Daily Clips: April 27th, 2015

Fracturing democracies
Washington Post – EJ Dionne.

Mr. Dionne has the unique ability to sift through the day to day grime of politics and find distinct patterns in our political eras. In his most recent article, Dionne takes a look at a range of Western nations and how their people are all dissatisfied and angered with the status quo. But he notices that this desire for change is limited by our distrust of our institutions.

Dionne puts forward a simple and profound diagnosis of where we are in 2015:
“A broad desire for governments to reduce the levels of economic insecurity and expand opportunity is constrained by a loss of confidence in the capacity of government to succeed.”
American politicians would be wise to analyze this contradiction if they hope to succeed in their messaging over the next two years .

New York Times – David Leonhardt

“College isn’t for everyone”. How many times have we heard that line from those on the right and the left? Disregard the thinly veiled classism of that statement and you’ll see that this line of thought is blatantly disregarding the huge income gap between those that attend university and those that do not. If we truly want to increase wages in this nation and sustain a robust middle class in the 21st century, we must do all we can to promote affordable post-secondary education to our citizenry.

Bloomberg Business – Alex Tribou and Keith Collins

While our political institutions appear to be gridlocked and unyielding, we sometimes forget how rapidly our nation’s social norms have transformed. This article beautifully displays how the U.S. has a history of social change which follows a distinct pattern:
A few pioneer states get out front before the others, and then a key event — often a court decision or a grassroots campaign reaching maturity — triggers a rush of state activity that ultimately leads to a change in federal law.

Washington Post – Matt O’Brien

For every problem, Republicans have a solution: tax cuts! “Republicans have run on the same platform…no matter how the economy is doing. The only innovation this time is trying to make prodigious tax cuts for the rich look populist by cloaking them in the language of tax simplicity and fairness.”

Because Free Trade Isn’t Free

Port of Seattle

The free trade crowd likes to roll their eyes at critics of the Trans-Pacific Partnership trade agreement as if we’re a bunch of idiots who just can’t (or won’t) understand the way markets work. But here’s the thing about “free trade” as defined by agreements like the TPP: it doesn’t create a free market.

Sure, goods are free to cross borders under TPP. And financial capital sure is free to cross borders. And since goods-plus-capital equals jobs, the TPP frees more jobs to cross international borders.

But you know what’s not free to cross borders? People. And since under TPP and NAFTA jobs are mobile and labor isn’t, free trade agreements like these end up distorting the economy in a way that advantages capital and disadvantages labor.

I’m not making shit up here. The same neoclassical economic theories that argue for free trade will tell you that if capital is free but labor mobility remains constrained, then the labor market can never reach a state of natural equilibrium. Capital can (and will) arbitrage the price difference between various labor markets, artificially suppressing wages for all.*

Good for profits, not so good for workers.

Of course, that doesn’t mean we can’t have free trade. We could open our borders to all comers, and vice versa, allowing people to move to where the good jobs are. Or, we could all openly acknowledge that trade agreements disadvantage labor, and insist that they come with policies designed to ameliorate the harm and redistribute the profits more broadly. You know, if we actually gave a shit about workers.

But let’s not pretend that, on their own, free trade agreements are good for American workers. TPP is great for the owners of capital, and it may be good for the economy broadly—if you broadly define the economy as GDP. But it will further weaken the relative power of labor in the United States, and thus push down wages for many workers.


* Not to be construed as an actual endorsement of neoclassical economic theory.

Daily Clips: April 24th, 2015

It’s Not the 1 Percent Controlling Politics. It’s the 0.01 Percent.
Mother Jones – Dave Gilson.

