Wednesday, September 25, 2013

[NJFAC] ways out of budget impasse available to Obama Adm.

"The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people before we could balance the budget of the national Government."—Franklin D. Roosevelt, 1936

Budget Brinksmanship is Baaack!  Yves Smith, Sept. 20, 2013

"'s a full list of the ways out of this [budget] impasse:

1. a selective default strategy by the Executive, prioritizing not paying for things that Congress needed, and perhaps not paying debt to the Fed when it falls due and working with the Fed to get the $1.6 Trillion in bonds that it was holding canceled;

2. an exploding option involving selling a 90-day option to the Fed for purchasing some Federal property for $ 2 Trillion. Then when Congress lifts the debt ceiling, the Treasury could buy back the option for one dollar, or the Fed could simply let the option expire;

3. using the authority of a 1996 law to mint proof platinum coins with arbitrary face values in the trillions of dollars to fill the Treasury General Account (TGA) with enough money to cease issuing debt instruments, and even enough to pay off the existing debt; and

4. using the authority of the 14th Amendment to keep issuing debt in defiance of the debt ceiling, while declaring that the debt ceiling legislation was unconstitutional because it violated the 14th Amendment in the context of Congressional appropriations passed after the debt ceiling mandating deficit spending.

Since, the summer of 2011, beowulf has offered yet a fifth option for getting around the debt ceiling by issuing consols. Consols are debt instruments that pay a fixed rate on interest in perpetuity, but never promise principal repayment at a maturity date.

The debt ceiling law is written in such a way that what counts against the ceiling is the principal repayment guaranteed by the instrument. Since consols provide no principal repayment, one can have unlimited consol issuance without increasing the debt-subject-to-the-limit.

Of all the items on the list, option 1 looks far and away the most likely, although an Administration with more guts might try a bit of option 2 along with it. Unlike a platinum coin, which just sounds too weird to people who haven't heard about the idea (and the Administration would need to be selling it hard now to see if it could legitimate it in the court of public opinion), options are something the public hears about regularly and sounds less gimmicky. But the larger point is that this budgetary Battle of the Titans is a phony war. Obama can finesse the Republicans if he needs to. But both sides seem quite convinced the other will bear the brunt of the public opprobrium that would result from a government closure (see the Atlantic for a rundown; many of the points it makes are valid, but I disagree about the Clinton margin of victory being a meaningful indicator; Bob Dole ran a world-class terrible campaign).

So hang tight for way too much unnecessary melodrama over the next month. It's another round of watching the two parties play chicken, with each posturing that it won't be the one to steer out of the impending crash. The fact is that Obama really wants his Grand Bargain. All of this high drama is necessary for him to pretend to his base that he was forced to do what he's been trying to do for years: sacrifice old people since he perversely believes that "reforming" Social Security and Medicare will get him brownie points in the presidential legacy ledger. This staged impasse is hard to take it as seriously until there's evidence that this iteration of budget farce really is different from its predecessors.

[emphasis mine--jz]

National Jobs for All Coalition

This list is only for announcements, so you may not post.
You received this message because you are subscribed to the Google Groups "goodjobs" group.
To unsubscribe from this group and stop receiving emails from it, send an email to
For more options, visit

Wednesday, September 18, 2013

[NJFAC] a non-apology to the German Finance Minister

My grovelling apology to Herr Schäuble

By Economics  September 17th, 2013

German Finance Minister Wolfgang Schäuble has been vindicated.

For my part, I have been wrong about everything. German discipline policies for the eurozone have been a tremendous success. I am ashamed for suggesting otherwise.

As the wise, patient, and always self-effacing Mr Schäuble writes today in The Financial Times, the Euro-sceptics talk and write relentless drivel.

"Ignore the doomsayers: Europe is being fixed" is the headline:

The eurozone is clearly on the mend both structurally and cyclically.

In just three years, public deficits in Europe have halved, unit labour costs and competitiveness are rapidly adjusting, bank balance sheets are on the mend and current account deficits are disappearing. In the second quarter the recession in the eurozone came to an end.

So there we have it. The problem is solved. How can I not have seen it? How can any of us on this blog thread have missed it?

