Thursday, December 22, 2011

Executive Disorder

Tom Barret, a Democrat, spoke like a Democrat, "I think it would be great if he [Scott Walker] could find another line of work," when asked about the impending recall of Scott Walker.

Chris Abele, Milwaukee County Executive and supposed Democrat, said, "I haven't been staying up nights thinking about it. It's not a driving thing." Asked whether he felt Walker should be recalled, Abele also demurred. "I don't know. It's not something I have a burning passion and opinion about."

The article notes, "Abele as county executive has sought to cast himself as an independent and a pragmatist for whom partisanship is secondary." This is not leadership.

You are a public servant...and you have no opinion on collective bargaining or the governor? As the county executive, you have no opinion about how the state is governed?

As Joseph McCartin states, "In 1959, Wisconsin became the first state to enact legislation recognizing the rights of government workers to bargain collectively." Overthrowing a 50-year labor standard for Wisconsin, a policy never mentioned by Scott Walker on the campaign trail, doesn't make Abele ruminate  even in the slightest?

Not to mention, Walker killing trains, broadband, windmills, numerous federal aid packages and a host of other productive policies and projects that were in the works until Scott Walker took over. Abele has no passion nor thinks about any of this?

Abele wasn't elected to parrot the right-wing with talk of no new taxes and cuts, cuts, cuts. Milwaukee County citizens would like some guidance and direction: provide good, efficient services to the taxpayers and speak to the most pressing and important needs of our community. This whole Walker debacle fits into the latter category, and Abele should be thinking about it.

Happy Holidays







Americans For Pretense

American's For Prosperity (AFP) is pushing to put and end to Tax Incremental Financing (TIF). They feel this tool of economic redevelopment gives the businesses in the tax incremental districts an unfair advantage over other businesses not in the districts.

I'm not going to discuss TIFs and their viability. (I am also somewhat skeptical of their efficacy and efficiency.) The thing about this situation that jumped out at me is the utter hypocrisy and obliviousness of AFP.

Do Americans For Prosperity feel that their million dollar political campaigns for their causes give them an unfair advantage over others whom can't afford to spend that much? I'm sure now that they've decided TIFs are unfair, they've also realized how unfair our pay-to-play political system is and they will be urging public financing of elections from now on.

I'm sure they now understand that because they can get access to politicians and lobby in favor of their causes, that they have an unfair advantage over those who can't. Seeing they seem so concerned with fairness, I'm sure they will be altering their mission and doing all they can to give a voice to the voiceless and the needs of the underrepresented 99 percent.

Buck You

The Journal Sentinel continues their advertising campaign periodic reporting for the Bradley Center. Don Walker writes, Operating Income Up, But Challenges Remain. (From fiscal year June 2010 to June 2011 operating income for the Bradley Center increased from $14.7 million to $16.3 million. A 10.9 percent increase.)

The thing that really irritates me about this whole stadium subsidization situation: these captains of industry, these entrepreneurs, these businessmen whom always complain about entitlements, aid to the poor, and workers wages (to name a few of their complaints), these same people have no problem putting their hand out and demanding taxpayer money for their private playgrounds and projects. They're so smart  and innovative, except when it comes to paying the costs of their own business.

Exemplified by Marc Marotta, the chairman of the Bradley Center board, "The next five to seven years, there has to be a public-private effort." Strange how the private sector believes the public sector exists to service them specifically. Yet, when these private players are asked to pay their fair share of taxes, excuses for why they shouldn't have to pay more could fill all the seats at the Bradley Center.

Workers need to sacrifice. They should pay for their own retirement and health care; employers should no longer bear any responsibility. Social Security, Medicare, and unemployment insurance should all be diminished...we just can't afford it.

But...we need a private-public effort when tax dollars are being redistributed upward. When unemployment is at double-digits, people are losing their homes, and others are going without needed medical care, we can't use those same tax dollars to help out. No, in that case, we're broke. But when you can afford a boardroom full of attorneys, we will find the money to help build your stadium. We can raise taxes to pay for Miller Park, but we can't do the same for our park system or public transportation.

And, it's odd that even though the NBA season started late this year, the City of Milwaukee didn't collapse without the Bucks playing their basketball games. According to all the blather being whipped up, one would have thought that the, roughly, 20 cancelled games would have left Milwaukee resembling Thunderdome.

Midweek Reading

An Inconvenient Truth
The Case For Congestion
The Corporations That Occupy Congress
2011 Milwaukee: Year In Review
The Origins Of Financial Innovation
The Past, Present, & Future Of Venture Capital
The Price of Extremism: Wisconsin's Economy Under The Walker Administration
The University & the Start-Up: Lessons From The Past Two Decades

Tuesday, December 20, 2011

U.S. Real Estate

Commercial Real Estate Prices for United States




Delinquency Rate On Loans Secured By Real Estate, All Commercial Banks




Loans Secured By Real Estate, All Commercial Banks 




Owners' Equity in Household Real Estate - Net Worth - Balance Sheet of Households and Nonprofit Organizations 




Real Estate - Assets - Balance Sheet of Households and Nonprofit Organizations



Sunday, December 18, 2011

Corporate Tax Dodgers

Citizen For Tax Justice has released an extensive report detailing corporate tax dodgers from 2008-2010.

