Unemployment and Production Stagnation
According to recent reports on unemployment, the U.S. economy shed an additional 62,000 jobs in June bring the yearly total to a frightening level. The total amount of jobs that have disappeared from the economy for this year is now close to half a million, at 438,000, with almost all those missing jobs showing up in an increase in applications for jobless benefits, which was last at 404,000.The construction industry shed 43,000 jobs and manufacturing 33,000 despite the latter being almost double the size of the construction industry. The significance of this shows in the fact that workers in these industries have a labor intensive skill set and are faced with difficulties when trying to find jobs in other sectors without retraining, which costs money, or taking a significant pay cut. With the country’s job growth coming mainly from information technology, health care, government jobs and service sectors (government jobs accounted for the most job growth in June at an increase of 29,000), construction and manufacturing workers will be hard pressed to diversify into those sectors without sacrificing their standards of living and accepting a new way of life.
The trend of growth in jobs in the service based sectors (health care, government, food service) as opposed to the decrease in production based sectors (construction and manufacturing) underlies an increasing trend of economic stagnation in production. As investments are more often made in volatile financial markets that offer quick profits instead of long term pay off, our economic base will continue to be degraded at the cost of real production output and trained, well paying jobs. This is exemplified in the previously mentioned report of construction job losses that are based primarily in the lack of need for buildings and factories that, if built or being built, would represent growth in real production capacity and output. But, as the housing market crash showed, real economic growth cannot be based upon extended credit lines that are treated with insignificance by lenders. Production growth must be centered around sustainable and practical long term needs, not just luxury consumption on credit. The solutions to unemployment will need to involve radically different ways of creating jobs and ensuring a healthy economy.
Plans to address the unemployment problem might include something along the lines of what Ryan Dodd’s article suggests in our March/April Issue, entitled; A New WPA? An Introduction to the Employer of Last Resort Proposal, in which unemployment is ended “...via a government promise to provide a job to anyone ready, willing, and able to work.” Additionally, according to the American Society of Civil Engineers, the country’s nationwide basic infrastructure (roads, water supply, waste disposal, energy) is in shambles and need of massive overhaul, repair and restructuring that could (or rather, needs to) provide numerous economic benefits and stimulation. Investing in new energy alternatives and updating our roads and sewer systems could constitute a new wave of job creation, increased efficiency, health and safety, and consumer spending that could lift the country to new heights of prosperity. All that is stopping such a need from being met is a large price tag that could, in theory, be easily met through decreased military spending or a reneging on the Bush tax cuts that favor the superrich. Unless something is done soon we may see the increased and unnecessary suffering of thousands of workers continue to be a symptom of an eroding economic base.
Labels: construction, Employer of Last Resort, infrastructure, stagnation, unemployment
Victory on unemployment insurance!
This just in from our friends at the Economic Policy Institute:After months of campaigning by EPI and allied groups, Congress finally enacted a 13-week extension of unemployment benefits in all 50 states and the District of Columbia. The veto-proof June 27 vote is expected to help more than 3 million unemployed workers who otherwise would have exhausted their benefits over the next nine months, and to provide a needed boost to hard-hit local economies. The vote also signals an understanding by members of Congress that the current economic downturn is serious and requires ground-level intervention.
EPI started agitating for the extension in December, when talk of a recession was just emerging. Since then, the Institute has been at the forefront of the campaign, with staff members providing testimony, giving media interviews, writing op-eds and blogs, and conducting research showing that rates of long-term unemployment were already high enough to warrant action. Benefits run out after 26 weeks in most states.
In early June, two weeks before the final vote, EPI urged its email subscribers to contact members of Congress. As EPI Vice President Ross Eisenbrey wrote in the alert, it was time to stop blaming the jobless for their plight. "There are now only 3.7 million job vacancies but 8.5 million unemployed looking for work," Eisenbrey noted. "The fault is not with the jobless; the problem is a failing economy and the government's failure to turn it around."
