We Interrupt your Regularly Scheduled Programming for a Bit of Deprogramming
Posted: April 12, 2011 Filed under: Catfood Commission, Domestic Policy, Economic Develpment, financial institutions, income inequality | Tags: helping the world's poor, Income Inequality, tax havens 9 Comments
Uncle Barrack sez: Time to feed the Corporate Kitty
It’s time for my regular rant on how bad income inequality is for an economy. I know that John Boenher wants to transfer all the resources in the country to so-called job creators and that CEO Hacks are trying to turn the public school system into a drone production unit, but as usual, I’m going to interrupt the messaging with empirical evidence. I’m just one of those people that doesn’t believe any one unless they back it up with honest numbers. This time, I’m going to direct you to a study by the International Monetary Fund (IMF). Just in case you don’t already know, the IMF is not exactly a bastion of comrades-in-arms. They’ve been soundly criticized by developing nations for exporting American-style capitalism wherever they go to provide help to struggling nations. So, with that in mind, here’s a briefing on the study titled “Warning! Inequality May be Hazardous to your Health”.
Their introduction is so meaty that I’m going to leave it nearly wholesale for you before I return to editing more things for a development journal. Finding ways to raise every one’s boat is my thing, just in case you never noticed.
Many of us have been struck by the huge increase in income inequality in the United States in the past thirty years. The rich have gotten much richer, while just about everyone else has had very modest income growth.
Some dismiss inequality and focus instead on overall growth—arguing, in effect, that a rising tide lifts all boats. But assume we have a thousand boats representing all the households in the United States, with boat length proportional to family income. In the late 1970s, the average boat was a 12 foot canoe and the biggest yacht was 250 feet long. Thirty years later, the average boat is a slightly roomier 15 footer, while the biggest yacht, at over 1100 feet, would dwarf the Titanic! When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss.
In fact, inequality matters. And it matters in all corners of the globe. You need look no further than the role it might have played in the historic transformation underway in the Middle East.
The increase in U.S. income inequality in recent decades is strikingly similar to the increase in the 1920s. In both cases there was a boom in the financial sector, poor people borrowed a lot, and it all ended in huge financial crises. Did the recent financial crisis result somehow from the increase in inequality?
Some time ago, we became interested in long periods of high growth (“growth spells”) and what keeps them going. The initial thought was that sometimes crises happen when a “growth spell” comes to an end, as perhaps occurred with Japan in the 1990s.
We approached the problem as a medical researcher might think of life expectancy, looking at age, weight, gender, smoking habits, etc. We do something similar, looking for what might bring long “growth spells” to an end by focusing on factors like political institutions, health and education, macroeconomic instability, debt, trade openness, and so on.
Somewhat to our surprise, income inequality stood out in our analysis as a key driver of the duration of “growth spells”.
We found that high “growth spells” were much more likely to end in countries with less equal income distributions. The effect is large. For example, we estimate that closing, say, half the inequality gap between Latin America and emerging Asia would more than double the expected duration of a “growth spell”. Inequality seemed to make a big difference almost no matter what other variables were in the model or exactly how we defined a “growth spell”. Inequality is of course not the only thing that matters but, from our analysis, it clearly belongs in the “pantheon” of well-established growth factors such as the quality of political institutions or trade openness.
While income distribution within a given country is pretty stable most of the time, it sometimes moves a lot. In addition to the United States in recent decades, we’ve also seen changes in China and many other countries. Brazil reduced inequality significantly from the early 1990s through a focused set of transfer programs that have become a model for many around the world. A reduction of the magnitude achieved by Brazil could—albeit with uncertainty about the precise effect—increase the expected length of a typical “growth spell” by about 50 percent.
The upshot? It is a big mistake to separate analyses of growth and income distribution. A rising tide is still critical to lifting all boats. The implication of our analysis is that helping to raise the lowest boats may actually help to keep the tide rising!
