retirement. These are the kind of jobs that support an entire community as families pay their doctor bills, buy new cars, and contribute to local charities. The plant and its workers were also an important source of tax revenue for the city, the county, and the state.
. . . The victims will not only be the workers and their families, but the suppliers, service providers, local businesses, and entire communities that depend on the industry. In sum, there is an enormous cost to doing nothing. If more plants like Tyler close, we can expect to suffer total additional losses of almost a billion dollars per plant, per year.
On the other hand, The Washington Post points out,
If Obama backs the tariff, he risks upsetting the Chinese at a time when the United States needs China to keep buying U.S. government debt to fund stimulus efforts.
This is not just an intellectual discussion. This, like all trade issues, is about American workers losing their livelihoods and communities losing their economic base. At the same time the policies of the Bush administration -- borrowing trillions of dollars from them while allowing our manufacturing base to deteriorate -- have placed China in a very strong position of economic advantage which gives them the power to demand concessions.
For more information:
USW fact sheets, background, other info related to tire trade case against China
Statements by Senators, other lawmakers supportive of USW unfair trade case claim against Chinese tires
More Members of Congress, Senate praise ITC ruling in tire trade case
A post at TradeReform.org: Trade Community Awaits President’s Decision on China Tire Safeguard
Testimony of Senator Sherrod Brown before the U.S. ITC on the tire issue.
ManufactureThis.org: Making the Case for Relief from Chinese Tire Imports
One group in opposition to this ruling is American tire distributors, who benefit from the low prices of Chinese imports. (Note this is published by the Chinese Xinhua News Agency.)
Posted by Dave Johnson at 10:25 AM | Comments (4) | Link Cosmos
August 27, 2009
A New Deal - Style Industrial Policy is Crucial
Here is a great post. Please read it. Excerpt:
A New Deal - style industrial policy is crucial as well for over the politically elusive, white working class. The New Deal was successful in creating a lasting political coalition because it created lasting political constituencies. As a result of the wide range of people it helped: Social Security for seniors, labor unions for workers, subsidies for small farmers, and jobs for the unemployed, these groups were brought into the Democratic party and stayed there for nearly forty years.
Stop The Teabaggers, Give Them Green Jobs: Lessons From the Coalfields of West Virginia
Posted by Dave Johnson at 2:30 PM | Comments (1) | Link Cosmos
August 26, 2009
The Bonuses and the Damage They Do
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
This is a story we are all too familiar with: Wall Street vs. Main Street. Irresponsible behavior leads to bonuses for Wall Street while working hard and playing by the rules leads to unemployment and foreclosure for Main Street.
You've heard the elements of the story: For quite some time Wall Street and the banks were operating irresponsibly, fomenting a huge credit bubble which led to the financial collapse. At the end of 2008 millions and millions of regular people – popularly known as “Main Street” – began losing their jobs, losing their houses, losing their savings and forgetting about ever retiring.
Wall Street: Huge Wall Street bonuses are in the news: Bank Bonus Tab: $33 Billion
Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.… The nine firms in the report had combined 2008 losses of nearly $100 billion. That helped push the financial system to the brink, leading the government to inject $175 billion into the firms through its Troubled Asset Relief Program.
The Cost: The same amount, used for the people, would bring over 2.5 million good-paying jobs.
The "financial collapse" bonus pool is $33 billion. For comparison, look at what $30 billion could buy for We, the People, if only we had some control over things. $30 billion is the amount requested in Senator Sherrod Brown’s (D-Ohio) Impact Act. $30 billion = more than 2.5 million jobs:
“IMPACT (Investments for Manufacturing Progress and Clean Technology) creates a $30 billion Manufacturing Revolving Loan Fund to help small and medium-sized manufacturers finance retooling, shift design, and improve energy efficiency.. . . the IMPACT Act could create 680,000 direct manufacturing jobs nationally and 1,972,000 indirect jobs over the next five years.”
