Category Archives: Economy

Drugs, Jobs, and “Houston We Have A Problem”

There was a short statement from the St. Louis Federal Reserve report last July that grabbed attention for a few days:

“Anecdotal evidence suggests employment is little changed since the previous report. Many contacts reported a desire to hire, but they have been unable to find suitable employees. Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees, with some citing candidates’ inability to pass drug tests or to consistently report to work.”

St. Louis wasn’t the only region experiencing these problems — job applicants who couldn’t pass a drug test.   The New York Times added more details and anecdotal evidence illustrating the issues in July 2017.   However, there were several publications which tried to sound an alarm well before the Fed Report was made public.  Business News Daily was slightly ahead of the report, with an article in mid May, 2017.  Also in mid-May the Washington Post reported high levels of drug screen tests failed.  A bit earlier, in March, CNN reported that some employers resorted to hiring refugees because of the number of home grown applicants who couldn’t pass drug tests.  The Pittsburgh Tribune Review added more to the story in April, 2017.   The reports were generally the same: The employer wanted to hire; applicants showed up; Drug tests were administered; and a significant percentage of the applicants failed.  The Louisville Courier Journal and the Columbus Dispatch published their versions of the oft repeated tales in August 2017.

And then, as the temperature increased on other issues, North Korea, the Russian Investigations, Immigration, Charlottesville… the opioid and other drug related issues faded back into the shadows.   So, why bring this up again now?

Because Houston, and a huge portion of east Texas is going to need rebuilding and this will have to be done by the construction trades — and what is becoming ever more prevalent in that sector of the economy? Drug testing. [proest]

Compounding the problem of finding qualified workers who can pass a drug test may be finding qualified workers in construction trades at all.  The after effects of Wall Street’s Casino Bust of 2007-08 linger on in places like Chicago:

” …lingering hangovers from the recession mean there aren’t enough new workers to fill all the construction jobs, some contractors say.  When work was scarce, some workers retired early and others switched careers, compounding concerns about an aging construction workforce. The median age of construction workers climbed to 40.4 in 2010 from 37.9 in 2000, according to The Center for Construction Research and Training.  In addition, unions put apprenticeship programs on hold. They have come back online as projects have picked up, but the programs are several years long so there is a lag in turning out the needed skilled labor, Redpath said.”

Subcontractors who learned to do more with fewer hands during the Recession may still be reluctant to hire additional employees.  While Chicago, and presumably other major areas around the country, aren’t experiencing major labor shortages for current projects, and the apprenticeship programs are back on track, the rebuilding of east Texas will have an impact on the drawing of skilled labor to that region.  Since “travelers” don’t always have the best reputation for work product, many current projects have locked in specialists (electricians, plumbers, etc.) to meet their schedules with generous contracts and subcontracts.  East Texans will have to compete with these elements during the rebuilding process.  Beginning with the fact that there are already blue collar shortages:

“The problem is expected to worsen in the coming years as demand rises. BLS projects a 13% growth in the construction sector between 2014 and 2024 – far above the average 7% growth rate – resulting in 180,100 new jobs.  If one assumes a conservative 20% replacement rate for retiring baby boomers, the total new demand in the decade ahead is 457,380 added professionals in the construction trades.

Over the next 10 to 15 years, the weak growth rate of labor productivity and the retirement of baby boomers are expected to further exacerbate the issue. A recent study by Conference Board analyzing 457 occupations ranked construction workers ninth in its labor shortages index, and found that the occupation faces a higher risk of labor shortage than 91.4% of all others examined. Skilled trades, such as electricians and welders, are at an especially high risk of experiencing a scarcity of labor.”[cecu]

Perhaps we need to step back a bit and instead of demeaning immigrant workers and visualizing the opioid addiction problem as one associated with “lesser beings,” we need to promote the idea that young workers — home grown and immigrant — will find productive and well paid employment in the construction trades.  It would also be helpful if we invested in drug treatment and rehabilitation programs as a portion of our economic development vision for this country — instead of perceiving it as a ‘crime problem’ or seeing it as a ‘public health crisis.’  The compartmentalization of labor issues, public health issues, and crisis management issues merely serves to obscure the relationships between these three elements.

