On Saturday the NY Times reported that President Bush is "scaling back expectations for the Iraqi government" and won't report on the "surge" until at least September.
The President is delaying because he refuses to acknowledge that his "surge", the latest attempt to salvage the Iraq quagmire, is failing just like the U.S “reconstruction” of Iraq, an oxymoron if there ever was one.
The $30 billion reconstruction effort was designed to complement the military effort to stabilize Iraq. Its official goals were to allow the government to function, revitalize the economy, including the oil industry whose revenues would finance the war, and promote good will toward the United States.
But inspectors for a federal oversight agency, the Office of the Special Inspector General for Iraq Reconstruction, have found that in a sampling of eight projects across the country that the United States had declared successes, seven were no longer operating as designed because of plumbing and electrical failures, lack of proper maintenance, apparent looting and expensive equipment that lay idle.
These new findings come after years of insistence by the President, Vice President, American officials in Baghdad and pro-war activists that too much attention has been paid to the failures in Iraq and not enough to the successes. You’ve surely seen the emails of smiling Iraqi children and rebuilt communities! This new report undermines that pro- war hype and recalls Bob Dylan's refrain "...there's no success like failure. And that failure's no success at all."
Bush is also "scaling back expectations for the Iraqi government" because he surely knows, as Frank Rich reports, that there is none: "... the Maliki “government” can’t meet any benchmarks, even if they were enforced, because that government exists only as a fictional White House talking point. As Gen. Barry McCaffrey said last week, this government doesn’t fully control a single province. Its Parliament, now approaching a scheduled summer recess, has passed no major legislation in months. Iraq’s sole recent democratic achievement is to ban the release of civilian casualty figures, lest they challenge White House happy talk about “progress” in Iraq."
In Saudi Arabia, 172 Al Qeada suspects were arrested for planning to blow up oil installations, and kill politicians- additional proof, as if it were needed, that the US venture in Iraq is in shambles. Buried in the Times report on these developments was an admission that the US occupation of Iraqi was generating more terrorist recruits: “The chaos in Iraq has fueled radical ideology among the region’s youth, while providing an environment for militants to train…Officials said that the suspects had trained abroad, in Somalia, Afghanistan and especially Iraq.'It is the beginning of jihadi operations leaking out of Iraq,' said Abdul Aziz al-Qassim, a retired Saudi judge and moderate Islamic activist. 'It is clear that this is some of the effects of what is happening in Iraq, in terms of training and in terms of learning from the Iraqi experience.'”
So the War continues, to paraphrase Kurt Vonnegut, longer now than US military operations in WWII, reconstruction has failed, and the world is less safe than it was before 9/11 as the US occupation of Iraq generates more and more terrorists! This is the world that the neo-cons and their ideological president have created!
Commentary on issues concerning Milwaukee, Wisconsin, and the nation.
(and sometimes wine & restaurant recommendations)
Sunday, April 29, 2007
Saturday, April 28, 2007
Ex-C.I.A. Chief Assails Cheney on Iraq!
George J. Tenet, the former director of central intelligence, has lashed out against Vice President Dick Cheney and other Bush administration officials in a new book, "At the Center of the Storm.”
He writes that top Bush administration officials pushed the country to war in Iraq without ever conducting a “serious debate” about whether Saddam Hussein posed an imminent threat to the United States.“There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat,” Mr. Tenet writes.
Nor, he adds, “was there ever a significant discussion” about the possibility of containing Iraq without an invasion.
Mr. Tenet largely endorses the view of administration critics, such as former Clinton and Bush terrorism Czar, Ricard Clarke, that Mr. Cheney and a handful of Pentagon officials, including Paul D. Wolfowitz and Douglas J. Feith, were focused on Iraq as a threat in late 2001 and 2002 even as Mr. Tenet and the C.I.A. concentrated mostly on Al Qaeda.
The book recounts C.I.A. efforts to fight Al Qaeda in the years before the Sept. 11 attacks, and Mr. Tenet’s early warnings about Osama bin Laden. He contends that the urgent appeals of the C.I.A. on terrorism received a lukewarm reception at the Bush White House through most of 2001.“The bureaucracy moved slowly,” and only after the Sept. 11 attacks was the C.I.A. given the counter terrorism powers it had requested earlier in the year.
Tenet's views echo those of Richard Clarke who wrote in his 2004 book, "Against All Enemies": "By late June (2001) Tenet and I were convinced that a major series of attacks was about to come. 'It's my sixth sense, but I feel it coming. This is going to be the big one,' Tenet told me. No one could have been more concerned about the al Qaeda threat than George, but he had been unable to find a way to go after the heart of al Qaeda...."
Clarke reports that he and Tenet tried to persuade the administration that al Qaeda posed a real threat at a September 4, 2001 meeting, seven days before the attack on the twin towers. "Rumsfeld, who looked distracted through the session, took the Wolfowitz line that there were other terrorist concerns, like Iraq..."
Clarke recounts briefing Condi Rice about al Qaeda" "...her facial expression gave me the impression that she had never heard the term before..." noting that"... Rice and her deputy, Steve Hadley, were still operating with the old Cold War paradigm...."
Clarke presciently concludes his book by saying:" The nation needed thoughtful leadership to deal with the underlying problems September 11 reflected...Instead America got unthinking reactions, ham held responses and a rejection of analysis in favor of perceived wisdom. It has left us left secure. We will pay a price for a long time." Presidential Medal of Freedom winner, George Tenet, apparently agrees.
He writes that top Bush administration officials pushed the country to war in Iraq without ever conducting a “serious debate” about whether Saddam Hussein posed an imminent threat to the United States.“There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat,” Mr. Tenet writes.
Nor, he adds, “was there ever a significant discussion” about the possibility of containing Iraq without an invasion.
Mr. Tenet largely endorses the view of administration critics, such as former Clinton and Bush terrorism Czar, Ricard Clarke, that Mr. Cheney and a handful of Pentagon officials, including Paul D. Wolfowitz and Douglas J. Feith, were focused on Iraq as a threat in late 2001 and 2002 even as Mr. Tenet and the C.I.A. concentrated mostly on Al Qaeda.
The book recounts C.I.A. efforts to fight Al Qaeda in the years before the Sept. 11 attacks, and Mr. Tenet’s early warnings about Osama bin Laden. He contends that the urgent appeals of the C.I.A. on terrorism received a lukewarm reception at the Bush White House through most of 2001.“The bureaucracy moved slowly,” and only after the Sept. 11 attacks was the C.I.A. given the counter terrorism powers it had requested earlier in the year.
Tenet's views echo those of Richard Clarke who wrote in his 2004 book, "Against All Enemies": "By late June (2001) Tenet and I were convinced that a major series of attacks was about to come. 'It's my sixth sense, but I feel it coming. This is going to be the big one,' Tenet told me. No one could have been more concerned about the al Qaeda threat than George, but he had been unable to find a way to go after the heart of al Qaeda...."
Clarke reports that he and Tenet tried to persuade the administration that al Qaeda posed a real threat at a September 4, 2001 meeting, seven days before the attack on the twin towers. "Rumsfeld, who looked distracted through the session, took the Wolfowitz line that there were other terrorist concerns, like Iraq..."
Clarke recounts briefing Condi Rice about al Qaeda" "...her facial expression gave me the impression that she had never heard the term before..." noting that"... Rice and her deputy, Steve Hadley, were still operating with the old Cold War paradigm...."
Clarke presciently concludes his book by saying:" The nation needed thoughtful leadership to deal with the underlying problems September 11 reflected...Instead America got unthinking reactions, ham held responses and a rejection of analysis in favor of perceived wisdom. It has left us left secure. We will pay a price for a long time." Presidential Medal of Freedom winner, George Tenet, apparently agrees.
