Daily Clips: May 18, 2017

US jobless claims fall

New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labor market slack.

Trump to propose scrapping beleaguered student loan forgiveness program

Household debt in USA surpasses its peak reached during the recession in 2008

The best replacement for Obamacare is Medicaid

The poor die younger

The investigator America needs

Even before the stunning events of the past week, Mr. Mueller would have had plenty to work with. But after the president’s abrupt firing of Mr. Comey on May 9 — followed by his apparent admission that he did so with the Russia investigation in mind, followed by reports that he previously pressed Mr. Comey to pledge his loyalty and asked him to drop a related inquiry into Lt. Gen. Michael Flynn, Mr. Trump’s former national security adviser — it became clear that the investigation needed to be kept alive at all costs, and as far from Mr. Trump as possible.

Daily Clips: May 17, 2017

Trump is above the law, for now–but not the people

More Republicans back independent probe

Welcome to the ‘War On Drugs,’ Redux

The broken promise of higher education

That millions of students have dropped out of college, often unable to pay back their student loans, is more than just a college-completion crisis. It is also an upending of the promise of higher education: to students, that they can educate their way into economic stability, and to citizens, that higher education will spur economic growth and a stronger nation. Instead, voters see students left to go it alone, navigating an unfamiliar and challenging world while forgoing a paycheck, taking on thousands in debt to cover the costs, and often moving back in with their parents to survive.

Hannity and Fox News are in full meltdown over Trump’s Comey scandal

No more holding that phone while driving under new law in Washington

Seattle could be first city to give heroin users ‘safe spaces’

Daily Clips: May 16, 2017

The tech sector is leaving the rest of the US economy in its dust

Exclusive: Democrats in U.S. Senate try to slow Republican deregulation

New Jersey Senator Cory Booker, a Democrat, on Tuesday will introduce legislation to kill the Congressional Review Act (CRA), a law Republicans used over the span of three months this year to repeal 14 regulations enacted by former President Barack Obama, also a Democrat, according to documents seen by Reuters.

McConnell’s Plea: ‘Less Drama’ From the White House

Extreme Gerrymandering Complicates 2018 Congressional Map for Democrats

Center for American Progress wonders what went wrong in 2016:

We do not yet know the exact reasons for the drop in turnout among young people and black voters. But with President Obama not on the ticket to drive voter enthusiasm, it is quite possible that lingering job and wage pressures in more urban areas with lots of young people, and in areas with large populations of African-Americans, yielded similar, if distinct, economic anxiety in ways that may have depressed voter turnout among base progressives. The combined effect of economic anxiety may have been to drive white noncollege voters toward Trump and to drive down voter engagement and participation among base progressives.

Daily Clips: May 15, 2017

Report: Michigan employers steal $429 million in pay from low-wage workers each year

Pramila Jayapal highlighted and interviewed by The Nation

For New York’s free-tuition plan, lessons from Tennessee

Enrollment is up by a third and federal student loan debt is down in the first state to offer free tuition at its community colleges.

Kansas’ economy is a cautionary tale for the rest of the country

We need to challenge the myth that the rich are specially-talented wealth creators

Daily Clips: May 12, 2017

To cut taxes on the rich Mitch McConnell is ok w/ Trump cover-up of Russia probe

Trump lawyer: Tax returns from past 10 years show no “income of any type from Russian sources,” with few exceptions

Why Trumponomics (see trickle down) won’t make America great again

The economist who helped write Trump’s tax plan in five Days

Quantitative easing, stock buybacks and other stuff

So, while stock buybacks and QE aren’t exactly the same they are similar in the sense that their efficacy is contingent on the specific environment and the implementation. There will be times when this is a good idea and times when there’s just better ways to implement policies that try to move the private sector needle in one direction or another.

Trickle Downer of the Week: The American CEO

The average S&P 500 CEO pulled in $13.1 million last year, a 5.6 percent increase from 2015. Meanwhile, the average employee only made $37,362. Think about that: Your typical head honcho makes nearly as much in one day as his typical employee makes in a year.

Daily Clips: May 10, 2017

Today is a genuinely sad day in American history. The worst part? If you would have told me in 2012 this was how the Republican Party would end up…I would have believed you.

They have become an awful group of legislators, so interested in their own power that they have sold out at nearly every key point in the last forty years. Democrats aren’t completely angelic, but the Republican Party stands alone in its utter betrayal of the American people.

James Comey’s firing is the moment of truth for the GOP

Calls for Independent Investigator, even from (a few) G.O.P.

Michael Flynn targeted by grand jury subpoenas, sources confirm

Mitch McConnell: Any new Russia investigations would derail current ones

Meaning without work?

In any case, the end of work will not necessarily mean the end of meaning, because meaning is generated by imagining rather than by working. Work is essential for meaning only according to some ideologies and lifestyles. Eighteenth-century English country squires, present-day ultra-orthodox Jews, and children in all cultures and eras have found a lot of interest and meaning in life even without working.

Leftist critique of Kristen Gillibrand

If Hillary Clinton’s closeness to Wall Street torpedoed her campaign — and more importantly, made her a poor agent of change — then Gillibrand has the same problem in spades.

And the rest of her record isn’t any better. Her unyielding, at-all-costs loyalty to Israel, her expedient shape-shifting, her questionable links to certain political figures — all make Gillibrand a suspect tribune for anti-Trump resistance.

 

The Case of the Missing Middle Class Wages

Hey, where’s that rich guy running with our paychecks?

