December 2010 archive

Jeannette Wicks-Lim completed her Ph.D. in economics at the University of Massachusetts Amherst in 2005, and now specializes in labor economics with an emphasis on the low-wage labor market and has an overlapping interest in the political economy of race, and is now Assistant Research Professor at the Political Economy Research Institute (PERI). She is author of a paper produced at PERI entitled Creating Decent Jobs in the United States (.PDF), in which she concludes that “collective bargaining presents a powerful way to turn the tide on the declining workers’ pay and benefits we have seen for decades“, finds that “a union worker has a 20 percent greater chance of having a decent job than a similar non-union worker“, and shows that “that there is no strong evidence that higher unionization rates lead to higher unemployment rates“.

Her dissertation: Mandated wage floors and the wage structure: Analyzing the ripple effects of minimum and prevailing wage laws (.PDF), is a study of the overall impact of mandated wage floors on wages.

In her dissertation Wicks-Lim provides empirical estimates of the extent to which mandated wage floors cause wage changes beyond those required by law, either through wage effects that ripple across the wage distribution or spillover to workers that are not covered by mandated wage floors.

When asked in an interview published at PERI “Though living wage laws may increase pay for some workers, by raising costs for employers might these laws have perverse effects on other workers? From a policy perspective, how do you reconcile the income benefits from living wages with their disemployment effects?“, Wicks-Lim replied with:

I think it is important to first consider whether an employer will actually need to reduce his/her workforce. Whether an employer will actually need to reduce his/her workforce has a lot to do with whether the law increases the costs of doing business significantly or not. The increased costs to employers are typically quite small – on the order of two percent or less of their sales revenues. For employers in the restaurant and hotel industry who are more affected by these laws, increased costs are typically on the order of three to four percent of their sales revenue. So, the fact that most employers face modest cost increases raises the question of whether there are other ways that these costs may be offset-perhaps through increased productivity and lower turnover rates of their now better-paid employees, or perhaps through modest price increases or small reductions in their profit margins. In fact, past research has indicated that minimum wage laws, for example, have not had large disemployment effects, suggesting that employers may react differently to these types of laws from what standard economic theory predicts.

Even for those employers that face more substantial cost increases, it’s important to consider their possible range of responses and then evaluate whether there is still a way to avoid disemployment effects, and if not, see if there is a way to minimize them so that the income benefits more than offset those negative effects.

Here Jeannette talks with Real News Network’s Paul Jay and makes a proposal to combine minimum wage and earned income tax credit policies to guarantee a decent living wage for all.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Reich: New Year’s Prediction

What will happen to the US economy in 2011? If you’re referring to profits of big corporations and Wall Street, next year is likely to be a good one. But if you’re referring to average American workers, far from good.

The two American economies — the Big Money economy and the Average Working Family economy — will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.

The big disconnect between corporate profits and jobs is likely to continue because America’s big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.

In a typical recovery, profits lead to more hiring. That’s because in a typical recovery, American consumers head back to the malls — and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers’ margins. In short, profits aren’t coming from American consumers — and profits won’t be coming from American consumers in 2011.

Most Americans don’t have the dough. They’re still deep in debt, can’t borrow against their homes, and have to start saving for retirement.

Richard (RJ) Eskow: Which of These Banks Was 2010’s Most Shameless Corporate Outlaw?

Bankers. The red carpet’s still being rolled out for them in Washington, but if there’s a stain on it they’ll pout for days. Jason Linkins documents the latest set of cheap white whines from very wealthy white men. (Discrimination lawsuits are a routine part of their legal troubles, too.) This time they’re upset because nobody from the six largest banks in America was invited to the president’s CEO Roundtable.

