Sunday Shredding

Does The Universe Have A Purpose?

Correcting The Right-Wing Myths About Detroit

Don’t buy the right-wing myth about Detroit

In the wake of Detroit’s bankruptcy, you may be wondering: How could anyone be surprised that a city so tied to manufacturing faces crippling problems in an era that has seen such an intense public policy assault on domestic American manufacturing? You may also be wondering: How could Michigan officials possibly talk about cutting the average $19,000-a-year pension benefit for municipal workers while reaffirming their pledge of $283 million in taxpayer money to a professional hockey stadium? ...

It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided from those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies.

Just How Generous Are Detroit's Worker Pensions for Retirees?

"My basic takeaway was that [Detroit's] pension system itself was not overly generous," said Jean-Pierre Aubry, assistant director of State and Local Research at Boston College's Center for Retirement Research... 

Retired general city workers, such as librarians or sanitation workers, received average payments of $18,275 a year in 2011, according to the Detroit General Retirement System... 

While retired Detroit firefighters and police officers receive more generous pension checks than auto workers -- checks averaged almost $30,000 a year in 2011 -- they often don't receive the added bonus of Social Security payments.

We Need A Federal Bailout for Detroit's Pensions

Does $1,500 a month after hauling garbage cans your whole adult life really sound like a fortune? ...

Retired Detroit employees didn't cause the financial crisis of 2008, which hit the pension plan's investment fund hard. Yet they're being handled as if they were morally equivalent to the Wall Street creditors who did. As the New York Times reports, the unelected city manager's plan would "treat bondholders the same as retirees" and ask them both to sacrifice... 

The average Detroit city pension is slightly less than $19,000 per year. For police and firefighters, pensions are their only source of retirement income. (They don't have Social Security.)

Five myths about Detroit

The real culprit in the city’s decline has been federal policies that put corporate health ahead of community health, such as free-trade agreements that sacrifice U.S. jobs for foreign trade...

Detroit’s major financial problem is that its shrinking tax base has meant years of declining revenue. Remember, the city has lost more than 1 million residents since its population peaked in the 1950s. Those who blame pensions confuse cause and effect — like blaming a personal bankruptcy on a pesky car loan after one’s salary was cut in half. The difference, of course, is that getting rid of a car you can no longer afford isn’t the same as reneging on a promise to 21,000 retirees.

Health Care Spending As A Percent Of GDP

[source]

This Kitten Has Claws

City to block raises for many public workers who leave Milwaukee

For Further Reading:
Residency Requirement: Reading & Facts
Residency Requirements
Logic Requirement

The Dog Days Of Summer

[source]

Republican Health Care Obstructionism

Open For Low-Wage Business

More Jobs, Less Pay

Wisconsin sees the largest month-to-month gain in a decade but most are low-wage jobs.

The good news: Wisconsin had a June jobs surge, a boost from May of 13,800 private sector jobs. State officials rightfully called it the largest month-to-month gain in nearly a decade. 

The bad news: Most of the growth—7,200 jobs—was in the “leisure and hospitality” sector, where average weekly pay was only $284 last year. That’s barely one-third the overall average wage in Wisconsin of $803.

Rewarding Failure: The Wisconsin Economic Development Corporation

Wisconsin Economic Development Corporation's CEO, Reed Hall, Gets 50% Raise

An agency embroiled in controversy (where is money being spent, how is it being spent, and what are the results of that spending?) seems unjustified in giving the CEO a 50% raise.

But that's how Scott Walker rolls. Ignore the questions swirling about efficiency, legality, underhandedness, and cronyism at WEDC. Just give the CEO a raise and pretend everything is going as planned. A perfect example of how the (quasi) private sector operates: regardless of results, those at the top are rewarded.

Sounds a lot like Scott Walker's political career. Even though he'e been a train-wreck in every office he has held, he keeps getting rewarded with higher offices.

