The Bully Mentality--III

Answering Kennedy’s Call

JONATHAN ERNST / REUTERS

“Fostering a culture of fear and ignorance is not the way to run a political party, or country, if it would ever come to that.”

I wrote this in 2014 about what I have called the Bully Mentality pervading the Republican Party that has enabled it to coerce its own supporters to vote against their own self-interests, making Republican red states the poorest states in our country.

These are states that in the main have opposed a higher minimum wage, union organizing that would enable workers to bargain collectively, and rely on the richest states via transfer payments to fund much of their governments. (Red states such as Mississippi, W. Virginia, Montana and Kentucky receive more than 30 percent of their revenues from other states).

Why does the USA have such a problem with bullies? Whether in the schools, in politics, or on Internet social media? The result has been teenage suicides, horrendous school shootings by students who felt bullied or belittled, and now a whole political party that opposes anything that smacks of aiding the poorest, seniors, and less educated.

That possibility has come closer with former President Trump seeking a second term without ever conceding that he lost the last election.

Bully Mentality is a state of mind that pervades those who are only good at one thing, preying on the weakest to empower themselves. 

It is something Nobel Laureate Paul Krugman wrote about during the Obama administration when it created Obamacare.

"But nobody expects to see a lot of prominent Republicans declaring that rejecting Medicaid expansion is wrong, that caring for Americans in need is more important than scoring political points against the Obama administration. As I said, there's an extraordinary ugliness of spirit abroad in today's America, which health reform has brought out into the open."

I said then the "ugliness" is really a textbook definition of bullying behavior.  Bullies prey on the most vulnerable and have tried every trick in the book to oppose any programs that smack of aiding those most in need.

• · Derogatory name-calling and nicknaming
• · Spreading rumors or lying about someone
• · Threatening someone
• · Yelling at or talking to someone in a rude or unkind tone of voice, especially without justifiable cause
• · Mocking someone's voice or style of speaking
• · Laughing at someone
• · Use of body language (i.e., the middle finger) to torment someone
• · Making insults or otherwise making fun of someone

The textbook definition fits former President Trump.

If the Republican Party can't keep its constituents poor and less educated, then the Republican Party, now Trump’s party, would lose its hold over them. Conservatives oppose expanding educational opportunities such as Head Start and pre-school aid because it would encourage rational thinking, and an appreciation of science. Their constituents would then begin to understand global warming, and maybe evolution instead of creationist theories that the world was created by a God just 7,000 years ago!

The danger of such behavior is even greater today. We have a Republican presidential candidate who has no compunction about endangering our national security by wanting to weaken NATO and other alliances, been indicted and awaiting trial under the Espionage Act for his carelessness with Top Secret documents, and endangered our economic security with his tax cuts that have created record deficits.

How then have Republicans been given the edge in various polls on the economy and foreign policy? It is another attribute of bully behavior—the total disregard for truth and facts that is at the heart of their propaganda machine.

There are many ways to counter bully mentality. Firstly, by recognizing that bullies are cowards at heart, which is why they avoid confronting those showing strength. It creates a pervasive culture of victimization, a feeling of powerlessness in which those so afflicted transfer their allegiance to a con artist such as Donald Trump.

That is how dictators all over the world have taken and maintained power. Can that happen to the world’s oldest democracy? It’s up to ordinary citizens to stand tall in opposing such behavior. It’s surprising how quickly bullies will disappear when citizens take back their own strength.

Harlan Green © 2024

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

ANSWERING THE KENNEDYS CALL

We are announcing a new blog series—ANSWERING THE KENNEDYS CALL. It will report on what is being done today to address the problems that deal with record income inequality, immigration and civil rights, environment protection, and the rebuilding of local communities both at home and abroad that we cover in a forthcoming book, ANSWERING the KENNEDYS CALL: Inspiring Lessons in Public Service and Community Building from the Sixties for the Future.

It is a book about the cultural and social revolution of the Sixties carried forward by newer generations that is healing our broken communities and a dysfunctional government.  The Sixties created many of the benefits we enjoy today—environmental protection, civil rights for minorities, scientific research that brought us moon landings, the Internet, modern commerce, and a greater openness to other peoples and countries. 

By portraying the history of community development via the experiences of the Sixties’ generations, and practices of M. Scott Peck, Cesar Chavez and sociologist Robert Putnam in community organizing, we will show we have never really left that hopeful spirit that is creating new forms of a healthy, functioning, participatory democracy.

The efforts of those generations in making the world a better place is finding a response among younger generations today in countering the rampant pessimism and sense of limited possibilities prevalent in much of our society, due in large part to the economic uncertainty and successive recessions that have impoverished a majority of Americans since the 1980s.

President Obama is now mounting a campaign with a similar goal to inspire our youth to a life of service; and the youth he talks about are my target audience:  http://thehill.com/blogs/pundits-blog/the-administration/330269-full-remarks-obama-at-chicago-event-discusses-future.

“The only folks who are going to be able to solve that problem are going to be young people, the next generation,” said President Obama. “And I have been encouraged everywhere I go in the United States, but also everywhere around the world to see how sharp and astute and tolerant and thoughtful and entrepreneurial our young people are. A lot more sophisticated than I was at their age. And so the question then becomes what are the ways in which we can create pathways for them to take leadership, for them to get involved?”