That basically says that no one’s boat will really rise as much as it could unless all boats rise. Intuitively, this makes sense because if you think about it, businesses need customers. Poor customers just don’t buy as much unless you provide them with good incomes. Unless you want make government the primary customer in an economy or you’re deluded into thinking business investment will ever be the major agent in GDP, you realize that household consumers are the true center of any market economy. Denying them incomes denies every one of incomes. Just providing monies to the top 1 or 2 percent who are now likely to take their spending and investment any where on the planet is just delusional. Actually, if you want some really good reading on that, I suggest you pick up the book Tax Havens: How Globalization Really Works (Cornell Studies in Money).
In Tax Havens, Ronen Palan, Richard Murphy, and Christian Chavagneux provide an up-to-date evaluation of the role and function of tax havens in the global financial system-their history, inner workings, impact, extent, and enforcement. They make clear that while, individually, tax havens may appear insignificant, together they have a major impact on the global economy. Holding up to $13 trillion of personal wealth—the equivalent of the annual U.S. Gross National Product—and serving as the legal home of two million corporate entities and half of all international lending banks, tax havens also skew the distribution of globalization’s costs and benefits to the detriment of developing economies.
The first comprehensive account of these entities, this book challenges much of the conventional wisdom about tax havens. The authors reveal that, rather than operating at the margins of the world economy, tax havens are integral to it. More than simple conduits for tax avoidance and evasion, tax havens actually belong to the broad world of finance, to the business of managing the monetary resources of individuals, organizations, and countries. They have become among the most powerful instruments of globalization, one of the principal causes of global financial instability, and one of the large political issues of our times.
There’s not really much difference between the Gadhaffi family and the Koch brothers when it comes to where the money goes from exploiting national resources. It’s also really no surprise that when you observe the countries that have the highest per capita incomes in the world that you find the world’s tax havens in the top tiers. (Norway and the US are the only countries in the top ten that aren’t tax havens.) Giving money to the richest folks in your country–the behavior of so-called banana republics–is detrimental to the economic health of that country in many ways. It’s just another way that financial institutions and financial innovation has gutted the productive capability of many a country.
The original IMF study–released on April 8, 2011–is here. I would like to point to the policy implications and suggestions section which makes going to the original study imperative. Think about this when you listen to US banana republic President Obama speak tomorrow on the marvels of the catfood commission’s report. Notice there are other studies cited in the policy suggestions.
There is nonetheless surely policy scope to improve income distribution without undermining incentives—perhaps even improving them—and thereby contribute to lengthening the duration of growth spells.
- Better targeting of subsidies can be a win-win proposition, as with the reallocation of fiscal resources towards subsidies of goods that are consumed mainly by the poor,which can free up capacity to finance public infrastructure investment while better protecting the poor (Coady et al., 2010).
- Active labor market policies to foster job-richer recoveries (ILO, 2011) may help to make recoveries more sustainable, especially as rising unemployment appears to be associated with deteriorations in the income distribution (Heathcote, Perri, and Violante, 2010).
- Equality of opportunity can make for both more equal and more efficient outcomes (World Bank, 2005). For example, effective investments in health and education—human capital—may be able to square the circle of promoting durable growth and equity while avoiding shorter-run disincentive effects (Gupta et al., 1999). Such investments could strengthen the labor force‘s capacity to cope with new technologies (which may have contributed to more inequality in a number of cases), and thereby not only reduce inequality but also help sustain growth. They could also help countries address possible adverse distributional consequences of globalization and reinforce its growth benefits.
- Some countries have managed through pro-poor policies to markedly reduce income inequality. Brazil, for example, after its market-oriented reforms of 1994 implemented active propoor distributional policies, notably, social assistance spending, that were critical to substantial reductions in poverty (Ravallion, 2009).
- Well-designed progressive taxation and adequate bargaining power for labor can also be important in promoting equity, though with due attention to the need to avoid dual labor markets that perpetuate divisions between insiders and outsiders.
Yes, I bolded the sections that are in absolute contradiction with current US political groupthink. I guess Obama just really isn’t that into development policy or research in economics. Read them and weep for what could be. Meanwhile, turn on the TV and go right back to the villagers promoting the idea that trickle up economics makes all of us better off, if you dare.