I apologise for mentioning that unemployment is 27.8pc in Greece, 26.3pc in Spain, 17.3pc in Cyprus, and 16.5pc in Portugal, or for pointing that it would be far worse had it not been for a mass exodus of EMU refugees. Nor was is proper to mention that Greek youth unemployment in 62.9pc. These are trivial details.

I apologise for pointing out that the EU-IMF Troika originally said the Greek economy would contract by 2.6pc in 2010 and then recover briskly, when in fact it contracted by roughly 23pc from peak-to-trough, and will shrink another 5pc this year according to the think-tank IOBE. This slippage is well within the normal margin of error.

I apologise for mentioning that the debt trajectories of Spain, Greece, Italy, and Ireland have accelerated upwards under the austerity plans, and therefore that the policy has been self-defeating.

It was quite uncalled for to point out that Italy's debt ratio has jumped to 130pc of GDP, or to so suggest that debt cannot keep rising on a contracting nominal GDP bas[e], and I will wash my mouth soap if I ever utter the words "denominator effect" again. It is shabby to use such cheap language.

I apologise for mentioning IMF studies showing that the fiscal multiplier is three times higher than first thought by EU officials in EMU crisis states, and therefore that the contractionary effects of belt-tightening are far greater than first calculated

.... keep reading:

Thanks to Paul Krugman's blog. j
National Jobs for All Coalition

This list is only for announcements, so you may not post.
You received this message because you are subscribed to the Google Groups "goodjobs" group.
To unsubscribe from this group and stop receiving emails from it, send an email to
For more options, visit

Wednesday, September 11, 2013

[NJFAC] Rich get richer: 99% up 1%; top .01 up 32%

The Rich Get Richer Through the Recovery  


The top 10 percent of earners took more than half of the country's total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.....

High stock prices, rising home values and surging corporate profits have buoyed the recovery-era incomes of the most affluent Americans, with the incomes of the rest still weighed down by high unemployment and stagnant wages for many blue- and white-collar workers.....

More generally, richer households have disproportionately benefited from the boom in the stock market during the recovery, with the Dow Jones industrial average more than doubling in value since it bottomed out early in 2009. About half of households hold stock, directly or through vehicles like pension accounts. But the richest 10 percent of households own about 90 percent of the stock, expanding both their net worth and their incomes when they cash out or receive dividends.

The economy remains depressed for most wage-earning families. With sustained, relatively high rates of unemployment, businesses are under no pressure to raise their employees' incomes because both workers and employers know that many people without jobs would be willing to work for less. The share of Americans working or looking for work is at its lowest in 35 years.

There is a glimmer of good news for the 99 percent in the report, though. Mr. Piketty and Mr. Saez show that the incomes of that group stagnated between 2009 and 2011. In 2012, they started growing again — if only by about 1 percent. But the total income of the top 1 percent surged nearly 20 percent that year. The incomes of the very richest, the 0.01 percent, shot up more than 32 percent.....

[Sorry for two in one day, but Saez-Piketty report too significant to resist. jz]
National Jobs for All Coalition

This list is only for announcements, so you may not post.
You received this message because you are subscribed to the Google Groups "goodjobs" group.
To unsubscribe from this group and stop receiving emails from it, send an email to
For more options, visit

[NJFAC] B. Garson: Corporate America Used the Great Recession to Turn Good Jobs Into Bad Ones

... the tactics Walmart has used for years to cut costs and goose profits -- cutting employees' hours and keeping wages down -- are spreading as the U.S. economy limps back to health.

Abracadabra: You're a Part-Timer
How Corporate America Used the Great Recession to Turn Good Jobs Into Bad Ones 8/20/13
By Barbara Garson


First, be aware of what a weird economic downturn and recovery this has been.  From the end of an "average" American recession, it ordinarily takes slightly less than a year to reach or surpass the previous employment peak.  But in June 2013 -- four full years after the official end of the Great Recession -- we had recovered only 6.6 million jobs, or just three-quarters of the 8.7 million jobs we lost.


"Do your managers claim that the short hours are just for the recession?" I asked.  "Do they thank you for making sacrifices till business picks up?"

