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

Police Shootings by State v. Percent of the Population that is Black

After my recent post on police shootings I was curious and did some googling on the topic. By coincidence, right about that time Peter Moskos (i.e., Cop in the Hood) wrote this:

I looked at the Washington Post data of those shot and killed by police in 2015 and 2016 and broke it down by states with more and fewer African-Americans. States that are more than 10 percent African American include 21 states plus D.C. (198 million people, 18 percent black, 36 million blacks). There are 29 states less than 10 percent African American (126 million people, 6 percent black, 7 million blacks).

 

Killed by Police v. Black Share of the Population

 

People, all people, are 1.6 times more likely, per capita, to be shot and killed by police in states that are less than 10 percent black compared to states more than 10 percent African American. Blacks are still more likely than whites, per capita to be shot overall. But this ratio (2.6:1) doesn’t change significantly based on how black a state is.

For both whites and blacks, the likelihood of being shot by police is greater in states with fewer blacks. And the difference is rather large. There are seven states less than two percent black. In 2015 and 2016, zero blacks were shot and killed in Maine, New Hampshire, Utah, Vermont, Wyoming, Idaho, and Montana. But if you think cops don’t shoot people in these states, you’re wrong. Compared to the four states with the highest percentage of African-American (Mississippi, Louisiana, Georgia, and Maryland are more than 30 percent black), the overall rate of police-involved killings in states with few blacks is higher. And this is despite a lower rate of overall violence.

There’s more at the link, including his data. I haven’t had an opportunity to go through the numbers, but I am not seeing a reason to disbelieve them offhand. I have a couple of theories (which are not entirely unrelated to each other) as to what is going on, but I’m curious about what readers think.

As an aside… regular readers may recall my earlier look at Washington Post data on police killings which led me to conclude one or two things that don’t fit the narrative the media, to include the Washington Post, seems to like to support.

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How Keynesian Policy Led Economic Growth In the New Deal Era: Three Simple Graphs

(Dan here…lifted and reposted)

by Mike Kimel

How Keynesian Policy Led Economic Growth In the New Deal Era: Three Simple Graphs

November 22, 2011

In this post, I will show that during the New Deal era, changes in the real economic growth rate can be explained almost entirely by the earlier changes in federal government’s non-defense spending. There are going to be a lot of words at first – but if you’re the impatient type, feel free to jump ahead to the graphs. There are three of them.

The story I’m going to tell is a very Keynesian story. In broad strokes, when the Great Depression began in 1929, aggregate demand dropped a lot. People stopped buying things leading companies to reduce production and stop hiring, which in turn reduced how much people could buy and so on and so forth in a vicious cycle. Keynes’ approach, and one that FDR bought into, was that somebody had to step in and start buying stuff, and if nobody else would do it, the government would.

So an increase in this federal government spending would lead to an increase in economic growth. Even a relatively small boost in government spending, in theory, could have a big consequences through the multiplier effect – the government hires some construction companies to build a road, those companies in turn purchase material from third parties and hire people, and in the end, if the government spent X, that could lead to an effect on the economy exceeding X.

This increased spending by the Federal government typically came in the form of roads and dams, the CCC and the WPA and the Tennessee Valley Authority, in the Bureau of Economic Analysis’ National Income and Product Accounts (NIPA) tables it falls under the category of nondefense federal spending.

Now, in a time and place like the US in the early 1930s, it could take a while for such nondefense spending by the federal government to work its way through the economy. Commerce moved more slowly back in the day. It was more difficult to spend money at the time than it is now, particularly if you were employed on building a road or a dam out in the boondocks. You might be able to spend some of your earnings at a company store, but presumably the bulk of what you made wouldn’t get spent until you get somewhere close to civilization again.

