Thursday, January 23, 2020

Martin Luther King Jr.’s Call for Peace

Answering the Kennedys’ Call


Martin Luther King, Jr. was assassinated on April 4, 1968, and his loss is felt even more than 50 years later as we continue to fight wars both foreign and domestic. He was organizing a march on Washington when he was killed. Who knows what might its effect have been on the Vietnam War if he had lived and mobilized America to end the war sooner?

King called it the Poor People's Campaign, said a Daily Kos commentator on Monday’s Martin Luther King, Jr. Day. He wanted to dramatize the suffering of the nation's poor by bringing them to the capital. Poor people would live together on the National Mall - the long strip of land between the U.S. Capitol and the Lincoln Memorial - and engage in widespread civil disobedience. King wanted to force the federal government to deal with poverty.

MLK gave a speech on 4 April, 1967 to over 3,000 at New York’s Riverside Church that is memorialized at Stanford’s Martin Luther King, Jr. Research and Education Institute.  King’s address emphasized his responsibility to the American people and explained that conversations with young black men in the ghettos reinforced his own commitment to nonviolence.

The Vietcong's TET Offensive of January 30, 1968 had just happened, which was when Americans first realized that we weren’t winning the Vietnam War. Robert Kennedy, campaigning in Indianapolis, gave an impromptu speech on learning of his death:

“What we need in the United States is not division;: said Kennedy, "what we need in the United States is not hatred; what we need in the United States is not violence and lawlessness, but is love, and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or whether they be black. So I ask you tonight to return home, to say a prayer for the family of Martin Luther King -- yeah, it's true -- but more importantly to say a prayer for our own country, which all of us love -- a prayer for understanding and that compassion of which I spoke.”

Robert Kennedy was assassinated two months later on June 5, 1968, just after he was declared the winner in the South Dakota and California presidential primary of the 1968 election. It looked like he would ride the Kennedy tide to become President, instead of Richard Nixon, who managed to prolong the war until 1974 and his impeachment.

These were our visionary leaders of that time we remember for what they stood for—that one day we may realize their hope for a peaceful America.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, January 13, 2020

What Is American Socialism?

Financial FAQs


What is American Socialism that candidate Bernie Sanders has talked about ever since he has been running for President? In fact, our one and only example of something that represents any definition of Socialism and concerted government planning benefiting all Americans was President Roosevelt’s New Deal.

But there has never been any actual American government ownership of businesses and its profits that is Socialism spelled with a capital ‘S’. Rather, tax revenues of private businesses and individual incomes have always financed government programs and investments.

New Deal-type programs were needed because we were living through the Great Depression with 25 percent of Americans unemployed that required government planning and investments to bring the U.S. economy back to life; and which also enabled the U.S. to win World War II.

There has never been American Socialism or socialist programs as defined by Marx-Engels’ classical definition that communist countries have espoused; that have only worked for a time in dictatorships by a wealthy elite such as rule China, North Korea and Russia.

Why did the New Deal work so well? By directing public investment in both infrastructure and the American people while building up an industrial base that could quickly convert to a war footing by converting automobile and aircraft factories to tank and military aircraft factories in 1941.

The investment in people was firstly creating social security, labor union legislation, Workman’s Compensation and other labor protections to support American workers, while paying Americans to keep working in such as planting trees, building dams, power grids, post offices, and all the public infrastructure we needed to boost the productivity of our economy.

The Roosevelt administration even created the Home Owners Loan Corporation (HOLC) to purchase and refinance more than one million delinquent home mortgages to keep homeowners who had lost jobs in their homes until the Depression was over.

Have we seen any such programs created today that helped US out of the Great Recession and the busted housing bubble? There were one-time spending boosts to public spending and the TARP bank bailout in 2007-08, but no new HOLC program to purchase and refinance delinquent loans and keep homeowners in their homes, which would have mitigated effects of the Great Recession and the tremendous losses for homeowners.

Yet even today, die-hard Republicans (and President Trump) call Bernie’s socialism no different than China’s or North Korea’s, or even Russia’s; where Russia is ‘owned’ by a very wealthy elite controlled by Putin and his oligarchs.

