Category Archives: Economics

We’re Still In A Pretty Big Hole

If you’re reading this blog post, chances are you can count the number of ways you were affected by the recent Great Recession on one hand with all its fingers cut off.  This makes it very hard to grasp how serious of an event it was and still is.  At the bottom of the Great Recession, the United States lost around 6.2% of its jobs.  We’re talking 10 million job losses in about two years.

Well, the bottom of the recession was over three years ago now and we’re still not back to the number of jobs we had when the Great Recession started.  Despite adding 7.5 million private sector jobs since the bottom, we’re still 1.4 million private sector jobs down from when we started.  And that doesn’t even include the 700,000 public sector jobs that were lost and will likely never return.

The jobs that were lost were about 60% mid-wage jobs.  Only 27% of the job gains were in mid-wage jobs while 60% were in low-wage jobs.  So not only are down in the number of jobs, the jobs that have been created are much lower in value than the jobs that were lost originally.  This is what’s happening to the middle class.

What I am hopeful for is a silver lining in all of this.  With mid-wage earners who have a modicum of political support being shifted to low-wage earners who generally have zero political support, we’re finally seeing some attention paid to how impossible it is to live on a low-wage job.  While the high costs of low wages at Wal-Mart has been looked into for a long time, the same is finally being done at fast food restaurants.  We’re starting to see instances of workers organizing at this level.  If this organization continues, we may finally see some sectors that have been traditionally low-wage pushed into the mid-wage range bringing millions out of poverty as a result.  Maybe, just maybe, we’ll see a living wage law come out of all of this.

The Speech I’d Like To Hear Obama Make

Ladies and gentlemen, good evening.  A few years ago, an unprecedented thing happened.  Republicans in Congress risked the full faith and credit of the United States of America by threatening to not raise the debt ceiling.  The debt ceiling is an imaginary number that, in the past, has solely been used for political grandstanding of the highest order with the full realization of all involved that the debt ceiling MUST be raised lest America suffer the gravest of financial catastrophes.  I say to you now that the debt ceiling will never again be used as a weapon to be brandished to force political concessions like it was in 2011.

Congress has two choices before it.  Raise the debt ceiling.  Repeal the debt ceiling.  Nothing will be given in return for either of these options.  It’s time for Congress to prove that it can be part of the solution and not just part of the problem.

Regardless of Congress’ action or inaction on this issue, I promise the American people this:  The debt ceiling is the gravest of National Security concerns.  It affects our government’s ability to function and our ability to effectively defend ourselves.  I will do everything in my power to protect America from this crisis.  As this crisis looms ever closer, there are many options available to me and I promise to use any and all of them to ensure to America and the world that the full faith and credit of the United States is sacred and shall not be infringed.

Thank you and good night.

A guy can dream, can’t he?

The Law Of Unintended Consequences: Obamacare Edition

Fast food is bad for you.  Very bad for you.  It is mostly high in calorie, high in fat, and low in nutritional content.  Most people “know” that fast food is bad for them, but much of the actual information is completely hidden from the consumer.  Obamacare has changed that.  Chain restaurants of, I believe, 20 stores or more are now required to post calorie information on their menus.  It’s a small step, but it provides consumers with needed information to make a healthy decision.

Or at least it should.  Then psychology comes into play and all rational decision making goes right out the window.  In this case, the psychology comes in the form of advertising.  And it’s kind of brilliant.  McDonald’s is taking lemons and turning it into artery clogging, heart attack inducing lemonade.  Some of their restaurants have a sign for their sausage muffin breakfast meal and they display the calorie count of over 1,000 calories in the biggest typeface and the under $5 price in smaller typeface.  The implication is look at how many calories you can get for this low, low price!  Your average McDonald’s patron does not have the time nor the inclination to do a detailed analysis of what’s good or bad about the meal they are about to purchase.  They know that they need around 2,000 calories a day and look at this, they can get half of those calories for only $5!  What a deal!

All advertising is deceptive.  That’s kind of the point.  It makes you feel you need something that you really don’t need.  This McDonald’s advertising campaign is so deceptive it would make satan blush.  Bravo, McDonald’s, bravo.

Ride The Wave, Baby!

