Another reminder to support BtN
Just reiterating yesterday’s plea: if you listen to my radio show, please contribute during WBAI’s fundraiser. Without WBAI, and without WBAI airing “Behind the News,” there would be no “Behind the News.”
Ways to do it are online (see links here), or phone in a pledge to 212-209-2950 during my fundraising shift today, 5-6 PM New York time. The show will feature, as a fundraising premium, my June interview with Norman Finkelstein on CD and/or Norman’s latest book, This Time We Went Too Far (description here.)
Support “Behind the News” on WBAI—really!
WBAI is in the midst of a crucial fundraising marathon now, running through most of this month. The station is in very bad shape financially, and unless we raise a bundle in the coming weeks, there could be dire consequences.
And the interim program director has made some noises about bringing in some “big names” in the 5–6 PM slot. That’s my slot, at least on Thursdays, and I doubt as I qualify as a “big name.” In pursuit of a similar strategy at KPFK, Pacifica’s Los Angeles outlet, they brought in Roseanne Barr to rant about 9/11 conspiracies. The strategy didn’t work, but that may be what they have in mind for WBAI.
So if you like my radio show, and want to keep it on, please pledge your support to WBAI, and my show in particular. There are several ways to do it. One would be to phone in a pledge during my fundraising time tomorrow (Thursday, October 14, 5–6 PM), by calling 212-209-2950. Or, you can make a secure contribution online (Donate To Your Favorite WBAI Show), naming “Behind the News” as your favorite show. Or—and this is something that station management is really pushing—become a BAI Buddy by filling out and mailing this form (http://wbai.org/pdf/WBAI%20Buddies_Sept2010.pdf), naming “Behind the News” as your favorite show. Nothing would secure my spot in the lineup better than a strong show of support for this little radio enterprise.
This is real—no cry of wolf. Without WBAI, and/or without me on WBAI, there will be no more “Behind the News.” People sometimes suggest to me that I could do the show as a podcast, but that’s too much trouble for too little exposure. I already put a full day of work into the show every week for no pay as it is, and I just couldn’t handle any more. So, if you like what you hear, please throw some bucks this way. Thank you.
September employment
[I didn’t do a new radio show this week because WBAI is fundraising. More on this very soon. In the meanwhile, here’s a quick analysis of the September employment report that I did as a special intro to the KPFA version of the show, which was almost all a rerun.]
And now a special update on the September employment report, released Friday morning. The headline number was a loss of 95,000 jobs—though more than all of that was accounted for by the continuing attrition of temporary workers who were hired to help on the 2010 Census over the summer. The private sector gained 64,000 jobs—decent, but about a third what we’d be seeing in a normal economic recovery. State and local governments, though, shed an unusually large number of workers—with 2/3’s of that loss coming in education. Laying off teachers, what a country. Within the private sector, construction and manufacturing showed minor losses, and the service sector showed modest gains. Among the strongest gainers within the service sector: health care and bars and restaurants. It looks like we may be going back to the overeat, overdrink, and check into the hospital economic model of 2006, when those two sectors were leading the way upwards.
Over the last year, we’ve added 344,000 jobs, a number that would have been a pretty good month in the old days.
Average hourly earnings were unchanged for the month. Wage gains have been ebbing—a year ago, they were modest, but now they’re heading towards the microscopic.
Those figures came from a survey of employers, The simultaneous survey of households was somewhat more downbeat. Yes, at least the unemployment rate didn’t rise, but it’s still close to 10%. And within the unemployed, there was a hefty rise in the number of permanent job losers (as opposed to those on temporary layoff). The number working part time only because they couldn’t find full-time work—part-time for economic reasons, in the jargon—rose to a record level, when measured as a percentage of those employed. The broadest measure of unemployment, the so-called U-6 rate, which includes those unwilling part-timers along with those who’ve given up the job search as hopeless, rose to 17.1%, matching the year’s high and not far from a record. And almost 35% of last month’s unemployed dropped out of the labor force in September, an all-time high since these numbers began in 1990. Among the hardest-hit in the recession and weak recovery have been younger people; older workers, those over 45, have done far better than the rest over the last few years.
It’s clear we’re still deep in the long slog out of a financial crisis recession. And there are some serious long-term concerns amidst all this. some long-term forward-looking indicators are quite disturbing: with so many young people not finding work, and so many former workers languishing outside the labor force, the population’s skills are either remaining undeveloped or deteriorating. Combine that with cutbacks in education and you have some serious problems ahead.