The New Deal was working so well by 1937 that Republicans gained a majority in congress, and convinced Roosevelt to begin to pay back the public debt that had boosted growth. But he had to reverse course in 1938 when the U.S. plunged back into the depression that lasted a total of 10 years, hence came to be called the Great Depression for its repeat performance.

The only reason the Great Recession didn’t become another Great Depression was a proactive Federal Reserve that printed $billions to create more liquidity when it realized government aid and action was necessary to fill the gap vacated by private business.

Why is a new New Deal necessary today? We are ignoring very real crises that could precipitate another Great Depression—maybe not this year or next. One such is looming Climate Change, or Global Warming, that could even create another World War says the U.S. Pentagon in several congressionally-mandated reports, as increasing droughts and rising oceans begin to drown coastal cities and even countries.

Professor James Livingston, a Rutgers University historian, has highlighted the excesses in capitalism responsible for the many post- World War II recessions we have endured (five just since 1980) in a NYTimes Op-ed.

It’s the decline of private sector investment over the past century in anything that continues to grow the American economy for all Americans. Corporations instead began to pay themselves a larger share of their profits in stock buybacks and higher CEO and executive salaries.
“So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.”
In the words of columnists Nicholas Kristoff and wife Sheryl Wudunn via a NYTimes’ Op-ed describing their new book, Tightrope, a chilling portrait of the decline of Kristoff’s tiny rural Oregon home town since the Great Recession, “First, well-paying jobs disappeared, partly because of technology and globalization but also because of political pressure on unions and a general redistribution of power toward the wealthy and corporations.”

Bernie Sanders doesn’t have to call his election platform Socialism, since the New Deal was not really a lesson in socialism, but how governments should work for all Americans in a capitalist, private-ownership economy.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Friday, January 10, 2020

December Job Formation Slipping

Popular Economics Weekly


This MarketWatch graph gives an instant picture of December payroll formation. The consumer-driven service sector is booming with more than 154,000 nonfarm payroll jobs created in December, but 19,000 jobs were lost in the Mining and Manufacturing sectors. Average hourly pay growth is slowing as well.

This is worrisome in the sense that plenty of lower-paying jobs are being created in Construction, Retail and Wholesale Trade, Transportation, Professional Services, Education/Health, and Leisure activities; hence the record low unemployment rate; but higher-paying job losses for blue collar workers (-19,000) brought the net job gains down to 145,000.
The Labor Department also reported, “In 2019, payroll employment growth totaled 2.1 million, compared with a gain of 2.7 million in 2018. Incorporating revisions for October and November, which decreased payrolls by 14,000, monthly job gains averaged 184,000 over the past 3 months.”
MarketWatch’s Jeffry Bartash conjectured that skilled workers are so hard to find that companies are afraid to layoff anyone in case the economy does speed up. Hence the job growth is in services, rather than manufactured things made by those blue collar workers.

We now have to look for signs that a signed Phase I tariff agreement with China can keep this economy growing. Estimates for Q4 GDP economic growth are still hovering around just one percent, because companies are not investing in capital investments for future growth. And so manufactured exports that were supposed to expand due to the various trade agreements are also declining.


In fact, this St Louis Federal Reserve-generated graph since 1994 for nondefense capital orders of manufacturing goods excluding aircraft shows that so-called capex expenditure growth was 10 percent during boom periods (Gray bars portray 2001 and 2007-09 recessions). But such investments are currently contracting at 1 percent, not a good sign for future growth.

The growth rate was last at 10 percent from 2010-12 due to a boost in government spending that brought us out of the Great Recession, but Tea Party-led Republicans then decreed spending caps and even a 2013 government shutdown that has limited public investments since then.

Private sector corporations would rather use their record profits from the Great Recession recovery to buy back stock and enhance CEO salaries, as I have been saying, so there has been little investment in public works—like infrastructure, education, the environment, and Research & Development, all spending that would restore our flagging labor productivity.  Hence annual economic growth has slowed to the current crawl of 2 percent since then.