"Not that I ever heard," Ina answered.  "I think -- and I've been saying this for a year and a half -- their ultimate goal is to have all part-time sales people working shifts of four-and-a-half hours.  That way they're not responsible for lunch, they have a lot of bodies, they pay no commissions, no benefits, and it's a constant turnover.  This is what I think they want even after the recession because," here she leaned in as though to reveal a secret, "they haven't stopped hiring people."  She checked to see if I grasped the significance of that.


When America's industrial workers were hit hard in the 1970s and 1980s, the excuse for breaking their unions, lowering their wages, and outsourcing their work was that we had to compete with foreign manufacturers.  But not to worry, it was then suggested, there might be tough times ahead for a few blue-collar troglodytes who couldn't be retrained, but the rest of us would soon be data manipulators in a booming postindustrial society.

Feldman is as postindustrial as you can get and his former company doesn't even compete with foreign firms.  It seems, though, that corporate headquarters no longer needs excuses or explanations to make workers cheaper and more replaceable.  


National Jobs for All Coalition

This list is only for announcements, so you may not post.
You received this message because you are subscribed to the Google Groups "goodjobs" group.
To unsubscribe from this group and stop receiving emails from it, send an email to
For more options, visit

Friday, September 6, 2013

paychecks vs. portfolios; profits back, wages not

Political Economy of the Wage Fight, Jared Bernstein, 8/30/13

Source: BEA (NIPA tbl 1.12)

"As the figure shows, the pattern of recent business cycles is the profit share is pro-cyclical and the comp share, counter-cyclical.  But here's the kicker: note that the profit share doesn't just recover from its cyclical lows; it surpasses them, as it has done already in this recovery, while the compensation share just keeps carving out new lows.  And, for the record, compensation itself has of course become more unequally distributed, so these data present only a partial view of the growing inequality problem.

It's a picture of an economy that has been continuously unforthcoming to those who depend on the paychecks as opposed to their portfolios."

See also his article,

National Jobs for All Coalition

Dr. King, The March on Washington, and Full Employment

Dr. King, The March on Washington, and Full Employment, Jared Bernstein  22 Aug 2013 

[With] the 50th anniversary of the historical civil rights march on Washington, a number of analyses have raised hard questions about the lack of economic progress among African-Americans.  The WaPo notes, for example, that:

[f]ifty years ago, the unemployment rate was 5 percent for whites and 10.9 percent for blacks, according to the Economic Policy Institute. Today, it is 6.6 percent for whites and 12.6 percent for blacks. Over the past 30 years, the average white family has gone from having five times as much wealth as the average black family to 61 / times, according to the Urban Institute.

"If you look at 50 years after the 1960s civil rights movement, the most stubborn and persistent challenge when it comes to the nation's racial challenge remains in the areas of economics and wealth," said Marc Morial, president of the National Urban League.

That's unquestionably true, and yet, these sweeping analyses risk overlooking some important evidence right there in the data that Dr. King would have recognized as entirely consistent with where he was trying to take the movement when his life was so tragically cut short.

It's about full employment, something I go on about a lot around here.  Remember, it was called the "March on Washington for Jobs and Freedom" (my bold).  And when he was taken from us, Dr. King was leading the "Poor People's Campaign," organized around the need for jobs, health care, and housing.

The last time this economy was operating with truly tight labor markets, back in the latter 1990s, I was quite struck by the gains made by African-Americans, both in absolute terms and relative to whites.  Here's just a small table, the work of a few minutes, which makes the case on a number of key economic variables.

–Between 1993 and 2000, the national unemployment rate fell from 6.9% to 4%, a decline of about three percentage points (ppts).  But African-American unemployment fell 5.4 ppts, about twice the decline of white unemployment.

–Employment rates—the share of the working-age population with a job—went up 5.5 points for blacks and 2.2 for whites.

–The poverty rates of black families with kids fell a whopping 14 ppts over those years, close to four times the 4 point decline for white families.  It's also true that 2000 marked an all-time low in the poverty rates for blacks.

–The ratio of black median income to that of whites rose almost 9 ppts to its highest level on record going back to 1947.

These statistics focus on the relative trends, but it is of course disarmingly clear that the levels in the table reveal great racial disparities.  Even with the noted gains, black family poverty was many multiples of the rate for whites.  Even at its peak, the income ratio was below two-thirds.

