Last week, it seemed as if every cartoonist wanted to draw something about the Baltimore Key Bridge, or about Trump’s bibles. Here’s the best of the lot.
Bridge collision brought some elephants to reality:
Some saw it as a metaphor:
Trump reduced to schilling:
It could have been worse:
The Biden Impeachment failed:
Suck it up, buttercup:
Capitalism is no longer ready for prime time:
The Daily Escape:
Sunrise, Northern VT – October 2023 photo by Kristen Wilkinson Photography
The UAW announced Monday evening it had reached a tentative agreement with GM, the last of the Detroit car companies to complete negotiations with the Union. So all three have a tentative agreement which will now be voted on by UAW members. This is a big deal, even if nobody’s talking about it.
Some details from The Insider:
“The 25% pay increases by April 2028 agreed to in the new contracts raise top pay to about $42 an hour, according to the union. That starts with an 11% immediate boost upon ratification, three annual raises of 3% each, and a final increase of 5%. The UAW said restoration of cost-of-living increases, which were suspended in 2009, could boost the total increases to more than 30%.”
Some industry analysts have estimated that Ford’s contract, if ratified, would add $1.5 billion to the company’s annual labor costs. Ford estimated that this could add up to $900 in labor cost to each vehicle rolling off its assembly lines. Another analyst says the pact will reduce profitability by 1%. To put these numbers into perspective, keep in mind that a fully loaded Ford F150 can run over $80k. That means the car companies can afford this deal.
Labor accounts for 4-5% of the average cost of making a car for the Big Three. Also, the Big 3 have made $250 billion in profits over the past decade and have diverted a substantial amount of that money into stock buybacks to enrich wealthy shareholders and top executives instead of investing in their businesses or paying their workers.
So please spare us the tears about the workers’ hard-fought gains putting the Big 3 in peril. The NYT wrote:
“The terms will be costly for the automakers as they undertake a switch to electric vehicles, while setting the stage for labor strife and demands for higher pay at nonunion automakers like Tesla and Toyota.”
To paraphrase, the NYT says that those evil unions are ruining shareholder value and will cause strife at Tesla, a company renowned for its fantastic working conditions.
Be it ever thus in the media: Unions demand, management offers. Note how the media framing is always “the automakers” as the protagonists, with workers as a mob that’s making trouble. Why can’t those workers be happy and content with their lot in life, which is ordained for them by the Higher Power?
Back in the real world, the tentative UAW agreement rewards autoworkers who had sacrificed much during and since the Great Financial Crisis. They now get record raises, more paid leave, greater retirement security, and more rights at work.
The UAW win is a testament to the power of unions and collective bargaining to build strong middle-class jobs, while helping a few of our most iconic American companies to thrive. The UAW workers have not only seen many of their jobs automated and offshored, they also hadn’t received an inflation-adjusted raise since the early 2000’s.
That the UAW prevailed shows that unionizing on a large scale is a viable path to rebuilding America’s middle class. Fed up with continual economic hardship at the hands of the Big 3’s management, these strikers achieved something good for themselves and their families. Moreover, they did it legally. Despite the NYT’s protests, they didn’t steal anything from anyone. They didn’t ask for handouts. They demanded a good future for themselves and their families.
This should be a lesson to all people whose labor is undervalued. You can organize and negotiate better contracts for yourselves.
And don’t underestimate how important a low rate of unemployment is to low-wage and working-class Americans, and how that also gives unions leverage. Biden’s American Rescue Plan Act of 2021 provided an economic stimulus that boosted US consumer purchasing power to the point that we avoided the expected recession. And today’s scarcity value of labor helped close the deal with the Big 3.
For some context, these landmark gains by the UAW, along with what the Teamsters secured with their UPS contract, and what health care support staff got at Kaiser Permanente go far beyond the pay and benefits that workers receive at their non-union counterparts. Except for railroad workers, it’s been a very good year for unions.
Once again, Biden took a risk that he hadn’t before by explicitly siding with the UAW. It paid off for him and the Union as well.
Finally, kudos to Shawn Fain and the UAW negotiating team!
Wrongo appreciates that Fain seems to understand class consciousness by describing the workers as working class. And their strategy was pure divide and conquer.
The final word on these tentative agreements will ultimately come from UAW members themselves when they vote on the new contracts.
The Daily Escape:
Comb Ridge, UT & AZ – July 2023 photo by RC Bullough Photography
Wrongo and Ms. Right were urban pioneers in NYC in the early 1980s. We rented a loft on Maiden Lane in the financial district. Back then, we had to go uptown or to Hoboken, NJ for groceries because there were so few people living amongst the downtown forest of office towers.
