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james galbraith
The Fed's War on Inflation Is Really an Attack on Workers
The takeaway for American workers: The Fed is not your friend.
Feb 02, 2022
US Federal Reserve Chair Jerome Powell has now committed to putting US monetary policy on a course of rising interest rates, which could boost the short-term rate (on federal funds and treasury bills) by at least 200 basis points by the end of 2024. Thus, Powell yielded to pressure from economists and financiers, resurrecting a playbook that the Fed has followed for 50 years--and that should have remained in its vault.
The stated reason for tightening monetary policy is to "fight inflation." But interest-rate hikes will do nothing to counteract inflation in the short run and will work against price increases in the long run only by bringing on yet another economic crash. Behind the policy is a mysterious theory linking interest rates to the money supply, and the money supply to the price level. This "monetarist" theory goes unstated these days for good reason: it was largely abandoned 40 years ago after it contributed to a financial debacle.
In the late 1970s, monetarists promised that if the Fed would focus only on controlling the supply of money, inflation could be tamed without increasing unemployment. In 1981, Fed Chair Paul Volcker gave it a try. Short-term interest rates soared to 20%, unemployment reached 10%, and Latin America spiraled into a debt crisis that nearly took down all the large New York banks. By the end of 1982, the Fed had backed off.
Since then, there has been almost no inflation to fight, owing to low global commodity prices and the rise of China. But the Fed has periodically shadowboxed with "inflation expectations"--raising rates over time to "preempt" the invisible demons, and then congratulating itself when none appeared.
The shadowboxing also ends badly. Once borrowers know that rates are going up over time, they tend to load up on cheap debt, fueling speculative booms in real assets (like land) and fake assets (like 1990s internet start-ups, 2000s subprime mortgages, and now cryptocurrencies). Meanwhile, long-term interest rates remain unmoved, so the yield curve flattens or even becomes inverted, eventually causing credit markets and the economy to fail. We now will likely see this feedback loop once again.
Of course, this time is different in one respect. For the first time in more than 40 years, prices are rising. This new phase was kicked off a year ago by a surge in world oil prices, followed by rising used-car prices as the semiconductor supply chain snarled automobile production. Now, we are also seeing rising land prices (among other things), which feeds into (somewhat artificial) estimates of housing costs.
Inflation rates are reported on a 12-month basis, so once any shock hits, it is guaranteed to generate headlines about "inflation" for 11 more months--a boon for the inflation hawks. But since oil prices in December were about the same as they were in July, the initial shock will be out of the data in a few months and the inflation reports will change.
True, the effect of more expensive energy will continue to percolate through the system. That's unavoidable. Whenever there is a structural change like an increase in energy costs or a reshoring of parts of the supply chain, "inflation" is inevitable and necessary. To hold average price increases to the previous target, some other prices would have to fall, and that generally doesn't happen. The economy always adjusts through an increase in average prices, and this process must continue until the adjustment is finished.
By reacting now, the Fed is saying that it would like (if it could) to force down some prices in order to offset rising energy and supply-chain costs, thereby pushing the average inflation rate back down to its 2% target as quickly as possible. Assuming the Fed understands that this is what it is doing, what prices does it have in mind? Wages, of course. What else is there?
Powell himself declared that the United States has a "tremendously strong labor market." Citing the ratio of job openings against "quits," he thinks there are too few workers chasing too many jobs. But why would that be? Considering that the US economy is still several million jobs below the actual employment levels of late 2019, it seems that many workers are refusing to go back to crummy jobs at lousy pay. As long as they have some reserves and can hold out for better terms, they will.
As wages rise to bring back workers, and because most jobs nowadays are in services, higher-income people (who buy more services) will have to pay more to lower-income people (who provide them). This is the essence of "inflation" in a services economy. Energy and most goods prices are set worldwide, so service wages are the only part of the price structure that the Fed's new policy can affect directly. And the only way the policy can work--eventually--is by making working Americans desperate. Obviously, logically, inevitably, and despite all the crocodile tears about inflation harming ordinary Americans, the Fed is determined to stop rising wages.
The takeaway for American workers: The Fed is not your friend. Nor is any politician who declares--as US President Joe Biden did this month--that "inflation is the Fed's job." And I write that as a Democrat.
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To Stop Far-Reaching Threat of Bolsonaro, 300+ Economists Sign Joint Declaration to Defend Brazil's Democracy
"We believe that democracy, search for peace, individual freedoms, plurality of opinions, tackling prejudice and inequalities (of income, race, regional and gender) are non-negotiable and essential values."
Oct 22, 2018
Faced with the looming threat that right-wing candidate Jair Bolsonaro could soon win the second-round of elections and become the next president of Brazil, hundreds of economists from across the country and around the globe have joined forces to declare their support for Fernando Haddad, the Workers' Party candidate, in order to save the nation's democracy and protect "essential values" like social inclusion, peace, and equal protection under the law.
"We believe that democracy, search for peace, individual freedoms, plurality of opinions, tackling prejudice and inequalities (of income, race, regional and gender) are non-negotiable and essential values." --Declaration of Economists in Support of Brazilian Democracy While not all signers of the declaration against Bolsonaro necessarily agree with every bit of Haddad's economic plan, they warn that a victory by the nation's regressive and far-right forces puts "Brazilian democracy and the institutions of the rule of Law" at stake.
According to Brazilian-American social scientist Luisa Abbott Galvao in a piece posted to Common Dreams Monday, the Bolsonaro campaign was built on his "disdain for democracy and glorification of authoritarianism."
The candidate, Galvao explained, has "gained infamy worldwide for past comments praising torturers and for asserting during a 1999 televised appearance that the Brazilian dictatorship should have executed 'at least 30,000' people. As a presidential candidate, Bolsonaro has called for political opponents to be shot, promised to deny the legitimacy of any election results that don't declare him the winner, and refused to partake in debates ahead of the general elections."
Additionally worrying, she added, is the manner in which the preferred candidate of the nation's wealthy and powerful elite "has capitalized on Brazil's deep economic and social inequality to push for an agenda that will undoubtedly drive even bigger rifts into the Brazilian socioeconomic fabric and further disenfranchise the country's most vulnerable people."
Posted in Portuguese here and in English below, the declaration signed by the hundreds of economists states: "We believe that democracy, search for peace, individual freedoms, plurality of opinions, tackling prejudice and inequalities (of income, race, regional and gender) are non-negotiable and essential values."
Read the full declaration and list of signatories below.
Declaration of Economists in Support of Brazilian Democracy
The signatories of this declaration have varying positions on economics; some, in fact, are outright critics of the economic policy adopted by the Workers' Party (PT) administrations. That said, what is at stake now is Brazilian democracy and the institutions of the Rule of Law.
We believe that democracy, search for peace, individual freedoms, plurality of opinions, tackling prejudice and inequalities (of income, race, regional and gender) are non-negotiable and essential values.
Therefore, it is imperative to have a position regarding the choice of the next Brazilian President. Fernando Haddad is, in this second round, the best alternative to ensure respect for these values.
We accordingly sign this declaration in support of his candidacy for political and economic stability, environmentally-sustainable development, social inclusion, and the fight against corruption. To ensure these democratic ends, we will maintain a critical and vigilant stance towards the elected government of Brazil in 2018.
Economistas que atuam no Brasil - Adesoes iniciais
Andre M. Cunha
Andre Nassif
Adriana Amado
Andre Chagas
Andre Roncaglia
Antonio Correa de Lacerda
Arthur Amorim Braganca
Bernard Appy
Carlos Eduardo Carvalho
Carmen Feijo
Cristina Froes de Borja Reis
Daniel Cerqueira
Daniela Magalhaes Prates
Dante Aldrighi
Darlene Dias
David Kupfer
Eduardo Correia de Souza
Eliane Cristina Araujo
Esther Dweck
Eustaquio Reis
Fernanda G. Cardoso
Frederico Gonzaga Jayme Jr.
Geraldo Biasoto Jr.
