Tuesday, October 13, 2009

A Call to Action

Last Friday, President Obama accepted the Nobel Peace Prize as a call to action rather than a reward for prior accomplishments. If you haven't watched his remarks yet, you should. While he takes some measure of credit for his work towards ending the Iraq War, he appears uncomfortable when speaking about Afghanistan. This is a good thing. He realizes the dissonance of accepting a Peace Prize while conducting a war in Afghanistan that many are urging him to escalate. This call to action should inform his decisions moving forward.

It's easy to prattle on about the Nobel Committee's process of selection (Hendrik Hertzberg and Howard Zinn offer the best attempts). Holding the leader of the most powerful nation on earth accountable for the advancement of the cause of peace is much harder. But it is what we must do if we want peace.

Thursday, October 8, 2009

Working People in Poverty at the University of California

The University of California employs thousands of people to keep the business of educating California's young people running smoothly. These people work every day to keep the ten campuses that make up the UC system clean and safe. They are also responsible for feeding students, faculty, administrators and campus visitors. These people work hard every day as employees of the best public university system in the world. And far too many of them live in poverty.

96% of UC service workers qualify for at least one form of public assistance, whether it's food stamps or public housing subsidies. Wages are so low for these workers that many cannot afford to meet their basic family needs. And so they work two or even three jobs. With wages for middle and low-income workers falling in the past decade (otherwise known as the Bush Years) even as the price of energy, housing, education and health care continued to rise, even with two (or three) jobs, it's very tough to make ends meet. Meanwhile, California community colleges pay their service employees an average of twenty-five percent more than the University of California and Mark Yudof takes to the pages of the New York Times magazine to brag about the sacrifice that he takes a $10,000 per month housing stipend instead of living in the millionaire "UC president's mansion" which requires $8 million in renovations an repairs.

Everybody who works for a living should earn a living wage. No one who works a full-time job should be impoverished and unable to support a family. It is simply immoral. And it's unacceptable that the best public university system in the richest state of the richest country in the world perpetuates such immorality.

Some may object to paying all UC employees a living wage because of the current budget crisis in the state of California that has put a squeeze on public education. Of course, I do not presume to view this issue in isolation. A living wage for UC service workers goes along with the fight to restore democracy to California so that we can properly fund public education in this state once again. In addition, if you look at the salaries for the administrative/executive staff of the University of California, the disparities are massive whether or not you take the budget cuts into account.

For those who would object to a living wage for UC service workers and everyone else who works for a living on the basis of a free market type of argument, I would remind you that in this country we structure our markets morally and have done so for a very long time. Child labor is illegal because it is exploitation. Slavery was outlawed long ago. You can't physically abuse your employees, nor can you sexually harass them. By the same moral logic, we should not permit poverty wages. We can do better in the United States of America.

Hat tip to Marika Goodrich for bringing www.facingpovertyatUC.org to my attention.

Tuesday, October 6, 2009

Ryan Lizza Should Spend Less Time Humping Larry Summers' Leg and More Time Asking Hard Questions About Obama's Economic Policy

I'm working on a longer post about the current status of the U.S. economy, but I want to quickly note that Ryan Lizza's article for the New Yorker, though impeccably written, is really quite lacking as far as good piece of reporting goes. As a puff piece designed to burnish the reputation of Larry Summers, it gets four stars. But I expect a lot more from the New Yorker than that. For more on the problems with Lizza's profile, check out what Dean Baker and Matt Yglesias have to say. Paul Krugman has an interesting take as well.

I do want to try to clear up some fuzzy thinking about economic policy that appeared in New Yorker and that Nikhil Dixit over at the Cal Dems blog seemed to commend in his post:
Yes, unemployment is rising, but that doesn’t mean the stimulus is a failure. It wasn’t designed to stop job loss altogether. Rather, it was designed as a backstop. Don’t ask what unemployment is now, ask what it would have been without the stimulus (FYI, most economists estimate it’s boosted GDP ~3%)

This comment was in reference to Lizza's description of a White House memo that argued that Obama's recovery plan "should not be used to fill the entire output gap; rather, it was 'an insurance package against catastrophic failure.'" I'm sorry, but I'm pretty sure that's a completely hollow argument. In an ideal world, why would we not want to stop job losses as much as possible? Why would not want to fill the output gap completely? The output gap represents the difference between what the economy should be like if there had been no financial crisis and what the economy actually is doing because of the financial crisis. What is the virtue of doing much less than we are capable of doing to fix the economy?

A chart might help explain why we need more than a backstop against continued economic malaise:

We are bleeding jobs. We lost nearly three hundred thousand jobs in September while the Bureau of Labor Statistics revised their estimates of job losses earlier this upward by several hundred thousand. The Recovery Act passed earlier this year stops job losses and creates new jobs every day. But it is not nearly enough. It is not nearly enough. We have the obligation to do more to stop the suffering caused by skyrocketing unemployment and rejuvenate the economy as quickly as we can. If we don't, we face many years of a weak job market, with the Congressional Budget Office estimating that unemployment will be higher in 2012 (above seven percent) than at almost any time in the Clinton or Bush years. That's a grim look at the near future, and it will take real leadership to avert it.