They’re offended because they didn’t meet with the president? From the looks of things they’re lucky not to be meeting with the warden. Their collective rap sheet includes fraud, sex discrimination, collusion to bribe public officials… even laundering drug money for Mexican drug cartels. One of them is accused of ripping off some nuns! None of this criminal behavior has stopped them from sulking over a presidential slight. Let’s review the record for these corporate malefactors, and then decide:

Which of these six banks was “America’s Most Shameless Corporate Outlaw” in 2010? (I mean, really: Nuns?)

Paul Krugman: The New Voodoo

Hypocrisy never goes out of style, but, even so, 2010 was something special. For it was the year of budget doubletalk – the year of arsonists posing as firemen, of people railing against deficits while doing everything they could to make those deficits bigger.

And I don’t just mean politicians. Did you notice the U-turn many political commentators and other Serious People made when the Obama-McConnell tax-cut deal was announced? One day deficits were the great evil and we needed fiscal austerity now now now, never mind the state of the economy. The next day $800 billion in debt-financed tax cuts, with the prospect of more to come, was the greatest thing since sliced bread, a triumph of bipartisanship.

Still, it was the politicians – and, yes, that mainly meant Republicans – who took the lead on the hypocrisy front.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

December 31 is the 365th day of the year (366th in leap years) in the Gregorian calendar. The last day of the year in the Gregorian calendar, it is widely known as New Year’s Eve.

On this day in 1759, Arthur Guinness signs a 9,000 year lease at £45 per annum and starts brewing Guinness.

Guiness is a popular Irish dry stout. Guinness is directly descended from the porter style that originated in London in the early 18th century and is one of the most successful beer brands worldwide.

A distinctive feature is the burnt flavour which is derived from the use of roasted unmalted barley (though this is a relatively modern development since it did not become a part of the grist until well into the 20th century). For many years a portion of aged brew was blended with freshly brewed product to give a sharp lactic flavour (which was a characteristic of the original Porter).

Although the palate of Guinness still features a characteristic “tang”, the company has refused to confirm whether this type of blending still occurs. The thick creamy head is the result of the beer being mixed with nitrogen when being poured. It is popular with Irish people both in Ireland and abroad and, in spite of a decline in consumption since 2001[1], is still the best-selling alcoholic drink in Ireland where Guinness & Co. makes almost €2 billion annually.

The company had its headquarters in London from 1932 onwards. It merged with Grand Metropolitan plc in 1997 and then figured in the development of the multi-national alcohol conglomerate Diageo.

Arthur Guinness started brewing ales from 1759 at the St. James’s Gate Brewery, Dublin. On 31 December he signed (up to) a 9,000 year lease at £45 per annum for the unused brewery. Ten years later on 19 May 1769 Guinness exported his ale for the first time, when six and a half barrels were shipped to England.

Guinness is sometimes believed to have invented stout,[citation needed] however the first known use of the word stout in relation to beer appears in a letter in the Egerton Manuscript dated 1677, almost 50 years before Arthur Guinness was born.

Arthur Guinness started selling the dark beer porter in 1778. The first Guinness beers to use the term were Single Stout and Double Stout in the 1840s.

The breweries pioneered several quality control efforts. The brewery hired the statistician William Sealy Gosset in 1899, who achieved lasting fame under the pseudonym “Student” for techniques developed for Guinness, particularly Student’s t-distribution and the even more commonly known Student’s t-test.

Guinness brewed their last porter in 1974.

Guinness has also been referred to as “the black stuff” and as a “Pint of Plain” – referred to in the famous refrain of Flann O’Brien’s poem “The Workman’s Friend”: “A pint of plain is your only man.”

Don’t Worry The U.S. Government Will Never Take responsibility  



Research links rise in Falluja birth defects and cancers to US assault

A study examining the causes of a dramatic spike in birth defects in the Iraqi city of Falluja has for the first time concluded that genetic damage could have been caused by weaponry used in US assaults that took place six years ago.

