Poverty & Wealth

Why We Need Occupy Wall Street

AP Photo/John Minchillo
Today—the same day that New York’s Mayor Bloomberg had his cops clear Zuccotti Park—Richard Fisher, the president of the Federal Reserve Bank of Dallas, called for breaking up America’s biggest banks, calling them “too dangerous to permit.” Also today, Warren Buffett, in an interview posted on the Business Wire of Berkshire Hathaway, his company, continued his criticism of American plutocracy. “Through the tax code, there has been class warfare waged, and my class has won,” Buffett said. “It’s been a rout. You have seen a period where American workers generally have gone no place, and where the really super rich as a group increased their incomes five for one in this rarified atmosphere.” All of which suggests that Occupy Wall Street has already been a stunning success in changing the nation’s public discourse. Not that Fisher and Buffett hadn’t criticized our economic policies well before OWS set up shop in Zuccotti Park, but they are now not just rich and powerful voices crying out...

Exit Berlusconi, Enter Uncertainty

AP Photo
It was a busy weekend in Italian politics. The Chamber of Deputies passed the latest round of austerity measures, Prime Minister Silvio Berlusconi resigned, and President Giorgio Napolitano mandated Mario Monti, a respected economist and former EU commissioner, to form of a new government of national unity. The backdrop to all this frenzied activity was the country’s growing liquidity crisis: As Italy, the world’s third largest bond market, saw its borrowing costs rise to unsustainable levels in recent weeks, the rest of the planet could only watch in numb horror, as if observing a slow-motion car crash. On Monday, as Monti was in talks with the political parties for the formation of the new cabinet—made up almost exclusively of unelected technocrats—the main index of the Milan stock exchange opened with a 1 percent jump. By the end of the session, though, it was down 2 percent as were the main indices in Spain (-2.2 percent), Germany (-1.2 percent), and France (-1.3 percent). The...

Generation Y Bother

Young adults entering the workforce today think they'll be worse off than their parents—they're not wrong.

(AP Photo/John Minchillo)
The recession officially ended nearly two and a half years ago, in June 2009, but for the generation of young adults who’ve been trying to take their first steps into adulthood, its effects could shape the future for decades to come. Why is this recession different from other sharp downturns? The standard economic indicators fail to tell the whole story. Yes, unemployment rates for young people remain at the record-high levels they hit at the Great Recession’s peak in 2007, but this is typical for young workers, who tend to be the last group that recovers after a recession—and tend to feel its effects far after the economy has rebounded. The young baby boomers who bore the brunt of the 1981-1982 recession had lower earnings even 15 years after the economy recovered, and during that downturn, the economy only lost half as many jobs as during the Great Recession. For youth entering the workforce today, not only has the sour economy delayed their careers; they are entering a workforce...

Are They Orphans?

Beware of overseas orphanages seeking donations. If you're not careful, you may become the victim of an orphanage scam—in which a savvy entrepreneur in a poor country hustles up some children so that he or she can ask developed-world humanitarians for money for the children's support. In some of the notorious cases , the orphanage director pockets the money while the children are left to starve or sold for sex. Few people know that they may be underwriting kidnapping or other modes of defrauding local families out of their children. In other cases, the traffickers put the children—who are neither abandoned nor orphaned—up for international adoption, which can bring in astonishing fees. One version of the orphanage scam has just been uncovered in India by the Esther Benjamins Memorial Foundation. Several years ago, a now-infamous child-trafficker traveled through Nepal's Humla province, asking families to pay him to take their children to boarding schools in Kathmandu. Instead,...