Thursday, April 26, 2007
Firearm Mortality Related to Rates of Gun Ownership
Bob Herbert reports in the New York Times today that:
A study released by the Harvard School of Public Health compared firearm mortality rates among youngsters 5 to 14 years old in the five states with the highest rates of gun ownership with those in the five states with the lowest rates.
The results were chilling.
Children in the states with the highest rates of gun ownership were 16 times as likely to die from an accidental gunshot wound, nearly seven times as likely to commit suicide with a gun, and more than three times as likely to be murdered with a firearm.
Only a lunatic could seriously believe that more guns in more homes is good for America’s children.
A study released by the Harvard School of Public Health compared firearm mortality rates among youngsters 5 to 14 years old in the five states with the highest rates of gun ownership with those in the five states with the lowest rates.
The results were chilling.
Children in the states with the highest rates of gun ownership were 16 times as likely to die from an accidental gunshot wound, nearly seven times as likely to commit suicide with a gun, and more than three times as likely to be murdered with a firearm.
Only a lunatic could seriously believe that more guns in more homes is good for America’s children.
Wednesday, April 25, 2007
Tuesday, April 24, 2007
Germany Avoids Race to the Economic Bottom
The German economy, Europe's largest and third in the world, is booming. Unemployment and corporate bankruptcies are down. Investor confidence and exports are soaring.
Germany is the world’s largest exporter of goods and has been for four straight years. Its export led growth has continued even as the Euro has surged to near record levels against the dollar and the yen, making German products more expensive, and in spite of a January tax increase that critics warned would stall the economy.
In contrast, the engine of economic growth in the United States has been consumer spending, driven by unsustainable levels of household debt and the high tech and real estate bubbles which have now burst. While U.S. trade deficits have soared to record levels, Germany is running record surpluses.
Wages are higher in German than in the US, as is union density. German workers also enjoy a significantly higher social wages (vacations, family medical leave, minimum wages, etc.). Labor markets are less ”flexible.” Co-determination which ensures labor union representatives a voice on corporate boards remains a fixture.
There is a lesson here for US policy makers and firms. You can compete globally and treat your employees fairly! But it requires that companies “get smart” and abandon strategies based on low prices and low wages!
Most U.S. multinationals seek competitive advantage based on high volume, low cost production. As result, they are aggressively anti-union and outsource production to lower wage nations. Concessionary bargaining has been a center piece of US labor relations for more than 25 years! In Milwaukee, Master Lock, Briggs and Stratton and Johnson Controls have hemorrhaged jobs as a result of this approach. It’s cheaper to produce high volume, low cost products in Mexico and China! Apologists for this approach justify their actions as the only rational response to globalization.
But German companies have responded to globalization differently by producing high quality global, niche products. They don’t attempt to compete on price and low wages. Rather they seek competitive advantage based on high quality, service and strong brands! From machine tools, to automobiles to lasers, the demand for German products has soared and the economy has grown. Germany is Europe’s engine of growth.
Germany is demonstrating that the race to the bottom is not inevitable; that you can succeed in the global economy without abandoning the labor market reforms of the 20th Century. It's a lesson and strategy far different than Walmarts’!
Germany is the world’s largest exporter of goods and has been for four straight years. Its export led growth has continued even as the Euro has surged to near record levels against the dollar and the yen, making German products more expensive, and in spite of a January tax increase that critics warned would stall the economy.
In contrast, the engine of economic growth in the United States has been consumer spending, driven by unsustainable levels of household debt and the high tech and real estate bubbles which have now burst. While U.S. trade deficits have soared to record levels, Germany is running record surpluses.
Wages are higher in German than in the US, as is union density. German workers also enjoy a significantly higher social wages (vacations, family medical leave, minimum wages, etc.). Labor markets are less ”flexible.” Co-determination which ensures labor union representatives a voice on corporate boards remains a fixture.
There is a lesson here for US policy makers and firms. You can compete globally and treat your employees fairly! But it requires that companies “get smart” and abandon strategies based on low prices and low wages!
Most U.S. multinationals seek competitive advantage based on high volume, low cost production. As result, they are aggressively anti-union and outsource production to lower wage nations. Concessionary bargaining has been a center piece of US labor relations for more than 25 years! In Milwaukee, Master Lock, Briggs and Stratton and Johnson Controls have hemorrhaged jobs as a result of this approach. It’s cheaper to produce high volume, low cost products in Mexico and China! Apologists for this approach justify their actions as the only rational response to globalization.
But German companies have responded to globalization differently by producing high quality global, niche products. They don’t attempt to compete on price and low wages. Rather they seek competitive advantage based on high quality, service and strong brands! From machine tools, to automobiles to lasers, the demand for German products has soared and the economy has grown. Germany is Europe’s engine of growth.
Germany is demonstrating that the race to the bottom is not inevitable; that you can succeed in the global economy without abandoning the labor market reforms of the 20th Century. It's a lesson and strategy far different than Walmarts’!
Thursday, April 19, 2007
Republicans Protect Drug Company Profits!
Earlier this week Republican Senators blocked a proposal to let the federal government negotiate lower drug prices for millions of older Americans, a practice now forbidden by law. That's right- it is against the law for the United States government to use its leverage to secure lower prices for medicare subscribers despite the fact that government pays 60% of total health care costs!
The legislation would have saved senior citizens $30 billion a year.
Republican Senators argued that private companies can do a better job than the government of obtaining cost savings and that allowing Medicare to negotiate lower drug prices would constitute interference with the free market!
Their commitment to unfettered markets was nowhere to be found when pharmaceutical companies were spending hundreds of millions of dollars on lobbyists whose job it was to get Congress to pass Medicare legislation (the heavy hand of government) that created Part D restricting buyers' (Medicare's) market power.
Perhaps a review of the Senators campaign contributions would shed light on their ideological inconsistencies.
Paul Krugman recently reviewed the legislation's impact:
"The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.
As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.
In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious “doughnut hole,” the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.
Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits."
The legislation would have saved senior citizens $30 billion a year.
Republican Senators argued that private companies can do a better job than the government of obtaining cost savings and that allowing Medicare to negotiate lower drug prices would constitute interference with the free market!
Their commitment to unfettered markets was nowhere to be found when pharmaceutical companies were spending hundreds of millions of dollars on lobbyists whose job it was to get Congress to pass Medicare legislation (the heavy hand of government) that created Part D restricting buyers' (Medicare's) market power.
Perhaps a review of the Senators campaign contributions would shed light on their ideological inconsistencies.
Paul Krugman recently reviewed the legislation's impact:
"The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.
As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.
In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious “doughnut hole,” the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.
Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits."
Coincidentally, this week Merck, Schering-Plough, Wyeth, Johnson & Johnson, Abbott Laboratories and Eli Lilly announced that strong drug sales led to quarterly profits that topped Wall Street expectations, adding, according to the New York Times," to the wave of good news for investors in major pharmaceutical companies."
Republicans have forgotten that the obligation of public officials is to promote the public interest. They consistently use their offices to promote narrow private interests of oil, gas, mining, and pharmaceutical companies.
The founding fathers understood the corrosive impact of narrow business interests on democracy. The noted American historian, Gordon Wood, observed they believed that..."in a republic no person should be allowed to exploit the public authority for private gain. Indeed several states wrote into their revolutionary constitutions declarations against any man or group of men receiving special privileges from the community. 'Government 'said the New Hampshire Constitution, 'was instituted for common benefits, protection, and security of the whole community, and not for the private interests ...of any one man, family or class of men.'"
Benjamin Franklin, who became a public official after his retirement, thought there was no greater insult than to say someone thought like a shopkeeper.
