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

The Oklahoma Republican Party calls Walmart and the mega-corporate fast-food and hospitality industries animals dependent on food stamps. And its chairman wants a national discussion about it. Oblige him, Democrats.

In any event, it’s completely unclear where people will stop in for hamburgers and fries, and where they will buy extremely cheap household items, once the fast food industry and Walmart have ceased to exist because there no longer are Americans who lack the skills and qualifications for good jobs and they’ve all found good jobs because we elected a Republican president who has persuaded Congress to enact a law that says that the way for people to get good jobs is for people to get good jobs.  Rather than, say, electing a Republican president who has persuaded Congress to enact a law that says that the way for people to get full-time jobs is for people to get full-time jobs although with no promise that they will be good jobs and instead might be full-time minimum-wage ones.

— MeScott Walker vs. the Walton Family and McDonald’s’ CEO, yesterday

—-

Am I reading too much into this, or did Oklahoma’s Republican Party call Walmart and fast food chain minimum-wage workers who receive food stamps animals who live in national parks?

Whoa. If the Republicans keep this up, the Walmart family and fast food chain executives will start their own Super PAC.  To help Democratic candidates!  If a Republican wins the White House, their companies might have to start paying their employees enough for them to afford groceries.

— Me, in an update to Scott Walker vs. the Walton Family and McDonald’s’ CEO, later yesterday

This actually is a really serious matter: Apparently, most people do not know that a substantial percentage of people on food stamps work—including many who have full-time, very-low-paying, no-benefits jobs.  Much less do most people know that most of the people who work yet receive food stamps are employed by mega-corporations or franchises of mega-corporations in the fast-food industry, in retail stores and in the hospitality industry, and have dependent children.

Prominent Democrats—Obama, Clinton, Elizabeth Warren, Bernie Sanders, and others—need to engage in a mass education campaign on this.  Especially now, in response to Scott Walker.

Key to this is to point out that the food stamp program is, to a surprising extent, corporate welfare—to which these companies have, like the animals in our national parks who have become dependent on the government (or at least on people visiting the parks, which are funded by the federal government) food handouts.

The article I linked to above is from Politico, and explains:

The Monday post, which has since been taken down, first sarcastically declared that the U.S. Department of Agriculture is proud to be distributing a record number of food stamps. It then said, “Meanwhile, the National Park Service, administered by the U.S. Department of the Interior, asks us ‘Please Do Not Feed the Animals.’ Their stated reason for the policy is because ‘The animals will grow dependent on handouts and will not learn to take care of themselves.’ Thus ends today’s lesson in irony ?#?OKGOP?”

To answer my own question, yes, Oklahoma’s Republican Party did call Walmart and fast food chain minimum-wage workers who receive food stamps animals who live in national parks.  Sort of.  The Party said that Walmart and fast food chains and the hospitality industry are like national parks, in that many of their workers receive food stamps.  The Party also said that Walmart, the fast food industry and the hospitality industry are, themselves, like animals who live in national parks, because these business are subsidized significantly by the food stamp program.

They’re right about Walmart, the fast food industry, and the hospitality industry.  I mean it.  And Democrats need to say this, again and again and again, when discussing the minimum wage or the social safety net.

Again and again and again.  No Democrat should ever talk about the minimum wage or about social safety net programs without saying this.

The Politico article, by Eliza Collins, goes on to say:

On Tuesday, Oklahoma Republican Party Chairman Randy Brogdon apologized.

“Last night, there was a post on our OKGOP Facebook page, and it was misinterpreted by many. I offer my apologies for those who were offended – that was not my intention,” Brogdon said.

He said the original statement was supposed to compare two separate situations and illustrate “government dependency in America.”

In addition to the apology, Brogdon used the new statement to continue the discussion on welfare programs.

“However I do think that it’s important to have conversations about government welfare programs since our dependency on government is at its highest level ever,” it said. “Quoting President Reagan, ‘We should measure welfare’s success by how many people leave welfare, not by how many are added.’”

