Relevant and even prescient commentary on news, politics and the economy.

At least as of yesterday morning, the Democratic establishment still didn’t get it. Then again, as of late yesterday, neither did the Republican establishment. And neither did Donald Trump. [UPDATED]

CHUCK SCHUMER’S TOUGH BALANCING ACT: CNN reports on an interesting dynamic to keep an eye on:

“For Schumer, the challenges will be formidable. He’ll have to listen to the vocal and outspoken progressive wing of his caucus, led by Massachusetts Sen. Elizabeth Warren and Vermont Sen. Bernie Sanders, who have legions of supporters. But he also has five red-state Democrats in states Trump won convincingly — Indiana, Missouri, Montana, North Dakota and West Virginia — up for re-election in 2018. And if Schumer takes his caucus too far to the left, he’s bound to could put his moderates in a difficult political spot.”

Worth watching: Whether those red state Democrats claim the party has moved too far to “the left” when it resists Trump’s agenda.

The first big political war of Trump’s presidency will be explosive, Greg Sargent, Washington Post, yesterday at 9:55 a.m.

Late yesterday I received a listserve email from Bernie Sanders’ new organization, Our Revolution, asking what we most wanted the organization to do immediately.  I haven’t responded yet, but my message will be a plea that it begin an intensive effort to inform the public in the Rust Belt states, and the Midwest generally, of what exactly the Conservative Legal Movement was, and is, up to regarding handing control of the federal courts, and federal law, to billionaires and mega-corporate interests.

That’s what Citizens United was really about.  But it’s also what a slew of other 5-4 Supreme Court rulings have been about since the Conservative Legal Movement gained that majority on the Court.  And during the three decades when it thoroughly controlled the federal appellate and trial-level courts.

The Supreme Court effectively rewrote the Federal Arbitration Act to forced-arbitration clauses in almost every aspect of employment, consumer (including banking and credit card law), and securities law.  It also rewrote that Act so that it uses those forced arbitration clauses to effectively eliminate class actions.

It literally rewrote the Federal Rule of Civil Procedure, Rule 8(a), that sets the parameters for what lawsuit complaints, the legal pleading must state

It has been extremely hostile to labor unions; Samuel Alito openly invites the filing of litigation whose very goal is to undermine or outright eliminate them.

Every single one of these attacks, and many others, were born and grew up through a precision pipeline system of think tanks and so-called legal foundations, small, non-profit (thus “Foundation” as part of their title) law firms, all funded by extreme economic self-styled libertarian (the Madison Avenue-inspired ideological label they use) billionaires, including the Kochs, financial-industry billionaire families that include the Mercers and the Ricketts and who were top funders of Trump’s general-election campaign, and oil-and-gas billionaires, including top funders of Trump’s general-election and primary campaigns.

And that includes, extremely significantly, the Federalist Society, cofounded in about 1980 by Antonin Scalia, and whose most aggressive and unabashed members include Alito, Clarence Thomas and a slew of high-profile members of the federal appellate bench.  John Roberts also apparently was a member, although very quietly, throughout his career as a lawyer.

What I want most, and most immediately, for Our Revolution to do is to begin a major public-awareness push to tell all those Midwesterners and other Rust Belters—including those in rural areas and small towns—what exactly Trump was saying when he promised during the campaign to appoint justices in the mold of Antonin Scalia.  And who, exactly—who, exactly—is feeding him the names on list of possible Supreme Court nominees.  And who exactly will be feeding him recommendations for lower federal court appointments.

Suffice it to say, it ain’t the Rust Belters and Midwesterners who brung him, late in the game, to this dance because they support the Paul Ryan fiscal plan whose goal is to all-but-eliminate both taxes on the wealthy and the social safety net programs, such as food stamps and Medicaid, that many of them rely upon for, literally, survival.

Nor was it because they salivate at the thought of industry lobbyists writing legislation to be fed quickly through Congress and onto President Trump’s desk for him to sign.

Nor, I’ll venture, was it because they want the Supreme Court and the lower federal courts to be proxy arms of economic-winger billionaires and industries ranging from Wall Street to Walmart to communications to chemical and pharmaceutical, to Big Ag, to fossil fuel and lumber industries.   As they were for roughly three decades.

Mitt Romney received the votes of the deplorables, without whose support Trump would not have won.  But Romney isn’t president.  Barack Obama is.  Trump’s bizarre efforts beginning in 2011 to change that fact, notwithstanding.

Yet throughout the day yesterday, the news was filled with Ryan’s and McConnell’s exaltation at their expectation that President Trump will effectively be President Ryan.  Puppet Trump, in other words.  They’ll serve him avalanches of legislation to sign.  And they will control the key appointments to every single federal agency and commission that they want to control.  Which is almost all of them.

Including the SEC and the NLRB, the FDA, the FTC and the FCC.  As well as the Interior Dept., which they presume now will simply hand over to the lumber and fossil fuel industries massive amounts of federal lands.

Which brings me to this: Every bit as important as informing the public of this, for Our Revolution, for the Progressive Change Campaign Committee, for Democracy for America, and the reconstructed, soon-to-be-Sanders-supported DNC—and for Bernie Sanders and Elizabeth Warren themselves—to do, right now, is to begin a massive public information campaign about this that targets House members and Senate Republicans up for reelection in 2018.  In their states.  In their districts.  Including seemingly safe ones in the Rust Belt and the entire Midwest.

We have their number.  As we do Donald Trump’s.  And we have the grass-roots movement and the social-media networks to determine their latitude for installing these virulently anti-working class, pro-billionaire, pro-mega-corporate, pro-mega-powerful-industry cooptation of each of the three branches of the federal government.  Including that professed savior of the working class, Donald Trump.

I still remember looking that the map of Michigan’s counties the day after the primary last March, showing how each county voted in each of the two primaries—and being utterly stunned looking at the one for the Democratic primary.  If I recall correctly, every single county except Wayne (home to Detroit) and Genesee (Flint and surrounding area)—both counties largely African-American—voted for Sanders.  The Republican stronghold counties in the western part of the state all the way along or near Lake Michigan, went heavily for Bernie.  And, had African-Americans in Wayne and Genesee voted for Clinton roughly 3-1, as projected, instead of roughly 2-1, as they did, Bernie still would not have beaten her.

