Month / December 2013

by hereandsphere

TOWARD A REALITY ECONOMY : MINIMUM WAGE HIKE — AND MORE

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^ new regulations governing big bank trading almost in place : Treasury Secretary Jacob Lew announcing

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Twice, since Here and Sphere’s inception last May, we have editorialized in favor of raising the legal minimum wage. To those editorials I refer you, if you’re interested : you’ll find them in our Archives section. Today, however, I want to expand upon the economic realities and policy choices that command our support for raising the minimum wage substantially. I understand that economic talk can be boringly statistical. But would you prefer exciting talk that was false or a fantasy ? After all, we’re talkiing the family’s income here; so I hope that you and I can be real for a while ? “Yes,” you tell me ? Good. Now for some facts :

1.Many political economists recently have written about the rapid increase of income inequality in America. Money is flowing ever faster to the top 1 % of earners and away from the bottom FIFTY (50) percent. Today the top 1 % of earners take in ten times greater a pecentage of America’s entire national income than it did fifty years ago. If current increase rates continue, the top 1 % of earners will soon control more income than the bottom SIXTY percent.

2.Incomes for the bottom 60 % of earners has barely grown at all in the past 30 years. That of the top 1 % has increased almost 100-fold. (Former Clinton economic adviser Robert Reich recently opined on this point. His column is well worth reading.)

The trend I have outlined has serious implications not just for the bottom 60 percent of earners bit for the entire economy. People whose incomes aren’t growing much at all can’t grow the economy without taking on more and more debt. The advent of credit cards in the late 1970s began a splurge of plastic money that eventually grew the spending economy by a full 20 percent of GDP. That splurge was the only reason that most Americans were able to grow their spending and thus grow the economy. But that splurge ended abruptly in 2008, and total credit card debt has fallen in almost every month since. Because credit card spending constituted 20 % of America’s 2008 GDP, a fall of merely 10 % in total credit card debt shaved a full 2 % off total GDP. Little wonder that since 2009 our economy has grown a slow 2.7 %; and little wonder that with consumer spending — which totals 2/3 of the ENTIRE economy — not growing at all, job growth has been slower than needed.

So the questions are ; ( 1 ) how are we going to get most family incomes growing again ? ( 2 ) how are we going to grow the economy fast enough so that businesses need to hire more people ? and ( 3 ) how can we assure that these new hires will benefit the economy rather than impede it ?

To these questions the Republican party, ever since the Bush ’43 years at least, has had one answer only : lower taxes for everyone. For most of us, so that we can spend more; for the top 1 %, because they are businesses owners, and the more money that business owners have, the more jobs they will create.

The first part of the GOP policy — lower taxes for most of us — did not work beause the added money in most of our pockets was far outstripped by the rush of income to the top 1 %, by price increases, and by credit card debt payments. The second part of the GOP policy was false to begin with. Businesses do NOT create more jobs because their owners have more money. They increase jobs because there is increased consumer demand for their products and services. If businesses see more money come in, while demand for their offerings barely grows, they put that money in the bank. They don’t invest it in new plant or research. They park it.

Today this huge accumulation of “parked money” — economists estimate it at FOUR TRILLION dollars (!) — overhsngs our economy like a mountain of tumors. And there it will stay, until the factor that totals TWO THIRDS of our entire economy — consumer spending — picks up significantly.

Parked money robs the economy in two ways. First, it does not spend and so generates no hires. second, it attracts money and financiers to its management : and reecently that has meant using parked money to speculate in trading markets, in search of arbitrage, the most useless of economic events. “Arbitrage” is simply the differences in the value of money in one place, or one time — or both — rather than another resulting from inefficiencies in communication. At the time of the Napoleonic wars — 200 years ago — when the Rothschilds first realized that profits could be made in arbitrage by acquiring information more rapidly than their trading rivals, arbitrage forced the world’s money markets to work together : out of which our present, world-wide economy has developed. Today, however, the inefficiencies that profit an arbitrageur are slight, and the huge amounts of money chasing them a damaging diversion from uses of money far better for the people who live in this arbitraged economy.

What is needed now are ( 1 ) to flow money back into the paychecks of consumers and ( 2 ) to tax the advantages of arbitrage so that investment of money now parked becomes more profitable than arbitraging it.

