“Rick Perry, Job Poacher”: Southern Grand Larceny With A Very Old Pedigree
Poaching on the labor of others is an ancient and honored Southern tradition, whose antebellum antecedents Texas Governor Rick Perry has recently brought up-to-date with a $1 million advertising campaign to encourage businesses to pack up and come on down to the Lone Star State where the taxes are lower than a worker’s wages.
Called “Texas is calling, your opportunity awaits,” the 30-second TV spots feature business leaders and celebrities like Dallas Cowboys running back Emmitt Smith calling Texas the “land of opportunity” and home of “creative renegades.”
On Fox News, Perry boasted, “Texas has the best business climate in the world. Over the last 10 years, 30% of all the new jobs created in America were in Texas.”
Wooing business from other states is all part of “healthy competition,” says Perry. “It’s the 50 laboratories of innovation that are out competing for the jobs to keep America at the front of the race,” the Governor insists.
Yet, when mayors and governors elsewhere talk about “growing” their economy they mean that literally – as in, creating new jobs where none existed before, from the ground up, nurtured by public-private partnerships, public investments in R&D and good schools, and other initiatives that create real value.
In Boston where I work, the South Boston Seaport District is one of the hottest real estate markets in the country right now, says Moody’s Investor Services, thanks in part to steps that Mayor Tom Menino has taken to make the area a magnet for entrepreneurs — an “Innovation District” — where start-up companies with bright ideas but not much cash can get reasonable financing and available space to help their businesses grow.
Just last week, the Boston Herald reported that the Small Business Administration called Menino’s Innovation District a model for other cities to follow who are interested in creating a cutting-edge start-up culture — “a Mecca for people from all over the world to launch out and build the next big company.”
He credited the city’s Innovation District initiative for creating a “community of entrepreneurship and creativity.”
Winslow Sargeant, chief counsel for the federal agency’s Office of Advocacy, said: “This ecosystem of innovation brings together entrepreneurs to share ideas and bring their vision to the marketplace. It presents a successful model and an ideal avenue for the public and private sectors to partner together for economic success,” he said.
In just three years, Boston’s Innovation District initiative has brought more than 4,000 jobs to the waterfront area.
Boston has become a great place to start a business, said Sargeant, who grew up in the city. “If someone wants to start a company or if someone wants to explore what it takes to, there are people that they can talk to and places they can go to network with others.”
Among the biggest benefits of the district, the Herald says, are the start-up incubators and accelerators that offer shared work spaces. “Magic things happen” when entrepreneurs get together and share work space and ideas, said Ben Einstein, founder of Bolt, one of the companies now operating in the district.
There is another economic development model, however, one favored by Governor Perry and governors throughout the South: Don’t make money the old fashioned way by earning it or actually “creating” anything. Let the Yankees do that with their fancy schools and business incubators. Then, when companies are off the ground and up and running, steal them away like cattle-rustlers in cross-border raids by luring owners with promises of lower taxes, fewer environmental regulations and protections against uppity workers who want a fair day’s pay for an honest day’s labor.
That is what Perry really means when he says that 30% of all the “new” jobs “created” in America were in Texas – proof of which is the $1 million Texas is now spending to steal other state’s jobs away from them.
There is political as well as economic method to Governor Perry’s madness since his desperado tactics are never aimed against other Republican governors, but only blue state Democratic ones in target-rich “enemy” territory.
Perry recently traveled to New York and Connecticut on a four-day trip to lure businesses away from those states. The trip comes on the spurred-heels of earlier raids into California and Illinois where Perry showed ads depicting an emergency exit door under the headline: “Get out while you still can.”
Both Perry’s trips and the ad campaign are being paid for by a group called TexasOne, which is a coalition of corporations and local chambers of commerce.