Let this sink in: About 125 Americans control more than 40 percent of election contributions. Within this article there are a couple informative graphs which show how this trend has accelerated after the Supreme Court’s 2010 Citizens United ruling.
Washington Post – Dana Milbank

Washington Post op-ed columnist Dana Milbank, is joining the growing chorus of Democrats who are against the trade deal. His main point is that trade deals, like the TPP, are a major contributing factor to US inequality. He goes on to say that,
“Thea Lee, a trade economist who is deputy chief of staff at AFL-CIO, argues that 40 to 60 percent of that growth in income inequality [in the US] is because of globalization, including free-trade deals. That may be high, but even Peter Petri, a pro-trade finance professor at Brandeis University whose research is often cited by business, estimates 10 to 20 percent of the increase in income inequality can be attributed to trade overall.”
New York Times – Timothy Egan

As long as Citizens United stands, these are the type of headlines which will continue to write themselves. Egan argues that we are in the “invisible primary”, where Republican candidates audition to win the blessing of a few billionaires. With over a year and a half to go until the election, we know at this point the moneyed interests have narrowed their choices down to five candidates: Cruz, Paul, Rubio, Walker, and Bush. According to the Koch brothers, their support will go to the candidate “who has a more positive message for America.” Riiiiiight.
Vox – Ezra Klein

Klein’s article is based on the fact that although we are entering a time of unparalleled political polarization, more and more Americans are not identifying as Democrats or Republicans. This paradox, he figures, is caused by fear – we merely vote against the ‘other’. Already, we can see that the GOP’s strategy for 2016 falls very much in line with his thesis. They are not going to run against Hillary Clinton by offering different policy choices – they are going to scare the American public into thinking she is a political monster who will stop at nothing in seeking power. This fear-mongering will not just be limited to the GOP, either. Over the next 18 months, we will almost certainly hear Democrats, particularly Hillary Clinton, warn Americans about the grave dangers of a Republican controlled Congress and White House.

The Media Obsesses Over Jeb Bush’s Diet Tips

"Mister President! Mister President! How many calories are in that turkey?"

“Mister President! Mister President! How many calories are in that turkey?”

Look, I’ve worked in the media during a presidential campaign. I know what it’s like. You get swept up in the craziness of it all, and sometimes your good sense goes out the window. You forget that these politicians are trying to be leader of the free world and you start to think of it as some sort of weird sport. The next thing you know, you’re cranking out one thousand words about Rick Santorum’s love of sweater vests and you haven’t thought about a real issue in a week and a half.

But it’s a little early for this kind of zaniness to seep into presidential coverage: the New York Times‘s Michael Barbaro has written a long story about Jeb Bush going on the Paleo diet.

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Daily Clips: April 23rd, 2015

Democrats Are Rallying Around $12 Minimum Wage
New York Times – Noam Scheiber.

Even Senator Schumer (hardly a bastion of progressivism) is behind the increase of the minimum wage from its current level of $7.25 to $12 by 2020. “The politics, substance and morality coincide to make it a winner issue for us in 2016,” Senator Schumer said. “It appeals not just to the people who would benefit,” he added. “Polling data shows it appeals to middle-class people, people of high income.”
The Guardian – Bertrand Olotra
 
What a sad story. Here’s a guy who works his butt off and has “done everything that politicians say you need to do to get ahead and stay ahead.” And yet, even though he works seven days a week and puts in 70 hour weeks, he can’t manage to pay rent, buy school supplies for his kids or even put food on the table. If you have that sort of work ethic and drive, there is no way you should be having to buy food stamps.
Politico – Adam Lerner
 
There’s no summary that would do justice to the stupidity of Jindal’s piece. So without further ado, Bobby Jindal everybody: “Hollywood and the media elite are hostile to our values and they tip the scales to our liberal opponents at every opportunity,” wrote Jindal. “Liberals have decided that if they can’t win at the ballot box, they will win in the boardroom. It’s a deliberate strategy. And it’s time for corporate America to make a decision.” 

In Other News, Water Is Wet and the Sun Is Bright

1040 Detail
It’s always satisfying when reality proves your theories to be true. Data-driven confirmation never gets old. Cole Stangler at the International Business Times says:

[a] study from Owen Zidar, a professor at the University of Chicago Booth School of Business, found that tax cuts aimed at the top 10 percent of earners produce little stimulative effect on the overall economy. On the other hand, those aimed at the bottom 90 percent have a greater impact.

