What’s
Wrong Today:

The
Netherlands is emerging as Europe’s Delaware, so says The
Economist:

That’s
3 different locations for 3 of the company’s key functions. The Economist went on to say that “Even
the most industrious executive cannot be in three places at once”. Why are
firms doing this? More from The Economist:
(emphasis by the Wrongologist)

Having Fiat’s
tax residence in the UK is an immediate benefit since, unlike Italy or the
Netherlands, the UK levies no withholding tax on the distribution of dividends
from foreign operations. Multinationals play down tax as a reason for splitting
their legal residences, but it always
factors into the decision. British tax law looks kindly on firms
using complex ownership structures that involve other low-tax jurisdictions, structures
that allow them to shuffle payments between subsidiaries and thus minimize tax
bills.

The Economist closes with this
observation:

These
firms are moving from the realm of  the “multinational”
to the “transnational”. Their decision-making is driven by accountants and
lawyers as much as by markets.

The trouble with
transnational organizations is that while governments have a moral imperative
to look out for the interests of their citizens both rich and poor, to be good
stewards of infrastructure, human capital and natural resources, transnational
firms have no such imperative.

Only
their shareholders can call them to account and then it’s usually about profit.
While some firms show occasional moral awareness, it’s not a requirement, and
is often ridiculed by some of the global elites.

We are witnessing
the morphing of capitalism into a singular global system.

This shift in capitalism has created a transnational
capitalist class.
Capital is more mobile than people. Mobility between economic classes in a given country’s
population is less and less dependent on that particular nation’s big businesses.
It has become more dependent upon smaller, service-oriented firms that cannot
deliver their services from abroad, and do not offer the same middle class job
opportunities.

Transnational
capitalists have become a ruling class that operates the controls of a powerful
transnational superstructure, managing assets and production of both commodities
and goods. Members of this new class (and their companies) have deeper connections
to each other than to their home nations, since their business and financial interests
are globally linked, rather than exclusively local or national in origin.

The world
is still organized into discrete national economies, but the transnational
capitalists, and their lawyers and accountants, have constructed a
superstructure that overlays their interests on a world of markets and nations.
Like Fiat, their business interests may or may not coincide with those of their
country of origin or of its citizens. Yet, at the same time, this worldwide decentralization and
fragmentation of the production process has taken place alongside a centralization
of command and control of the global economy by these transnationals.

This has cemented
the world into a single production system. One outcome of transnational capitalism
is that a large gap between the global rich and the rest of us has developed,
one which exists not simply on a national level.

Forbes reported
that corporate wealth is becoming more concentrated. In fact, the top 147
transnational corporations control
roughly 40% of the entire economic value of the world’s transnational
corporations. And it is worse than that:

That is
out of a total of 43,000 transnational corporations analyzed by the Swiss Federal Institute of Technology in Zurich. They built a
model of who owns what and what their revenues are, and thus mapped the entire
edifice of economic power.

It
is not clear how this concentration of wealth which has no loyalty to country will
play out in the 21st Century. In America so far, it has meant that the
rich employing the near-rich to tell the middle class that everything is the fault
of the poor.

We
have accepted the fantasy of a free market, the acceptability of 6% unemployment
as the best we can do, of the uselessness of unions; that equality is unnecessary,
and that privatization is sacred.

And
above all, that it is absolutely necessary for private industry to
self-regulate.

Unchecked,
the transnational firm will be the triumph of fascism.

What’s
Wrong Today:

The minimum wage was last
increased in 2007 by huge bi-partisan majorities. George W. Bush was
president, and the House and Senate were controlled by the Democrats. In the
Senate, only 3 Republicans voted against the bill, Messrs. Coburn
(R-OK), Kyl (R-AZ) and DeMint (R-SC), while 2 Democrats did not vote: Messrs.
Schumer (D-NY) and Johnson (D-SD). The bill passed 94-3.

In the House, the bill passed by 315-116, with all 233 Democrats voting
for it along with 84 Republicans, while 116 Republicans voted “no”. Today’s
Senate is different. Only 22 of the 45 Republicans who voted for the bill
in 2007 are still in the Senate, while Think Progress reports
that 67 House Republicans who voted for it in 2007 are still house members.

