Thursday Links: “Fix Our T,” SEC, TPP, etc.

Fix-Our-T-Petition(1) Fix “Our” T:  On my walk from Boston’s South Station to the D&S office this morning, I encountered an army of people in red “Fix Our T” t-shirts asking commuters to sign a petition to “Fix Our T.” (The “T” is Boston’s public transit systems, including a subway, buses, and commuter rail.) When I asked one of the petition-wielders what it was all about, she mumbled something about “increasing transparency and accountability.” I said that wasn’t enough information for me to sign anything, and asked if she had any handouts. (Lots of other people were just signing–people are really fed up with the T, especially after terrible service this winter in the wake of multiple blizzards!) She gave me a flyer which revealed that the petition was to “tell Beacon Hill [the state legislature] to work with Governor Baker and fix our T” and to “to adopt the responsible bipartisan reform proposed by Governor Baker.”

It turns out that the website mentioned on these people’s t-shirts, www.FixOurT.com, was put up by a group called the Coalition for a World Class public Transit System. It is made up of area chambers of commerce (the North Shore Chamber of Commerce, Metro South Chamber of Commerce, etc.), industry organizations (Massachusetts Lodging Association, Massachusetts Restaurant Association, Massachusetts Petroleum Council (!)), and free-market, pro-business lobbying organizations (the Massachusetts Business Roundtable, Massachusetts Taxpayers Foundation). The list of “solutions” to the T’s problems is mostly bland and meaningless, but key items tip their hand as anti-union (“Provide greater accountability and transparency for the T’s governance and management practices to ensure the entity is efficiently and effectively run while employing a productive workforce”) and against increased funding for the T (“Ensure that the T balances its operating budget without the need for ever-increasing state assistance each year”). So it’s pretty shady to be asking commuters to sign a petition without revealing that this is a big business group with an agenda that many commuters would disagree with.  (As my co-editor Alejandro Reuss likes to point out, nobody ever suggests that the military should “balance its operating budget without the need for ever-increasing state assistance each year” they way fiscal conservatives seem to think actual public goods like Social Security, public transit, or USPS should.)

At least the Boston Globe got it right about the petition with this story: Business Groups Lobby in Favor of Baker’s MBTA Plan. All these pro-business organizations give the lie to the claim (however technically true) on the group’s Facebook page to be a “nonprofit organization,” and also makes you wonder what they mean by “Our” T.  It reminded me of a Short Run from our April 1975 issue that we republished in our Nov/Dec 2009 35th anniversary issue:

You Make It Work (April 1975)
The Reader’s Digest editorial staff is preparing a year-long series of articles defending the U.S. economic system. The Business Roundtable, made up of top executives of 150 major corporations, is paying $1.2 million for the series, which will run under an “[advertisement]” label in each month’s Digest and will be placed in 50 college newspapers as well.
The chairman of the Business Roundtable public information committee, which will supervise the series, is Vice President Paul M. Lund of AT&T. The title of the series is surprisingly up front (emphasis added): “OUR Economic System—YOU Make It Work.”

(2) The SEC:  Rootstrikers has a new report out about how compromised the current head of the Securities and Exchange Commission is, Mary Jo White, the SEC, and the Revolving Door. It is a great follow-up to Elizabeth Warren’s June 2 letter to White criticizing her performance at the SEC, and it is a great riposte to the notion that White would be someone Wall St. wouldn’t want to “mess with.” From the executive summary:

A deeper dig into White’s career indicates that not only has White’s tenure at the SEC
been troubling, it has been a disappointment very much in keeping with her
professional track record. Her defenders are right in one very important regard: White
has in fact led the SEC exactly as one might expect she would based on her career.
White’s career serves as an emblematic example of what is problematic about the
revolving door; indeed, she is also a proponent of the revolving door in her hiring and in
her personal statements. Her position on the SEC leads to an insolvable dilemma: her
lengthy and lucrative ties to Wall Street (Section A below) lead to justifiable calls for
frequent recusal, and her frequent recusals (see Section F) lead to frequent deadlock in
the commission, preventing adequate enforcement. White’s tendency to hire people
for high ranking jobs at the SEC who are likely to avoid stringently enforcing laws
protecting society from the dangers of the insiders and large banks for whom they will
go to work for next (see Section E) is emblematic of her ideology opposing strong white
collar criminal enforcement (see Sections (C) and (D)).