Take one major regional weather disaster, add a slowdown in the apprenticeship programs in the immediate aftermath of the Recession, add a general shortage of skilled blue collar workers to replace retirees, add the locked in contracts for other major projects, and then subtract the number of individuals who might otherwise qualify for construction employment but will be eliminated from hiring by positive drug tests and “Houston, we have a problem.”

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Filed under Economy, Politics

Patterns and the Perils of Straight Line Thinking: Tax Reform and Corporate Profits

M’Thinks I see a pattern from the Oval Office — this time on the subject of ‘tax reform.’  First, make vague campaign promises such as “health care for everyone,” or now “tax reform for working people.”  Step Two:  Announce equally vague guidelines for the associated legislative program and proceed to dump the issue on the Congress to figure out.  Follow up with Step Three:  Make speeches which range from obstructive to downright unhelpful.  Finally, blame the Congress when the whole steaming mess falls apart.

We witnessed this during the health insurance debate, and we’re getting yet another wave with the tax reform issue.  There is a Trump Tax Plan, (pdf) with “guidance” but little specificity.  It reduces brackets from 7 to 4, it reduces the corporate income tax, and it eliminates the estate tax, aka The Paris Hilton Legacy Protection Act.  However, recent statements would lead a person to believe that the details will be left to Congress, or at least the Republican Congressional leadership.

The reform is predicated on the proposition that corporations need a tax cut to encourage the expansion of capacity to deliver goods and services (and thus hiring more workers.)  There’s a problem with this assumption.  Corporate profits are doing just fine.

During the first quarter of 2017 there were some rosy predictions:

“Higher profits are a good sign for the economy, suggesting that businesses can do more hiring and spend. Many companies are hopeful in early 2017 that a pro-business Trump White House will ease regulatory burdens and take other steps to provide relief, giving them further impetus to expand.

“The post-election surge in business sentiment is broadly expected to support stronger investment – a key support to stronger growth that has been largely elusive thus far in the current expansion,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

For all of 2016 the U.S. grew 1.6%, down from a 2.6% in 2015. The last time the U.S. topped 3% growth—the historical average is 3.3%—was in 2015.”

And the forecasts still look positive for corporate profits:

“Corporate Profits in the United States is expected to be 1570.63 USD Billion by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Corporate Profits in the United States to stand at 1584.26 in 12 months time. In the long-term, the United States Corporate Profits is projected to trend around 1580.69 USD Billion in 2020, according to our econometric models.”

It’s difficult to argue that a corporate tax cut will help spur expansion of employment when corporate profits are high at present, and still there is no increase in hiring more workers.  Return with us now to the only rational explanation for hiring anyone to do anything:  The ONLY reason to hire someone is that the firm cannot meet the DEMAND for goods and services at current staffing levels with an acceptable level of customer/client satisfaction.  Heard this before? Yes, I’ve been pounding on this point for years.

Giving a corporation a tax cut will increase profitability, but increased profitability doesn’t necessarily cause increased expansion — because without an increase in  demand for the goods and services there will be no increase in hiring.

Those who would draw a straight line from decreasing corporate taxes to the hiring of more workers ignore the fact that there are other options corporate HQ can pursue:

(1) Park the money putting it into their own portfolio of long and short term investments.  The return on these investments, obviously, becomes part of the corporation’s revenue stream.  If cash, for example, could be earning more in a short term investment than in a regular deposit, then the corporate profits become a way to increase another segment of the corporate profits.

(2) Pay increased dividends to shareholders.  A note of caution here, looking at dividend yields isn’t all that useful for individual investors [Seeking Alpha] and the use of an index like the S&P is problematic because the corporations included change over time.

