Tag Archives: economy

Our Weekly Fresh Horrors

Gee, what fresh horror would make for a nice blog post today?

#1. We could start with this analysis of Orange Blossom’s perfectly inane trade policy, as expounded by conservative economist Walter Block in the not-so-failing New York Times:

“The negative consequences of a trade war will soon be felt, if they aren’t already. Even if the United States avoids trade conflict with Europe, tariffs on steel and aluminum from China, Mexico and Canada will raise domestic prices, hurting consumers. And the administration is likely to find itself subsidizing voters who purchase these items or who are hurt when other countries slap tariffs on American goods in retaliation — mainly farmers, manufacturers and builders.”

Perhaps the color coded cue cards were insufficient to explain BASIC economics to our special Orange Blossom during his meetings with EU officials.  Is there an emoji for putting both of one’s hands palm forward into one’s face? I could use one right now.

#2.  Also from the New York Times — the Feds announce they’ve met the deadline for reuniting children with their migrant parents. However, there’s this little Oops paragraph in the article:

“But in a day that saw government officials and community volunteers scrambling to bring families together, multiple reports of failed reunifications raised questions about whether the deadline had in fact been met. Further confusing the issue was a change in the way the government tallied its progress, with the latest report counting children rather than parents, a reversal from prior reports.”

So, if they can’t reunify families, then they simply reclassify the children and/or parents to say they aren’t eligible for reunification!  Whee. How convenient.   Yes Sir, I could say I really stuck to my pledge to make healthier eating choices — IF we don’t count the two chocolate chip cookies, the can of Pepsi, the chips, the cheeseburger, the … you get the idea. There are still some 700 children not reunited with family.  And when the ADL is putting out warnings about what happens to children separated from parents, as in what happened during the Holocaust, maybe we should be paying attention.  I really do need that double face-palm emoji thing.

#3.  The Ruskies are still here. As in still attacking our American electoral system; as in attacking the McCaskill Senate campaign in Missouri.  They also appear to have attacked two other campaigns. This isn’t “history,” this is current events.  There’s more at “The Hacking of America,” on Slate.   The article isn’t exactly pleasant reading, but it’s recommended as a reminder that God helps those who help themselves, and DHS is talking about new initiatives with 90 day timelines.   90 days?  What happened to getting a start on this, say some 1 year, 188 days, and 2 minutes (as of now) ago?

#4.  Special concern for the people in the Redding, California area.  The news on that fire front is horrible. Up here in cheat grass country we lucked out during the Holloway Complex Fire in 2014.  There’s nothing quite so chilling as the sound of a local deputy on a bull horn announcing a preliminary notice of an evacuation order.  I don’t wish it on anyone.  Please, California neighbors, stay safe!

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Filed under Economy, elections, Immigration, Politics

America Last

The first law of negotiation:  It is impossible to be part of any bi-lateral or collective agreement if an agency is not at the table.

And thus, the Rose Garden Jazz Concert and International Default Announcement last week violated the First Law, by a noted (albeit self-described) deal maker.  Green lit public buildings around the nation and globe notwithstanding, the Grand Announcement was more theater than substance.  There’s a pattern herein.  First, the administration announces its announcements.  “On Wednesday, June ___, at 12:05 pm the White House will ____”  This sets up our cable news “panels” for almost interminable displays of speculation, multiplying the publicity.  Thence comes The Announcement, which may or may not be substantive.  Witness the now infamous Rick-Rolling “announcement” by the administration about President Obama’s birth certificate authenticity.  Notice there was never any apology issued for the Birtherism, and attendant racist cant, just an “announcement” made in conjunction with the opening of a family business hotel.

In reality, the first time the U.S. can withdraw from the Paris Accord comes after the next presidential election.  In reality, the accord is entirely voluntary, and has been noted in several commentaries, can’t be both draconian and voluntary at the same time.  In reality, the rest of the nations aren’t about to allow the US to “renegotiate” the terms, especially since the Paris agreement was framed to answer US objections to the Kyoto version to which the US would not agree.  In reality, the world witnessed a statement expressing the narrow vision of the current administration, violating the First Law of Negotiation.