Bunga Bunga and the Bond Market

It’s clear that the markets don’t want Silvio Berlusconi to continue as Italy’s prime minister. They were cheered yesterday, briefly, when word got around that Berlusconi was stepping down, then subsided into their accustomed grumpiness when he denied it. (We know this by following the interest rates on Italy’s bonds, which are soaring, save during the brief moment when it was thought Berlusconi’s departure was nigh.) But the markets’ moment may be at hand. The leaders of two of Europe’s Mediterranean governments are either hanging by a thread (Berlusconi) or have already gone (Greece’s George Papandreou), unable to reconcile the demands of their people not to have their lives decimated by austerity with the markets’ demands for precisely such austerity. Such a moment marks a triumph of the market over democracy, queasy as I am to identify Berlusconi with democracy. After all, it was Berlusconi who brought the logic of the market, and of marketing, into Italian politics, controlling...

The Kids Aren't All Right

Don’t miss The Washington Monthly ’s article Taxing the Kindness of Strangers , in which a couple of bleeding-heart, middle-class liberals take in a foster care child—and discover the exhaustion and humiliations of trying to get the services the child needs. In a way that we never really anticipated, welcoming Sophia into our home led us into the wilderness of red tape and frustration navigated every day by low-income parents who struggle to raise children with the critical help of government programs … It’s a major bureaucratic process to remove a child from her home and family. The state insures the child, pays for daycare, investigates the claims of abuse, and retains legal custody, but it cannot actually put a baby to bed at night. And so, on the other side of this most intimate public-private partnership are usually people like us, left alone with a stranger’s child and a garbage bag full of clothes and wondering what’s going to happen next. And what happens next depends, to a...

One Big Question

Last Thursday, I attended a conclave, sponsored by the Frederich Ebert Foundation, of about 20 American liberals (chiefly economists and union representatives) and 20 German social democrats (economists, unionists, Social Democratic Party officials, and a couple of stray businessmen) to see what we could learn from each country’s respective economic, social, and political arrangements. Early on, one German friend posed a question to us Americans: “Where’s your [i.e., America’s] learning curve?” What he meant was that Germany and much of continental Europe had relearned certain key lessons after the financial meltdown of 2008 and its calamitous aftermath that America had apparently failed to process—chiefly, the need for an active and resourceful government capable of regulating markets and boosting the economy when the private sector is flat on its back. To be sure, with Northern Europe (Germany in the lead) currently promoting austerity to Southern Europe (Greece above all), it’s not...

Q&A: Justice for Black Farmers

AP Photo/Alex Brandon
On October 27, after a 15-year fight, a federal judge approved a $1.25 billion settlement to black farmers discriminated against by the United States Department of Agriculture (USDA). In 1997, hundreds of farmers filed a class-action suit, in the case Pigford v. Glickman , alleging pervasive discrimination of black farmers by the USDA between 1981 and 1997. For decades, the department, which regularly gives loans to farmers to keep their business afloat, had refused loans to black farmers while awarding greater loans to white farmers of equal standing. Because of an inability to receive loans, many black farmers were forced to forfeit their farms or operate on a smaller scale. In 1999, the judge demanded a settlement for those with claims. More than 40,000 farmers with documented claims joined the suit following the first decision, necessitating a revisiting of the case approved in the 2008 farm bill, which ultimately awarded $100 million toward the settlement. In November 2010,...

A Model of Health

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I n 2005, when Local 6 won its first union contract at the boutique Time Hotel on West 49th Street, Angel Aybar, then a 21-year-old room attendant responsible for checking, cleaning, and restocking minibars, not only got a raise from $10 to $16.50 an hour; he became a member of a uniquely effective health plan. The New York hotel workers’ plan provides comprehensive coverage at its own health centers, including full dental and optical care, with no deductibles or co-pays and a core philosophy that emphasizes primary care, wellness, and prevention. Aybar even credits the health plan for his marriage. “My wife and I had been sweethearts since junior high,” Aybar says. “She was working, and they were taking over $100 a month out of her paycheck for her health insurance. I guess it’s not very romantic of me to say this, but it was the union health plan that pushed us over the edge to get married. She was getting chronic headaches. They kept telling her it was just stress. Her first visit...

