Economy

The Keystone Fight's Labor Pains

The battle over the tar sands pipeline among unions has been XL on drama.

AP Photo/Nati Harnik, File
AP Photo/Nati Harnik “F or too long we have allowed some corporations to hold a gun to our heads and demand that we choose jobs or choose the earth.” That’s what Terry O’Sullivan, the general president of the Laborers International Union of North America, told green groups and fellow unions at a green-jobs conference in February 2009, just a few months after the union—one of the largest in the country—joined the Blue-Green Alliance, a group organized to advocate for a “clean economy.” But by January 2012, O’Sullivan had made a choice. The climate bill had failed, the money from the recovery act had run out, political tides had turned against government spending, and the union was no longer so keen to partner with the environmental movement. “We’re repulsed by some of our supposed brothers and sisters lining up with job killers like the Sierra Club and the Natural Resources Defense Council to destroy the lives of working men and women,” O’Sullivan said. This heady “job killer” rhetoric...

Destroying the Economy and the Democrats

AP Photo/Susan Walsh
AP Photo/Susan Walsh President Barack Obama speaks at the Police Academy in Denver yesterday. J ob creation slowed to just 88,000 in March, signaling a sluggish economy. And President Obama, with unerring timing, picked this moment to put out an authorized leak that he is willing to put Social Security and Medicare on the block as part of a grand budget bargain that will only slow the economy further. The deterioration in economic performance was all too predictable, given the combined lead weights of the March 1 $85 billion of budget cuts in the sequester and the January deal to raise payroll taxes by about $120 billion. (The tax hike on working people was almost double the much-hyped tax increase on the top one percent, which totaled a little over $60 billion.) Taken together, these twin deflationary deals cut the deficit by around $270 billion dollars this year. That’s close to two percent of GDP. And according to the Congressional Budget Office, this combined contractionary...

Why the AFL-CIO Is Embracing Immigration Reform

Flickr/Old Shoe Woman
Flickr/Old Shoe Woman Their agreement is very preliminary and hasn’t yet even been blessed by the so-called Gang of Eight Senators working on immigration reform, but the mere fact that AFL-CIO President Richard Trumka and Chamber of Commerce President Thomas J. Donohue agreed on anything is remarkable. The question is whether it’s a good deal for American workers. It is, and I’ll explain why in a moment. Under the agreement (arrived at last weekend) a limited number of temporary visas would be issued to foreign workers in low-skilled occupations, who could thereafter petition to become American citizens. The agreement is an important step toward a comprehensive immigration reform package to be introduced in the Senate later this month. Disagreement over allowing in low-skilled workers helped derail immigration reform in 2007. The unions don’t want foreign workers to take jobs away from Americans or depress American wages, while business groups obviously want the lowest-priced workers...

Industry-Funded High-Frequency Trading Study Falls Short

I recently published an article in response to a study of high-frequency trading (“HFT”) by Professor Charles M. Jones of Columbia Business School and an opinion piece he published simultaneously in Politico . My article focused on the funding of the research by Citadel LLP, a major HFT user. It also pointed out broad concerns about the study, which asserts that computer-based algorithmic trading provides substantial net value to the economy. Keeping in mind the Professor Jones’ funding source, it is useful to look into the studies on which the professor relies (his independent work was limited to interpretation). These should be compared with other academic work that draws alternative conclusions. The studies that he cites as supportive are generally based on conventional views of the efficiency of markets. These studies identify lower trading costs that have been experienced during the years that HFT has emerged as a dominant force in the equities and commodities markets. He...

Why Politicians Aren't Sensitive to Public Opinion on the Economy

Flickr/Alex E. Proimos
Flickr/Alex E. Proimos Who says American politics is gridlocked? A tidal wave of politicians from both sides of the aisle who just a few years ago opposed same-sex marriage are now coming around to support it. Even if the Supreme Court were decide to do nothing about California’s Proposition 8 or DOMA, it would seem only matter of time before both were repealed. A significant number of elected officials who had been against allowing undocumented immigrants to become American citizens is now talking about “charting a path” for them; a bipartisan group of senators is expected to present a draft bill April 8. Even a few who were staunch gun advocates are now sounding more reasonable about background checks. It’s nice to think logic and reason are finally catching up with our elected representatives, but the real explanation for these changes of heart is more prosaic: public opinion. The latest ABC News/Washington Post poll finds support for marriage equality at the highest in the ten...

