Category: Economics

Watch Out! Article V Constitutional Convention Nears Reality

Overhaul of the Constitution sounds tempting: don’t bite

There are some things that liberals don’t like sitting like bedrock in the U.S. Constitution.  In particular, the Electoral College to elect the president, and the assignment of two senators to each state.  Then there’s the First and Fourteenth Amendments when extended by the Supreme Court going back to the 1880s to give the same protections to corporations as to real breathing humans.

Liberals, as well as many conservatives, also dislike the scope of powers conferred on the U.S. President that have expanded over the years. At least they dislike them when the president belongs to the opposing political party. (As a Virginian, I would like to point proudly to our Senator Tim Kaine’s principled crusade to limit the chief executive’s license to conduct wars, starting with the Obama Administration.)

How might these anti-democratic features of the Constitution be remedied? In fact, Article V of the Constitution provides for a method to completely overhaul the Constitution.

Say that again? What we customarily have in mind when we think of amending the Constitution is passing an individual amendment with two-thirds vote in both houses of Congress, then ratified by three-quarters of state legislatures.  It’s what’s been done to add all 28 amendments (28 in 229 years) to the original 10 in the Bill of Rights. That cautious procedure is in Article V, but also in Article V is something truly radical: a full-blown Constitutional Convention called for by two-thirds of the states (34 out of the current 50). The Congress would then be required to hold the convention, and a new constitution coming out of it could eventually be ratified by “the legislatures of three fourths of the several states, or by conventions in three fourths thereof”—i.e., 38 out of 50 states.

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The Protein Predicament: Livestock’s Impact on Human and Environmental Health (and What to Do About It)

Report says red meat OK for human health

By now you have likely heard of a report recently published in the Annals of Internal Medicine that concludes “there’s no need to reduce red or processed meat consumption for good health,” as summarized in the Washington Post.

Beef: good (for protein), bad (for the environment, and probably for health), and kinda ugly (for aesthetics, if that matters)

Kaboom! Went the plunge of this report into the midst of what had been a gathering consensus about the many ill effects of a meat-heavy diet.

RECOMMENDATION: before you read the full Washington Post piece, first read its last two paragraphs (beginning with “Willettt says the panel’s conclusions and recommendations do not reflect the study’s findings . . .”  – emphasis mine).  They indicate that the editorial board of the Annals etc. have spun the data in favor of the red and processed meat industry. In the editorial itself, the writers bury concerns about the environmental impacts of meat consumption in the final paragraph.

If you read the complete piece in the Post, you will see that the conventional nutritional wisdom, that it’s healthier to eat less meat, still has solid  support among almost all nutritionists. Walter Willett pointed out that the study itself associates moderate reduction in meat production with a 13 percent lower mortality, and said,  “if a drug brought down the number of deaths to that degree . . .  it would be heralded as a success.” Certainly such a drug would be heralded as a success by a multi-billion dollar drug company.  There is no multi-billion dollar profit-making enterprise to curb the consumption of red meat.

Once the media, always on the hunt for controversy, had taken up the  report it went mainstream (as in the Washington Post, the New York Times etc.) accompanied by a glut of social media chatter. And then came a firestorm of backlash such as you can read of in a litany of objections from nutritionists, doctors, and researchers found on this page of WebMd.

The study is tainted by past ties of one of the research’s co-leaders to an industry trade group, the “International Life Sciences Institute” (ILSI)—a connection he did not disclose because technically the connection did not fall within the past-3-year reporting requirement for publication. While the earlier study—which incidentally was an attempt to allay health concerns about sugar additives—was published in December 2016 (less than 3 years ago), researcher Bradley Johnston said he was paid for the research in 2015 (more than 3 years ago).  Ergo he was not obliged to disclose the connection because the payment fell outside the 3-year window. . . .  Did he really think this was not going to come out? Did he really think that no one would suspect he might be eyeing future funding by the ILSI, having insinuated himself further into their good graces with the red meat study?  Maybe in the context of runaway mendacity and moral obtuseness in the twenty-teens he saw no reason to observe the spirit of disclosure rules.

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Americans Serious about Climate Change? Tell Me Another Whopper

[WARNING: many readers may find the following a downer—but if you care about facts, you must be willing to look at all kinds of Inconvenient Truths.] 

U.S. public on climate change: a crisis in name only

The September 20th Global Climate Strike has been inspiring—for those seriously concerned about global warming and climate change.

It’s less inspiring to read of how not-serious most of the American public is. A week before the Climate Strike, the release of a Washington Post/Kaiser Family Foundation poll headlined “Americans increasingly see climate change as a crisis” appeared to portend a sea change (pun partially intended) in attitudes toward climate change.