We begin with this recent headline from the United Farmworkers Union: Salinas, Calif.-based D’Arrigo Bros. of California has just signed a new contract with the United Farm Workers union that will cover more than 1,500 farm workers, according to this press release from The Packer, “the fresh fruit and vegetable industry's leading source for news, information and analysis.”

The agreement provides family medical, dental and vision benefits for the farm workers that will be paid for by D’Arrigo. Health insurance will be provided by the Robert F. Kennedy Medical Plan, a plan established in 1968 specifically for farm workers and their families.

“Both parties have come to a new era of a working relationship and realize the agricultural workers need to be taken care of,” President John D’Arrigo said in the release. “That investment will hopefully translate into people wanting to work here the whole season,”

Employees also receive hourly and productivity pay increases. The incentive and box pay rate will increase by 3 percent in the first year, 3 percent in the second year and 2.5 percent in the third year. Workers will also receive six paid holidays a year, and loaders and machine operators who use their personal vehicles will be paid 50 cents per mile for travel time.

“To be willing to put that much investment in their employees really demonstrates the value that John D’Arrigo is placing on his employees,” UFW president Arturo Rodriguez said in the release.

Why the realization from a major Salinas, California grower that union workers are important to his business? There is a growing scarcity of seasonal farmworkers due to the ICE sweeps and “zero tolerance policy” of the Trump administration that is decimating America’s agricultural industry. Growers are beginning to look to the UFW to supply those seasonal workers that labor contractors formally provided, but were mainly undocumented workers.

It took the first-term election of California’s Democratic Governor Jerry Brown in 1975 to give farmworkers bargaining rights with his enactment of the California Agricultural Labor Relations Act that legalized the union organization of farmworkers.

Today’s suppression of employee bargaining rights is little different, even though there is a National Labor Relations Board to enforce union collective bargaining rights. The problem is 28 so-called right-to-work states under Republican control allow private sector nonunion employees off the dues hook who work in a job that benefits from union bargaining.

And just recently the US Supreme Court overturned a 40-year precedent in Janus v. AFSCME that nonunion government workers cannot be forced to pay fees to public sector unions if they chose not to belong to them. Those fees, approved by the court in the 1977 case Abood v. Detroit Board of Education, cover collective bargaining costs such as contract negotiations, but are meant to exclude political advocacy.

SCOTUS’s Chief Justice Alito stated in his majority opinion that taking the side of governments in such labor disputes saves governments money. Really? Justice Alito is admitting that weakening government unions’ ability to collect dues will also weaken employees’ ability to bargain for their pay and benefits.

We don’t buy his argument that he wants to help governments with their finances. He as a good conservative is only interested in downsizing government in any way he (and probably his 4 fellow SCOTUS conservatives) can, which includes downsizing the standard of living of both union and nonunion government employees.

Harlan Green © 2018

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

A Greater Lawlessness—Self Interest vs. The Common Interest

Popular Economics Weekly

Are we at the beginning of an era of Greater Lawlessness, or nearing the end with the greatest law breaking we may have seen in our lifetime? And are we at the beginning or end of the greatest wealth accumulation by the wealthiest, of another Gilded Age that last happened in 1900, at the beginning of the Industrial Age?

In a potentially bombshell report, CNN reported Wednesday night that the FBI has information that suggests members of President Donald Trump’s team may have colluded with Russian operatives to coordinate the release of damaging information in an effort to torpedo Hillary Clinton’s presidential campaign.

FBI Director James Comey had already testified in televised House hearings that the Trump campaign team was under criminal investigation for collusion with Russian intelligence operatives in trying to undermine the legitimacy of US elections and democracy in general.

Such interference by Russian and even Wikileaks has led to the election of possibly the most corrupt President in US history, with his refusal to divest himself of his assets that are creating countless conflicts of interest, as well as blatantly ignoring the emoluments clause of the US Constitution that prohibits presidents from being compensated by foreign governments.

How did the US, leader of the free and democratic world since WWII, become so weak and vulnerable that Russian hackers could help to elect Donald Trump, an openly pro-Putin ally who wants to implement the Kremlin’s own foreign policies and subvert those of the democratic western world?

We have had major lawbreaking by Presidents before with Nixon’s Watergate, which was a break into Democratic National Committee headquarters to steal their election plans. Sound familiar?

Then there was President Reagan and the Iran-Contra Affair in the 1980s, which entailed the secret shipping of some $8 million in weapons to Khomeini’s Iranian government to aid them in their Iraq war, and more than 250 criminal convictions of Reagan era office holders for law breaking.

This was in part because President Reagan considered government the problem, and therefore its laws and regulations to be subverted or ignored when inconvenient to his goals.

What were those goals? It’s in fact a long story, but one that can be summarized easily. Such a greater lawlessness of elected representatives and presidents in particular, began with the concerted push to transfer greater wealth to the already wealthy begun in the 1970s and catalogued best in Jacob Hacker & Paul Pierson’s Winner-Take-All Politics. It was the beginning of massive tax cuts, and gutting of labor protection laws, the backbone of middle class prosperity, which weakened labor’s ability to both organize and bargain collectively, and resulted in the massive globalization of the labor force.

These policies were implemented under the rationale that self-interest trumped the common interest championed by governments, and therefore those laws that supported public interest should be subordinate to private interests. Its ideologues and supporters advocated an economic program called trickle-down economics that maintained the owners of capital knew best how to run a country and create the greatest prosperity for all with only the most minimal government regulations and protections, in order to maintain US leadership as a world power.

