• Navigating the Homeless and Mentally Ill

    February 24, 2020 // 12 Comments »

     

    New York, America’s richest city and Ground Zero in how economic inequality is reshaping every day of our lives.
     
    NYC is home to 70 billionaires, more than any other American city. One apartment building alone, 740 Park Avenue, is home to the highest concentration of billionaires in the United States. Yet living among those billionaires (NYC is also home to nearly one million millionaires, more than any other city in the world) the city also has the highest homeless population of any American metropolis, close to 80,000 and growing. The homeless numbered 24,000 during Rudy Giuliani’s mayoral administration some twenty years ago. Three years after that the homeless population swelled to almost 38,000 under Michael Bloomberg. The number of homeless single adults today is 142 percent higher than it was ten years ago, the highest level since the Great Depression.
     
    The city shelters about 64,000 on any given night. Another 3,000 people make their full-time home in the subway system. Their belongings and their defecation crowd out morning commuters on the platforms. In the winter many never emerge above ground. A visitor from outer space would be forgiven for thinking they weren’t even human, recognizable as just a head emerging from a urine-soaked bundle of clothing, not living really, just waiting. The ones who prefer to ride the trains 20 hours a day or more are like one-celled amoebas that react to heat or light by moving out of the way, in the specific case a transit employee whose inquiry causes some physical shift but no sign of sentient action.

    Don’t be offended — what did you think runaway economic inequality was gonna end up doing to us? Macroeconomics isn’t a morality play. But for most New Yorkers the issue isn’t confronting the reality of inequality, it is navigating the society it has created.

    Navigating income inequality is not a problem for the rich. Public transportation, once the great melting pot, is less so as Uber plays a bigger role. The new super apartments, with their city-required handful of “affordable” units, have separate entrances based on wealth. A someone goes and gets the coffee, does the shopping, delivers the food. Armored cars for personal use are seeing a boom in sales. NYC’s newest mega-development, Hudson Yards, (Jeff Bezos is a fan) has been dubbed the Forbidden City, a mean snub as it is self-contained, literally walled off from the environment around it (there are “service” entrances for workers, and the stores have their primary doors opening into the gated courtyard, not on to Tenth Avenue.) NYC helps its wealthy pay for all this with a generous 40 percent incentive tax break. The city also built Hudson Yards its own subway line and park network for a total expenditure of six billion (the city spends only half that total on the homeless.) Elsewhere private restaurants, private clubs, private entrances, members only-everythings and VIP sections at public events keep the homeless beyond arm’s reach.
     
    For the rest, stuck between middle class and the abyss, navigating the world of economic inequality is more of a contact sport.

    Public libraries are in various degrees off limits, at best shared, with the well-behaved homeless. They are among the tens of thousands who live in the gulag archipelago of NYC’s vast shelter system. Most of the shelters (there some exceptions for women with small children) are only open at night, leaving the residents to find somewhere to physically exist between 7am and 11pm, after which the city cares about them again. There is no daytime plan for this population, so in bad weather they take over the libraries. Regular patrons are on their own if the staff don’t manage it well; the signature main library with the stone lions has guards to send the homeless across the street to a branch, where the homeless are more or less curated like the oversize books on to one particular floor. At the 96th street branch, the library serves no other purpose than homeless daycare, except for a brief period after school when bodies are moved around for an hour or two to accommodate story time.

    How do the non-homeless navigate this? They buy books on Amazon. They buy quiet workspace and WiFi at coffee shops. They buy their way around the homeless same as others buy their way around via ride sharing services.

    Economic inequality is part of life for many New Yorkers. Not homeless but damn poor, 400,000 reside in taxpayer-paid permanent (permanent as in multi-generational, grandmas passing squatter’s rights to grandkids) public housing. Conditions are literally toxic in these “projects,” as well as crime-ridden and just plain Third World crumbling. And yes, New York’s public housing authority is the world’s largest. There are probably fewer no-go zones than in the dark times of the 1970s, but maybe more “why would you want to go there anyway” places.

    Housing prices for who can pay their own way are such that 40 percent of adult renters live with a roommate. The city even has a program to help elderly renters share their homes. Hanging on to the middle in times of economic inequality means shared or public housing, juggling multiple jobs which often pay less than minimum wage (Taskrabbit, Fiverr, who background check their employees and then send them into anonymous homes), living with life-crippling debt, skating on the edges of no healthcare, and snubbing your nose at people who aren’t living that Big Apple dream.

    In a society constantly creating more poor people and depleting its middle class, spending more money on shelters won’t work. Look to Honolulu. It has been overwhelmed with some 7,000 people who became newly homeless in 2019. That number erased the 616 homeless people per month, on average, who were placed into “permanent housing.” They’ll really not ever stop building until, in theory, shelters house about 99 percent of everyone.

    To lighten things up, New York loves irony. Many of the cheaper apartments for young Millenials are in the same parts of town which once housed new immigrants in the early 20th century, that now golden-hued era of open borders celebrated as a democratic ideal when a more accurate vision would realize it was just a massive labor pool for the wealthy to exploit. That’s also a reminder that modern immigrants, particularly from Central America, form the exploitable, discardable labor pool that undergirds New York’s food service and day labor industries, and staffs car repair shops, butcher and delivery businesses.

    Hey, businesses, too, still have to navigate, especially around the homeless. I used to work at a Barnes and Noble near the bus stop out to the main homeless shelters on Randall’s Island. The B&N was open late and in bad weather the homeless came in to wait for their ride. There was actually a store policy created, and the regulars were trained: don’t interfere with commerce, no bathing in the restrooms, no sleeping, use the electrical outlets in the back to charge phones, don’t panhandle in the coffee shop and you can stay. A kind of Darwinian process kept some warm inside while security moved others out into the weather.

    An ecosystem in balance, same as at most Starbucks. People here sometimes refer to the place as a public toilet which also happens to sell coffee because, following charges of discrimination, the chain now claims its space and toilets are open to all, not just customers. Of course in some marginal parts of town those toilets are forever closed to all “under repair,” but in most places the homeless are trained to navigate us, staying out of the way, taking a cup out of the trash to set on the table and pretend they are buying something. Being seen as being nice is important to Starbucks’ customers as they mentally navigate their own place being able to afford expensive coffee alongside those who have less. Awkward!

    As a woke company catering to woke customers who want nice things without guilt, Starbucks has a whole corporate page up about how kind they are to the homeless. Something similar at the new food court at Essex Market (called the “anti-Hudson Yards”), which has full-time staff assigned to monitor the public toilets, allowing the homeless in and nudging them into the boundaries the Market deems acceptable. Essex market, like Starbucks, seems to see faux-humanitarian gestures towards the homeless as part of its marketing plan to Millenials who don’t want to see bag ladies dragged into the street whilst sipping artisanal Tibetan tea. It’s pretty much all just undergrad-level socialist theatre. Different rules and rougher play at Macy’s and Bloomingdale’s, where the more delicate suburban ladies and fragile tourists still shop pretending like it is 1968. At the end of the day, however, the homeless are still homeless at each place and night comes the same for all.
     
    The urban stories above are only about one part of the homeless population. There are two overlapping populations: those outside capacity of existing systems who depend on businesses and us to navigate, and those so far whacked and gone nothing exists to help them.

    It’s inevitable in a society that is constantly adding to its homeless population while simultaneously lacking any comprehensive way to provide medical treatment, all the while smoothing over the bumps on the street with plentiful supplies of alcohol and opioids (I was in line behind a homeless guy in liquor store paying with sock full of coins. He was 67 cents short for a bottle of no-name gin. What’s the right thing to do? I probably drink as much as he does most nights but it’s OK because I work for my money instead of begging? There are moral hurdles to navigate as well) are the severely mentally ill. These people exist outside the vast shelter system. They live outside, discarded, driven out of the overnights and the daytime Starbucks by violent or paranoid delusions. Even the recent killing of four homeless men by a fifth mentally ill homeless man failed to shock anyone into action.

    Navigating these people requires something more than a benign balancing of company profits and makeshift humanitarian gestures. At the Fulton Center subway station, problems with the mentally ill homeless reached a point where wire rope was installed alongside a made-up “no sitting” law to eliminate places to rest. A team of angry rent-a-cops make the homeless stand, wandering through the space waking up those who tumble, and chase away the worst. The sole working men’s room remains a kind of demilitarized zone, and it is not uncommon to see one man washing his clothes in the sink while another talks to himself as a third vocally struggles with his defecation. Most of the city’s such privately owned public spaces employ guards not against crime per se, but to enforce rules about how much baggage the homeless can bring in, whether they can sit, sleep, or have to pretend to buy something, and act as not gentle referees when a tourist snaps an unwanted photo and angers someone, or a homeless person otherwise becomes too aggressive with himself or another homeless person.

