A Better Deal for American Workers

From today’s New York Times by Sen. Chuck Schumer (D-NY):

Americans are clamoring for bold changes to our politics and our economy. They feel, rightfully, that both systems are rigged against them, and they made that clear in last year’s election. American families deserve a better deal so that this country works for everyone again, not just the elites and special interests. Today, Democrats will start presenting that better deal to the American people.

There used to be a basic bargain in this country that if you worked hard and played by the rules, you could own a home, afford a car, put your kids through college and take a modest vacation every year while putting enough away for a comfortable retirement. In the second half of the 20th century, millions of Americans achieved this solid middle-class lifestyle. I should know — I grew up in that America.

But things have changed.

Today’s working Americans and the young are justified in having greater doubts about the future than any generation since the Depression. Americans believe they’re getting a raw deal from both the economic and political systems in our country. And they are right. The wealthiest special interests can spend an unlimited, undisclosed amount of money to influence elections and protect their special deals in Washington. As a result, our system favors short-term gains for shareholders instead of long-term benefits for workers.

And for far too long, government has gone along, tilting the economic playing field in favor of the wealthy and powerful while putting new burdens on the backs of hard-working Americans.

Democrats have too often hesitated from taking on those misguided policies directly and unflinchingly — so much so that many Americans don’t know what we stand for. Not after today. Democrats will show the country that we’re the party on the side of working people — and that we stand for three simple things.

First, we’re going to increase people’s pay. Second, we’re going to reduce their everyday expenses. And third, we’re going to provide workers with the tools they need for the 21st-century economy.

Over the next several months, Democrats will lay out a series of policies that, if enacted, will make these three things a reality. We’ve already proposed creating jobs with a $1 trillion infrastructure plan; increasing workers’ incomes by lifting the minimum wage to $15; and lowering household costs by providing paid family and sick leave.

Read the entire op-ed here.

FED Chair says risk of financial crisis increases if Trump deregulates economy

From today’s LA Times by Jim Puzzanghera:

Federal Reserve Chairwoman Janet L. Yellen told senators Thursday that the risk of another financial crisis would increase if some Trump administration proposals to roll back regulations were enacted.

In her second straight day of Capitol Hill testimony, she walked back her statement last month that she didn’t expect another financial crisis “in our lifetimes.”

“I think we can never be confident there won’t be another financial crisis,” Yellen told members of the Senate Banking Committee.

The U.S. has “done a great deal” since the 2008 crisis to strengthen the financial system, she said. That includes forcing banks to hold more capital to cover potential losses as part of the 2010 Dodd-Frank financial regulatory overhaul law.

“It is important that we maintain the improvements that have been put in place that mitigate the risk and the potential damage,” Yellen said.

President Trump has promised to dismantle Dodd-Frank, which Republicans have said has been too burdensome for banks.

In a report last month ordered by Trump, Treasury Secretary Steven T. Mnuchin proposed sweeping regulatory reductions, including changes that would reduce capital requirements for the biggest banks.

Yellen said she would not favor reducing those capital requirements.

Read the entire article here.

Gamers vs. Gainful Employment: Young Men Are Choosing Leisure Over Labor

A noticeable trend has emerged in the last decade: younger men are staying out of the labor force for longer periods of time or altogether. The cause? Economists increasingly focus on the growth of the “gamer” culture: men play more video games than women, and apparently they prefer the leisure of gaming to the frustration of personal growth that comes with gainful employment in the economy.

Past studies have shown an increasing prevalence of younger men to either avoid work or otherwise work intermittently, instead staying home and playing video games all day. This trend has intensified with the development of online gaming, where individuals play other individuals in live action games that happen in real time through various internet game providers.

According to a recent paper published by the economists Erik Hurst, Mark Aguiar, Mark Bils and Kerwin Charles at the Bureau of Economic Research:

By 2015, American men 31 to 55 were working about 163 fewer hours a year than that same age group did in 2000. Men 21 to 30 were working 203 fewer hours a year. One puzzle is why the working hours for young men fell so much more than those of their older counterparts. The gap between the two groups grew by about 40 hours a year, or a full workweek on average.

Although many economists have pointed to other factors including technological innovation, globalization, and the rise of service sector work, the paper argues that a significant percentage of younger men staying away from work can be traced to the rise of the “Gamer Culture.” That raises important questions about the gender gap at work, including the wage gap, but also whether productivity is stifled by a culture of technological fetishism that worships gadgets that enhance leisure activities rather than increase actual productivity on the job.

For a thorough review of the paper and this growing trend, read here.

Robocalypse Now? Central Bankers Argue Whether Automation Will Kill Jobs

From today’s New York Times by Jack Ewing:

SINTRA, Portugal — The rise of robots has long been a topic for sci-fi best sellers and video games and, as of this week, a threat officially taken seriously by central bankers.

