Rising unemployment and negative growth show austerity is working

Via here, this really is remarkable:

In an interview with the Wall Street Journal, Carlo Pier Padoan said euro-zone governments are close to stabilizing and even cutting their debts relative to economic output.

But he warned that governments facing resistance from voters as unemployment rates rise may halt their fiscal consolidations before they achieve that “remarkable result.”

“There is a risk that reform fatigue increases significantly, with governments facing very strong social resistance, and that happens at the wrong moment, because we are almost there,” Mr. Padoan said. “Our message is, we have done a lot in Europe, let’s not waste it.”

…

“Fiscal consolidation is producing results, the pain is producing results,” he said.

He added that euro-zone policy makers need to do a better job of communicating their successes to a weary population.

“There is an issue of communication,” he said. “It’s as if we will do more of the same and never stop. But we are achieving results, and we will see those results sooner than expected.”

…

Like other international financial institutions, Mr. Padoan said the OECD is set to cut its growth forecasts for the euro zone, and now fears that the currency area may face a long period of stagnation.

So, unemployment in the EU has gone up to 12.1%, including 27% in Spain and Greece, youth unemployment (under 25) is at 23.5%, 59.1% in Greece, and GDP is expected to decrease again this year, but austerity is working. Wow, imagine what things would be like if it wasn’t working. Also, note that last bit–a long period of stagnation obviously doesn’t mean austerity isn’t working. This is a perverted way of looking at the world.

How the invisible hand works

There is an update to this paper by Rand Ghayad who is working towards his PhD here at Northeastern University. It’s not pretty:

The results are equal parts unsurprising and terrifying. Employers prefer applicants who haven’t been out of work for very long, applicants who have industry experience, and applicants who haven’t moved between jobs that much. But how long you’ve been out of work trumps those other factors. As you can see in the chart below from Ghayad’s paper, people with relevant experience (red) who had been out of work for six months or longer got called back less than people without relevant experience (blue) who’d been out of work shorter.

 …

As long as you’ve been out of work for less than six months, you can get called back even if you don’t have experience. But after you’ve been out of work for six months, it doesn’t matter what experience you have. Quite literally. There’s only a 2.12 percentage point difference in callback rates for the long-term unemployed with or without industry experience. That’s compared to a 7.13 and 8.95 percentage point difference for the short-and-medium-term unemployed. This is what screening out the long-term unemployed looks like. In other words, the first thing employers look at is how long you’ve been out of work, and that’s the only thing they look at if it’s been six months or longer.

This is the Free Market at work. Employers have decided that people who have been out of work for more than six months aren’t worth the risk and so they don’t hire them. The employment problem has been solved by ignoring this group of people. This isn’t really completely logical–there must be many very qualified people in this class of long-term unemployed that most companies are ignoring and a company that took the time to look therefore would be able to get more qualified people for less money … and yet it doesn’t seem to be happening. And it certainly isn’t humane–these people are basically now out of the job market for the rest of their life. For committed Free Market people that’s just the way things are, but the rest of us should be demanding that the federal government get involved.

Taxis

The Boston Globe has the first of a three article series on taxi drivers in Boston. It’s probably what you expect, the owners are doing quite well but the actual drivers are not:

For the owners, there’s a steady stream of money, a vast amount of it cash. For each cab an owner rents for two shifts a day, 300 days a year, he earns about $60,000 annually.

“Regardless of how busy a day it is, regardless of how the work is . . . or whether there’s not enough passengers out there, [the owner] knows he’s going to get that shift fee from every driver, every 12 hours, rain, shine, whatever,’’ said attorney Shannon E. Liss-Riordan,  who has filed a class-action lawsuit in Suffolk Superior Court challenging the independent contractor system.

In sharp contrast, it is not uncommon for drivers to spend nearly half their work day earning just enough money to break even. Some days they can’t even do that. The US Bureau of Labor Statistics puts an average Boston cabbie’s income at $27,000, just slightly lower than the city’s own estimate. With drivers often on the road for 60 hours a week or more, it can amount to minimum wage work — or less than that. Some sleep in their cars during shifts, or work 24 hours straight in what the drivers call “iron shifts.”

It’s an indictment of the current system and yet this is what caught my attention:

“It’s entirely run for the owners’ benefits,’’ said Edward Rogoff, a professor of management at Baruch College in New York who has studied the taxi industry for years. “The question is: Who does the system work for? And it works for these medallion owners. It’s a socialist system. It’s like Russian oligarchs.’’