It really is that simple. We do the ( 1 ) by increasing the minimum wage so that full workers don’ need public assistance to make ends meet and can even earn enough to participate in the discretionary spending economy ; by banning so-called “payday loans” and other loan schemes that prey on the survival conditions in which many of us live; and by assuring workers paid sick leave and single-payer health insurance, so that most of us don’t have to stress over life situations that deflect our work vigor and enthusiasm. If we then do ( 2 ) , we make it clear to those with large money that it benefits them to invest it, not park it, and to hire — and pay decently — knowing that everyone who is hired can then become an effective consumer of what invested money produces.

The more of us who are able to consume effectively, the stronger the economy. One reason why this is so is that someone who earns 50 times as much as another doesn’t spend 50 times more money. He or she spends maybe 30 times more. The rest of the money is saved, either out of prudence or because after one has bought one’s luxury stuff there isn’t anything else to buy. For most of us, however, almost every dollar available needs be spent, on necessities and on things useful to a normal life, such as a smarter suit of clothes (so that one looks successful, which is often needed in the businesses world) or a newer car (which won;t need repair down time any time soon)>

The above is, more or less, the economic policy of today’s Democratic Party. Apologists for the GOP policy sometimes call Democratic economic policy “socialism.” It is nothing of the kind. It is simply smart commercial regulation, an application of capitalism to the real deal rather than to what isn’t real at all. Which is why we prefer it.

Not to mention that paying full time workers a decent and useable wage is the right thing to do.

—- Michael Freedberg / Here and Sphere

by hereandsphere

BOSTON POLICE PAY RAISE : THE CITY COUNCIL SETS A TRAP

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^ trapped — and not by a thing called love : Mayor-elect Marty Walsh

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At my first hearing of it, the Boston City Council’s unanimous 12-0 vote to grant a 25.4% pay raise to the Boston Police Patrolmen depressed me enormously. (The 13th vote, John Connolly, woiuld have been a No, but he is on vacation; he told the Boston Globe that he would have come back and cast his No vote if it was going to make a difference.) Why even HAVE a Council if it’s going to take a hike when the City’s funds are on the line ? 25.4% is DOUBLE the pay raise granted to almost every other of the City’s many employee unions.

Reasons for the vote were trotted out by Councillors trying not to look wind-twisted ; none makes any sense, including the Quinn Bill of 1998, by which the Patrolmen gave up certain pay raises in exchange for education-furthering bonuses. 1998 ? Really ? Come on, guys. Comic indeed was Councillor Pressley’s statement that she voted yes because she “didn’t want to begin a race to the bottom.” I don’t think it’s racing to the bottom to reject an award double that granted to other city unions. Pressley also praised “the huge sacrifices” that Patrolmen make to ensure citizen safety. Does she mean the “sacrifice” of doing public works details for which the Patrolmen get paid most generously, details that no other state requires be handled by uniformed police officers ? If you include those plum puddings, the average Boston patrolmen — as pointed out in Farah Stockman’s damning op-ed in the Boston Globe two days ago — grabs yearly pay of about $ 109,000 ! Many earn north of $ 175,000. Some scoop over $ 200,000.

These are scandalous numbers.

I am the last journalist to want public employees to earn skimp money — far from it — but Boston Police pay exceeds any argument of fairness or necessity. There has to be balance between city employees and city taxpayers — and as columnist Stockman also pointed out, most Patrolmen move out of the City as soon as their ten-year in-city obligation terminates, which means that most of them aren’t even city taxpayers — and a raise double that of other city employees is a ramp that will repercuss like crazy when the other city Unions come calling at contract renewal time.

My thinking had reached this point, when suddenly I realized that the Council had done something more portentous. They had laid a trap for the incoming Mayor, Marty Walsh. He cannot be pleased.

It is Walsh who will now have to decide how to adjust the Patrolmen’s huge pay raise to the City’s budget deficit. Walsh has said there may be layoffs. For a Union guy, that cannot be a happy message to send to his core supporters, many of whom are looking to be hired, not sent home

Next year the FireFighters of Local 718 will be coming to the table with their pay raise demand. Local 718 was the first city union to back Marty Walsh in his Mayor campaign. It was at Local 718’s request that he filed his now infamous House 2467 bill to strip City Councils of the power to review arbitrator awards — a bill that almost cost him the election. Walsh deferred whenever in the campaign he was asked about closing under-worked City fire-houses. His ducking this issue was noted by editorialists.

Walsh was already going to have a hard time negotiating Local 718’s next contract demand. By voting 12 to 0 to give a 25.5% pay raise to the patrolmen, the Council has boxed Walsh into a Local 718 corner he almost certainly cannot get free of. How can he not let Local 718 do its damnedest and thereby earn the dislike to City taxpayers ? How will he not paint himself forever as exactly “the Union guy” that people other than his core supporters saw him as ? Local 718 can, if it wants, save his ass. It will cost them pay to do it. Is that likely ?

