Dr. King's "Revolution of Values"

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play

the good Samaritan on life's roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth.

  
                                                                          Martin Luther King

"IMF warns on threat of income inequality"

Financial Times:

The International Monetary Fund has highlighted the threat posed to the global economy by growing income inequality as the world’s business and political leaders prepare to head off to the World Economic Forum in Davos this week.

Uh, oh! "Brooks Worst Column Ever!"

Robert Kuttner, piling on @ American Prospect, lowers the bar in considering today's Brooks offering a milestone of sorts:

Well, this is getting to be a habit. Alert readers may recall that a few weeks ago, I wrote a piece about Tom Friedman’s worst column ever, plugging efforts by a billionaire hedge fund friend to persuade college students that their enemy was Social Security. 

Now, Friedman’s colleague David Brooks has written an even worse column. It’s really hard to determine Brooks’ worst column ever, since he seems to turn out one every week.

Brooks’ latest piece, in Friday’s Times, begins inauspiciously, “Suddenly, the whole world is talking about income inequality.” (Where has Brooks been, Jupiter?)

Paul Krugman, the "Liberal Conscience" animated by fairly conventional Keynsianism, further diminishes Our Mr. Brooks:

Why We Talk About the One Percent

Many people in Washington, even those willing to concede that inequality has been rising rapidly, are uncomfortable talking about the famous 1 percent — perhaps because it sounds too populist, too much like an invitation to crowds with pitchforks. For a long time respectable discussion focused on the top 20 percent; today I see my colleague David Brooks talking about the top 5 percent.

But framing the discussion in terms of some broader group is in this case deeply misleading. Here’s what the Piketty-Saez numbers tell us about the top 5 percent (incomes in 2012 dollars):

            Piketty and Saez 

If you look at the bottom 4 percent of the top 5, you see good but not spectacular income gains. These are the kinds of gains that you might be able to explain in terms of skills, assortative mating, and so on. But the top 1 percent is in a different universe altogether. And in fact the gains within the top 1 percent are concentrated in an even smaller group: this is a Pareto distribution thing, in which the higher the income the greater the percentage gains.

The point is that using wider definitions than the one percent is, in effect, diluting the wolves of Wall Street by lumping them in with the upper middle class. Not the same story at all.

Another terrible David Brooks column

Dean Baker @ CEPR Beat the Press challenges the ignorant ramblings of one David Brooks, Big City Newspaper Columnist and Pop Sociologist:

David Brooks is sweating hard trying to defend the one percent against the rest of the country and reality. His column today desperately warns readers:

"Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness."

Funny, I thought Social Security, the Fair Labor Standards Act (i.e. the 40-hour workweek), the National Labor Relations Board, and other products of the New Deal were pretty big accomplishments. Much of this was done quite explicitly with a sense of class consciousness. These were all measures that were backed by mass movements that sought to ensure that working people got their share of the economic pie. Good thing we have David Brooks to tell us the opposite.

This is far from the only place where Brooks seems to be at odds with reality. Brooks condemns focusing on inequality because it leads to ineffective policies like raising the minimum wage. He then cites a study by Joseph J. Sabia and Richard V. Burkhauser telling readers:

"Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.

"That’s because raises in the minimum wage are not targeted at the right people."

Actually the Sabia and Burkhauser study goes against the overwhelming majority of other studies on the topic as summarized in this analysis by University of Massachusetts professor Arin Dube.

Record low of unemployed Americans recieiving benefits

Huffington Post:

A record-low 25 percent of unemployed Americans will receive benefits now that Congress has allowed the federal program to expire, according to data from the Department of Labor compiled by House Democrats on the Ways and Means Committee.

The number is the lowest since the Department of Labor began keeping records in 1946. Before Congress let the federal unemployment benefit-assistance plan expire on Dec. 28, 38 percent of unemployed Americans who paid unemployment taxes were receiving unemployment insurance either through their state or the federal government...

A Tale of Two Rands - Unemployment Benefits and Economic Illiteracy

Rand Paul - well-known foe of economic illiteracy - arguing that "extending unemployment benefits to two years does a disservice to the unemployed.":

Economic illiteracy condemns us to well-intentioned, big-hearted, but small-brained

responses to real problems.

Millions of people are out of work. We all have sympathy for those who are unemployed and I believe it is our moral obligation as a society to take care of those who cannot take care of themselves. Liberal pundits try to argue that Democrats are the only ones who care about the poor and unemployed, but the truth is, caring doesn't help unless it is linked to good policy...