(And no, I don't dispute the assertion that Larry Summers is very smart.)

Thursday, October 1, 2009

We're Not the Only State with a Budget Crisis...

...but we are the only state held hostage by minority rule that refuses to consider any measure to raise some revenue in order to close the budget gap and thereby prevent teachers from being laid off, health services from being cut, criminals from being released early and parks from closing (as well as myriad other problems associated with drastically cutting spending in the midst of a recession). I bring this up, of course, because last night the news from Michigan indicated that their state government was going to shut down because of a failure to come to an agreement on a budget. But within hours, state lawmakers had gotten their act together (sort of):
The interim budget avoided state worker layoffs and office closures. It also delayed some tough financial decisions in a state facing a $3 billion shortfall while struggling with the nation's highest unemployment rate, a shrinking auto industry, a high home foreclosure rate and an economy that soured long before the national recession.

With the stopgap signed by Democratic Gov. Jennifer Granholm, lawmakers have 30 days to put a permanent budget in place. The interim budget was adopted less than two hours into Michigan's second partial government shutdown in three fiscal years — implemented after lawmakers failed to agree on a permanent budget before midnight Wednesday. Michigan's 2007 shutdown lasted four hours.

Two things. First, the Michigan State Senate has a Republican majority. So it actually makes sense to some extent that they are having this problem. Republicans believe that the only way to respond to recession-caused deficits is to cut spending drastically even though this will make the recession much worse, especially for the most vulnerable people in our society (children, seniors, and the disabled). But if they control part of a state legislature, it follows naturally that they would use their democratic power to work hard to follow this belief even in a budget crisis. In California, there are large Democratic majorities in both houses of the legislature. But because of minority rule imposed by Proposition 13, we don't live in a democracy. And the tiny number of intransigent Republicans still in legislative office can use their disproportionate power to hold the state hostage on the brink of collapse.

Second, Michigan's economy is based on selling cars that nobody wants. By contrast, California's economy is based on selling food, planes, entertainment and high technology that everybody wants. California does have major economic problems related to the housing bubble and particularly over the long term because we don't invest in high quality K-12 public education. But the point is that we are not (or shouldn't be) in as deep of a hole as Michigan. We can pull ourselves out of this. But that won't happen unless we restore democracy to California in next fall's elections.

A Thoughtful Conservative Critique of the Obama Administration (!!!)

I know, it's hard to believe. But contrary to what you may have presumed from constantly hearing about the hijinks of Glenn Beck, Michael Steele and Michelle "I only stopped ranting against the US Census after a census worker was murdered for doing his job in Kentucky" Bachmann, there are still serious conservatives out there making smart, intellectually honest arguments. They've just been completely marginalized. But Tyler Cowen describes one of the most disturbing trends in our polity as skillfully as any progressive:
FOR years now, many businesses and individuals in the United States have been relying on the power of government, rather than competition in the marketplace, to increase their wealth...Lately the surviving major banks have reported brisk profits, yet in large part this reflects astute politicking and lobbying rather than commercial skill. Much of the competition was cleaned out by bank failures and consolidation, so giants like Goldman Sachs and JPMorgan had an easier time getting back to profits. The Federal Reserve has been lending to banks at near-zero interest rates while paying higher interest on the reserves the banks hold at the Fed....

...finance and health care are two separate issues, of course, but in both cases we’re making the common mistake of digging in durable political protections for special interest groups. One disturbing portent came over the summer when it was reported that the Obama administration had promised deals to doctors and to pharmaceutical companies under the condition that they publicly support health care reform.

As Cowen points out, Robert Reich has been doing excellent work tracking these frustrating and secretive special interest side deals. And of course it would be unfair to lay all the blame for the process difficulties of health care reform on the shoulders of the Obama Administration. The US Senate is now a completely dysfunctional and antidemocratic institution that needs to be radically reformed or outright abolished as far as I'm concerned.

But for the first nine months of his presidency at least, Barack Obama seems to have found that taking on the special interests was more useful as campaign rhetoric than it is as a governing strategy. That's quite disheartening for the idealistic among us. And yesterday's vote on the public plan in the Senate Finance Commitee demonstrated that Max Baucus and Kent Conrad are willing to use a more pernicious mutation of the tautological argument deployed by Rahm Emanuel last week on Charlie Rose to oppose a policy that is great for most Americans but very bad for Big Pharma and the health insurance lobby.

But I'm not a cynic yet. Nancy Pelosi, for one, appears ready to kick some ass. And that could be a very good thing.