So let’s make a simple assumption – let’s say that according to this Keynesian theory we’re looking at, growth in any given year a function of nondefense spending in that year and the year before. Let’s keep it very simple and say the effect of nondefense spending in the current year is exactly twice the effect of nondefense spending in the previous year. Thus, restated,

(1) change in economic growth, t =
f[(2/3)*change in nondefense spending t,
(1/3)*change in nondefense spending t-1]

For the change in economic growth, we can simply use Growth Rate of Real GDP at time t less Growth Rate of Real GDP at time t-1. The growth rate of real GDP is provided by the BEA in an easy to use spreadsheet here.

Now, it would seem to make sense that nondefense spending could simply be adjusted for inflation as well. But it isn’t that simple. Our little Keynesian story assumes a multiplier, but we’re not going to estimate that multiplier or this is going to get too complicated very quickly, particularly given the large swing from deflation to inflation that occurred in the period. What we can say is that from the point of view of companies that have gotten a federal contract, or the point of view of people hired to work on that contract who saved what they didn’t spend in their workboots, or storekeepers serving those people, they would have spent more of their discretionary income if they felt richer and would have spent less if they felt poorer.

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Your solution is…

Lifted from comments at Naked Capitalism

MC
So your solution includes taking money from those who saved and invested, and re-distribute it to those who spent everything they earned? As someone in the “saved and invested” category, I find that plan to be a non-starter.
When I was setting aside 15% of my income for savings and investments, paying extra on my mortgage, and driving older cars, I have friends who (at the same income level as my wife and I) literally spent everything they earned. They had lots of fun, and lots of new stuff that I didn’t.
Fast forward 30+ years, and now – in my late 50’s – I’m planning my retirement (before my 60th birthday). My friends? None of them are even thinking of retiring, and one couple has said they will need to work into their 70’s.
We made different choices, and ended up in different places – but that doesn’t obligate me to hand them what I have.

Yves
What a bunch of total nonsense.
If you’ve been able to work on a consistent basis at decent enough paying jobs that you could save, it is substantially due to luck: being born into a stable middle to upper middle class family, being white and male, being born at a time when there was enough growth in the economy that you could land good jobs early in your career, which is critical for your lifetime earnings trajectory. Oh, and not having you or a spouse or a child get a costly medical ailment that drained your savings. And not winding up in a job where you were being ethically compromised and stood up against it, resulting in career and earnings damage.
Did you miss that college grads had a worse time that high school grads and even dropouts in landing jobs in 2008-2010? And getting no or crap jobs then set them back permanently? And this includes graduates in the supposedly more “serious” STEM fields, where contrary to DC urban legend, there aren’t a lot of entry level jobs. You do well if you find employment, but save in a few niches like petroleum engineering, the unemployment rate is actually worse for STEM college grads overall than liberal arts grads.
……………..
…inflation is created in the real economy due to any of commodities inflation (cost-push inflation), wage-pull inflation (created by too much demand, or in MMT terms, too much net government spending) and more recently and not sufficiently acknowledged, by monopolies and oligopolies (see pricing of cable services and drugs, which have monopolies via patents) . Interest rates are a different matter and are controlled by the central bank. We’ve had risk-free interest rates below the inflation rate for years now thanks to the ministrations of the Fed.
Central banks have the power to kill the economy (raising interest rates so high that it induces inflation) but not much/any power to stimulate (save goosing asset prices, which only trickles down a bit to the real economy). The cliche is “pushing on a string”.

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What is the secret to joining the rich country club

Steve Roth writes What is the secret to joining the rich country club at Evonomics:

By Steve Roth

There’s a curious fact about the wealth and growth of nations that you rarely see mentioned: No country has ever joined the modern, high-productivity, rich-country club without massive doses of redistribution, and universal government programs for social support and financial security. Not one. Ever.

You can get a rough feel for the scale of those programs here (the OECD countries pretty much constitute the “rich-country club”):

graph

There are a zillion other measures you could plot, but they paint roughly the same picture. In this measure, the richest countries all devote fifteen to thirty percent of GDP to social spending. As Bruce Bartlett pointed out recently, Germany — a darned “conservative” country that is thriving today, and which rode out our recent economic Great Whatever better than almost any other country — started building its welfare state more than 150 years ago.

