Friday, March 30, 2018

How Unions Carried Pennsylvania’s 18th District — and Why the DNC Should Be Paying Attention [feedly]

How Unions Carried Pennsylvania's 18th District — and Why the DNC Should Be Paying Attention
https://aflcio.org/2018/3/27/how-unions-carried-pennsylvanias-18th-district-and-why-dnc-should-be-paying-attention

How Unions Carried Pennsylvania's 18th District — and Why the DNC Should Be Paying Attention
AFL-CIO

Rep.-elect Conor Lamb made national waves with an improbable win last week in Pennsylvania's 18th Congressional District. He faced down $10 million in outside money funneled to his opponent by corporate and right-wing interests. He fought through a barrage of incessant, hyper-partisan attacks blanketing the airwaves. He was abandoned by his own party's national infrastructure in a district that hadn't elected a Democrat in nearly 15 years. And he still came out on top.

It wasn't because of some stale advice whispered into his ear by an overpaid consultant. He doesn't owe this victory to super PACs or corporate donations. It certainly wasn't thanks to the Democratic Party establishment — it's still finding its way out of an agenda and message that failed to resonate with working people in 2016.

The fact is: Working people and the power of a union-run, member-to-member campaign are what carried the 18th District.

This election came down to a fight between our grassroots labor coalition and state Rep. Rick Saccone's corporate-funded, RNC-managed smear campaign. The outcome proved what we already knew: The path to power runs through the labor movement.

Conor will be settling into a new office in Washington because he proudly stood with unions in southwestern Pennsylvania.

Read the full post at Medium.

Kenneth Quinnell Tue, 03/27/2018 - 10:51

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Three ways mass incarceration affects women of color [feedly]

Three ways mass incarceration affects women of color
https://www.urban.org/urban-wire/three-ways-mass-incarceration-affects-women-color

Of the 2.3 million people incarcerated in America, the majority are men. But women bear many burdens of mass incarceration.

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Tariffs raise concerns about future of US – China relations [feedly]

Tariffs raise concerns about future of US – China relations
http://larrysummers.com/2018/03/26/tariffs-raise-concerns-about-future-of-us-china-relations/

In an interview on CNBC at the Asian Development Bank, Summers discussed the implications of steel tariffs for the US economy. The steel tariffs will do damage to the American economy "even before China retaliates" says Summers.

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Implications of steel tariffs for the US economy [feedly]

Implications of steel tariffs for the US economy
http://larrysummers.com/2018/03/26/implications-of-steel-tariffs-for-the-us-economy/

In an interview on CNBC at the Asian Development Bank, Summers discussed the implications of steel tariffs for the US economy. The steel tariffs will do damage to the American economy "even before China retaliates" says Summers.

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Should-Read : Thomas Piketty : Brahmin Left vs. Merchant Right: Rising Inequality and the Changing Structure of Politic... [feedly]

Should-Read : Thomas Piketty : Brahmin Left vs. Merchant Right: Rising Inequality and the Changing Structure of Politic...
http://www.bradford-delong.com/2018/03/thomas-piketty-brahmin-left-vs-merchant-right-rising-inequality-and-the-changing-structure-of-political-conflict-evidence.html

So if you believe a simplified version of conservative views on the economy, Trumponomics is pretty contradictory (and yes they are contradictory, even if one may doubts about why). Tax cuts should lead to growth, via supply side economics, and the recently proposed tariffs on steel and aluminum do exactly the opposite. Protectionism (not a very good name, I prefer managed trade, as I discussed here before) has made a come back, but while many heterodox economists have suggested that 'free trade' is not always beneficial to all, and those concerned with the fate of manufacturing and the working class in the United States have decried Free Trade Agreements (FTAs) over the years, it seems that the association of these ideas with Trumponomics has made them less keen on the recent tariff proposal.