Gas Prices and Bonuses: Do you remember those soaring gas prices that hit Main Street so hard last year. They play a part in this bonus story. For some background, see Matt Taibbi's Rolling Stone piece, Inside The Great American Bubble Machine,
So what caused the huge spike in oil prices? Take a wild guess. . . . [Wall Street] persuad[ed] pension funds and other large institutional investors to invest in oil . . . The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.[. . .] But it wasn't the consumption of real oil that was driving up prices — it was the trade in paper oil. By the summer of 2008, in fact, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude, which meant that speculators owned more future oil on paper than there was real, physical oil stored in all of the country's commercial storage tanks and the Strategic Petroleum Reserve combined. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.
This fits our story because the top bonus-getter this time around is Andrew J. Hall. Hall "earned" it by helping to run up the price of oil last year. Hall is getting a $100 million bonus. (Thanks to previous years' bonuses Hall already owns a 1000-year-old castle called Schloss Derneberg. Go look at some of the pictures of what these nice Wall Street bonuses can buy.)
Here's some more bonus news: Goldman may pay out largest bonus pool ever,
Looks like things are back to normal, or perhaps even better, at Goldman Sachs Group Inc. (NYSE:GS) as the firm is reportedly on track to pay out its largest bonus pool in the firm's 140-year history thanks to soaring profits in the first half of 2009.
Yes, that’s right "back to normal." Huge bonuses, in some cases the largest ever.
Main Street: Also back to "normal," the rest of the country remains mired in debt, unemployment, foreclosures, budget cuts and a health care crisis looks on, helpless to do anything about it because the functioning of their government has been captured by a wealthy few. Even before the financial collapse things were pretty bad. Wages had been near-stagnant for decades while costs rose, resulting in soaring credit card and other household debt. The savings rate had actually gone below zero. But not for Wall Street. While this was happening the finance sector had quadrupled to nearly 40% of all corporate profits and insiders were reaping tens and hundreds of millions and even billions for themselves.
There are many who say that these problems of debt and stagnant wages are because of Wall Street. Wall Streeters encourage companies to focus on maximizing short-term profit rather than investing in long-term stability. Wall Street pressure encourages companies to cut benefits, outsource jobs, increase workloads and eliminate customer services as much as possible.
These changes in business practices occurred partly because of the huge cuts in the top tax rates from the Reagan through the Bush years. It used to be that people built fortunes over time by carefully building businesses. But the tax cuts enabled "get rich quick" schemes that let a few benefit from chopping up and selling off once-stable companies, raiding pension funds, and so many of the business practices that have destroyed Main Street livelihoods.
This also happened because of deregulation. People were convinced that regulation of business "cost jobs," or a hundred other things we were told. Well it turned out that regulation was important. And it turned out that a few people reaped massive fortunes from the experiments in deregulation and tax cuts.
The Damage Done: While the bonuses are the largest ever, for public trust in their government and elected leaders this may equate to some of the most damage ever. People see these bonuses being handed out, paid for with taxpayer money, and they understand that their money is going out to the very people who destroyed the economy and their dreams. This kind of unfairness and injustice can tear apart the fabric of society. We are seeing elements of this in the disruptions at the Town Hall meetings on health care. People are angry at the way they are being treated, and the corporate right is channeling that anger into further demands for deregulation and favors for a few at the top.
While the stage was set for the bailouts and bonuses by the Bush administration, President Obama was elected to change things. Immense damage has been and continues to be done to the Obama administration in the public mind by these huge Wall Street bonuses. This set the stage for opposition to the health care plan. People feel that the President should find a way to stop this travesty. But instead he is seen as continuing it. His advisors are seen as being from Wall Street and unwilling to stand up against their friends and social and professional circles in which they live.
The Hope: President Obama has appointed a "Pay Czar." Kenneth Feinberg, who previously worked for free as head of the September 11th Victim Compensation Fund, has the job of "Special Master for Compensation." He will look at the compensation of the top 25 executives at these firms and decide if it is fair.
I think I speak for a lot of people when I say I want Mr. Feinberg to be aware that this bonus pool comes from taxpayer money, that the firms giving these bonuses wouldn't even be here if the taxpayers hadn't bailed them out, that the rest of the country - Main Street - hasn't seen a raise in a very long time, largely because of the policies of Wall Street, and that the bonus pool just happens to match the amount that would create 2.5 million jobs on Main Street through the IMPACT Act.
Mr. Feinberg, claw it back. Don't let these people get these bonuses, and be very public about it. The public needs to have their trust restored.