Now contrast these countries to all the countries that have eschewed those freedom-sapping, serf-ifying government programs, and that have emerged as thriving, prosperous utopias of liberty.

Name one.

Why hasn’t it happened? Not even once.

If countries like that were in fact so economically efficient, shouldn’t we expect to have seen at least one of them emerge, and surge ahead of all the rest — outcompeting all the others, in a very Darwinian sense? Isn’t that the prediction that libertarians and conservatives are making? How can we explain the complete and abject failure of those predictions?

An explanation is perhaps not far to find. Market capitalism — especially modern “holding-company capitalism,” in which corporations own corporations which own corporations, ad infinitum — inevitably concentrates wealth and income into fewer and fewer hands. It’s just the nature of the beast. Along with its immense, world-changing, manifest benefits, market capitalism labors under that inescapable burden.

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Before we can get to issues…

Via US News:

Less than half of recently polled Trump supporters believe Donald Trump Jr. met with a Russian lawyer, despite the president’s eldest son admitting he attended the controversial meeting.The latest survey from Public Policy Polling finds that only 45 percent of Trump voters believe Trump Jr. attended a meeting with Russian lawyer Natalia Veselnitskaya

.…

In spite of confirmation from Trump Jr. himself, 32 percent of respondents said the meeting didn’t happen and 24 percent said they’re not sure.

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DID MAYA MACGUINEAS of CRFB LIE on TIME magazine website OR WAS SHE JUST FOOLIN’ AND DID ANYONE NOTICE

by Dale Coberly

 

DID MAYA MACGUINEAS of CRFB

LIE on TIME magazine website

OR WAS SHE JUST FOOLIN’

AND DID ANYONE NOTICE

 

Maya MacGuineas is president of the Committee for a Responsible Federal Budget (CRFB) which reliably confuses the Federal Budget with the Social Security program.   CRFB claims to want to cut government spending to balance the Budget,  but it spends most of its time arguing for the need to cut Social Security.

Social Security is not funded by the federal budget.  It is paid for entirely by the people who will get the benefits.

In MacGuineas op-ed on TIME magazine’s website

https://act.myngp.com/el/826676200205584384/2618988919232268288

she says a number of things reasonable people could agree with.  This is not surprising,  a  technique of expert liars is often to draw you in with reasonable, and true, statements and then lead you to false, and dangerous conclusions.  MacGuineas does lead you to false conclusions without necessarily “lying,”  and I will get to those.  But I’d like to begin with a statement which she made that is not true which I find particularly egregious.

“My goal would be to both ensure that those who depend on the program are protected, while also balancing the growing cost of Social Security with other pressing priorities — from programs for children, the vulnerable, public investments, and shoring up our education and worker retraining systems”.

While it may be doubted that MacGuineas is sincere in her concern for “programs for children, the vulnerable, public investments, and shoring up our education and worker retraining systems,”  Social Security has nothing to do with funding for any of these programs.  Social Security is paid for entirely by the workers who will get the benefits.  It subtracts not one dime from the federal budget. Except, of course, when the Congress is obligated to REPAY the money it BORROWED FROM Social Security.

MacGuineas could no doubt find funds for her favorite programs by taking a gun and demanding your wallet.  This would be exactly the same as cutting Social Security to find the money to pay for someone else’s favorite program. Taking money from SS and using it to pay for other programs would not cut your “taxes” one dime.  Neither would it cut “the budget.” All it would do would to leave you “busted, dead broke”  when time came for you to retire.   This is a shell game”  “Lookee!  We’re going to cut SS in order to spend on other programs.  This will save you money, see!” The reason the SS tax was created as dedicated funding with a separate trust fund,  was to make sure the money collected for Social Security was not confused…is not fungible…with other government money.

