Solving the Demand-Side Problem

by: Matt Singer

Tue Aug 24, 2010 at 09:43:16 AM MST

Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments -- the missing ingredients for a strong economic recovery.

Many Democrats say the economy needs more stimulus. Business lobbyists and their Republican allies say it needs less regulation and lower taxes.

But here in the heartland of America, senior executives say neither side's assessment fits.

They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis.

This is a textbook case for Keynesian economics. Hilariously, though, the Post makes the claim that this isn't really about stimulus.

This isn't rocket science, though. I've gotten more cautious in my spending. I'm working to pay down my debt. So are millions of others. But if we want to figure out what it would take for me to drive fewer dollars into savings or paying off debt, ask me or the millions of other people out there who are engaging in this altered behavior.

More money in the economy would do it. Almost certainly. And there are ways for either the Fed or the Congress to inject more money into the economy. In fact, they could do it by borrowing the money that consumers like myself are putting back into savings.

If our economy comes back in an altered state, that's good. If we have more money going to CSAs, organic farmers, and gardening supply companies and tool libraries and less going to underwrite crap food chains, that's awesome. If we have more money going into savings and less into purchases of unnecessary crap, that's awesome. Economic transitions are, of course, painful. But we don't need to insist that this one be more painful than necessary.

A call for "small-government egalitarianism" from an unusual place

by: Jay Stevens

Tue Jul 13, 2010 at 08:39:25 AM MST

This policy is typical of the way the federal government does business. In case after case, Washington's web of subsidies and tax breaks effectively takes money from the middle class and hands it out to speculators and have-mores. We subsidize drug companies, oil companies, agribusinesses disguised as "family farms" and "clean energy" firms that aren't energy-efficient at all. We give tax breaks to immensely profitable corporations that don't need the money and boondoggles that wouldn't exist without government favoritism....

All of this ought to be grist for a kind of "small-government egalitarianism," in the economist Edward Glaeser's useful phrase, that seeks to shrink government by attacking Washington's wasteful spending on the well-connected....conservatives need to recognize that the most pernicious sort of redistribution isn't from the successful to the poor. It's from savers to speculators, from outsiders to insiders, and from the industrious middle class to the reckless, unproductive rich.

The Corner's Ramesh Ponnuru adds, "a reform that made the federal government more redistributive, but smaller and more efficient, would be worthwhile."

Uh, yes, it would. And you can kiss goodbye those cushy box seats in a conservative think tank they were warming for you fellas.

Seriously, this is essentially what I was ranting about the other day. Douthat does try to bring his argument back to conservative talking points now and then -- for example, he does rail against liberals' inclination to want to raise taxes on the rich, although I'd argue that we want to level taxes on the rich, simply ensuring that they pay the tax rates assigned to them. No loopholes, no tax havens, and their income taxed at the same rates as, say, mine.

In any case, it's nice to see conservatives understand that income inequality exists, and that our economic system unfairly favors the wealthy. Usually do conservatives not only care (if they recognize this unfairness), they do everything they can to rig the system for the rich.

Deep thought for the day: the Pepsi edition

by: Jay Stevens

Wed Apr 14, 2010 at 11:10:35 AM MST

More and more, businesses and businesspeople talk about their rights.

It seems, though, that organizations and individuals that focus more on their responsibilities and less on their rights tend to outperform.

You're responsible to your community, to your customers, to your employees and to your art. Serve them and the rights thing tends to take care of itself.

Another thought: If I worked at Pepsi, I'd be actively lobbying for the obesity sweet soda tax (a penny an ounce) being proposed in New York. Instead, in a no-surprise knee jerk reaction, almost everyone in the industry is lobbying like crazy to stop it. This is dumb marketing.

The benefit of a tax is that it affects you and your competitors at the same time, so you all benefit from doing the right thing, as opposed to having to compete against someone who doesn't care as much as you do.

Once people realize that excessive use of your product makes them sick and then die a long and painful death, it's probably time to stop lobbying and time to start doing something about it. This industry should stop thinking it is in the corn syrup delivery business (which brings nasty side effects along with it) and start focusing on delivering joy in a bottle. Lots of interesting ways to do that without giving up profits.

