01/10/2014 archive

The number of jobs created in the month of December fell far short of the expected 200,000 and unemployment (U-3) fell to 6.7% the lowest it has been since November 2008. I think the word “disappointing” is an understatement:

Stock futures fell after the report was released.

The slowdown in hiring could cause the Federal Reserve to rethink its plans to slow its stimulus efforts. The Fed decided last month to cut back on its monthly bond purchases by $10 billion. It could delay further reductions until it sees evidence that December’s weak numbers were temporary.

Cold weather may have slowed hiring. Construction firms cut 16,000 jobs, the biggest drop in 20 months.

Still, December’s hiring is far below the average gain of 214,000 jobs a month in the preceding four months. But monthly gains averaged 182,000 last year, nearly matching the previous two years.

The proportion of people working or looking for work fell to 62.8 percent, matching a nearly 36-year low.

As Huffington Post‘s Mark Gongloff writes “unemployment is falling for al the wrong reasons”

One reason for the big drop in unemployment in December was that many, many people dropped out of the labor force — 347,000, to be exact. They stopped looking for work, which made them no longer “unemployed” in the eyes of the Bureau of Labor Statistics.

Click on image to enlarge.

Some of this is due to the fact that Baby Boomers retiring — but only some. Most of it has to do with the fact that the economy is still too weak to create enough jobs to draw people into the market. This is most clearly evident in the fact that younger people are leaving the labor force, too — or never even entering it — because they can’t find jobs.

Meanwhile, Charles Pierce reports that the Republicans keep finding new ways for “screwing the unemployed”

Rob Portman of Ohio, who might have been the 2012 Republican vice-presidential nominee had the Romney people not been terrified that, if they put Romney and Portman on the same stage together, the earth would spin into a dark region of the galaxy made up only of the primeval tedium whence the cosmos came, and we’d all come out named Tagg or something. Now, though, he’s back in the Senate being “reasonable,” which means that Portman felt free to allow an extension of unemployment benefits to come to a vote in the Senate, so Portman then could devise a way to sabotage those benefits because that is reasonable and bipartisan and centrist, and nobody will yell at him on the radio too loudly back in Columbus or Elyria.

   It depends, he said, on whether lawmakers find a way to pay for the $6.4 billion cost. Wednesday, Portman said he has just such a way. He said that people drawing two other kinds of government aid — Social Security disability insurance payments (SSDI) and trade adjustment assistance (TAA) — can simultaneously get unemployment benefits, which he thinks is wrong.It depends, he said, on whether lawmakers find a way to pay for the $6.4 billion cost. Wednesday, Portman said he has just such a way. He said that people drawing two other kinds of government aid — Social Security disability insurance payments (SSDI) and trade adjustment assistance (TAA) — can simultaneously get unemployment benefits, which he thinks is wrong.

The “compromise” on offer is to help the unemployed while stoking the usua; anger at a vague claque of disabled freeloaders elsewhere. Where ever did Portman get the idea that the country’s economy is beset by double-dipping cripples?

The Labor Department reported Friday that in December, the average unemployed person had been out of work for more than 37 weeks.

Meanwhile, “Christiegate.”

The Power Parable

Ian Welsh

January 9, 2014

Imagine that you have crawled out of the desert. You have not drunk in days, and if you do not have water soon you will die. Only one man has water, but he will not give it to you for free, he wants to be paid.

What is that water worth? To put it another way, what is your life worth?

One answer is that your life is worth everything you will ever earn, minus the cost of subsistence. The water-seller might say “if you die, you will never earn anything again. Therefore everything you earn is because I gave you water. So this water is worth your life’s income.”

Now you might not find life worth living under these circumstances, which amount to slavery. If the water-seller had many possible customers crawling out of the desert, he might find that too many people would rather die than pay, and might reduce his price somewhat to maximize his profit. If one quarter of people would rather die than pay, he might reduce the price to two-thirds of his customers life earnings, and see if most of them were willing to pay that.

Over time he might find that, knowing he’d take two-thirds, once saved his customers wouldn’t work very hard: just enough for subsistence and some alcohol, perhaps. So he might continue to experiment-how much could he take to maximize his profits?

But there is another possibility, back at the original bargain “your earnings, or your life?” What if you decide to take the water whether the water-seller wants you to have it or not? What if you’re willing to use violence? You’re weak, you might not win and if you lose you’re dead, but you might win and if you do you don’t have to pay anything. And if you win, you could start selling water yourself.

The water-seller has to take this into account. Which means he either has to reduce the price he charges so it’s not worth people trying to kill him, or he has to spend some of his profits on security. Thugs, pretty much.

But why pay for his own thugs? Why not pay government, and use its thugs? Everybody chips in some money, the government creates police and an army, and they make sure that customers don’t just take the water. They also solve another problem we hadn’t mentioned, making sure that people keep paying up later once they are no longer dying for thirst. The government enforces the water-seller’s contracts.

