Category Archives: Labor & the Economy

Who Is At The Table?

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This article was produced as part of Commonweal Institute’s Progressive Op-Ed Program

Progressives believe in a “we’re all in this together” philosophy while conservatives follow a “you are on your own” philosophy. The differences between these approaches can be clearly seen in the battle over how we share the benefits of our economy.

Conservatives encourage people to take “personal responsibility” rather than to rely on each other for support and guidance. When it comes to things like negotiating for pay and benefits this approach limits each of us to the power and resources that we have alone as individuals.

But big companies are not “on their own.” They are legally allowed to concentrate resources and power that dwarf anything an individual could muster. Companies might have thousands, even tens of thousands of employees who have to do what they are told. They have top legal teams at the table across from you. They can place advertisements and hire PR firms to spin false stories that turn the public against you.

A “you are on your own” approach puts each of us alone at the table with powerful the big companies. When we ask for higher pay, time off, benefits or better working conditions they can set us against each other by saying, “we’ll just find someone else to do your job.” Big companies seeking to lower or eliminate worker costs (you) and pocket the savings on one side of the table with regular individuals on the other side of the table is a one-sided negotiation. The result is an increasingly one-sided economy, with the benefits of the economy going overwhelmingly to those who control these powerful companies.

The negotiating table is out of balance and the result is this terrible economic downturn.
There is another approach. We can create win-win solutions that work for companies and for each of us as individuals. This will happen when there is balance between those at the table negotiating shares in the benefits of our economy. To achieve this we need to strengthen the unions. We know this because there was a period in our history when we had a few strong unions which brought a better balance of power at the negotiating table. This balance didn’t just help union members, it created the middle class.

Unions are the very essence of “we’re all in this together”. People banded together and refused to work unless conditions improved. This unity gave them the power to ask for better wages, benefits, time off, sick pay, health care, pensions and other benefits that we all came to expect and enjoy. The resulting balance of power forced both sides to look for balanced, win-win approaches. It created an economy with a stable workforce that could afford to purchase consumer goods, so companies prospered as well.

But in recent decades the unions have been weakened. The companies have created a stacked deck, forcing unions away from the bargaining table. With only the big companies at the table, of course the outcome reflects their short-term interests. Job security is non-existent. Raises are rare. Benefits are cut. Pensions and health insurance are ever harder to find.

The fact is, when unions are weakened the interests of all workers, unionized or not, are not represented.

The current state of the economy demonstrates how the conservative “you’re on your own” approach has failed us. Our economy is terribly out of balance because the negotiating table has been out of balance for so long.

So it is time to restore balance. A progressive “we are in this together” approach can restore our economy. The Employee Free Choice Act, now before the Congress, is an example of the kind of progressive policy that would let workers join unions and again sit at the table without fear of being fired by their employers.

When working people are once again represented at the bargaining table, the big companies will be forced to accept win-win solutions. The economy will be restored and can once again benefit all of us.

Why Is ‘Pro-Corporate’ Called ‘Centrist’ And ‘Moderate’?

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A new block conservative Democrats in the Congress has formed what they call the Blue Dog Coalition.  Their objective is to block President Obama’s health care, energy and union organizing reforms.  This is pretty clearly an effort to attract corporate money; by announcing they have the power to stop Obama’s reform efforts, they can soak up millions from companies they would otherwise have to change their polluting or profiteering ways.

Robert Borosage of Campaign for America’s Future writes at Huffington Post,

“The new Senate Blue Dogs claim, of course, to be high minded
advocates of “fiscal responsibility.” But this is often a cover for
more parochial concerns. Nelson objects to the Obama budget because it
calls for moving to direct lending for student loans, saving billions
in subsidies to banks and using that money to pay for increased grant
aid. Nelnet, a leading student lender, will be hit badly by the change.
Its headquarters happen to be in Nebraska.

Kent Conrad argues piously that the deficits are too high, but that
doesn’t stop him for opposing Obama’s call to save billions by paring
the wasteful subsidies that go to agribusiness, leading contributors to
Conrad’s campaign coffers”

Meanwhile his organization has launched an effort to counter this, called Dog the (Blue) Dogs.

“It is time for progressives to “dog the dogs” — to call conservative Democrats in the House and Senate and tell them to not be lapdogs for the “Dr. No’s” on the right who want to obstruct the administration’s common-sense agenda.”

Their list includes the following California members:  Joe Baca (43), Dennis Cardoza (18), Jim Costa (20), Jane Harman (36), Loretta Sanchez (47), Adam Schiff (29), Mike Thompson (1).

