Friday, March 1, 2013

Dorian Warren: Criminals, Conservatives, and Oligarchs Are Deepening Inequality | Next New Deal

Dorian Warren: Criminals, Conservatives, and Oligarchs Are Deepening Inequality | Next New Deal

On the first point, Dorian notes the recent Wal Mart bribery scandal and says that when you think of "the lawlessness of Wal Mart when it comes to unionization, I think that's a great example to think about the other ways in which employers have pretty flagrantly violated the law in the last 20 years or so. So when you think about minimum wage, when you think about health and safety, we're in a new environment, and activists who work on this call this 'wage theft.'" He highlights some shocking statistics from a 2009 study that shows how badly low-income workers have been ripped off by their employers and points out that there is a "basic principle of the social contract that when you work at a job you have an agreement with the employer for how much you're going to make... There is a pretty systematic violation of that contract, and that explains at least part of the wage stagnation that we've seen in the low-wage service sector specifically." While updating and modernizing labor laws is important, "monitoring and enforcement of existing wage and hour laws are really important."

Weak I-O policing causes an Iv-B and V-Bi disconnect, Iv employers rip off B workers to survive, those that don't can go broke in a Gresham's dynamic. B workers can also rip off iv employers, leaving them for other employers, stealing, working unreliably when not watched, etc. A social contract needs to be enforced, usually it is Iv agents versus Bi communities making stable contracts. When Iv-B tries to make contracts it is like in a poker game with bluffs on both sides, they are unlikely to be done honestly. 
Where race is concerned, Dorian argues that while it doesn't explain the rise of inequality by itself, "there is a story where race does play a role, and it's a political story." He points out that "for 80 percent of our country's history, the majority of Americans weren't classified as citizens," and that Lyndon Johnson's signing of the Civli Rights Act caused an exodus of white southerners from the Democratic Party to the GOP. He says that "there is a difference between Republican administrations and Democratic administrations, but how you get to a Republic administration has to be part of that story, and that's very much about race and the response of southern whites to greater inclusion into American democracy." This racial backlash in turn helps to shape the policies that further inequality

Viable Opposition: "JOLT"ing America Back to Work

Lastly, how about manufacturing?

While things have picked up significantly since the bottomless pit of the Great Recession, openings in April 2012 dropped to 246,000, down 20 percent from the previous month where openings hit a post-recession high of 308,000.  Keep in mind that we must keep this data in perspective; looking back to the early part of the millennium, manufacturing job openings exceeded 440,000 when this data was first recorded.

Actually, this graph may help explain some of the issues facing those who manufacture things for a career:

Apparently, America just doesn't make things any more, either that, or it takes a whole lot less Americans to make what we actually do consume.

This illustrates how manufacturing job losses have led to higher unemployment since the GFC, with a limited number of these compared to demand of these goods they have gone to cheaper wage countries. The argument is usually that if jobs go to countries better specialized for them then everyone benefits, however in Aperiomics this is only true for Biv countries in a positive sum game. When resources are scarce a job lost to another country may be a Roy negative sum game where that country minimizes their losses, other consumers might minimize their costs by buying cheaper goods from them. However this can now be at the expense of the original workers who don't just fail to make as a high a profit, they can experience losses such as losing their homes over this. For example in a Biv country if someone else gets a job instead of a person then that person can usually get a job somewhere else, this can then be a process where people work where they are most skilled with Pareto optimization. In a Roy country if a person misses out on a job there might not be another one so they might starve or lose their home. This can also be regarded as Pareto optimal, that those best suited to survive do so while others perish. This can then be a version of Darwinism or survival of the fittest. In a wealthy country most survive so the fittest tend to become more wealthy than those less fit, not perish. So in a Roy recession or quasi depression the strategies are different, the government needs to minimize losses to return to Biv prosperity. Letting people go bankrupt or starve is very wasteful as is a Roy economy that used to be Biv. For example in the Great Depression many assets and skills became nearly worthless and so people lost their savings and skills looking for work. When the Great Depression ended then these skills and assets were still degraded when they would have been better off preserved. This is then like a Biv forest going through a drought, plants get damaged by exposure to the elements as the big plants die or get knocked over by Roy animals. The ecosystem can be badly damaged even if it rains next year, the forest might take a long time to regrow and even permanently lose some plants and animals. 

Was the decline of American unions inevitable? Not if you ask Canada.

Was the decline of American unions inevitable? Not if you ask Canada.

Since the 1960s, organized labor in the United States has been steadily decaying. A half-century ago, 30 percent of American workers were members in a union. By last year, that had shriveled to 11.8 percent. Economists have offered up all sorts of theories for the drop, from the shrinking manufacturing workforce to foreign competition that has made U.S. companies more hostile toward unions.

