Saturday, February 20, 2010

Journal Sentinel misleads on stimulus

The Milwaukee Journal Sentinel sank to new lows in covering economics with an inaccurate and sensationalist front page article on the American Recovery and Reinvestment Act's job creation record.

The headline blared "Economists see no stimulus jobs."

Journal Sentinel economics reporter John Schmid wrote: "... more than two-thirds of economists responding to a a nationwide survey say the stimulus so far has failed to create jobs."

This was awful reporting on several levels.

First and foremost, it is dead wrong.

There is virtually no dispute among economists that the stimulus prevented the worst recession since the Great Depression from getting much worse by slowing the rate of job loss and saving between 1.6 and 1.8 million jobs.

The New York Times economics columnist, David Leonhardt, effectively refuted Schmid, in a column the MJS buried (on page 7 in Sunday's edition) when he wrote:

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

Before the stimulus was passed the nation was losing an average 650,000 jobs a month. It is widely recognized that the "widely successful "cash for clunkers" and the mortgage rebate program shave have stimulated automobile and home purchases saving thousands of jobs. Other stimulus projects have accelerated shovel ready projects and kept or put construction workers to work

The recession began in December 2007, during President Bush’s 7th year in office. By the time President Obama was inaugurated, 4.4 million jobs had been lost. By the time the Recovery Act was passed, 5.9 million jobs had been lost. As the graph above illustrates, the job losses that were accelerating before the Recovery Act was passed have been virtually eliminated.

We should not forget the damage done to the economy before the Recovery Act. From December 2007 to March 2009, one out of every twenty private sector jobs was eliminated, a rate of destruction 50% greater than even the severe recession in the early 1980s. The economy was in a free fall. With unemployment at 9.7% today, and a record 40% unemployed for more than six months, it’s hard to appreciate how much more damage the stimulus investments prevented.

Without the two million jobs generated by the Recovery Act, the unemployment rate would now exceed 11% rather than the 9.7% rate in January.

Schmid not only misinformed his readers about the stimulus bills' impact, he also misrepresented the survey. It did not ask whether the stimulus had created jobs, but whether it had created jobs "in their firm or industry."

That's a distinction with a world of difference.

The decision to make a minor survey of a handful of business economists the lead article on the front page was a decision with real consequences. The publics' perception of the Recovery Act's effectiveness bill will shape future federal economic policy decisions including:

  • Will unemployment benefits be extended for the more than two million people who are about to run out of them?

  • Will the feds provide additional job training dollars so the unemployed can acquire the training they need to get back on their feet?

  • Will Congress provide financial assistance to the states which face a $357 billion budget shortfall and local governments with an additional $80 billion budget deficit? Without it, state and local governments will be forced to slash spending, laying off police officers, firefighters, teachers, and other public employees or raise taxes to balance their budgets, threatening the nascent recovery.

  • Will Congress provide additional health care funding so that's states don't raise eligibility limits or cut programs?

  • Will Congress invest in repairing our national infrastructure, our schools, highways, the electric grid, water systems, ports, dams, and levees which must be upgraded, rebuilt or replaced if the U.S. is to remain a first class economy in the Twenty First Century?
The American Recovery Act helped reverse the nation's economic free fall, even if it wasn't large and targeted enough to stimulate a robust recovery. The economy is showing signs of life, but it remains on life support.

Private demand, consumer spending and private investment remain anemic. The only engine of growth and employment remains public demand. Without an accurate analysis of the Recovery Acts positive results, public opposition will grow, fanned by partisan opposition, and Congress will retreat from making the strategic investments our nation needs to revive the economy.

That's the real story. And its the story John Schmid and the Milwaukee Journal Sentinel missed.

Friday, February 19, 2010

Milwaukee's brand-inner city evictions

A few weeks ago the Milwaukee Common Council voted to establish a committee to assess public perceptions of Milwaukee and develop a brand to promote the metropolitan area.

The task force better get to work before our well-earned reputation as a city that's tough on poor folks generates any more publicity.