According to a study by Rand Ghayad and William Dickens for the Federal Reserve Bank of Boston, employers will choose a less-skilled worker who has been unemployed for two months over a worker with more skills who has been unemployed for two years. So yes, extending unemployment benefits to two years does a disservice to the unemployed...conservatives who argue for shorter unemployment benefits actually have more concern for the worker than liberals who believe in no limits... (Bold added)

Rand Ghayad, the economist Paul cites, @The Atlantic, countering that based on his research "there's no reason to cut unemployment benefits:

Rand Paul says he cares about the unemployed."...

So why does he want to end unemployment benefits for people who have been out of work for 6 months or longer? Well, Paul cites my work on long-term unemployment as a justification—which surprised me, because it implies the opposite of what he says it does.

"9 Things The Rich Don't Want You To Know About Taxes"

An Oldie but Goodie from David Cay Johnston @ AAN (4/11):

Illustration by Justin Rose (Metro Times)

For three decades we have conducted a massive economic experiment, testing a theory known as supply-side economics. The theory goes like this: Lower tax rates will encourage more investment, which in turn will mean more jobs and greater prosperity -- so much so that tax revenues will go up, despite lower rates. The late Milton Friedman, the libertarian economist who wanted to shut down public parks because he considered them socialism, promoted this strategy. Ronald Reagan embraced Friedman's ideas and made them into policy when he was elected president in 1980.

For the past decade, we have doubled down on this theory of supply-side economics with the tax cuts sponsored by President George W Bush in 2001 and 2003, which President Obama has agreed to continue for two years. You would think that whether this grand experiment worked would be settled after three decades. You would think the practitioners of the dismal science of economics would look at their demand curves and the data on incomes and taxes and pronounce a verdict, the way Galileo and Copernicus did when they showed that geocentrism was a fantasy because Earth revolves around the sun (known as heliocentrism). But economics is not like that. It is not like physics with its laws and arithmetic with its absolute values.

Tax policy is something the Framers left to politics. And in politics, the facts often matter less then who has the biggest bullhorn.

The Mad Men who once ran campaigns featuring doctors extolling the health benefits of smoking are now busy marketing the dogma that tax cuts mean broad prosperity, no matter what the facts show.

As millions of Americans prepare to file their annual taxes, they do so in an environment of media-perpetuated tax myths. Here are a few points about taxes and the economy that you may not know...  (All figures are inflation adjusted.)

"The Fear Economy"

Professor Krugman @ NYTs:

More than a million unemployed Americans are about to get the cruelest of Christmas “gifts.” They’re about to have their unemployment benefits cut off. You see, Republicans in Congress insist that if you haven’t found a job after months of searching, it must be because you aren’t trying hard enough. So you need an extra incentive in the form of sheer desperation.

"The GOP's Great Depression agenda"

Ryan Cooper at WaPo "Plum Line":

Paul Ryan has set everyone’s socks ablaze with a new comment suggesting he wants to shake down the country again over the debt limit. This inevitably inspired a lot of amateur psychoanalysis attempting to figure out whether he was serious or just pandering to the base. Whether that is true is an important thing to figure out, but the deeper subtext here is that the Republican Party continues to organize itself around the kind of austerity agenda that, should they obtain enough power to implement it, would cause another recession immediately, possibly a very bad one.

Retrospective on dishonesty and hysterics around the rapidly declining deficit

One of the last handful of honest conservatives, Bruce Bartlett @ NYTs, looks back at the Bush-induced "Obama" deficits:

On Dec. 20, the Brookings Institution economist Justin Wolfers sent out this provocative post on Twitter: “The decline in the budget deficit since 2009 is the largest four-year improvement since the demobilization from WWII.”

I was aware that the deficit was declining sharply, both in nominal terms and as a share of the gross domestic product, but hadn’t thought much about the magnitude. Mr. Wolfers, whose partner Betsey Stevenson is a member of President Obama’s Council of Economic Advisers, is correct, as the data show. Fiscal year 2014 began on Oct. 1.

Congressional Budget Office

 

The Congressional Budget Office further projects that the deficit will fall to just 2.1 percent of G.D.P. in fiscal year 2015, less than it was in fiscal year 2008, when it was 3.1 percent of G.D.P. Thus we will have seen a decline in the deficit of 7.7 percent of G.D.P. over seven years.