The bankers are not yet ready to buy into dystopian visions in which robots render humans superfluous. But, at an exclusive gathering at a golf resort near Lisbon, the big minds of monetary policy were seriously discussing the risk that artificial intelligence could eliminate jobs on a scale that would dwarf previous waves of technological change.

“There is no question we are in an era of people asking, ‘Is the Robocalypse upon us?’” David Autor, a professor of economics at the Massachusetts Institute of Technology, told an audience on Tuesday that included Mario Draghi, the president of the European Central Bank, James Bullard, president of the Federal Reserve Bank of St. Louis, and dozens of other top central bankers and economists.

The discussion occurred as economists were more optimistic than they had been for a decade about growth. Mr. Draghi used the occasion to signal that the European Central Bank is edging closer to the day when it will begin paring measures intended to keep interest rates very low and bolster the economy.

“All the signs now point to a strengthening and broadening recovery in the euro area,” Mr. Draghi said. His comments pushed the euro to almost its highest level in a year, though it later gave up some of the gains.

But along with the optimism is a fear that the economic expansion might bypass large swaths of the population, in part because a growing number of jobs could be replaced by computers capable of learning — artificial intelligence.

Policy makers and economists conceded that they have not paid enough attention to how much technology has hurt the earning power of some segments of society, or planned to address the concerns of those who have lost out. That has, in part, nourished the political populism that contributed to Britain’s vote a year ago to leave the European Union, and the election of President Trump.

“Generally speaking, economic growth is a good thing,” Ben S. Bernanke, former chairman of the Federal Reserve, said at the forum. “But, as recent political developments have brought home, growth is not always enough.”

In the past, technical advances caused temporary disruptions but ultimately improved living standards, creating new categories of employment along the way. Farm machinery displaced farmworkers but eventually they found better paying jobs, and today their great-grandchildren may design video games.

But artificial intelligence threatens broad categories of jobs previously seen as safe from automation, such as legal assistants, corporate auditors and investment managers. Large groups of people could become obsolete, suffering the same fate as plow horses after the invention of the tractor.

Read the entire article here.

Is the Gig Economy Working?—For Some, But Not For Most Workers

From this month’s The New Yorker magazine by Nathan Heller:

The American workplace is both a seat of national identity and a site of chronic upheaval and shame. The industry that drove America’s rise in the nineteenth century was often inhumane. The twentieth-century corrective—a corporate workplace of rules, hierarchies, collective bargaining, triplicate forms—brought its own unfairnesses. Gigging reflects the endlessly personalizable values of our own era, but its social effects, untried by time, remain uncertain.

Support for the new work model has come together swiftly, though, in surprising quarters. On the second day of the most recent Democratic National Convention, in July, members of a four-person panel suggested that gigging life was not only sustainable but the embodiment of today’s progressive values. “It’s all about democratizing capitalism,” Chris Lehane, a strategist in the Clinton Administration and now Airbnb’s head of global policy and public affairs, said during the proceedings, in Philadelphia. David Plouffe, who had managed Barack Obama’s 2008 campaign before he joined Uber, explained, “Politically, you’re seeing a large contingent of the Obama coalition demanding the sharing economy.” Instead of being pawns in the games of industry, the panelists thought, working Americans could thrive by hiring out skills as they wanted, and putting money in the pockets of peers who had done the same. The power to control one’s working life would return, grassroots style, to the people.

The basis for such confidence was largely demographic. Though statistics about gigging work are few, and general at best, a Pew study last year found that seventy-two per cent of American adults had used one of eleven sharing or on-demand services, and that a third of people under forty-five had used four or more. “To ‘speak millennial,’ you ought to be talking about the sharing economy, because it is core and central to their economic future,” Lehane declared, and many of his political kin have agreed. No other commercial field has lately drawn as deeply from the Democratic brain trust. Yet what does democratized capitalism actually promise a politically unsettled generation? Who are its beneficiaries? At a moment when the nation’s electoral future seems tied to the fate of its jobs, much more than next month’s paycheck depends on the answers.

Read the entire article here.

Economic inequality in LA ripens new concerns about future riots

From today’s LA Times by Victoria Kim and Melissa Edelhed:

Nearly 6 out of 10 Angelenos think another riot is likely in the next five years, increasing for the first time after two decades of steady decline. That’s higher than in any year except for 1997, the first year the survey was conducted, and more than a 10-point jump compared with the 2012 survey.

Young adults ages 18 to 29, who didn’t directly experience the riots, were more likely than older residents to feel another riot was a possibility, with nearly 7 out of 10 saying one was likely, compared with about half of those 45 or older. Those who were unemployed or worked part-time were also more pessimistic, as were black and Latino residents, compared with whites and Asians, the poll found.