Gilberto Tadeu Lima
Hedibert Freitas Lopes
Joaquim P. Andrade
Joao Sayad
Jose Heleno Faro
Jose Luis Oreiro
Jose Roberto Afonso
Julio Sergio Gomes de Almeida
Laura Carvalho
Leda Maria Paulani
Lena Lavinas
Leonardo Weller
Lucia Helena Salgado
Luciano Coutinho
Luiz Carlos Bresser Pereira
Luiz Gonzaga de Mello Belluzzo
Luiz Fernando de Paula
Manoel Carlos de Castro Pires
Marcia Bezerra
Marcio Favilla Lucca de Paula
Maria Luiza Falcao
Maria Sylvia Saes
Marta Castilho
Mauro Boianovsky
Monica Viegas
Naercio Aquino Menezes Filho
Nelson Marconi
Nelson Henrique Barbosa Filho
Paulo Furquim de Azevedo
Paulo Nogueira Batista Jr.
Ramon Garcia Fernandez
Reynaldo Fernandes
Ricardo Carneiro
Rudinei Toneto Jr
Sergio Gobetti
Thiago Fonseca Morello
Economistas que atuam no Brasil
Aderbal Oliveira Damasceno
Adhemar Mineiro
Adriana Nunes Ferreira
Adroaldo Quintela
Afranio Garcia Jr.
Alberto Di Sabbato
Alain Herscovici
Alexis Toribio Dantas
Aline Souza Magalhaes
Amanda de Albuquerque
Ana Celia Castro
AnaCecilia Milagres
Ana Flavia Machado
Ana Maria Hermeto C. de Oliveira
Ana Urraca Ruiz
Andre Martins Biancarelli
Andre de Melo Modenesi
Andre Mourthe de Oliveira
Andre Nassif
Andrea Simone Rente Leao
Andres Ferrari Haines
Anna Mortara
Beatriz Macchione Saes
Bernardo P. Campolina Diniz
Betty Nogueira Rocha
Biancca Castro
Bruno M. de Conti
Camila Kimie Ugino
Carolina T. Baltar
Carlos A. Medeiros
Carlos Gadelha
Carlos Henrique Lopes Rodrigues
Carlos Mielitz
Cassio Garcia Ribeiro
Clelio Campolina Diniz
Cristiane Garcez
Cristina Lemos
Daniele da Rocha Faria
Debora Freire
Denis Maracci Gimenez
Denise Gentil
Ebenezer Pereira Couto
Edison Rodrigues Barreto Jr
Eduardo Costa Pinto
Elena Soihet
Eliana Ribeiro da Silva
Eneas G. de Carvalho
Ernani Torres
Fabio Sa Earp
Fabio Terra
Fabricio Missio
Flavio Azevedo Marques de Saes
Fernando Amorim Teixeira
Francisco de Assis Costa
Francisco Luiz C. Lopreato
Frederico Mazzucchelli
Gabriela Freitas da Cruz
George Flexor
Gilberto de Assis Libanio
Guilherme Delgado
Guilherme Grandi
Gustavo Britto
Helena Lastres
Henrique Tahan Novaes
Hugo Eduardo A. da G. Cerqueira
Igor Briguiet
Ilmar Ferreira Silva
Isabela Nogueira
Jennifer Hermann
Joao Hallak Neto
Joao Romero
Joao Saboia
Jose Carlos Braga
Jose Celso Cardoso Jr
Jose Eduardo Cassiolato
Jose Gabriel Porcile Meirelles
Jose Jorge Gebara
Jose Sergio Leite Lopes
Kaio Vital da Costa
Karina Kato
Laura Schiavon
Lauro Mattei
Leon Santiago Mendes Suhett
Leonardo Marco Muls
Lilian Nogueira Rolim
Lourival Batista de Oliveira Junior
Luiz Antonio Elias
Luiz Martins de Melo
Mauro Boianovsky
Marcos Antonio Macedo Cintra
Marcelo Miterhof
Marcio Wohlers
Margarita Silvia Olivera
Margarida Batista
Maria Antonieta Del Tedesco Lins
Maria Carolina Capistrano
Maria Cristina Penido de Freitas
Maria de Lourdes Rollemberg Mollo
Maria Luiza Falcao Silva
Maria Luiza Levi
Mariana Ribeiro Jansen Ferreira
Marina Sequetto Pereira
Mario Marcos Sampaio Rodarte
Maryse Farhi
Mateus Girafa Lachtermacher
Mauricio Borges Lemos
Mauricio Muniz
Mauro Arruda
Mauro Osorio
Miguel Bruno
Milena Fernandes de Oliveira
Nathalia Crissia Posena
Niemeyer Almeida Filho
Nilson Maciel de Paula
Nina Quintanilha Araujo
Norberto Montani Martins
Paula Alexandra Nazareth
Paulo Baltar
Paulo Guimaraes
Paulo Sergio Fracalanza
Pedro Amaral
Peter May
Raquel A. Ramos
Renata Lebre La Rovere
Renata Lins
Rene de Carvalho
Ricardo Henriques
Ricardo Machado Ruiz
Ricardo Meilman Cohn
Ricardo Schaeffer
Roberto Vermulm
Rogerio Gomes
Sandro Augusto Viegas Leao
Simone Deos
Thiago Mandarino
Ulisses Pereira dos Santos
Vitor Pereira
Walter Tadahiro Shima
Wilnes Henrique
Zina Angelica Caceres Benavides
Economistas que atuam no exterior
George Akerlof, USA - Premio Nobel em Economia, 2001
Adam Aboobaker , USA
Agnes Labrousse, Franca
Ajit Zacharias, USA
Alan Cibils, Argentina
Alberto Botta, UK
Alessandro Caiani, Italia
Alexander Guschanski, UK
Alfredo Saad Filho, UK
Amit Bhaduri, India
Amitava Krishna Dutt, USA
Andrea Califano , Italia
Andrea Roventini, Italia
Angel Vilarino Sanz, Espanha
Anne Eydoux, Franca
Annina Kaltenbunner, UK
Antoine Mandel, Franca
Antonella Stirati, Italia
Avinash Persaud, UK
Barbara Fritz , Alemanha
Bernhard Leubolt, Belgica
Bhola Khan, Nigeria
Bill Black, USA
Brittany Nicole McGhee, Alemanha
Bruno Bonizzi, UK
Bruno Theret, Franca
Byasdeb Dasgupta, India
C.P. Chandrasekhar, India
Carlo D'Ippoliti, Italia
Carlos A. Carrasco, Mexico
Carlos Mielitz, Italia
Carmen Diana Deere, USA
Christian Gehrke, Austria
Claire Pignol, Franca
Dani Rodrik, USA
Daria Pignalosa, Italia
Dominique Plihon
Edwin Le Heron, Franca
Eileen Appelbaum, USA
Eric Berr, Franca
Eugenio Caverzasi, Italia
Federico Tamagni, Italia
Fiona Tregenna, Africa do Sul
Francisco Louca, Portugal
Fred Mosseley, UK
Frido Wenten, UK
Gary Dymski, UK
Gennaro Zezza, Italia
Gerald Epstein, USA
Giorgio Fagiolo, Italia
Giovanni Villavicencio, Mexico
Ha-Joon Chang, UK
Hee-Young Shin, USA
Hulya Dagdeviren, UK
Heinz D. Kurz, Austria
Ilhan Dogus, Alemanha
Ilias Alami, Holanda
Imko Meyenburg, UK
Ingo Schmidt, Canada
Isabel Ortiz, USA
Ivan Velasquez, USA
Jaime Marques Pereira
Jaime Ros, Mexico
James Galbraith, USA
Jan Kregel, USA
Jan Priewe, Alemanha
Jayati Ghosh, India
Jean-Francois Ponsot, Franca
Jeff Madrick, USA
Jessica Sklair, UK
John Hall, USA
John Williamson, USA
John Willoughby, USA
Jonathan Marie, Franca
Jorge Buzaglo, Suecia
Jorge Garcia-Arias, Espanha
Jorim Gerrard, Franca
Jose Gabriel Palma, UK
Juan Grigera, Argentina
Julimar Bichara, Espanha
Kevin Costa, Franca
Lance Taylor, USA
Leonardo E. Stanley, Argentina
Leslie Carnoye, Franca
Lionello Franco Punzo, Italia
Louison Cahen-Fourot, Austria
Luana Ladu, Alemanha
Luca Zamparelli, Italia
Luis Bertola, Uruguay
Machiko Nissanke, UK
Manfred Max-Nee, Chile
Marco Mazzoli, Italia
Marco Missaglia, Italia
Marco Valente, Italia
Margarida Antunes, Portugal
Maria Cristina Barbieri Goes, Italia
Maria Cristina Marcuzzo, Italia
Maria Savona, UK
Marianna Mazzucato, UK
Mario Cassetti, Italia
Mario Tonveronachi, Italia
Mark Setterfield, USA
Mark Weisbrot, USA
Mary C. King, USA
Martha Carro Fernandez, Espanha
Mathieu Beraud, Franca
Matias Vernengo, USA
Matteo Deleidi, Italia
Matthieu Montalban, Franca
Maurin Masselin, Franca
Mauro gallegati, Italia
Mauro Napoletano, Franca
Mauro Virgino de Sena e Silva, Inglaterra
Megan Ward, Alemanha
Michel Heinrich, Alemanha
Michael Lipton, UK
Michael Meeropol, USA
Michael Roberts, UK
Mogens Ove Madsen, Dinamarca
Monika Meireles, Mexico
Mritiunjoy Mohanty, India
Murat Yildizoglu, Franca
Natalya Naqvi, UK
Nathalie Coutinet, Franca
Nicolas Piluso, Franca
Nicolette Cattaneo, Africa do Sul
Nikolaos Karagiannis, USA
Noemi Levy Orlik, Mexico
Oscar Ugarteche, Mexico
Ozlem Onaran, UK
Patricia E. Perkins, Canada
Patrick Bond, Africa do Sul
Paul Hudson, USA
Paul Mason, UK
Peter Dorman, USA
Philip Arestis, UK
Philippe Lege, Franca
Pierre Salama, Franca
Stephany Griffith-Jones, UK
Richard Parker, USA
Robert A. Blecker, USA
Roberto Frenkel, Argentina
Robert Guttmann, Franca
Roberto Veneziani, UK
Robin Hahnel, USA
Robin King , USA
Rodrigo Adao, USA
