economy – Page 25 – Hank Kalet

A shrinking pie

Conservatives used to talk of expanding the economic pie as a way to ensure that the lower classes got what they needed, rather than redistributing some money down the income ladder. It was an approach that, though it might have sounded good on paper, just never worked.

The failure, unfortunately, is made worse by reports like this:

New Jersey’s unemployment rate climbed to its highest level in 15 years last month, triggering worries that the drain on the state’s unemployment insurance fund will prompt payroll tax increases.

The 7.1 percent unemployment rate was a full point increase over the rate in November, and just barely under the national average of 7.2 percent, Gov. Jon Corzine and State Labor Commissioner David Socolow announced today.

Basically, the pie is shrinking and the people on the bottom are finding that a smaller portion of nothing is still nothing.

Thoughts on Wal-Mart — sort of

I posted the following status update to Twitter and Facebook yesterday, which triggered an unexpected bit of commentary:

“Hank is thinking he should write a poem about WalMart.”

Here are the responses:

Wouldn’t a dirty limerick be more fitting?
“Walmart sucks” should be in there somewhere.
Ah, I don’t know about that…I’m a single parent and appreciate the low prices there, as well as Target. There’s a place for everything in the world. Though I also use Amazon and Overstock.
I come from the land of wall mart. The middle class, wanting to free us “prols” got rid of all our factory jobs, and, now because they don’t want us to be “exploited,” they’ll get rid of the crummy service jobs we have left. Before anyone mocks wall mart, they should talk to the workers. The owners aren’t effected by your well meaning but misdirected hatred. The working people are– those who can’t afford Wegmans or yoga lessons. I am as scared of liberal and leftist scoffing as I am of conservative moralism and pro-big business. Both come from all too comfortable places (the suburbs or urban yuppieville) Wall marts is easy to mock. What’s not easy is offering viable alternatives to shit jobs like that.
I don’t like Walmart because of the way they treat their employees. They actually encourage their employees to go on Welfare so they don’t have to pay them more money. Sounds illegal to me. Yes, you get great savings, but at what cost?
There are a few in my family that work for Wal Mart both full and part time. Wal Mart pays much more then any Mall store or any grocery store. They give benefits health insurance, vacation and personal days plus a discount card for their families. Plenty of morale booster meetings and gatherings. I have never seen a Borders or Hot Topic offer that. There is nothing wrong with a company making money, nothing.
Why would you want to spend any energy on Walmart?
Kudos, Becky! I knew I liked you in high school. Say hello to your brother, Bill, for me. Absolutely nothing wrong with a company being competitive and offering a place for everyone. I’m actually rooting for a Super Wal-Mart to come into the area I live…the Pineys. It would be great to have more options to shop versus BJs. And anytime I walk into Wal-Mart, I’m welcomed. I like that, given I choose to spend my money wisely.
http://www.walmartmovie.com/
Wall marts is an easy tarket. Much harder is for leftists and radicals to admit they abandoned the working class issues in the late sixties and turned toward “life style” leftism. Wall Marts exists because both the left and right have surrendered to the corporate nexus (it’s no longer cash nexus) and to a “globalization” that only favors the elite of other countries and of our own and enslaves working people. As a person who worked in a shit hole of a factory for twenty years I am qualified to speak from experience, not knee jerk liberalism or conservatism. For working people, a job is a job. Wall Marts is a travesty, but so is a country that looks down on manual labor and skilled jobs where people actually make things and that hog ties small business with taxes and regulations only the big guys with big lawyers can survive. We need to get rid of the new eminent domain laws, and we need to organize- for small, responsible businesses that can offer competitive prices.
There is a pretty good poem by a West Virginia writer named Mark DeFoe: http://writersalmanac.publicradio.org/index.php?date=2008/12/22
A couple of points:In much of the country, WalMart is the only game in town for both merchandise (affordable or not) and employment. I look at the city of New Brunswick and note that all of the department stores have closed in town and been replaced by restaurants–many of them I can’t come close to affording. Although I make something less than the average NJ resident, I know I make more than many, if not most, of the residents of New Brunswick. So they schlep out to the WalMart on Rt. 1 in North Brunswick. If you get past the $70 hunks of cheese and hit the core of Wegman’s, it’s actually shocking less expensive than going to ShopRite, Stop & Shop or PathMark. Milk, canned veggies, yogurt, etc. are all appreciably less expensive at Wegman’s. (At least in NJ)
True, but up here, the professors shop at Wegmans and the townies shop at Wall mart, and I think it’s asinine. It’s all classicism. Unless people can provide viable job opportunities for the poor, near poor, and working class, they ought to stop dismantling the little economy they have left. Truth: groceries, rent and just about everything else is proportionately higher in poor neighborhoods than in middle class suburbs. Just go to a bodega. These little mom and pop stores can’t compete, and we make laws that assure they never will.
(Me:) There is truth in everything that has been said. WalMart acts as a corporate bully, aggressively fighting union organizing and using its size to set wholesale prices, often driving small wholesalers out of business. They have been hell on the mom and pops, who have suffered less because of regulatory imposition than because of the cut-throat way in which we have structured our economic system — though both have created terrible hardships on the smallest of businesses. That said, WalMart offers generally decent goods at reasonable prices and has allowed people who are nowhere near being rich a level of comfort that they otherwise would be denied. The reality is that we have an economic system that rewards the wrong behaviors. The casino metaphor has become so overused that is is cliche, and yet it remains apt. We bail out banks that took advantage of poor homebuyers, offering them loans they couldn’t afford and telling them they could, while playing three-card monte with the economy.
True Hank. When I was a kid working stiffs like my dad could afford to go the butcher– actual butchers. The rag man came down our street and bought and sold towels and rags. My mom was home making sure there was a family dineer every night, and we talked for hours. We’ve destroyed our country. The kids have no sense of communion even with their own families, and our stores are souless. My dad, a factory worker, could afford a four bedroom house. Those days are over.
(Me:) Yep. I come from the suburbs, but I’ve seen how these changes have killed communities, simply wrecked cities like Trenton and New Brunswick, with the problems spilling out to the places people would escape to in the past. We can’t keep exporting jobs and assume all will be well.