This sort of Southern grand larceny has a very old pedigree. A cold and forbidding climate like New England’s grows a population that must be skilled at living by its wits and the “Yankee Ingenuity” that cemented New England’s reputation as home to world-class education, the textile mills of Lawrence and Lowell that gave birth to America’s industrial revolution, and the Yankee traders who invented, then sailed, world-famous clipper ships like the Flying Cloud and Sovereign of the Seas.
A hot and humid climate like the South, rich in natural resources, on the other hand, tends to spawn a class of indolent, parasitic oligarchs whose labor saving inventions consist almost entirely of exploiting the labor of others.
In short, what we have in New England is called “entrepreneurial capitalism,” which means using the state as partner to nurture good ideas and develop them into profitable companies, perhaps whole new industries.
What Governor Perry exports from Texas, on the other hand, is “crony capitalism,” using the power of the state to enrich and reward powerful insiders, not by creating new opportunities but by lowering the rewards workers get from those opportunities that already exist.
And now that the GOP has become a Southern Party, Republicans have inherited the most disreputable features of what author Michael Lind calls this “Southernomics” as well.
It was not always thus. Between the 1930s and 1970s, so-called “modern Republicans” like Dwight Eisenhower and Richard Nixon tried to level the playing field among the states — not through regressive tax and labor policies — but through revenue sharing and other public investments in infrastructure, writes Lind in Made in Texas: George W. Bush and the Southern Takeover of American Politics.
Ironically, then, modern Republicans and New Deal modernists built an infrastructure for the South and West that traditional conservatives inherited and were able to use for their own “illiberal purposes,” says Lind.
It is no coincidence, says Lind, that the two biggest companies to fail during the Bush administration – Enron and WorldCom – were both Southern.
Entrepreneurial or “bourgeois” capitalism is alien to Texas and other Southern states, he says, because “crony capitalism is the only kind familiar to the Southern oligarchs, decedents of planters who could not balance their books and knights who despised mere trade.”
The lesson from these scandals, says Lind, as well as Governor Rick Perry’s politically-motivated raids against Democratic economies, is not that capitalism is unworkable, but that “capitalism only works where there are real capitalists.”
By: Ted Frier, Open Salon Blog, July 4, 2013
“What We Need Now”: A National Economic Strategy For Better Jobs
Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.
Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.
That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.
Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not.
Any why not? Both because we don’t have the political will to implement them, and we’re trapped in an ideological straightjacket that refuses to acknowledge the importance of such a strategy. The irony is we already have a national economic strategy but it’s been dictated largely by powerful global corporations and Wall Street. And, not surprisingly, rather than increase the jobs and wages of most Americans, that strategy has been increasing the global profits and stock prices of these giant corporations and Wall Street banks.
If we had a strategy designed to increase jobs and wages, what would it look like? For starters, it would focus on raising the productivity of all Americans through better education — including early-childhood education and near-free higher education. That would require a revolution in how we finance public education. It’s insane that half of K-12 budgets still come from local property taxes, for example, especially given that we’re segregating geographically by income. And it makes no sense to pay for the higher education of young people from middle and lower-income families through student debt; that’s resulted in a mountain of debt that can’t or won’t be paid off, and it assumes that higher education is a private investment rather than a public good.
It would also require greater accountability by all schools and universities for better outcomes — but not just better test results. The only sure thing standardized tests measure is the ability to take standardized tests. Yet the new economy demands problem-solving and original thinking, not standardized answers.
Better education would just be a start. We would also unionize low-wage service workers in order to give them bargaining power to get better wages. Such workers — mostly in big-box retailers, fast-food chains, hospitals, and hotel chains — aren’t exposed to global competition or endangered by labor-substituting technologies, yet their wages and working conditions are among the worst in the nation. And they represent among the fastest-growing of all job categories.
We would raise the minimum wage to half the median wage and expand the Earned Income Tax Credit. We’d also eliminate payroll taxes on the first $15,000 of income, making up the shortfall in Social Security by raising the cap on income subject to the payroll tax.