Sebastian Gechert, Alemanha
Sergio Cesaratto, Italia
Steven Fazzari , USA
Sunanda Sen, India
Susanne Soederberg, Canada
Terry McKinley, UK
Thierry Kirat, Franca
Thomas Palley, USA
Thorvaldur Gylfason, Islandia
Torsten Niechoj, Alemanha
Valpy FitzGerald, UK
Venkatesh Athreya, India
Victor Manuel Isidro Luna, Mexico
Yanis Varoufakis, Grecia
Yilmaz Akyuz, Suica
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What Do Those People Want?
It's simple: progress.
Jun 20, 2018
Where is the Democratic Party? The Party of the People is stuck in the status quo--- the still reigning, old-line hierarchy of the Democratic party is unwilling to just be dedicated to well, to the democratic interests of its own political base. People know from real-life experience that the economy has been rigged against them for the benefit of the uber-rich and the political system has been totally corrupted by the bipartisan pay-to-play ethic that protects the status quo from interference by us commoners. While Republicans are a wholly-owned corporate subsidiary, unabashedly dedicated the narrow interests of the moneyed elites, the Dems' congressional elders, key party officials, entrenched consultants and corporate funders continue to push bland, business-as-usual candidates running on a pusillanimous policy agenda of vague "reforms" that don't actually change anything. Then the party establishment wonders why such people stray or stay home in November!
What do those people want?
Progress! Meaning a national commitment to advance the economic, political and social circumstances of the American majority of workday families and poor people. Yes, that requires major change, and that will definitely make powerful enemies among wealthy elites plotting to impose Koch-style plutocratic rule over our society. Nonetheless, most voters want BIG populist changes in government policy that will lift up average Americans and hold down corporate greed and abuse.
One major proposal to do just that is an 11-point Economic Agenda for America's Future, initiated by a broad coalition of some 80 progressive thinkers and doers. Coordinated by Roger Hickey of the Campaign for America's Future and Larry Cohen, a renowned labor agitator who chairs the board of Our Revolution, this document is both a to-do list for restoring economic democracy and a rallying cry to move today's burgeoning democratic movement from mere resistance to insistence on a new percolate-up alternative to Republican/Democratic trickle-down economics.
As Hickey notes, "If Trump and the GOP majority in Congress were to disappear tomorrow, our society would still face the challenge of restructuring our economy -- after many decades of leaders allowing inequality to spread and letting our public infrastructure fall apart." The agenda draws from the solid analyses of America's widening inequality by such esteemed economists as Joseph Stiglitz, Thea Lee, James Galbraith, Robert Pollin and Dedrick Asante-Muhammed.
The document builds on the remarkably progressive 2016 Democratic Party Platform, which was largely hammered out between Bernie Sanders delegates and progressives in Hillary Clinton's camp. Their good work quickly got lost in the general election debate, because the Democratic establishment's campaign strategists didn't like the platform's powerful message of populist change. So, they ignored it, choosing instead the negative message that Clinton was "Not Trump."
The drafters of the economic agenda, however, saw the enormous political value of much of that discarded platform, both in its populist appeal and in the fact that it had been produced as a progressive unity document. ("We are not interested in re-fighting the 2016 election," says Hickey). So, they used it to enlist former backers of Sanders and Clinton to help resurrect, refine and expand it into a manifesto we can carry anywhere as a clean summary of our goals.
Process aside, what we have here is a worthy and timely program of economic renewal for our democratic movement. Rather than a flashy wish list of grand schemes, the agenda is a concise presentation of bread-and-butter ideas and basic rights that various progressive activists have long supported, and several of the items have even been implemented by some cities and a few states. Also, its drafters and initial co-signers do not pretend that this is the ultimate populist program, but a starting point for others to consider and improve, creating a well-marked political map that will show the larger public a way to put our nation back on the path to good middle-class jobs, economic justice and sustainable prosperity for all. You can read and sign on to this progressive "people's" agenda at CampaignForAmericasFuture.org.
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Scores of Leading Economists Demand End to All Fossil Fuel Investments
"Simply put: there is no more room for new fossil fuel infrastructure and therefore no case for ongoing investment," declaration states.
Dec 08, 2017
Scores of leading global economists this week demanded an end to the funding of fossil fuel projects and called for a massive increase to investments in renewables, saying "it will take unprecedented actions to limit the worst consequences of our dependence on oil, coal, and gas."
The declaration, signed by economists including James Galbraith, Juliet Schor, Jeffrey Sachs, and Yanis Varoufasis, "affirms that it is the urgent responsibility and moral obligation of public and private investors and development institutions to lead in putting an end to fossil fuel development."
The case for "keeping it in the ground" is clear, they write, given that the potential carbon from already developed fossil fuel projects will push the planet to beyond a so-called safe level of warming.
"Thus, not only are new exploration and new production incompatible with limiting global warming to well below 2oC (and as close to 1.5oC as possible), but many existing projects will need to be phased-out faster than their natural decline. Simply put: there is no more room for new fossil fuel infrastructure and therefore no case for ongoing investment," the declaration states.
Instead, they write, "let us all prioritize the tremendous investment opportunities for a 100 percent renewable future that support healthy economies while protecting workers, communities, and the ecological limits of a finite planet."
"It's time to stop wasting public money on dirty fossil fuels and invest it instead in a sustainable future."
--Tim Jackson, University of SurreySuch a future offers a promise of "a new economic paradigm of prosperity and equity," they write.
The declaration was released ahead of the One Planet summit, convened by French President Emmanuel Macron, taking place two years after the historic Paris climate accord was reached. Trump will not attend, but the global leaders who do will ostensibly energize the push for continued climate action, though it was organized in part by the World Bank Group, which continues to fund dirty energy.