Researchers theorized that the turnaround may be linked to several factors, including the more polarized national dialogue on race sparked by police shootings in Ferguson, Mo., and elsewhere, as well as by the tenor of last year’s presidential election. Moreover, many parts of L.A. still suffer from some of the economic problems and lack of opportunities that fueled anger before the riots.

“Economic disparity continues to increase, and at the end of the day, that is what causes disruption,” said Fernando Guerra, a political science professor who has worked on the survey since its inception. “People are trying to get along and want to get along, but they understand economic tension boils over to political and social tension.”Los Angeles riots rememberedThere was a moment of silence candlelight vigil in Koreatown to commemoratethe 17th anniversary of the Los Angeles riots. This year’s theme focused on teaching their history to Korean American youth, many of whom were born after the riots, during which tensions between the city’s black and Korean communities exploded.

Although the city’s unemployment rate last year was about half of what it was in 1992, the median income of Angelenos, when adjusted for inflation, is lower than it was around the time of the riots. Poverty rates still remain high at 22%, comparable with the years preceding the riots.

Read the entire article here.

Read coverage of LA Times Special Edition: 25th Anniversary of LA Riots here.

Trump Cabinet Signals Embrace of Wall Street Elite

We told you so, America. Trump voters have elected a billionaire business man, with a myriad of conflicts of interest between his private companies and his new public position, and who has deep ties to Wall Street and the wealthy and political elite of this country. There will be no change under Trump; only more of the same status quo economics that has hurt ordinary working Americans and enriched the wealthy even more. It almost belongs in a Charles Dickens novel. So sad!

From The New York Times, December 1, 2016. Read the full story here.

In a campaign commercial that ran just before the election, Donald J. Trump’s voice boomed over a series of Wall Street images. He described “a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth, and put that money into the pockets of a handful of large corporations.”

The New York Stock Exchange, the hedge fund billionaire George Soros and the chief executive of the investment bank Goldman Sachs flashed across the screen.

Now Mr. Trump has named a former Goldman executive and co-investor with Mr. Soros to spearhead his economic policy.

With Wednesday’s nomination of Steven Mnuchin, a Goldman trader turned hedge fund manager and Hollywood financier, to be Treasury secretary, a new economic leadership is taking shape in Washington.

That two investors — Mr. Mnuchin and Mr. Ross — will occupy two major economic positions in the new administration is the most powerful signal yet that Mr. Trump plans to emphasize policies friendly to Wall Street, like tax cuts and a relaxation of regulation, in the early days of his administration.

While that approach has been cheered by investors (the stocks of Bank of America, Goldman Sachs and Morgan Stanley have been on a tear since the election), it stands in stark contrast to the populist campaign that Mr. Trump ran and the support he received from working-class voters across the country.

Don’t believe economic lies that Trump peddles this election

From today’s NYT article on Trump’s economic policy speech:

“But the economic agenda Mr. Trump described included many traditionally Republican policies that offer little to no direct benefit to working-class Americans, while giving a considerable financial boost to the wealthiest.

For example, Mr. Trump called for ending what Republicans label the “death tax.” He did not mention that the estate tax currently exempts the first $5.45 million for an individual and $10.9 million for a married couple — meaning that only the very wealthy pay even a dime. If Mr. Trump’s net worth is as large as he has says, his heirs would have a great deal to gain from eliminating the estate tax; the typical displaced steelworker or coal miner, or even a relatively prosperous retiree, would have nothing to gain.”

If disaffected workers want to make gains, they should not vote for someone who will institute “labor” reforms that make the already wealthiest American even more wealthy, while leaving workers themselves farther behind. The only way American workers will be able to make gains is by advocating for and passing labor reform that improves wages, while limiting the income gains of the wealthiest Americans who, let’s face it, already have enough to get them by comfortably.

Strong Unions, Strong Democracy

From yesterday’s New York Times “Opinion” by By Richard Kahlenberg

IF the questions that came up during oral argument in Friedrichs v. California Teachers Association on Monday are any guide, the ruling bloc of conservative justices appears ready to render a decision later this year that would significantly weaken public sector labor unions.

By stripping these unions of key financial resources — their fair share of fees provided by nonmembers — the court would upend a longstanding precedent. A decision in favor of the plaintiff would effectively slam the door on an era in which some conservatives joined liberals in recognizing that vibrant unions help make our democracy work. This is radicalism, not conservatism.

Public sector unions — representing teachers, firefighters and the like — are the remaining bright spot in America’s once-thriving trade union movement. In the case before the Supreme Court, Rebecca Friedrichs, a dissident teacher in Southern California, argues that she should be able to accept the higher wages and benefits the union negotiates, but not help pay for the costs.

