I had a crazy dream talkin to Mimke bloomberg

I am interested in the Michael Bloomberg presidential candidacy. My first question is: Has the labor movement, or the 'Bernie Sanders' constituency, broadly speaking -- my base, more or less :) -- got a deal to propose with Mr Bloomberg, a hard headed but pragmatic globalist billionaire liberal, on LABOR's REVIVAL as the effective, and most market oriented means of reversing the aggravated inequality tearing this country apart. and restoring a just distribution the shares of growth to labor AND capital? I ask the question in reference to Mr Bloomberg, who has a well documented financial and political record, as I would ask it reference to any representative, rational members of the billionaire class.

My (short) version of a deal:

I am not proposing a return to the 30's, Mr Bloomberg. I am proposing a certain shift in the adversarial stance of US labor laws, written in the 1930's and 1940's toward transforming labor organizations into quasi public institutions. These institutions can and should be principle conveyors in universalizing health care, and adjusting flexible workforces to the structural and retraining shifts mandated by both automation and globalization. The new world requires adaptation to rapid changes in work and family. Institutionalizing democratic, labor-based organizations as publicly accountable, self-administrators of much of the necessary transitions between jobs, careers, families and retirement could pave a new path in American competitiveness and economic justice for American workers.

It can enable the losers in these painful transitions to become winners. As quasi public institutions, as full partners in society, labors' own politics could become more parliamentary, and diverse, in its own ranks -- a challenge in the past, forced upon labor politics by the neverending war by corporations to destroy it.

Do we have grounds for discussion, Mr Bloomberg?

If we do not, if this path toward progressive social peace in IRRATIONAL to Mr Bloomberg, then what are we left to say to ANY of the billionaires?

Hillary's governing sensibilities are not far afield from Michael Bloomberg. She and Sanders were not able to join together on a ticket --- the surest path to Democratic Victory in 2018.

I doubt my deal above is far afield from Bernie. Can we make a deal, Mr Bloomberg --- we need a sweeping, far-reaching coalition that can make a major shift in direction for the country. We have see what failure to close a deal means. Are we talking, Mr Bloomberg???

--

John Case
Harpers Ferry, WV

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Tyler Cowen: Why Brexit is so important [feedly]

I usually don't take Tyler Cowen (R-libertrian economist and author of Blog/Zine Marginal Revolution) seriously despite his being clever at times.

AND, the UK is 1/5 the size of the US so the UK crisis is not identical to the nationalist expressions -- or its targets -- in the Trumpian US. Nonetheless there is one striking similarity being "tested" --- CAN ESTABLISHED DEMOCRACIES MANAGE THE TRANSFORMATIONS AND INEVITABLE (?) LOSS OF SOVEREIGNTY UNLEASHED BY GLOBALIZATION?????

Why Brexit is so important
http://marginalrevolution.com/marginalrevolution/2018/12/why-brexit-is-so-important.html

In this dilemma, I think of U.K. citizens as a kind of stand-in for the human race. Per capita income and education in the U.K. are well above the global average and, more important, Great Britain has one of the most firmly established democratic traditions in the world. So if the U.K. cannot get this decision right, it's pretty gloomy news for all of us. I am reminded of the scene in Ingmar Bergman's "The Seventh Seal," where the traveling knight has to play a game of chess against the figure of Death, and his life will be spared if he wins…

Paul Krugman opined recently that Brexit would likely cost the U.K. about 2 percent of GDP, a fair estimate in my view. But that is not the only thing at stake here. Humanity is on trial — more specifically, its collective decision-making capacity — and it is the U.K. standing in the dock.

I'll be glued to my seat, watching.

 -- via my feedly newsfeed

Bernstein: Another solid jobs report, even with a slightly slower trend in payrolls [feedly]

Another solid jobs report, even with a slightly slower trend in payrolls
http://jaredbernsteinblog.com/another-solid-jobs-report-even-with-a-slightly-slower-trend-in-payrolls/

Payrolls were up 155,000 last month, and the unemployment rate held steady at 3.7 percent, close to a 50-year low. Hourly wages were up by 3.1 percent over the past year, the same rate as last month and tied for a cyclical high. Though another in a string of solid job reports, the pace of job gains downshifted a bit compared to last month's report, average weekly hours ticked down slightly, and both the job and wage numbers came in below market expectations. That said, monthly noise, weather and other one-off effects (winter storms, fires) can influence monthly data, and the underlying trend remains that of a labor market closing in on full employment.

To better glean the underlying trend of job growth, our monthly smoother looks at 3, 6, and 12-month averages of monthly job growth. The 3-month average of 170,000 is slightly below that of the 6- and 12 -month averages, suggestive of a slower trend in monthly payroll gains. However, this pattern is to be expected as the labor market closes in on full-capacity. In fact, the 3-month pace (170K), if sustained, is easily strong enough to put further downward pressure on the unemployment rate and thus, upward pressure on wage growth. Moreover, as I note below, I suspect real (inflation-adjusted) wage growth will soon accelerate due to declining oil prices.

Wage growth held at its cyclical high reached last month of 3.1 percent, year-over-year, a sign that tight labor markets are giving workers a bit more bargaining clout. The figures plot nominal gains for all private sector workers and for middle-wage workers (blue-collar factory workers and non-managers in services). The six-month moving average shows the recent acceleration from about 2.5 percent through 2017 to around 3 percent this year.

But what about real wage growth? Over the near term, real wages and the price of oil tend to be highly correlated. That is, falling oil and gas prices lead to slower overall price growth, which raises real wage growth. That means we now have two factors helping to boost real wage growth: the tight labor market is generating faster nominal wage gains, and cheap oil is pushing up real gains. Though we do not yet know CPI inflation for November, my guess is that the price index is up about 2.2% over the past year. If that's correct, it means real hourly wages grew at a yearly rate of about 1 percent, the fastest pace of real wage gains since late 2016.

Other highlights from today's report:

–The closely watched "prime-age" (25-54) employment rate was unchanged at 79.7 percent. However, it was up 0.2 points for men and down slightly for women. Abstracting from the monthly blips, this series, especially for men, shows potential available labor supply, as the men's rate is still 1.6 points below its pre-recession peak (prime-age women have surpassed their peak).

–The black unemployment rate fell to 5.9 percent, tied for an all-time low, but the decline was accompanied by lower labor force participation, so it's not unequivocal good news. Also, these data are particularly noisy, month-to-month.

–Construction employment was up only slightly (5,000), possibly reflecting the slowdown in the interest-rate-sensitive building sector.

–Government employment has been flat in recent months, driven largely by state-level declines, possibly reflect state budget constraints, particularly in education.

Finally, turning to the Fed, according to recent news reports, the central bank is considering downshifting its "normalization" campaign, meaning pausing between rate hikes more than they've heretofore been signaling. Today's report constitutes a supportive data point in that regard. Wage growth is growing but not quickly accelerating, and the trend pace of job gains is off its peak, as shown in the smoother. Most importantly, as the figure below reveals, even while unemployment remains well below the Fed's "natural rate" and wage growth has picked up, their key inflation gauge remains not merely well-anchored but, in its most recent print, slightly below target.

Given other recent headwinds, most notably the flattening of the yield curve and the fact that fiscal stimulus is scheduled to go neutral in terms of its growth contribution later next year, the cause for a pause continues to gain momentum.

 -- via my feedly newsfeed

Jared Bernstein's letter to the New Democratc House

Jared Bernstein: An open letter to the new House Democrats

To: New House Dems

From: Jared, the Good

Re: Woohoo!!!

First, I can't tell you how glad I am to see you!

If I had known you were coming, I would've baked a cake! Instead, I've written you a memo on what looks most important from my humble political-economy corner.

But before we jump in, two points. First, rest assured that I know you do not represent an ideological monolith. In this divided country, that's a feature, not a bug. I welcome your diversity in all forms.

That said, after paying close attention to many of your campaigns, I believe you are united by a desire to get things done to help a lot of people who've been left behind. As I suspect you know, this stands in stark contrast to many who've come before you in recent years whose implicit message was "Washington is broken! Send me there, and I'll make sure it stays that way!"

Second, you've heard a lot about gridlock and how you won't be able to legislate anything. That may or may not be true — legislation is always possible in Washington up until the moment it isn't. But forget about all that. I strongly urge you to use your time to craft the best policies to meet the many deep challenges we face.

The rest of this note is intended to provide a brief glimpse of the lay of the land in those areas.

There's a reason the strong macroeconomy didn't help Republicans in the midterms.

Strong GDP growth and low unemployment are, of course, welcomed, but they don't provide health care. They don't guarantee decent employment opportunities in places hurt by global competition. They don't even guarantee real wage gains commensurate with overall growth, and, thanks to the Republicans' tax cut — which broke the linkage between strong growth and tax revenue — they don't lower deficits that should be falling now instead of rising.

ARTICLE CONTINUES BELOW


So, my first point is that growth is necessary but not sufficient to uplift Americans' living standards. Republicans have long argued otherwise; the growth itself would trickle down to average folks. If that were even the slightest bit true, we wouldn't be having this conversation. In fact, what's missing is the policy agenda that creates the connective tissue, linking growth to the incomes and opportunities of middle- and lower-income households.

Sticking with health care, the extent to which Republicans pretended to be the defenders of preexisting coverage suggests we've won that part of the argument. Yet one thing that's clear in today's non-representative politics is that you can win a policy argument and lose the policy. Republicans are actively pursuing a legal strategy to repeal the Affordable Care Act, and I urge you to pay close attention to the Trump administration's sabotage efforts, including skimpy coverage that exempts people from key consumer protections, along with attempts to destabilize the individual insurance market.

As far as folks who've been left behind even as the economy closes in on full employment, a reconnection agenda should include wage and employment policies. Some of your new colleagues have plans to raise the minimum wage, increase pro-work wage subsidies, and subsidize employment in places still not reached by the current expansion. Again, the Senate is unlikely to support these ideas, but the more the people learn about them, the better chance they'll have down the road.

During the midterms, it made sense not to mud-wrestle with President Trump on immigration. (I suggest you be guided by this George Bernard Shaw quote: "Never wrestle with a pig. You get dirty, and besides, the pig likes it.") But many of you are here to join that fight, and Democrats need to hone a coherent position. Two areas to start with are public charge and a path out of the shadows for undocumented workers here already.

By changing the rules that determine whether someone is deemed a "public charge," the Trump administration is pushing a radical policy that without congressional involvement would "effect major changes in the nation's immigration system, shifting it away from family-based immigration toward one restricted to people who are already relatively well-off or highly skilled when they enter the country." Again, people need to know about this, and the more public hearings and comments you can help generate on this unjust, self-destructive attack on legal immigrants — and, in some cases, their citizen children, who will be frightened from accessing public benefits as a result of this policy — the better.

Both "dreamers" and undocumented workers need immediate protection from deportation and a longer-term path to integration and citizenship. Note that neither of these groups invoke arguments about broader and more complicated immigration flow or border issues. They're here already, and we help neither them nor the rest of us by ignoring their status.

Finally, whether it's new ideas, such as infrastructure or job subsidies, or protecting much-valued old ones, like Social Security or Medicare, you're going to be told that there are simply no resources. Just look at the rising debt!

To which I say, just look at whose fingerprints are all over that rising debt. As noted, the tax cut broke the linkage between growth and improved fiscal balance. Democrats must repair the fiscal damage. One point of reference in this regard is rising wealth and profits, even as real workers' wages are just now catching a bit of a buzz. Closing the many wide loopholes that favor wealth and inheritances is both good fiscal policy and good politics in the age of Trump.

Also, let's see a strong push to fully fund the IRS, simply to collect what's owed. Each dollar spent on tax enforcement raises $18 in revenue, and recent budget cuts have reduced the tax agency's enforcement staff by 28 percent. Remember, this is not a fight about whether taxes should be raised or lowered; it's a "fair share" argument to, as I recently put it on this page, "block the gaming of the tax code by lawyered-up tax avoiders, to collect what is owed, and, in so doing, to fight back against the corrupt plutocracy that we saw in the Paul Manafort trial and ... in the dealings of the president."

There's a lot more for us to talk about, but you've already got a lot on your plate. So again, welcome fresh-women and -men! Settle in, fasten your seat belts, and let's roll!

--

John Case
Harpers Ferry, WV

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Can anything hold back China’s economy? [feedly]

Summers on China: 

I have higher hopes for socialist led development than Larry Summers. And I agree its a tricky problem what level of "state subsidies" unfair or improper. A US machine tool company might have a competitive problem -- and thus grievance -- against a Chinese firm (with state help) giving away machines for free to establish itself in a market. On the other hand every nation engages in subsidies to strategic industries in one form or another.

Thus, its probably a waste of time to debate any of this in the abstract with capitalist enterprise leaders. But Summers is a pragmatist, a brilliant one, and knows it IS possible, even with differently oriented social systems at different stages of development, to deal pragmatically with differences where harm is being done. Thus, grievances against China need not alter either countries' ability to grow an prosper in the future.

The great debate over whether state directed capitalism gets to happy life faster, and more reliably, than free-for-all markets and cowboys, remains unresolved But the Chinese are making a strong case for the former.

Can anything hold back China's economy?
http://larrysummers.com/2018/12/05/can-anything-hold-back-chinas-economy/

Presidents Trump and Xi Jinping reached an agreement over the weekend at the Group of 20 meeting in Argentina on a framework for trade dialogue that will delay the imposition of new American tariffs. While surely better than the alternative, this step does not address any of the fundamental tensions in the economic relationship between the United States and China.

Few observers doubt that China needs to make significant changes in areas such as intellectual property, the rights of foreign investors and subsidies to state-owned companies if it is to meet international norms. Antipathy toward Chinese economic practices is hardly confined to Trump. Recent months have witnessed attacks on the existing economic relationship from members of previous U.S. administrations, noted China experts and the American business community. Indeed, it can be fairly said there are no China accommodationists left in Washington. When foreign governments get past their frustrations with the Trump administration, they acknowledge that they, too, are frustrated with Chinese commercial practices.

Yet it is also easy to sympathize with Chinese leaders who insist that China's political system is for it to choose, and that economic negotiations should focus on the pragmatic identification of win-win opportunities, rather than on questions of ideology. At the same time, it is hard to see how anyone with a modicum of historical knowledge could fail to be concerned by a combination of increased domestic repression, centralization of power in one man, rapidly increased military spending and rhetoric about enlarging China's role in the world.

The United States requires a viable strategy for addressing its legitimate grievances. Unfortunately, neither rage nor proclamation constitutes such a strategy. A viable approach would involve feasible objectives clearly conveyed and supported by carrots and sticks, along with a willingness to define and accept success.

At the heart of the problem in defining an economic strategy toward China is the following awkward fact: Suppose China had been fully compliant with every trade and investment rule and had been as open to the world as the most open countries at its income level. China might have grown faster because it reformed more rapidly, or it might have grown more slowly because of reduced subsidies or more foreign competition. But it is highly unlikely that its growth rate would have been altered by as much as 1 percent.

Equally, while some U.S. companies might earn more profits operating in China, and some job displacement in American manufacturing because of Chinese state subsidies may have occurred, it cannot be argued seriously that unfair Chinese trade practices have affected U.S. growth by even 0.1 percent a year.

This is not to say that China is not a threat to the international order. It is a seismic event for the United States to be overtaken after a century as the world's largest economy. If, as is plausible though far from certain, the United States loses its lead over the next decade in information technology, artificial intelligence and biotech, the trauma will be magnified.

Can the United States imagine a viable global economic system in 2050 in which its economy is half the size of the world's largest? Could a political leader acknowledge that reality in a way that permits negotiation over what such a world would look like? While it might be unacceptable to the United States to be so greatly surpassed in economic scale, does it have the means to stop it? Can China be held down without inviting conflict?

These are hard questions without obvious answers. But that is no excuse for ignoring them and focusing only on short-run frustrations. China appears to be willing to accommodate the United States on specific trade issues as long as the United States accepts its right to flourish and grow, knowing that sheer weight of numbers will make it the clear world's largest economy before long.

That is a deal the United States should take while it can. It can bluster but it cannot, in an open world, suppress the Chinese economy. Trying to do so risks strengthening the most anti-American elements in Beijing.

Trump, for all his failings, has China's attention on economic issues in a way that eluded his predecessors. The question is whether he will be able to use his leverage to accomplish something important. That will depend on his ability to convince the Chinese that the United States is capable of taking yes for an answer, and on his willingness to go beyond small-bore commercialism. We can hope, but we should not hold our breath.

 -- via my feedly newsfeed

Dan Little: Is corruption a social thing? [feedly]

Is corruption a social thing?
http://understandingsociety.blogspot.com/2018/12/is-corruption-social-thing.html

When we discuss the ontology of various aspects of the social world, we are often thinking of such things as institutions, organizations, social networks, value systems, and the like. These examples pick out features of the world that are relatively stable and functional. Where does an imperfection or dysfunction of social life like corruption fit into our social ontology?

We might say that "corruption" is a descriptive category that is aimed at capturing a particular range of behavior, like stealing, gossiping, or asceticism. This makes corruption a kind of individual behavior, or even a characteristic of some individuals. "Mayor X is corrupt."

This initial effort does not seem satisfactory, however. The idea of corruption is tied to institutions, roles, and rules in a very direct way, and therefore we cannot really present the concept accurately without articulating these institutional features of the concept of corruption. Corruption might be paraphrased in these terms:

• Individual X plays a role Y in institution Z; role Y prescribes honest and impersonal performance of duties; individual X accepts private benefits to take actions that are contrary to the prescriptions of Y. In virtue of these facts X behaves corruptly.

Corruption, then, involves actions taken by officials that deviate from the rules governing their role, in order to receive private benefits from the subjects of those actions. Absent the rules and role, corruption cannot exist. So corruption is a feature that presupposes certain social facts about institutions. (Perhaps there is a link to Searle's social ontology here; link.)

We might consider that corruption is analogous to friction in physical systems. Friction is a factor that affects the performance of virtually all mechanical systems, but that is a second-order factor within classical mechanics. And it is possible to give mechanical explanations of the ubiquity of friction, in terms of the geometry of adjoining physical surfaces, the strength of inter-molecular attractions, and the like. Analogously, we can offer theories of the frequency with which corruption occurs in organizations, public and private, in terms of the interests and decision-making frameworks of variously situated actors (e.g. real estate developers, land value assessors, tax assessors, zoning authorities …). Developers have a business interest in favorable rulings from assessors and zoning authorities; some officials have an interest in accepting gifts and favors to increase personal income and wealth; each makes an estimate of the likelihood of detection and punishment; and a certain rate of corrupt exchanges is the result.

This line of thought once again makes corruption a feature of the actors and their calculations. But it is important to note that organizations themselves have features that make corrupt exchanges either more likely or less likely (link, link). Some organizations are corruption-resistant in ways in which others are corruption-neutral or corruption-enhancing. These features include internal accounting and auditing procedures; whistle-blowing practices; executive and supervisor vigilance; and other organizational features. Further, governments and systems of law can make arrangements that discourage corruption; the incidence of corruption is influenced by public policy. For example, legal requirements on transparency in financial practices by firms, investment in investigatory resources in oversight agencies, and weighty penalties to companies found guilty of corrupt practices can affect the incidence of corruption. (Robert Klitgaard's treatment of corruption is relevant here; he provides careful analysis of some of the institutional and governmental measures that can be taken that discourage corrupt practices; link, link. And there are cross-country indices of corruption (e.g. Transparency International) that demonstrate the causal effectiveness of anti-corruption measures at the state level. Finland, Norway, and Switzerland rank well on the Transparency International index.)

So -- is corruption a thing? Does corruption need to be included in a social ontology? Does a realist ontology of government and business organization have a place for corruption? Yes, yes, and yes. Corruption is a real property of individual actors' behavior, observable in social life. It is a consequence of strategic rationality by various actors. Corruption is a social practice with its own supporting or inhibiting culture. Some organizations effectively espouse a core set of values of honesty and correct performance that make corruption less frequent. And corruption is a feature of the design of an organization or bureau, analogous to "mean-time-between-failure" as a feature of a mechanical design. Organizations can adopt institutional protections and cultural commitments that minimize corrupt behavior, while other organizations fail to do so and thereby encourage corrupt behavior. So "corruption-vulnerability" is a real feature of organizations and corruption has a social reality.  

 -- via my feedly newsfeed

US stocks plunge amid trade uncertainty [feedly]

US stocks plunge amid trade uncertainty
http://www.atimes.com/article/us-stocks-plunge-amid-us-china-trade-deal-skepticism/

The dog that didn't bark in today's equity market crash was the Chinese market. The most popular proxy for Chinese stocks, the large-cap ETF FXI, lost 1.5%, about half the 3% decline in the broad US market.

The biggest losers were financials, for whom a yield curve inversion is like Kryptonite for Superman, and the parcel delivery companies who face competition from Amazon.

UPS lost 7%, the worst performer in the S&P 100, while FedEx lost 5.5%. Major financials like Blackrock, CapitalOne, Morgan Stanley and Bank of America were down around 5%. Utilities and consumer staples companies, which the market treats like bond proxies, gained along with US Treasuries.

There is a clear message from today's market action.
The first is that the US Administration can't un-break the glass in world trade investment with happy talk. World economic growth has depended on a global supply chain in which electronic components are manufactured in Japan, Taiwan, and South Korea, and assembled into finished goods in China, and then exported to the US and Europe.

The profitability of major corporations from Apple to the chipmakers depends on this supply chain, which would be the first casualty of a trade war. As I showed in an Asia Times analysis last week, the contraction in world trade during the past several months appears to reflect a sharp reduction in orders for investment goods, promoted by Washington's trade war threats.

Falling exports, in turn, pushed the German economy into negative growth during the third quarter, and preliminary data suggest that Germany will endure a second quarter of negative growth. Switzerland, Sweden and Italy also reported negative growth for the third quarter. Japan reported negative growth in two of the last three quarters as well, with GDP down 0.3% during the third quarter.

That leaves most of the world's big economies – excluding the US and China – in recession or close to it. The US is still growing, but likely to slow sharply in 2019. CapEx in the US remains extremely weak, a disappointment following the 2017 corporate tax cut. S&P companies spent more buying back their own stock than on CapEx during the second and third quarters. The US housing market, moreover, is already in recession.

President Trump is looking at a weakening economy and a heightened risk of recession before the 2020 elections. Credit conditions are tightening around the world, most severely in Europe, where the cost of protection on a bundle of subordinated debt of financial companies has doubled during 2018 (from LIBOR +100 to LIBOR +200). The collapse of European bank stock prices by 26% during 2018 and of Japanese bank stocks by 18% is a reminder of the fragility of the financial system.

That explains why the Federal Reserve's Chairman Jerome Powell last week indicated that interest rates are "close to neutral," which means the Fed is close to done tightening monetary policy.

One of the biggest irritants in the system remains the threat of trade war. Presidents Trump and Xi Jinping last weekend called a truce at the G20 meeting in Buenos Aires last weekend, but a truce is not the same as the end of a war. Restoring the damaged confidence of major actors in the world economy will require speedy and decisive action to come to an agreement with China. I continue to believe as I wrote in October that China will make it easy for Trump to strike a deal which he can claim as a victory.

Earlier today, for example, China announced stiff penalties for intellectual property theft, a major concern of the Trump Administration. At this point, Chinese companies probably are stealing more intellectual property from each other than they are from the United States, and it is in China's interest to discourage the practice.

The relative outperformance of Chinese stocks in a market freefall suggests that investors believe that the Trump Administration will do what it takes to put the trade war behind it.
 

-- via my feedly newsfeed