    There are of course other, more profitable, ways to navigate. San Diego created a “toolkit” to help businesses benignly wrangle the homeless without needing to involve the cops. NYC stores are told to invest in barbed grates that homeless can’t lay on comfortably (the hostile architecture of bars, protrusions and spikes that make it impossible to lie down on a park bench or wall are pretty much sculpted into the architecture of the city, markers of the struggle for public space. The idea even has its own Instagram account.) A private security firm offers more comprehensive solutions: advice about restricting access to sidewalk overhangs, alcoves, or other areas protected from inclement weather, remove handles from water spigots, and keep trash dumpsters locked when not being filled or emptied. If things get too bad, the company, for a price, will deploy “remote cameras integrated with military-grade algorithms capable of detecting people in areas they shouldn’t be in.” There are other ways to make money off the homeless, of course. Many of the shelters in NYC are contracted through private companies (fraud criss-crosses the system) , who charge the city about $80 per adult per night for an SRO room without its own indoor plumbing. Food stamps are distributed via Electronic Benefits Transfer or EBT (some recipients claim the acronym really means “Eat Better Tonight.”) JPMorgan Chase holds the contracts in half the United States to handle the transactions. In New York that’s worth more than $112 million. But hey, Amazon now accepts EBT online in New York and you don’t even need Prime!

    A concise fable of what economic inequality has done to this city lies in canning, a nice term invented to describe the underground economy of returning aluminum cans for the five cents deposit. What was started in 1982 in hope the deposit would encourage consumer recycling alongside kids picking up cans to supplement their allowances, has become way to make a sort of living for an estimated 8,000 human beings. As the value of a nickel to many faded over the years, the need for a few bucks among the city’s growing homeless population grew. They started picking up cans for the money wealthier people set out as trash. The recycling centers in most food stores, however, hoping for return shoppers, did not want the homeless in their stores. Most set $12 daily redemption limits, often broken up in per can lots that forced the homeless to return two or three times. Streetside automated drop off points devolved into social centers for the homeless, including the infamous Pathway site at 125th Street that was renown as a drug market and dumping spot for the near-dead until it was closed down.
     
    Unable to redeem their cans, the homeless moved on, replaced by highly exploitive canning crews which buy cans in bulk from elderly pickers (many are retired or on disability) for about a $30 nightly haul per person, and who then deal directly with the bulk metal recyclers uptown. A five cent can might be worth only three cents on the street; competition among the people living off my garbage is sharp, where on a late night dog walk just before the bulk trucks arrive can crews run by Chinese organized crime (rumor is those who can’t work off human smuggling fees otherwise work the can routes) tussle with individuals for turf. The cops are uninterested and some local doormen try and intervene but often tire of the guff. It’s not a proud thing to witness.

    We’re a society built around economic inequality. We’ll all just have to learn to navigate our way through.
      

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    Bernie and Reality of Economic Inequality

    February 16, 2020 // 23 Comments »


     
    It is a good thing candidates like Bernie Sanders make economic inequality a campaign issue in 2020. But with apologies to the Bernieverse, he is well-meaning but like everyone else has no practical solutions. Bernie, et al, imagine there exists some means to redistribute wealth, most likely, following the economist Thomas Piketty, via a progressive tax on the wealthy. Just talking about that may be enough to scare the wealthy into putsching a corporate Democrat in place of Bernie once again despite the human shield of green-haired pierced volunteers, but even if he were to win he could not be enough to change America. It’s a reality problem.

    The reality of wealth is the gap between most Americans and those who sit atop our economy continues to grow. This is nothing new. For two decades after 1960, real incomes of the top five percent and the remaining 95 percent increased at almost the same rate, about four percent a year. But incomes diverged between 1980 and 2007, with those at the bottom seeing annual increases only half of that of those at the top. Then it got worse.

    Lower savings and hyper-available credit (remember fraudulent Countrywide mortgages, ARMs, and usurous re-fi’s?) put the middle and bottom portions of society on an unsustainable financial path that increased spending until it crashed into the Great Recession of 2008. Meanwhile, America’s top earners’ wealth grew; the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009 as the markets recovered, while the bottom ninety percent became poorer as their missing homes did not. Their wealth, such as it was, was a Potemkin vision, wealth in the form of their homes which they actually did not own. The recession represented the largest redistribution of money in a century. How did the rich pull this off?

    The reality of possession. They own stock and real estate, not just personal homes to live in. Less than half of Americans do not own any stock while the wealthiest of Americans own over 80 percent of all stock, and 40 percent of America’s land. It is worse on an international scale. Only 85 human beings own half of all the world’s stuff. Markets over time go up and those who own parts of them do well. People who do not own homes have to rent them from those that do own. Owners can raise rents as they think they can get away with. A rising tide lifts all yachts, as historian Morris Berman observed. It can be hard to understand this level of wealth; a few years ago the real estate site Redfin figured out Bill Gates could buy all of the real estate in Boston. Candidate Michael Bloomberg could pick up Anaheim. Google’s Larry Page is able to buy Boca Raton. Never mind yachts, they can buy whole cities.

     

    It is the reality of the system. Walmart associates make minimum wage. Most associates are nowhere near full-time, so their take home pay is well below the poverty threshold. Employer-paid Obamacare, such as it is, only kicks in after one works 20 hours a week or more, so following the implementation of that policy most employees were cut to less than 20 hours, meaning they had to juggle multiple jobs to live and still did not have healthcare. They might be working 60 hours a week at three different places but that did not qualify them for healthcare as the qualifying hours are not cumulative.

    In return for paying below-poverty wages, Walmart enjoys taxpayer subsidies of $5,815 per worker in the form of food stamps paid by the government to keep the workers nearer the poverty line than below it, and tax breaks given to “create jobs.” On their side of the ledger, a few years ago the top four members of the Walmart family made a combined $28.9 billion from their investments. Less than a third of that would have given every U.S. Walmart worker a $3.00 raise, enough to end the public subsidy, though the four Walmart scions would have to make due with only $20 billion a year. Essentially the interests of the 99 percent are in direct conflict with those of the one percent.

    But the real money from economic inequality is made in much bigger bites. Walmart can pay low wages, creating a new status known as working poor, without having to see workers literally starve on the job because their employees receive $2.66 billion in government poverty assistance each year. That works out to about $5,815 per worker, or about $420,000 per store. Food stamps, a generic term for food assistance, are a key part of navigating in and profiting from, income inequality. In one year under study nine Walmart Supercenters in Massachusetts received more than $33 million in food stamp dollars spent at their stores, a fair amount by their own workers. In two years, Walmart received about half of the one billion dollars in food stamp expenditures in Oklahoma. Overall, 18 percent of all food benefits money nationwide is spent at Walmart. That’s about $14 billion.

     

    The reality of the system protects those who make massive amounts of money by owning things, as opposed to working for wages. So let’s Robin Hood those wealthy bastards, Bernie and Elizabeth and others say. Jeff Bezos’ net worth is $109 billion. But that’s everything he has, not just the six percent tax Elizabeth Warren wants him to pay. The net worth of the entire Forbes 400 is under three trillion dollars. That’s everything they all own, as if we killed them and took it. The reforms Elizabeth Warren proposed to address economic inequality will cost some $20 trillion. It does not exist.

    But you have to start somewhere, right?  Given that America’s largest companies already pay little to no tax, it is  unclear how such a system would ever be enforced in the long run before the wealthy offshore their money. Taxes still leave in place other factors driving economic inequality, including a system of higher taxes on wages than capital gains, inheritance laws (Money is immortal. The children of rich people are born rich and unless they get really into hookers and blow, will inevitably get richer. They almost can’t help it), and the ability of the wealthy to control wages and the availability of jobs. Unions are increasingly a thing of the past and automation threaten more jobs daily. The rich decide when to pull the trigger on touch screens in fast food restaurants and deep six cashier jobs, never mind the mass extinction driverless delivery vehicles will bring on, and the one after that when advances in AI crush entry-level coding jobs.

