Economy

A German History Lesson

Yesterday, the German Parliament relented and agreed to let the Greek debt restructuring go forward, but only the price of crushing austerity for the Greek economy. This is a widespread attitude in Germany, where aid to the Greeks is unpopular.

The other day, Jörg Krämer, chief economist for Commerzbank in Frankfurt, said of the Greeks, “If you live beyond your means, then you can repair your balance sheet only if your consumption goes down.”

But the Germans might take a moment and reflect on their own history.

Keystone Back From the Dead

Today's Balance Sheet: TransCanada's ready to break ground on the Keystone pipeline, and the White House just might give them the permit to do it.

After the Obama administration halted progress on the Keystone XL pipeline in January—stating that the 60-day window of time permitted by Republican legislators was too small for a thorough environmental review—those against the proposal cheered and hoped the pipeline was dead.

The Moral Calculus of Online Shopping

Amazon fulfillment center in Scotland (Flickr/Chris Watt)

I don't know too many liberals who shop at Walmart. The primary reason is principle—the company is notoriously cruel to its largely low-wage workforce, works to crush the faintest hint of a desire for collective bargaining with a ferocity that would be the envy of any early 20th century industrialist, and imposes vicious cost-cutting all the way down its supply chain. But not shopping at Walmart is also easy. The stores are rare in the urban areas where lots of liberals live, and elsewhere, there's probably a Target nearby where you can get stuff just about as cheaply (Target's own corporate citizenship is a complicated topic for another day). So it isn't like not shopping at Walmart is some kind of hardship or costs them any money.

But what about Amazon? A few months ago, Harold Pollack explained why he no longer shops there: nearly every sin of which Walmart is guilty, Amazon also commits. And the online world has its own particular sweatshop: the fulfilment center, where people who work not for the place you bought your book or toothpaste from but for a logistics company or a temp agency toil in conditions that are absolutely hellish. That's the topic of Mac McClelland's article in the latest Mother Jones, in which she spent some time working at a fulfilment center, and reports on the physically brutal, psychologically dehumanizing, low-paid work that drives the cyber-economy.

I tried to find one excerpt to give the flavor of the piece, but you really have to read the whole thing to grasp the full awfulness of what it's like to work at one of these places, where you're treated like crap, you run around like a maniac for 10 hours getting objects ready for shipping, and despite the low pay you know there are a dozen people back at the temp agency eager to take your place if you slip up. If you've ever ordered something off Amazon or a similar retailer and said, "How the hell can they sell that thing for only three bucks?", this is part of the reason why.

So where does that leave us consumers? It's awfully hard, if you're just getting by yourself, to choose to pay more for the things you get every day. And unlike walking by the struggling Mom & Pop's Grocery to go to Walmart, where you interact with the people whose working conditions you know to be substandard, online you interact only with a bright, cheery website where all you have to do is click "Add to Cart" and you're done. The moral implications of your consumer choices are physically remote and concealed. But as online retailers, particularly Amazon, have grown so big, it's a question all of us are going to have to confront. I'll confess that I haven't yet begun my own personal boycott—the prices are just too damn good. But the moral questions are getting harder to ignore.

States Still Fighting Obamacare

Today's Balance Sheet: Affordable Care Act implementation is running into the roadblock of Republican governors.

States have been slow to create the health-insurance exchanges mandated by the Affordable Care Act, most likely because of recalcitrant governors waiting to hear the Supreme Court's decision on whether the law is constitutional. The Urban Institute, a think tank, has found that only 14 states have made significant progress in creating the government-subsidized exchanges while 16 had made little or no progress. The study also showed that the states that have been slowest to move have the most uninsured residents. 

Kansas GOP: Poor Are Too Rich

(Flickr/jimmywayne)

Kansas Republicans, under the leadership of “compassionate conservative” Sam Brownback, are working hard to stick it to the poor:

A Kansas House tax committee passed a bill in which anyone making less than $25,000 a year — roughly half a million of the state’s 2.9 million residents — will pay an average of $72 more in taxes, while those making more than $250,000 — about 21,000 people — will see a $1,500 cut, according to Kansas Department of Revenue estimates cited by the Kansas City Star.

The hike would come from the elimination of tax credits typically benefiting the poor.

No Silver Bullet for Gas Prices

Today's Balance Sheet: No Death Star for Earth, but no low gas prices either. 

Obama has upped his campaign game on energy in the past week, while conceding there is little he can do to combat the rising gas prices before November. The president has been advocating an "all of the above" response to gas prices, including pushing more domestic oil production and stricter fuel-efficiency standards.