Apparently Chuck Schumer is unaware of this.  Bernie should tell him.  The old sheriff is gone, run out of town, or more accurately, the country, on Tuesday.  There’s a new sheriff in the country.  Named economic populism.

It could have been our sheriff; thanks to folks like you, it wasn’t.  But we can make due with the one who is not ours.

One side of this divide—the wealthy Republican and corporate elite, proxied by Ryan, McConnell, and the Federalist Society, or the folks responsible in such large part for bringing Trump to the dance—will control the federal government.  Puppet Trump. Puppeteers Ryan, McConnell, Wall Street and other industry lobbyists, and the Federalist Society.  On the other side, Rust Belt and Midwestern blue-collar voters.  Including labor union members.

And if it’s the former, it will last only until January 2019.  Believe me.

Better yet, believe Bernie Sanders.

 

____

UPDATE:  Holyyyy macaroni.  Chuck Schumer’s gotten the message now.  It took two and a half days.  But he’s gotten it now.

See “Schumer throws his support behind Keith Ellison for DNC chairman,” posted about an hour ago on the Washington Post’s website.

Wow.

So the first big political war turned out to be a two-and-a-half-day-long skirmish.  And this is why.  The times, they are a-changin’.  Really, really quickly.  In the Democratic Party.

Updated added 11/11 at 11:19 a.m.  Just past the eleventh hour of the eleventh day of the eleventh month.  It’s Veterans’ Day, folks.  Not to equate the two events, of course.  Just to acknowledge the meaning of Veterans’ Day, which originally was called Armistice Day.

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Trump Is Making the Same Mistake that Clinton Did: He’s Already Ignoring Working-Class Rust Belt Whites. Progressives Need to Start Illustrating This by Highlighting His Planned Court and Cabinet Nominees. Now.

There are several excerpts from the news media since Tuesday night that help drive home the point I make in that title about Trump and the Democrats in the immediate future.  But the excerpts are about Clinton, not Trump:

There are several excerpts from the news media since Tuesday night that help drive home the point I make in that title about Trump and the Democrats in the immediate future.  But the excerpts are about Clinton, not Trump:

There are vast rural, small-town or post-industrial areas of the country where Barack Hussein Obama will have greatly outperformed Clinton

– twitter.com/AlecMacGillis of Pro Publica, Nov. 8, late evening

And:

The left-behind places are making themselves heard, bigly

– twitter.com/AlecMacGillis of Pro Publica, Nov. 8, late evening

And:

From Pennsylvania to Wisconsin, industrial towns once full of union voters who for decades offered their votes to Democratic presidential candidates, even in the party’s lean years, shifted to Mr. Trump’s Republican Party. One county in the Mahoning Valley of Ohio, Trumbull, went to Mr. Trump by a six-­point margin. Four years ago, Mr. Obama won there by 22 points.

Donald Trump Is Elected President in Stunning Repudiation of the Establishment, Matt Flegenheimer and Michael Barbaro, New York Times, yesterday

And:

Clinton and her operatives went into the race predicting her biggest problems would be inevitability and her age, trying to succeed a two-term president of her own party. But the mood of the country surprised them. They recognized that Sanders and Trump had correctly defined the problem—addressing anger about a rigged economy and government—and that Clinton already never authentically could. Worse still, her continuing email saga and extended revelations about the Clinton Foundation connections made any anti-establishment strategy completely impossible.

So instead of answering the question of how Clinton represented change, they tried to change the question to temperament, what kind of change people wanted, what kind of America they wanted to live in. It wasn’t enough.

Using Trump as a foil and a focus, she hit on a voice and an argument for why she should actually be president that perhaps only she could have, and that she’d struggled for so long to find on her own. That wasn’t enough either.

Meanwhile, her staff harnessed all the money and support they could to out organize, first in the primaries and then in the general, grinding out victories while her opponents had movements.

None of it was enough, though all of it should have been, and likely would have been for another candidate. She couldn’t escape being the wrong candidate for the political moment.

Interviews over the closing weeks of the 2016 campaign with members of Clinton’s innermost circle, close advisers and other aides reveal a deep frustration with their failure to make a dent, a consuming sense that their candidate’s persecution paranoia might actually be right, and a devastating belief that they might never persuade Americans to vote for her.

“There was no way to generate momentum,” one top adviser said.

Any positive storyline from Clinton “was always fragile,” admitted that adviser, and issues related to the emails inevitably stripped away any uptick in Clinton’s favorable ratings.

Inside the Loss Clinton Saw Coming: Publicly they seemed confident, but in private her team admitted her chances were ‘always fragile.’, Edward-Isaac Dovere, Politico, yesterday

And:

To several top aides, the best day of this whole campaign was a year ago, before the Sanders headache or the Trump threat really materialized, when the House of Representatives hauled Clinton and her emails in with the single aim of destroying her candidacy over Benghazi. …

She delivered tirelessly [that day], knocking back the Republicans one by one, complete with facial expressions that have launched GIFs that have been all over Democrats’ Facebook and Twitter feeds ever since. She renewed her shaken team’s faith that she was the leader they wanted to follow into what was already shaping up to be a dejecting primary battle.

“It reminded people of everything they like about her,” said one of her senior advisers. “It’s toughness, but also a calm, adult presence of someone you can actually see being president of the United States.”

Inside the Loss Clinton Saw Coming: Publicly they seemed confident, but in private her team admitted her chances were ‘always fragile.’

And:

Bill Clinton had his own problems, but never that one [his gender], and neither did Trump, who openly disparaged women throughout his campaign and still prevailed. The result was at once unfathomably difficult for the Clintons and yet not entirely surprising to Bill. He saw the signs all along the way of this campaign. He knew the people who were voting for Trump, and also the people who during the primaries were voting not for his wife but for Bernie Sanders. He saw the anger and the feelings of disconnection, but he did not know how he, or his wife’s campaign, could connect to it effectively without resorting to demagoguery or false populism, something Hillary was not good at even if she was disposed to try.

The Clintons were undone by the middle-American voters they once knew so well, David Maraniss, Washington Post, today

And:

Last year, a prominent group of supporters asked Hillary Clinton to address a prestigious St. Patrick’s Day gathering at the University of Notre Dame, an invitation that previous presidential candidates had jumped on. Barack Obama and Joseph R. Biden Jr. had each addressed the group, and former President Bill Clinton was eager for his wife to attend. But Mrs. Clinton’s campaign refused, explaining to the organizers that white Catholics were not the audience she needed to spend time reaching out to.

