Economy

Europe Limps on in the Year Ahead

T he last meeting of the European Council in December 2013 was absent of much concern for economics. Instead the Council, a body made up of heads of EU states, who come together twice a year to discuss big picture policy issues, decided to focus on security and foreign policy instead. It was a sign that the region was no longer in an acute economic crisis and that other issues like the protests in Ukraine and the NSA’s spying program were of graver concern. In 2014 don’t expect the troubled waters of the eurocrisis to recede completely, but do look forward to a year full of small scares and pseudo-crises that might seem big but will amount to little. While the political calendar is sparse and there are no major elections in any important EU states, one of the core EU countries, Italy, remains a political mess. And with the Italians taking over the rotating EU presidency in June, some analysts are worried the current Italian government might fall before then, which would create an...

The Flying News

AP Images/Daniel Reinhardt
I t was a damned-if-you-do/damned-if-you-don’t contract that Boeing offered its workers last week, and its workers responded accordingly. Confronted with a contract that transformed their pensions into 401k’s, and with the company’s threat to relocate production of its new 777x to some other, lower-wage state unless its workers took the deal, the members of the International Association of Machinists Puget Sound/Boeing district approved the company’s offer by a suitably ambivalent 51-percent-to-49-percent margin. Two months earlier, the same members had rejected management’s offer by a two-to-one margin—whereupon Boeing invited other states to offer it relocation deals. Shortly before the second vote, the company announced that 22 states had responded with proposals—promising tax abatements, free land, anti-union public policies, and Lord only knows what else. If the company took one of those states up on its offer, as many as 10,000 of the 80,000 Boeing jobs in the Greater Seattle...

The Government Guide to Screwing Poor Homeowners

AP Images/Carlos Osorio
AP Images/Carlos Osorio T he December 28 th expiration of extended unemployment benefits, which cut off payments to 1.3 million recipients—and will cut off 3.6 million more over the next year—has dealt a painful body blow to the most vulnerable members of our society. Rolling back unemployment insurance to a maximum of 26 weeks when the average duration of unemployment is still 36 weeks puts millions of families’ lives in jeopardy. Another recently expired provision could cause comparable damage to the same population, but it has yet to trigger similarly urgent attention from lawmakers. The end of the Mortgage Forgiveness Debt Relief Act, which lapsed December 31, means that any type of debt forgiveness on a mortgage will result in a giant tax bill—one that a stressed homeowner cannot usually afford. Even homeowners entitled to compensation for past abuse by the mortgage-lending industry would be subject to unfavorable tax treatment. This will lead to more economically debilitating...

The Moral Calculus Underlying the Debate Over Unemployment Insurance

The FDR memorial's depiction of Depression-era moochers. (Wikimedia Commons/Stefan Fussan)
The Senate is working its way toward (possibly) overcoming a Republican filibuster of an extension of longterm unemployment insurance, after which the measure will die when John Boehner refuses to bring it up for a vote in the House. Or perhaps not; Boehner's current position is that he's "open" to allowing a vote if the cost of the benefits is offset, presumably by taking money from some other program that helps the less fortunate. Boehner might also allow a vote in exchange for a fun-filled afternoon in which a bunch of orphans and widows are brought to the Capitol building so Republicans can lecture them about their lack of initiative, then force them to watch while members of the Banking Committee and a carefully selected group of lobbyists eat mouth-watering steaks flown in from an exclusive ranch in Kobe, Japan. I kid. But there is a particular kind of moral clash at play in these negotiations, one that we don't think about very often. It has to do with the question of what...

Dan Cantor's Machine

Timothy Devine
Timothy Devine E lection night, New York City, November 5, 2013. Mayoral candidate Bill de Blasio, the candidate for both the Democratic and Working Families parties, is racking up a huge victory after running on a platform that calls for raising taxes on the rich and raising wages for workers. Shunning the usual Manhattan-hotel bash, de Blasio has decided to celebrate in a Brooklyn armory, where his supporters have gathered to mark the end of the Michael Bloomberg era and, they hope, the birth of a national movement for a more egalitarian economy. In one corner of the packed armory, Dan Cantor is talking with old friends and young activists who either work for him or used to—two groups that, combined, probably include about half the people in the hall. Cantor, who is 58 years old and of medium height, is wearing a black suit and tie but exhibits a touch of the willful schlumpiness that comes naturally to certain New York Jewish males. His most prominent features are a white streak...