How things have changed! Now candidates and public officials boast about being shopkeepers citing their "real world experience." This can only mean that the rest of us work in the surreal world!
This vote was a victory for the pharmaceutical industry which spent hundreds of millions of dollars to ensure that America’s senior citizens continue paying the highest drug prices in the world. Private interests trumped the public good.
The 2003 legislation should be renamed the pharmaceutical windfall profits protection plan!
Trees Generate Significant Economic Returns!
Researchers at the University of California at Davis and the United States Forest Service have determined that every dollar New York City invests in trees generates $5.60 in benefits.
The study analyzes a tree’s impact on local property values, its contribution to cleaning the air by absorbing carbon dioxide, and how much its shade helps reduce energy consumption. Factoring in the costs associated with planting and upkeep, New York City’s street trees provide an annual benefit of about $122 million.
$5.60 is a decent return- not as high as the $8-$16 that a dollar of early childhood education (the highest return you can get) generates. But it sure beats most money market funds and CDs. It’s high enough that it should turn every fiscal conservative into a conservationist! And it provides the citizens of Milwaukee another reason to appreciate the City’s forestry department and the contributions of its public employees.
The study analyzes a tree’s impact on local property values, its contribution to cleaning the air by absorbing carbon dioxide, and how much its shade helps reduce energy consumption. Factoring in the costs associated with planting and upkeep, New York City’s street trees provide an annual benefit of about $122 million.
$5.60 is a decent return- not as high as the $8-$16 that a dollar of early childhood education (the highest return you can get) generates. But it sure beats most money market funds and CDs. It’s high enough that it should turn every fiscal conservative into a conservationist! And it provides the citizens of Milwaukee another reason to appreciate the City’s forestry department and the contributions of its public employees.
Sunday, April 15, 2007
Airlines Praised for Breaking Promises!
When the airline industry went into a deep slump after the 2001 terrorist attacks, American Airlines' pilots, flight attendants and mechanics agreed to billions of dollars in cuts in wages and benefits to keep the carrier afloat. American’s 18,000 attendants took an across-the-board 16% pay cut and gave up vacation days.
Now the airline industry is back. Passenger traffic and fares are up. The industry netted a cool $2 billion in profits last year. So American Airlines plans to reward almost 1000 top executives (how can you even have 1000 top executives?) with more than $180 million in bonuses.
Business Week brags: “Since September 11, 2001 the airlines have done a tremendous job of cutting employee costs. Four of the largest carriers declared bankruptcy, allowing them to break labor contracts and hand over pension liabilities to the federal government.”
Airline executives are being celebrated for cutting the pay of its pilots, mechanics and attendants, breaking contracts, reneging on retirement benefits and shifting the responsibility to the American taxpayer! Gordon Gekko is alive and well!
Since when did people who break promises and shirk responsibility become heroes?
And for those who like to pretend that this is all just posturing because executive compensation is too small to make a difference, do the math!
$180 million split among 57,000 workers is....$3,123 each. $3 grand may be chump change for the new robber barons running American Airlines, but it would make a real difference in the lives of the company's flight attendants.
Now the airline industry is back. Passenger traffic and fares are up. The industry netted a cool $2 billion in profits last year. So American Airlines plans to reward almost 1000 top executives (how can you even have 1000 top executives?) with more than $180 million in bonuses.
Business Week brags: “Since September 11, 2001 the airlines have done a tremendous job of cutting employee costs. Four of the largest carriers declared bankruptcy, allowing them to break labor contracts and hand over pension liabilities to the federal government.”
Airline executives are being celebrated for cutting the pay of its pilots, mechanics and attendants, breaking contracts, reneging on retirement benefits and shifting the responsibility to the American taxpayer! Gordon Gekko is alive and well!
Since when did people who break promises and shirk responsibility become heroes?
And for those who like to pretend that this is all just posturing because executive compensation is too small to make a difference, do the math!
$180 million split among 57,000 workers is....$3,123 each. $3 grand may be chump change for the new robber barons running American Airlines, but it would make a real difference in the lives of the company's flight attendants.
Friday, April 13, 2007
UWM Study Misrepresents Brewers' Impact
Opening Day is a time for optimism. Spring and warm weather are just around the corner. Another miserable Bucks season comes to a merciful close. And we can hope against hope that our hapless Brewers will finally make a real run at the pennant or at least a winning record.
But a recent piece in the Journal Sentinel by Leon Schur and Swarnjit Arora gives new meaning to the baseball fans' maxim that “hope springs eternal” when it asserts that: “The direct and indirect economic impact by visitors (Brewers’ fans) from outside the area, a majority of whom came from outside the state, resulted in $327.3 million in increased spending and the creation of 4,683 additional full and part time jobs.”
These findings contradict all academic studies of professional sports teams. Studies done by independent economists, not those paid for by stadium proponents or the professional sports cartel like this one which was financed by Major League Baseball, are unanimous that there is no real economic benefit from public subsidies of sports stadiums or teams. A study done by Robert Baade of Lake Forest College, for example, studied 30 cities over 30 years and found that 27 experienced no significant impact from new stadiums while three cities experienced a negative economic impact.
An anthology edited by economists, Roger G. Noll and Andrew Zimbalist, concluded: “A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.”
The Schur and Arora study makes two major errors: it ignores the substitution effect and grossly overestimates the number out of town visitors and their expenditures. Both contribute to grossly overestimating the Brewers contribution to the local economy.
Schur and Arora acknowledge that their argument relies on historical local economic impact multipliers. But these multipliers misrepresent the effect of consumer expenditures on professional sports because sports expenditures are subject to extraordinary consumer substitution away from other local entertainment expenditures.
Money spent on the Brewers is not new spending. Most Brewers' fans have a relatively inflexible and limited budget for recreational and leisure activities. The money they spend on a sporting event is a substitute for other local entertainment such as movies, restaurants, or Milwaukee Wave games.
Brewers’ baseball doesn’t increase the aggregate amount of entertainment spending in metro Milwaukee; it simply redistributes it from one form of entertainment to another.This reallocation of expenditures creates a zero net effect (or close to it) in the metropolitan area.
Similarly, most professional sports tax collections, almost $15 million according to the Brewers’ study, are also substitutes: as other entertainment businesses decline, tax collections from them fall, something the Schur and Arora study fails to take into account.
Schur and Arora estimate that 57% of Miller Park attendees came from outside the metropolitan area, “a majority of whom came from outside the state,” and spent an additional “$327.3 million”. This is almost double the most successful export facility, Oriole Park, where less than a third of the crowd at every game came from outside the Baltimore area. (Baltimore's baseball exports were enhanced because it was 40 miles from the nation's capital, which had no major league baseball team until a few years ago.) Even so, the net gain to Baltimore's economy in terms of new jobs and incremental tax revenues was roughly $3 million a year—not much of a return on a $200 million stadium investment and not close to Schur and Arora’s $327 million.
The evidence is overwhelming that sports facilities and professional teams attract relatively few visitors (except for the visiting teams themselves) nor industry.
Schur and Arora even overestimate the spending of the Wisconsin visitors the Brewers’ attract. Fans from Green Bay and Wausau don’t spend nearly as much as projected because tailgating, one of the rationales’s for locating the stadium outside downtown Milwaukee, ensures that visitors spend their food and beverage dollars in the communities they come from. Put simply, people who tailgate buy their beer and brats at the local grocery before the game.