Why we love Dems (cont.)
Because they try so hard to “keep the stakeholders in the room”—even when they deserve a stake in the heart!
Tom Daschle tells Wonk Room about how the public option—weak tea in the first place—was too much for the industry, so they snuffed it:
I don’t think it was taken off the table completely. It was taken off the table as a result of the understanding that people had with the hospital association, with the insurance (AHIP), and others. I mean I think that part of the whole effort was based on a premise. That premise was, you had to have the stakeholders in the room and at the table. Lessons learned in past efforts is that without the stakeholders’ active support rather than active opposition, it’s almost impossible to get this job done. They wanted to keep those stakeholders in the room and this was the price some thought they had to pay. Now, it’s debatable about whether all of these assertions and promises are accurate, but that was the calculation. I think there is probably a good deal of truth to it. You look at past efforts and the doctors and the hospitals, and the insurance companies all opposed health care reform. This time, in various degrees of enthusiasm, they supported it. And if I had to point out some of the key differences between then and now, it would be the most important examples of the difference.
If the “stakeholders” supported it, that’s all the proof you need that it sucked. But this is the essence of the Democrats: pretend to be “progressive” while serving as stooges for capital. To outside observers, this sometimes seems weak and indecisive, but in fact this is what they’re all about.
The Bush tax cuts: a $2.74 trillion loss
The excellent David Cay Johnston asks: So How Did the Bush Tax Cuts Work Out for the Economy? Short answer: a nearly $3 trillion loss. And the GOP wants to extend them, and the Dems don’t want to go out of their way to stop them.
Citi update
Brad DeLong, um, comments on the 19-month-old Citigroup report on the Treasury’s bank policy that Citi demanded that WordPress and I take down: Citigroup’s View of the Obama Administration in February 2009… – Grasping Reality with Both Hands.
Fresh audio posted
Just posted to my radio archives (links there):
September 16, 2010 Stephen Mihm, co-author of Crisis Economics, on The Crisis in historical perspective • Two segments on Cuba: Julia Sweig in an excerpt from a Council of Foreign Relations conference call (full audio here) about her conversation with Fidel, and consultant Kirby Jones on the Cuban economy and U.S. companies doing business there
September 23, 2010 Eric Garris, founder of Antiwar.com, on the antiwar movement, the libertarian perspective on it, and the effort to unite opponents across the spectrum • Gary Shteyngart, author of Super Sad True Love Story, on life amidst anxious imperial decline my and U.S. companies doing business there
Citigroup feels violated
This morning, WordPress informed me that they’d received a “valid DMCA notice”—as in Digital Millennium Copyright Act—notice about a Citigroup research report I posted here in February 2009. Until the issue could be “resolved”—meaning I acknowledged this grave offense against intellectual property—I couldn’t post anything to this blog. Once I said “Yes, Sir,” my posting privileges were restored. The document was, of course, deleted.
The report was an analysis of the Treasury’s proposed bank capital requirements in the run-up to the stress tests. Citi’s conclusion—and I think even the DMCA allows me to quote a phrase this brief from the doc—was that “the US government is following a relatively bank-friendly, investor-friendly approach.” So there you have it, just for the record.
Interview
Me, interviewed by Allison Kilkenny of Citizen Radio: http://www.breakthruradio.com/index.php?show=11537
Why we loved the Zaps
This is terrific:
We loved the Zapatistas, because they were brave enough to make history after the end of History. We loved the Zapatistas, because we were afraid of political power and political decisions. We loved the Zapatistas, because we thought we could do without a century and a half of baggage. But we could have done far more for the Zapatistas if we mounted a better challenge to the system that shackles us all—neoliberalism. I mean capitalism.
Radio commentary, September 15, 2010
[Been a while since I posted one of these. Too many things to do, too little time. Sorry. Much more, including graphs, in the forthcoming LBO.]
Thursday morning brought the release of the Census Bureau’s annual income, poverty, and health insurance numbers. These are drawn from a special edition of the Bureau’s monthly Current Population Survey. The regular survey, which covers about 60,000 households, is what the monthly unemployment figures, among other things, are based on. This special survey, done every March, covers 100,000 households. This is a very large sample, though it’s far from perfect, as I’ll say in a bit.