The Fed Transformed

AP Images/Charles Dharapak
AP Images/Charles Dharapak I t is a small miracle that on February 1, Janet Yellen will become chair of the Federal Reserve. She is not just the first woman to head America’s central bank but the first labor economist. While the Fed is ordinarily obsessed with inflation, Yellen has given equal or greater emphasis to unemployment. Yellen represents a break with the Wall Street–friendly senior Obama economic officials who promoted their former colleague Larry Summers for chair. Had Summers gotten the post, the Fed and Treasury would both have been in the hands of the same old boys’ club that coddled the big banks before and after the financial collapse of 2008. That the job went instead to Yellen means the Fed will be an independent power center, and somewhat to the left of the administration. With a four-year term as chair, Yellen will serve at least two years into the next presidency as well. The transformation of the Fed since the economic collapse of 2008, however, is far broader...

The Year in Preview: Labor's Outlook

AP Images/PAUL BEATY
L abor—unions and the broad working class of wage workers—hasn’t had a good year in a very long time. Union membership continues its long, slow decline, as does median family income. But if nothing else, 2014 should be a clarifying year in the life of several legal and organizing struggles that will either advance or retard the progress of labor. The Cold Hard Numbers The labor year begins in early January when the Bureau of Labor Statistics releases its union-membership numbers. Despite recent high-profile fights over public-sector unionism—teachers and government workers—union density among public employees has stayed remarkably steady, somewhere around 35-36 percent of the public-sector workforce. Private-sector unionism (the iconographic male union members of yore—autoworkers, steelworkers, truckers, coal miners) continues, year by year, to creep lower and lower—last year, density stood at 6.6 percent, probably the lowest since the beginning of the 20 th century. The members of...

Google to Begin Building Robot Army

Boston Dynamics' Atlas marches over the rubble of our shattered world.
When Amazon bought a robotics company called Kiva Systems last year, it made perfect sense. Kiva makes robots that move things around warehouses; Amazon has a lot of warehouses full of a lot of stuff that needs moving around. Google, on the other hand, would seem to have no obvious need for robots, which is why it might appear odd that they just announced the purchase of Boston Dynamics, a company developing robots that mostly resemble animals and are designed to do things like carry equipment for soldiers , run fast , and jump really high . In fact, it's only the latest of a bunch of robotics companies Google has bought. So what are they up to? In some ways, Google increasingly resembles a corporation out of a near-future sci-fi novel, one that begins by making some nice but (seemingly) not exactly world-transforming product, then that product turns out to be bigger than anybody imagined, then it gradually expands into one area after another until it controls practically the entire...

The Year in Preview: Paul Ryan's Misguided Poverty Plan

N ext year will mark the 50th anniversary of the War on Poverty, launched by President Lyndon Johnson. But don’t expect a golden anniversary party for the tired, poor, huddled masses. Johnson’s initiatives passed beginning in 1964 and throughout his second term, and were aimed at the communities left out of policies that had created the widespread prosperity enjoyed by most Americans after the Great Depression—especially the rural poor and African Americans. It wasn’t long, however, before those programs came under attack. The next president, Richard Nixon, used resentment over expanded rights and anti-poverty legislation to wrench the votes of Southern whites away from the Democrats: Ronald Reagan began dismantling these programs in the 1980s. Since then the country has concerned itself more with policies that help businesses grow than with the plight of the least well off. It’s part of the reason we suffered through the Great Recession, and why poverty remains stuck at 15 percent...

A Dubious Budget Deal

The years of Republican obstructionism and the corporate campaign for deficit reduction have taken such a toll that merely the fact of getting a budget deal at all looks like a great achievement. This one is better than continued impasse, but the deal itself is a stinker. Representative Raul Grijanva, co-chair of the House progressive caucus, put it well: “I feel like punching myself in the face, but I’ll vote yes.” The deal does override the automatic sequester for this year. It will restore some $31.5 billion in sequester cut over the next two years in domestic spending, and a like amount in military spending. But those increases are against a backdrop of more than a trillion dollars of cuts over a decade. The deal nominally is deficit-neutral, because it adds new budget cuts in Medicare in 2022 and 2023. Even worse, the deal did not even include an extension of expiring extended unemployment insurance, at a time when the share long-term unemployed is stubbornly stuck. That...