But by the 2020 census, lower Manhattan was the fourth fastest-growing residential neighborhood in NYC. Since the pandemic, downtowns have looked more like the ghost towns of the 1980s with so many workers adapting to remote work. And they seem to be staying away.
Things are going to get interesting. We may be at the beginning of a massive structural change, not just a temporary blip impacting office towers: It seems that companies have figured out they won’t ever need this vast amount of vacant office space. Brookings says that office utilization averages less than 50% across major US downtowns. While The Gothamist reports that national office vacancies are at a high of 19.2% (compared to 12.6% in early 2020). They also report that McKinsey predicts that remote work will erase $800 billion from urban office real estate values.
This has many cities thinking about conversion of office space into residential space. In NYC, 25 Water Street, which was once home to the Daily News and JPMorgan Chase, has a plan to gut the offices, carve out courtyards and add 10 floors to the 22-story structure. GFP Real Estate and Metro Loft bought the building, formerly known as 4 New York Plaza, in December for about $250 million.
One loophole is that the Financial District doesn’t require that the conversions include any affordable housing. So this project will not have any apartments with capped rents for low-income units. That isn’t true in other parts of the City, like Midtown, Queens or the Bronx.
Boston is testing an incentive program for developers to convert empty downtown offices into housing. Mayor Michelle Wu announced that the owners of repurposed buildings could get up to 75% off on their property taxes. Boston’s office market vacancy rate climbed to 14.2% in the second quarter, the highest level in 20 years, according to data from CBRE Group Inc. And median monthly rent for a one-bedroom apartment has jumped 8% in the past year to $2,800.
Boston’s downtown has about half of the city’s office space. An October 2022 report commissioned by the city found that economic activity downtown remained 20% to 40% below pre-pandemic levels for industries like retail.
Back in NYC, Mayor Eric Adams is also proposing incentives to designate 136 million square feet of office space for conversion to residential development. It’s worked before: A 1995 tax break for conversions helped create 13,000 new apartment units in Lower Manhattan.
Brookings raises the question of what the taxpayers’ interest should be in these conversions:
“To what extent are current high office vacancies a market problem whose burden falls on the private sector (property owners and investors) and to what extent do they represent a market failure and policy problem to which government must respond with financial support from the public?”
The advocates of tax breaks and other financial incentives say it will:
It seems that office-to-home conversions are no more a comprehensive remedy for housing than e-bikes are for transit issues. Few office buildings are truly suited for conversion. It’s often more straightforward for developers to knock down the existing structure and build condos from scratch.
Moreover, the best thing that cities can do to encourage more housing is to loosen zoning restrictions, allowing multi-use and apartment buildings to be developed rather than just supply tax breaks.
The battle lines are drawn. The 25 Water St. developer said state and city lawmakers will have to pay up if they actually want to turn vacant offices into homes:
“The politicians, if they want to create housing in New York City out of these buildings, they will need to provide significant incentives….And if they want to provide affordable housing, those incentives would have to be even higher.”
Time to wake up America! We can’t let our mayors give away more tax revenues to developers! We’re unsure if the current rate of office utilization will improve or not, so cities need to be smart about what they do next. To help you wake up, we dust off an oldie. Here are the Rolling Stones with “Salt of the Earth” from their album “Beggars Banquet”. Performed live at the Rolling Stones Rock and Roll Circus in 1968. This was the first tune where Keith Richards had the lead vocal:
Sample Lyric:
Raise your glass to the hard-working people
Let’s drink to the uncounted heads
Let’s think of the wavering millions
who need leaders but get gamblers instead
The Daily Escape:
Super bloom, Carrizo Plain NM, CA – April 2023 photo via Today’s California
Bed Bath and Beyond (BBBY) filed for Chapter 11 bankruptcy on April 23. It said it will liquidate its assets and close its remaining stores unless it can find a bidder for the 360 Bed Bath and Beyond stores and for the 120 buybuy BABY stores.
A little history: A year ago, the prices of their bonds began to collapse. By August 2022, suppliers halted shipments due to unpaid bills. When this became public, its 30-year bonds, issued in 2014, plunged to 16 cents on the dollar (last Friday, they were at about 5 cents on the dollar).
From Wolf Richter:
“While all this was going on, the company promoted its latest turnaround plan and closed hundreds of stores. But you can’t turn around a failing brick-and-mortar retailer. On January 5th this year, the company issued a “going concern” warning.”