Today's New York Times has a feature article and the accompanying photo on evictions in Milwaukee.

It reports:

On Milwaukee’s impoverished North Side, the mover’s name (Eagle) is nearly as familiar as McDonald’s, because Eagle often accompanies sheriffs on evictions. They haul tenants’ belongings into storage or, as Ms. Smith preferred, leave them outside for tenants to truck away.

Here and in swaths of many cities, evictions from rental properties are so common that they are part of the texture of life. New research is showing that eviction is a particular burden on low-income black women, often single mothers, who have an easier time renting apartments than their male counterparts, but are vulnerable to losing them because their wages or public benefits have not kept up with the cost of housing.

And evictions, in turn, can easily throw families into cascades of turmoil and debt.

Just a few years ago we were told that w-2 would help break the cycle of poverty and enable poor parents to become self-sufficient.

The promises are long forgotten. Many of the politicians who made them have retired or returned to lucrative private life. But the havoc they wrought remains.

Wednesday, February 17, 2010

Skilled labor decisive in attracting green jobs to Milwaukee

It's great news that Ingeteam, the Spanish energy service firm that builds wind turbine parts, has decided to build its first U.S. factory in the Menominee Valley Industrial Center.

There are several reasons to be excited about this development:

1) Ingeteam will create sorely needed manufacturing jobs in Milwaukee. It is projected that when its factory opens in January 2011 it will employee 50 to 60 people. By 2015 it could an additional 250 workers. This investment won't solve Milwaukee's monumental unemployment problems, but these will be value added, full-time jobs with benefits, far better than adding another health club or Walmart with their low-paying, part-time employment.

2) Ingeteam is an energy technology firm whose components are found in 12% of all wind turbines. Its decision to locate in Milwaukee is a boast to the region's effort to become a center of green and advanced manufacturing.

3) In a city where the organized business community has been vocally opposed to a paid sick leave law that was overwhelmingly approved by the voters, Ingeteam appears to be family friendly. On their web site Ingeteam lists as one of its values: "Conciliate work and family life: provide opportunities and flexibility in working days and hours, etc., to conciliate work life and family life. Special priority should be given to maternity, by providing support measures."

The political spin over Ingeteam's decision has already begun.

Both leading candidates for Governor, Mayor Tom Barrett and County Executive Scott Walker inaccurately attributed Ingeteam's decision to tax cuts.

The Barrett campaign released a statement declaring Ingeteam's decision:" shows the success of Tom's philosophy of tying tax cuts to jobs."

Walker, not to be outdone, strayed even further from reality arguing that Ingetam's decision validated his staunch anti-tax position.

But it turns out that tax breaks weren't decisive. As Thomas Content and Tom Daykin report in today's Milwaukee Journal Sentinel:

"The key differentiator for Milwaukee: its labor force. In particular, Milwaukee had far and away the most people employed in the making of electric motors, the province of local firms including Rockwell Automation Inc. and New Berlin's ABB.

"Southeastern Wisconsin has a history and legacy of manufacturing here that a lot of people are down on," said Darin Buelow, a principal at the Chicago office of Deloitte Consulting LLP, Ingeteam's site-selection firm. "(Building) motors is something that this area does really well, and this is something that Ingeteam wanted us to look for.'"

It was Milwaukee manufacturing and technical labor force, largely a product of our public schools, tech colleges and universities, all taxpayer financed institutions, and our industrial know-how that attracted Ingeteam and its jobs. Ingeteam acknowledged this in its press release: "... the Milwaukee area boasts prestigious universities with some of the highest-ranked engineering departments in the country, offering specific courses in renewable energies, which will be highly useful when it comes to finding specialized staff."

If the Milwaukee area is going to compete for green energy and advanced manufacturing firms and employment, it will not succeed by getting poor, by competing on the basis of low-cost labor and reduced public investments.

There will always be states and nations where people will work for much much less. Think Bangladesh or Shri Lanka.

