Tuesday, May 26, 2009

Water: Public Good

The privatization of Milwaukee's Water Works would be one of the City's biggest budgetary, security, and policy mistakes ever made. Privatization schemes do not work. Water is a vital recource - becoming moreso by the day. Water is a public good that should remain under the supervision of the public sector.

Monday, May 25, 2009

Race To The Bottom

Bill Foy, a retired Menomenee Falls investment banker, opines in the Milwaukee Journal Sentinel that Milwaukee is unappealing to business because of card check, prevailing wage standards, mandated sick leave, property taxes, and the Milwaukee Public School system.

Is this investment banker really preaching to us, "...look beyond our present, personal gratifications and to consider how best to sustain and grow our business base for our long-term benefit and that of our children"? Is that what the financiers were practicing these last 30 years? Was is that forward-thinking, love-the-children mojo that culminated in the destruction of the world economy in 2008 and the near-Depression conditions we're in now? It's funny to see businessmen, again and again, failure after failure, still telling the rest of us how everything ought to be.

The problem is that we don't have federal standards regarding incentives and development. If we did, we wouldn't need to worry about prevailing wages and such because that would be the national standard. A model of labor and business working in cooperation - producing needed products and services, equitably sharing in the gains, and exporting this policy worldwide with our trading partners - lifting all boats. As opposed to our current development policies which are seeing too many citizens' economic boats capsize. When did we decide an honest day's work wasn't worth an honest day's pay?

To say mandated paid sick days are part of the problem is disingenuous at best. How can sick days, a policy only developed in the last year, be part of a long-standing business impediment problem? Mandated paid sick day policies are not yet implemented. Some communities in the Milwaukee area have already banned them. Conversely, 9 To 5 has found no negative effects from the enactment of sick days; the results have been positive.

Card check is another policy that has not even been enacted. These conservative businessmen are afraid of things that aren't even there. More than serious business impediment issues, Foy's complaints seem to just be proactive griping - getting the typical business-friendly talking points out there to frame and steer the debate.

We have only exacerbated the public school issue by implementing various semi-privatization schemes. Following private-sector models have not led to school improvement - as with health care, retirement, the airlines, etc. - though its proponents demanded it would. This looting of the public coffers has allowed private agencies to divert funding from public schools to unsupervised, untested, and underperforming voucher schools.

And, as I've written about here before, focusing on property taxes as if they were the only taxes paid is just plain sloppy analysis and presentation. As if property taxes were the only taxes we had to worry about. Property taxes are also part of a much broader discussion: how immensely an important source of revenue they are, what they pay for, the tax incidence - who the burden falls upon, policies they support, and how they've changed over time.

If we continue to follow the lead of these Captains of Industry, these Free Marketeers, we're going to be a nation of Walmart workers. We're supposed to be leading the world with a smart, efficient, sustainable model of growth enabling a high standard of living. But since we became enraptured with The Market we're racing backwards toward lower wages, poor health care, and without any pension or chance of decent retirement. This seems to be the "growth" model Foy and his ilk want us to continue to pursue. Why wouldn't he? He and his bretheren have made out like bandits off such policies while the workers below them were the ones having to provide the sweat, take the cuts, and make the sacrifices.

For Further Reading:

The Institute for Wisconsin's Future has admirably reported on: a) the falsehood of Wisconsin as a "tax hell," b) how the corporate sector underpays taxes by $1 billion, c) many corporate tax avoidance schemes, and d) correcting the many myths about "burdensome" property taxes.

Sunday, May 24, 2009

Who Could Have Known?

Economists, pundits, CEOs and financiers who should have recognized and helped prevent the economic bubble (which we're now trying to clean up) "missed" it because, as Shiller and Thaler would note, they were caught in the psychological fervor of the time. We were in a New Economy, mathematicians had solved risk, and there were gobs of money waiting for the taking. It was the prevailing notion of the day.

Deep down inside, they knew better. But why not milk the system and deal with the consequences later...and then claim, "Who could have known?" [Wink]

Saturday, May 23, 2009

Stink Tanks

The Wisconsin Policy Research Institute (WPRI) - a conservative group, masquerading as a think-tank - has yet another public policy problem (involving public sector retirement accounts) they are courageously willing to solve for us. [We'll put aside the fact that the findings are false, along with the numbers, and we won't mention the obvious bias and lack of any context in their report.]

Ed Garvery, over at Fighting Bob, exposes the quid pro quo between Journal Sentinel writer Alan Borsuk and WPRI. WPRI writes methodologically weak and analytically sluggish reports, Borsuk pens a front-page story about their crucial findings. Usually WPRIs "reports" are conservative talking-points, masked in a for-the-good-of-all, Paul Revere type of moment or scenario. They are the good guys exposing the waste and corruption in public policy. In actuality, they are using clever rhetorical devices to wrap classic conservative mantra in populist clothing.

Their reports generally are regurgitations of typical conservative talking-points: taxes are bad, government is wasteful, public sector employees are overly rewarded, the market will solve everything, the private sector is the epitome of efficiency, etc.

I know times are hard at the newspapers. But reporters really need to be able to analyze the difference between a party-propaganda piece and actual research. I know it's easy to just get a few quotes from the report's author, bullet a few of the findings, and knock a couple of witty one-liners out for a quick, yet incisive story. But this muddling of the debate by reporters trying to show two sides to every story (or create a second side for controversy and sales) has lowered the level of discussion and wasted precious time on numerous issues as we've been sucked into frivilous debate where there should be none.

WPRIs role is like that of a lawyer - to introduce doubt. They don't want honest and open discussion, they just want their way. And, if the newspapers bite every time WPRI throws out some red meat, in the form of one of their "reports," WPRI can steer the discussion and influence public opinion - often incorrectly and in inequitable ways.