I may of course be wrong. Walsh may find a way to wiggle free of Local 718. Even so, he cannot be happy wth the ugly leg trap that yesterday’s Council vote has placed in his path.

A foundation for the 2017 Mayor election is being laid now. Yesterday’s vote placed the cornerstone.

—- Michael Freedberg / Here and Sphere

by hereandsphere

#MAPOLI : BAKER TAKES A RIGHT TURN…AND OTHER VEERINGS

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the would be Governor stoops for a spot of Tea : Karyn Polito to be Charlie Baker;s running mate

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A number of high-visibility Massachusetts pols did the attention-getting unexpected today. Perhaps the biggest such event of the day, however, was not a happy move and had the feeling of a surrender  : Charlie Baker, who almost certainly will be the Republican nominee for Governor next year, anointed one Karyn Polito as his Lieutenant Governor sidekick.

Who IS Karyn Polito ? A former State Representative from Shrewsbury and the 2010 Republican candidate for Treasurer. And why her ? It is speculated that Baker chose her because ( 1 ) Baker lost women voters in the 2010 Governor election by 24 points and ( 2 ) she is popular with the Worcester County Tea folks. As I wrote three days ago, Polito recently spoke at an event on the South Shore at which the featured guest was one Allen West, a stridently contemptuous, Tea party favorite and one-term (defeated) Florida Congressman. Polito is said to have praised West in her own speech at that event. That would be reason enough to wonder why Baker would link his candidacy to Polito, who served as campaign chair for Michael Sullivan’s right-wing US Senator campaign earlier this year. Sullivan’s opposition to marriage equality (and of course to transgender civil rights) mirrored Polito’s own recent legislative record. (Baker’s campaign says tat Polito has since come around and now shares his views on social issues.)

All of this represents a huge shift for Baker, who in 2010 chose as his running mate Richard Tisei, an openly gay State Senator who vigorously supports lifestyle civil rights — indeed, he was the original legaislative sponsor of the transgender rights bill that was enacted as law last year. As it happens, Polito, too, has made her own huge shift. During the Romney years she was — like almost all Massachusetts Republicans — strongly pro-choice and supportive of marriage equality. Of course we all know what Mitt Romney did in the years since he left he Massachusetts governorship. Polito has simply followed his example, bowing her reformist record to the voices who want to repeal all reform.

Such is the politician whom Baker has chosen as his symbol this campaign cycle : a gravatar of reaction, a face of opposition to nearly everything the GOP has stood for in Massachusetts since it was founded. Well might I call the Baker-Polito ticket “anti-Republican.”

Baker had other options. He could have chosen State Representative Geoff Diehl, a social progressive who spearheads the “Tank the Gas Tax” movement. He might have gone really bold and picked Pamela Julian, leader of the League of Women Voters and a force in Boston. Elizabeth Childs of Brookline was a possibility. I would have preferred any of these.

Will this ticket likely succeed with Massachusetts voters ? As hardly anybody votes for a Lieutenant Governor, in the end it probably won’t matter to anyone who isn’t a political junkie. But it should. A successful candidacy gives the angry anti’s of the Tea party a credibility that right now they thankfully lack.

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^ John Connolly as WHAT ? Mayor Walsh’s new school superintendent ? Not damn likely

No sooner had I digested this swig of political castor oil than news came that, in an interview by radio host Jim Braude, Mayor-elect Marty Walsh said that he “absolutely do(es) not rule out asking John Connolly to be his new superintendent of schools.”

WTF ? Immediately came the waves of outcry from the teachers union activists, the Diane Ravitch groupies, and the opponents of charter schools and US Secretary of Education Arne Duncan. That was to be expected. But I too, a supporter of Connolly and his “school transformation” vision, found the suggestion a red herring — or maybe a sly nick. Connolly is screwed by this knee-chop remark no matter how he responds — IF he does respond. His best response being to not respond at all. Clearly John Connolly has a ton of career options better than the tainted biscuit that Walsh so suavely served up.

Whoever agrees to be Mayor Walsh’s superintendant of schools is bound to disappoint almost everyone : school parents wanting big reform, the Teachers Union opposing every reform except its own politically unlikely agenda, the administrators, principals, kids — you name it. Boston’s public schools need significant reconfiguration; almost any new superintendent won’t be able to get it done. Why should John Connolly descend into that vortex ?