This is the classic capitalist set-up where the people with money have all the power while the workers have none and so have to fight to make a living. I really don’t understand how Rogoff can believe this is socialist. And doesn’t he know that the Russian oligarchs came into being as the communist system was ending when the US and IMF pushed through privatization and shock therapy. The quick transfer of enterprises to private owners made some of them very rich, these are the Russian oligarchs–thus the oligarchs came into being when Russia stopped being communist.

Anyway, this is an important article–the type of muckraking article that’s needed to show how modern capitalists rig the system.

And I say it will lead to kitten showers

This is typical of reporting on the deficit:

The Senate’s budget would shrink annual federal shortfalls over the next decade to nearly $400 billion, raise unspecified taxes by $975 billion and cull modest savings from domestic programs.

In contrast, a rival budget approved by the GOP-run House balances the budget within 10 years without boosting taxes.

That blueprint— by House Budget Committee Chairman Paul Ryan, R-Wis., his party’s vice presidential candidate last year — claims $4 trillion more in savings over the period than Senate Democrats by digging deeply into Medicaid, food stamps and other safety net programs for the needy. It would also transform the Medicare health care program for seniors into a voucher-like system for future recipients.

The problem is that Paul Ryan’s budget isn’t specific, so when it says it’s going to balance the budget it doesn’t really say how. As with his earlier budgets, he is quite specific with the tax cuts but not specific with the spending cuts or the elimination of tax deductions. The basic Ryan formula is: big tax cuts for the rich, huge domestic spending cuts, and then Free Market magic will lead to a balanced budget.

This is also wrong:

Both sides have expressed a desire to reduce federal deficits. But President Barack Obama is demanding a combination of tax increases and spending cuts to do so, while GOP leaders say they won’t consider higher revenues but want serious reductions in Medicare and other benefit programs that have rocketed deficits skyward.

Currently half of the deficit is estimated to be because of the economic downturn and also look here to see that the deficit has been decreasing the last few years (from the CBO report–obviously the numbers for 2013 and later are projections; Automatic stabilizers are automatic changes in revenues and outlays that are attributable to cyclical movements in real (inflation-adjusted) output and unemployment according to the CBO):

Year	Budget Deficit	Stabilizers	Deficit-Stabilizers
2008	-459	-45	-414
2009	-1,413	-350	-1,063
2010	-1,293	-417	-876
2011	-1,300	-409	-891
2012	-1,089	-386	-703
2013	-845	-422	-423
2014	-616	-444	-172
2015	-430	-352	-78
2016	-476	-186	-290
2017	-535	-43	-492

Gee, why don’t they want to come back

Via here, it seems that there’s a surge in construction:

Nationwide, sales prices rose 7.3 percent over the course of 2012, according to the Standard & Poor’s Case-Shiller index, ranging from a slight decline in New York to a surge of 23 percent in Phoenix. Tracking more closely with the national trend were cities like Dallas, up 6.5 percent; Tampa, which rose 7.2 percent; and Denver, which gained 8.5 percent.

In many areas, builders are scrambling to ramp up production but face delays because of the difficulty of finding construction workers and in obtaining permits from suddenly overwhelmed local authorities. At the same time, homeowners — many of them lifted above water for the first time in years — often remain reluctant to sell, either because they want to wait and see how much further prices will climb or because they are afraid of being displaced in the sudden buying frenzy.

There’s one bit that is telling:

Some, like the 38-year-old electrician Gideon Jacks, are gingerly returning to construction work after taking a hiatus (in Mr. Jacks’s case, the hiatus was in several low-paying jobs at restaurants), but others remain reluctant to return to the hard physical labor and unstable job prospects.

“They say, ‘That’s the last time I’m riding that roller coaster,’ ” said Rick Wylie, president of the Beutler Corporation, a Sacramento air-conditioning and plumbing company. In 2005 he employed 2,100 workers, but by 2009 Beutler had only 270 employees. Mr. Wylie, who currently employs about 550, is now having trouble luring back many workers he let go.

“I don’t mean to complain,” he said. “This is a good problem to have, a world-class problem, to not be able to find workers to do all the work you’re getting.”

Gee My Wylie, I wonder why you’re having trouble finding people? Perhaps because they see that you got rid of almost 90% of your workforce the last time there was a problem? It’s funny how a lack of loyalty to your workers can cause problems.