Nobody reads Politico to discover something new. Campaign staff and their consultants read Politico in order to gauge how their latest spin played out in the DC Beltway. Celebrity politicians check Politico to make sure they’re mentioned. The media reads Politico to see what the dominant narrative for the day will be.

Every so often, Politico will break some news, or publish an editorial that reframes a debate. But the day-to-day grind of Politico—its bread and butter—is regurgitating known knowns for the DC crowd. It’s the outlet for pushers of conventional wisdom to promote and bolster conventional wisdom for other pushers of conventional wisdom.

All this brings us to a story by Danny Vinik titled “The economy keeps improving. Why aren’t wages?” Here’s the nut of the problem, as Vinik sees it:

Wages have grown just 2.5 percent over the past year, only slightly higher than inflation. Since 2010, nominal wages have grown about 2.5 percent each year, while inflation has averaged 2 percent. Perhaps most concerning, as the labor market has tightened, wage growth hasn’t accelerated.

Vinik talks to some economists who have “a few theories” about why wage growth hasn’t happened, and he boils their theories down to three main hypotheses:

  1. The economy still isn’t at full employment”
  2. Workers aren’t becoming more productive”
  3. Industries are too concentrated”

Let’s just say up front here: the conventional wisdom isn’t really interested in solving this problem. The conventional wisdom is interested in paying lip service to the problem while ensuring the status quo. And so of these three theories, two are completely wrong and one barely lands a glancing blow on the real problem. So let’s talk about the wrong theories first.

Full employment” is an economic term that gets pointed to a whole lot at moments like this where unemployment stats sink to a fairly low point. Basically what Vinik is arguing here is that the market should raise wages naturally when enough workers enter the job market.

So if this theory is correct, why isn’t the Invisible Hand—hallowed be its name—raising wages? Well, mainstream economists argue, it’s because there still aren’t enough workers in the job market. How many workers need to be in the job market for wages to start climbing? Unclear! And what could coerce the Invisible Hand into action? Tax cuts are one theory that Vinik floats, and we’ll come back to that after we look at the second and third items on his list.

So moving on: are workers not productive enough? “Traditional economic theory holds that workers’ wages will rise in line with productivity growth,” Vinik writes. He says that “as they become more productive, workers become more valuable to companies and can demand a raise.” Again, presumably, the Invisible Hand—praise be unto it!—would make this happen.

Except worker productivity has risen dramatically since the 1970s, and wages have stayed flat. A 2012 study showed that the minimum wage would have hit over 21 dollars per hour in 2012, had wages and productivity stayed tied together. They did not, and our national minimum wage is still $7.25, just as it was in 2012.

So that brings us to the third and final option on Vinik’s list. Are monopolies to blame? “In a world where workers can’t simply switch to a new industry — gaining new skills takes time, for instance — workers have little power to demand a pay raise,” he warns.

Which, okay. Yes, that’s a valid point. But throughout this post, Vinik ignores the easiest explanation for all this: Workers aren’t earning more because employers aren’t paying them more.

Simple? Yes. True? Also yes. And here’s another condition that Vinik doesn’t really examine: Union membership in the United States has precipitously declined since an all-time high in the 1950s, and without that collective bargaining power, individual Americans can’t successfully negotiate for better wages. Here’s a fun fact: the word “union” doesn’t appear in the piece at all.

You know what other word doesn’t appear in the piece? “Profits.” Here’s the St. Louis Fed’s chart of after-tax corporate profits:

That money is not going to wages. No mythical Invisible Hand is sweeping down from the heavens to redirect those profits into worker paychecks. That’s where the money has gone. That’s money that should belong in the pockets of workers. Instead, it’s going toward the top one percent.

Vinik should get credit for at least asking the right questions in his piece. Even promoters of the conventional wisdom can’t ignore the fact that wages are artificially low. But the simplest explanation is right in front of them. Those wages didn’t disappear. They aren’t being withheld by a mysterious Invisible Hand. They’ve just been funneled into the top one percent.

Yet corporate interests keep urging reporters like Vinik and politicians like President Trump and Speaker Ryan to promote tax cuts for the wealthy and deregulation for corporations as solutions to this problem. This is almost exactly like asking fire departments to put out house fires with gasoline. So many of America’s current problems—the sluggish recovery, the stagnation of rural areas, the lack of revenue to fund education and other essential government funds—can be traced directly to the inequality created by the working class’s missing wages.

If we were to raise the wage and ensure that middle class policies like a decent overtime threshold were in place, those profits would go to the middle class. Those people would then spend those profits on goods and services in their community, they’d invest them in education and nonprofits, they’d start their own small businesses. Everyone would be better off.

But as long as the conventional wisdom continues to serve the interests of the wealthy at the expense of ordinary Americans, you’re not going to see the obvious truth in Politico. What happens if this situation continues—if the wealthy continue to keep a grossly disproportionate share of profits that belong to 99 percent of all Americans? The answer to that question, funnily enough, can be found in an essay written by Nick Hanauer that was published in Politico about three years ago: “The Pitchforks Are Coming…for Us Plutocrats.”

Daily Clips: May 5, 2017

Apple plans to spend $1 billion to support advanced manufacturing jobs in the U.S.

U.S. job growth rebounds sharply, unemployment rate hits 4.4 percent

Most U.S. homes are worth less than before the crash

GOP can now turn their attention to taxes

In rare unity, hospitals, doctors and insurers criticize health bill

History will remember these 217 House Republicans for their inhumanity

The science of inequality: why people prefer unequal societies