Labels: Economic Policy Institute, unemployment, unemployment benefits, unemployment insurance
The Doctors' Revolt
Ida Hellander, executive director of Physicians for a National Health Program, emailed us recently with praise for Paying More, Getting Less, from our May/June issue. She called the article "very clear and compelling. It will be very, very useful to all of us in the single payer movement... Thanks again for publishing this article. I've wanted something like this for many years!"In fact, a solid majority of U.S. doctors now support a single-payer system, as reported in a web-only piece posted to the American Prospect website on Tuesday:
The Doctors' Revolt
Doctors, the traditional advocates for the medical status quo, are increasingly in favor of major reforms to the U.S. health-care system.
Roger Bybee | July 1, 2008 | web only
Doctors have historically been the watchdogs of the U.S. medical system, with the American Medical Association scaring New Dealers into dropping national health coverage from the Social Security Act and then the AMA shredding Harry Truman's reform efforts in the late 1940s. But a new poll and other significant indicators suggest that doctors are turning against the health-insurance firms that increasingly dominate American health care.
The latest sign is a poll published recently in the Annals of Health Research showing that 59 percent of U.S. doctors support a "single payer" plan that essentially eliminates the central role of private insurers. Most industrial societies -- including nations as diverse as Taiwan, France, and Canada -- have adopted universal health systems that provide health care to all citizens and permit them free choice of their doctors and hospitals. These plans are typically funded by a mix of general tax revenues and payroll taxes, and essential health-care is administered by nonprofit government agencies rather than private insurers.
The new poll, conducted by Indiana University's Center for Health Policy and Professionalism Research, shows a sharp 10 percent spike in the number of doctors supporting national insurance: 59 percent in 2007 compared to 49 percent five years earlier. This indicates that more physicians are eager for systematic changes, said Toledo physician Dr. Johnathon Ross, past president of Physicians for a National Health Program. Read more...
Visit the new health care links page on our site for more articles from D&S on health care, and for links to national and state-level organizations working for single-payer.
Labels: American Prospect, health care, Physicians for a National Health Program, single-payer
Repackaging Globalization
The 15th World Congress of the International Economic Association (IEA) kicked off a five day convention yesterday, June 25th, entitled "The Challenge of Globalization." Guillermo Calvo, President of the IEA, welcomed the participants by placing emphasis on the importance of the congress: "The IEA World Congress offers an ideal setup to discuss globalization issues because the Association encompasses many countries around the world and, since its inception, encourages scientific and nonpartisan debate." He went on to speak on some of the more current mainstream debates and issues being put forth in the area of international economics:Globalization issues have become central to the discussion about a good number of important topics such us trade and financial liberalization, global warming, and poverty and income distribution. Although most people would agree that globalization opens up new and exciting possibilities, risks are very real and cannot be ignored. Financial crises in emerging markets, for example, show that opening up channels for capital to flow from rich to poor countries - a process that has the potential of benefiting everyone, rich or poor -could backfire and turn the tide in the opposite direction. Even in cases in which globalization has brought about higher growth rates, one hears loud and angry voices claiming that the winners are just a handful few, while most of the population is left behind. To the extent that this perception prevails, the political sustainability of globalization will always be at stake, weakening the credibility of policy and policymakers, and bringing a new wave of massive and indiscriminate interventionism with global implications.
The main themes being discussed at the congress were listed as; "international finance, political economy considerations, macroeconomic policy, the role of the state and institution in a globalized environment, migration issues, global imbalances, and globalization in historical perspective." Keynote speakers included Joseph Stiglitz (former chief economist of the World Bank ), Dani Rodrik (Harvard professor of international political economy) and Arvind Panagariya (a professor of Indian political economy at Columbia).
As we can see from Calvo's opening remarks, the perspective taken at the congress is one which sheds a favorable light upon the "potential" of globalization and the need to address some of the issues and crises threatening it. Taking this viewpoint, globalization is not a problem in and of itself to be solved or changed but is rather a positive advancement being misconstrued as a problem by "angry voices." It seems that the speakers at the congress are addressing political sustainability of globalization—how globalization is perceived, and the threat of "interventionism"—instead of the nature of capitalism and whether or not it is a legitimate and healthy springboard for global economic integration.
Despite the claim to address "global imbalances" and "migration issues," we didn't notice any evidence that people most negatively affected by neoliberal globalization were invited to participate. Conspicuously absent from the talks are labor and community spokespeople who could best represent the detrimental economic affects of globalization on their wages, working and living conditions, cultures, and societies. The conference seems more like a chance for the elites who dominate the conversation of international economics to gather and exchange ideas about policy solutions and the image of globalization with no intention to involve regular people or seriously alter the status quo.