This led to the abuses of the housing bubble and wholesale loss of middle class wealth from overleveraged Wall Street, a shadow banking system, and failure of financial institutions such as Lehman Brothers that bankrupted millions of ordinary workers.

It led to the Great Recession, which did as much damage to the US economy as the much longer Great Depression, but without the leadership of an FDR and Francis Perkins, his Labor Secretary, who created most of the modern social safety net, including social security and the Fair Labor Standards Act, the first minimum wage and overtime laws for American workers.

It has also led to the greatest income inequality since the beginning of the Great Depression in 1929, which in turn led to the polarized electorate we have today. There is very little left of the middle class created after WWII that grew due to New Deal legislation that protected unions and collective bargaining, funded early education and government research that gave US the technological edge.

Under the aegis of a revolt against globalization, we have instead elected those who believe healthcare should be restricted only to those that can afford it, a government so diminished that it no longer is able to protect the environment, educate all in public schools and tuition-free public universities, or protect the public from Wall Street excesses, (which means another recession is inevitable).

All this could only have happened with the greater lawlessness we have today that a president and White House make no attempt to hide. President Trump seems to believe in the Mafia code, a code that trusts only his family and closest associates, where the only honor is the honor among thieves, some of whom are turning out to be Russian oligarchs whose stolen wealth he is more than happy to launder in his various real estate holdings.

CNN, basing its report on unnamed U.S. officials, said the evidence is largely circumstantial and is not yet conclusive, though the investigation is ongoing and is now focusing on the possibility of that collusion. The FBI’s information is based on “human intelligence, travel, business and phone records and accounts of in-person meetings,” CNN said.

Rep. Adam Schiff (D-Calif.) went a step further Wednesday, telling MSNBC “there is more than circumstantial evidence now” of collusion with Vladimir Putin’s Russia.

So is this the beginning, or the end of an era of rampant lawlessness that began almost 50 years ago, and that few of the lawbreakers have paid for, from Presidents to Wall Street financiers?

Maybe the various investigations will help is to understand what has happened to the no longer United States of America?

Harlan Green © 2017

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

It’s Time For the 30-hour Week

Popular Economics Weekly

Don’t look now, but we should soon have the 30-hour work week as the standard, instead of the 40-hour work week last enshrined during FDR’s New Deal. Why, when Americans now work more hours than any other developed country?

There are a number of good reasons, and they have little to do with the ACA, or Obamacare, which has decreed that 30 hours per week is considered to be full time employment for large businesses that are required to offer insurance coverage to their employees.

But it has a lot to do with the labor slack in our job market that Fed Chair Yellen has been talking so much about, and the declining health and welfare of American workers. Thanks to the tech revolution and huge productivity gains of those past 30 years, fewer workers are needed to do the same amount of work in the digital world. So if fewer workers are needed to do the same work, then why are more employees working overtime?

Maybe because no one in America has thought through the consequences. What would it mean to share the workload with more people? The Germans certainly have done something about it. Rather than fire employees when times were tough in Germany’s last recession, firms hit hardest by the reduction in demand reduced their employees’ working hours to spread the pain.

And, the four-day workweek is nearly standard in the Netherlands, especially among working moms, according to a CNN Money article. Overall, the entire workforce averages around 29 hours a week -- the lowest of any industrialized nation, according to the OECD.

Some 86 percent of employed mothers worked 34 hours or less each week last year, according to Dutch government statistics, as reported by CNN. Among fathers, about 12 percent also worked a shortened workweek. Denmark is close behind with a 33 hour average work week and five weeks of paid vacation.

“Dutch laws promote a work-life balance and protect part-time workers,” said the report. All workers there are entitled to fully paid vacation days, maternity and paternity leave. A law passed in 2000 also gives workers the right to reduce their hours to a part-time schedule, while keeping their job, hourly pay, health care and pro-rated benefits.

Whereas in a U.S., a Gallup survey last summer found that the average for full-time employees was actually 47 hours—or 46 if you isolate those workers with just one job. Either way, that's almost the equivalent of an extra business day on top of the usual five-day workweek. And it’s affecting our health and longevity.

Of the more than 1,200 adults surveyed by Gallup, 21 percent said they worked 50 to 59 hours while 18 percent said they worked 60 or more. Another 11 percent estimated 41 to 49 hours. It is an insanity that American workers have become such workaholics at the expense of their health, their families, and their own sanity.

The Centers for Disease Control and Prevention cites studies that found "a pattern of deteriorating performance on psycho physiological tests as well as injuries while working long hours."

It also cited four studies that found "that the 9th to 12th hours of work were associated with feelings of decreased alertness and increased fatigue, lower cognitive function, [and] declines in vigilance on task measures."

Wouldn’t this be the least painless way for workers to catch up to the incomes of their bosses that now earn on average 303 times their average employees’ income, according to a recent EPI study? Where have most of the productivity profits since the late 1970s gone, as illustrated by the BLS graph? To those executives and their stockholders, as this graph illustrates.

It’s no longer a secret that America is the most over-worked country in the developed world, according to the Center For American Progress, a progressive think tank. It is the only developed country with no mandated vacation, sick leave or parental work leave allowances, which even many third world countries like Afghanistan and Ethiopia have.