As it became clear on Tuesday night that Mrs. Clinton would lose to Donald J. Trump, supporters cast blame on everything from the news media to the F.B.I. director’s dogged pursuit of Mrs. Clinton over her personal emails, and to a deep discomfort with electing a woman as president.

But as the dust settled, Democrats recognized two central problems of Mrs. Clinton’s flawed candidacy: Her decades in Washington and the paid speeches she delivered to financial institutions left her unable to tap into the anti­establishment and anti­-Wall Street rage. And she ceded the white working­-class voters who backed Mr. Clinton in 1992.

Though she would never have won this demographic, her husband insisted that her campaign aides do more to try to cut into Mr. Trump’s support with these voters. They declined, reasoning that she was better off targeting college­-educated suburban voters by hitting Mr. Trump on his temperament.

Instead, they targeted the emerging electorate of young, Latino and African-American voters who catapulted Mr. Obama to victory twice, expecting, mistakenly, that this coalition would support her in nearly the same numbers. They did not.

Hillary Clinton’s Expectations, and Her Ultimate Campaign Missteps, Amy Chozick, New York Times, yesterday

And then there is this:

Clinton picked Mook, instead of promoting a campaign manager out of loyalty from her own inner circle. She persuaded Podesta, who had kept his distance in 2008 because he didn’t get along with polarizing top strategist Mark Penn, to join as the guiding hand and the buffer for all the “friends of” who streamed in with advice and second-guessing.

But that didn’t mean there weren’t serious problems. Bill Clinton complained throughout that Mook was too focused on the ground game and not enough on driving a message-based campaign. Without a chief strategist in the mold of Penn or David Axelrod, the campaign was run by a committee of strong-willed aides struggling to assert themselves in the same space. Longtime consultant Mandy Grunwald and Palmieri grappled at points over message control as Palmieri worked her way into the inner circle. Mook and strategist Joel Benenson barely spoke to each other for the month of April, battling over their roles.

Inside the Loss Clinton Saw Coming: Publicly they seemed confident, but in private her team admitted her chances were ‘always fragile.’

And here it is, in summation of all of the above:

Whoever takes over what’s left of the Democratic Party is going to have to find a way to appeal to a broader cross section of the country. It may still be true that in the long term, Republicans can’t win with their demographics, but we found out Tuesday that the long term is still pretty far away. Democrats have to win more white voters. They have to do so in a way that doesn’t erode the anti-racist or anti-sexist planks of the modern party, which are non-negotiable. If only there were a model for this. [Link in original.  Do click it.]

The few Democratic leaders who remain are going to say that it was just a bad note struck here or there, or the lazy Bernie voters who didn’t show up, or Jim Comey, or unfair media coverage of Clinton’s emails, to blame for this loss. I am already seeing Democrats blaming the Electoral College, which until a few hours ago was hailed as the great protector of Democratic virtue for decades to come, and Republicans were silly for not understanding how to crack the blue “wall.” They will say, just wait for Republicans to overreach. Then we’ll be fine.

Don’t listen to any of this. Everything is not OK. This is not OK.

The Democratic Party Establishment Is Finished, Jim Newell, Slate, yesterday

Among all the email exchanges leaked from Podesta’s hacked email account—the ones I read; I read a couple of articles quoting from each group of releases—the most revealing, in my opinion, were two sets of exchanges released about a week before the Comey outrage.  Both were from early 2015, a few weeks before Clinton was scheduled, finally, to announce her candidacy in mid-April.

One shows newly hired campaign manager Robby Mook asking for John Podesta’s and Huma Abedin’s help in persuading Clinton to ask her husband to cancel a $225,000 speech to Morgan Stanley scheduled for a few days after her announcement and while she was scheduled to be in Iowa on her inaugural campaign trip.

The difficulty wasn’t resistance from Bill; it was resistance from Hillary, at whose instance the speech had been arranged.  The email exchanges indicate that Hillary could not be persuaded to all the cancellation, because it had been arranged personally by her and Tom Nides, a top aide to Clinton at the State Dept. and by then a top executive at Morgan Stanley.

Finally it was decided that Abedin would get Bill to agree to cancel the speech, and she would tell Hillary that Bill (who apparently did have qualms about the speech) was the one who decided to cancel it.  Abedin reported back to Podesta and Mook that Clinton was angry about it for a couple of days but then moved on.

The other one is from about the same time and is somewhat similar. This series of exchanges was among Mook, Abedin, Podesta and Neera Tanden, and concerned Hillary’s appearance in early May, shortly after her campaign announcement, at a massive Clinton Global Initiative gala in Morocco paid for by the king of Morocco, a friend of Clinton’s, who all told would donate $12 million to the foundation.  This, too, had been arranged by Hillary, and was not strongly supported by Bill or anyone else at the foundation.

Abedin’s emails suggest (without saying outright) that she and perhaps others had tried to dissuade Clinton from arranging this, and then, once Clinton had set the date of mid-April for her campaign announcement, tried to persuade Clinton to cancel it.  But by the time of this email exchange with Mook and Podesta, Abedin said it was so late and Clinton had had earlier opportunities to cancel but instead had assured her presence there, that it will break a lot of glass” (or some such phrase) for Clinton to cancel.  Mook did manage to get Clinton’s agreement to have Bill attend instead of her.

These instances illustrate what was a constant throughout: Mook and two or three others, including Podesta, having to put on a full court press to stop Clinton from acting as though she weren’t a candidate for president.  Or a candidate for anything.  Both Podesta and Tanden complained about Clinton’s “instincts,” a euphemism for “I’m completely unaware of the overarching mood of the public in this election cycle.  Or, I don’t give a damn about the overarching mood of the public in this election cycle.  And I certainly don’t give a damn about down-ballot Dems.  Or about Dems.  Or about anything other than what I want to do.”

Clinton arranged to clear the Democratic field of anyone thought in early 2015 to have chance against her in the primaries. She just wasn’t willing to swear off anything else she wanted, besides the presidency, in order to reduce the chance that she would lose the general election.