Given that we are not in attendence—and the interesting and relevant subject matter being discussed—we are hopeful that the conference actually addresses the some of the issues concerning the harmful economic affects of globalization on workers and poorer countries. But without adequate representation from these interests, and what looks to be a dedication to only changing the image of globalization instead of the way it works, we are skeptical.
The website for the IEA Congress can be found here.
Labels: 15th world congress, global imbalances, globalization, international economics
Cousin ♥ NY Landlord
We received a long and interesting comment about our recent post, Scenes from the Class Struggle in the East Village, from a close relative of the landlord who is trying to turn the five-story tenement he owns into an 11,000-square-foot mansion. We initially posted the comment in full, but our, um, legal department is worried about libel issues. So here is the comment, with the potentially libelous bits taken out:New York landlord Alistair Economakis's fight to rid the five-story tenement on 47 East Third Street of its tenants has disturbed me, but it hasn't surprised me. That's because I have known Alistair's family for many years now. You see, I have the misfortune of being his first—and eldest—cousin.
Alistair was always ♥♥♥♥. I remember once, in some village in southern Greece, he stuck his five-year-old head out of his father's—my uncle's—car, and, encouraged by his guffawing dad, ♥♥♥♥♥♥. I nearly slapped my little cousin's face for that. I regret now I didn't.
The apple doesn't usually fall far from the tree. My uncle Alexander (Alistair's father) is a ♥♥♥♥♥♥♥. Back in 2005, when I first learned of the scandal brewing in New York around the Economakis name, I asked my uncle if it was true Alistair was trying to evict people from the building in the East Village. His answer, word-for-word, was: "♥♥♥♥♥♥♥"
Shocked? You shouldn't be. It's almost impossible to be filthy rich and not be a rotten scoundrel inside. After all, behind most great fortunes lies a crime. But Alistair and his wife Catherine Economakis (who is ♥♥♥♥♥♥) will reap what they've sown. Their crime will come back—again and again, for as long as they live—to haunt them. Of this I haven't the slightest doubt.
My cousin, who grew up in Greece and England, wraps himself in the American flag and evokes the U.S. Constitution to "justify" his family's need to live in 60 rooms, in a 11,000-square-foot home. I've read the popular outcry, the indignant outrage. Yet what do people expect from the likes of my cousin and his wife? Crying "shame!" or noting the irony in the fact that Alistair's mother-in-law is a Columbia University dean who teaches urban studies, of all things [as reported here and elsewhere], is an exercise in futility. I can assure you they aren't at all fazed by such criticism.
So many good people bemoan the legal ruling allowing the eviction to take place. This is naïve. Who makes the laws, after all? The government does. And what is the government but the representative of a country's ruling class? What do low-income tenants expect from the enemy, after all?
Yet what goes around tends to come around. You can spit on the collective—as Alistair and Cathy Economakis have done, but it's quite another thing when the collective turns around and spits on you!
Low income tenants of New York! Run the Economakises—and all human lice like them—out of town! Turn their "American dream"—a dream at your expense—into a real nightmare! Give them no quarter! Make it physically and psychologically impossible for them to evict you! Send THEM packing!
Evel G. Economakis,
Athens, Greece
Labels: affordable housing, Alistair Economakis, rent control
Sexy Comrades and the City
This hilarious item is from MRZine:Sex sans the City (A Post-Marxist Preview)
by Susie Day
Many capitalist roaders say the Left is out of touch with popular culture. Well, I say NYET to that! Here, for instance, is an episode of Sex and the City that I translated for my Marxist-Leninist study group, so that we may better throw off our Tiffany chains.
[Scene I: Chic, Upper West Side restaurant]
SAMANTHA: [Striding in elegantly and sitting at table where the girls are waiting] Greetings, comrades! How glad I am that I—sexy, 50-year-old blonde girl, being fabulous and having much sex with men—meet you in favorite haute bourgeois bistro for sex talk. Look at dick of sultry, ethnic waiter—is not fabulous?