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^ Guess who is heading to Israel as a guest of the ADL ? Yup, Council Felix G. Arroyo.

No sooner had I digested the Connolly suggestion than Councillor Felix G. Arroyo announced that he is visiting Israel next week as a guest of the Anti-Defamation League. This surprised me. Most politicians allied with the Labor Left — and Arroyo is definitely there — are supporters of the Palestinians, not the ADL. So what is up ? Politicians make trips to Israel when they have high officer in mind. Might Felix G. Arroyo be thinking of running for Lieutenant Governor ? It would make sense. He would enhance the Democratic ticket no matter which of the four likely hopefuls becomes the nominee. He’d be an inspired choice. Is Arroyo on it ?

—- Michael Freedberg / Here and Sphere

NOTE : this is article was updated December 5, 2013 at 8:00 am.

by hereandsphere

#MAGOV : THE FIGHT FOR CONTROL OF THE BAKER CAMPAIGN

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^ Charlie Baker 2013 : taking it to real people in the real world

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GOP Governor hopeful Charlie Baker tweeted at 9:55 AM this morning :

“Visiting the team at the Dimock Center to discuss health and social service issues with one of Boston’s top provider groups.”

With that tweet — the first, since the campaign began, that i have seen in which he addresses health issues, and in Boston, no less — Baker pretty much said to the GOP right-wing “Game On !”

Baker does face a fight from the Right. He faced one, as Governor nominee, in 2010 too : but then, the GOP had a Senator, Scott Brown, who wielded his power to tamp down that year’s  Tea candidate, with complete success. This time there is no Senator Scott Brown in office, and the GOP right-wing looks far stronger. Its candidate in the Special Senate election, Michael Sullivan, won 33 % of the vote in the GOP Primary. Today’s Right uses all the social media linkages. A new pressure group,” Mass Fiscal Alliance,” is importing the Cato Institute’s anti-social safety net propaganda — devious stuff — into the boil.  The Right has also spurred a ballot referendum called “Tank the Tax,” collecting well more than the 68,000-odd voter signatures needed to be printed on the 2014 state ballot. This effort expanded the right wing’s reach beyond the Michael Sullivan voters into the 15 % vote that libertarian-ish Dan Winslow won at that Senate primary and even into the 51 % garnered by non-ideological Gabriel Gomez.

Baker’s challenge has steepened in the past week thanks to two developments : ( a ) one Max Fisher, a Tea Party member from Worcester County — ground zero for right-wing doom-saying in Massachusetts — announced his candidacy for Governor and ( b ) Karyn Polito, also of Worcester County, and a former State Representative, announced her candidacy for Lieutenant Governor.  Fisher’s candidacy doesn’t scare a whole lot, but Polito’s does. She was a Sullivan supporter and — so reports today’s Boston Globe — spoke at a right-wing event honoring one Allen West, whom some may remember as an outspokenly hateful one-term Florida Congressman. West is a hero to the folks who sling the word “patriot” around as if mouthing a phrase with seven bleepable letters. That Polito would even be in the same county as such a man, much less speak in  his honor, casts a pall upon the GOP’s Governor prospects, already damaged in Massachusetts by the contemptuous 2012 Presidential campaign and all but poisoned by the recent government shut down.

Yet now, on the very morning of the Boston Globe article entitled “Running Mate Issue Gets Thornier for Baker,” Baker tweets about health care and social service ! It caught my attention, and it should catch yours. Either he sees Polito as his shield against the angry right, freeing him to discuss issues that matter to the vast majority of voters, or he is sending the right — and Polito — a message that he will not be intimidated, will in fact move aggressively away from right-ism and make IT his bogey man, as it already is for most Massachusetts voters.

We will soon find out which of the two courses Baker has chosen. Meanwhile, the fight is on, as anyone following Worcester County Tea-publican’s facebook threads and anti-Obama tempests should know.  The right has its guns locked and loaded, and how ! It is itching to win one… As accomodative Republicans mix on the same floor as power-groupies and the Right wing contempt machine, the Massaachusetts GOP convention of March 22nd should be a barn-burner.

It may come down to the supporters of state Representative Geoff Diehl, of Plymouth County. Though Diehl has got aboard the “Tank the Tax” referendum drive, to great effect, I sense that his instincts favor the reasonable side. He proclaims himself a “Charles Sumner Republican” in a context strongly advocat-ive of civil rights for all, including voting rights — the original GOP message. My guess is that at the Convention, Diehl’s supporters find an alternative Lieutenant Governor nominee to Polito; and by all means they go with Baker, not Max Fisher. The Republicans of Plymouth and Norfolk Counties are not Worcester Tea guns. My sense is that they congratulate Charlie Baker speaking to Boston area voters. I also sense that Baker sees these South Shore Republicans the same way that I do. Baker has tweeted his outreach to all voters, in social settings, as well as to business groups and innovators, who he addresses no differently from how Democrats Steve Grossman and Don Berwick speak.

