Newshoggers.com

Those skilled low skilled workers!

Commentary By Ron Beasley

I have a great deal of respect for James Joyner and his does a good job of critiquing the really offensive book by Charles Murray, Coming Apart: The State of White America, 1960-2010.

But in the comments section he goes too far:

As a matter of sheer economics, the gravy train in which low skill laborers could make fantastic livings in manufacturing was unsustainable. But the pendulum has swung too far in the other direction and huge swaths of the country are finding it hard to make a decent living. Blaming that on the 1960s counterculture isn’t very helpful.

My response:

Why? Those “Low Skill Workers” may not have had a college education but that doesn’t mean they weren’t skilled. As an engineer I appreciated the skills of those “low Skilled” people I worked with. And what created the economic miracle that was the US in the 50s, 60s and 70s. It wasn’t the wealthy it was those “low skilled workers” that had money to spend. The wealthy don’t create jobs it’s those “low skilled workers” with money to spend that create jobs.

James is still a believer in supply side economics.  He is also guilty of thinking that only the college educated are skilled.  Nothing could be further from the truth. 

An odd lesson to pick

By BJ Bjornson

Look, as my name might indicate, I’m rather partial to stories that put the Nordic countries and their people in a good light, but I still have to shake my head at this article from Alternet about how the Swedes and Norwegians paved the way for a more equitable society, referencing events in the 1920’s and 30’s to make its point.

Why am I bemused? Well, for starters, because you hardly have to go overseas for examples of how to build a better and more equitable society. The 20’s and 30’s were the home of massive general strikes and violent suppression of the same here in North America, as well as the period when the first major advances towards a more progressive modern state took place under Roosevelt’s New Deal. What happened in Sweden and Norway were reverberations of the same movement that was wreaking havoc worldwide in the industrialized West, not some unique unfolding that had never been seen before or since.

Second, there is the not-really-small matter of the Second World War, a discontinuity event even on this side of the Atlantic, but very much more so in Europe, and particularly for the conquered and occupied Norway. That’s not to say that the events of the pre-war period were unimportant, but it might behoove the author to note just how those countries were able to pick themselves back up after the war and return to a peacetime economy that still carried on the earlier tradition.

And again, there is no need to look to Scandinavia for examples, since the post-WWII boom in the U.S. and the rise of a true middle class is practically the textbook example of how these things get done, absent a few tweaks such as a universal health care system that your northern neighbours managed to pull off during the same period.

While I don’t pretend to be professional historian, what I have read and seen is that the single most important factor in ensuring an economically fair society is a strong labour movement, something the Republicans, for all their other craziness, have maintained a laser-like focus on for decades, and work to destroy, disrupt, or outright dismantle at every turn whenever they get the chance, as can be seen most recently in Ohio, Wisconsin, and elsewhere.

It may just be me, but I rarely see this kind of focus from the left on this point, and this article from Alternet is little different. It’s not that I don’t think the struggles of the Scandinavian labour movement isn’t inspirational to some degree, but it isn’t quantitatively different from the same struggle in North America or elsewhere. The real questions that needs to be asked is how the Swedes and Norwegians, and other European nations, maintained their strong labour movements while the U.S. saw its labour unions being sidelined and crumble away as a political force, and how and what it will take to bring a real labour movement back.

The article doesn’t say, and in that, it doesn’t strike me as too much different from a lot of progressive blogging these days. They know what they want to see as an end result, but seem incapable of charting or even exploring a tried and true path towards achieving it. Inspiration isn’t enough. Give working people the information they need to really organize themselves.

I have a feeling I'll be coming back to this.

Old School Labour Relations

By BJ Bjornson

Seems to me that I’ve read about this kind of thing happening in North America in decades past, or at least the precursor of what made this a story, a plant manager calling in the police to beat and kill a union leader. The counterattack doesn’t seem to be quite as common.

Workers at the Regency Ceramics factory in the India raided the home of their boss, and beat him senseless with led pipes after a wage dispute turned ugly.