MIRANDA: [Rummaging impatiently through briefcase] Waiter dick unimportant for proper ordering, comrade. I, being caustic, hard-driven attorney with bright red hair, styled to evoke Great Mistakes in Hedge Trimming, no have time for frivolity. Must get back to office to shill for corporate capital—
SAMANTHA: Ooh, "shill"—sounds sexy, comrade!
MIRANDA: It is, comrade! Today, I defend sexy Fortune 500 Company owning Indian Point—nuclear power plant making much electricity for city—from selfish, unsexy officials who warn of nuclear disaster. My logic: Why upset capitalist system?
CHARLOTTE: [Sighing pertly] For myself, comrades, I—token person of dark hair color—esteem the finding of Perfect Monogamous Soul Mate as most high goal in consumerist free market society. This is exalted dream for which masses labor, regardless of increasing work hours, fear of layoff, dwindling surplus profit, endless war—and possible nuclear disaster. Heedless, heedless masses!
CARRIE: [Flexing highly toned abs, set off to perfection by jaunty, $5,000 Christian Dior ensemble resembling clothes of Carmen Miranda after werewolf attack] Ah, comrades—how good it is to exploit our lives in my column, earning many thousands of dollars more than other writers who, unlike me, have college vocabulary and knowledge of world history! [She signals waiter]
Greetings, comrade bit actor of exotic descent who is destined to receive five dollars each time this episode is played in rerun! Please give us four of your most costly watercress omelets, removing yoke and other caloric nutrients. Hurry—before more radioactive groundwater leaches from Indian Point into Hudson River!
CHARLOTTE: Comrade! This is too much food! Is not anorexia neoliberal pre-condition for true female happiness?
CARRIE: You are mistaken, comrade. We must order many expensive things—regardless of whether we shall actually consume them—so that our power may grow! Profit motive of late capitalism dictates terms of feminine value and we must obey.
Read the whole piece here.
Labels: communism, late capitalism, MRZine, Sex and the City, Susie Day
Scenes from the Class Struggle in the East Village
The New York Times recently ran a story about a New York landlord, Alistair Economakis, who is trying to convert the five-story East Village tenement he owns into an 11,000-square-foot mansion for himself and his family. The building formerly housed fifteen rent-stabilized apartments, whose rents ranged from $675 to $1200 per month. So far Economakis has been able to buy off six of the tenants, and has renovated and converted the spaces into a home with which he, his wife, and his two children are making do.
But the remaining tenants are fighting back:
At its core, the fight involves a law allowing landlords to displace rent-stabilized tenants if the landlords will use the space as their primary residence. The Economakis family has prevailed, thus far, on the principle that the law applies even to a building this large. But the tenants continue to press the notion that given the scope of the proposed home — which calls for seven bathrooms, a gym and a library — the owners are just trying to clear them out so they can sell the building off to become so many market-rate condos.
As evidence that they have no such intention, the landlords emphasize how much they love the neighborhood, especially its working-class history:
“Once we realized we wanted to make this building our home, nothing else compared,” said Mrs. Economakis, 36, who, along with her husband, works for her father’s company, Granite International Management, which manages about a dozen apartment buildings in Manhattan and Brooklyn. “I love this building, and I love this neighborhood.”
Part of the charm, she said, is that the block includes the Hells Angels headquarters and Maryhouse, one of the city’s most enduring Roman Catholic missions for the homeless.
In Manhattan, it seems, the super-rich want have the working class and eat it too.
The Times's coverage of the struggle is characteristically even-handed, depicting both landlords and tenants as in enviable positions:
In a way, each faction is living a version of the New York real estate dream. Anyone might envy the Economakises, who work at a family-owned apartment-management company and lucked into buying the building for $1.3 million — what some one-bedroom condos in the area cost today. They have both the cash and the connections to create a sprawling showpiece. But there are also countless New Yorkers who would sacrifice their firstborns (or at least a beloved pet) for a charming if cramped perch like [tenant] Mr. Boyd’s in a coveted neighborhood where comparable spaces command twice or three times as much.
Evidently, the Times regards affordable housing in New York as but a dream, and rent-stabilization as a luxury.
Read the whole story here.
For information about the tenants' struggle, visit their website.