Milwaukee, the region and our manufacturing firms need to compete based on our strategic advantages, skilled labor, industrial know-how, network of suppliers, supportive academic institutions like MATC, UWM and MSOE, efficient transportation and communication systems, access to fresh water, high quality service, quality and productivity. Those are the region's strengths and our competitive advantage. And that's why Ingeteam will be in the Menominee Valley and not the Mississippi Delta.

Sunday, February 14, 2010

Coalition for MPS responds to Journal Sentinel

Bob Peterson and Wendell Harris, co-chairs of the Coalition against the MPS Takeover, have an excellent opinion piece in Sunday's Milwaukee Journal Sentinel. It is linked here.

Transportation Subsidies

Daniel Peterson has an excellent Crossroads piece that exposes the hypocrisy of those who oppose freight and passenger rail investments even as other more costly forms of transport feed at the public trough.

Peterson writes:

If it's the subsidy of rail transportation that you oppose, then philosophical integrity requires that you also oppose subsidies for the trucks, barges, buses and airlines that compete with rail. Something more to think about: Railroads are four to five times more fuel efficient for moving freight than are trucks. And just one freight train with two crew members moves the equivalent of 400 semis with 400 drivers (which drain public coffers because " 80,000-pound truck does the same road damage as 9,600 automobiles.").

Money follows efficiency unless artificially tampered with, and so my assertion is that if the competing non-rail modes of transportation had not been artificially supported via massive subsidies, the private railroads in the U.S. would still be operating tens of thousands of miles of now abandoned rail lines.

Privately operated intercity and intracity passenger rail service might still be viable, as it was prior to the "freeway" system. Most freight would be on the rails instead of clogging up the roads, so we would have needed far fewer roads and lanes on expressways. And, therefore, our taxes would be significantly less today.

Oh, and that estimated $18 billion to expand one airport? Less than half that amount would build a high-speed rail network connecting Chicago-Milwaukee-Minneapolis, Chicago-St. Louis, Chicago-Indianapolis and Chicago-Detroit.

The article is linked.

Saturday, February 13, 2010

Obama defends CEO bonuses & bank bailouts

Paul Krugman reports:

The lead story on Bloomberg right now contains excerpts from an interview with Business Week which tells us:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

Oh. My. God.

First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.

And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability. Don’t take it from me, take it from the rating agencies:

The planned overhaul of US financial rules prompted Standard & Poor’s to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again.

The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state. There’s good reason to feel outraged at the growing appearance that we’re running a system of lemon socialism, in which losses are public but gains are private. And at the very least, you would think that Obama would understand the importance of acknowledging public anger over what’s happening.

But no. If the Bloomberg story is to be believed, Obama thinks his key to electoral success is to trumpet “the influence corporate leaders have had on his economic policies.”

We’re doomed.

Tuesday, February 9, 2010

Wisconsin's unemployed need jobs

If you lost your job last year, you're not alone. There are now 15.3 million Americans who are officially unemployed, up from 7.5 million in December 2007. A record 40% have been unemployed for more than six months.

Wisconsin's unemployment rate surged to 8.7% in December from 8.2% in November.

The state lost a total of 163,000 jobs in 2009, more than 26,000 in December alone.

The four-county metro Milwaukee area has been particularly hard hit losing 48,200 jobs (5.7% of total employment), the third-deepest percentage loss in the nation. Only Las Vegas, where employment levels fell 7.4% and Detroit, which fell 6.2%, lost a greater percentage of their jobs .

The employment picture is even worse than the official data suggests.

In the past year 82,840 workers dropped out of the Wisconsin labor market, 13,400 in December alone.

If discouraged workers are counted, Wisconsin's unemployment rate jumps to 11.4%. And if you include people who are working part-time only because they cannot find full-time employment the rate jumps 13.2%.

Wisconsin's working people are hurting. Job loss is undermining families and communities across the state.

Bankruptcies have soared, 30% last year, following a 35% increase the year before contributing to a record number foreclosure filings as job cuts make it difficult for homeowners to keep up with their monthly mortgage payments.