     

    The single most significant factor is that financial growth via capital ownership (what the rich do for money) always outstrips wage growth (what the rest of us do to get money.) Getting richer by owning stuff is always a better deal than trying to get rich by working for wages from the people who own stuff. Even if a magic wand reset society somehow, the nature of capitalism would soon set things back on the path to income inequality. This was French economist Thomas Piketty‘s significant finding. Rich people know about this even if poor people don’t. Rich people get money through capital gains, basically assets they buy cheaply becoming worth more over time (until slavery was replaced with the minimum wage, human beings were also considered as a form of capital asset. Seriously, check with human “resources” where you work.) That’s why a short-term downturn is bad for you, ultimately good for most of them. It’s why stock market trouble uninformed people wish for will not make Trump go away. Math!

    The only hope lies in the reality of politics, right? Over large swaths of the earth, there are no elections. In some of the wealthiest countries in the Middle East and Asia there is not even the pretext of anyone choosing a government. Most governments are controlled by family ascension, not unlike the Middle Ages or in more modern places corruption and manipulation. Power and wealth work together.

    Such is the case now in the United States. According to the once-prescient Lawrence Lessing (who has since lost his mind to Twitter and TDS), with the concentration of wealth, 132 people in the U.S. essentially control elections. They do so by donating, just that handful of people, over 60 percent of the SuperPac money. Those 132 people represent 0.000042 percent of the total number of voters; most other contributions to candidates are small, many below $200. It sounds nice when a candidate talks about it but it diffuses power even as you he owes you something now. It is impossible under such circumstances for government to create laws again the interests of the wealthy; after all, they work for them.

    The reality is there is no answer, no solution. That’s because things are working more or less as they are supposed to. From a certain perspective, income inequality means things are going according to the rigged rules. The system is designed to squeeze wealth up into a smaller and smaller group of hands. A by product is the creation of more and more poor and eventually homeless at the bottom. It is the inevitable end point for a society set up to fund the wealthy via capital appreciation by paying low or stagnant wages to everyone else.

    To say it can’t be is to ignore the last time in history when it sort of was, one king in one castle sustained by tens of thousands of serfs living in sloven conditions. The world has seen this before, for the West, during the Middle Ages, when feudalism was the dominant force. A very, very few owned most everything of value. The 99.999 percent majority — serfs then, valued Target associates now — worked for whatever the feudal lords allowed them to have.

    Of course this is all very wrong. It’s very American to believe there are always answers, that there are not forces stronger than change at work, especially in an election year. If you’re still looking for those answers — solutions — well, you’ve gotten to the end of the article.

      

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    Dear People Wishing for Stock Market Trouble

    August 26, 2019 // 20 Comments »


     
     
    NOTE: I’ve been re-running this article every time over the last three years a temporary downturn on Wall Street causes progressive idiots to celebrate. The last run was in January 2019, but here we go again.

     
     

    Dear People Wishing for Stock Market Trouble:
     
    Stock market trouble will not make Trump go away.

     

    You can have fun posting memes though! He’s owned! He screwed up the one thing he says he’s good at! Rich people will abandon him! Hah hah!

    First of all, that is not what is happening. But if people want to panic based on panic journalism, by all means go ahead.

    But for the rest of us from 1929 to 2018 the S&P averaged 8-10% gains. It is up well above that for this year, so declines are expected and normal. Recessions on the other hand are CAUSED by things, they do not happen in cycles per se just because it is time. Or because the MSM wants “recession” to replace “Russia” as the magic bullet to end Trump.

    Everything tangled by US-China can be untangled, suggesting its long term effects are able to be mitigated directly. You can spend as much time as you like blaming/congratulating whomever that the fundamentals are strong, but they are and that speaks better to longer term trends than other factors. Even in the short term there is money to be made; if you bought on Friday’s drop you are already making money on today’s rise.

    If you are learning about inverted bond yields roughly the same way you learned about Emoluments and the 25th Amendment and Russiagate, you are still listening to the wrong people.

     

    But let’s look into what progressives are cheering for, hoping to happen, a real live recession. Any serious downturn in markets will cause more economic inequality. Wealthy people depend on periodic downturns to force middle class people to sell. The rich then buy cheap and wait for the inevitable swing back. They end up owning more stuff, and they got it cheaply.

    About half of all American households own stock, in most cases indirectly through mutual funds, and, more and more via 401(Ks) and whatever company pension accounts still exist. Yet despite that broad base — half of us own something in the stock market — the richest 10% of Americans owned 84% of the total value of the market as of 2016.

    Though those numbers roughly match those of America’s worst period of inequality, the so-called Gilded Age, they are a big change from 2001, when the top 10% owned only 77% of all stocks.

    Today, they have more. You have less. Your part of the market exists because the few wolves need lots of rabbits to eat. You are predator or you are economic prey. Guess where this goes? Think of it as one of those pictures where parallel railroad tracks seem to get closer and closer as they recede into the distance. The theoretical end point is one person owns 100% of everything. But modern wealthy would be happy if .01% owned just 99%, close enough.

     

    In case you missed it, that’s what the 2008 mortgage/housing crisis was all about. Middle class people lost their homes when they could not pay their mortgages. “The banks” then owned those homes and you did not. It took a few years and most prices started back up. You in turn now rent from someone who now owns those homes.

    The inequality of net worth, after almost two decades of little movement, went up sharply from 2007 to 2010, and relative indebtedness for the middle class expanded. The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable to the high leverage of middle class families and the high share of homes in their “portfolio.”

    What that means is middle class people have most of their net worth embedded in their homes, but see most of that “worth” is actually debt (leverage.) When times get tough, they may lose the home because they can’t pay the debt. People rich enough to spend money in downturns buy up those homes. They have extra money to ride out the tougher years until the government bails out the markets like Obama did in 2008. Same story for the stock market.

     

    It gets worse, because you get money by working for wages. Rich people get money through capital gains, basically stuff they buy cheaply becoming worth more over time. That’s why the downturn is bad for you, ultimately good for most of them. It is math!

    If you like math with letters in it, it is written as R > G. All explained here if you want to understand precisely why you are going to be poorer. And as a bonus, be sure to note the part about how in the U.S. wages are taxed at a higher level than capital gains. You can never have too many advantages.

    Note also that until slavery was ended in the United States, human beings were also considered as part of capital. Meanwhile, because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into hookers and blow, will inevitably get richer. They almost can’t help it. The gap between the 1 percent and the 99 percent must grow. This will create the society reminiscent of the pre-Enlightenment past we are in the early stages of now. You know it from Jeopardy! as “feudalism.”

     
    Downturns are a huge sucking, a redistribution of wealth upward. You’re basically fucked in this process. Poverty is ennobling, so you do have that. Have a nice day!

     

    BONUS: I wrote a whole book about this called the Ghosts of Tom Joad but few people wanted to read it, so this is all kind of a fun secret between us.

     
     

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    Democrats Need to Stop Dry Humping the American Dream

    May 13, 2019 // 2 Comments »


     

    Economic inequality could be the signature issue for Democrats, one that speaks to purple voters, progressives, and maybe even some current Trump supporters. But the Dems do not seem to understand this. They need to decide if they are running as a party of governance, or just one of protest.

    On economics, an issue voters reliably care deeply about, Trump’s approval rating is 58%. Rarely is an incumbent defeated under a strong economy. While many factors affecting the economy are long waves, with decisions made one or five administrations ago rippling forward, the reality is the president in office gets the credit on election day. That payoff is due to be collected by Donald Trump. Throw in his tax changes, that he is the only president since the fall of the Soviet Union to not start a new war, and his red-meat-to-the-base wins on immigration and Supreme Court appointments, all coupled with the whimpering end of Russiagate, and you have a candidate with lots to crow about.

    On the other side, “Not Trump” will be enough for the Whole Foods base. But Democrats appear willing to punt too many other votes for lack of a message about what they might do if elected. The recent Politico headline “Biden Goes Light on Policy, Heavy on Emotion” is not good.

    Meanwhile, economic inequality, the disparity at the heart of our nation, is shaping whether America will remain something of a pluralistic democracy, or complete its descent into a modern form of feudalism where 0.01% of Americans effectively control the rest of us. That’s could be a very powerful anti-Trump message.

    Yet the Democrats’ version is erroneously based on economic inequality being a minority POC issue, maybe something to address via reparations or more social justice programs. Dems scold into deep resentment the vast numbers of white midwesterners stuck in poverty (who lean Trump) as too stupid to vote in their own self-interest. They lean on tell-us-what-we-want-to-believe books like Hillbilly Elegy (due out as a Ron Howard film for 2020) to reinforce the concept of meth-addled yokels.

