The Economy Is Not A Board Game

The elites who make policy, write about it, have dinner parties where they cluck their tongues about it, mostly have good-paying jobs, health care and secure retirements. They are not affected by it. The elite commissions don’t include unemployed people. The Congressional hearings don’t hear from regular people. The news shows don’t spend a lot of time talking to regular people. The newspapers don’t run op-eds written by regular people because the corporate-conservative think tanks don’t hire regular people regular people to write them.
So the elites think about what is happening in the economy like it is a video game, a TV show, an academic exercise.
This concept struck me back during the “run up” to the Iraq war when I was talking to a conservative supporter of George Bush. He didn’t even try to claim, as Bush did, that Iraq had attacked us on 9/11 or there were WMD in Iraq. He asked if I had ever played the board game Risk. In Risk, he said, it is good to capture countries and surround the enemy. He Meant Iran. So hundreds of thousands of Iraqi people were killed, we spent what will add up to trillions of dollars, and all of the other terrible consequences of this lie, for what? Because people thought it was a board game?
Unemployment, low wages, union-busting, foreclosures, refusing to prosecute elites for real crimes — all of these have real consequences for real people and for our country. This is not a board game. The elites should get their heads out of their board-game asses and look at what is happening out here in the real world that exists outside of DC and NY and the high-end malls.
Just drive around the midwest, going from one former manufacturing town to the next. Jeeze, drive around Detroit. We are becoming a third-world country, except where the elites live. The elites would never let that happen where they live, and they move when it starts to happen. But they never fix it — because it doesn’t effect them, and because the rules of the board game say it can’t be happening..
Regular people are being affected, and the elites need to get some regular people onto their commissions and into the hearings and onto the boards of the companies and organizations that make a difference to regular people. The economy is broker – the whole system is broken – but not for the elites. Get some input from regular people and you’ll know that.
And no, I do not mean regular banker people.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Corporations Aren’t The Problem

A pro-labor column in a major newspaper? I’d better look out my window and see if pigs are flying down the street. Nope, they’re not! Hell hasn’t frozen over. And hey, monkeys aren’t even coming out of my butt!
In today’s NY Times Joe Nocera writes, in Turning Our Backs on Unions,

In the early postwar years, even the Chamber of Commerce believed that “collective bargaining is a part of the democratic process,” as its then-president noted in a statement.
But, in the late-1970s, union membership began falling off a cliff, brought on by a variety of factors, including jobs moving offshore and big labor’s unsavory reputation. Government didn’t help either:Ronald Reagan’s firing of the air traffic controllers in 1981 sent an unmistakable signal that companies could run roughshod over federal laws intended to protect unions — which they’ve done ever since.
…“Draw one line on a graph charting the decline in union membership, then superimpose a second line charting the decline in middle-class income share,” writes Noah, “and you will find that the two lines are nearly identical.” Richard Freeman, a Harvard economist, has estimated that the decline of unions explains about 20 percent of the income gap.

Nocera concludes, “…if liberals really want to reverse income inequality, they should think seriously about rejoining labor’s side.”
Ok, checking again, are monkeys really not flying out of my butt?

OK, this is for real, and people had best pay attention if we want our economy to recover. We have a consumer economy and when regular people have money in their pockets to spend on things, the economy does better. Why is this so hard to get? So why are all of the solutions to the economic downturn based on, as Atrios writes, “free money for banks” instead of helping regular people?
See Businesses do not create jobs, people do. Also, It’s the lack of demand, stupid! and Businesses hire when customers are coming in the door and The rich don’t create jobs, we do.
Again, the rich don’t create jobs, we do. And companies want customers, not tax cuts. And this means that we need strong unions pushing to get raises and benefits so working people can start walking through the doors of the businesses again, which will make them hire again, to meet that demand.

Who’s In Charge Here?