Working your Way into the Poor House
Posted: April 3, 2011 Filed under: income inequality, Team Obama, The Bonus Class, U.S. Economy, unemployment | Tags: income stagnation, shrinking middle class, wage insecurity, wage stagnation 18 CommentsThe basic promise of modern America was that you can work hard and get ahead. These days, that promise goes 
undelivered daily. The gap between the promise and the delivery is widening exponentially and it’s time for all of us to get the few to listen. The basic problem in our economy is that we are not producing jobs that help working families meet basic needs. I see this a lot down here in New Orleans where many of our homeless people sleep on air mattresses in front of the shelter at night but have jobs in the French Quarter during the day. They wash dishes or straighten beds. They work and they work hard. Yet, they cannot afford basic shelter in a southern city with relatively low costs of living compared to other places. This is not the Social Contract we’ve been taught in our schools for years. Working a job is not supposed to mean you can’t get your children to the doctor or put a roof over your head.
I wanted to highlight the recent findings of an income insecurity study for you. Then, I’m going to talk about the role of wage and income stagnation in all of that. I felt that just possibly you might take your Sunday afternoon to look at the people around you and appreciate the struggle. The first study was commissioned by Wider Opportunities for Women. The results were highlighted in the New York Times. The uncovered realities are harsh and make the future for many folks in this country look unpromising. WOW was looking for an index–now called National BEST–to demonstrate how much it takes to minimally exist in the US as a middle class family and how far short some of our citizens have fallen of that minimal standard. It’s a slightly upscale version of the Poverty index. It basically tells you what it takes to be marginally working/middle class. This measure includes good nutrition, a small sedan, and some basic savings for retirement so it’s not a survive or die measure. It measures what it takes to really have the minimal American Dream. It’s what every American would have if our country met its Social Contract with working Americans.
According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.
A single worker with two young children needs an annual income of $57,756, or just over $27 an hour, to attain economic stability, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker.
That compares with the national poverty level of $22,050 for a family of four. The most recent data from the Census Bureau found that 14.3 percent of Americans were living below the poverty line in 2009.
Wider Opportunities and its consulting partners saw a need for an index that would indicate how much families need to earn if, for example, they want to save for their children’s college education or for a down payment on a home.
So, we’re talking a minimal, humble “American Dream” which, again, is what we’ve been promised for our hard work. This dream does comes from hard work and not some one’s daddy’s trust fund like the Koch Brothers or Paris Hilton. These people work . More and more, working does not pay for them and it is creating problems for us all. The most disenfranchised are workers who have not completed high school and have no training. The recession has only made this worse and the recovery does not appear to be bringing anything better. Still, I hear nothing about helping these people prepare and find work.
We have no discussions about what it means to be working and poor in America. I hear only about cutting budgets. We’d have never won World War 2 with that attitude. If they’d have worried about the debt left to me and my generation, we’d have a completely different world right now. That appears to be what they want to leave to our children. We are building a world where the Social Contract for the American Dream is broken and no one wants to pay to get it fixed.
For some of the least educated, Mr. Waldman fears that even low wages are out of reach. “Given the needs of a more cognitive and more versatile labor force,” he said, “I’m afraid that those that don’t have the education are going to be part of a structural unemployment story.”
Even for those who do get jobs, it may be hard to live without public services, say nonprofit groups that assist low-income workers. “Politicians are so worried about fraud and abuse,” said Carol Goertzel, president of PathWays PA, a nonprofit that serves families in the Philadelphia region. “But they are not seeing the picture of families who are working but simply not making enough money to support their families, and need public support.”
In New York, Áine Duggan, vice president for research, policy and education at the Food Bank for New York City, estimates that about a third of the group’s clients are working but not earning enough to cover basic needs, much less saving for retirement or an emergency. She said that among households with children and annual incomes of less than $25,000, 83 percent of them would not be able to afford food within three months of losing the family income. That is up from 68 percent in 2008 at the height of the recession.
