Economy

Why You Shouldn't Shop at Wal-Mart on Friday

(Flickr/Laurie O'Findy)
A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits. Today, America’s largest employer is Wal-Mart, whose average employee earns $8.81 an hour. A third of Wal-Mart’s employees work less than 28 hours per week and don’t qualify for benefits. There are many reasons for the difference—including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail. But one reason, closely related to this seismic shift, is the decline of labor unions in the United States. In the 1950s, over a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizeable share of corporate profits. At the peak of its power and influence in the...

Under Water Pressure

Nearly 400 years after the first Thanksgiving, the Navajo and Hopi are fighting the coal industry for rights to their land.

(Canadian Press via AP Images)
(AP Photo/Evan Vucci) Interior Secretary Ken Salazar, center, accompanied by Senator Jeff Bingaman, right, speaks during a news conference on Capitol Hill in Washington, Thursday, October 1, 2009, to discuss future activities relating to the Navajo-Gallup water supply project. F ive years after the Wampanoag tribe shared a three-day feast of maize, venison, eel, and shellfish with a hapless group of English separatists in Plymouth, Massachusetts, the Dutch governor of New York bought the island of Manhattan from the Canarsie tribe for $24 worth of gold. This week, thousands of New Yorkers will fly out of La Guardia for Thanksgiving, and those fortunate enough to do so in the evening will enjoy a spectacular view of the return on that investment; phosphorescent skyscrapers and over a hundred-thousand streetlights trace a real-estate market valued at just under $1 trillion. Nowhere else has the memory of conquest been so thoroughly blotted out, and perhaps as an extension, nowhere else...

Why We Should Stop Obsessing about the Federal Budget Deficit

(Flickr/401(K) 2012)
I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both. Deficit reduction leads us in the opposite direction—away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know—it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy. But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected—bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse...

The Collapse of Black Wealth

Prince George’s County was a symbol of African American prosperity. Then came the housing crisis.

(Jesse Lenz)
Jesse Lenz W hen Joe Parker was a young, newly married public-school administrator who wanted to buy a home in 1974, he didn’t even think about leaving Prince George’s County, Maryland. It was where he and his parents had grown up. But when Parker first tried to bid on a house in a new development in Mitchellville, a small farming community that was sprouting ranch and split-level homes on old plantation lands, the real-estate agent demurred, claiming there were other buyers. In truth, the development had been built to lure white, middle-class families to the county, which sits just east of Washington, D.C. Parker never told the agent that he served on a new county commission to enforce laws forbidding housing discrimination. He just persisted, he says, until he and his wife were able to bid. “My wife kept saying, ‘Why don’t you tell him?’” Parker recalls, but he refused to pull rank. “I said no, because what does the next black man do?” The next black families did arrive. Throughout...

The Twinkie Defense

(AP Photo/Orlin Wagner)
You remember the Twinkie Defense? It was a term of ridicule coined by reporters covering the 1979 San Francisco murder trial of county supervisor Dan White. The right-wing White had assassinated both fellow supervisor Harvey Milk, a heroic figure in San Francisco’s gay community, and Mayor George Moscone. Lawyers for White claimed that he overdosed on Twinkies, and was acting under the delusional influence of a sugar high. Now, there is a new Twinkie Defense, and it is equally shameless and delusional. The Twinkie Defense is: the unions made us do it. For those who missed it, having perhaps spent the weekend on Jupiter, the iconic Twinkie brand is on the verge of extinction. The parent company of America’s beloved junk food, Hostess Brands, has been in bankruptcy since January 2012. In the bankruptcy proceeding, management has been leaning on the unions to go along with massive pay and benefit cuts to “save the company.” The bakers’ union, the largest at Hostess, voted by a 92-percent...

The Great Society's Next Frontier

(AP Photo/Susan Walsh)
(AP Photo/Susan Walsh) A copy of H.R. 3200, America Affordable Health Choices Act of 2009, sits on the desk of House Energy and Commerce Committee Chairman Henry Waxman, a Democrat from California. A s The Washington Post ’s Ezra Klein declared shortly after voters re-elected President Barack Obama, one of the major winners last week was health-care reform. With Democrats holding on to the Senate and the White House, Republicans will be unable to repeal the law before all of its provisions go into effect in 2014—after which, the theory goes, the public will come to accept that government has the responsibility to ensure health care is available for all. This is the end of a long battle for progressives: Health care has been the major missing piece of our welfare state for nearly a century, and for decades making it part of our system of social insurance has been a primary goal of politicians, think tanks, and activists. With this piece of the progressive puzzle in place, the natural...