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Non competes

Via Alternet, Thom Hartmann writes:

…This type of labor system has been the dream of conservative/corporatists, particularly since the “Reagan Revolution” kicked off a major federal war on the right of workers to organize for their own protection from corporate abuse.Unions represented almost a third of American workers when Reagan came into office (and, since union jobs set local labor standards, for every union job there was typically an identically-compensated non-union job, meaning about two-thirds of America had the benefits and pay associated with union jobs pre-Reagan).Thanks to Reagan’s war on labor, today unions represent about 6 percent of the non-government workforce.

But that wasn’t enough for the acolytes of Ayn Rand, Ronald Reagan and Milton Friedman. They didn’t just want workers to lose their right to collectively bargain; they wanted employers to functionally own their employees.Prior to the current Reaganomics era, non-compete agreements were pretty much limited to senior executives and scientists/engineers.If you were a CEO or an engineer for a giant company, knowing all their processes, secrets and future plans, that knowledge had significant and consequential value—company value worth protecting with a contract that said you couldn’t just take that stuff to a competitor without either a massive payment to the left-behind company or a flat-out lawsuit.

But should a guy who digs holes with a shovel or works on a drilling rig be forced to sign a non-compete? What about a person who flips burgers or waits tables in a restaurant? Or the few factory workers we have left, since neoliberal trade policies have moved the jobs of tens of thousands of companies overseas?Turns out corporations are using non-competes to prevent even these types of employees from moving to newer or better jobs.America today has the lowest minimum wage in nearly 50 years, adjusted for inflation. As a result, people are often looking for better jobs. But according to the New York Times, about 1 in 5 American workers is now locked in with a non-compete clause (bolding mine) in an employment contract.Before Reaganomics, employers didn’t keep their employees by threatening them with lawsuits; instead, they offered them benefits like insurance, paid vacations and decent wages.

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Still Not a Win and Just a Delay

The biggest lie coming out of the Senate today:

“’One of the major problems with Obamacare was that it was written on a strict party-line basis and driven through Congress without a single Republican vote,’ McCain said. He added that Congress must now ‘hold hearings, receive input from members of both parties, and heed the recommendations of our nation’s governors.’”

An African-American comes to be President and Republicans vow from day one to obstruct. McConnell made it his “single most important thing to achieve is for President Obama to be a one-term president.” There was no intent to ever work with Barack Obama then or Democrats today.

Lets not forget, the Republicans have until EOM September to pass a bill under Reconciliation to change the ACA. October 1 is a new budget year and the Republicans will have to decide whether to change those parts of the ACA using Reconciliation or pass Tax Reform using Reconciliation. They can not do two Reconciliations in one budget year. One or the other will have to wait.

Besides blocking the Risk Corridor Program which caused much of the premium increase since 2015, insurance companies to lose money and withdraw from healthcare exchanges, and Coops to go bankrupt; President Trump has threatened to withhold CSR subsidies for out-of pocket expenses to those 100% – 250% FPL with Silver Plans. This subsidy goes directly to insurance companies. Withholding it will cause premiums again to increase and more companies to withdraw from the exchanges.

The second biggest lie coming out of Congress comes from a Congressman who relied on SS benefits to put him through college and who hopes to deny healthcare to his constituents and others as well.

“’The Senate’s got to pass a bill for us to even move the process forward,’ Congressman Ryan said. ‘That’s the next step. So, we’re hoping that they can achieve that next step so that we can bring real relief.’”

This is what Trump means by making the ACA fail or worst than what has occurred to date with Republican meddling in it.

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Not business but finance models

Financialized business models sticks to faith based “Market knows best” rule.

…The number of MBAs graduating from America’s business schools has skyrocketed since the 1980s. But over that time, the health of American business has decreased by many metrics: corporate R&D spending, new business creation, productivity, and the level of public trust in business in general.