It should be pointed out that the water-payer is getting a lot more out of the governments thugs than most ordinary people are. Even if we assume the new police enforce all contracts and stop violence against everyone (as best they can), this guy has a lot more enforcement needs and a lot more people who want to kill him than an ordinary person. So even if everyone pays, say, 10% of income for the police, our water-seller is doing well out of this.

But why should the water-seller pay 10%? If the government has politicians whose money is separate from the government’s money, who can’t just use it as their purse, why not give them personally, say, 2% in gifts. That’s enough money to make them, personally, filthy rich. And they can lower water-seller taxes (after all, he saves lives and is a lynchpin of the economy) and raise them on other people. With a bit of work he might not pay any direct taxes, only gifts, and the rest of the population will pay for the enforcement of his contract rights. Yes, that reduces the post-subsistence money he gets from the people whose lives he saved, but for every dollar spent on enforcement he would have only gotten two-thirds anyway.

“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”.

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Paul Krugman: The War Over Poverty

Fifty years have passed since Lyndon Johnson declared war on poverty. And a funny thing happened on the way to this anniversary. Suddenly, or so it seems, progressives have stopped apologizing for their efforts on behalf of the poor, and have started trumpeting them instead. And conservatives find themselves on the defensive.

It wasn’t supposed to be this way. For a long time, everyone knew – or, more accurately, “knew” – that the war on poverty had been an abject failure. And they knew why: It was the fault of the poor themselves. But what everyone knew wasn’t true, and the public seems to have caught on. [..]

You can see the new political dynamics at work in the fight over aid to the unemployed. Republicans are still opposed to extended benefits, despite high long-term unemployment. But they have, revealingly, changed their arguments. Suddenly, it’s not about forcing those lazy bums to find jobs; it’s about fiscal responsibility. And nobody believes a word of it.

Richard (RJ) Eskow: Chris Christie Is the True Face of the Republican Party

Some Republicans are claiming Chris Christie isn’t really one of them. Some pundits are claiming, even as scandal erupts around him, that he’s a “different kind of Republican.” He’s more than that: He is the archetypal Republican, the incarnation of its bullying, corporatist soul.

It’s like we said a while back: Christie is “the heartless, smug, bullying embodiment” of his party. He and his staff reflect a world in which other people are nothing more than rubes to be manipulated and exploited, whether they’re trying to escape the trap of long-term unemployment or Fort Lee during the morning rush hour.

The conventional wisdom says that Christie’s not like other Republicans. Pundits say he’s a “moderate,” a “pragmatist,” a counterbalance to the far-right ideology of the Tea Party Republicans. But no leading Republican is really moderate, including Christie. And at the end of the day they’re all pragmatists, ready to do whatever it takes to serve their paymasters’ agenda.

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.

January 10 is the 10th day of the year in the Gregorian calendar. There are 355 days remaining until the end of the year (356 in leap years).

On this day in 1901, a gusher signals start of U.S. oil industry

A drilling derrick at Spindletop Hill near Beaumont, Texas, produces an enormous gusher of crude oil, coating the landscape for hundreds of feet and signaling the advent of the American oil industry. The geyser was discovered at a depth of over 1,000 feet, flowed at an initial rate of approximately 100,000 barrels a day and took nine days to cap. Following the discovery, petroleum, which until that time had been used in the U.S. primarily as a lubricant and in kerosene for lamps, would become the main fuel source for new inventions such as cars and airplanes; coal-powered forms of transportation including ships and trains would also convert to the liquid fuel.

Crude oil, which became the world’s first trillion-dollar industry, is a natural mix of hundreds of different hydrocarbon compounds trapped in underground rock. The hydrocarbons were formed millions of years ago when tiny aquatic plants and animals died and settled on the bottoms of ancient waterways, creating a thick layer of organic material. Sediment later covered this material, putting heat and pressure on it and transforming it into the petroleum that comes out of the ground today.

(emphasis mine)

There had long been suspicions that oil might be under [“Spindletop Hill.” The area was known for its sulfur springs and bubbling gas seepages that would ignite if lit. In August 1892, George W. O’Brien, George W. Carroll, Pattillo Higgins and others formed the Gladys City Oil, Gas, and Manufacturing Company to do exploratory drilling on Spindletop Hill. The company drilled many dry holes and ran into trouble, as investors began to balk at pouring more money into drilling with no oil to show for it.

Pattillo Higgins left the company and teamed with Captain Anthony F. Lucas, the leading expert in the U.S. on salt dome formations. Lucas made a lease agreement in 1899 with the Gladys City Company and a later agreement with Higgins. Lucas drilled to 575 feet (180 m) before running out of money. He secured additional funding from John H. Galey and James M. Guffey of Pittsburgh, but the deal left Lucas with only a small share of the lease and Higgins with nothing.