In short, reality has precious little to do with the Rose Garden Jazz Concert Announcement.  Nor does reality square with the Trumpian bluster that the Deal Maker can get America a better deal in the foreseeable future.  At the risk of redundancy, in order to get a deal an agent must be at the table.  The question then becomes does the administration even want a seat at that table?

One theme among the pundits is that the current administration sees international agreements in zero sum terms, that is, every multi-national treaty or protocol is a link in the shackles restraining American sovereignty.  The problem, of course, is that each American retreat also comes with an obverse side — leadership abhors a vacuum, and others will step in where the US fears to tread.  Isolationism brings with it the specter of Splendid Exile.

A related theme is a theory of executive management in which Dear Leader sits atop the pyramid, in a well appointed corner office, issuing edicts which others are expected to follow without dissent.  This, however, is also a formula for a toxic corporate culture:

“Companies hire people because the managers can’t do everything themselves. It stands to reason that we should trust the people we hire to do their jobs, but some fearful managers can’t give up control.

They have to make all the decisions and call all the shots. A rule-driven, command-and-control culture is a toxic culture that will drive talented people away.”  [Forbes]

It will also drive away those who want to cooperate in major projects and programs — like environmental improvement.  Applying a “toxic” corporate culture model to the management of major governmental projects and processes is counterproductive.

It is equally toxic to consider that an increase in cooperative engagements means that gains by some necessarily means someone must lose.  It’s easy to see the world in terms of Winners and Losers, but this perspective excludes the possibility that if everyone gives a little then the prospects for mutual gains are improved.  This philosophy also denigrates the idea that improvement is always possible, holding instead that destruction is the best option.  One of the first regional trade agreements in the modern era, NAFTA, has problems (which may be feeding discontent with other agreements), however, this doesn’t mean that the benefits of freer movement of goods and capital need to be obliterated in the interests of “removing the shackles.”

The idea that the US can effectively lead by abandoning the field (or the bargaining table) is inherently false, as are the promises extrapolated therefrom.

The second law of bargaining says “never negotiate with yourself.”  Pronouncements concerning unilateral actions — as being preferable to mutually agreed upon items of interest — rarely lead to positive outcomes. It’s essentially bargaining with yourself.  For example,  the United States under the current terms of the Paris Accord can set its own carbon emission standards and goals.  Operating in mutual terms, the US could modify its goals and simply inform global partners of the changes and rationale.  The isolationist response assumes that xenophobia is a positive feature of national policy, and no other nation is deserving of notice of our intentions and reasoning.  This is tantamount to that isolated corporate executive in the corner office who sees no benefit in having his or her board actually question directives.

When other voices are ignored those directives and policies coming from the top floor are more likely to be the produce of interior monologues than of well crafted discussion, in other words the CEO/President is negotiating with himself.

Violating the first two essential rules of negotiation aren’t exactly the way to cement one’s reputation as a deal maker.

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Filed under ecology, Economy, Politics

Republican Myths and Legends

Good morning, another day another 24 hours of trumpster fires, lit by the tinder of well worn Republican mythology.

The Economy Works In Reverse.  Let’s guess that the whopping increase in defense spending will be covered by an increase in “economic growth.”  I doubt very seriously that my utility company would be much impressed by my assertion that increases in my power bill will be paid for by my getting up an hour and a half earlier every morning.  The argument would go “because I get up earlier I will be more productive, and if I am more productive then my earnings will increase. If my earnings increase then I will have more money to spend, and therefore my bills will ‘pay themselves.'”  Gee, perhaps if I aroused myself two hours earlier I could trade my vehicle in for a Cadillac CTS-V? Somehow, I don’t think my banker will be sufficiently enamored of my presentation to hand over the money.

There’s another facet of the administration’s fantasy economy which we need to discuss, at least two ways in which while waving its firearms it shoots itself in the foot.  Round one into the metatarsal — anti-immigration rhetoric and action.  Before theorizing about economic growth, the GOP might want to look at economic activity in our major urban centers, which depend in no small part on their immigrant communities.