    The Democrats are simultaneously throwing away an issue that resonates with progressives: economic inequality drives the search for scapegoats, the handmaiden of racism and hate. It has to be someone else’s fault I’m not doing well, because “they” get free food from the government or because of immigration policies which take my job away to give to “them.” Reduce economic inequality and you will reduce its societal ills is a very powerful anti-Trump message.

    Using government money to reduce economic inequality goes against the ethos of many. But we have underestimated the societal disruption economic inequality created in America even as we mark a surge in deaths of despair from alcohol, suicide, and opioids, Robert Merry, writing in The American Conservative, calls our time “definitional” and wonders if the polity will hold. While we wait for everyone to lift themselves up by their bootstraps, we are missing what a volatile people we are, and have ceded our darkest tendencies to those who manipulate them for their own gain. We have become too violent and too well-armed and too goaded by social media to let the market sort this out.

    Yet according to a CNN poll, 71% of Americans still rate the nation’s economic conditions favorably. Democrats must explain to Americans while things are not visibly bad on the surface, they are fundamentally not good for about 90% of us. Silliness like “Trump might still crash the market” or “Obama deserves the credit” simply encourage the short-term thinking that drives that CNN poll. Democrats need to explain the long term — the top 0.1% of households now hold about the same amount of wealth as the bottom 90%, and it is only getting worse. The share earned by the top 0.01% rose from 0.5% in 1973 to 3.3% in 2010. Something that threatens the financial life of 90% of us is a majority, not minority, problem.

    Economic anxiety, more than what the left imagines as racial or cultural uneasiness, lies deep in the Heartland. Trump spoke to it in 2016 in the guise of promises to bring back coal mining’s glory days, raise tariffs, and slow immigration. Democrats should speak sense to that anxiety. The answer should be infrastructure.

    Bernie Sanders loves infrastructure. Elizabeth Warren wants to rebuild the middle class. Biden’s liked it since he was VP. Infrastructure underlies other candidates’ plans for guaranteed incomes and assured jobs. It’s hard to find anyone against infrastructure. But no one has presented something sweeping, linear, and encompassing enough to reach at economic inequality. This isn’t about jobs per se – unemployment is at a near-50 year low – but about how we live. Earnings for non-management, private-sector workers reached their peak in 1973, the high water mark of the middle class out there in Youngstown and South Bend, left today dry heaving about what’s still called the American Dream.

    The response comes from the last time economic inequality was this bad. America needs a new version of the 1935 Works Progress Administration (WPA) to build roads, bridges, and rail lines. A new WPA to create jobs people can do without significant training (not everyone can learn to code) and which pay living wages with real healthcare. Get echelons of people too used to chronic under-employment used to working for a living again. People working multiple jobs should not need food aid as many do today.

    Almost every community in the United States got a new park, bridge, or school under the WPA, never mind airports, train stations, over 600,000 miles of roads, the Golden Gate Bridge, and Hoover Dam. Upgrading all that after 80 years to improve lives is a powerful message. Fight growing racism and hate with the self-respect work gives. You don’t need to create an enemy if you don’t see yourself as a victim.

    The Democrats flirted with something like this recently, after Chuck Schumer and Nancy Pelosi met with Trump to “agree” on a $2 trillion infrastructure initiative. But peek behind the curtain and it’s just rhetoric. Despite knowing the House controls the budget, Pelosi almost immediately crossed her arms and declared it is Trump’s job, not hers, to figure out how to pay for it. The whole thing appears to be a cynical ploy to claim “Because Trump” we can’t have nice things.

    Let how to pay for it become part of the Democratic platform. But the message better be more sophisticated than “were gonna tax the rich” because voters have been burned too many times, when “the rich” ended up being themselves paying higher taxes while the benefits fell to those below. The real rich, the 0.01%, seem to always have a loophole. This simplistic message is particularly dangerous in 2020 when many purple voters fear what progressives might do unfettered (Free medical care! No more college loans! A pony for everyone, just look under your seats!)

    The thing is the money is already there, or at least has been when we wanted it to be. The WPA over eight years used about 6.7% of the era’s GDP to pull the nation out of a full-blown depression with some 20% unemployment. Currently the U.S. spends about 3.3% of its GDP on military.

    But we don’t need that much. The U.S. spends $70 billion a year on food aid for 40 million Americans; repurpose some of that into living wages so people can earn their supper. During the last few wars, reconstruction and the building of infrastructure for Iraqis ate up $60.45 billion. The total for the same failures is more than $154 billion in Afghanistan, with the counter still running at about $9 billion a year on such projects. Only the most inane pundit could call such re-appropriation “anti-military” instead of pro-American; no much-needed bridge for you, Middleton, Ohio, we’re gonna build it in Helmand Province instead. The Obama-era American Recovery and Reinvestment Act, with its more modest goal of a short-term stimulus not intended to address inequality, spent $105.3 billion on infrastructure. Unemployment is obviously much lower today, and the goal – better jobs to nudge economic inequality – is different. Those numbers would make an accessible start.

    Some 64% of Americans agreed with an earlier Trump proposal to improve U.S. infrastructure (75% support spending federal money to improve infrastructure when the idea was polled without Trump’s name.) Infrastructure spending also has bipartisan support: 78% of Republicans and 54% of Democrats agree with the need for more.

    Democrats must tell voters what they’ll do, instead of just saying one day it may be Not Trump in the White House. Infrastructure has bipartisan support, will reach purple voters and progressives, and address fundamental problems. The impact of the WPA is long, a bright moment in our history when government raised people out of depression. Imagine the power of owning that legacy.

     
     
    BONUS:

    The Gini coefficient is a measurement of the income distribution within a country which shows the gap between the rich and the poor. Zero represents perfect equality (everyone has the same income) and one representing perfect inequality (one person earns the entire country’s income and everyone else has nothing.) A higher Gini coefficient number means greater inequality. America overall (GDP) earns money in the same range as most European nations, but has a Gini number more in line with Russia, China, and chunks of the third world. That is an unique situation globally. Here are some more hard numbers.

     
    This article by Paul Krugman in the NYT goes to great lengths to create the spurious argument it is Republicans who despise the slack jawed yokels even more than the Democrats do.
     
    Matt Bennett of the center-left group Third Way put it clearly “There are things about this economy that are very popular — low unemployment, a lot of jobs, there’s been some real wage increase. We attribute zero of that to good Trump policy. But he will claim credit. What that means is that [Democrats] need a very clear economic narrative that resonates deeply with the voters that we have to win, and we better not be caught up in our own blue bubble world.”

     
     

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    An Entire Generation is Likely to See Its Standard of Living Regress

    April 14, 2017 // 24 Comments »

    pigs_trough
    It is modern feudalism, happening in a slow motion crash as we watch, aware of what is coming down, but at first unwilling and likely now unable to stop it.
    Welcome to the Third World

    We are living in so-called first world societies where economic disparity is trending toward developing world levels. Some numbers you can argue about individually if you like (and how does your head feel buried in the sand?), but the aggregate situation is beyond debate:

    — The one percent holds 35.6 percent of all private wealth, more than the bottom 95 percent combined.

    — The 400 wealthiest individuals globally have more wealth than the bottom 150 million Americans.

    — Between 1983 and 2009, over 40 percent of all wealth gains flowed to the one percent and 82 percent of wealth gains went to the top five percent. The bottom 60 percent lost wealth over this same period.

    — A significant amount of the redistribution of wealth, redistributed upward, took place following the 2008 market collapses in the United States as bailouts, shorts, repossession of home and land, and new laws helped the top end of the economy at cost to the bottom. More and more of government is controlled directly by corporations.

    — The world’s one percent own $42.7 trillion dollars, more than the bottom three billion residents of earth.

    — A rising tide lifts all yachts, as historian Morris Berman observed. Less than half of Americans do not own any stock at all. The wealthiest of Americans own over 80 percent of all stock, and 40 percent of America’s land.

    It’s Getting Worse

    Now add to that grim tally new information that shows the problem of gross income and wealth inequality is getting worse.

    report from McKinsey finds that in developed economies such as the United States two-thirds of all households experienced “flat or falling” incomes over the past decade, from 2005-2014. In the U.S., the portion was even worse: 81 percent.