Calculated Risk is one of my favorite blogs.  Why?  Because while economics can be pretty boring, the applications of economics are absolutely fascinating.  Oh, and because of things like this:

PopDist

 

That’s the age distribution of the population of the United States from 1900 to 2060.  Check out that Baby Boomer wave!  Another cool thing is you can witness medical progress in this graph as well.  Notice how it goes from a max of 75+ to 85+ to 100+ as the brackets become statistically significant.  Also, look at how normalized the graph becomes after the wave.  This signifies the mostly flat birth rate in the U.S. that we currently have.

I’m trying to come up with an explanation as to why the Baby Boom wave kind of peters out near the end like a wave getting eaten away by an undertow.  The only thing that I can think of is general mortality slowly eats away at it.  That doesn’t seem like it could be the whole story though.  There has to be some other sort of statistical meaning behind it that I can not fathom.  Anyone care to explain?

Immigration, The Answer To All Of Our Problems!

Hyperbole!  But seriously, immigration reform is critically important to our continued status as a world power.  It is just as important as it always has been.

Unfortunately, one of our two political parties (Hint: It rhymes with Schmupublicans.) is dead set against any type of immigration reform bill that doesn’t make immigrants suffer.  Take Senator Jeff Session (R-AL) for example.  He is dead set against the reform that has been proffered by the most recent Gang Of Whatever.  So what does he do?  He gets the Congressional Budget Office (CBO) to score the bill and see what the economic impact would be.  I’m sure Senator Sessions fully expected the CBO to come back and say that all of those Brown people would cost the Real Amurican Taxpayers billions.  But what does the CBO actually say?  Only that the immigration reform bill will save our country $197B over ten years.

Facts, the enemy of Republicans for well nigh eternity.  Hyperbole!  But seriously, elected Republicans do seem to have great aversion to facts these days.

Department Of Completely Missing The Point

Oregon, for the past two years, has massively increased access to Medicaid.  (Correction: It wasn’t a massive increase, it was a drastic reduction and then more money was found to support 10,000 more participants when 90,000 were still eligible.)  Participants in the expansion were chosen by lottery.  This has led to a unique opportunity to study the effects of wider access to healthcare on the poor.  The results of that study were recently released.

The study is seen as a presage of what things will look like for poor people under Obamacare.  And, besides the ridiculous lottery aspect of it, it is.

The study shows that those added to Medicaid have no better medical outcomes than those that weren’t added to Medicaid.  This has led to a large amount of gloating from people who oppose Obamacare.   Oh noes!  Obamacare is a failure!  We told you it was a giant boondoggle!

Not quite.  First and foremost, Obamacare, like Medicaid, is insurance.  Plain and simple.  Insurance protects you financially.  Period.  And the study shows much better financial outcomes for those on Medicaid.  Expecting better health outcomes because you suddenly have health insurance is like expecting not to get into a car accident because you have car insurance.  It’s ridiculous.

There were also many other benefits associated with being on Medicaid.  These include drastically lowered rates of depression, better diagnosis and management of diabetes, and increased use of health services.

The mental health aspect of the study is enormous.  This cannot be understated.  Those in the Medicaid group had a 30% reduction in the rates of depression.  Depression leads to all sorts of other issues that don’t show up on a health screen.  Economic and social outcomes can be greatly affected by depression.  Being poor is bad enough.  Being poor and depressed can be disastrous.  If the only thing that Obamacare succeeds at is reducing depression by 30%, it will be well worth the money spent.

All in all, the Oregon Experiment is a good study for Obamacare.  Opponents, of course, will continue to pick any little nit they can find and there are certainly plenty of nits worth picking.  But, like I’m fond of saying, Obamacare is a bag of doggie poo left on the doorstep of America, but what was there before was a flaming bag of doggie poo.  Baby steps.

Large Corporations Are Evil

If there is one thing that the current financial crisis should have taught us it’s that large corporations are evil.  They become entities that care about one thing and one thing only; profit.  Many times, just short term profit.  The banking crisis was all about short term profit.  Don’t believe for a moment that no one could have seen it coming.  The big banks ALL saw it coming.  They saw an opportunity to rake money in hand over fist and distribute huge bonuses to a select few and they took it.  All with the realization that they would very likely not be held responsible for their grossly immoral actions.