Walker Selling Wisconsin

Developer wrote Scott Walker expressing interest in buying state buildings

One of Wisconsin's largest real estate developers wrote to Gov. Scott Walker to express his interest in buying several prominent state office buildings at the same time the Legislature was considering doing away with competitive bidding for such sales, according to newly released records. 

Terrence Wall offered his cellphone number in the letter, urging that the "appropriate person" call him to discuss possible deals for properties including the State Crime Laboratory, records obtained by The Associated Press show. Wall also offered his support for the change in the bidding process, an idea that originated with Walker. 

Wall sent the letter on June 10. The Republican-controlled Legislature agreed 11 days later to allow no-bid sales of state properties over the objection of Democrats, who argued that it opened the door for political cronies to be cut special deals...

Walker called for legalizing no-bid sales of state properties in the budget he proposed in February. The Republican-controlled Legislature agreed in June, after adding a requirement that any sale negotiated by the governor be approved by the budget committee. The state Building Commission, which Walker chairs and is controlled by Republicans, would also have to approve.

 Stay classy, Scotty.

More Wasteful Walker Spending

State Pays $1 Million To Defend Act 10

After nearly $1 million in expenses, the state is ending its contract with a Republican-aligned law firm that helped it fight litigation over the 2011 law that sharply limits collective bargaining for most public workers. 

From now on, the legal work will be handled entirely by the state Department of Justice.

Why wasn't the work handled by the state Department of Justice from the beginning?

Another False Idol: Venture Capital

There goes the Journal Sentinel again...continuing their never-ending venture capital boosterism.

As for Wisconsin, the state routinely pulls in less than 1% of all venture capital raised, and the numbers are so small that it's difficult to pull any insights from quarterly trends. In the first quarter, state companies raised $18.42 million of venture capital, the best showing to start the year since 2010.

Has the Journal ever shown any type of link between employment, poverty, or any other economic indicators and a particular place's venture capital? You know, something like: as such-and-such place increased their amount of venture capital over the last decade, they have also shown an increase in employment and a decline in poverty...and this is also true for the other places attracting the most venture capital. I don't recall much analysis of any kind. They just simply keep repeating this storyline of how much we need more venture capital, yet I haven't really heard any convincing arguments as to why.

As I've asked before, "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?"

The Journal, and their co-conspirators, go on and on about venture capital, deregulation, anti-unionization, and even more vague measurements, like business climate, but none of these supposed panaceas are ever quantified.

Here is another area where actually looking at the data and what is already known regarding venture capital could go a long way in dispelling these myths and moving us toward truly good investments rather than this pie-in-the-sky cronyism.

Back in 2010 I wrote, "Josh Lerner, of Harvard, has found the number of exceptional venture capitalists is very small. Harold Bradley, of the Kaufmann Foundation, believes venture capitalists have plenty of money, but allocate it very inefficiently, and therefore should not be receiving additional public dollars with the hope of boosting a local economy. Bradley and Carl Schramm, in an article for Business Week, write that the current focus on fees has promoted start-up flipping rather than nurturing."

Plus, as I recently wrote, "Venture capital provides just two percent of the capital for new businesses. More than half of new businesses are gone within five years."

In an earlier post I summed up the Journal's venture capital cheerleading thusly, "Scott Walker and the Journal Sentinel want venture capital to be a centerpiece, a major investment, of our economic development playbook. This disregards the fact that venture capital, overall, has been a bad/subpar return on investment. And, when it has been successful, only a very select few were rewarded."

None of this points toward venture capital being a crucial part of moving Wisconsin business and job growth forward.

For Further Reading:
A Steaming Pile Of Boldness
Venturing Wisconsin's Money

Elizabeth Warren 2016

It appears as though if we (Democrats, leftists, Labor, environmentalists, the reality-based, etc.) really want change, we need Elizabeth Warren leading the way. The strongest, most relentless, and most lucid voice of public service and public policy.

[source]

Walker's Dirty Double Standard

Gov. Scott Walker decries protesters at proposed iron ore mine

Gov. Scott Walker says activities of protesters at the site of proposed iron ore mine near Lake Superior "has no place in Wisconsin."