Robbing Illinois's Public Employees

I n the span of a few hours on December 3, two Midwestern states changed America’s relationship to its public employees, perhaps irrevocably. If courts approve plans for bankruptcy in Detroit and a new law in Illinois, retirees who worked their careers as sanitation engineers and teachers, firefighters and police officers, public defenders and city clerks, under a promise of pension benefits protected by state constitutions, will not receive their promised share. “This is a bipartisan collection of politicians who essentially don’t respect democracy,” says Steve Kreisberg, director of Research and Collective Bargaining for the public-employee union AFSCME. “They authorized a violation of their own state constitutions.” The implications for the future of public pensions are grave. Michigan and Illinois are two of just seven states with clauses in their state constitutions prohibiting cuts to public pensions. If they can nevertheless slash benefits, cities, and states with less...

On Inequality, Obama's Words Aren't Enough

President Obama speaking Wednesday on inequality.
There are times, like the speech Barack Obama gave yesterday on economic inequality, when he reminds liberals of what we found so appealing about him. The address can stand among the most progressive statements of his presidency. Not for the first time, Obama declared inequality "the defining challenge of our time," and articulated an eloquent case, based in American history and values, for the damage it does and why we need to confront it. So why was I left feeling less than enthusiastic? Because over the last five years, Obama has succeeded in doing so little to address the problem. "Making sure our economy works for every American," he said, is "why I ran for president. It was the center of last year's campaign. It drives everything I do in this office." If that's true, then his presidency hasn't been particularly successful. Now granted, it's not as though he hasn't been awfully busy. And he still has some notable achievements in this area, none greater than the Affordable Care...

Plan for Robotification of Everything Proceeding Apace

In the late 19th century, major American cities began installing networks of underground pneumatic tubes between post offices, enabling them to whisk hundreds of letters back and forth at speeds up to 35 miles per hour, with the satisfying thurp sound as an added bonus. Most of the systems were dismantled in the 1920s, but somehow New York's managed to stay in use until the 50's ( here's a description of this odd bit of postal history). Sadly, the dream of universal pneumatic tube delivery to the home was never achieved. But in a 14-minute ad for Amazon that was cleverly staged as a report on 60 Minutes ("If you can do this with all these products, what else can you do?" gushed Charlie Rose on the floor of a fulfilment center. "You guys can organize the world!"), the company revealed the future of package delivery: drones. It isn't as though they're the first ones to have thought of this; people have been making jokes about things like pizza-delivery drones for a few years now. But as...

The People's Court?

If you want to see where the problems of unaffordable housing and low wages and poor education play out every day, go to Detroit's 36th District Court. 

Associated Press
*/ Associated Press Detroit's 36th District Court T he first time I went to Detroit’s 36th District Court, I didn’t know the drill. Most people don’t know the drill the first time they go. A lawyer I’d met agreed to accompany me. He went in the side door, reserved for attorneys and court staff. I joined the long line at the main entrance, waiting to pass through the metal detectors and have my bag scanned. No cell phones, the guard told me. Put it in your car. I waved the lawyer back outside. He was due in court, and his car was blocks away. Give me the phone, he said. I’ll bring it in. I returned to the line. You can’t bring in that hair clip, the guard told me. Just throw it out, I said. I scooped my bag off the belt and joined the lawyer, who was standing where the entryway carpet meets the linoleum, near a line of people snaking through a rope maze, waiting to pay tickets. I was intimidated and upset, and I’d been at the 36th less than five minutes. The lawyer and I rode the...

Europe's Miserable Credit Score

Without access to credit, the European South is unlikely to bounce back anytime soon.

AP Photo/Michael Probst,File
E uropean Central Bank president Mario Draghi surprised markets last Thursday by cutting the Bank’s benchmark interest rate to a record low 0.25 percent (as low as the federal funds target rate in the U.S.). Explaining his decision, Draghi—the person who deserves most of the credit for the lull in the euro crisis over the past 15 months—noted that “monetary and, in particular, credit dynamics remain subdued” and that monetary policy must remain accommodative in order to “assist the gradual economic recovery” taking hold in the Eurozone. In other words, monetary policy must remain extremely loose to prevent Europe from sliding into a Japan-style period of protracted stagnation. The Eurozone recovery, which materialized in the second quarter of 2013 after a year-and-a-half of double-dip recession, is weak and, more importantly, uneven— as the head of the ECB is well aware. While Germany and Finland grew 0.7 percent quarter-on-quarter and France followed closely behind with 0.5 percent,...

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