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

The Fallacy of Unions

Because it had always been that way, none could think differently. From time immortal, labor was that what did much of the work of production. There is now a generation, maybe two, on this earth, most of whom will never know labor; will seldom see it performed. The energy for their world will not come from the sweat of the back’s of coal miners. So, if it wasn’t (production = material + labor) what was the real equation for production? The input was work, not labor. Today, machines, can and do, do the work. These machines doing the work are becoming more and more intelligent.

Without the help of governmental restrictions on immigration, the unions would never have been able to organize the coal miners; they had no leverage as long as there was a constant flow of poor and desperate immigrants. Point Pinole Regional Shoreline Park is nearby. The Park was once site for the manufacture of gunpowder and dynamite. Originally, the company had been located in what is now known as Glen Canyon Park in San Francisco (owners had one of the original licenses to manufacture dynamite). In 1869, an explosion destroyed every building on the site (including the fence around the plant), killed 2 and injured 9. So, they moved the plant to what is now the Sunset District of SF (area was sand dunes then). Blew up again. This time they moved across the Bay to Berkeley. When the plant in Berkeley blew up, it killed everyone on site. Wound up at, the then remote, unpopulated, Pt. Pinole on San Pablo Bay. The point? They never had any trouble hiring immigrants, mostly Croats, it seems, to work in the plants.

A “Seditious Caucus” Stunt to Defraud America

History Professor Heather Cox Richardson at Morrissey College of Arts and Sciences, Boston College writes a daily(?) news letter (Letters from an American) which she describes as; “a chronicle of today’s political landscape, but because you can’t get a grip on today’s politics without an outline of America’s Constitution, and laws, and the economy, and social customs, this newsletter explores what it means, and what it has meant, to be an American.”

These were the same questions a famous observer asked in a book of letters he published in 1782, the year before the Treaty of Paris ended the Revolutionary War.

Hector St. John de Crevecoeur called his book, “Letters from an American Farmer.”

Like I say, history doesn’t repeat itself, but it sure rhymes.


Myself: Professor Richardson encapsulates all of the never ending BS being tossed at the American public by Republicans. Enough is enough and this is little more than a power struggle to fill the vacuum left by a man who never was President and just a figurehead giving this eleven, others, and financial interests cover.

I find the Professor’s words interesting. I hope you do also.


January 2, 2021

Today the fight to pick up Trump’s supporters continued. Eleven senators, led by Ted Cruz (R-TX), said they would object to certifying certain state electoral votes when Congress meets on Wednesday, January 6, to count them. They want a commission appointed to audit the results. This attempt is separate from the one launched yesterday by Josh Hawley (R-MO) to object to the counting of the electoral votes from Pennsylvania, but both are a transparent attempt to court Trump voters before 2022 and 2024.

The senators signing onto the effort are: Ron Johnson (R-WI), James Lankford (R-OK), Steve Daines (R-MT), John Kennedy (R-LA), Marsha Blackburn (R-TN), and Mike Braun (R-IN), and Senators-Elect Cynthia Lummis (R-WY), Roger Marshall (R-KS), Bill Hagerty (R-TN), and Tommy Tuberville (R-AL).

Looking ahead, politically

Infidel753 at Infidel753 blog had an interesting post up which I thought makes for a good read. Infidel753 can also be found at Crooks and Liars blog.


Soon the time of Trump will give way to a Democratic presidency and House and hopefully a 50-50-plus-Harris control of the Senate.  Some things to keep in mind:

1. When 2022 and 2024 arrive, most of the Democratic voting base will judge Biden and the Democrats in Congress mainly by results.  Has the pandemic been vanquished?  Have jobs and wages (not “the economy”, which takes in all kinds of things, but jobs and wages specifically) recovered?  Has federal legislation to protect voting rights from state-level gerrymandering and vote suppression been enacted?  Has Medicare access been expanded or some other kind of public option been provided?  Have DC and Puerto Rico become states?  If the Democrats achieve results, our voters will care only that it was done, not how it was done.  Conversely, if little or nothing is accomplished, nobody will much care about whatever reasons or excuses are offered.