In fact, it is already beginning to happen among high tech firms that allow flex hours and even work at home. A 4-day -- or compressed -- workweek is offered as an option to at least some employees at 43 percent of companies, according to the Society for Human Resource Management. But only 10 percent of those companies make it available to all or most of their employees.

And there are roughly two dozen local union contracts that include a compressed workweek option for public-service employees working in municipalities, universities and institutions such as prisons, according to the American Federation of State, County and Municipal Employees.

So there is no good reason America, the richest country in the world, should remain an underdeveloped, overworked country anymore.

Harlan Green © 2015

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

Higher Minimum Wage Strengthens Labor Unions

Popular Economics Weekly

Unions may have been weakened by Republican efforts to abolish labor’s collective bargaining power, (in order to weaken their support of Democratic Party policies), but that may be changing as unions have found a new cause—working to raise minimum wages.

Los Angeles is the latest city to raise the minimum wage—to $15/hour in 5 years. Los Angeles is the fourth city, and by far the largest, to enact a $15 minimum in the past year, reports the New York Times. The others are Seattle, San Francisco and Emeryville, Calif. (near San Francisco). A $15 minimum has been proposed in New York City, Washington, D.C., and Kansas City, Mo.

And labor unions in the service industries are behind the push. This is exactly what unions are good at—encouraging higher wages in non-union businesses to match union benefits, such as at MacDonalds, Walmart, and even Facebook. The vote by the Los Angeles City Council was 14-1 in favor. This means it is now on the national agenda.

The $7.25/hour national minimum wage was last set in July 2009. And, according to the University of California Davis Center for Poverty Research, in 2013:

• Five Southern states (Louisiana, Mississippi, Alabama, Tennessee and South Carolina) have no minimum wage laws.
• Four states (Wyoming, Minnesota, Arkansas and Georgia) have state minimum wage rates that are lower than the federal rate, so the federal minimum wage applies.
• Twenty states have laws that set the minimum wage at the federal rate.
• Twenty-one states and the District of Columbia set their rates higher than the federal rate. Currently the state of Washington has the highest minimum wage rate at $9.32 per hour.

Unions had been stymied by outright banning of collective bargaining, or even the requirement that members don’t have to pay dues when joining a unionized shop in many of the right to work states—25 at last count, all controlled by Republican legislatures. It is a I win-You lose bargain that Republican legislatures have made with workers in their own states. The outright suppression of workers’ wages only weakens economic growth, and indeed the reddest states with the strongest anti-union laws are also the poorest.

Several other cities, including San Francisco, Chicago, Seattle and Oakland, Calif., have already approved increases, as we said, and dozens more are considering doing the same. In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wages by ballot initiative.

The 67 percent increase from the current California state minimum will be phased in over five years, first to $10.50 in July 2016, then to $12 in 2017, $13.25 in 2018 and $14.25 in 2019. Los Angeles businesses with fewer than 25 employees will have an extra year to carry out the plan. Starting in 2022, annual increases will be based on the Consumer Price Index average of the last 20 years. The LA City Council’s vote will instruct the city attorney to draft the language of the law, which will then come back to the Council for final approval.

Graph: EPI.org

This can only strengthen collective bargaining efforts in other states, a plus for union organizing efforts. Household incomes for most Americans have been declining since 1979. The above columns show real annual income growth from 1947-79 (blue) , and from 1979 to 2015(red) . It highlights the tremendous income inequality for the poorest Americans since then, partly due to the current national minimum wage of $7.25/hour.

“The effects here will be the biggest by far,” said Michael Reich, an economist at the University of California, Berkeley, who was commissioned by LA city leaders to conduct several studies on the potential effects of a minimum-wage increase. “The proposal will bring wages up in a way we haven’t seen since the 1960s. There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing.”

The groups pressing for higher minimum wages said that the Los Angeles vote could set off a wave of increases across Southern California, and that higher pay scales would improve the way of life for the region’s vast low-wage work force.  Actually, it is already happening nationally, and popular even in the right to work states that have suppressed workers’ right for so long.

The push for a $15-an-hour minimum wage is not confined to populous coastal states, said the New York Times. In Kansas City, Mo., activists recently collected enough signatures to put forward an August ballot initiative on whether to raise the minimum wage to $15 by 2020. The City Council is deliberating this week over how to respond and could pass its own measure in advance of the initiative.

Of course, there is an additional bonus to state budgets for raising the minimum wage. It takes many of those income earners at the bottom off state assistance programs like Medical, food stamps, and even welfare rolls. Why shouldn’t everyone support such a grand bargain?

Harlan Green © 2015

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

Janet Yellen’s Nemesis—The Great Moderation

Popular Economics Weekly

New Fed Chairwoman Janet Yellen has a great task ahead of her. How to combat the results of the Great Moderation, as it was called, that period of low inflation with moderate economic growth that prevailed from 1985 to 2007, according to Paul Krugman. But why, when lots of jobs were created, particularly the 22 million jobs created during Clinton’s presidency?

It was a period, “…that worked in part because the political insulation of central banks also gave them more than a bit of intellectual insulation, too,” said Krugman in a recent column. “If we’re living in a Dark Age of macroeconomics, central banks have been its monasteries, hoarding and studying the ancient texts lost to the rest of the world. Even as the real business cycle people took over the professional journals, to the point where it became very hard to publish models in which monetary policy, let alone fiscal policy, matters, the research departments of the Fed system continued to study counter-cyclical policy in a relatively realistic way.”