Preliminary figures show there were 30,624 foreclosure filings in the state last year, up almost 20% from a record 25,541 in 2008, Madison-based, which tracks foreclosures through court documents, reported. Milwaukee leads the way with more than 5,800 foreclosure filings.

The Wisconsin Senate Republican response to these alarming numbers is to propose more of the very same policies-reducing regulations and taxes - that caused the Great Recession.

Their press release says nothing they haven't said for the past thirty years. No matter what ails the economy and despite all the evidence, including massive job loss and declining real wages, Wisconsin's Republican leadership prescribes the same failed medicine.

Their tax cut proposals, like eliminating capital gains, corporate taxes and combined reporting, are the least effective form of economic stimulus. Upper income, capital gains and dividend tax cuts were the centerpiece of the Bush administration's economic agenda. The result-anemic growth, no net job creation, the most unequal distribution of income since 1929 and soaring deficits.

Republican insistence that tax cuts be one third of the $787 billion stimulus package and President Obama's acquiescence significantly undermined its effectiveness according to a recent Congressional Research Service (CRS) report .

The report notes that the February 2009 economic stimulus package included $286 billion in tax cuts, many directed towards business. It concludes that "the evidence ... suggests that a business tax subsidy may not necessarily be the best choice for fiscal stimulus" because "product demand appears to be the primary determinant of hiring."

When firms are saddled with excess capacity which is currently a low 72%, investment tax credits will not stimulate investment.

Businesses and their advocacy organizations like the MMAC and WMC will always seek taxpayer subsidies, and apparently the Wisconsin's Republican Party will always help them, because profit margins increase when taxes are reduced. But these taxpayer funded subsidies do not create jobs.

Unfortunately, the state's Democratic leadership hasn't offered much help to the Wisconsin's workers either. It recently passed legislation that includes a post secondary education tax credit for businesses, higher annual limits on angel investment tax credits and other provisions, but nothing that will help put the Wisconsin's 251,000 unemployed workers back to work.

The Obama administration's failure to enact a stimulus package large enough and targeted to create jobs led to the Democrats stunning defeat in Massachusetts.

Wisconsin workers need work. Is anybody listening?

Monday, February 8, 2010

Public meetings on Waukesha's bid for Lake Michigan Water

Environmental activist and blogger Jim Rowen is urging people to attend one of several public meetings on future uses of Lake Michigan water being held this week.

He writes:

People will be able to attend focus group meetings help guide a very important, fast-moving study looking at a question whose relevance to our region and shared experience cannot be overstated: what are the effects on our hyper-segregated region of transferring Lake Michigan water to Waukesha and other communities outside of Milwaukee - - thus what are the economic opportunities that water can offer to residents and businesses across a region with Milwaukee at its core?

The focus group opportunity arose because local activists joined successfully with a relatively new entity, the Environmental Justice Task Force attached to the regional planning commission (SEWRPC) and forced the agency at the 11th hour to hold its narrowly-drawn water supply draft recommendations in abeyance (SEWRPC leaders had considered the study virtually completed, and had already sent it out for public meetings) until it researched whether there would be so-called "socio-economic" impacts in the region if Lake Michigan water were indeed piped to Waukesha and elsewhere.

The focus group meetings are scheduled as follows:

Monday 2/8 1:30pm Early Afternoon meeting (1:30pm)

Waukesha County Administration Building

515 W. Moreland Blvd Room AC 255

Waukesha WI

Wednesday 2/10 4:30 PM Early Evening Meeting (4:30 PM) NEW SITE/TIME

Washington Park Library on Sherman Blvd

2121 North Sherman Boulevard

Milwaukee, WI

Thursday 2/11 1:30 PM Early Afternoon meeting (1:30 pm) Parking passes provided by UWM

University of Wisconsin Milwaukee

Union - Room 181

2200 E. Kenwood Blvd

Milwaukee WI

Waukesha is applying to the eight Great Lakes states for a precedent-setting Lake Michigan diversion, and the Waukesha draft diversion application released about a week ago acknowledges that some of the water is ticketed to large-scale annexations and population growth projected to its south and west.