The workers were enraged enough to kill president K. C. Chandrashekhar after their union leader, M. Murali Mohan, was killed by baton-wielding riot police on Thursday. The labor violence occurred in Yanam, a small city in Andra Pradesh state on India’s east coast.Police were called to the factory by management to quell a labor dispute. The workers had been calling for higher pay and reinstatement of previously laid off workers since October. Murali was fired a few hours later. The next morning, at 06:00 on Friday, Murali went to the factory along with some workers and tried to obstruct the morning shift, local media reported. Long batons, known as lathis in India, were used by police who charged the workers, injuring at least 20 of them, including Murali. He died on the way to hospital, according to The Times of India. Hundreds of workers gathered outside the police station and demanded that officers be charged with homicide.

I didn’t bother commenting on the recent NYT article on conditions at Apple’s supplier factories in China a couple of days ago since that story was more than well-covered already, but it does an excellent job of showing the costs of pushing the costs of manufacturing ever downward.

Per the Forbes story above, India is the poorest of the BRIC countries and its factory workers are paid the least, so maybe it isn’t too much of a surprise that disputes between management and labour are far nastier there than elsewhere, but I do wonder sometimes if the continued “flattening” of wages worldwide might bring such scenes back to these shores one day.

Moral Hazard

Commentary By Ron Beasley

One of my great blogging joys used to be mocking David Brooks.  Now Sir David would have been at home in England a few decades ago.  A rather worthless fellow who was lucky enough to have a title and a stage to to spew nonsense.  An easy target for a desperate blogger.  But all good things must end and David Brooks mocking ended with Charles Pierce.

The applause came from deep in the plush leather armchairs gathered by the fireplace in the clubroom of the Premature Fogies Club. It was warm and sustaining, as was the morning brandy. People touched the patches on his master's blazer as he walked by. "Good show, old top," they told him. Moral Hazard, the Irish setter belonging to David Brooks, yawned and stretched his legs all the way down to the tips of his paws. He knew what was going on. His master had brought joy to all the calcined specimens in all the armchairs by telling them the up-from-poverty saga of Willard Romney and his family, the relentless immigrant-ish striving that still drives Willard no matter which of his several luxury homes in which he happened to be doing his striving at the moment. This Friday's column had made them all feel like pioneers squinting across the Great Plains into the setting western sun. His master, thought Moral Hazard, will never lack for dinner-party invitations after this:

Mitt Romney is a rich man, but is Mitt Romney's character formed by his wealth? Is Romney a spoiled, cosseted character?

Go to the link to find the answer to these questiions.  I can't compete with Mr Pierce.

Psychopaths as the rule rather than exception

By BJ Bjornson

It has been bandied about for some time that the banksters who caused the crash of 2008, hoovered the taxpayers dry in bailouts, and continued to lavish themselves with massive bonuses and perks while the rest of the economy struggled are little better than psychopaths. The scary part is that it is no accident.

In a paper recently published in the Journal of Business Ethics entitled "The Corporate Psychopaths: Theory of the Global Financial Crisis", Clive R Boddy identifies these people as psychopaths.

"They are," he says, "simply the 1 per cent of people who have no conscience or empathy." And he argues: "Psychopaths, rising to key senior positions within modern financial corporations, where they are able to influence the moral climate of the whole organisation and yield considerable power, have largely caused the [banking] crisis'.

And Mr Boddy is not alone. In Jon Ronson's widely acclaimed book The Psychopath Test, Professor Robert Hare told the author: "I should have spent some time inside the Stock Exchange as well. Serial killer psychopaths ruin families. Corporate and political and religious psychopaths ruin economies. They ruin societies."

Cut to a pleasantly warm evening in Bahrain. My companion, a senior UK investment banker and I, are discussing the most successful banking types we know and what makes them tick. I argue that they often conform to the characteristics displayed by social psychopaths. To my surprise, my friend agrees.

He then makes an astonishing confession: "At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles."

Little wonder the financial world is so screwed up, isn’t it?

Net worth, or why Americans are not as wealthy as they think

By BJ Bjornson

A week or so ago, John put up a post describing the difference between one’s income and one’s net worth, the latter being another way of determine just how wealthy one is. It is a very important concept, particularly for this point.

Building net worth is everyone's safety net for the future.