(3) Engage in stock buy-backs.

“The unmistakable conclusion from the last few years of stock buyback data is that buybacks are having an impact on reducing shares outstanding. Impressively, since the calendar-year bottom in 2009, buybacks have tripled from $205 billion to $627 billion, and net buybacks have increased by more than $540 billion. Since February 2007, total gross buybacks have grown from $521 billion to $627 billion, and net buybacks have grown from $350 billion to $448 billion.”  [Seeking Alpha]

(4) Pay down existing debts.

(5) Engage in mergers and acquisitions.

” Executives are looking at more targets and deals will tend to be smaller as they target startups and fast-growth technology innovators. According to a survey by EY Global Capital Confidence Barometer, 57% of executives expect to actively pursue acquisitions in 2017 and 49% of companies have more than five deals in their pipeline. What’s more, 76% see the global economy as either stable or improving and 82% see corporate earnings as either stable or improving. Still, modest global growth will drive mergers and acquisitions as companies seek to boost results, according to JP Morgan’s 2017 M&A Global Outlook report. Low cost of funds and high stock valuations will also be positive for deal activity, the report says.”

Therefore,  the 6th option — plant and production expansion — must compete with the other 5 options listed above.  There is no straight line from increased corporate profitability to option 6.

The audience for the next round of speeches from the anti-tax quadrants would be well advised not to fall into the trap of thinking that expansion of production or services is the only obvious result of corporate tax reductions.  There are at least 5 other options available to corporate leaders and NO guarantee they will increase capacity or production unless there is sufficient DEMAND to justify it.

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Filed under Economy, Politics, Taxation

Hellerisms on Parade: Health Care Edition

And then there was this:

“The individual mandate I thought was atrocious, was wrong and shouldn’t have been in Obamacare at all,” he said. “I don’t think your government should tell you to buy something that you can’t afford. And if you can’t afford it you pay a fine. Yet 90,000 Nevadans pay the fine.” — Senator Dean Heller

Let’s start with the assumption that Senator Dean Heller is a capitalist, a firm believer in the free market system.  He’s certainly reinforced this impression given any occasion to do so.  So, why was there an “individual mandate” in the Affordable Care Act?  — The answer is capitalism.

The more precise answer is the “adverse selection” problem in free markets.  The most concise explication I’ve found for this comes from the Economist’s View:

“To explain how the adverse selection problem arises in these markets, note that people purchasing health insurance generally have better information about their health status than the people selling the insurance. If insurance is offered in this market at somewhere near the average cost of care for the group, people will use the superior information they have about their own health status to determine if this is a good deal for them. All of the people expecting to pay less for health care than the price the companies are asking for the insurance will drop out of the market (the young and healthy for the most part; all that is actually needed is that some people are willing to take a chance and go without insurance). With the relatively healthy people dropping out of the insurance pool, the price of insurance must go up, and when it does, more people drop out, the price goes up again, and the result is just like in the used car example above: The market breaks down and nobody (or hardly anybody) can purchase insurance.”

Now, if a person is reasonably conversant with capitalism and the patterns intrinsic to the operation of free markets, then the problem of  ‘adverse selection’ should be part of that person’s lexicon.  Granted it’s not an easy thing to explain, but the Economist’s View post quoted above offers the “used car” analogical example which makes the concept more accessible.   Therefore, if Senator Heller is indeed a capitalist, and if he has better that average economic knowledge base, then his explanation of his opposition to the individual mandate makes absolutely no sense whatsoever.

There’s also the political side of the issue, recall that Obama’s original plan didn’t contain an individual mandate while Secretary Clinton’s proposal did, and the result:

“Once elected, Obama quickly recognized the inescapable truth: An individual mandate was essential to make the plan work. Without that larger pool of premium-payers, there is no feasible way to require insurance companies to cover all applicants and charge the same amount, regardless of their heath status.” [WaPo]

There’s just no way to get around the problem of Adverse Selection, and still have an insurance system based on free market capitalism. 