We, the People were supposed to be in charge here. The economy was supposed to be for our benefit and we were all supposed to get a slice of that pie we all baked together. But (as always throughout history) wealthy interest were able to dominate, “influence” the lawmakers and enforcers, and grab what they could get for themselves. Our system fell down because it didn’t control the ability of a few wealthy people to gain power over the rest of us.
Unions gave regular working people the power to get the share of the pie that democracy promises. Before unions came along to enforce the promise of democracy working people didn’t get their share of the prosperity that democracy promised. After unions working people did. Before unions we had 12 (or more)-hour workdays, seven days a week. Before unions we had low pay. Before unions we had no benefits. Before unions we certainly didn’t get vacations. Before unions we could be fired for no reason. Before unions a wealthy few were able use their wealth to pay off influence legislators and keep the rules bent in their favor.
Unions organized people into power blocks that forced changes that brought a larger share of the pie to We, the People. Unions are a vital part of the system of democracy because they give regular people the power to confront the wealthy.

Corporations Aren’t The problem — The Rules Are The Problem

One thing Nocera wrote: “Company managements don’t pay workers any more than they have to” — actually, I would change “don’t” to “can’t”. Companies can’t pay workers more than they have to. And they can’t provide health insurance and benefits and good working conditions and all the other things we wish they would do.
Here is what a lot of us don’t get about corporations: it isn’t the corporations that are the problem, it’s the playing field that is the problem. If one corporation can get away with paying its workers less, then they all have to. They don’t have a choice. When one company finds a competitive advantage the rest of the companies have to respond or risk being driven out of business. They really do not have a choice. One company can’t pay better than the others. We, the People have to make them all pay better. It’s called making the rules. We are supposed to be making the rules, not them. And when we are not making the rules, the system stops working.
I think this is so important to understand. To change companies we have to change and enforce the rules that companies operate under. It is up to us to tell them what to do, to lay down the playing field, and then they will compete on that field as it is defined, up to the limits of how it is defined. They have to push to those limits, and they will, they all will, it is what they are wired to do. When we fall down on the job a few can game the system and break it and end up with everything for themselves, and this is what is happening.
It isn’t just that We, the People come out better when we are the ones making the rules, it’s that the system doesn’t work at all unless we are the ones making the rules. When (the owners and managers of) companies are making the rules, the ones with the most money are able to make the rules to benefit them and only them Which is exactly what we are experiencing today.
The economy and the system just don’t work without strong unions to balance the power of the billionaires and the big corporations they hide behind.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Trade Deficit – One Root Of Many Problems

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff… Finally you’re selling off the tools you had used to make a living. That’s where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The Root

Pick a national problem, and the odds are that our trade imbalance is aggravating it. Our trade deficits literally suck money out of the country. When looking up the numbers I had to double check, our annual trade deficits are so huge. In the chart below that first line under the dates represents $100 billion. Look at what happened in the late 90s, when we opened the China flodgates. (Click to enlarge):

In the 70’s the trade balance dipped below zero because of oil, and the country responded with conservation and the beginning of the search for alternatives — until Reagan. To make matters worse, Reagan preached “free trade” — as in use cheap foreign labor to break American unions. (But Reagan also enforced rules against “dumping” and other trade violations.) The real break in our balance of trade clearly begins around the time that NAFTA and the World Trade Organization went into effect, and then went absolutely nuts after China was brought in. Between 2001 and 2009 we lost 1/3 of all of our manufacturing jobs, more than 50,000 factories, and entire industries. We drained trillions of dollars out of our economy.

Causes

Energy. The trade imbalance started with OPEC and the oil price shocks in 1970s, and oil imports since then. This is a huge problem but the beneficiaries of this trade imbalance fight to keep things the way they are. (By the way, next time you hear someone of FOX running down our country’s green energy efforts, knocking the Chevy Volt or denying climate change, think abougt this: Fox’s second-largest shareholder is a billionaire Saudi oil prince. Also, FYI, Koch brothers == oil.)
“Asymmetries.” One-sided trade relationships are now draining money from our country at a dramatic rate. We are much more open to imports than many of our “trading partners” are. We buy from them, they don’t buy from us — and we just let this continue year after year.
“Strong” dollar policies, combined with currency manipulation by others. A strong dollar is great for Wall Street, but is terrible for manufacturers and producers. When the dollar is “strong” it means that goods made here cost more than goods made elsewhere. The dollar went way up in the early 1980s because of the borrowing following the Reagan tax cuts for the rich and the trade deficit went up along with it. Dollars had to be purchased to buy our bonds, creating a “demand” for them, which increased their “price,” contributing significantly to the then-record U.S. trade deficits. Meanwhile, we let countries like China manipulate their currencies to make them “weak,” which means goods made there cost must less in world markets.
Trade cheating. Many countries violate trade rules (like manipulating currency), which brings them a competitive advantage in world markets. We don’t call them on it for various reasons, largely because powerful interest groups benefit from the cheating. When goods from elsewhere cost less than they should it undermines our own manufacturers and producers, but the lower prices enrich distributors, retailers, and others.