This year, it seems unlikely that there are sufficient votes to bring the
$10.10 minimum wage bill to the floor of the Senate, while the Republican House
leaders say they have no intention of voting on the legislation, even if passed
by the Senate.

President Obama and
congressional Democrats support an increase to $10.10, indexed to inflation.
Republicans plan to obstruct this. Indeed,
Republican governors called
out the minimum wage at the National
Governors Association meeting at the White House, with several governors
indicating that they opposed increasing the minimum wage in their home states. Mr.
Obama to the govs:

Reply from Gov. Bobby Jindal (R-LA):

So, what’s different today from the environment in 2007? Republicans
now hate the minimum wage increase. Rep. Paul Ryan (R-WI) said the
following to CNN after Mr. Obama’s SOTU speech:

Can raising the minimum wage be a defining political battle of the
2014 elections? Big
majorities of voters in both parties want the minimum wage raised. As the Wrongologist reported in December, when the public can vote on minimum
wage increases, they pass handily:

Even in
New Jersey, where voters re-elected Republican Chris Christie as governor, the
minimum wage was increased to $8.25, and indexed it to inflation, by 61% to 39%
of the voters.

Polls show
public support for an increased minimum wage: A December 11 Wall
Street Journal/NBC News poll found that 63% supported a rise to $10.10:

Here are a
few more polls: A November Gallup
poll
showed that 76% of Americans want the minimum wage raised to at least $9 from
the current $7.25. This is up 5 percentage points just since March. An August poll by the National
Employment Law Project (NELP) found that 80%
support raising the minimum
wage to $10.10,
including 62% of Republicans and 75% of southern whites. A March poll by the
USA Today/Pew Research Center found that 71% favor increasing the
minimum wage to $9.

Making the minimum wage a national election issue could succeed. Republicans will have to decide: Will they obstruct a vote on the
minimum wage and run in 2014 as opponents of fair pay for working people?

The
current salary (2013) for rank-and-file members of the House and Senate is
$174,000 per year. If you broke that down to a 40 hour work week and 52 weeks a
year then they would make $83.65 per hour.

You know
they don’t work 40 hours per week, and certainly not 52 weeks per year. BUT all
of the House Republicans tell you that you can live on $7.25 per hour.

Republicans will continue
to push the nonsense that joblessness will result from a higher minimum wage, as
did Mr. Ryan above. In fact, more consumer demand via a higher minimum wage
means more jobs. Raising the federal
minimum wage means all businesses must do the same thing at the same time, so
no business gains an advantage over other businesses.

Businesses can
decide how to cover their added costs. Some might raise prices, others might
pay top executives a bit less, and others would dip into some of the excess
cash. Companies that raise prices so top executives can retain their pay will
be at a disadvantage if their competitors don’t raise prices.

Raising
take home pay will not hurt our (now) growing economy; it will help it move
ahead.

Let’s
force Congressional Republicans to tell voters why they think a higher minimum
wage is a bad idea.

What’s
Wrong Today:

Last
Thursday, William Martini, a US District Judge, ruled that the New York Police
Department’s (NYPD) surveillance
of Muslim Americans in New Jersey was a lawful effort to prevent terrorism,
not a civil-rights violation.

In a decision
in federal court in Newark, NJ, Judge Martini dismissed a lawsuit brought in
2012 by eight Muslims who alleged that the NYPD’s
surveillance program was unconstitutional because it focused on religion,
national origin and race. Their suit accused the department of spying on
ordinary people at mosques, restaurants and schools in New Jersey since 2002.

Martini
said he was not convinced the plaintiffs were targeted
solely because of their religion:

But
as Samuel Bagenstos, a law professor at the University of Michigan and former
official in the civil rights division of the Justice Department, told MSNBC’s Adam Serwer, that’s not the way it works:

The ruling
also singled out the Associated Press, which sparked the lawsuit with a series of stories
based on confidential NYPD documents showing how the department sought to
infiltrate and surveil at least 20 mosques, 14 restaurants, 11 retail stores,
two grade schools, and two Muslim student associations in New Jersey. The
NYPD’s spying on daily life in Muslim communities in the region – with no
probable cause, and nothing to show for it – was exposed in a Pulitzer-Prize winning series by the AP.

The Judge’s
logic is that the reporters for AP, Adam Goldman and Matt Apuzzo, were
responsible for any injuries to the Muslim community by providing them proof of
the spying targeted at them. Here is a quote from Judge Martin’s opinion: (emphasis
by the Wrongologist)

The
most impressive thing that jumps out in the opinion is Judge Martini asserting,
not once but twice, that AP had published or released “without authorization”. Is it naive to think that a US
District Court judge would have heard of the First Amendment to the US
Constitution?

It appears
that Judge Martini actually hit a weird kind of trifecta: In one decision, he gets the 1st,
4th and 14th Amendments wrong, and maybe sets a record of some kind by getting
the 1st Amendment wrong three times. That would be Freedom of Religion,
Freedom of Association and Freedom of the Press.

OK, think
about it. By Judge Martini’s reasoning, you live on a farm, and you notice a
poacher on your neighbor’s farm. When you reveal this information to your neighbor,
he then sues the poacher for damages. The poacher’s defense is that you are responsible
for the damages since you disclosed the poaching that resulted in the lawsuit
against the poacher.

And to Judge Martini, this makes sense. Martini is a one-term Republican congressman from New
Jersey. He was appointed to the federal bench by George W. Bush in 2002.
Previous critiques of his judicial conduct have been unusually blunt and
public, including repeated rebukes at the appellate level and the local US
attorney’s describing him in court filings as “misguided” and “irrational.”

In other
words, this fool, who was appointed by another fool who was appointed by the US
Supreme Court, has again acted like a fool. Maybe we shouldn’t be surprised.

Omar
Sacirbey of the Religion News Service quotes
Hina Shamsi of the American Civil Liberty Union, about this case:

But the NYPD
wasn’t hunting for Muslim terrorists in places where the 9/11 terrorists were
known to hang out, like cheap hotels, gyms, and cybercafes. Rather, the NYPD
was hunting terrorists in schools in Newark, including one that taught Muslim girls
in fifth to twelfth grades, and another teaching first through fourth graders.

The NYPD
was hunting terrorists in a girl’s school. Was the 9/11 plan hatched in a girl’s
school?

Sadly, the nature of the republic for which we stand is changing. This court’s decision gives
legal sanction to the targeted discrimination of a minority, in this case Muslims, anywhere and
everywhere in this country, without limitation, for no other reason than their
religion.

Sochi tries to dominate the week’s news, but
Ukraine steals the headlines, pushing the Pussy Riot whipping by Russia’s
modern Cossacks off the front page.

Western bureaucrats and politicians work to
figure out if Ukraine is another proxy war between Putin and Obama, like Syria
and Iran, or an organic response to another autocrat’s excesses.

On the home front, Tom Delay tells the
nation that our Constitution was written by his god. A snake handling preacher,
who believed his god would protect him from snake bite, dies from a snake bite.
We learn that John Boehner has been against raising the minimum wage since
1996. We learn from a Bush-appointed judge that it is perfectly fine for the
NYPD to spy on Muslim girls in a grade school in New Jersey, but not OK for the
AP to reveal it.

We met with Iran to flesh out the nuclear weapons deal, with
modest progress, and with more hysteria from Israel. The UN orders the warring
parties in Syria to stop blocking the delivery of humanitarian aid, but without
any prospect of punishment for those who disobey.

We live in times that cry out for solutions,
but none will be forthcoming in Washington this year. Politicians on both sides
think ANY KIND of political action creates risk for their reelection this fall.
So, the only deal they will make is no deal at all. You can’t have better days, but you will get exhortations for more money from the congress critter who is doing nothing for you.

Use the following, adapted from Henry
Demarest Lloyd, as the inspiration for this Sunday’s homily: If our civilization is destroyed, it will
not be by barbarians at our gates. Our barbarians will come from inside, and above.

Be
sure you know the difference between these on Sunday:

The games are not always between Olympians:

And America still sucks at curling:

Canadian Men, following Canadian Women, beat US 1-0:

Congressional do-nothings should only get merit pay:

Photo taken in Aleppo on February 16, 2014:

There will be limited to zero blogging until late Sunday, when Sunday Cartoon Blogging will be published.

The Wrongologist and Ms. Oh So Right are escaping 20″ of snow and heading to Florida for a long weekend.

No salt, no shovel, no snow blower.

Well, maybe some salt on the rim of the margarita…

What’s
Wrong Today:

According
to the Federal Reserve Bank
of NY (FRBNY), student loan balances increased by $53 billion in the 4th
quarter of 2013, and totaled $114 billion for the year, ending at $1.08
trillion. Student loans now make up 9.4% of total consumer debt and 36.7% of
non-housing debt.

As the Wrongologist said last April, student loans are growth
market.

In 2003,
student loans accounted for 3.1% of total consumer debt and 12.2% of
non-housing debt. So, student loans have more than tripled in 10
years. It looks like student loans could bankrupt a
generation, not to mention really affect their credit scores. Most students in debt will need to use the best credit cards to build credit before even thinking about taking out another loan like a mortgage.

It’s
obvious that growing student debt is hurting not just those who attended
college or who have graduated. It also impacts any relatives who may have co-signed
for a student loan. Many look to UniTaskr and similar job desks to get jobs during their degrees to help repay the debts, and those graduates who do have jobs must also give top priority to
servicing their college debts, which means they must defer certain life
experiences, like buying a home, or getting married, or starting a family. Services like BenefitEd are avaliable to help you, but more needs to be done to prevent this problem!

Consider
this: Researchers at the FRBNY did their
own analysis of the student debt problem’s impact. From 2009 to 2012, the home ownership rate fell twice as much for
30-year-olds who had a history of student loans than it did for those
without such debt. The finding upends traditional thinking, which
held that student debt signaled higher earnings and higher chances of owning a
home.

Why is
this happening? Tuition has skyrocketed since 1980. Students are getting a
similar education as before, but at a much higher price. And afterwards,
they’re left with a mountain of debt. It is possible to consolidate your debts into one more manageable loan, like what is offered by debtconsolidation.loans.

Consider
the relative growth in inflation of college costs:

It
is a value judgment if today’s students are getting better (or more) education for
their money. It is not a value judgment that the jobs market is offering less
to someone with a college degree. As the chart below shows, median income for
those with a bachelor’s degree has fallen since 2003. Graphing median income
vs. student debt shows a very depressing gap has appeared since 2003:

Student debt is the symptom, not the problem. The real problems
are soaring costs of a college education and the sharply declining real-world
value of a diploma.

It
is true that at public colleges and universities, tuition has risen due in part
due to the states shifting funding away from their university systems. Other reasons
include the fact that it takes longer
to complete a degree today than in the past, so the borrowing goes on
for longer:

• Only
  37% of freshman at 4-year colleges graduate in four years

• 59%
  of full-time students at 4-year institutions graduate within 6 years

Also,
non-teaching positions have grown faster than teaching positions. According to
an analysis released this month by the New England Center for Investigative Reporting,
(NECIR) from 1987 until 2011-12, the most recent academic year for which comparable
figures are available, universities and colleges collectively added 517,636
administrators and professional employees. The ratio of nonacademic employees
to faculty has also doubled. There are now two nonacademic employees at public
and two-and-a-half at private universities and colleges for every one
full-time, tenure-track member of the faculty.

NECIR also reported that
the number of employees in central system offices has increased six-fold since
1987, and the number of administrators in them by a factor of more than 34.

With all
this borrowing by students, student loan delinquencies have increased rapidly.
They were around 6% in 2005, but they were 11.5% at the end of 2013.

American debtors
have always leaned heavily on credit cards. Therefore, credit card
delinquencies have always been highest category of past due debt, usually
ranging between 8.5% and 10.2%. They spiked to 13.7% during the Great Recession
before dropping again. In Q3, 2012, student
loan delinquencies exceeded credit card delinquencies for the first time.
Since then, the gap has widened, with credit card delinquencies at 9.5% and
student loan delinquencies at 11.5%.

As bad as
that sounds, real student delinquencies are worse than that. Many student borrowers
don’t have to make any payments while they are in school. So if the delinquency
rate were calculated based on those borrowers who have made payments as a
percentage of those who should be
making payments, the delinquency rate would be considerably higher.

It may not
be an exaggeration to call our student loan situation another subprime debacle waiting to happen. Here’s why: In
the below 30 age group, 38% of the borrowers had credit scores of under 621,
and 29% had scores between 621 and 680. And it is at that lower end of the
credit spectrum where student loans grew the most during the
year:

(HELOC
means Home Equity Line of Credit)

These
borrowers, who are at the low end of the creditworthiness spectrum, are least likely to pay off the debt they
took on in order to attend schools that have often leave them unprepared
for today’s job market, assuming they can even find a job in today’s tough job
market.

And these lucky duckies can’t even use
bankruptcy to create a clean slate! We should remember
that by law, student loan debt is treated differently than other kinds of
consumer debt. Among the differences:

• Student loan debt is not dissolved
  in bankruptcy

• Student loan lenders can garnish
  Social Security benefits without a court order

These “enhancements”
were passed in successive versions of the Higher Education Act over the past 15
years. The fact that the banking
industry lobbied for the ability to garnish SS benefits tells you they expected
high losses on student debt. That’s one more win for the Plutocracy.

What’s
the plan, Congress?

In
the 20th century, no other institution could say that it had a greater ability
to raise people out of poverty or, to have contributed more to the development
of a robust American middle class than higher education.

For nearly 30 years,
medical care and higher education costs have risen at rates substantially above the official rate of inflation. Since the Clinton administration,
Americans have agreed that health care is a national policy concern that
warrants serious public consideration.

Yet,
we fail to give higher education the same degree of attention, notwithstanding
the rising costs to students and families.

These kids
who have to borrow to get their bachelor’s degree will start out their working
lives broke, and they will stay broke as long as there is student loan debt to
repay. It will handicap their contribution to the economy for years to come. It
will delay their starting a 401k, or other lifetime savings program.

We used to talk about being wage slaves. While that is still true, this generation of students is on
track to becoming America’s first debt-slave generation.

What’s
Wrong Today:

WNET is the NYC affiliate of PBS. It broadcasts on Channel 13 in the greater
New York area. WNET has a storied history, but it needs to adjust its moral compass, which is starting to point towards money, not
towards true north. WNET has (again) been caught doing the bidding of
plutocrats. From last Friday’s New York Times:

WNET said
production on the planned series, dubbed “Pension
Peril,” would be suspended indefinitely after journalist David Sirota of PandoDaily revealed the money
was coming from the Laura and John Arnold Foundation (LJAF). Arnold was an oil
trader at the disgraced Enron, who became one of the youngest billionaires in
the US. He is also a member of the WNET Board of Trustees.

Mr. Sirota
reported:

PandoDaily went on to report
that PBS and WNET had originally approached the foundation: (emphasis by the
Wrongologist)

Apparently,
Pension Peril will still be aired on public
television outlets, but the Arnold money will be returned. Pension Peril includes an episode on California public pensions. That segment discusses a ballot
initiative being pushed in the state to roll back public employee pensions − a campaign
being partially funded by, wait for it, John D. Arnold. The initiative
is run by San Jose Mayor, Chuck Reed (D), and Reed has thanked
“people from the Arnold Foundation” for putting him in touch with other
funders.

That’s not
a clear conflict of interest?

After the Arnold/pensions
relationship became public, PBS and WNET rethought having the Arnold Foundation
provide the funding for the Pension Peril
project. The Times reports that Stephen
Segaller, WNET’s VP for programming, said: (emphasis by the Wrongologist)

He added
that the grant had been solicited with “absolute conviction” that the
foundation was an acceptable funder. In other words, WNET still doesn’t believe
that there was any actual
conflict here — it just believes that there’s “a perception problem”. WNET is
returning the money because of “the optics” — which is to say, because Sirota’s
article came out, and it made both WNET and PBS look bad.

PBS’s
Ombudsman, Michael Getler wrote about the Arnold’s funding:

Apparently,
WNET’s management issue with the Arnold Foundation deal was not that the
content of the Pension Peril series
was too aligned with corporate interests, rather, it was the “optics” for WNET
and PBS!

This
shows us once again, the cynicism on the right. They have steadily campaigned
for the withdrawal of public funding from PBS since the Reagan administration. But, now that they have gotten the government off the horse, the right is busy saddling up.

This is not the first time that WNET
has had a problem with politically active plutocrats. In May, 2013, Jane
Mayer of the New Yorker wrote that two PBS-affiliated
documentaries featuring the Koch
Family came under pressure to be censored and edited due to fear that Charles
and David Koch, who, in addition to being the primary funders of conservative political
causes, are major donors to public media, would withdraw support.

David Koch has contributed to cultural and medical institutions including
Lincoln Center. In the 1980s, he expanded his charitable contributions to media,
donating $23 million to public television over the years. In 1997, he began serving as a trustee
of Boston’s public-broadcaster, WGBH, and he subsequently also became a trustee of WNET.

One film,
by Academy Award winning director Alex Gibney, Park Avenue: Money, Power &
The American Dream, received close scrutiny and was almost pulled, before
some edits and a compromise
format that included a rebuttal conversation at the program’s conclusion by Koch
and Sen. Charles Schumer (D-NY) were agreed by the producers and WNET.

Another
project, Citizen
Koch,
a documentary about the Citizens
United Supreme Court decision, was subject to editorial arm-twisting by
WNET representatives. Subsequently, WNET prevailed on ITVS, an independent
film production company based in San Francisco to withdraw funding of Citizen
Koch.

The film production
ultimately collapsed, and the producers’ statement said:

David
Koch was not mollified, and he resigned from the WNET Board of Trustees in May,
2013. Now, you could say that WNET is standing up to the plutocrats, since
David Koch was lost as a funding source, but consider the overriding issues:

First,
that public television is just another commercial mass media venture, one where
its advertisers are rich individuals and their foundations, instead of corporations
serving the mass market. As such, they have become very adept at creating programming
which represents the interests of their funding sources.

Second,
the management of WNET has lost focus on what independent journalism requires, tilting
toward the effort to fund its programming, instead the work of informing the
public.

He who pays the piper
will always call the tune. Soon, PBS could stand for the Plutocrat’s
Broadcasting Service.

What’s
Wrong Today:

Tom
Friedman is writing about economics again. In his Sunday Friedtastic Op-ed in the NYT, Mr. Friedman can’t contain his
enthusiasm for Silicon Valley and for “start-up America”. He begins
by telling readers:

After
giving a few examples, he says about San Jose’s entrepreneurs: (emphasis by the
Wrongologist)

Dean
Baker, in his reaction to the Friedman column:

If Mr. Friedman read
the business
section of the Times, he would
have known that Apple scoured the world for investment opportunities for their
billions and came up with a plan to buy back $40 billion of their stock.

Great innovation,
indeed.

Of
course great ideas are coming out of Silicon Valley. But they create very few jobs. In January, the Wrongologist wrote:

So,
the winners in Silicon Valley are a really just a few founders and their Venture Capital partners. After that, it’s
a few programmers, many of them immigrants on H1b visas. Just how many manicurists
and hair stylists, wait staff, gardeners and maids can the 11 Instagram
creators actually employ?

So let’s stop overemphasizing the billions on the table from innovative products developed in
Silicon Valley. Without a way to include the tens of millions of unemployed or
underemployed Americans, Silicon
Valley’s innovation will prop up the stock market, but it won’t prop up the
middle class.

Indeed,
all the techno-wow profits rolled up to 0.01% hasn’t helped and will not help
the middle class. All it did was move those 11 Instagram founders (among
others) to the uber-class.

The real
story in Mr. Friedman’s Op-ed is his calling out Washington for not supporting
the trade deals that corporations love. It is hardly surprising that Friedman
would strongly support the Trans-Pacific Partnership (TPP) and the
Trans-Atlantic Trade and Investment Pact (TTIP). He calls them “next
generation” trade agreements:

Then Mr. Friedman
quotes the Economist:

Does Mr. Friedman
think these numbers are for next year, or for 10 years out? He doesn’t tell us. For those who actually like their numbers to have a context, these projections are for somewhere around the middle of the next
decade when world GDP will be around $160 trillion and US GDP will be close to
$30 trillion.

That puts
the projected gains (if they are real) at a bit less than 0.4% of world GDP and
0.7% of US GDP. Not trivial, but hardly
the difference between a booming and a stagnant economy. In the
case of the US, the boost to GDP growth would be around 0.05 percentage points.

Hey, the
world is flat, everyone is hyper-connected, and why should facts matter?

Mr.
Friedman’s policy nostrums − multilateral trade agreements and additional
openness to immigration – will tend to expose American workers to more, rather
than less competition. Without simultaneous safeguards, the policies Friedman
favors may not enhance the welfare of American workers.

Dean Baker
wrote that Mr. Friedman makes no pretense of evaluating trade deals based on
evidence. Baker says that Friedman has proudly said just the opposite:  (emphasis by the
Wrongologist)

The
pursuit of cheap labor abroad has transferred wealth from US workers to
corporations. Mr. Friedman thinks we should import even more foreign workers to
replace the American workers who made our country great. Yet the children of
those American workers are loaded with education debt. They are being priced out of the global market.

The corporate bounty from cheap labor should be taxed, instead of
being tax sheltered by remaining offshore. Low tax rates should go with domestic
hiring at a living wage.

Tom
Friedman is popular because his articles are comforting to high-income metropolitan
elites. He focuses on big ideas, which we all love because of their simplicity.
He does not focus on the economic details, and it’s the details that get you
every time.

Mr.
Friedman raises one great point: Ideas can be tried and are celebrated if
successful in Silicon Valley. In Washington, politicians are afraid not just of
failure, but of imperfection. All ideas are picked apart.

That means that many good ideas cannot even be tried.

Take
Obamacare. The ACA was tried and is far from perfect. But what does the other
party do? It doesn’t promote any ideas that might improve it. It doesn’t suggest
a serious alternative. Instead, it tries to undermine the ACA for political gain.

Think
about it. Almost every important policy issue is treated the same way in
Washington. While in Silicon Valley, failure is treated as a learning
experience.

We’re
waiting, Tom Friedman.
Tell us how Comcast CEO Brian Roberts wakes up every day, reinventing himself
and Comcast’s broadband monopoly service by merging it with Time Warner,
another monopoly cable service, for the non-zero sum benefit of America.


What many Americans ask every day when they wake up, is not how to reinvent
themselves. They ask why the playing field has tilted so much since the last time they reinvented
themselves.

And when you’re done
asking yourself that, compare the result as you usually do, with those really bright
kids in third world countries, who don’t make as much money and live at a lower
standard. Ask how they are pushing American kids to the margins of
innovation.

Then ask American
multi-national firms why they are OK with that.

 

 

Our feel-good
tales about American Exceptionalism have entered a new chapter. People are
starting to talk about the American
Precariat, particularly, the NYT’s
David Brooks. The term describes people who feel that the ground beneath them
may be crumbling, so says Mr. Brooks:

Reports
are that Europe, that socialist haven of health care for all, may be passing us
(or matching us), in social mobility, and even in their faith in capitalism as
a successful economic model. More from Mr. Brooks:

Capitalism has been a useful and a powerful force. But
left unregulated, it can lead to bad decisions.

Here is today’s homily topic: Capitalism
is like the fisherman who uses dynamite to feed his family. He knows full well
the fish will be all gone before his children grow up, but he doesn’t care.

Cable industry consolidation won’t improve the little
guy’s life. Who cares?

Only way the main stream media covers joblessness:

Obamacare messaging depends on corporate message: (h/t Monty)

Missouri football player tackles NFL:

RIP Sid:

UN censures Vatican to no effect:

Boehner skates on Debt Ceiling increase:

What’s
Wrong Today:

January’s BLS
employment report shows total nonfarm payroll jobs gained were 113,000 for
January 2014, with private payrolls adding 142,000 jobs. Government jobs
decreased by 29,000. The US Postal Service alone shed 9,000 jobs.

The start
of the Great Recession was in December 2007. We are still down 851,000 jobs from December 2007, more than six years ago.

There are lots of ways to look at the data, but let’s focus today on self-employment.
Self-employment has been hailed as a solution for America’s employment ills. If you’re looking to become self-employed in Britain, taxi driving is a great option but make sure you use one sure insurance for the best deals.
There was the hype of Free
Agent Nation, by Daniel Pink that declared in 1997 that the work
environment was about to get radically different, that freelancers, temps and microbusiness
owners were where America’s employment
growth would occur. The Internet revolution untethered workers and made
independent work very possible, while the mindset of Generation X and the Millennials
leads them to prefer working independently.

So,
has self-employment been growing like a weed? No, it has not.

Justin Fox of the Harvard Business Review wrote
about the BLS data for self-employed workers:

Fox shows
that the number of self-employed is unchanged since January 2000, but the
long-term trend in self-employment is headed down:

Declines
in the unincorporated self-employed are largely due to the decline in farmers. They
were more than 8% of the workforce in the late 1940s. Now they account for less
than 1%. This shows we should support people trying to run their own business in a much better fashion. Many people work as tradesman, but we have to ensure they have everything they need to thrive. In the UK, insurance companies offer all risk insurance to help support these people.

Other
long-established occupations have also declined: Mom & pop stores, and physicians,
who have been grouping together or joining hospital staffs. Real estate agents
and contractors are down due to the bust in housing.

But, we
have been told that self-employment is the future for the new economy, where free
agents, contractors and part-time work from home would explode since corporations
were not hiring and government jobs wouldn’t be coming back.

If so, where
are they in the statistics?

The BLS
gets its self-employment totals from the Current
Population Survey, (also called the household survey), a monthly survey of
60,000 American households conducted by the Census Bureau (this survey also generates
the unemployment rate). Respondents are asked, “Last week were you employed by
government, by a private company, a nonprofit organization, or were you
self-employed?”

This
either/or choice may exclude a lot of people who are working on
the side, or whose jobs are really more like gigs. Self-employed owners of incorporated
business are not counted among the self-employed, nor are workers who freelance
or have secondary sources of income.

A survey
on behalf of MBO Partners, a provider
of support services for independent workers, counts temp workers, on-call
workers, and those on fixed-term contracts as “independent workers.” They say the
total self-employed pool was 17.7 million in 2013, up from 16 million two years
before. Steve King of Emergent
Research, which designed the MBO survey says:

Wait,
there’s more. The Freelancers Union
frequently cites the number 42 million
independent workers, about a third
of our workforce. They get their number from a 2006 GAO report that said
there were about 42.6 million “contingent workers,” meaning:

The bad jobs are probably really
growing, but the BLS definitions haven’t caught up with data, so it’s hard to see them. Which
jobs had the largest increases in self-employment? Fox at the HBR included another graph that shows
which “careers” are having a party:

There hasn’t exactly been a boom in
independent white-collar work. “Managers All Other” is a category of people who can’t otherwise be classified as construction
managers, purchasing managers, financial managers, etc. Also, the definitions of
the occupational categories used by
the government has an impact: All the nation’s maids get thrown into
one category; while physicians are split into nine.

Since
the start of the Great Recession, many white collar workers who may have previously
worked as independent, freelanced, long term contractors are required to be
employees of the contingent workforce agencies that corporations now use.
Moreover, most are exempt from overtime. Few employees hired by these companies
will ever receive 20+ hours per week, unless they have skills in an area that
is in great demand.

There
are looming social costs that may contribute to the self-employment/contractor future: A recent survey by TD
Ameritrade found that even though the majority of self-employed people
think that they’ll live on their savings when they eventually stop working, 70% of them are not actually saving for
retirement on a regular basis:

• 28% of self-employed people
  report that they aren’t saving for retirement at all
• 40% aren’t saving regularly
• 83% have put their retirement
  savings on hold or cut back at one time or another

It gets
worse: For those who own a business, only
19% plan to fund their retirement through profits from the company which will
continue to run after their retirement, and only 14% think they’ll be able to
sell their business and live off the profits from the sale.


Even worse: According to the
TD Ameritrade survey, 29% of Gen X and 32% of Millennial self-employed aren’t currently saving for their
retirements. So, a significant minority of our youngest self-employed
are expecting a miracle to bail them out when they face retirement.

The next
time one of our political elites celebrates the energy and entrepreneurship being
shown by our self-employed, perhaps we should remind them that most of the jobs
being created in this category are service industry workers who earn below or near
median wage, and that many of these “entrepreneurs” are not saving for
retirement.

Oh, and remind
the politicos that the self-employed often find it very difficult or impossible
to qualify for a mortgage
and for health
care insurance.