Wow. And all I was suggesting was to write a poem.

A stimulating speech from the president-elect

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Visit msnbc.com for Breaking News, World News, and News about the Economy

President-elect Barack Obama offered what The New York Times is calling an “unusually direct and high-profile appeal” on the economy today.

The speech, given at George Mason University in northern Virginia, outlined in broad terms his plans for a

sweeping economic stimulus measures, including a tax cut and an infusion of as much as $800 billion, or face the likelihood that “this recession could linger for years.”

Obama’s speech came against a backdrop of further bad news on the economy, as the federal Labor Department reported that

The number of laid-off workers who are continuing to draw unemployment checks has jumped to the highest in more than a quarter-century and is likely to keep climbing this year — fresh evidence that people are finding it increasingly difficult to get a new job amid a deepening recession.

The Labor Department’s report Thursday also said first-time applications for jobless benefits dropped to 467,000 last week. But economists largely described that decline as a distortion, reflecting the government’s difficulty in making seasonal adjustments over the holiday period. Even with the dip, the figure still signaled trouble in the labor market. A year ago, initial claims stood at 330,000.

Persistent economic woes — housing, credit and financial crises — along with a flurry of layoffs announcements in the opening days of 2009 all point to another terrible year for jobseekers, economists said.

The report — as much of the news on the economic front over the last six months — should instill a sense of urgency in policymakers, prodding them to move quickly.

Obama described the collapsing economy and then made it clear that he believed change was possible, but only if policymakers move quickly.

I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and our standing in the world.

In short, a bad situation could become dramatically worse.

The Times offered this summary of his proposal:

He said he aimed to double the production of alternative energy within three years, a seemingly ambitious target; computerize all medical records in the country within five years, a move he said could save lives, money and jobs; modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes; upgrade classrooms, libraries and laboratories in thousands of schools, and expand broadband access to rural areas.

Other elements, include road and bridge repair that focuses on “well-planned, worthy and needed infrastructure projects” and aid to the “states, workers and families who are bearing the brunt of this recession.”

To get people spending again, 95 percent of working families will receive a thousand-dollar tax cut, the first stage of a middle-class tax cut that I promised during the campaign and will include in our next budget. To help Americans who have lost their jobs and can’t find new ones, we’ll continue the bipartisan extension of unemployment insurance and health-care coverage to help them through this crisis. Government at every level will have to tighten its belt, but we’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education and health care.

He also endorsed the notion of regulation — a heartening change from the anti-government rhetoric of the last two decades.

We must also work with the same sense of urgency to stabilize and repair the financial system we all depend on. That means using our full arsenal of tools to get credit flowing again to families and business, while restoring confidence in our markets. It means launching a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes. It means preventing the catastrophic failure of financial institutions whose collapse could endanger the entire economy, but only with maximum protections for taxpayers and a clear understanding that government support for any company is an extraordinary action that must come with significant restrictions on the firms that receive support. And it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors and businesses from the reckless greed and risk- taking that must never endanger our prosperity again.

No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.

Strong words, which is why Matt Rothschild, editor of The Progressive, gave the Obama speech good reviews. Rothschild, while critical of Obama’s tendency to “shoot too low,” makes it clear that what Obama has put on the table is unlike anything we’ve seen in recent years on the economy. “(A)t least,” he says, “Obama recognizes a crisis when he sees one.”