Thirsty Suburbs

A May 13 Journal-Sentinel editorial, Unwarranted, chastised Clean Wisconsin for intervening, on behalf of the environment, in Waukesha's attempt to obtain diverted water from Lake Michigan. The paper concedes Clean Wisconsin meant well, but their input was unnecessary. We don't need debate, "pressure politics," or public education when we're dealing with such a non-issue like water?

But [thinking about the bigger picture] why not - regarding these water-starved areas - make them institute growth boundaries, population or usage limits, as a prerequisite of any water diversion? Obviously mother nature never intended such intensive uses and such concentrations of people in these areas. Also, the price should be much, much higher. Water is a vital resource becoming more and more scarce for certain communities. Those located in unsustainable areas should pay the real cost of obtaining diverted water. Meaning, a huge amount, an amount that encourages conservation and development in more sustainable areas.

Friday, May 22, 2009

(Un)Shared Sacrifice

Ed Garvey (at Fighting Bob) takes, supposed Democrat, Governor Jim Doyle to task for proposing to solve Wisconsin's budget problem by cutting school aid, laying off state workers, and cutting local government aid. I've previously posted on this topic. As Ed says, "Lead or get out of the way."

Sort of related: how is it that we can "bail out" banks and insurance companies (even though the problems were totally creations of their own doing), yet we cannot provide financing to prevent massive state and local budget cuts/lay-offs (which provide the workforce, services and institutions local citizens and infrastructure depend on)?

Data Doldrums

John G. Craig Jr., president of Pittsburgh Regional Indicators, penned a May 16, Milwaukee Journal Sentinel article about many economic lessons Milwaukee could learn from Pittsburgh. All-in-all this was an admirable and informative piece. But to what ends?

The major misleading perspective of the article is its "regional" usage. Most cities and their suburbs do not have concerted efforts to attract business and maintain services - regional governance. In fact, they are usually in direct competition. [Think about the millions the City of Milwaukee spent to move Manpower from Glendale to within the City limits. Millions for no economic growth whatsoever. Merely to get Manpower on the Milwaukee tax roll. A realignment, not growth.]

So, when recommending responses to certain "regional" economic problems, who are supposed to enact these solutions? These types of comparisons are fine for Minneapolis, Indianapolis, and Louisville which have regional governing bodies in place. But comparisons and recommendations beyond cities and suburbs with regional structures can be misleading. Not to mention factors such as a city's age, annexation history, etc. And, to surmise from regional data that all the underlying components of that data (city, suburb) are on the right track could be mistaken.

Pittsburgh's central city has lost 45 percent of its population since the 1970s, compared to Milwaukee losing only 20 percent. The number of employed residents in the City of Pittsburgh has declined by over 30 percent since the 1970s, 23 percent for the City of Milwaukee. And, the City of Pittsburgh population is 311,000; while the City of Milwaukee has 602,000 people. Employment growth over the last decade was -4.5 percent for the City of Pittsburgh, and -9.3 percent for the City of Milwaukee. The City of Milwaukee employs about 240,000 compared to Pittsburgh's 140,000.

CityMayors just released a report showing that Pittsburgh is the most (short-term particle) polluted city. According to Men's Health, Milwaukee is the 11th fittest city, Pittsburgh ranks 25th. Milwaukee was also recently named to the Global Compact City program (water technology) of the United Nations. The indicators can go both ways depending on what we’re looking at, and where (city v. suburb).

There are many best practices that any city and suburb could follow and would most likely reap some benefits. But, for the most part, our economic development paradigm today is a zero-sum game. Benefits for one city, suburb, or region are the losses of another. This is the heart of the matter we must address if we want healthy growth for our cities, suburbs, and regions.

For Further Reading:
Corporate Blackmail
Doing Development Right
Legalized Bribery
Nudging Away Nonsense

Wednesday, May 20, 2009

Defending Dick

President Obama will be giving a televised national security speech tomorrow. Simultaneously the networks will also be airing a speech by...wait for it...Dick Cheney!?!? Liberal media? Gimme a break! [Hat tip to John Amato at Crooks and Liars]

Down With The Sickness

A recently released report from the Center for Economic and Policy Research finds that, "the U.S. is the only country among 22 countries ranked highly in terms of economic and human development that does not guarantee that workers receive paid sick days or paid sick leave."

James Kwak, at Baseline Scenario, offers some comments on a posting from Ezra Klein regarding this issue.

Sunday, May 17, 2009

Retirement: An Antiquated Notion

Even though corporate welfare exceeds social welfare and even though our private sector's inefficiencies and mismanagement has destroyed the world economy, somehow our budgetary problems are always the fault of unions and public sector employees. We must stop them. Elected officials that do not want to impose more burdens on all the lavishly rewarded public workers cannot be taken seriously in their budget-reducing measures. The answer to our problems is to make livable - yet hardly extravagant - paying jobs less so by encumbering them with additional retirement and medical expenses? What if America actually practiced, and exported, an employment model of a livable wage, guaranteed health care, and a modest retirement package? I'm surprised the all-knowing market hasn't incentivized, naturally and magically, such common-sense human decency.

Outsourcing Boondoggle

A Milwaukee Journal Senitnel editorial raises an issue I've analyzed many times in previous posts - why do government agencies keep contracting work out to private companies (downsizing public sector employment in the process) when there are no apparent cost-savings?

The Real Cost Of Water

Richard Meeusen, CEO of Badger Meter Inc., shares my opinion that many cities are selling their water too cheaply.

Saturday, May 16, 2009

Goodbye, Governor Ass-hat & Texas

Secede. Go ahead.

Cut To Death

Governor Doyle wants to cut state spending for public schools and local aid by 5 percent. This is exactly the wrong action to take during this downturn. A previous post illuminated some of the problems with this approach.

