Tag: Economics

Yes, comrades, we need to talk about crises again, the term recession simply does not explain what is really going on! Just in case you might not have noticed or perhaps the mainstream media where you live ignored it, the obvious has happened and the end of the so-called recession has disappeared into the fantasy novel. Once again there is a slowdown in growth and the financial markets are not particularly happy. This time, Germany and China are showing signs of slowdown. Globalisation has not ended the potential towards crises in the capitalist economic system; in fact, the greater interconnectedness of the world economy has exacerbated the situation and ensured that the contagion spreads.  

For those who believe the fantasies of neoliberal economics, the shock of these latest failures of neoliberalism must come as a surprise. But for those of us that have been warning of the stupidity of squeezing wages and destroying work conditions, rising inequality in income and wealth, the dangers of export-led growth when wage incomes are being squeezed meaning that unless governments become the sole purchasers of goods and services that are being produced (and they are not) that obviously there comes a point when working people cannot purchase goods and services as their incomes are too low, wiping out of savings  has happened and personal indebtedness leads to default and bankruptcy. Neither of these things helps to maintain capitalist growth, accumulation and profitability in the long run; forget that, it hasn’t even lasted in the short run.

I will be giving a run through on what is going on and why our lives feel as though we are living through the Shock Doctrine (which we are) then address the proposals of dealing with persistent unemployment under capitalism from the Left on which there is significant disagreement.

A day after the People’s Climate March filled the streets of New York, a smaller group of protesters are engaging in non-violent, direct action against climate change. By conducting a sit-in on the steps of the New York Stock Exchange and blocking lower Broadway, organizers say they are confronting “the system that both causes and profits from the crisis that is threatening humanity.”

The protest does not have a permit, and some participants have pledged to risk arrest during the sit-in.

The leaders of 125 nations will meet on Tuesday at the United Nations for the largest summit on the climate since Copenhagen summit that ended in collapse in 2009.

Climate change is not a far-off problem. It is happening now and is having very real consequences on people’s lives. Climate change is disrupting national economies, costing us dearly today and even more tomorrow.  But there is a growing recognition that affordable, scalable solutions are available now that will enable us all to leapfrog to cleaner, more resilient economies.

The summit will be preceded by the People’s Climate March in New York City. The march is expected to draw over 100,000

The truth about our planet is horrifying, but the true leaders aren’t the ones at the UN – they’re in the streets

At exactly 1pm on Sunday, the streets of New York City are going to fill with the sound of clanging pots, marching bands, church bells and whatever other kinds of noisemakers that participants of the People’s Climate March decide to bring along.

It’s being called the “climate alarm”, and the general idea is that a whole lot of people are going to make the very loud point that climate change is a true emergency for humanity, the kind of threat that should cause us to stop what we are doing and get out of harm’s way.

Is it a stunt? Well, sure, all protests are. But the mere act of expressing our collective sense of climate urgency goes beyond symbolism. What is most terrifying about the threat of climate disruption is not the unending procession of scientific reports about rapidly melting ice sheets, crop failures and rising seas. It’s the combination of trying to absorb that information while watching our so-called leaders behave as if the global emergency is no immediate concern. As if every alarm in our collective house were not going off simultaneously.

Only when we urgently acknowledge that we are facing a genuine crisis will it become possible to enact the kinds of bold policies and mobilize the economic resources we need. Only then will the world have a chance to avert catastrophic warming.

In her new book, “This Changes Everything: Capitalism vs. the Climate,” Ms. Klein outlines the need for “a new economic model to address the ecological crisis.” She joined Amy Goodman and Juan González of Democracy Now! to discuss the radical action that will be needed,

“We have not done the things that are necessary to lower emissions because those things fundamentally conflict with deregulated capitalism, the reigning ideology for the entire period we have been struggling to find a way out of this crisis,” Klein writes. “We are stuck because the actions that would give us the best chance of averting catastrophe – and would benefit the vast majority – are extremely threatening to an elite minority that has a stranglehold over our economy, our political process, and most of our major media outlets.”

Watch the livestream of the People’s Climate March on Sunday September 21 from 10:30am to 1:30pm ET via Democracy Now.

