Wednesday, August 1, 2018

Carl Davidson: Strategic Thinking on the U.S. Six Party System

You know its time to rethink theoretical concepts (again), when an article provokes your own thinking in a way that starts out as critical, but quickly becomes self-critical! I think there can be better, simpler and more consumable frameworks than Carl's, but his youthful 'retirement' shines here!


Congressional Progressive Caucus presenting its platform

"If you know the enemy and know yourself, your victory will not stand in doubt; if you know Heaven and know Earth, you may make your victory complete." 
–Sun Tzu, The Art of War

By Carl Davidson
Keep On Keepin' On

Successful strategic thinking starts with gaining knowledge, particular gaining adequate knowledge of the big picture, of all the political and economic forces involved (Earth) and what they are thinking, about themselves and others, at any given time. (Heaven). It's not a one-shot deal. Since both Heaven and Earth are always changing, strategic thinking must always be kept up to date, reassessed and revised.

To make a political assessment of the forces commanded by the U.S. bourgeoisie and its subaltern allies and strata, it helps to make an examination of Congress, the White House and other Beltway institutions, as well as voting trends and others political and cultural among the masses. And to get an accurate estimation, we must often tear away, set aside or bracket misleading labels and frames, as well as assess varying economic resources and voting results. We want to illuminate an intentionally obfuscated landscape, like when a flash of lightning at night does away with shadows and renders the landscape in sharp relief.

The primary conventional wisdom we want to dissect here is that the U.S. has a two-party system.  First, the nature of political parties in the US today is rather unique; they are not parties in any European parliamentary sense, where members are bound to a program or platform with some degree of discipline, and mass party organizations exist at the base. Second, the Republicans and the Democrats in the US are largely empty shells locally, consisting mainly of incumbents and staffers, and their retained lawyers, fundraisers and media consultants. There is some variation from state to state–state committeemen and women will pass resolutions and certify ballot status and positions, but there's not much of a mass character save for an occasional campaign rally. Third, at the Congressional level the two-party structure, to some degree, still allows for dividing the spoils of committee assignments, but even these are often warped by other considerations.

A few also like to argue that the US has only one party, a capitalist party, with two wings, the bad and the worse. But this is reductionist to a fault, and doesn't tell you much other than that we live in a capitalist society, which is rather trivial.

Some also hold out hope for a 'third party' that is noncapitalist. But given the 'winner take all' rules in most elections, along with the amount of money and resources required to mount credible campaigns, these are long shots, save for periods of crisis and upheaval, like the period just before the U.S Civil War, where the Whigs imploded, the Liberty Party had a role, and a new 'First Party' formed, the GOP. Another period worth a deeper look is 1944-48, when the rising forces of the Cold War and Southern racism led to a four-way race in 1948 between the Dixiecrats (Strom Thurmond), the Democrats (Harry Truman), the GOP (Thomas Dewey) and the Progressive Party (Henry Wallace).

Our Six-Party System

But today, we'll do better to get a more accurate picture of our adversaries if we set aside the labels of 'two-party system', 'Democrats' and 'Republicans' and the other nuances mentioned above.  Instead, I'll offer an alternative working hypothesis, that we live under a six-party system with two labels, and that this will give us a closer and more realistic view of the relation and balance of forces with which we have to deal. But even here, it's important to note that we are discussing 'parties' as clusters of colluding and contending blocs of interests, economic views and social coalitions, not unified and disciplined ideological formations strictly bound to a platform. The six 'parties' described here below, however, do come closer to these kinds of constructs than the larger 'two labels' they operate under.

So who are they?

The Tea Party. So far, only the most far right group has been given the label 'party' in the mass media, even though it operates as a faction within the GOP. It generally represents anti-globalist nationalism with a prominence given to the 'Austrian School' economics of classical liberalism and, in some cases, the self-interest philosophy of Ayn Rand. It also merges with paleo-conservative traditionalists, which serves as a cover for defending white and male privilege and armed militia groups. It appeals to about 10-20 percent of the electorate, with greater support in the South and West. It is currently locked in a fierce factional struggle with the other wing of the GOP. While a minority in the House overall, they dominate the GOP House Caucus, and thus, as reported widely on 24-hour news cycles, they can and do block many bills from coming to the floor. Tea Party incumbents have been aided in gaining and retaining their seats by GOP-led redistricting on the level of the states they control, breaking up districts electing Democrats and forming new one with more homogenous rightwing majorities. This was begun by Paul Weyrich of the 'New Right' under Reagan, and continues to this day