Speaks directly to the big energy industries banking the climate change denial industry.

Of course, conservative Christians aren't a profitable industry - well, not overtly so - and their goal isn't expanding the bottom line, but there is a definite lack of interest in responsibility and community among Tea Baggers and Bathroom fear mongers.

Chamber of Commerce ready to benefit from Citizens United

by: Jay Stevens

Tue Mar 09, 2010 at 12:55:19 PM MST

The U.S. Chamber of Commerce is building a large-scale grass-roots political operation that has begun to rival those of the major political parties, funded by record-setting amounts of money raised from corporations and wealthy individuals....

The chamber's expansion into grass-roots organizing -- coupled with a large and growing fundraising apparatus that got a lift from Supreme Court rulings -- is part of a trend in which the traditional parties are losing ground to well-financed and increasingly assertive outside groups. The chamber is certainly better positioned than ever to be a major force on the issues and elections it focuses on each year, analysts think.

It figures that the Chamber of Commerce is there, hat outstretched, to catch the falling dollars from huge multinational corporations that Citzens United unloosed on our political system. Not that there's been much doubt about the CoC's mission. It's certainly not about the folksy "main street" businesses that it pretends to represent. And it's certainly not about workers or employees, taxpayers or citizens.

Besides the political system itself and your citizen, the big loser in this has got to be small businesses, as the ever-increasing payouts from big corporations dictates the policies, strategies, and efforts of chambers of commerce across the country.  Run a small business, and happen to be worried about the long-term effects of climate change? F*ck you! F*ck your kids! The fossil fuel industry's shelling out big bucks for the chamber to carry its water. You don't matter.

By the way, when the CoC can organize a "grassroots" campaign, you know that word has lost its meaning.

Robbing the poor to feed the rich

by: Yellowstone Kelly

Tue Feb 23, 2010 at 07:51:17 AM MST

It has legs.

Forty-five fellow R's, including twenty-one Republican legislator wannabes have signed on to it.

Here it is:

Oregon just raised it taxes on businesses. And Senator Jeff and 44 others say we need to advertise in Eugene and Ontario and Hines and elsewhere and entice businesses there to come to Montana because of our business-friendly tax climate.

To his and the R's credit, the rhetoric is, well, rhetorical:

Essmann said Oregon had taken a "higher tax path" to the detriment of good business. And while Montana's own tax system isn't perfect, he added, it does offer a favorable tax policy when compared to Oregon.

Among the advantages, Essmann named Montana's top marginal income tax. He said it helps small businesses retain capital and reinvest it, making it possible to expand and hire new employees.

"We need to leverage every competitive advantage we can," Essmann said. "We think now is the time, when we have a need for more jobs - and with small business in Oregon feeling under duress - to advertise the availability and the quality of our work force, and have Oregon businesses take a look."

So, what's going on? Jeff and his fellow travellers might need to review how the higher tax path was accomplished. By a vote of more than half of the state's registered voters.

Actually, there were two initiatives that passed. The Montana R's conveniently ignore the fact that the Legislature approved the tax increases last spring. Irate Oregonians took matters into their own hands and gathered enough signatures and place the tax increases on the ballot. By gum, we'll show 'em. Measure 66, which raises taxes on households earning $250,000 or more, passed by 54 percent. Measure 67, which increases corporate levies, passed with 53 percent.

Those damned, pesky voters.

So, now, let's see, Oregon bad. Montana good.  

Defending the status quo

by: Jay Stevens

Thu Feb 04, 2010 at 15:14:09 PM MST

Let's start with this post over at the Montana Main Street blog:

I don't know who originally coined the axiom, "First, do no harm," but that is what the government needs to do in order to get us even close to thinking about an economic recovery. As Congress debates and the President presses for sweeping changes in health care, climate change (cap & trade), card check, different tax rates for investors, different rates for income tax payers, death tax revisions, huge financial and banking reforms, and record deficit spending, my question is this - who would want the risk of hiring new people in a time of record uncertainty? And not just economic uncertainty, but uncertainty largely created by government officials and regulators.