Union Busters Going Down

Polls for a referendum on an anti-union law in Ohio indicate repeal.

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Tomorrow, Ohioans will vote on Issue 2, a referendum to repeal an anti-union law that threatens to destroy public-sector unions in the state. Last spring, the governor and majority-Republican legislature passed Senate Bill 5, restricting public unions' ability to strike, collectively bargain with employers, and collect dues. In response, state Democrats and unions put the law on the ballot. Going into tomorrow's vote, it looks like labor will pull it off. A new survey from Public Policy Polling shows 59 percent of voters plan to reject SB 5 on Tuesday, while only 36 percent of voters will vote to approve it. It would be an immediate victory for workers' wages and job stability. As a crucial swing state, the win for labor also bodes well for Democrats in the 2012 elections. The Latest Ohio Set to Vote Big Against Kasich's Anti-Union Bill Talking Points Memo Democrats hatch new jobs bill plan Politico Greek Leaders Reach Deal to Form a New Government The New York Times As crisis spreads...

A Sign for OWS

We learn from Samuel Brittan’s column in the Financial Times today that when Winston Churchill was the U.K.’s chancellor of the exchequer in 1925, he wrote in a letter to a British Treasury official that he’d like to see “finance less proud and industry more secure.”

Has Occupy Wall Street Affected Anything?

Peter Dreier at HuffPo has a cool graph showing how often the word “inequality” appeared in news coverage between October 2010 and October 2011. Guess what happens right about, oh, September 17 ? (Hat tip to Mother Jones ).

Strike While It's Hot

Today, Occupy Oakland ups the ante in Occupy Wall Street tactics: It has called a general strike for the city of Oakland. Nobody seriously expects that the general strike will turn into—well, a general strike. The kind of effort required to assure that establishments large and small either close their doors or allow their workers to wander off hasn’t really been attempted, as it was, successfully, across the Bay in 1934, when the San Francisco general strike did come pretty close to shutting the city down—the only time in American history when a general strike actually became general. (More on that below.) But a number of unions and left-of-center groups have endorsed today’s strike without actually calling upon their members to strike. The Oakland Education Association has urged its members to take a personal leave day to join the rally, or conduct teach-ins on the 1934 strike. A large SEIU local that represents city workers has said it would be a contractual violation for it to call...

Half-Right Brooks

David Brooks’ column today is one of his better ones—noting that the U.S. is plagued by two kinds of inequality, that which divides the top one percent from everyone else, which is prevalent in our major cities, and that in smaller cities and rural areas, where college grads are doing OK but where the bottom has fallen out for those Americans who don’t complete college or, worse, high school. The gap between the lives of college grads and others has widened not just in terms of income but health, diet, marriage stability, and the percentage of children born and raised out of wedlock. Brooks isn’t the first conservative to have noted the disintegration of family life within America’s working class; Rich Lowry at National Review has also picked up on this. But neither Brooks, in today’s column, nor Lowry take the necessary further step of identifying what exactly has caused all this. If they want to take that step, they should check out the collected works of William Julius Wilson, the...

Limit Leverage!

The astounding thing about the collapse of Jon Corzine’s gambling venture, MF Global, is the revelation that his bets were leveraged at about 40 to 1. This is like playing poker and borrowing 97 percent of your stake. If you guess wrong on a big bet (as Corzine did), you are wiped out (as he was). The same thing happened to Lehman Brothers. This also shows how utterly feeble Dodd-Frank is and how little the system has changed since the collapse of 2008. The so-called shadow banking system—outfits like Corzine’s—can still bet the house if they have a taste for risk. The only good news was that at $8 billion, Corzine’s MF wasn’t big enough to take down the system or require a government bailout. But it could have been. As a regulatory matter, it would not be difficult to limit all kinds of leverage for any financial institution to, say, 10 to 1. And the more risky the kind of institution and its strategy, the more leverage should be limited. You could require all financial institutions...

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