Here’s something from Bloomberg Business about the report:  SEC Chair’s Conflicts Fuel Sympathy for Wall Street, Group Says.

Meanwhile, Bloomberg Business also reported (here) that the SEC could act as soon as August 5th to (finally) implement a Dodd-Frank rule “that will force public companies to publish a ratio that compares the chief executive officer’s reported pay with that of their typical worker.”

What I find hilarious about the resistance to this rule is that corporations, exhibiting that “can’t do attitude,” have been whining about how much time it would take for them to calculate the pay rate of the “average” worker (with the median pay). But the Stanford University Engineering website has a delightful piece explaining how a doctoral student there, Michael Ohlrogge, figured out a way to do it using statistical sampling:

He began to contemplate how the SEC might use statistical sampling to calculate the required median compensation at a reasonable cost. His quantitative training in engineering had taught him that highly accurate statistical estimates could be derived using relatively small samples drawn from large populations. On the other hand, his legal training taught him that the SEC has broad discretion in interpreting and implementing such laws as it deems appropriate.

“You can actually get a very accurate median estimate by sampling as little as one-half of 1 percent of a company’s workforce, even for massive multi-national companies,” Ohlrogge said.

Ohlrogge submitted several comment letters to the SEC, building his case for statistical sampling. He analyzed legal precedent to argue that, despite there being no specific mention of statistical sampling in Dodd-Frank, the SEC would be justified in using sampling. Then, relying on his engineering skills, he crafted the sampling technique companies could use to estimate median income.

Well done.  You can bet, though, that the corporations wouldn’t have found it so burdensome to figure out if they thought they could profit from it (vs. the pay ratio promising to expose the ludicrousness of their executives’ pay).

(3) TPP:  Just two items to pass on about the TPP:

(4) Rana Plaza Victory:  To end on an up note:  we have been covering the efforts to get clothing retailers whose goods were being made in the Rana Plaza factory that collapsed in Bangladesh on April 24, 2013, in John Miller’s articles After Horror, Apologetics, and After Horror, Change? (his columns in our last two Sept/Oct annual labor issues). Finally, change has arrived, as announced by the International Labor Rights Forum:

The International Labor Rights Forum is thrilled to announce that two years of campaigning, with over one million people participating, has succeeded in securing $30 million in compensation for the victims of the Rana Plaza building collapse – the deadliest disaster in the history of the global garment industry.

“This campaign victory would not have been possible without the hard work of workers’ rights groups and labor unions on the ground in Bangladesh, and activism from a wide array of allies around the world who held more than a hundred store actions and demonstrations at corporate headquarters,” said Judy Gearhart, Executive Director of the International Labor Rights Forum.

Maybe we’re overcoming the dynamic Barry Deutsch documented in his cartoon for our March/April 2014 issue:

0314toon--500x483

That’s it for now.

 

Tuesday Links: CEO Pay, Crisis Costs, Climate March, etc.

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(1) Dr. Dollar on the Ex-Im Bank.  Our latest piece from the (still in production) Sept/Oct issue: Arthur “Dr. Dollar” MacEwan answers this question from D&S reader Arne Alpert: “Congressional Republicans and the Heritage Foundation are making a big deal about the Export-Import Bank, calling it “crony capitalism.” Are they right? Does the Ex-Im Bank serve a useful purpose, or is it just propping up the profits of trans-national corporations?”