The Labor Secretary shouldn’t be supported by labor

President Obama has selected Thomas Perez to be Secretary of Labor. This fact:

The 51-year-old Perez is popular throughout the labor movement and earned prominence as Maryland Democratic Gov. Martin O’Malley’s labor secretary.

means that he’s going to be opposed by Republicans. Of course they can’t just say that, so they’ll come up with something else. Right now it looks to be the New Black Panther Party thing:

He is sure to be questioned during his confirmation hearings about his time as head of Justice’s civil rights division, especially after a report from the department’s inspector general questioned his testimony in a recent civil rights lawsuit.

The report said Perez gave incomplete testimony to the U.S. Commission on Civil Rights when he said the department’s political leadership was not involved in the decision to dismiss three of the four defendants in a lawsuit the Bush administration brought against the New Black Panther Party.

Hmm, let’s see what Adam Serwer has noted from that report:

the Inspector General’s report, like a previous OPR report, found that the decision to narrow the New Black Panther case was “based on a good faith assessment of the law and facts of the case,” not on anti-white racism or corruption. The report also concludes that the political leadership at Justice did influence the handling of the New Black Panther case—but not improperly—by insisting that that the case could not be dismissed outright.

So, Republicans will complain that the Black Panther thing was influenced by political leadership under Obama without noting that they influenced it in a way that Republicans were pushing for–further investigation. This could make for an interesting story, in the unlikely event that the reporters actually tell the whole story.

The new pope and Paul Ryan

In some sense, since I’m an agnostic/atheist, I don’t really care who the new pope is, but he might be disturbing to Paul Ryan who is Catholic:

But in the CBN interview, Ryan made a moral case for his budget, saying that the government shouldn’t be responsible for lifting its citizens out of poverty — rather, that it’s the obligation of the citizens themselves to be society’s caretakers.

“Through our civic organizations, through our churches, through our charities, through all of our different groups where we interact with people as a community, that’s how we advance the common good, by not having Big Government crowd out civic society, but by having enough space in our communities so that we can interact with each other, and take care of people who are down and out in our communities,” Ryan said.

“Those principles are very, very important, and the preferential option for the poor, which is one of the primary tenants of Catholic social teaching, means don’t keep people poor, don’t make people dependent on government so that they stay stuck at their station in life, help people get out of poverty, out into a life of independence.”

This was his response when US bishops spoke out against his budget. Well, here’s the new pope:

The Archbishop of Buenos Aires, Cardinal Jorge Mario Bergoglio, has called for an ethical response to solve the problem of social debt, saying that, not only do terrorism, repression and murder violate human rights, but also extreme poverty and the “unjust economic structures that give rise to great inequalities.”

Social debt is “immoral, unjust and illegitimate,” the cardinal said, emphasizing that this is especially true when it occurs “in a nation that has the objective conditions for avoiding or correcting such harm.” “Unfortunately,” he noted, it seems that those same countries “opt for exacerbating inequalities even more.”

and:

Bergoglio has supported the social justice ethos of Latin American Catholicism, including a robust defense of the poor.

“We live in the most unequal part of the world, which has grown the most yet reduced misery the least,” Bergoglio said during a gathering of Latin American bishops in 2007. “The unjust distribution of goods persists, creating a situation of social sin that cries out to Heaven and limits the possibilities of a fuller life for so many of our brothers.”

I don’t like much of what the new pope has said, he is very much a social conservative, but I’m not a Catholic and Paul Ryan is.

Cantor says no

Via here, it seems the Eric Cantor was the reason there was no grand bargain (by the way, I’m glad there was no grand bargain) and why there is now the sequester:

Cantor was one of the most influential political forces in Obama’s first term.  In June of 2011, the President and the Speaker began working toward a Grand  Bargain of major tax increases and spending cuts to address the government’s  long-term budget deficits. Until late June, Boehner had managed to keep these  talks secret from Cantor. On July 21st, Boehner paused in his discussions with  Obama to talk to Cantor and outline the proposed deal. As Obama waited by the  phone for a response from the Speaker, Cantor struck. Cantor told me that it was  a “fair assessment” that he talked Boehner out of accepting Obama’s deal. He  said he told Boehner that it would be better, instead, to take the issues of  taxes and spending to the voters and “have it out” with the Democrats in the  election. Why give Obama an enormous political victory, and potentially help him  win reëlection, when they might be able to negotiate a more favorable deal with  a new Republican President? Boehner told Obama there was no deal. Instead of a  Grand Bargain, Cantor and the House Republicans made a grand bet.