2. Achieving such results will partially depend on two intermediate steps — abolishing the filibuster, and enlarging the Supreme Court or otherwise neutering the ability of its current McConnell-Trump-imposed hard-right majority to block progress.  The obstacle that a few Democrats oppose abolishing the filibuster should be surmountable — Feinstein needs to hear, vociferously, from a few million of her constituents, and Manchin can perhaps be brought around with the offer of some major benefit for his state, etc.  One or two Republicans might even be brought to support the move.  But if Democrats gain control of the Senate and don’t abolish the filibuster, the reasons for not doing it won’t matter — it will just mean they’ve handed the Republicans the rope to hang them with.

Consequences

Professors Piketty, Saez, and Zucman!

Have a minute? A minute to talk about rentiers, retirement, growth, and sharing?

Thanks.

Seems some sixty-percent of Americans think that things are going pretty well. For them, things are going pretty well. But, for the lower forty, things aren’t going well at all. Surely, this sixty – forty ratio is not a healthy economy? What’s worse; it’s getting worse.

Fifty, maybe even as few as thirty, years ago, one could lease a commercial space for, what at the time, seemed a princely sum and start a business. Today, upon comparison, that princely sum seems a mere pittance. Today, more than half of what one could possibly gross in a small start up goes to the landlord, the rentier. Between the rent, insurance, utilities, …, and the bottom line; one winds up paying their employees less than they deserve. Hardly anything left. Plunge taken, the budding entrepreneurs, and their employees, winds up working for the rentiers, the insurance company, the utility company, …; wind up working for next to nothing, or even worse.

Violence Against Women Act Blocked

While everyone is social distancing (?), wearing masks when out, and staying at home (mostly); there has been an uptick in women and men not getting along together well when confined to apartments or homes. No place to go and the heart may not grow fonder of your-other when confined due to the COVID-19 pandemic.  

Domestic violence surges during mandatory lockdowns

USA Today: The National Domestic Violence Hotline reported a 9% increase from 2019 in calls between May 16 in 2020. During that period many states declared lockdowns.

The San Antonio Police Department received 18% more calls related to family violence March 2020 compared to March 2019, the New York City Police Department experienced a 10% increase in domestic violence reports over the same period, and the Portland Police recorded a 22% increase in arrests YOY in March related to domestic violence.  

Review of Act History

Is an Increased Federal Deficit good or bad ?

As the Senate decides whether to send an additional $1400 to US residents, there are two macroeconomic policy issues. One is whether aggregate demand stimulus would be useful. The other is whether we should be concerned about the budget deficit.

I think that the case for fiscal stimulus is medium strong and the case for higher Federal Debt is very strong. Thus I agree with Donald Trump and Bernie Sanders and disagree with Larry Summers.

The case for stimulus is only medium strong. Unemployment is fairly high, but part of this is an efficient response to the risk of Covid Transmission. There are two ways to argue that demand is undesirably slack. One is below peak employment in sectors which are not especially directly affected by Covid 19 such as construction. The other is that core inflation is below target and falling. Both are enough to convince me that general stimulus is OK.

But mostly the amazing fact is that the 30 year TIPS real interest rate is negative. This means that investors are willing to pay the US Federal Government to store their wealth safely. Given this, I think there is a very strong case for selling more long term bills and giving the money to residents. The interest rates assert that the US Federal Government intertemporal budget constraint is slack. This can’t be Pareto efficient.

I anticipate the concern that interest rates might rise. That is why I graphed the 30 year rate, which is locked in now. If interest rates rise, investors will lose money, but it won’t create a new problem for the Treasury. Also these are real rates (paid in multiples of the consumer price index) so deflation wouldn’t be a problem for the Treasury (although it would be a catastrophe for the economy).

Given the market interest rate, the ration of the debt to GDP should fall roughly in half over the life of the bonds. If the rates lasted, rolling over the debt would be a source of income indefinitely. The argument is absurdly simple. It is also valid.

The only concern is that public debt might crowd out private investment. This could cause higher returns on capital and lower wages with undesirable distributive effects. This problem can be managed by shifting taxation from labor to capital.