This wasn’t Lent, after all.  And anyway, Clinton isn’t Catholic.

Had Mook not killed that $225,000 speech to Morgan Stanley by Bill Clinton in April 2015, Bernie Sanders—whom Clinton could not clear the field of until June 6, 2016—would have won the nomination and would be president-elect now, accompanied by a newly elected Senate, and maybe House, Democratic majority. That fee would have been identified in the Clintons’ tax returns, filed presumably in last April and (presumably) released shortly afterward.

In early 2015, when Hillary was arranging for Bill to give that speech—undoubtedly arrangements made shortly after Elizabeth Warren removed any doubt that she would run—Clinton looked to be free of any challenge from the left.  So it didn’t bother her one whit that this would be revealed during the primary season.

Nor, since she expected her general election opponent to be Jeb Bush or Marco Rubio, did it concern her that this would be known during the general election campaign.  It wasn’t as if Bush wasn’t a wholly owned subsidiary of Wall Street.  Or Rubio owned by other highly unpretty financial interests.

And even if it did, well, it was worth the risk.  After all, after the general election, the gravy train for both her and her husband would stop. And it wasn’t blue collar workers in the Rust Belt who were her target votes, so it wasn’t all that big a risk anyway.

So we were saddled with a Democratic presidential nominee whose decades in Washington and the paid speeches she delivered to financial institutions left her unable to tap into the anti­establishment and anti­-Wall Street rage. Someone who had to cede the white working­-class voters who backed Barack Obama in 2008 and again in 2012, because the only way someone who’d taken so very much money from Wall Street as personal income for doing so very little—someone who was selling her anticipated presidency to Wall Street—had no avenue with which to connect effectively with working class Rust Belters without resorting to demagoguery or false populism, something she was not good at even if she was disposed to try.

The answer then was to highlight her high status and the importance she placed on connections with celebrities and the pillars of the establishment in various venues, by campaigning hardly at all, by spending August secluded in the Hamptons, by parading with entertainment celebrities at the few rallies she had.

And by incessantly rolling out ever more names of the most elite establishment people to endorse her or at least make clear that they, too, recognized that her opponent is unfit to hold the office of the presidency.  Because even though the targeted audience has access to the same information on that the elite establishment did, and were reminded by Clinton and her ad campaign of these lowlights so often that they lost their resonance, there might be a few people whose decision would turn on the opinion of these elites.

They just weren’t the people the blue collar Rust Belters who, it seemed clear all along would play an outsize role in the outcome of the election.  As they had in 2008 and 2012.

Nor, apparently, did she have any avenue to point out whom Trump’s financial campaign backers actually were, who was writing his budget and regulatory proposals, who was selecting his court and agency-head nominees, his SEC, FTC and NLRB member nominees, and why.  They’re not people with labor union backing, nor do they have the interests of blue collar folks at heart.  Their interests are diametrically opposite those of blue collar workers.  And Trump wasted not so much as a day in handing over to them the entire panoply of powers of the federal government.

But having sold her avenue for informing people of this, to Wall Street and any other huge-money interest waiving a mega-check around in exchange for a 45-minute-long speech by or question-and-answer session with, the likely president she was limited to reminding voters of what they themselves saw, and assuring them that elites viewed him just as they did.  Which may be why her campaign manager, Mook, wasn’t as focused on messaging as Bill Clinton wished.  Normally, a candidate has one. This candidate had foreclosed to herself the message she needed to have, and had nothing much filling in for it. That wasn’t Mook’s fault.

Trump wasn’t going to co-opt Paul Ryan and Mitch McConnell.  Paul Ryan and Mitch McConnell were going to co-opt Trump.  All the indications were that that is what would happen. And that, Trump has made unabashedly clear now, is what will happen. Our nominee couldn’t—or at least wouldn’t campaign on this anything resembling consistency.

The way to contain this is for high-profile Democrats to make clear to the public what is happening.  And to threaten massive campaigns on this in none other than the Rust Belt, in the 2018 election cycle.  And to start very, very soon. People who supported Obama in 2008 and 2012 aren’t Donald Trump’s base.  Most of them would have flocked to Sanders or to Elizabeth Warren in this election.

The latter should be shoved in anyone’s face who starts blathering about sexism hurting Clinton among the hoi polloi. The former should answer the question about whether racism was part of the appeal to the voters who put Trump over the top, by one per cent, in Michigan, Wisconsin and Pennsylvania, and came within barely more than a point of doing son in New Hampshire and, of all states, Minnesota.  All states went comfortably for Obama, and all except Pennsylvania went for Sanders in the primary, as did Indiana.  And had Warren instead of Sanders been Clinton’s primary challenger, she like Sanders would have voted for her.

People who claim otherwise on either point don’t know the region.  It is not the South and it is not the Southwest. Trump’s racism and xenophobia did not win those states for Trump.  Nor did Clinton’s gender.

The first step is to appoint a strong Sanders backer in charge of the DNC.  Jeff Weaver, maybe.  Or Jim Dean.  No war for the soul of the party.  That ship sailed on Tuesday.

Recognize that.

And join me in wishing Hillary and Bill Clinton a happy jaunt in their retirement as they luxuriate in the massive wealth that, while possibly still not quite enough to sate them, we are about to pay very dearly for.

____

Links to be added later today.

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The Bottom 10 Performing Immigrant Groups in the US – Lessons Learned

In my last post, I looked at the top ten immigrant groups by country of origin to the US, ranked by their per capita income in the US. In this post, I want to look at the bottom ten countries. Here’s some information on those countries (data sources mentioned at the bottom of the post):

Post 3, Figure 1 - Bottom 10 Countries by Immigrant Income - Corrected
(click to embiggen)
(note – this is a corrected table. Thanks to reader Mike B for pointing out the error in the last column of the table.)

The first thing to note is that Saudi Arabia is an outlier. Based on median age, education, and income, the composite Saudi immigrant described by this table is either a graduate student, a layabout, or something in between. Many Saudis may be receiving income from sources that are not accounted for in this table; from my limited experience, Saudi expats I have come across seem to receive a stipend, which is born out from other sources, though it seems those stipends are getting cut due to falling oil prices.