Those still unsure about their understanding of Adverse Selection and how it operates in a free market system may want to consult some of the following sources:  Investopedia is a good source for short, concise, definitions of economic terms such as Adverse Selection. The Economic Times also has a dictionary style definition.  Risk Management specialists have a more technical definition.  Those wishing to dive a bit deeper into the weeds might want to see the World Bank’s explication.   There’s also an explanation from the National Association of Insurance Commissioners which goes into greater depth. (pdf)

Granted the individual mandate isn’t popular — that part is easy — but anyone who professes to be a free market capitalist (as does Senator Heller) can’t ignore the principle of Adverse Selection and how that concept impacts the insurance markets.

The alternatives to a purely market based insurance system in which the most people possible can obtain health insurance at relatively affordable rates are problematic for the free-marketeers.  A public option (federally sponsored insurance program operating in the general market) is one possibility.  Another alternative simply removes the free from free market — the single payer, or Medicare for All proposal, in which public insurance pays for medical services delivered in the private market.  At the furthest end of the spectrum would be nationalized medical health services such as the British or French systems. The arguments for and against each of these are ideological and political, and not necessarily relevant to the discussion of free market based health care delivery.  However, they do mitigate, from divergent directions, the issue of Adverse Selection.

The problem for Senator Heller is that he can maintain his free market positions OR he can oppose the individual mandate, but in light of the persistent and perpetual issue of Adverse Selection he can’t do both.

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Filed under Economy, Health Care, health insurance, Heller, nevada health, Nevada politics, Politics

It’s A National Emergency, we think…

Since his attempt to revive Nancy Reagan’s “Just Say No” campaign in the face of a crisis in the increased addiction to opioid drugs in this country fell flat,  Dear Leader appeared to suggest the problem is a matter of law enforcement — a major mistake.  The genesis of the issue comes from the over-prescribing and over use of opioid medication once advertised as “virtually addiction free.”  Indeed, Purdue Pharma is still facing litigation from the state of New Hampshire over its advertising of Oxycontin. This, in addition to the 2007 guilty plea from the corporation for mislabeling the drug, and the payment of  $634.5 million to resolve a DoJ investigation.  Meanwhile, Nevada holds its unfortunate position in the top ten states when counting opioid death rates.  There were 224 overdose deaths in 2014, another 259 in 2015 [CDC] related to natural and semi-synthetic opioids; Nevada’s statistics were more bleak citing some 465 opioid related deaths in 2015.

Since we probably can’t arrest our way out of this mess, in Nevada or anywhere else, the answer in the long run is prevention (better guidance for physicians and tracking, combined with better public education on the nature of opioid addiction) and treatment.  And, for treatment, people have to have a way to afford it.

Medicaid has been a Godsend for many suffering through an opioid addiction.

“The authors of the report (Urban Institute) draw a parallel between the Affordable Care Act’s Medicaid expansion and spending on addiction medications, saying it has brought addiction treatment to previously underserved populations.

“What we saw was this gigantic, rapid, ongoing expansion in treatment,” says co-author Lisa Clemans-Cope. “It was particularly fast after 2014 when the big Medicaid expansion came into play. There’s definitely an effect of people getting access to treatment. That’s the primary driver of growth of spending.”

So, Medicaid spent more on treatment after 2014 – because more people were in a position to afford the treatment programs available to them.  Therefore, the next time a Republican politician stands before us with plans to slash Medicaid spending, and turn the Medicaid program into a block grant lottery for the states, we might well ask:  What does your proposal do to assist the states, like Nevada, deal with the treatment expenses of individuals trying to cope with opioid addiction and who are seeking assistance to make that treatment affordable.