There are at least three lessons to take away from the BBBY story: First, they are the latest victim of the move to online shopping. People trusted Bed Bath & Beyond, and they had a pretty good e-commerce business. They could have done very well with it if they had accepted 10 years ago that they needed to phase out of their brick-and-mortar stores.
But brick-and-mortar retailers have difficulty letting go of their brick-and-mortar storefronts. They just can’t explain to their investors that their huge, fixed investment in physical stores are doomed and need to be closed.
Wolf has two great charts comparing the rapid growth in e-commerce and the steep drop in sales by brick-and-mortar retail over the past 15 years:
These two charts show that e-commerce basically replaced $5-9 Billion in annual in-store sales for the retail industry. The top chart shows that e-commerce had reached about $115 billion by 2023. The lower chart shows that in-store sales fell from $17 billion per year in 2008 to a low of $8 billion in 2020 before recovering to nearly $12 billion in 2023.
The second issue was that rather than investing in their business, BBBY spent $11.6 billion on share buybacks from 2005 to 2021. Since 2010, BBBY basically burned $9.6 billion in cash on its share buybacks. Like other companies, BBBY used share buybacks to drive up its share price, as “demanded” by its large shareholders and Wall Street. In addition, by not using that money to transition to e-commerce, they began driving the company towards April’s Chapter 11 filing.
A third problem was that the activists that won control of the BBBY board created a self-imposed disaster. While BBBY had withstood competition from Amazon earlier, in 2019, activist investors in control of its board hired a CEO who implemented a private-label product strategy. This led to customers no longer finding the national branded goods they expected on BBBY’s shelves. Products like AllClad, Kitchen Aid, Rowenta, Miele, Corning, Wustof and Braun. So customers bought them elsewhere. That sent sales down even further, and left BBBY in a cash-poor position.
Wrongo and Ms. Right occasionally shopped at our local BBBY stores, both here in CT and earlier in CA. We always thought it was a good value proposition, particularly for towels, sheets and pillows. Back then, the stores seemed well-stocked and the 20% off coupons didn’t hurt.
BBBY followed a classic path to failure: The retail founders preside over rapid growth. Then when Wall Street and the financers get involved, the founders step back. They then hire “professional” CEOs from their big retail rivals who apply whatever worked at their previous employer.
The new leadership skips the crucially important step of giving customers more of what they need than competitors do, focusing instead on sophisticated financial engineering.
All the while their aggressive rivals are going after their customers. This leads to a loss of market share, ultimately sending a once-proud retailing icon into bankruptcy. To BBBY’s credit, they outlasted far older, bigger and better financed competitors from Sears to Montgomery Ward to pretty much everyone else in their household-goods space.
Is late-stage Capitalism at fault in the BBBY story? You betcha.
The Daily Escape:
Death Valley sunset, Death Valley NP, CA and NV – February 2023 photo by Leila Shehab Photography
From the NYT:
“To Democrats, the train derailment and chemical leak in the hamlet of East Palestine, Ohio, is a story of logic, action, and consequences: Rail safety regulations put in place by the Obama administration were intended to prevent just such accidents. The Trump administration gutted them.
To Republicans, East Palestine is a symbol of something…more emotional: a forgotten town in a conservative state, like so many others in Middle America, struggling for survival against an uncaring mega-corporation and an unseeing government…”
If you follow FOX news you can be forgiven for thinking that the federal disaster relief teams just got around to dealing with the hazardous materials spill in East Palestine, Ohio.
Actually, those federal teams have been on the scene since it happened.
Republicans are trying to make a political meatloaf out of Biden’s visiting Ukraine rather than visiting Ohio. Or why it took Pete Buttigieg three weeks to visit the site. Even the East Palestine mayor Trent Conaway said Biden’s trip to Eastern Europe was “a slap in the face.” But if Biden had visited, you know the mayor would say he had better things to do than shepherd around a bigwig.
Their message is that Democrats are indifferent to working-class voters.
But maybe there’s something under the surface of these politics-as-usual arguments. The derailment presents issues that Republicans rarely like to grapple with: Corporate power and a clear need for government regulation.
What may be brewing is a new and different message by the GOP’s populist wing, one that breaks with Party orthodoxy and targets corporate America. And Norfolk Southern, owner of the derailed train and also behind a clear lobbying effort to keep the government from improving rail safety, is a big and very easy target.