Lucas continued drilling and on January 10, 1901, at a depth of 1,139 ft (347 m), what is known as the Lucas Gusher or the Lucas Geyser blew oil over 150 feet (50 m) in the air at a rate of 100,000 barrels per day (16,000 m3/d)(4,200,000 gallons). It took nine days before the well was brought under control. Spindletop was the largest gusher the world had seen and catapulted Beaumont into an oil-fueled boomtown. Beaumont’s population of 10,000 tripled in three months and eventually rose to 50,000. Speculation led land prices to increase rapidly. By the end of 1902, over 500 companies were formed and 285 active wells were in operation.

Production began to decline rapidly after 1902, and the wells produced only 10,000 barrels per day (1,600 m3/d) by 1904. On November 14, 1925, the Yount-Lee Oil Company brought in its McFaddin No. 2 at a depth of about 2,500 feet (800 m), sparking a second boom, which culminated in the field’s peak production year of 1927, during which 21,000,000 barrels (3.3 GL) were produced. Over the ten years following the McFaddin discovery, over 72,000,000 barrels (11.4 GL) of oil were produced, mostly from the newer areas of the field. Spindletop continued as a productive source of oil until about 1936. It was then mined for sulfur from the 1950s to about 1975.

America’s first documented oil spill

Poor Gov. Chris Christie has a sad.

Does anyone truly believe that a deputy assistant director would take it upon herself to send this e-mail, if the governor, himself, had not been aware of it? Especially, a control freak, like Chris Christie, who is well known for be a bully and for the misuse of the power of his office?  

What is even more puzzling, why would any voter in his right mind consider this man a contender for the presidency of the US, let alone the governorship of a state (Oh, wait, GWB, but that was Texas)? What was the Democratic leadership thinking when they backed this blowhard, abusive epitome of dirty politics?

Does anyone believe that he only just learned about this yesterday? And, as far as he knew, it was a traffic study? Where has he been the last few weeks, Mars?

As Charles Pierce, rather politely out it, “what a fking poltroon”

He was the only victim here. Reading the smoking-gun e-mails, he felt “sad and betrayed” in his pajamas yesterday. (And, again, governor, please do not ever put that image in my head again and how is it that he hadn’t slept in 36 hours if he only learned about this yesterday morning?) He doesn’t know how this disloyal brood of vipers that he hired got the idea that he would be open to some indiscreet political bullying, because he doesn’t think he’s created a climate of bullying in his administration, hasn’t given that much thought at all because he’s spent all the time thinking about how he had come to such a terrible pass, his trust betrayed by Bridget Kelly, the Machiavellette who blindsided the poor dear. Under the bus, acushla. There’s still plenty of room.

And he didn’t even know David Wildstein in high school! He was too busy being the BMOC.

The basic theme of the press conference was that Big Chicken was responsible for one thing and one thing only — of trusting people who preyed on his well-known innocence and his extensively documented and deeply held faith in his fellow human beings. Hell, he didn’t even know the mayor of Fort Lee’s name! He searched his soul and that’s what he came up with — he, Chris Christie, was sold down the river and, because he, Chris Christie was sold down the river, the people of New Jersey, embodied by him, were also betrayed. He was humiliated. He was deceived. What a world it is when a man cannot trust the hacks whom he appoints to serve him. Jesus H. Christ in the HOV lane, Nixon threw Haldeman and Ehrlichman out the windows with more compassion and fellow feeling than Christie demonstrated yesterday.

He apologized to the people in Fort Lee for allowing this passel of Judases to do these terrible things to him. How, he asked, could they possibly look at him berate schoolteachers and reporters and act like a general jackass throughout his political career and think he possibly could sit still for such obvious thuggery? He was a maverick. He works with both sides. He took an oath. Why is he the only honest man in this whole mess? It’s a heavy burden he carries, a lonely road he walks, but he will do it on behalf of the people of New Jersey for what he’s done to them by allowing such terrible, awful, horrible things to be done to him. “This was the job I asked for, and I gotta do it!” What a man is this. Stay under the damn bus, Bridget.

And just for laughs, in the midst of an ongoing investigation by state and federal authorities, Gov. Christie nominated his Chief of Staff, Kevin O’Dowd, to be the next state attorney general. If confirmed by the Democratic Senate, Mr. O’Dowd would be in charge of the investigation that may well involve himself. He is scheduled to appear before the Senate Judiciary Committee on Tuesday.

Even as the controversy over lane closures at the George Washington Bridge continues to roil the Trenton waters, one man who has so far not been implicated could find his future altered.

Kevin O’Dowd, who served as Gov. Chris Christie’s chief of staff as so called ‘bridgegate’ unfolded last fall was nominated last month as the state’s new attorney general.  He is due to go before the Senate Judiciary Committee on Tuesday.