It's not an easy time to be a business owner right now, especially a small business owner. I think most are thinking they are safer just treading water than trying to expand, and it's due in large part to many things being debated in Congress right now. If we want to get our people back to work, we must first understand what's been keeping businesses from hiring new people. Tax credits aren't going to get people back to work in any large numbers.

Jon doesn't come right out and say it, but it's the obvious rationale for the policy of status quo - which means deregulation, corporate subsidies and tax breaks, etc & co. Of course, the kicker is this: the crises that are causing so much instability are the targets of the policies Bennion is singling out. The global financial crisis. Global warming. The health care crisis. All of which are the direct results of the kind of pro-corporate status quo that the Montana Main Street blog is paid to represent.

But Bennion is right. These problems aren't going to be solved with your usual run-of-the-mill tax credits. We need something else that address the roots of the crises that face us.

Which brings me to Cory Pein's profile of economist Samuel Bowles:

"Inequality," she says, "really holds us back."

Bowles offers a key reason why this is so. "Inequality breeds conflict, and conflict breeds wasted resources," he says.

In short, in a very unequal society, the people at the top have to spend a lot of time and energy keeping the lower classes obedient and productive.

Inequality leads to an excess of what Bowles calls "guard labor." In a 2007 paper on the subject, he and co-author Arjun Jayadev, an assistant professor at the University of Massachusetts, make an astonishing claim: Roughly 1 in 4 Americans is employed to keep fellow citizens in line and protect private wealth from would-be Robin Hoods.

The job descriptions of guard labor range from "imposing work discipline"-think of the corporate IT spies who keep desk jockeys from slacking off online-to enforcing laws, like the officers in the Santa Fe Police Department paddy wagon parked outside of Walmart.

The greater the inequalities in a society, the more guard labor it requires, Bowles finds. This holds true among US states, with relatively unequal states like New Mexico employing a greater share of guard labor than relatively egalitarian states like Wisconsin.

The problem, Bowles argues, is that too much guard labor sustains "illegitimate inequalities," creating a drag on the economy. All of the people in guard labor jobs could be doing something more productive with their time-perhaps starting their own businesses or helping to reduce the US trade deficit with China.

And think off all the service workers laboring to justify the inequities of our system. Like the Montana Main Street blog. Why, Fox News, too, is essentially "guard labor," isn't it? Working tirelessly to protect the status quo and its economic inequities, producing nothing of actual value?

Bowles' suggestion is a one-time sum of $250,000 for every American when they turn 18, allowing them to go to college or start a business and break individuals out of the rut of poverty. Not sure if I'd go there, but a nice alternative would be to give generous tax breaks to those in the lower strata of tax brackets while levying higher taxes on those that earn more.

Or sumpin...

You should see what words I mouthed...

by: Jay Stevens

Thu Jan 28, 2010 at 09:53:29 AM MST

"Last week, the Supreme Court reversed a century of law to open the floodgates for special interests- including foreign corporations- to spend without limit in our elections," Obama said. "Well I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. They should be decided by the American people, and that's why I'm urging Democrats and Republicans to pass a bill that helps to right this wrong."

Justice Alito was seen mouthing the words, "not true," during this passage. Reaction from the right is hilarious.

Sara Palin: "Obama was "embarrassing our Supreme Court. ... T]his will be the huge take-away moment." The Corner's [Bradley Smith called it "either blithering ignorance of the law, or demagoguery of the worst kind."

Politico's Randy Barnett:

In the history of the State of the Union has any President ever called out the Supreme Court by name, and egged on the Congress to jeer a Supreme Court decision, while the Justices were seated politely before him surrounded by hundreds Congressmen? To call upon the Congress to countermand (somehow) by statute a constitutional decision, indeed a decision applying the First Amendment? What can this possibly accomplish besides alienating Justice Kennedy who wrote the opinion being attacked. Contrary to what we heard during the last administration, the Court may certainly be the object of presidential criticism without posing any threat to its independence. But this was a truly shocking lack of decorum and disrespect towards the Supreme Court for which an apology is in order. A new tone indeed.