They lost the bet, in other words voters liked Obama’s positions more than Republicans. This caused some soul-searching:

Cantor had been struck by one presentation at the retreat. Patrick Doyle, the  president and C.E.O. of Domino’s, had given a talk called “Turning It Around,” in which he explained that he revived the failing company after conducting  extensive research that led him to conclude that Domino’s pizza was terrible.  But Cantor seemed more interested in Doyle’s sales advice than in his point  about his product.

“There was a discussion about features and benefits,” he said. “Marketing  101, right? If you’re selling detergent and you put a new blue dot in a  detergent block, that’s a feature. But the benefit is it gets your clothes  cleaned.” He paused to let the lesson sink in.

Republicans wondered if they would have to shift their policies or just have better marketing. I wonder on which side Cantor falls:

Since the 2012 elections, the Republicans have been divided between those who  believe their policies are the problem and those who believe they just need  better marketing—between those who believe they need to make better pizza and  those who think they just need a more attractive box. Cantor, who is known among  his colleagues as someone with strategic intelligence and a knack for political  positioning, argues that it’s the box.

So, to summarize, Cantor stopped the grand bargain because he thought they would be able to get a better deal after the election (and because he didn’t want to do anything that might help Obama) then when he lost the bet (a majority of voters voted for Democrats for President, in the Senate races, and in the House races) he still thinks he should be able to get a better deal and the only problem is marketing. This isn’t going to be fun.

Austerity

It seems the sequester is going to happen. So the US is going to try austerity. As noted here, we should look at Europe to see how austerity is working there. It’s not going well:

A top European official warned on Friday that the euro area economy would shrink for the second consecutive year and that countries like France and Spain would miss fiscal targets meant to ensure the stability of the common currency. Separately, the European Central Bank announced that the region’s banks planned to repay less than half the expected amount of low-interest loans they took out a year ago. And Moody’s Investors Service downgraded Britain’s government bonds from its top AAA rating.

And that’s understating things, the unemployment rate is 16.9% in Portugal (go here to see how it has changed), 26% in Spain (trend), and 27% in Greece (trend). For the Euro area it’s now past 11.7% and the percentage of unemployed who have been unemployed more than a year is over 44%. This is Great Depression level suffering.

I can’t seem to embed the charts, but government spending has gone down over the last three years in Portugal, Spain, and Greece. Really, we should listen to many Republicans and cut the budget now.

Republicans want austerity now and always

The current recession/depression has shown that austerity is a bad thing to try during recessions, which means that Republicans want to put it into the Constitution:

Senate Republicans are launching a major new push to encourage the adoption of a Balanced Budget Amendment to the Constitution, an effort with little chance of success but one that will allow the GOP a new way to frame their criticisms of Democratic spending.

Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Minority Whip John Cornyn (R-Tex.) introduced the legislation Wednesday. They were joined by all other Senate Republicans as co-sponsors.

Their amendment would require that the president submit a balanced budget to Congress that would include spending that totaled no more than 18 percent of the gross domestic product and require that Congress adopt a budget with spending capped at the same figure. Government spending for the 2013 fiscal year has risen to 22.2 percent. The Republican amendment would also require a two-third super majority to raise taxes or the nation’s legal debt ceiling.

Somebody really needs to tell them how recessions work. Here’s the usual generic way a recession works: there’s an economic shock of some kind which leads people and companies to spend less; since people and companies are spending less, the companies lay off workers; workers spend less because either they lost their job or are afraid they will; companies respond by spending less and laying off more workers; repeat. Government can help to break this cycle in two ways: automatic spending such as unemployment payments and welfare (which automatically increase as workers lose their jobs); stimulus spending. In either case, deficit spending is required–this is basic Keynesian economics (yeah, I know, Republicans don’t believe in it even though it has proven itself over and over again). Republicans not only want to make it impossible for the government to help end recessions, they also want a big cut in government spending (a cut from 22.2 to 18% of GDP would be a cut of about 20%) and they want to do it as spending should be increasing because of the aging of the US population. It really makes no sense.