Gov. Scott Walker blasts anti-mining activists

"The type of harassment and abuse we saw on the recent video of radical activists at Gogebic Taconite's proposed mine site has no place in Wisconsin. These extremists - who are disrupting work and causing harm to law-abiding employees - should be prosecuted to the fullest extent of the law," Walker said.

Was Scott Walker calling for the full prosecution of the Tea Partiers and other disruptors (during the last election cycle) who impeded, interrupted and scuffled at their opponents Town Hall meetings and other gatherings?

And, nevermind the environmental harassment caused by mining.

Seems Scott Walker likes his politics and his business really dirty.

For Further Reading:
Mining For jobs
Corps Of Engineers Questions Wisconsin Rewriting Mining Laws
A Fractured Process
Clean Coal Jobs?
Coal Job Promises Overblown?
Oil & Gas Industry's False Jobs Promise
Frac-Sand Mining’s Promise of Economic Prosperity Fails to Materialize

Shale Oil Jobs Vastly Exaggerated

Repairing Infrastructure & Interest Rates

From Barry Ritholtz:

What can we do as a nation to take advantage of these interest rates before they return to normal? Choose your favorite part of America that can be upgraded: 

• Our electrical grid consists mostly of wires strung between wooden poles, which may have been innovative in 1850 but is somewhat past its sell-by date today. After Hurricane Sandy, much of New Jersey, Long Island and Connecticut lost electrical service for two weeks. The entire grid needs to be hardened, upgraded against cyberattack — and buried underground. 
• We can make our road system “intelligent” by using sensors and software to move traffic more quickly and efficiently than the current “dumb” system does. The productivity boost and fuel savings make this a big return on investment. 
• Bridges that are well past their life expectancy should not simply wait to fail. We should be actively replacing these. The alternative is waiting for random events — like the truck crash that caused the Washington state Skagit River bridge collapse — to cause a disaster. 
• The United States’ cellular network is a decade behind Europe’s and Asia’s coverage and reliability. Mandate better minimum service requirements and make available cheap financing to wireless providers to do so. We can do the same with broadband as well. 
• The interstate highway system has been one of the lasting legacies of the Eisenhower administration. It is time for a full upgrade of this economic multiplier.

The Zombie Skills Gap Meme That Won't Die

Friday, On Real Time With Bill Maher, guest Mike Rowe got the ball rolling, continuing the mythical meme that is the skills gap.

We've all heard it - I know such-and-such company that just can't find any workers to do the numerous positions they are trying to fill. According to the proponents of this fairy tale, the U.S. just isn't training workers to do the jobs businesses need.

Yet, when we actually look at the data, a classic supply-and-demand explanation (with most of the blame on low wages) appears.

As UWM professor Marc Levine notes, "There is, in short, little labor market evidence – when we examine job openings, wages, hours, employment projections, or worker credentials— of a skills gap or structural unemployment...National data on wages, hours, job vacancies, and employment projections provide no evidence that a skills gap has caused high unemployment in the U.S. as a whole –- either before or after the Great Recession. This finding is consistent with the conclusions of a daunting array of research and analysis on the subject. As we have seen, these include: Studies by: a) Scholars from such top universities as Duke, Berkeley, Penn, Stanford, MIT, and UW-Madison; b) Economists from the Brookings Institution, the Roosevelt Institute, the Center for Economic and Policy Research, and the Economic Policy Institute; c) Economists at the Federal Reserve Banks of Atlanta, Boston, and Chicago; and d) Consultant-economists such as the Boston Consulting Group. In addition, articles and commentary by: a) Two recent Nobel Laureates in Economics (Krugman and Diamond); and b) Two former heads of the President’s Council of Economic Advisers (Tyson and Lazear), thoroughly reject the skills gap or structural unemployment as explanations for our underperforming labor market."

The U.S. does have a few industries, in a few locations across the country, where specifically-trained workers are needed. Do you know what happened in those few places? The already-employed workers saw their hours increase to meet the demand, to fill-in for the needed-workers. Wages also rose to attract workers to the job openings.