Friday, May 15, 2009

Stay Classy, GM

Whether or not this was just a public relations position Fritz Henderson - GM CEO - was delivering, he took a classy stance with Glenn Beck regarding the auto industry and the UAW. [Paraphrasing] "They [the UAW] have been more a part of the solution than part of the problem." All the while Glenn Beck attempts baiting Henderson and smearing the unions. And, Glenn's closing admonition classically encapsulates the expanse of Beck's boundless stupidity.

Lay-off The Furlough Talk

Lay-offs and furloughs are terrible "solutions" to budgetary issues facing all levels of government. Of course there are efficiencies that can be gained in some departments; this is true of private and public actors. But there are better ways gather revenue without destroying good jobs.

Governor Doyle, Mayor Barrett, and Scott Walker have all threatened public workers with furloughs and outright termination.

As Roger Bybee and Michael Rosen have both identified, this will depress purchasing power at exactly the time when the economy needs it the most. Laying-off and furloughing public workers will only decrease their spending, hurting more businesses and causing more unemployment.

These factors also relate nicely with an earlier post linking to a piece by James Rowen. It's easy to pile-on public workers and criticize. But suddenly when the services and amenities that public workers provide are gone, then we're complaining, "Where's the government?" Such as when we complain about garbage pick-up, snow removal, and library and park closings. The more we allow the public sector to be starved of necessary resources, the more we lower our own standard of living and the attractiveness of our communities.

Another piece I wrote linked to a New York Times op-ed by Robert Butterworth and Charles Intriago. They recommend seizing the assets and finances of the scoundrels whom have defrauded and manipulated their way to gains over the past decade-or-so bubble economy. This is a much better way to shore up public finances - by confiscating misappropriated gains.

And, as I've written about many times, an obvious route to solving budget woes is by: a) making sure corporations are paying their fair share, and b) removing exemptions and tax avoidance schemes. These few items would produce billions for public agencies.

Finally, it's time we removed the mandate that states must balance their budgets. Government entities, like any large business, have times (such as during recessions) when it is necessary to operate in the red, to continue making investments to see things through the tough times, so that there will be a bright light at the end of the tunnel.

Taxation Perspective

James Rowen, at The Political Environment, pens a short piece reminding readers of some services paid by our taxes.

Thursday, May 14, 2009


What possible reason could 60 senators have for opposing a 15 percent cap on credit card interest rates? It appears, as Dick Durbin has stated, the banks do own Washington.

All Aboard

Road are expensive to build and maintain. And, it appears, we're not maintaining them very well. "In many urban areas nationwide, 30-60 percent of roads are in poor shape," according to an American Association of State Highway and Transportation Officials report.

One solution, which would also be good for the environment, is to invest more in rail networks. A study by the HNTB Corporation found rail networks induce development and increase property values.

Here is a recent article from John Gurda, Milwaukee historian, on his experience with the rail system in Zurich. Elisabeth Rosenthal, in a piece for the New York Times, tells the story of Vauban, Germany, and their experiment as a car-free city.

Tuesday, May 12, 2009

Social Security Scare Tactics (Again)

I really wish the press would stop spreading the doomsday scenarios and outright lies about a program - Social Security - that is perfectly solvent, without any changes, until the 2050's. Second, it would also be nice if the press stopped lumping Social Security and Medicare together as of they were one program; they're not.

Getting health care reform - universal or single-payer - would solve many of the cost issues with Medicare. As Peter Orszag, White House budget director, and Dean Baker, co-director Center for Economic and Policy Research, have said, this is a health care problem not an aging problem.

Restricting corporate hegemony over our government, thus reducing volitility in the markets, would relieve any shortcomings facing Social Security, by assuring stabile employment and a more equitable distribution of earnings.

For Further Reading:
Budget For Fiscal Year 2009
Cutting Our Benefits
Facts and Figures

Long-Term Budget Outlook
Media's Social Security Deception
Medicare Choice Plus
Prophets of Doom
Social Security Byte
Social Security Is Fine
Social Security Isn't Broken
Social Security Program Solid

Social Security, The Wrong Retirement Crisis
Social Security WMD Story
Truth Behind Social Security, Medicare Alarm Bells

Ventura Frankness

Jesse Ventura telling it like it is to Larry King, on the View to Elisabeth Hasselbeck, and to Sean Hannity at Faux News.

Never Too Much With Rush

Adam Serwer, over at The American Prospect's Tapped blog, has a nice correction to the Wanda Sykes bashing over her remarks about the hallowed Rush Limbaugh.

Eat Endangered Species?

Hat tip to David Neiwert at Crooks and Liars for this post. I never thought someone could out-stupid Glenn Beck. Way to sink to the occasion, John Stossel.

Nuclear Waste

Shahla Werner, Sierra Club's Madison chapter director, penned an informative article in the Milwaukee Journal Sentinel, Nuclear Energy Too Risky When Efficiency Works. Nuclear energy shouldn't even be an option. We're supposed to be moving toward sustainability. Nuclear, coal, and oil are yesterday's energy.

Banning Development Incentives

Kenneth Thomas, associate professor of political science at the University of Missouri-St. Louis, wrote a telling op-ed for the St. Louis Post Dispatch on development incentives.

I just commented on this subject a few days ago.

One can only hope President Obama's Urban Czar moves forward on this issue.

Monday, May 11, 2009

Las Cucarachas

Here is an impassioned, well-written artile by John Drew, of UAW, about the travesty of taxpayers bailing out Chrysler - while they are now planning on building a new plant in Mexico, yet closing down the plant in Kenosha.

But this is exactly why the deal went through. American workers had to be expendable, production had to be allowed to use new cheaper (Mexican) labor. All in the name of competitiveness and cost reduction. Somehow, executive salaries are never part of this restructuring.

The middle-class American worker must continue to make sacrifices so that hedge fund managers and bankers don't have to.

Sunday, May 10, 2009

Tax Boogey Man

An excellent article by Paul Weldman, from The American Prospect, putting taxes into perspective.

Saturday, May 9, 2009

Retraining Is Good, But...