Leaving the Federal Reserve to only worry about large cyclical swings, while allowing the markets to largely grow with little regulation or oversight worked too well, in other words. It lulled policy makers into allowing the massive deregulation of financial markets for one, which led to the Great Recession.

And much worse. The result was loss of so much wealth since the Great Recession for the 99 percent that didn’t profit from deregulation. The labor market in particular has suffered most from deregulation, with globalization and free trade agreements allowing even highly skilled jobs to flow overseas, while states restrict collective bargaining for government employees and unions.

Graph: Econoday

This graph of Productivity and Unit Labor Costs illustrates the damage done to household incomes. So-called unit labor costs (ULC), a measure of incomes and benefits, have not on average grown at all since 2009, the end of the Great Recession.

The result is that The Great Moderation has more than moderated household incomes, reducing income growth for most Americans to zero after inflation, resulting in reduced demand and so slower economic growth that may never return to the 3.2 percent average GDP growth that prevailed since the Great Depression.

As Professor Krugman put it, “…the very success of central-bank-led stabilization, combined with financial deregulation – itself a by-product of the revival of free-market fundamentalism – set the stage for a crisis too big for the central bankers to handle. This is Minskyism: the long period of relative stability led to greater risk-taking, greater leverage, and, finally, a huge deleveraging shock… Also, sooner or later the barbarians were going to go after the monasteries too; and as the current furor over quantitative easing shows, the invading hordes have arrived.”

So it is Chairwoman Yellen’s task to bring growth back to household incomes and the overall economy. She must ignore the maxims and experience of the Great Moderation to do it, however. She must push for more government stimulus programs—whether for infrastructure, education, or Research and Development—to accompany the Fed’s efforts to hold down interest rates as long as possible to encourage moderate inflation. And she must not allow those “barbarians” at the Fed’s gate to prevail that want to reduce its powers to moderate such Great Recessions.

Harlan Green © 2014

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

Repubs Platform—Reverse Robin Hoodism

The Financial FAQs

Reagan Budget Director David Stockman and even President Obama have called it the reverse the Robin Hood effect, or taking the meager wealth from the poorest to give to the wealthiest. Because the Tea Party has created the Republican election platform, their agenda has been laid bare, which is a blatant effort to suppress the wages and salaries of 80 percent of our workforce. This after more than 200 years of government working for both the advantaged and disadvantaged.

The Republican platform no longer even tries to hide what they want to do--make the poor and middle classes even poorer by shrinking the social safety net, as well as restrict or outright ban collective bargaining of both public and private sector employees.

It is unbelievable, but true. Their platform even includes removing all restrictions on assault rifles, with no limits on magazine sizes, and taking away a woman's freedom to choose her own health care options, including contraception.

They are doing it in their time-tested way, playing the blame game again. As Rick Santorum said in his convention speech—“Almost half of Americans are on some form of government assistance,” implying that the poorest among US are too lazy to work. But most who receive government aid have retired on social security and Medicare, with very few on welfare, thanks to Clinton’s welfare reform that required welfare recipients to find work.

In fact, playing the blame game is their attempt to direct attention away from their own wholesale draining of the public coffers with tax breaks for the wealthiest that continue to increase the federal deficit, while income inequality is already at record levels. They would even make it worse under the Paul Ryan’s budget proposals by continuing to cut taxes, as well as social security, Medicare, education, and environmental protection programs.

Meanwhile defense spending would increase from some $500 trillion to over $900 trillion in 10 years by some estimates, if we follow Ryan’s prescription,  when we are the only super-power. This includes 9 super-carriers when no other country has even one.

What best confirms the Republican Party’s outright suppression of wages and salaries is the change in labor laws that have happened since at least 1980, when President Reagan disbanded the FAA Air Traffic Controllers Union, after only 4 days of negotiations.

In a just released report by the Center for Policy and Research, “Protecting Fundamental Labor Rights: Lessons from Canada for the United States,” begins with a comparison of the current state of organized labor in the United States and Canada.  It notes that, from the 1920s to about 1960, Canada and the United States had roughly the same unionization rates. But in 1960, the two began to diverge. As of 2011, the unionization rate in Canada stood at 29.7 percent, compared to less than half that in the U.S., at 11.8 percent.

While Canada and the U.S. both have elections as one route to forming unions, Canadian workers in several provinces also have the much faster option of card-check certification. Under card check, once a majority of employees signs cards in support of unionizing, an employer is required by law to recognize their union. . While the United States, however, workers must first file a petition showing support for unionizing and then vote to unionize in an election before an employer is required to recognize their union, unless an employer voluntarily recognizes a union.

And this can take months, during which companies are able to employ tactics to intimidate their workers. “During this time, U.S. employers usually engage in anti-union campaigns, often committing illegal acts – such as threatening to close the workplace or threatening to fire workers – to discourage them from voting to form a union,” said the report . “In fact, workers were illegally fired in about 30 percent of certification elections in 2007. Unfortunately, the legal response to such practices is slow and ineffective.”

Even more damning is the direct suppression of wages in the 23 right to work states  that say workers don’t even have to join a union, or outright banning collective bargaining of public workers, such as teachers, police and fireman, in Wisconsin, which other states are attempting to emulate.

For instance, A February 2011 Economic Policy Institute study found:

• Wages in right-to-work states are 3.2 percent lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic variables as well as state macroeconomic indicators. Using the average wage in non-RTW states as the base ($22.11), the average full-time, full-year worker in an RTW state makes about $1,500 less annually than a similar worker in a non-RTW state.
• The rate of employer-sponsored health insurance (ESI) is 2.6 percentage points lower in RTW states compared with non-RTW states, after controlling for individual, job, and state-level characteristics. If workers in non-RTW states were to receive ESI at this lower rate, 2 million fewer workers nationally would be covered.
• The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states, using the full complement of control variables in [the study's] regression model. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions.

The damage to economic growth is considerable when the 80 percent of Americans who are wage and salary earners have not been able to boost their incomes sufficiently to grow the economy. The facts are daunting. Income inequality has been growing since the 1970s—so much so that economic growth will continue to suffer, unless workers have sufficient bargaining power to begin to grow their incomes again.  But that can’t happen unless/until they recognize who is blocking their path to greater prosperity.

Harlan Green © 2012

States are Making A Comeback

Financial FAQs

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2012 that are a measure of current activity, and so a good measure of how widespread is the recovery. In the past month, the indexes increased in 48 states, decreased in one (Alaska), and remained unchanged in one (Wisconsin) for a one-month diffusion index of 94. Over the past three months, the indexes increased in 48 states, decreased in one, and remained unchanged in one for a three-month diffusion index of 94, said Calculated Risk.

Graph: Calculated Risk

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Graph: Philadelphia Fed

Pundits and economists will soon ask why Wisconsin is lagging. It also had the lowest job creation rate in 2011. Was it because of Governor Scott Walker’s abolishment of union collective bargaining rights? Wisconsin has been hurting ever since. Time and the fall recall election of Governor Walker will tell if its voters realize this.

Harlan Green © 2012

Why Are Republicans Playing With Fire?

Financial FAQs

The reports that 4,000 FAA employees and up to 70,000 airport construction workers narrowly escaped being laid off until Labor Day is unbelievably true. And this is the height of the summer travel season.

In this case, Senate Majority Leader Harry Reid had to scotch together a last minute compromise after Republican Senator Orrin Hatch scotched an earlier compromise of the House bill negotiated by Senators Rockefeller and Kay Bailey Hutchinson that would have cut spending on rural airport subsidies, according to the New York Times.

In fact, such actions are putting into question the motives for Republicans’ opposition to any kind of stimulus spending to spur economic growth. Republicans have once again brought us ever closer to another recession by imposing their anti-government, anti-union agenda.

What else should we think? In fact, we just had the 30^th anniversary of President Reagan’s firing of 11,000 striking Air Traffic Controllers that Governor Scott Walker has been holding up as his model for banning collective bargaining of public employees in Wisconsin. (Though that may soon be reversed with next week’s Wisconsin recall elections.)

The only problem is that Reagan wasn’t against collective union bargaining according to Associate Professor Joseph A. McCartin of Georgetown University, author of a forthcoming book, “Collision Course: Ronald Reagan, the Air Traffic Controllers, and the Strike That Changed America.” And it exposes Scott Walker’s total disregard of both history and the truth.

“Although he opposed government strikes, Reagan supported government workers’ efforts to unionize and bargain collectively’” said Professor McCartin in a recent New York Times’ Op-ed. “As governor, he extended such rights in California. As president he was prepared to do the same. Not only did he court and win Patco’s endorsement (the Traffic Controllers union), he directed his negotiators to go beyond his legal authority to offer controllers a pay raise before their strike—the first time a president had ever offered so much to a federal employees’ union.”

How close are we to a double-dip recession? The latest revisions to Q1 and Q2 2011 Gross Domestic Product growth show that consumer spending has shrunk—mostly from a lack of confidence in the future, and household debt that is still too high. This is while DOW Jones plunged 512 points on Thursday—due to fears of another recession. So this is not the time for Republicans to be playing with fire.

It is why GDP growth has slowed so drastically. There are 4 indicators used by the National Bureau of Economic Research Business Dating Committee to determine a recession—employment, personal income less transfer payments, real GDP growth, and industrial production, as we have said. Of the 4, industrial production and GDP growth have been recovering since mid-2009. But they are really dependent on employment and personal incomes less transfer payments, which haven’t done so well. Personal incomes have improved for those who are employed, but the money is either being saved or used to pay down debts.

And employers are not hiring enough workers to keep up with population growth. So there is really no excuse for Republicans’ ideological blindness that opposes any kind of government action to stimulate growth, unless it is intentional. In other words, would they use another economic collapse to try to knock out Obama in 2012? It is a horrific thought, if so. Republicans should keep in mind the Blame Game can work in unexpected ways. Playing with fire during this economic conflagration could forfeit their chances of winning anything.

Harlan Green © 2011

How Do We Boost Economic Growth?

Popular Economics Weekly

There is a tremendous misunderstanding of how to boost economic growth, and this is hurting the recovery. Conservative politicians want to cut taxes and government services, while progressives want to use government to boost growth. Yet it really doesn’t matter who does the boosting. The results are the same.

The best way to understand growth is with a concept used by economists, aggregate demand, that we have mentioned in past columns. Aggregate demand can be thought of as income and assets earned by consumers, private business, the financial sector and government. And said income and assets can be either hoarded in mostly MZM accounts (Money at Zero Maturity—i.e., earning 0 interest), as it is now, spent on things, or invested in facilities that produce more things.