This structural malady is a small proportion of unemployment. As Rortybomb informs, "A report the IMF put out - The Great Recession and Structural Unemployment - which found find that structural unemployment is 1%-1.75% nationwide, with skills being 0.5%."

In most places, where some falsely claim a skills gap, wages for new hires have not risen, nor have the hours of those currently-employed increased.

Dave Alitg, in The Skills Gap: Still Trying To Separate Myth From Fact, stated, "We have yet to find much evidence that problems with skill-mismatch are more important postrecession than they were prerecession. We'll keep looking, but—as our colleagues at the Chicago Fed conclude in their most recent Chicago Fed Letter—so far the facts just don't support skill gaps as the major source of our current labor market woes."

As I've written, "In reality, this is simple supply-and-demand economics. People don't want to work at grueling jobs for low pay, minuscule benefits, and without a retirement plan. If these jobs were paying living wages and had some sense of security, people would be lined up around the block for the positions."

For Further Reading:
Skills Shortage Sham

Where The Jobs Are

From NPR's Planet Money:

To see how the jobs picture has changed since the start of the recession, we created the graph below. Here's how it works: 

• The size of the circle represents the number of jobs in each industry today. 
• The circle's position on the vertical axis shows the number of jobs lost or gained since the start of the recession. 
• The circle's position on the horizontal axis shows average hourly earnings for workers as of this spring. 

[source]

A few notes on some key sectors from the graph:

Manufacturing lost 2 million jobs during the recession. The sector has actually added back about half a million jobs during the recovery, and average wages are over $24 an hour. But many of the jobs that disappeared during the recession are probably gone forever. Even before the recession, automation and global competition led U.S. manufacturers to cut jobs, even as they increased output. That trend is likely to continue.

Construction is the other big sector that really got wallopped. This isn't surprising, given that the recession followed a massive real estate bubble that triggered an unsustainable building boom. Still, it's worth noting that even now, with the housing sector coming back to life and adding jobs again, there are nearly a million fewer construction jobs than there were a decade ago.

Health care is the big bright spot in the jobs picture. The sector has added 1.5 million jobs since the start of the recession, and average earnings of over $26 an hour are solid.

Leisure and hospitality mostly means jobs at restaurants and bars. The sector has more jobs now than ever. But average earnings, at about $13 an hour, are low.

Mining and logging includes the oil and gas industries, which have been booming, and where average hourly earnings are nearly $30 an hour. But, as the graph shows, even after strong growth, the sector has fewer than 1 million jobs. It just isn't big enough to make much of dent in the national jobs picture.

Professional and technical services includes a big swath of the tech industry as well as architects and lawyers and other skilled professionals. Not surprisingly, average hourly earnings are high, at about $37 an hour.

Flip-Flop Foot Murder

[source]

Why Visit Milwaukee?

From Twenty-Something Travel:

• Old Fashioneds
• Al Fresco Dining
• Harley Davidson
• Cool Architecture
• The Milwaukee Art Museum
• German Culture
• Summerfest

Midweek Reading

Why Government Is Virtuous
Can't Deny Global Warming After Seeing This Graph
Republicans Stopped Worrying And Learned To Love Government
Here's One Smart Way To Fight Big Box Stores
Highway Revolts Break Out Across The Midwest
Collapse Of Science, Not Housing, Ended The American Dream
Congress Has Only Itself To Blame For IRS Troubles
How Shareholders Are Ruining America Business
Wielding Derivatives As A Tool For Deceit
Consumer Debt Is Soaring. That's Good News (For Now)

State & Local Jobs Disappearing

State and local governments had 703,000 fewer employees in June 2013 than in August 2008, according to the jobs numbers released on Friday. That number has barely budged since January 2012 (see chart), meaning that in the last year and a half, states and localities essentially have made no progress in refilling the giant workforce hole that the recession caused. Although the days of drastic employment cuts seem over, state and local governments aren’t replacing the teachers, firefighters, police officers, sanitation workers, and many other critical employees that they lost in recent years.

