Reasons to feel hopeful

Two news stories caught my eye.

1. An op-ed by Robert Reich in today's NYT titled "Totally Spent". He writes:

The only lasting remedy, other than for Americans to accept a lower standard of living and for businesses to adjust to a smaller economy, is to give middle- and lower-income Americans more buying power — and not just temporarily.

The only way to keep the economy going over the long run is to increase the wages of the bottom two-thirds of Americans. The answer is not to protect jobs through trade protection. That would only drive up the prices of everything purchased from abroad. Most routine jobs are being automated anyway.

"Trade protection" is a straw man argument. Nobody is asking for trade protection. He uses this to sidestep the issues of fairness in how laws and rules are enacted and how they are enforced, be it illegal immigration or outsourcing/offshoring.

However, at this point, even his acknowledgment that an economy comprised of impoverished workers cannot thrive is a welcome change of tone.

2. In his column titled "Obama (Finally) Putting Attack On NAFTA Front and Center?", David Sirota quotes Obama's attack on NAFTA and free trade policies:

"It's a game where trade deals, like NAFTA, ship jobs overseas and force parents to compete with their teenagers to work for minimum wages at the local fast-food joint or at Wal-Mart. It's what happens when the American worker doesn't have a voice at the negotiating table, when leaders change their positions on trade with the politics of the moment, and that is why we need a president who will listen not just to Wall Street, but to Main Street, a president who will stand with workers not just when it's easy, but when it's hard, and that's the kind of president I intend to be when I'm president of the United States of America."

I trust Sirota based on his columns in earnest support of American workers. So, if Sirota is sensing a change of tone in Obama's words, then I am prepared to allow myself to feel hopeful.

Finally some signs of change? Perhaps.



Obama vs. Hillary on trade

I'm not so sure we're hearing campaign rhetoric from Obama trying to claim he's the guy who will reform trade.

Over on the
blog is a huge comparison contrast on actual position statements they have made and Hillary seems to be the one with more policy change to actually modify trade.

If that's true, she shouldn't let him steal this thunder, she especially shouldn't because Bill is the one who helped pass that turkey.

But, Obama seems to be very good a rhetoric without actually saying specifics.

To make it sound like he's going to do more than he is.

Nice catch of Reich. He mentions women "iincreasing" the labor supply
yet doesn't mention outsourcing, insourcing, guest worker Visas, immigration and the big one, illegal immigration as a wage lowering force at all.

Or trade. I find it odious that he would mention women. Usually that accompanies minorities to imply that it's best when only white males have a job and it's also not true...
women have been in the workforce for decades and decades, before the 1960's as well as minorities..

all the movements in the 60's did was enable them to get better jobs and better pay (which hasn't made that many gains actually).


My first substantive comment here and I'm going to disagree with you! (politely)

When I read Reich this morning, I thought he pretty well nailed it! (up until the last paragraphs when he brought out the education B.S.)

I read him as saying, virtually all of the gains of the last 35 years have been at the very top end. Average Americans coped by (1) becoming two wage earner families, then (2) working more hours, then finally (3) by going deep into debt. But now the cupboard is empty and the game is over. BAM! Nailed it.

Then the education BS.
Let me say something a little controversial, but bear with me until the end. I have not problem with trade agreements like NAFTA, provided (and it's a big proviso)
there is real and true compensation to the losers. And ultimately that is just about everybody. If China can save us all $300 B on production costs a year, fine. But then let's distribute that as $1000 for every citizen in every household.
It's that last part that always gets glossed over.

BTW, Reich plus Russ Winter plus Mish make a terrific trifecta today. Russ Winter adds in about the financial insolvency in the credit markets, and Mish has a nice pictorial tour of where our wealth is going.

welcome to disagreementville!

Sure, if people are looking for two elements as a goal:
1. keep the US #1 economically
2. raise up as many people as possible into middle class, social mobility.

debating this stuff is a learning exercise. I don't know those two you list so links or an overview would be awesome.

On the two wage earner thing, I'm referring to the more to the "Right" sorts of comments (maybe you haven't seen these which imply that if only we could return to the good ole days where only white men were the earners everything would be fine) that women just "bam" entered the workforce, increasing supply (and thus claiming lost wages and job security since increases in supply wage repress all things being statistic). I'd claim the real wage decline started accelerating with bad trade deals, union busting and that women were not a sudden influx in the labor market for they were working before really being recognized, as wage earners, I'm not saying "in the home.

i.e. there are many other factors going on here to explain why people are working longer, harder for less than trying to attribute it to women in the workforce. Borjas has a little graph on the effect increase in supply in his labor economics text. (I like Borjas for while he's clearly coming from the right ...he doesn't waver with his statistics, he'll just say wage repression is good ;))

ok, this idea of paying people off when they lose their jobs as compensation I have real issue with.

I lost job x @ 100k a yr. Gov pays me difference between new bad job 70k salary and lost job, say 30k, I'm out 570k over 20 yrs total over time. that just doesn't add up to increase the middle class.

I think this is a terrible, true blow off idea. If they want to really do an adjustment retrain those people, same salaries in the next generation skill sets and also for public works. I also think the entire labor arbitrage element in moving around the globe should be "tariffed" out by anything from a global minimum wage to just the entire package which makes the payout for certain industries (high skilled) not worth it as a cost reduction. (not an actual tariff on finished goods but through a series of tax breaks, health services, labor laws, environmental) make the savings differential on just "person per person labor exchange" just not pay off.

Sure if you can produce widget x cheaper in country y and so on but that's not what these agreements do and free trade theory only comes into equilibrium when the means of production are not mobile.

BTW, have you read the China PNTR? (HR 4444) Forget labor arbitrage (which I think is fundamentally a disaster), the thing is so biased towards China what business in the US has a prayer chance against it unless they are a multinational, moving to China.

I have a book for you to check out Gomory, Baumol, Trade, Conficting interests (first one on books list).

It puts the means of production as variable and shows how it's a "lose-lose" with math, they have extensive mathematical models and hence one needs more strategic trade. I find it most interesting the interpretation of this book, but it's really good work to deal with the variables (that should have been static) in the theory.

Links for you

Here is the link to Russ Winter's blog entry today:

Russ is more of a financial blogger, but he is a real bloodhound running down some of the financial games being played. He is my favorite underappreciated blogger.

Here is a link to Mish's blog entry this morning:

Mish is one of the best known econo-bloggers. Today's photo tour of Dubai is a devastating indictment of our addiction to foreign oil and our trade imbalances.

BTW, have you noticed any of the reforms being offered to prevent future financial blowups like we're seeing now? No? You haven't? Probably because, in the face of the worst speculative debt fueled banking/financial industry blowup since 1929, NOBODY"S OFFERING ANY!

Boggles the mind. Cheers.

Winter Watch

Wow I added him to the middle column. (See those little b's it means you can automatically blog on a blog).

Dubai also is talking about using a "basket of currencies" since the devaluation of the dollar.

I have been looking for real reforms and the closest I can find is Hillary, yet another reason I'm holding my nose and writing some overviews of her positions. (determination of least objectionable candidate magic secret decoder ring - also available in cracker jacks) .

Overviewing the lack of plans (and least non-existent plan recommendation) if you are so adventurous to comparison contrast O/C would make a fine major writing piece.

I have meager SKF to sell @ 160. Can't decide if that's too low/high for I always underestimate shelf life of FC. (how can someone make you laugh and cry at the same time, Winterism).