There is indeed no comparable period in which the deficit fell as much since the aftermath of World War II for the simple reason that the deficit never grew large enough to drop so much. The largest deficit recorded in the postwar era before 2009 was in 1983, when it reached 6 percent of G.D.P.

After the war, the deficit fell to 7.7 percent in 1946 from 22 percent of G.D.P. in 1945. A surplus of 1.2 percent of G.D.P. was achieved in 1947.

This got me thinking about President Obama’s budgetary record when viewed from 2009. I turned first to the last C.B.O. projection of the George W. Bush administration, which was made on Jan. 7, 2009, and thus includes no Obama policies. The decline in the deficit after 2010 is largely attributable to the assumed expiration of the Bush tax cuts, because the C.B.O. must assume current law and they were set to expire at the end of 2010.

Congressional Budget Office

 

What’s important to see is that the federal government was going to run the largest deficit since World War II in fiscal year 2009, which began on Oct. 1, 2008, regardless of who became president on Jan. 20, 2009. It was baked in the cake by policies put in place by the Bush administration and the natural rise in spending and fall in revenues resulting from a sharp drop in economic growth and rise in unemployment, which economists call “automatic stabilizers.”

This point was always known by anyone who bothered to look carefully at the data, regardless of how many hand-wringers on both sides of the aisle acted as if the deficit was solely a result of President Obama’s policies. Both because of myopia and because everyone tends to invest the president with far more power than he actually has, there is a tendency to assume that whatever happens on his watch is attributable solely to him.

"Losing it over Obamacare"

Barkley Rosser @ Econospeak:

I know, I know.  That every GOP hack who wants to stay on Fox News and so on must relentlessly spout idiotic drivel about the old Heritage Foundation plan cooked up by Stuart Butler back in 1989 and supported by many Republicans, even being adopted successfully in MA by one Mitt Romney as governor, although all shifting into massive opposition when Obama came out for it in an effort to gain GOP support (hah!).  So, I should not waste my or anybody else's time pointing out the specific lies and stupidities emitted by any such "pundit."

However, I cannot resist in the case of Charles Krauthammer in the Washington

Post of Dec. 20, 2013...he really shows the pathetic state of those trying to block the implementation of Obamacare (OK OK, "ACA").  It may be that I am using him to complain about a syndrome so entrenched that we do not even pay it any more mind. But the basis of its ongoing constant diatribes on this matter are becoming increasingly inane and absurd.  So, I shall pick this particular column apart.

The Minimum Wage Brouhaha According to Comedy Central

Jon Stewart supports fast-food workers' strikes, invokes the populist compassion of the new Pope and takes on the wretched, dim-witted, morally obtuse cretins of cable "business" chatter:

Pope Francis v. "Unfettered capitalism" and "The tyranny of markets"

The new Pope appears to be taking the church back to basics. Reuters via NYTs:

VATICAN CITY — Pope Francis attacked unfettered capitalism as "a new tyranny" and beseeched global leaders to fight poverty and growing inequality, in a document on Tuesday setting out a platform for his papacy and calling for a renewal of the Catholic Church.

The 84-page document, known as an apostolic exhortation, was the first major

work he has authored alone as pope and makes official many views he has aired in sermons and remarks since he became the first non-European pontiff in 1,300 years in March.

In it, Francis went further than previous comments criticizing the global economic system, attacking the "idolatry of money", and urged politicians to "attack the structural causes of inequality" and strive to provide work, healthcare and education to all citizens. 

He also called on rich people to share their wealth. "Just as the commandment

'Thou shalt not kill' sets a clear limit in order to safeguard the value of human life, today we also have to say 'thou shalt not' to an economy of exclusion and inequality. Such an economy kills," Francis wrote in the document issued on Tuesday. 

"How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses 2 points?" 

The pope said renewal of the Church could not be put off and said the Vatican and its entrenched hierarchy "also need to hear the call to pastoral conversion". 

"I prefer a Church which is bruised, hurting and dirty because it has been out on the streets, rather than a Church which is unhealthy from being confined and from clinging to its own security," he wrote. 

Italian theologian Massimo Faggioli greeted the work as "the manifesto of Francis" while veteran Vatican analyst John Thavis called it a "Magna Carta for church reform". 

"The message on poverty sets Pope Francis on a collision course with neo-liberal Catholic thought, especially in the United States," said Faggioli, an expert on the Second Vatican Council and reform in the Catholic Church.