Overall, Waukesha County is projected to achieve far-fasater job expansion than Milwaukee County - - trends being made worse by the recession.

Had the Environmental Justice Task Force not forced SEWRPC to hire an independent socio-economic consultant - - even so late in its water supply study process (it could have added this component anytime since it began its study in 2005) - - the agency would have by now approved its draft, pro-diversion recommendations, and Waukesha would have been running with the SEWRPC pro-diversion report as Exhibit "A" to validate its draft diversion application: in fact, at the release of the draft application last week, during a Q&A session, I pointed out that the Waukesha draft application in fact erroneously in a bold-faced color box on p. 45 said SEWRPC had "recommended" the diversion plan.

The water supply study is currently in hiatus as it awaits the socio-economic report - - and those findings may force a rewrite or reinterpretation of the entire SEWRPC water supply study.

Waukesha officials agreed to amend its application documentation to accurately reflect that no final SEWRPC diversion recommendation has been made.

UWM's Center for Economic Development - - - - was chosen by SEWRPC to complete its socio-economic research in a mere 90 days, so there is a short time line to take advantage of a rare opportunity for direct public input into a SEWRPC study - - arguably the most important such study in a long time.

Having pushed hard for this SEWRPC procedural reform and new research initiative, it behooves us to attend, and bring friends, contacts and networks to these focus groups, and to urge that water transfers not be recommended lightly, and certainly be seen by all parties in their broadest possible context.

We need to emphasize that water is a both a resource held in trust for the entire public, and a key and growing form of wealth, and that adding it to already more relatively upscale suburban and exurban communities without related, regional and real improvements to transit, affordable housing, and job opportunities will exacerbate the economic and racial disparities that have made our region one of the most segregated and self-restrained in the country.

Participation in the focus group will include clarification of and a brief discussion on the recommendations set forth in the RWSP, and participation in a SWOT Analysis to identify any Strengths, Weaknesses, Opportunities, and Threats that the recommendations may have on populations within Southeastern Wisconsin.

# Strengths: attributes of the plan or recommendations that are helpful to achieving the objective.
#Weaknesses: attributes of the plan that are harmful to achieving the objective.
#Opportunities: external conditions that are helpful to achieving the objective.
#Threats: external conditions which could do damage to the objective.

Please contact Randy Crump at Prism or Catherine Madison at CED if you would like to participate in one of the focus groups or if you have any questions.

* Randy’s contact information is or (414) 847-0990 ext. 104.

* Catherine’s contact information is or (414) 229-6155.

More information regarding the Socio-Economic Impact Analysis for the Regional Water Supply Plan can be found on the CED Website at

More information regarding the recommendations set forth in the preliminary draft of the Regional Water Supply Plan can be found on the SEWRPC Website at

Friday, February 5, 2010

Moore says cutting MPS funding will harm Milwaukee's children

Washington, DC – Today, U.S. Congresswoman Gwen Moore (D-Milwaukee) wrote to Tony Evers, State Superintendent of the Wisconsin Department of Public Instruction, asking him to immediately stop the process to withhold $175 million in Federal education funding from Milwaukee Public Schools.

Congresswoman Moore wrote that Superintendent Evers’ action is… “especially troubling given that Congress and the Obama Administration are working to change the one-size-fits-all approach of No Child Left Behind that was designed to punish schools, not students” and that “punishing our children is no solution.”

She also wrote that, “If our schools are not meeting expectations today – they sure won’t be able to meet expectations tomorrow with even fewer resources” and wrote that halting this process to withhold funding is necessary to give the newly-hired superintendent of Milwaukee Public Schools “a chance to succeed.”