[source]

Year-over-year change in employment.

[source]

Republican Anti-Intellectualism

The Republican War On Data

This is part of a long-term effort to eliminate data collection or pervert it so that policy is biased toward Republican priorities. For example, Republicans have:

• Forced the Internal Revenue Service to drop a program called the Taxpayer Compliance Measurement Program in order to make the extent of tax evasion harder to calculate. This has made it easier to cut the IRS budget. 

• Abolished the Office of Technology Assessment and the Advisory Commission on Intergovernmental Relations because they often produced widely respected data that conflicted with Republican dogma on issues such as global warming.

• Prohibited the federal government from collecting data on the cost of gun-related injuries and death in order to prevent it from being used by gun control supporters.

• Are currently attempting to defund a Census Bureau program called the American Community Survey. Among other things, it would eliminate the government’s ability to properly calculate the unemployment rate. Republicans claim it is too intrusive.

Government: The Mother Of (Much) Invention

Government - Not Business - Has Been The Source Of Breakthrough Innovation

The New York Times obituary for Douglas C. Englebart, identified as the “Computer Visionary Who Invented the Mouse,” is fascinating reading, in part because Englebart, an Oregon farm boy, was in many ways the father of modern networked computing. Beginning in the early 1960s, he put together a team of engineers and computer scientists, funded by the federal government, that developed a prototype for most of the computer tools we all take for granted today...

Mariana Mazzucato, a professor of economics at the University of Sussex, has been making the point very effectively in lectures and a new book, The Entrepreneurial State, that the real innovation engine in the global economy is not business, nor the market, but the government. A recent story about Mazzucato in Forbes cites her view that long-term, patient capital–provided by government–is the absolute prerequisite for breakthrough innovation.

“Her case study for myth-debunking is the iPhone, that icon of American corporate innovation. Each of its core technologies–capacitive sensors, solid-state memory, the click wheel, GPS, internet, cellular communications, Siri, microchips, touchscreen—came from research efforts and funding support of the U.S. government and military."

Inequality Was Created

Wisconsin Abortion Law Is Delayed

Wisconsin: Enforcement of Abortion Law Is Delayed

A federal judge on Monday granted a temporary restraining order blocking enforcement of a new Wisconsin law that bans doctors who lack admitting privileges at nearby hospitals from performing abortions. The order by Judge William Conley of Federal District Court will remain in place pending a fuller hearing on July 17. Planned Parenthood of Wisconsin and Affiliated Medical Services filed a lawsuit Friday. The suit alleged that the requirement would unconstitutionally restrict the availability of abortions in the state, violate the Constitution’s due process guarantee and unconstitutionally treat doctors who perform abortions differently from other doctors. The bill was introduced in the Legislature on June 4, passed nine days later and signed into law Friday by Gov. Scott Walker.

Worst State Highway Systems

20. Wisconsin

2013 Ranking: Wisconsin’s state highway system is ranked 31st in the nation in overall highway performance and efficiency.

Last Year's Ranking: It is a slight decline for Wisconsin which ranked 27th in the previous Annual Highway Report.

Problem Areas: Wisconsin ranks 7th in deficient bridges, 15th in fatality rate, 30th in urban interstate congestion, and 31st in disbursements per mile.

Total Spending Per Mile: $165,184/mile.

Government Continues To Shed Workers

Year-over-year change in employment.

[source]

Wisconsin Beer Drinking

5. Wisconsin: 36.2 gallons of beer consumed per person in 2012

Weekend Reading

Bernanke Was Clear, Fed's Crystal Ball Is Cloudy
The Strange Life Of John Menard
Citigroup Agrees To Pay $968 To Fannie Mae
EU Suspects 13 Banks Of Collusion In Swaps Trading
Labor's Declining Share Is An International Problem

The IRS Scandal Unwinds
America Doesn't Have The Richest Middle Class...We're 27th

10 Brilliant Pieces Of Bike Infrastructure
Why We Trail America In Jobs Growth