Corporate Taxpayers & Corporate Tax Dodgers 2008-10

Press release with key findings:

A comprehensive new study that profiles 280 of America’s most profitable companies finds that 78 of them paid no federal income tax in at least one of the last three years. Thirty companies enjoyed a negative income tax rate over the three year period, despite combined pre-tax profits of $160 billion. These are among the findings in “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” released today by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author.  “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

The study examines 280 corporations, all from the Fortune 500 list.  All of the companies were  profitable in each of the last three years and provided sufficient and reliable information in their  financial reports about their pretax U.S. profits and their U.S. federal income taxes. Corporations are lobbying for lower corporate rates and an exemption for profits they shift  offshore. McIntyre, however, says “Our study provides proof that too many corporations are  already being coddled by our tax system.” Findings in the report include:

 The average effective tax rate for all 280 companies in the study over the three year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.

 78 of the companies enjoyed at least one year in which their federal income tax was zero or less.

 30 companies enjoyed a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.

 Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010.

 Wells Fargo tops the list of 280 U.S. corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks from the U.S. treasury in the last three years.

 Pepco Holdings had the lowest effective tax rate of all the companies in the study, at negative 57.6 percent over the three year period. Some companies within sectors fare worse than others. For example, the report finds that FedEx paid a 0.9 percent tax rate over the three year period while its competitor, UPS, paid a 24.1 percent rate.

 While retailers and wholesalers in the study generally pay average effective tax rates of about 30 percent, Amazon.com paid a rate of only 7.9 percent on its $1.8 billion in profits from 2008-2010.

 Financial services received the largest share (16.8 percent) of all federal tax subsidies over the last three years. More than half of federal corporate tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.

 The top ten defense contractors saw their combined tax rate decline from 19.3 percent in 2008 to a mere 10.6 percent rate in 2010.

 U.S. corporations with significant (ten percent or more of their total worldwide profits) foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.

The Time Is Now?

Are you kidding me?

On the list of priorities for public dollars - where public investment should be steered - building a new basketball stadium shouldn't even make the list.

But Michael Hunt, of the Journal Sentinel, feels the time is now to address a new arena for the Bucks.

The article notes:

"Marotta, a former Marquette basketball player, is getting it started by evoking the name of former Wisconsin state Sen. George Petak, whose vote saved Miller Park.

"Where would we be without a guy like Petak? Here was a guy who cared more about doing the right thing than being re-elected," Marotta said.

"He lost his seat, but if he hadn't taken that vote, we wouldn't have the Brewers here. And Milwaukee would be a significantly diminished town. We do have a lot of challenges. There's no denying that. We have significant economic challenges within the city. We've got public infrastructure needs. We've got libraries that need to be funded.

"The way to continue to do that and grow as a community is to invest in our entertainment, cultural and sports assets. That's what attracts business to come and expand here. It makes it a great place to live and work."

Entertainment, cultural and sports assets sure do make a city more tolerable. But Milwaukee isn't Las Vegas - lets not pretend these are the economic engines of Milwaukee's economy. We may have tourist attractions, but our economy isn't driven by the tourism industries. Manufacturing; trade, transportation, and utilities; information; financial activities; professional and business services; and education and health services all employee more people than our leisure and hospitality industry.

It's fine to look at our stadiums and conventions centers at some point. Preferably, when our economy is on better footing, and taxpayers may be more receptive to such public investment. But, as far as bang-for-the-buck investments are concerned, in helping to get our economy growing again, stadium subsidization has a poor return on investment. 

The time is now for public investment in infrastructure. But it should be in public transportation, energy, water, and education, not sports stadiums.

Free-Falling

David Rohde has an interesting article up over at the Atlantic, Free-Falling In Milwaukee.

Excerpt:

"First, the numbers. From 1970 to 2007, the percentage of families in the Milwaukee metropolitan area that were middle class declined from 37 to 24 percent, according to a new analysis by the Southeastern Wisconsin Regional Planning Commission. During the same period, the proportion of affluent families grew from 22 to 27 percent-while the percentage of poor households swelled from 23 to 31 percent. In short, Milwaukee's middle class families went from a plurality to its smallest minority."

Roads, Roads, Everywhere

With a dying planet and a dying economy, the Wisconsin Department of Transportation decides to double down on pollution and antiquated energy and transportation sources.

DOT kills Hoan Bridge bike lane proposal.

Risky Business

The Journal Sentinel is promoting, again, venture capital.

"The State of Wisconsin Investment Board (SWIB) said it will commit as much as $80 million to Danville, Calif.-based Northgate Capital. This is the first time the $85 billion public pension fund has had the opportunity to invest with the top venture capital pools, which are willing to take public funds' money because the weak economy has made it more difficult for the funds to lure private investors."

"We believe the current venture environment offers an unprecedented opportunity to access top-tier funds and invest into a climate with favorable valuations," Chris Prestigiacomo, SWIB portfolio manager, said. "Both should translate into higher future returns that meet SWIB's fiduciary duty to the Wisconsin Retirement System beneficiaries."


The Whitefish Bay school district's trust fund (along with 4 other districts) wanted to 'get a piece of the action' and leverage funds with some Wall Street high-rollers, with the hopes of cashing in. 

"So an old-fashioned financial romance began: Supply (Wall Street’s hottest financial products) met Demand (school districts seeking to build up their OPEB trust funds). It looked like a perfect match."