Round two into the navicular bone comes compliments of heavy budget cuts. For the millionth time in this blog, there’s a formula for the gross domestic product.  Once more C+I+G + (Ex-IM) = GDP.  That G stands for government spending, and not just defense spending.  Want to expand the consumer economy? Then remember that every dollar spent on the SNAP program almost doubles in economic activity.

Round three into the phalanges: Seek to limit increases in the minimum wage.  Evidently it has not occurred to GOP economists that people do not spend money they do not have.  They can accumulate debt (which Wall Street is only too happy to securitize) up to a point, but the point is quickly reached. Delinquency happens, leading to defaults, leading to the unraveling of all those beautifully packaged tranches of securities.  We know what happened last time.

Round four into the cuboid, continue the progress of income inequality, the trends of which promote the accumulation of wealth into fewer hands, creating a surplus to be used not for corporate promotion and expansion but for the collection and trading of risk diversion securities or for corporate buy-backs which do NOT generate economic growth in the overall economy but bolster the financial sector.  Have I been railing about Financialism before? Constantly?

Four shots into the foot and we’re not walking, much less running, anywhere towards overall economic prosperity.  It’s the return of the old, stale, Trickle Down Supply Side Hoax nurtured and pampered by right wing think tanks and GOP orthodoxy.

And now, we should return to a discussion of why we need an independent commission to investigate the political and economic ties of the Trump-Bannon regime to the Russian government. We might also want to avoid the trap of calling for a special prosecutor, which would only have the authority to investigate outright crimes, when what we need immediately is an investigation into the possibly profound security risks in the executive branch.  But that’s a discussion for another post.

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Filed under conservatism, Economy, financial regulation, Politics, Republicans

The Warning Flags are Up: Trumpsterism and Corporate Debt

Corporate Debt Chart 2016

No, you don’t need to get out the magnifier to get the gist of this chart, but if you’d like to see the original click here.  Simply consider the trajectory of the blue line indicating the level of non-financial corporate business debt – as in UP.  Nevadans may want to gaze at this with some caution, because (to borrow and vandalize a fine old saying) the last time the national economy caught a cold, Nevada got pneumonia.  We can, and should, look at the comparison in the trends of corporate debt, government debt, and household debt:

Corporate Government Debt Levels

In the last five years government debt has dropped precipitously, (don’t show this chart to Uncle Fustian at your holiday dinner it’s likely to jolt his fact free universe) household debt has declined, and “business debt” is way up.  There are all manner of reasons for an increase in corporate debt, and some of them are very productive – such as expansion of plants and factories – others not so much.  We’re in “maybe not so much” territory.

Part of the pile of current corporate debt is the result of stock buy backs, a boomlet of sorts in recent times:

“Over the first six months of the year (2016) S&P 500 companies paid out 112 percent of their earnings in the form of either dividends or share buybacks. That, Damodaran argues, is the kind of figure you might expect to see when a recession had suddenly crimped company cashflows, not during a very long-running, if tepid, expansion.

The last time companies were paying out this much more than they are taking in was in 2008, when the financial crisis hammered revenues faster than companies could cut buybacks and dividends.”

… Certainly the very idea of buybacks has come under increasing scrutiny. While a share buyback improves per share earnings performance, it is a piece of financial engineering which increases leverage but does nothing to improve a company’s product offerings or market position, much less its long-term prospects. Indeed, the vogue for buybacks has happened at the same time as an otherwise puzzling lack of corporate investment, especially given that corporate profit margins are still high by historic standards.” [Time] (emphasis added)

There’s nothing too terribly “puzzling” about this state of affairs.   Why would companies indulge in “financial engineering” while profits are high?  Could it be that the “wealth” of the company is financially anchored rather than structurally? Consider this Household debt service as a percentage of disposable personal income  chart from FRED:

Household Debt trends 2016

Superficially, we could argue that the American consumer has done some belt tightening since the Recession of 2007-08 and there’s less money being paid out in debt service from the family coffers – but, we’d also have to be realistic and see that the debt levels are already too high.