Gee, the states are supposed to “benefit” from greater flexibility?  Would that be the flexibility to choose between supporting special education children with speech and physical therapy and opiate addicts?  Or choosing between the needs of the families of opiate addicts and the severely disabled?  Or choosing between the needs of opiate addicts seeking treatment and women seeking mammograms and other cancer screenings?  Santa doesn’t come without some expense.

Somehow the Republicans have managed to entangle themselves in their own rhetoric.  We can cut taxes, expand the military, all by cutting social safety net programs, and still have money for fighting opioid addiction in this country!  Santa will bring us tax cuts and another Santa will keep Granny in the skilled nursing facility, help cousin Elwood find a job in a new industry, make sure the family can get immunizations, cancer screenings, treatment for acute and chronic medical conditions, and insure that the Interstate Highway System is continually maintained.

It’s Jude Wanniski’s Two Santa Theory — a position only definable as something coming from an opiate induced delusion:

“Unfortunately, Mr. Wanniski opened Pandora’s box when he let loose the two-Santa theory. Republicans are now bound to it, whether they know it or not. As Keynes once put it, “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

**For more information: See the following excellent articles in the Nevada Independent — “Another side of the opioid heroin crisis,” “For Many Governors…” “As Out of Control opioid epidemic rages..”

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Filed under Economy, health insurance, Medicaid, nevada health, Nevada politics, Politics

Coal Myths and Legends: North Valmy as Dinosaur in the Coal Mine

The applause line “I dig coal” may play well in certain West Virginia venues, but it’s not playing all that well with Idaho Power:

“Idaho Power says its coal plants still generate capacity during high-demand periods, but baseload from the facilities has been declining—a trend it sees continuing in the region, and nationwide.

“The decline in baseload energy production is primarily viewed as driven by low natural gas prices and the expansion of renewable generating capacity,” the utility writes in its IRP. “Because of the low natural gas prices and expanded renewable generating capacity, wholesale electric market prices over recent years have frequently been too low to merit economic dispatch of coal generating capacity.”

Idaho Power is giving serious consideration to retiring its North Valmy plant in Nevada early; notice the references to natural gas prices and the expansion of renewable generating capacity.  In short, coal isn’t coming back, anywhere.

Why? Probably because capitalism works.  

“Coal has been crushed by the shale boom, which has made natural gas — coal’s biggest competitor — extremely cheap. The price that U.S. power plants have been paying for natural gas plunged 71% between 2008 and 2016, the Columbia report found. Coal prices were down just 8% in that same period.

At the same time, coal faces new competition from the rise of renewable energy, including wind and solar. The falling cost of solar energy combined with federal tax credits have created a boom in solar jobs. The solar industry ended 2016 with 260,000 workers, according to the Solar Foundation.” [MoneyCNN]

Why would a utility, or any other business for that matter, purchase supplies from a higher priced vendor when cheaper supplies are at hand?  If you want an example of how the “market works” this is it.  Utilities are increasingly using natural gas and renewables because those sources are (1) cheaper or (2) going to be cheaper in the long run.

A second point should be made — there are two coal markets: Metallurgical coal is used primarily in steel production; Thermal coal is used for electrical production.  Prices for metallurgical coal, also called Met Coal or Coking Coal, have increased as seaborne coal (from Queensland) tightens, and as supplies from Chinese mines diminish as their mines come under increased scrutiny about safety concerns.  The price of Met Coal is a function of not only American mines, but of Australian and Chinese sources.  The price of Thermal Coal has been declining since 2012 and doesn’t show any signs of reversing that five year trend anytime soon.  This is not a case of “if you mine it they will come,”  even with the decline in Thermal Coal prices, the price of natural gas and renewables are still putting pressure on the market.

The Columbia Study (pdf) explains, once again, how capitalism works.  What are the causal factors in the collapse of the coal mining sector of the economy?

“US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.”