But more than that, the conditions that enabled Wall Street to benefit from destroying the livelihoods of the rest of us need to be reversed. Strong regulation needs to be reintroduced by the administration and backed up as necessary by the Congress. Top tax rates need to be increased back to where they were before Reagan to discourage this terrible "get rich quick" behavior and to reverse the concentration of the country's wealth among a top few. Most important: strong campaign finance and lobbying rules need to be implemented to remove Wall Street's ability to influence government. Truest and fairness need to be restored to our system.
Posted by Dave Johnson at 7:22 AM | Comments (0) | Link Cosmos
August 19, 2009
National Association of Manufacturers Blasts … American Manufacturing?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Last week Harold Meyerson wrote a great column in the Washington Post, Just One Word: Factories, promoting American manufacturing. Meyerson wrote,
“Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent. Once the world's leading net exporter, we have become the world's leading net importer. In 2007, we exported $1.2 trillion worth of goods and services but imported $1.8 trillion. If there were a debtor's prison for nations, we'd all be in the clink.[. . .] What makes the decline of American manufacturing particularly galling is that we're not falling behind because we're inefficient: American factories are among the most productive on the planet, as McCormack notes. But alone among the world's industrial powers, we have left the task of enticing manufacturers not to the federal government but to state and local governments, which try to attract factories and research facilities with tax abatements and public investments that are dwarfed by the efforts of national governments in other lands. …
It's not just that the United States uniquely lacks an industrial policy. It's that the United States uniquely has an anti-industrial policy.”
This sounds good to me. If we are going to restore American economic power we need to promote American manufacturing.
So who comes out to blast Meyerson for his column promoting American manufacturing? Was it the European Manufacturers Association? Was it the China Manufacturers Association? Was it the Korean Manufactures Association? No, it was America’s own National Association of Manufacturers (NAM). Yes, the American NAM, not the European, Chinese, Japanese or Korean NAM, but the American NAM. They say American manufacturing is in fine shape and doesn't need any help from the government to keep it strong.
WTF?
Why is the NAM blasting Meyerson for writing a column promoting American manufacturing? A clue might be the source of the anti-American-manufacturing information they use. They quote Daniel J. Ikenson of the Cato Institute. Cato is an anti-government “libertarian” think tank that supports “free trade” and is against any kind of regulation of business, including any restrictions on imports. This could be because Cato receives a great deal of financial support from non-manufacturing interests including commodities and securities traders, tobacco companies, communications companies, software companies and oil companies. They also receive support from non-American manufacturing interests, including the Korea International Trade Association.
What I want to know is: Why is America’s National Association of Manufacturers echoing the Cato Institute’s views against American manufacturing? Has this organization lost its way? Does the NAM membership know about this?
Posted by Dave Johnson at 12:57 PM | Comments (0) | Link Cosmos
August 18, 2009
China Is Being Smart On Trade. Will We?
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Trade is not complicated. Trade is just an exchange of goods. You trade something for something. I buy something from you, and in exchange you buy something from me. It is simple. It is a win-win bargain because we both end up with something we needed. The wealth of each of us is increased.
In modern times we use money as an intermediary instead of making a direct and immediate trade of one good for another. You have the money I used to buy from you, and you can use it to buy from me in the future. Of course, we both have to agree on what to use as money and its value for exchanges, but once we do our transactions proceed smoothly.
Trade between countries works the same way: we buy tings made in Factorystan and Factorystan gets richer, then the Factorystanis buy from us and we get richer. Both of us have things we didn’t have before.
Add in additional countries and the equations become more complicated. But it comes back to the same principle. Goods are exchanged. Each side benefits.
So obviously the more goods a country makes or grows, the stronger its position in this global system.
Just as the intermediary of money enable individuals to trade more easily, it introduces ways for international transactions to proceed. We agree on the value of the money using “exchange rates.” This allows a balancing mechanism. As countries accumulate an excess of the money without exchanging it for goods made elsewhere the exchange rates fluctuate according to the rules of supply and demand, making their goods more expensive to others. Therefore goods made in the other countries become less expensive and the exchange flows should come into balance.