Marco Rubio lies to make his point

I’m sure that many others have done this, but let’s look at Marco Rubio’s answer to President Obama’s State of the Union address:

Presidents in both parties – from John F. Kennedy to Ronald Reagan – have known that our free enterprise economy is the source of our middle class prosperity.

many of them also know that unions and the government are also a big reason for the rise of the middle class after WW II with programs such as Social Security, Medicare and Medicaid, the GI plan, support of education (including colleges), support of research through plans like the NSF and NIH (have you heard of this thing called the internet?), and many other programs.

But President Obama? He believes it’s the cause of our problems. That the economic downturn happened because our government didn’t tax enough, spend enough and control enough. And, therefore, as you heard tonight, his solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.

Umm:

Maybe lots of promised cuts turned out to be “cuts”. But the record shows that total federal governmentoutlays were 25.2% of GDP in 2009, 24.1% of GDP in 2011, and 22.8% in 2012. (Receipts rose from 15.1% of GDP in 2009 to 15.4% in 2011 to 15.8% in 2012.)

Both outlays and receipts are, as a share of GDP, below pre-crisis levels. And while receipts are now forecast to rise back to pre-crisis level by 2014, outlays are expected to remain about two percentage points higher than before the recession. But the point remains that the “austerity” of 2011-2012 wasn’t “austerity” but austerity. Federal government spending fell by a meaningful share of GDP over that period. So did federal government employment, which dropped by 31,000 jobs in 2011 and 45,000 jobs in 2012. What’s more, we have good reason to believe that these cuts entailed positive multipliers above those we’d observe in normal times. You don’t have to take the IMF’s word for it; even stimulus sceptics like Valerie Ramey find that multipliers may sometimes be above normal, and above one, during periods of economic slack.

…

Update: A bit more information to make clear that the change in outlay/GDP ratio isn’t solely about growth: the CBO indicates that in current-dollar terms total outlays fell from 2011 to 2012 (by about $50 billion). CBO reckons outlays will fall again, also in nominal terms, from 2012 to 2013.

and this doesn’t include the states where government spending dropped. Also, Obama has passed tax cuts several times (although taxes are going up now).

This idea – that our problems were caused by a government that was too small – it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.

Wow, that’s some major revisionism–go read Krugman.

And the idea that more taxes and more government spending is the best way to help hardworking middle class taxpayers – that’s an old idea that’s failed every time it’s been tried.

Yes, austerity is working so well for much of Europe.

For example, Obamacare was supposed to help middle class Americans afford health insurance. But now, some people are losing the health insurance they were happy with. And because Obamacare created expensive requirements for companies with more than 50 employees, now many of these businesses aren’t hiring. Not only that; they’re being forced to lay people off and switch from full-time employees to part-time workers.

The number of companies that provide health insurance for their employees has been decreasing for years:

The percentage of non-elderly workers with employer-sponsored coverage has been falling, from 68% in 2000 to 61% in 2009, the latest year for which data is available.^[5] While the primary cause of falling rates of insurance is the rising cost of health care for employers, the economic downturn since 2008 has swelled the ranks of the uninsured, in large part because workers who lose their jobs also lose employer-sponsored insurance. Over 1 million workers lost their health care coverage in January, February and March 2009. Approximately, 268,400 more workers lost health care coverage in March 2009 than in March 2008, so the decline of employer sponsored insurance has likely accelerated in recent years.

but hey, let’s blame it on Obamacare.

When we point out that no matter how many job-killing laws we pass, our government can’t control the weather – he accuses us of wanting dirty water and dirty air.

So, Marco you don’t believe in global warming and/or don’t think it matters?

Aah, that’s all I can stand. I’m not going to bother with Rand Paul’s idiocy.

Let’s cut our way to recession

Paul Ryan really has no shame:

“Look, if we had [a] Clinton presidency, if we had Erskine Bowles, chief of staff of the White House or president of the United States, I think we would have fixed this fiscal mess by now. That’s not the kind of presidency we’re dealing with right now,” Ryan said on NBC News’s “Meet The Press.”

Paul Ryan voted against proposal by Erskine Bowles because he refuses to consider any tax increase and he thinks Clinton would have agreed with him? Ryan wants to ‘balance the budget’ with only tax cuts, which is working so well for England:

Britain’s economy contracted by a worse-than-expected 0.3 percent in the last three months of 2012, raising the possibility that it might fall back into recession for the third time since the global financial crisis.

…

The GDP figure released Friday is subject to revision. It was the fourth quarter of negative growth out of the past five and leaves the economy 3.3 percent smaller than it was at the start of a steep 15-month recession in 2008-2009.