"Their trust fund for retirees’ benefits could accumulate almost $9 million in seven years by borrowing and investing $80 million. These CDOs would pay them over 1 percent more than what it would cost to borrow the money. The more the schools borrowed, the more they would make. It was practically free money. What was not to like?"

It didn't quite work out that way. The Wall Streeters made their money; Whitefish Bay, not so much.

"Whitefish Bay and the other school districts got something substantial too: nearly all of the risk. The school districts are about to lose all of their initial $37.3 million. They will also lose another $165 million of the money they’d borrowed from Depfa. As soon as the default rate is reached, $200 million will go to pay insurance claims to the Royal Bank of Canada. And the schools still will owe the full $165-million Depfa loan, and they will still owe on the bonds they had issued to raise much of their $37.3 million in collateral. The risk of reaching total default currently is so high that Kenosha’s entire piece of the CDO investment ($35.6 million) was valued at only $925,000, as of January 29, 2009—a decline in value of $36,575,000. Now the school districts are paying hefty fees not just to bankers but also to lawyers, as they sue to unwind the deal and recover damages."

We've been warned.

Saturday, December 17, 2011

American Inequality



Standards For State Economic Development Subsidy Programs

Good Jobs First has released a new report, Money For Something: Job Creation & Job Quality Standards For State Economic Development Subsidy Programs.

Excerpts:

"At a time when unemployment remains high and states and cities are spending an estimated $70 billion a year in the name of economic development, taxpayers are right to ask if such expenditures are creating a substantial number of good jobs. An analysis of major state economic development programs finds that many subsidy programs require little if any job creation. Fewer than half provide any kind of wage standard for the workers at subsidized companies, and fewer than a fourth require any sort of healthcare coverage."

"These findings come from a careful analysis by Good Jobs First of the most significant subsidy programs in all 50 states and the District of Columbia—238 programs in all, which together cost taxpayers more than $11 billion a year (amounts are not available for 20 of them). The programs include corporate income tax credits (for job creation, capital investment, and/or research & development), cash grants, low‐cost or forgivable loans, enterprise zones, reimbursement for worker training expenses and other types of company‐specific state assistance. (Subsidies that are enabled by state law but whose costs are borne by local governments, such as property tax abatements, are not among the programs examined.)"

"We rate each of the 238 programs on three primary criteria (and several derivative qualities): whether they require recipient companies to meet job‐creation or other quantifiable performance standards; whether the subsidized companies have to pay their workers above a certain wage level; and whether the companies have to provide their workers healthcare coverage or other employee benefits."

"Fewer than half (98) of the 238 programs impose a wage requirement on subsidized employers, and only 53 of those wage standards are tied to labor market rates, which are a more effective benchmark for economic development than fixed amounts that can stagnate in the manner of the federal minimum wage."

"Based on our criteria, the states with the best average program scores are: Nevada (82), North Carolina (79), Vermont (77), Iowa (70), Maryland (68), and Oklahoma (66). The worst averages are: District of Columbia (4), Alaska (5), Wyoming (10), Oregon (13), Washington (18), Hawaii (19) and North Dakota (19). Twenty‐three states score above 40, which is the average for all the states."

Average Hours Worked



h/t The Big Picture

We're Broke

CEO Pay Skyrocketed 27% Last Year

Weekend Reading

Competition Hasn't Worked In Health Care
How Did Fannie & Freddie Become Symbols Of The Housing Bubble?
How Finance Vultures Feed Off The Poor
It's Time To Tax The Church
Questioning The Benefits Of Curbing Short Sales
Rethinking Debt
The Top 1 Percent Since 1990: Getting Richer
Uncertainty & The Welfare Economic Of Medical Care
We Have More Doctors Per Capita Than Ever Before
Why Rich People Don't Create Jobs

Reality & Public Sector Compensation

With election season heating up, Republican myth-making and outright dishonesty can't be far behind. In anticipation of the next round of right-wing attacks on government and the public sector, here is some of the latest research completely debunking the Republicans' attempted deception on government size and public worker pay.

Are Wisconsin Public Employees Overcompensated?
Right-Wing Media Pushing Phony Public Sector Worker Stats
State Budget Deficits Are Not An Employee Compensation Problem
Wisconsin Has Lean Public Sector
Wisconsin Public Employees
Wisconsin Public Sector Workers Are Undercompensated

Race To The Bottom

The former head of Obama's auto task force, Steven Rattner, while speaking at a luncheon in Detroit, expressed that he wished he would have made the UAW sacrifice more.

Rattner also mentioned, "Friends on Wall Street were concerned by GM's earnings and communications with the market."

The three-tiered pay structure has the highest 900 workers making $29 an hour, $16 for those 200 workers in the middle, and $9 for those subcontracted at the bottom. Which means that the top worker has gross earnings somewhere near $60,000 per year; the middle worker somewhere near $33,000; and the bottom somewhere near $19,000.  

The article goes on to note that GM's North American division posted profits of $5.7 billion in the past nine months of this year. So, even though the workers are not making lavish amounts and the company is profiting handsomely, the Wall Street and Republican mindset is on full display - the rich deserve more, while the workers should sacrifice more.

This is class warfare people. Wake up! 

Sunday, December 11, 2011

Economic Engine or Albatross?

Marc Marotta, the board president for the Bradley Center, in the Milwaukee Journal Sentinel, declared the Bradley Center an economic engine.