Schur and Arora attribute significant job growth to the Brewers. But, most sports revenue goes to a relatively few players, managers, coaches, and executives who earn extremely high salaries—all well above the earnings of people who work in the industries that are substitutes for sports. Most stadium employees work part time at very low wages and earn a small fraction of team revenues. Thus, substituting spending on sports for other recreational spending concentrates income, reduces the total number of jobs, and replaces full-time jobs with low-wage, part-time jobs. In fact, since Miller Park was built Milwaukee has lost 19,000 jobs!
Professional sports expenditures also suffer unusually large first round leakages from the local economy because players export their earnings to the locale of their permanent residency. Very few Brewers reside in Milwaukee full time. When Robin Yount was the highest paid Brewer in the early 1990’s his permanent residence was in Arizona. Moreover, players make inflated salaries for only a few years, so they have high savings, which they invest in national firms. Most of the millions that Schur and Arora count simply leaves this community with the players and their investment advisers.
Stadium booster studies fail to recognize that there is an opportunity cost involved in publicly financing stadiums. More than the price of construction, what communities sacrifice in other goods or services to build professional stadiums is critical in determining the benefit to the community. For example, in Milwaukee, with the 7th highest poverty rate in the country and an African American unemployment rate of 44%, there are strong arguments that the public dollars that financed Miller Park would have been better spent on education (in the early 1990’s MPS Superintendent Howard Fuller unsuccessfully proposed a $400 million construction and maintenance program for the Milwaukee Public Schools) or in subsidizing programs that provide full time, family support jobs or training.
According to researchers Noll and Zimbalist, “the opportunity forgone in building a stadium is not the cost of the stadium, but the benefits from the other ways this money could be spent (including tax reductions).”
Finally Schur and Arora argue that the Brewers are an amenity “… helping to decrease the recognized brain drain from Wisconsin.” This is circular reasoning at best. The Brewers have been in Milwaukee since 1970, well before the alleged "brain drain" began. If the Brewers were the solution, we wouldn't have the problem!
The 1994/1995 Major League Baseball strike was a natural experiment that sheds light on the impact of professional baseball on a local economy. If Schur and Arora are correct, the strike would have had a significant and negative impact on Milwaukee's economy. It had none. In fact, a study by John Zipp, formerly of UWM, found:”… the strike had little, if any, economic impact on host cities. Retail trade appeared to be almost completely unaffected by the strike...."
Dennis Coates and Brad R. Humphreys from the University of Maryland Baltimore County arrived at similar conclusions writing:” …work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.”
There may be good reasons for rooting for the Brewers. Economic development isn't one of them.
But a recent piece in the Journal Sentinel by Leon Schur and Swarnjit Arora gives new meaning to the baseball fans' maxim that “hope springs eternal” when it asserts that: “The direct and indirect economic impact by visitors (Brewers’ fans) from outside the area, a majority of whom came from outside the state, resulted in $327.3 million in increased spending and the creation of 4,683 additional full and part time jobs.”
These findings contradict all academic studies of professional sports teams. Studies done by independent economists, not those paid for by stadium proponents or the professional sports cartel like this one which was financed by Major League Baseball, are unanimous that there is no real economic benefit from public subsidies of sports stadiums or teams. A study done by Robert Baade of Lake Forest College, for example, studied 30 cities over 30 years and found that 27 experienced no significant impact from new stadiums while three cities experienced a negative economic impact.
An anthology edited by economists, Roger G. Noll and Andrew Zimbalist, concluded: “A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.”
The Schur and Arora study makes two major errors: it ignores the substitution effect and grossly overestimates the number out of town visitors and their expenditures. Both contribute to grossly overestimating the Brewers contribution to the local economy.
Schur and Arora acknowledge that their argument relies on historical local economic impact multipliers. But these multipliers misrepresent the effect of consumer expenditures on professional sports because sports expenditures are subject to extraordinary consumer substitution away from other local entertainment expenditures.
Money spent on the Brewers is not new spending. Most Brewers' fans have a relatively inflexible and limited budget for recreational and leisure activities. The money they spend on a sporting event is a substitute for other local entertainment such as movies, restaurants, or Milwaukee Wave games.
Brewers’ baseball doesn’t increase the aggregate amount of entertainment spending in metro Milwaukee; it simply redistributes it from one form of entertainment to another.This reallocation of expenditures creates a zero net effect (or close to it) in the metropolitan area.
Similarly, most professional sports tax collections, almost $15 million according to the Brewers’ study, are also substitutes: as other entertainment businesses decline, tax collections from them fall, something the Schur and Arora study fails to take into account.
Schur and Arora estimate that 57% of Miller Park attendees came from outside the metropolitan area, “a majority of whom came from outside the state,” and spent an additional “$327.3 million”. This is almost double the most successful export facility, Oriole Park, where less than a third of the crowd at every game came from outside the Baltimore area. (Baltimore's baseball exports were enhanced because it was 40 miles from the nation's capital, which had no major league baseball team until a few years ago.) Even so, the net gain to Baltimore's economy in terms of new jobs and incremental tax revenues was roughly $3 million a year—not much of a return on a $200 million stadium investment and not close to Schur and Arora’s $327 million.
The evidence is overwhelming that sports facilities and professional teams attract relatively few visitors (except for the visiting teams themselves) nor industry.
Schur and Arora even overestimate the spending of the Wisconsin visitors the Brewers’ attract. Fans from Green Bay and Wausau don’t spend nearly as much as projected because tailgating, one of the rationales’s for locating the stadium outside downtown Milwaukee, ensures that visitors spend their food and beverage dollars in the communities they come from. Put simply, people who tailgate buy their beer and brats at the local grocery before the game.
Schur and Arora attribute significant job growth to the Brewers. But, most sports revenue goes to a relatively few players, managers, coaches, and executives who earn extremely high salaries—all well above the earnings of people who work in the industries that are substitutes for sports. Most stadium employees work part time at very low wages and earn a small fraction of team revenues. Thus, substituting spending on sports for other recreational spending concentrates income, reduces the total number of jobs, and replaces full-time jobs with low-wage, part-time jobs. In fact, since Miller Park was built Milwaukee has lost 19,000 jobs!
Professional sports expenditures also suffer unusually large first round leakages from the local economy because players export their earnings to the locale of their permanent residency. Very few Brewers reside in Milwaukee full time. When Robin Yount was the highest paid Brewer in the early 1990’s his permanent residence was in Arizona. Moreover, players make inflated salaries for only a few years, so they have high savings, which they invest in national firms. Most of the millions that Schur and Arora count simply leaves this community with the players and their investment advisers.
Stadium booster studies fail to recognize that there is an opportunity cost involved in publicly financing stadiums. More than the price of construction, what communities sacrifice in other goods or services to build professional stadiums is critical in determining the benefit to the community. For example, in Milwaukee, with the 7th highest poverty rate in the country and an African American unemployment rate of 44%, there are strong arguments that the public dollars that financed Miller Park would have been better spent on education (in the early 1990’s MPS Superintendent Howard Fuller unsuccessfully proposed a $400 million construction and maintenance program for the Milwaukee Public Schools) or in subsidizing programs that provide full time, family support jobs or training.
According to researchers Noll and Zimbalist, “the opportunity forgone in building a stadium is not the cost of the stadium, but the benefits from the other ways this money could be spent (including tax reductions).”
Finally Schur and Arora argue that the Brewers are an amenity “… helping to decrease the recognized brain drain from Wisconsin.” This is circular reasoning at best. The Brewers have been in Milwaukee since 1970, well before the alleged "brain drain" began. If the Brewers were the solution, we wouldn't have the problem!
The 1994/1995 Major League Baseball strike was a natural experiment that sheds light on the impact of professional baseball on a local economy. If Schur and Arora are correct, the strike would have had a significant and negative impact on Milwaukee's economy. It had none. In fact, a study by John Zipp, formerly of UWM, found:”… the strike had little, if any, economic impact on host cities. Retail trade appeared to be almost completely unaffected by the strike...."