We’d also restructure the relationships between management and labor. We would require, for example, that companies give their workers shares of stock, and more voice in corporate decision making. And that companies spend at least 2% of their earnings upgrading the skills of their lower-wage workers.
We’d also condition government largesse to corporations on their agreement to help create more and better jobs. For example, we’d require that companies receiving government R&D funding do their R&D in the U.S.
We would prohibit companies from deducting the cost of executive compensation in excess of more than 100 times the median compensation of their employees or the employees of their contractors. And bar them from providing tax-free benefits to executives without providing such benefits to all their employees.
And we would turn the financial system back into a means for investing the nation’s savings rather than a casino for placing huge and risky bets that, when they go wrong, impose huge costs on everyone else.
There’s no magic bullet for regaining good jobs and no precise contours to what such a national economic strategy might be, but at the very least we should be having a robust discussion about it. Instead, economic determinists seem to have joined up with the free-market ideologues in preventing such a conversation from even beginning.
By: Robert Reich, The Robert Reich Blog, June 11, 2013
“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
“The Sorry Spectacle Continues”: Polarized Washington Ignores Long-Term Issues At Its Peril
Scandalfest continues. Official Washington is still flitting from one minor controversy to another, with the news media breathlessly reporting the latest leaked email or unsubstantiated accusation. Clearly, the chattering classes have declared the jobs crisis ended and the economic recovery complete.
While the Obama administration hasn’t popped open champagne bottles to celebrate, the air of silliness that hangs over the Beltway is a reminder that the worst is over. After all, the stock market is soaring. Consumer confidence is climbing.
The latest national unemployment number is down to 7.5 percent, the lowest level since December 2007, when the economy started its steep descent. Indeed, the sustained economic uptick may have a direct tie-in to Washington’s current obsession with less consequential matters: The economy is strong enough to have persuaded Republicans to stop blasting President Barack Obama over joblessness, so they’ve had to find other issues with which to batter him.
Here’s an update from outside the Beltway Bubble: The jobs crisis is not over. Average Americans are still struggling through an ugly economic transformation — a structural change decades in the making that jumped into overdrive with the Great Recession. Millions of Americans of working age remain unemployed, while others patch together two or three part-time jobs to keep food on the table. Still others have found full-time jobs but at far less pay than they used to earn.
A recent Quinnipiac poll provides a clear look into the minds of voters, who have little interest in the imbroglios of the moment. Rightly, 44 percent believe the revelations about the Internal Revenue Service, which singled out conservative organizations for unfair screening, as most important among the current controversies. Only 24 percent cited the deaths of four Americans at a diplomatic outpost in Benghazi, despite the GOP’s obsession with it. Far fewer, just 14 percent, listed the Justice Department’s scrutiny of reporters.
But here’s the news you may have missed: An overwhelming 73 percent said that boosting the economy and creating jobs is more important than any of the other three issues. If politicians were as poll-obsessed as they are rumored to be, they’d at least pretend to be devoting most of their time to helping middle-class Americans get back into stable jobs with good pay.
The jobs crisis has been decades in the making, an economic restructuring fueled by globalization and technology. Think about it: Those Bangladeshi textile workers killed in an April building collapse were doing work once done in the United States. No matter how many affluent Americans protest the conditions and boycott the designers who contributed to the disaster, those jobs are not coming back to these shores. Manufacturers will continue to pursue cheap labor.
As a result, the jobs that once guaranteed good wages and stable futures to generations of Americans without college degrees have all but disappeared. That transformation, which started in the 1970s, has contributed to the wage gap, the ever-widening rift between the haves and have-nots. The average American worker has been losing economic ground for decades.
Politicians ignore that growing gap at their peril. The notion of an America where everybody has an equal shot has always been more myth than reality, but there was once a time when it was not so difficult for young adults to imagine a more prosperous future than their parents had. That is no longer a likely scenario.
