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“The Big Shrug”: A Combination Of Complacency And Fatalism By Fiscal Policy Makers That Nothing Need Be Done Or Can Be Done

I’ve been in this economics business for a while. In fact, I’ve been in it so long I still remember what people considered normal in those long-ago days before the financial crisis. Normal, back then, meant an economy adding a million or more jobs each year, enough to keep up with the growth in the working-age population. Normal meant an unemployment rate not much above 5 percent, except for brief recessions. And while there was always some unemployment, normal meant very few people out of work for extended periods.

So how, in those long-ago days, would we have reacted to Friday’s news that the number of Americans with jobs is still down two million from six years ago, that 7.6 percent of the work force is unemployed (with many more underemployed or forced to take low-paying jobs), and that more than four million of the unemployed have been out of work for more than six months? Well, we know how most political insiders reacted: they called it a pretty good jobs report. In fact, some are even celebrating the report as “proof” that the budget sequester isn’t doing any harm.

In other words, our policy discourse is still a long way from where it ought to be.

For more than three years some of us have fought the policy elite’s damaging obsession with budget deficits, an obsession that led governments to cut investment when they should have been raising it, to destroy jobs when job creation should have been their priority. That fight seems largely won — in fact, I don’t think I’ve ever seen anything quite like the sudden intellectual collapse of austerity economics as a policy doctrine.

But while insiders no longer seem determined to worry about the wrong things, that’s not enough; they also need to start worrying about the right things — namely, the plight of the jobless and the immense continuing waste from a depressed economy. And that’s not happening. Instead, policy makers both here and in Europe seem gripped by a combination of complacency and fatalism, a sense that nothing need be done and nothing can be done. Call it the big shrug.

Even the people I consider the good guys, policy makers who have in the past shown real concern over our economic weakness, aren’t showing much sense of urgency these days. For example, last fall some of us were greatly encouraged by the Federal Reserve’s announcement that it was instituting new measures to bolster the economy. Policy specifics aside, the Fed seemed to be signaling its willingness to do whatever it took to get unemployment down. Lately, however, what one mostly hears from the Fed is talk of “tapering,” of letting up on its efforts, even though inflation is below target, the employment situation is still terrible and the pace of improvement is glacial at best.

And Fed officials are, as I said, the good guys. Sometimes it seems as if nobody in Washington outside the Fed even considers high unemployment a problem.

Why isn’t reducing unemployment a major policy priority? One answer may be that inertia is a powerful force, and it’s hard to get policy changes absent the threat of disaster. As long as we’re adding jobs, not losing them, and unemployment is basically stable or falling, not rising, policy makers don’t feel any urgent need to act.

Another answer is that the unemployed don’t have much of a political voice. Profits are sky-high, stocks are up, so things are O.K. for the people who matter, right?

A third answer is that while we aren’t hearing so much these days from the self-styled deficit hawks, the monetary hawks — economists, politicians and officials who keep warning that low interest rates will have dire consequences — have, if anything, gotten even more vociferous. It doesn’t seem to matter that the monetary hawks, like the fiscal hawks, have an impressive record of being wrong about everything (where’s that runaway inflation they promised?). They just keep coming back; the arguments change (now they’re warning about asset bubbles), but the policy demand — tighter money and higher interest rates — is always the same. And it’s hard to escape the sense that the Fed is being intimidated into inaction.

The tragedy is that it’s all unnecessary. Yes, you hear talk about a “new normal” of much higher unemployment, but all the reasons given for this alleged new normal, such as the supposed mismatch between workers’ skills and the demands of the modern economy, fall apart when subjected to careful scrutiny. If Washington would reverse its destructive budget cuts, if the Fed would show the “Rooseveltian resolve” that Ben Bernanke demanded of Japanese officials back when he was an independent economist, we would quickly discover that there’s nothing normal or necessary about mass long-term unemployment.

So here’s my message to policy makers: Where we are is not O.K. Stop shrugging, and do your jobs.

