Economy

Do Black Lives Matter to the Federal Reserve?

With black communities nationwide far from recovered, a grassroots coalition wants the Fed to know that an interest rate hike could be disastrous. 

Center for Popular Democracy
Center for Popular Democracy A Fed Up rally in San Francisco on March 5, 2015. T his week, Dawn O’Neal has traveled from her home in south DeKalb County, Georgia, to the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, with a simple message for Fed leaders: Don’t raise interest rates. The 48-year-old teacher’s assistant and mother of four wants Fed governors to know that her community is far from recovered and that raising interest rates too soon could be disastrous. O’Neal is one of dozens of activists and policy experts traveling to Jackson Hole this week to urge the Fed against raising rates. The campaign, called Fed Up, includes some two-dozen unions, community groups, and think tanks, from the AFL-CIO to the Working Families Party. In Jackson Hole, organizers will deliver a petition demanding that the Fed rethink its plan to raise interest rates until the recovery can reach more Americans. Fed Up also plans to hold a series of teach-ins exploring questions like “How...

The Labor Prospect: Getting Sick of No Paid Sick Leave

The case for paid leave, domestic workers win minimum wage protecton, and the fight to grow union membership at McDonald's. 

AP Photo/Mary Altaffer, File
AP Photo/Mary Altaffer, File In this Friday, Jan. 18 2013 file photo, activists hold signs during a rally at New York's City Hall to call for immediate action on paid sick days legislation in light of the continued spread of the flu. Welcome to The Labor Prospect, our weekly round-up highlighting the best reporting and latest developments in the labor movement. D espite an expanding patchwork of paid sick leave policies cropping up around the U.S., an In These Times investigation reminds us that this country is woefully behind the rest of the world in terms of such worker rights. Lacking any sort of basic safety net, nearly one-quarter of working mothers are back on the grind within just two weeks of giving birth, the report finds . As Sharon Lerner writes, “most Americans don’t realize quite how out of step we are. It’s not just wealthy, social democratic Nordic countries that make us look bad. With the exception of a few small countries like Papua New Guinea and Suriname, every...

Yet Another Subsidy for the Big Banks

If Congress really wanted to save hundreds of billions of dollars, the Fed could stop paying interest on bank reserves.

(Photo: AP/Richard Drew)
(Photo: AP/Richard Drew) A television screen on the floor of the New York Stock Exchange in June. W hen Mitch McConnell wanted to pay for a transportation bill this summer, he targeted a subsidy the Federal Reserve automatically pays to banks. All 2,900 banks who purchase stock in the Federal Reserve system—a kind of membership fee for using services like check-clearing and the discount window—get a 6 percent annual dividend , costing the government $16.3 billion over ten years. McConnell used this pot of cash for his highway bill, which remains in limbo until the House passes its own long-term version. But there’s a bigger risk-free payout the Fed makes to big banks, one set to rise exponentially as the economy improves. In fact, according to the Congressional Budget Office, hundreds of billions of dollars that would otherwise go into the federal Treasury will leak out to banks, including branches of foreign banks, in the coming years. If Congress needs to find money to pay for new...

The Future of Europe

Unless it can restore the principles of growth and sovereignty on which it was founded, the Eurozone may not last. 

AP Photo/Petros Giannakouris
AP Photo/Petros Giannakouris A Greek flag waves as the sun's rays shine through clouds at the ancient Acropolis hill, in Athens, Monday June 22, 2015. O n June 8 th , I had the honor of accompanying then-Greek finance minister, Yanis Varoufakis, to a private meeting in Berlin with the German finance minister, Wolfgang Schäuble. The meeting began with good-humored gesture, as Herr Schäuble presented to his colleague a handful of chocolate Euros, “for your nerves.” Yanis shared these around, and two weeks later I had a second honor, which was to give my coin to a third (ex-)finance minister, Professor Giuseppe Guarino, dean of constitutional scholars and the author of a striking small book (called The Truth about Europe and the Euro: An Essay , available here ) on the European treaties and the Euro. Professor Guarino's thesis is the following: “On 1 st January 1999 a coup d'état was carried out against the EU member states, their citizens, and the European Union itself. The 'coup' was...

Boosting Low Pay

A look inside the Summer 2015 cover package on new fronts in the labor movement.  

AP Photo/Seth Wenig
AP Photo/Seth Wenig Protesters rally for higher pay in front of a McDonald's, Wednesday, April 15, 2015, in New York. W idening inequality in America has its roots in several trends but is driven primarily by unequal earnings. In this package of articles, five authors address the pressure on middle- and working-class income—and strategies for reversing the trend. In a highly original essay, Harold Meyerson assesses the chilling parallels between the role played by the slave South in both the 19th-century global economy and the U.S. political economy—and the similar, wage-depressing influence of the South today. Robots are one more threat to jobs and pay levels. As economist Jeffrey Sachs explains , automation in a laissez-faire economy indeed produces that result. However, with the right public policies, robots can relieve a lot of human toil and spread wealth and leisure. Three companion pieces focus on organizing. They explore the rise of unions in three key sectors, two of them...