Yes, household debt levels relative to the GDP have been declining, but it remains higher than it’s been for almost all of post-war history, and by post-war we mean World War II. [Slate]  

What else could be depressing loans? Other loans – such as Student Debts. Again, we have a picture of that from the Federal Reserve:

Student Loan Trends FRED

What we see here is an increase in student loans owned and securitized, which are outstanding: from Q1 2006 at $480.9670 to Q3 2016 at $1,396.3355.  Student loan indebtedness now exceeds credit card debt, auto loans, and other non-mortgage debt. [Slate] What’s happening here?  Perhaps those corporate profits aren’t predicated on the increasing number of consumers flocking to their doors?  Perhaps not when consumers have an annual household credit card debt of $16,000; a $27,000 average of auto loans; and $169,000 in mortgages? [Slate]

Then, there’s the matter of real household income in the US.  In the first quarter of 1999 it hit a high of $57,909 and hasn’t been back since. The current figure is $56,516. [FRED]   Little wonder there’s some “financial engineering” going on in the corporate world.   That “financial engineering” especially in terms of stock buybacks simply doesn’t make any long term sense:

“No matter how low-interest rates get, it is hard to justify the raising of corporate debt to purchase outstanding stock. Longer-term debt should be used for longer-term needs, e.g. capital expenditures. But from a macroeconomic view, raising stock prices does not figure in promoting economic growth or general well-being—it is simply financial engineering serving the interest of only shareholders and management. No new jobs are created and no new capital investment is undertaken in a world of corporate buybacks. Investors are simply bribed with their own money.” [FinSen] (emphasis added)

So, where does Trumpsterism come into play?  First, let’s assume, given the preliminary appointments to Commerce and Treasury, that the emphasis in this administration won’t be on reducing student debt and regulating the securitization of corporate debt.  Let’s also assume that a Corporate Tax Holiday in the form of “re-patriated” corporate earnings will be a feature.  How is that likely to be spent?

The Financial Times reports: “Much of the debt sold by companies in recent years has been used to buy back their own shares, pay out higher dividends or finance big mergers and acquisitions. While these buybacks funded by cheap borrowing have boosted earnings, a missing ingredient has been spending on investment to build their businesses.”

Why not? If the consumers (read the other 99% of the US population) aren’t clamoring to spend more (read creating demand) then the “financial engineers” will boost themselves by … buybacks, higher dividends, and mergers and acquisitions.  Or…

“A tax holiday that prompts repatriation of cash held overseas by global US companies, a move investors expect during the Trump administration, could help boost investment. Mr Milligan says it is unclear whether companies will plough any repatriated profits into capital investment or simply boost buybacks.“Repatriation could flow through fairly quickly and lead to a noticeable rise in share buybacks.” [FinT]

In less diplomatic terms – here we go again.  Corporations, getting tax breaks and subsidies, faced with a market in which there is declining or stagnating consumer capacity, find ways to engineer their financial statements.  Nevada has seen this movie before, and it didn’t end well for us.

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Filed under Economy, financial regulation, Nevada economy

The Republican Money Pits

money whirlpool So, how many ways can the House GOP find to waste taxpayer money? Let’s start with the House Oversight Committee which wasn’t pleased with the FBI’s conclusions on their manufactured outrage narrative concerning Secretary Clinton’s emails – now they want to haul the FBI director in for a grilling. [TPM]  However, this is only the latest.

Meanwhile, it’s estimated by the Department of Agriculture that 15.3 million children in the United States under the age of 18 live in homes where they don’t have consist access to enough nutritious food to sustain a health life. [FA.org]

It was reported yesterday that House leadership was meeting to discuss whether to launch a formal investigation into the sit-in staged by House Democrats over the failure of the leadership to bring a gun safety bill to the House floor. [TPM]

Meanwhile,  every day 7 children in the United States die in gun violence, and another 41 survive being shot in assaults (31), suicide attempts (1), and accidental shootings (8). [BC.org]

Representative Marsha Blackburn (R-TN) continues to pump for more investigations into … Planned Parenthood. Who would have guessed? Not that the committee hasn’t soaked up some 80% of the supplemental funds for the House Administration Committee, that would be $790,000.  [Esq]