We might even see more of Baker out and about in Boston. Meets and greets, perhaps. Wouldn’t that be something ? Baker of course wants to steer clear of the ballot referenda. He wants not to become the grinch of welfare “reform.” He does not want to be talking “2nd Amendment.” Would you ?

No, Baker wants to talk innovation, health care, empowerment for immigrants, school reform, the huge numbers of homeless that the State now houses;  transportation improvements — all the issues that matter to most Massachusetts voters. He wants to move Massachusetts forward, not backward. The question is, will be allow himself to do that ?

We will soon find out what Baker is thinking — I may well have it wrong. In any case, don’t count out Geoff Diehl. His is a name you’ll be hearing a lot more of.

—- Michael Freedberg / Here and Sphere

by hereandsphere

A BAD REFERENDUM — AND WE OPPOSE IT

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^ Geoff Diehl (R-Abington) : a good guy makes his pact with an unserious rant

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Massachusetts voters going to the polls next November face at least two referendum questions. One, we support : raising the minimum wage to $ 11.00 an hour. we have already editorialized our reasons for casting a “yes’ on this referendum. The  proposal, we strongly dislike. This one seeks to cancel the three percent gas tax hike enacted earlier this year, by which our state will fund all sorts of needed road and public transit repair and upgrades.

That “Transpo Bill,” as it has come to be known, has already taken one hit : repeal of the software tax included in the original enactment. We agreed that taxing technology was a wrong idea. Technology should be encouraged and aided, not nicked. It is different with the gas tax. Driving wears and tears our roads and bridges; their upkeep is a public charge –and we make it so because driving keeps the economy moving, pun intended — and thus the gas tax.

The same people who initiated the software tax repeal now initiate the gas tax repeal. This time, their motives are suspect. From what they say at facebook and on twitter, they appear to oppose all public spending, or to view it suspiciously, as if public spending were a kind of con man come to scam us. Many of these opponents are Tea sorts, who view public spending as extortion money paid to “moochers” and “illeagl aliens.” We’ve already seen their impact upon the EBT program, a food-buying fund by which those living on the margins try to survive.

A referendum that begins with this mindset is tainted ab initio. By two arguments, its sponsors seek to justify it. We reject both :

1. they tell us that gas tax revenue is often spent by the state on programs other than road and bridge repair and transit upgrades. True enough, but so what ? This happens because the anti-public spending crowd denies the state funds that it needs for those other programs, many of them immediate, such as policing, courts, and administration, to pay for which the State’s Commissioner of Administration and Finance simply decides to defer road and transit work. Denying the State new gas tax revenue is going to worsen this situation, not improve it.

2. they say that pegging gas tax increases to the cost of living index is “taxation without representation.” Representaive Geoff Diehl (R-Abington), one of the repeal referendum’s leaders, and usually one of the really good guys, actually tweeted last night that every single “COLA” hike, every year, should be voted on by the legislature !

Keep in mind that the gas tax hike itself is three percent. On a 20-gallon fill-up at current gas prices — about $ 3.35 a gallon — that’s a tax of $ 2.01 per fill up. the usual “COLA” hike these days runs about two percent. two percent of $ 2.01 = $ 0.04 ! For four cents a fill up we’re to call the legislature into session to vote ?

The entire argument crashes and burns. We already peg our sales tax to prices; and prices go up, automatically, without the legislature voting. That the gas tax hike takes effect without a legislative vote is simply to tie it to the price of gas. Otherwise the gas tax hike would be assessed upon gas only at the price of gas on the day the tax hike took effect.

The referendum proponents already know this. They know the whole flap is a nullity. Its  REAL purpose is to raise the hue and cry against “moochers” and “illegal aliens,” anti-spenders’ favorite scapegoats, and thus to help elect no-spending legislators in Districts outside the Boston media zone, within which the unseriousness of this device would be fully and quickly debunked.

Someday, if and when the no-spending crowd actually adduces a serious reason — and attacks upon its scapegoats’ desperate lives is both flip and despicable — for why they oppose taxes to fund State spending, we will listen respectfully to their arguments and maybe even agree. I’m not holding my breath.

—- Michael Freedberg / Here and Sphere