Tales of the Great Recession

Breadlines are making a comeback. At the NYT's Editorial Page Editor's blog, Teresa Tritch:

The Great Recession was the worst downturn since the Great Depression.  And yet, throughout the recent decline and today’s sluggish recovery, conditions have never seemed as bad as they were in the 1930s. Breadlines, for example, have not been commonplace.

That may be about to change.  

In an article published on Monday, The Times’s Patrick McGeehan described a line snaking down Fulton Street in Brooklyn last week, with people waiting to enter a food pantry run by the Bed-Stuy Campaign Against Hunger. The line was not an anomaly. Demand at all of New York City’s food pantries and soup kitchens has spiked since federal food stamps were cut on Nov. 1. The cut — which affects nearly all of the nation’s 48 million food stamp recipients — amounts to a loss of $29 a month for a New York City family of three. On the shoestring meal budgets of food stamp recipients, that’s enough for some 20 individual meals, according to the New York City Coalition Against Hunger.

The food stamp cuts are occurring even though need is still high and opportunity low. In a report released today, the Coalition estimates that one-sixth of the city’s residents and one-fifth of its children live in homes without enough to eat. Those numbers have not improved over the past three years. The lack of economic recovery for low income New Yorkers is at odds with gains at the top of the income ladder, reflected in soaring real estate prices, rising stock prices and big Wall Street bonuses.

"GOP Alternatives to Obamacare"

Tom Tomorrow:

We should be talking about increases in Social Security, not cuts...

The initiative supported by Senators Tom Harkin, Sherrod Brown, Bernie Sanders, Elizabeth Warren and other reliable liberals to change the conversation about Social Security from cuts to the need for increases in a program where the typical senior gets less than $1500 a month for their retirement has freaked out the "serious" people at the Washington Post. The Professor responds. Paul Krugman @ NYTs:  

The Washington Post editorial board wants to cut Medicare and Social Security. That has been its consistent position as long as I can remember. And what it advocates, always, are cuts in benefits, not costs — that is, while it may give lip service to efforts to control health-care costs (which seem to be going surprisingly well, in one of the untold success stories of Obamacare), what it has pushed repeatedly are things like a rise in the Medicare age. These are the kind of moves that are considered serious inside the Beltway. And as you might imagine, the Post has gone wild over recent suggestions that Social Security should be expanded, not cut.

But perceived seriousness is not the same as actual seriousness, which depends on the facts. We now know that raising the Medicare age is a truly terrible idea, which would create a lot of hardship while making next to no dent in the budget deficit. And the central premise of the latest editorial — that the elderly are doing fine — just isn’t true.

The Post writes:

The bill’s authors warn of a looming “retirement crisis” because of low savings rates and disappearing private-sector pensions. In fact, the poverty rate among the elderly is 9.1 percent, lower than the national rate of 15 percent — and much lower than the 21.8 percent rate among children.

This suggests that Social Security is doing a good job of fighting poverty as is and that those gains could be preserved in any attempt to trim the program.

"Wall Street Isn't Worth It"

Economist John Quiggan @ Jacobin:

---

The financial sector has grown massively since the 1970s, whether size is measured in terms of the volume of transactions, the number and remuneration of highly skilled professionals, the share of corporate profits, or, most importantly, the political power of the finance capital. As Frase observes, referencing Felix Salmon, the huge returns extracted by this sector distort the distribution of income for the economy as a whole. The market return on any activity must be adjusted for the cut taken by the financial sector. This fact makes the attempt to assign ethical status to marginal productivity academic, in the worst sense of the term.

Taking this further, any strategy for the Left that yields more than modest changes in the distribution of income, wealth and power, must involve a direct conflict with the financial sector, and must imply a substantial contraction in the size, wealth and power of that sector. A necessary condition for such a strategy to be feasible is the premise that the incomes flowing to the financial sector come at the expense of the rest of the economy, and in particular, at the expense of working people.

The Damage Done...

Professor Krugman @ NYTs:

Five years and eleven months have now passed since the U.S. economy entered recession. Officially, that recession ended in the middle of 2009, but nobody would argue that we’ve had anything like a full recovery. Official unemployment remains high, and it would be much higher if so many people hadn’t dropped out of the labor force. Long-term unemployment — the number of people who have been out of work for six months or more — is four times what it was before the recession.

These dry numbers translate into millions of human tragedies — homes lost, careers destroyed, young people who can’t get their lives started. And many people have pleaded all along for policies that put job creation front and center.

John Stewart takes down Obamacare's critics - must see!

The Daily Show
Get More: Daily Show Full Episodes,The Daily Show on Facebook