WESTFIELD, Mass. — The envelope factory where Lisa Weber works is hot and noisy. A fan she brought from home helps her keep cool as she maneuvers around whirring equipment to make her quota: 750 envelopes an hour, up from 500 a few years ago.
'Thank you, Mr.Speaker, for finally admitting on national television that all the fiscal cliffs, sequestrations and budget battles you’ve created are, indeed, artificially fabricated.' David Sirota, Salon...
John Weeks. "We frequently hear or read, "governments, like households, should not spend more than their incomes". That old chestnut, much loved by Margaret Thatcher, has a problem. It is nonsense. Households routinely spend more than their incomes. This happens when people take mortgages, buy a car, and send their children to universities, to mention a few examples. Wait, you might say, those are all investments, and there is nothing wrong with debt that finances investments.
Let's inspect the mortgage example more closely. It finances an asset that substitutes for paying rent. Except in extreme circumstances, the asset is worth more than the mortgage debt. Today a very large number of Americans hold mortgages larger than the value of their houses, but that is not an argument against buying houses on credit. "Negative equity" demonstrates the need for stricter regulation of the mortgage market. It also argues for limits to household borrowing on home equity, which before the 1990s was of little importance.
If we accept mortgages as acceptable household behavior when contracted responsibly, then we also have to accept that public sector borrowing to invest is also acceptable behavior. A house with greater market value than the mortgage that financed it represents a net asset. Similarly, the still functioning investments carried out by the federal government far exceed the US public debt. The federal government has "positive equity".
By Dean Baker, co-director of the Center for Economic and Policy Research The government has implemented a wide array of policies over the last three decades that have led to a massive upward redistribution of income. As a result, most workers have seen little benefit from the economic growth over this period.
Not surprisingly, the wealthy people who have benefitted from the policies that have redistributed income upward, for example NAFTA-type trade deals, Wall Street bailouts, and anti-union labor policies, don't want the public talking about them. This is why we have the Erksine Bowles and Alan Simpson speaking tour.
In the wake of the thrashing the GOP got at the polls last month, the media was filled with stories highlighting the demographic shifts deemed responsible for Obama’s win and, more importantly, Romney’s loss. A number of pundits, both liberal and conservative, argued that unless the GOP figured out a way of attracting more Latinos, it would wither away as a political party. There are a number of problems with this proposition, not the least of which is that it’s hard to imagine large swaths of the Latino electorate running to embrace a party that has spent decades marginalizing and criminalizing them.
The notion that all the GOP has to do is introduce some immigration reform, drop race-baiting, and start generating TV ads showing brown-skinned Latinos hanging with good ol’ southern white boys, misses some very important points. To begin with the GOP would need to overcome the distrust it has engendered among Latinos through its use of racist, misogynistic, and xenophobic language and the support it’s given to proto-fascists like Joe Arpaio and nativist, gun-totting, protect-our-borders, vigilante groups. But, more importantly, it overlooks the fact that one of the reasons Latinos do not flock to the Republican Party is because GOP ideology does not resonate with them. And no, I do not mean the demeaning “government as Santa Clause” view hoisted upon Latinos and other “they don’t look American” groups, mentioned by a shell-shocked Bill O’Reilly on election night. I instead mean a conception of government that’s more in line with the Democratic Party of the New Deal and Great Society era, and a political attitude that echoes the Pink Tide that’s been sweeping through Latin America for at least the last thirteen years. In short, the GOP’s conception of government clashes with conceptions that are rooted in Latino culture and evident in the politics of Latin America...
Seth Ackerman. "The word “competitive” gets thrown around a lot, often with the murkiest of meanings, but in this case there can be no doubt at all that a company, Hostess, was unable to pay a competitive wage. Ninety-two percent of its workers voted to walk out on their jobs rather than accept its wage, and they stayed out even after they were told it was the company’s final offer.
By all the canons of competitiveness, it was the company that was deluded. Hey, it’s a tough labor market out there. Hostess just couldn’t compete.
But the union got blamed instead, and that points to a fascinating aporia in neoliberalism. The competitiveness ideology keeps a double set of books. On the surface, it celebrates free individuals making voluntary agreements on a footing of formal equality. But look just a little deeper and it turns out to be a musty, medieval system of morality that venerates human hierarchy and inequality. If taken literally, an accusation of insufficient “competitiveness” would refer to a failure to buy or sell on the terms objectively demanded by the dispersed actors of the marketplace. But nine times out of ten, this literal meaning is just a facade for the real underlying meaning, which is all about policing the socially accepted rules concerning who is a worthy human being and who is not. Workers at an industrial bakery are losers. They need to take a pay cut — not so much to make the numbers add up (that’s a secondary consideration for all the commentators and columnists) but as a ritual affirmation of their debased social status. The refusal to take the cut was shocking and revolting — an act of lèse-majesté. It’s in that sense that the union was uncompetitive. The workers didn’t know their place"
"At the policy level, this is the GOP that denies climate change, that rejects Keynesian economics, and that identifies voter fraud where there is none. At the loony-tunes level, this is the GOP that has given us the birthers, websites purporting that Obama was lying about Osama bin Laden’s death, and not one but two (failed) senatorial candidates who redefined rape in defiance of medical science and simple common sense. It’s the GOP that demands the rewriting of history (and history textbooks), still denying that Barry Goldwater’s opposition to the Civil Rights Act of 1964 and Richard Nixon’s “southern strategy” transformed the party of Lincoln into a haven for racists. Such is the conservative version of history that when the website Right Wing News surveyed 43 popular conservative bloggers to determine the “worst figures in American history” two years ago, Jimmy Carter, Obama, and FDR led the tally, all well ahead of Benedict Arnold, Timothy McVeigh, and John Wilkes Booth..For all the hand-wringing about Washington’s chronic dysfunction and lack of bipartisanship, it may be the wholesale denial of reality by the opposition and its fellow travelers that is the biggest obstacle to our country moving forward under a much-empowered Barack Obama in his second term. If truth can’t command a mandate, no one can."