We have a “Wageless” Recovery. Incomes are only going up at the extreme upper levels. Every one else is losing lifestyle and yet, they are working hard. Employment Policy Research Network (EPRN) researcher Frank Levy of MIT has released a monograph called ‘Addressing the Problems of Stagnant Wages’. (Yes, I know, I actually read these things with relish and print wonky graphs for you on a sunny Sunday afternoon because of some weird inner trait of mine I really can’t name.) Just reading his introduction takes me back to my childhood in Iowa where farmers bought trucks from my dad and I knew everything would be alright if I just went to college and got a degree.
In the three decades after World War II, a central feature of the American economy was a mass upward mobility in which each generation lived better than the last, and workers experienced earnings gains through much of their careers. In short, the American Dream was alive and well. The central drivers of mass upward mobility were real wages for most workers that grew in line with overall labor productivity. Because of rising real wages a 40-year-old male blue-collar worker earned more in the late 1960s than most managers had earned in the late 1940s.
The alignment of wage growth and productivity growth resulted from two main factors: labor markets for most groups of workers in which demand matched supply, and the post-World War II Social Compact that emerged from the Great Depression helped to propogate wage norms throughout the economy, norms that were enforced in part through collective bargaining and professional personnel/human resource management practices.
By the 1980s, both of these factors had reversed. Labor demand increasingly shifted toward more educated workers – particularly well-educated women. At the same time, the post-war Social Compact was challenged by the inflationary 1970s and collapsed in the 1980s. Nothing has emerged to replace it.
Now, in the absence of a labor market boom like that of 1996-2000, increased labor productivity no longer translates into rising real wages for many groups of workers.
Well, that’s all and fine, but how do we address the problems that we’ve got now? How is it that so many of us can work and do the right thing and still not make ends meet? Well, that’s the policy part of the paper and there are suggestions. The author argues that during the last three decades business and government have broken the Social Contract. He’s got some suggestions. One of them is pretty basic. That would be increasing the High School Graduation rate and trying to get employers to buy into the idea that they must providing training and education opportunities to their workers. If they don’t, then society must offer this as a public good because provision of the good is cheaper than the social costs of not providing the good.
Increasing the number of college graduates requires dealing with two potentially related obstacles. One is the stagnation since the early 1970s in the high school graduation rate at approximately 75 percent.25 The failure to increase the high school graduation rate explains about one-half of the slowdown since the 1970s in the growth in the rate of college completion (Bailey and Dynarski, forthcoming). The other is the weak ability of high school graduates, once in junior college or college, to complete a degree. The historically large college-high school earnings gap has caused a growing fraction of high school graduates to start higher education, but the fraction who complete a bachelor’s degree has increased only modestly for women over the last twenty years and has remained basically flat for men.
There’s also a pretty good discussion of the idea of charters schools and inflicting the competitive charter school model on the education system that follows with some really good questions. Other proposals include making certain that we invest in the jobs and industries of the future even if the private sector isn’t doing their share. There’s also some discussion of how to encourage better labor-management relations and laws but given the demonization of working people–even by working people themselves–the author doesn’t hold much hope for the national discussion that needs to take place on less combative and abusive management practices.
One of the things that I do want to bring up is the role of using the classification “independent contractor” and how it’s allowed businesses to get around paying workers. It is thought to be responsible for a chunk of the wage stagnation and to many of the lost benefits problems leading to the loss of middle class lifestyles. It worries me greatly that many tea party governors are actively trying to dismantle labor laws. They are even trying to get rid of child labor laws so businesses can get access to children under 14 again.
One necessary but far from sufficient requirement for setting and maintaining a floor on wages for hourly workers, and especially for low-wage hourly workers, is that federal and state wage and hour laws are enforced vigorously and as uniformly as possible. Recent studies have shown there are widespread violations of wage and hour laws ranging from failure to pay minimum wages, overtime, required meal and rest breaks, and misclassification of employees as independent contractors. One recent study estimated these types of violations have the effect of lowering wages of affected workers by 15 percent
One of the major themes in the research is on the increased role of the financial markets in the breakdown of the Social Contract. The growth of the finance industry has come with the loss of manufacturing. Not only is this due loss of manufacturing jobs that are now lower paying services jobs, but it has caused incomes to shift from labor to capital. The political power and rise of the financial class has a lot to do with this trend. These people don’t just want ordinary returns on their money. They want extraordinary returns. Squeezing costs is usually the short sighted, short term way to achieve that.