Relying on the First Amendment, Ms. Friedrichs says that she shouldn’t be forced by the government to support political causes with which she disagrees. But almost four decades ago, the Supreme Court came to a sensible compromise on this issue, written by an Eisenhower appointee, Justice Potter Stewart:

No public sector worker can be compelled to join a union or to pay for its political efforts. However, the state may require that every worker pay fair share fees to support the costs of collective bargaining over bread-and-butter issues like wages, benefits and working conditions.

That 1977 ruling appears in real danger of being overturned. Doing so, David C. Frederick, a lawyer representing the union, told the court, “would substantially disrupt established First Amendment doctrine and labor management systems in nearly half the country.”

Continue Reading Full Article Here.

Voodoo Econ, the Next Generation

From yesterday’s NYT “Opinion” by Paul Krugman:

Even if Republicans take the Senate this year, gaining control of both houses of Congress, they won’t gain much in conventional terms: They’re already able to block legislation, and they still won’t be able to pass anything over the president’s veto. One thing they will be able to do, however, is impose their will on the Congressional Budget Office, heretofore a nonpartisan referee on policy proposals.

As a result, we may soon find ourselves in deep voodoo.

During his failed bid for the 1980 Republican presidential nomination George H. W. Bush famously described Ronald Reagan’s “supply side” doctrine — the claim that cutting taxes on high incomes would lead to spectacular economic growth, so that tax cuts would pay for themselves — as “voodoo economic policy.” Bush was right. Even the rapid recovery from the 1981-82 recession was driven by interest-rate cuts, not tax cuts. Still, for a time the voodoo faithful claimed vindication.

The 1990s, however, were bad news for voodoo. Conservatives confidentlypredicted economic disaster after Bill Clinton’s 1993 tax hike. What happened instead was a boom that surpassed the Reagan expansion in every dimension: G.D.P.jobswages and family incomes.

And while there was never any admission by the usual suspects that their god had failed, it’s noteworthy that the Bush II administration — never shy about selling its policies on false pretenses — didn’t try to justify its tax cuts with extravagant claims about their economic payoff. George W. Bush’s economists didn’t believe in supply-side hype, and more important, his political handlers believed that such hype would play badly with the public. And we should also note that the Bush-era Congressional Budget Office behaved well, sticking to its nonpartisan mandate.

But now it looks as if voodoo is making a comeback. At the state level, Republican governors — and Gov. Sam Brownback of Kansas, in particular — have been going all in on tax cuts despite troubled budgets, with confident assertions that growth will solve all problems. It’s not happening, and in Kansas a rebellion by moderates may deliver the state to Democrats. But the true believers show no sign of wavering.

Meanwhile, in Congress Paul Ryan, the chairman of the House Budget Committee, is dropping broad hints that after the election he and his colleagues will do what the Bushies never did, try to push the budget office into adopting “dynamic scoring,” that is, assuming a big economic payoff from tax cuts.

So why is this happening now? It’s not because voodoo economics has become any more credible. True, recovery from the 2007-9 recession has been sluggish, but it has actually been a bit faster than the typical recovery from financial crisis, despite unprecedented cuts in government spendingand employment. In fact, the recovery in private-sector employment has been faster than it was during the “Bush boom” last decade. At the same time, researchers at the International Monetary Fund, surveying cross-country evidence, have found that redistribution of income from the affluent to the poor, which conservatives insist kills growth, actually seems to boost economies.

 But facts won’t stop the voodoo comeback, for two main reasons.

First, voodoo economics has dominated the conservative movement for so long that it has become an inward-looking cult, whose members know what they know and are impervious to contrary evidence. Fifteen years ago leading Republicans may have been aware that the Clinton boom posed a problem for their ideology. Today someone like Senator Rand Paul can say: “When is the last time in our country we created millions of jobs? It was under Ronald Reagan.” Clinton who?

Second, the nature of the budget debate means that Republican leaders need to believe in the ways of magic. For years people like Mr. Ryan have posed as champions of fiscal discipline even while advocating huge tax cuts for wealthy individuals and corporations. They have also called for savage cuts in aid to the poor, but these have never been big enough to offset the revenue loss. So how can they make things add up?

Well, for years they have relied on magic asterisks — claims that they will make up for lost revenue by closing loopholes and slashing spending, details to follow. But this dodge has been losing effectiveness as the years go by and the specifics keep not coming. Inevitably, then, they’re feeling the pull of that old black magic — and if they take the Senate, they’ll be able to infuse voodoo into supposedly neutral analysis.

Would they actually do it? It would destroy the credibility of a very important institution, one that has served the country well. But have you seen any evidence that the modern conservative movement cares about such things?