There are many reasons for this, but one key factor is that the basic training that future business leaders in this country receive is dictated not by the needs of Main Street but by those of Wall Street. With very few exceptions, MBA education today is basically an education in finance, not business—a major distinction. So it’s no wonder that business leaders make many of the finance-friendly decisions. MBA programs don’t churn out innovators well prepared to cope with a fast-changing world, or leaders who can stand up to the Street and put the long-term health of their company (not to mention their customers) first; they churn out followers who learn how to run firms by the numbers. Despite the financial crisis of 2008, most top MBA programs in the United States still teach standard “markets know best” efficiency theory and preach that share price is the best representation of a firm’s underlying value, glossing over the fact that the markets tend to brutalize firms for long-term investment and reward them for short-term paybacks to investors. (Consider that the year Apple debuted the iPod, its stock price fell roughly 25 percent, yet it rises every time the company hands cash back to shareholders.)

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R and D

Angry Bear has over the years described the Pharma industry and its spending on Rand D and stock buybacks, among other developments in comparing US health outcomes to other countries.

Via New York Times discussing this study at Ineteconomics.

US Pharma’s Financialized Business Model
JUL 2017 |

Price gouging in the US pharmaceutical drug industry goes back more than three decades. In 1985 US Representative Henry Waxman, chair of the House Subcommittee on Health and the Environment, accused the pharmaceutical industry of “gouging the American public” with “outrageous” price increases, driven by “greed on a massive scale.” Even in the wake of the many Congressional inquiries that have taken place since the 1980s, including one inspired by the extortionate prices that Gilead Sciences has placed on its Hepatitis-C drugs Sovaldi since 2013 and Harvoni since 2014, the US government has not seen fit to regulate drug prices. UK Prescription Price Regulation Scheme data for 1996 through 2010 show that, while drug prices in other advanced nations were close to the UK’s regulated prices, those in the United States were between 74 percent and 181 percent higher. Médecins Sans Frontières (MSF) has produced abundant evidence that US drug prices are by far the highest in the world.

The US pharmaceutical industry’s invariable response to demands for price regulation has been that it will kill innovation. US drug companies claim that they need higher prices than those that prevail elsewhere so that the extra profits can be used to augment R&D spending. The result, they contend, is more drug innovation that benefits the United States, and indeed the whole world. It is a compelling argument, until one looks at how major US pharmaceutical companies actually use the profits that high drug prices generate. In the name of “maximizing shareholder value” (MSV), pharmaceutical companies allocate the profits generated from high drug prices to massive repurchases, or buybacks, of their own corporate stock for the sole purpose of giving manipulative boosts to their stock prices. Incentivizing these buybacks is stock-based compensation that rewards senior executives for stock-price “performance.”

Like no other sector, the pharmaceutical industry puts a spotlight on how the political economy of science is a matter of life and death. In this paper, we invoke “the theory of innovative enterprise” to explain how and why high drug prices restrict access to medicines and undermine medical innovation. An innovative enterprise seeks to develop a high-quality product that it can sell to the largest possible market at the most affordable price. In sharp contrast, the MSV-obsessed companies that dominate the US drug industry have become monopolies that restrict output and raise price. These companies need to be regulated.

“The key cause of high drug prices, restricted access to medicines and stifled innovation, we submit, is a social disease called ‘maximizing shareholder value,’” the study’s authors concluded.

This concept, the authors said, is actually “an ideology of value extraction.” And chief among the beneficiaries of the extraction are drug company executives, whose pay packages, based in part on stock prices, are among the lushest in corporate America.

“There’s no shortage of spending on R&D in the U.S. economy, and no shortage of spending on life sciences, even though it has declined somewhat in real terms,” one of the authors, William Lazonick, a professor of economics at the University of Massachusetts, Lowell, said in an interview. “But there really is very little drug development going on in companies showing the highest profits and capturing much of the gains.”

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