Labels: affordable housing, rent control, wealth inequality
Elasticity! Why cutting gas taxes won’t lower prices, but will fatten oil companies
When Clinton and McCain proposed cutting gas taxes, I asked my environmental economics students, "So how much do you think drivers will save?" The students diligently Googled the numbers. "Well," said one, "the federal gas tax is 18.4 cents and the average state tax is 28.6 cents, so that’s 47 cents a gallon drivers will save!" "But what about elasticity of demand and supply?" I asked. "Oh!!! Forgot about that!"
Elasticity. Nemesis of Econ. 1. A vital concept even professional economists often forget. Elasticity is just the percentage change in quantity purchased or supplied, divided by the percentage change in price. An increase in price will lead consumers to buy less, and suppliers to offer more; vice versa for a price decrease; elasticity measures the size of that effect.
Elasticity of demand for gas is low, around 0.5. That means a 10% increase in gas prices will cause only a 5% decrease in gas consumption. That’s because it’s difficult, in the short run, for people to change their habits, for example, to buy smaller cars, to move closer to work, or to change vacation plans. But in fact some people do change; already unsold SUV’s clog the dealers’ showrooms and lots.
But--and here’s the crucial point--elasticity of gas supply is even lower, much lower than elasticity of demand. In fact, short run elasticity of supply is near zero. Two reasons: First, it’s very hard to increase supply quickly because that means expanding refining capacity. Many suppliers, especially national suppliers like Russia, Venezuela and Libya, are failing to invest in upgrading capacity. Then there’s the oil production disaster in Iraq. Second, oil companies have some monopoly power, which means they are, to some degree, already holding back production in order to raise their prices. That makes it even harder for them to decrease or increase supply in response to a tax or subsidy.
A tax on a product like gasoline falls in inverse proportion to elasticity. If elasticity of demand is 0.5, and the elasticity of supply is, say, one tenth as much, or 0.05, then suppliers pay ten times as much of the tax as consumers. That is, most of the tax falls on suppliers. Another way to put it is that suppliers cannot pass on a gas tax to consumers.
Conversely, a tax cut will deliver a windfall to suppliers, without appreciably lowering prices at the pump. When some New York State counties tried lowering local gas taxes in response to consumer protests, gas prices didn’t budge.
There are broader policy implications here: First, we can substantially raise gas taxes without much pushing gas prices above their market level--in the process capturing more of the windfall profits currently enjoyed by oil producers. Second, if we wish to discourage carbon emissions from cars, we need to look to other approaches besides gas taxes, for example, setting emission standards for automobiles, improving public transportation and encouraging denser development.
The US subsidizes ethanol production by something over a dollar a gallon, supposedly to replace gasoline. On the final exam, I asked my students this question: if Congress eliminates ethanol subsidies, will suppliers or consumers suffer more, and why? Only one student got the answer completely correct: By the same logic of relative elasticity, subsidies to ethanol production accrue mostly to suppliers, not consumers. So eliminating subsidies hurts suppliers more than consumers. Elasticity is a slippery concept!
Polly Cleveland
EPI urges immediate action on unemployment benefits extension
A press release from the Economic Policy Institute:This morning, EPI Vice President Ross Eisenbrey issued the following statement on pending legislation to extend unemployment benefits:
"For months, as the nation's economy has deteriorated, members of Congress have tried and failed to push through a common-sense extension of unemployment insurance benefits. Now there is another chance. House leaders plan to vote as soon as tomorrow (Wednesday) on a stand-alone extension bill passed April 16 by the House Ways and Means Committee. The extension, which adds 13 weeks of benefits to unemployed workers who have exhausted their benefits, might also remain attached to the emergency supplemental appropriations bill for war funding. Congress should use every possible vehicle to put this issue before the president. For the families of the millions of workers who are exhausting their right to unemployment compensation, the deteriorating job market is a real emergency. There are now only 3.7 million job vacancies but 8.5 million unemployed looking for work. The fault is not with the jobless; the problem is a failing economy and the government's failure to turn it around."
The Congressional Budget Office estimates that the bill now under consideration will provide benefits to 3.8 million people who otherwise are at extreme financial risk. The benefits will also provide a crucial boost to the faltering economy. Now is the time to ensure that Congress takes action. EPI asks that you contact your local representatives in the House and Senate (names and addresses can be located at www.house.gov and www.senate.gov) and urge them to pass this needed legislation.
Labels: Economic Policy Institute, unemployment