    “While the recession and slow recovery after the 2008 global financial crisis were a significant contributor to this lack of income advancement, other long-run factors played a role — and will continue to do so,” McKinsey notes. “They include demographic trends of aging and shrinking household sizes as well as labor-market shifts such as the falling wage share of GDP.”
    Capital Beats Labor Every Time

    As predicted by economists from Karl Marx to Thomas Piketty, this is the natural progression of capital (making money by owning things) over labor (making money by working.) It represents the same basic economic world of the Middle Ages, land-owning kings and serfs who have no option but to work the fields.

    It is statistically likely that you won’t live a better life than your parents did. The economic world of your parents and grandparents was an aberration, a one time exception that was called the American Dream. And even that was largely limited the white people.

    Do enjoy that gig economy youngsters, and hope Uber doesn’t put you out of an income by flooding the market with more drivers.

     

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    Let’s Understand Why We’re So Finished Economically

    August 3, 2016 // 26 Comments »

    krugman

    How ya’ doing? I mean money-wise. Too much? Maybe not enough?


    So let’s listen to economist Paul Krugman explain why we are so screwed. Not we will be screwed, or maybe things will go that way, or we will in the future. Nope, it already happened, though most of us haven’t yet figured it out.

    Krugman, and the economist he discusses, Thomas Piketty, paid attention in math class, and the other classes, too. That’s why they understand this stuff and I’m still trying to suss out why no matter how many hours I stay on the job and how much I save, it is never enough.

    In case you’re reading this on your 15 minute break at Target, I’ll try to summarize.



    The American Dream (Patrimonial Capitalism)

    The myth of the American Dream is the dominating factor in keeping people mostly complacent in the United States. You know it — work hard, and your life will improve. Well, maybe not your life, but your kids’, or at least your grandkids’. If that doesn’t work, it is the fault of the Irish immigrants, or the darn Chinese, or those welfare freeloaders. Ask Donald Trump how it all works.

    The thing that makes the myth so powerful is that the tiny percent that is true sounds better than the 99 percent which is a lie. As long as near-constant growth could be assured, enough pieces would fall to the the lower and middle classes to make the Dream seem real. It helped that a kindly media would promote the heck out of every exception, whether it was the shoeshine boy in the late 19th century who went to college, or the plucky guys who invented some new tech in their garage and became billionaires. See, you can do it too, just like if we run hard enough, everyone can be in the Olympics. It’s just a matter of wanting it, believing in yourself, having passion and grit, right?



    The Undeniable Reality of the Now

    The bulk of the industrial jobs are gone and never coming back; ask Detroit, or the people in Youngstown and Weirton. People have been talked out of most union jobs, convinced somehow that organizing was not in their own interest, and now they find themselves accepting whatever minimum of a wage they can get. Food stamps and other need-based programs are finding more and more middle class users, as suburban people who once donated to charities are now lining up out front of them. Health care paid for by our own taxes is seen as a give away to lazy people. This is the stuff Bernie Sanders talked about.

    Like with gravity, the universe doesn’t care if you “believe” it or not; it is just true, independent of what you “think.” That you have been taught this all is something you can choose to believe or not is the weight that holds us all down.



    Drilling Down Into Our Miserable Lives

    In case you have a few more minutes on your break, or if you’ve been laid off since starting this article, here are some more things happening out there whether you believe in them or not. You can read more about all of this in Thomas Piketty’s book, Capital in the Twentieth Century.

    — Our income inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.

    — The inequality is driven by two complementary forces. By owning more and more of everything (capital) rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims wealth is growing at six-to-seven percent a year, more than three times faster than the size of the economy.

    — Wages are largely stagnant, or sinking, driven by factors in control of the wealthy, such as automation that eliminates human jobs and the not-adjusted-for-inflation minimum wage more and more Americans now depend on for their survival.

    — All of this is exacerbated by America’s lower tax rate on capital gains (how the rich make their money) versus wages (how the 99 percent make their money.)

    — Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into fast women and cocaine, will inevitably get richer. They can’t help it. The gap between the one percent and the 99 percent must grow.

    — Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes significantly affecting income equality. The only people who can change society are those who profit from it not changing. That’s the big reveal on why we are in so much trouble.

    FUN FACT: Until slavery was ended in the United States, human beings were also considered capital, just like owning stocks and bonds today.



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    Hah Hah: You are So Poor

    September 19, 2014 // 13 Comments »






    BREAKING: According to the Congressional Budget Office (CBO), the rich are getting richer while the poor in America continue to get poorer. And the government is contributing to all this.




    You are Poorer Now than Before

    Here’s the story from the CBO:

    — Between 1979 and 2007, income grew by 275 percent for the top one percent of households, compared to only 18 percent for the bottom twenty percent of us.

    — In 2007, federal taxes and transfers reduced the dispersion of income by 20 percent. The share of transfer payments to the lowest-income households declined. “The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” thus doing less to reduce the concentration of income, the CBO said.

    — The most affluent fifth of the population received 53 percent of after-tax household income in 2007, up from 43 percent in 1979. In other words, the after-tax income of the most affluent fifth exceeded the income of the other four-fifths of the population.

    You can read the full Congressional Budget Office report online.


    Shut Up Serfs

    Just to make sure the point is clear, the top ten percent of wealth holders own roughly 70 percent of everything in the United States. The bottom half of us have roughly five percent, and falling, because…

    The Great Recession of 2008 stripped swaths of the middle class of their most valuable asset. Some five million homes were lost to foreclosure between 2008 and 2013. 8.2 million more foreclosure starts took place in that same time period. Another three million homes in the next three or four years will face foreclosure.

    The value of those homes and their real estate migrated into the hands of those who controlled the banks. Many homeowners were turned into renters, shoving more money upward to those who controlled the property. America’s the top earners’ wealth grew even as those responsible for the collapse were never punished and the companies involved received federal bail-out money to cover losses, being too big to fail. In a neat closing of the circle, the money came from taxes paid in part by those destroyed in the Recession.

    This was one of the largest single redistributions of wealth in American, perhaps world, history. Cool– you were around to witness history in the making.

    GINI

    The mathematical measure of wealth-inequality is called “Gini,” and the higher it is, the more extreme a nation’s wealth-inequality.

    The Gini for the U.S. is 85; Canada, 72; and Bangladesh, 64. Nations more unequal than the U.S. include Kazakhstan at 86 and the Ukraine at 90. The African continent tips in at just under 85.

    Odd company for the “exceptional nation.”


    Serfs All, or at Least 99% of Us

    Thanks for reading this. I hope it distracted you briefly from the daily hunger pangs you face. If you don’t complain, we’ll allow you 30 minutes of TV tonight. Now back to work serf.



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    Interview with KGNU: Ghosts of Tom Joad

    July 20, 2014 // 1 Comment »




    I recently spoke with KGNU‘s Claudia Cragg about my personal work experience at a store I call “Bullseye,” in the minimum wage Big Box economy and how this led to Ghosts of Tom Joad: A Story of the #99Percent.


    Ghosts looks up close at the drastic effects of social and economic changes in America between WWII and the decline of the blue collar middle class in the 1980’s right up to today.

    Have a listen to the full interview.







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    Why Don’t the Unemployed Get Off Their Couches?

    July 10, 2014 // 10 Comments »

    And Other Critical Questions for Americans

    Last year eight Americans — the four Waltons of Walmart fame, the two Koch brothers, Bill Gates, and Warren Buffett — made more money than 3.6 million American minimum-wage workers combined. The median pay for CEOs at America’s large corporations rose to $10 million per year, while a typical chief executive now makes about 257 times the average worker’s salary, up sharply from 181 times in 2009. Overall, 1% of Americans own more than a third of the country’s wealth.

    As the United States slips from its status as the globe’s number one economic power, small numbers of Americans continue to amass staggering amounts of wealth, while simultaneously inequality trends toward historic levels. At what appears to be a critical juncture in our history and the history of inequality in this country, here are nine questions we need to ask about who we are and what will become of us. Let’s start with a French economist who has emerged as an important voice on what’s happening in America today.

    1) What does Thomas Piketty have to do with the 99%?

    French economist Thomas Piketty’s surprise best-seller, Capital in the Twenty-First Century, is an unlikely beach read, though it’s selling like one. A careful parsing of massive amounts of data distilled into “only” 700 pages, it outlines the economic basis for the 1%-99% divide in the United States. (Conservative critics, of course, disagree.)