By: Paul Krugman, Op-Ed Columnist, The New York Times, June 9, 2013

June 10, 2013 Posted by | Economy, Jobs | , , , , , , , | 1 Comment

“Really, Really Free Enterprise”: California To Wal-Mart, No More Taxpayer Subsidized Profits For You

For years, Wal-Mart—and other large retail operators—have been piling up huge profits by controlling their labor costs through paying employees sub-poverty level wages. As a result, it has long been left to the taxpayer to provide healthcare and other subsidized benefits to the many Wal-Mart employees who are dependent on Medicaid, food stamp programs and subsidized housing in order to keep their families from going under.

With Medicaid eligibility about to be expanded in some 30 states, as a result of the Affordable Care Act, Wal-Mart has responded by cutting employee hours—and thereby wages—even further in order to push more of their workers into state Medicaid programs and increase Wal-Mart profits. Good news for Wal-Mart shareholders and senior management earning the big bucks—not so good for the taxpayers who will now be expected to contribute even larger amounts of money to subsidize Wal-Mart’s burgeoning profits.

But, at long last and in a move gaining popularity around the nation, the State of California is attempting to say ‘enough’ to Wal-Mart and the other large retailers who are looking to the taxpayers to take on the responsibility for the company’s employees—a responsibility Wal-Mart has long refused to accept.

It’s about time.

Legislation is now making its way through the California legislature—with the support of consumer groups, unions and, interestingly, physicians—that would levy a fine of up to $6,000 on employers like Wal-Mart for every full-time employee that ends up on the state’s Medi-Cal program—the California incarnation of Medicaid.

The amount of the fine is no coincidence.

A report released last week by the Democratic staff of the U.S. House Committee on Education and the Workforce, estimates that the cost of Wal-Mart’s failure to adequately pay its employees could total about $5,815 per employee each and every year of employment.

“Accurate and timely data on Wal-Mart’s wage and employment practices is not always readily available. However, occasional releases of demographic data from public assistance programs can provide useful windows into the scope of taxpayer subsidization of Wal-Mart. After analyzing data released by Wisconsin’s Medicaid program, the Democratic staff of the U.S. House Committee on Education and the Workforce estimates that a single 300- person Wal-Mart Supercenter store in Wisconsin likely costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year – about $5,815 per employee.”

Says Sonya Schwartz, program director at the National Academy for State Academy for State Health Policy, “There are concerns that employers will be gaming this new system and taking less and less responsibility for their workers. This may make employers think twice.”

Of course, the California Retailers Association, where Wal-Mart Stores,  Inc. is listed as a board member company, is not quite so pleased with the legislation. According to Bill Dombrowski, chief executive of the Association, ”It’s one of the worst job-killer bills I’ve seen in my 20 years in Sacramento, and that says a lot. The unions are fixated on Wal-Mart, but that’s not the issue here. It’s a monster project to implement the Affordable Care Act, and having this thrown on top is not helpful.”

One wonders if we will ever see the day when Americans will stop falling for the hostage-taking narrative consistently put forward by those whose job it is to defend the indefensible. At the first suggestion of finally putting a chink in Wal-Mart’s policy of profiting at the taxpayers’ expense—a practice that should have every American thinking about what passes for free-enterprise in the United States today—the response is to always threaten to take away jobs if we dare to challenge their business practices, even if those practices cost us billions.

While the unions may, indeed, be “fixated” on Wal-Mart, it is hard to miss the fact that Mr. Dombrowski did not even attempt to explain why it is acceptable policy for taxpayers to continue subsidizing Wal-Mart’s ever expanding profits. Nor does Dombrowski attempt to deal with the fact that, according to a Los Angeles Times report, an additional 130,000 people working for large and profitable firms will go onto California’s Medi-Cal rolls over the next few years, bringing the total number of Medicaid recipients in the Golden State who are employed by large companies to just under 400,000 people.

Note that these are not people who rely on ‘government handouts’ because they do not wish to work. Rather, these are people who show up to do their jobs for as many hours a week as their employer will permit them to work.