The full text of Congresswoman Moore’s letter follows:

February 5, 2010

Mr. Tony Evers
Wisconsin Department of Public Instruction
Madison , Wisconsin

Dear Superintendent Evers:

I read with much dismay in the Milwaukee Journal Sentinel that you are beginning a process to take away Federal funding from Milwaukee ’s public schools. Your action is especially troubling given that Congress and the Obama Administration are working to change the one-size-fits-all approach of No Child Left Behind that was designed to punish schools, not students. I ask that you immediately stop the process to withhold $175 million in critical Federal funding from Milwaukee Public Schools.

We simply cannot lift our children up and build a workforce in Milwaukee and in Wisconsin for the 21st Century if we are poorhousing our kids’ education.

We both want every MPS student to succeed, and we also want a thriving school system in Milwaukee that guarantees equal opportunity for every child. Our kids deserve nothing less. But punishing our children is no solution. If our schools are not meeting expectations today – they sure won’t be able to meet expectations tomorrow with even fewer resources.

Community members have indicated they believe you are withholding this Federal funding as part of an attempt to take away local control of Milwaukee Public Schools in order to qualify for Race to the Top funding. If that is the case, I want to remind you that Education Secretary Arne Duncan has repeatedly told me and our community – he even put it in writing – that mayoral control of public schools is not necessary for Wisconsin to receive Race to the Top funding.

You know that Milwaukee Public Schools just hired a new superintendent who will start in the summer. Your move only takes away local ability to bring about positive changes in our schools. It makes sense to immediately stop this process of withholding $175 million from Milwaukee Public Schools because we must give our new superintendent a chance to succeed.

It’s going to take all of us working together to solve these problems, and I stand ready to work with you.


Gwen Moore
Member of Congress

Focus on deficit reduction ignores unemployed

Budget deficit hawks, including Wisconsin Congressman Paul Ryan, have been successful in shifting the nation's focus from our unacceptably high rate of unemployment to the deficit.

Noble prize winning economist Paul Krugman says the reason is partisan "politics."

The main difference between last summer, when we were mostly (and appropriately) taking deficits in stride, and the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama’s image even as it cripples his policy agenda. And if the hypocrisy is breathtaking — politicians who voted for budget-busting tax cuts posing as apostles of fiscal rectitude, politicians demonizing attempts to rein in Medicare costs one day (death panels!), then denouncing excessive government spending the next — well, what else is new?

The trouble, however, is that it’s apparently hard for many people to tell the difference between cynical posturing and serious economic argument. And that is having tragic consequences.

For the fact is that thanks to deficit hysteria, Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there’s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction — and millions of Americans will pay the price.

The entire op ed is linked.

Monday, February 1, 2010

America needs jobs, not tax credits

The Baltimore Sun points out that fixing the nation's crumbling infrastructure would create more jobs and economic growth than President Obama's proposed $5,000 per job tax credit.

The editorial is linked.

The Atlantic Monthly's Richard A. Posner also weighs in:

The program is unlikely to have an appreciable effect on employment. It is too small. It will either be gamed (as by firms that fire and then rehire), or the procedures created by the legislation to prevent gaming will entangle the program in red tape, delaying its implementation and perhaps rendering it largely ineffectual, like the program to encourage mortgage modifications. It will not be targeted on industries and areas of the country in which unemployment is highest.

But the biggest problem with the job-subsidy program is that it is fundamentally misconceived. The Keynesian theory of stimulus (the only theory that makes economic sense) is that if private demand for goods and services falls substantially below the economy's productive capacity (as it has done), government can replace the shortfall in demand by increasing its own demand. It can buy roads and airports and military equipment with borrowed money (so as not to take money out of people's pockets, in the form of taxes, and by doing so depressing private demand). And it can borrow cheap, because consumers are saving more than usual, and with demand weak, businesses are borrowing less than usual. So the private demand for credit is weak, and interest rates therefore low. The surge in government demand increases production, and increased production results in increased employment.

The job-stimulus plan is not aimed at increasing demand, and therefore is unlikely to increase employment. For example, if a company is producing 1,000 widgets a year with a work force of 30, and it adds a 31st employee and thereby earns a $5,000 tax credit, the company's total costs will have risen by the wages and benefits that he pays the new employee minus the $5,000. But his sales will not have risen. Participating in the job-subsidy program will actually reduce his profits (revenue minus cost).