As Susie Madrik of Crooks and Liars states, what jobs are we training them for?

As I posted earlier, it's not as much a lack of skills as a lack of jobs that is the problem.

Friday, May 8, 2009


Why can't the majority of our auto workers be retrained for producing green vehicles or other green technologies (solar, wind turbines, etc.), along with retooling the factories? The government could use stimulus money to establish a management team to retool the factories and workers for these new production possiblities (rather than just throwing money at Fiat and making the workers continue to experience paycuts and layoffs). Then after getting the new endeavors up and running, sell them off to the highest private bidders. This would be similar to what many have suggested we do with the banks (nationalization) to get them healthy again. We already have a defacto policy that does this, the problem is we (the taxpayers) have no control and only get to experience the losses rather than the upside.

Thursday, May 7, 2009

Auto Asphyxia

Allowing the auto companies to slowly crumble (while bailing out financiers and banks) and their workers to be laid-off, or take substantial wage cuts, is having a devastating effect on communities countrywide, as predicted.

Will Power

Will Allen is an inspiration to Milwaukeans and citizens all over the planet. He has developed a successful and sustainable business. In the process, he is also revitalizing underused areas, creating jobs, and providing nutritious food. Kudos to an entrepreneur and visionary we can all be proud of.

Wednesday, May 6, 2009

Legalized Bribery

Rocky Marcoux, commissioner of the City of Milwaukee's Department of City Development, couldn't be more wrong in his Milwaukee Business Journal op-ed, City Should Offer Incentives.

"In the past, developers have criticized Milwaukee officials for being reluctant to provide incentives to get a development to occur in the city," states Marcoux.

So what? This whole incentive game is blackmail and is terribly inefficient. It makes cities bid-up giveaways to corporations dangling jobs in front of city leaders. It leads to less-than-optimal locational decisions, and often cities never recoup the subsidies. Local leaders, legislators, and public servants should be cooperating with national leaders to enact federal legislation banning such zero-sum games.

$5 million to Astronautics? $1 to $20 million to Boston-Power? What is the cost-per-job? How much does the subsidy offset the supposed tax-base maintenance? Are there any clawbacks in the agreements? Is there a minority or prevailing wage clause in any construction agreement? Are there any provisions that protect the taxpayers?

Marcoux declares, "Milwaukee must make sure it is offering whatever makes sense to retain and lure new business." Now there's a concrete development policy to get behind.

During the last presidential campaign all the candidates talked about small business being the incubators, the place where job growth occurs. Yet, for development policy we are supposed to subsidize large companies to lure and retain jobs, no matter what the cost? Why not just make more funding available for small businesses and small business entrepreneurs? [Although it must also be noted, small businesses aren't quite the job machines politicos make them out to be.]

The more large companies we base our economy on, the greater chance for catastrophic consequences when the economy experiences downturns and these large companies layoff workers, offshore jobs, or go out of business. Just as we've seen with the "too big to fail" problems of the present.

These policies are blackmail and bribery. Often the only ones benefiting are the company executives receiving the subsidy and the city development cadre strengthening their private sector connections.

For Further Reading:
Corporate Blackmail
Doing Development Right
Foreign-Owned: Yes. American-Owned: No.
Great American Jobs Scam
Investment Incentives
Miller Pork
Pabst Farms Mirage
Public-Sector Economic Development
This Is Economic Development
Walmart Propaganda

Wisconsin CEO Performance Evaluation

Below is a performance evaluation of Wisconsin CEOs; their company; total compensation; compensation change from 2007; and company stock value change between Jan. 1, 2008 and Jan. 1, 2009 [although a typical U.S. business fiscal year begins Oct 1st and ends Sept 30th].

Gale Klappa; Wisconsin Energy; $9,875,302; -16; -6
Jeff Yabuki; Fiserv Inc.; $6,119,720 ;-14; -29
Jeffrey Joerres; Manpower Inc.; $5,743,775; -41; -38
James Ziemer; Harley-Davidson; $5,625,595; 27; -56
Kenneth Manning; Sensient Technologies; $5,570,291; -47; -8
Timothy Sullivan; Bucyrus International; $4,801,383; 25; -60
Michael Sutherlin; Joy Global; $4,431,854; -25; -63
Paul Jones; AO Smith; $4,382,669; 14; -14
Nicolas Pinchuk; Snap-on; $3,957,423; 37; -18
Kevin Mansell; Kohl's Corp.; $3,488,721; 54; -21
Curt Culver; MGIC Investment; $3,118,969; -10; -81
Mark Furlong; Marshall & Ilsley; $2,346,665; -31; -48
Michael Crowley Jr.; Bank Mutual $2,175,820; 15; -3
Steve Smith; Journal Communications; $1,445,957; 22; -67
Thomas Florsheim Jr.; Weyco Group Inc.; $1,281,734; 60; 12
Douglas Gordon; Waterstone Financial; $1,096,665; -3; -75
Richard Meeusen; Badger Meter; $1,020,316; 16; -23
Kerry Woody; Ladish Co.; $876,528; -20; -61
Helen Johnson-Leipold; Johnson Outdoors; $795,278; -37; -70

Only 1 saw the value of his/her company's stock rise (Thomas Florsheim). Although, his compensation rose 60 percent, while the company's shares only rose 12 percent.

Of all 19 CEOs, only 3 saw their compensation decrease more than the company stock value. 8 saw their compensation rise even as their company stock lost value.

Yet more proof that CEO pay is not based on the performance of the company.

Although it can also be said that stocks are not a good indicator of the performance of a company because of the fraud, gimmicks, and accounting chicanery involved in their trading.

Tuesday, May 5, 2009

Obliged to Avoid Taxation

WOW! This is powerful stupid.

To correct Ms. Burnett, considering the tax burden rather than just the highest marginal rate, as a Center on Budget and Policy Priorities report found, "Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent."