Here is another ploy that large corporations often pull.  Peabody Coal spun off a company called Patriot Coal.  When they did so, they filled Patriot Coal with as much of their debt burden as possible.  They threw as many retiree pension obligations as possible in with Patriot.  Why would they do this, you ask?  Well, because that way Patriot can go bankrupt and remove the pension and healthcare obligations that Peabody once agreed to give their employees.

20,000 people are going to have their pensions stripped and their healthcare taken away.  Just like that.  Peabody could have afforded these benefits if they kept everyone in the parent company, but they chose not to.  Why?  All for the almighty dollar.

And there’s nothing the workers can do about it.  Now that the National Labor Relations Board has been rendered toothless by the courts, companies have free reign to do whatever they want with their employees and retirees.  They are safe in the knowledge that they have at least a decade before anything will be able to be done against their actions today.

Notice that the new company that was spun off and designed to fail is called Patriot Coal.  That’s how sick these people are.  This, to them, is patriotism.  They take the best years of thousands of people and work them hard in one of the most dangerous jobs which is known to cause a myriad of health problems.  For this, they promise them retirement benefits and healthcare.  Then, at the first political opportunity, they throw all the retirees into a spinoff company they never worked for with the obvious intention of letting that company fail.  Never a thought made to the individuals affected by it.

Patriot Coal.  It makes the blood boil.  This is evil on an epic scale.  Yet no one will hear of it.  And it happens every day.

We Need Unions

Why?  Because of things like this.  Chrysler fired Alex Wassell,  a man with 20 years of experience, because he was “engaging in, participating in, aiding or approving conduct constituting or appearing to constitute a conflict with the interests of the Company.”  a.k.a. fighting for better conditions for employees.

Talk about Orwellian language.  Anything a worker does could constitute a conflict with the interests of the Company.  Heck, they could fire you for asking for a raise with that language.  The National Labor Relations Board has found such language discriminatory in the past, but the NLRB doesn’t really exist right now because a court found Obama’s recess appointments to the Board to be unconstitutional.

This creates a lovely dynamic.  Republicans block NLRB appointments.  Obama makes recess appointments which allows the NLRB to do their job.  Republican judge rules appointments unconstitutional.  NLRB ceases to function and all NLRB cases that had been decided have to be reheard once the appointments are approved by the Senate.  Alex Wassell is looking at a year before his case is heard.  It’s a win-win situation.  Companies win and Republicans win.  Workers lose.  This is how Republicans want the government to work.

Companies have all of the power over an individual employee.  Unions do what they can to level that balance of power.  Yes, there are abuses.  They pale in comparison to the history of abuses that companies have inflicted on their employees.

Republicans Don’t Want A Grand Bargain

This Ezra Klein article gets to the heart of the obstructionism that is the meat and potatoes of the Republican party.  Barack Obama is Charlie Brown and the Republican party is Lucy.  Every time Charlie Brown tries to kick that football, Lucy pulls it away.  And no matter how many times this happens, it’s still Obama’s fault that there is no Grand Bargain.  Because, you see, he’s not acting at all leader-y with his compromising.  Or he’s not communicating well with his detailed plan that anyone can read.

There is literally nothing Obama can do to get Republicans on board with any of his ideas.  Obama has presented the Republican party with a deal that includes EVERYTHING that they want and only one thing that they don’t want; a slight raising of taxes.  Bargaining requires two parties that are willing to bargain.  Republicans are not.  And instead of covering this fact, we get a bunch of press articles about how both sides are to blame.  Both sides are very decidedly not to blame in this instance.  It’s all Republicans.

 

You Have No Idea How Bad Inequality Has Gotten

Below is a video that really gets to the heart of how unequal society has gotten.  Think about this the next time you complain about Obama wanting to raise taxes on the top 1%.  These people aren’t going to suddenly stop creating jobs because their taxes go up a percentage point or two.  They are amassing wealth because they enjoy the power, not because they enjoy the wealth.  And even if they do like the wealth, do you honestly think that they’re just going to stop accumulating it just because their taxes go up?

One minor quibble about the video.  They get socialism wrong.  Socialism’s goal is not, nor has it ever been, perfect redistribution of wealth.  Although, I guess they do use the definition that everybody seems to think socialism means.