A typical example is the recent op-ed by Jared Bernstein and Dean Baker in WAPO, and I cite them exactly for my respect for their economic views in general, and their commitment to progressive causes. In their view: "The bigger dangers to our economy are twofold. One, that our trading partners will retaliate by taxing our exports to them, thus hurting a broad swath of our exporting industries, and two, by leading an emboldened, reckless Trump administration to enact more bad trade policy." Essentially, they agree that tariffs would have a negative effect on employment, but perhaps not as big as some Cassandras have suggested, and that this 'bad protectionist' policies would continue. A similar argument can be found in Brad DeLong's op-ed, another progressive economist, in which he argues that the tariff is a tax hike for consumers. Brad, I should note, has recently published a very good book in which he praises the Hamiltonian system, that is,  the use of managed trade to promote industrial development (I discussed it here).*

It's worth remembering that while on other issues Trumponomics is essentially Reaganomics (low taxes for the wealthy and increased military spending), on trade his views are a break with more recent Republican positions (and hence the push back in his own party against the tariffs) and closer to what many Dems, particularly those connected with trade unions, often defended. He has not signed TPP, has really started renegotiating NAFTA (something Obama promised to do as a candidate, but did not deliver as president) and now has imposed some tariffs (like, btw, Bush, so I'm not suggesting this is unprecedented; just that he has been more consistent on this topic).
Don't get me wrong, I'm not a big fan of Trumponomics, or even in particular of these tariffs. And this will not work probably, but the reasons are not the ones adduced by progressives. Their basic argument is that retaliation by other countries will make them innocuous. In all fairness, the US is already more 'protectionism' (manages trade) than most people understand. The ability to use trade treaties and organizations for defending the country's own advantage is considerably tilted in favor of advanced economies and their corporations that can use loopholes to creatively avoid rules and continue to subsidize their industries (and agricultural sector). The US use of the defense department, again used by Trump, is typical. Poor countries some times lack the basic technical capabilities (lawyers and economists) to face the trade teams of advanced economies. The complexity of the WTO dispute settlement process, the geopolitical role of the US and the importance of US markets for many developing countries render it a very ineffective tool for the interests of less developed economies.

It should not be a surprise that American corporations continue to thrive in international trade (it's the American working class that is in trouble). Manufacturing is doing well, with the support of what Fred Block has termed the hidden developmental state in the US. So the problem is not that tariffs could not work. In all fairness, tariffs together with significant expansion of domestic spending on infrastructure (and more steel demand), with a vigorous defense of trade unions, with higher minimum wages, with policies to improve income distribution, like progressive taxes on the wealthy, to strengthen the domestic market might actually be part of a Hamiltonian strategy of economic growth. Note also that the whole point of imposing tariffs is to depend less on exports and more on domestic markets, so that to some extent retaliation should matter less. A more closed (not closed, but more so, like Keynes suggested in his National Self-Sufficiency piece of 1933) international economic order, to role back of some of the excesses of the neoliberal, pro-corporate globalization process, used to be be, and should be, on the agenda of the left.

The problem, then is less the tariffs per se, and more the fact that the Trumpian agenda is empty, and has nothing for the working class. That was my biggest concern reading the progressive economists complaints about Trump's trade views. Their solutions are to stop protecting patents and professionals, that is more 'free trade,' and a more depreciated currency (I'll leave my skepticism about this one for another post, at any rate I discussed this before). While I'm more sympathetic to the skepticism on property rights, note that China, in part, thrives, exactly because they do explicitly infringe the rules on patents (the first Geely car was a knock off of a Mercedes, and they bought Volvo to have access to foreign technology; there are many examples; it's worth noticing that the US did that in the past too). That would not necessarily be good for American corporations. To weaken doctors, lawyers and other middle (and upper middle) class professionals is certainly not the way out of the hole for the American working class.

The political danger of these views, which I think still dominate the liberal wing of the Democratic Party, is considerable. I think, that even if his policies turn out not to be very helpful (for the reasons I outlined, meaning lower wages and protections for workers, lower taxes for the wealthy and corporations and so on) his true dislike of globalization and free trade policies would strengthen his position with working people in the Rust Belt, which were central for his victory (maybe you think it was Russia… oh, well). As I noticed before the election, this would make things so much hard for Dems in elections. I said back in September 2016 that: "Note that this doesn't mean he [Trump] is going to win the election. Demographic changes make it harder for Republicans to win now, since Dems get more of the electoral college to start with. And I hope he doesn't, btw. But there are good reasons to be afraid. This is going to be way closer than it should be." And so it was.

