Monday, November 30, 2015

How Hedge Fund Billionaires Take Over a State

Excellent piece on Illinois politics in Today's New York Times.

MUST READ: WEALTHY SHIFT BALANCE OF POWER IN ILLINOIS: We've chronicled for months the daily battles between Republican Illinois Gov. Bruce Rauner and the state's public employee unions. But the New York Times' Nicholas Confessore offers a brilliant macro-level view of the group of millionaires and billionaires that mobilized to elect Rauner. "To bring about a revolution in the Illinois Capitolin Springfield, Mr. Rauner and his allies have created what amounts to a new campaign economy, in which union money has long been the financial lifeblood of both parties," Confessore writes. "All told, the Griffin family's contributions to Mr. Rauner through the end of 2014 came to $13.6 million - more than the combined sum donated to [former Democratic Gov. Pat] Quinn by 244 labor unions in the state." 
What's more, that group of wealthy donors is staying in the game after Rauner's election, with an ongoing spending binge designed to draw union-friendly Democrats to its corner, Confessore writes. Most of the wealthy donors "lean Republican; some are Democrats. But to a remarkable degree, their philosophies are becoming part of a widely adopted blueprint for public officials around the country: Critical of the power of unions, many are also determined to reduce spending and taxation, and are skeptical of government-led efforts to mitigate the growing gap between the rich and everyone else." 
"They come with a very political and philosophical bent," said the Chicago hedge fund executive William Daley, a former chief of staff to President Barack Obama and a member of Rauner's transition team. "I think they believe philosophically in that business mentality and that strong public unions are a root of all evil in governing places like Illinois or Chicago and New York and California."

A similar effort is at work in California.  The primary target is labor unions.

And on the worker side:

Alexander Hertel-Fernandez 
The American Prospect
Managers and supervisors can now legally require their workers to participate in politics as a condition of employment. For instance, in most states, managers have the legal right to mandate worker attendance at a political rally for a favored candidate—and fire or punish workers who decline to participate.
Aside from Citizens United and the overall political climate, several other changes in the American workplace have facilitated greater political recruitment of workers by managers. Most important, American workers have lost much of the voice and bargaining power that they possessed a generation ago. One clear manifestation of this imbalance in workplace power is the stagnation of the typical worker’s wages relative to the productivity of the overall economy, especially since the 1970s. Other signs of reduced worker bargaining power include record levels of wage theft by managers and the rise of on-call positions where employees are not notified of their schedules until just before they are required to report for work...
The collapse of the labor movement, competition with lower-wage economies overseas, the failure to update labor-law protections, and greater pressures on firms to generate high returns have all contributed to workers’ loss of power and left them in a far weaker position to resist employer demands for political support. In the past, when workers were more secure in their employment, they might have been comfortable refusing to participate in employer-led political activities. Today, not so much: Employees are reluctant to defy management for fear of being replaced.

Wednesday, November 25, 2015

Talking Political Economy for Thanksgiving

 With Thanksgiving just a day away, I wanted to send along some guidance on how to deal with the inevitable political debate that breaks out over Thanksgiving dinner.

When your conservative cousin insists that raising the minimum wage is a bad idea, I want you to know how to push back. When your cantankerous uncle vilifies unions, I want you to be prepared with the facts.

Let’s start with the erroneous attacks on unions.

MYTH: "Unions haven’t done anything for us."
Wrong. Unions do not damage productivity or employment growth. Instead, unions help distribute income gains more equitably toward workers from corporate owners and their executive managers. Evidence shows that when unions are empowered, the higher pay and standards they set—such as overtime pay and the 40-hour workweek—spill over and benefit all workers.