Thus, bolstering the contention made previously that prices matter, and if lower prices are available for some commodity, then that’s where the “market” will go.  There are other factors: (pdf) A slowdown in Chinese manufacturing demands; deregulations may not have any significant effect on mining if the prices for natural gas and renewables continue to decrease; and, while we might expect a modest recovery to 2013 levels — that’s probably all that can be squeezed from this market.

So, Idaho Power/NVEnergy’s decision to concentrate on production using more renewables and natural gas is likely to be sound economically for long term corporate health — and the old coal-fired North Valmy plant sits like a Jurassic Creature in Pumpernickel Valley.

As for employment prospects, coal mining isn’t a growth industry: (pdf)

A plausible  range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 — lower than anything the US experienced before 2015.

Thus, basing economic policy on a sector which includes only 0.03% of our national economy makes precious little sense.  It makes even less sense to look backwards:

“When it comes to electricity generation in the US, the Department of Energy’s 2017 Energy and Employment Report suggests that the solar industry now employs more people than coal, oil, and gas combined. Oil still employs the largest share when including jobs related to fuels, however.

“Our findings would lead us to believe that the right place to invest dollars are in renewable energy rather than fossil fuels,” Delaney says. “These jobs are widely geographically distributed, they’re high paying, they apply to both manufacturing and professional workers, and there are a lot of them.”

How about job training for those seeking to move from a declining sector to sectors with more hiring prospects?  The Trump administration has lauded the prospects of job re-training and apprenticeship programs, but the money isn’t where the mouths are:

“Trump has proposed cutting the Labor Department’s budget by 21 percent in fiscal 2018.  That includes a 40 percent cut to the Labor Department’s Wagner-Peyser Employment Service, which supports about 14 million job seekers annually and last year helped nearly 6 million people find jobs. The proposed cuts also include a $1.3 billion reduction to programs that operate under the Workforce Innovation and Opportunity Act, which Congress reauthorized in a bipartisan move three years ago.”

Drilling down to “coal communities,” the impact is patently worse:

“Based on the limited information provided by the blueprint, President Trump’s FY 2018 budget would cut at least $1.13 billion from these programs and offices, including several in their entirety—a total that may increase when the full budget is released in May.2 Through the POWER Initiative, offices and programs targeted by the cuts funded more than $115.8 million in economic development, job training, and other grant projects targeting coal communities in more than 20 states from 2015 through early 2017.”

It is egregiously unseemly to give pep talks about “digging mining,” in coal country while slashing budgets for economic development and job training for the people facing declining employment prospects in the mining sector in those communities.  Indeed, the current administration gives every impression of saying “we love you,” to coal country residents while allowing greater pollution of their cities and towns, and cutting job training opportunities for residents seeking employment in faster growing sectors of the regional economies.

Meanwhile, the North Valmy plant stands in Pumpernickel Valley.

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Filed under ecology, Economy, energy, energy policy, Nevada economy, Nevada energy, Politics

Amodei, Your Banker’s Best Friend

House Roll Call Vote 412 wasn’t one of those votes likely to draw much general media attention, even its title seemed designed to induce yawns: “Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to “Arbitration Agreements.”  Representative Mark Amodei (R-NV2) voted in favor of this measure on July 25th, and few noticed, much less commented.  It’s a small thing, but indicative of a mindset that favors the Big Banks over the interests of American consumers.

Background

 “In May 2016, the CFPB issued a proposed rule prohibiting predispute arbitration agreements in providing consumer financial services products. This rule would prohibit mandatory predispute arbitration agreements in consumer agreements for items such as checking or savings accounts, credit cards, student loans, payday loans, automobile leases, debt management services, some payment processing services, other types of consumer loans, prepaid cards, and consumer debt collection. The rule would also prohibit predispute arbitration agreements in connection with providing a consumer report or credit score to a consumer or referring applicants to creditors to whom requests for credit may be made.” [ABA]