He probably even disagrees with this:

two days after the chief economist of the International Monetary Fund said it was time for the government to reassess its focus on spending cuts.

The US will be in much better shape if President Obama ignores Ryan.

If something doesn’t work, double down

In an article on Prime Minister Cameron’s intention to renegotiate the UK’s terms with the EU, we get this:

For Mr. Cameron, with elections coming in 2015, that means heading off a challenge from the hard-right, anti-Europe U.K. Independence Party, known as UKIP, while shoring up support for his government, which recently admitted that its unpopular austerity program would have to be extended to 2018, analysts said.

Ya see the austerity program isn’t working, in fact it has caused the country to dip back into recession, so they have to extend it. Great minds at work.

Poor, poor banks

Jamie Dimon, of JP Morgan, really has it rough:

Two years ago, Jamie Dimon, chief executive of JPMorgan Chase, told an audience in Davos that people should stop picking on bankers. Mr. Dimon is still waiting for his wish to come true.

and:

JPMorgan Chase slashed CEO Jamie Dimon’s bonus by 53%, citing the fallout from the bank’s so-called London Whale trading losses.

Ok, not that rough:

Earlier this month, for instance, an international conclave of central bankers and bank supervisors, meeting in Basel, Switzerland, relaxed new rules that were intended to ensure that banks would be able to survive an event like the collapse of Lehman Brothers in 2008.

The rules, which are not binding but serve as a benchmark for national regulators, would require banks to maintain a 30-day supply of cash or liquid assets that are easy to convert into cash. But after the decision in Basel this month banks would have until 2019 to accumulate the additional cash and assets, instead of 2015. The regulators also broadened the kinds of assets that qualify, so that now they can include even some mortgage-backed securities—the same general class of security that was at the heart of the crisis.

and this is despite more criminal activity being found such as:

UBS, based in Zurich, agreed to pay a $1.5 billion fine to the global authorities after admitting this month that it had helped manipulate a key benchmark rate used to set mortgage and other interest rates. Wegelin, a private bank based in St. Gallen, Switzerland, shut down earlier this month after admitting it had helped wealthy Americans evade taxes. The bank, founded in 1741, was the oldest in Switzerland.

Banks, at least in the US, are back making record profits:

JPMorgan has reported record profits for three consecutive years and praised what they called Dimon’s forceful response to the trading problems.

And don’t cry too much for Dimon, his ‘punishment’ means he’ll only make $11.5 million this year. I think  most of us could scrape by on that.

‘Right to work’ in Michigan

So it seems Michigan will become a ‘right to work’ (no, it doesn’t give you a right to work) state:

Snyder said Thursday morning at a packed news conference at his office in the  Romney building across from the Capitol that he wanted the Legislature to act  quickly on the bills and that he would sign them.

The Legislature is scheduled to adjourn by Dec. 20, but Republicans were  hoping to leave town as early as Dec. 13.

Snyder has long said right-to-work legislation hasn’t been on his agenda, but  he changed his view because of Indiana’s February passage of a right-to-work law  and increased political pressure to pass the bill in the Legislature’s lame-duck  session.

“Workers should have freedom to choose who they associate with,” Snyder  said.

Good job Governor Snyder, you give a quote that has nothing to do with a bill that doesn’t do what its name implies. No matter what backers of the bill say, they want to get rid of unions because unions make companies spread money out more (owners get less, workers get more).

Backers say right to work helps the economy of a state, but consider this:

The data on wages tell a fairly clear story. Of the top 10 states in per capita income in 2011, seven were not right-to work states. Of the bottom 10 states with the lowest per capita income, seven were right to work states.

“There is a lot of evidence that wages and benefits are lower in right-to-work states. There’s a redistribution of wages and benefits toward owners’ capital,” Belman said Thursday.

If you want, you can also look at this paper

People are confused

Here’s a bit of Republican induced confusion:

So we asked simply: Were the United States to “go over the fiscal  cliff,” what do you expect would happen to the National Deficit?

At least according to the CBO and most economists, the correct answer is that  “It will decrease.”  Going over the Fiscal Cliff would, according  a Congressional Budget Office study, result in a reduction in the National  Deficit of $607 billion between fiscal years 2012 and 2013.

However that was not the most popular answer. Per the survey, 47.4% of  respondents said that the deficit would INCREASE if we went over the Fiscal  Cliff. Only 12.6% think it will decrease.