Vox quotes Saurabh Sharma, the president of American Moment, a public policy organization that aims to influence young conservatives to become more populist:
“I think that this tragedy that happened in East Palestine is an opportunity for Republicans that have been looking for opportunities to distinguish themselves from the neoliberal set in the party to do so.”
The execrable JD Vance was in East Palestine with Trump, and told Axios afterwards that figures like Trump, Tucker Carlson and himself recognize that East Palestine residents and those like them were the GOP’s voters:
“The three of us, in our own ways, recognized instantly: This is fundamentally our voters, right? These are sort of our people. It’s a reasonably rural community. It’s been affected by industrialization,” Vance said. “These are the people who really lost when we lost our manufacturing base to China, And these are the people who are going to be forgotten by the media unless certain voices make sure that their interests are at the forefront.”
Wow, Yale grad Vance, trying to speak mid-western English says: “This is fundamentally our voters, right?”
The question is: Can Republicans build an economic populist base within their Party? It’s clear that Trump deserves criticism from the Democrats over the accident, since it’s easy to connect the derailment to Trump’s deregulation of ineffective train braking systems, the cause of the accident. That means Trump wouldn’t be exempt from political attacks by economic populist Republicans.
Conservatives like Jon Schweppe, the director at the American Principles Project, a conservative think tank, tried to link a few ideas together:
“There is a growing sense that all of these corporations are against us — not only are they trying to screw us over on the woke stuff, but generally, they just don’t care about ordinary people.”
The American Principles Project is virulently anti-woke, anti-trans and anti-voting rights. Can they also be anti-corporations? And how close are they to mainstream Republicans?
Can the East Palestine accident cause Republicans to embrace truly populist issues? Would the GOP tie corporate graft and greed to bureaucratic incompetence and Democratic indifference? They seem to fit easily within existing Tucker Carlson messaging.
BTW: All of it also fits very easily into Democratic messaging.
But let’s forget about who’s woke or, how will the second year of the Ukraine war go? It’s time for our Saturday Soother, when we disengage from the world as completely as possible and focus on finding a calm state to prepare us for the week to come.
Here in the Mansion of Wrong, we spent time upgrading our internet service to fiber optic. That wasn’t the promised slick changeover touted by the provider, but it’s finally working.
To get soothed, settle in a big chair by a south-facing window and watch Lang Lang play Debussy’s “Suite Bergamasque, or Clair de lune”. This performance was part of an album launched in Paris on Valentine’s Day, 2019. Listen as Lang Lang performs on a boat cruising along the Seine while you enjoy Paris at night:
The Daily Escape:
Walker River, NV – February 2023 photo by TheOsideBish
According to the GOP, your organization has to toe the line or else you could be banished or investigated. CNBC is reporting that House Speaker Kevin McCarthy (R-CA) and House Majority Leader Steve Scalise (R-LA) are set to banish the US Chamber of Commerce from Capitol Hill for endorsing Democrats in some 2020 and 2022 House races.
CNBC quotes Mark Bednar, a spokesman for McCarthy:
“The priorities of the US Chamber of Commerce have not aligned with the priorities of House Republicans or the interests of their own members, and they should not expect a meeting with Speaker McCarthy as long as that’s the case…”
CNBC says Scalise also won’t meet with them either, quoting his spokeswoman Lauren Fine: (brackets by Wrongo)
“[the Chamber headquarters in] Washington has radically shifted away from the pro-business philosophy of most local Chambers across America….unless the Chamber gets back to their traditional pro-business roots, they should not expect to have any engagement with Majority Leader Scalise’s office.”
This all started in 2020, when the Chamber endorsed 23 House Democrats in swing districts, a sharp break from the past practice of endorsing a nearly exclusive slate of Republicans, with one or two Democrats thrown on the list for a patina of bipartisan perception. And Republicans failed to regain the majority. The Chamber then reportedly endorsed 23 House Republican candidates and just four Democrats during the 2022 election. But that hasn’t made them “pure” enough for Kevin McCarthy, despite the Chamber providing $3 million to Mehmet Oz in his losing effort for a Senate seat in Pennsylvania.
Wrongo met often with the US Chamber of Commerce during his days at the big bank. They are far from being anti-GOP. On Monday, Tim Doyle, a spokesman for the Chamber, told CNBC:
“The Chamber’s priorities include lower taxes, reduced spending, fighting over regulation and numerous other issues, and we are aligned with House Republicans on many of the issues that are important to American businesses of all sizes,”
That sounds to Wrongo like it’s aligned with the Republicans. Doyle did go on to say:
“We do disagree with those who believe the Chamber should become a single-party partisan organization….”