The problem for O’Dowd is that Deputy Chief of Staff Bridget Kelly, who was implicated today as part of the investigation into the flap, worked for him. To date none of the emails that have surfaced implicate O’Dowd, even as several other administration members have found themselves caught up in the controversy.

But Judiciary Committee Chairman Sen. Nicholas Scutari said late last night he doesn’t know what effect Kelly’s role in the growing scandal will have on O’Dowd, adding that he’ll wait to see what comes out of today’s Assembly Transportation Committee hearing before deciding what’s next.

The side show continues.

I should know better than to pay attention to the evening news on teevee.  It just ticks me off.  Not because I can’t handle the news, but because of the way that it’s slanted.

The other night I was watching the PBS Newshour’s feature on the 50th anniversary of LBJ’s “War on Poverty.”  Among the talking heads that appeared to discuss it was Glenn Hubbard, economist for hire and notable shill for the financial services industry.

What really caught my attention the other night was this part of Hubbard’s discussion of what means the government ought to employ in order to mitigate poverty. The whole discussion is here.

JEFFREY BROWN: Let me bring you back in, Glenn Hubbard — striking that of course a lot of these same issues are now very much still on the table and back on the table, right, questions of economic inequality, and raising the minimum wage. There are the kinds of debates that we have on this program where you and Angela Blackwell might disagree on some of the policies, but you are still agreeing that something more needs to be done.

GLENN HUBBARD: These are huge issues. And something definitely needs to be done.

I guess I wouldn’t think the things like supporting higher minimum wages are the answer. I don’t think that provides employment. We do need to support skills for people coming in. And we need to support their incomes, things like the Earned Income Tax Credit. If we as a society want to provide better opportunities for work, we need to pay for it. Neither side of the aisle is in my view bold enough on this.

JEFFREY BROWN: But what — what — go ahead, Angela Blackwell.

ANGELA GLOVER BLACKWELL: Yes.

If we raise the minimum wage to $10, five million people will be bought out of poverty. People who work shouldn’t be poor.

JEFFREY BROWN: Mr. Hubbard?

GLENN HUBBARD: I agree with that, but why use the minimum wage to do that, as opposed to the Earned Income Credit?

This is something that — as a society, if we want this, we should pay for it, not in terms of job loss for others, or higher prices, or lower profits. This is something we ought to pay for.

Hubbard’s 1% agenda is on full display here.

Looking at his claims in bold above:

Raising the minimum wage if done with enough rigor, will solve the problem of the millions of working poor people.  When people work, they should be paid enough to support themselves.

Supports like the earned income tax credit (for people who work but don’t get paid enough to support themselves or their family) or food stamps, housing allowances, heating assistance and medicaid have become welfare for corporations, subsidizing corporations who cut costs by paying workers too little to maintain themselves. These corporations dump those costs on us.

How much do they dump on us? Billions of dollars every year:

How you subsidize the minimum wage

According to a University of California Berkeley Labor Center and University of Illinois study out Tuesday, 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families. That’s compared to 25% of families in the workforce as a whole.

The report estimated that this public aid carries a $7 billion price tag for taxpayers each year. …

Public assistance isn’t just for those out of work, down on their luck, or in a short-term bind. It’s for those who are gainfully employed but earning such a low wage they can’t sustain themselves. Which is to say: The reason fast-food and other low-wage employers can get away with paying so little is because taxpayers subsidize the slack. The report estimates McDonald’s (ticker: MCD ) subsidy alone is worth $1.2 billion a year, which equates to more than a fifth of its 2012 profits.

If a corporation cannot afford to pay a living wage for a good or a service that it sells, we should not automatically subsidize it.  If society has a need that is not being met by an enterprising corporation, it has other means of availing itself of products and services.

Raising the minimum wage meaningfully will also create jobs.  As low wage worker pay rises, they will spend that money creating demand, which is the basis for the creation of jobs.

Recent research reveals that, despite skeptics’ claims, raising the minimum wage does not cause job loss.[6] In fact, throughout the nation, a minimum-wage increase under current labor market conditions would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend any extra earnings immediately on previously unaffordable basic needs or services.

Increasing the federal minimum wage to $10.10 by July 1, 2015, would give an additional $51.5 billion over the phase-in period to directly and indirectly affected workers,[7] who would, in turn, spend those extra earnings. Indirectly affected workers-those earning close to, but still above, the proposed new minimum wage-would likely receive a boost in earnings due to the “spillover” effect (Shierholz 2009), giving them more to spend on necessities. [footnotes at link]

Hubbard’s proposal above amounts for a demand for welfare from the 1%; he wants us to subsidize their profits by paying part of their labor costs.

Just say no to the 1% when they start their poor-mouthing.