The headline findings are that incomes were down, poverty was up, and millions lost their health insurance last year. This is just what you’d expect in a recession, of course. A few words about each.
Income
First, income . The median income of all households—the income level at middle of the distribution, meaning that half the population is richer, and half, poorer— fell by almost 1% last year, but the move was deemed not large enough to be statistically significant. That is, the likely error in the estimate is larger than the change itself. But the overall number was helped considerably by a near-6% rise in incomes for households headed by someone 65 or over. (The concept of a head of household—usually the person’s name on the deed or lease—is problematic, but it’s not my terminology.) Under-65 households saw their income fall by 1.3%, and this did pass the test of statistical significance. Especially hard hit were the young, foreign born non-citizens, and blacks. So-called Hispanics held their own. Curiously, residents of central cities did a lot better than suburbanites or country-dwellers.
Taking a longer-term look, median household income in 2009 was just 2% above where it was in 1989, even though real GDP was up 63% over the same period. Of course, population is up about 25% over the period, and not all of GDP takes the form of personal income—some of it goes to corporations, some to government. But real disposable income per capita—the total of income after taxes throughout the entire economy divided by the population—is up 40% over the last twenty years. So, on paper, or its silicon equivalent, were things being distributed equally, the average household would have gained about 20 times more income than it has in reality. The reason for this, of course, is that the rich have gotten most of the benefits of economic growth over the last few decades. The top 5% of the population, according to the Census numbers (which badly understate things, for technical reasons I’ll go into in a moment) has gotten about 25% of the growth in income over the last twenty years—the top 20% altogether has gotten just over half, 54%.
There are several reasons why the Census numbers understate incomes at the top. One is that the very rich can’t be bothered answering questionaires from pesky enumerators. And another is that the Census Bureau treats all incomes over a certain amount—it rises every year, but it’s around a million dollars now—as if they were that amount. The stated reason for this is to protect confidentiality, since the records are available for public use. Maybe. But the effect is seriously to understate how well the very rich have done. For example, the Census shows the top 5% gaining 28% from 1989 to 2009. Work based on tax records done by the economists Thomas Piketty and Emmanuel Saez show that to be roughly true for households at the 95th percentile—that is, those richer than 95% of the population. But by missing the seriously rich, the Census understates things by almost 2/3: Piketty and Saez have the top 5% gaining almost 75% from 1989 to 2007. (Sadly, 2007 is as far as their data goes, but it probably wouldn’t change much if you took it out another couple of years.) The reason for the difference is the action at the high end. The top 1% was up over 100%. The top 0.01%—the 12,000 or so richest households, with incomes averaging $35 million a year—were up 215%.That almost 30 times the increase of the bottom 90% of the population. In other words, an enormous portion of the gains of economic growth have gone to just a few thousand hyper-rich.
All that said, the Census numbers are a good measure of broad economic trends, even if they miss life in the stratosphere.
A few other notes on income. The average black household’s income fell to just below 60% of the average white household’s, down nearly 2 percentage points from last year, and extending a downtrend that began when the boom of the 1990s burst in 2001. At its 2000 peak, the average black household hit 65% of the white average. The average Hispanic household’s income was just below 70% of its white counterpart—down a couple of points from a few years ago, but basically in the neighborhood it’s been in for years. The average Asian household’s income was 120% of the white average last year, also more or less where it’s been for several years.
Poverty
Now, poverty . Before proceeding, it’s important to say that the U.S. poverty line is an extremely stingy thing. It’s based on research done in the 1950s that showed that the average household spent a third of its income on food. So, the Johnson administration, eager for metrics in its war on poverty, decided that a poverty line would be three times a minimal food budget computed by the Agriculture Department. Never mind that that food budget was considered something of an emergency measure, not something to live on. They needed something in a hurry and went with that. And they’ve just adjusted that line for inflation ever since, with no notice paid to rising GDP or average incomes, or the changing nature of household budgets (like medical inflation or the need for child care). So, conceptually, a poverty income today is exactly the same as it was almost 50 years ago, even though average incomes have more than tripled. A more honest poverty line would produce numbers probably twice what officialdom reports.
Yet despite that undemanding standard, 14.3% of Americans were officially poor in 2009, up from 13.2% in 2008, the highest level since the early 1990s. It’s almost certainly up this year, since it tracks the unemployment rate pretty closely. The rate among white households was just over 9%; for black and Hispanic households, over 25%, or nearly three times the white rate. It was almost that high for households of any race with children under 6.