For Further Reading:
Corporate Tax Avoidance in the States
Corporate Tax Decline & U.S. Inequality
Double Taxation Double-Speak
How Progessive is the U.S. Federal Tax System?
Most Firms Pay No Income Tax

Cousins Center

The Journal-Sentinel feels Cardinal Stritch backing away from their intention to build at the Cousins Center site is a blow to St. Francis and the area. They feel the proposal was a "perfect fit" for the site and all involved.

They highlight that the development would have provided "community benefits and jobs." But what about the community benefits of open space and tranquility. Not to mention a habitat for the wildlife of the area.

What is the obsession with growth, for growth's sake, and paving over all open space?

Couldn't redevelopment of brownfields or blighted buildings in the city, especially in the most depressed areas, be an even better development? This could involve the resuse of unused or underused existing facilities, a revitalization of an impoverised section of the city, and the maintenance of green space.

This converges nicely with the push for development of county grounds at the edge of the city for expansion of UWM facilities. Let's reuse existing buildings within the city before we bulldoze and pave green space.

Paranoia Overdose

It's almost become cliche here that whenever John Torinus or Patrick McIlheran write a column in the Milwaukee Journal-Sentinel I have to spend a post correcting their many fallacies.

Well, Pat has done it again. So here I go.

In his piece - Not against taxes, just an overdose - McIlheran mumbles on about teabaggers and deficits. Let's do a point-by-point critique of the many falsehoods, embellishments, and misdirections.

First, I'd like to point out McIlheran's go-to research group, The Tax Foundation. Their work has been discredited over and over by many much more thoughtful social scientists. His continual reliance on them in article after article only weakens his arguments.

He then refers to deficit spending as a "deferred bill". Deficit spending is an investment like any other. Corporations use internally financed capital expenditures to grow their businesses (Henwood, Wall Street, p. 3). When the private sector is not providing the demand stimulus in the economy, the only entity left to do such is the government. Deficit spending is an investment in the future. Conversely the Republicans' tax cutting has led to increased inequality, allowed our infrastructure to crumble, and increased deficits with no tanglible improvements to show for it.

Next, Pat tried to revive the story that the Teabag fiasco was a grassroots endeavor. This is a display of delusion and cognitive dissonance on a grand scale. (Maybe Pat needs a history lesson regarding the original Tea Party.) He goes on and on about citizens rightfully uprising over onerous taxation. The Teabag theater was organized by well-funded Washington lobbyist groups - Freedom Works (Dick Armey) and Americans for Prosperity (Newt Gingrich). And, most importantly, President Obama has not increased taxes on 98 percent of the population. To keep claiming the opposite of reality just so that these right-wingers can hear themselves speak really does a diservice to the country, and muddles any attempt at a civil discourse - which seems to be their aim.

McIlheran then goes on to compare all Wisconsin municipalities with Washington County to prove there can be good government with little cost. Pat also states that these people have no problem with the share of taxation consumed by the Fire and Police departments. In the City of Milwaukee, the proposed 2009 total budget for general city purposes is $590,058,363; total wages and salaries for the police department are $159,065,554 - 27 percent; for the fire department $71,126,450 - 12 percent. I doubt most people know that fire and police consume 39 percent of the total budget for general city purposes. Across the U.S. these two departments, on average, account for 25 to 75 percent of budgets.

Moreover, Washington County (pop. 129,277) doesn't have the population, amenities, infrastructure, and concentration of poor people, like the City of Milwaukee (pop. 602,191). If we expand to Milwaukee County, the population is 953,328. So, comparing Milwaukee to Washington County is deceptive at best. And, to think that the surrounding communites do not benefit from the many amenities - the stadium, Calatrava, the lakefront, the theater, the riverwalk, the festivals, etc. - provided by the City is ridiculous.

Mr. McIlheran then bellows about an "ever-growing, unlimited government". Talk about paranoid. Government runs up its largest deficits and expands in size the most under Republican administrations. It also performs the worst economically under right-wing rule.

He then goes on to make snide insinuations toward "nationalized health care and vast new energy taxes." I guess he feels our health care system that doesn't cover 50 million people and cost twice as much as any other industrialized nation is just fine. He also must think our dependence on foreign oil and the fact that its pollution is destroying the planet isn't anything to worry about either.

He routinely comes back to the (I'm paraphrasing) 'government is taking your money' mantra. The fact is, most people feel government is a necessary regulator of the market, a provider of base services and institutions, and a means to ensuring equality of opportunity among its citizens.

McIlheran closes his rant by complaining about "subsidizing, taxing, regulating, and bailing out every corner of life." This completely ignores the fact that a lack of enforcement and regulation enabled our current mess. It also ignores the fact that the majority of government subsidization is corporate welfare. Only 1 percent of state and local budgets go toward assistance to the poor. And, the ones bailed out thus far have been corporate behemoths and the largest banks...the (auto) workers have been the only ones whom have had to sacrifice.

It is really work to correct and keep up with all the misinformation Teabaggers like McIlheran can imagine.

Monday, May 4, 2009

Corporate Tax Crackdown

Another good move on the part of the Obama administration.

Sunday, May 3, 2009

Performance Evaluation

The highest paid CEOs & their 2008 performance as measured by stock prices (from January 1, 2008 to January 1, 2009):

Chesapeake Energy, Paid: $112.5 million, Stock: down 56 percent
Motorola, Paid: $104.1 million, Stock: down 60 percent
Walt Disney, Paid: $51.1 million, Stock: down 23 percent
Goldman Sachs, Paid: $42.9 million, Stock: down 57 percent
American Express, Paid: $42.9 million, Stock: down 62 percent
Citigroup, Paid: $38.2 million, Stock: down 75 percent
Apache, Paid: $37.2 million, Stock: down 21 percent
Philip Morris, Paid: $36.9 million, Stock: down 11 percent
Juniper Networks, Paid: $36.1 million, Stock: down 36 percent
JPMorgan Chase, Paid: $35.7 million, Stock: down 32 percent

Regulating Hedge Funds

It's a start.