The German Menace

Forgetting its history, Germany's obsession with austerity and debt threatens to derail the project of European union. 

Rex Features via AP Images
Rex Features via AP Images Alexis Tsipras and Angela Merkel European Union Emergency Summit, EU Headquarters, Brussels, Belgium, July 12, 2015. This story originally appeared at The Huffington Post . A t the end of World War II, a bloody horror that cost 80 million lives worldwide, American leaders were determined that Germany must never again rise to massacre its neighbors. So the Allies created a plan to strip Germany of its industrial might and turn it into a "pastoral" economy with a GDP well below its level of 1938. In addition, the reparations from the previous damage created by Germany during World War I, which were levied at the Versailles peace conference but never paid, were made due and payable over ten years. The combined cost of the reparations and the loss of its industry were deemed a fitting punishment for the Germans, who pretended not to know what was going on but were fully culpable for the rise and the grotesque atrocities of the Hitler regime. Germany,...

How to Live Happily with Robots

It takes extensive government intervention to assure that gains of automation are broadly shared.

(Photo: AP/Shizuo Kambayashi)
(Photo: AP/Shizuo Kambayashi) The Robot Will See You Now: (And she never goes on break.) Customeres at the Mitsukoshi department store in Tokyo watch an android receptionist, who greets customers as they walk in the store. This article appears in the Summer 2015 issue of The American Prospect magazine. Subscribe here. M achines do indeed eliminate jobs. And on the whole, we should be grateful. In the biblical telling, humanity was condemned to hard labor following the expulsion from Eden: “By the sweat of your brow you shall eat bread.” Yet machines have offered us some respite, easing our burdens and raising living standards. The armies of robots and other smart machines now on the horizon can ease those burdens further, if we humans are smart enough to act so that the benefits of these technologies are widely shared. Market forces alone won’t do the job. Smart machines may raise productivity and output on average, but market forces will tend to concentrate the gains among a fraction...

Why Social Security Beats All Rivals -- And the Case for Expanding It

More retirees are relying exclusively on Social Security than ever before. The program itself is sound—but it needs to be expanded. 

AP Photo/Jon Elswick
AP Photo/Jon Elswick The cover page for the summary of the 2015 Status of the Social Security and Medicare Programs released by the Social Security and Medicare Board of Trustees is photographed Thursday, July 23, 2015, in Frederick, Maryland. This article originally appeared at The Huffington Post . T his is the season when we hear calls to cut Social Security. That's because of the annual trustees report on the system's financial condition. Last week, the trustees reported that Social Security can pay all of its projected obligations through about 2034. To keep faith with today's workers and tomorrow's retirees, Social Security will need additional funds, though the shortfall is entirely manageable if we act in the next few years. The report prompted the usual right-wing blarney about cutting benefits or privatizing Social Security, as well as familiar bleatings from billionaire deficit hawks about the need to delay the retirement age for people far less fortunate. One part of the...

The Latest Indication of Obama's Lack of Commitment to Financial Reform

The new Fed nomination signals the administration's belief that Dodd-Frank solved everything.

(Photo: AP/Evan Vucci)
(Photo: AP/Evan Vucci) In this October 2014 photo, Obama sits with financial regulators including Fed Chair Janet Yellen (left). W ith the fifth anniversary of Dodd-Frank, you will hear a lot about the Obama administration’s commitment to financial reform. And you can certainly break down what the law did and find successes on discrete issues. But even supporters will agree that a financial regulatory law is only as good as the people conscripted to implement and oversee it. And so the Obama administration said more about their position on financial reform with a key nomination on the day before the anniversary than they did with any subsequent rhetoric. The White House nominated Kathryn Dominguez, a professor of public policy and economics at the University of Michigan, to fill the final open seat on the seven-member Federal Reserve Board of Governors. Dominguez teaches a class called “Jane Austen and Economics” along with courses in macroeconomics and international financial policy...

Why Liberals Have to Be Radicals

(Photo: AP/Charlie Neibergall)
(Photo: AP/Charlie Neibergall) Democratic presidential candidates stand on stage during the Iowa Democratic Party's Hall of Fame Dinner on July 17 in Cedar Rapids. From left, Bernie Sanders, Martin O'Malley, Hillary Clinton, and Lincoln Chafee. J ust about nothing being proposed in mainstream politics is radical enough to fix what ails the economy. Consider everything that is destroying the life chances of ordinary people: Young adults are staggered by $1.3 trillion in student debt. Yet even those with college degrees are losing ground in terms of incomes. The economy of regular payroll jobs and career paths has given way to a gig economy of short-term employment that will soon hit four workers in 10. The income distribution has become so extreme, with the one percent capturing such a large share of the pie, that even a $15/hour national minimum wage would not be sufficient to restore anything like the more equal economy of three decades ago. Even the mainstream press acknowledges...

Why Joining a Union is Good For Your Well-Being

New research suggests that workplace organizing is key to personal happiness and overall well-being. 

AP Photo/Matt Rourke
AP Photo/Matt Rourke A Protestor gestures as he demonstrates to push fast-food chains to pay their employees at least $15 an hour, outside during a march to a McDonald's restaurant Thursday, September 4, 2014, in Philadelphia. A merican labor unions are facing a political assault unparalleled since the New Deal, from the Trans-Pacific Partnership to “right-to-work,” to the attack on public sector unions at the state level. And there’s a good chance it’ll just get worse. Ahead of Scott Walker’s possible nomination in the race for 2016, Republicans in Congress are already floating the “ National Right to Work Act .” If passed it would create a legal environment more hostile to the rights of workers than in any industrial democracy. Any conceivable Republican president would certainly sign such a bill if it reached his or her desk. As is well known, these laws dramatically and purposely reduce workers' ability to collectively bargain. Already, half of American states are right-to-work. A...

The Real Debt Problem

(Photo: AP/Rex Features)
(Photo: AP/Rex Features) Demonstrators protest the recent deal imposed on Greece by the European Union outside the German Embassy in London. Note: This is adapted from the new preface to the just-published paperback edition of Debtors’ Prison: The Politics of Austerity Versus Possibility . (Vintage) I n the era when it was common to throw people in jail as a punishment for debts they could not pay, the result was perverse for both debtor and creditor. The debtor’s economic life ended—in prison there was no way the inmate could earn money to repay debt; thus there was no way the creditor could be made whole. The invention of bankruptcy in 1706 during the reign of Queen Anne of England offered an ingenious solution. A magistrate would evaluate the assets of the bankrupt party; creditors would be repaid at so many pence on the pound; the debt would be considered discharged and the debtor could get on with his life. This was the origin of the modern Chapter 11 bankruptcy, in which a...

Clinton Tries to Move the Economic Conversation Beyond Jobs

(Photo: AP/Charlie Neibergall)
(Photo:AP/Charlie Neibergall) Hillary Clinton speaks to residents of Iowa City, Iowa, during a July 7 campaign stop. A s most of us understand, "Do I have a job?" is not the only question you might ask about your economic situation. That understanding is what Hillary Clinton is counting on as she delivers her first major economic address Monday, an attempt to articulate a vision that will not only provide a means of understanding the collection of policy changes she'll be advocating in her 2016 campaign for president, but also contrast with the now 17 Republicans who want to face her next fall. I'm writing this before the full text of Clinton's speech is available, so what I have to go on is only the outline and selections that have been leaked to a couple of reporters (see here and here ). But it's clear that Clinton is attempting to expand the economic conversation beyond the two measures that usually dominate the discussion: job growth and GDP growth. "The measure of our economic...

Get Out of Jail Free

How prosecutors and courts collude to keep corrupt executives from doing prison time. 

AP Photo/Lefteris Pitarakis/Nick Ut/Kathy Willens/Matt Dunham
AP Photo/Lefteris Pitarakis/Nick Ut/Kathy Willens/Matt Dunham This combination made from file photos shows signage for four banks, Barclays, Citigroup, JPMorgan Chase, and the Royal Bank of Scotland, that will pay $2.5 billion in fines and plead guilty to criminally manipulating global currency market going back to 2007. This article appears in the Summer 2015 issue of The American Prospect magazine. Subscribe here . Why Not Jail?: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction By Rena Steinzor 192 pp. Cambridge University Press $32.99 Too Big to Jail: How Prosecutors Compromise with Corporations By Brandon L. Garrett 290 pp. Belknap Press $29.95 I n these partisan times, here’s an assertion that cuts across party lines: The United States faces a problem of “overcriminalization,” an explosion of statutes that give the government extraordinary powers to make felons of us all. In 2013, the House Judiciary Committee formed a special task force to address this...

The IRS Will Close This Tax Loophole -- Unless Wall Street Gets Its Way

Hedge fund managers are fighting to keep a little-known tax cheat that saves them hundreds of millions, if not billions, of dollars. 

(Photo: Ray Tsang/Flickr)
(Photo: Ray Tsang/Flickr) F or nearly a decade, Democrats from President Obama on down have vowed to close the “carried interest” loophole, which allows investment managers to classify a substantial portion of their income as capital gains, benefiting from reduced tax treatment. But there’s another, even more audacious loophole hedge fund managers routinely use to further reduce their tax burden. It involves a form of laundering—cycling money through shell companies pretending to sell a specialized form of insurance. Using this technique, the nation’s biggest hedge fund managers have shielded hundreds of millions, if not billions, of dollars. A couple weeks before a deadline to comment on proposed rules to close this loophole, activists have gotten involved by demanding that the IRS act robustly. They want to highlight this elaborate tax evasion as an example of how hedge funds use whatever strategy they can devise to enrich themselves, to the detriment of ordinary workers and the...

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