Health insurance
And the percentage of people without health insurance for the entire year—and not just a spell, so these are lowball numbers—rose more than a percentage point, to 16.7%—or 51 million people. Since people over 65 are covered by Medicare, giving them near-100% coverage, it’s worth looking at the under-65 crowd: almost 19% of them were without insurance for the whole year. The share rises to 30% for young adults, those under 35.
So, a bad year for the mass of the American population, and it’s likely that 2010 was equally bad or worse. And this news will be reported for a day or two, and then forgotten, as the TV moans about the sufferings of the rich, who desperately need their tax breaks renewed.
New radio product
Just added to my radio archives (links to guest bios and articles are there):
September 9, 2010 Liz McNichol of the Center on Budget and Policy Priorities on the fiscal crisis of the states • Yanis Varoufakis of the University of Athens fact-checks Michael Lewis’ Vanity Fair article on Greece
September 4, 2010 (KPFA version) Jesse Eisinger talks about how banks flipped CDOs to each other, made billions, stuck us with the bill • Michael Yates talks about the miserable mood out there in the Real America
Immigration: more evidence in its favor
I reviewed a lot of the studies of the economic effects of immigration in LBO several years ago: Economics of immigration. Bottom line: on balance, it’s quite good. Not popular these days, so it’s more important than ever to make the point.
Just in, a new study from the San Francisco Fed. Quoting from the abstract:
Statistical analysis of state-level data shows that immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization. This produces efficiency gains and boosts income per worker. At the same time, evidence is scant that immigrants diminish the employment opportunities of U.S.-born workers.
It’s too bad that most of the yahoos whipping up a nativist frenzy aren’t much into empirical evidence. But there it is.
LBO News from Doug Henwood 
5 Comments
Posted on September 24, 2010 by Doug Henwood
Radio commentary, September 23, 2010
Summers • recession over! — except in housing and jobs • Zuckerberg & the charter scam
Summers back to Harvard
So Larry Summers is leaving as head of Obama’s National Economic Council. Everyone who talks about Summers assures us that he’s a very smart fellow, though he left Harvard, where he was president for five years, a financial wreck. (Background here, here, and here.) He’d advised the endowment to borrow heavily to speculate in derivatives that went sour, yielding billions in losses. But, as everyone will tell you, Larry is very smart. He did help design the stimulus package, which, for all its faults—not being big enough and not focusing enough on long-term investments—was a lot better than nothing, since it helped keep us from falling into Great Depression II. It’s about the best thing the Obama administration so far.
It’s likely that Summers is going to be replaced by someone worse. There’s a lot of pressure on Obama to replace him with someone from the world of business. It’s not clear how well business experience translates into the world of politics and policy, and it’s also not clear that American business has been running itself all that well, but that’s the conventional wisdom. Obama, you see, being a Kenyan anti-colonialist and socialist, has been hostile to business. We know this is true—despite bailing out the banking sector, saving GM, and sparing the insurance industry in its health care reform—because he once called bankers “fat cats.” They’ve never recovered from this grievous insult: the monied are so sensitive. Years ago, an old friend of mine said that the rich don’t merely want not to pay taxes—they want to be paid tribute. I think she was onto something.
Recovery report
The U.S. economy continues its noble attempt to find its feet, with mixed success. In the “no kidding” department, the Business Cycle Dating Committee of the National Bureau of Economic Research—a panel of eight economists who are the official arbiters of recession and recovery for the U.S. economy—declared on September 20 that the Great Recession ended in June. Not June 2010, but June 2009. This may surprise a civilian audience in at least two ways. First, what took them so long? The answer is that they really really want to be sure, and a 15 month delay is actually about average. And second, the news that the recession is over may strike some people as strange. There were over 300,000 fewer jobs last month than when the recession officially ended in June 2009, the unemployment rate is a tenth of a point higher, and the share of the adult population with a job is off by almost a full percentage point. (The unemployment rate would be a lot higher if people hadn’t dropped out of the labor force.)
But, you know, GDP. Real GDP, that is the total value of goods and services produced in the U.S adjusted for inflation, stopped shrinking in the middle of last year and is up a miserable 1.7% since then. And since, to a bourgeois economist, the economy is about money and not people, the recession is over. Doesn’t that make you feel better.