The Intercept is reporting that the new House Republican majority wants to investigate the Chamber over its commitment to ESG regulations. ESG stands for environmental, social, and governance, key criteria that can impact company market valuations and its behavior. But ESG has become a red line for Conservatives, who argue that companies that follow it are failing to live up to their fiduciary duty to maximize profits for investors.
Apparently, Republicans in the House are also questioning the Chamber’s own conduct, including reportedly allowing former Chamber CEO Thomas Donohue to use the organization’s corporate jet for personal trips.
Look, the Chamber can be pretty terrible. They’re planning to sue the Securities and Exchange Commission if it goes forward with a climate change-related disclosure rule. But forcing them to only give money to Republicans is a new low, even for these nihilists.
Separately, Florida’s Governor DeSantis is set to take over Disney’s special Reedy Creek tax district in order to force the company to cough up $1 billion. Wrongo reported on DeSantis’ fight with Disney in April 2022 here and here. Targeting Disney became a thing after the company spoke out about Florida’s “don’t say gay” law.
Back in April, DeSantis pushed lawmakers to dissolve the Reedy Creek Improvement District, which for 55 years effectively gave Disney control of the land around its Florida properties. Republicans complied, and the district was scheduled to sunset on June 1, 2023.
But on Monday, Republican lawmakers unveiled a bill to turn over control of Disney’s special taxing district to a five-member board to be chosen by DeSantis. The proposal also comes with a rebrand; Reedy Creek would become the “Central Florida Tourism Oversight District.”
This gives DeSantis a new form of control over Disney, the state’s largest employer. And the opportunity for extorting collecting an additional $1 billion from a company that is on the DeSantis enemies list (which will ultimately be paid by the park’s patrons) is totally on brand for DeSantis.
Anyone else getting really tired of Republicans telling us we can’t say certain words, we can’t read certain books, we can’t teach certain things, we can’t talk about certain history, or we can’t donate to a few Democrats?
What’s Conservative about any of that?
The Daily Escape:
Pikes Peak with Garden of the Gods in foreground, Colorado Springs, CO. View is from the reflection pool at Garden of the Gods Club and Resort – November 2022 photo by John Susan Hoffman
On Monday, Biden called on Congress to prevent a rail workers’ strike. Railroad workers are threatening a nationwide strike on December 9, which could deliver a crippling blow to the American economy. According to the Association of American Railroads, a nationwide rail shutdown could cost more than $2 billion per day. Passenger rail transportation would also stop, disrupting hundreds of thousands of commuters.
The unions have rejected a tentative agreement that had secured a pay increase of 24% over 5 years for rail workers, but wages don’t appear to be the primary sticking point. The outstanding issue is paid sick leave. The railroad companies have adamantly refused to include any more short-term paid leave. That means rail workers must report to work, even when they are sick, or forfeit their pay.
The essence of the unions’ position is that rail workers must use accrued paid time off (PTO) for their sick time. Actually, they use PTO for ANY days off. They get about 21 days of PTO annually. The rest of their time, including their weekends, is tightly controlled.
The context is that rail workers do not get weekends or holidays off unless they use their PTO. They’re on call 24/7, and if they refuse a shift after a designated (12 hour) rest period, they are docked points. Since the rail carriers have laid off more than a third of their workforce in the past decade, every shift is understaffed, and on most shifts, everyone who is eligible is likely to be called in.
Rail workers have jobs that often require them to be on the road for weeks at a time. From Heather Cox Richardson: (brackets by Wrongo)
“…[the unions]…oppose a new staffing system implemented after 2018, which created record profits for the country’s main rail carriers but cost the industry 40,000 jobs, mainly among the people who actually operate the trains, leading to brutal schedules and dangerous working conditions.”
The Precision Schedule Railroading (PSR) system made trains more efficient by keeping workers on very tight schedules. Any disruption in those schedules, like a family emergency, brought disciplinary action and possible job loss for the worker.
In the US, the 40-hour work week provides on average, 104 weekend days off per year, plus federal holidays. How many American workers would accept the total of 21 days off that most rail workers will accrue in PTO under the now-rejected Tentative Agreement?
The Railway Labor Acts of 1926, 1934 and 1966 control not only railroad labor disputes but also airline labor disputes. There is a series of steps that must be taken by both sides, and the final steps are where a union may strike, and Congress can step in and enact a law codifying an agreement between the companies and the unions.