The Republican Multinationalists. These are the neoliberal moneybags of the GOP (and the neoconservative subset termed 'The War Party' by Pat Buchanan and Ron Paul from the right)-the Bushes, Cheney, Karl Rove, the Koch brothers and others with fortunes rooted in petroleum, defense industries and other US businesses with global reach. Their neoliberal economics became hegemonic with Reagan's ascendancy via the anti-Black and anti-feminist 'Southern Strategy' alliance with the forces that later came to make up the Tea Party right. The Koch brother's money also helped form ALEC, the American Legislative Exchange Council, thus allowing business lobbyists to write uniform reactionary legislation, mainly on the state level, across the country. Despite statewide gains, the GOP label's current dilemma is that the Tea Party's more inane, backward and proto-fascist views on social and cultural issues is causing the GOP tickets to lose national elections, deadlock the Congress and strain the alliance. On the other hand, if the 'Country Club' Republicans dump the Tea Party, the GOP itself may implode

The Blue Dogs. This caucus in the Democratic Party is tied to 'Red State' mass voting bases-the military industrial workers, and the Southern and Appalachian regions. They are neo-Keynesian on military matters, but neoliberal on everything else. Their 'party' frequently sides with the GOP in Congressional voting. The Blue Dog Coalition has recently shrunk from 27 to 14 members, often having paved the way to self-defeat by backhandedly encouraging GOP victories in their districts by attacking Obama and other Democrats.

The 'Third Way' New Democrats. This 'party' of the center right is mainly the U.S. electoral arm of global and finance capital, with the Clintons and Rahm Emanuel as the better known public faces. Formed to break with 'economic populism' of the old FDR coalition, and assert a variety of globalist 'free trade' measures and the gutting of Glass-Steagall banking regulations, this new post-Reagan-Mondale grouping decided to put distance between itself and traditional labor allies. While neo-Keynesian on most matters, it also 'triangulates' with neoliberal positions. Started as the Democratic Leader Council and the 'New Democrat Coaltions. John Kerry is a member of the DLC but President Obama has claimed 'no direct connection,' even though the grouping lists Obama as one of its 'rising stars' The DLC/'New Democrats' essentially speaks for some of the more powerful elements of finance capital under the 'Democratic' label.. It is the dominant view among the Senate Democratic majority.

Old New Dealers.  This 'party' is represented by unofficial wealthy Democratic groups like Americans Coming Together, plus the AFL-CIO's Committee on Political Education and others. They take a Keynesian approach to economic matters, and are often critical of finance capital and the trade deals promoted by the globalists. They are also wary of deep defense cuts that would cause layoffs among their membership base. They maintain, however, strong alliances with some civil rights, women's and environmental groups. Their main value to Democratic tickets is their independent get-out-the-vote operations, which can be decisive in many races. They also work closely with the Alliance for American Manufacturing, a business-based anti-free trade lobby that works with labor.

PDA/Congressional Progressive Caucus. While the largest single caucus in the House, the CPC 'party' is still relatively small, representing 80 out of 435 votes. Its policy views are Keynesian and, in some cases, social-democratic as well.  Its recent 'Back-to-Work Budget' serves as an excellent economic platform for a popular front against finance capital. It also largely overlaps with the Hispanic and Black Caucuses, and is the most multinational 'Rainbow' grouping in the Congress. It also includes Senator Bernie Sanders, the sole socialist in Congress, who was an initial founder of the CPC. It has opposed the wars in Iraq and Afghanistan, under the Progressive Democrats of America banners of 'Healthcare Not Warfare' and 'Windmills Not Weapons.' It has recently gained some direct union support from the militant National Nurses United and the Communications Workers of America. Many, but not all, CPC members are also members of Progressive Democrats of America, an independent PAC dubbed the 'Tom Hayden/ Dennis Kucinich' Democrats at the time of their founding in 2004. The Congressional Progressive Caucus is the closest political group the US has that would parallel some of the 'United Left' socialist and social democratic groups in European countries

What Does It All Mean?