Dennis Coates and Brad R. Humphreys from the University of Maryland Baltimore County arrived at similar conclusions writing:” …work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.”
There may be good reasons for rooting for the Brewers. Economic development isn't one of them.
Thursday, April 12, 2007
Bush Administration Doctors Another Report
The Bush administration’s cynical manipulation of information is well documented.
From fabrications about Iraq (weapons of mass destruction, fictional uranium purchases in Niger and associating Saddam Hussein with 9/11) to the rewriting of scientific reports on global warming by Bush appointee, Philip A. Cooney (a former lobbyist for the American Petroleum Institute with no scientific training), this administration has made truth a casualty of political expediency.
Now we have learned that the Republican campaign against voter fraud is itself fraudulent.
The New York Times reported yesterday that a Republican dominated panel, the Election Assistance Commission, rewrote a federal study that concluded that voter fraud is nonexistent to suggest exactly the opposite.
Allegations of voter fraud have been used to enact voter identification laws in at least two dozen states. And the failure to vigorously pursue voter fraud was one of the reasons used to fire eight United States attorneys which is now under investigation by the United States Congress.
Most objective commentators have argued that voter fraud was being used by Republican operatives to suppress traditionally Democratic voters, the poor, members of minority groups and the elderly, who are less likely to have photo IDs.
Though the original report said that among experts “there is widespread but not unanimous agreement that there is little polling place fraud,” the final version of the report released to the public concluded in its executive summary that “there is a great deal of debate on the pervasiveness of fraud.”
There was no voter fraud. The Republican manufactured campaign against voter fraud is itself fraudulent.
From fabrications about Iraq (weapons of mass destruction, fictional uranium purchases in Niger and associating Saddam Hussein with 9/11) to the rewriting of scientific reports on global warming by Bush appointee, Philip A. Cooney (a former lobbyist for the American Petroleum Institute with no scientific training), this administration has made truth a casualty of political expediency.
Now we have learned that the Republican campaign against voter fraud is itself fraudulent.
The New York Times reported yesterday that a Republican dominated panel, the Election Assistance Commission, rewrote a federal study that concluded that voter fraud is nonexistent to suggest exactly the opposite.
Allegations of voter fraud have been used to enact voter identification laws in at least two dozen states. And the failure to vigorously pursue voter fraud was one of the reasons used to fire eight United States attorneys which is now under investigation by the United States Congress.
Most objective commentators have argued that voter fraud was being used by Republican operatives to suppress traditionally Democratic voters, the poor, members of minority groups and the elderly, who are less likely to have photo IDs.
Though the original report said that among experts “there is widespread but not unanimous agreement that there is little polling place fraud,” the final version of the report released to the public concluded in its executive summary that “there is a great deal of debate on the pervasiveness of fraud.”
There was no voter fraud. The Republican manufactured campaign against voter fraud is itself fraudulent.
Wednesday, April 11, 2007
"Business Week" Solves Labor Shortage Mystery
The great labor shortage mystery has been solved!
Throughout the late 1990’s and again recently, business organizations and owners have identified skilled labor shortages as the major obstacle to economic growth.
At the same time, multi-national corporations from Circuit City to General Motors to Citibank have been laying off tens of thousands of experienced employees. It is also well documented that cities like Milwaukee suffer from exceptionally high rates of African American unemployment.
It makes one wonder how labor shortages, layoffs and high rates of African American unemployment can exist simultaneously.
A recent Business Week article may provide the answer:
A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That's in spite of widely publicized layoffs, including Citigroup's plans to shed as many as 15,000 staffers ... Corporations are determined to keep labor costs under control, so they're reaching deeper into their bag of tricks ... Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven't discovered ... Economists, of course, will tell you there's no such thing as a labor shortage. From a worker's viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can't find jobs. The strongest evidence that there's no general shortage today is that overall worker pay has barely outpaced inflation.
At the dawn of the Twentieth Century Henry Ford couldn’t find dependable workers. His company's turnover rate was 300%. Ford was, in today’s business speak, facing severe labor shortages. His solution was to double the daily wage to $5 a day. Bingo! As the price (hourly wage) was increased the number of workers willing to work on the assembly lines increased dramatically. Ford jobs became desirable, despite being hard, monotonous and dangerous. The labor shortage vanished.
Maybe there’s a lesson for today’s employers. Or maybe they know, as the Business Week article suggests, exactly what they are doing - keeping labor costs under control!
Throughout the late 1990’s and again recently, business organizations and owners have identified skilled labor shortages as the major obstacle to economic growth.
At the same time, multi-national corporations from Circuit City to General Motors to Citibank have been laying off tens of thousands of experienced employees. It is also well documented that cities like Milwaukee suffer from exceptionally high rates of African American unemployment.
It makes one wonder how labor shortages, layoffs and high rates of African American unemployment can exist simultaneously.
A recent Business Week article may provide the answer:
A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That's in spite of widely publicized layoffs, including Citigroup's plans to shed as many as 15,000 staffers ... Corporations are determined to keep labor costs under control, so they're reaching deeper into their bag of tricks ... Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven't discovered ... Economists, of course, will tell you there's no such thing as a labor shortage. From a worker's viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can't find jobs. The strongest evidence that there's no general shortage today is that overall worker pay has barely outpaced inflation.
At the dawn of the Twentieth Century Henry Ford couldn’t find dependable workers. His company's turnover rate was 300%. Ford was, in today’s business speak, facing severe labor shortages. His solution was to double the daily wage to $5 a day. Bingo! As the price (hourly wage) was increased the number of workers willing to work on the assembly lines increased dramatically. Ford jobs became desirable, despite being hard, monotonous and dangerous. The labor shortage vanished.
Maybe there’s a lesson for today’s employers. Or maybe they know, as the Business Week article suggests, exactly what they are doing - keeping labor costs under control!
Tuesday, April 10, 2007
McDonalds Workers Organize in China!
A year after the notoriously anti-union Wal-Mart agreed to unionize all its stores in China, McDonalds announced that it will allow employees in its 750 Chinese stores to form unions.
There are 60 million workers in the "land of the free," thousands who are employed by McDonalds and Wal-Mart, who would love to have the same right to unionize and engage in collective bargaining.
They are denied these rights by employer coercion and weak US labor laws. According to a survey of National Labor Relations Board (NLRB) election campaigns in 1998 and 1999 by Cornell University scholar Kate Bronfenbrenner, private-sector employers illegally fire employees for union activity in at least 25 percent of all efforts to join a union.
The All-China Federation of Trade Unions says its goal by the end of this year is to have unions active in 70 percent of the foreign-invested companies operating here. Yet in the United States the percentage of private sectors workers in unions has fallen to 7.4%. No wonder wages are stagnating and inequality is growing!
If Wal-Mart and McDonalds can extend the basic democratic right to organize to workers in China, is it too much to ask that they do the same for their employees at home?
There are 60 million workers in the "land of the free," thousands who are employed by McDonalds and Wal-Mart, who would love to have the same right to unionize and engage in collective bargaining.
They are denied these rights by employer coercion and weak US labor laws. According to a survey of National Labor Relations Board (NLRB) election campaigns in 1998 and 1999 by Cornell University scholar Kate Bronfenbrenner, private-sector employers illegally fire employees for union activity in at least 25 percent of all efforts to join a union.
The All-China Federation of Trade Unions says its goal by the end of this year is to have unions active in 70 percent of the foreign-invested companies operating here. Yet in the United States the percentage of private sectors workers in unions has fallen to 7.4%. No wonder wages are stagnating and inequality is growing!