Do oblige him, Democrats.  Give the man the conversation he wants.

Tags: , , , , , , , , Comments (36) | |

Scott Walker vs. the Walton Family and McDonald’s’ CEO

The left claims they’re for American workers, and they’ve got lame ideas, things like minimum wage. Instead of focusing on that, we need to talk about how we get people skills and qualifications they need to get jobs that go well beyond minimum wage.

Scott Walker, yesterday

Yep, raising the minimum wage and instituting policies that get people skills and qualifications they need to get jobs that go beyond minimum wage definitely are mutually exclusive.  Which I presume is why “the left” never, ever talks about getting people skills and qualifications they need to get jobs that go beyond minimum wage. They’re talking about raising the minimum wage instead!

When Clinton, Sanders, Obama, whoever, proposes free community college and free or low-tuition state university access, they always make clear that those proposals are alternatives to, not in addition to, raising the minimum wage.  It’s one or the other; not both.

So really, it comes down to three alternative choices: (1) raise the minimum wage (the Democrats); (2) or make community college and state universities free or low-tuition, by supporting them through state and federal funding (the Democrats); or gutting state funding for state university and community college systems (Scott Walker).

We do indeed need to talk about how we get people skills and qualifications they need to get jobs that go beyond minimum wage.  And talk, we will.  Or at least the Democratic primary candidates will; not sure that the Republican ones will, since neither Walker nor any other the others has, yet.  But, I mean, maybe Douglas Holtz-Eakin has some ideas that he can pass along to one or another of them.  Who knows?  Maybe to Scott Walker!  Ideas about how we get people skills and qualifications they need to get jobs that go beyond minimum wage, while further gutting the federal and state tax bases, at least for the wealthy and for corporations.

Of course, we also need to talk about how we get people jobs that employ those newly acquired skills and qualifications—the ones they needed to get jobs that go beyond minimum wage.  Presumably jobs that pay more than the minimum wage.  Scott Walker apparently is unaware that there are huge numbers of people who have skills and qualifications for good jobs but haven’t found a good job, some of them who lost the one they had.  Or maybe he’s aware of it and wants government to get out of the way.  Let Detroit go bankrupt!  Kill the National Labor Relations Act!  And the Fair Labor Standards Act!

In any event, it’s completely unclear where people will stop in for hamburgers and fries, and where they will buy extremely cheap household items, once the fast food industry and Walmart have ceased to exist because there no longer are Americans who lack the skills and qualifications for good jobs and they’ve all found good jobs because we elected a Republican president who has persuaded Congress to enact a law that says that the way for people to get good jobs is for people to get good jobs.  Rather than, say, electing a Republican president who has persuaded Congress to enact a law that says that the way for people to get full-time jobs is for people to get full-time jobs although with no promise that they will be good jobs and instead might be full-time minimum-wage ones.*

And certainly rather than electing a Democratic president who has persuaded Congress to enact a law significantly increasing the minimum wage, thus precluding persuading Congress to enact legislation than would assist people in getting people skills and qualifications they need to get jobs that go beyond minimum wage.  And precluding even talking about it!

The good news for us Dems is that if Walker wins the nomination, we won’t have to worry about Walmart and McDonald’s exercising their First Amendment speech rights by donating to Walker’s campaign or Super PAC, since if he wins he will put them out of business.

*Paragraph edited slightly for clarity. 7/15 at 10:09 a.m.

—-

ADDENDUM: Okay. Just want to clarify, with the following exchange between reader Carol and me in the Comments thread:

Carol

July 14, 2015 3:11 pm

I was just curious, maybe I haven’t been listening closely, but when do Democrats state that education and the minimum wage are mutually exclusive? The minimum wage would be a short term solution to the fact that we have more and more people working in minimum wage jobs (that require a lot more skills than hamburger flipping, but hey, who cares about that discussion?) who can’t even feed their family, including those who have been pushed out of jobs that paid OK into jobs that don’t during this last and current depression. Education and training are long term solutions to meet a work world that (foolishly in most cases) wants more and more certification for jobs that don’t warrant the training. OJT really should be what should be provided, but most employers are too short-sighted and stupid to invest in their workers (see how many tolerate huge turnover when the real solution would be adequate pay and OJT). Whether education really should serve as the free training ground for employers who don’t even know what is needed is dubious. Education is always a good, but jobs training? Each business has specific skills, and from where I sit no one wants to take the time to show their employees what those are, preferring the sink or swim method. I see the massive stupidification of management as a big issue, and employees suffer.