Small Salamander*

Unbelievable! Republicans are criticizing the White House press? Now? Suddenly the press is doing a terrible job and is a public relations wing of the White House? Are these guys for real?

The press is largely horrible, I agree. But to claim it's a one-way street favoring the Democrats is disingenuous at best. If anything the corporate press has been overly deferential to the Republicans, while being overly questioning of the Democrats.

And, really, who gives a @#$* about what Newt thinks anymore? Go away, *Newt!

Political Hack Boosterism

Is the Milwaukee-Journal Sentinel implicitly supporting Paul Ryan and Scott Walker in their attempts at advancement within the Republican party and on the national stage? It doesn't seem a day, or at least week, goes by without some glowing article about one of these characters in the paper.

In the article, Walker Gets Strong Support At GOP Convention, they report on Scott Walker's popularity at the state Republican convention, but no mention is made of his disastrous policies and performance for Milwaukee County.

Ryan Draws Inspiration From Family, Mentors is a big warm literary hug from the Journal to Paul Ryan. It's tells of his family, previous jobs, and his economic views. They mention his work at Empower America, a right-wing lobbying group, and for Sam Brownback, an ultra conservative Kansan. Of course none of this is put in context or given any weight, in that these experiences may give insight into how Ryan wants to or would govern. He has a degree from the University of Miami Ohio in economics, so this makes him a serious economist alongside Paul Krugman, John Keynes, and Joe Stiglitz. Or at least that's how the Republican party and the Journal-Sentinel have been selling the story whenever Ryan spouts something regarding taxes or deficits.

Ryan Shines As GOP Seeks Vision is the extended version of the Journal slobbering all over Paul. At one moment the article states, "Ryan has clearly made the bet that he can offer detailed, controversial, conservative ideas (personal accounts for Social Security; vouchers for Medicare; lower tax rates for the wealthy; freezing most domestic spending) and still prosper politically, as long as voters see him as substantive, civil, inclusive and attentive." But then the story primarily goes back to patting Ryan on the back, and doesn't really delve into the fact that this is the same old party line coming from a younger face.

A whole compendium of Walker falacies, errors, and other stories can be found at The Political Environment. They also have plenty on Paul Ryan. I, too, have a previous post on Walker's ineptitude, and two previous posts on Ryan (here and here).

To me, this supposed reporting is more correctly described as boosterism. Blatant boosterism from a media organization for political figures. It's as if they are reporting GOP talking points. I hope the Journal follows suit with glowing and loving pieces about Jim Doyle and whomever may be running against Paul Ryan next.

Saturday, May 2, 2009

Twelve Bad Democrats

Twelve Democrats with some explaining to do:

Senator Max Baucus (D-MT) (202) 224-2651

Senator Michael Bennet (D-CO) (202) 224-5852

Senator Robert Byrd (D-WV) (202) 224-3954

Senator Thomas Carper (D-DE) (202) 224-2441

Senator Byron Dorgan (D-ND) (202) 224-2551

Senator Tim Johnson (D-SD) (202) 224-5842

Senator Mary Landrieu (D-LA) (202) 224-5824

Senator Blanche Lincoln (D-AR) (202) 224-4843

Senator Ben Nelson (D-NE) (202) 224-6551

Senator Mark Pryor (D-AR) (202) 224-2353

Senator Arlen Specter (D-PA) (202) 224-4254

Senator Jon Tester (D-MT) (202) 224-2644


Some economists have purported the ideas that domestic spending has shifted away from manufactured goods, growing international trade is at most a minuscule reason for the declining manufacturing employment, and the decline in employment is a part of a natural, comparatively advantaged, order involving a rise in demand for skilled workers.

The last point was directly addressed in a previous post, The Skills Crisis and Job Training, "There is little evidence of absolute declines in cognitive or hard skills in the United States or generally poor performance relative to other advanced industrialized countries," as reported by associate professor Michael Handel.

Another relevant question is whether or not this supposed rise in demand for skilled workers was simply the by-product of having more college graduates available for the workforce. It's the chicken or the egg question. Also, even though a country moves toward higher skills and education among more and more of its citizens, does that necessarily mean that the productive use of the workforce also follows in-line by only providing services and offering more "professional" employment opportunities?

No matter how advanced a country might be, every citizen cannot be a lawyer, doctor, or CEO. As I reported in The Skills Crisis and Job Training, Marc Levine finds, "Over the next decade the Bureau of Labor Statistics projects the greatest job growth in occupations requiring a high school education and short-term, on-the-job training."

Manufacturing productivity has been consistently increasing throughout the years, but demand supposedly hasn't kept up. Josh Bivens dissects and dismantles this (and the other claims) idea of decreased demand in his report, Shifting Blame For Manufacturing Job Loss. He finds:

Trade imbalances in manufacturing accounted for 59 percent of the decline in employment.

Demand for manufactured goods as a share of total demand has grown over the past 10 years.

The rising trade deficit in manufactured goods accounts for 58 percent of the decline in manufacturing employment between 1998 and 2003.

The use of contract, part-time, and temporary workers by manufacturing companies also hurts wages and overall employment numbers. A development obviously connected to increased productivity and cost-cutting initiatives at firms (induced by global competition of cheaper labor).

Some also explain the (mythical) decline in domestic spending for manufactured goods with the supposition that goods have become cheaper. But this is a glaringly, sweeping generalization. Which goods? Cheaper for whom? Sure VCRs are relatively inexpensive, but cars are the second largest purchase for most families, and the price of most cars is near the yearly median income of most workers. And, let's not forget that wages have stagnated for the majority of workers since the 1970s.