If Wal-Mart and McDonalds can extend the basic democratic right to organize to workers in China, is it too much to ask that they do the same for their employees at home?
Monday, April 9, 2007
NY Times calls for Investigation of Thompson Case
The New York Times called on Congress to expand its investigation of the Bush administration's political firing of eight United States attorneys to include a review of the role top Bush administrators played in the prosecution and imprisonment of Wisconsin state employee Georgia Thompson.
In a sharply worded editorial, the Times asked: "what did the surviving attorneys (including the United States attorney in Milwaukee, Steven Biskupic) do to escape the ax?"
The Times added its voice to a growing chorus that is demanding to know if Biskupic prosecuted Georgia Thompson, who was imprisoned on evidence that Judge Diane Woods called "beyond thin," at the urging of Bush operatives who thought the corruption trial would help their candidate in November's gubanatorial election.
Here is what the Times wrote:
"As Congress investigates the politicization of the United States attorney offices by the Bush administration, it should review the extraordinary events the other day in a federal courtroom in Wisconsin. The case involved Georgia Thompson, a state employee sent to prison on the flimsiest of corruption charges just as her boss, a Democrat, was fighting off a Republican challenger. It just might shed some light on a question that lurks behind the firing of eight top federal prosecutors: what did the surviving attorneys do to escape the axe?
Ms. Thompson, a purchasing official in the state’s Department of Administration, was accused by the United States attorney in Milwaukee, Steven Biskupic, of awarding a travel contract to a company whose chief executive contributed to the campaign of Gov. Jim Doyle, a Democrat. Ms. Thompson said the decision was made on the merits, but she was convicted and sent to prison before she could appeal.
The prosecution was a boon to Mr. Doyle’s opponent. Republicans ran a barrage of attack ads that purported to tie Ms. Thompson’s “corruption” to Mr. Doyle. Ms. Thompson was sentenced shortly before the election, which Governor Doyle won.
The Chicago-based United States Court of Appeals for the Seventh Circuit seemed shocked by the injustice of her conviction. It took the extraordinary step of releasing Ms. Thompson from prison immediately after hearing arguments, without waiting to issue a ruling. One of the judges hinted that Ms. Thompson may have been railroaded. “It strikes me that your evidence is beyond thin,” Judge Diane Wood told the lawyer from Mr. Biskupic’s office.
Ms. Thompson’s case is not the only one raising questions about whether prosecutors tried last year to tilt close elections toward the Republicans. New Jersey’s federal prosecutor conducted an investigation of weak-looking allegations against Senator Robert Menendez that was used in Republican ads.
Congress should look into both cases to determine whether partisan politics played a role — and whether they were coordinated with anyone at the Justice Department or the White House.
The list of things to investigate keeps growing. A federal agency that protects the rights of military employees is now investigating the firing of David Iglesias, the New Mexico United States attorney. Justice Department officials said he was fired in part because he was out of the office due to his commitments as a Navy military reservist. If so, the firing may have been illegal.
There is also trouble in the Minnesota United States attorney’s office, where the administration recently installed Rachel Paulose, a 34-year-old with scant management experience. Three of her top assistants have resigned their management positions, and The St. Paul Pioneer Press reports that they did so out of dissatisfaction with her. Senator Charles Schumer, Democrat of New York, said the resignations were more evidence of the attorneys’ offices being “deprofessionalized.”
The White House is resisting making Karl Rove; Harriet Miers, the former White House counsel; and other top officials available to Congress. Mr. Schumer proposed last week that their testimony could, at least as a first step, be taken in private, but with a transcript. Clearly, he made the offer to move the investigation forward. But any agreement to conduct such interviews should make it clear that they would be followed by open testimony before Congress.
The integrity of the Justice Department is a matter of overriding importance. Voters should be able to see and hear the testimony for themselves.
In a sharply worded editorial, the Times asked: "what did the surviving attorneys (including the United States attorney in Milwaukee, Steven Biskupic) do to escape the ax?"
The Times added its voice to a growing chorus that is demanding to know if Biskupic prosecuted Georgia Thompson, who was imprisoned on evidence that Judge Diane Woods called "beyond thin," at the urging of Bush operatives who thought the corruption trial would help their candidate in November's gubanatorial election.
Here is what the Times wrote:
"As Congress investigates the politicization of the United States attorney offices by the Bush administration, it should review the extraordinary events the other day in a federal courtroom in Wisconsin. The case involved Georgia Thompson, a state employee sent to prison on the flimsiest of corruption charges just as her boss, a Democrat, was fighting off a Republican challenger. It just might shed some light on a question that lurks behind the firing of eight top federal prosecutors: what did the surviving attorneys do to escape the axe?
Ms. Thompson, a purchasing official in the state’s Department of Administration, was accused by the United States attorney in Milwaukee, Steven Biskupic, of awarding a travel contract to a company whose chief executive contributed to the campaign of Gov. Jim Doyle, a Democrat. Ms. Thompson said the decision was made on the merits, but she was convicted and sent to prison before she could appeal.
The prosecution was a boon to Mr. Doyle’s opponent. Republicans ran a barrage of attack ads that purported to tie Ms. Thompson’s “corruption” to Mr. Doyle. Ms. Thompson was sentenced shortly before the election, which Governor Doyle won.
The Chicago-based United States Court of Appeals for the Seventh Circuit seemed shocked by the injustice of her conviction. It took the extraordinary step of releasing Ms. Thompson from prison immediately after hearing arguments, without waiting to issue a ruling. One of the judges hinted that Ms. Thompson may have been railroaded. “It strikes me that your evidence is beyond thin,” Judge Diane Wood told the lawyer from Mr. Biskupic’s office.
Ms. Thompson’s case is not the only one raising questions about whether prosecutors tried last year to tilt close elections toward the Republicans. New Jersey’s federal prosecutor conducted an investigation of weak-looking allegations against Senator Robert Menendez that was used in Republican ads.
Congress should look into both cases to determine whether partisan politics played a role — and whether they were coordinated with anyone at the Justice Department or the White House.
The list of things to investigate keeps growing. A federal agency that protects the rights of military employees is now investigating the firing of David Iglesias, the New Mexico United States attorney. Justice Department officials said he was fired in part because he was out of the office due to his commitments as a Navy military reservist. If so, the firing may have been illegal.
There is also trouble in the Minnesota United States attorney’s office, where the administration recently installed Rachel Paulose, a 34-year-old with scant management experience. Three of her top assistants have resigned their management positions, and The St. Paul Pioneer Press reports that they did so out of dissatisfaction with her. Senator Charles Schumer, Democrat of New York, said the resignations were more evidence of the attorneys’ offices being “deprofessionalized.”
The White House is resisting making Karl Rove; Harriet Miers, the former White House counsel; and other top officials available to Congress. Mr. Schumer proposed last week that their testimony could, at least as a first step, be taken in private, but with a transcript. Clearly, he made the offer to move the investigation forward. But any agreement to conduct such interviews should make it clear that they would be followed by open testimony before Congress.
The integrity of the Justice Department is a matter of overriding importance. Voters should be able to see and hear the testimony for themselves.
Saturday, April 7, 2007
The Journal Sentinel Denies Middle Class Decline
A recent Milwaukee Journal Sentinel editorial minimized concerns about increased economic inequality when it suggested: "If the middle class is shrinking, it may just be because some of its former members have moved up...There is no doubt that many people feel under stress because of smaller wage gains in recent years and rising costs. But the middle class is holding its own."
That argument is a pretty hard sell since, contrary to the Journal's claims, 90% of Americans have seen their incomes fall and only the extremely wealthy have experienced significant increases. Not since the Roaring Twenties have the rich been so much richer than everyone else. And we all know how that ended up!