The People’s Bank

flickr/BismarckPride.com
W hen the financial crisis struck in 2008, nearly every state legislature was left contending with massive revenue shortfalls. Every state legislature, that is, except North Dakota’s. In 2009, while other states were slashing budgets, North Dakota enjoyed its largest surplus. All through the Great Recession, as credit dried up and middle-class Americans lost their homes, the conservative, rural state chugged along with a low foreclosure rate and abundant credit for entrepreneurs looking for loans. Normally one of the overlooked states in flyover country, North Dakota now had the country’s attention. So did an unlikely institution partly responsible for its fiscal health: the Bank of North Dakota. Founded in 1919 by populist farmers who’d gotten tired of big banks and grain companies shortchanging them, the only state-owned bank in America has long supported community banks and helped keep credit flowing. The bank’s $5 billion deposit base comes mostly from state taxes and funds. The...

Whither Homo Economicus?

Jamelle Bouie
It's hard out there for a culture warrior. Every time an opponent of same-sex marriage does an interview these days, one of the first questions is, "Isn't your side on this issue doomed to failure?" They're even getting a cold shoulder from their own allies; after years of bashing hippies and wielding "God, guns, and gays" to great electoral effect, the leadership of the GOP would rather talk about anything else. And now it's Democrats who are happy to stoke the cultural fires, secure in the knowledge that the majority is on their side. Not long ago, many in the GOP began to hope that the rise of the Tea Party could transform the culture war into one primarily about economics and the role of government. We could still have just as vigorous a battle between Us and Them, but with the old social issues fading into the background. There would be a new division, one in which our kind of people value free markets, low taxes, and a government that leaves you alone, while those other kind of...

Government Monopolies Even Liberals Can't Love

Flickr/billytechkid
In a post yesterday, I said that it would be absurd for the federal government to produce its own brand of cola, not because doing so would make us all less free, but because there's just no need. Well lo and behold, today I find out that the state of Pennsylvania, where I used to live, has its own brand of mediocre wine, called Table Leaf. It's manufactured by a winery in California, but sold through state-owned Pennsylvania liquor stores. Does that seem nuts? Well, it starts to make sense when you recall that in Pennsylvania, the state has a virtual monopoly on liquor sales through the stores run by the Liquor Control Board. So in addition to making it incredibly inconvenient for you to buy a bottle of wine or other booze, they also are able to market their own house brand (at apparently inflated prices). In the decade I lived in the state, I never met a single person who thought the state monopoly wasn't ridiculous ( polls show support for privatization to be strong, albeit not...

The Runaways

Flickr/Kymberly Janisch
Flickr/ Kymberly Janisch T he first time Breanna found herself homeless, she’d left her mom’s house when she was 12 because her stepdad didn’t like her and her mom never took her side in fights. That had left her sharing a room in a Motel 6 with her father and sick grandmother near her high school in Jefferson County, Colorado. A short, slim, dark-haired Latina, she’d grown up in the area, and most of her family was there; it’s where she felt at home. In the motel, though, her dad, who was a drug addict, would occasionally beat her. “My Grandma would tell him I deserved it,” Breanna says. “I never understood why I deserved it.” Sometimes her father kept Breanna out of school because she had bruises on her arms and he didn’t want the abuse reported to authorities; sometimes Breanna missed school because she was too tired to wake up. When she finally wanted to leave for good, her father said he wouldn’t let her go unless she peed in a cup for him so he could pass a drug test; she agreed...

The Weeklies

Flickr/Steve Schroeder
Flickr/Steve Schroeder F rom the outside, it is hard to know that people live in the Ramada Inn. The parking lot is always empty. The hotel sits facing a wide suburban boulevard called Kipling Street, just off Interstate 70 in Wheat Ridge, Colorado. The interchange where Kipling meets the freeway is packed mornings and evenings with daily commuters going to or coming from Denver and with skiers heading west into the Rockies. Hotels dot I-70 as it cuts through the 764-square-mile stretch of suburbia that runs from the city into the mountains, but at the intersection with Kipling is a cluster of seven budget-savers that travel websites warn tourists away from. The hotels advertise low prices—ranging from $36 to $89 a night—on neon signs next to gigantic flags that whip in the Front Range wind. Most offer even lower weekly or monthly rates. The Ramada is farther from the frontage road than the other hotels and is harder to notice, with its plain yellow stucco and dimly lit red sign...