You see, something like the fiscal cliff was the Republican plan called the Ryan budget except with more cuts and no new tax revenues and it’s operative even when there are disasters:

Still, any disaster aid package may well need to satisfy the concerns of conservative lawmakers, who have indicated an unwillingness to approve additional disaster spending without cuts that would offset the costs — and avoid adding to the deficit.

and whatever they say they want austerity:

But in the debt ceiling fight, the tables might turn. Many conservative Republicans say they are willing to let the nation default if Congress refuses to cut spending. If the tax rate fight is already resolved by the time the debt limit increase is needed, Democrats will find themselves without the leverage they now have with the expiration of the lower tax rates a certainty unless Congress acts affirmatively.

The point is that Republican’s fiscal cliff is made by cutting taxes and even bigger spending cuts than are anticipated now–after all they believe that austerity works. Well, in a way. The goal of Republicans has long been to cut taxes and cut all spending they don’t like–so huge spending on defense is good while spending on the poor is bad. They don’t really care about the deficit. But Republicans have pretended to want to cut the defiict for so long that now that they are publicly worried about the fiscal cliff, people figure it must mean it will increase the deficit.

ALEC and global warming

It seems ALEC is going to join the Heartland Institute in trying to get rid of renewable energy:

Todd Wynn, who directs ALEC’s energy, environment and agriculture task force,  said the group decided to take up the issue because some of its members are  worried about the mandates’ “impacts on their state’s economies and their constituents.”

That makes it timely that there’s a report (via here) showing that the thing’s that ALEC says are good for the economy aren’t, so if ALEC thinks this might hurt the economy then it’s probably good for it. As an example on how they think, go to ALEC’s report on the economies of the states. It gives Massachusetts (on page 78) an economic performance rank of 43. Given unemployment in Massachusetts is at 6.6% (tied for 16th place and below the national average), its poverty rate is ranked 14th, and its per capita income is ranked fifth, it’s an interesting ranking (in fact none of the states in the bottom 10 in per capita income are in the bottom 10 of ALEC’s ranking, Indiana is the worst with a 37th ranking, and 3 of the 4 states with the highest incomes are in their bottom 10).

Of course, the less said about the Heartland Institute the better.

More jobs

So the jobs picture is a bit better:

The unemployment rate decreased to 7.8 percent in September, and total nonfarm payroll employment rose by 114,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care and in transportation and warehousing but changed little in most other major industries.

Of course, the numbers tell a different story because they come from different surveys:

Total employment rose by 873,000 in September, following 3 months of little  change. The employment-population ratio increased by 0.4 percentage point to  58.7 percent, after edging down in the prior 2 months. The overall trend in  the employment-population ratio for this year has been flat. The civilian labor  force rose by 418,000 to 155.1 million in September, while the labor force  participation rate was little changed at 63.6 percent.

So, according to one survey employment went up 114,000 and up 873,000 by the other.  This could be because they measure two different things–more succinctly given here:

Why are there two monthly measures of employment?

The household survey and establishment survey both produce sample-based estimates of employment and both have strengths and limitations. The establishment survey employment series has a smaller margin of error on the measurement of month-to- month change than the household survey because of its much larger sample size. An over-the-month employment change of about 100,000 is statistically significant in the establishment survey, while the threshold for a statistically significant change in the household survey is about 400,000. However, the household survey has a more expansive scope than the establishment survey because it includes the self- employed, unpaid family workers, agricultural workers, and private household workers, who are excluded by the establishment survey. The household survey also provides estimates of employment for demographic groups.

But, of course, the discrepancy has led to complaints by conservatives:

The leader of the “job truther” movement: former GE CEO Jack Welch.

“Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers,” he said on Twitter.

He had some friends in Congress too. Rep. Allen West (R-FL) tweeted “I agree with former GE CEO Jack Welch, Chicago style politics is at work here.” He added on Facebook that the jobs report was  “Orwellian to say the least and representative of Saul Alinsky tactics from the book ‘Rules for Radicals.’”

FOX News’ Stuart Varney apparently sensed where his audience was going. Within minutes of their release he told viewers that “there is widespread mistrust of this report and these numbers.”

“How convenient the rate drops below 8% [for the] first time in 43 months, five weeks before the election,” he added later.

You would think if they were cooking the books they wouldn’t get: ‘The overall trend in  the employment-population ratio for this year has been flat’.