And Iraq is now asking U.S. soldiers to leave Iraq because the U.S. Iraqi Prime Minister Adel Abdul-Mahdi in a late Thursday night phone call to Secretary of State Mike Pompeo also said, “American forces had entered Iraq and drones are flying in its airspace without permission from Iraqi authorities, and this was a violation of the bilateral agreements.”

War is a great distracter from real problems that only better economic growth can solve. How can such hostile behavior help to keep any economy growing, much less ours? That is the question yet to be answered.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, January 9, 2020

Why the Irrational Exuberance In Such A Dangerous Year?

Financial FAQs


We are now living in a much more dangerous world, because there is the possibility of war in the Middle East that is accompanying the various trade wars waged by the “Make America Great” White House.

In fact, it may have already begun with the “revenge” missile attacks by Iran against two Iraqi military bases housing U.S. personnel—though no casualties were reported. My wonder is that stocks are rallying on the news, with the DOW Jones up 200 points at this writing. Have stockholders forgotten the irrational exuberance reigning during Fed Chairman Greenspan’s tenure in the last decade?

It was such that Greenspan, et. al., raised the Fed’s interest rates 16 times (a total of 4 percent) over 2 years, which ultimately led to a busted housing bubble and the 2017-19 Great Recession that hasn’t been a full recovery for the majority of Americans.

In fact, median household incomes are still at 1970’s levels when inflation is subtracted, because most of the growth has been in stocks owned by just 50 percent of households, not with the wages and salaries of working folk. Hence the record income inequality that isn’t getting better, even at full employment.

And what if stocks plunge again as during the Great Recession that lost an estimated $9 trillion in value, with housing values also declining almost as much (the mainstay of middle class wealth)?
Greenspan had held rates too low for too long to finance the Bush/Cheney Iraq and Afghanistan occupations while cutting taxes at the same time, resulting in rising inflation and the largest federal budget deficit of the time.

In fact, we seem to be at the beginning of another period of irrational exuberance. The Fed dropped interest rates three times last year to boost slowing economic growth.

Manufacturing activity has been declining for the last five months, per Reuter’s Wrightson ISM Manufacturing Index graph above, mainly due to the various tariff hikes that bumped up prices on European and Chinese imports.

The service industries have been declining from a higher level of activity to the current 55 percent, reflected in the latest ISM non-manufacturing survey (also see graph, where a 50 percent result of those surveyed means breakeven growth).
“The upside surprise (of non-manufacturing survey) was almost entirely due to the subjective general business activity index, which rebounded by nearly six points to 57.2,” said Reuters.  “The employment and new orders indexes both fell.  The drop-off in employment was minimal (down 0.3 to 55.2), but the orders index fell off noticeably (down 2.2 points to 54.9, versus an annual average of 57.5). ”
Also important is the effect on world oil prices and economic growth in general, as I said in my last column, since the only reason the U.S. economy is continuing to grow is the very low inflation coupled with very low, recession-level interest rates. And that can’t be maintained if oil prices spike for some reason.


We are skating on thin ice, economically, as I said, even if oil prices and inflation don’t spike as they did during the early and mid-2000s. Oil may not be as important, but 39.7 million Americans still live at or below the U.S. poverty level, which is $21,300 for a family of three in 2017, per the U.S. Census Bureau, and median household incomes after inflation are not improving.

So the real question is why on earth did the U.S. kill Iran’s leading general and several Iraqi militia commanders at a time of recovery from the Great Recession, slowing worldwide growth, amid growing geopolitical uncertainty?

It has to be another form of irrational exuberance held by certain parties that believe this will make America Great Again, but without the friends and alliances that made America great until now.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, January 6, 2020

2020—A Year of Living Dangerously

Popular Economics Weekly 



There is plenty of speculation on the effects of killing Iran’s Quds Force General Qassem Suleimani. Of course the first question is how Iran will retaliate? But terrorist attacks by its proxies, such as Iraqi militias that were bombed by the U.S., should be the least of our worries.

More important is the effect on world oil prices and economic growth in general, since the only reason the U.S. economy is continuing to grow is very low inflation coupled with very low, recession level interest rates. And that can’t be maintained if oil prices spike for some reason.

