Economy

Fruits of Republican Folly

AP Images/J. Scott Applewhite
The Republicans badly damaged themselves with their contrived government shutdown and debt crisis, but it remains for the Democrats to drive home their advantage. Will they? Based on the cost to the Republican brand and the pressure from corporate elites not to harm the economy, the days of shutdowns and games with the debt are probably over for the foreseeable future. If the Tea Party faction tries to repeat these maneuvers, House Speaker John Boehner would likely permit a free vote again, and enough Republicans would vote with Democrats to keep the government open. The Republicans seem hopelessly split between a Tea Party faction that relishes governing crises and a more mannered corporate faction that kills government softly. But the GOP is still one party when it comes to destroying government as a constructive force in the economy and society. Since Barack Obama took office, the two Republican factions have complemented each other in a successful “good cop, bad cop” effort to...

Be Our Guest Worker

A look at the uncertain existence of the legal migrant farmworkers that the agricultural industry relies on for cheap labor. 

AP Images/Eric Risberg
AP Images/Eric Risberg L uis Perez sits up on the edge of his bed, a stiff cot mattress resting on a flimsy metal bedframe a few inches above the concrete floor. He’s in the 120-square-foot cinder block walled room that he shares with a fellow migrant worker in Angier, North Carolina. “The television and coffee maker, that’s all his,” Perez says, pointing toward a corner where a mini-refrigerator sits. A half-empty bag of rice slouches on top. “I know he’ll take those back to Mexico, but I don’t want to carry stuff like that with me. Or waste my money at Wal-Mart.” He smiles broadly and laughs. With the door closed, that smile seems to be the only light in the room. Perez is legally employed through the federal H-2A visa program, which allows foreign workers to be hired to work seasonally in U.S. agriculture. Each May for the past five years, Perez has boarded a bus in Mexico City, Mexico with about 20 other workers headed to North Carolina to plant and harvest crops until November...

From White Collars to Pink Slips

Americans have been told that a college education will help them avoid the fate of workers whose jobs have been shipped overseas. A new report pours water on that idea.

AP Photo/Wally Santana
AP Photo A t first glance, Kingston Technology doesn’t appear to have much in common with big auto manufacturers like General Motors (GM). Based in sunny Southern California, the computer-technology company makes small memory products and primarily employs white-collar programmers and designers. But Kingston and GM have at least one thing in common: They ship jobs overseas. Kingston recently handed out pink slips to 80 employees and moved its RAM and flash-memory production operation to China. “Our company has been, and continues to shift primarily production work from the U.S. to China,” Kingston wrote in a disclosure to the Department of Labor. But the company is also letting go of "finance, engineering, and IT positions." Outsourcing is usually associated with blue-collar jobs that require a high-school education or less. But an increasing number of workers in the technology industry with a bachelor’s degree or more—electrical engineers, computer designers, and audio and visual...

Bill de Blasio's Elements of Style

AP Photo/Seth Wenig
Jenny Warburg W hen he wins New York City's mayoral election today, Bill de Blasio will have succeeded in branding himself the next big thing in progressive politics. But it remains to be seen which de Blasio shines through over the next four years: the former Hillary Clinton operative who admires neoliberal Governor Andrew Cuomo and is friendly with the real-estate industry, or the activist lefty who got arrested protesting the closure of a Brooklyn hospital and has promised to take on income inequality and the New York Police Department's sprawling anti-terrorism apparatus. "The aspiration is to be fundamentally transformative," says Professor John Mollenkopf at The City University of New York's Center for Urban Research. "He really does want to see how New York City can become less unequal and more capable of promoting upward mobility. But assuming things go the way the polls suggest, he still faces an enormous challenge." In particular, de Blasio will have to muscle through an...

Bretton Woods Revisited

AP Images
AP Images O n July 22, 1944, as allied troops were racing across Normandy to liberate Paris, representatives of 44 nations meeting at the Mount Washington resort in Bretton Woods, New Hampshire, created a financial and monetary system for the postwar era. It had taken three weeks of exhausting diplomacy. At the closing banquet, the assembled delegates rose and sang “For He’s a Jolly Good Fellow.” The fellow in question was John Maynard Keynes, leader of the British delegation and intellectual inspiration of the Bretton Woods design. Lord Keynes, the world’s most celebrated economist, was playing a tricky dual role. He had proposed a radical new monetary system to free the world from the deflationary pressures that had caused and prolonged the Great Depression. Bretton Woods, he hoped, would be the international anchor for the suite of domestic measures that came to be known as Keynesian—the use of public spending to cure depression and the regulation of financial markets to prevent...

The Next Battle at the Fed

AP Images/Pablo Martinez Monsivais
AP Images/Pablo Martinez Monsivais W ith the Administration’s stunning decision to name Janet Yellen to chair the Federal Reserve, at least one major government institution will weigh in strongly on the side of economic recovery, right? Well, maybe. First, of course, Yellen has to be confirmed. That, thankfully, seems a good bet. But there is also the problem of three vacancies on the seven-member Fed Board of Governors, which President Obama will soon fill. If the wrong people are appointed to these jobs, Yellen’s ability to aggressively use low interest rates to strengthen the recovery will be destroyed. But why would Obama do that? The Treasury and Wall Street crowd who dearly wanted Larry Summers rather than Yellen will now be focusing on the three other seats. If they can’t get their man in as chair, at least they can narrow the options of the woman who got the job. The same insiders who pressed Obama to go out on a limb for Summers will be pushing hard for Wall-Street-friendly...

The Other Default?

AP Images/Yves Herman
AP Images/Yves Herman In Brussels they had a word for it: Shutdownfreude . As the standoff between the President and Congress reached its fever pitch last week, officials at the European Commission were relieved that, this time at least, it wasn’t their political system at the center of a potential global meltdown. Now that the United States won’t default on its debt due to a few dozen Tea Party radicals, things are returning to normal. Or should we say the new normal in Europe—serial crisis. Amid Congress’s desultory lurch toward a government shutdown, Euro assets were looking good—growth continued to be anemic, but then again, no one in any European government was intentionally trying to force a debt default. However, that North American storm now seems to have passed. The usual fears about sovereign debt still haunt European markets, but what is driving concern today is the uncertainty surrounding the continent’s banking system. In policy circles, everyone seems to agree that the...

Mission Affordabled: Why Obama’s Website Problems Aren’t “His Iraq”

AP Photo/J. Scott Applewhite
AP Photo/Jacquelyn Martin, File Y es, the Affordable Care Act website rollout has been a fiasco. And, as always happens when political catastrophe strikes, the wave of bad analogies has rushed in its wake. One in particular is gaining ground: Healthcare.gov is for Barack Obama’s presidency what the invasion of Iraq was to George W. Bush’s administration, complete with outraged liberal reactions to it . Here’s the funny thing: it’s a bad analogy, which could turn out to be accurate … but probably won’t. To start with, the fact that people died in Iraq, as opposed to the inconvenience involved in a malfunctioning website, doesn’t make it a bad analogy. The analogy has to do with presidential decisions; it’s about process, not outcomes, and there’s nothing at all wrong with that. No, what makes it a bad analogy is that Iraq War was misconceived from the start, and the actual events of the war, to a large extent, made obvious what some saw from the beginning. With the exchanges, on the...

Sorry, John Stuart Mill Was Not a Libertarian

Libertarianism as it exists in the United States is basically a mid-20th century American philosophy, at least in origin. Owing perhaps to a combination of bad introductory classes and an urge for a longer historical pedigree, libertarians often like to pretend that great canonical thinkers prior to that time were also libertarians. But as that is an obvious anachronism, it turns out to be untrue. There are some lesser knowns here and there along the trail who might come close, but basically none of the big old philosophical names can rightly be associated with this mid-20th century libertarianism. Previously, I pointed out John Locke’s anti-libertarian transgressions , in which he observed and prescribed a solution to the intense coercion of labor contracts made between those with very unequal bargaining strength, contracts he analogized to slavery. To suggest Locke was not a mid-20 century American libertarian was so infuriating that some rather amusing, but ultimately incompetent,...

The Key to the Broffordable Care Act's Success

Flickr/CNDOZ
W hen Barack Obama made the decision to design a universal health care program based on the private insurance market, he faced one key problem. If you require insurance companies to accept anyone regardless of pre-existing conditions—as everyone wanted—you face the threat of "adverse selection," in which only those who are sick (and therefore expensive) get insurance. Just as the system of car insurance needs those who go long periods without having an accident to pay premiums so there's enough money to fix the cars of those who do have accidents, the health-insurance system needs the currently healthy to keep paying to support the currently sick. The answer was the individual mandate, which pulls people into the system and expands the risk pool. And especially critical to expanding that risk pool is getting as many young, healthy people as possible to get insured. So it may have been inevitable that young people would become targets for both the law's advocates and its opponents. A...

The Hidden Indentured Class

Sex trafficking isn't our only problem—forced labor accounts for a significant number of the estimated 20,000 victims of human trafficking who enter the U.S. each year.