Thursday, November 12, 2015

The Real Divide Between Clinton and Sanders - neoliberalism

Jerome Karakul, Sociology, U.C. Berkeley 
When the Democratic candidates for president come together for their second presidential debate this Saturday, the question may arise -- as it did in the first debate -- as to what Bernie Sanders means when he says he is a socialist. But the distinction between "socialism" and "capitalism" is misleading here, for the real debate is about what type of capitalism the candidates favor, for none of them are old-fashioned socialists who advocate public ownership of major industries. There is, however, a far-reaching difference between the social democratic version of capitalism favored by Senator Sanders and the neoliberal version preferred by Secretary Clinton.
This difference is what was really beneath the disagreement that took place in the first debate about Denmark, which -- along with Sweden and Norway, the other countries mentioned in the debate by Senator Sanders -- embody the social democratic model: a type of highly regulated market economy that is characterized by strong labor unions, a generous welfare state, vigorous public institutions, and relatively high taxes and public expenditures.
A man taking a stroll on Rost Island, Norway
In contrast, the model of capitalism favored by Secretary Clinton might be termed neoliberal: heavy reliance on market mechanisms (hence Obamacare rather than Medicare for all or even a public option), privatization of many services previously carried out by the government (hence extensive private contracting by the U.S. military), a less generous welfare state, a bias toward deregulation (hence the decision to repeal Glass-Steagall), and lower taxes and public expenditures (though it should be noted that all of the Republican candidates support an even purer and more extreme version of the neoliberal model than Secretary Clinton). 
Senator Sanders captured a key element of the difference between the two models when he said in the first debate that "Congress doesn't regulate Wall Street; Wall Street regulates Congress." The degree to which concentrated corporate power dominates the political process is incompatible with the social democratic model, which is premised on the capacity of democratically elected government to regulate the economy in the public interest. An observer of European societies put the matter succinctly: In genuine democracies, the political institutions must shape the economy, not the other way around.

Neoliberalism, Democrats, and Public Schools

Jeff Bryant,  Education Opportunity Network,

The “big economic fight” in the Democratic Party that news outlets are reporting isn’t confined to economics.
The link above takes you to a story in the Washington Post explaining how a “populist wing” in the Democratic Party is rebelling against the conventional wisdom of “centrist” Democrats who have dominated the party since the 1990s.
“Right now the populist story is winning,” the article concludes.
My colleague Richard Eskow pounced on the article and writes for the Huffington Post, “The corporate-friendly policies of the party’s more conservative wing have fared poorly, both as policy and as politics, and as a result the party has moved to the left.”
Eskow points to “the insurgent candidacy of Bernie Sanders” and other recent events as signs of “a major setback for the so-called ‘New Democrats’ who have dominated the party since the election of Bill Clinton in 1992. Nearly 25 years after they rose to power, the ideas of the ‘New Democrats’ don’t seem so new.”

Wednesday, November 11, 2015

This Changes Everything

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Tuesday, November 10, 2015

California, Austerity and Prop. 30

The states, Justice Brandeis famously pointed out, are the laboratories of democracy. And it’s still true. For example, one reason we knew or should have known that Obamacare was workable was the post-2006 success of Romneycare in Massachusetts. More recently, Kansas went all-in on supply-side economics, slashing taxes on the affluent in the belief that this would spark a huge boom; the boom didn’t happen, but the budget deficit exploded, offering an object lesson to those willing to learn from experience.

Paul Krugman
Macroeconomics, trade, health care, social policy and politics.

And there’s an even bigger if less drastic experiment under way in the opposite direction. California has long suffered from political paralysis, with budget rules that allowed an increasingly extreme Republican minority to hamstring a Democratic majority; when the state’s housing bubble burst, it plunged into fiscal crisis. In 2012, however, Democratic dominance finally became strong enough to overcome the paralysis, and Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare.

I guess we’re not in Kansas anymore. (Sorry, I couldn’t help myself.)

Needless to say, conservatives predicted doom. A representative reaction: Daniel J. Mitchell of the Cato Institute declared that by voting for Proposition 30, which authorized those tax increases, “the looters and moochers of the Golden State” (yes, they really do think they’re living in an Ayn Rand novel) were committing “economic suicide.” Meanwhile, Avik Roy of the Manhattan Institute and Forbes claimed that California residents were about to face a “rate shock”that would more than double health insurance premiums.

What has actually happened? There is, I’m sorry to say, no sign of the promised catastrophe.

If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers. Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housing bubble, is back to pre-recession levels.

On health care, some people — basically healthy young men who were getting inexpensive insurance on the individual market and were too affluent to receive subsidies — did face premium increases, which we always knew would happen. Over all, however, the costs of health reform came in below expectations, while enrollment came in well above — more than triple initial predictions in the San Francisco area. A recent survey by the Commonwealth Fund suggests that California has already cut the percentage of its residents without health insurance in half. What’s more, all indications are that further progress is in the pipeline, with more insurance companies entering the marketplace for next year.

And, yes, the budget is back in surplus.

Has there been any soul-searching among the prophets of California doom, asking why they were so wrong? Not that I’m aware of. Instead, I’ve been seeing many attempts to devalue the good news from California by pointing out that the state’s job growth still lags that of Texas, which is true, and claiming that this difference is driven by differential tax rates, which isn’t.