This is certainly somewhat different than previous outcry from conservatives about "judicial activism," eh? Especially when Citizens United was an actual example of judicial activism, where conservative SCOTUS justices saw fit to greatly expand the scope of a case brought before them to undo a century of precedent concerning the regulation of corporate money and politics. And as former SCOTUS justice, Sandra Day O'Connor, noted, Citizens United poses more of a threat to the reputation, independence, and efficacy of our judicial system than any paragraph in a speech ever could:

She added that last week's decision was likely to create "an increasing problem for maintaining an independent judiciary."

"In invalidating some of the existing checks on campaign spending," Justice O'Connor said, "the majority in Citizens United has signaled that the problem of campaign contributions in judicial elections might get considerably worse and quite soon."

But based on previous rulings by the SCOTUS' conservative majority - from Bush v Gore to rulings on voter ID laws to Citizens United - it appears that some justices think the law should align with corporatist Republican electoral strategy by discouraging voters from going to the polls and removing roadblocks on corporations to allow them to dictate policy.

Finally! Corporate America gets a voice in politics!

by: Jay Stevens

Fri Jan 22, 2010 at 14:12:26 PM MST

A lobbyist can now tell any elected official: if you vote wrong, my company, labor union or interest group will spend unlimited sums explicitly advertising against your re-election.

"We have got a million we can spend advertising for you or against you - whichever one you want,' " a lobbyist can tell lawmakers, said Lawrence M. Noble, a lawyer at Skadden Arps in Washington and former general counsel of the Federal Election Commission.

The majority opinion essentially found that corporations - with the rights of "legal personhood" - enjoyed extensive First Amendment rights, utterly oblivious to the to the fact that corporations, well, aren't people.

In his dissent (pdf), Justice Stevens questioned the wisdom of granting corporations such sweeping individual rights, noting that the majority, in ruling the case this way broke with a hundred years' of precedent.

In the context of election to public office, the distinction between corporate and human speakers is significant. Although they make enormous contributions to our society, corporations are not actually members of it. They cannot vote or run for office. Because they may be managed and controlled by nonresidents, their interests may conflict in fundamental respects with the interests of eligible voters. The financial resources, legal structure, and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process. Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races.

Dahlia Lithwick:

But you can plainly see the weariness in Stevens eyes and hear it in his voice today as he is forced to contend with a legal fiction that has come to life today, a sort of constitutional Frankenstein moment when corporate speech becomes even more compelling than the "voices of the real people" who will be drowned out. Even former Chief Justice William H. Rehnquist once warned that treating corporate spending as the First Amendment equivalent of individual free speech is "to confuse metaphor with reality." Today that metaphor won a very real victory at the Supreme Court. And as a consequence some very real corporations are feeling very, very good.

(Check out SCOTUSblog analysis by Lyle Dennison of the implications on corporate personhood Citizens United v. FEC has.)

The New York Times:

Congress and members of the public who care about fair elections and clean government need to mobilize right away, a cause President Obama has said he would join. Congress should repair the presidential public finance system and create another one for Congressional elections to help ordinary Americans contribute to campaigns. It should also enact a law requiring publicly traded corporations to get the approval of their shareholders before spending on political campaigns.

These would be important steps, but they would not be enough. The real solution lies in getting the court's ruling overturned. The four dissenters made an eloquent case for why the decision was wrong on the law and dangerous. With one more vote, they could rescue democracy.

That's right. The New York Times is claiming our democratic system is at stake with this ruling.

The paper is absolutely correct. Already corporations control our political systems; this ruling rolls back the meager protection we've had from mega-capital a hundred years. It's a raw piece of judicial activism, a blow against equality and economic egalitarianism, and will further erode whatever structures of meritocracy existent in the county, replacing it with a kind of plutocratic aristocracy, whose coats of arms will be company logos.

Oh, and the ruling will probably benefit Republicans in the 2010 midterms. But, as is too often the case with the SCOTUS' conservative majority, that's not a bug, that's a feature.