Most of the workers are non-union, low-wage, seasonal and without benefits. Not the type of jobs most economic development aims to, nor should, create. Most of the millionaire athletes that play at the Bradley Center don't live in Milwaukee - their tax and spending dollars spillover outside Milwaukee. Often, the money spent on sporting events leaks outside the host region.

To be an economic engine, a project has to lure customers from outside the area that would not otherwise be spending money, or induce locals to spend more than they otherwise would. If people decide to go to the Bradley Center rather than a movie one night, there is no growth. This is merely a realignment of leisure spending. The majority of dollars spent at these events are simply a substitution of spending patterns (a basketball game rather than eating dinner out).

And, again, perplexingly, many whom would routinely be lumped in with the ultra-conservative, government-is-bad, no-new-taxes cabal are saying they need public dollars to continue their private entity. So...government can't do anything right, they don't know how to properly spend tax dollars...but when the government is giving millions to stadiums and arenas, they're investing wisely. Yes, screw public transportation, green energy, and modernized sewer and water systems. Sport stadiums are much more crucial to our economic future.

If extra-market forces (taxpayer subsidies) are good when it comes to stadiums, why aren't taxpayer subsidies good for public works programs, light rail, greening older buildings, or facilitating universal health care? Those subjects seem much more important to the average citizen than sporting facilities.

It's also very strange to claim the Bradley Center is an economic engine and then offer up nothing quantitative to back up that claim. But then again, actual studies looking into the effect of stadium subsidization have found that stadiums have little to minimal impact on the local economy.

For Further Reading:
Basket Case
Buck The System
Conclusions On Subsidies For Sports Franchises
Economic Impacts Of Tourism
Sports, Jobs, & Taxes
Stadiums & Convention Centers As Community Loss Leaders
The Stadium Gambit & Local Economic Development
Stadium Swindle

Republican Campaign Strategy #1: Lie

Walker's latest campaign/defense/promotional commercial is packed with lies. A blonde female school board member gushes Republican inanities.
  • Walker has reduced school costs and improved education.
  • Illinois and Minnesota raised taxes and hurt their prosperity.
Yet, actual educators have said Walker's policies are hurting schools. Yes, who would have guessed that removing millions in funding from our schools could actually be counterproductive?

And, according to the last jobs report, Illinois added the most jobs of any state, while Wisconsin lost the most. Again demonstrating that, in our current economic situation, austerity only leads to continued suffering.

Reality, indeed, appears to have a liberal bias.

Saturday, December 10, 2011

Overcompensating?

Johnson Controls reported record sales for the fiscal year ending September 30, 2011. Sales rose 9% in 2011. Earnings rose 19%.

As of September 29, 2010 Johnson Controls stock price was $25.94. One year later, September 29, 2011, the price was $27.40. This was a 5.6 percent increase.

As of December 9, 2010 Johnson Controls stock price was $37.93. One year later, December 9, 2011 the value was down to $31.95. A 15.8 percent decline.

The highest stock price for Johnson Controls, over the past 10 years, was October 22, 2007 at $42.74. Recently, July 11, 2011, the stock price reached $40.85. Considering the current value ($31.95), Johnson stock has seen a 21.8 percent decline since July 2011.

[On March 2, 2009 the stock was down to $9.13, the lowest since September 18, 2000 when it was $7.98.]

Steve Roell, Johnson Controls CEO, saw his total compensation increase from $17.56 million to $22.34 million for 2011. A 27.2 percent increase.

I'll let you decide whether this is a fair compensation. Or, whether "we're broke" and the rich "job creators" are unable to pay a small percentage more in taxes.

Weekend Reading

Bradley Foundation Builds Conservative Empire
For Business, Golden Days; For Workers, The Dross
House Prices & Current Account Deficits
Mackinac Center Emails Reveal True Motives
Quality Doesn't Follow Rise In Voucher Schools
$7.7 Trillion in Secret Federal Reserve Loans To Banks?
State Jobs Carried An Asterisk
Structure Of Excuses
Take A Stand Against School Vouchers
Why School Choice Fails

Why Aren't We Prosecuting Wall Street?



h/t Crooks & Liars

Sunday, December 4, 2011

Ronnie & The Right's Reality Problem

Everything conservative is encapsulated in the mythology of Ronald Reagan. But, as usual with Republicans, their talking-points don't mesh with reality. Most of what they claim to be the Reagan legacy is merely elaborate revisionism detached from actual experience. If we were to look at the list of conservative principles [as mandated by Grover Norquist] - no new taxes, shrinking the size of government, and an aversion to debt and deficits - Reagan would fail every one. 

It's actually funny that the party that hates Hollywood chose a former actor to be their posterboy for the Republican platform; nevermind that Reagan himself failed at this platform. As another election cycle begins to heat up, I thought it would be good to shine a light on the often repeated, yet completely false, right-wing Reagan talking-points.

"Ultimately, Reagan signed measures that increased federal taxes every year of his two-term presidency except the first and the last."

"Federal spending grew by an average of 2.5 percent a year, adjusted for inflation, while Reagan was president."

"The national debt exploded, increasing from about $700 billion to nearly $3 trillion."

"The number of federal employees grew from 2.8 million to 3 million under Reagan."

"During the Reagan administration the number of families living below the poverty line increased by one-third."