The US Chamber of Congress and some 400 business groups, representing a wide range of industries, have sent a letter calling on Congress to intervene before the strike deadline if a deal is not reached to “ensure continued rail service.”
You would think that puts Democrats in a bind. They’re pro-union, but in this case, they’re jumping to the tune of big business. And why did Biden make his announcement a week in advance of the possible strike? A good negotiator would create some uncertainty in the minds of both the companies and the unions. There should be at least the appearance of a strike being possible.
Shouldn’t the “most pro-labor president” in a generation (in 1992, he was one of only six Senators to vote against legislation that ended another strike by rail workers), demonstrate that he’s proud to be on the workers’ side, at least until he isn’t?
Congress also has the option to dictate a cooling-off period, allowing parties to continue negotiating until they reach an agreement, or force both sides to enter arbitration, where a third-party mediator gets involved.
The unions knew that Congress would likely intervene. So workers would rather have a bad deal forced on them than to vote for it.
Four paid sick days is nothing. The fact that the rail companies are unwilling even to give four sick days says everything you need to know about American corporations in 2022.
The Daily Escape:
Sunset, Housatonic River, New Milford CT – 2022 photo by Tony Vengrove
There are just 55 days left until the 2022 midterm elections, and Wrongo’s crystal ball remains cloudy. For example, take the US Senate race in Pennsylvania. Democrat John Fetterman leads Republican Mehmet Oz by 48.5% to 40.4% in the 535 average of polls as of September 8. Sounds like a big lead, no?
But the US Chamber of Commerce told Axios on Sept. 11 that it was donating $3 million to support Oz’s campaign. Who is the US Chamber? They are an industry group that represents virtually every major American corporation. From Judd Legum:
“Corporations — whether individually or through a trade organization like the Chamber — are prohibited from donating $3 million directly to Oz’s campaign. (Corporate PAC donations are capped at $5,000 per election.) So instead, the Chamber is routing the money through the Senate Leadership Fund, a Super PAC set up by Republican Leader Mitch McConnell….The Senate Leadership Fund can raise unlimited funds from any source and spend them to boost Oz and other Republican candidates.”
In a statement, Chamber EVP Neil Bradley described Oz as “a pro-business champion” and said Fetterman “subscribes to a far-left, government-knows-best approach.”
So, America’s big corporations are against Fetterman. Sounds like a reason to be for him.
Legum takes a deep dive into where the US Chamber gets the millions it is donating to promote Oz’s candidacy: It comes from dues paid by member corporations. And which corporations are members? The Chamber keeps its membership list secret. More from Legum:
“We know, however, that virtually every major American corporation is a member of the Chamber. The Chamber’s board of directors includes representatives from FedEx, Bristol Myers Squibb, Facebook, AT&T, United Airlines, Abbott, 3M, Microsoft, Deloitte, Fidelity, Chevron, Intuit, Xerox, Pfizer, Dow, AllState, Delta, and many others.”
And most member companies don’t have a board seat. Their donations are secret as well, but CVS disclosed that it paid $500,000 to the Chamber in 2021 and $325,000 to a related organization, the US Chamber Institute for Legal Reform. And CVS isn’t a board member! Imagine how much the really big guns paid.
A few major corporations aren’t members. Apple, for example, resigned its membership in 2009 in protest of the Chamber’s policy on climate change.
Sadly, corporations are not accountable (or even visible) in their support of the extreme policies of the GOP when they donate through vehicles like the US Chamber. We have to hope that as the Republican message gets ever more extreme, corporations will have a harder time continuing their support for this type of Citizens United chicanery.
This shows just how scummy our politics have become with the help of the Roberts Court and the Federalist Society. If it’s illegal to donate a certain amount directly to this person or organization, we simply create a PAC or a Super-PAC, and then donate huge sums directly to them.
If creating a PAC achieves this result, how is the individual limitation protecting democracy?
There’s an old joke about how if you know a little about politics, your issues are guns, abortion and taxes. If you know a lot about politics, your issue is campaign finance reform.
Pennsylvania is one of a handful of states that could determine which Party holds the majority in the Senate. While Fetterman has a lead, Pennsylvania is still a competitive state, with money pouring into its governor’s race as well. This $3 million from the Chamber could have a real impact on the outcome.
It’s important to understand that more than 40% of the Pennsylvania electorate seems to want what Oz is offering. That’s scary, and it speaks to something that many in the media don’t want to address. They’re actually scared to address what the Republican Party has become. It isn’t surprising because the media are both a large part of the problem and not a part of the solution.