"It is time for European leaders, especially President Macron, who understands the threat posed to our planet by Donald Trump's climate change denial, to help smash our economies' reliance on fossil fuel subsidies and investment," said Varoufakis. "Not one more penny or cent can go to coal, oil, or gas subsidies."
A mass mobilization with that message is set to take place in Paris on Dec. 12, the day of the summit.
"If our leaders remain hesitant to put their full support behind green investments, despite it making economic sense," said signatory Tim Jackson of the University of Surrey, "I would like to remind them that they have enormous public support. It's time to stop wasting public money on dirty fossil fuels and invest it instead in a sustainable future."
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Winning Back the Working Class: A Time of Reckoning for Progressives
By not acting on behalf of the nation's struggling workers, the left will continue to cede the jobs terrain to Donald Trump
Nov 16, 2016
Over the next two years 1,400 Carrier air conditioner workers will see their decent paying jobs migrate to Mexico. This highly profitable Indiana facility, represented by the United Steel Workers, will make even more money south of the border where workers earn less in one day than the Indiana employees make in one hour, according the New York Times. (A YouTube video of the heartbreaking plant closing announcement has nearly 4 million views.)
While Hillary Clinton remained silent on this impending catastrophe, Donald Trump turned this facility into the poster child for what's wrong with U.S. trade policy. He pledged that if the plant moved, he would place a 35% tariff on all Carrier products imported from Mexico as well as a similar duty on the Mexican products of its parent company, United Technologies.
Trump boasted he would make the company cry uncle: "I'll get a call from the head of Carrier and he'll say, 'Mr. President, we've decided to stay in the United States. That's what's going to happen -- 100%."
Carrier became the 100% battering ram with which to pound Hillary Clinton and her embrace of NAFTA and other trade deals. In doing so, Trump snatched the plant closing issue away from the Democrats, something the party apparatchiks didn't recognize until the Trump votes poured in from the Rust Belt.
"If progressives were well organized -- a very big if to be sure -- we should join with these workers (represented by the United Steelworkers) to build mass demonstrations at United Technologies headquarters, hedge funds offices and the White House. Such a series of protests would keep the Carrier shutdown on the front burner and provoke Trump to live up to his job promises."
The Carrier case, however, was not just the usual media meme about Trump backing the less educated, white working class. In fact, the threatened Indianapolis plant is 50 percent African-American. Women make up half the workforce on the assembly lines and the facility also employs dozens of recent Burmese immigrants, well regarded by their co-workers. So making this facility great again actually means coming to the aid of America's increasingly diverse labor force.
But Trump is stumbling into something far more problematic than trade deals. At the heart of this story is the financial strip-mining of America organized and led by Wall Street.
Why does United Technology want to move to Mexico?
Let's round up the usual suspects: .
- They can't turn a decent profit using unionized American workers? No. Carrier is the most profitable division of United Technologies.
- NAFTA caused this proposed move? Not likely. NATA is 22 years old, so unless United Technologies is the corporate Rip Van Winkle, they could have moved long ago.
- New technologies make the destruction of decent paying manufacturing jobs inevitable? Not at all. In this factory transplant, they are redeploying the same technologies already in use, machine by machine.
So if profits, trade and automation are not the driving forces, what is?
The major pressure to shift jobs abroad comes from the big hedge funds and private equity investors who have one goal only -- to siphon as much wealth as possible out of companies like United Technologies.
High profits, low profits, or no profits, they pressure company after company to squeeze their costs as much as possible so that there is more money available for the company to buy back its own shares.
Why? Because stock buybacks immediately raise the share price and give the big hedge funds an instant windfall.
Before a 1982 SEC rule change -- a major turning point in the disastrous deregulation of finance -- massive stock buybacks were illegal because they were considered stock manipulation, and a major cause of the 1929 crash. Now, Wall Street extracts billions from this destructive activity. It's what drives runaway inequality. (For the definitive account see Professor William Lazonick, "Profits Without Prosperity" Harvard Business Review)
CEOs cherish this process because they now derive the majority of their compensation through stock incentives. So by acting as Wall Street shills, they drive up the price of stock and become richer and richer themselves.
In 1970, before stock buybacks became the norm, the pay gap between the top CEOs and the average worker was $45 to $1. Today it is an incomprehensible $844 to $1. (See Runaway Inequality) So there's a co-dependency between the big hedge fund investors and the United Technologies CEO to move the Carrier facility, obtain more cash flow, and use it all to buy back more stock.
What proof do we have? Since 2006, United Technologies has spent over $25 billion on stock buybacks, amounting to over fifty percent of its net income. Last year, just before it announced the move to Mexico, the parent company instituted a $10 billion stock buyback and the stock price immediately jumped 5%. This means United Technologies used 131.4 percent of its net income to move money from the company to its major investors and top officers.
Gregory Hayes, United Technologies CEO, gets his share of the booty. Since 2012, he received $44,100,000 in total compensation, about half of which derives from stock incentives. Fifty-six top hedge funds have taken a stock position in the company to reap the bounty from these stock buybacks. (Many thanks to Matt Hopkins for this data.)
And so Trump bluffed his way into the soulless heart of an economy dominated by Wall Street. Does he have the guts to take on the fundamental evil of stock buybacks? Not unless he is forced to. It's so much easier to blame Mexico and China.
Is Carrier a major opening for the Democratic Party?
Hillary Clinton's benign neglect of these workers is symptomatic of the party's ongoing romance with Wall Street elites -- the source of so much of the party's funding. These political leaders, their high level campaign officials and the party's financial backers have never had it so good. They won't suffer one iota from the loss of those 1,400 Carrier jobs. They won't have to contemplate finding a replacement job at Wal-Mart for $13 an hour. They won't have to worry about how to pay off their kids' student loans. Instead, they will continue to enjoy the fruits of America's wealth that is rapidly flowing to the top 1 percent.
Unless the party is captured by the Sanders forces, there will be little concerted action to outlaw stock buybacks. The establishment Democrats will do next to nothing about the never ending rip-off of the American people by Wall Street elites.
What Should Progressives Do?
Right now we are in the streets bearing witness to the threats posed by Trump to immigrants, people of color, Roe v Wade, LBGTQ rights, and the environment. These protests build a protective sense of community, a public space to share pain and anger, a place to shield each other against deportation and Trump vigilantes.
But to date, these emotive and reactive responses provide no alternative path or program. Love trumps hate is no match for what will soon be jammed through Congress.
Moving from Trump, the person, to the Wall Street horrors that give us Trump.
The Carrier relocation offers new possibilities. It allows us to protest en mass about what Trump either does or does not do in behalf of working people.
If progressives were well organized -- a very big if to be sure -- we should join with these workers (represented by the United Steelworkers) to build mass demonstrations at United Technologies headquarters, hedge funds offices and the White House. Such a series of protests would keep the Carrier shutdown on the front burner and provoke Trump to live up to his job promises.
Imagine if Black Lives Matter, the Sierra Club, 350.org, the Moral Monday movement, the Sanders supporters, and other unions and church groups rallied around these at-risk workers. That would send a loud, clear message that the progressive movement for economic, environmental and social justice cares deeply about the plight of working people -- black, white, Hispanic and immigrant alike.
Not only would it challenge Trump's bluster, but it would create a litmus test for the Democratic Party. If we took to the streets for this kind of working class cause, the Democrats would finally be forced to decide whether they are, as economist James Galbraith put it, "the party of the predators or the prey."
The Democrats lost this election because they tried to be both. That's why Hillary didn't think twice about taking all that Wall Street cash for her inane private speeches. That's why she could talk so glibly talk about "the deplorables" to a closed-door donor meeting. The Democratic elites were confident that they could build a new winning coalition of women, people of color, immigrants and upper income voters. They thought they didn't really need the working people left behind by Wall Street's financial strip-mining. They do now.