I am convinced that raising the subsidy to $2000 is an improvement.

Who Has Been Warring Against Christmas?

Who Has Been Warring Against Christmas?

 Where I am the Third Day of Christmas is just finishing with the news that Grinch Trump has ended his own brief War on Christmas and is signing the Covid-19 relief bill, thereby reinstating unemployment benefits for 14 million people although they’ll miss a week of payments, as well as preventing millions more from being evicted from their rental housing units, along with the Omnibus spending bill so the government will not shut down after tomorrow.  There has been less noise this year about the War on Christmas by the usual gang of right wing media types who like to whine about merchants and others saying “Happy Holidays!” rather than “Merry Christmas!” during the runup to Christmas, probably because so many of them have been caught up in whining about Biden supposedly stealing the election from Trump.  But this somehow draws my attention to another group entirely who have been at warring on Christmas for a long time.

So according to most of the major Christian denominations such as the Roman Catholic Church, and the Episcopalians, and Lutherans, and others of that ilk, the official proper Christmas season actually is the Twelve Days of Christmas, the first of which was Christmas Day itself, with the twelfth day of Christmas being Jan. 6, the Epiphany, the day supposed the Magi (Wise Men) visited the Baby Jesus. But for many they are not even willing to wait until New Year’s day, the official seventh day, to bring it to an end.  There I was on Facebook yesterday, the second day, also known as Boxing Day in UK and some other places, and an FB friend posted about being “glad it is over,” with a commenter on that thread getting even more worked up and declaring to have “taken down out tree and put away all the decorations, I could hardly wait for it to end!”  Yikes! Along these lines for some years now around here there is a rock/pop radio station that begins playing cheesy commercial “Christmas” music like “Frosty the Snowman” all the time starting almost immediately after Halloween, but reverts immediately to its usual fare starting December 26, the Second Day of Christmas. Sheesh!

Trump As The Grinch Who Stole Christmas

Trump As The Grinch Who Stole Christmas

 So the Congress struggled for months after the House passed a $3.3 trillion followup Covid relief bill, which Senate Majority Leader McConnell blocked and kept blocking.  House Speaker Pelosi and Treasury Secretary Mnuchin kept negotiating and coming up with this or that proposal, only to mostly have McConnell shoot it down, or sometimes Pres. Trump himself doing so.  Finally after the election, and with the threat of losing control of the Senate, McConnell suddenly decided a deal needed to be made, so sure enough, with Mnuchin supposedly representing Trump, a deal got cut.  It must be recognized that the push for having another round of direct payments was pushed by Trump, who threw out several numbers, and McConnell got it that this was popular. So he went along with Mnuchin’s suggested $600 per person, half of what was sent out in the CARES round last spring.

The whole thing has also been linked to the Omnibus general budget spending package, which needs to get passed or the government will get shut down, with ongoing week by week Continuing Resolutions holding that off, the current one expiring on Monday.  It contains mostly things approved in the budget sent officially from Trump’s OMB to Congress, although it is pretty clear he does not know what is in there.

Status quo bias and vaccine supplies

Here is a simple thought experiment on the use of scarce vaccine supplies.

Suppose that we had tested the Pfizer/Moderna vaccines with one dose per person and discovered that they were 85% effective at preventing covid-19. However, due to an administrative error, we gave some people two doses, and when we analyzed the data it turned out that a two-dose regimen was 95% effective at preventing covid-19.

Only 200 million doses of vaccine will be available over the next six months.

Under these circumstances, the idea that we should switch from our initial vaccination plan of one dose per person to two doses would be regarded as insane. It is clearly better to give 200 million people 85% protection than it is to give 100 million people 95% protection.

Yet today, many people believe that we should vaccinate half as many people using two doses per person, simply because this was our initial plan. This certainly seems like an irrational framing effect, or a status quo bias of some kind, or hidebound, bureaucratic thinking, and it seems likely to lead to thousands of unnecessary deaths and prolong our social and economic misery by months.

Come on people! Let’s think outside the box.