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The Top 10 Performing Immigrant Groups in the US – Lessons Learned

by Mike Kimel

The Top 10 Performing Immigrant Groups in the US – Lessons Learned

First, I’d like to apologize. An earlier version of this post was taken down because I sent it with the wrong table. This version has the correct table, and I added a bit of verbage as well.

In my last post, I noted that that on aggregate, immigrants’ per capita income in the US was correlated with the GDP per capita in their native land. The following two graphs were generated:

kimel 17Figure 1

The graph on the left shows that on aggregate, immigrants from richer countries do better in the US than immigrants from poorer countries. The graph on the right shows that the effect is magnified for immigrant groups which have been in the US for the longest.

In this post, I want to look at the top ten countries (for which data is available) ranked by earnings of a country’s immigrants to the US to see if there are obvious lessons to be learned:

Post 2, Figure 2 - Top 10 Countries by Immigrant Income - Corrected
Figure 2

The first thing to note is that most of the countries on the top ten list are relatively wealthy to start with. This make them examples of the rich stay rich, and not examples of the poor making good.

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Taking the CEO Salary Fight Local

Portland, Oregon’s government will be the first to test the legislative waters on excessive CEO pay by companies if passed the city board December 7, 2016. If the pay of a CEO exceeds 100 times of what a typical company employee makes, a surtax will be assessed the corporation. More than 500 corporations do enough business within Portland to be affected by the new tax. Since the Republican led Congress has failed to act on CEO excessive pay based upon Risk, many states and cities are looking at taking it upon themselves to assess companies who pay their executives in stock options and similar performance methods as it is taxed at a lower level than regular income. With the new tax, Portland is expected to generate up to $3.5 million, which will be used to care for the homeless.

Firms that do business in Portland would owe a 10 percent surtax on the city’s existing business tax if they pay their CEOs more than 100 times what their workers receive. For example, if a large company owes the city $100,000 and has a pay ratio of 175-to-1, its surtax would be $10,000. Other cities such as San Francisco are considering taking similar action.

Peter Drucker had strong feelings on the subject and he once termed sky-high CEO compensation ‘a serious disaster,’ which was well worth revisiting in light of the news that the men who sat atop Fannie Mae and Freddie Mac (FRE) (BusinessWeek, 9/10/08) could be eligible for as much as $24 million in severance and other benefits after being ousted from their positions. Last week the federal government was forced to step in and rescue the faltering mortgage giants in a move that could cost taxpayers billions.”

Around that time CEO’s had income packages worth $10.5 million or about 344 times what the average worker was making. Peter Drucker felt a CEO’s pay should not exceed 20 times (1984) what the average worker was making in income. As of 1993 the problem has worsened as companies dodge corporate income tax by paying their CEO is stock options which can be deducted from corporate income tax and are tax at a lower rate than ordinary income tax at ~39%.

References:

“Put A Cap on CEO Pay” , Rick Wartzman, Bloomberg, September 12, 2008.

“Take The CEO Pay Fight Local”, Sarah Anderson, US News, October 21, 2016.

Institute for Policy Studies — Talking Points —, Sarah Anderson, October, 2016.

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Wall Street CEO Bonus Loophole

Sarah Anderson at Institute for Policy Studies writes about how the 1993 reform to rein in runaway CEO pay by capping tax deductions of executive compensation at $1 million created a loophole as it did not apply to stock options and other performance pay methods. More-performance-measured-income to executives paid out, the lower the company income tax presently.

What was the impact?

CashingInOnTheCrisis-Graphic-1-1[1]
$2 billion in fully deductible performance bonuses by top 20 U.S. banks to their top five executives over the past four years at a 35 percent corporate tax rate resulted in a taxpayer subsidy of > $725 million or $1.7 million per executive per year.

CashingInOnTheCrisis-Graphic-2-1
On-the-hot-plate Wells Fargo Bank between 2012 and 2015 received $54 million in tax subsidies for CEO John Stumpf bonuses. During those years, CEO John Stumpf’s bank faced $10.4 billion in misconduct penalties.

CashingInOnTheCrisis-Graphic-3-1-400x200[1]
The same top 20 executives received ~ $800 million in stock-based “performance” pay, before stockholders were out of the red and the bank’s stocks returned to pre-2008 levels.

CashingInOnTheCrisis-Graphic-4-1[1]
Jamie Dimon CEO of JP Morgan cashed in fully deductible $23 Million in bonuses in Feb/March 2010 while the nation was still reeling from the crisis. Since 2010 JP Morgan has received $28 billion in penalties for mortgage misconduct.

The same as Main Street bailing out Wall Street for their malfeasance, Main Street was also subsidizing Wall Street Executive bonuses. Some potential solutions:

Implement Sec. 956 of Dodd-Frank: Rigorous limitation by regulators of Bank excessive risk taking and the banning of excessive bonus based upon risk – “not yet been implemented and this proposal does not go far enough to prevent the type of behavior that led to the 2008 crash.” Sec 956 allows lenient bonus deferrals, weak stock-based pay restrictions, and discretionary enforcement left to bank managers.

Close the hedge and private equity loophole which allows private equity and hedge fund managers to pay a 20 percent capital gains rate on the bulk of their income rather than the 39.6 percent ordinary income rate. The Carried Interest Fairness Act of 2015 (HR 2889/S 1689) requires that the “carried interest” compensation received by private equity and hedge fund managers be taxed at ordinary income rates. Due to a lack of activity by Congress some states such as New York are implementing their own legislation to close the loop hole generating $3 billion in new revenue.

The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S. 1127 and HR 2103) eliminates “performance pay” exemptions and caps the deductibility of compensation at $1 million for every employee.

Reference:

Executive Excess 2016: The Wall Street CEO Bonus Loophole, Sarah Anderson and Sam Pizzigati, Institute for Policy Studies, August 31, 2016. “The first report to calculate how much taxpayers have been subsidizing executive bonuses at the nation’s largest banks.”