Have the House Democrats finally realized there is a way to beat the recalcitrant Republican majority?  Somebody in the Democratic caucus must have been up watching old movies on Netflix and remembered an old House rule called a “discharge petition”

A discharge petition is a means of bringing a bill out of committee and to the floor for consideration without a report from the committee and usually without cooperation of the leadership. Discharge petitions are most often associated with the U.S. House of Representatives, though many state legislatures have similar procedures. They are used when the chair of a committee refuses to place a bill or resolution on the Committee’s agenda; by never reporting a bill, the matter will never leave the committee, and the full House will not be able to consider it. A successful petition “discharges” the committee from further consideration of a bill or resolution and brings it directly to the floor. The discharge petition, and the threat of one, gives more power to individual members of the House and usurps a small amount of power from the leadership and committee chairs. The modern discharge petition requires the signature of an absolute majority of House members (218 members). Only twice has it been used successfully on major legislation in recent history.

Democrats plot a way to bypass Boehner

Rachel Maddow explains how congressional Democrats are considering the use of the discharge petition to get votes on immigration and the minimum wage.

House Dems seek to force GOP’s hand on minimum wage hike

By Mike Lillis, The Hil

CAMBRIDGE, MD – House Democrats are launching an effort to force Republicans’ hand on the minimum wage.

The Democrats will introduce a discharge petition later this month designed to force a floor vote on a proposal to hike the minimum wage, even in the face of entrenched opposition from GOP leaders.

The discharge petition faces a high bar, as it would require at least 18 Republicans to buck their leadership and endorse the measure – a scenario the Democrats readily acknowledge is unlikely.

“I don’t think we’re ever confident that we’re going to get 18 Republicans to sign a discharge petition,” House Minority Whip Steny Hoyer (D-Md.) conceded during the Democrats’ annual issues retreat on Maryland’s Eastern Shore. [..]

Hoyer said he hasn’t yet surveyed the Democrats to learn exactly how many would endorse the discharge petition, but he predicted it will be “close to everybody.”

Schumer Offers Long-Shot Option to Skirt House G.O.P. on Immigration

By Ashley Parker and Jonathan Weisman, The New York Times

WASHINGTON – Senator Charles E. Schumer, Democrat of New York, offered a long-shot option on Thursday to revive the moribund effort to overhaul the nation’s immigration laws that would require the support of more than a dozen House Republicans – and, if nothing else, pressure others to act on an election-year issue that Tea Party-aligned members strongly oppose. [..]

Mr. Schumer was responding to a recent column in The Washington Post by E. J. Dionne Jr., suggesting that Democrats go the route of the discharge petition. He also suggested during a “Meet the Press” appearance on Sunday that Congress could pass immigration legislation this year, but delay its implementation until 2017, to assuage the concern of many Republicans who say they do not trust President Obama to enforce the laws.

Now the issue is getting enough Republicans to vote with the Democrats. It’s an election year and there are a number of Republican seats that are vulnerable. So what will the Republicans do if the Democrats get all their members to sign on to a discharge petition? The bigger question is will House Minority Leader Nancy Pelosi (D-CA) be able to rally the troops? We’re watching.

Author’s Note: Hi everybody! Welcome to a participatory diary. That’s right, participatory. I’m offering this up as an exercise for everyone to try. The original text is  an explanation of the exercise and why I’m suggesting it, followed by a couple of examples. Then, it’s up to you to complete the diary. Add comments with your own examples and I’ll build out the diary with your content. Let’s see what the whole feels like when we make an attempt to respond to the State of the Union address together. When we make a conscious effort to dig into the principles we find buried in the speech and compare them to the principles we would like to live by, how aligned do they feel?

We’ve heard a lot of responses this week to President Obama’s State of the Union Address. What I find persistently frustrating with any US political speech the lack of unpacking the “capitalist”, “democratic” and “American Way” framework. Or rather, the lack of establishing the principles behind what is being said to see whether it’s fits with the principles and values that we hold.

I have not framed this diary as an “anti-capitalist” one. I am suggesting that regardless of how you feel about capitalism, you might find it useful to analyze what another capitalist is saying by setting aside the supposed common ground of capitalism and searching for what values are reflected in what is being said. Capitalism isn’t a value. It’s a type of economic system. When we identify as a capitalist, however, we probably attach a value system to that identity. What I’m wondering here is whether everyone attaches the same value system. Do you even know if the speaker has the same value system as you?