The Trap

Here is the trap of our one-sided trade agreements: these “free-trade” agreements increase exports. The reason this is a trap and a problem is that they increase imports more. So, on the one hand the agreements create and enrich interest groups that push for continuation and expansion of the agreements, while on the other hand they increase trade deficits, which drain our economy.
Example: We opened up trade with China. China lets their imports grow, so we have some appearance of increasing sales to China, but they keep barriers while manipulating currency and subsidizing their companies, and their exports to us grow faster than their imports from us, which increases the imbalance. They can steadily reduce their import barriers and let their currency rise slowly, giving the appearance of moving toward open trade and providing what appear to be incentives to keep the relationship going, but by also increasing their exports they continue to drain us.

The Answer: Balance

We must balance our country’s trade. Of course, to do that we must understand ourselves as a country again. Our competitors certainly do.

We’re A Country. Deal With It.
Here’s the important thing to understand, even if you think the idea of “countries” is out of date, and don’t think of the United States as a country is important anymore: Others see themselves as countries and they organize their countries to win as countries. And you don’t live in those countries. They see us – this geographic region we live in — as a country, even if we do not, and they plan their efforts accordingly. They attack us as a country and you happen to live in the geographic region called a country that they are attacking. So as they seize the jobs and factories and industries from our country all of us who happen to live within the geographic borders that we refuse to call a country lose out economically, whether we believe we are part of this country or not. This means we have to respond as a country regardless of whether our ideology says we shouldn’t. We are under economic attack as a country, so national government still matters as the only force capable of organizing a national response.

Our government must say that the amount coming in must match the amount going out. Period.
(Note, The Causes of the U.S. Trade Deficit, Robert A. Blecker, Ph.D., August 19, 1999 is a good read.)
Join me at the June 18-20 “Take Back the American Dream” conference.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Virtually Speaking Tonite With Digby

Virtually Speaking Sundays | June 3 | 6pm pacific | 9pm eastern
Dave Johnson, a Fellow with Campaign for America’s Future and a Senior Fellow with Renew California blogs at Seeing the Forest Follow @DCJohnson
DIgby writes primarily at Hullabaloo. This week, she is guest blogging at Mother Jones, while Kevin Drum takes a break. Follow @digby56
Listen live & later at BlogTalkRadio — meaning you can listen live tonite, or later hear the whole show on podcast.

Crucial That You Watch This

Murdoch’s Scandal | FRONTLINE | PBS shows how FOX corrupted UK government. This is a criminal organization, and the response here shows they are intimidating and corrupting media and government. MUST SEE.
They have obviously broken US laws against a US company bribing officials, why will Obama Justice Dept not prosecute for this? Why won’t Dems in Senate launch investigations?

Unions Fucking Us All Up By Requiring Actual Pay For Work

A letter in today’s paper, about how unions are “handcuffing” us, because they won’t let cities replace paid people with volunteers. This pretty much sums up the anti-union argument, doesn’t it?
Letters to the Editor – San Jose Mercury News,

Union rules handcuff library volunteers
[A person's] attacking of volunteers …(Letters, May 28) does not surprise me, but her lack of candor does. As business agent for San Jose’s largest public service employee union, she had a vested interest in keeping librarians employed. She should have disclosed this. … While libraries have “friends” groups, members are relegated to tasks not performed by union employees because of union rules. Take restrictions off library volunteers and they may flourish, …

Oh, and they’re also fucking us all up by getting pensions and health care. In a free market no one should get pay, pensions and health care! Then we can all prosper. Or something.