And when Biden accurately calls out what the Republican Party has become, when he says that Republican behavior and beliefs are inimical to what America is supposed to be, the media says he’s being divisive.
Oz is an example of what happens when one Party creates an existential situation out of whole cloth. When it’s backed by their 30 years of increasing extremism, the existential threat to democracy is now real.
No, America’s corporations aren’t going to save you. Giving money and time to Democratic Senate candidates like Fetterman, or Georgia’s Warnock (up by 2%), or Arizona’s Kelly (up by 2%), or New Hampshire’s Hassan (up by 4%), or Ohio’s Ryan (up by 1%), or North Carolina’s Beasley (up by 1%) MIGHT save you.
Do what you can.
The Daily Escape:
Harvest Moon, Cape Cod National Seashore, MA – September photo by Tom Baratz
With all of the media’s coverage of the comings and goings of the British monarchy, Wrongo’s certain that you missed the reviews of a new book, “Slouching Towards Utopia” by Brad DeLong, an economist from UC Berkeley. Dylan Matthews in Vox quotes DeLong from the book:
“The 140 years from 1870 to 2010 of the long twentieth century were, I strongly believe, the most consequential years of all humanity’s centuries.”
Matthews thinks it’s a bold claim. After all, homo sapiens has been around for at least 300,000 years; DeLong’s “long twentieth century” represents 0.05% of that history.
But DeLong says an incredible thing happened during that sliver of time that had eluded our species for the other 99.95% of our history: Before 1870, technological progress was glacial, but after 1870 it accelerated dramatically. More from Vox:
“DeLong reports that in 1870, an average unskilled male worker living in London could afford 5,000 calories for himself and his family on his daily wages. That was more than the 3,000 calories he could’ve afforded in 1600, a 66% increase….But by 2010, the same worker could afford 2.4 million calories a day, a nearly five hundred fold increase.”
DeLong is speaking of the nations of the rich north, not about all nations. He’s saying that food surplus was the key driver of progress. What’s implied is that the greatest difference between the wealthy and everyone else was that the poor were living on the verge of starvation. Those basic economic facts shifted once having enough to eat ceased being society’s most critical status distinction.
Another interesting statistic from the book:
“…the average number of years of a woman’s life spent either pregnant or breastfeeding…has gone down dramatically, from 20 years of a typical woman’s life in 1870 to four years today.”
Most historians present modern history as a long 19th century (from the French revolution in 1789) to the crisis of 1914. Which is then followed by a shorter 20th century ending with the fall of communism. DeLong, by contrast, argues that the period from 1870 to 2010 is best seen as a coherent whole: the first era, he argues, in which historical developments were overwhelmingly driven by economics.
From the Economist:
“…despite the Industrial Revolution…for millennia, technological improvements never yielded enough new production to outrun population growth. Incomes had stuck close to subsistence levels. Yet from around 1870, growth found a new gear, and incomes in leading economies rose to unprecedented levels, then kept climbing.”
DeLong says that economic policy in this period was a duel between the ideas of Friedrich von Hayek, who extolled the power of the free market, and Karl Polanyi, who warned that the market should serve man, not man serving the market.
Before WWI, markets generated rapid growth along with soaring inequality. People pushed back, demanding greater political rights, which they used to pursue regulation of the economy and improved social insurance.
After WWII, a mix of a market economy and a generous safety-net made for a happy marriage of Hayek and Polanyi, improved by Keynes, who said that governments should act to prevent economic recessions. This led to a three-decade post-war period of growth unmatched before or since. DeLong calls them the Thirty Glorious Years; from 1945 to 1975, as the US and Europe recovered from World War II.
But when growth sagged and inflation rose in the 1970s, voters supported politicians promising market-friendly, or “neoliberal”, economic growth reforms, like lower taxes and reduced regulation. But those reforms didn’t keep economic growth high. And they also led to even worse inequality. Still, the US and other rich countries pressed on with them, right up to the 2008 global financial crisis, which marks the end of DeLong’s 20th century.
According to a paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distribution that America experienced in those thirty glorious years stayed constant, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in just the year 2018. That’s an amount equal to nearly 12% of GDP.
Price and Edwards say that the cumulative inequality cost for our 40-year experiment in government-supported income inequality added up to $47 trillion from 1975 through 2018. And probably equaled $50 trillion by 2020.
That’s $50 trillion that would have made the vast majority of Americans far more healthy, resilient, and financially secure.