I'm afraid that his trade policies, and the Dems position that effectively are to his right (like Hillary, but not Bernie) would make it more likely (hopefully not enough) for a longer period of Trumponomics than is acceptable. This suggests that a good chunk of Dems are stuck in the model that Mark Lilla has referred to as identity liberalism (see his book here), and have become vulnerable to right wing populism. It's getting increasingly difficult to have hope in the dark.

PS: For discussions of trade policy see this two previous entries which provide a simple discussion of the Ricardian and neoclassical models of trade and its limitations. I would also recommend the paper by Robert Wade linked here.

* There are many others that have written on this in the last couple of days. Paul Krugman could, arguably enter the list of progressives here, but he has been consistently more of a free trade guy. Krugman complain is more macro than the others. In his view, the Fed would hike rates, since we are close enough to full employment and any additional gains from the tariffs will be eroded, even without retaliation from other countries. In part, that would happen because higher interest rates would lead to inflows and an appreciation of the dollar (see here).



 -- via my feedly newsfeed

Triple Crisis: The Left and the Return of Protectionism [feedly]

The Left and the Return of Protectionism
http://triplecrisis.com/the-left-and-the-return-of-protectionism/

So if you believe a simplified version of conservative views on the economy, Trumponomics is pretty contradictory (and yes they are contradictory, even if one may doubts about why). Tax cuts should lead to growth, via supply side economics, and the recently proposed tariffs on steel and aluminum do exactly the opposite. Protectionism (not a very good name, I prefer managed trade, as I discussed here before) has made a come back, but while many heterodox economists have suggested that 'free trade' is not always beneficial to all, and those concerned with the fate of manufacturing and the working class in the United States have decried Free Trade Agreements (FTAs) over the years, it seems that the association of these ideas with Trumponomics has made them less keen on the recent tariff proposal.

A typical example is the recent op-ed by Jared Bernstein and Dean Baker in WAPO, and I cite them exactly for my respect for their economic views in general, and their commitment to progressive causes. In their view: "The bigger dangers to our economy are twofold. One, that our trading partners will retaliate by taxing our exports to them, thus hurting a broad swath of our exporting industries, and two, by leading an emboldened, reckless Trump administration to enact more bad trade policy." Essentially, they agree that tariffs would have a negative effect on employment, but perhaps not as big as some Cassandras have suggested, and that this 'bad protectionist' policies would continue. A similar argument can be found in Brad DeLong's op-ed, another progressive economist, in which he argues that the tariff is a tax hike for consumers. Brad, I should note, has recently published a very good book in which he praises the Hamiltonian system, that is,  the use of managed trade to promote industrial development (I discussed it here).*

It's worth remembering that while on other issues Trumponomics is essentially Reaganomics (low taxes for the wealthy and increased military spending), on trade his views are a break with more recent Republican positions (and hence the push back in his own party against the tariffs) and closer to what many Dems, particularly those connected with trade unions, often defended. He has not signed TPP, has really started renegotiating NAFTA (something Obama promised to do as a candidate, but did not deliver as president) and now has imposed some tariffs (like, btw, Bush, so I'm not suggesting this is unprecedented; just that he has been more consistent on this topic).
Don't get me wrong, I'm not a big fan of Trumponomics, or even in particular of these tariffs. And this will not work probably, but the reasons are not the ones adduced by progressives. Their basic argument is that retaliation by other countries will make them innocuous. In all fairness, the US is already more 'protectionism' (manages trade) than most people understand. The ability to use trade treaties and organizations for defending the country's own advantage is considerably tilted in favor of advanced economies and their corporations that can use loopholes to creatively avoid rules and continue to subsidize their industries (and agricultural sector). The US use of the defense department, again used by Trump, is typical. Poor countries some times lack the basic technical capabilities (lawyers and economists) to face the trade teams of advanced economies. The complexity of the WTO dispute settlement process, the geopolitical role of the US and the importance of US markets for many developing countries render it a very ineffective tool for the interests of less developed economies.