Meanwhile,  the CDC reports that between 2011-2014 the prevalence of children with obesity aged 2-5 yrs. was 8.9%, 17.5% among children between the ages of 6 and 11; and, 20.5% among adolescents aged 12 to 19. [CDC pdf]

The House Republicans racked up approximately $7,000,000 in expenses for its interminable Benghazi hearings.  [BBN]  The State Department spent about $14,000,000 trying to process and present information requested by the Committee, the Pentagon reported about $2 million in expenses associated with the “investigations.”

Meanwhile,  when the FAST Act expires at the end of FY 2020, the Congressional Budget Office projects the average annual shortfall to the federal Highway Trust Fund will grow to $16 billion, [TRIP scrib] and we have a backlog of pavement projects of about $59 billion, and another $30 billion needed to improve and maintain bridges.  This isn’t even county the $100 billion we need for highway system expansion and enhancement. [TRIP scrib]

Is it not reasonable to conclude that the House GOP is far more interested in political scandal mongering than it is in … investigating why 15.3 million children aren’t getting enough nutritious food to eat? Or, why 20% of our teenagers are suffering the health effects of obesity? Or, why we’re losing 7 children every day to gun violence?  Or, why we’re only spending 61% of what we should be allocating to the repair and maintenance of our national highway system?

Is there to be no investigation into why there isn’t adequate affordable housing in one single county in the entire United States? [Fortune]  Why aren’t members of the Congressional leadership interested in hearing why the gender pay gap is the widest for blue collar women? [Detroit News]

Instead, the House GOP seems entangled in the past, engaged in corybantic fits of furor over all but imaginary “threats” while veritably ignoring the very real economic, health, educational, infrastructure, and commercial interests of this country.  A person can reside in the past only so long as the future doesn’t catch up.

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Filed under Gun Issues, Health Care, Infrastructure, Republicans, youth

The Media Was Warned: Trump Campaign is one giant Gish Gallop

Gish Gallop Trump

“Trump’s incessant barrage of outrageous pronouncements is reminiscent of the Gish Gallop strategy of argumentation: keeping your opponent on their heels and unable to debate effectively by throwing out so many false and misleading statements that it becomes too difficult to address any single one of them or make your own case. It’s a common creationist tactic, and a common tool of hucksters and swindlers everywhere.” [Washington Monthly, November 22, 2015

Three ways to spot a swindle:

Number One:  High pressure sales pitch.  Those who would have you part with the contents of your wallet will tell you that “time is short!” “Act now.” “This is a limited time offer!”  Hogwash. In order for me to pull off a swindle on you it is necessary for you to feel the “urgency” of my pitch.  If I were trying to pitch an investment swindle, I’d tell you that the economy is in terrible shape (it isn’t) and if you don’t act now to protect your retirement fund (which is probably fairly safe where it is) you’ll be in Dire, I say DIRE straits down the line. Notice I didn’t tell you where that line was drawn.

Trump’s pitch, and it’s more Pitch than a stump speech, is that voting for him is necessary to Save The Country; Yes, Save It Immediately – from what?  The leading economic indicators forecast a modest growth rate in the early part of 2016. [MarketWatch]

What part of this chart indicates to any sentient person that there’s a horrible unemployment rate problem in this country?

Unemployment chart trend The President noticed the Gish Gallop from Trump quarters in a recent speech:

“But he largely defended his record and sought to tell voters about the stakes in this November’s election.

Improved economic numbers don’t mean “folks aren’t struggling in some circumstances, and one of the things I’ve emphasized is that there’s some long-term trends in the economy we have to tackle,” Obama said in the PBS town hall. “So we’re going to have to make sure we make some good decisions going forward.”

“The notion that somehow America is in decline is just not borne out by the facts,” Obama said. “But it resonates. It resonate with aggrieved people who are voting in big numbers for Donald Trump.” [NBC]

No, we’re not “in decline,” and NO we don’t need to make America great again, it’s already the strongest nation on this planet.  But that isn’t going to impress the devotees of the Gish Galloping Trump; they are listening for the second element of the perfect swindle pitch.