 

Beverly Mann

July 14, 2015 3:56 pm

Damn. I forgot to say that this post is sarcasm. It’s sarcasm, Carol. The Democrats have not stated that education and the minimum wage are mutually exclusive. Scott Walker said that; the Democrats have not. The Democrats do understand that raising the minimum wage for people who right this very minute have minimum wage jobs—a large percentage of Walmart employees, fast food and other restaurant workers, hotel workers, and many, many others—does not actually preclude training people for non-minimum-wage jobs.

As [commenter] Denis Drew points out, the Germans have figured out how to train most of their workforce for non-minimum-wage jobs. And, largely because German labor has a big say in how businesses are run there, through co-determination worker councils that bring the workers into the design and manufacturing process throughout, Germany has managed also to actually have non-minimum-wage jobs available to their skilled workers, through increased productivity (the kind that economists talk about; not the kind that Jeb Bush talked about a few days ago).

Now that that’s clear ….

Added 7/14 at 4:10 p.m.

—-

UPDATE: Am I reading too much into this, or did Oklahoma’s Republican Party call Walmart and fast food chain minimum-wage workers who receive food stamps animals who live in national parks?

Whoa. If the Republicans keep this up, the Walmart family and fast food chain executives will start their own Super PAC.  To help Democratic candidates!  If a Republican wins the White House, their companies might have to start paying their employees enough for them to afford groceries.

Added 7/14 at 5:45 p.m.

Tags: , , , , , , , Comments (18) | |

Impending disaster in Greece

Paul Krugman analyzes the debacle in Greece. Although Greeks voted barely a week ago to reject the bailout terms offered by the EU, which called for uninterrupted austerity, Prime Minister Alexis Tsipras proposed to the EU to accept almost all of the terms if there was some true financial relief. Instead, what the European Union, spurred by Germany, proposed today demanded all of the pain, and none of the gain that Tsipras sought. Indeed, Germany has essentially demanded regime change in Greece, even though Tsipras only came to office in January. As Krugman says, “It is, presumably, meant to be an offer Greece can’t accept.”

The Germans, it would appear, have decided to push Greece from the eurozone. But demanding an end to Greek sovereignty and austerity as far as the eye can see is simply evil. Moreover, it negates the long-successful stand of European Central Bank (ECB) president Mario Draghi that the ECB would do “whatever it takes” to keep the eurozone intact. The ECB’s reputation would be damaged greatly should crisis recur in Spain, Portugal, Ireland, etc., now that the world knows the ECB will not do “whatever it takes.” This is a recipe for a new recession in Europe spreading from the EU periphery.

The German demands are particularly “grotesque,” as Krugman says, when you consider that Greece has already endured 25+% unemployment for three years (see chart). This is an unemployment rate that the United States never saw even at the height of the Great Depression in 1933, when it peaked at 24.9%.


source: tradingeconomics.com

However, I believe Krugman’s argument actually overlooks an important point. He writes:

But still, let’s be clear: what we’ve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line.

His point is that eurozone membership has removed Greece’s ability to exercise monetary policy autonomy and respond to its specific conditions, including via currency devaluation. Indeed, there can be no doubt that monetary union was flawed from the start. But Krugman overestimates the ability of devaluation to fix an economic crisis. At the same time, he underestimates the ability of creditors to destroy a government whose economic policies they disapprove of.