I am someone who gets frustrated when people try to make decisions or solve problems together without establishing their shared principles. “Capitalism” is not a principle. Principles are about values and beliefs. They are guides to how we behave, how we treat one another. You could claim to be a capitalist and believe that everyone has a right to food and shelter. You could claim to be a capitalist and believe that food and shelter are not rights, they must be “earned.” Those are mutually exclusive principles which two different people are claiming as part of the capitalist construct. If they simply greet each other as capitalists, it is possible for them to think they are aligned when they are not. This opens the door for misunderstanding, at best, and deception, manipulation and oppression, at worst.

Is that happening in this speech? The answer to that and the places where we feel it is happening may be different for each person. Hence, the participatory nature of this diary. What feels unaligned for me may feel aligned for you and vice versa. But, perhaps, we’ll find some common threads of values that we would like to see underpinning our governance and social life. Perhaps ….

The alleged recovery from the recession that began in 2008 has done wonders for the wealthiest of the world.

The Rich Get Richer Through the Recovery

By Annie Lowry, The New York Times

The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.

High stock prices, rising home values and surging corporate profits have buoyed the recovery-era incomes of the most affluent Americans, with the incomes of the rest still weighed down by high unemployment and stagnant wages for many blue- and white-collar workers. [..]

More generally, richer households have disproportionately benefited from the boom in the stock market during the recovery, with the Dow Jones industrial average more than doubling in value since it bottomed out early in 2009. About half of households hold stock, directly or through vehicles like pension accounts. But the richest 10 percent of households own about 90 percent of the stock, expanding both their net worth and their incomes when they cash out or receive dividends.

The economy remains depressed for most wage-earning families. With sustained, relatively high rates of unemployment, businesses are under no pressure to raise their employees’ incomes because both workers and employers know that many people without jobs would be willing to work for less. The share of Americans working or looking for work is at its lowest in 35 years.

Three years ago during the height of the Occupy Wall Street movement, the Congressional Budget Office issued a report based on information from the IRS and US Census Bureau that over the last forty years the top 1% has nearly quadrupled:

– The top 1 percent made $165,000 or more in 1979; that jumped to $347,000 or more in 2007, the study said.  [..]

– The top 20 percent of the population earned 53 percent of after-tax income in 2007, as opposed to 43 percent in 1979.

– The top 1 percent reaped a 17 percent share of all income, up from 8 percent in 1979.

– The bottom 20 percent reaped just 5 percent of after-tax income, versus 7 percent in 1979.

This is exacerbated by the fact that hourly wages have stagnated while the biggest banks are even bigger than they were before the collapse thanks to policies of the government and the Federal Reserve.

The wealth gap is not an isolated problem, according to a report by the NGO, Oxfam, it’s global with just 85 people possessing owning half the world’s wealth

Almost half of the world’s wealth is now owned by just one percent of the population, and seven out of ten people live in countries where economic inequality has increased in the last 30 years. The World Economic Forum has identified economic inequality as a major risk to human progress, impacting social stability within countries and threatening security on a global scale.

This massive concentration of economic resources in the hands of fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities – such as those between women and men. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of economic elites – to the detriment of ordinary people.

Eighty of the those billionaires are meeting this week in Davos, Switzerland for the World Economic Forum, where the wealth disparity has finally become a concern:

As billionaires bet on accelerating growth and rising asset prices, income inequality is emerging as a key theme for this week’s annual meeting. A study released last week by the forum identified the income gap as the most probable menace to the global economy during the next decade. Wealth disparity — driven by globalization and the recent financial crisis — threatens to breed poverty and social disorder, it said.

Next Tuesday, President Barack Obama will give his State of the Union Address where he will outline the ideas he has for closing this gap that has gotten bigger since he was elected. Perhaps, as Huffungton Post’s Howard Fineman suggests, that the president find governing role models other than Ronald Reagan whose policies have brought the US economy into its New Gilded Age.

Journalist David Dayen, explains how Illinois and other states are breaking contracts with workers and slashing pensions, why workers won’t be protected by Social Security, how large are the cuts workers are facing, why public sector workers are demonized, why public pensions funds are financially safer and more politically active, how the Murray Ryan budget deal slashes federal workers pensions, why federal workers are paying the price for small reversals in sequestration and why we are almost at the Ryan far right budget.

Dayen gave a detailed explanation how these cuts hurt not just military pensions but the pensions of every federal employee who inspects our food, works in veterans hospitals, investigates crimes at the FBI and generally ensures the smooth functioning of essential government services.