(2) Susan Holmberg and Mark Schmitt, The Overpaid CEOInteresting piece that focuses on the costs of high CEO pay. When CEOs get huge paychecks, “the company is choosing to pay executives instead of doing other things—distributing revenues to shareholders, raising wages for workers, or reinvesting in the business. But the greater cost may be the risky behavior that very high pay encourages CEOs to engage in, especially when pay is tied to short-term corporate performance.” This piece resonates with our July/August cover story, Marianne Hill’s Taming the Corporate Beast.

(3) David Cay Johnston, Corporate DeadbeatsThe awesome DCJ has a cover story in Newsweek, which is back in print as of March (it stopped last December). The subtitle: How Companies Get Rich Off Of Taxes.” Key quote: “How can a tax burden become a boon? Simple. Congress lets multinationals earn profits today but pay their taxes by-and-by. In effect, Uncle Sam is loaning these companies all that money they do not immediately turn over as taxes. And all of these loans come with the same attractive interest rate: zero.” Great article; I’m not sure I like “Off Of” in the subtitle, though. Did Newsweek lay their editors off between December and March?

(4) Abby Scher, At Least Some Unions Step Up for Big Climate MarchFormer D&S co-editor Abby Scher had this piece at Truthout on Sunday. Choice quote: “The transit workers are my personal heroes of the climate justice movement; when you encounter members of Transport Workers Union Local 100 while flyering for the march on city streets, not only are they already on board, they often have something to say about the state of a world that doesn’t deal with the reality of climate change.”

(5) National Jobs for All Coalition, Green Jobs for All flyer.  Hat-tip to Trudy Goldberg for this flyer that folks from the National Jobs for All Coalition will be handing out at this weekend’s Climate March in NYC. Print some up and hand them out if you’re going to the march!  “Creating green jobs would solve both environmental and unemployment crises—as well as decrease our growing economic inequality.”

(6) Americans for Financial Reform, Cost of the Crisis:  A briefing paper from AFR, to mark the sixth (!) anniversary of the Lehman Brothers bankruptcy filing. A summary:

Cost of the Crisis – An Updated Reckoning, Six Years After the Lehman Bros. Bankruptcy

On the sixth anniversary of the Lehman Brothers bankruptcy filing (Sep. 15, 2008), the financial crisis is still severely affecting our economy. Today, Americans for Financial Reform (AFR) released an updated compilation of the quantifiable costs of the financial crisis. A few highlights:

  • The Dallas Federal Reserve estimates the total U.S. economic output loss from the financial crisis and its aftermath will eventually be $6 trillion to $14 trillion, or $50,000 to $120,000 for every U.S. household.
  • Median household wealth in 2013 was $81,200, down 40.0% from $135,400 in 2007 before the financial crisis began (numbers in inflation-adjusted, 2013 dollars). Federal Reserve 2013 Survey of Consumer Finances, Table 4.
  • From the beginning of the recovery in 2009 through the end of 2013, wage rates decreased for the bottom 90 percent of workers, despite productivity growth of 4.8 percent over that period. On the other hand, the stock market and corporate profits (adjusted for inflation) have both surpassed their pre-recession peak. EPI.
  • More than five years after the recession officially ended, the unemployment rate (U-3) stands at 6.1 percent as of August 2014, up from a pre-crisis rate of 4.7 percent (in November 2007). Long-term unemployment remains at near-record levels. The typical (median) unemployed worker still takes over three months to exit unemployment – a longer period than has ever been observed during any recession period since World War II. Bureau of Labor Statistics.
  • At the end of the second quarter of 2014, 8.7 million households remained underwater on their mortgages, representing one out of every six homes with mortgage debt. The average negative equity amount for underwater homeowners was $72,381, or 34.8% more than the home’s worth. In most markets, the largest part of the negative equity is in lower priced homes ­­– 28 percent of the least expensive third of homes were underwater compared to 9 percent in the top tier.  Zillow.

With $613 billion in debts, the Lehman bankruptcy was the largest bankruptcy in US history and a defining moment of the financial crisis.

That’s it for now.

–Chris Sturr