That’s a very difficult problem to solve, which helps explain why politicians don’t like to discuss it. It calls for a multigenerational response, the sort of bipartisan approach that is usually reserved for battles against foreign enemies.
But Washington is stuck in a period of deepening polarization, incapable, it seems, of even agreeing on the causes of our economic woes. Democrats, at least, have a language for discussing widening income inequality. Republicans haven’t yet come to terms with its existence. So the sorry spectacle continues.
By: Cynthia Tucker, The National Memo, June 6, 2013
“Focus Should Be On Jobs”: Ben Bernanke Clearly Explained What’s Still Wrong With The Economy
In recent congressional testimony, Federal Reserve Chairman Ben Bernanke clearly explained what’s still wrong with the economy, outlined the Fed’s thinking on monetary policy and strongly implied that fiscal policy is still off base. His account and policy recommendations reflect mainstream economic thinking – and, thus, run counter to much of the economic doctrine that’s driving Republican budget policies.
Here’s how Bernanke sees the economy: though payroll employment has expanded by about 6 million jobs since its low point and unemployment has dropped by about 2.5 percentage points from its peak, the job market remains weak overall. I couldn’t agree more.
Bernanke points to the same indicators I would. The unemployment rate is still too high, too many of the unemployed have been looking for work for more than six months, too many people have stopped looking at all while job prospects remain dim, and nearly 8 million people are working part time even though they’d prefer full-time work. I’m glad to see him emphasize how “extraordinarily costly” this situation is:
Not only do [high levels of unemployment and underemployment] impose hardships on the affected individuals and their families, they also damage the productive potential of the economy as a whole by eroding workers’ skills and – particularly relevant during this commencement season – by preventing many young people from gaining workplace skills and experience in the first place. The loss of output and earnings associated with high unemployment also reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur.
While unemployment is still a major concern, inflation isn’t. Therefore, the Fed is appropriately interpreting its “dual mandate” to foster both “maximum employment” and “price stability” as requiring “a highly accommodative monetary policy.” That means keeping its short-term interest rate target as low as possible until unemployment falls closer to normal long-term levels and monitoring its program of purchasing longer-term assets – as long as inflationary expectations remain low. As the Fed notes, this policy carries some risks, but the risks and costs of continuing high unemployment are far greater.
Republicans, in contrast, want to remove “maximum employment” from the Fed’s policy concerns. They seem to see our most pressing problem as the possibility of future inflation, not the reality of current high unemployment. The Republican chairman of the Joint Economic Committee, where Bernanke testified, wants to replace the dual mandate with a single mandate for long-term price stability. Even some conservatives recognize that, during major recessions, that’s a recipe for disaster. An even more extreme policy – a return to a gold standard – made it into the 2012 Republican platform.
On fiscal policy, Bernanke recognizes that recent policy decisions have tilted too far toward short-term budget austerity, while largely ignoring longer-term budget challenges. He neither shared Republicans’ disdain for stimulus policies nor endorsed their flirtation with “expansionary austerity” arguments.
Federal fiscal policy, taking into account both discretionary actions and so-called automatic stabilizers, was, on net, quite expansionary [emphasis added] during the recession and early in the recovery. However, a substantial part of this impetus was offset by spending cuts and tax increases by state and local governments, most of which are subject to balanced-budget requirements, and by subsequent fiscal tightening at the federal level.
While too much fiscal restraint has hampered the economic recovery, policymakers have done little to address longer run fiscal challenges that will begin to reappear later in the decade. Bernanke’s counsel:
Importantly, the objectives of effectively addressing longer-term fiscal imbalances and of minimizing the near-term fiscal headwinds facing the economic recovery are not incompatible. To achieve both goals simultaneously, the Congress and the Administration could consider replacing some of the near-term fiscal restraint now in law with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run.
By contrast, the House Republican budget goes full bore on deficit reduction, starting immediately – jobs be damned.
By: Chad Stone, U. S. News and World Report, May 24, 2013
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