Daily Clips: April 28, 2017

Trump’s corporate tax cuts would increase deficit, and therefore are very unlike to pass

The Republican tax cut myth:

It’s worth remembering that the conservative Heritage Foundation made exactly the same argument about the 2001 tax cut that Secretary Mnuchin is making today. It issued a report on April 27, 2001 forecasting that by 2011, federal revenues would be higher with the tax cut than they would have been without it, due to higher economic growth, greater investment, and lower unemployment. In fact, real G.D.P. growth was half of what Heritage predicted and the unemployment rate was 50 percent higher. It predicted that federal revenues would equal $3.3 trillion in 2011 including the effect of the tax cut; revenues actually were $1 trillion less, $2.3 trillion.

American Airlines announces pay raises for pilots and shareholders freak

Trends in absolute income mobility since 1940

US economy has weakest quarterly performance in three years: So…is this still a part of the Obama economy?

Quote of the day:

Mr. Obama, who recently accepted a very lucrative speaking engagement on Wall Street, now looks like just one of the fortunate members of historically depressed minorities who mistake their own upward mobility for collective advance.

The Other Washington is podcast back

We’re excited to announce that our podcast, The Other Washington, is coming back for Season 2. In our first episode we interviewed Thomas Frank, the author of Listen, Liberal—and we have quite the conversation. We talk about the failings of the Democratic Party, both electorally and intellectually. Here’s a snippet of what Frank spoke to us about on the episode (which you can listen to here):

…no political faction gives up its grip on power such as this. The Democrats have no state power anymore. The faction that I described in the book still has the … It has the Democratic Party by the throat. There’s no question about it. They are the dominant faction. Nobody is going to give that up on purpose or without a fight. They have to be forced. They have to be challenged the leadership, and they have to lose. That’s easier said than done. You think that a debacle like last November would help to change people’s minds.

For those of you who listened to the podcast last year, you know that we delved into a range of big political ideas and examined how these policies could be practically implemented.

We talked paid sick leave with WA legislators, the $15 minimum wage with a venture capitalist, and secure scheduling with Seattle city council members.

The big ideas will remain, but Season 2 will be a little different in a couple of ways. First off, the frequency of episodes will be weekly as opposed to monthly — a change that will allow us to explore more subjects and react to breaking news and the latest trends in politics — both here in Seattle and Washington state, and also in that other Washington.

We also want to bring in new voices, examine ideas that are new to us, and publicly debate ideas that we don’t all agree on. Our first season was a lecture series where we explained the core of our beliefs. Season 2 puts our beliefs to the test.

Yours truly will now be participating (enjoy my dulcet tones) as will our research associates, Dujie Tahat and Annie Fadely—who are helping us on policy research. At Civic Skunk Works, we believe that more perspectives always lead to better outcomes—and that’s what we hope Season 2 brings.

We’re really excited to get going on this project and we hope you join along. If you haven’t already, be sure to subscribe to our podcast on iTunes or SoundCloud or wherever you get your podcast.

Daily Clips: April 27, 2017

Do sweatshops lift workers out of poverty?

For poor countries to develop, we simply do not know of any alternative to industrialization. The sooner that happens, the sooner the world will end extreme poverty. As we look at our results, we are conflicted: We do not want to see workers exposed to hazardous risks, but we also worry that regulating or improving the jobs too much too quickly will keep that industrial boom from happening.

Economists fear tax plan heightens a ‘mountain of debt’

House Republicans have made a move to avert government shutdown — for at least a week

Texas mayor blasted after she says lack of faith in God causes poverty

New Trumpcare plan ‘makes bad bill worse,’ AARP says

Trump’s tax plan is trickle-down fundamentalism:

Experts on the left and right agree there’s no way the White House can cover the cost of those cuts—about $2.4 trillion in lost revenue over 10 years—just by limiting deductions, closing loopholes, or even including dubious revenue raisers like House Speaker Paul Ryan’s border-adjustment tax, which Trump has now ditched. Alas, Trump and his aides are turning to the only argument that politicians can make to justify trickle-down economics: that when the wealthy and corporations pay less in taxes, economic growth surges and make up for the lost revenue.

If You Care About Growing the Economy from the Middle Out, This Is Required Listening

Some of the many guests from The Other Washington season one.

Tomorrow, we’re relaunching the second season of our podcast, The Other Washington, with a fantastic interview with author and progressive truth-teller Thomas Frank. Frank, the author of Listen, Liberal, believes that the Democratic Party has been hijacked by a professional class of elites, at the expense of the working class. I can’t think of a better way to kick off a new (weekly!) season of The Other Washington, and I can’t wait for you to hear it. (You can read a sample of our talk here.)