Read on for what underlies appearances.

The takeaway from the poll is that the public says, big problem—let somebody else take care of it. Consider that 38% describe climate change as “a crisis,” and another 38% describe it as “a major problem but not a crisis.” However, to combat climate change only 37% say major sacrifices will be required, 48% say minor sacrifices, 14% “not requiring much sacrifice,” with 1% having no opinion.

Next we read that “nearly half of adults say they would be willing to pay a $2 monthly tax on electricity to help combat climate change.” If that sounds promising,  the report says just 27% would pay $10 extra a month. Meaning that at best 27/38 (71%) is the fraction of those saying the threat is “a crisis” would also pay $10 extra a month. $120 a year. Hmmm . . .  33¢/day = a bit more than 1/6th the price of a “tall” cup of Starbucks coffee.  Now that’s what I call a major sacrifice!

Continue reading “Americans Serious about Climate Change? Tell Me Another Whopper”

Hollowing out of the Middle Class: a Second Look

Middle class hollowed out? Kind of. Unhappy? It depends . . .

Progressives like Bernie Sanders and Michael Moore are fond of excoriating the rich and powerful for the “hollowing-out of the middle class.”  What they fail to mention—either for lack of information or for political expediency—is that, money-wise, more families are leaving the middle class on the upside rather than the downside.  There’s plenty of evidence for this.  Check out the following, which is similar to other reports, but I especially like it because it is based on Pew research findings:

https://qz.com/1005068/the-upper-middle-class-is-the-new-middle-class/

A larger segment of the middle class, it seems, is rising into the highest  and upper-middle class than is falling into the lowest class (the lower middle has remained unchanged), and the net effect, dollar-wise, of “hollowing out” appears to be a positive.   Is this a Good Thing?  After all, can’t money buy happiness?

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Gambling with Other People’s Money: Trump Trade Wars

How easy to win are trade wars?

Vainglorious boaster President Trump, having declared trade war against much of the developed world,  assured us that trade wars are easy to win.

??  Maybe, and maybe not. I’m no economist, but I have noticed that the majority of mainstream economists and many business leaders have opined that trade wars are bad for everyone.  They are particularly bad when they slow down the global economy as a whole, in an age where the global economy is increasingly THE economy that really matters in the long run.

On the other hand, seasoned economist Irwin Stelzer proposed that Trump’s trade war “really might be easy to win.” Stelzer on trade war

The basis of Stelzer’s conjecture is that the U.S. economy dwarfs that of any one of its economic adversaries (euphemistically called “trading partners”), excepting China, and they need the U.S. market more than the U.S. needs theirs. Secondly, if foreign tariffs really were as relatively disadvantageous to us as Trump claims (and Stelzer seems to agree), greater parity could put those foreigners on the ropes.  As Stelzer points out, a German auto industry’s proposal to eliminate tariffs is a sign that some foreign businesses are seeing trouble ahead with the status quo.  The status quo is that EU tariffs on U.S. automobiles have been five times that of the America’s on theirs.

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Robots Coming for Our Jobs? – Not So Fast

Reassuring News on Automation and Employment?

A recent study led by Melanie Arntz, acting head of the labor markets research department at the Center for European Economic Research,*  addressed the specter of massive unemployment due to automation.  It concluded that the risks of robots taking our jobs has been exaggerated.  Looking forward 10-20 years, it revises downward the estimates of job losses in the U.S. from 38% to 9%.  As we know, doomsayers (such as I) have forecast job losses more like 50% by 2040.

Here’s a link to the study, where you can download a free .pdf: Revisiting the Risk of Automation

The paper, released in July 2017, is chock-full of jargon and hairy statistical equations, but the thrust of it is commonsensical: scary scenarios of massive job losses** fail to take into account what the authors call “the substantial heterogeneity of tasks within occupations” [emphasis mine] “as well as the adaptability of jobs in the digital transformation.” (I take this language from the abstract, which nicely encapsulates the study and findings in the nine pages that follow.)

These findings stem from an approach that distinguishes between occupation-level work and  job-level work.

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Will Work for Crumbs: Why Republicans May Hold the House

Pocketbooks will fatten just enough to get scammers on the congressional Right re-elected

It couldn’t be more transparent, that the middle class has been bought off with token tax relief in the Republican tax bill, while billionaires and corporations continue to top up their coffers with still bigger tax breaks.