Note that in the California legislature we have the same problem in the Senate (in
particular), with the self-identified “business Dems.” At the blog Down With Tyranny! Joshua Grossman wrote a while back,

“Meanwhile, the so-called “Business Dems” number almost half the
Democrats in the state legislature and constantly force the watering
down of progressive legislation if not ensuring its outright defeat.”

Here is my question.  Articles about the Blue Dogs seem to unfailingly label call these legislators ‘centerists’ and ‘moderates.’  A couple of examples: Centrists Flex Power of Veto and Moderate Democrats balking at Obama’s spending plans.  Why is this?  What is ‘centrist’ or ‘moderate’ about going against the will of the people and the results of the last election or two?  What is ‘centrist’ or ‘moderate’ about taking corporate cash and then voting for an agenda that enriches a very few at the expense of the rest of us?

 

Who Is Our Government For?

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dday, writing in Giving Away The Tax Argument at Digby’s Hullabaloo blog, asks why so many California newspapers have “tax increase calculators” but no calculators that show people how much the budget cuts affect them.

In my life, I have never seen a “spending cut calculator,” where someone could plug in, say, how many school-age children they have, or how many roads they take to work, or how many police officers and firefighters serve their community, or what social services they or their families rely on, and discover how much they stand to lose in THAT equation. Tax calculators show bias toward the gated community screamers on the right who see their money being “taken away” for nothing. A spending cut calculator would actually show the impact to a much larger cross-section of society, putting far more people at risk than a below 1% hit to their bottom line.

[. . . The media already highlights the tax side of the equation over spending, dramatically portraying tax increases while relegating spending cuts to paragraph 27. It feeds the tax revolt and distorts the debate. And it’s completely irresponsible.

In Why Are Public Assets Being Cut Right When We Need Them Most? Jay Walljasper, of OnTheCommons.org wonders why public transit, libraries and other things the government does for us are all being cut at exactly the time people need them? As the economy turns downward more people need to take the train or bus, or use the library. Jay makes the connection,

Minnesota governor Tim Pawlenty, one of the leading contenders for the Republican presidential nomination in 2012, proposes closing the state’s budget gap by reducing corporate taxes and slashing state aid to local governments. This will mean painful cuts in public assets, such as transit and libraries.

. . . This loss of our public assets is an alarming threat to our society. The things we all own in common and depend upon–libraries, transit, parks, water systems, schools, public safety, infrastructure, cultural programs, social services–are being gradually but steadily undermined.

For many years I have been blogging at Seeing the Forest, often coming back to a question, “Who is our economy for?” For some time now regular incomes have stagnated, while incomes at the very top just go up and up. The GDP keeps rising, productivity keeps going up, but regular people see less and less of the benefit of this increase. In fact, if you look at charts and data, the stagnation of incomes started almost exactly at the same time as President Reagan took office and started implementing the corporate agenda of anti-tax and anti-government policies. So is this a coincidence?

Throughout human history we have seen one scheme after another wherein a few people seize power and devise a system to hold it and use it to enrich themselves at the expense of everyone else. This is human nature and through history we have seen it happen over and over.

America formed in reaction to the British monarchy’s exploitation of its people. We, the People formed our government to band together and protect each other from attempts by the powerful few to exploit us. Our Constitution was supposed to be include a system of checks and balances to account for the nature of power.

It is time for the people to take back that power and use it to again benefit each other. And it is time for California’s newspapers to do something for We, the People and include a “budget cuts calculator” as well as tax increase calculator. It is just as important, maybe more so, that we all understand how we’re injuring and jeopardizing our future with the budget cuts the Republicans required in this year’s budget negotiations.

Our Businesses Thrive On The Infrastructure We Built

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The key to California’s successful business environment are education and infrastructure.  It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries
developed in California instead of in “low
tax” states like Mississippi and Alabama.  These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure. 

There has been a dramatic wealth-building return on our investment in education and infrastructure.  Investors could count on California as a good place to start and grow a business, and it has paid off.

But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People
built?  What would it cost if companies had to pay the full education cost every time they hire someone who was educated
at a California public school or state college or university? 

Continue reading →

Help Stop the Cuts

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Over at SEIUVoice.org there is a petition to Governor Schwarzenegger asking him not to balance the budget using cuts that hurt homecare workers.  The Governor is proposing to cut state funding for In-Home
Supportive Services, which helps provide crucial assistance to thousands of
elderly and disabled people in California.  The
proposal would reduce state funding for homecare workers to minimum wage and eliminate care.  This would cause thousands of workers to lose their health benefits.

here’s the thing: it would also force many current homecare patients into nursing homes.  So in future years this would be a
far greater cost to the state.