But even without the newest numbers, the Journal's argument is a dubious notion in the dairy state where household income fell more than in any other state over the past six years (-2.2%) and health care costs are more than 20% above the national average. Milwaukee has the nation's 7th highest poverty rate, ranking even higher than even pre-Katrina New Orleans, the 4th highest child poverty rate, and the highest (or 2nd highest) African American unemployment rate (44%).
The most recent numbers only further weaken the Journal's argument
In 2005 while the economy grew at a 3.25% rate and productivity by 2.1%, 90% of Americans' real market income (i.e., income aside from government transfers) actually fell $172 (-0.6%).
All income gains went to households in the top 10%, people earning above $100,000. Moreover, the higher up the income scale—say, the top 1% and above—experienced the largest gains of all.Income growth for households within the 90-95th percentile was up a modest 2.2%. But wealthy households did much better. In fact, income growth among the top half of the top 1% (a group whose average annual income is already $1.8 million) soared 16%!
300,000 Americans earned almost as much income as the bottom 150 million Americans. They received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.
The top 10 percent of Americans collected nearly half (48.5%) of all reported income in 2005 up from roughly 33% in the late 1970s. It is only slightly below the Gilded Age peak of 49.3% in 1928.
The top 1% received 21.8% of all reported income in 2005, doubling their share of income in 1980.The top tenth of a percent and top one-hundredth of a percent recorded even bigger gains in 2005 over the previous year. Their incomes soared by almost 20% in one year, largely because of the rising stock market and increased business profits.
The result of these trends is that, in 2006, the share of national income going to wages and salaries (51.6%)was at the lowest level on record.Increased health care and other benefit costs do not explain this redistribution since the share of national income going to total employee compensation in 2006 — 64.0 percent — is also near an all time low.
What, then, explains all this? Well, follow the money!
Corporate profits captured a record 13.8 percent of national income in 2006. In the early 1990's corporate profits were less than 10%.
These trends lead to two clear conclusions. First, the factors driving inequality—diminished union presence, globalization, surging CEO pay, upper income tax cuts—are funneling growth to the top of the income scale and dramatically shaping the economic fate of America's working families. Second, these trends argue against additional regressive tax cuts that favor the wealthiest and exacerbate the seriously skewed pre-tax income distribution.
Milwaukee has been hammered by a loss of blue collar middle class jobs. From Tower/A.O. Smith to Delphi, working men and women aren't just feeling stressed as the Journal suggests. They are actually losing union jobs and their foothold in the middle class.
Nationally, according to the Bureau of Labor Statistics, more than 30 million people have been forced out of jobs since the early 1980s. Most have seen their incomes decline! While nearly 50 million new jobs have been created during this period they are mainly at lower pay. Among those who have lost work, only a third held new jobs two years later that paid as well as those that were lost. Another third were in jobs that paid, on average, 15% to 20% percent less than their previous employment — while the final third had dropped out of the labor force entirely.
Michigan, which shared the dubious distinction with Wisconsin of experiencing a decline in household income, reported a jump in net out migration last year: some 42,300 people left, up from 29,700 in 2005. That was far and away the largest outflow from the state since 1984, during the Rust Belt's deindustrialization crisis. In some Michigan neighborhoods that had been home to auto workers, the New York Times reports, houses are now selling for less than the prices of some of the vehicles rolling off of assembly lines in Detroit, Dearborn, Lansing and elsewhere in the state.
Economic inequality and insecurity are growing. Dissatisfaction with these developments was a key factor in the Democratic take-over of Congress. The Journal's denial of these realities is a triumph of ideology over reality that trivializes the plight of Wisconsin's working people.
That argument is a pretty hard sell since, contrary to the Journal's claims, 90% of Americans have seen their incomes fall and only the extremely wealthy have experienced significant increases. Not since the Roaring Twenties have the rich been so much richer than everyone else. And we all know how that ended up!
But even without the newest numbers, the Journal's argument is a dubious notion in the dairy state where household income fell more than in any other state over the past six years (-2.2%) and health care costs are more than 20% above the national average. Milwaukee has the nation's 7th highest poverty rate, ranking even higher than even pre-Katrina New Orleans, the 4th highest child poverty rate, and the highest (or 2nd highest) African American unemployment rate (44%).
The most recent numbers only further weaken the Journal's argument
In 2005 while the economy grew at a 3.25% rate and productivity by 2.1%, 90% of Americans' real market income (i.e., income aside from government transfers) actually fell $172 (-0.6%).
All income gains went to households in the top 10%, people earning above $100,000. Moreover, the higher up the income scale—say, the top 1% and above—experienced the largest gains of all.Income growth for households within the 90-95th percentile was up a modest 2.2%. But wealthy households did much better. In fact, income growth among the top half of the top 1% (a group whose average annual income is already $1.8 million) soared 16%!
300,000 Americans earned almost as much income as the bottom 150 million Americans. They received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.
The top 10 percent of Americans collected nearly half (48.5%) of all reported income in 2005 up from roughly 33% in the late 1970s. It is only slightly below the Gilded Age peak of 49.3% in 1928.
The top 1% received 21.8% of all reported income in 2005, doubling their share of income in 1980.The top tenth of a percent and top one-hundredth of a percent recorded even bigger gains in 2005 over the previous year. Their incomes soared by almost 20% in one year, largely because of the rising stock market and increased business profits.
The result of these trends is that, in 2006, the share of national income going to wages and salaries (51.6%)was at the lowest level on record.Increased health care and other benefit costs do not explain this redistribution since the share of national income going to total employee compensation in 2006 — 64.0 percent — is also near an all time low.
What, then, explains all this? Well, follow the money!
Corporate profits captured a record 13.8 percent of national income in 2006. In the early 1990's corporate profits were less than 10%.
These trends lead to two clear conclusions. First, the factors driving inequality—diminished union presence, globalization, surging CEO pay, upper income tax cuts—are funneling growth to the top of the income scale and dramatically shaping the economic fate of America's working families. Second, these trends argue against additional regressive tax cuts that favor the wealthiest and exacerbate the seriously skewed pre-tax income distribution.
Milwaukee has been hammered by a loss of blue collar middle class jobs. From Tower/A.O. Smith to Delphi, working men and women aren't just feeling stressed as the Journal suggests. They are actually losing union jobs and their foothold in the middle class.
Nationally, according to the Bureau of Labor Statistics, more than 30 million people have been forced out of jobs since the early 1980s. Most have seen their incomes decline! While nearly 50 million new jobs have been created during this period they are mainly at lower pay. Among those who have lost work, only a third held new jobs two years later that paid as well as those that were lost. Another third were in jobs that paid, on average, 15% to 20% percent less than their previous employment — while the final third had dropped out of the labor force entirely.
Michigan, which shared the dubious distinction with Wisconsin of experiencing a decline in household income, reported a jump in net out migration last year: some 42,300 people left, up from 29,700 in 2005. That was far and away the largest outflow from the state since 1984, during the Rust Belt's deindustrialization crisis. In some Michigan neighborhoods that had been home to auto workers, the New York Times reports, houses are now selling for less than the prices of some of the vehicles rolling off of assembly lines in Detroit, Dearborn, Lansing and elsewhere in the state.
Economic inequality and insecurity are growing. Dissatisfaction with these developments was a key factor in the Democratic take-over of Congress. The Journal's denial of these realities is a triumph of ideology over reality that trivializes the plight of Wisconsin's working people.
Friday, April 6, 2007
Did Biskupic Carry Out Gonzalez hit?
Eight United States attorneys were fired by the Bush administration because they refused to engage in politically motivated prosecutions or to open up posts for Bush loyalists seeking career advancement.