    Just in case you aren’t yet rock-bottom certain about the reality of that divide, here are some stats: the top 1% of Americans hold 35% of the nation’s net worth; the bottom 80%, only 11% percent. The United States has such an unequal distribution of wealth that, in global rankings, it falls among the planet’s kleptocracies, not the developed nations that were once its peers. The mathematical measure of wealth-inequality is called “Gini,” and the higher it is, the more extreme a nation’s wealth-inequality. The Gini for the U.S. is 85; for Germany, 77; Canada, 72; and Bangladesh, 64. Nations more unequal than the U.S. include Kazakhstan at 86 and the Ukraine at 90. The African continent tips in at just under 85. Odd company for the self-proclaimed “indispensable nation.”

    Piketty shows that such inequality is driven by two complementary forces. By owning more of everything (capital), rich people have a mechanism for getting ever richer than the rest of us, because the rate of return on investment is higher than the rate of economic growth. In other words, money made from investments grows faster than money made from wages. Piketty claims the wealth of the wealthiest Americans is rising at 6%-7% a year, more than three times as fast as the economy the rest of us live in.

    At the same time, wages for middle and lower income Americans are sinking, driven by factors also largely under the control of the wealthy.  These include the application of new technology to eliminate human jobs, the crushing of unions, and a decline in the inflation-adjusted minimum wage that more and more Americans depend on for survival.

    The short version: A rising tide lifts all yachts.

    2) So why don’t the unemployed/underemployed simply find better jobs?

    Another way of phrasing this question is: Why don’t we just blame the poor for their plight? Mention unemployment or underemployment and someone will inevitably invoke the old “pull yourself up by your bootstraps” line. If workers don’t like retail or minimum-wage jobs, or if they can’t find good paying jobs in their area, why don’t they just move? Quit retail or quit Pittsburgh (Detroit, Cleveland, St. Louis) and…

    Move to where to do what? Our country lost one-third of all decent factory jobs — almost six million of them — between 2000 and 2009, and wherever “there” is supposed to be, piles of people are already in line. In addition, many who lost their jobs don’t have the means to move or a friend with a couch to sleep on when they get to Colorado. Some have lived for generations in the places where the jobs have disappeared. As for the jobs that are left, what do they pay? One out of four working Americans earn less than $10 per hour. At 25%, the U.S. has the highest percentage of low-wage workers in the developed world. (Canada and Great Britain have 20%, Japan under 15%, and France 11%.)

    One in six men, 10.4 million Americans aged 25 to 64, the prime working years, don’t have jobs at all, a portion of the male population that has almost tripled in the past four decades. They are neither all lazy nor all unskilled, and at present they await news of the uncharted places in the U.S. where those 10 million unfilled jobs are hidden.

    Moving “there” to find better work isn’t an option.

    3) But aren’t there small-scale versions of economic “rebirths” occurring all over America?

    Travel through some of the old Rust Belt towns of this country and you’ll quickly notice that “economic rebirth” seems to mean repurposing buildings that once housed factories and shipping depots as bars and boutiques. Abandoned warehouses are now trendy restaurants; a former radiator factory is an artisanal coffee shop. In other words, in a place where a manufacturing plant once employed hundreds of skilled workers at union wages, a handful of part-timers are now serving tapas at minimum wage plus tips.

    In Maryland, an ice cream plant that once employed 400 people with benefits and salaries pegged at around $40,000 a year closed its doors in 2012. Under a “rebirth” program, a smaller ice cream packer reopened the place with only 16 jobs at low wages and without benefits. The new operation had 1,600 applicants for those 16 jobs. The area around the ice cream plant once produced airplanes, pipe organs, and leather car seats. No more. There were roughly 14,000 factory jobs in the area in 2000; today, there are 8,000.

    In Louisville, Kentucky, more than 5,500 people applied for what turned out to be just 50 factory jobs in 2013, some of them temporary, paying $15.78 per hour at Ford Motor Company’s Fern Valley Road plant. State unemployment officials sifted through the thousands of applications and forwarded them to Ford staff, who narrowed the field by lottery (which in itself says something about the skill levels of the jobs offered.) The wage offered to new employees is about half what union workers receive.

    In January 2014, Ford announced it would hire another 350 people, to be pulled from an existing pool of 10,000 applicants. State officials in Kentucky approved $290 million in financial incentives, using taxpayer money, to bring those jobs to Louisville. The impact of those jobs is shockingly minimal; unemployment in the area is 8.2 percent, much higher than the U.S. national average. There are some 52,763 people in the Louisville metro area unable to find work, not including those working part-time jobs or who have given up trying to find work at all.

    Also in in Louisville, Kentucky, General Electric’s Appliance Park, once employed 23,000 union workers at its peak in 1973. By 2011, the sputtering plant held onto only about 1,800 workers. What was left of the union there agreed to a two-tier wage scale, and today 70% of the jobs are on the lower tier — at $13.50 an hour, almost $8 less than what the starting wage used to be. A full-time worker makes about $28,000 a year before taxes and deductions. The poverty line for a family of four in Kentucky is $23,000. Food stamp benefits are available to people who earn up to 130% of the poverty line, so a full-timer in Kentucky with a family still qualifies. Even if a worker moved to Kentucky and lucked out by landing a job at the plant, standing on your tiptoes with your lips just above sea level is not much of a step up.

    People once called Millinocket, Maine the Magic City. The Great Northern Paper mill, which conjured this town out of the backwoods and sustained it for a century, employed 5,000 people and sustained a way of life. At least until it closed for good in 2008, turning the community into a ghost town. 2014 saw a rebirth of sorts, as new owners repurposed the mill into a wood pellet factory. But only 55 jobs were created. The town hopes to attract tourists now, but they have not come.

    Only a generation ago, Bethlehem, Pennsylvania had a steel mill that employed 31,500 people. They were not alone; in the final quarter of what was to be the American Century, some 1.5 million steelworkers lost their jobs. Including all benefits, an average union steelworker made $26.12 per hour then, the equivalent of $40.66 today. It was enough to create one of the most powerful economies on earth, supported by a robust middle class driving demand for housing, cars, everything.

    It is common in such circumstances to blame greedy workers, and decry how their fate was tied to selfishness and out-of-control unions. But that would be wrong, or at least only part of the story. The ratio of CEO salary-to-average-worker-salary in 1980 was 42:1, climbing to 120:1 in 2000 and stands at 204:1 today. So indeed among the complex factors that changed America’s economic landscape, greed and selfishness did indeed play a part. It is just incorrect to blame it on the workers themselves.

    Low paying jobs are not a rebirth.

    4) Can’t people just get off their couches and get back to work?

    There are 3.8 million Americans who have been out of work for 27 weeks or more. These are the country’s long-term unemployed, as defined by the Department of Labor. Statistically, the longer you are unemployed, the less likely it is that you’ll ever find work again. Between 2008 and 2012, only 11% of those unemployed 15 months or more found a full-time job, and research shows that those who do find a job are less likely to retain it. Think of it as a snowball effect: more unemployment creates more unemployable people.

    And how hard is it to land even a minimum-wage job? This year, the Ivy League college admissions acceptance rate was 8.9%. Last year, when Walmart opened its first store in Washington, D.C., there were more than 23,000 applications for 600 jobs, which resulted in an acceptance rate of 2.6%, making the big box store about twice as selective as Harvard and five times as choosy as Cornell.

    Telling unemployed people to get off their couches (or out of the cars they live in or the shelters where they sleep) and get a job makes as much sense as telling them to go study at Harvard.

    5) Why can’t former factory workers retrain into new jobs?

    Janesville, Wisconsin, had the oldest General Motors car factory in America, one that candidate Obama visited in 2007 and insisted would be there for another 100 years. Two days before Christmas that year and just before Obama’s inauguration, the plant closed forever, throwing 5,000 people out of work. This devastated the town, because you either worked in the plant or in a business that depended on people working in the plant. The new president and Congress quickly paid for a two-million-dollar Janesville retraining program, using state community colleges the way the government once used trade schools built to teach new immigrants the skills needed by that Janesville factory a century ago.

    This time around, however, those who finished their retraining programs simply became trained unemployables rather than untrained ones. It turned out that having a certificate in “heating and ventilation” did not automatically lead to a job in the field. There were already plenty of people out there with such certificates, never mind actual college degrees. And those who did find work in some field saw their take-home pay drop by 36%. This, it seems, is increasingly typical in twenty-first-century America (though retraining programs have been little studied in recent years).