Dean Baker writes, "At the end of the 1960s, nearly twenty-nine percent of workers in the U.S. were employed in manufacturing...part of the decline of manufacturing is attributable to the decisions of firms to move operations overseas...the U.S. has been running an annual trade deficit in excess of $150 billion for the last several years. If this trade deficit were eliminated it would create over two million additional manufacturing jobs, and increase of almost fifteen percent."

The trade deficit has been accelerated by the high value of the dollar versus other currencies.

"The American dollar had been high through much of the Bretton Woods period, but in 1979 it took off and rose some 60 to 70 percent...Manufacturing thus did not decline as a consequence of natural causes, but was hastened to the edge of the cliff and pushed off by the high dollar," concludes Jeff Madrick. As a share of overall employment in the Midwest, manufacturing has fallen from 29 percent in 1969 to 12 percent in 2007. Declines were pronounced during the Clinton administration because of Robert Rubin's high dollar policy.

Howard Wial and Alec Friedoff, in a report for the Metropolitan Policy Program at the Brookings Institution, found that, "Despite these job loses, manufacturing remains a major driver of the nation's economy and the economy of the Great Lakes region."

Manufacturing represents 20 percent of GDP in Europe, 14 percent in the U.S., 33 percent in China and 18 percent worldwide. David Huether of the National Association of Manufacturers, in a New York Times article by Nelson Schwartz, explains, "Manufacturing makes up two-thirds of U.S. exports and contributed more to GDP growth over the last 20 years than any other sector of the U.S. economy. Our share of global manufacturing output has remained steady at 20 to 23 percent over the past decade."

In a recent posting, Failure Bonuses, I noted that the Economic Policy Institute had found:

Of the 20 richest countries tracked by the U.S. Bureau of Labor Statistics, the United States ranks 17th in hourly pay for production workers in manufacturing.

Of the 16 nations with higher compensation for production workers in manufacturing, the United States ranks behind only Ireland (a nation with a manufacturing workforce less than 2% as large as that of the United States) in terms of “value-added per employee” (a rough measure of productivity).

The combination of relatively low compensation and high productivity means that U.S. manufacturing leads the world in terms of competitiveness of per unit costs of manufacturing output.

If the wages claimed by managerial and non-supervisory labor in the United States were the same as the median of comparable countries, U.S. manufacturing would have a 6.4% cost advantage over major trading partners.

Robert Scott elucidates, "Manufacturing supported 14 million jobs in 2007, about 10.1 percent of total employment...generating $1.6 trillion in GDP in 2006 (12.2 percent of total U.S. GDP)...gross output of $4.5 trillion in 2005, by far the most important sector of the U.S. economy in terms of total output." In Wisconsin, manufacturing generated 20.8 percent of GDP, $47 billion.

Manufacturing is a hugely important industry. It deserves our attention and support. To simply allow it to steadily decline is a failure of national, industrial, economic, and security policy. Manufacturing is an important element of our economy and a source of many well-paying jobs. Manufacturing also allows us, as a nation, to innovate and produce products sought after the world over. Doing nothing and allowing America to become a nation of service-providers leaves our choices to the whims of foreign producers.

After all that has happened since the economic collapse of 2008 (the fault of our "professional" financial service providers - Wall Street), I think it's time we rediscovered production of tangible objects. I'd much rather be helping assembly line workers get back on their feet and securing America's future building and providing things - such as wind turbines and electric cars, rather than seeing my money gambled on the black hole that is Wall Street.

For Further Reading:

Friday, May 1, 2009

GOP Plan?

Ed Schultz has Grover Norquist on to discuss the GOPs problems and the Republican "plan" for health care. Grover gives the standard Republican boilerplate - tort reform (less litigation) and less regulation (less state health-care mandates) are the solutions to our health care conundrum. I'm glad at the end of the interview Ed points out that less than 1 percent of total cost of health care are due to litigation.

They also touch on the Republican's "new" group, the National Council for a New America, which consists of Newt Gingrich, John McCain, Eric Cantor, Bobby Jindhal, John Boehner, and Jeb Bush. A cast of fresh faces it is not. The same old guys spouting the same old rhetoric.

The Skills Crisis and Job Training

The myth of a skills crisis among workers sure has gained steam among municipal leaders, the business community, and even some (so-called) academics. Although, in reality, this phenomenon is more of an urban legend. As Marc Levine [a former employer], professor of history and urban studies at the University of Wisconsin-Milwaukee, reports in a Milwaukee Journal-Sentinel article, “Over the next decade the Bureau of Labor Statistics projects the greatest job growth in occupations requiring high school education and short-term, on-the-job training.” According to the Census Bureau, 80 percent of the City of Milwaukee population has at least a high school education. The total number for the U.S. is 84 percent.

Gordon Lafer, associate professor at the University of Oregon, in his expansive and definitive work on job training, The Job Training Charade, states, “Job training has served primarily as a form of political diversion. At both the federal and local levels of government, the rhetoric of job training has encouraged a discourse about poverty and unemployment which minimizes the public’s expectations of government. If poverty were viewed largely as the result of a shortage of jobs, and the government were held responsible as employer of last resort, scores of mayors and governors would have been thrown out of office in response to the dislocations of the past two decades. By instead promoting a view of poverty as largely rooted in the educational, cultural, and moral failings of poor communities, the assumptions underlying training policy suggest that the government could not be expected to provide more than marginal assistance toward solving this problem.” (212)

The market and the government are doing all they can or are able to do. The heart of the problem is the motivation, laziness, and inherent inabilities of poor people. Or some variation of this is what job training proponents would like us to believe.

As noted in this review of Gordon Lafer’s work, “The commonsense idea that there are plenty of jobs to go around if only the unemployed and the poor had the motivation and the skills to fill them…The number of decently-paid jobs that were available over the last twenty years has never been more than a fraction of the number needed to raise the poor beyond the poverty level…Except for certain professional positions that require specialized and highly controlled education and that compromise a very small portion of the labor market, variables such as gender, age, race, and whether or not workers are unionized, are more important determinants of the levels of employment and wages than are the levels of education.”