Our economy has become seriously skewed during the past 10 years because corporate profits zoomed, while household incomes have not even kept up with inflation.

This is not the column to discuss the whys, including why so much income has migrated to the top 1 percent income bracket. But the result has been that most corporations haven’t invested in their employees. Which is why aggregate demand—the source of economic growth—has suffered mightily.

We know that consumers make up 70 percent of GDP growth, for example. So because their incomes were stagnant, they had to borrow to maintain their standard of living. And because they indebted themselves so heavily while their incomes remained stagnant, most have not been able to boost their spending during the recovery.

So business spending, which makes up the other part of aggregate demand (along with government spending) hasn’t been expanding because of so much excess industrial capacity. We know that excess capacity is still a problem today, as evidenced by the latest industrial production numbers.

Overall capacity utilization is improving, rising to 76.0 percent in December from 75.0 percent in November.  It is at its highest since a reading of 77.9 percent for August 2008, but is still far below the 82 percent long term average.

Industrial production posted a healthy 0.8 percent gain in December, following a 0.3 percent rebound in November.  However, the boost was led by a monthly 4.3 percent surge in utilities output, following a 1.5 percent increase in November.  By market groups, strength was widespread.  Production of consumer goods increased 1.0 percent in December; business equipment, 0.6 percent; nonindustrial supplies, 0.1 percent; and materials, 1.0 percent.

And because most profits have not been flowing back to average consumers, employers are not seeing enough demand for their products and services to warrant hiring more workers. That is the major reason for the entire government stimulus—to boost aggregate demand. The $787 Billion American Recovery and Reinvestment Act (ARRA) was in fact not enough to bridge the so-called lost output gap between potential and actual GDP growth over the past 2 years. The Fed’s purchase of government securities has held down interest rates, enabling businesses to borrow cheaply, and preventing real estate values from going into free fall.

Then what is the answer on how to create sustainable aggregate demand? The major push should be reestablishing the middle class that has been so decimated by lost jobs and much of its wealth—both in stocks and real estate. New York Times’ David Leonhardt is one of the few pundits to voice this concern in his most recent column, “In Wreckage of Lost jobs, Lost power,” in which he laments the loss of labor’s bargaining power.

Whereas employment in most other developed countries, including Japan and Russia, is much higher than in the U.S., corporate profits are lower. This is because U.S. domestic workers’ bargaining power has been severely diminished, in part because of laws that give employers the advantage in hiring and firing. And Germany and Canada, who barely had a recession, encourage companies to cut work hours for all during slowdowns—called ‘short work’—rather than lay off some, so that the pain of reduced incomes is spread over the entire workforce.

There are many other ways to cure insufficient aggregate demand, such as more progressive taxation. For instance, the top income tier during the Eisenhower years had a 95 percent tax rate on its top income bracket. This had the effect of siphoning off money from the wealthiest who spend the least percentage of their income, and putting it into the more productive use of building infrastructure, such as the interstate highway system, or education, or into more research and development.

Also, a better-run health care system would reduce health costs, which are double per capita in the U.S. vs. other developed countries. This would have several benefits, including increasing the competitiveness of U.S. made products, while boosting workers’ benefits and incomes.

There is still almost $3 trillion in lost output—the difference between actual and potential GDP growth caused by the recession, as we said. But unless we get over the conservative-progressive divide on how to bridge that gap, we won’t be able to generate sufficient aggregate demand that will bring back the jobs and salaries lost during the worst downturn since the Great Depression. U.S. workers don’t care which sector generates their jobs, so neither should politicians.

Harlan Green © 2011

Wisconsin’s Message—Preserving Prosperity

Financial FAQs

There is one overriding lesson in the Republican vs. Democrat struggle to preserve union negotiating rights in Wisconsin and elsewhere. If Wisconsin’s unions lose the right to collective bargaining, Wisconsin will not only lose their most productive workers in fields such as teaching, nursing, and even in police and fire—50 percent of whom have college degrees—but also impoverish their economy.

This is because reducing employees’ incomes and benefits does the same thing as reducing government spending in general during recessionary times. It reduces demand for the very goods and services that spur economic growth, as we said last week, at a time when the private sector cannot boost its own spending and investment.

So Wisconsin Governor Scott Walker is in effect biting the hand that feeds him, and all Wisconsinites. There are many ways to address budget deficits, but giving tax breaks isn’t one of them. This reduces revenues, increasing the very budget deficits that need to be addressed.

This is something that many politicians and ideologues simply do not understand. A Tea Party candidate and Illinois Republican congressman, Joe Walsh, recently echoed this misconception on Sunday’s ABC This Week: “Every dollar we take out of the public sector goes into the private sector, and it will grow the economy.” No, it won’t necessarily grow the economy. The tax cuts of the Bush era were meant to grow the economy, but resulted in record debt levels and the Great Recession. In fact, we now know only the ‘economy’ of the wealthiest benefited. This philosophy of ‘trickle down’ economics won’t work, if its benefits are not distributed evenly.