Number Two: It’s too good to be true.  Again, if I were to launch a swindle in your direction I’d promise outcomes like a 25% increase in your investment, in some ridiculously short amount of time.  And, should you hesitate I’d shower you with misinformation, disinformation, and pure south bound product of a north bound bull, all the time pointing to the Bright Blue Sky (to which MY bank account is headed if I can only get you to play along).

If, IF, you will invest with me all your troubles will be long ago and far away.  I’ll “build a wall,” I’ll “get a better deal,” I’ll “get you a better job,” I’ll “fight the Chinese currency manipulators,” I’ll “turn the water on.”…..

This will work, if you don’t do two things: Check my facts, and do some Critical Thinking.  If I can get you to avoid these two activities, then I can effectively initiate the third element of a good swindle pitch.

Number Three: Downplay the risks.  Galloping right along… Here’s Mr. Trump with a classic example: “We have been too afraid to protect and advance American interests and to challenge China to live up to its obligations. We need smart negotiators who will serve the interests of American workers – not Wall Street insiders that want to move U.S. manufacturing and investment offshore.”

Unfortunately, for those who know how to use the Google, downplaying the risk of getting into a trade kerfuffle with the Chinese is a matter of taking on the wrong target for the wrong reasons.  

The Chinese “currency manipulation” charge is a set piece of conservative attacks on our trade policy.  First, let’s agree that setting nominal interest rates is something that central banks DO.  The U.S. Federal Reserve sets its sites on the federal funds rate; the European Central Bank focuses on the marginal lending facility, and the Chinese central bank fixed the yuan-US dollar rate along with a “basket” of other currencies. [Wall St Journal]  Message to Mr. Trump: “Currency devaluation of revaluation is a common exercise of sovereign monetary policy.”

With this understood we can get down into the weeds, and again look closely at what the Wall Street Journal had to say about focusing on the “currency manipulating:”

“Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries.

The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy.”

[…] Today more companies operate in global supply networks—in which trade and investment link different stages of production across different countries. Because these networked companies incur both revenues and costs in many currencies, their trade competitiveness tends to vary little with the movement of any one currency.” [emphasis added]

Thus, NO, Mr. Trump, waving the “Currency Manipulation” banner like some kind of red flag obscuring the more complex nature of international trade forces and trends, doesn’t come anywhere near explaining the issues involved in international trade and the related currency valuations thereof.  What Mr. Trump is saying is a rather vapid “I’ll get a better deal.” Without, obviously, introducing any of the real factors associated with international trade policy.  However, in Trump’s campaign, waving this banner is just one more piece of the continuing Gish Gallop.

Before the third element of the perfect swindle pitch is successful, it’s time to remind ourselves of H.L. Mencken’s famous line:”

“There is always an easy solution to every problem – neat, plausible, and wrong.”

It isn’t like the Trump Gish Gallop hasn’t been spotted already – Blue Virginia caught it back in March 2016, the Democratic Underground wrote of it in January 2016 – proposing to call it the “Trump Trot,” and the media was warned, as noted previously, by the Washington Monthly in November 2015.

Gish Gallop 2

Those still confused by the combination of Gish Gallop and Word Salad emanating from the Trump Campaign may note with some trepidation that Mr. Trump can lie faster than the fact-checkers can keep up.  Prevaricate he will, as he pours forth his high pressure sales pitch, promising that which is too good to be true, and downplaying the risks of his preposterous proposals.

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Filed under Economy, Nevada politics, Obama, Politics

Distracted to Distraction?

carnival barker What are there? Some 412 days until the next general election, and the broadcast media is behaving like that is going to happen any moment? Perhaps we might call the campaign thus far, as presented by the beltway media and associated punditry, “The Click Bait Campaign?”  There are as many explanations for why the campaign appearances and speeches by Democratic candidates (Clinton, Sanders, etc.) aren’t getting the press coverage garnered by the Republican Clown Car as there are Punditatti to express them.  But while the press-gangs muse about whether Secretary Clinton is seen as “reliable,” or if Senator Sanders is perceived as “electable,” of if candidate Fiorina is “crisp and effective”… or if candidate Trump is “serious”… we’re missing some issues that deserve far more attention than the National ADHD click bait coverage is giving us.  Here’s what I’m waiting to hear more about.