With this brief descriptive and analytical mapping of the upper crust of American politics, many things begin to fall in place. Romney, a very wealthy representative of the Multinational GOP group, defeated all the Tea Party candidates in the primaries, and consequently, could never convince the Tea Party he was one of them, simply because he wasn't. This led to a drop in GOP voter enthusiasm that couldn't even be overcome with 'dog whistle' appeals to racism and revanchism in the campaigns.

The Obama administration, on the other hand, at its core, represents an alliance between the DLC 'Third Way' and the Old New Dealers, while also pulling along the PDA/Congressional Progressive Caucus as energetic but critical secondary allies. The Blue Dogs found themselves out in the cold from the wider Obama coalition, and shrank accordingly. Barbara Lee of PDA and the CPC, moving from a minority of one on Afghanistan at the start of the invasion, finally got a majority of House Democrats to oppose and push Obama on the wars, but to little avail in any immediate sense, being thwarted by both the DLC and the Multinational GOP.

This 'big picture' also reveals much about the current budget debates, which are shown to be three-sided-the extreme austerity neoliberalism of the Tea Party Ryan budget, the 'austerity lite' budget of the DLC-dominated Senate Democrats, and the left Keynesian progressive 'Back to Work' budget of the Congressional Progressive Caucus. The 'Old New Dealers' were caught in the middle, with only 20 or so coming over on the Black Caucus version of the 'Back to Work' budget, which was still in the minority.

While all this shows why and how Obama was able to pull together a majority electoral coalition, it also reveals why he is still thwarted on pulling together an effective governing coalition. Likewise, it shows how the Tea Party, with only 10-20 percent of the electorate, is able to water down or completely bloc common-sense measures on gun control with 70-90 percent support among the general population.

Finally, the fact that there is only one avowed socialist in Congress tells us something about our own position in the overall balance of forces. Socialist candidates are only able to draw 2% to 5% of the votes in this period, save for Sanders, and we all know that Vermont has some unique features that made it possible, not that Sanders didn't do yeoman work in pulling together a progressive majority that elected him.

In summary, here are a few things to keep in mind.  If you decide to intervene in electoral work to build independent working class grassroots organizations, you don't go 'inside the Democratic Party'. There's not much of an 'inside' there anymore. What you do instead is join or work with one of the two factions/'parties' that are left of center.  Your aim is to make either of these stronger, preferably the PDA/Congressional Progressive Caucus. Then to shift the overall balance of forces, your task is to defeat the Tea Party, the Multinational GOP, and the Blue Dogs. At present, not a single piece of progressive legislation is going to get passed without driving a wedge between the two parties under the GOP label and weakening both of them.

We have to keep in mind, however, that 'shifting the balance of forces' is mainly an indirect and somewhat ephemeral gain. It does 'open up space', but for what? Progressive initiatives matter for sure, but much more is required strategically. We are interested in pushing the popular front vs. finance capital to its limits, and within that effort, developing a socialist bloc. If that comes to scale, the 'Democratic Party Tent' is likely to collapse and implode, given the sharper class contractions and other fault lines that lie within it, much as the Whigs did in the 19th Century. That demands an ability to regroup all the progressive forces into a new 'First Party' alliance able to contend for power

An old classic formula summing up the strategic thinking of the united front and popular front is appropriate here: 'Unite and develop the progressive forces, win over the middle forces, isolate and divide the backward forces, then crush our adversaries one by one.' In short, we have to have a policy and set of tactics for each one of these elements, as well as a strategy for dealing with them overall. Finally, a note of warning from the futurist Alvin Toffler: 'If you don't have a strategy, you're part of someone else's strategy.'

John Case
Harpers Ferry, WV
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Sam Webb: The Trump danger and Us

The Trump danger and Us

Sam Webb

A few thoughts — exploratory — on the Trump danger.

Trump isn't a systematic thinker, but he is, as he demonstrated once again at a mass rally last night in Tampa, a dangerous and clever demagogue. He is less a conservative president than a right wing autocratic strongman, disposed to reckless actions and aligned with similar political types on a global level. Putin being one. Of course, among them, he considers himself to be the first among equals.