So, the big unanswered question is: Can we again return to a period where we see both economic growth and equitable growth? It’s highly doubtful. As DeLong says in Time:
“Our current situation: in the rich countries there is enough by any reasonable standard, and yet we are all unhappy, all earnestly seeking to discover who the enemies are who have somehow stolen our rich birthright and fed us unappetizing lentil stew instead.”
The problem here is that our entire culture, economy and even our civilization is predicated around growth and people haven’t known anything else. Hope you’ve enjoyed the ride.
Time to wake up America! We need to reimagine capitalism, our taxation policies and our welfare scheme if we are to survive. Expect a rough adjustment. To help you wake up, listen, and watch Bruce Springsteen perform “Darlington County” live in London in 2013:
The Daily Escape:
Monopoly, Revere Beach, MA – From the 2022 Revere Beach International Sand Sculpting Festival. July 24, 2022 photo by Jack Daryl Photography.
From Paul Krugman:
“The US economy is not currently in a recession. No, two quarters of negative growth aren’t, whatever you may have heard, the “official” or “technical” definition of a recession; that determination is made by a committee that has always relied on several indicators, especially job growth.”
Nonetheless, Wrongo predicts that over the next few months, the Big Brain News Pundits will spend mucho time arguing among themselves while we watch, about the meaning of the word “recession“. They will ensure that the word “recession” is said at least once every 30 seconds.
Wrongo brought this up a few weeks ago. Recessions are determined not by pundits but by a committee of economists at the National Bureau of Economics (NBER). The two measures that have had the most weight are real personal income and non-farm payroll employment. So, despite what you’re hearing, it boils down to income and employment. If income and employment turn south, there’s a good chance economic output will be lower. From Robert J. Shapiro:
“Start with employment, which normally contracts in the first two quarters of recessions. Over the first six months of the 1990–91 recession, employment fell by 690,000, or 0.6%. Similarly, over the first two quarters of the recessions of 2001 and 2007–09, employment fell respectively by 761,000 and 426,000 positions, or 0.6% and 0.3%.”
But in the first two quarters of 2022, employment actually grew, increasing by 2,740,000, or 1.8%.
The main factor behind the lower GDP in the second quarter was business inventories. Businesses generally finance increases in their inventories. So as interest rates rose in the second quarter, inventory purchases fell sharply, subtracting 2% from GDP. GDP growth in the second quarter was -0.9%, so inventories accounted for all of the loss of GDP.
Inventories grew. but at a slower pace, bringing about the negative GDP performance. But this change in the rate of growth in inventories is not tied to either employment or to income, so we’re not in a recession, even though GDP fell.
But our bigger economic problem is inflation. Back to Krugman:
“Obviously gasoline prices are down — almost 80 cents a gallon from their mid-June peak. (Remember those scare stories about $6 a gallon by August?)”
We all know that the Big Brain Pundits only really care about how much it costs to fill their gas tanks compared to what it may have cost when some other guy was president. Expect that they will ignore our record low unemployment, and the growth in median wages.
Despite growing slower than inflation, wages are growing at about 5.4% annually. That’s good, although it could be better. Yet, the Big Brains want us all to be worried about the possibility of recession and inflation occurring at the same time. They’re worrying about that old 1970’s bugaboo, stagflation, which is highly unlikely to occur, despite how much Republicans are rooting for it to happen.
If America really wants to stop inflation in its tracks, we know how to nudge prices in the right direction: Implement a windfall profits tax on oil and food companies, whose profits are off the charts, along with their prices. Also, we could pass the corporate minimum income tax that is a part of the proposed Inflation Reduction Act.
How well the Federal Reserve addresses inflation will decide how soon the current economic expansion ends, and a recession begins. Although the economy’s fundamentals are sound, there’s a danger that the Fed’s interest rate hikes may dampen demand and employment too much. That’s a 50/50 call right now.
Time to wake up America! We’re not in a recession, although we may see one in 2023. We don’t have inflation under control yet, although that’s likely to happen within the next year.
To help you wake up, watch and listen to Sir Elton John from his “Farewell Yellow Brick Road” tour. Wrongo and Ms. Right got to see him in Foxborough, MA last Wednesday, courtesy of daughter Kelly and her partner Bob.
It was Wrongo’s second time seeing Sir Elton, the first was at the Budokan in Tokyo in 1974.
Last Wednesday was a great night with an adoring audience for what seems to be near the end of his touring career. Here’s his final encore from last week’s performance, “Goodbye Yellow Brick Road” performed on the night we were there: