(* A collection of recent tid-bits -- including blurbs about jobs, outsourcing and the oil glut.)
More Economic Propaganda from Stephen Moore (From Econospeak: Federal Tax Revenues During the 1980’s) [In a post titled Lies, Damned Lies, and Reaganolatry] Paul Krugman takes on another aspect with respect to the latest intellectual garbage from Stephen Moore by commenting on Moore’s claim that Federal tax revenues soared from 1980 to 1989 ... Paul is debunking a claim that has been made and debunked many times. The usual line is that Federal tax revenues almost doubled from $517.1 billion in 1980 to $1032.0 in 1990. The inflation-adjusted part comes from the fact that the GDP deflator rose by 50.3% over this period so in real terms revenues rose by 32.8% over the entire decade. But there is another serious problem with this that anyone who followed the various tax policy changes during the Reagan years should know. Yes income tax rates were cut in 1981 but there were various tax rate increases that followed including a significant increase in payroll tax rates in 1983. Table B.21 of the Economic Report of the President provides the details on Federal tax revenues. Payroll taxes rose from $157.8 billion in 1980 to $380 billion in 1990. Yes, a 140.8% nominal increase and a 60.3% increase in real terms when this tax rate was increased. All other Federal taxes therefore rose by only 20.8% in real terms over the decade. Since I’m not the first to point this out one would have to believe that Stephen Moore would have seen this often made point before. And yet he [Stephen Moore] can’t be bothered to tell his readers the whole story. [Why?] Mark Thoma calls the latest from Stephen Moore a joke. First — some of the choice Laughers from this idiotic, if not dishonest oped... (Read: Monetary Policy During the 1974 and 1982 Recessions)
Robert Reich: The Republican’s Magical Mystery Tour (Starting Next Week) -- "According to reports, one of the first acts of the Republican congress will be to fire Doug Elmendorf, current director of the non-partisan Congressional Budget Office, because he won’t use “dynamic scoring” for his economic projections. Dynamic scoring is the magical-mystery math Republicans have been pushing since they came up with supply-side “trickle-down” economics."
Paul Krugman: "Robert Waldmann is shocked, shocked, to find conservative economists not doing their homework. I’m shocked that he’s shocked. There’s a world of think tanks that don’t want too much thinking [and] partisan media that don’t do fact-checking. Oh, and for the haters: saying something that doesn’t match your opinion is not an error of fact. After all, the facts have a well-known liberal bias."
New York Times: "How much slack really remains in the labor market? The unemployment rate stands at 5.8 percent. If it continues on its current trajectory, it will have fallen an additional half a percentage point by mid-2015, putting it at a level that some economists see as effectively full employment. Yet much of the reduction in unemployment reflects a decline in the share of the population in the work force. If a stronger economy were to induce these people to return to work, the recovery would still have a long way to run before we got to full employment. Moreover, millions of those who are counted as employed remain stuck in part-time jobs but want full-time work. Further improvements in the labor market also depend on whether the long-term unemployed — those who have been out of work six months or longer — will successfully transition into new jobs. Pessimists emphasize that high levels of long-term unemployment proved to be an intractable problem throughout much of Europe over the last 40 years. Yet more recent evidence from the United States — particularly from the early stages of this recovery — makes me more optimistic that we can get the long-term jobless back to work ...[Also,] what will be the consequences of lower oil prices, which have fallen by about half since June? Typically, an oil price decline is like a tax cut, leaving more money in consumers’ pockets to spend elsewhere. That should spur growth. But since the shale boom, the United States is not only a leading oil consumer but also a leading producer. So lower oil prices also spell smaller revenue for some of our energy companies. And our producers have particularly high costs, so further investment in them may become unprofitable if prices fall too far."
Wall Street on Parade -- Oil Crash: Don’t Believe the Happy Clatter -- "If this price collapse were happening in just crude oil, it could be shrugged off as a supply glut problem attributable to growing shale production in the U.S. and over production among OPEC members. But other industrial commodities are in freefall as well ... a broad gauge of industrial commodity prices entered a gradual decline in June and then began to plunge in September. [This] looks suspiciously similar to the price action in industrial commodities in the same time period in 2008 – which signaled an early warning to the greatest economic collapse in the United States since the Great Depression." Econbrowser: "Longer term, I think we can anticipate ongoing geopolitical disruptions in Africa and the Middle East and a resumption of demand growth from emerging economies. That is why I believe that before long the world will once again want that higher-cost oil. But December 2014 doesn’t seem to be the time to try to sell it." (Related: How does Cheap Oil Risk U.S. Jobs and Pensions?)
Financial Chicanery: Wall Street Bank Regulator Issues Outrageous Press Release
Valerie Wilson at the Economic Policy Institute offer a list of five things that might be different if more of our nation’s wealth, power and influence were used to positively transform lives and promote economic mobility.
We could get to full employment and close racial unemployment gaps. Currently, the Fed holds the most power to determine how close the economy gets to a full recovery and how fast wages grow based on when they decide to raise interest rates. Strong job growth this year has offered a glimpse of how critical this is, especially for people of color. Even though African Americans and Latinos experienced greater labor market gains than whites in 2014, the pace of recovery remains uneven by state and race.
More Americans would get a pay raise. Wages for the vast majority of workers have been stagnant or falling for the last 35 years. Progress has been gradual this year as several states and localities increased their minimum wage and the president took action to reform the immigration system. Yet, the erosion of labor standards and diminished bargaining power for workers over the years has limited wage growth for the masses. Wage theft and outdated overtime rules continue to rob those at the middle and lower end of the wage distribution while CEOs make nearly 300 times what the average worker earns.
We could dramatically reduce child poverty. A lot of this reduction would flow from increased employment and higher wages (especially for working mothers), but also through strengthening safety net programs.
Schools would be desegregated — at least by socioeconomic status (SES) if not also by race. Sixty years after Brown v Board, black and Hispanic kindergarteners are disproportionately in high poverty schools, most of which are also predominantly minority schools. As it happens, school segregation stems from neighborhood segregation (both by race and SES), producing a number of cumulative negative effects on opportunity and academic achievement.
We might make real progress toward closing the wealth gap over the next generation. This assumes that at a minimum we accomplish numbers 1 through 4 and then build upon that foundation with policies that expand rather than constrict access to higher education and a range of assets. Beyond that, we also must take steps to affirmatively remedy the effects of centuries of institutionalized racial inequality that continue to affect household wealth accumulation.
Economic Populist: "If anyone believes that offshoring/outsourcing jobs is passé and not impacting U.S. labor markets, then think again. The Economic Policy Institute has published a new study showing America has lost millions of jobs to China's cheap labor market. From 2001 to 2013, the massive trade deficit with China has cost the United States 3.2 million jobs. Worse, the researchers discovered 75.7% of those jobs lost, 2.4 million, were in manufacturing. China, and China alone, accounts for two-thirds of all manufacturing jobs lost between 2001 and 2013." [And these jobs are usually union and better-paying jobs --- and they also have a greater multiple effect (especially in the tech industry.]
History.Com -- Dec 27, 1944: FDR seizes control of Montgomery Ward -- A story about the once-ubiquitous catalogue and retail operation whose chairman refused to comply with wartime labor agreements 70 years ago. It’s a fascinating story. But why did Montgomery Ward ultimately disappear from the scene? It wasn’t the wartime obstructionism; it was bad macroeconomics. As the Times reports: "Retail historians date the start of [Montgomery Ward’s] decline to the postwar boom of the 1950’s, when its rival, Sears, Roebuck & Company, moved aggressively into the then nascent suburbs, while Ward, under the steely leadership of its then chief executive, Sewell Avery, hoarded cash and waited for a second Great Depression."
Mother Jones: Friends Don't Let Friends Walk Drunk -- On New Year's Day (January 1st, between midnight and 6 a.m.) is the deadliest day of the year to walk home -- 59 percent of pedestrians who died that day were legally drunk, according to their blood alcohol levels at time of death. In nearly half of the traffic crashes that killed pedestrians, the driver or the walker (or both) had consumed alcohol. But get this: Pedestrians in these crashes were more than twice as likely as drivers to have had a blood alcohol level greater or equal to 0.08 grams/deciliter, or above the legal driving limit (34 percent of walkers versus 14 percent of the drivers.) On a per-mile basis, a drunk walker is eight times more likely to get killed than a drunk driver. As you ring in 2015, if you can't call a cab or squeeze onto the subway, your best option is to grab a pillow and stay put. ( * My note: Also, friends shouldn’t let friends text while driving either (whether they drank of not). And more importantly, friends shouldn’t let friends vote Republican --- ever!)