There are other critical political realities to consider. By not acting in behalf of these workers, we continue to cede the jobs terrain to Trump. If for some reason Carrier does not move, Trump will get all the credit -- and justifiably so. But if our movement sustained the demand in a systematic way, the victory would be for all working people, not just Trump. We would become the movement for jobs and justice.
But wait, why fight to save these manufacturing jobs when the planet is heating up, black men are being slaughtered by the police, and millions of immigrants are about to be deported?
This is a time of reckoning for progressives. It is time to face up to the fact that we will win very little unless we recognize that working people of all shades must become a vital part of a common progressive movement.
Their inclusion, however, requires that we climb out of our issue silos. We need to build a state, local and national progressive alliance that unites our specific issues. Bernie Sanders proved that such a common effort has enormous potential. He successfully made the case that the actions of the rapacious billionaire class unites us all as we struggle to reverse runaway inequality, eliminate discrimination, provide universal health care and free higher education, while also protecting the planet. We came together then around a broad social democratic platform. We need to do it again.
For starters, Sanders should deploy his prodigious list of small donors to raise substantial funds to build a national movement infrastructure. An opening campaign could focus on Carrier and highlight the evils of stock manipulation. Working people all over the country would take notice.
Yes, we are hurting. Yes, we are fearful. Yes, we are incredulous that the country we love could turn to a demagogue. But, we have just entered one of those rare historical moments when the poignant words of Joe Hill, the labor troubadour, again ring true. In a telegram written to the radical labor leader Bill Haywood, just before Hill was executed on trumped up charges 101 years ago, he wrote:
"Don't waste anytime mourning: Organize!"
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The Most Substantive Political Debate in Recent Political History
Win or lose, Bernie Sanders has made this Democratic primary the most substantive in my lifetime. Not that Hillary Clinton's campaign is devoid of ideas. She has some thoughtful ones. But the boldness of Sanders' proposals is what has driven this historic and instructive debate.
Apr 13, 2016
Win or lose, Bernie Sanders has made this Democratic primary the most substantive in my lifetime. Not that Hillary Clinton's campaign is devoid of ideas. She has some thoughtful ones. But the boldness of Sanders' proposals is what has driven this historic and instructive debate.
The dynamic so far consists of Sanders setting a marker (e.g. free tuition, universal free health care, breaking up the banks, a $15 federal minimum wage, a $1 trillion public works investment); Clinton responds, and their two camps engage in a spirited, intelligent, and surprisingly concrete debate.
This back and forth has forced both candidates to raise their game. When Sanders proposed free college tuition, Clinton responded by unveiling her detailed New College Compact Plan. When Clinton attacked Sanders for failing to identify revenue sources to finance his free tuition and health care proposals, he promptly posted chapter and verse on his web site.
When economics Professor Gerald Friedman concluded that if all Sanders policies were implemented the combined effect would be to stimulate dramatically strong economic growth, four former heads of the Council of Economic Advisers (CEA) wrote an open letter not only dismissing his conclusions as not credible but admonishing, "Making such promises runs against our party's best traditions of evidence-based policy making..."
The three-paragraph letter generated a collegial scolding from James Galbraith, former Executive Director of the Joint Economic Committee, the Congressional counterpart of the CEA. He pointed out the signatories' own lack of evidence for their conclusion. "I looked to the bottom of the page to find a reference or link to your rigorous review of Professor Friedman's study. I found nothing there." That led one of the signers to undertake a far more detailed response, which in turn generated an instructive and much too rare discussion regarding the validity of assumptions inside the black box of conventional economic models.
The back and forth has also revealed strategic differences born of a distinct political philosophies. Bernie would deal with concentrated economic power through structural change; Hillary would rely on regulatory oversight. Bernie would work to break up giant banks directly. Clinton prefers to strengthen the Dodd-Frank law. Clinton sees Sanders' proposal as politically untenable. Sanders sees Clinton's proposal as unworkable.
"The boldness of Sanders' proposals is what has driven this historic and instructive debate." Sanders' prescription for structural change often includes using government as a competitive service provider. That is the case with his proposal to revive Postal Banking. From 1910 to 1967 the U.S. Post Office, the most ubiquitous of all public institutions, provided financial services. At its peak 1947 the U.S. Postal Bank had over 4 million accounts and deposits exceeding $3.3 billion. Almost 90 million people in the United States have no bank account and pay about l0 percent of their income in fees and interest to gain access to credit or other financial services.
Today the USPS already handles money orders. Sanders, adopting recommendations put forth in 2014 by the USPS Inspector General, proposes to allow the post office to also offer reloadable prepaid debit cards, mobile transactions, domestic and international money transfers, savings accounts, check cashing and small loans.
Different political philosophies may also explain Sanders and Clinton's contrasting positions on means testing. Sanders proposes free education at public colleges and universities for billionaires and paupers alike. Clinton disagrees. She finds it ethically offensive to require taxpayers to foot the college tuition bill for those who can afford to pay. "I disagree with free college for everybody. I don't think taxpayers should be paying to send Donald Trump's kids to college," she has said several times during the campaign. As for those who can't afford to pay full fare, she notes that her education plan "makes everybody put some skin in the game."
Hillary has the support of most economists. Twenty-two selected by NPR's Planet Money "from across the political spectrum" turned thumbs down on Bernie's proposal. 2007 Nobel Laureate Eric Maskin spoke for most of his profession, " Many students can afford to pay a considerable amount toward their higher education. It is wasteful to give them a free ride."
For Sanders, programs designed to help only those in severe economic distress save taxpayers money but the savings are achieved at a great moral and social cost. Means testing imposes a considerable and often humiliating burden on families to prove their dire straits, not to mention an avalanche of paperwork and significant overhead expense. He would also note that programs that involve means testing also tend to have a bumpier ride and shorter life expectancy than universal programs. Consider the divergent past, present and future of Medicare and Medicaid.
Sanders and Clinton's proposals for health care reveal similar ideological/strategic differences. Both accept that Obamacare has extended health insurance to tens of millions of people. Clinton believes we can get to universal health care by further expanding Obamacare. Sanders disagrees. He considers the foundation of Obamacare--a network of increasingly concentrated private profit oriented insurance companies--an insurmountable obstacle to achieving universal, affordable health care.
With massive subsidies, the Obamacare exchanges have extended health insurance to millions. But health insurance does not necessarily translate into access to health care. Nearly a quarter of all non-elderly adults are underinsured, nearly double the rate in 2003. As a result, almost half go without a doctor's visit, medical test, or prescription due to cost. Under Obamacare the average deductible for families with a silver plan is about $6000 and out of pocket costs for co-payments and deductibles can be as high as $13,200. Dr. Robert Zarr, President of Physicians for National Health Program (PNHP) observes, "In short, under the new health law we're witnessing a dramatic acceleration of the trend of shifting more and more medical costs onto the shoulders of patients and their families, even as medical costs and premiums rise and as private health insurance companies reap record profits."
Government spending currently accounts for over almost two thirds of US health care spending when we take into account tax expenditures. As Dr. David Himmelstein, cofounder of Physicians for National Health Program points out, "We already pay for national health insurance but we don't get it."
Bernie proposes a dramatic structural change--a single non-profit insurance company, Medicare for All--that would provide free health care without deductibles or copays negotiate prices with a pharmaceutical industry that boasts a profit rate five times higher than that of the rate of the median Fortune 500.
Unlike in the debate involving free tuition, where both sides agree that sufficient public money exists but disagree on its appropriateness, deep and often-vehement disagreement exists about the financial impact of Bernie's health proposals. Critics estimate savings from reduced overhead and lower drug prices to be only a fraction of those projected by Sanders supporters. But again, the back and forth is readily available for those wanting to make their own decisions.
Sanders envisions a government role not only as insurer but also as a direct provider of health care. His vehicle for this is the government financed and operated Veterans Administration (VA). Most of those reading this will be surprised because of the scandals regarding long wait times. But these are problems of access, not quality. Many independent studies of the VA here and abroad found it one of the most effective and lowest cost medical systems in the US. Its long-term care model allows it to profitably focus on prevention. Salaried doctors allow it to avoid a fee for service model that encourages waste. And its pioneering information technology allows for data gathering and sharing that reduces medical mistakes and identifies areas for improvement.