The job-subsidy plan can be understood only in political terms. The country is riled up about the unemployment rate, and so, demands that the government do something. So it is doing something, just not anything that will affect the unemployment rate....

50th anniversary of Greensboro Sit-in

Fifty years ago today, February 1, four North Carolina Agricultural and Technical College students sat-in at Woolworth's whites only lunch counter.

Their courageous action inspired a movement that challenged the American system of Jim Crow segregation.

What happened in Greensboro, North Carolina, on February 1st, went unreported in The New York Times the next day, but it had the effect of the Boston Tea Party. It was the single spark that was to ignite the conscience of white America and the hope of black America.

The four freshmen from a Jim Crow college who sat-in that day in Greensboro's downtown F.W. Woolworth could hardly sense the historic significance of their deed. No one, not John Kennedy, then starting his bid for the Presidency, not Martin Luther King, then a Moses without a movement, not George Wallace, then running for governor of Alabama, could know that a simple plea for a cup of coffee would set into motion a chain of events whose final meaning, six years later, is still shrouded beyond the rim of history.

As Jack Newfield wrote:

On Sunday night, January 31st, four freshmen at all-Negro North Carolina Agricultural and Technical College, in Greensboro, relaxed in a dorm in Scott Hall, discussing the problem. Ezell Blair, Jr., chairman of the Student Committee for Justice, was one of them. the other three were David Richmond, seventeen, of Greensboro; Franklin McCain, eighteen, of Washington, D.C.; and Joseph McNeill, seventeen, of Wilmington, North Carolina.

The quartet, according to Blair, "spent a lot of time discussing the segregated situations we were exposed to. . . . It just didn't seem right that we would have to walk two miles to town, buy notebook paper and toothpaste in a national chain store, and then not be able to get a bite to eat and a cup of coffee at the counter."

On Sunday night the same dehumanizing experiences were being recited again when Joe McNeill exclaimed, "well, we've talked about it long enough. let's do something."

The four decided to "do something" the next day. They told no one of their decision.

At about 4;45 p.m. on February 1st, the four freshmen entered the F.W. Woolworth Company store on North Elm street in the heart of the city. each of them purchased a tube of toothpaste and then sat down at the lunch counter.

A Negro woman working in the kitchen rushed over tot hem and said, "You know you're not supposed to be in here." Later the woman called the four "ignorant" and a "disgrace to their race."

The students requested four cups of coffee from the white waitress.

"I'm sorry but we don't serve colored here," she informed them politely.

Franklin McCain responded, "I beg your pardon, but you just served me at the counter two feet away. Why is it that you serve me at that counter, and deny me at another? Why not stop serving me at all the counters?"

A few minutes later the manager of the store told the youths, "I'm sorry but we can't serve you because it is not the local custom."

The four young Negroes remained at the counter, coffeeless, until 5;30 p.m., when the store closed.

The next day, Tuesday, February 2nd, sixteen other North Carolina A and T undergraduates joined the four pioneers at the lunch counter. they were all denied service, and returned on Wednesday, fifty strong, including Negro high-school students from Dudley High and a few white co-eds from Women's College in Greensboro.

By Friday, February 5th, the integrated group had grown so large that some of them sat-in at an S.H. Kress store, one block away. they, too, were refused service. On Friday, a large group of white high-school toughs in black leather jackets, carrying Confederate flags, began to heckle the students.

The confrontation was repeated on Saturday afternoon, when several hundred students, many carrying Bibles and all well dressed, sat-in and were surrounded by taunting white teen-agers.

At about 3 p.m. the management of Woolworth received a bomb threat, and the tense police used that as the pretext for emptying the store of both demonstrators and hecklers.

The students then marched to the Kress store. The manager met them in the doorway and shouted, "this store is closed, as of now."