In free markets things come back into balance. But this natural balancing is not occurring today. China has been building up their economic power for some time. China should be the economic powerhouse now. According to the rules of currency and balance its currency should be extremely strong. Its products should be the most expensive on the planet. Its people should be rich, enjoying the consumption of things made elsewhere. This should be providing strong incentives to open factories in our own country.
This is not what is happening. Instead China’s currency is not strong, so the prices for their goods continue to undercut everyone else’s. China is manipulating the exchange rate so that its currency stays low. This keeps the price of its goods low, and keeps the business flowing to its factories. They are not buying from us. In fact they are even requiring that internally they buy Chinese.
This is occurring under the current rules described as “free trade.” Of course this is not free trade. It is manipulated and enables China to capture much of the world’s manufacturing. China is rising up and seizing the world’s means of production.
China is just being smart. The problem is that we are not responding and protecting our own interests. Our country’s leadership appears to be hamstrung, unable or unwilling to challenge this and develop a long-term economic and manufacturing plan. Part of the reason for this is that a wealthy Wall Street few profits from this in the short term, as we bleed away our country’s long-term interests. Our country’s decision-making processes appear to be under the control of that wealthy Wall Street few. And they are selling China the rope with which it is hanging us.
Theorists tell us that eventually economic forces should force a rebalancing of China’s currency and a shift in the world economic order. But there are a number of problems with sitting back and waiting for this to occur. It could take decades, and things could get (and may already be) so far out of whack that any rebalancing will be “disorderly,” meaning another – and worse – chaotic economic crash. And there is no guarantee that a rebalancing will ever occur. As China increases its economic power it increases its ability to bend the rules in its favor. The lesson learned so far is that manipulating the rules is highly profitable and brings few, if any, consequences.
Even if a rebalancing does eventually occur there is no guarantee that it will help us. When a factory closes we lose more than the jobs. We lose the know-how – the intellectual infrastructure that supports modern technological processes. We lose the supply chain. We lose the customer base. We lose the economic power that could enable us to rebuild. We lose more of our manufacturing capacity every day this situation is allowed to continue.
Our country’s leadership must engage and develop policies to fight this and restore our economic power. We need an economic plan. We need a manufacturing plan. We need an accountability plan, holding Wall Street and China accountable, making them follow the rules. We need to know that our leadership is on our side and is fighting for us.
Trade is a two-way street and it is time that the goods flow in both directions. "Free" trade is not "free" if only one side plays by the rules.
Posted by Dave Johnson at 11:33 AM | Comments (1) | Link Cosmos
August 14, 2009
Steel: Important To Us But Not Important To Us
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I had the opportunity to tour a steel plant outside of Pittsburgh yesterday. (I am here for the Netroots Nation convention.)
The word that keeps coming into my mind is "intense."
I experienced intense heat, intense colors in the molten steel, and intense faces on the workers. We wore protective clothing, boots, earplugs, gloves and protective eyeware. Safety is a prime concern because without careful attention to detail this can be a very dangerous undertaking. The workers in these plants depend on safety procedures and each other to a degree that you do not find in many other occupations.
One of the notable things about this tour was the security. It was intense. I won't get into some of the details, but plants like these are considered to be very important to the Department of Homeland Security and special precautions are taken. You need special permission to even enter the grounds. ID is carefully checked. We not only couldn't even take pictures of the facilities but they will confiscate a cell phone if they see it out of your pocket. (You can have it back later.)
Let that sink in: Manufacturing plants like these are considered vitally important to the security of the United States and are assigned special protection.
Unfortunately our own government does not feel the need to protect plants like this beyond the vague post-9/11 threat of "terrorism." They check your ID at the gate, but they aren't concerned with making sure plants like this one stay in the United States. The two blast furnaces at this plant are the last two operating in the whole state of Pennsylvania. There used to be a dozen just at this plant. Nationally the decline is similar. We all know this but we do not seem to be capable of doing something about it.
This decline is not the "buggy-whip" phenomenon where an industry is being replaced or is evolving. Quite the opposite. Steel is the core component of the bridges, buildings, appliances, cars, etc. that we build. But now much of that steel comes from other countries. And much of it is inferior quality or produced in ways that harm the planet. This plant produces 1/3 the carbon emissions of similar plants in China. And then there is the carbon-emitting shipment across oceans to consider. But harming the planet is apparently someone else's long-term problem when money is to be made today.