 The mega-example of this, of course, is the Latin American debt crisis of the 1980s. Mexico, Brazil, and all the other victims of this crisis (caused primarily by the U.S. Federal Reserve cranking up interest rates to astronomical levels in the late 1970s and early 1980s, which in turn caused an unprecedented rise in the value of the U.S. dollar and a global recession) were “bailed out” by the International Monetary Fund (IMF) in order to prevent the collapse of creditor banks in the United States, but were subject to strict austerity, with the same results we’ve seen in the EU. Indeed, in virtually every Latin American country income per capita was lower in 1990 than at the start of the crisis in 1982, giving rise to the term “lost decade of development” to describe these events.

Supposedly, the IMF learned its lesson after the Asian financial crisis that austerity packages didn’t work. Krugman has argued this many times (one example here). Indeed, the IMF has seemed to be more of a voice of sanity in the current crisis than in either the Latin American or Asian crises. Yet, in the endgame of the Greek crisis, this seems to have fallen away, with the IMF going along with the EU on Greek austerity. Something is seriously wrong here.

But there is another important example to mention, where the IMF was not involved. This, too, was a result of the Fed-caused global recession, this time in France. After Francois Mitterrand and the Socialist Party swept to power in 1981, among the government’s many policy changes was an attempt at Keynesian stimulus. However, this was met by massive capital flight. The problem was that the French franc was losing so much value that the government had to reverse its policies. For example, the franc was 4.6453 to the dollar in January 1981, but fell to 8.0442 by August 1983, 9.3041 by September 1984, and 10.0933 in February 1985. The takeaway is that even having floating exchange rates does not guarantee that you can maintain your policy independence.

Events are moving very rapidly; perhaps the EU will find a way to prevent this disaster. But at the moment, things look very grim.

Tags: Comments (6) | |

Okay, so Douglas Holtz-Eakin thinks that proposing policies that have been proposed before but have not been adopted (or are no longer in force) is the same as proposing policies that have been adopted and are still in place. Seriously, he completely conflates the two.

Many conservatives breathed a sigh of relief after the speech, having feared a fresh set of innovative proposals that might have required serious responses. “I think it’s a horse race between what’s more tired, her or the material,” said Douglas Holtz-Eakin of the conservative American Enterprise Institute. “There really isn’t anything new here. It’s really more of the same, and I don’t understand how that would produce an outcome different from the last six or seven years.”

Clinton speech react: ‘Is that it?’, Ben White, Politico, today

Okay, I realize that the Republicans have settled on a tactic of pretending that Democratic economic policy proposals that either never were in place or that have been repealed (e.g., Glass-Steagall) or have been dramatically altered (a progressive income tax system; e.g., large government expenditures for infrastructure, college funding, science and medical research) don’t work because they currently aren’t working.

But if Douglas Holtz-Eakin truly doesn’t understand how implementing policies that have never been implemented, and reimplementing ones that worked very well during their existence, might produce an outcome different from the last six or seven years, he’s not very smart.

The subtitle of White’s article is “The Democratic front-runner manages to underwhelm both Wall Street and its reformers in her signature economic policy speech.”  And I myself certainly would like to see an end to what feels like a repeated tease.  It’s past time for her to stop announcing (or hinting) that she’ll be announcing specific policy proposals on such-and-such day, and actually announce specific policy proposals.  The generics phase of her campaign has more than worn out its welcome, I think.

I, of course, hope that the Republicans actually expect to convince people that the George W. Bush administration’s and current Kansas’s, Wisconsin’s, New Jersey’s detaxification/disinvestment policies—the ones that were enacted, not just proposed—worked, and that earlier, far more progressive tax policies didn’t, and that the deregulation of the finance industry was a good thing and the laws that the deregulation juggernaut repealed held back the economy of the postwar decades.  That way they’ll keep up their Mad Hatter routine long enough for someone—Bernie Sanders, if not Clinton—to ask them, rhetorically, which of the policies Clinton and other Democrats are proposing are currently in place.  And which of the policies that the Republicans are proposing more and more and more of worked during the Bush administration.