Take Social Security and Medicare Off the Bargaining Table

Flickr/Adam Fagen
P rominent Democrats—including the president and House Minority Leader Nancy Pelosi—are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation. This is even before they’ve started budget negotiations with Republicans—who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions. It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise. For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy...

A Post-Iraq Security Consensus?

AP Photo
On the tenth anniversary of George W. Bush's invasion of Iraq, we may be witnessing a seismic shift in America's politics of national security. After decades of using hawkish positions for partisan advantage, the Republican Party is facing a foreign policy identity crisis. Its brand is still stained by the Iraq War and the Global War on Terror, and the once-fringe views of Ron Paul are becoming mainstream among the public and party activists, as shown by the response to Senator Rand Paul's March 6 filibuster and his success at this past weekend's Conservative Political Action Conference. This is liberating progressive Democrats to criticize the Obama Administration—now safely reelected—for its hawkish national security policies, and it might even free the party from some of its ceaseless fear of looking "soft" on terror. It's about time. One can't help wondering what took so long, since this is clearly a winning issue: opposition to the Global War on Terror abroad and civil liberties...

How to Fix Entitlements? More Immigrants

Gallup
Given Washington’s obsession with spending, this won’t enter the picture, but this figure—from a recent Gallup poll on immigration—is more important to the future of entitlement reform than any policy discussed by President Obama or Congress: As Kevin Drum noted yesterday, the “primary reason that Medicare (and Social Security) expenditures are rising over the next 30 years is simply because we’re going to have more old people.” We can solve this by cutting spending on services for old people, raising taxes on everyone else to support these services, or we can take the (relatively) easier option and let more people into the country . In general, more people means more workers and greater productive capacity. Yes, these people will consume services, but they’ll also be paying taxes. In other words, if the problem with government spending is that the United States is getting older, the obvious solution is to find ways to make the country younger . At the moment, the best way to do that...

Cyprus's Big Bluff

AP Photo/Petros Karadjias
The Cyprus banking crisis presents, in microcosm, everything that is perverse about the European leaders’ response to the continuing financial collapse. And bravo to the Cypriot Parliament for rejecting the EU’s insane demand to condition a bank bailout on a large tax on small depositors. If this crisis threatens to spread to other nations, it’s a good object lesson. Here is the punch line of this column: It's time for Europe’s small nations, who are getting slammed into permanent depression by the arrogance of Berlin and Brussels, to think about abandoning the euro. At least the threat would strengthen their bargaining position, and if they actually quit the euro, the result could hardly be worse than their permanent sentence to debtors’ prison. More on that in a moment. The back story: Cyprus, with just over a million people, is not a poor country. Its per capita GDP is actually above the European Union average. Cyprus has only used the euro since 2008. Once Cyprus was in the...

Banks Are Too Big to Fail Say ... Conservatives?

AP Photo/Jae C. Hong
AP Photo/Jae C. Hong M embers of the Federal Reserve don’t usually make the rounds at partisan gatherings. But amid the tri-cornered hats and “#StandWithRand” buttons of last week’s Conservative Political Action Conference (CPAC)—the largest annual gathering of conservatives in the country—was Richard Fisher, president of the Dallas Federal Reserve Bank. In a Saturday morning speech , Fisher quoted Revolutionary War hero Patrick Henry, who once said that while “Different men often see the same subject in different lights,” such quibbling had to be set aside in a time of “awful moment to this country.” Fisher described the current time as an era of economic injustice in which the nation’s largest banks threaten our financial stability and act with immunity. He said that the Dodd-Frank financial reform law did not go nearly far enough to fix the problem, and that mega-banks still profited from being “Too Big to Fail.” His solutions included a proposal to limit the total assets held by...

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