Right now because of the huge wealth disparity that prevails, most private sector dollars go into the hands of such as the Koch Brothers who funded Scott Walker’s campaign and other wealthy backers, not into the hands of those workers who will spend it. And the purpose of their support of conservative causes in the case of the Koch Brothers is obvious, to reduce the amount of government regulations in general. There is also a clause in the legislation that dissolves unions’ collective bargaining rights—called SB 11—that also allows sale of Wisconsin’s public utilities without any competitive bidding. And that wouldn’t benefit the Koch Brothers who already own 45 percent of Wisconsin’s power plants?

So opposing in effect what are the rights of workers everywhere—whether union or non-union—Scott Walker and company impoverish Wisconsin and so drive one more state into the ‘have-not’ category by reducing workers incomes and benefits, including health care.  America’s declining health care system already produces the highest infant mortality rate, for example, and a declining longevity at the bottom of any developed country, according to numerous Pentagon, CIA, and IMF surveys. Our wealth inequality is also the greatest of any developed country, approaching that of Mexico.

And it seems Governor Walker wants to do the same for Wisconsin. Walker’s bill throws the old one-two punch at health care in Wisconsin. First, it undermines the ability of health care workers to advocate for improved working conditions that improve patient care. Then it gives Walker’s administration the power to unilaterally change the state’s Medical Assistance program, subject only to review by the state legislature’s Joint Finance Committee (dominated by very conservative Republicans) and the minimum standards set by the federal government. The state’s Department of Health Services can make these unilateral changes even if the changes conflict with other existing aspects of state law.

In fact, history shows that it was unions via collective bargaining who formed America’s middle class after WWII—by redistributing income from the topmost income earners that prevailed before the Great Depression to a workforce that was able to participate in the increased post-WWII productivity brought on by its technological advances.

It is a different matter today. The richest 1 percent of households have garnered 23.5 percent of national income, as it did in 1928, whereas the top 1 percent had just 9 percent of national income in the 1970s . All other income classes have seen a decline in real, after tax incomes, since then. It is a well-known fact thanks to recent research by two economists sure to be on the Nobel Prize short list, Emmanuel Saez and Thomas Piketty, that has not yet reached the national consciousness.

This is the major reason for the economic instability we are experiencing at present, and why governments as well as consumers had to rely on so much borrowed money. What will it take before policymakers realize this? Sharing the pain also creates a shared prosperity.

Harlan Green © 2011

More Jobs = Faster Recovery

Popular Economics Weekly

There really is an innate conflict between policies that create more jobs, and policies that advocate cutting budget deficits during hard times. Policy makers have to ask themselves, which is more important—creating more jobs, or reducing debt? It depends on the timing. Debts are accumulated during bad times—especially public debt—and paid down in good times. The question is when is the economy strong enough to begin to pay down the deficits that have been created.

Everyone knows too much debt was accumulated in the last decade—most from tax cuts; but also from two wars, falling personal incomes, and the last two recessions (2001 and 2007-09). Most of the federal deficits were created by falling revenues that couldn’t cover those higher debt loads incurred by financing tax cuts and wars with borrowed money, as Alan Greenspan has famously said.

So the Wisconsin debate on public employees’ right to collective bargain is bringing this debate front and center—which is a good thing. Most states have to balance their budgets each fiscal year by law. The question is whose budget to cut. Taking collective bargaining (for salaries, not benefits) away from Wisconsin’s public employees is the worst way to balance its budget, because it takes away the means to cure their deficit.

For by reducing salaries and or benefits of its public employees, Wisconsin takes away a huge engine of economic growth by reducing the spending and saving power of its consumers, who as wage and salary earners make up 80 percent of the workforce and 70 percent of all economic activity. The dilemma for policy makers is how to add jobs and keep manageable deficits, in other words.

In fact, the only real way to cure any budget deficit is by growing revenues, not reducing spending. The reason for the deficits (which usually occur during recessions, remember) is loss of tax revenues—whether at the state or national level. This unfortunately is not clear to either most pundits or ideologues. Revenues shrink during recessions, period. And it takes a long time to ‘regrow’ those revenues.

The latest Gross Domestic Product numbers tell us as much. It wasn’t until Q4 2010 just ended that GDP growth—a proxy for overall economic growth—was back up to the level before December 2007, the beginning of the Great Recession. It took all of 2008, 2009, and 3 quarters of 2010, in other words, to return economic growth to pre-recession levels.

(And, it was done with 7 million fewer employed!) Fewer workers are now producing more, so that labor productivity is soaring. But with so-called unit labor costs cut to the bone, productivity—or output per worker—will only decline, unless employers hire more workers.

That is why governments tend to borrow more during hard times, in the hopes that it will stimulate enough spending to stop a precipitous drop in demand, and so jobs. But it is a delicate balancing act, since the credit rating agencies that determine bond interest rates watch budget deficits closely, and will drop a government’s rating almost as quickly as those for corporations.

Collective bargaining is the right of employees to negotiate with their employers, a right that unions in particular have enshrined in their charters. And guess who make up the majority of union membership? Public workers make up 36 percent of public employees, vs. just 9 percent of the workforce in private business. It is a combination of both blue collar (police and firemen), and white collar (teachers and workers in government administration).

So in fact, reducing workers salaries and benefits that make up approximately 80 percent of the workforce in order to cut budget deficits does more than cuts the demand for goods and services. It starves governments of the revenues needed to cure those deficits. Some form of government stimulus spending is therefore necessary until employment returns to levels that create a sustainable demand.

Harlan Green © 2011