At least he is fluent enough in economics to understand the essential role that the federal government must play in such a crisis.

And at least he has put on the table several good ideas for ameliorating that crisis.

David Sirota, editor of In These Times and a regular blogger for Open Left, also viewed today’s speech in a positive light, praising “rhetoric (that) will translate into proposals to spend billions on public infrastructure and re-regulate the financial industry.”

In that sense, he is embracing the lessons of Franklin Roosevelt, and rejecting conservatives’ increasingly loud claims that the New Deal “prolonged the Great Depression” – claims that are demonstrably false. As Census data shows, the pre-WWII New Deal spending and regulatory agenda resulted both in robust GDP growth rates and the single biggest decline in the unemployment rate in American history. Unbelievably, conservative think tanks have resorted to quite literally lying about government data, claiming, as the Heritage Foundation has, that the “New Deal never drove unemployment below 20 percent.” As you can see from the Census Bureau’s verifiable data from 1936 and 1937, that claim is a patent lie – and it’s great that Obama and his economic team seems to understand that.

At the same time, Sirota raises something that might otherwise be lost in the coverage of today’s address: Obama’s comments earlier this week on Social Security and Medicare, which were just vague enough to cast doubt on his commitment to the two programs.

As the New York Times points out, that’s coded politicalspeak for an effort to “reform” Social Security and Medicare, which history has shown is often itself politicalspeak for cuts to those programs.

There is debate on this — a fact that should cause concern by itself. A progressive Democrat would not be talking about entitlements, especially at this moment in history. And while I doubt the likelihood of cuts to the two programs, I can’t help but remember that it was Bill Clinton, the last Democratic president, who “ended welfare as we know it,” pushed through Nafta and altered the entitlement debate in the first place.

More bad news on the economic front

I was watching one of the cable news stations this morning with the sound off while I ran and I was caught off guard by a graphic that said “Economy likely to be better in 2009.” Huh?

A strong opening for the Dow Jones Industrials today offered some cause for optimism — but only if one focused solely on stocks and not on the issues affecting the larger population. That, however, explains only part of the seemingly out-of-kilter optimism.

At issue is the use of market experts to talk about the economy — people who follow stock market trends but who, for the most part, completely missed the cracks spreading throughout the foundation. Most assumed what we were facing earlier this year was a temporary cooling, most saw the extreme growth in housing prices as a permanent expansion, acting like cheerleaders rather than analysts.

So when we hear them talking now, shouldn’t we be a bit more cautious, a bit more skeptical — expecially when their modest optimism is contextualized by headlines like these?

I think we all know the answer.

Waiting for help

Gov. Jon S. Corzine is right to delay introduction of the state’s budget, given that the incoming Obama administration is promising a massive stimulus package that is expected to include money for cash-strapped states.

Consider the mess New Jersey is in and what a lack of federal aid might mean:

Corzine has said declining tax revenues amid the national recession could push next year’s budget as low as $29 billion, down from $32.9 billion this year.

That’s nearly $4 billion — which would only add a lot of formerly employed state, county and local workers to the growing list of out-of-work New Jerseyans at a time when state (and local) services will be in great demand. Cutting state spending, which Paul Krugman rightly raised concerns about in his column yesterday, will do little more than slow efforts at the federal level to staunch the economic decline.

Krugman called the governors “50 Herbert Hoovers,” a group being forced to “(slash) spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.”

These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.

He’s not laying blame at their feet. On the contrary, he reminds us that many — not all, as New Jerseyans know too well — of the states’ problems stem from the larger economic mess, long-term federal negligence of state issues and the Bush administration’s clueless response to the meltdown.

It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.

In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.

And shredding the social safety net at a moment when many more Americans need help isn’t just cruel. It adds to the sense of insecurity that is one important factor driving the economy down.

That leaves them stuck between a rock and a hard place. I have been very vocal in my criticism of the state — governors and legislators of both parties, including the current crowd — and its willingness across nearly two decades to defer painful budget decisions. The list of bad decisions made with politics and not fiscal health in mind is long and does not need another recounting. Suffice to say that we went over the cliff a long time ago.

That said, “even the best-run states are in deep trouble,” Krugman writes, and “we shouldn’t punish our fellow citizens and our economy to spite a few local politicians.”

So President-elect Barack Obama should listen to Corzine and David Paterson of New York and Ted Strickland of Ohio, who is

pushing for federal aid to the states on three fronts: help for the neediest, in the form of funding for food stamps and Medicaid; federal funding of state- and local-level infrastructure projects; and federal aid to education.

This kind of aid can go a long way to easing the economic pain while building a new foundation for future growth.