On the demise of Wyden's Free Choice Act

by: Jay Stevens

Wed Oct 07, 2009 at 05:46:47 AM MST

But the drama came late in the evening. About one in the morning, Wyden's Free Choice Act came before the committee. But it never came up for a vote.

Instead, Max Baucus effectively ruled it out of order. The reason? It didn't have a full CBO score. This came as a surprise to Wyden and his team, who'd gotten the amendment scored by the CBO, and had been in endless negotiations with Baucus, the White House, employers, and labor over the past week. If the score was in fact partial, as Baucus and Conrad claimed, you'd think someone might have mentioned it. No one did.

But suddenly, in the wee hours of Friday morning, the chairs of the Finance and Budget Committees were explaining that the amendment lacked a valid score. ANde an amendment without a valid score is "out of order." Wyden was left with little choice but to withdraw the amendment. It was not deliberative democracy at its finest. But it served its purpose: it killed the amendment.

Klein does a great job of explaining Wyden's amendment and its importance to reform, but here I'll just say it would have given all Americans full access to the health insurance exchange, the place that allows consumers to buy a policy that falls under the restrictions of newly enacted community standards - no discrimination against preexisting conditions, etc - as well as the public option, when that's passed. If you work for a big company and you don't like your insurance, under Wyden's amendment you could ditch it and get something better.

With the amendment scratched, however, you're stuck with what you have. Reform will not touch you in any significant way.

For those of us who have been watching the legislative "process" unfold, that's not really much of a wrinkle, right? We've seen how Senators, time after time, cut down legislation that would open up the market to real competition, real choice, and access to effective and affordable insurance for fear of injuring the private insurance industry. Old hat, eh?

But the surprise in this particular amendment's demise is who opposed it:

The proposal was doomed by the joint opposition of businesses and labor. Businesses didn't like it because they lose control over their employees' health benefits. Labor groups didn't like it because they lose control over their members' health benefits. That's not an entirely selfish concern: It is easier to bargain on behalf of your workers or members if they have no other options, and thus are guaranteed customers for the insurer. But it is a short-sighted concern. It means the protection and preservation of a system where employers offer us one or two health-care choices, which may or may not be of high quality, and which will almost certainly dissolve if we leave or lose that job. It also means a system in which insurers compete less, and costs are further hidden from consumers, and businesses continue to bargain on their own.

One of the biggest mysteries to me swirling around healthcare reform is, where were the major corporations? Of all the stakeholders in healthcare reform, it's America's business community that stands to gain the most from good, comprehensive healthcare reform. (Okay, maybe the uninsured and the ill stand to gain more from an individual's point of view...) Under, say, a single-payer healthcare system, the burden for providing employee health benefits would - poof! - vanish. Sure, there'd be taxes to pay for the system that business would necessarily share, but it'd be no doubt considerably less than what they're dishing out now.

Of course, the present character of reform has removed them from the debate. Their beef isn't with the uninsured. It's with costs. They're there to shoot down anything that might steal from their bottom line - an employer mandate, say - but sitting quietly otherwise. And why not? For most of them, as with most of us, this bill will change the present healthcare status quo not one bit. Killing Wyden's amendments ensures that.

As for the unions, well they're looking out for their members. Period. A robust public option open to all reduces their bargaining power for their members.

It's frustrating to watch all this, isn't it? To get something good and comprehensive, like a single-payer system say, or a public option open to all, would require compromises from deep-pocketed groups to allow legislation to pass that would work against their interests. In short, they'd have to support something that's good for the country and its citizens, but bad for them in the short term, which takes courage.

I'm not saying it isn't possible. But under the conditions that this debate started - with a complex array of hodge-podge proposals and counter-proposals born out of the lukewarm pot of compromise with disparate and competing ideologies - there never was something to get excited, or courageous, about.

And thus died the Wyden amendment in the early morning hours in a Capitol Hill committee room late last week.

How about a "green" New Deal?

by: Jay Stevens

Mon Mar 24, 2008 at 12:56:13 PM MST

Given that the council has been an active lobbyist against climate change legislation since the mid-1990s and is extensively funded by Exxon, you'd expect a doom-and-gloom study about the cost of battling climate change. You'd be right.