Sometimes the differences between Clinton and Sanders are more quantitative than qualitative. Sanders pushes the envelope (break up the banks in a year, require no copays or deductibles for health care). Clinton is far more cautious. Bernie would invest $1 trillion over 5 years on infrastructure. Clinton's budget calls for $250 billion. Bernie advocates raising the federal minimum wage to $15 an hour. Clinton proposes $12.
Clinton has criticized many of Bernie's proposals as "pie in the sky", comparing them to what she views as her own more pragmatic and politically feasible plans. I suspect Bernie would concede that Clinton's proposals would be easier to enact, although he could make a powerful argument that even a modest proposal is highly unlikely to receive a hearing in a Republican Congress.
"Whatever policy differences exist between Hillary and Bernie pale into insignificance next to the Grand Canyon-wide chasm dividing Democratic and Republican candidates."
But Sanders may well see a need for proposals commensurate with the scale of the problem. He raises the question, "What do we want?" which then leads to the question, how do we get there? Clear ambitious goals set the terms of the debate. The conversation tends to focus on whether we can achieve these goals and even more challenging, how we might do so. Should we break up concentrated economic power and if so, how can we? Should we once again make public higher education free and if so how can we? Should we make health care universally accessible and affordable, and if so, how can we? Political negotiation will undoubtedly restrain lofty ambitions but recent experience should have taught Democrats that compromising at the outset often results in even more compromised outcomes.
Whatever policy differences exist between Hillary and Bernie pale into insignificance next to the Grand Canyon-wide chasm dividing Democratic and Republican candidates. While Sanders and Clinton debate how far and fast to raise the federal minimum wage, Republican candidates insist on a freezing it at the current $7.25 an hour. While Bernie and Hillary debate whether tuition should be free for all, Republicans continue to slash state and federal spending on higher education. While Sanders and Clinton debate whether Dodd-Frank is sufficient to curb financial predation Republicans prefer to get rid of Dodd-Frank entirely.
As the Democratic primary campaign moves into the homestretch, the media will focus even more narrowly on candidate miscues, delegate counts, new polls and intra party maneuvering. That is inevitable. But perhaps we can pause to applaud the nature and level of the policy debate so far. And thanks to the wonders of the internet, enterprising citizens can access both sides of those debates, tap into some of the best thinking about what can and should be done to address central problems, and make up their own minds.
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Why Climate Activists Should Care About Greece
After months of conflict and a marathon 16 hours of negotiations on Sunday, Greece's Prime Minister Alexis Tsipras and the Troika reached an agreement on the country's future: a third bailout and a distant promise of debt restructuring in exchange for draconian austerity measures, deregulation and creditors' strict control over nearly ever aspect of the Greek ec
Jul 15, 2015
After months of conflict and a marathon 16 hours of negotiations on Sunday, Greece's Prime Minister Alexis Tsipras and the Troika reached an agreement on the country's future: a third bailout and a distant promise of debt restructuring in exchange for draconian austerity measures, deregulation and creditors' strict control over nearly ever aspect of the Greek economy. Now, tail between his legs, Tsipras is returning to Athens in attempt to pass the deal through a hostile parliament.
The situation is a far cry from the triumph of Tsipras and Syriza's historic victory in late January on the promise of ending austerity. It also stands in stark contrast to the mood in Greece the weekend before last, when -- defying even Syriza's own predictions -- a remarkable 61 percent of the country rejected creditors' terms in a popular referendum.
The Financial Times has called the deal now on the table the "most intrusive economic supervision program ever mounted by the E.U.," the result of -- as one senior E.U. official said -- the "mental waterboarding" of Tsipras and the Greek negotiating team. Against two separate mandates of the Greek people, the first in Syriza's election and the second in the oxi ("no") vote last weekend, Tsipras, backed into a corner, brought a capitulation to the negotiating table that would see Greece remain in the Eurozone and accept another round of deep cuts to pensions and public services, further privatization, and even a scale-back of the modest reforms Syriza's government has been able to implement thus far. What the Troika eventually accepted was harsher still, involving scrupulous control over Greek finances and an effective ceding of the country's sovereignty.
As many have commented, the creditors might be cutting off their nose to spite the European project's face. Some of the world's leading economists have issued indictments of austerity and the creditors' bravado: "Capital in the 21st Century" author Thomas Piketty wrote an open letter to German chancellor Angela Merkel urging a "humane rethink of the punitive and failed program of austerity." Paul Krugman and Joseph Stiglitz each voiced their support for a "no" vote in the referendum, and even the International Monetary Fund has been quietly prodding Merkel's camp to back down on purely pragmatic grounds. "There are some divisions amongst the creditors that are well known," wrote economist James Galbraith, "But they're all variations on the theme of insular, sheltered, cloistered people who do not understand what is happening in Greece and do not know the economics."
In a showdown as political as it is economic, the experts and the people alike are lining up against the interests of capital -- a situation that should sound familiar to those also following the climate movement.
Climate activists are plenty used to decision-makers flouting established fact -- prioritizing short-term political and financial gain over long-term sustainability. Austerity has failed Greece and, ultimately, will fail Europe. Climate change will fail us all. Still, the connections between the climate fight and the one waged in Brussels these past several months might not seem obvious. Grasping the web of relationships between the European Central Bank, IMF, European Commission and Greece, the necessary historical context of the last several years, and the divisions within Syriza in Greece requires a serious investment of time for those not already well-versed in Eurozone politics. Even without a nuanced understanding of these relationships, however, there are important lessons for climate activists to draw from recent events in Europe.
Around the time of the referendum, Daniel Aldana Cohen did an excellent job mapping out the climate politics of what's happening in Greece and providing some cogent take-aways for climate activists. Pointing out Germany's pioneering role in prioritizing publicly-funded clean energy production and enforcing austerity in southern Europe, he writes, "The European Union, with Germany its most powerful member, sends a similar message: pro carbon reductions, friendly to austerity, prepared to enforce intense internal stratification, and suffering, to keep the current elites in power." Last month, it was Merkel who announced the G-7 nations' commitment to phase out fossil fuels by the almost laughably far-off date of 2100. But at what cost? It's possible to celebrate the movement-triggered sea change this announcement represents and denounce austerity, while supporting a democratic end to the fossil fuel economy.
The climate movement itself is premised on the idea that there is -- contra Margaret Thatcher -- an alternative to the impending, catastrophic doom of runaway global warming. Earlier this year, Syriza offered a popular alternative to the crippling austerity wrecking Greece and the corrupt New Democracy government failing to meet its people's basic needs. Syriza was attacked so viciously by creditors precisely because of the challenge that it posed for imagining a new and more democratic Europe free of austerity -- especially against the backdrop of rising, egalitarian populist parties like Spain's Podemos.
Using Angela Merkel and this week's events as crude metrics, it might actually be more feasible to imagine multilateral action on climate change than an end to austerity. The trouble will be getting what's needed: both. With everyone from Mitt Romney to the World Bank to Goldman Sachs aligning around the need for some loosely defined "climate action," an easy way out on climate that keeps control of the economy firmly in the hands of a 1 percent might well present itself in the next few years. Building and, notably, defending a popular alternative to that -- one bolstered by an inclusive, populist movement -- will be a battle no less uphill than the one Greece faces now.
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Caught Between 'Grexit' and 'Hell No' -- Greece Submits To Austerity's Knife
As Syriza-led government lobbies for support of its latest proposal, few envy position of leftwing government that stood up to Europe's financial elite
Jul 10, 2015
After submitting a proposal for consideration by foreign creditors overnight, the Greek government of Alexis Tsipras on Friday presented the plan to a full meeting of Parliament, in hopes of securing backing for a plan that would keep Greece in the eurozone by exchanging long-term debt relief and further financial assistance for a new set of of harsh austerity programs and conditions.
| Tweets from https://twitter.com/commondreams/lists/greek-crisis |
"We are confronted with crucial decisions," a government official quoted Tspiras as telling Syriza lawmakers during the morning session. "We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone."