What you won’t hear about this new deal: Public workers will get eviscerated, to achieve “deficit reduction”

2013 has not been a pleasant year if you work for the federal government. You’ve been subject to pay freezes, furloughs and shutdowns. One of you got yelled at by a Tea Party Republican at the World War II memorial. And if Congress passes the budget deal announced Tuesday night by Rep. Paul Ryan and Sen. Patty Murray – a big if – you will get a final Christmas present: You’ll have to pay more into your pension, an effective wage cut that just adds to the $114 billion, with a “B,” federal employees have already given back to the government in the name of deficit reduction.

The deal between House and Senate negotiators Ryan and Murray would reverse part of sequestration for 2014 and 2015, itself a major source of pain for federal workers. But negotiators want to pay for that relief in future years, with the overall package cutting the deficit by an additional $23 billion. And one of the major “pay-fors” is an increase in federal employee pension contributions. President Obama’s 2014 budget included such a proposal, which would have raised the employee contribution in three stages, from 0.8 percent of salary to 2 percent. Congress had already made this shift for new hires; the Obama proposal would affect all workers hired before 2012.

That proposed increased contribution translated to a 1.2 percent pay cut, and a total of around $20 billion in givebacks over 10 years. Negotiators were pressured by the powerful Maryland Democratic delegation, including Minority Leader Steny Hoyer, House Budget Committee ranking member Chris Van Hollen and Senate Appropriations Committee chairwoman Barbara Mikulski, into softening the blow on federal employees, many of whom live in their districts. According to Sen. Murray, the increase in contributions now equals about $6 billion over 10 years. But negotiators traded some of the cuts to federal employee pensions with different cuts to military pensions, also totaling $6 billion. So whatever the occupation, people who work for the government will bear the brunt of the pain.

Wall Street had a boomer of a year, everyone else not so much.

Stock Market Has Great Year, You… Not So Much

By Mark Gongloff, Huffington Post

This has been the best year for the U.S. stock market in at least 16 years. But that great news is meaningless for many Americans. [..]

But only about half of Americans own stocks, including those in retirement accounts. Meanwhile, corporate profits are soaring largely because companies have been squeezing costs — especially labor costs. In the chart below, tracking the change in average hourly wages for private-sector workers against corporate profits and stock prices since the stock market bottomed in March 2009, you’ll notice one line is badly lagging.

Click on image to enlargew

You guessed it: The lagging line is your sad hourly earnings. They have barely budged since the market bottomed in 2009, while the Dow has skyrocketed 153 percent. Between November 2012 and November 2013, the latest data available, hourly wages for nonsupervisory workers rose just 2.1 percent, just barely ahead of inflation.

Gongloff concludes that Wall Streeters are “bullish on 2014,” others not so much. Our friend David Cay Johnston looks at tech stocks, like FaceBook and Twitter, that essentially have no profits, yet, through speculators and the Federal Reserve policy of nearly zero interest rates, these stock have greatly exaggerated value.

The coming stock market collapse

By David Cay Johnston, Al Jazeera America

Tech stocks have returned to bubble levels, thanks to PR, weak financial journalism and cheap credit

Markets can benefit from speculators, who take risks that prudent people and institutions should avoid, but speculators should represent the edges, not the core of the market.

It’s bad enough that the financial press allows the inflated commentary of tech companies to go unchallenged. But why in the world should Americans tolerate hedge funds and other speculators being subsidized with cheap and easy credit, thanks to the Federal Reserve’s policy of near-zero interest rates?

Only speculators would buy companies with no profits. And only subsidized speculators would bid up prices on companies with a PR in three digits, like Twitter.

Back in 1995, Alan Greenspan, then chairman of the Federal Reserve, asked a rhetorical question about stock prices, “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions, as they have in Japan over the past decade?”

We now suffer through a prolonged period with high unemployment, flat to falling wages for most workers and unrealized potential for economic growth. But the speculators are making out like bandits, thanks to government suppression of interest rates, allowing massive borrowing by offshore hedge funds, and to lax rules for both accounting and trading.

Given the history of stock markets since 1995 and today’s blinking red indicators, no one can rationally claim they were not warned when the next collapse comes, as surely it will.

Click on image to enlarge.