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How Does Diversity Affect Economic Growth?  A Look at Data on Immigration, Tax Rates and Real GDP per Capita

Authored by Mike Kimel

In this post, I will explain the annualized growth rate in real GDP per capita using tax rates and the percentage of the population that is foreign born using data for the United States.  The data shows the following:

A. the tax rate that maximizes economic growth is higher than you think
B. immigration from countries with advanced economies whose population resembles the US correlates with faster economic growth over subsequent years
C. increasing rates of immigration from countries with diverse populations does not correlate with faster future economic growth

You can skip ahead to the results of the regression if you want.  Otherwise, if you care about the details, here goes…

I used to occasionally write posts where I would build models based on fitting models of the following form: 

growth in real GDP per capita, t to t+1 = f(tax rate at t, tax rate squared at t)

In that formulation, tax rate = top marginal income tax rate.  The quadratic form allows us to find a tax rate that maximizes growth rates if the real world has such a thing (which, happily, it does as we will see below).   

More recently, I have been looking at how immigration has affected the economy.  In particular, I had a few posts looking at this relationship:

job growth, t to t+10 = f(foreign born % at t)

Why the ten year look-ahead?  To be frank, I just got tired of arguing with readers about causality.  Comparing X today to Y over the next ten years puts a halt to chicken and egg arguments tout suite.  

I’ve also had a few essays speculating about the effect of changes in immigration law in 1965 on the economy but in those posts, I relied only on logical and not on data.  

In this post, I want to combine those three (well, really two and a half) issues. I will fit the following model:

1. Dependent variable:  annualized growth in real GDP per capita, t to t+10
2. Explanatory variables i and ii are tax rate and tax rate squared, both at time t
3. The next explanatory variable is the % of the population that is foreign born at time t.   But…  if immigration, and its impact on the economy, changed as a result of the 1965 Immigration Act as I’ve stated in earlier posts, what we really need is two variables:
3a.  Foreign Born as a % of the Pop Until 1965 (and zero otherwise)
3b.  Foreign Born as a % of the Pop After 1965 (and zero otherwise)

Tax rates came from the IRS’s historical table # 23.  The foreign born percentage was obtained from the Migration Policy Institute (MPI).  The MPI’s data originated with the Census, but they organized it a bit better so I downloaded it from them rather than the Census.  Data is available in ten year increments from 1850 to 2010, and annually from 2010 to 2015.   I annualized the decennial data by simply assuming a linear annual change between every tenth year’s figures.  

The entire set of data was organized in Excel, but the regression itself was run in R.  The output (click on figure for larger size) appears below:

OutputFromRGrowthTaxesForeignBorn

The first thing to note is that the model explains about half of the variation in the ten year economic growth rate.  Not bad for tax rates and immigration alone.  

Next, the coefficient on tax rates is positive, the coefficient on tax rates squared is negative, and both are significant.  (That’s the quadratic relationship mentioned earlier.)  If you do the math, it turns out that the rate that maximizes the ten year annualized growth in real GDP per capita is 55%. This is about what most of my previous estimates over the years have come up with as well.  

Moving on, the next variable is the percentage of the population that is foreign born in years prior to 1965.  That variable is positive and significant even at the 1% level.  In plain English, before 1965, more immigrants -> faster economic growth. 

But the next variable is problematic, and spits out a result that is, at a minimum, politically incorrect. That variable, the percentage of the population that is foreign in years after 1965 is negative though not quite significant.  If we are worried about being reported by the neighbors, we could with a straight face, stop here and state from this that immigration has not not affected growth since 1965.  For the moment, let’s do that.  

The coefficients and relative significance of the last two variables essentially restate what I have been writing in the last few weeks.  As a result, I can explain what is going on by more or less plagiarizing myself.  So, at a high level, why does pre-1965 immigration clearly boost economic growth and post-1965 immigration clearly not?  As I noted in earlier posts, from 1921 to 1965, about 70% of the immigrants came from Germany, Great Britain and Ireland.  The 1965 Immigration Act was designed to allow more immigration from the rest of the world.  

Before 1965 immigrants would have fit in more seamlessly. After all, the US had been strongly shaped by previous immigrants from the very same countries where the new immigrants had just left.  Furthermore, most of the people the immigrants would encounter in their new land would have experience with other immigrants from the same culture. Additionally, in the last century technology was an important driver of growth, and the countries which supplied the most immigrants before 1965 also happened to be fairly technological advanced countries.  One more thing to keep in mind – the percentage of the population that was foreign born shrunk steadily from close to 12% in 1929 to about 5% in 1965.

Since 1965, of course, the story is very different.  The foreign born population has been increasing, reaching 13.5% in 2015.  Post-1965 immigrants have been far more heterogeneous in ethnic composition and skillset than the earlier group.  May have come from poorer, less technologically advanced societies.  Some have cultural traits that are not entirely compatible with accepted norms in the US which results in a variety of frictions.   

My guess, from the results, is that if more granular data was available on post 1965 immigration (say, by country of origin, or better still, by education level and education quality), it would turn out that some subsamples of post 1965 immigration had positive and significant effects on growth, but proportionately larger subsamples would have negative and significant coefficients.  I will dig a bit harder to see if I can find data that can confirm or repudiate my guess.  

A few closing comments.  Given the election is coming up, it is worth noting that Hilary and Trump are on opposite sides of both the tax and immigration issues.  Hilary’s proposed tax changes are likely to generate faster economic growth, Trump’s proposed tax changes are likely to slow the economy.  On the other hand, Trump’s immigration proposals (to the extent that they can be coherently defined) suggest an interest in pre-1965 style policies.  Hilary, though, will probably accelerate the path we are already following.  

For what it is worth, both tax and immigration policies have consequences.  However, it is easier to change direction, or to reverse the effects of earlier policies if those relate to the fiscal rather than the immigration arena.  That’s why the Roman Empire could survive crazy behavior by madmen like Caligula and Nero, but one mistake by a dry technocrat like Valens led inexorably to the sacking of Rome.  

In future posts, I will try to understand what some of the impediments have been to integration of post-1965 immigrants.  I am also interested in whether and how those impediments can be reduced.    

Finally, as always – if you want my data, drop me a line at my first name (mike) dot my last name (kimel – and that’s with one m, not two) at gmail which of course is followed by a dot com.  I’d be happy to share my Excel spreadsheets and if you want it, the trivial amount of R code that went into this.  If you contact me within a month of this post going up, I’ll send it to you.  Beyond that, I will probably send it to you but no guarantees.  I reserve the right to have my computer stolen, go into a coma, move on with my life, etc.  But of course, the data is pretty easy to recreate.  