But the transparency doesn’t mean much, since the cynical middle class has had to resign itself to getting Something rather than Nothing for the last few decades.  They’re inured to it. Now a few crumbs tossed to ordinary folks will suffice to keep Republican politicians in the House afloat for at least another year.  That’s because elections usually turn on pocketbook issues, and if by November the average taxpayer has received $1,500 worth of reductions  in withholding, then s/he will settle for the status quo. (Even a status quo with Trump at the helm, as long as he does not actually start a major war.) Put that together with gerrymandering, and seeing that the House Republicans would have to lose 46 seats to lose majority, I imagine they will hold it.  Especially because there are bound to be more rounds of attempting to repeal the ACA—even though McConnell is now loathe to touch it in the Senate—which will rally the conservative base.

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How to Cripple an Economy, Part 1: Inequality

Does inequality matter in the big economic picture?

I’m not going to discuss here why economic inequality is worsening.   That it’s getting worse is an unarguable fact. What drives the worsening is not yet perfectly clear—is it mainly the inevitable outcome of market forces, or is it a side-effect of “rent-seeking” by rich folks and rich corporations?  (I will treat rent-seeking issue in another post.)

Does increasing economic  inequality harm the economy as a whole? Does it suppress growth in total wealth? (Agreed that definition of “wealth” is slippery.  IMO the Gross Domestic Product does not exactly measure wealth, since it includes the production of a lot of Stuff no one really needs, some of it downright absurd, such as the more than two billion annually spent on Halloween costumes for pets. But the movement of the GDP is the best guide we have to economic growth, or the lack of it.)

I’m not addressing the somewhat different issue of fairness here.  It is obvious that huge inequalities are  unfair to those on the lower rungs. Enough people are talking about that, that I don’t need to chime in.

Aside from fairness, does the canard that the “Rising Tide Lifts All (or most)Boats” hold, when economic inequality is a main driver of the tide?

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How to Cripple an Economy, Part 2: Taxes

A Bad Joke in Search of a Punch Line

This post was prompted by an anecdote concerning a meeting top Trump  economic adviser Gary Cohn had with a number of high-flying corporate executives. He asked for a show of hands of those who would use benefits from the corporate tax cut to reinvest in their business, or some other business, in the U.S.  A few hands went up. Most did not.  The administration’s heavy hitter asked (I believe these were his literal words), “Why aren’t there more hands up?”

The answer from execs who failed to raise their hands was, they already had plenty of money, there just weren’t many opportunities to invest in.  And that’s because . . . (is this the punch line?) consumers weren’t spending!

Oops! Went a tiny voice in Gary Cohn’s shrinking brain.

Of course, what holds for corporations also goes for rich individuals who can only spend so much money until they are sated.  After a certain threshold, they buy things not for use, but for bragging rights.  Not avarice, but ego ego ego.  My yacht is bigger than your yacht, and everyone knows that Size Matters.

I first heard this anecdote on NPR but unfortunately cannot find the segment where their sharp correspondent identified it (sheesh! – forgot her name too—sorry, sharp reporter!).

Continue reading “How to Cripple an Economy, Part 2: Taxes”

How to Cripple an Economy, Part 3: Wealth Gap Multipliers

[One note here at the outset:  the wealth gap multipliers are not really “hidden pieces” as my headline below implies, but they are pieces that most people don’t think about when they speak of income disparities and tax policy. But they are pieces you can’t separate from the whole picture of economic disparities, and are arguably just as important a topic of discussion as income taxes.  Bernie Sanders speaks about it, but unfortunately his bombast tends to cause independent voters—the ones who increasingly make the differences in elections—to tune out.]

Hidden Pieces of the Tax and Wealth Puzzle: Wealth and Wealth Gap Multipliers

Regardless of specific amounts, even at comparable incomes (say, within one order of magnitude, $75,000 to $150,000), those with wealth behind them are many times more secure than those with little wealth.  (Note that I plucked these numbers out of national averages; of course incomes and expenses are far greater in many major cities and upscale suburbs.  Incomes are far lower among the poor and much of the lower middle class, of whom to speak of their nonexistent “wealth” is a bitter irony.)

To state the obvious: the wealthy have something to fall back on in hard times and personal emergencies.

Moreover, their wealth expands through wealth multipliers.

I have not looked at exact disparities in wealth in the U.S. for 20 years, since it was bad then and has obviously been getting worse.  The Great Recession of 2007-2009 amplified the wealth disparity, and it  hasn’t improved since then. (For a good idea of where it’s all going, read Plutocrats by Chrystia Freeland. )

Multiplier Number One, Race: note that the hardest hit are people of color, where the wealth gap is worse than for whites, and widening: see CNN analysis at Racial wealth gap in 2016

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