But while we wait for the second season of the podcast to arrive, I’d like to urge you to visit (or revisit) the first season of The Other Washington. “Why would I want to listen to some old political podcast,” you ask? Well, because the first season of the Other Washington was constructed to be an evergreen listen. It establishes the foundation of our beliefs at Civic Ventures, and explains why we promote the policies that we do.  The first season is a primer that says what we’re all about. The second season will put those bedrock policies into action and show how here in the other Washington  we’re moving forward while leaders over in the other other Washington — that’s Washington DC—keep pushing us back.

Here’s a rundown of our first season:

+ Read More

Daily Clips: April 26, 2017

Tax Cuts Pay for Themselves? Revival of Contested Theory: “Contested”

Obama’s getting paid $400k to speak for a Wall St investment bank: This made me so angry. Here’s a guy that clearly has no bloody clue about how to appeal to a nation that is mired in economic inequality. Maybe now that he’s president he doesn’t care, but if that’s the case, he’s half the man I thought.

Sanders and 21 Democrats introduce bill to raise minimum wage to $15 an hour

The Raise the Wage Act of 2017, which Sanders and Murray will unveil later today, would hike the minimum wage for the first time in a decade, raising it to $9.25 immediately, and inching it up to $15 by 2024, while simultaneously raising the minimum wage for tipped workers.

Why regulators won’t confront big banks

America’s rich get richer and the poor get replaced by robots

The U.S. makes it easy for parents to get college loans—repaying them is another story

The Latest Poster Children for the Anti-$15 Crowd: Low-Quality Restaurants?

Some sage advice for restaurant owners in this screenshot from the Hell’s Kitchen video game.

I simply can’t respond to every single dumb trickle-down take on the $15 minimum wage. If I felt the need to write back to every jerk who took an Econ 101 class and thought it earned them a Nobel laureate in economics, I’d be writing takedowns every hour of every day, with no sleep and no breaks. My fingertips would bleed from all the typing, and I’d need to rent a helper monkey to put drops in my eyes so they wouldn’t dry out as I type.

But when I noticed that someone named Peter Heck published a piece titled “Minimum Wage Hikes are Killing the Poor” — well, how could I just ignore a title as ridiculous as that? Heck says that the “wealthy liberal city of San Francisco” is facing a “coming disaster” as it’s raising its minimum wage to $15 next year. He quotes a new working paper from Harvard Business school which, according to its abstract, finds that…

…lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).

Heck then extrapolates from their abstract:

Bob’s Burgers may not be able to absorb the cost associated with paying $15 an hour for their entry level employees without coming to economic ruin. But swanky, upscale Eagle’s Nest Steakhouse, on the other hand, can simply jack up the cost of their filet by a few bucks and be okay.

In other words, the liberal minimum wage policy lets the rich get richer and the poor lose their job when the business they work for goes under.

Except that’s a really bad misreading of the study. The stars used in the study are taken from Yelp. The quality that they’re measuring is the customer experience, not the cost of the restaurants. Yelp has a second ranking, of dollar signs, to identify prices, but price didn’t really figure into the closures. In fact, the study overtly states that they found (emphasis mine) “evidence that the heterogeneous effects observed earlier are driven by quality rather than by the restaurant prices.”

So if Yelp customers rate Bob’s Burgers 4.5 stars because they like the food and the service, Bob’s Burgers will weather the minimum wage increase just fine. Some comparably rated Seattle businesses on Yelp would be Paseo, which serves no meal over $15.50; Tacos Chukis on Capitol Hill, which serves tacos for under $2 and tortas for $6.90; and Fat Ducks Deli and Bakery in the University District, which sells sandwiches for $8.95 each. (I can say from experience that all three of those restaurants, by the way, are excellent.)

And if the Eagle’s Nest Steakhouse has gotten more than a little gross over the years and customers now give it a 1.5 average star rating, under a minimum wage increase the odds increase for the Eagle’s Nest to go out of business. So even if Bob’s Burgers charges $10 for a burgers-and-fries meal deal and the Eagle’s Nest charges $75 for a steak and a side, it’s the Eagle’s Nest which, according to the study, is much more likely to go out of business.

Heck doesn’t seem to realize that he’s actually arguing against the power of the market. By opposing a decent minimum wage, he’s saying that a city should subsidize low-wage, low-quality employers by allowing them to legally exploit their workers. It’s more than a little weird to me that conservatives are now complaining about the consequences of the free market. For some reason, they hate the idea that businesses which can’t afford to pay their employees a living wage should have to close while other businesses thrive. I would hope that even conservatives like Heck would agree that low-quality employers shouldn’t be subsidized by taxpayers. When businesses pay less than a living wage, those employees often have to rely on government assistance like food stamps and rental subsidies in order to get by.

Look, opening a restaurant is risky business. Everyone knows that restaurants fail with shocking regularity. Every new location requires a confluence of many different qualities (including a good location, an inviting theme, a welcoming staff, an appealing storefront and, uh, one more thing that I can’t remember…oh, yeah — delicious food) to become a success. That’s an understood quantity for anyone opening a business.