I haven't seen the actual report, but I suspect it leaves out the already existing economic impact of having a fossil-fuel based economy. Heck, the Iraq War itself is costing taxpayers - what? -- $12 billion a month? And then there's environmental cleanup costs associated with drilling and mining for coal and oil, the cost of polluting, the billions poured into infrastructure supporting an oil-burning economy, and the subsidies for Big Energy.

And I suspect not a word was penned about the economic impact of not reacting to climate change, a hint of which we already see here in Montana as our wildfire fighting budget spins out of control, hampering the Forest Service's ability to actually manage our country's forests.

Thorning and the American Council for Capital Formation are defending existing and obsolete industries from extinction, and drumming up support to halt meaningful innovation, progress, and long-term sustainability of our environment and, yes, our economy.

Class warfare and the redistribution of income

by: Jay Stevens

Fri Mar 07, 2008 at 11:01:27 AM MST

What's most striking however is the income and tax shares. The IRS report shows that the Fortunate 400 now control 1.15% of the nation's income - twice the share they controlled in 1995. Over the same period, however, the average income tax paid by this same group has fallen from 30% to 18%. That's due mainly to the Bush tax cuts.

Yearning for a little "creative destruction"

by: Jay Stevens

Thu Feb 28, 2008 at 08:05:58 AM MST

Consider: Alternative energy produces far less emissions. That means it's clean. Less pollution. Burning coal puts mercury, sulfur dioxide, and nitrogen oxide (and loads o' carbon dioxide) into the air. Solar puts...nothing...into the air. Alternative energy is cheaper, especially for the consumer. Producing and building alternative energy sources has an almost minimal impact on our environment. There are no "external costs" -- like waging war in the Middle East - for alternative energy, so it'd cost the taxpayer less in the long run, too.

And best of all, there's a whole sh*tload of money to be made in the new alternative energy economy.

Baucus softens rhetoric on trade

by: Jay Stevens

Wed Oct 03, 2007 at 07:19:53 AM MST

Baucus' four "areas where changes must be made":

First, the federal government must take up its responsibility in the face of globalization, he said. That includes enforcing trade agreements, protecting consumers and providing assistance to workers who lose their jobs or are otherwise affected by global trade.

This fall, his panel will take up bills on trade enforcement and trade adjustment assistance, he said.

Second, the U.S. must multiply its successes. He cited a May 10 bipartisan agreement to require environmental and labor norms in trade deals and said skeptics must be shown that those provisions work. He also said tariffs should be adjusted so that everyday items like socks and T-shirts are taxed less than luxury goods. The U.S. must build its trade relations with China, he said.

"We do have real problems with China," he said. "But we cannot disengage."

Third, the U.S. must focus on its strengths and needs. The U.S. should pursue trade agreements with countries such as Taiwan, Indonesia, Japan and India. He advocated for an intellectual property agreement and elimination of tariffs on environmental goods and services.

Lastly, the U.S. must rethink its policies to predict and embrace change, he said, rather than react to it.

There's a lot left out, of course. Is fast-track off the table? Will the international trade bodies - WTO, e.g. -- have democratic representation? Can we repeal existing, bad agreements, and refashion them into fair trade agreements?

We folks on the left aren't against "globalization," we're against world corporatization, which is what you get under our current trade policies. We prefer fair, not "free," trade. Trade that benefits workers everywhere, not just the bottom line of a few Fortune 500 companies.

It's good to hear Baucus soften his approach to trade. Let's see if good legislation follows.

Preserve Sarbanes-Oxley

by: Jay Stevens

Sun Jun 10, 2007 at 21:35:52 PM MST

(Sorry about that: the Iraq War and the administration's extra-legal activities are what got me started blogging, and I'm only now catching up on all the rest of the inequities, indignities, and other miscellaneous outrages of American politics. It's going to be a long process.)

Sarbanes-Oxley is legislation that was passed shortly after the Enron et al. scandals and "establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms, and preserving it is crucial in ensuring that big business executives stay within the law, and are appropriately accountable to shareholders and employees."

Sounds reasonable, right? So, what's the fuss?