Texas intermediate crude prices per barrel stayed in the $100 per barrel range from 2011 to 2015, per the above FRED graph, before coming down to the $50-$60 range in 2015. It was a major reason economic growth hasn’t risen above 2 percent this decade.

I say recession-level rates, since current interest rates were last this low during the Great Recession. The Federal Reserve had to lower interest rates three times last year to boost growth since the manufacturing component has been shrinking for the past 4 months, according to the ISM’s Manufacturing survey.


We are skating on thin ice, economically speaking. There were dangerous signals in 2018 when the Fed was raising interest rates to slow down what it saw as incipient inflation and had to reverse course. The stock market plunged, because money was no longer cheap, and it raised fears of such a oncoming recession.

So the unique combination of low rates plus low inflation has kept the U.S. growing in the 11th year of this recovery from the Great Recession, which is the longest post—World War II recovery on record.

But past history has shown low inflation and interest rates cannot last forever. In fact, as the above FRED CPI retail inflation graph shows, the Federal Reserve has been more than proactive on keeping inflation at the 2-2.5 percent range since 1980, when it reached 12.5 percent because of soaring oil prices in the 1970s 

Anyone remember the Arab oil embargo and long lines at gas stations when OPEC cut off oil supplies to the U.S.?  The result was back-to-back recessions in 1981-82, and another recession in 1991 during the Desert Storm invasion of Kuwait, and just before the 9/11 Trade Center bombings.

The question may not be skyrocketing oil prices now, since the U.S. in now domestically producing more than 7 million barrels per day. But economic growth is already slowing with the tariff wars that have cut foreign trading by almost 25 percent, the UK’s Brexit battle, and now a possible Middle East war. Iran has many ways to create more trouble.

Then why has the U.S. been killing Iran’s leading general and Iraqi militia commanders in the recent drone attacks? Reuters is reporting that Iran-backed militias had already been planning attacks on U.S. installations and civilians with advanced weaponry brought in from Iran.

Whether such intelligence is true or not, a new Middle East war may have already begun.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, January 2, 2020

Today’s Very Unequal National Minimum Wage

Financial FAQs


This New Year is a good time to talk about our record income inequality, in the hope that it can be improved. Because it’s the reason a minority of white male Republicans have been able to hold onto their power for so long.

U.S. income inequality is the worst since 1929, which is why it was a main cause of both the Great Depression and Great Recession. The majority of Americans held a minority of the wealth, but were the biggest spenders. So when they ran out of the means to spend, the economies crashed.

The above graphs portray the real message of such income inequality. The top 1 percent of U.S. income earners have doubled their share of national income since 1980, whereas the national income share of the 1 percent in Western Europe has held steady at just 10 percent. In other words, there has been a massive transfer of Americans’ wealth to the one percent since 1980.

The result has been disastrous for our participatory democracy. It has created a country of Haves and Have-nots, where the Have-nots live in the poorest red states dominated by Republican legislatures that haven’t raised the current minimum wage above the federal rate of 7.25 percent, and Haves in the more prosperous blue states with Democratic Party-majority governments that have.

CNBC.com

The federal minimum wage was last raised in 2009 to $7.25 per hour. Seven states and Washington D.C. are raising their minimum wage to $15 per hour and nearly 7 million wage earners will be getting their minimum pay raised January 1, according to CNBC and the Economic Policy Institute (EPI), a labor think-tank.

The CNBC graph shows those states with pending increases to $15 per hour. That comes to $2,580 per month with a 40-hour week and just $30,960 annually; barely enough for a single person to live, but not families.

That is how much conservatives (and the NFIB small business lobby) have succeeded in blocking any raise to the national minimum wage since 2009.

Recent research by Nolan McCarty, a professor at Princeton University suggests why. McCarty, working with political scientist Boris Shor and economist John Voorheis, has released a new study that shows that the growing ideological gap between the Republican and Democratic parties — a common obstacle to getting anything done in Washington — is not just due to politicians' incompetence or their unwillingness to work together. It's due, at least in part, to the widening gap between the rich and poor.