Here is the wording from the petition page:

Dear Governor Schwarzenegger-

Balancing the budget shouldn’t be done on the backs of homecare workers whose hard work allows hundreds of thousands of Californians to live safely and with dignity in their own homes.  Cutting California’s homecare workers to the minimum wage with drastic cuts in benefits is unacceptable.

I stand in solidarity with the homecare workers who are gathering on Saturday, January 24th in Sacramento, San Francisco and Fresno to stop the cuts.

Go to the page and sign the petition.

Society is only as strong as its weakest link, and it is the responsibility of the people and our government to protect those who are genuinely unable to care for themselves.  We are morally and duty bound to do whatever we can to assure every human being a level of basic dignity. That is what these workers provide for those whom they serve.  We are talking here about cutting this kind of care rather than, for example, asking oil companies to pay something when they take our oil out of the ground to sell back to us.  How have we gotten to this point?

What Are Tax Brackets?

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In 2009 California is going to have to confront and settle a number of budget issues that we have been putting off for decades. We have been putting off so many necessary decisions — deferring maintenance of our infrastructure, pushing pain into the future by borrowing, setting aside the needs of our people by cutting school, police, fire and other budgets, and practicing almost every form of avoidance of reality that we could find. 

Well, the karma is coming back on us, all the chickens have come home to roost, we are getting what we gave and we are going to pay for our sins.  (Please leave more cliches in the comments.)

The number one budget issues that has to be confronted is taxation.

So, let’s talk taxes, beginning with the basics.  I have found that many people don’t really understand how taxes work so I want to write a bit about that here.  One reason for the lack of understanding of taxes is that there has been quite a bit of deliberate misinformation.  By confusing people, the very wealthy and corporate interests have been able to trick people into letting them avoid paying their fair share.  Instead we either take on ourselves the bulk of the burden of paying for democracy, or just borrow and put that burden on our children.

One thing that I have found many people do not quite understand is the concept of tax brackets.

Tax brackets

A “progressive” tax is one where the tax rate increases as income increases.  A progressive tax structure consists of brackets.  You pay a certain tax rate on income up to the next bracket.  After that bracket is reached, a higher tax rate applies to income that is earned that is above that amount.  Let’s say that you pay 5% on income below $10,000 and 7% on income above $10,000.  So if you make exactly $10,000 of income the tax is $500.  At $10,100 the tax is still that $500 on the amount below $10,000 and $7 on the additional $100, for a total of $507.  The key point is that only the amount in the new bracket is taxed at the higher rate.

Many people believe that once you reach a higher bracket you pay the higher tax rate on all the income that falls below that bracket amount as well.  I have actually talked to people who think they need to “get their
income into a lower bracket” to avoid paying a higher tax rate, because
they think that a higher tax rate would apply to all of the income they
earned.

Using the example of the earlier paragraph, many people believe that you would pay $707, not $507, on income of $10,100, assuming that the entire $10,100 is taxed at a 7% rate because the total income is above $10,000.  This incorrect belief is one result of anti-tax arguments.  It is also the basis of many tax-avoidance schemes.  

So, to repeat:  If you enter a higher tax bracket, you only pay the higher tax rate on the amount of income you earn that is in the new tax bracket, not on all of your income.

Stunning New Budget Demands From Republicans

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Tuesday I wrote that Republicans were demanding mass layoffs of public employees — during a recession.  And they are getting away with it because the state’s corporate-owned media outlets are not explaining to the public what is going on. 

The history of how we got to this point of budget stalemate is that Republicans in the legislature have blocked every single budget and gone back on their own Governor and every negotiated compromise, demanding that all budget shortfalls be solved by laying off teachers, construction workers, DMV workers, firefighters, etc.  And through the whole process they have refused to offer any plan for the cuts they demand.  But this is explained to the voters as a problem caused by “both sides” or “the legislature” or “refusing to work together” or to “reach a compromise” or “pointing fingers.”  Some even manage to blame the Democrats for not completely caving in to every single demand!  The result is that effective public pressure does not develop to get this solved.

Now, rather than compromise and work with the Democrats and the Governor, they have come up with a new list of demands, on top of their previous demands.  And this list is really something:

“Democrats have to capitulate to GOP demands for the 8-hour work day,
meal breaks, looser environmental regulations, permanent budget cuts
and a stiff spending cap, among other things.