While acknowledging the plan is not ideal, he said: "We are all in this together."
The EUR53.5 billion plan--which calls for surplus budgets, cuts to pensions, controversial tax increases, and further privatization of industries and assets--looks much like a similar proposal that was put to a vote and rejected by Greek voters on Sunday, but includes important differences when it comes to the prospect of debt relief and includes longer pay-off periods. The Guardian looks at the details of the plan here.
Though market forces were responding positively to the proposal and French President Francois Hollande was among European leaders expressing optimism for an agreement as he called Greece's plan "serious and credible," voices and political forces on the left in Greece are expressing strong criticism of the deal.
Greek Energy Minister Panagiotis Lafazanis, who belongs to the hard left wing of the Syriza coalition, said the conditions of the deal are simply "not compatible with the SYRIZA program." As of Friday morning, however, it was unclear how angered party members would ultimately vote. "We will take it step by step," he said.
Looking at the deal from the outside, Nobel-winning economist Paul Krugman, in a blog post on Friday morning, argues that with the Troika "still demanding a rising primary surplus over time, and balking at top line debt relief that might at least offer a clear marker of progress," the deal that Syriza has presented is only putting off for now, what will become unavoidable later. "If those are the requirements for Greece to stay in the eurozone," Krugman predicts, "Grexit is inevitable."
In addition to those on the left who expressed criticism of the deal put forth by the Syriza leadership, many economists continue to believe that while painful, an exit from the eurozone would have been the better decision. Still other observers are making the case that the situation in Greece has become one for which no good solution--political or economic--exists.
As James Galbraith, economics professor at the University of Texas, told KPFA in an interview (audio) on Thursday, the Greeks have put the onus on foreign creditors to accept or reject their offer, but "[i]t's not going to be a good result no matter what happens." The choice, he said, "is between a bad result and a catastrophic one."
Responding to critics like Lafazanis, Galbraith acknowledged that opposition the proposal is a widely (and rightly) held position among a huge majority of the Greek people, as indicated by Sunday's referendum result. The Greek people, he said, "[d]on't wish to be bullied; don't want to have bad policies inflicted on them [by] the European leadership."
However, he continued, the government cannot just tell the EU and Troika members "to go to hell," because Greece, from the beginning of the crisis, "has been committed to paying its [debt] obligations--however odious and disagreeable they may be."
The crux of the situation, according to Galbraith, is that the only real political or economic leverage Greece has ever had against the European Commission, the IMF, and the ECB is the threat to leave the eurozone--but that this leverage is actually quite weak, because the political consensus within Greece, and the stated position of the Syriza government throughout the negotiations, has been to stay with the single currency.
As Alex Andreou, a writer and political commentator on Greece, put it in a tweet on Friday: "Some fellow Greeks seem to bemoan Tsipras not signing deal that existed only in their imagination. There was no right way. Don't you get it?"
And in a lengthier blog post--titled The Pantomime of the Greek Deal--Andreou explained:
Instant, dramatic, pantomime reactions of the type "Tsipras just destroyed Greece" and "Tsipras just saved Europe" are numerous and deeply unhelpful. He has done neither. This isn't a booing or cheering moment. He simply has tried to balance his two basic mandate commands to a. end austerity and b. stay within the Euro, which turned out to be pretty much mutually exclusive, in an ideologically propagated, German-controlled climate. As that became clear, one had to be prioritized over the other. It is fair to say that a shrewder assessment at the start may have revealed them to be mutually exclusive, but shoulda-coulda-wouldas are also not particularly constructive.
With the European Commission coming together in Brussels over the weekend to consider Greece's proposal, there remains much speculation about how events will unfold in the coming days.
In the streets of Athens on Friday, Guardian correspondent Angelique Chrisafis talked with 27-year-old Cristos, an engineer now employed at a cafe, who said that though he voted 'No' in the Sunday's referendum, he remains faithful in Tsipras and hopes that even with a new austerity package imposed, the Greek economy will begin to recover.
"I think everyone has always known that things were going to be very difficult now and in the coming years," he said. "The deal will be very difficult for us, but it's probably the best solution. Better a deal than no deal. I think our only chance is to continue on our road in the eurozone. The No vote was a way for Greeks to express their feelings to Europe, there's a certain happiness that the No vote has been heard. And it seems there has been an understanding that more should be put on the table for Greece, in the form of debt relief. There has been progress."
As for critical observers like Andreou, there also remains hope that the most recent developments have put Greece on stronger footing as it faces what comes next.
"My long term best case scenario would be Tsipras to make the deal, then start planning for an orderly and controlled Grexit and start working on convincing people that it is the right choice," he wrote. "My second best case scenario is Germany digging in its heels and refusing the deal. Painful, violent, but ultimately freeing Greece from bondage to pursue default.
Andreou concluded: "After decades of the wrong people succeeding from the wrong reasons, Greece was yearning for the right people to fail for the right reasons. I believe this is what has happened. I do not, for a moment, doubt this government's honesty or integrity and that is an important step forward, psychologically. I believe they have done the best that anyone could have, with honesty and--yes, at times--wide eyed naivete. I do not envy their task in the weeks and months to come, whatever it turns out to be, and I intend to fully support them in it."
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Yanis Varoufakis - Who Called Austerity "Fiscal Waterboarding" - Appointed Greek Finance Minister
Greece's new economic chapter begins as unrepetent bailout critic takes helm ahead of promised bailout re-negotiations–
Jan 27, 2015
As the Syriza Party took the helm of the Greek government in earnest on Tuesday, the Guardian newspaper described its selection of top cabinet ministers, announced by the new Prime Minister Alexis Tsipras, as "a formidable coterie of academics, human rights advocates, mavericks and visionaries."
Among the most discussed appointments to the more than 40-member cabinet was that of Yanis Varoufakis as Finance Minister. As both university professor and an outspoken public critic of the austerity-laden bailout program imposed from abroad, Varoufakis has been unrelenting in his insistence that painful cuts to social spending, tax avoidance by the rich, the privatization of key industries, and enormous debt payments should be supplanted by a new economic paradigm that will put the Greek people ahead of foreign creditors and elite interests.
Known for writing a daily blog and an influential Twitter feed which have both chronicled his critique of the Troika's assault on Greece, Varoufakis indicated on Tuesday that the leaders of the IMF, the European Central Bank, and the European Commission should not expect any erosions to his positions just because he will now be the chief negotiator with whom they must deal when it comes to debt restructuring and possible reforms to the bailout terms.
"The time to put up or shut up has, I have been told, arrived," he wrote on his blog early on Tuesday, just as the news broke regarding his new position in the government. "My plan is to defy such advice. To continue blogging here even though it is normally considered irresponsible for a Finance Minister to indulge in such crass forms of communication."
Meanwhile, in the international press, Varoufakis has been poked and prodded by the business pages--including Bloomberg, the Wall Street Journal, and others--over recent days in order to see what the man who once said the Eurozone was "like the Hotel California" and characterized austerity as "fiscal waterboarding" would do now that he's been given the keys to the Greek economy.
According to a profile in the Guardian:
John Maynard Keynes with a hint of Karl Marx is how one analyst described the self-proclaimed "accidental economist" who is now to become Greece's finance minister and a key negotiator with its international creditors.
With a typically literary flourish, he celebrated his party's victory by paraphrasing Welsh poet Dylan Thomas.
"Greek democracy today chose to stop going gently into the night. Greek democracy resolved to rage against the dying of the light," the Greek-Australian wrote on his blog.
In an interview with Channel 4's Paul Mason news just ahead of Sunday's elections, Varoufakis pledged that with Syriza in power--which they come to "reluctantly" and only in the name of public service, he said--the overall aim of their economic plan would be "to destroy the Greek oligarchy system" that played an outsized role in creating the current crisis.