The research, which will be published next week, confirms earlier estimates revealed by the Guardian of a major, unexplained rise in cancers and chronic neural-tube, cardiac and skeletal defects in newborns. The authors found that malformations are close to 11 times higher than normal rates, and rose to unprecedented levels in the first half of this year – a period that had not been surveyed in earlier reports.<

Wall Street’s Fatal Defect

Mark Sunshine, The Huffington Post

President and CEO, M.A. Sunshine Capital

Posted: December 29, 2010 03:06 PM

According to many industry experts, including the Congressional Oversight Panel, many private label mortgage backed bonds have a fatal defect. Of course, Wall Street disagrees and claims that the problem is a mere technicality and not very important. The “insignificant” defect that Wall Street is downplaying is that many mortgage backed bonds may not be backed by mortgages.

The last sentence was not a typo or a mistake of fact.

There is a serious chance that the issuers of many mortgage backed bonds lack ownership of the mortgages that are supposed to back their bonds. This dirty little defect has paralyzed the private mortgage finance markets and is a primary reason that new issuance of even private mortgage securities made up of loans to “A” quality borrowers and low loan to values has ceased. And, the problem seems to be ignored by the administration and regulators.

Remember, our Masters of the Universe went to the best schools and are ever so much brighter than us mere serfs.

Why Mortgage-Backed Securities Aren’t (Backed by Securities): How MERS Toasted the Banks

L. Randall Wray, The Huffington Post

Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri-Kansas City

Posted: December 30, 2010 08:35 AM

In a series of pieces I have argued that MERS, a creation of the mortgage banking industry, has effectively destroyed the institution of private property in America. Ironically, MERS was created to facilitate quick and easy and cheap securitization of mortgages — what are called mortgage-backed securities. In fact, what it did was to eliminate any backing of the securities by mortgages. Of the total securitized asset universe, something like $7 trillion are (supposedly) backed by residential mortgages. However, MERS helped to delink the securities from the mortgages. At best, they are unsecured debt — there is no property backing the securities. What this means is that foreclosure is not permitted. As I have said before, it is likely that most or even all foreclosures occurring in the US are illegal seizures of property — home thefts. We are talking about 100,000 completed home thefts per month, with another 250,000 new foreclosures started to steal homes every month. Projections are that 13 million homes will have been “foreclosed” (read: stolen) by 2012.

Worse, from the perspective of the banks, they’ve got to take back all the fraudulent MBSs, most of which are toxic.

In what follows I want to present the most favorable case for the mortgage industry. That is to say, I will ignore fraud and criminal conspiracies. Let us look at the current predicament as if it resulted from a series of monumental errors. With that in mind, what is the best-case scenario? First a caveat: I am not a lawyer nor am I an investigative reporter. I have relied on my perusal of reported evidence, plus a discussion with James McGuire who has put together an entirely convincing argument that the securitizations of mortgages resulted in securities that are not backed by mortgages. I urge interested readers to go to his website.

Happy Amateur Night!  If you’re like me you’re not that into sharing the road or even a space.  I remember one year when someone poisoned themselves on 1.75 of Stoli, announced they had to pee, stood up, turned around, and proceeded to do so on the couch they had previously been sitting on.

Being a charitable fellow I literally held the bag for him as he detoxified before he slept it off.  I will admit I let him do it on the same couch (well, we had to burn it anyway).

In any event to kick off the festivities I direct your attention to the Holiday Bowl Big Balloon Parade.  Yup, bigger than Macy’s and more concentrated, only an hour at 9 am on USA.  The results of last night’s Holiday Bowl itself?  Washington 19 – 7 over Nebraska.

Expect updates.  This edition good until noon.  Now through 8 pm.  Up to 11 pm.  Now until 2 am.  6 am.

New Tools.  Previous entries.  Instant gratification-

Zap2it TV Listings, Yahoo TV Listings

I rarely write fiction, because I am better at scientific nonfiction.  However, listening to Stossel on the Fox “News” Network just now has stimulated me to imagine.  And what an imagination it is!