Deficit Scare Is Shock-Doctrine Scam

The deficit scare is about stampeding people into giving up what they have. It is about handing over democracy to the 1%.
Krugman, The Austerity Agenda.

So the austerity drive … isn’t really about debt and deficits at all; it’s about using deficit panic as an excuse to dismantle social programs.
… The big question here is whether the evident failure of austerity to produce an economic recovery will lead to a “Plan B.” Maybe. But my guess is that even if such a plan is announced, it won’t amount to much. For economic recovery was never the point; the drive for austerity was about using the crisis, not solving it. And it still is.

Have you noticed that people who are screaming up the terror over deficits are the very same people demanding tax cuts for the rich, no cuts in military, cuts in the minimum wage, selling off public assets, etc?
These people just say stuff, they just lie. They have their own agenda, and it is about tricking people and enriching themselves. Don’t listen, never even give them the time of day.

Jobs: It Is (Long Past) Time For Government To Act

Combine a too-optimistic administration with a Republican Party that is sabotaging the economy as a campaign strategy and what do you get? You get today’s terrible jobs report. First, though, remember that the economy lost 818,000 jobs in the last month of the Bush presidency. The stimulus at least turned that around. But then we started hearing more about “green shoots” and “pivots” to austerity and less about the urgent need for government action to get people working again.
From Bob Borosage’s statement this morning on today’s terrible jobs report,

“As Great Britain has shown, austerity in the midst of recession is self-destructive. This is leech economics. Like the Medieval practice of applying leeches to convalescing patients, it causes pain without benefit. It adds to human suffering, driving the economy into recession which ends adding to deficits, and worsening the ratio of debt to GDP. It is time for government to act.”

End This Depression Now!*

It is long past time for government action to get people working again.
The solution to the jobs problem is obvious and in front of our faces – and has been for a long time. There are millions of jobs that need doing. Financing the work that needs to be done is officially at the lowest cost in history. The payoff would be enormous. We, the People urgently, urgently, urgently need our government to take direct action to put people to work right now:
Infrastructure: The nation’s infrastructure is f*#&ing falling down. It is five years since the I-35 bridge in Minneapolis collapsed. A national push to modernize our infrastructure would employ millions (especially if we require that the supplies and steel be made in America!), while cutting the safety-net spending, saving hundreds of thousands of houses from foreclosure, restoring income tax revenues, and it would f*#&ing pay for itself by making our economy more competitive.
Energy retrofitting: The nation is wasting energy, literally letting it leak out through drafty doors and windows. A national effort to retrofit our buildings and homes to be energy efficient would employ millions (especially if we require that the supplies be made in America!)! And, again, the payoff would be enormous as our newly-energy-efficient economy competes in the world. (Not to mention – again – the savings on safety-net programs and the increased tax revenues…)
Buy American in government purchases: If we start implementing Buy-American policies in the states and increasing them in federal procurement, we would employ more millions as factories reopen. These policies are allowed in our trade agreements, and our trading “partners” sure aren’t buying from us!

Stop Fooling Around

These are just a few of the ways the country could end this depression right now. Stop fooling around, and that means you in the administration, too. Right now demand that Congress pass a massive government infrastructure program and a massive energy retrofitting program and strengthen federal Buy American procurement provisions and ask states to implement Buy American in their procurement.
* Yes, End This Depression Now! is the title of Paul Krugman’s new book. From Krugman’s web page for the book:

The Great Recession is more than four years old—and counting. Yet, as Paul Krugman points out in this powerful volley, “Nations rich in resources, talent, and knowledge—all the ingredients for prosperity and a decent standard of living for all—remain in a state of intense pain.”
How bad have things gotten? How did we get stuck in what now can only be called a depression? And above all, how do we free ourselves? Krugman pursues these questions with his characteristic lucidity and insight. He has a powerful message for anyone who has suffered over these past four years—a quick, strong recovery is just one step away, if our leaders can find the “intellectual clarity and political will” to end this depression now.

Paul Krugman will be speaking at the “Take Back the American Dream” conference June 18-20 in DC.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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