Interestingly, the federal law imposes a penalty on companies with more than 50 employees who do not provide health insurance to an employee working over 30 hours per week. The feds also penalize a company when its workers buy their own healthcare coverage on an exchange and receives a government subsidy to do so.

However, there is no penalty imposed by the federal government on a company when a company’s workers become eligible for Medicaid.

Think that this ‘oversight’ had anything to do with Wal-Mart’s early support of the Affordable Care Act?

The result is that companies like Wal-Mart are actually encouraged by the federal policy to pay their workers even smaller sums without providing healthcare benefits so that even more of their workers will qualify for Medicaid.

What I always find fascinating is that the very people who are so critical of the subsidies provided by Obamacare to lower-earning Americans (how many times have these people reminded us that “someone is paying for these subsidies”) never seem to have much of a problem with the subsidies we pay to support Wal-Mart’s massive profits by picking up the healthcare tab for so many of the company’s employees. But then, those who support taxpayers doing the job that Wal-Mart should be doing tend to be the same folks who are quick to suggest that nobody is forcing workers to take a job at Wal-Mart. Apparently, these people are operating under the opinion that a Wal-Mart worker earning below the federal poverty level wouldn’t readily move to a better paying job if such a job were available to that worker.

The good news is that the proposed California legislation has a very good chance of becoming law. While the proposed legislation will require a 2/3 vote in both the Senate and Assembly, Democrats currently have supermajorities in both legislative bodies in the state.

Let’s hope that California gets this done and other states are quick to follow California’s lead. This is legislative action whose time is long overdue.

 

By: Rick Ungar, Op-Ed Contributor, Forbes, June 3, 2013

June 10, 2013 Posted by | Corporations, Health Care | , , , , , , , | Leave a comment

“A High Stakes Gamble”: The NSA Leaker’s Decision To Flee To Hong Kong Sets Up A Very Uncomfortable Diplomatic Stand-Off

Edward Snowden’s choice of Hong Kong as a haven from where to leak intelligence documents and to unmask himself as a whistleblower rests on calculations on the territory’s press freedom safeguards and its extradition treaty with the US. It is a high-stakes gamble.

Just before sovereignty over Hong Kong passed from Britain to China in 1997, the US signed a new extradition treaty with the semi-autonomous territory. Under that treaty, both parties agree to hand over fugitives from each other’s criminal justice systems, but either side has the right of refusal in the case of political offences.

Beijing, which gave its consent for Hong Kong to sign the agreement, also has a right of veto if it believes the surrender of a fugitive would harm the “defence, foreign affairs or essential public interest or policy” of the People’s Republic of China. In short, the treaty makes Snowden’s fate a matter of political expediency not just in Hong Kong but in Beijing.

In his Guardian interview, Snowden denied that his decision to fly to Hong Kong to make his allegations on NSA intrusion and infringement of American civil liberties was intended as a vote of confidence in Chinese human rights. But he noted that the people of Hong Kong have “a spirited commitment to free speech and the right of political dissent”.

Certainly in comparison with mainland China, Hong Kong is an island of press freedom and political tolerance. When the UK ended 156 years of colonial rule and Hong Kong became China’s first ‘special administrative region’, it was given special status under the principle of “one country, two systems”. Most importantly, Hong Kong passed its own constitution, its Basic Law, giving it a “high degree of autonomy” on all issues except foreign relations and defence.

The territory has multi-party politics but its chief executive is chosen by an election committee of just a few hundred electors. The freedom of the Hong Kong press, meanwhile, is being continually put to the test. When the government attempted in 2003 to impose restrictions on the grounds of sedition and national security, half a million people came out to demonstrate and the bill was withdrawn.

The tradition of commemorating the 1989 killing of Tiananmen Square demonstrators – banned in the rest of China – is vigorously upheld in Hong Kong. Attendance at a memorial ceremony in the territory’s Victoria Park last week was estimated at between 54,000 and 150,000, despite torrential rain.