"His administration was responsible for numerous brutal actions in Latin America, including massacres in El Salvador and the war against Nicaragua."

"Unemployment jumped to 10.8 percent after Reagan enacted his much-touted tax cut, and it took years for the rate to get back down to its previous level."

"Reagan signed into law a bill that made any immigrant who had entered the country before 1982 eligible for amnesty."

"Reagan fought a proxy war with the Soviet Union by training, arming, equipping, and funding Islamist mujahidin fighters in Afghanistan."


Sources:
Five Myths About Reagan's Legacy
Reagan & The Joy Of Myth-Making
Reagan Revisionism & Reagan Mythology
The Ronald Reagan Myth
Ten Things Conservative Don't Want You To Know About Reagan
Top 10 Reagan Myths

Saturday, December 3, 2011

Put That In Your Pipeline & Smoke It

We're broke.  We're drowning in debt. We must sacrifice.

We don't have money for living wages, improved transportation infrastructure, or green energy projects.

But we have - seemingly unlimited - money for continuing tax breaks for the wealthy, corporate giveaways, continued building of new roads to nowhere, and billions for filthy energy sources.

To help the already heavily subsidized fossil fuel industry, we (along with TransCanada) are now planning on building a pipeline to deliver crude from Canada down to the Gulf Coast.

"There will be jobs!"

Indeed. But not nearly the amount the boosters claim.

And, wouldn't green infrastructure jobs be a better investment for the future of the U.S.? Wouldn't such a green investment place the U.S. and our industries in a better competitive position? Couldn't such a green initiative be the leap forward (which the U.S. needs) to positioning America as an attractive place to live and work versus our global competitors?

We can continue subsidizing old, obsolete industries and maintain our steady downward spiral into insignificance. The other option is to actually put our money where our mouth is by building sustainable, efficient infrastructure and assuring the relevance of the U.S. into the next century.

For Further Reading:
Economic Value Of Green Infrastructure
Dirty Oil From Canada To Texas
Green Infrastructure
Green Water Infrastructure
Pipeline Bad For Environment


Weekend Reading

Death Of The Fringe Suburb
Double Taxation Of Corporate Profits & Other Fairy Tales
George Will Confused By Numbers At The Post Office
Mining Bill Rushed Before Governor's Office
Myth Of Profligate Euro Zone Countries
No New Drugs? Blame Wall Street
The Obama Spending Non-Surge
Skilled Jobs Go Begging? Not Quite
Small Business & The Millionaire Surcharge
The Squeeze On State Workers
Top 0.1% Of The Nation Earn half Of All Capital Gains
Walker's Union-Busting Bill Challenged In Court
Who Does Not Pay Taxes? Kimberly Clark, Brunswick, Rockwell, & Snap-On

Thursday, November 24, 2011

Walker Losing Jobs

Wisconsin has more October job losses than any other state.

How can that be? We're open for business!

For Further Information on Recalling Scott Walker:
United Wisconsin
Recall Headquarters

Fund Fail

The Journal Sentinel in really pushing a venture capital fund for Wisconsin. It would create "a more vibrant entrepreneurial system."

It would be nice if the article mentioned how much the state already spends in this capacity. Or how much the state spends, in general, on job creation, corporate tax breaks, subsidies, and other giveaways that supposedly create a better business climate and thus jobs.

But no. Wisconsin ranks in the middle (25th) nationally in venture capital invested and, therefore, increasing venture capital must be a priority. There's no real discussion of the difference between the 25th ranking and the 10th ranking, nor any discussion of where the editors think Wisconsin should be. How big is venture capital in proportion to other investment options? Why must venture capital be the focused policy option?

Just saying something will work, or simply wanting it to, doesn't make it so.

For Further Reading:
Casino Capitalism
Cut Out The Private Sector Middle Man
Deja Vu
Doing Wisconsin

Weekend Reading

Are Wisconsin Public Employees Over-Compensated?
Can The Middle Class Be Saved?
Does 'Right-To-Work' Create Jobs?
Does The Middle Class Have To Take A Hit?
The Myth Of Income Inequality, Courtesy Of AEI
Scarce Job Opening In The U.S.
Skewed Economic Rewards In The U.S.
What Would Keynes Do?

Adversely Impacted

"Major League Baseball has commissioned a study that will look at the direct and indirect economic impact of Miller Park," reports Don Walker, of the Journal Sentinel.

"This study, presumably, would produce evidence of tangible economic benefits of a stadium."

It's not much of a study if you already know what your outcome and conclusions will be. Let's study Miller Park. Miller Park has a big economic impact. Our study will show Miller Park has large economic impact.

Sophisticated analysts have reached a consensus on the impact of stadiums - and it's nothing close to the glowing, overblown claims of stadium boosters and promoters. In fact, most studies have shown that money spent subsidizing stadiums would be better spent on other, more pressing and more stimulative investments.

For Further Reading:
An Examination of Sporting Event Impact Studies

This Week In Extraordinary Delusions

Walker says he's not responsible for recall effort against him.