Or, to put it another way, your net worth is what you use and/or borrow against when you no longer have any income to maintain your lifestyle. It is your security against hard times, and your hope for a decent retirement. If you have little or, as is too often the case these days, negative net worth value, you have no security and little hope for a secure future.

As John noted, most people focus on income when they speak of riches, and when the U.S. is spoken of as one of the richest countries in the world, it is usually by a measure of per capita GDP, or the average income per person based on the GDP of the country, where the U.S. always comes out near the top outside of a group of small, usually oil-rich, countries where the GDP per capita can be greatly skewed by a single great revenue driver.

When one looks at wealth, though, and particularly median wealth rather than average, a very different picture starts to emerge, as this article at The Daily Reckoning points out.

According to the article, the average wealth of people in Britain and the U.S. is $258,000 and $248,000 respectively. Not a lot a difference there, but when you look at the median instead of the average, which tells you a lot more about what the typical net worth actually is. For Britain: $121,000. For the U.S.: $53,000. Less than half, and that’s not an aberration.

What this means, says our Bonner Family Office chief economist, Rob Marstrand, is that “wealth in America is heavily skewed to the rich, with a lot of adults with very little net worth.”

Compared to the typical Japanese or European, the typical American is only half as rich. Half the people in the US have less than $53,000 net worth. You can imagine what the bottom 20% have.

This is a devastating and grim insight. It explains why so much of America seems, well, so poor. Because it is poor. People don’t have any money. They dress poorly. Eat poorly. Live poorly.

This skewing of wealth has been intentional, and it is only going to get worse. There is a generational cost hidden in that data. Take as an initial example the cost of college or university education. This article from the NYT tells a part of the story:

Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.

. . .

Although college enrollment has continued to rise in recent years, Mr. Callan said, it is not clear how long that can continue.

“The middle class has been financing it through debt,” he said. “The scenario has been that families that have a history of sending kids to college will do whatever if takes, even if that means a huge amount of debt.”

More than just the straight cost of higher education, the less capital (or net worth) you have available, the less money you have to assist your children in pursuing that education. As noted, the only way around that is to add more debt, either to yourself or your children, and the servicing of that debt acts as a drag on your and their ability to create a nest egg of capital to fall back on, or to use to assist their children.

Even worse is the fact that the sacrifices people make to send their children to post secondary schooling no longer pay off the way they used to, at least unless your family is already well-connected.

This kind of drain continues elsewhere. No extra money lying around to help out with a downpayment or cosigning on a car loan, or for a mortgage, or anything else you might want to do to give them a good start in life because you’re still stuck paying down your own debts when they’re ready to get started.

Worse, without a nest egg or retirement income, you’re pretty much forced to depend on them or other family members to look after you when your own productive years end. That at least is nowhere near as bad as it once was, but should the Republicans and others of their ilk get their way and gut or destroy Social Security and Medicare, that problem is going to return to its previous hellishness for the elderly poor.

All of which points to the reasons that social and economic mobility in the U.S. has dropped below where it is for most other first-world nations and why the “American Dream” is now more and more becoming a true fantasy.

Increasingly, the "richest country in the world" is just a place where a lot of really rich people happen to live.

Aboriginal People’s Tragedy = Profit Opportunity!

By BJ Bjornson

Some background information needed for this one. The tiny Northern Ontario Aboriginal community of Attawapiskat has been in the news a lot recently here in Canada due to the fact that years of neglect have finally caused enough of crisis to receive widespread attention, with the Red Cross flying in aid to help the desperately poor people living there.

I’d like to write more about the situation itself, but several others far better informed and eloquent have already been on the case. You can start here, then here, and in fact that whole blog is well-worth the read, and then you can head over to here if you want to get more informed about the whole mess, at least for a start.

My own contribution has to do with an article I came across in the Financial Post, that starts with this:

De Beers Canada and its Victor diamond mine is currently in the media spotlight regarding the poverty in the nearby First Nations community of Attawapiskat. Many are questioning why the community is not significantly benefiting from this diamond mine, located on its traditional territory. The Victor deposit — which is the smallest of Canada’s four diamond mines — just started production in July 2008 and has an expected life of 11 years. The mine employs about 500 people, half of whom are of First Nations background and 100 come from Attawapiskat.