The combination of a comparatively liberal civic culture and the sovereignty of Beijing, America’s great Pacific rival with which it has an often testy relationship, seems to have been a factor in Snowden’s choice of Hong Kong. It may play to his advantage that Presidents Barack Obama and Xi Jinping reportedly agreed to differ on cybersecurity issues in their weekend summit in California. Against this background, Snowden’s extradition might be seen in the party leadership in Beijing as a capitulation. But such calculations can change.

“Call me naive but I think this is going to come down to how Beijing wants to play this,” Josh Marshall argued on his Talking Points Memo blog. “If they don’t want a fight over this, Snowden’s toast. If they like the optics of it, I don’t think it matters what that extradition treaty says. China’s a big enough player and the US has enough other fish to fry with the Chinese, that the US is not going to put the bilateral relationship on the line over this guy.”

 

By: Julian Borger, Business Insider, June 9, 2013–This article originally appeared on guardian.co.uk

June 10, 2013 Posted by | National Security | , , , , , , , , | Leave a comment

“Libertarianism’s Achilles’ Heel”: Circular Hypocritical Logic That Avoids The Messy Choices

In politics, we often skip past the simple questions. This is why inquiries about the fundamentals can sometimes catch everyone short.

Michael Lind, the independent-minded scholar, posed one such question last week about libertarianism that I hope will shake up the political world. It’s important because many in the new generation of conservative politicians declare libertarianism as their core political philosophy.

It’s true that since nearly all Americans favor limits on government, most of us have found libertarians to be helpful allies at one point or another. Libertarians have the virtue, in principle at least, of a very clear creed: They believe in the smallest government possible, longing for what the late philosopher Robert Nozick, in his classic book “Anarchy, State, and Utopia,” called “the night-watchman state.” Anything government does beyond protecting people from violence or theft and enforcing contracts is seen as illegitimate.

If you start there, taking a stand on the issues of the day is easy. All efforts to cut back on government functions — public schools, Medicare, environmental regulation, food stamps — should be supported. Anything that increases government activity (Obamacare, for example) should be opposed.

In his bracing 1970s libertarian manifesto “For a New Liberty,” the economist Murray Rothbard promised a nation that would be characterized by “individual liberty, a peaceful foreign policy, minimal government and a free-market economy.”

Rothbard’s book concludes with boldness: “Liberty has never been fully tried in the modern world; libertarians now propose to fulfill the American dream and the world dream of liberty and prosperity for all mankind.”

This is where Lind’s question comes in. Note that Rothbard freely acknowledges that “liberty has never been fully tried,” at least by the libertarians’ exacting definition. In an essay in Salon, Lind asks:

“If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early 21st century is organized along libertarian lines?”

In other words, “Why are there no libertarian countries?”

The ideas of the center-left — based on welfare states conjoined with market economies — have been deployed all over the democratic world, most extensively in the social democratic Scandinavian countries. We also have had deadly experiments with communism, a.k.a Marxism-Leninism.

From this, Lind asks another question: “If socialism is discredited by the failure of communist regimes in the real world, why isn’t libertarianism discredited by the absence of any libertarian regimes in the real world?”

The answer lies in a kind of circular logic: Libertarians can keep holding up their dream of perfection because, as a practical matter, it will never be tried in full. Even many who say they are libertarians reject the idea when it gets too close to home.

The strongest political support for a broad anti-statist libertarianism now comes from the tea party. Yet tea party members, as the polls show, are older than the country as a whole. They say they want to shrink government in a big way but are uneasy about embracing this concept when reducing Social Security and Medicare comes up. Thus do the proposals to cut these programs being pushed by Republicans in Congress exempt the current generation of recipients. There’s no way Republicans are going to attack their own base.

But this inconsistency (or hypocrisy) contains a truth: We had something close to a small-government libertarian utopia in the late 19th century and we decided it didn’t work. We realized that many Americans would never be able to save enough for retirement and, later, that most of them would be unable to afford health insurance when they were old. Smaller government meant that too many people were poor and that monopolies were formed too easily.

And when the Great Depression engulfed us, government was helpless, largely handcuffed by this anti-government ideology until Franklin D. Roosevelt came along.