I’d like to close with an interview with Cornel West that encapsulates some of the problems. It’s a little old. I grabbed it from Naked Capitalism; also a place concerned with policies that impact middle class Americans. Listening to the interview made think again about our priorities and our need to enforce the American Dream Social Contract once again. Dr West talks about the experience of poor and working class blacks in this clip, but many of the same things can be applied to any and all poor and working class Americans. I think it’s time we start the discussion. The country’s in trouble when an increasing amount of income comes from shuffling paper between financial institutions and bonuses replace wages for a hard day’s work.
Income Inequality, Redux
Posted: April 1, 2011 Filed under: income inequality, poverty, The Media SUCKS, the villagers | Tags: Income Inequality, joseph stiglitz, the one percenters, trust fund WATB 12 Comments
US Income Inequality – Too Big To Ignore
I had to frontpage this because I just can never make this point enough. Vast income inequality is not the sign of a healthy society or economy. H/t to Corrente for my first look at this Joseph Stiglitz article at Vanity Fare called ‘Of the 1%, by the 1%, for the 1%’. We’re back to the Versailles days and the Bush tax policies–extended by Obama–are a good part of the source of the problem. I hate to just lift just one paragraph out of Stiglitz’ rant because the entire thing is worth reading. However, here’s two for starters. Go read the entire thing, please.
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing.
The other reason that I decided to front page this is the here-here response from Michael Tomasky at the UK Guardian. It’s aptly called ‘Sad, just sad’. He mentions something we’ve said for some time. The villagers are also the beneficiaries of this kind of windfall. Why would those DC beltway types want to downsize when they can blame teachers, nurses, firefighters, and police officers for all those budget woes? It’s the overgenerous tax cuts. A nation can’t sustain itself without roads, airports, electrical grids, education, and public health and safety programs unless your idea of an ideal nation is that found in the Grapes of Wrath.
Stiglitz might have added the very important point that the majority of the country’s most prominent pundits who go on television and interpret all this for the American people, who soothe their audiences with assurances that all this is completely reasonable, are in the top 1%, which means households above around $380,000 per year. Many of course are far above that (Bill O’Reilly, Rush Limbaugh, etc.). High-end print journalists who aren’t quite at that level are still likely in the top 2%.
Anyway, the piece makes many important points, all of which boil down to the idea that while income inequality has several initial causes, there is only one thing that sustains it: a political process that is owned lock, stock and barrel by the top 1%.
Stepping back and looking at this context, and staying aware of it, makes watching these budget cuts particularly noxious. That’s not to say there isn’t waste, fine. But it is to say that the US political system of today is pretty inevitably designed to help the rich and punish the poor. So it’s no surprise when GOP Congressman Paul Ryan proposes, as he just has, cutting $1 trillion from Medicaid, which provides health care for poor people and the disabled (and to some extent, a greater extent than many people are aware, middle-class families, too, in the form of nursing-home cost support or in-home services like those from NY CDPAP agency).
Yes, Medicaid costs are high, killing the states. The feds could actually pick them up. Ronald Reagan proposed doing this. But that would be radical today. If Americans, especially wealthy ones, were paying taxes (income and capital gains) even at the rate we were in the Reagan era, we’d have no budget problems.
This brings me to the latest “Dopiest Constitutional Amendment of All Time” discussed by former economist Bruce Bartlett. The very same people that gutted tax revenues and funding sources for ten years and went on a spending spree on Treasury Bills now want to demand a federal balanced budget amendment. It’s not like watching the states get into deep trouble with their own versions of the stupid thing has taught any lessons. Balanced budget amendments simply lead to bad economics. When the revenues come in, the politicians spend like crazy on unnecessary things because the money’s there and the economy doesn’t require the expenditures. When the recession hits, the revenues go down, and the balance the budget part hurts, they start doing things that basically put their states in worse situations. This should be immoral, unethical and illegal. Instead, they stick in constitutions. Evidently none of these guys ever got away to reading the Grasshopper and the Ant. They’re all Grasshoppers until the real need for fiscal management comes into play.