The students cheered, feeling they had won a victory. "It's all over," they shouted. But it had really just began. An idea's time had come.

The next week there were spontaneous sit-in demonstrations in many parts of North Carolina--Durham, Raleigh, Charlotte, Winston-Salem, High Point, Salisbury, and Concord. By Wednesday, February 10th, the movement had spilled over the border into Rock Hill and Orangeburg, in South Carolina. In Rock Hill a Negro boy was knocked off a stool by a white teenager, and ammonia was hurled through the door of a drugstore, bringing tears to the eyes of the students.

The sit-ins next swept into Hampton, Richmond, and Portsmouth, in Virginia. the first arrests came on February 12th in Raleigh, North Carolina, where forty-three students, including several whites, were jailed on charges of trespassing.

Twelve days after Greensboro, forty students, including John Lewis, future chairman of SNCC, sat-in at Woolworth's in Nashville, during a snowstorm. On February 27th, seventy-six people sat-in in Nashville. Lighted cigarettes were jabbed at the necks of several girls by segregationist hecklers. A white student from Vanderbilt University was dragged off his stool and pummeled. Paul LePrad, a Negro student at Fisk University, was pulled from his stool by a white adult and punched in the mouth. he got up and climbed back on his stool. By the end of the day all seventy-six had been jailed.

In Orangeburg, South Carolina, students at Claffin College and nearby South Carolina State held a series of workshops and seminars in nonviolence. On March 14th in Orangeburg, lunch counters were reopened after a month's closing, and seven hundred students marched nonviolently downtown. Police met them with tear-gas bombs and fire hoses. Dozens were knocked off their feet and slammed against walls by high-pressure hoses that tore the bark off tree stumps.

More than 500 were arrested, and 350 of them were locked into an eight-feet-high chicken coop because the jails were full. The next day The New York Times carried a front-page picture of the 350 huddling in the chicken-coop stockade, in subfreezing temperatures--singing "God Bless America."

By the first anniversary of the Greensboro sit-in, the NAACP reported it had paid for the legal defense of seventeen hundred demonstrators during the intervening year. According to Howard Zinn, in The New Abolitionists, more than 50,000 people participated in some kind of civil rights protest in the twelve months after Greensboro, and "over 3600 demonstrators spent time in jail."

It is impossible to overestimate the impact of those first, hardly noticed sit-ins. Harold Flemming, who was director of the Southern Regional Council in 1960, said recently, "Just as the Supreme Court decision was the legal turning point, the sit-ins were the psychological turning point in race relations in the South."

Ralph McGill, the beacon of Atlanta liberalism, did not at first support the sit-in movement. But a few years later, in his book, The South and the Southerner, he wrote

The sit-ins were, without question, productive of the most change. . . . No argument in a court of law could have dramatized the immorality and irrationality of such a custom as did the sit-in. . . . The sit-ins reached far out into the back country. They inspired adult men and women, fathers, mothers, grandmothers, aunts and uncles, to support the young students in the cities. Not even the Supreme Court decision on schools in 1954 had done this. . . .

The sit-in technique was not invented in Greensboro. the Gandhi-influenced Congress of Racial Equality (CORE) had used it successfully in Chicago, in 1942, and again in St. Louis, in 1949.

Greensboro was not a particularly backward city in terms of race relations. its public schools desegregated voluntarily in 1955, and both daily newspapers were to come out against lunch-counter segregationist after the sit-ins began.

It all seemed to be the caprice of history that the spontaneous sit-in on February 1st in Greensboro should give off sparks that showered the South, igniting local protests in sixty-five communities in twelve states within six weeks. Perhaps the Greensboro sit-in was merely the catalyst that needed to be added to the existing chemicals of the 1954 school desegregation decision, the Montgomery bus boycott, and the emerging nations of Africa, in order to liberate the damned-up rivers of idealism, energy, and courage that cascaded through the South those first weeks of 1960.

Source: Jack Newfield. A Prophetic Minority. New York: The New American Library, 1966.