    Manufacturing is dead and the future lies in a high-tech, information-based economy, some say. So why can’t former factory workers be trained to do that? Maybe some percentage could, but the U.S. graduated 1,606,000 students with bachelor’s degrees in 2014, many of whom already have such skills.

    Bottom Line: Jobs create the need for training. Training does not create jobs. 

    6) Shouldn’t we cut public assistance and force people into the job market?

    At some point in any discussion of jobs, someone will drop the nuclear option: cut federal and state benefits and do away with most public assistance. That’ll motivate people to find jobs — or starve. Unemployment money and food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) encourage people to be lazy. Why should tax dollars be used to give food to people who won’t work for it? “If you’re able-bodied, you should be willing to work,” former House Majority Leader Eric Cantor said discussing food stamp cuts.

    The problem with such statements is 73% of those enrolled in the country’s major public benefits programs are, in fact, from working families — just in jobs whose paychecks don’t cover life’s basic necessities. McDonald’s workers alone receive $1.2 billion in federal assistance per year.

    Why do so many of the employed need food stamps? It’s not complicated. Workers in the minimum-wage economy often need them simply to survive. All in all, 47 million people get SNAP nationwide because without it they would go hungry.

    In Ohio, where I did some of the research for my book Ghosts of Tom Joad, the state pays out benefits on the first of each month. Pay Day, Food Day, Mother’s Day, people call it. SNAP is distributed in the form of an Electronic Bank Transfer card, or EBT, which, recipients will tell you, stands for “Eat Better Tonight.” EBT-friendly stores open early and stay open late on the first of the month because most people are pretty hungry come the Day.

    A single person with nothing to her name in the lower 48 states would qualify for no more than $189 a month in SNAP. If she works, her net monthly income is multiplied by .3, and the result is subtracted from the maximum allotment. Less than fifty bucks a week for food isn’t exactly luxury fare. Sure, she can skip a meal if she needs to, and she likely does. However, she may have kids; almost two-thirds of SNAP children live in single-parent households. Twenty percent or more of the child population in 37 states lived in “food insecure households” in 2011, with New Mexico (30.6%) and the District of Columbia (30%) topping the list. And it’s not just kids. Households with disabled people account for 16% of SNAP benefits, while 9% go to households with senior citizens.

    Almost 22% of American children under age 18 lived in poverty in 2012; for those under age five, it’s more than 25%. Almost 1 in 10 live in extreme poverty.

    Our system is trending toward asking kids (and the disabled, and the elderly) to go to hell if they’re hungry. Many are already there.

    7) Why are Walmart and other businesses opposed to SNAP cuts?

    Public benefits are now a huge part of the profits of certain major corporations. In a filing with the Securities and Exchange Commission, Walmart was oddly blunt about what SNAP cuts could do to its bottom line:

    “Our business operations are subject to numerous risks, factors, and uncertainties, domestically and internationally, which are outside our control. These factors include… changes in the amount of payments made under the Supplemental Nutrition Assistance Plan and other public assistance plans, [and] changes in the eligibility requirements of public assistance plans.”

    How much profit do such businesses make from public assistance? Short answer: big bucks. In one year, nine Walmart Supercenters in Massachusetts received more than $33 million in SNAP dollars — more than four times the SNAP money spent at farmers’ markets nationwide. In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma. Overall, 18% of all food benefits money is spent at Walmart.

    Pepsi, Coke, and the grocery chain Kroger lobbied for food stamps, an indication of how much they rely on the money. The CEO of Kraft admitted that the mac n’ cheese maker opposed food stamp cuts because users were “a big part of our audience.” One-sixth of Kraft’s revenues come from food stamp purchases. Yum Brands, the operator of KFC, Taco Bell, and Pizza Hut, tried to convince lawmakers in several states to allow its restaurants to accept food stamps. Products eligible for SNAP purchases are supposed to be limited to “healthy foods.” Yet lobbying by the soda industry keeps sugary drinks on the approved list, while companies like Coke and Pepsi pull in four billion dollars a year in revenues from SNAP money.

    There is another side to big retail and fast food’s support for food stamps.

    There is much talk about the minimum wage. What was once a way for teenagers and college kids to earn a little pocket money has devolved into the take-home pay for a vast swath of America. Defenders of a low minimum wage insist that most of us benefit from workers being paid very little; lower wages mean lower costs for Walmart and others, and so lower prices for us.

    Makes sense, except that it is not true.

    The difference between what Walmart pays the majority of its employees and what those employees need is made up by taxpayers in the form of food stamps and other assistance. Walmart is America’s largest private employer, so we’ll use them here for most of the examples, but this applies across the board.

    Choose your statistic to understand the problem: about 25% of all employed people in the U.S. receive some form of public assistance; in the fast food industry, it is 53%. About 1 out of every 3 retail workers gets public assistance. In sum, American taxpayers subsidize the minimum wage with $7 billion in public assistance.

    Let’s break it into a smaller piece: After analyzing data released by Wisconsin’s Medicaid program, the House Committee on Education and the Workforce estimates that a single 300-person WalMart in Wisconsin costs taxpayers $5,815 per Walmart associate in public assistance paid.

    What about higher prices? The quick answer should be obvious by now. Whatever you think you are saving at the cash register in Walmart due to those lower wages, you as a taxpayer are paying anyway in taxes to feed the woman ringing you up. If store paid a living wage, step one would a lessening in demand for public assistance. Ka-ching, lower taxes!

    But let’s follow the money. Walmart consistently pays the lowest wages they possibly can, and claims that keeps prices down. Walmart is not alone in this practice; the average family’s income is lower today than at any point in the last ten years, income inequality more extreme than at any point since before the Great Depression. The U.S. now has the highest proportion of low-wage workers in the developed world. The fall in wages parallels another trend line: in January of 2013, the Bureau of Labor Statistics reported that union membership had reached a 97 year low in America.

    Poverty is big business.

    8 ) Should we raise the minimum wage?

    One important reason to raise the minimum wage to a living one is that people who can afford to feed themselves will not need food stamps paid for by taxpayers. Companies who profit off their workers’ labor will be forced to pay a fair price for it, and not get by on taxpayer-subsidized low wages. Just as important, people who can afford to feed themselves earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that no longer believes in itself. Rock bottom is a poor foundation for building anything human.

    But won’t higher wages cause higher prices? The way taxpayers functionally subsidize companies paying low-wages to workers — essentially ponying up the difference between what McDonald’s and its ilk pay and what those workers need to live via SNAP and other benefits — is a hidden cost squirreled away in plain sight. You’re already paying higher prices via higher taxes; you just may not know it.

    Even if taxes go down, won’t companies pass on their costs? Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to a semi-livable $14.50 an hour, not only would most of them go off public benefits, but so would the company — and yet a Big Mac would cost just 68 cents more. In general, only about 20% of the money you pay for a Big Mac goes to labor costs. At Walmart, increasing wages to $12 per hour would cost the company only about one percent of its annual sales.

    Despite labor costs not being the most significant factor in the way low-wage businesses set their prices, one of the more common objections to raising the minimum wage is that companies, facing higher labor costs, will cut back on jobs. Don’t believe it.

    The Los Angeles Economic Round Table concluded that raising the hourly minimum to $15 in that city would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage in the nation. The area with the highest percentage of annual job growth was San Francisco, the city with the highest minimum wage in the nation. Higher wages do not automatically lead to fewer jobs. Many large grocery chains, including Safeway and Kroger, are unionized and pay well-above-minimum wage. They compete as equals against their non-union rivals, despite the higher wages.

    Will employers leave a state if it raises its minimum wage independent of a nationwide hike? Unlikely. Most minimum-wage employers are service businesses that are tied to where their customers are.  People are not likely to drive across state lines for a burger. A report on businesses on the Washington-Idaho border at a time when Washington’s minimum wage was nearly three bucks higher than Idaho’s found that the ones in Washington were flourishing.

    While some businesses could indeed decide to close or cut back if the minimum wage rose, the net macro gains would be significant. Even a small hike to $10.10 an hour would put some $24 billion a year into workers’ hands to spend and lift 900,000 Americans above the poverty line. Consumer spending drives 70% of our economy. More money in the hands of consumers would likely increase the demand for goods and services, creating jobs.