While there is little doubt that Trump advances capitalist interests in many ways, he also operates autonomously and frequently from them — not to mention his closest advisors — on matters of great consequence. To squeeze him into a rigid Marxist jacket, as some do, in which he faithfully carries out the marching orders of one or another section of big capital is more likely to confuse than clarity the Trump danger.

Trump in my view is a one man, exceedingly dangerous show. He is not only loosely tethered to his class benefactors and the Republican Party, but also completely contemptuous of democracy and viscerally animated by the most vile ideology. The guard rails that limit presidential power are nearly non-existent for him.

Trump is more like a feudal lord who is the state than a typical president who governs more or less within some constitutional and political boundaries. What compounds the danger is that the Republican Party obediently bends to his dictates and he is at the head and enjoys the adulation of a substantial mass constituency, as we saw last night, that has no critical capacity and marches to his beat.

What he doesn't control is the outcome of the fall elections, the Mueller probe, and other critical encounters between Trump and a growing majoritarian movement. And while we can't do much about Mueller's investigation other than to defend it from the outrageous attacks from Trump, Gulliani, and the right wing attack machine, the same can't be said about the coming elections or other key battles. Each of us, if we so chose, can have a hand in effecting their outcome, each of us can be an actor who makes a difference.

John Case
Harpers Ferry, WV
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Reich: Why Wages Are Going Nowhere [feedly]

Why Wages Are Going Nowhere

The official rate of unemployment in America has plunged to a remarkably low 3.8%. The Federal Reserve forecasts that the unemployment rate will reach 3.5% by the end of the year.

But the official rate hides more troubling realities: legions of college grads overqualified for their jobs, a growing number of contract workers with no job security, and an army of part-time workers desperate for full-time jobs. Almost 80% of Americans say they live from paycheck to paycheck, many not knowing how big their next one will be.

Blanketing all of this are stagnant wages and vanishing job benefits. The typical American worker now earns around $44,500 a year, not much more than what the typical worker earned in 40 years ago, adjusted for inflation. Although the US economy continues to grow, most of the gains have been going to a relatively few top executives of large companies, financiers, and inventors and owners of digital devices.

America doesn't have a jobs crisis. It has a good jobs crisis.

When Republicans delivered their $1.5tn tax cut last December they predicted a big wage boost for American workers. Forget it. Wages actually dropped in the second quarter of this year.

Not even the current low rate of unemployment is forcing employers to raise wages. Contrast this with the late 1990s, the last time unemployment dipped close to where it is today, when the portion of national income going into wages was 3% points higher than it is today.

What's going on? Simply put, the vast majority of American workers have lost just about all their bargaining power. The erosion of that bargaining power is one of the biggest economic stories of the past four decades, yet it's less about supply and demand than about institutions and politics.

Two fundamental forces have changed the structure of the US economy, directly altering the balance of power between business and labor. The first is the increasing difficulty for workers of joining together in trade unions. The second is the growing ease by which corporations can join together in oligopolies or to form monopolies.

What happened to unions

By the mid-1950s more than a third of all private-sector workers in the United States were unionized. In subsequent decades public employees became organized, too. Employers were required by law not just to permit unions but to negotiate in good faith with them. This gave workers significant power to demand better wages, hours, benefits, and working conditions. (Agreements in unionized industries set the benchmarks for the non-unionized).

Yet starting in the 1980s and with increasing ferocity since then, private-sector employers have fought against unions. Ronald Reagan's decision to fire the nation's air-traffic controllers, who went on an illegal strike, signaled to private-sector employers that fighting unions was legitimate. A wave of hostile takeovers pushed employers to do whatever was necessary to maximize shareholder returns. Together, they ushered in an era of union-busting.

Employers have been firing workers who attempt to organize, threatening to relocate to more "business friendly" states if companies unionize, mounting campaigns against union votes, and summoning replacement workers when unionized workers strike. Employer groups have lobbied states to enact more so-called "right-to-work" laws that bar unions from requiring dues from workers they represent. A recent Supreme Court opinion delivered by the court's five Republican appointees has extended the principle of "right-to-work" to public employees.

Today, fewer than 7% of private-sector workers are unionized, and public-employee unions are in grave jeopardy, not least because of the Supreme Court ruling. The declining share of total US income going to the middle since the late 1960s – defined as 50% above and 50% below the median – correlates directly with that decline in unionization. (See chart below).

Perhaps even more significantly, the share of total income going to the richest 10 percent of Americans over the last century is almost exactly inversely related to the share of the nation's workers who are unionized. (See chart below). When it comes to dividing up the pie, most American workers today have little or no say. The pie is growing but they're getting only the crumbs.

What happened to antitrust

Over the same period time, antitrust enforcement has gone into remission. The US government has essentially given a green light to companies seeking to gain monopoly power over digital platforms and networks (Google, Apple, Amazon, Facebook); wanting to merge into giant oligopolies (pharmaceuticals, health insurers, airlines, seed producers, food processors, military contractors, Wall Street banks, internet service providers); or intent on creating local monopolies (food distributors, waste disposal companies, hospitals).

This means workers are spending more on such goods and services than they would were these markets more competitive. It's exactly as if their paychecks were cut. Concentrated economic power has also given corporations more ability to hold down wages, because workers have less choice of whom to work for. And it has let companies impose on workers provisions that further weaken their bargaining power, such as anti-poaching and mandatory arbitration agreements.

This great shift in bargaining power, from workers to corporations, has pushed a larger portion of national income into profits and a lower portion into wages than at any time since the second world war. In recent years, most of those profits have gone into higher executive pay and higher share prices rather than into new investment or worker pay. Add to this the fact that the richest 10% of Americans own about 80% of all shares of stock (the top 1% owns about 40%), and you get a broader picture of how and why inequality has widened so dramatically.

What happened to politics

Another consequence: corporations and wealthy individuals have had more money to pour into political campaigns and lobbying, while labor unions have had far less. In 1978, for example, congressional campaign contributions by labor Political Action Committees were on par with corporate PAC contributions. But since 1980, corporate PAC giving has grown at a much faster clip, and today the gulf is huge.

It is no coincidence that all three branches of the federal government, as well as most state governments, have become more "business-friendly" and less "worker-friendly" than at any time since the 1920s. As I've noted, Congress recently slashed the corporate tax rate from 35% to 21%. 

Meanwhile, John Roberts' supreme court has more often sided with business interests in cases involving labor, the environment, or consumers than has any Supreme Court since the mid-1930s. Over the past year it not only ruled against public employee unions but also decided that workers cannot join together in class action suits when their employment contract calls for mandatory arbitration. 

The federal minimum wage has not been increased since 2009, and is now about where it was in 1950 when adjusted for inflation. Trump's labor department is busily repealing many rules and regulations designed to protect workers.

The combination of high corporate profits and growing corporate political power has created a vicious cycle: higher profits have generated more political influence, which has altered the rules of the game through legislative, congressional, and judicial action – enabling corporations to extract even more profit. The biggest losers, from whom most profits have been extracted, have been average workers.

America's shift from farm to factory was accompanied by decades of bloody labor conflict.The shift from factory to office and other sedentary jobs created other social upheaval.

The more recent shift in bargaining power from workers to large corporations – and consequentially, the dramatic widening of inequalities of income, wealth, and political power – has had a more unfortunate and, I fear, more lasting consequence: an angry working class vulnerable to demagogues peddling authoritarianism, racism, and xenophobia.

[This article originally appeared in the July 29, 2018 edition of The Guardian, under the title "Almost 80 Percent of Americans Live From Paycheck to Paycheck. Here's Why."]

 -- via my feedly newsfeed

Stiglitz: The US is at Risk of Losing a Trade War with China [feedly]

The US is at Risk of Losing a Trade War with China

The "best" outcome of President Donald Trump's narrow focus on the US trade deficit with China would be improvement in the bilateral balance, matched by an increase of an equal amount in the deficit with some other country (or countries). In fact, significantly reducing the bilateral trade deficit will prove difficult.

NEW YORK – What was at first a trade skirmish – with US President Donald Trump imposing tariffs on steel and aluminum – appears to be quickly morphing into a full-scale trade war with China. If the truce agreed by Europe and the US holds, the US will be doing battle mainly with China, rather than the world (of course, the trade conflict with Canada and Mexico will continue to simmer, given US demands that neither country can or should accept).

Beyond the true, but by now platitudinous, assertion that everyone will lose, what can we say about the possible outcomes of Trump's trade war? First, macroeconomics always prevails: if the United States' domestic investment continues to exceed its savings, it will have to import capital and have a large trade deficit. Worse, because of the tax cuts enacted at the end of last year, the US fiscal deficit is reaching new records – recently projected to exceed $1 trillion by 2020 – which means that the trade deficit almost surely will increase, whatever the outcome of the trade war. The only way that won't happen is if Trump leads the US into a recession, with incomes declining so much that investment and imports plummet.

The "best" outcome of Trump's narrow focus on the trade deficit with China would be improvement in the bilateral balance, matched by an increase of an equal amount in the deficit with some other country (or countries). The US might sell more natural gas to China and buy fewer washing machines; but it will sell less natural gas to other countries and buy washing machines or something else from Thailand or another country that has avoided the irascible Trump's wrath. But, because the US interfered with the market, it will be paying more for its imports and getting less for its exports than otherwise would have been the case. In short, the best outcome means that the US will be worse off than it is today.9

The US has a problem, but it's not with China. It's at home: America has been saving too little. Trump, like so many of his compatriots, is immensely shortsighted. If he had a whit of understanding of economics and a long-term vision, he would have done what he could to increase national savings. That would have reduced the multilateral trade deficit.

There are obvious quick fixes: China could buy more American oil and then sell it on to others. This would not make an iota of difference, beyond perhaps a slight increase in transaction costs. But Trump could trumpet that he had eliminated the bilateral trade deficit.

In fact, significantly reducing the bilateral trade deficit in a meaningful way will prove difficult. As demand for Chinese goods decreases, the renminbi's exchange rate will weaken – even without any government intervention. This will partly offset the effect of US tariffs; at the same time, it will increase China's competitiveness with other countries—and this will be true even if China doesn't use other instruments in its possession, like wage and price controls, or push strongly for productivity increases. China's overall trade balance, like that of the US, is determined by its macroeconomics.

This much is clear: if Trump's objective is to stop China from pursuing its "Made in China 2025" policy – adopted in 2015 to further its 40-year goal of narrowing the income gap between China and the advanced countries – he will almost surely fail. On the contrary, Trump's actions will only strengthen Chinese leaders' resolve to boost innovation and achieve technological supremacy, as they realize that they can't rely on others, and that the US is actively hostile.If China intervenes more actively and retaliates more aggressively, the change in the US-China trade balance could be even smaller. The relative pain each will inflict on the other is difficult to ascertain. China has more control of its economy, and has wanted to shift toward a growth model based on domestic demand rather than investment and exports. The US is simply helping China do what it has already been trying to do. On the other hand, US actions come at a time when China is trying to manage excess leverage and excess capacity; at least in some sectors, the US will make these tasks all the more difficult.

If a country enters a war, trade or otherwise, it should be sure that good generals – with clearly defined objectives, a viable strategy, and popular support – are in charge. It is here that the differences between China and the US appear so great. No country could have a more unqualified economic team than Trump's, and a majority of Americans are not behind the trade war.

Public support will wane even further as Americans realize that they lose doubly from this war: jobs will disappear, not only because of China's retaliatory measures, but also because US tariffs increase the price of US exports and make them less competitive; and the prices of the goods they buy will rise. This may force the dollar's exchange rate to fall, increasing inflation in the US even more – giving rise to still more opposition. The Fed is likely then to raise interest rates, leading to weaker investment and growth and more unemployment.2

Trump has shown how he responds when his lies are exposed or his policies are failing: he doubles down. China has repeatedly offered face-saving ways for Trump to leave the battlefield and declare victory. But he refuses to take them up. Perhaps hope can be found in three of his other traits: his focus on appearance over substance, his unpredictability, and his love of "big man" politics. Perhaps in a grand meeting with President Xi Jinping, he can declare the problem solved, with some minor adjustments of tariffs here and there, and some new gesture toward market opening that China had already planned to announce, and everyone can go home happy.

In this scenario, Trump will have "solved," imperfectly, a problem that he created. But the world following his foolish trade war will still be different: more uncertain, less confident in the international rule of law, and with harder borders. Trump has changed the world, permanently, for the worse. Even with the best possible outcomes, the only winner is Trump – with his outsize ego pumped up just a little more.1

Joseph E. Stiglitz

Writing for PS since 2001 
248 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump.

 -- via my feedly newsfeed

High-Speed Rail Expansion and German Worker Mobility [feedly]

High-Speed Rail Expansion and German Worker Mobility

Morgan Foy at the NBER Digest:

High-Speed Rail Expansion and German Worker Mobility: Starting in the late 1990s, Germany expanded its high-speed rail network (HSR), connecting outlying locales to large urban areas. In The Effect of Infrastructure on Worker Mobility: Evidence from High-Speed Rail Expansion in Germany (NBER Working Paper No. 24507), Daniel F. Heuermann and Johannes F. Schmieder study how this large-scale infrastructure investment affected commuter behavior. They find that the expansion reduced travel times and increased commuting, as workers moved to jobs in smaller cities while keeping their places of residence in larger urban areas.

Until the late 1990s, the HSR system connected the largest cities of Germany. The connected cities were located in just three of the 16 German states. Areas between the large cities, through which the tracks ran, campaigned for stations, and in a second wave of expansion, the government added stops in many of these cities. 

The researchers analyze the effects of this infrastructure improvement by comparing cities granted stops in the second wave of expansion with other small German cities that were not added to the rail network. They note that new rail stops were not placed due to economic conditions, such as connectedness to urban centers, but because of political factors. Moreover, unlike infrastructure investments in roads and highways, the HSR system exclusively carries passengers. It does not transport goods, so it affects labor but not product markets. 

The researchers create a dataset that includes travel times, train schedules, and administrative employment data, which contain the region of work and residence for each traveler. 

For the average pair of cities in their study, the high-speed rail expansion reduced travel time by 13 minutes, or about 10 percent of the pre-expansion time. The number of commuters rose by 0.25 percent for each 1 percent decrease in travel time. Reductions in commuter time and the corresponding increase in passengers followed an inverted U-shaped pattern, with the largest impacts occurring on routes of 200 to 500 kilometers in length.

The researchers estimate that 840,000 people started to use rail transportation for commuting during their 1994-2010 sample period. Twelve percent of the increase in ridership was attributable to the 10 percent reduction in commuting time as a result of HSR expansion. 

The researchers find that the number of commuters from small cities to large cities is 40 percent larger than the number commuting from large to small cities. The opposite pattern, however, commuting from large cities to small, was much more sensitive to the reduction in travel time from HSR expansion. This supports the view that workers enjoy living in large urban areas and are not there solely for employment. 

The study concludes that the gains from the investment in infrastructure accrued mainly to smaller cities. Commuters are twice as likely as non-commuters to be college graduates, which suggests that building HSR networks may be one way to engage relatively high-skilled workers in the economies of peripheral regions.

 -- via my feedly newsfeed

Nothing misleading about this: Typical workers’ pay and productivity have diverged [feedly]

Nothing misleading about this: Typical workers' pay and productivity have diverged

Jason Furman has an interesting piece on Vox today, claiming that the "puzzle" of weak wage growth in the face of low unemployment is not really a puzzle at all.

There's a lot in this piece to agree with and a lot to quibble with. But, this post will just note one quick quibble. Furman describes a chart of ours—one we like a lot—as "misleading." Here's the full paragraph from him:

Productivity does a good job of explaining the evolution of average wage growth in the United States as well, especially prior to 2000. (But it does a decent job even since then, even with the wage slowdown.) From the end of World War II until around 2000 average wages grew almost lock-step with productivity — if you use the same measure of inflation for both concepts, so the comparison is apples to apples. Often, presentations of the comparison between wages and productivity, as in this much-reproduced graphic, use a higher inflation measure to adjust wages than productivity and thus produce a misleading impression.

This is a criticism we've seen, and addressed, before, so forgive me if I seem a tad sensitive on this, but I want to be really clear: there is nothing misleading about our presentation of this data. The wedge we show between our measure of pay and economy-wide productivity is indeed driven overwhelmingly by rising inequality and not the differing deflators. In this figure we measure the pay of typical workers, not average wages. We define "typical" as either the median worker (the one in the middle of the wage distribution) or the average pay of production and non-supervisory workers (a group consisting of about 80 percent of the private-sector workforce). We don't use average pay precisely because, as Jason notes, average pay kept up pretty well with economy-wide productivity pre-2000. This means that the bulk of the rise in inequality over that time was driven by inequality within wages, or the divergence between average and typical pay (as we clearly show—see the previous link).

So, if Jason wants to claim that average pay and productivity tracked better since 1979 than one might imagine if they were looking at our graph and thinking it showed average pay and productivity, this isn't because we're being misleading with deflators, it's because they're misunderstanding what is clearly labeled on our graph. Again, we're not showing average pay, because average pay obscures the primary way inequality rose in recent decades (or not-so-recent now) decades—the typical workers' pay falling further behind measures of average pay pulled up by stratospheric growth at the top.

Now, there are graphs out there that seem to have been inspired by EPI's that do show a divergence of average pay and productivity, and that wedge is indeed nearly-entirely driven by differing deflators (the remainder is a shift from labor to capital-based incomes). That's a problem in these presentations, but, that's why we don't do it that way!

Finally, if we were trying to mislead about the sources of the wedge between typical workers' pay and productivity with our presentation, we probably wouldn't have included tables that precisely decompose these sources, and also provide this figure.

 -- via my feedly newsfeed

China to build gravitational wave simulator in Shenzen [feedly]

China to build gravitational wave simulator in Shenzen

hina's Sun Yat-sen University has unveiled an ambitious 1 billion yuan (US$147 million) project to build a ground-based gravitational wave simulator at its new campus in the burgeoning tech hub of Shenzhen.

The university said the simulator, when completed, would mock the environment in space within the safety of laboratories. It would also have a peripheral wave-detection facility that can "create" a complex space environment for research into the mysterious waves and other obstacles in space.

A 5,000-square-meter observatory and a new lab occupying more than 10,000 square meters for similar research are taking shape in neighboring Zhuhai, on top of an ultra-quiet cave laboratory built in the city of Guangzhou, where the university's main campus is based.

"Gravitational waves" are ripples in the curvature of space-time caused by some of the more violent and energetic processes in the universe – the acceleration of masses that send out waves at the speed of light.

These waves were first detected by the Laser Interferometer Gravitational-wave Observatory in Louisiana in September 2015 in a landmark breakthrough that made global headlines.

新華社照片,華盛頓,2016年2月11日 (國際)(3)科學家宣佈發現引力波 2月11日,加州理工學院、麻省理工學院以及
A scientist with the US-based Laser Interferometer Gravitational-wave Observatory examines components of a wave detector. Photo: Xinhua

Gravitational waves collect observational data about events such as the formation of the early universe shortly after the Big Bang.

China's efforts to further investigate such ripples followed in the wake of the US discovery. The Guangdong-based university has reportedly earmarked 15 billion yuan for its research in this field.

Also under construction and later to be launched into space is the university's gravitational-wave antenna, an equilateral triangle-shaped detector consisting of three high-precision drag-free satellites for space-based gravitational-wave observation.

Precision lasers will measure the tiny displacement caused by gravitational waves that pass near the satellites, according to the university's Research Center for Gravitational Physics.

The entire ground and space-borne gravitational-wave observation program named Tianqin (meaning "harp in heaven" in Mandarin) will consist of such three satellites.

Tianqin program leader and Sun Yat-sen University President Luo Jun. Photo: WeChat

"If you send three satellites in orbit at a distance of about 100,000 kilometers and connect the three by laser beams, the space formation looks like a harp and when the gravitational waves come, there will be disturbances… it would be like someone is plucking the string," lead scientist Luo Jun, who is also the president of the university, said in a China Central Television program.

He said the US lab's historic discovery of gravitational waves was still ground-based while Tianqin would have detectors in space and simulators on the ground to reduce disturbances and pick up a wider range of gravitational radiation.

His team shot the country's first lunar laser beam to the surface of the moon in January. Before that China's laser range was 'only' 40,000 km, far from the 100,000-km range required for the Tianqin program.

 -- via my feedly newsfeed