Then, and only then, will Republicans come to the table to discuss — but not necessarily agree to — new taxes”

Continue reading →

Stimulate The California Economy And Balance The Budget

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California’s unemployment rate has soared to 8.2% — third highest in the United States!  We need to stimulate California’s economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today — wealth has massively concentrated at the top, and the consumer is “tapped out.”  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the
economy.  But this isn’t what has happened when this has been done in
the past.  Actually history shows that taxing the wealthiest and
corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement — and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can’t.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

They — It Affects Our Thinking

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I want to caution about the use of the word “they” in current policy debates. This use of “they” leads to a kind of understanding in our brains that might just be short-circuiting our ability to make rational decisions. How we understand a problem has huge implications for how we decide to solve those problems.
Let me use the current debate over providing a loan to the auto companies as an example of what I mean. Some people say that “they” – the auto companies – did bad things. “They” opposed higher CAFE standards. “They” pushed SUVs because SUV sales led to higher profits in the short term. “They” made cars that were not as good as Japanese cars. Therefore “they” deserve what they get.
But who is the “they” here? What happens to your thinking about policy solutions if you instead understand that SOME executives of these companies were able to get their hands on the resources of the company, and did things that increased their own personal fortunes, even as their actions harmed the long-term profitability of the companies? In fact THOSE particular executives might have already fled with the loot they got for themselves, leaving the car companies behind.
Do you see what I mean? In that first use of “they,” where you think of a company as some kind of a sentient being, a monolithic entity that makes decisions, you are led toward one kind of solution. Namely to let “them” fail and let “them” deal with the consequences of “their” decisions. The companies “deserve” to fail because “they” did certain things.
“Let them fail” ignores the millions of jobs at stake, the communities that those incomes support will be seriously affected, and that the country’s manufacturing infrastructure will be further degraded if the auto companies fail.
But if you think about it the other way, where certain individual bad actors were able to make personal fortunes off of their access to company resources and their control of company decision-making (and lobbying), we are led to very, very different conclusions about how to fix the mess we and our economy are in. In this mindframe the solution that presents itself involves dealing with the bad actors, and setting up rules that keep future bad actors from being able to cause companies to harm themselves and the country in their pursuit of personal gain.

We Prosper From Higher Taxes, Not Lower

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I came across the article, Why the Economy Grows Like Crazy Amid High Taxes, by Larry Beinhart, and it says some things that the people of California should hear.

Beinhart make some very good points. first, he points out that if you look at the periods of higher taxes, you see that these are the very periods when the economy does much better. He writes,

Examples include World War II and the Truman-Eisenhower years, when it
was around 90 percent, and the Clinton years, when it was high relative
to the preceding and following administrations.

He also points out that big tax cuts are often followed by bubbles and crashes, like the big crashes of 1929, 1987 and 2008.

Beinhart says that one reason for this is that low taxes encourage businesses to distribute profits rather than reinvest them in their companies. When taxes are low the owners have incentive to grab all the cash they can out of the company.  But when taxes are high every dollar they take out of the company is immediately reduced.  If the money stays and is reinvested in the company the company’s value grows and can later be taken as capital gains.  As a former business owner I understand how this works. 

Beinhart writes,

With high taxes, the only way to retain the bulk of the wealth
created by a business is by reinvesting it in the business — in
plants, equipment, staff, research and development, new products and
all the rest.

The higher taxes are (and from 1940 to 1964 the top rates were around 90 percent), the more this is true.

This creates a bias toward long-term planning.

If
a business is planning for the long term, it wants a happy, stable work
force. It becomes worthwhile to pay good wages and offer decent
benefits.

So low taxes cause companies to only think a few months ahead and sacrifice their long-term good for short-term gain, instead of planning to be in business year after year.  Also, low taxes encourage a fast-buck climate in which takeovers and disruption rule.  Beinhart writes that when the Reagan tax cut era took over,

It was no longer enough for a business to be a reasonably good business, making steady, reliable profits.

Indeed,
that became a very bad condition for a business to be in. It made it a
target for takeovers by people who were willing to milk them of their
profits.

There is a lot more over at the article, so go read the rest.

This holds important lessons for Californians.  Along with Beinhart’s observations, there are other reasons to think that low taxes harm the economy.  For one, it is the nature of our economic system that a few people can come into possession of huge shares of the wealth.  This dries up the economy because regular people don’t have enough of a share of the wealth to allow them to spend much on consumer goods, etc.  We are seeing this happening today.  On top of that we are seeing the government forced by tax shortfalls to lay people off just at the time we need more people to be able to buy houses, cars, etc.  Taxes provide jobs and redistribute the wealth in multiple ways, so that regular people CAN buy houses, etc.

But in California we have rules that don’t let us raise taxes, even though we can see that we need the income so that the state can keep teachers, firefighters, roadworkers, etc. employed!  We as citizens actually tolerate rules that keep us from asking corporations and wealthy people from pitching in to help fix the economy!  It is time for us to start looking at how to fix these rules that hobble us during times of economic emergency.