U. S attorney Steven Biskupic was not among them.
Yesterday the 7th Circuit Court of Appeals ruled that Georgia Thompson, the Wisconsin bureaucrat who became the target of a Republican smear campaign in November's gubernatorial race, be acquitted and freed. During 26 minutes of oral arguments, all three judges assailed the government's case, with Judge Diane Wood saying at one point that "the evidence is beyond thin."
In light of these developments, it is fair to ask if Biskupic avoided the Gonzalez/Bush hit list because he carried out their orders?
U. S attorney Steven Biskupic was not among them.
Yesterday the 7th Circuit Court of Appeals ruled that Georgia Thompson, the Wisconsin bureaucrat who became the target of a Republican smear campaign in November's gubernatorial race, be acquitted and freed. During 26 minutes of oral arguments, all three judges assailed the government's case, with Judge Diane Wood saying at one point that "the evidence is beyond thin."
In light of these developments, it is fair to ask if Biskupic avoided the Gonzalez/Bush hit list because he carried out their orders?
Thursday, April 5, 2007
Circuit City's Job and Wage Cuts Won't Work
Circuit City’s decision to summarily fire 3400 employees and replace them with lower paid workers is only the latest maneuver by corporate American to shore up short term profits by cutting labor costs. Retail firms can’t move to Mexico or China like their manufacturing counterparts. So Circuit City decided to bring Mexican level wages to the U.S.
Mainstream economists argue that flexible American labor markets give us a competitive advantage over other mature economies like France or Japan with greater job security.
But several recent studies argue that layoffs undermine corporate effectiveness by demoralizing the workforce and undermining the cooperative relationships between employees that are critical to efficient retail and service operations.
Dr. Kim Cameron, a critic, writes: “Corporate downsizing remains the most pervasive yet unsuccessful organizational improvement strategy in the 1990’s business world… the evidence suggests that quality, productivity and customer service often decline over time and financial performance-while frequently improving in the short run after downsizing due to promised savings and lower costs-erodes over the long run.”
The management consulting firm Bain and Company has studied layoffs and argues that companies with the highest customer satisfaction are the least likely to engage in layoffs.
It makes sense that employees who feel valued will work harder and smarter than those treated like disposable assets. But Circuit City execs weren’t interested in common sense or studies. They were motivated by dollars and cents.
Mainstream economists argue that flexible American labor markets give us a competitive advantage over other mature economies like France or Japan with greater job security.
But several recent studies argue that layoffs undermine corporate effectiveness by demoralizing the workforce and undermining the cooperative relationships between employees that are critical to efficient retail and service operations.
Dr. Kim Cameron, a critic, writes: “Corporate downsizing remains the most pervasive yet unsuccessful organizational improvement strategy in the 1990’s business world… the evidence suggests that quality, productivity and customer service often decline over time and financial performance-while frequently improving in the short run after downsizing due to promised savings and lower costs-erodes over the long run.”
The management consulting firm Bain and Company has studied layoffs and argues that companies with the highest customer satisfaction are the least likely to engage in layoffs.
It makes sense that employees who feel valued will work harder and smarter than those treated like disposable assets. But Circuit City execs weren’t interested in common sense or studies. They were motivated by dollars and cents.
Tuesday, April 3, 2007
Circuit City's "Wage Management Initiative"
Circuit City executives announced last week that they would cut costs by laying off 3,400 of their most experienced sales clerks- 8% of their total workforce. They will be replaced by lower paid, less experienced people and will not even be given the opportunity to immediately re-apply for their jobs at the lower wages. For that they will have to wait 10 weeks.
IT infrastucture operations will also be outsourced.
Corporate City executives in yet another example of corporate speak labeled axing their most experienced employees a “wage management initiative.” Domestic outsourcing might be more accurate.
Perhaps because these retail jobs are not family supporting, unionized employment, Circuit City’s announcement didn’t attract a lot of attention. But 3,400 “associates” as they have come to be called were just fired by a company that declares devotion to employees and customer service on its Web site: “Our associates are our greatest assets. We expect every associate to demonstrate that they respect and value others for their efforts, their knowledge and the diversity that they bring.”
Evidently Circuit City's CEO isn't held to the standard of valuing others!
Circuit City’s commitment to its "greatest assets" was dashed by the promise of saving $250 million over two years. Of course not all Circuit City employees will feel the pain. If you add up salary, bonus, stock options, and other perks, Philip J. Schoonover, chief executive, and W. Alan McCollough, chairman, received almost $10 million in various kinds of compensation last year for steering the company to its imperiled state. Nor is rewarding incompetence unusual in corporate America. Over the last five years, the CEOs of 11 of the largest U.S. corporations received $865 million while presiding over the loss of $640 million in shareholder value according to the Corporate Library. And they talk about pay for performance!
Circuit City’s new competitive model devalues employees and customer service. How else can one explain the company’s decision to get rid of its most experienced people? Analyst Timothy Allen told the Washington Post: It's definitely going to have some cost-savings, but I think the bigger impact could be seen in weaker, poor service. I have a feeling the people they're letting go have probably been there longer, have more experience, more product knowledge." Circuit City is betting that the only thing that matters to the American consumer is low, low prices. Their stores will become the big box retail equivalent of self service gas stations.
Circuit City’s announcement puts a human face on recent articles documenting that the richest 300,000 Americans had almost as much income as the bottom 150 million Americans
Surprisingly, this arbitrary decision didn’t play so well on Wall Street. Circuit City’s stock price has actually fallen since the announcement. Maybe even Wall Street executives want a knowledgeable “associate” to assist them when they cash in their bonuses for that new flat screen or MP3 Player.
IT infrastucture operations will also be outsourced.
Corporate City executives in yet another example of corporate speak labeled axing their most experienced employees a “wage management initiative.” Domestic outsourcing might be more accurate.
Perhaps because these retail jobs are not family supporting, unionized employment, Circuit City’s announcement didn’t attract a lot of attention. But 3,400 “associates” as they have come to be called were just fired by a company that declares devotion to employees and customer service on its Web site: “Our associates are our greatest assets. We expect every associate to demonstrate that they respect and value others for their efforts, their knowledge and the diversity that they bring.”
Evidently Circuit City's CEO isn't held to the standard of valuing others!
Circuit City’s commitment to its "greatest assets" was dashed by the promise of saving $250 million over two years. Of course not all Circuit City employees will feel the pain. If you add up salary, bonus, stock options, and other perks, Philip J. Schoonover, chief executive, and W. Alan McCollough, chairman, received almost $10 million in various kinds of compensation last year for steering the company to its imperiled state. Nor is rewarding incompetence unusual in corporate America. Over the last five years, the CEOs of 11 of the largest U.S. corporations received $865 million while presiding over the loss of $640 million in shareholder value according to the Corporate Library. And they talk about pay for performance!
Circuit City’s new competitive model devalues employees and customer service. How else can one explain the company’s decision to get rid of its most experienced people? Analyst Timothy Allen told the Washington Post: It's definitely going to have some cost-savings, but I think the bigger impact could be seen in weaker, poor service. I have a feeling the people they're letting go have probably been there longer, have more experience, more product knowledge." Circuit City is betting that the only thing that matters to the American consumer is low, low prices. Their stores will become the big box retail equivalent of self service gas stations.
Circuit City’s announcement puts a human face on recent articles documenting that the richest 300,000 Americans had almost as much income as the bottom 150 million Americans
Surprisingly, this arbitrary decision didn’t play so well on Wall Street. Circuit City’s stock price has actually fallen since the announcement. Maybe even Wall Street executives want a knowledgeable “associate” to assist them when they cash in their bonuses for that new flat screen or MP3 Player.