David Howell, professor at Milano The New School for Management and Urban Policy, observes, “In short, employers in the 1980s responded to increased competitive pressures by taking a low-road human resource strategy, one aimed above all at reducing current labor costs…In a great many industries, workers learned new skills to work with more advanced production technologies – but their higher productivity was not reflected in higher wages…In the 1980s, higher skills have simply not led to higher wages. In industry after industry, average educational attainment rose while wages fell.”

The disappearance of good-paying jobs has more to do with a decrease in collective bargaining (unionization) and anti-worker public policy initiatives rather than a lack of skills in the workforce.

Michael Handel, associate professor of sociology and Northeastern University, finds, “There is little evidence of absolute declines in cognitive or hard skills in the United States or generally poor performance relative to other advanced industrialized countries." (Annual Review of Sociology, Jan. 2003)

For Further Reading:
Bush’s Call For Job Training: Cruel Joke on Unemployed
Is There A Skills Crisis?
Worker Skills and Job Requirements: Is There a Mismatch?

Having It Both Ways

Republicans complain about Obama’s pump-priming: trying to get the economy moving forward with the only entity able to invest at this point – the government. They duplicitously complain that the taxpayers will end up paying for this. (Putting aside that this argument shows an obvious lack of understanding about investment and multiplier effects), this completely ignores the Republican’s own deficits that they’ve run up over the last three decades. This also completely disregards the fact that if the government were to do nothing: unemployment would be increasing even faster, more businesses would be failing or filing for bankruptcy, more people would be losing their jobs and filing for unemployment and in need of government aid for medical care – who do they think would be paying for these costs?

A Just Society

Some thoughts on wage equity, fairness, efficiency, and our societal structure during this period of budget cuts, cost-benefit analysis, and general search for cost efficiency:

I feel an honest day’s work deserves and honest day’s pay. Yet those with the most back-breaking, demeaning jobs are also paid the most demeaning wages. While those performing in the most reprehensible and unproductive ways (Citigroup, A.I.G., et al) are paid the most spectacular sums.

The wealthiest never have to worry about their health care. And they don't seem to realize the connection between their earnings and a healthy workforce. Single-payer or universal health care would allow a more healthy and productive workforce by enabling workers to see a doctor whenever they feel "under the weather," rather than struggling through illness, missing more work, and, in the end, losing more productivity than they otherwise would have. This would also help decrease the present astronomical cost of health care.

Next, we should strengthen Social Security, making it pay more of a livable stipend for retirees. This could be accomplished by removing the cap on the amount of income taxable for Social Security. Alongside this, we should reinvigorate the pension system as a supplement to Social Security. And, if workers chose, they can also put aside a percentage of their income in 401Ks. This would, no doubt, improve the stability of retirement for a majority of citizens. It would also permit many to retire sooner, allowing younger workers earlier entrance to decent paying jobs. This too would help cut costs. New workers are not paid as much as someone who has been on the job for thirty years.

Another easy cost-cutting measure is the removal of the bloated fringe benefits that now seem to come with every two-bit "management" position. Unless a person is on-call, needs to make communication every hour or so, needs to drive to various locations daily for their work, etc. – car and cell phone allowances are perks that could be immediately slashed from public and private budgets. Most working people already have a cell phone and a car. Those that drive occasionally can turn in an expense report for the miles of gas they use at those times. The same can be done when one makes a business call from their cell phone that is absolutely necessary.

We have deluded ourselves into the belief that we cannot get by without every pampering of modern-day society in every moment of our daily lives. Every manager, executive, council man, and the like, does not need a car allowance, an expense account, a business-paid cell phone, and on and on. This is terribly inefficient and encourages wastefulness. This is especially true in a country that preaches to the rest of the world about how cost-effective we are.

Next, there are managers and executives that are making five or more times as much as their underlings, usually simply because of seniority. Now, I agree seniority, time, and experience should count for something. But should they even make twice as much? The public sector seems to manage this somewhat well – because they have to directly answer to taxpayers. But the private sector is out of control (even though the public sector heavily supports them through exemptions, tax breaks, subsidies, etc.). What they add to the real economy in no way justifies their pay. How (by anyone thinking sanely) can millions of dollars in bonuses be given to the workers of a company that is essentially bankrupt (hello A.I.G.)? How is this justified?

The same can be said of most of the private sector which, unbeknownst to most citizens, is indirectly massively financially supported by taxpayers: oil companies, sports teams, the entertainment industry, Wall Street – to name a few.

We’ve essentially structured our own warped caste system here in America. The majority of workers – the 85 percent making under $100,000 – must continually pay more in health care costs or go without, take pay cuts or see no wage increase at all, and continually (due to our volatile economy) fear for the security of their job. Conversely, those at the top of the ladder are continually subsidized, given bonuses, bailed out, allowed to take huge pay-days (even when they oversee a fall in their company’s stock value), and make obscene amounts of money, that their workers (the ones actually allowing them to exist) can only dream of.

The solutions to this travesty are not complicated. It would involve the Masters of the Universe trimming back on their decadent lifestyles and redistributing some of the bounty, but since they also control governments and world markets, they will not allow this to happen. This is class warfare. Until people realize this and use their representative democracy to install politicians and policies that regulate and redistribute for a more equitable society, we will continue to see this volatile, topsy-turvy economy that benefits the few while punishing the rest.

Until we curb corporate greed, workers will be forced to make all the sacrifices and take all the hits. Until corporations are made to pay their fair share of taxes, workers will continue to bear the cost of a semblance of a just society. Until corporations are regulated in a manner consistent with our principles, they will continue to pillage and plunder, reaping all the rewards while leaving all their mistakes to be cleaned up by the taxpayers.