The national economy.  The candidate who can convince me that he or she understands the shape of the American economy is probably the one who will get my vote.  Surely someone can clarify and amplify the changes in the U.S. economy in the past forty years:

“Previously, income grew more or less in step with household wealth. From 1962 to 1966, a period of low inflation and robust economic growth, real private sector wages rose 27.5 percent while real net worth increased 23.6 percent, according to Bloomberg News calculations based on government data. In the five-year period ending in 1996, real net worth gained 15.6 percent while private wages grew 11.3 percent. More recently, the gap between household net worth and wage growth has widened. From 2001 to 2005, the value of household assets minus liabilities rose 16.6 percent after inflation. Private sector wages rose just 2.7 percent.” [Bloomberg 2006]

Thus we  have an hour-glass economy, [Salmon, Reuters] one in which the wealth is concentrated at the upper end of the scale, and more occupations continue fall into the low-income levels. [Salon]  Senator Sanders has made continuous reference to the Income Inequality Gap, [Sanders] and Secretary Clinton has made this topic part of her repertoire on the campaign trail. [WSJ]

By February 2015 someone on the Republican side of the aisle noticed the Income Inequality gap (hour glass economy) [NYT] and Senator Marco Rubio attempted to slot into the issue by suggesting expanding the Child Tax Credit and cutting the tax brackets from seven to two (15% and 35%) unfortunately there’s no suggestion as to how to pay for this. Nor does he specify how to pay for expanding tax credits to childless adults; put simply, his arithmetic doesn’t work.  [NYT]  And, then there’s the rather tired Republican “promise” to create “flex funds” – another way of expressing the block grant anti-poverty programs proposal which lends itself nicely to eventual (and predictable) cuts to the grants by Congress.  In short, there’s nothing much new here: Credit Card Conservatism, and cuts to anti-poverty programs.  Meanwhile, we have the Limping Middle Class.

Perhaps we need a What To Watch For List?

  • Which candidates are speaking of a taxation system which rewards work and not just wealth?
  • Which candidates are addressing the decline in middle class income jobs in this country?
  • Which candidates are advocating equal pay for equal work? And/or an increase in funding for child care?
  • Which candidates are proposing an increase in the federal minimum wage?
  • Which candidates are suggesting we need to address the restoration of the manufacturing sector in this country?
  • Which candidates are supportive of workers’ rights to organize and form unions to bring more balance with multi-national corporations?
  • Which candidates are advocating funding for the improvement and maintenance of our national infrastructure?

It may be difficult to listen for these points since the media seems intent on speculating about the “electoral” effect of what candidates are proposing instead of explaining or clarifying the implications of their policy positions.  Meanwhile the media focuses on “Abortion!” or the “Planned Parenthood” hoax videos – the “Email,” the “Islamists!” the Whatever Will Get The Clicks of the Day.  A little over 412 days from now Americans will vote, and we’ll probably cast ballots based on the issue that is and remains the top American concern: It’s the Economy Stupid. Or, It’s the Stupid Economy.

Recommended: Robert Reich, “The Limping Middle Class,” New York Times, 9/03/11.  Danny Vinik, “Marco Rubio…”, New Republic, 1/14/15. Brendan Nyham, “Why Republicans are suddenly talking about economic inequality,” New York Times, 2/13/15.  Andrew Leonard, “The Hour Glass Economy,” Salon, 9/13/15.  Future of Jobs, “In an Hourglass Economy,” transcript, Marketplace.org, 8/2011. Bernard Starr, “Corporations Plan for a Post Middle Class America,” Business, Huffington Post, 4/6/12.  Mollie Reilly, “Thomas Piketty calls out Republican hypocrisy on income inequality,” Huffington Post, 3/11/15.

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Filed under Economy, elections