Colorado Voters' Power of the Purse

Current and former lawmakers are taking the Taxpayer Bill of Rights to court for a second opinion.

(AP Photo/Charlie Neibergall)
(AP Photo/Ed Andrieski) Workers install a large U.S. flag and a Colorado State Seal on the west side of the Capitol in Denver on Friday, January 7, 2011, as part of the decoration for the inauguration of Governor-elect John Hickenlooper. M any states have provisions designed to limit the amount of taxes their legislatures can raise, but only Colorado has gone so far as to pass the Taxpayer Bill of Rights. Known as TABOR, Colorado’s unique constellation of confusing laws prevents the state legislature from raising taxes without public approval and caps the amount the government can spend in a way that’s designed to shrink it over time. All levels of government—city, county, and state—are limited in what they can spend by a complicated formula, which basically indexes revenue to inflation plus population growth. If the tax revenues the state and local governments collect in any given year are higher than the cap, which happens in good economic times or when there is an influx of new...

Fiscal Cliff: The End Game

(AP Photo/Charles Dharapak)
(AP Photo/Charles Dharapak) President Barack Obama makes an opening statement during his news conference yesterday in the East Room of the White House. The president says the economy cannot afford a tax increase on all Americans and is calling on congressional Republicans to support an extension of existing tax rates for households earning $250,000 or less. P resident Barack Obama continued to display a new toughness about the debt negotiation at his first post-election press conference yesterday. He confirmed publicly what he has been telling progressive leaders privately. He will not give on the principle that taxes—rates as well as loophole closings—must be raised on people earning over $250,000 a year. “We should not hold the middle class hostage while we debate tax cuts for the wealthy,” he declared. Obama has also told progressive leaders that he is looking for $600 billion more in other tax increases on the well-to-do, in order to reduce the pressure for spending cuts. And he...

Want Less Inequality? Tax It

Revive the big idea of British economist Arthur C. Pigou! And apply it to America's most outrageous problem.

Courtesy of the Ramsey and Muspratt Collection
Courtesy of the Ramsey and Muspratt Collection Arthur Cecil Pigou F or the last two decades of his life, Arthur Cecil Pigou didn’t get much respect. Once considered Britain’s leading economist, he had come under caustic attack from a colleague at Cambridge—his friend and famous protégé John Maynard Keynes—for insisting that the Great Depression would correct itself without strong government intervention. By the mid-1940s, before Keynes died, Pigou had capitulated. But the dispute between the two, and Pigou’s eventual acknowledgment that Keynes might have a point, seemed to consign his own work to the dustbin. His student Harry Johnson remembers him as “a tall, straight figure, eccentrically garbed, glimpsed occasionally walking about the countryside.” In the hall where Pigou lectured on economic principles, one unknown undergraduate had carved into a desk “Pigou mumbles.” After the 2008 crash, it seemed Pigou might make a comeback. Nobel laureate economist Amartya Sen, writing in The...

Greece's Very Real Fiscal Cliff

The tired country's parliament continues to enact austerity measures to ensure Eurozone financial help keeps flowing, to the anger of many affected parties.

(AP Photo/Thanassis Stavrakis)
Last Wednesday night, I sat in the press stalls inside the main hall of Greece’s parliament watching a critical bill being debated. While Americans were still distracted by the results of their own election, Greece’s ruling coalition, made up of three parties that straddle the center, was struggling to pass new cuts and reforms necessary for continued financial help for the debt-ridden country. As the measure was attacked by deputies from SYRIZA, the hard-left official opposition, and the populist-right Independent Greeks, I heard yelling and commotion from inside the parliament building. My first thought was that the tens of thousands of protesters who had gathered outside in the pouring rain had broken through the lines of police and made it into the building. The reality was even worse. The screaming came from the employees of parliament, a notoriously well-connected and privileged enclave of the public sector, who had learned they were going to be included in stricter pay and...

