ITEP-Prosperity Now: 2017 Tax Law Gives White Households in Top 1% More Than All Races in Bottom 60% [feedly]

ITEP-Prosperity Now: 2017 Tax Law Gives White Households in Top 1% More Than All Races in Bottom 60%
https://www.cbpp.org/blog/itep-prosperity-now-2017-tax-law-gives-white-households-in-top-1-more-than-all-races-in-bottom

We've explained that the 2017 tax law largely ignored working-class families, instead delivering large tax cuts to the most well-off and large, profitable corporations. A new analysis from the Institute on Taxation and Economic Policy (ITEP) and Prosperity Now shows that that's particularly troubling for Black and Latino households:

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Stiglitz on the global mid-term stakes: People vs. Money in America’s Midterm Elections [feedly]

People vs. Money in America's Midterm Elections
https://www.project-syndicate.org/commentary/how-democrats-can-win-midterms-by-joseph-e-stiglitz-2018-10
People vs. Money in America's Midterm ElectionsOct 11, 2018 JOSEPH E. STIGLITZ

We will soon find out whether US voters matter more than the money flowing into the Republican Party's coffers. America's political and economic future, and most likely the peace and prosperity of the entire world, depends on the answer.

NEW YORK – All eyes are on the United States as November's Congressional elections approach. The outcome will answer many alarming questions raised two years ago, when Donald Trump won the presidential election.


Will the US electorate declare that Trump is not what America is about? Will voters renounce his racism, misogyny, nativism, and protectionism? Will they say that his "America First" rejection of the international rule of law is not what the US stands for? Or will they make it clear that Trump's win was not a historical accident resulting from a Republican primary process that produced a flawed nominee and a Democratic primary process that produced Trump's ideal opponent?

As America's future hangs in the balance, impassioned debates about what caused the 2016 outcome are more than academic. At stake is how the Democratic Party – and similar parties of the left in Europe – should position themselves to win the most votes. Should they lean toward the center or focus on mobilizing young, progressive, and enthusiastic newcomers?

There are good reasons to believe that the latter course is more likely to bring electoral success and stymie the dangers posed by Trump.

American voter turnout is abysmal, and worse in non-presidential-election years. In 2010, just 41.8% of the electorate voted. In 2014, only 36.7% of eligible voters cast ballots, according to data from the United States Elections Project. Democratic turnout is even worse, although it appears to be on the upswing this election cycle.

People often say they don't vote because they think it makes no difference: the two parties are as similar as Tweedledee and Tweedledum. Trump has shown that's not true. The Republicans who abandoned all pretense of fiscal rectitude and voted last year for a massive tax cut for billionaires and corporations have shown it's not true. And the Republican senators who rallied behind the nomination of US Supreme Court Justice Brett Kavanaugh, despite his misleading testimony and entirely credible evidence of past sexual misbehavior, have shown it's not true.


The thirst for a different kind of contender is evident in voter support for progressive candidates like former presidential candidate Senator Bernie Sanders and New York's 28-year-old Alexandria Ocasio-Cortez, who recently defeated the fourth-ranking Democrat in the US House of Representatives in a party primary.But the Democrats are also responsible for voter apathy. The party must overcome a long history of collusion with the right, from President Bill Clinton's capital gains tax cut (which enriched the top 1%) and financial market deregulation (which helped bring on the Great Recession), to the 2008 bank bailout (which offered too little to displaced workers and homeowners facing foreclosure). Over the last quarter-century, the party has sometimes seemed more focused on winning the support of those who live on capital gains than those who live on wages. Many stay-at-home voters complain that the Democrats are relying on attacks on Trump, rather than putting forward a real alternative.

Progressives like Sanders and Ocasio-Cortez have managed to present an attractive message to the voters whom Democrats must mobilize to win. They seek to restore access to a middle-class life by providing decent, well-paying jobs, reestablishing a sense of financial security, and ensuring access to quality education – without the chokehold of student debt that so many graduates currently face – and decent health care, regardless of pre-existing medical conditions. They call for affordable housing and a secure retirement in which the elderly are not preyed on by an avaricious financial sector. And they seek a more dynamic, competitive, and fair-market economy by curbing the excesses of market power, financialization, and globalization, and by strengthening workers' bargaining power.

These perquisites of a middle-class life are attainable. They were affordable a half-century ago, when the country was substantially poorer than it is today; and they are affordable now. In fact, neither America's economy nor its democracy can afford not to bolster the middle class. Government policies and programs – including public options for health insurance, supplementary retirement benefits, or mortgages – are crucial to realizing this vision.

I am encouraged by the outpouring of support for these progressive proposals and the political leaders who support them. In a normal democracy, these ideas would, I am confident, prevail. But US politics has been corrupted by money, gerrymandering and massive attempts at disenfranchisement. The 2017 tax bill was nothing short of a bribe to corporations and the wealthy to pour their financial resources into the 2018 election. Statistics show that money matters enormously in American politics.