Today, all 47 Senate Republicans introduced a constitutional amendment to balance the federal budget. Full text available here. Presumably, this is the amendment that Republicans plan to demand as their price for increasing the federal debt limit. Of course, simply refusing the raise the debt limit would balance the budget overnight — the nation would default on its debt and we would be plunged into the worst fiscal crisis in history, but the budget would be balanced. I have previously explained the idiocy of right wing advocates of debt default (here and here) and the idiocy of a balanced budget amendment (here and here). However, the new Republican balanced budget proposal is especially dimwitted.
At what point do the Republicans just change their name to the party of Batshit Crazy Liars? At what point do the Democrats start fighting some of this? It’s unbelievably hard to watch a group of people with so little at stake except their own re-election just run through a country’s future and assets like a Mardi Gras krewe tossing trinkets to bystanders. How much more looting of national resources to benefit their cronies can we honestly take before people really take to the streets and say enough!
Tuesday Reads
Posted: February 22, 2011 Filed under: collective bargaining, Food, Gulf Oil Spill, hunger, income inequality, morning reads, worker rights | Tags: BP oil spill, export restrictions, hunger, Scott Walker's John Birch Society ties, Wisconsin, world food prices 26 Comments
Good Morning!!!
By the time you start reading this, I’ll be headed back down to Grand Isle to check on the new ‘old’ oil that just surfaced and hit Grand Isle and Elmer’s Island. The Federal Government and BP are about to leave us since they consider the beaches clean. Too bad they’re not cleaning up the marshes and the bottom of the Gulf too. I thought I’d start with some of the latest Gulf Gusher news this morning. This one is from the BBC. It’s on the impact on animals living at the bottom of the Gulf.
In places the layer of oil and dead animals is 10cm thick
The 2010 Deepwater Horizon oil spill “devastated” life on and near the seafloor, a marine scientist has said.
Studies using a submersible found a layer, as much as 10cm thick in places, of dead animals and oil, said Samantha Joye of the University of Georgia.
Knocking these animals out of the food chain will, in time, affect species relevant to fisheries.
She disputed an assessment by BP’s compensation fund that the Gulf of Mexico will recover by the end of 2012.
Millions of barrels of oil spewed into the sea after a BP deepwater well ruptured in April 2010.
Professor Joye told the American Association for the Advancement of Science conference in Washington that it may be a decade before the full effects on the Gulf are apparent.
She said they concluded the layers had been deposited between June and September 2010 after it was discovered that no sign of sealife from samples taken in May remained.
Professor Joye and her colleagues used the Alvin submersible to explore the bottom-most layer of the water around the well head, known as the benthos.
“The impact on the benthos was devastating,” she told BBC News.
Meanwhile, the BP oil spill claim process has been nearly as devastating to people whose livelihoods depend on the Gulf. The number of complaints has been tremendous. Another set of ‘final rules’ for damage reimbursement has come out. Head of the process, Obama appointee Kenneth Feinberg, asked for input from every one for the final criteria.
The final rules also promise to give claimants more data about the status of their claims, including how any payments were calculated and why.
They’ll be bad news to local boat operators who helped with clean-up efforts, though; the final rules say boats used as part of a “Vessels of Opportunity” program can’t get paid for any resulting property damage via the claims facility.
Under the new rules, oyster processors will now be eligible for four times their 2010 documented losses as a lump-sum payment. In earlier versions, only oyster harvesters could get that much.
Although the Facility’s experts predict that the region will fully recover from the spill in 2012 (so claimants in most other fields are being offered a one-time check for double their documented 2010 losses), they estimate it will take oyster beds longer to return to normal.
The final methodology also offers to pay “reasonable costs” of claimants who work with an independent accountant on their claims, and to treat them as part of their losses. That offer should help claimants submit proper documentation to back up their claims; less than 17% had submitted completed 2010 documentation as of Friday, the GCCF said.
…
BP, for one, submitted a 24-page letter saying that the proposed methodology overstates the region’s losses and that payments were too generous.