One postscript…  This post kind of reminds of me of Presimetrics, the book I wrote with Michael Kanell.  I like to think the book never found an audience because we went where the data took us, rather than towing either the Republican or the Democrat Party lines.  As a result, some of the results we presented were in line with Republican beliefs, and some with Democrat beliefs, but neither side could embrace the results.  Had we been smart enough to be partisan hacks, perhaps the book would have sold much better. 

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Jeeps Made w/American Steel by Union Workers in Toledo

CLEVELAND — Hillary Clinton entered the final phase of her campaign on Friday, working to ensure a victory that is decisive enough to earn a mandate for her presidency and a surge of voters to help Democrats win congressional races.

Emerging from a nine­-day absence from the trail, Mrs. Clinton seized on the momentum of her performance in the final presidential debate, choosing Ohio — a battleground state where she has struggled the most against Donald J. Trump — as her first stop on a four­-day swing. With new polls showing Mrs. Clinton closing in on Mr. Trump in the state, her campaign is glimpsing the opportunity for a clean sweep of traditional swing states.

Reminding voters of Mr. Trump’s refusal in Wednesday’s debate to say definitively he would accept the outcome on Election Day, Mrs. Clinton said that as secretary of state she had visited countries whose leaders jailed political opponents and invalidated elections they did not win. “We know in our country the difference between leadership and dictatorship,” she said.

She also portrayed herself as a the candidate who could attract independent, undecided and even Republican voters unhappy with Mr. Trump’s campaign. “I want to say something to people who may be reconsidering their support of my opponent,” she said. “I know you still may have questions for me, I respect that. I want to answer them. I want to earn your vote.”

Her stop here marked the start of a rare multiday tour of swing states as the Clinton campaign revved up its efforts to decisively defeat Mr. Trump on Nov. 8, including releasing a powerful minute­-long ad featuring Khizr Khan, the father of a Muslim American soldier killed in Iraq. The ad featuring Mr. Khan, who was attacked by Mr. Trump after he spoke at the Democratic convention, will run in Ohio, Florida, Pennsylvania and North Carolina, as well as other crucial states.

Hillary Clinton Makes Pitch for Mandate and a Swing-­State Sweep, Trip Gabriel and Ashley Parker, New York Times, today

She knows some voters still may have questions for me, and she respects that and wants to answer them, and earn her listeners’ vote?  Does she think those questions are whether or not she would accept the outcome on Election Day if she lost?  And about whether as president she’d trash families of fallen U.S. Armed Services members who are Muslim, and attempt to categorically keep Muslims from immigrating here?

Who does she think that reminding voters of Trump’s actions and words of those sorts, including ones that has dominated the news and internet since last Wednesday night, is concerned about whether Clinton would do these things?

Clinton obviously thinks that these things are the only things that moderates and mainstream Republicans would support her about.  That’s what’s been at the heart of her campaign from its inception to, apparently, this very minute.  And it’s why she’ll win only because of who her opponent is, and why Dem Senate candidates are struggling so hard.

Paul Krugman keeps pushing the line that Clinton actually  is a terrific candidate, and by golly she’d be way ahead against Rubio or another mainstream Republican, partly because those candidates’ policy agendas and base-baiting lines are mostly pretty similar to Trump’s.  He’s right about mainstream Republican candidates’ policy agendas and, certainly, about the meaning of the Rubio bot.  But he probably still would be very much in the running to beat Clinton—who herself is trapped in a bot.

Meanwhile, yesterday, there was this little news story:

Ohio Sen. Sherrod Brown and a staffer were in a car crash in the senator’s home state on Thursday, but have been released after receiving treatment for minor injuries at a Cleveland area hospital.

The Columbus Dispatch reports that Brown and the staffer were driving from Columbus to Brown’s home in Cleveland when they were hit by another car around 4 p.m.

Brown, a Democrat, thanked hospital staff and the makers of his Jeep Cherokee in a statement to the newspaper. “[M]y Jeep Cherokee, made with American steel by union workers in Toledo, made all the difference in allowing us to walk away from this crash, a little stiff, but unharmed,” he said.

Brown reaffirmed his thanks in a Twitter post on Friday: “Thx for care & concern. Doing fine. Grateful to Parma police, medical staff & my Jeep made w/American steel by union workers in Toledo,” he wrote.

The Dispatch also reports that “Brown’s rescue dog Franklin, strapped in with a harness, was uninjured.”

Sherrod Brown treated for minor injuries after car crash, Madeline Conway, Politico

I don’t doubt that the ad featuring Mr. Khan is powerful.  But I do doubt that it will sway many wavering Rust Belters, because they already know Mr. Khan’s message.

Had the Clinton stranglehold on the Democratic Party apparatus (certainly including donors) not elbowed out the very thought of any progressive other than Bernie Sanders—who ran only because no other progressive would—Sherrod Brown I think would have.  And would be about to witness a largely-progressive Democratic wave not seen since Franklin Roosevelt’s death.

Instead, Democrats may not even retake the Senate.

Even Franklin probably knows that things such as NLRB appointments would be good to mention in Ohio.  Maybe he can tell Clinton.  Since her campaign gurus apparently haven’t.

 

____

ADDENDUM:  Gail Collins’s NYT column today, titled “Don’t Take Donald Trump to Dinner,” is mostly about Trump’s jarring use of the annual Catholic Charities dinner in NYC a few days ago as just another forum for his usual ugly comments about Clinton.  But Collins also said this:

In a perfect world, Hillary Clinton would then have gotten up and given the most good-­natured speech in political history, scrapping all the barbed lines in her prepared script, like the one about how a Trump White House would be awkward for gatherings of the ex­-presidents (“How is Barack going to get past the Muslim ban?”). But she didn’t change a word, because Clinton is not a spontaneous politician.

If this were a normal election, we could have a very interesting discussion about how programmed she can be, and whether that would be a problem if she’s elected. But as things stand, unless we discover she’s actually an android, there’s just no point.

I wouldn’t have expected Clinton to spontaneously scrap her prepared speech and give an entirely off-the-cuff one, and at least that joke that Collins quoted was funny and pointed at Trump’s and the alt-right’s actual words and positions.