"We are going to destroy," he said of the nation's wealthy elite, "the basis upon which they have built for decade after decade a system, a network that viciously sucks the energy and the economic power from everybody else in society."
According to a profile written by Peter Spence in The Telegraph, although Varoufakis is "obviously a man of the left," he is no "radical zealot" as some of his detractors on the right have described him. According to Spence:
Born in Athens in 1961, he moved to England to study mathematical economics at Essex. From there, he went on to earn his PhD in Mathematics and Statistics, taking university appointments at Cambridge, East Anglia, Sydney, and Glasgow.
He has since become a visiting professor at both of the University of Athens and the University of Texas. It is at the latter than he co-authored "A Modest Proposal for Resolving the Eurozone Crisis," along with prominent left-wing economist James Galbraith.
There is no question that Mr Varoufakis has an awareness of Greece's precarious situation. Speaking to Bloomberg TV after Syriza's win, he made it clear that there was "a deep sense ... of fear of what's coming ahead."
As Varoukis told Channel 4, the Syriza government has inherited a "poisoned chalice" from the elites of his own country and those abroad, both of whom have disregarded the needs of the Greek people.
Now, he says, he and his colleagues will do some of "the basic things" that others have not done. Asked what he would tell those sitting across from Syriza at the negotiating table in the weeks ahead, he answered: "It is time to speak the truth."
He said that Greece has no desire to leave the Eurozone, but said the EU must reform itself if it wants to survive. "You cannot have a monetary union," he said, "which pretends it can survive a major financial crisis simply by lending more money to the [weakest] countries on the condition they should shrink their economies."
As he explained to the BCC recently, "Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders, the Greek taxpayer."
He added, "What we've been having ever since is a kind of fiscal waterboarding that have turned this nation into a debt colony."
Now that he's become the nation's Finance Minister, Varoufakis told the readers of his blog on Tuesday, "Naturally, my blog posts will become more infrequent and shorter. But I do hope they compensate with juicier views, comments and insights."
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A May Day 2014 Lament for American Labor
Today, May 1, 2014, is International Labor Day. It is worth summing up how well American workers--and their unions--have fared over the past year; since the so-called economic recovery began in mid-2009; and for the recent decades preceding.
May 01, 2014
Today, May 1, 2014, is International Labor Day. It is worth summing up how well American workers--and their unions--have fared over the past year; since the so-called economic recovery began in mid-2009; and for the recent decades preceding.
What's happened to jobs, wages and incomes, health and retirement security, and other indicators of the quality of life for the more than 100 million non-supervisory wage and salary earners--the core of the working class in America--over the past decade and especially since 2009?
What a summary of the facts tell us is as follows:
While jobs have been created for managers, supervisors, and highly skilled business and technical professionals since 2009, job levels for the core of the American working class--the category of the more than 100 million 'Production & Non-Supervisory Workers'--is still 11 million below 2007 pre-recession levels. Manufacturing jobs are still 1.4 million fewer today than in 2007, and Construction jobs 1.3 million fewer.
The real unemployment rate in the US is approximately 14%, when the 'hidden unemployed' are added to the ranks of the officially declared full time unemployed (U-3) and underemployed (U-6) estimates. That's approximately 22 million still jobless after five years of so-called economic recovery.
The quality of job creation since 2009 has been extremely poor by past historical standards. The US is 'churning out' high paying-good benefit jobs for low pay, increasingly part time/temp (contingent) jobs, with few if any benefits. 79% of jobs lost during the recent recession paid more than $14/hr., while 58% of the jobs created since recession were low pay (less than $14 and with a median of only $7.69hr.)
While 5 million plus jobs have been added since the official 'end' of the recession in June 2009, more than 5 million have left the labor force or been unable to find work as new entrants--a 5+million 'in' and a 5+ million 'out' additional churn. As labor force participation has declined in general (from 66.2% to 62.9% since 2009), and has fallen especially rapidly for age groups 35 and below, previously retired workers are entering the labor force in record numbers as their savings are depleted and retirement benefits are being reduced. The fastest growing age groups entering the labor force are: age 65-69 (64% increase in participation), 70-74 (91%), and >75 (81%).
The US economy is not only churning out high pay for low pay, and labor force drop-outs for new hires, but is also churning non-union for union jobs, in the process reducing private sector unionization to historic lows not seen since the 19th century.
Union membership in the private sector has fallen to only 6.7% of the total labor force, or 7.3 million--down roughly 5 million since 1980 despite 45 million more wage workers having entered the labor force. And for the first time in decades, since 2009 union membership in the public sector has also begun falling since 2009, down by more than 2% points.
The US is experiencing a chronic long-term problem in the 21st century creating jobs sufficient to keep up with the growth of its population, a structural problem in the US economy that clearly pre-dates the onset of the latest recession. Since just 2009, the ratio of employed to the US population has fallen from 63% to 58.7%. The population is growing much faster than the economy can create jobs.
The US economy has developed a corresponding problem of inability to find jobs for the long term unemployed, whose numbers are growing as a percent of total jobless. The Employment to Population ratio has continued to decline through both recent recession and recovery, revealing a chronic structural problem of job creation in the US economy long term. The long term jobless as percent of total unemployed remains twice that (36%) of historical average (18%) today, five years into the recovery.
Income inequality is growing in the US not only because the rich are getting richer, but because the US working class is locked into stagnant wage growth (in best of times) or declining wage growth (in recession or slow growth times) for the past 30 years.
The real average hourly wage for the 100 million plus full-time employed core working class, adjusted for inflation, has declined despite nearly five years of 'recovery', from $8.86/hr. (adjusted in 1982-84 prices as per the US Government estimates) to $8.83/hr.
But when adjusted for the core working class as a whole--not just full time employed--the decline in core working class income since 2009 has been precipitous--(i.e. when adjusted further for the rise of millions more part time/temp workers, unemployed, for millions of workers leaving the labor force, for millions rise of workers on disability, for millions' expiration of unemployment benefits, and for workers' rising share of healthcare benefits costs and reductions of pension benefits). The adjusted decline is at least 15%.
Per US Government statistics (unadjusted per above), real median household income fell 4.1% under George W. Bush, collapsed by 9.6% since 2008 under Obama, recovering only 3.4% of the overall decline since 2012--i.e. a net loss of more than 10% since 2000.
The share of wages & salaries of total National Income has declined steadily for 30 years, from 55.6% in 1983 to 52.0% in 2007 just prior to the recession. It has continued to fall during the recession period, 2007-09, as well as during the post-2009 recovery, to 49.1% today.
Concluding Comments
Much has been written over the past year about the growing income inequality in America, and how the wealthiest 1% households, who almost exclusively derive their income from returns on capital (capital gains from stock & bond trading, foreign exchange & derivatives speculation, interest, real estate, rents, etc.), have accrued 95% of all the national income gains in the US economy since the June 2009 so-called economic 'recovery' officially began.
Liberal economists like Paul Krugman, Robert Reich, James Galbraith and others have been writing numerous books and countless newspaper columns on the subject of income inequality in general over the past year. They have finally discovered in recent years the sad fact of accelerating income inequality in America, a developing trend that has been in progress for decades, at least since the early 1980s.
But while liberal economists today are finally focusing on why and how the wealthiest 1% are accruing more for themselves, not enough attention has been paid to why and how more than 100 million working class households in America have been doing so poorly--and increasingly so--during recent decades and in particular during the most recent period, 2004-2014. Nor have mainstream commentaries offered much in the way of correcting the historic decline in American working class conditions. How to improve the latter is just as important as taming the runaway capital incomes of the rich and super-rich. But only tepid and conservative proposals are forthcoming thus far from the mainstream economic profession, proposals that are long term and 'safe' for the owners of Capital today and do not embarrass their political friends and benefactors.
That condition of the 100 million plus working families in America today, International Labor Day 2014, is as lamentable as the accelerating accrual of income and wealth by the 1% is disgusting. Of course, the two trends are not mutually exclusive but directly related. The rich and very rich are becoming super-rich and mega-rich in large part at the direct expense of the rest.
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