Speaking of miserable, the housing market, which led us into this mess, isn’t showing much leadership in getting us out of it. July’s housing figures were uniformly awful. August’s, which we’re just now getting, are coming in a little better. As Economy.com’s Dismal Scientist service put it on Thursday morning, “August sales of existing homes recovered somewhat from the July free fall, but this gain only brings the pace of sales up to the high end of miserable.” But applications for new mortgages have been down for the last several weeks, and the Federal Housing Finance Agency’s price index, released the other day, was off by 0.5%. That’s a July number, though, so maybe that’s just a relic of a really bad month.
But first-time applications for unemployment insurance, filed by people who’ve just lost their jobs, rose 12,000 last week following two weeks of decline. Right now, this number seems trendless, up one week and down the next, but stuck at a high level. The job market is off life support, but it’s not bounding out of bed and ready to run a half-marathon, either.
And the Federal Open Market Committee, the group within the Federal Reserve that sets monetary policy, met earlier in the week and decided to keep the spigots wide open. They’re still concerned that the recovery is weak. Further, their statement expressed discreet worry that the economy was in danger of sinking into deflation, a period of falling prices and shrinking activity that almost no one but the most extreme sadomonetarist would enjoy.
Zuckerberg, Christie, & Booker
Ok, enough business cycle news. On to something of longer-term interest. We’ll hear later in this show from Gary Shteyngart, whose excellent dystopian novel Super Sad True Love Story depicts an American future of corporatized, wired illiteracy. By one of those freakish bits of coincidence that would be unbelievable in fiction, I just read in The New York Times (which I still get delivered every morning, in its dead-tree format) that Mark Zuckerberg, one of the founders of Facebook (of which I am, I must disclose, an avid user) is planning to give $100 million to the public schools of Newark, New Jersey.
Parenthetically, I’m not sure how Zuckerberg can actually put his hands on $100 million. He’s supposedly worth, in the monetary sense, something like $7 billion. Facebook is wildly successful, of course; something like one in every 12 earthlings has an account (no exaggeration). But the valuation of Facbook is mostly on paper. It’s not making oodles of money right now, and I don’t get how Zuckerberg is a centimillionaire in any money more tangible than that of the mind. But, hey, in the world of Web 2.0—or is it 3.0 now? I keep losing count—you gotta dream.
Let’s leave all that aside. So Zuckerberg, who grew up in Westchester, now lives in California, and has absolutely nothing to do with Newark, wants to give $100 million to the schools in a desperately poor city whose schools could use every penny they can get their hands on. The city’s school system has spent 15 years in a kind of receivership, under state and not local control. So Zuckerberg has now made a deal with New Jersey governor Chris Christie to turn some control of the schools back to the city and its mayor, Cory Booker. Christie is a budget-cutting Republican, and Booker a sleek corporate new Democrat, but both are in love with what’s euphemized as education “reform,” which means privatization, competition, charter schools, and lots of testing. Curiously, corporate America also loves this agenda—and so does the Obama administration.
And where will these three men, Christie, Booker, and Zuckerberg, make the official announcement? On the Oprah Winfrey show. As I say at the beginning of my interview with Shteyngart, this country is almost impossible to satirize, since it does so much of the satirical work on its own.
Of course, it’s important to point out that the so-called school reform agenda doesn’t work. Some charter schools are very good, and some are awful, but the evidence is that they have little effect on educational outcomes. The problems of a school system like Newark’s are that the city is full of poor people leading very hard lives. Even a $100 million gift won’t change that. Neither will Web 9.0, if we get there.
So why does Corporate America love charter schools so much? Partly it’s ideological—the rhetoric of choice and competition appeals to their businessy minds. But they’re also a way to break teachers’ unions and cut salaries. So even if charters and the rest of the debased agenda, like frequent testing, make no educational sense, they can give us the same depressing outcome at half the price.
The school reform movement took some serious hits in last week’s elections. In New York, the three candidates most prominently associated with it—who were showered with cash from Wall Street—all lost badly. And Washington’s current mayor, Adrian Fenty, also lost to a primary challenger. There were other local issues at stake—notably the perception by the city’s black voters that Fenty, a Booker- and Obama-style New Democrat, wasn’t doing much for them—but his aggressive school reform agenda was an important part of the mix. His schools chief, Michelle Rhee, is reportedly a favorite to run New Jersey’s schools. When corporate America loves something, it doesn’t matter that it lacks any empirical or popular support.
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