More and more information is coming to the surface about the connections between Tea Party politicians, organizers and the John Birch Society. I’m not sure how many people were aware of their new governors’ associations and campaign contributors when they voted for him but they should have some awareness now. You always have to follow the money. No where is this more true than in Wisconsin.
Much of Walker’s critical political support can be credited to a network of right-wing fronts and astroturf groups in Wisconsin supported largely by a single foundation in Milwaukee: the Lynde and Harry Bradley Foundation, a $460 million conservative honey pot dedicated to crushing the labor movement.
Walker has deeply entwined his administration with the Bradley Foundation. The Bradley Foundation’s CEO, former state GOP chairman Michele Grebe, chaired Walker’s campaign and headed his transition. But more importantly, the organizations lining up to support Walker are financed by Bradley cash:
– The MacIver Institute is a conservative nonprofit that has provided rapid-response attacks on those opposed to Walker’s power grab. MacIver staffers produced a series of videos attacking anti-Walker protesters, including one mocking children. Naturally, the videos have become grist for Fox News and conservative bloggers. In addition, MacIver created studies claiming that Wisconsin teachers and nurses are paid too “generously” and other reports claiming that collective bargaining rights hurt taxpayers. The Bradley Foundation has supported MacIver with over $300,000 in grantsover the last three years alone.
– The Wisconsin Policy Research Institute is a major conservative think tank helping Walker win support from the media. The Institute has funded polls to bolster Walker’s position, and like MacIver, produced a flurry of attack videos against Walker’s political adversaries and a series of pieces supporting his drive against the state’s labor movement. Over the weekend, the Institute secured a pro-Walker item in the New York Times. The Wisconsin Policy Research Institute is supported with over $10 million in grantsfrom the Bradley Foundation.
– As ThinkProgress has reported, the powerful astroturf group Americans for Prosperity not only helped to elect Walker, but bused in Tea Party supporters to hold a pro-Walker demonstration on Saturday. In 2005, the Bradley Foundation earmarked funds to help Koch Industries establish the Americans for Prosperity office in Wisconsin. From 2005-2009, the Bradley Foundation has givenabout$300,000 to Americans for Prosperity Wisconsin (also called Fight Back Wisconsin).
It should be no surprise that Walker’s radicalism is boosted by Bradley money. Today, the Bradley Foundation is controlled by a group of establishment Republicans, along with Washington Post columnist George Will.
I’m not sure if you’ve gotten a chance to check out Yves’ excellent analysis of public vs. private pay scales in Wisconsin from Sunday, but if you haven’t, you’ll see that the private sector clearly pays more. One thing that the right wing frequently does when it explores this issue is to throw all public sector and all private sector employees into an average. This is comparing apples to oranges because public sector jobs frequently take higher levels of education than the overall economy. Think scientists, teachers, engineers, etc. Yve’s also point out the roll of the Koch brothers PAC in Walker’s campaign.
First, let’s debunk a couple of issues thrown out by Wisconsin governor Walker’s camp before turning to the real culprit in state budget’s supposed tsuris. The state budget is not in any kind of real peril. The Wisconsin Legislative Fiscal Bureau estimated that the state would end fiscal year 2011 with a gross positive balance of $121. 4 million and a net balance (after mandated reserves) of $56.4 million. Walker asserts there is actually a $137 million deficit. But where did that change come from? Lee Sheppard of Forbes estimated that Walker’s tax cuts for businesses would cost at the bare minimum $100 million over the state’s biennial budget cycle. Other sources put a firmer stake in the ground and estimate the costs at at $140 million. Viola! Being nice to your best buddies means you need to go after someone else.
The second major canard is that Wisconsin state employees are overpaid. If any are, it sure isn’t the teachers, nurses, or white collar worker.
There’s a nifty chart there via Menzie Chin at Econbrowser that breaks it down nicely.I’m really getting tired of hearing distorted stories from the right wing on this. Wisconsin right winger Congressman Paul Ryan is among the seriously confused. He’s supposed to be the Republican bright bulb on economics too. You can also add an article at the rather conservative The Economist to those with data showing how public sector employees do not receive better than private sector wages and benefits with an article called ‘Don’t join the government to get rich’.