The problem is not even labor costs. Labor is not a large component of our steel costs. The cost of raw materials is a larger part of the lower cost of imported steel. When you hear about hundreds of people trapped in mines in other countries you are hearing about lower cost of raw materials. Lives can be cheap and it is someone else's problem when money is to be made.
We have stood by and allowed other countries take over industries like this one by pursuing national strategies to build their economies at the expense of our own, or their own workers and of the environment. When competition is allowed to occur by continually moving the work to cheaper and less protective (of both lives and the environment) regions the result has to be a continued downward spiral of living standards. This is not sustainable and we are all living the results of this constant downward pressure.
Manufacturing is the key to economic power. Yet we worry about some fanatics in a cave somewhere, but we don't seem to worry about losing the steel plants and other industries and the jobs and the economic benefits to us and the world. This practice of checking ID at the gate but standing back and letting the plant itself close because another country allows worker or environmental exploitation is beyond short-sighted. It is self-destructive.
Posted by Dave Johnson at 7:33 AM | Comments (0) | Link Cosmos
August 11, 2009
New Report: Pittsburgh —The Rest of the Story
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Campaign for America’s Future has released a report, Pittsburgh —The Rest of the Story (pdf file, 12 pages). This report tells the story of "Pittsburgh's transition from the old to the new."
A lot is happening in Pittsburgh this summer and fall. Netroots Nation is taking place in Pittsburgh this week, then next month the AFL-CIO annual conference and the G-20 Summit. (See also.)
But a lot more has been happening in Pittsburgh so there’s a good story to tell.
Pittsburgh, known as "Steel City," was a center of the “rust belt” – so-called because so much of our manufacturing, once America’s economic powerhouse, has been “outsourced.” This is the process where the contents of the factories are packed up and sent to another country to make the same things that were made here, using the same raw materials, and shipping the same items back here to sell. For propaganda reasons that is called “trade,” even though it isn’t trade it’s really just paying off politicians to let them externalize costs onto the local communities and pocket the profits. (Our laws even let the companies pay lower taxes at the very time they are transferring so many costs onto the rest of us.)
At the same time, competitors arrive from countries that understand that manufacturing is the key to economic power. They have national policies to build their own manufacturing base. So the might subsidize their industries, or hold the value of their currencies low, or exploit their workers or the environment, giving their companies a pricing advantage. Or, they might just "dump" products into our market
The result is closed factories, eyesores rusting in the sun and rain, taking up local space. Hence the name, “rust belt.”
Pittsburgh has been working to do something about the rust-best phenomenon. From the report,
In the 1990s, the city reinvented itself. The story often told is one of transition from heavy industry to a new post-industrial age, with a high-end service economy built around health care and higher education. Grant-funded research led to entrepreneurial opportunity in software and biotechnology. The University of Pittsburgh Medical Center replaced U.S. Steel as the region’s largest employer. Pittsburgh built the world’s first Gold LEED-certified convention center. Once a giant consumer of dirty energy, Pittsburgh positioned itself for leadership in the new energy economy.The good news is true enough, although many problems are far from solved. But it is only half of the story. Behind the good news are two unseen parts of the story.
I'm not going to tell the story here. Instead you have to read it for yourself. It's a good read.
Posted by Dave Johnson at 11:10 AM | Comments (0) | Link Cosmos
August 6, 2009
Manufacture Or Borrow (Until We Can't)
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
When things are going wrong it is often good practice to go back and review the basics, and start again. In baseball you go back to batting and fielding practice. To master a musical instrument you practice your scales every day.
Things have gone wrong with our economy. So let’s go back to some basics and see if we can figure out where we went wrong. Let’s start with the most basic of basics in an economy: wealth comes from making things that you can trade with others.
It is a simple concept worth repeating: if you make something you can trade it for things other people make. As you make things and trade them you build wealth. In an economy making and trading things creates good jobs and brings to the people income and goods they need.
So obviously manufacturing is the key to a healthy economy. Trade means fairly trading the things you manufacture for things that others manufacture. And it is a simple jump from there to understanding that if you don’t make things you have to borrow to be able to pay for things other people make, or you go without. You can borrow and borrow – until you can’t.