Obama's Squandered Recovery

In The Escape Artists, Noam Scheiber depicts a White House out of its depth on the financial crisis.

The Escape Artists: How Obama's Team Fumbled the Recovery. By Noam Scheiber, Simon & Schuster, 351 pages, $28.00.

Occupy's Return From Hibernation

The movement will next take on foreclosures.

(AP Photo/Mary Altaffer)

As winter fades, the Occupy Wall Street movement is heating up again. But don’t expect the same focus on physical encampments and rowdy protests. While the blood of the 99 percent is still boiling at the injustice of growing inequality, in organizing meetings and workgroups, cooler heads are prevailing. This is Occupy 2.0—the mainstreaming of momentum.

From my conversations with Occupy organizers and supporters, my sense is that the main thrust of organizing energy and attention will go toward Occupy Our Homes— a coalition of Occupy activists joining with existing grassroots groups to support families that are facing foreclosure or have been evicted by big banks. Prioritizing Occupy Our Homes is great choice for two reasons. 

Internet Privacy: It's Complicated

Today's Balance Sheet: The White House takes on Internet behemoths.

The White House plans to release guidelines for internet companies to help them protect consumers' privacy today. However, the rules are voluntary, which means the web will likely remain an information free-for-all. The Federal Trade Commission will only police companies who agree to the administration's Consumer Privacy Bill of Rights. The only real incentive for companies to agree to the rules is to boost consumer confidence.

Obama's Tax Code Spring Cleaning

Today's Balance Sheet: The White House vacuums out the corporate tax code. 

Obama is stealing the spotlight from Mitt Romney—who plans to announce a new economic plan on Friday—by announcing his framework for  simplifying the corporate tax code. The White House is asking Congress to lower the top corporate tax rate to 28 percent, while ridding the code of any loopholes and subsidies.

Bare Minimum Wage

Big business lobbyists work to prevent any rise in workers' paychecks.

(Flickr/wbeem)

The federal minimum for an hourly wage was $3.35 in 1982 and now it’s $7.25, up 120 percent. Inflation, meanwhile, has climbed during that period by 135 percent. Eight states, including New York, Connecticut, and New Jersey, are considering legislation to boost the base wage. Advocates say that such state measures are fair and make good economic sense: Putting more money in the hands of workers means more demand—good news for small businesses struggling to overcome poor sales. Then there’s politics. More than two-thirds of Americans favor raising the hourly wage to at least $10.

The Eurozone Marathon

Today's Balance Sheet: Greece has a new eurozone bailout, but that doesn't mean the country is out of the woods just yet.

Early today, eurozone finance ministers finally approved the €130 billion rescue package to prevent Greece from defaulting, a move that will hopefully keep the country off the precipice before its bond repayment comes due March 20.

Foxconn Tiptoes Out of The Jungle

Today's Balance Sheet: Foxconn announced a 25 percent pay raise for their factory workers on Saturday.

Foxconn Technology—responsible for assembling iPhones, Xbox 360s, and Dell computers—announced a 25 percent pay raise for its employees at Chinese factories on Saturday. News of the raise comes after weeks of increased scrutiny of the working conditions at the plants, which together employ 1.2 million workers who work as much as 14 hours a day. The pay raise comes with a limit on overtime hours. “This is the way capitalism is supposed to work,” said David Autor, a MIT economist, to The New York Times. “As nations develop, wages rise and life theoretically gets better for everyone.

Money Makes Good Partners

Today's Balance Sheet: The United States is a bit nervous about getting any more involved with the euro crisis.

EPI

As Europe works toward bringing Greece back from the edge of default, the United States is trying to puzzle out how good of a partner we want to be to the eurozone. Lael Brainard, the Treasury's top international diplomat, told the Senate banking committee yesterday that the International Monetary Fund doesn't need an infusion of cash from the U.S. in order to create a buffer from whatever may happen with Greece and the other European economies. “The challenge Europe faces is within the capacity of the Europeans to manage,” she said.

Republicans' Deceptive Payroll Tax Compromise

(Flickr/Gage Skidmore)

Republicans finally came to their senses yesterday and realized they were waging a losing battle with their opposition to a payroll tax extension. The two-month extension Congress passed in December was set to expire by the end of this month, and Republicans were adamant that any further extension be paired with equal spending cuts. Democrats balked, instead suggesting a surtax on millionaires that the Republicans would never accept, and another last minute legislative showdown appeared inevitable. Then out of nowhere yesterday afternoon Congressional Republicans announced that they would drop their resistance:

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