Translation:  For “predispute” read Day in Court, as in the rule prevents a financial corporation from requiring arbitration before a person can take his or her case to court as a member of a group of consumers who have been hurt by the financial institution’s action or actions.   The Consumer Financial Protection Bureau explained:

“Many consumer financial products like credit cards and bank accounts have contract gotchas that generally prevent consumers from joining together to sue their bank or financial company for wrongdoing. These widely used clauses leave consumers with no choice but to seek relief on their own – usually over small amounts. With this contract gotcha, companies can sidestep the legal system, avoid accountability, and continue to pursue profitable practices that may violate the law and harm countless consumers.”  (emphasis added)

And, Representative Amodei supported the legislation to disapprove of this rule which was an attempt to protect consumers from actions like the following:

The poster child of bank malfeasance, Wells Fargo’s  —  “admitted its employees systematically created millions of sham bank accounts in its customers’ names, and then in many cases fraudulently billed those same customers for fees and services they never agreed to. Executives of the megabank knew this was happening but did nothing. Then, they decided to blame 5,300 “rogue” employees, who were summarily fired. Now, to ward off thousands of lawsuits, the company is hiding behind binding arbitration clauses in its victims’ contracts.” [USNWR]

And, there’s this —

“Military readiness has been negatively affected by unscrupulous payday lenders who prey on military servicemembers and veterans. The victims become overly indebted thanks to exorbitant interest rates and hidden fees they don’t understand, and then find themselves unable to obtain relief thanks to forced-arbitration clauses. Because of this, the Military Coalition, which represents nearly 6 million uniformed service members, veterans and their families, has formally petitioned Congress to ban the clauses.”  [USNWR]

It’s hard to imagine siding with unscrupulous bankers against the interests of enlisted personnel who are in the E6 to E9 ranks  in which pay runs from $2,486.99 to $4,186.09 for a person with more than eight years service, however Representative Amodei found a way to do it.  The problem became such a persistent issue for the military that in 2007 the Department of Defense started enforcing the Military Lending Act to protect its service personnel. However, pay day lenders found loopholes such that they could re-introduce their ‘products’ to members of the military. [MrktPlc] Who would support legislation designed to force members of the Armed Services to accept arbitration before they could have their day in court?  Representative Mark Amodei (R-NV2) and his Republican cohorts in the 115th Congress.

What makes this vote particularly noticeable regarding the protection of bankers is that there are ways — at least two — to ‘prevent’ that bete noir of all Republicans, the consumer lawsuit, without pitching the baby out with the bath water.

The first way would be to make all arbitration voluntary.  Companies could save time and money, and avoid publicity IF the consumer agrees.  If there is no agreement then the case goes to court.

The second possible solution would be to put the arbitration on a “business pays” status.  The American Bar Association offers this common sense proposal:

“The CFPB should require any consumer arbitration to be fully business-funded at no cost to the consumer. When a business faces transaction costs of nearly $2,000 per arbitration filed, repeat consumer filings will attract its attention. In addition, the CFPB could consider requiring that any consumer arbitration which results in a favorable consumer award on the merits should be awarded treble damages and attorneys’ fees. This provision would include a sort of “built in” incentivizing provision. The goal of this provision is to encourage organically what we already see occurring, increased settlement of consumer disputes. Still further, the CFPB should require that any consumer arbitration award must result in a written statement of decision, which permits other consumers to know how the arbitrator applied the law to the facts of that case. This will facilitate consumer knowledge of potential corporate overreach (and encourage more recovery), and will also help aid the consumer in arbitrator selection.”

In short, it is not necessary to go full-bore all-out in support of the banksters among us in order to prevent the unscrupulous from skinning the unwary or uninformed, but that’s what Representative Mark Amodei did on July 25, 2017.

Perhaps this may be explained by the fact that as of May 2017 Representative Amodei received $8,000 in donations from commercial banks for this election cycle, another $7,000 from credit unions, and $1,000 from finance and credit companies.  Or maybe it relates to the $25,000 he’s collected from the American Bankers Association over his political career?  Whatever the motivation, it’s clear that Representative Mark Amodei is placing the interests of the bankers above those of American consumers.   This situation could be rectified in 2018.