But you'll never get to the levels you desire without the trends moving in the right directions, and for that to happen, we need to get back to full employment.

....[Dr. King] recognized not only the role of racial discrimination, but the systematic lack of opportunity facing the disadvantaged in an economy that left large swaths of workers behind.

And from his early involvement with the Montgomery bus boycott to his last speech on behalf of Memphis sanitation strikers, King realized the power of the economic leverage as part of the solution.  In full employment labor markets, it's more expensive for employers to discriminate.  They risk leaving profit on the table if they're unwilling to reach more deeply into the unemployed labor pool.

I want to be careful not to over-claim: full employment will neither solve everything nor cure the nation of the disease of racial bias.  But it will help, and if history is much of a guide, it will help a lot.

Most 2013 job growth is in part-time work

Most 2013 job growth is in part-time work, survey suggests

By Kevin G. Hall | McClatchy Washington Bureau

The July government employment report released Friday showed the job market treading water.

And a closer look at one of the two measures the Labor Department uses to gauge employment suggests that part-time work accounted for almost all the job growth that's been reported over the past six months.....

"Over the last six months, of the net job creation, 97 percent of that is part-time work," said Keith Hall, a senior researcher at George Mason University's Mercatus Center. "That is really remarkable."

Hall is no ordinary academic. He ran the Bureau of Labor Statistics, the agency that puts out the monthly jobs report, from 2008 to 2012. Over the past six months, he said, the Household Survey shows 963,000 more people reporting that they were employed, and 936,000 of them reported they're in part-time jobs.

"That is a really high number for a six-month period," Hall said. "I'm not sure that has ever happened over six months before."....

Hall speculated that the implementation of the Affordable Care Act, shorthanded as Obamacare, might be resulting in employers shifting workers to part-time status to avoid coming health care obligations.


Find more here:

1.65 million U.S. hh fell below the $2/day/person threshold in a given month [2011]

Aug 10

Millions of Americans live in extreme poverty. Here's how they get by. Dylan Matthews, May 13, 2013, Washington Post's worth keeping in mind that even the richest countries haven't completely eradicated extreme poverty. That's the key takeaway from the work of sociologists Kathryn Edin (Harvard) and Luke Shaefer (Michigan), who for the past few years have been trying to nail down the incidence of extreme poverty in the United States. Their latest research is set to be published in the journal "Social Service Review" next month. They use a slightly different measure, defining extreme poverty households as those living on less than $2 a day per person; that's also a World Bank measure, derived from the average poverty line in the developing world, rather than the average in very poor countries.

The results are astonishing. Using data from the Survey of Income and Program Participation (SIPP), a Census program that tracks samples of tens of thousands of households across 2 1/2 to 4 years, Edin and Shaefer estimate that in 2011, 1.65 million U.S. households fell below the $2 a day per person threshold in a given month. Those households included 3.55 million children, and accounted for 4.3 percent of all non-elderly households with children.

That sounds unbelievable, but Shaefer explained that the research was prompted by qualitative work Edin did in households like this. "Kathy and I were talking and she mentioned that she felt like she was going into more and more homes where there was really nothing in income," he said. "They were surviving on food stamps, or in some cases on nothing at all." So they set about investigating whether or not these households showed up on the SIPP. And they did.

So how do these families survive? The safety net is a big part of the story. If you take food stamps, housing subsidies and refundable tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) into account, the number of households in extreme poverty is 613,000, or 1.6 percent of non-elderly households with children (compared to 1.65 million and 4.3 percent without transfers). So taking government aid into account reduces the extreme poverty population by 62.8 percent. Then again, there are limits to treating aid as equivalent to cash. As Shaefer said, "You can't eat a housing subsidy."

Civil society also plays an important role. Shaefer noted that follow-up qualitative work he and Edin have done shows that many of these households rely heavily on homeless shelters and soup kitchens, as well as public goods like libraries. "We see people relying on the availability of libraries, since you have to have Internet access to have any chance of getting a job, as most hiring is now done online," he explained.....