For Further Information on Recalling Scott Walker:
United Wisconsin
Recall Headquarters

Thursday, November 10, 2011

Sunday, November 6, 2011

Sunday Reading

Biggest public firms paid little U.S. tax
Has America become an oligarchy?
How corporate tax breaks could hurt small business
Income inequality is not a myth
Making globalisation work for workers
Soaring suburban poverty catches communities unprepared
Social Security and the federal deficit

The Consumption Imperative

Insight from James Livingston:

  • Private investment doesn't actually drive economic growth.
  • Between 1900 and 2000, real gross domestic product per capita grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What's more, in 1900 almost all investment came from the private sector whereas in 2000, most investment was either from government spending or residential investment, which  means consumer spending on housing, rather than business expenditures on plants, equipment and labor.
  • According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we have.

Saturday, November 5, 2011

Immobility

David Callahan has a great article, The Income Mobility Myth.

  • The majority of the new jobs created during the presidencies of Bill Clinton and George W. Bush were low-wage positions with no benefits.
  • Today, about a third of poor families with children include a parent who is working full-time.
  • The conservative mobility narrative trumpets the wealthy as "job creators" and agents of opportunity. But that story is exactly backwards in some respects. Corporations and the wealthy have embraced a set of strategies for improving the bottom line that have spelled downward mobility for many workers. For example, when a company moves its back office accounting work overseas, executives and shareholders in that firm may get a nice return as profits go up. But a bunch of college grads lose their jobs.
  • African-Americans and Latino households lost over half their median net worth during the most recent boom and bust - even as the Wall Street insiders who invented the subprime securitization machine and capitalized predatory lending outfits got unbelievably rich.
Go read the entire article.

Bluff Stuff

Articles regarding the bluff collapse in Oak Creek:
Bluff collapse came weeks after Congress rebuffed EPA on coal ash rule
Collapsed bluff got pass from state regulations
Bluff collapse at power plant sends dirt, coal ash into lake

For more on why we need the EPA and regulations on dirty industries like mining:
Tests find toxins at Flambeau mine

Journal Sentinel Likes Walker's Package

More astute pronouncements from the Journal Sentinel editorial board, Compensation package works for Wisconsin. They want to assure readers, "The Walker administration's compensation plan takes a reasonable approach to pay and overtime."

"It reduces the chance for overtime abuses, give managers the tools they need to reward the best employees and saves taxpayers money."I'd like to see what percentage of the budget "overtime abuses" actually account for. Overtime pay is part of a contractual negotiation reflecting the total compensation of an employee; if we looked at overtime recipients years of service and hours worked, what do those numbers say? It's easy to throw out a big number and get taxpayers riled. A job of the media is to put things within a larger context and give a true representation. This is merely sensationalism without context...scapegoating.

The editorial conveniently glosses over the pay for political appointees issue. That can be handled at a later date; it's not a big deal. Nothing to see (or talk about) here, move along. Even though they then, later in the article, while discussing merit pay, note that, "There is legitimate concern that merit pay could turn into rewards for political or personal favorites, but thats seems unlikely." Yes, Scott Walker has only tried to reward every crony he knows in his first few months in office. But such favoritism seems unlikely? The articles says, "As the plan is explained on the state's website, the work of an employee would need to meet certain standards." Oh, "certain standards." That clears things up. Now I feel better.

They then repeat well-worn woe for the long-suffering private sector, "Such increased costs for benefits and cuts in pay have been routine in the private industry for several years." Um, where the hell has this editorial board been? Public workers in Wisconsin have seen increased health care costs over the past few years, they've also been furloughed and laid off. This is on top the recent wage freezes, lay offs, and increased pension and health care cost mandates. And, this punish-the-public-workers sentiment completely ignores recent studies showing that a public sector worker's total compensation is LESS that similarly educated and experienced private sector worker. The Journal wants public sector workers, whom already earn less, to be the ones to sacrifice more, while also pumping more lies into the debate - that public workers haven't yet sacrificed and that they earn more.

And, since it's an editorial board standard, they commend the private sector, yet again, "As many in the private sector understand, merit pay hikes can be useful tool for increasing efficiency and productivity, and the overtime changes are especially warranted." Geez, one would think with this omnipotent and sensible private sector we would have eradicated poverty and unemployment by now.

Making sure no public worker is paid at a higher rate for overtime work is very important to the editorial board. This abuse must be stopped. Again, no numbers are given to support such apoplexy. And, even more perplexing, I never see the board pontificating about excessive executive pay, the millions made by CEOs whom have lost their company money or presided over a decline in their stock's price, the tax avoidance schemes of the well-to-do, or any of these abuses of the system. Always punishing the peasants, but never questioning the kings.

It Was Wall Street

Numerous cranks are continuing their efforts to revise the cause of our current economic downturn. They claim (wrongly and completely unsupported by evidence) that the government - Fannie Mae, Freddie Mac, the Community Reinvestment Act, etc. - was responsible for the economic recession.

It wasn't inept/crooked Wall Street, bankers, or ratings agencies selling junk mortgage-backed-securities and collateralized-debt-obligations.

New York mayor Michael Bloomberg, the 12th richest person in the U.S., is the most recent revisionist attempting to rewrite history.

The definitive takedown of this nonsense is David Min's Faulty Conclusions Based On Shoddy Foundations. And, the documentary Inside Job is a great primer on the real culprits behind our current crisis.