But this is a person who genuinely seems unable to take a breath on her own, and who apparently delegated to campaign consultants and advisors her campaign’s very raison d’être.  G.W. Bush did the same.  But that was unusual.  And it was a very different political era, although Clinton and her circle hadn’t noticed this until Bernie Sanders and Donald Trump forced them to belatedly, and even then not really.  Or at least not fully.  Even yet.

We have no choice now but to look forward, not backward.  But anyone who thinks that had either one run, Elizabeth Warren or Sherrod Brown would not be about to usher in a genuinely progressive era, is willfully blind.  That is precisely because a Warren or a Brown campaign’s raison d’être would be Warren’s or Brown’s own raison d’être as politicians to begin with, argued eloquently and passionately, and contrasted to their Republican opponent’s and the Republican Party’s—in their own words, their own sentences, their own paragraphs.

Added 10/22 at 4:40 p.m.

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Really disappointed that Clinton last night didn’t mention Trump’s single-year businesses losses of $916 million and his habitual stiffing of employees and contractors, and didn’t directly protest Wallace’s absurd the-stimulus-led-to-the-slow-growth assertion

After the first debate, there was some criticism of Clinton that she came off as “too prepared”—a semantic contrast to Trump’s lack of preparation—and then criticism of the criticism: How can someone be too prepared for something?

The answer to that question is that what was really meant by “too prepared” was “too programmed.”

That was true again last night to some extent, in my opinion, particularly when she didn’t respond to Trump’s bragging about his business prowess that Trump’s businesses lost $916 million in a single year and that he habitually stiffs employees and contractors.  Instead she just mentioned that Trump started his business with a yuge loan from his multimillionaire father—an important point, but one that should have been joined to a comment noting that he lost $916 million in a single year and that he habitually stiffs employees and contractors.

That’s a point Clinton has made many times, including at each of the two earlier debates, when, granted, it mattered more.  But the points are key to so much deconstructing Trump’s claim to business genius and also as critical evidence of his sociopathology.  I hope she places this at the center of ads and rally comments going forward.

Clinton also failed to explicitly correct a glaring and really significant misstatement of fact by Chris Wallace, when he said that the low level of economic growth was caused byled to—the 2009 Obama stimulus program.  That was a preposterous falsehood, and I wondered whether any pundit would actually catch that and make an issue of it.

Thankfully, one did.  Thank you, Professor Krugman.  And I bet (and hope) you discuss it fully in your column tomorrow.

Look, I fully recognize that Clinton is at this point emotionally exhausted—really drained—as is Trump.  It was evident on both of their faces almost from beginning to end last night.  And on balance, she did fine, I thought.

But her very best moment last night came in a spontaneous comment, when she retorted, “Well, that’s because he [Putin] wants a puppet.”  Obviously, it’s important to come to a debate armed with specific points to get across.  But that should not preclude responding extemporaneously to statements by your opponent or by the moderator.

Still, ….

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Paul Krugman Gets Berned. Er, Burned.

In a speech to a Morgan Stanley group on April 18, 2013, WikiHillary praised the Simpson­Bowles deficit reduction plan, which included reforming the tax code to increase investment and entrepreneurship and raising certain taxes and trimming some spending and entitlements to make them more sustainable.

The ultimate shape of that grand bargain could take many forms, she said, but Hillary stressed behind closed doors: “Simpson-­Bowles … put forth the right framework. Namely, we have to restrain spending, we have to have adequate revenues and we have to incentivize growth. It’s a three-­part formula.”

She is right. We’ll never get out of this economic rut, and protect future generations, unless the business and social sectors, Democrats and Republicans, all give and get something — and that’s exactly where WikiHillary was coming from.

WikiHillary for President, Thomas L. Friedman, New York Times, today

Eeewwwwwe.  I mean, um … yikes.

Friedman, of course, has spent the last decade or more obsessively pushing a “Grand Bargain.”  He says in today’s column that he wishes Clinton had campaigned on this.  In order to build an electoral mandate for it, see.

Seriously; he says this.

Paul Krugman, by contrast, has spent the eight years or so trashing deficit mania, and the last five years mocking Simpson-Bowles.  And Simpson and Bowles.  And their ilk.  Including Thomas Friedman.

Also in Friedman’s column today:

In an October 2013 speech for Goldman Sachs, Clinton seemed to suggest the need to review the regulations imposed on banks by the Dodd­Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010. Her idea was not to get rid of all of the rules but rather to make sure they were not imposing needless burdens that limited lending to small businesses and start­ups.

As Clinton put it, “More thought has to be given to the process and transactions and regulations so that we don’t kill or maim what works, but we concentrate on the most effective way of moving forward with the brainpower and the financial power that exists here.” Again, exactly right.

Friedman thinks this, too, would have been a hit with the public if only Clinton had had the guts to campaign on it.

Krugman in his Twitter feed has been pushing the proposition that Clinton really, honestly, dammit, was the strongest possible Democratic nominee to beat Trump, cuz she so deftly baited him during the first debate into his weeklong meltdown about that former Miss Universe, and no other candidate would have thought to do that.  Then again, there are a few possible candidates whose victory would have been assured without that.  But, whatever. Candidates who speak like this, for example.*

And he responded to some pundits’ dismay at the tail-wagging-the-dog role that Clinton’s campaign consultants and friends—as Frank Bruni put it recently, the extensive array of Clinton whisperers—who crafted everything from minutia to the very raison d’être for her candidacy, by insisting that that’s what consultants do.  Making me wonder why we don’t just cut to the chase and cut out the puppet, and nominate a consultant instead.

None of this matters now, of course.  I’ll reiterate, yet again, that I believe that Clinton is a genuinely different candidate, politician, and in important respects, person now than she was until recently.  And I support her wholeheartedly now.  But even if she were who she was in 2013 I’d be supporting her, if grudgingly.

But the instant I read that Friedman column—particularly the part about Clinton telling Morgan Stanley she supports Simpson-Bowles—I thought of Krugman.  And wondered whether upon reading that, if he did, he was moving close enough to the bonfire to feel a tad Berned.

____

*The link, inadvertently omitted originally, is to an op-ed by Elizabeth Warren in yesterday’s Washington Post titled “Elizabeth Warren: Trump didn’t invent the ‘rigged election’ myth. Republicans did.” The second Friedman excerpt also was not indented here originally.  All is now corrected.  10/20 at 2:12 p.m.

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