 

AP Images/New Mexico Attorney General's Office
AP Images/New Mexico Attorney General's Office A nna and her husband were supposed to be in the U.S. on their honeymoon. They arrived at Los Angeles International Airport in the spring of 2007 and found Daniel waiting for them with a sign bearing their names. Daniel was an acquaintance, someone Anna’s father-in-law—who lived in Houston—knew through church. He had offered to show them parts of Southern California before they continued on to Texas. It was an attractive detour for a Southeast Asian couple in the U.S. for the first time. From the airport, they drove to a restaurant for dinner and met some of Daniel’s family—a stop that felt warm and welcoming since they were all from the same country originally. “He was really nice and since we don’t know anybody—and we came from the same country,” Anna recalls, “that’s why we trusted to go with him.” But then, instead of playing tour guide, Daniel brought the couple to an elder-care facility he owned. He told them to work, care and cook...

Big Bank Punishments Don't Fit Their Crimes

AP Images/Richard Drew
With the Justice Department desperate to rehabilitate its image as a diligent prosecutor of financial fraud, securing headlines along the lines of “the largest fine against a single company in history” is a lifeline. In a tentative deal , the Department would force JPMorgan Chase to pay a $9 billion fine and commit $4 billion to mortgage relief, to settle multiple investigations into their mortgage-backed securities business. The bank stands accused of knowingly selling investors mortgage bonds backed by loans that didn’t meet quality control standards outlined in its investment materials. JPMorgan Chase wants to “pay for peace” in this deal, ending all civil litigation around mortgage-backed securities by state and federal law enforcement, though at least one criminal case would remain open. But for the Justice Department to truly start fresh, and fulfill their mission of stopping corporate fraud and preventing it from occurring again, they will have to compel JPMorgan to admit full...

Four Reasons We Don’t Need to Count Down to a January Shutdown

AP Photo/ Evan Vucci
AP Photo/J. Scott Applewhite T he government has re-opened, the debt limit disaster was avoided, and something resembling peace has broken out in Washington. The cynics, however, have been quick to note that all of this is only temporary, with the next shutdown deadline falling on January 15. This round of budget squabbling resolved basically … nothing, so another debacle is likely . Ted Cruz is already threatening a repeat of what he just put the nation through. Don’t count on a sequel to the 16-day hell we just witnessed, though. Barack Obama certainly doesn’t want a shutdown. And this time, Republicans probably won’t force one. Of course, government shutdown has always been a bad idea, as Republicans just spent three weeks proving. But the very fact that they did it despite knowing that it was a terrible plan (or at least most of them knowing it was a terrible plan) suggests it could happen a second time, at least unless something new has happened to change things. So why won’t it...

Beware a Grand Bargain

AP Photo/ Evan Vucci
W ill President Obama and the Democrats win a major battle only to lose the war? The longterm war that Republicans are fighting is a deadly serious struggle to destroy the most important and valued achievements of the New Deal-Great Society legacy, Social Security and Medicare. Wall Street billionaires like Peter G. Peterson and Stanley Druckenmiller have been softening the ground for decades by claiming that Social Security is bankrupting the country and destroying future prospects of America’s youth. So there is a kind of pincer movement between the scorched-earth Republicans of the Tea Party, willing to shut the government if they don’t get their way, and the more mannered Wall Street Republicans who want to gut social insurance for the alleged good of the country. It adds up to the same thing—cut or privatize the Democrats’ two crown jewels. What’s worse, even though Nancy Pelosi and Harry Reid were able to maintain 100 percent party unity in their House and Senate caucuses in...

Closing the Gender Gap in the Fed's Hallowed Halls

AP Images/Charles Dharapak
J anet Yellen, President Obama’s superb pick to be the next chair of the Federal Reserve, should have been a shoo-in all along. In fact, it was widely thought this past spring that, as vice chair of the Federal Reserve, she was the most likely candidate to replace Ben Bernanke when his term as chair was scheduled to end early in 2014. But in the months before October 9, when she stood beaming next to President Obama in the White House as he finally announced her as his pick to succeed Bernanke, a curious campaign had emerged to nominate Larry Summers, a close economic advisor to the president, for the position. The Summers push received copious media coverage, reportedly fueled by senior White House advisors. As summer reached its doldrums, journalists began reporting that high-level White House advisors worried that Yellen lacked “gravitas,” was too “soft-spoken,” or might not be good in a crisis. A few journalists pointed out that these coded words suggested sexism. (The gender...

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