National Jobs for All Coalition

government has supported innovation's boldest risks and biggest breakthroughs

A brilliant exploration of new ideas in business argues that government is behind the boldest risks and biggest breakthroughs

The Entrepreneurial State: Debunking Public vs Private Sector Myths, by Mariana Mazzucato, Anthem Press, RRP£14.99, RRP$18.95

Growth of output per head determines living standards. Innovation determines the growth of output per head. But what determines innovation?

Conventional economics offers abstract models; conventional wisdom insists the answer lies with private entrepreneurship. In this brilliant book, Mariana Mazzucato, a Sussex university professor of economics who specialises in science and technology, argues that the former is useless and the latter incomplete. Yes, innovation depends on bold entrepreneurship. But the entity that takes the boldest risks and achieves the biggest breakthroughs is not the private sector; it is the much-maligned state.

Mazzucato notes that "75 per cent of the new molecular entities [approved by the Food and Drug Administration between 1993 and 2004] trace their research ... to publicly funded National Institutes of Health (NIH) labs in the US". The UK's Medical Research Council discovered monoclonal antibodies, which are the foundation of biotechnology. Such discoveries are then handed cheaply to private companies that reap huge profits.

A perhaps even more potent example is the information and communications revolution. The US National Science Foundation funded the algorithm that drove Google's search engine. Early funding for Apple came from the US government's Small Business Investment Company. Moreover, "All the technologies which make the iPhone 'smart' are also state-funded ... the internet, wireless networks, the global positioning system, microelectronics, touchscreen displays and the latest voice-activated SIRI personal assistant." Apple put this together, brilliantly. But it was gathering the fruit of seven decades of state-supported innovation.

Why is the state's role so important? The answer lies in the huge uncertainties, time spans and costs associated with fundamental, science-based innovation. Private companies cannot and will not bear these costs, partly because they cannot be sure to reap the fruits and partly because these fruits lie so far in the future.

Indeed, the more competitive and finance-driven the economy, the less the private sector will be willing to bear such risks. Buying back shares is apparently a far more attractive way of using surplus cash than spending on fundamental innovation. The days of AT&T's path-breaking Bell Labs are long gone. In any case, the private sector could not have created the internet or GPS. Only the US military had the resources to do so.

Arguably, the most important engines of innovation in the past five decades have been the US Defense Advanced Research Projects Agency and the NIH. Today, if the world is to make fundamental breakthroughs in energy technologies, states will play a big role. Indeed, the US government even helped drive the development of the hydraulic fracturing of shale rock.

Mazzucato insists this involves more than state support of research and development, vital though that is (in the US, the government funds a quarter of R&D and nearly 60 per cent of basic research). But the state is also an active entrepreneur, taking risks and, of course, accepting the inevitable failures. America has been a developmental state since the days of Alexander Hamilton. Indeed, the nation's recent role as the premier promoter of fundamental innovations owes as much to its state as to the get-up-and-go of its entrepreneurs. Germany's failure to remain at the forefront of today's new technologies, in contrast to before the second world war, may be down to the limited role now accorded its state.

Mazzucato loves puncturing myths about risk-loving venture capital and risk-avoiding bureaucrats. Does it matter that the role of the state has been written out of the story? She argues that it does.

First, policy makers increasingly believe the myth that the state is only an obstacle, thereby depriving innovation of support and humanity of its best prospects for prosperity. Indeed, the scorn heaped on government also deprives it of the will and capacity to take entrepreneurial risks.

Second, government has also increasingly accepted that it funds the risks, while the private sector reaps the rewards. What is emerging, then, is not a truly symbiotic ecosystem of innovation, but a parasitic one, in which the most lossmaking elements are socialised, while the profitmaking ones are largely privatised. Do ordinary taxpayers understand that their taxes fund the fundamental innovations that drive their economy?

This book has a controversial thesis. But it is basically right. The failure to recognise the role of the government in driving innovation may well be the greatest threat to rising prosperity.

The writer is the chief economics commentator of the Financial Times

National Jobs for All Coalition

Confirm your subscription

We have received a request for this email address to join the goodjobs group, hosted by Google Groups. In order for us to process this subscription, we need confirmation from you. If you did not request to join this group, you may ignore this message.

This message is the result of someone entering your email address in a public subscription box for this group. You will only be added to this group if you click on the button below.

If you have questions related to this or any other Google group, please visit the Help Center.

Join This Group