I then read through the article, which swiftly moves to criticism of the Far North Act, which has set aside lands for parks and other, non-destructive mining uses, and then goes on to laud the amount of money being spent in exploration and the fact that some of the newer mines are hiring some small portion of their workforce from the surrounding aboriginal communities. But there appears to be something missing from the whole thing.

Well, actually, there’s a whole lot missing, like the entire history of the mining industry in rural Canada, with its poisoned rivers, fishing lakes turned into toxic tailings ponds, and massive clean-up bills left to the taxpayers after all the valuable minerals had been sucked out of the ground, but no, there’s something more that’s missing from this article that can be basically summed up as:

What’s happening to those people in Attawapiskat is a tragedy, so give us more land to pillage the wealth out of, and then ...

Yeah, it’s the “and then” that seems to be missing. It’s the answer to the question from the article’s opening paragraph. If these mines and their bounty are so valuable and productive to the local aboriginal communities in northern Canada that to deny mining companies the ability to despoil massive tracts of landscape in their hunt for more minerals is the equivalent of being anti-aboriginal, then why, pray tell, is Attawapiskat in such dire straights when they have an existing diamond mine right on their doorstep? Where are those fantastic benefits from the mine going, if not to the people whose land is being mined? Why is the community "not significantly benefitting from this diamond mine"?

The question is asked, but never answered, since of course the answers wouldn't help the mining industry's cause all that much. If the mining industry was such a unmitigated boon for the communities around them, Attawapiskat wouldn’t be in the news at all, and then this jackass couldn’t use their suffering to pretend that if only those dastardly “well-funded and powerful” environmentalists and “Liberal-left” government folks would allow the (apparently weak and poor) mining corporations access to pillage additional massive tracts of rural wilderness, the folks living in third world conditions in the midst of one the richest countries in the world would be all puppies and flowers.

Too bad it’s all a fairly tale.

The Rich need the Middle Class too

By BJ Bjornson

Via Kevin Drum, more proof that economics of the very rich don’t mesh all that well with Republican ideology. Not only does Nick Hanauer call for higher taxes on the rich, but he gets to real nub of just who are the “job creators” in society.

I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.

. . .

One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

. . .

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.

The whole column is well worth the read, and it’s always nice to see someone with wealth acknowledge that a policy of sticking it to the middle class and increasing income inequality is actually cutting their own throats as well.

The only unfortunate part being that there are still far too many vultures out there content to feed on the rotting carcasses their policies are creating. When one of the leading GOP candidates can talk seriously about using the labour of poor children to replace unionized janitorial staff because otherwise they'll be criminal riffraff and thereby increase his inner-party standing, you know things are unlikely to change fpr the better anytime soon.

Lowest Common Denominator

By BJ Bjornson

Not many easier ways to show just how the American middle class has found itself an increasingly rare species these days than this story about American Airlines filing for bankruptcy.

AMR said agreements with its workforce forced it to spend $600m (£384m) more than other airlines on staff costs.

. . .

It was the only one of the major US airlines operating international routes not to file for bankruptcy after the September 11th terrorist attacks.

Its competitors have successfully used bankruptcy to restructure their labour contracts and cut costs.

. . .

Mr Horton said the board had unanimously decided to file for bankruptcy on Monday night.

He announced that American would be looking to change its employees' terms and conditions. "We plan to initiate further negotiations with all of our unions to reduce our labour costs to competitive levels," he said.

So basically the system has been set up to reward those who failed first and could use that failure to stick it to their employees, ultimately forcing their competitors to do the same to remain competitive.

Little wonder that things just keep spiralling downwards.

Climategate II - The Yawning

By BJ Bjornson

I was going to do up a post on the release of more of the hacked emails and other documents from the Climate Research Unit of the University of East Anglia, but I think I’ll just outsource this one to Brendan DeMelle, who has a thorough round-up of the coverage and what you need to know about this latest dumping of additional documents from the original hack.

In the end, it appears to be a poorly disguised attempt to derail the upcoming UN climate summit. (Though given the certainty of a complete lack of action from the U.S. and the likely attempts at outright sabotage from countries like Canada, why even bother at this point?)

More interesting to me is the apparent lack of effort by the UK police to track down the hackers themselves.