Note to Obama: Shoot First, Compromise Later

(AP Photo/Jae C. Hong, File)
(AP Photo/Pablo Martinez Monsivais) President Barack Obama with Republican House Speaker John Boehner I hope the president starts negotiations over a “grand bargain” for deficit reduction by aiming high. After all, he won the election. If the past four years have proved anything, it’s that the White House should not begin with a compromise. Assuming the goal is $4 trillion of deficit reduction over the next decade—that’s the consensus of the Simpson-Bowles Commission, the Congressional Budget Office, and most independent analysts—here’s what the president should propose: First, raise taxes on the rich—and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in more than 80 years. Why not go back 60 years when Americans earning more than...

Romney and the 0 Percent

AP Photo
My favorite exit-poll factoid this year comes near the end of the quadrennial Edison-Mitofsky questionnaire, as reported on the NBC News web site. The pollsters asked people leaving their voting places whether Barack Obama’s policies, and Mitt Romney’s policies, “generally favor[ed]” the rich, the middle class, or the poor—and respondents could give more than one answer. Among Obama supporters, 86 percent said that Obama’s policies favored the middle class, with another 25 percent saying that they favored the poor. Only 12 percent of Romney’s supporters, by contrast, believed that Obama’s policies favored the middle class while a whopping 74 percent said that they favored the poor—not a good thing in Romneyworld. But the interesting numbers come in the answers to the question on Romney’s policies. Not surprisingly, 87 percent of Obama supporters said the Mittster’s policies favored the rich, while 0 percent said they favored the poor. Among Romney’s own supporters, only 10 percent...

Oil: The Bad News in the Good News

(Flickr/Mayhem Chaos)
(Flickr/Mayhem Chaos) An oil field near Bakerfield, California O n Monday, the International Energy Agency (IEA) came out with a stunner of a projection. The United States will replace Saudi Arabia as the world’s largest producer of oil by 2020, thanks to the unlocking of massive shale oil reserves. With hydro-fracking technology, the U.S. is riding a boom in natural gas as well. Oil production will increase from its current level of about 6 million barrels a day per year to 11 million barrels by 2020. Within a few years, the U.S. will be a net exporter. Pardon me if I don’t rejoice. This good news all but guarantees that the United States government, Democrat or Republican, will turn away from efforts to replace carbon fuels with clean, renewable energy. It guarantees another generation of relatively cheap gasoline for motorists—and an increase in the U.S. contribution to global climate change. Hundreds of thousands of people are still suffering the aftereffects of Hurricane Sandy...

Nixon Can't Always Go to China

New America Foundation/Flickr
New America Foundation/Flickr By this point, it’s clear that former Clinton administration official and twice-failed North Carolina Senate candidate Erksine Bowles is on the short list to replace Tim Geithner as Treasury Secretary. For reasons outlined by Paul Krugman, and our own Robert Kuttner, Bowles would be a terrible choice for Treasury: He’s a deficit scold more concerned with lowering taxes than reducing unemployment and providing a strong base for economic growth. But he has his advocates, among them William Cohan, a former investment banker and investigative journalist. Cohan sees the deficit as the chief problem facing the United States, and thinks Bowles is the only candidate for Treasury who can craft a bipartisan deal to get our “fiscal house in order” and bring some accountability to Wall Street. Wait, what? Yes, Cohan sees Bowles as a more progressive alternative to the other name on the short list, White House Chief of Staff Jack Lew. Here’s what he has to say: For...

University of Hard Knocks

Contrary to the prevailing view, recent college grads will have the hardest time bouncing back from the recession.

(Flickr/Ali Reza Zamli)
(Flickr/Ali Reza Zamli) W ith two positive jobs reports in a row, it seems clear that the economy is slowly and steadily recovering, which should come as welcome news to students shielded from the effects of the recession behind university walls. But for those who had the misfortune to graduate and enter the workforce at the height of the downturn, the effects of the Great Recession will likely stay with them for the rest of their working lives. At first glance, it seems clear that those with a college degree have a leg up in a recession. Young people with only a high-school diploma have an unemployment rate of 22 percent, compared with 9 percent with a college degree. But the average college graduate will have the most permanent impact on their earnings because they’ll have missed the first steps in building their career. Picture three people: one person who doesn’t go to college, someone who graduates with average grades from a non-elite college, and a third who graduates from the...

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