The unfortunate truth is that there will always be losers. But by encouraging a smarter, more livable wage, we can ensure that there are more winners. Seattle, which raised the wage before San Francisco, has more eating places than at just about any other time in our history. Our unemployment nunbers are at near-record lows. If we did see the same closures of low-quality restaurants that the Harvard study found, those restaurants were quickly replaced by newer (and better!) ones. Which is exactly how capitalism is supposed to work: business owners are supposed to create new concepts, and consumers are supposed to choose between them. The concepts that don’t draw the most consumers either change into something more appealing, or they fail.

And the thing about raising the minimum wage that Heck really doesn’t get is this: when the minimum wage is increased, workers have more money, and that increases demand. It allows people to try more of their ideas out in the marketplace, and it allows consumers to decide between those ideas. Nobody ever promised that every idea would be a good one, or that every business would succeed. But Seattle’s thriving restaurant scene has proven that there’s more room for winners — among business owners, workers, and consumers — when everyone agrees to pay a living wage.


And I wanted to take a second to address Heck’s moronic final claim. He writes: ” If $15 is better than $10 an hour, doesn’t it stand to reason that $20 or $30 an hour is better than $15?” Heck, the poor dear, acts like this is a new concept, but it’s actually as old as the minimum wage itself. Nick Hanauer addressed this concern-trolling best in this piece in the Democracy Journal:

“If $15 is so great, why not $50 or $100?” critics sometimes mockingly ask. Well, because that would be stupid. The positive benefits of a $100 per hour minimum wage would almost certainly be overwhelmed by the costs. So no one is proposing $100; instead we are proposing $15, which is roughly halfway between what the minimum wage would be had it tracked either productivity gains ($21) or inflation ($10).

I hope that passage answers Heck’s question. I also hope he doesn’t misread it as badly as he misread that study.

Daily Clips: April 25, 2017

Ivanka Trump gets booed, hissed at during Berlin event: There’s some sense in the world.

Seattle home-price hikes lead U.S. again; even century-old homes command top dollar

Washington state relies on a rotten tax system:

The top 1 percent in Washington paid 2.4 percent of their income, which is less than half of the national average, 5.4 percent.

There have been efforts to introduce an income tax, but in recent times they’ve never gotten far.

The idea of a Seattle city income tax on high-income households is going to be an issue in this year’s race for mayor. Current Mayor Ed Murray announced in the first mayoral debate last week that he will send a tax proposal to the City Council.

The grim biology of being poor:

Why do so few make it out of poverty? I can tell you from experience it is not because some have more merit than others. It is because being poor is a high-risk gamble. The asymmetry of outcomes for the poor is so enormous because it is so expensive to be poor. Imagine losing a job because your phone was cut off, or blowing off an exam because you spent the day in the ER dealing with something that preventative care would have avoided completely. Something as simple as that can spark a spiral of adversity almost impossible to recover from. The reality is that when you’re poor, if you make one mistake, you’re done. Everything becomes a sudden-death gamble.

Now imagine that, on top of that, your brain is wired to multiply the subjective experience of stress by 10. The result is a profound focus on short-term thinking. To those outsiders who, by fortune of birth, have never known the calculus of poverty, the poor seem to make sub-optimal decisions time and time again. But the choices made by the poor are supremely rational choices under the circumstances. Pondering optimal, long-term decisions is a liability when you have 48 hours of food left. Stress takes on a whole new meaning—and try as you might, it’s hard to shake.

Cuomo’s college plan is less than ideal:

The plan seems less revolutionary, however, when we remember that CUNY charged no tuition at all until 1976. And Cuomo’s progressive cred disappears when we remember that he has, until now, fought to raise tuition rather than cut it. Tuition is 30 percent higher today than it was when Cuomo took office, thanks to what he championed as “rational tuition.” In fact, only last year, he proposed slashing CUNY’s budget by $485 million, about one-third.

Daily Clips: April 24, 2017

How ideologues use grade-school economics to distort the minimum wage:

The United States has the lowest minimum wage, as a proportion of average wages, of any advanced economy—one reason for our wide gap between rich and poor. But according to economism, raising the minimum wage would only backfire and harm poor people.

U.S. Chamber of Commerce Chief expects basic NAFTA deal by mid-2018

Republicans want to muzzle database of consumer complaints

Want to rescue rural America? Bust monopolies

It is a myth that the economic challenges that rural and small-town America face are caused by forces largely outside our control, like globalization or improvements in technology. We have the ability to help restore competition and economic vibrancy in rural America and beyond. The government has the authority to ensure markets are once again open and competitive so that communities have a chance to shape their own economic destinies. The question is whether we will recognize the error of our ways and put taking on monopolies high on the economic agenda — for rural and small-town America, and for everyone who wants to ensure our country can once again be the land of opportunity.

Watch: Bill Nye rips CNN for treating climate change like theater instead of science