Even with a flawed democracy – including a concerted effort to prevent some from voting – the power of the American electorate matters. We will soon find out whether it matters more than the money flowing into the Republican Party's coffers. America's political and economic future, and most likely the peace and prosperity of the entire world, depends on the answer.


JOSEPH E. STIGLITZ

Writing for PS since 2001
251 Commentaries

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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.

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They Won this Year’s Nobel for Economics. Here’s Why their Work Matters [feedly]

They Won this Year's Nobel for Economics. Here's Why their Work Matters
https://www.globalpolicyjournal.com/blog/10/10/2018/they-won-years-nobel-economics-heres-why-their-work-matters

On the day that the UN Intergovernmental Panel on Climate Change (IPCC) warned that we only have 12 years left in which to prevent climate catastrophe, an American climate economist cited heavily in…

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Richmond Federal Reserve: "Inequality in and across Cities" [feedly]

"Inequality in and across Cities"
http://www.calculatedriskblog.com/2018/10/inequality-in-and-across-cities.html

Inequality in and across Cities

Article by: Jessie Romero and Felipe F. Schwartzman

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Inequality in the United States has an important spatial component. More-skilled workers tend to live in larger cities where they earn higher wages. Less-skilled workers make lower wages and do not experience similar gains even when they live in those cities. This dynamic implies that larger cities are also more unequal. These relationships appear to have become more pronounced as inequality has increased. The evidence points to externalities among high-skilled workers as a significant contributor to those patterns.

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Imagine you have just completed an advanced degree and are entertaining multiple job offers. One offer would take you to a large city, such as Washington, D.C.; your other offers are in smaller cities, such as Greenville, South Carolina, or Roanoke, Virginia. The large city probably offers more job opportunities down the line, as well as a greater number of people to interact with and learn from. In Washington you also will enjoy a greater variety of cultural amenities, such as restaurants and theaters. At the same time, housing is very expensive there; even if the job in the large city pays a higher salary, you may still have to settle for a smaller home or a longer commute.

Imagine you have completed high school and do not wish, or are unable, to pursue post-secondary education. If you move to Washington, it's unlikely you will find a job with a salary that enables you to pay the high housing costs, much less provides you with enough disposable income to eat at restaurants and attend plays. You might find better job opportunities in a smaller town and be able to purchase a better home relative to your wage.

In the end, where one lives is also influenced by personal preferences — a highly educated worker might choose to live in a small town, or a less-educated worker in a large city, to be closer to relatives or because they find the lifestyle more appealing.

Together, all these factors determine what's known as a "spatial equilibrium" — people choose where to live, and wages and housing prices adjust accordingly.1 Over the past few decades, this equilibrium has shifted. Certain cities have experienced faster and more concentrated wage growth, a higher share of college-educated workers, and higher rents. In a recent article, one of the authors of this Economic Brief, Schwartzman, reviews the literature documenting these shifts and organizes some of its main lessons with the help of a stylized spatial equilibrium model.2 He finds that the trend is driven by relative increases in the demand for skilled labor in large cities where there is already a high proportion of high-skilled workers.

Key Facts about Spatial Inequality

A large body of research has identified several key facts about inequality across and within cities. First, larger cities have a greater concentration of high-skilled workers.3 In the Fifth District, for example, the share of the population over age twenty-five with a bachelor's degree is 45 percent in the most urban areas, compared with 16 percent in the most rural areas. In the United States as a whole, the proportion ranges from 35 percent in the most urban areas to 17 percent in the most rural areas. (See Figure 1 below.)

Second, nominal wages are higher in larger cities and in cities with a larger proportion of high-skilled workers. In the most urban areas of the Fifth District, average annual pay in 2016 was nearly $64,000; in the most rural areas, it was less than $35,000. Nationwide, workers in the most urban areas earned about $60,000 on average in 2016, while workers in the most rural areas earned about $36,000. (See Figure 2 above.) In recent research, Nathaniel Baum-Snow, Matthew Freedman, and Ronni Pavan find that nominal wages increase 0.065 percent for every percentage point increase in city size (based on data from 2005–07). They also find that the relationship between city size and wages has strengthened over time and that the wage gap between urban and rural areas has increased.4

While nominal wages are higher in larger cities, the same is not necessarily true of real wages. That's because the largest cities and the cities with the most skilled workers also tend to have the highest rents and have experienced the largest rent increases in recent decades; high housing costs somewhat offset high wages.

One challenge for researchers studying local price levels is accounting for differences in the quality and variety of goods — such as the larger selection of restaurants and theaters one finds in a large city. In a 2015 article, for example, Jessie Handbury and David E. Weinstein conclude that even when focusing on groceries, typical price indices used to compare cities are biased because they don't account for quality and variety.5In addition, Rebecca Diamond finds in a 2016 article that other contributors to quality of life, such as schools and air quality, are better in larger, more-skilled cities.6Factoring in such amenities suggests that standards of living increase with city size. Thus, while high housing costs in cities may suggest that there is less inequality in standards of living than one would infer based on nominal wage data alone, the quality and variety of goods and other amenities in cities could mean the opposite.