Everything else in the economy flows from the manufacturing. When it comes down to it you can't have a healthy service sector unless you are manufacturing items to sell and trade because you can't pay for the restaurant bill or insurance or hotel room or lawyer or even the doctor if you don't make something to sell and trade. And mostly you can't keep buying the things made elsewhere. You can only borrow for so long.
But somehow as country we have lost sight of this most basic idea. Instead of maintaining and promoting manufacturing we say it isn’t important anymore. We say that we have instead transitioned to a “post-industrial” service economy and/or a knowledge / information economy. (What does that even mean -- instead of making and trading, we serve and think? And borrow I guess.)
I read an important post about this yesterday, It's All About Jobs! by Leo Hindery, Jr., Leo W. Gerard and Sen. Don Riegle – a CEO, a labor leader, and a former Senator. They come to us from these different sectors of society to warn us that giving up our manufacturing has meant giving up our jobs. They wrote,
“Importantly, we need to be just as worried about the fact that our economy has mostly hemorrhaged jobs in the very sector -- manufacturing -- that must grow in order for us to move permanently away from debt-financed consumption as the principal engine of economic growth. And it is the current and now decades-long persistent manufacturing jobs collapse that unites the three of us as friends and as colleagues, despite coming from very different backgrounds.”
And how do they feel our country’s “transition” away from a manufacturing economy is working out for us?
“Just since this recession began, manufacturing has lost 13% of its workforce; manufacturing industries now represent a meager 11.7% of GDP; people working in manufacturing now account for only 8.7% of the jobs in the country; a quarter of the nation's 282,000 remaining manufacturing companies -- 90,000 in all -- are now deemed severely "at risk"; and we have run an average annual trade deficit in manufactured goods of more than $500 billion over the past five years.”
What do they say we need to do about this?
“Congress and the Administration, working together, need to immediately enact a robust industrial policy that puts American workers first and is comparable to the policies of our major trading partners. And then we need to integrate this policy with efforts to be the world's dominant manufacturer of green technologies and components, which offer us such enormous opportunities.”
So again back to basics: Trade requires giving and getting. And you can’t trade FOR things without having things TO trade. Which means that you have to have manufacturing. The more you have manufacturing, the stronger your economy. Pretty basic, no?
As I said above, it is a basic that if you don’t make things to trade you can, for a while, borrow to buy the things that others make. And for some time, since we started this transition to the “post-industrial” economy we all have been borrowing to buy the things we need. Individual, business and government debt started increasing rapidly at the same time as people started believing that we were undergoing such a transition. Our trade deficit has shot up through the roof, and now we collectively now owe a tremendous, massive debt to others.
But guess what? When you have a lot of debt, someone is making a lot of money. In The Quiet Coup, Simon Johnson writes,
From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.
Paul Krugman has noted a similar trend,
On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
Ethan Porter, reviewing Kevin Phillips' book, Bad Money, drives the point home,
In 1950, manufacturing contributed 29.3 percent to the GDP, and financial services 10.9 percent. By 2003, the totals were almost reversed: manufacturing made a 12.7 percent contribution; financial services, 20.5 percent.[. . .] All this is a fancy way of saying that we don’t make things anymore. We import most of our products from overseas.
So what they are saying is that what we have been doing, namely packing up our factories and sending them to the trading partner countries, isn’t “trade” it is something else. (The word “stupid” suggests itself.) And as a result of doing that we have a massive, massive “trade deficit.” We buy things but we don’t sell enough things because we don't make enough things anymore. And over time this means we get poorer and poorer. We borrow more and more, which drives up profits in the financial sector - while the borrowing continues. That can only go on so long.
So here is the question that we face: what are we going to do about it? And by we, I mean We,the People. So what’s the plan? What is our plan, our strategy, our policy for rebuilding and maintaining our manufacturing base? We obviously have a national financial strategy (a strategy that involves even more borrowing to execute) but none for getting back to the basics of creating wealth by manufacturing things.
Having a national policy for manufacturing is about as basic as it gets. China does. India does. Japan does. Russia does. France does. Germany does. Et Ceterastan does.
What is America’s manufacturing policy? What is our strategy? What is our plan?
Posted by Dave Johnson at 7:38 AM | Comments (5) | Link Cosmos