Spain and Greece

Most of the stories about Greece and Spain talk about how their problems will affect banks and the markets. Remember, there is also a human side:

The Caritas report also found that 22 percent of Spanish households were living in poverty and that about 600,000 had no income whatsoever. All these numbers are expected to continue to get worse in the coming months.

About a third of those seeking help, the Caritas report said, had never used a food pantry or a soup kitchen before the economic crisis hit. For many of them, the need to ask for help is deeply embarrassing. In some cases, families go to food pantries in neighboring towns so their friends and acquaintances will not see them.

And this is a huge problem in Spain:

Spain is stuck in a double-dip recession with unemployment close to 25 percent. The conservative government of the Spanish prime minister, Mariano Rajoy, has introduced sharp cuts and raised taxes in a move to reduce the deficit and to reassure investors and officials from the 17-nation euro zone.

and Greece:

“The cumulative reduction (of gross domestic product) since 2008 is just under 20% and is expected to reach 25% by 2014,” he told a Greek–Chinese business forum in Athens.

Perhaps at some point, they might realize that austerity is not helping:

Consider Greece. The country’s prime minister, Antonio Samaras, has been pushing a package of pension cuts and public salary reductions worth $14.6 billion next year in order to satisfy the conditions of its February aid package from the rest of Europe. In a country with 24 percent unemployment, those measures are already inciting protests and labor unrest. And now it turns out, according to reports from Germany, that those austerity measures won’t even be enough, because Greece’s economy is hurting so badly that its deficit keeps swelling anyway:

Spiegel Online and Suddeutsche Zeitung have updates on the Greek budget gap, which is even bigger than previously assumed – around €30bn. This is the accumulated short-fall the troika is expected to identify in its forthcoming report – the amount Greece has to raise, save, restructure, default on, if it wants to make it through the second loan programme.

Spiegel writes that the troika will say that the recession has totally counteracted the budgetary savings, while the government has failed to introduce structural reforms.

Given that this has been going on for 4 years, I’m not optimistic.

Income and insurance

The Census Bureau has a new report out about income, poverty, and insurance coverage. Here are some highlights:

Insurance:

• The number of people with health insurance increased to 260.2 million in 2011 from 256.6 million in 2010, as did the percentage of people with health insurance (84.3 percent in  2011, 83.7 percent in 2010).
• The percentage of people covered by private health insurance in 2011 was not statistically different from 2010, at 63.9 percent. This was the first time in the last 10 years that the rate of private health insurance coverage has not decreased. The  percentage covered by employment-based health insurance in 2011 was not statistically different from 2010, at 55.1 percent.
• The percentage of people covered by government health insurance increased from 31.2 percent to 32.2 percent. The percentage covered by Medicaid increased from 15.8 percent in 2010 to 16.5 percent in 2011. The percentage covered by Medicare also rose over  the period, from 14.6 percent to 15.2 percent. The percentage covered by Medicaid in 2011 was higher than the percentage covered by Medicare.

oh and the percent without insurance in the 19-25 year age group went down by 2.2%–thanks Obamacare.

Income:

• Median family household income declined by 1.7 percent in real terms between 2010 and 2011 to $62,273. The change in the median income of nonfamily households was not statistically significant.
• In 2011, real median household income was 8.1 percent lower than in 2007, the year before the most recent recession, and was 8.9 percent lower than the median household income peak that occurred in 1999. The two percentages are not statistically different from one another.
• Income inequality also increased between 2010 and 2011 when measured by shares of aggregate household income received by quintiles. The aggregate share of income declined for the middle and fourth quintiles. The share of aggregate income increased 1.6 percent for the highest quintile and within the highest quintile, the share of aggregate income for the top 5 percent increased 4.9 percent. The changes in the shares of aggregate income for the lowest two quintiles were not statistically significant.

so the economy is still quite weak–unemployment is still a bigger problem than the deficit. And there is no class-warfare in the US but one group seems to be winning.

Poverty:

• In 2011, the family poverty rate and the number of families in poverty were 11.8 percent and 9.5 million, respectively, both not statistically different from the 2010 estimates.
• In 2011, 6.2 percent of married-couple families, 31.2 percent of families with a female householder and 16.1 percent of families with a male householder lived in poverty. Neither the poverty rates nor the estimates of the number of families  in poverty for these three family types showed any statistically significant change between 2010 and 2011.

That’s pretty pathetic, maybe we can start talking about poverty in the US?