But the Economic Policy Institute tells us that, in Wisconsin, public-sector workers are not in fact paid more than their private-sector counterparts. They’re paid less. You can only make it appear that public-sector workers earn more by ignoring the fact that “both nationally and within Wisconsin, public sector workers are significantly more educated than their private sector counterparts.”
Nationally, 54% of full-time state and local public sector workers hold at least a four-year college degree, compared with 35% of full-time private sector workers. In Wisconsin, the difference is even greater: 59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared with 30% of full-time private sector workers.
…Public employees receive substantially lower wages, but much better benefits than their private sector counterparts. Wisconsin state and local governments pay public employees 14.2% lower annual wages than comparable private sector employees. On an hourly basis, they earn 10.7% less in wages. College-educated employees earn on average 28% less in wages and 25% less in total compensation in the public sector than in the private sector.
The EPI study does find there’s a class of public-sector workers who earn a bit more than their private-sector counterparts: those without high-school degrees. In other words, district attorneys earn less than corporate lawyers, but janitors at the district attorney’s office may earn more than janitors at a corporate law office—provided the government hasn’t outsourced its facilities staff to the same private company the law office uses, which it may have, since governments have been targeting low-skilled workers for outsourcing precisely because that’s how they can save money.
The article also talks about Republican efforts to let state’s escape their pension obligations through bankruptcy. I can only imagine how many elderly workers would be impacted by this. Interestingly enough, Wall Street is against this too since many firms make money managing huge state pension plans and any state bankruptcy would impact bonds issued by states. It’ll be interesting to see how this unfolds.
It turns out, however, that state governments won’t have the money to pay a lot of those pensions. They’re likely to renege on their promises, and Republicans in Congress want to allow them to declare bankruptcy in order to do so. (Funnily enough, this may be the one area in which labour unions and Wall Street are in alliance: neither one wants states to be allowed to declare bankruptcy.) In other words, as Ezra Klein points out, the public-sector employees got rooked: they accepted lower pay in exchange for retirement benefits, and now the retirement benefits look unlikely to come through.
Pascal Lamy, Director-General of the World Trade Organization has written an article at Project Syndicate indicating that high food prices might be due to protectionist trade policies and a relative small amount of global trade in wheat and other grains. Can the world work together to stop food insecurity?
Export restrictions, for example, play a direct role in aggravating food crises. Indeed, some analysts believe that such restrictions were a principal cause of food-price rises in 2008. According to the United Nations Food and Agriculture Organization, they were the single most important reason behind the skyrocketing price of rice in 2008, when international trade in rice declined by about 7% (to two million tons) from its record 2007. Similarly, the 2010-2011 price rise for cereals is closely linked to the export restrictions imposed by Russia and Ukraine after both countries were hit by severe drought.
Most people are surprised to learn how shallow international grain markets truly are. Only 7% of global rice production is traded internationally, while only 18% of wheat production and 13% of maize is exported. Additional restraints on trade are a serious threat to net-food-importing countries, where governments worry that such measures could lead to starvation.
Those who impose these restrictions follow a shared logic: they do not wish to see their own populations starve. So the question is: which alternative policies could allow them to meet this goal? The answer to that question consists in more food production globally, more and stronger social safety nets, more food aid, and, possibly, larger food reserves.
A conclusion to the Doha Round of global trade negotiations could constitute part of the medium- to long-term response to food-price crises, by removing many of the restrictions and distortions that have muddied the supply-side picture. A Doha agreement would greatly reduce rich-world subsidies, which have stymied the developing world’s production capacity, and have pushed developing-country producers completely out of the market for certain commodities. The worst kind of subsidies – export subsidies – would be eliminated.
I didn’t cover any of the major international news items today since we’ve been trying to keep live blogs of the global protest contagion. I’ll try to come back with some pictures and information on the oil in the marshes here in Louisiana so you can see exactly what our government is letting BP get away with.
What’s on your reading and blogging list today?
peej
Carissa
bostonboomer
dakinikat
ecocatwoman
mablue2
Mama Lopez
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
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