For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s housing prices. Despite the bursting of the bubble, home values in California are still double the national average, while in Texas they’re 30 percent below that average. So a lot more people are moving to Texas even though wages and productivity are lower than they are in California.

And while some of this difference in housing prices reflects geography and population density — Houston is still spreading out, while Los Angeles, hemmed in by mountains, has reached its natural limits — it also reflects California’s highly restrictive land-use policies, mostly imposed by local governments rather than the state. As Harvard’s Edward Glaeser has pointed out, there is some truth to the claim that states like Texas are growing fast thanks to their anti-regulation attitude, “but the usual argument focuses on the wrong regulations.” And taxes aren’t important at all.

So what do we learn from the California comeback? Mainly, that you should take anti-government propaganda with large helpings of salt. Tax increases aren’t economic suicide; sometimes they’re a useful way to pay for things we need. Government programs, like Obamacare, can work if the people running them want them to work, and if they aren’t sabotaged from the right. In other words, California’s success is a demonstration that the extremist ideology still dominating much of American politics is nonsense.

A version of this op-ed appears in print on July 25, 2014, on page A27 of the New York edition with the headline: Left Coast Rising. Today's Paper|Subscribe

A History of the Decline of Labor

What the 1 % Want

What the 1% wants from our politicians

Posted: 09 Nov 2015 07:37 AM PST

The 1% in America have an out-sized influence on the political process. What policies do they support? And do their priorities differ from those of less wealthy Americans?

Political scientist Benjamin Page and two colleagues wanted to find out, so they started trying to set up interviews with the richest of the rich. This, they noted, was really quite a feat, writing:

It is extremely difficult to make personal contact with wealthy Americans. Most of them are very busy. Most zealously protect their privacy. They often surround themselves with professional gatekeepers whose job it is to fend off people like us. (One of our interviewers remarked that “even their gatekeepers have gatekeepers.”) It can take months of intensive efforts, pestering staffers and pursuing potential respondents to multiple homes, businesses, and vacation spots, just to make contact.

Thursday, November 5, 2015

Elizabeth Warren on Social Security

Three weeks ago, the Social Security Administration made a quiet announcement.

Next year, for just the third time since 1975, seniors who receive Social Security won’t be getting an annual cost of living increase. Neither will millions of other Americans whose veterans’ benefits, disability benefits, and other monthly payments are pegged to Social Security.

Two-thirds of retirees depend on Social Security to pay for the basics, to put food on the table and keep a roof over their heads – but seniors who usually get a small boost on January 1st won’t see an extra dime next year. That’s why today, I’m introducing the Seniors and Veterans Emergency (SAVE) Benefits Act – a one-time payment equivalent to a Social Security benefits increase of 3.9%.

Help us show Congress that America’s seniors and veterans need a boost on January 1st. Sign up right now to show your support for the SAVE Benefits Act.

Why give seniors and veterans a 3.9% Social Security boost? Well, times are tough for America’s seniors – but they aren't tough for everyone. According to recent data, CEOs at the top 350 American companies received, on average, a 3.9% pay increase last year.

Tuesday, November 3, 2015

Prediction: The Future of Climate Change is Widespread Civil War

The Future of Climate Change Is Widespread Civil War
Portside Date: 
November 3, 2015
Michael T. Klare
Date of Source: 
Tuesday, November 3, 2015
The Nation
At the end of November, delegations from nearly 200 countries will convene in Paris for what is billed as the most important climate meeting ever held. Officially known [1] as the 21st Conference of the Parties (COP-21) of the United Nations Framework Convention on Climate Change (the 1992 treaty [2] that designated that phenomenon a threat to planetary health and human survival), the Paris summit will be focused on the adoption of measures that would limit global warming to less than catastrophic levels. If it fails, world temperatures in the coming decades are likely to exceed 2 degrees Celsius (3.5 degrees Fahrenheit), the maximum amount [3] most scientists believe the Earth can endure without experiencing irreversible climate shocks, including soaring temperatures [4] and a substantial rise [5] in global sea levels.
A failure to cap carbon emissions guarantees another result as well, though one far less discussed. It will, in the long run, bring on not just climate shocks, but also worldwide instability [6], insurrection, and warfare. In this sense, COP-21 should be considered not just a climate summit but a peace conference—perhaps the most significant peace convocation in history.

Monday, November 2, 2015

Standing Up to Wall Street

Charlie Rose interviews Bernie Sanders on Standing Up to Wall Street, socialism and social democracy, and more.  Sanders defines differences between he and Hillary Clinton.
Very good interview.