In fact, as Lind points out, most countries that we typically see as “free” and prosperous have governments that consume around 40 percent of their gross domestic product. They are better off for it. “Libertarians,” he writes, “seem to have persuaded themselves that there is no significant trade-off between less government and more national insecurity, more crime, more illiteracy and more infant and maternal mortality . . . .”

This matters to our current politics because too many politicians are making decisions on the basis of a grand, utopian theory that they never can — or will — put into practice. They then use this theory to avoid a candid conversation about the messy choices governance requires. And this is why we have gridlock.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, June 9, 2013

June 10, 2013 Posted by | Libertarians | , , , , , , , , | 1 Comment

“A Misleading Media Picture”: Why The National Security Agency’s PRISM Program Is Nothing To Fear

It has been revealed that the National Security Agency has been employing PRISM, a $20-million-per-year program that monitors the movement of individuals through digital data, for roughly six years. PRISM has gained access to private information and online correspondence through nine technology companies here in the U.S. The USA PATRIOT Act and the Protect America Act of 2007 (PAA) opened the door for this surveillance program to take shape.

President Obama and the NSA have been criticized for a lack of transparency and the program’s assumed targeting of American citizens. The president said during a press conference on Friday that PRISM does not target American citizens or those living in the U.S., stating, “Nobody is listening to your telephone calls” and “They are not looking at people’s names and they are not looking at content.” The surveillance program was structured to exclusively monitor correspondence between foreign individuals—solely the lines of communication between these individuals that pass through the U.S.

PRISM may not be the top-secret program of government overreach that many are trying to portray it as. The program is lawful (as long as American citizens and individuals in the U.S. are not monitored) under PAA, and for six years the entire program was fully recognized by Congress and the Foreign Intelligence Surveillance Court. The NSA still must have a reasonable cause for intercepting communications, appeal to a federal court and gain permission to monitor any correspondence—all of which include Congressional oversight.

The NSA recently declassified a slideshow that outlines PRISM on a very basic level. This is what is currently known about the surveillance program: There were a total of nine technology companies included in PRISM—Microsoft in September, 2007, Yahoo in March, 2008, Google, Facebook, and PalTalk in 2009, YouTube in September, 2010, Skype and AOL in early 2011, and Apple in October of 2012.

While officials from AOL, PalTalk, Facebook, Yahoo, and Apple have all denied any knowledge of PRISM or working with the U.S. government on such a program, the NSA would still be within legal parameters if they monitored any data from these companies with a court order.

According to the PRISM slideshow, the types of materials they seek are email, video and voice chat, videos, photos, stored data, VoIP (phone calls made over the internet), file transfers, video conferencing, log-ins, time stamps, and any information provided on social networking sites.

The NSA slideshow makes three points defining the necessity of such a program: “Much of the world’s communications flow through the U.S.,” “A target’s phone call, email or chat will take the cheapest path, not the physically most direct path—you can’t always predict the path,” and “Your target’s communications could easily be flowing into and through the U.S.”

Basically, what we’ve learned about the NSA and PRISM is nothing new. Senator Saxby Chambliss (R-GA) said of PRISM, “Every member of the United States Senate has been advised of this, and to my knowledge we have not had any citizen who has registered a complaint relative to the gathering of this information.” In other words, these actions have been lawfully taking place for six years and were approved by Congress with the effortless passages of the PATRIOT Act in 2001 and the Protect America Act in 2007.

The picture that is being painted of PRISM—a secretive surveillance program that unlawfully delves into the average American’s private life—is misleading. PRISM, if carried out properly, is only used to monitor suspicious patterns of communications abroad. If individuals choose to use means of communication that are based here in the U.S., the U.S. government, with the proper court approval, is entirely within its rights to seek out information it deems necessary for national security purpose—as long as Congress continues to authorize the laws that allow such programs.

By: Allison Brito, The National Memo, June 7, 2013

June 10, 2013 Posted by | National Security | , , , , , , , , | 2 Comments

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