For Further Reading:
An Autopsy of Fannie & Freddie
An Obtuse & Deceptive Accounting
The Banker, In The Office, With The CDO
The Big Lie Goes Viral
Brooks Discovers It Was All Fannie's Fault
Did Fannie Cause The Disaster?
Dispelling More Campaign Myths
Drowning In Delusions
Fannie, Freddie, and You
Fannie & Freddie Did Not Cause The Housing Crisis
Fannie & Freddie Did Not Start The Crisis
Fannie & Freddie's Future
The Myth of Fannie, Freddie, Barney Frank & The Housing Bubble
Peter Wallison Discusses Fannie & Freddie For The American Spectator
Things Everyone in Chicago Knows
Why Wallison Is Wrong About The Genesis Of The Housing Crisis

Revenue, Not Spending



Thursday, November 3, 2011

Mining For Jobs

The Journal Sentinel editorial board opined support for relaxed mining laws for a possible mining site near Ashland, Wisconsin. They believe less regulation on mining will create jobs, and if done properly won't hurt the environment.

They admit the Wisconsin outdoors are a major source of pride, tourism and income. But the editorial board feels we can deregulate whilst protecting the environment.

And, if ifs and buts were candy and nuts, everyday would be Christmas.

By making mining laws weaker, we would be weakening environmental laws, and thus, harming the environment.

Yes, new mining would create jobs. But so would greener, sustainable projects, which wouldn't compromise the future of Wisconsin's environment. And, how long will the mining last? What are the guarantees? The article mentioned glowing projections for job numbers and pay, but will there be clawbacks or penalties for the mining company if they don't meet these goals?

The article states, "Too much red tape and too many bureaucratic delays can be deadly. That's why the state should change its laws." The "red tape" encumbered by mining companies was put in place because of the deadly consequences of their past actions. Mining is a filthy business. The disaster that occurred at WE Energy's plant (where hazardous materials ended up in Lake Michigan after a bluff collapse) in Oak Creek is another recent reminder that maybe we should take a pause before pushing forward with more potentially destructive legislation and deregulation all in the name of supposed job growth.

High unemployment should not force us into the dilema of weakening environmental laws for the sake of jobs. It's time we take a high-road strategy to development and jobs. This is the only planet we have.

Buck The System

According to the Journal Sentinel, Business leaders begin effort to help Bucks, Bradley Center.

"Last week, a small group of influential business leaders and the MMAC began talking in earnest about a more modest campaign to provide support for the Bradley Center and its biggest and most important tenant, the Milwaukee Bucks."

The article informs, "The group is in the process of finding ways to encourage MMAC members to look for sponsorship opportunities at the Bradley Center or buying tickets or suites at Bucks' games." The cynical side of me thinks this is just PR talk and they're merely setting the stage for asking the public to help fund a new stadium or for Bradley Center improvements.

Ted Kellner, a Bradley Center board of directors member, equates (wrongly) that MMAC "help" directly led to the Brewers to their recent success. MMAC pushed for Miller Park, it was built, and the Brewers made the playoffs.

[Funny, but aren't the business folks the ones always claiming throwing money at something doesn't solve anything. When it comes to schools, poverty, etc., more money is a waste in their opinion. But, it seems, when it's public money financing their own private playgrounds (stadium, convention center, etc.), more money equals success.]

The major reasons for the Brewers' success is a great minor league system, good scouting, and Attanasio's $90 million payroll. If new stadiums were the answer, every city would be a winner. Since 2000, more than 30 teams have new stadiums. Yet, they're not all winners.

Herb Kohl, owner of the Bucks, is the third richest member of the senate and worth hundreds of millions of dollars. It really puzzles me that we subsidize millionaire sports team owners. They are millionaires and it's their business. Let them pay for it!

Cut Out The (Private Sector) Middleman

State Senators Tim Cullen and Dale Schultz have jumped on the venture capital bandwagon. Their recent Journal Sentinel opinion piece touted a venture capital bill for Wisconsin. Venture capital is described by Investopedia as, "Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity."

The jobs are right around the corner.

"We believe that properly structured and administered by non-politicians, the venture capital bill will be our most important long-term jobs legislation of the year," state Cullen and Schultz.

Huh? The most important jobs legislation? If that's the case, we're in real trouble. Venture capital is a small part of capital markets and much less efficient than the glowing mythology created by venture capital firms and the media.

Now, some of the caveats of the bill are laudable: making sure private money is invested before public dollars are committed and rejecting proposals that use a CAPCO investment structure.

But even those caveats don't mean venture capital is a panacea for job creation.

The authors also state, perplexingly, "We should not put public dollars where private dollars don't want to go." WTF?! Um, public goods and public investment are exactly that - the stuff businesses won't do because they generally can't see a clear and immediate profit from such (but nonetheless are still integral to our daily lives and counted on by all citizens). Business isn't going to build the Hoan Bridge or the Marquette Interchange, repair and plow the roads, nor ensure clear air and water. These types of costs are externalized onto the general public by businesses. They benefit disproportionately from such infrastructure, but aren't willing to decrease their bottom line for it. So, yeah, we do want public dollars to go where private dollars won't go. And it would also be nice of those parasites would pay their fair share.

For some reason, in the article, the state senators parrot the oft-repeated right-wing theme of bashing government, "The Legislature should reject any plan that presumes government can make better decisions with your money than investors can with their own money." Based on the fact that the majority of American citizens are ill-prepared for retirement (have been unsuccessful in investing for their golden years), this mantra falls flat in the face of the evidence. Ask Social Security recipients if they are happy with that investment program which allows them to invest during their working years (over such time their investment appreciates at a steady, reliable rate) and then receive a defined benefit when they retire.