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Filed under Amodei, consumers, Economy, financial regulation, Nevada economy, Nevada politics, Politics

Dear Sir: Your Presidency is a failure

Dear Mr. President: Your presidency so far is a failure.  Not necessarily in legislative terms.  Not necessarily in terms of a poorly articulated agenda.  However, when we look at what is supposed to be your “wheelhouse,” your “strike zone,” business management, you’ve tossed the playbook.

You’ve not made the distinction between a boss and a leader.  Let’s discuss it in business terms — a boss directs employees and manages the production in a system of rewards and punishments; a leader uses mentorship and encouragement to get employees to work towards shared goals. [BND] It doesn’t take much consideration to reach the conclusion that productivity is higher for the latter than the former.  One piece of advice on bosses/leaders which is well worth a reminder is:

“A good boss elevates everyone around them, provides the resources they need to do their job well and acknowledges them often,” Borba Von Stauffenberg added. “Additionally, a good boss allows each team member to be brilliant by staying out of their way but is willing to get in the trenches with them when needed.”

The next time the president is tempted to launch a Twitter rant or issue threats to members of Congress or to members of his administration he would do well to read the last sentence with great care.  There are some other precepts from the business community which call for more consideration in this administration.

A good “boss” or leader communicates a clear vision to employees.  Good leadership can be measured by looking at how well the employees understand why they are doing what they are doing.  Needless to say,  the manager who resorts to threats and badgering may “make the quarterly numbers,” but will fall well short in terms of overall success.  An element of this is the establishing of equally clear performance objectives.  What did the president want in regard to health insurance reform legislation? Was it outright repeal? Was it repeal with a plan to cut Medicaid? Was it a plan to cut taxes without cutting Medicaid?  Answering these questions requires reading Tweet Streams that are constantly changing and range from alternative one to alternative three.

A good boss/leader listens.  Listening means the boss gets answers to operational issues and systemic problems from the shop floor.  Once received the advice should be acknowledged, credit must be given where it is due, and the employees are recognized as human beings, not merely “human resources.”   If your Secretary of State is saying one thing and you are saying something else entirely, then you’re not listening.  How much longer can this situation continue before a subordinate decides there is such a paucity of trust and support that further efforts are futile?

There are personal traits which are associated with good business management which aren’t really in evidence in the Oval Office at the moment.  One is the capacity to acknowledge faults and weaknesses,  and to work to minimize these when it comes to team building for successful operations.  A good manager will leave meeting participants feeling that their contributions were appreciated and that they were personally respected.  That infamous cabinet session during which members each offered sycophantic accolades to their Dear Leader wasn’t at all reassuring that we’re led by those who feel respected themselves.

Trust, respect, and operational success are never a given when employees and subordinates feel there’s a bus coming around every corner.   The following is as good a summation as any:

“Terrible bosses throw their employees under the bus. Good bosses never throw their employees under the bus.  Memorable bosses see the bus coming and pull their employees out of the way often without the employee knowing until much, much later… if ever, because memorable bosses never try to take credit.”

Attorney General Sessions may be thinking of this summary at the moment?  Additionally, notice that last sentence above, the one about never trying to take credit for all the successes and deflecting blame for any failures.  That requires getting one’s ego out of the way.  While the boss may be personally responsible for the advancement of the company, he or she should not take things personally.  For example, the chaos created when a major supplier goes out of business may cause issues, but that’s no reason to rail at the manager of the procurement department.

Not to put too fine a point to it, but even a cursory examination of articles on good leadership and business management yields a pattern of management practices which are violated on a daily basis by this mis-administration.  It’s about time for the board of directors to start speaking of putting some additional pressure on the Boss to review and revise his management practices.

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