Canada has a more balanced Biv economy, the workers can remain more as Bi instead of fragmenting to B. The US weakened their I-O regulators more which causes more Iv-B business breaking up Bi unions.

An increasingly rare sight.
But a new paper (pdf) from Kris Warner of the Center on Economic and Policy Research suggests that the decline in U.S. labor unions wasn’t simply due to inexorable economic forces. Government policies likely played a big role too. And the easiest way to see this, Warner argues, is by comparing unionization rates in the United States to rates in nearby Canada, “the country that is probably more like the U.S. than any other – economically, socially, and politically.”

Thursday, February 28, 2013

As Common As Dirt

As Common As Dirt

The case alleges that while Gomez and Villalobos picked onions across the Coachella and Central valleys in California, the contractors routinely altered payment documents to undercount hours worked; failed to pay the state’s minimum wage of $8 an hour or overtime; failed to provide safe or sanitary working conditions; and housed the workers in unsafe and unsanitary living quarters. Significantly, Calandri/SonRise Farms was also named as a defendant in the suit, meaning it was not absolved of responsibility because it had outsourced its harvesting work.

Clandri acts as V using Iv agents to distance itself from deceptions. Often B workers are used who are also secretive and deceptive, here they can be undocumented workers. Sometimes they can come together as a Bi team to balance the Iv tactics like a union trying to form. If not then this Iv-B interaction continues to evade the I-O police. 


Compared with other recent tales of American farmworkers, Villalobos and Gomez might consider themselves lucky. In Florida, tomato pickers have been locked in box trucks under the watch of armed guards; in North Carolina, pregnant workers have been exposed to pesticides during harvest and birthed babies with missing limbs; in Michigan, children as young as six have been found laboring in blueberry groves.

If they become common enough then like a contagion they attract the attention of the I-O market and police, the Bi community sees this and demands action.

Those are marquee cases that garner national media, shining the spotlight on the most egregious abuses. In relative terms, suits like Villalobos are mundane, but they are also ubiquitous, filed with a frequency that suggests the most pervasive and insidious abuse faced by farmworkers is the kind Villalobos encountered: the blatant disregard of labor laws governing wages, safety, and health. This type of abuse is most typically seen in fields managed not by farmers but by farm-labor contractors, many of whom started out as farmworkers themselves.

The laws can be ignored because Iv-B has both sides being secretive and deceptive, also highly competitive where people can be fired giving others an opportunity. 
Known in some circles as “custom harvesters,” farm-labor contractors offer produce growers a ready workforce, but they also give these growers the ability to distance themselves from the people who pick their crops. These contractors control the flow of money between farmer and worker as well as all the paperwork. They track hours worked, crops harvested, and wages paid and take responsibility for everything related to labor, from verifying immigration status to providing workers’ compensation. Contractors can be found in the fields of nearly every handpicked crop in the United States, organic or conventional: green beans in Florida, grapefruit in Texas, peppers in Georgia, greens in Colorado, and garlic in California.
Farm-labor contractors give American produce growers what companies like China’s Foxconn offer to Apple: a way to outsource a costly and complicated part of the business, often saving money in the process and creating a firewall between the brand and the working conditions under which its products are made.

The firewall is often secrecy and deception from transparent V-Bi.

Chart Of The Day: The "New Normal" Trade Off - Debt vs Jobs | ZeroHedge

Chart Of The Day: The "New Normal" Trade Off - Debt vs Jobs | ZeroHedge

In the last few weeks much has been said about how the US economy, after nearly collapsing in the Lehman aftermath has staged a gradual, if painful and very slow improvement in the last 3 years. Sure enough, After jobs peaked at an all time high of 138 million in January 2008, they then tumbled to a depression low of 129.2 million in February 2010 and beginning in September 2010 have posted 24 consecutive months of growth, rising to 133.5 million last month: a 4.25 million trough to, so far, peak.  Not bad.
What, however, has received very little discussion by either presidential candidate, primarily because it is largely a byproduct of both Republican and Democratic policy and action, is what can be seen on the chart below courtesy of Diapason Securities, or the cost of said recovery - namely the New Normal angle of debt increase, which from merely steep, has mutated into beyond acute.
What is worse, is that instead of a mere one-time bump in the rate of public debt accumulation, as has happened in days past, the New post-Lehman Normal has shifted the entire curve steeper by a factor of two!

This can be a zombie economy, Iv-B businesses were like the roots and branches of trees that grew very finely in the Great Moderation. Now to regrow them from the stumps of their ruins gives businesses which much less leverage. Because of this it costs much more to make jobs, the problem is the velocity of money is low and so more money is needed. Also there are areas between formerly networked businesses that are now stagnant, businesses are no longer country wide or global as much and so cannot be a specialized.
What one can also see is that the public cost of "normalization", aka the Trade Off of the new normal is an additional $4.25 trilion in debt over and above where the previous historic trendline would put total US debt, just under $12 trillion. Instead total debt is now $16.2 trillion. Oddly enough, this translates to precisely $1,000,000 per job gained or saved from the first (and certainly not last) post-crisis trough: yet another fact that will not be mentioned in either the mainstream press or any presidential debate, as sadly trading off record amounts of public debt for new jobs is the only game left in town for either party. 