How about a good old fashioned investment in a nationwide public works program? Post WWII, it created the middle-class and erected the infrastructure that made us the greatest nation and the envy of the world. Now other countries have passed us by, or at least have a plan for public investment and realize it's importance. Instead of directly investing through our government, to put our fellow Americans back to work, our legislators are selling the debunked idea of channelling such investment through private sector machinations. Venture capital funds (which may be a viable, small portion of government-initiated job creation) are, generally, a circuitous and inefficient route to job creation.

Wednesday, November 2, 2011

Walker World

An informative article by Scott Bauer cites numerous job-creation-failures of the Scott Walker administration:

"The Department of Revenue report released Friday predicts that by 2014, the state will have added only 136,000 jobs in the private sector compared with 2010. The job growth estimate was down 43,000 from the department's previous report released in June."

"Through September, the state added just 29,300 jobs since Walker took over in January. At that pace, there would be roughly 159,000 new jobs in the state by 2015."

And yet, Mr. Walker tries to justify public expense for his new website glorifying his administration's accomplishments?


Sunday, October 30, 2011

Tax The Poor

For Further Reading:
Tax The Poor

The Creation Conundrum

At one turn, the Republicans are extolling small business as the engine of job creation. (Remember hearing this oft-repeated line during the 2008 and 2010 elections?) Small here obviously implies these "job creators" are not part of the top 1 percent. These are everyday people, playing by the rules, working hard, and trying to build a business of their own.

At the next turn, the Republicans are claiming we can't tax the top 1 percent because they are job creators. The richest amongst us are rich due to deserved rewards for their risk, innovation, and efficient allocation of capital. These are very special people with keen insights and understanding (that layperson can't process) and therefore deserve their rewards.

Hmmm, if that's the case - if all (big or small) are job creators - where are all the jobs? If small business owners and the rich are all job creators, why are so many people unemployed?

Do the Republicans have a platform? Any kind of belief system anymore? Or have they become the party of intellectual somersaults, continually rolling into whatever position best riles the rabble?

Saturday, October 29, 2011

So...How's That Infrastructure Doing?

1.7 Million Without Electricity

The Moral Police

The Journal-Sentinel asserts a "disease" is spreading throughout the Milwaukee Police Dept. "A tolerance for outrageous behavior by some of its officers."

They cite 93 instances of disciplinary actions against officers.

93 instances out of a 2,000 member police department. That's under 5 percent.

5 percent of the staff of most organizations has had a run-in with the law.

I'm not condoning drunken driving, domestic violence, or any other crime committed by a member of the police department. But, in any large organization, like the Milwaukee Police Department, 5 percent of the staff, or more, is going to have a criminal record. 3 percent of the entire U.S. population is under correctional supervision. 15 percent of the American population has a criminal record.

By all means, lets hold those committing illegal deeds accountable. But the sensationalism and the sky-is-falling immediateness portrayed in the article distract from what could be an insightful look at the old-boys' network, of favors and looking the other way, at large organizations. We all, hopefully, want justice served, no matter the circumstances.

Yet, to purport that criminal activity by those in charge of upholding the law is out-of-control and/or something new...I smell a cheap tabloid hook to sell a few papers. To hold this up as some sort of shocking revelation or ground-breaking investigative reporting is stretching the truth.

Casino Capitalism

Scott Walker's budget solution for Wisconsin is to gamble more public dollars at the Wall Street casino.

"Walker said he wants legislators to create a $100 million "fund of funds," an investment vehicle in which a manager hired by the state would put taxpayers' money into a variety of existing venture capital funds."


I like the caveat of the plan whereby investments must be in Wisconsin. But, wouldn't it be quicker, and more efficient, to just directly distribute these funds to targeted Wisconsin companies? Why pay Wall Street fees and commissions? Why hire a manager to do part of the job we elected our legislators to do?

Investment Versus Debt


$4.8 trillion of this (if we include the total $1 trillion, pre-Reagan, debt as the Democrats' debt), for argument's sake,  can be considered the Democrats.

That leaves $9.2 trillion the responsibility of the Republicans.

Over sixty-five percent of our debt is the responsibility of the tax-cut, deregulation, government-stinks, unions-are-thugs cabal.

We have one party - the Democrats - investing in the country, thereby incurring debt:

  • the infrastructure: roads, bridges, trains, wind turbines, broadband
  • the people: earned income tax credits, retraining incentives, unemployment insurance, Medicare, public works, green jobs
And, another party - the Republicans - digging in their heels on deregulation, public sector ineptitude, corporate tax cuts, and privatization; the policies explaining the majority of their debt-incurrence.

At least with the Democrats' policies we have something to show for what we've spent; an actual investment.

With the Republicans, all we seem to get is more debt and a continually-morphing economic platform impervious to empirical evidence and increasingly self-assured, even in the face of apparent failure.

History Lesson

Veil of Ignorance

A telling line from a recent Paul Krugman column (about our inadequate response to the second worst economic downturn in our history), "This doctrine was sold both with claims that there was no alternative — that both bailouts and spending cuts were necessary to satisfy financial markets — and with claims that fiscal austerity would actually create jobs.".

When did our representative democracy, our daily objectives, our standard for achievement and progress, equate to satisfying financial markets?