Sunday, March 10, 2013

More false hope

If you haven't heard, the Dow Jones reached its all-time high, over 14,000, last week. Such indicated to many people that the economy is finally on its way back after a six-year (or thereabout) slump because, finally, people with the means to hire will do so.

I think that such optimism, which will be unfortunately short-lived, is unfounded and shows just how much the mentality of "supply-side economics" has taken hold.

One thing we need to understand: "Creating jobs" is not the primary end of employers -- making money is. That is their right, as no one goes into business for any reason except to make a profit, expanding payroll simply a result of doing well.

Over the past three decades, however, "doing well" simply hasn't translated into jobs, and I don't suspect that will change now.

Productivity among American workers is at an all-time high. Automation has eliminated the need for some kinds of employment. And, these days, companies are doing their best to shed payroll, not least because health benefits cost so much. (Which, ironically, is due to the focus on speculation that caused the shift in the first place.)

The so-called jobless recovery of the Bush II years thus should have exposed as a lie the idea of putting the economy in the hands of "job creators," the closest thing our country has to an aristocracy, being the key to improved performance. "All employers are rich people," you might say. True, but not all rich people are employers, and we began seeing in the early 1980s that the policies that directly benefited them primarily didn't "trickle down" to everyone else.

What we need to do is to find ways to get more money into the hands of people who need it the most -- of course that does mean work, but jobs these days are pretty hard to find. Any suggestions?

Monday, March 4, 2013

The back story on the 'sequester'

As I write we're looking at a major shutdown of parts of the Federal government due to last week's "sequester." I'm sure you, and a lot of people, are a little tired of "Washington" not being able to get its act together and come up with some solutions to the perpetual stalemate between President Obama and Republicans in Congress. "Surely they can come up with something," you insist.

But you need to understand one thing, contrary to conventional wisdom: This fight is not, and never was, about "spending," despite what the Republicans will tell you. It's about politics -- more accurately, just what and whom that money is being spent on. There's a reason why the late Thomas P. "Tip" O'Neill, a former Speaker of the House, said, "All politics is local."

That is to say, "What's in it for me?"

I'm serious about this -- after all, that's the way our political system was built so that we feel that we have a stake in the way things are run. Remember that we don't have just one nation -- we have 435 different regions of the country, all with different, and often contrasting, agendas. Plus, we have a culture of telling the government what it should and shouldn't do. Bottom line, the chaos we're seeing now is precisely because of that diffusion of power.

This is why the tea-party movement, which when it got started in 2010 promoted itself as an independent grass-roots force (which couldn't be further from the truth), couldn't but fail. "Cut spending," it demanded.

But it never mentioned exactly what should be cut and by how much. After all -- and this is rarely addressed -- one person's "waste" may be another's livelihood. If you think I'm just blowing smoke, try closing a military base and see just how many folks get up all bent out of shape. (It happens all the time here in Pittsburgh whenever people talk about closing a major base near our airport. Why? It provides jobs.)

The "fiscal conservatives" should have learned that lesson in 1995, when the government ran out of money and shut down, not once but twice. Recall that President Clinton during that budget battle wouldn't knuckle under to GOP leadership's demands, offering a budget that resulted in a surplus but preserved the social programs that it wanted gone. In the end it got most of what it wanted, but Clinton won the PR war and another term in the process (and also got him impeached because he had the gall to be reelected).

Similarly, Obama may have tried to set a trap for congressional Republicans, whom he had to have known aren't inclined to work with him or anyone else; in saying in the fall that this impasse surely wouldn't -- couldn't -- happen, he was either being extremely naive or cunning. It's too soon to tell if this political chicanery, if that's what it is, will work given that few people haven't already taken sides. But as I indicated before, folks will focus on what benefits them personally before anything else. Advantage the president.