Zidar examined the short- to medium-term impact of tax changes at the state and federal levels going back to 1948. On the national level, he found a 1 percent gross domestic product (GDP) tax cut aimed at the bottom 90 percent translates to job growth of 2 to 5 percent, but the impact of a similar cut on the top 10 percent of earners has a negligible effect. He reached similar conclusions on the state level: Tax decreases for most of the population generated 5 percent employment growth, but yielded little change when applied to the top income bracket.

Who’d have thought that keeping money in the hands of more people would result in more spending and more jobs? It’s almost like basic arithmetic actually works. Yes, and Zidar’s study found raising taxes on the wealthy has little effect on the economy, too, while tax increases on the poor have a detrimental effect. You can add Zidar’s hard work to the mountain of data disproving conservative trickle-down economic theories. Those weak old Reagan-era economic policies are starting to look as ridiculous and fusty as Reagan-era fashions.

Conservative Thinker Argues 73 Percent of All American Voters Are “Wrong” About Raising the Minimum Wage

Over at the National Review’s Corner blog, Cato Institute senior fellow Michael Tanner published a post on the minimum wage titled, hilariously, “The Voters Want a Higher Minimum Wage, but the Voters Are Wrong.” This headline identifies everything wrong with the conservative stance on the minimum wage — in sum, they’re denying reality. When political actors dismiss the 73 percent of the American voting public that wants a higher minimum wage as “wrong,” they’re either on the bad side of an issue or they’re suffering from a serious message problem.

You know that old conservative saying: "if nearly three quarters of all Americans agree on something, they must be wrong." (Image via 15now.org.)

You know that old conservative saying: “if nearly three quarters of all Americans agree on something, they must be wrong.” (Image via 15now.org.)

Tanner’s post is a fact-free diatribe (note the distinct lack of links in the text) referring to “Anecdotal evidence” that Seattle and San Francisco are becoming restaurant-free hellscapes (decidedly not true, and here’s a link to a wonderful Seattle Times story disproving his “anecdotes.”) He also refers to “a survey” saying Seattle small businesses are likely to cut staff without linking to the survey, which should set off alarm bells for any reader. If you have the facts, show your work. If you don’t have the facts, shut up.

Tanner continues, “There has also been a sharp fall-off in the number of firms seeking a business license in the city that has roughly corresponded with the passage of the minimum-wage hike.” He also says Seattle and San Francisco “have seen an unusual increase in the number of restaurants going out of business since the hike.” Uh. Twitter user Barry Ritzholtz disproved those claims within minutes:


Tanner’s post is full of unsubstantiated information like this. But he does supply a very useful overview of Republican presidential candidate opinions on the minimum wage:

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Daily Clips: April 22nd, 2015

Home sales hit 18-month high; prices accelerate
Reuters – Lucia Mutikani.

This good news however is tempered by this stat: first-time buyers accounted for 30% of transactions last month, far lower than the 40-45% share that economists and realtors say is required for a strong housing recovery.
Bloomberg View – Noah Smith

Student debt now comprises 45% of federally owned financial assets. And what’s more, the U.S. government is actively encouraging young Americans to continue adding to this number. As the author, Noah Smith, astutely points out, “Obama’s “Student Aid Bill of Rights” “…is a list which “emphasizes students’ right to go to college, to take out loans and to pay those loans back quickly and easily. In other words, it’s exactly what you’d expect from a government interested in maximizing the revenue it collects from indebted college graduates.”
The Cap Times – Todd Milewski

While Scott Walker can make a great case for his foreign policy experience because he dealt with pesky unions, he may have a harder time making a compelling case about his economic chops. This article shows how under his watch, Wisconsin ranked 40th for job growth and 42nd for wage growth in 2014. It’s almost like trickle-down economics doesn’t work.