The third key fact about cities is that larger cities and cities with more skilled workers are more unequal and have become more unequal over time. Baum-Snow and Pavan found in a 2013 article that from 2004 through 2007, the variance of log hourly wages in rural wages was 0.28 percent. The variance was nearly double — 0.53 — in the three largest metropolitan areas, meaning that the gap between the highest and the lowest earners in metro areas was much larger than the gap in rural areas. In 1979, the variance in rural areas was 0.19 and just slightly more in the three largest metropolitan areas at 0.24.7

In addition, the skill premium increases with city size, and it appears to increase with the share of skilled workers already living in a city. This might seem surprising because basic supply and demand implies that when the supply of something (in this case skilled workers) goes up, the price (in this case wages) should go down. In fact, prior to 1980, cities with more skilled workers had lower skill premia, but this correlation reversed by the early 2000s.8

Explaining the Facts

The most natural explanation for these facts is that the demand for skilled workers has increased more in larger cities and in cities with a high share of skilled workers, while the demand for unskilled workers has not increased much anywhere. Schwartzman develops a stylized model that illustrates this explanation. In the model, cities are in fixed locations and are equipped with a production technology for a tradeable good. Production in each city depends on the number of high- and low-skilled workers in the city. While low-skilled workers are similarly productive in different cities, the productivity of high-skilled workers varies by city. More productive cities try to attract more workers, and the resulting increase in workers pushes up housing demand and rents. So firms have to increase wages to retain workers in those cities. Workers' utility depends on their preferences about location, housing, and consumption, and can also vary with a city's amenities. Consequently, the supply of labor in a city is a function of wages and rental prices. In this model, variation in firms' demand for skilled labor can explain the spatial equilibrium described above, in which wages and wage inequality are higher in larger cities and in cities with a greater share of skilled workers.

This invites the question, what accounts for that variation in demand? Researchers have explored three main possibilities: information technology, industrial composition, and externalities.

Information technology plays a role by making skilled workers more productive; it is a complement to skilled labor but not to unskilled labor. As computers become cheaper, firms increase their use, which gives them an incentive to use more high-skilled workers. At the same time, firms have a greater incentive to adopt technology in cities where there is already a high supply of skilled labor that can use the technology. Together, these trends increase the demand for skilled workers in high-skill cities. Still, while technology can help explain the shift from a negative correlation between college-educated workers and wage inequality to no correlation, this explanation does not readily support the shift to a positive correlation.

Another contributing factor could be the industrial composition of cities. Different industries have different skill intensities; so the extent to which cities specialize in these different industries could explain cross-city variation in the number of and demand for skilled workers. It's also the case that cities with a large fraction of skilled workers have large business services sectors, such as accounting or law firms. Lutz Hendricks proposes in a 2011 article that the output of these service firms is complementary to skilled workers. As it becomes cheaper to hire an external accountant, for example, firms may choose to outsource those services rather than hire them internally.9 Other research suggests that availability of business services might contribute to firms' decisions to locate their managers and executives in cities, while locating their production facilities in more rural areas.10 Hendricks finds, however, that cross-city variation in industrial composition accounts for only a small fraction of cross-city variation in skill composition and that the special role of the business services sector has to be explained by increasing returns to that sector.

This takes us to the final explanation for increasing demand for skilled workers, and the one for which Schwartzman finds the most support in his model and in the literature: externalities. These externalities may operate in various ways. For example, there are more opportunities for knowledge transfer when people are in close proximity; because high-skilled workers perform more knowledge-intensive tasks, they stand to benefit more, in terms of increasing their productivity, from these transfers than do lower-skilled workers. Alternatively, a larger supply of high-skilled workers might also facilitate better matching of workers and firms, leading to higher productivity. These externalities are one example of what urban economists call "agglomeration economies," or the idea that there are advantages to concentrating economic activity in one place.11

The above explanations all refer to factors that influence the demand for skilled labor. It's possible, however, that the observed wage trends could result instead from workers sorting themselves; that is, the highest-skilled workers move to the cities with the most amenities, and the high wages they receive in those cities are just reflections of the high productivity that they would have irrespective of where they live. However, there are a variety of reasons why sorting does not appear to be the explanation, including the fact that a sorting explanation may require unrealistic assumptions in the model. Most importantly, recent empirical work using detailed administrative data has found little role for sorting.12

Conclusion

After considering multiple explanations, Schwartzman concludes that externalities that benefit high-skilled but not low-skilled workers are a major contributor to inequality across and within U.S. cities. This explanation creates a challenge for policymakers, who then face a tradeoff between equality and efficiency. From the perspective of productivity and economic growth, there are potentially large gains to policies that incentivize high-skilled workers to become even more concentrated — but these policies would tend to make cities even more unequal. Exploring these tradeoffs, and what they imply for optimal policy, is an important direction for future research.