It should not be a surprise that American corporations continue to thrive in international trade (it's the American working class that is in trouble). Manufacturing is doing well, with the support of what Fred Block has termed the hidden developmental state in the US. So the problem is not that tariffs could not work. In all fairness, tariffs together with significant expansion of domestic spending on infrastructure (and more steel demand), with a vigorous defense of trade unions, with higher minimum wages, with policies to improve income distribution, like progressive taxes on the wealthy, to strengthen the domestic market might actually be part of a Hamiltonian strategy of economic growth. Note also that the whole point of imposing tariffs is to depend less on exports and more on domestic markets, so that to some extent retaliation should matter less. A more closed (not closed, but more so, like Keynes suggested in his National Self-Sufficiency piece of 1933) international economic order, to role back of some of the excesses of the neoliberal, pro-corporate globalization process, used to be be, and should be, on the agenda of the left.

The problem, then is less the tariffs per se, and more the fact that the Trumpian agenda is empty, and has nothing for the working class. That was my biggest concern reading the progressive economists complaints about Trump's trade views. Their solutions are to stop protecting patents and professionals, that is more 'free trade,' and a more depreciated currency (I'll leave my skepticism about this one for another post, at any rate I discussed this before). While I'm more sympathetic to the skepticism on property rights, note that China, in part, thrives, exactly because they do explicitly infringe the rules on patents (the first Geely car was a knock off of a Mercedes, and they bought Volvo to have access to foreign technology; there are many examples; it's worth noticing that the US did that in the past too). That would not necessarily be good for American corporations. To weaken doctors, lawyers and other middle (and upper middle) class professionals is certainly not the way out of the hole for the American working class.

The political danger of these views, which I think still dominate the liberal wing of the Democratic Party, is considerable. I think, that even if his policies turn out not to be very helpful (for the reasons I outlined, meaning lower wages and protections for workers, lower taxes for the wealthy and corporations and so on) his true dislike of globalization and free trade policies would strengthen his position with working people in the Rust Belt, which were central for his victory (maybe you think it was Russia… oh, well). As I noticed before the election, this would make things so much hard for Dems in elections. I said back in September 2016 that: "Note that this doesn't mean he [Trump] is going to win the election. Demographic changes make it harder for Republicans to win now, since Dems get more of the electoral college to start with. And I hope he doesn't, btw. But there are good reasons to be afraid. This is going to be way closer than it should be." And so it was.

I'm afraid that his trade policies, and the Dems position that effectively are to his right (like Hillary, but not Bernie) would make it more likely (hopefully not enough) for a longer period of Trumponomics than is acceptable. This suggests that a good chunk of Dems are stuck in the model that Mark Lilla has referred to as identity liberalism (see his book here), and have become vulnerable to right wing populism. It's getting increasingly difficult to have hope in the dark.

PS: For discussions of trade policy see this two previous entries which provide a simple discussion of the Ricardian and neoclassical models of trade and its limitations. I would also recommend the paper by Robert Wade linked here.

* There are many others that have written on this in the last couple of days. Paul Krugman could, arguably enter the list of progressives here, but he has been consistently more of a free trade guy. Krugman complain is more macro than the others. In his view, the Fed would hike rates, since we are close enough to full employment and any additional gains from the tariffs will be eroded, even without retaliation from other countries. In part, that would happen because higher interest rates would lead to inflows and an appreciation of the dollar (see here).



 -- via my feedly newsfeed

Jared Bernstein: NYT oped: When it comes to trade-induced job loss, “don’t worry, be happy!” [feedly]

NYT oped: When it comes to trade-induced job loss, "don't worry, be happy!"
http://jaredbernsteinblog.com/nyt-oped-when-it-comes-to-trade-induced-job-loss-dont-worry-be-happy/

I've long hoped, probably na├»vely, that one of the benefits of team Trump's promotion of generally ineffective (or worse) solutions to the downsides of trade could engender a debate about better ideas. Of course, the debate will also generate some really bad arguments, like this one from economist David Boudreaux in this AM's NYT.

Boudreaux argues that trade (and, implicitly, anything else) can't be a problem for jobs because the US economy creates and destroys tons of jobs all the time. The nub of his case comes down to:

"…estimates of jobs destroyed by trade sound big, but they're actually tiny. Relative to overall routine job destruction and creation — "job churn" — the number of American jobs destroyed by trade is minuscule.

In January alone, the number of American workers who were laid off or dismissed from their jobs was 1.8 million. The number of workers who quit their jobs that month was 3.3 million. Adding in workers who left their jobs for other reasons, such as retirement and disability, the number of job separations in January was 5.4 million. But there were 5.6 million hires in January, too. Those numbers are typical of most months.

Awareness of job churn should calm Americans' fears about imports [good luck with that–JB]…Compared with the number of total annual job losses…job losses from trade shrink into insignificance."

He then cites some estimates of trade-induced job losses:

"Ms. Wallach's estimate that Nafta destroyed one million jobs in its first 20 years means that it took freer trade with Mexico two decades to destroy as many American jobs as are now destroyed every 18 days on average. Mr. Autor, Mr. Dorn and Mr. Hanson's calculation that 2.4 million American jobs were ended by trade with China from 1999 through 2011 implies that the 13-year "China shock," as the paper called it, eliminated as many jobs as are eliminated, on average, every 41 days."

By this measure, almost any amount of job loss attributed to any cause will be insignificant. Boudreaux has taken Panglossian economics ("don't worry—be happy!") to a new high. His trick, if you didn't notice, is a) conflating gross with net flows, and b) not giving a crap about the pain of job loss, dislocation, and the damage done to whole communities that found themselves on the wrong side of these global dynamics.

I asked David Autor—he's one of the economists whose work Boudreaux critically cites—what he thought about this argument that job churn somehow negates job loss. His response follows:

"It's unfortunate that a Ph.D. economist would not recognize the crucial difference between gross and net job losses. By Boudreaux's logic, since "in a normal year, then, the number of workers laid off or dismissed averages 21 million," the U.S. Great Recession was a negligible event: the U.S. lost fewer than 4 million jobs in the first year (a mere one-quarter's worth of job losses) and no more than another 2 million in the second year (only a month's worth). It's remarkable that we even noticed!

Yes, when the U.S. loses and gains 21 million jobs in a year, this is the normal ebb and flow of the labor market. Large gross job flows need not imply any net loss of employment. But when sharp changes in world trading conditions cause the U.S. manufacturing sector to close up shop on 14 percent of its base employment level (2.4 million of 17.3 million manufacturing jobs) in the space of a few years, and many of these displaced workers leave the labor force, that's a huge rise in concentrated net job loss that is not part of the normal ebb and flow. (By the way, 2.4 million is the conservatively estimated trade-induced fall. U.S. manufacturing jobs plummeted from 17.3 million in 1999 to 13.8 million in 2007, a net reduction of 3.5 million, followed by another 1.9 million net fall between 2007 and 2010)."

So, if you happen to read Boudreaux's oped and it seemed inconceivable to you that millions of net job losses magically "shrink into insignificance," be assured that you were right and he was very wrong.

As I've tried to stress in much recent work, this moment does, at least it should, create a moment to talk about what we should do for those hurt by trade.

I've argued:

–Much better work supports for job losers, including direct job creation in places with persistently weak labor demand.

–Improve the quality of existing jobs through much better labor standards (see Heidi Shierholz's recent work on this). Though there are definitely pockets of weak labor demand, even today, broadly speaking, our labor market problem is less job quantity than quality.

–Help our smaller manufacturers by expanding the Manufacturing Extension Partnership (it's a small but venerable part of the solution—I've got a piece coming out soon on this with the details).

–Push back on currency intervention by trading partners with "countervailing currency purchases" (see Gagnon/Bergsten on this). Trump's new South Korean trade deal relegated currency rules to a toothless side agreement.

–See Lori Wallach and my agenda for more inclusive trade deals, including taking ISDS out of these agreements, putting a currency chapter in the deal with enforceable disciplines, and ensuring a much more balanced set of interests around the table when these deals are cast.



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