Sober Look: 55 straight months of job cuts in Spain's service sector

Sober Look: 55 straight months of job cuts in Spain's service sector

With Spain's recession deepening, the nation's service sector continues to struggle. Service industries such as hotels and restaurants are caught between rising input costs and falling output prices, as margins become compressed.
Markit: - The Spanish service sector ended the third quarter of 2012 deep in contraction territory. Moreover, September data signalled faster reductions in both activity and new orders as the economic crisis in Spain continued.Higher fuel costs contributed to an acceleration in input price inflation to its fastest since July 2011. On the other hand, companies continued to lower their output prices, despite a rise in the rate of VAT limiting the extent to which they were able to do this.

This can be an Iv-B economy based on credit, people in a bubble invested in Spanish real estate and unless the bubble reinflates this part of the market cannot regrow. A collapse without a potential for regrowth can be like a damaged building partially collapsing, then there are further collapses as parts of it give way later. It can also be like a plant that collapses partially in a storm so it is no longer viable, it then slowly dies as reserves are used up causing more collapses. In this case the V-Bi savings of people and the government might be used up waiting for a revival where there is no market. it is like a zombie economy or a patient on life support that cannot revive, resources are waste din keeping parts of the body alive though it does not have enough connections to move and sustain itself. In Aperiomics the economy needs to be analyzed not just with V-Bi statistics that only measure the stagnant or stable parts of an economy not the growing areas. the roots and branches of the economy need to be analyzed, a representative sample of these workers would be selected and then what business they connect to. Then the business those people connect to until long chains of business are mapped out to see if there are any breakages. If these weak links can be fixed then the Iv-B parts might revive, otherwise resources will just be wasted in keeping disconnected areas on welfare. Eventually this can lead to complete collapse into Roy as debts mount until they cannot be paid.

Source: Markit

Driven by sharp declines in demand, employment is Spain's services sector has been hit especially hard. This is the 55th straight month of service jobs losses.
Markit: - With workloads falling, service providers lowered their employment accordingly, extending the current sequence of job cuts to 55 months. The sharpest reduction in staffing levels was at Renting & Business Activities companies, while Hotels & Restaurants was the only sector to take on extra staff.

A period of unemployment greatly increases the odds that a worker and members of the worker's
family will be counted among the nation's poor. For example, among persons between the ages of
16 and 64 who were unemployed in early 2010, nearly one in four (24.1%) were poor based on
their families' incomes in 2009; among those who were employed, 6.7% were poor.

B workers can have a collapse in resources when unemployed, for example they might have to sell assets at a fraction of their worth or become ill from it.

A variety of social insurance benefits may be available for unemployed workers. The benefits
analyzed in this report can be generically grouped into the category of Unemployment Insurance
(UI) benefits. UI benefits provide a cash supplement to replace a portion of lost wages to
qualified unemployed individuals. Two main objectives of the joint federal-state unemployment
insurance program are to provide temporary and partial wage replacement to involuntarily
unemployed workers and to stabilize the economy during recessions.

this is Bi and adds insurance to quench chaos, for example someone unemployed can hold onto their assets or sell them more slowly getting more money from them. They also have the time to retrain and look for work, unemployment can cause people to become weak from lack of food or living homeless and become less employable.The floor here then can be R poverty or nomadic life as homeless or living in a  car.

As a temporary, partial replacement of lost earnings due to job loss, the benefits workers receive
may help to prevent them and their family members from reaching poverty, an ancillary but
important role of the program. Unemployment benefits are an individual worker's entitlement (as
long as that worker meets the criteria for the benefit) and are not means tested.
 In this regard, the
UI program, while not a poverty program per se, can play an important role in reducing poverty
associated with job loss.
Additionally, as a countercyclical program UI has a macroeconomic effect in reducing poverty.
By injecting dollars into the economy directed toward those who have experienced job loss, UI
helps to partially mitigate income loss among a group directly affected by economic downturn,
and it thereby temporarily augments the ability of unemployed workers to meet basic needs,
which further stimulates the economy. In this regard, the macroeconomic effect of UI helps
dampen the tendency for poverty to increase during periods of economic downturn.

It can act as a stimulus but runs the risk of people adapting as R or B to this money, learning how to get it instead of how to find work. This is like Iv-B weeds adapting to sprinklers used in a drought so they can no longer survive with normal rainfall patterns.