The red states have been hit hardest by the loss of industrial jobs, and conservatives have fanned the flames of political polarization by scapegoating immigrants (especially the dark-skinned), while blaming Washington’s political ‘swamp’, and big city folk in general for their suffering that has skyrocketed rates of suicide and opioid use.

The EPI calculates the federal minimum wage of $7.25 was worth 14.8 percent less than when it was last raised in 2009, after adjusting for inflation, and 28.6 percent below its peak value in 1968, when the minimum wage was the equivalent of $10.15 in 2018 dollar.

The federal minimum wage has no inflating indexing, which is why it is worth so much less today; whereas it is indexed with some state minimum wage laws, and eighteen states have upcoming minimum wage increases that are also indexed to inflation. But at least 12 red states have not slated increases. It is one reason they are among the poorest states while voting for President Trump in 2016.

There is an even greater danger looming due to the record income inequality. It is to the U.S. Constitution. For the current Republican Party has become the party of oligarchs, the supremely rich, which is why they can deny the reality of the suffering of their red state supporters, the voting rights of minorities, and constitutional laws that protect us from foreign intervention in elections.

It is incredible that the oligarchs have managed to convince their red state constituents they are not the cause of so much suffering when they were the first to advance a free trade agenda, thus allowing many of those higher-paying manufacturing jobs to flee the U.S..

This is also why they almost totally support a sociopath in the White House with no regard for the truth or laws that support a democracy. They prefer to live by the only law they heed—the law of the jungle in a Darwinian survival of the strongest exploiting the weakest for their own personal gain.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Sunday, December 29, 2019

Christmas Isn't For Bullies

Popular Economics Weekly


This is how one of our political parties celebrates the Christmas spirit. Restrict as much aid to the poor and weak as possible—i.e., cut up to $1.5 billion in Medicaid and Medicare spending to ‘pay’ for their 2017 tax cuts, and build a wall while cutting back immigration quotas (even of family members) to keep out as many non-white peoples as possible.

Wait a minute, doesn’t President Trump need them to maintain his properties? Then create enough H2-B exemptions for low-skilled workers to benefit him personally, including 70 granted last year just for Mar-a-Lago, his Florida White House.

What was once the Republican Party is now the Trump Party, cleansed of all Christmas spirit. There’s not even a whiff of Christmas or Christian charity left—instead the Trump Party is tearing babies away from immigrant mothers seeking safe haven, and cutting some $1.4 billion from the food stamp programs that aid the poorest among US.

Why the malevolence towards the weakest who are least able to protect themselves? I have called it the Bully Mentality that tends to prevail during chaotic times a time of pervasive fear and paranoia. It is the prevailing psychosis of the American far right movement.

Bullying behavior manifests itself in many ways, but bullies come into the open when there are no leaders that will stand up to them to condemn the hate and cruelty bullies always manifest against those weaker than them. And today we have a leadership vacuum. There is no spiritual leader such as Martin Luther King, Jr., and no political leader since former President Obama has disappeared from the public sphere.

Such malevolence towards others shows in many ways and fits the definition of bully behavior. Psychology Today has posted a list of bullying behavior, a list that fits the Trump Party to a tea:
  • – Uncontrolled anger and unpredictable irritability, frequently directed at the weakest people (‘safe targets’) or those perceived as a future threat
  • – A sociopathic ability to control their own image – the selective ability to look like a different person to different audiences – for example, being aggressive to ‘subordinates’, while being charming and helpful to others
  • – Having little status outside of work, bullies wield the power that their job gives them with vicious zeal
  • – Running ‘witch-hunts’
  • – Gratuitous domineering behaviour – sometimes physical
  • – The ability to make the unreasonable seem reasonable, even to the victims
  • --Projecting their own inadequacies onto others
  • – Making irrational accusations
  • – Publicly putting people down
  • Sadistic enjoyment in humiliating others
Americans love to celebrate the Christmas spirit. It is the time to give aid and comfort to those less fortunate, to treat all with empathy and love, rather than hateful cruelty. Celebrating brotherhood is also one of the best ways to stand up to bullies. Remember, bullies are really cowards who only dare to prey on the weakest.

So Merry Christmas and Happy New Year to everyone in the spirit of love that is the best weapon against hate!

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen