Native American Facts
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Of course, Scott Brown is not going to let this go. Fortunately, I am not in charge of the Elizabeth Warren campaign, or I would start asking Scott Brown why he refuses to name the person who, according to Brown’s book, molested him when he was at summer camp. He needs to come clean, and stop protecting a child molester.
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‘Fair and square’ pricing? That’ll never work, JC Penney. We like being shafted
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MSNBC has the story ‘Fair and square’ pricing? That’ll never work, JC Penney. We like being shafted.
I might add that we like our politics that way, too.
To be a little less cynical, I’ll include this quote from the MSNBC story.
To oversimplify for a moment, here’s Penney’s problem. They told the world that retailers only offer their best prices during crazy sales, and Penney stores would no longer host them. Sensible consumers apparently took that information to heart and decided to simply wait for such sales at other stores. As an added benefit, Penney lowered consumers’ search costs, because they now knew they didn’t need to bother driving to a Penney’s store anymore.
I have seen successful attempts at carrying off the policy of un-”shrouded price tags”. In Dallas, Texas there was a company called Three Day Tire Store. It opened only three days per week. It ran massive newspaper adds full of consumer advice on buying tires. It drew massive crowds of customers, including me. I was happy with my purchase as compared to the shrouded incompetence I experienced buying tires from Sears. I am not so sure about the longevity of the company, though. In the end, there may just not have been enough consumers that wanted an education.
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Put Out A Prairie Fire With Gasoline
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USA Today has actually chosen a different sound bite to headline this story. They use Obama: Romney offers ‘cowpie of distortion’.
I prefer the headline I chose. According to President Obama, Mitt Romney went to Iowa and described the current slow down in government spending as a “Prairie Fire Of Debt”. He then described Romney’s prescription as putting out the supposed prairie fire of debt by using the gasoline equivalent of an extra $5 trillion in tax cuts.
In describing the costs and benefits of Romney’s business practices, you can tell by all I have written about them on this blog, that I would not be and am not nearly as charitable about them as President Obama is.
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Should Growth Drive Jobs, or Jobs Drive Growth?
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The article by L. Randall Wray, Should Growth Drive Jobs, or Jobs Drive Growth?, is largely made up of a long quote from the article Jobsworth by Edward Hadas. I give you links to both articles because I think each one adds something worthwhile reading.
Here is part of the quote that originates with Hadas.
Politicians and other leaders have watched the job destruction with something like horror. They shouldn’t have been surprised. The unending fight against inefficiency leads to a natural employment asymmetry. As technology advances, businesses and governments usually find it easier to cut than to add jobs. Some businesses can progressively expand headcount, but in tough times there are more employers looking for ways to use less labour.
Most politicians and economists believe that GDP growth is the cure. It is considered not only the highest economic good but also the best way to create jobs. In search of higher output, governments run huge deficits, while central banks pass out money for free. The policymakers often invoke the name of John Maynard Keynes. But they twist the great economist’s ideas. As Pavlina Tcherneva points out in a recent article in the Review of Social Economy, Keynes thought “the real problem” governments should address during the Great Depression was “to provide employment for everyone”. In Keynes’s view, output follows jobs, not the other way around.
Keynes’s own preferred solution was for governments to organise projects with a high “elasticity of employment”. “There are things to be done; there are men to do them,” he said. “Why not put the two together? Why not put the men to work?” The best way for governments to create jobs quickly is still to hire people directly. A look at the dilapidated infrastructure of the United States suggests that Keynes’ prescription is still relevant.
Enthusiasts for small government might want to privatise such programmes, but they should still agree with the true Keynesian principle: it is better to pay people to work than to pay them not to. Programmes which protect the unemployed and disabled serve a valuable social purpose and payments for early retirement may be defensible, but programmes which create jobs are far preferable to either.
The concept of “natural employment asymmetry” is a nice encapsulation of an idea that is kind of obvious when you are forced to think about it. However, the encapsulation into a simple ideas allows us isolate the phenomenon so that we can focus on the causes and possible cures. I am sure this isn’t news to many experts in the field, but it is eye opening for me.
The article is also a reminder of what John Maynard Keynes really thought was the most direct solution and exactly why he would think that way. This is also eye opening to me who has a very minor undergraduate level understanding of what Keynesian economics is all about. In another 40 years of reading a bit here and a bit there, I might be able to get to a Ph.D. level understanding. That doesn’t stop me from trying to explain things to people who are varying numbers of years behind me in understanding.
Oh, by the way, now that I have explained to you exactly what my opinion is worth, I can give you my answer to the question, “Should Growth Drive Jobs, or Jobs Drive Growth?” I do not think it should be an either/or proposition. I think the lesson learned should be that we ought to attack the problem from both directions. The value of the article is to remind us of one of the directions that we seem to have left out of what we are trying.
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Romney Has Public And Private Morality Upside Down
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Romney Has Public And Private Morality Upside Down is another great little video from Robert Reich.
He’s got private and public morality upside down. He doesn’t want to regulate where regulation is necessary — at the highest reaches of the economy, where public immorality has cost us dearly, and will cost even more unless boardroom behavior is constrained. Yet he wants to regulate where regulation is least appropriate — at the level of the individual, in bedrooms and other intimate spaces, where private morality should govern.
The way I have always put it is “Republicans don’t want the government to touch their money, but their sex life is fair game. Democrats feel ok with the government touching their money, but they want their private parts left alone.”
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How Did Mitt Make So Much Money And Pay So Little in Taxes?
Filed Under SteveG's Posts
Well here is the video I promised in my previous post, Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan. It’s not quite what I had in mind, but it is darned close.
In the post How Did Mitt Make So Much Money And Pay So Little in Taxes?, Robert Reich says:
Because the magic of private equity reveals a lot about how and why our economic system has become so distorted and lopsided – why all the gains are going to the very top while the rest of us aren’t going anywhere.
The magic of private equity isn’t really magic at all. It’s a magic trick – and it’s played on you and me.
Here is the note I sent to Robert Reich about this video, and how it compares to the video I’d like to see.
I liked the video “How Did Mitt Make So Much Money And Pay So Little in Taxes? “, but I was hoping for a video with just a slightly different emphasis.
This video would show how Mitt Romney takes over failing or nearly failing companies, strips out their assets, and then lets them go bankrupt. It is the same point you made, but I would show a bully forcing his way to the head of the line. He gets in front of the legitimate creditors and steals all the assets. He leaves them nothing when the bankruptcy judge gets to them.
You might even show how this theft from the legitimate creditors forces some of them into bankruptcy, so Romney can ride to the rescue and strip them bare too, the big bully.
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Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan
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I was thinking that Robert Reich would be the perfect person to come up with a demonstration animation to describe vulture capitalism. I went to his web site to make the suggestion, and came across the interesting post, Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan.
I wish President Obama would draw the obvious connection between Bain Capital and JPMorgan Chase.
That way his so-called “attack” on private equity is neither a personal attack on Mitt Romney nor a generalized attack on American business.
It’s an attack on a particular kind of capitalism that Romney and JPMorgan both practice: Using other peoples’ money to make big bets which, if they go wrong, can wreak havoc on the economy.
It’s the substitution of casino capitalism for real capitalism, the dominance of the betting parlor over the real business of America, financial innovation rather than product innovation.
It’s been terrible for the American economy and for our democracy.
It is nice to know that he is on the same wavelength that I am, or vice-versa. Independently, I have been writing furiously over the past few days on this very topic, trying to explain these very ideas.
There are hints on his blog that he might even have already made the animation, I seek. Well, off to check those out.
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Obama Campaign Misses The Point Of Its Own Attack Ads
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The Boston Globe has the article, Obama campaign got donations from Bain employees. This time, I am not going to take The Boston Globe to task for the article. My complaint is with the Obama administration.
Once again the Obama campaign misses its own point in attacking Romney’s business practices.
“We’re not challenging the virtues of the private equity business, or Romney’s right to run his business as he saw fit, or even his right to run other businesses into the ground while turning a profit for himself and his investors,” Obama campaign spokesman Michael Czin said.
It is not an attack on the virtues of private equity that the ad attacks. It is the particular crimes that Bain has perpetrated in some well documented cases. They buy failing companies to strip out all the assets, such as pension funds, health care funds, and any hard assets that they can sell, and turn these assets into cash which they then pay to themselves. In other words they bully their way to the head of the line in front of the legitimate creditors in order to take the assets and leave only the liabilities.
The legitimate creditors who would receive 50 to 90 cents on the dollar in an ordinary bankruptcy proceeding get nothing after Bain Capital’s interference. Bain Capital walks off with the money that should have gone to the legitimate creditors. Bain Capital drives many of those creditors into bankruptcy, but probably not before Bain strips some of them bare, too.
Talking about all the crimes Bain did not commit does not absolve it of criminal responsibility for the ones it did commit. Even one serious crime in a life full of virtue, which is not Bain’s situation, is enough to land ordinary folk in jail.
It is too bad that the Obama campaign can’t make a straightforward explanation of this important point. I wonder if The Boston Globe can take any notice of what I point out above.
I have posted the above as a comment to the article on The Boston Globe’s web site.
I think that this act of the Obama campaign deserves the following merit badge:
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JPMorgan’s “Wild, Crazy Insane Gamble” Puts Global Economy at Risk: Bill Black
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The Daily Ticker on Yahoo his another segment with William Black. This one is headlined JPMorgan’s “Wild, Crazy Insane Gamble” Puts Global Economy at Risk: Bill Black.
More importantly, Black notes JPMorgan is betting on “derivatives of derivatives” and is by far the largest player in the market for the CDX Investment Grade 9 and CDX High Yield 11, the derivatives underlying the trade that earned Bruno Michel Iksil the nickname ‘the London Whale.’
“They didn’t just gamble, this was a wild, crazy insane gamble,” says Black, who calls JPMorgan “the world’s largest gambling operation in financial derivatives” in his latest blog at New Economic Perspectives.
To be sure, a $2 billion loss is just 0.1% of JPMorgan’s assets, as of March 31. JPMorgan has suspended its share buyback program and would appear to have ample resources to cover the losses, even if they were to double or triple or even quadruple.
But that’s not the point, according to Black.
“We don’t want any federal insured entity…to be speculating in financial derivatives. That’s just nuts,” he says. “It’s really disastrous when you’re talking about an institution like JPMorgan. It will sooner or later have a really bad year…when it has the really bad year, we will all end up having to bail them out or having another global crisis.”
Given its size and outsized bets on credit derivatives, “JPMorgan poses a clear and present danger to the global economy,” according to Black.
I don’t suppose William Black could have put it in any more stark terms than that last sentence above, emphasis added by me.
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Greece Is Tearing Europe Apart Politically, Socially and Economically: William Black
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The Daily Ticker on Yahoo has the story and interview headlined Greece Is Tearing Europe Apart Politically, Socially and Economically: William Black.
I think the headline is slightly off in that it might give you the impression that William Black thinks Greece is at fault here. More to his point is the remark:
“Austerity…is an inconceivably awful policy,” Black says. The European periphery nations are suffering great depressions — not recessions – he notes, and the region’s best and brightest are emigrating from Europe because of high unemployment and economic uncertainty.
One thing about William Black, a former senior financial regulator and author of the book The Best Way to Rob a Bank is to Own One, he doesn’t mince words.
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