The three of them were on a junket and their small aeroplane crashed, gently, onto an uncharted island, sort of like Gilligan’s.  The three of them, plus the pilot (a rank amateur) and the other crew of one (a 55 year old mother of three) survived, but in very different camps.

Happy New Year Charlie Brown.  I shouldn’t be so flip about Stamford, they are after all the last team to beat UConn before the streak, but I don’t see any reason to think they will tonight unless it is a very bad night indeed.  The secret of their success is very similar to Tiger Woods’.  He starts playing to win on Thursday, most of the others play to make the cut until Saturday.  Likewise the Lady Huskies play crushing defense from the tip off and never show any mercy on scoring.

• AMC– Back to the Future, Back to the Future Part II
• Bravo– Real Housewives marathon
• Comedy– Futurama marathon
• Disney– Hannah Montana Movie
• Discovery– Sr. v. Jr (this week’s, new episode Monday they say, filming of)
• ESPN– College Throwball Music City Bowl: North Carolina v. Tennessee, Holiday Bowl: Nebraska vs. Washington
• ESPN2– College Hoopies, Temple at Villanova, NCAA Women’s Basketball: @ Stamford (#90 probably)
• Food– Feuds (premier)
• History– Aliens! and Conspiracy Theories (some new)
• Lifetime– Antwone Fisher
• National Geographic– Dog Whisperer marathon
• Sci Fi– Catwoman, The Cave
• Style– The Bridges of Madison County, The Pelican Brief x 2
• Turner Classic– The Strip, Requiem for a Heavyweight
• TNT– Hoopies, Knicks @ Magic, Spurs @ Mavs
• Travel– Man v. Food marathon (thank goodness)
• USA– Burn Notice (part of a 22 hour marathon)
• VH1– SNL marathon

Later-

• AMC– Back to the Future Part III, Summer Rental
• Comedy– The Beast With A Billion Backs
• FX– Zodiac, Archer
• Sci Fi– Children of the Corn, Clive Barker’s Book of Blood
• Spike– Die Another Day (Brosnan)
• Turner Classic– Breakfast at Tiffany’s, The Comic

Dave in repeats from 12/6.  Conan in repeats from 11/17.

With any luck at all I’ll have your 24 hour New Year’s Eve listings up by 6 am.

Zap2it TV Listings, Yahoo TV Listings

Evening Edition is an Open Thread

1 UN warns Gbagbo against attack on Ivory Coast peacekeepers

by Dave Clark, AFP

1 hr 39 mins ago

Big Tent Democrat commented earlier today at Talkleft in his post Policy And Politics: The Economy that:

Discussing E.J. Dionne’s column today, Booman makes some good points:

Considering that [the column] is supposed to be about [Dems] regaining the initiative, it’s pretty weak to lecture the White House about its tendency to defend itself and “the left” about never being satisfied. Those things aren’t going to change. We can be critical of that reality, but we ought not offer it up as something to fix so that we can get our mojo back.

In fact it is not something to fix. The White House should tout its accomplishments. They are in the politics business after all. And people dissatisfied with what the White House is doing should say so and work to make them do what they want. That’s how it works. But both Booman and Dionne miss the connection between the political problems Dems have and the economic policies of the Obama Administration.

[…]

And these failures explain almost all of the political trouble the Democrats are in. Booman writes:

There are two things that will help us get our mojo back: Speaker Boehner and Obama’s reelection campaign. That’s all we need. And improving economy would be nice, but realistically we are going to be fighting over who is to blame for high unemployment and who has a better plan to get something through Congress that will create jobs.

(Emphasis supplied.) If that is where the political battle is going to be fought, then the Dems’ political fortunes do not look bright.

“An improving economy would be nice but realistically we are going to be fighting over who is to blame for high unemployment”?

Booman of course and as usual has his finger on the pulse of reality, and like many strong Obama supporters knows deep in his heart that it’s far more important for them to “win” than it is to have the administration produce results, even if he has to lose to win.