When we consider all working-age men, including those who are not working, the real earnings of the median male have actually declined by 19 percent since 1970...Women have fared much better over these 40 years, but they started from a lower level, and the same problems faced by their male counterparts are beginning to have an effect..after making significant wage gains over several decades, that progress has slowed and even reversed recently. Since 2000, the earnings of the median woman have fallen by 6 percent.
Dean Baker. "If economics were like astronomy, the experts in the field would all be calling for the government to spend what is needed to boost growth. But economics is not like astronomy. When [the Reinhart and Rogoff study a] key piece of evidence arguing for austerity was discredited, many experts just doubled down."
Mayo Toruño's insight:
But, unlike astronomy, economics has traditionally served it's ideological role very well, supplying arguments that have the patina of being "scientific" and are acclaimed as sound and beyond reproach not because they properly explain economic relationships but because they give voice to the dominant ideology. It fulfills its ceremonial function very well ...
By William K.Black (Cross posted at Benzinga.com) Roger Erickson brought to my attention a column by Matthew Yglesias that relates to the ethical issues I was discussing in my column yesterday about Yglesias’ ode to GHB (Geithner, Holder, and Breuer’...
Paul Krugman. "If writers at a major newspaper can't get deficit facts straight, how can you expect ordinary voters to get it?... I think it comes back to the epistemic closure issue. Even supposedly well-informed people on the right get their "facts" from the likes of the Heritage Foundation. Mr. Jindal probably never talks to anyone who will quietly explain that the fiscal cliff is a problem because, well, Keynesian economics is basically right, and you really don't want austerity in a depressed economy. So he has some vague notion that it's about the wages of fiscal irresponsibility, which it isn't, and apparently believes that he knows enough to pontificate."
Salvatore Babones argues that American politics has swung violently to the right... The more social class is involved, the further to the right America has swung. Poverty was once a social disease to be cured; it is now an individual crime to be punished. Put it down to individualism, conservatism, neoliberalism, or whatever -ism you want, America is now the world's greatest reactionary force."
This is worth repeating: We’re not having a debt crisis. What we’re having is a political crisis born of the fact that one of our two great political parties has reached the end of a 30-year road. The modern Republican Party’s grand, radical agenda lies in ruins — but the party doesn’t know how to deal with that failure, and it retains enough power to do immense damage as it strikes out in frustration.
By William K.Black (Cross posted at Benzinga.com) The New York Times produces profiles of national leaders like Italy’s Mario Monti and Ecuador’s Rafael Correa. I invite readers to contrast the worshipful treatment accorded Monti with the Correa ..The NYT’s slant in describing Monti as a “technocrat” and Correa as a “left-leaning economist” is typical of the dominant media. Monti and Correa both have doctorates in economics from U.S. universities and both have been professors of economics" ... yet Monti's policies have hurt Italy and benefited only the wealthy, while Correa's policies have helped Ecuador and benefited the workers, the poor, and business.
Thomas Ferguson ... in sharp contrast to 2008, the partisan split along income lines is huge. Obama’s vote percentage declines in straight line fashion as income rises. He got 63 percent of the votes of Americans making less than $30,000 and 57 percent of those making between $30,000 and $50,000. Above $50,000, the Other America kicks in. Romney won 53 percent of the votes of Americans making between $50 and a $100 thousand and 54 percent of the votes of Americans making above $100,000.
Bipartisan austerity sounds so good to the Beltway class. They yearn to see Obama and Boehner working together again to commit economic suicide and unravel the safety net. The Beltway’s baby boomers will show that they understand joint sacrifice. They will sacrifice the poor, sick, and the unemployed in a gratuitous recession. They will begin the process of giving Wall Street its greatest dream – the privatization of Social Security. That will produce hundreds of billions of dollars in additional fees to Wall Street. When you read odes to the Grand Bargain you are reading Wall Street propaganda (directly or via regurgitation).
Mark Thoma. This relationship between the acceptance of the price allocation system in the wake of natural disasters and how fair the system is perceived to be has lessons that extend beyond times of crisis. If income inequality is very low and monopoly power is largely absent, then most people can consume most goods and services if they are willing to sacrifice enough. In this case, people are tolerant of allowing prices to dictate who gets what...But as inequality grows and people are priced out of markets, when there are more and more things that a large fraction of society cannot obtain no matter how much they are willing to give up, and as more and more people feel they are being taken advantage of by a system beholden to economic or political power, the support for the price allocation mechanism – the heart of capitalism – begins to erode."
... economists are not rewarded for studying the economy. That is why almost everyone in the profession missed the $8 trillion housing bubble, the collapse of which stands to cost the country more than $7 trillion in lost output according to the Congressional Budget Office (that comes to around $60,000 per household)... Few if any economists lost their 6-figure paychecks for this disastrous mistake. But most economists are not paid for knowing about the economy. They are paid for telling stories that justify giving more money to rich people. Hence we can look forward to many more people telling us that all the money going to the rich was just the natural workings of the economy.