So what will happen to the market when the Fed starts to raise interest rates? 2014 may not be the “boom” that Wall Street expects.

One would think that the person we speak to behind the bullet proof plexiglass at the bank was paid enough to own his/her own home, put food on the table, have a good pension plan and health care insurance. Apparently, that is a myth. In NYC, one in three bank tellers need some form of public assistance and the average pay is only $11.59 per hour, three dollars below what is considered a living wage in big cities where the cost of living is highest. The recent focus has been on Walmart and fast food workers, now we can add bank tellers to the list of the underpaid

Thirty-nine percent of NYC-based bank tellers and their families rely on at least one government assistance program, like Medicaid, the Earned Income Tax Credit or food stamps, which costs the city a total of $112 million per year (pdf), according to the study from the New Day New York Coalition, a group of progressive organizations. Researchers arrived at their findings through government data, as well as interviews with 5,000 bank workers in the New York area, who answered questions about stress, working conditions, pay practices and how the industry has changed since 2008.  [..]

The study’s findings mirror trends nationwide and are yet another sign that the pool of so-called middle-class jobs is shrinking. Nearly one-third of the almost half-million bank tellers in the country rely on public assistance, according to an analysis by the University of California, Berkeley’s Labor Center. The Labor Center’s Ken Jacobs estimates that these employees’ reliance on such programs costs taxpayers nationwide roughly $900 million per year. [..]

Activists have been quick to point out that if companies like Walmart, McDonald’s and now big banks paid their workers more, fewer of them would have to lean on public assistance, saving taxpayers money. More than half of frontline fast food workers rely on government assistance, costing the nation $7 billion, according to an October report. A single Walmart store’s low wages could cost taxpayers $900,000 per year, according to a May report from Senate Democrats.

Fast-food workers are walking off the job in about 100 cities today in what organizers call their largest action to date. Today’s strikes and protests continue a campaign that began last year to call for a living wage of $15 an hour and the right to form a union without retaliation. Early this morning, Democracy Now!’s Amy Goodman and Hany Massoud headed to Times Square in New York City where a group of McDonald’s workers were joined by a crowd of hundreds of supporters to kick off their strike. We hear voices from the protest and speak to Camille Rivera of United NY, part of the newly formed New Day New York Coalition, which has organized this week of action to fight income inequality and build economic fairness.

US fast-food workers strike over low wages in nationwide protests

By Adam Gabatt, The Guardian

Thousands due to strike across 100 cities through the day in a signal of the growing clamour for action on income equality

Thousands of fast food and retail workers went on strike across the US on Thursday in a signal of the growing clamour for action on income equality.

In Chicago, hundreds of protesters gathered outside a McDonalds at 6.15am. As a large “Christmas Grinch” ambled about in freezing temperatures, demonstrators chanted for the minimum wage to be increased to $15 per hour.

It was the first of nine strikes in Chicago, with employees at McDonalds, Wendy’s, Walgreens, Macy’s and Sears also due to walk off shift. Low wage workers were due to strike across 100 cities through the day, including Boston, Detroit, New York City, Oakland, Los Angeles and St Louis.

“Poverty Wages in the Land of Plenty”

By Amy Goodman, Democracy Now!

The holiday season is upon us. Sadly, the big retailers are Scrooges when it comes to paying their staffs. Undergirding the sale prices is an army of workers earning the minimum wage or a fraction above it, living check to check on their meager pay and benefits. The dark secret that the retail giants like Wal-Mart don’t want you to know is that many of these workers subsist below the poverty line, and rely on programs like food stamps and Medicaid just to get by.  This holiday season, though, low-wage workers from Wal-Mart to fast-food restaurants are standing up and fighting back.

“Wal-Mart was put in an uncomfortable spotlight on what should be the happiest day of the year for the retailer,” Josh Eidelson told me, reporting on the coordinated Black Friday protests. “These were the largest protests we’ve seen against Wal-Mart … you had 1,500 stores involved; you had over a hundred people arrested.” Wal-Mart is the world’s largest retailer, with 2.2 million employees, 1.3 million of whom are in the U.S. It reported close to $120 billion in gross profit for 2012. Just six members of the Walton family, whose patriarch, Sam Walton, founded the retail giant, have amassed an estimated combined fortune of between $115 billion-$144 billion. These six individuals have more wealth than the combined financial assets of the poorest 40 percent of the U.S. population.