Or, for that matter, during the Hoover administration.  Jeb Bush has said that the way to raise GDP substantially is for people who have part-time jobs and want, but can’t find, full-time jobs to get full-time jobs.  Isn’t that similar to what Herbert Hoover’s economic plan was in 1930, and in 1931, and in 1932?  The way to end the Great Depression was for the unemployed to get jobs?

Maybe not.  Maybe Hoover just never thought of that plan.  Jeb Bush, though, has thought of it.  And if he’s elected, we’ll see how it works.

Tags: , , , , Comments (4) | |

“The Rivals: Paul Samuelson and Milton Friedman arrive at the University of Chicago – in 1932”

The Rivals: Paul Samuelson and Milton Friedman arrive at the University of Chicago – in 1932
A really important intellectual history of American Economics since 1932 from Economic Principals which self-describes as “A WEEKLY COLUMN ABOUT ECONOMICS AND POLITICS, FORMERLY OF THE BOSTON GLOBE, INDEPENDENT SINCE 2002, David Warsh, proprietor”

For those like me who are not professional economists it very helpfully puts all the major players into both institutional and intellectual context. Everybody who is anybody.

Tags: , , Comments (2) | |

The Sixty Hour Weeks of the Leisure Class

A typical excuse for widening income inequality is that the ‘job creators’ actually work oh so much harder than the ‘job takers’. That while the latter simply leave work at 4 or 5 PM, the former are just getting started and in fact routinely put in 50-70 hour workweeks. Now I hasten to add that there are certainly people who work month in and month out 60-100 hours a week. I have a very talented and successful young relative that has earned six figure salaries since his 20s doing exactly that. But he works in the heavy transportation sector (trains and trucking) and everyone from top executives to over the road truckers do tend to put in long hours.

My question is more for New York, London and Frankfurt based financial professionals, the traders that boast that they could just take our measly jobs and do them better, faster, with two hands tied behind their backs, who don’t even have time for bathroom breaks because they are focused like lasers on their terminals. You know the guys who kill what they eat and eat what they kill. To them I have to ask: who exactly is keeping those restaurants, craft cocktail bars, and racket ball courts busy? Exactly how do you fit in time to keep your golf game up? To spend that week at Vail? Or to accept your bosses invitation to spend a weekend at his place in the Hamptons? How does your BOSS find the time to actually enjoy that yacht? His ski trips to St. Moritz? Who exactly is is that is keeping business humming at Ruth’s Christ Steak House? Who is the customer base at all those golf resorts The Donald is building and marketing? Okay that is not just one question.

When Thorstein Veblen wrote The Theory of the Leisure Class (1899) there was certainly a lot of controversy about his thesis, but little I think about the existence of a Leisure Class in the Gilded Age. American Millionaires and British Aristocrats alike entertained on a lavish scale, frequented higher end resorts like Monte Carlo, perhaps maintained stables of polo ponies, played golf, sailed on yachts and all without even a hint of a pretense that they were working the same 70 hour weeks typical of miners and farmers who were producing their wealth. Indeed the whole point of being wealthy for most of this class was precisely to be able to pursue Leisure Class activities and lifestyles.

And I would argue that this is still true in the New Gilded Age. The wealthy and particularly the ultra-wealthy of our day are still enjoying that same range of leisure activities and that same level of excess consumption but in some respect seem oddly ashamed of it all. Which is why they ‘explain’ that “I worked hard for my money, I worked hours that you moochers never dreamed of, etc, etc”. Which doesn’t explain how they found time to maintain a Plus 2 handicap.

I bring this up of course in the context of JEB explaining that the key to 4% GDP growth is just people working more hours. With the unstated addition “like me and the rest of the job creators”. Well I want to call bullshit. The idea that the 1% on average just work harder than everyone else is belied by the fact that they even have yachts and weekend homes in the Hamptons and bottle clubs and third homes at Aspen and Vail.

Tags: , , Comments (68) | |