    In many ways, the debate over raising the minimum age mirrors what was said about unions in the 1970s. Many at the time, especially pro-business economists and politicians as they do today, claimed the high wages fought for by unions hurt American competitiveness and cost jobs. How could a business survive paying $25 an hour? If wages were cut, and profits went up as costs fell, more jobs would be created. So how’d that work out? The demise of unions did certainly help raise corporate profits, but it clearly did not create jobs, at least not jobs at a living wage. Quite the opposite. Want more minimum wage jobs, maybe? Keep the wage dirt poor low.

    9) Profit Before People

    Where could the money to pay workers a living wage come from, except of course by raising prices?

    The top one percent of income earners garnered 93 percent of income gains in the recent recovery. In the third quarter of 2012, corporate profits reached $1.75 trillion, their greatest share of GDP in history. During that same quarter, workers’ wages fell to their lowest share of GDP on record. The top six members of the Walton family (owners of Walmart) own as much wealth as 48 million other Americans combined. Meanwhile, among 35 economically advanced nations, the U.S. has the second highest rate of child poverty, 23%, just slightly better than Romania.

    Yes, raise the minimum wage. Double it or more. We can’t afford not to.

    10) Okay, after the minimum wage is raised, what else can we do?

    To end such an article, it’s traditional to suggest reforms, changes, solutions. It is, in fact, especially American to assume that every problem has a “solution.” So my instant suggestion: raise the minimum wage. Tomorrow. In a big way. And maybe appoint Thomas Piketty to the board of directors of Walmart.

    But while higher wages are good, they are likely only to soften the blows still to come. What if the hyper-rich like being ever more hyper-rich and, with so many new ways to influence and control our political system and the economy, never plan to give up any of their advantages? What if they don’t want to share, not even a little more, not when it comes to the minimum wage or anything else?

    The striking trend lines of social and economic disparity that have developed over the last 50 years are clearly no accident; nor have disemboweled unions, a deindustrialized America, wages heading for the basement (with profits still on the rise), and the widest gap between rich and poor since the slavery era been the work of the invisible hand. It seems far more likely that a remarkably small but powerful crew wanted it that way, knowing that a nation of fast food workers isn’t heading for the barricades any time soon. Think of it all as a kind of “Game of Thrones” played out over many years. A super-wealthy few have succeeded in defeating all of their rivals — unions, regulators, the media, honest politicians, environmentalists — and now are free to do as they wish.

    What most likely lies ahead is not a series of satisfying American-style solutions to the economic problems of the 99%, but a boiling frog’s journey into a form of twenty-first-century feudalism in which a wealthy and powerful few live well off the labors of a vast mass of the working poor. Once upon a time, the original 99% percent, the serfs, worked for whatever their feudal lords allowed them to have. Now, Walmart “associates” do the same. Then, a few artisans lived slightly better, an economic step or two up the feudal ladder. Now, a technocratic class of programmers, teachers, and engineers with shrinking possibilities for upward mobility function similarly amid the declining middle class. Absent a change in America beyond my ability to imagine, that’s likely to be my future — and yours.

    Feudalism

    If I had a crayon I’d draw you a picture, but I think you don’t really need that at this point. None of this is accidental, some sort of invisible hand at work.

    The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline. For the top 5 percent of Americans, household net worth increased 14 percent over the same 10 years.

    Companies will continue to demand Federal, state and local governments keep the minimum wage as low as possible. The same corporate entities will then continue to have those low wages subsidized by the taxpayers. Companies will continue to spew out propaganda to convince those same taxpayers that people on public assistance are lazy cheats, and that low wages mean low prices. Capping wages at 2009 levels assures that any broad rise in societal prosperity will not reach low-wage workers, and there is no broad upward path for retail workers and fry cooks. It’s not about education, either: the percentage of low-wage workers with at least some college education has spiked 71 percent since 1979, to now encompass over 43% of all low-wage workers. Meanwhile more and more money will be hoovered up by an ever-concentrated group of the super wealthy, squeezing their workers tighter and tighter. Hey, how many miles can you drive on a gallon of blood?

    In today’s America, even working full-time, at most jobs you can’t earn enough to live with government assistance. More and more of everything is owned by fewer and fewer people. If you look that stuff up in a reference book, it is called feudalism. It is our future, and, of course, thank you for shopping at Walmart!



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    Despite Falling Revenues, Walmart Increases Pay for Top Execs

    May 14, 2014 // 16 Comments »




    Sometimes the effects of our social and income inequality are easy to see, but hard to measure.

    But not in this case: despite falling revenues, and despite only reluctantly paying minimum wage to its workers, Walmart increased the pay for its top executives. The people who do the labor get little. The people who make the decisions that can cause falling revenues get more (and more and…) Could it be any clearer what is going on? A flatulence of money.

    This is what Thomas Piketty’s theories look like in practice.

    Some Background from a Real Economist

    Economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century makes clear there has been a significant increase in income inequality in America. Our inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.

    In the United States, the top one percent own 35 percent of all capital, and the top ten percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly five percent. Note also that until slavery was ended in the United States, human beings were also considered capital.

    The inequality is driven by two complementary forces.

    By owning more and more of every thing (capital), rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims the top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.

    At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted minimum wage more and more Americans now depend on for their survival.

    Back to Walmart

    A key question for detectives trying to figure out who may have committed a crime is to ask cui bono, “Who benefits?” Who stands to profit from a murder, from a crime? That’s often your perp.

    In Walmart’s case, it is not its stockholders who profited. Indeed, this has not been a money year for Walmart shareholders. Despite an overall good twelve months for the stock market in general, Walmart stock bumbled due to lower sales growth.

    No joy for Walmart’s customers, or its own employees. Walmart cited cuts in federal food stamps as one reason for its weak sales increase. Since they are paid only minimum wage (and Walmart fights vigorously against any increases) and only are given 39 hours a week or less so as not to qualify for full-time benefits, a fair number of Walmart’s own workers receive food stamps.

    Good news though for Walmart’s top executives. The company employed some accounting tricks to “adjust” on paper actual revenues to make them appear higher than in reality. On the strength of that “adjusted” performance, William Simon, CEO of Walmart’s United States unit, received total compensation of $13 million last year. Of that, $1.5 million was a “performance bonus,” paid out actually for declining revenues. In fact, six of Walmart’s top executives received a total of $8.42 million in cash incentive payments for 2014 even as revenues fell and the company closed stores. The former employees of those stores, needless to say, did not receive any performance pay bonuses as they fell deeper into poverty.

    Fair Play?

    Walmart’s executives receiving these bonuses are the equivalent of a sports team getting paid extra because they lost. And we know that only happens when a game is rigged, right? How much more clarity into how the New Economy works do you need? More? Well, just wait for Walmart’s next earnings report and you see who is shaving points for their own benefit.



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    Piketty for Ghosts of Tom Joad Readers

    May 12, 2014 // 12 Comments »






    Unlike that guy who cornered you at the party, I’ll admit I haven’t read all ten million pages (it’s actually 700 pages) of economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century. I’ve read a bunch of it, and skimmed more it, and so here are the takeaways for people who are also reading my book about America, our society and our economy, Ghosts of Tom Joad




    What Piketty says:

    — There has been a significant increase in income inequality in America. Our inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.

    — The inequality is driven by two complementary forces. By owning more and more of everything (capital) rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.

    [NOTE: In the United States, the top one percent own 35 percent of all capital, and the top 10 percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly 5 percent. Note also that until slavery was ended in the United States, human beings were also considered capital.]

    — At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted minimum wage more and more Americans now depend on for their survival.

    — All of this is exacerbated by America’s lower tax rate on capital gains (how the rich make their money) versus wages (how the 99 percent make their money.) This all becomes a kind of snowball effect.

    — Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into hookers and blow, will inevitably get richer. They almost can’t help it. The gap between the 1 percent and the 99 percent must grow. This will create a society reminiscent of the pre-Enlightenment past.

    — About the only way to change this is either via world-wide cataclysmic events such as wars, or by alterations in tax policy, specifically a progressive tax that really charges rich people more than poor people. Piketty does not seem to address the issue that many rich people profit mightily from wars, but either way, these cataclysmic events are transitory. It is not clear how Piketty sees a more fair tax system coming into play, but he seems very optimistic it will happen.

    — Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes of significantly affecting income equality.

    — All of this is based on A LOT of data. Much of it is historical data, so the overall arguments are not some politically-vulnerable factoid-based stuff.

    — A good Piketty quote: “The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor… Once constituted, capital reproduces itself faster than output increases. The past devours the future.”




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