---

Jessie Romero is an economics writer and Felipe Schwartzman is a senior economist in the Research Department at the Federal Reserve Bank of Richmond.

 

1 

For an overview, see Edward L. Glaeser, "The Economics Approach to Cities," NBER Working Paper No. 13696, December 2007.

2 

Felipe Schwartzman, "Inequality across and within US Cities around the Turn of the Twenty-First Century," Federal Reserve Bank of Richmond Economic Quarterly, First–Fourth Quarter 2017, vol. 103, nos. 1–4, pp. 1–35.

3 

This remains true regardless of how skill is defined, for example, by education level, occupation, or the degree of cognitive processing required for the position.

4 

Nathaniel Baum-Snow, Matthew Freedman, and Ronni Pavan, "Why Has Urban Inequality Increased?" American Economic Journal: Applied Economics, October 2018, vol. 10, no. 4, pp. 1–42.

5 

Jessie Handbury and David E. Weinstein, "Goods Prices and Availability in Cities" Review of Economic Studies, January 2015, vol. 82, no. 1, pp. 258–296.

6 

Rebecca Diamond, "The Determinants and Welfare Implications of U.S. Workers' Diverging Location Choices by Skill: 1980–2000," American Economic Review, March 2016, vol. 106, no. 3, pp. 479–524.

7 

Nathaniel Baum-Snow and Ronni Pavan, "Inequality and City Size," Review of Economics and Statistics, December 2013, vol. 95, no. 5, pp. 1535–1548.

8 

Paul Beaudry, Mark Doms, and Ethan Lewis, "Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas," Journal of Political Economy, October 2010, vol. 118, no. 5, pp. 988–1036.

9 

Lutz Hendricks, "The Skill Composition of U.S. Cities," International Economic Review, February 2011, vol. 52, no. 1, pp. 1–32.

10 

Gilles Duranton and Diego Puga, "Micro-Foundations of Urban Agglomeration Economies," in Handbook of Urban and Regional Economics Vol. 4, edited by J. Vernon Henderson and Jacques-François Thisse, Amsterdam: Elsevier, 2004, pp. 2063–2117.

11 

For a discussion of agglomeration economies in the Fifth District, see Sonya Ravindranath Waddell, "A Tale of Three Cities: Richmond, Charlotte, and Baltimore," Federal Reserve Bank of Richmond Regional Matters, October 18, 2017.

12 

See Nathaniel Baum-Snow and Ronni Pavan, "Understanding the City Size Wage Gap,"Review of Economic Studies, January 2012, vol. 79, no. 1, pp. 88–127; also, see Jorge De La Roca and Diego Puga, "Learning by Working in Big Cities," Review of Economic Studies, January 2017, vol. 84, no. 1, pp. 106–142.

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This article may be photocopied or reprinted in its entirety. Please credit the authors, source, and the Federal Reserve Bank of Richmond and include the following statement. Views expressed in this article are those of the authors and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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Trump bangs table as Seoul differs over North Korea sanctions [feedly]

The China plan moves forward, not backward, at key pressure points: Russia, India, S. Korea, Vietnam.  The Philippines and Indonesia, not so much 

Trump bangs table as Seoul differs over North Korea sanctions
http://www.atimes.com/article/trump-bangs-table-as-seoul-differs-over-nth-korea-sanctions/

t has always been a delicate balancing act, but a policy gap – the much feared "wedge" – now appears to be widening between South Korea and the United States over the issue of North Korean sanctions.

For decades, South Korea has been united with the United States against North Korea. There has always existed the possibility that the South will one day turn away from its political and military ally in order to embrace its estranged brother nation in the north.

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Now, with inter-Korean tensions easing far more rapidly than North Korea-US strains, that possibility is looking more likely.

In a range of trial balloons released over the last week, South Korean Foreign Minister Kang Kyung-wha has raised the possibility of lifting bilateral sanctions against North Korea, while winning waivers on international sanctions. Her latest statement, made at the Korean National Assembly, appeared to be a bridge too far for Washington.

On Wednesday, US President Donald Trump, when asked whether South Korea would lift sanctions, said: "They won't do it without our approval. They do nothing without our approval."

That presidential broadside may appear to stamp upon Seoul's sovereignty. But given the apparent pushback against North Korean engagement in Washington's defense, foreign policy and intelligence communities, Seoul's Moon Jae-in administration has little choice but to continue championing Trump.

The president may be the only member of his administration who believes that ties with North Korea – a foreign policy black hole – can improve.

And while Trump huffs and puffs, Kang's moves may win approval elsewhere. On the same day that Kang spoke and Trump issued his brow-beating, China, North Korea and Russia called for eased sanctions.

Seoul seeks sanctions waivers

While Washington holds a veto on the UN Security Council – meaning it can prevent motions to alter international sanctions – it has no power over Seoul's policies, which include a range of bilateral sanctions against North Korea.

On Wednesday, during a National Assembly audit of her ministry, Kang raised the possibility of lifting those sanctions. "A review is underway," she said in the National Assembly, according to Yonhap newswire. "It's an important executive order. (We) have constantly reviewed it," she added. "As there are many (bilateral) sanctions overlapping the UN ones, it won't necessarily mean the substantive lifting (of sanctions on the North)."

Though she clarified that there was no "pan-governmental" discussion on the issue yet underway, she added: "I think it's a matter to be reviewed in comprehensive consideration of South-North relations."

The sanctions were emplaced in 2010, following the sinking of a South Korean corvette in the Yellow Sea, in what the South insists was a Northern torpedo attack. North Korea denied it. The sanctions severed all trade and investment ties with North Korea.

However, if they were lifted, by allowing cross-border barter trade – in which goods, but no actual currency crosses borders – North-South trade could feasibly resume without violating international sanctions.

North Korean exports that were former hits in the South include fresh seafood, wild vegetables, some alcohol and even sand – used by the South Korean construction industry for concrete.

Moreover, in prior comments, Kang had also raised the possibility of exemptions from international sanctions.

In an interview granted to the Washington Post on the sidelines of the UN General Assembly in New York last month, Kang said: "What we need to proceed with the South-North cooperation project as identified in the Panmunjom Declaration [issued after the April inter-Korean summit] means that sometimes we may need waivers on the sanctions, but getting waivers is very different from seeking a weakening of the sanctions regime."

And last Saturday, she told reporters in Seoul, according to Bloomberg: "The South Korean government's position on sanction exemptions is that we will request exemptions of sanctions to pursue various collaboration projects between North and South Korea."

Foreign Ministry spokesman Noh Kyu-duk later clarified, saying the government would seek sanction exemptions "in the event they are necessary," citing previous sanction exemptions that enabled the invitation of North Koreans to the Pyeongchang Winter Olympics early this year, Bloomberg reported.

Considerable exemptions would almost certainly be necessary if the North and South are to carry out their flagship cross-border project: The re-linking of their rail nets. The two Koreas have agreed to begin work on that by the end of this year, and the equipment and technology that would cross the border would almost certainly require UN Security Council permissions.

Earlier this year, in an unusual and still-murky episode, the UN Command in South Korea – headed by a US general – prevented a South Korean train from crossing the border into North Korea. The train had Seoul governmental officials on board, reportedly planning an exploratory mission in advance of the rail re-linking project.

Kang's remarks drew the ire not only of Trump, but also Korea's right wing.

"Kang flubs it," the conservative Joongang Daily editorialized. "We are flabbergasted … We can't violate international sanctions. Sanctions are the very leverage we have to denuclearize the North."

But it seems unlikely that Kang flubbed it, one expert said. Her comments more likely reflect the opinions of an administration frustrated with Washington.

"Kang is biting the bullet, and indicating to North Korea that South Korea is trying its best to ease sanctions," said Go Myong-hyun, a North Korea researcher at the Asan Institute in Seoul. "This indicates that Seoul is unhappy with the Americans: If Kang made a faux pas, she would be fired."

Opposed to sanctions

Kang's remarks generated smiles in other quarters.

On Wednesday, Beijing's Foreign Ministry released a statement reading: "It is time to start considering the adjustment of the UN Security Council's sanctions regime against [North Korea]. The three parties also oppose unilateral sanctions."

The statement following a two-day meeting in Moscow between the deputy foreign ministers of China, North Korea and Russia, who all favor a phased, quid-pro-quo process in which Pyongyang is rewarded by eased sanctions as it takes steps on denuclearization.

The statement contradicts the "maximum pressure" strategy pursued by Washington and enthusiastically endorsed by Tokyo, but which Seoul now appears to be wavering on: It calls for sanctions to remain in place until denuclearization is complete.

While some in the US administration have indicated that denuclearization could be completed within the lifespan of the Trump administration, some experts say it could take more than a decade – assuming it is faithfully implemented, which many doubt.

In her remarks to the Washington Post, Kang also differed with the US view on the denuclearization process.

She suggested that US demands for a full disclosure of North Korean nuclear assets – which Pyongyang has balked at providing – is a poor path to follow, citing how the last time a similar process took place, it disintegrated in 2008 over the issue of related verification protocols.

She suggested instead the dismantlement of the Yongbyon nuclear reactor complex – an idea North Korea has put forward, in return for vague, reciprocal US steps. Washington has not yet reacted to that suggestion and remains mum on Pyongyang's repeated demands for a peace treaty to end the Korean War and for upgraded bilateral relations.

The denuclearization process, which looked so promising when Kim and Trump met in Singapore in June, is now looking stillborn. Visits to Pyongyang by US Secretary of State Mike Pompeo, and other contacts with North Korean officials, have made little apparent leeway regarding how denuclearization should proceed.

Some clarity may transpire when Kim and Trump meet for their second summit, at a date and location yet to be decided, after the US mid-term elections on November 6.

Meanwhile, despite Trump's undiplomatic language, the Moon government is in a bind. "It is in the interest of the South Korean government to retain good relations with Trump, as the only person in his administration who is truly in favor of good relations with North Korea is Trump himself," said Asan Institute's Go. "In that sense, President Moon considers Trump an ally."

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Medicaid Expansion Continues to Benefit State Budgets, Contrary to Critics’ Claims [feedly]

Medicaid Expansion Continues to Benefit State Budgets, Contrary to Critics' Claims
https://www.cbpp.org/health/medicaid-expansion-continues-to-benefit-state-budgets-contrary-to-critics-claims

A large and growing body of evidence shows that Medicaid expansion has produced large gains in health coverage and improved beneficiaries' physical and financial health.As residents of Idaho, Nebraska, and Utah prepare to vote this November on initiatives to expand Medicaid as part of the Affordable Care Act (ACA), a large and growing body of evidence shows that Medicaid expansion has produced large gains in health coverage and improved beneficiaries' physical and financial health.  

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Re: What’s the Deal with Tariffs?

I do not think the program is a difficult as some make out. Its called PAY THE LOSERS. AS long as we live and die by commodities --- and the cash it takes to obtain them -- trade will happen. trade with other nations will create winners and losers in each partner country, depending on the relative efficiencies of the products or services each nation desires to export. This is called comparative advantage in economics. The role of economies of scale and giant multinational corps adds another layer of complexity to who wins and who loses, but does not change the basic equation. Some jobs will be created, some will be destroyed by trade. PAY THE LOSERS means compensate those hurt by trade sufficiently to make them winners in the changed division of labor. Denmark does this via training, stipends, universal health and retirement security. Denmark's economy is nearly 50 percent exports/GEP. US is about 13% exports/ GDP. There is no stopping either trade or immigration (globalization's lagging, but always present twin). If you try and stop it,  like stopping water from running downhill, black markets --- dams become waterfalls and floods, to persist the metaphor --  will intervene. Plus leaks -- e.g. bribes of public officials to get through the bans. PAY THE LOSERS works boh in the country, and is the soul of internationalism upon which all hopes of peace and mutual happiness between nations, peoples an nature depend.  Invest the gains from trade in the PEOPLE -- a la Bernie's transaction tax, and return to New Deal levels of progressive income and wealth tax, for example -- and the ruined US "middle class" will revive. Invest in global health, education and economic development and the threats of losses to low wage nations will recede, since their wages will rise as their skills rise, assuming reasonable labor market regulation.  PAY THE LOSERS>

On Mon, Oct 8, 2018 at 8:50 PM Portside <moderator@portside.org> wrote:

What's the Deal with Tariffs?     Stephanie Luce October 2, 2018 Organizing Upgrade So is Trump the worker's hero? Will increased tariffs return jobs to the US? The left has been weak on this issue. The left lacks a real program to address the real concerns of those impacted by trade deals. ,   Donald Trump voiced the real concerns of many Americans when he spoke of the need to bring jobs to communities and to end unfair trade deals. By blocking the Trans-Pacific Partnership, pushing a re-negotiation of NAFTA, and increasing tariffs on a range of imports, Trump has appeared to finally take seriously the needs of unemployed and underemployed workers. Some unions have been calling for tariffs for years, most notably the United Steelworkers. While Obama ran in 2008 on a promise to renegotiate NAFTA he never did so, and in fact became a relentless proponent of expanding "free trade." Meanwhile, the Trump administration recently announced details of the draft deal with Mexico, and it appears to contain benefits for U.S. and Mexican workers. So is Trump the worker's hero? Will increased tariffs return jobs to the US? The left has been weak on this issue. On the one hand, we need to take economic development and job creation seriously. Workers are suffering. Even though official unemployment rates are low, more and more of the jobs people hold are low-wage, insecure, non-union, and dead-end. The left lacks a real program to address the real concerns of those impacted by trade deals. We need to better understand the history of tariffs and trade, and we need an international vision for economic development. What are Tariffs? Most rich countries have used import tariffs as a way to develop their own industries. Alexander Hamilton argued in the late 1700s for using tariffs to develop "infant industries" until they grew large enough to compete in a global market. In general, the idea was to allow raw materials in at a lower tax. The import tariff on intermediate or finished goods was much higher.  This allowed manufacturers to import cheap inputs from other countries, and then manufacture the items domestically. Most of the profit in a good comes in the production stage. The goal for countries is to be able to "move up the economic ladder," where they can go from raw material exporters (at low profit rates), to finished goods exporters (at much higher profit rates). Marx explained this process through the concept of socially-necessary labor time, or the average amount of labor time needed for a worker to produce a good for exchange. There is relatively little labor time needed to harvest a peanut and more labor time needed to manufacture peanut butter. For example, in the 1400s Britain was making money by exporting raw wool, but Henry VII understood that there were much greater profits for those who converted the raw wool into clothing. He took a number of steps, including increasing the tax on raw wool exports and then banned the export of unfinished cloth. This forced British producers to process the wool and cloth into finished clothing. Only then did Britain lower tariffs. When Robert Walpole came in as British prime minister in 1721, he significantly raised tariffs on manufactured imports such as clothing and metal works, and reduced or eliminated import tariffs for primary commodities produced in the colonies, including wood, tobacco, clay and cotton. The United States relied heavily on high import tariffs on a range of goods, for many decades. According to the economist Ha-Joon Chang, the U.S. had some of the highest tariffs in the world from 1816 to 1945.[1] But tariffs were not the only tool governments used. Chang points out that every rich country became rich by using a range of government interventions. Tariffs are just one tool. Other tools include direct subsidies to firms, public investment in infrastructure that allows industries to develop and transport goods, public investment in research and development, public schools to train workers, financial regulations, banking systems to generate savings available for investment, nationalization of industries, and more. Governments have also used more insidious tools to develop their economies, including war, colonization, industrial espionage, and the trade in human beings forced into slave labor. Many economists from a range of perspectives have argued the world as a whole benefits from "free trade": the idea that countries should be able to exchange goods and services without tariffs or other disincentives or barriers. The "free trade" school of thought has dominated economics since WWII. The General Agreement on Tariffs and Trade (GATT) was established just after WWII as a diplomatic forum where states could meet and agree to reduce tariffs. In 1995 the World Trade Organization (WTO) was formed, with a mandate to govern the rules of trade between states, with the "goal of ensur[ing] that trade flows as smoothly, predictably and freely as possible." Alongside the WTO, countries signed "free trade" agreements and bilateral or multilateral investment treaties, designed to reduce tariffs further, and particularly to reduce other "barriers" to trade. The US signed its first free trade agreement in 1985, with Israel, and has since signed bilateral or multilateral agreements with 19 other countries. The U.S. now has a highly complex tariff schedule. There are three different rates of duty – the general rate, a "special" for "free trade" or "generalized system of preference" partners, and a third rate that applies to Cuba and North Korea.[2]  Some products are free: there is no import tariff. Fresh plantains, for example, can come in with no tariff even from Cuba or North Korea. Dried plantains, however, require some processing. They have a 1.4% tariff for the general rate, free for the special rate, and 35% for our enemy countries. Chain saw blades have a 7.2% general tariff, free for the special rate, and 60% otherwise. Meanwhile, circular saw blades are free for the general and special rate, and 25% otherwise. All of this highlights the reality that tariffs are greatly influenced by political processes as much as economic ones. Employer associations, powerful corporations, members of Congress, unions and consumers have all lobbied to set tariff rates for each of the tens of thousands of products. There is no other way to explain why tariff rates differ for forks versus spoons, or for almonds versus pistachios versus pecans versus chestnuts. Another political consideration is how other countries respond to our tariffs. If we raise tariffs on Chinese steel, China might raise tariffs on our wheat. Since the end of World War 2, most Western countries have agreed to keep tariffs low and avoid this sort of scenario. In fact, tariffs have been so low that "free trade" agreements haven't lowered them much; the difference between, say, 1.4% and zero is trivial. This raises the question: why has there been so much uproar about free trade agreements, since at least the "Battle of Seattle" in 1999? The answer is that modern "free trade" agreements aren't really about tariffs. Rather, they're about loosening restrictions on flows of international investment, which makes it easier for Western companies offshore jobs (and hide their profits from the tax authorities). (For more on this, see this comic). Trade agreements have also been about lowering "non-tariff barriers to trade." These include things large sections of the population support, such as environmental protections, labor laws, or licensing restrictions (such as against genetically modified seeds).  Many of these protections have been weakened or voided in the name of "free trade." Should we support increased tariffs to save jobs? It is impossible to say for sure why Trump is pushing for tariffs and some better terms for labor in a new NAFTA, but it is highly unlikely he is concerned with worker rights. His appointments for Secretary of Labor and the Supreme Court alone are evidence that that he is out to break unions and reduce worker wages and benefits. Trump's other great campaign promise to workers was to enact large infrastructure programs that would create jobs, but that has yet to happen. While spending tens of millions on military parades and Mar-a-Lago weekends and passing a $1.5 trillion tax cut, Trump has failed to bring his infrastructure proposal to light. Instead, the Trump policy seems designed to redirect real worker frustrations about jobs and wages into anger at other countries (and immigrants), rather than at corporations. Trump presents himself as the only politician willing to stand up for the blue-collar worker – and this is easy to do, because so few politicians have actually been champions of the working class. Action on tariffs and trade deals has won him support among certain voters and even union leaders who have felt long ignored. The new NAFTA language is interesting because it seems to contain a number of advances on labor issues, including eliminating the controversial protections for investors and a requirement that at least 45 percent of an automobile, or 40 percent of auto parts be made by a worker earning at least $16 per hour.  This seems a clear play to gain support from the United Auto Workers and rustbelt workers. Yet even auto industry analysts don't think the proposal is likely to Just ask Kristin Dziczek, from the Center for Automotive Research, who said, "The big upshot is there's nothing in this agreement that looks like lots of jobs are coming to the U.S." But Trump's stance on tariffs and trades appeals to workers who have lost their jobs and are looking for hope anywhere they can. It also plays with some of his supporters who are motivated more by nationalism and racism than economic concerns, so the fact that tariffs won't bring back many jobs doesn't matter to them. And while tariffs are a real problem for some of the capitalist class, not all are directly impacted, and for all of Trump's talk of NAFTA re-negotiation, his plans will leave the bigger problems with "free trade" (unregulated cross-border money flows and erosion of environmental and labor protections) untouched. So what's really going on? Here are a couple of key points that help us evaluate what to think about tariffs. First, economic development is a complicated subject. No one has figured it out, and no one has the magic solution. Tariffs have in fact been a useful tool for economic development and job creation but they are only one tool. Tariffs on their own can backfire if they are used to protect corrupt or inefficient employers, or dying industries. They can also backfire if they provoke other countries to impose retaliatory measures. Second, the package of tools that rich countries used to become rich have mostly been disallowed for developing economies under our trade and investment agreements. We do not allow partner countries to use tariffs or subsidies to develop their infant industries. We push them to privatize publically owned businesses. We do not allow them to keep our goods or our businesses out (imagine what Japan's situation would be today if Ford and GM had been able to freely sell cars there or open auto plants there; Toyota, Mitsubishi, and Nissan would never have had a chance). All the while we continue to use a range of these tools ourselves. For example; the Mexican government was forced to stop subsidizing Mexican corn growers under NAFTA, while opening their markets to US agriculture, even though US food is heavily subsidized (subsidies that violate every supposed principle of "free trade"). US food flooded the Mexican market, undercutting Mexican farmers and driving them off the land (bizarrely, many wound up moving north to grow food in the United States to be sent back to Mexico). US unionists talk of unfair behavior in China: dumping, fixed currency rates, and intellectual property law violations. And these are real issues. But US corporations engage in a wide range of unfair activities as well, often supported by or protected by the US government. Any talk of tariffs should be situated in this context. So yes, let's reform our economic relations with other countries. US trade and investment policy have been disastrous—damaging economies elsewhere, exacerbating global inequality and destabilizing the world economy, which has rebounded back on us. Let's talk about trade and economic development policies that allow workers to find living wage jobs in their own home countries. It can be hard to frame demands in an internationalist rather than nationalist framework. But in this moment of rising hate groups, anti-immigrant and nationalist movements, it is crucial that the left not be pulled into making alliances around nationalist policy. Third: tariffs are not the only economic development tool. People may blame outsourcing or unfair trade, but in fact there are many policy options available to us to try right now to create good jobs. For example, one argument for steel tariffs was based on national security. But if security is really our concern, it is mistake to leave vital production of things like steel, oil, medicine, and food in the hands of unaccountable private corporations. Create public entities that can do this! There is a wide range of policy options that we could pursue to create jobs, and to make bad jobs into better ones. These include: Raise taxes on the rich and corporations; use the money to bring back the federal and state jobs cut in recent years. Re-hire people to run our libraries, state parks, mail service, trains and more Public investment in education to expand the number of teacher jobs and raise salaries for educators Real public investment in rebuilding our bridges and trains and tunnels Instituting universal health care would have many benefits, including greatly reducing the cost of production for US manufacturers Reform labor laws so that is it easier for workers to join unions. This would allow workers to convert many of the current low-wage, sometimes dangerous jobs, to good ones Free higher education! This allows more students to gain education and training, and it is an investment in research and development Our demands must focus on ways to create jobs that also undercut the power of multi-national corporations to pit workers against one another. The principle must be job creation built on solidarity—with other workers, with workers in other industries, and with workers overseas—not competition. Thanks to Michael Goodwin, Adam Hefty and Jonathan Kissam for input on this article. Stephanie Luce is a professor at the School of Labor and Urban Studies/CUNY.  She is the author of Labor Movements: Global Perspectives and Fighting for a Living Wage.  Her writing can be found at stephanieluce.net. [1] This of course can create strong tensions between different sections of the ruling class. For example, Southern plantation owners wanted low tariffs so that they could easily export raw cotton and import manufactured goods. Northern manufacturers wanted high tariffs on manufactured imports. [2] See also the complicated rate of duties applied to "Products of the West Bank, the Gaza Strip, or a qualifying industrial zone."  See General Notes chapter, pages 4-6. https://www.usitc.gov/tata/hts/bychapter/index.htm       Interpret the world and change it     Submit via web Submit via email Frequently asked questions Manage subscription Visit portside.org Twitter Facebook

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John Case
Harpers Ferry, WV

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