I’ll will be on WBAI-FM today (Pacifica Radio) with Susan Lee from 10:30 to 11:00 AM EDT today. You can listen to the live stream at http://stream.wbai.org/
As a result of my breaking my Linda Evangelista rule (and having two TV gigs yesterday and getting some mixed factual readings on a post underway), I’m a bit thin on long posts. Back to regular programming later today.
Body parts found in shark ‘belong to missing sailor’ BBC. Eeew
New study finds public workers earn less than private sector workers, even factoring in benefits PhysOrg
NYC Tornado Barry Ritholtz. My usual weather/disaster karma: I was having a drink with my agent, heard a bit of thunder, and when left, the rain was over. I had no inking of what had happened until I saw the news.
Jimmy Carter: Ted Kennedy killed health reform Raw Story
US turns up heat over renminbi Financial Times
Why Getting Tough With China Won’t Solve Our Jobs Problem Robert Reich
California home sales down 14% from last year: DataQuick Housing Wire
Bernanke Shadow of Easing Limits BOJ Success With Yen Weakness Bloomberg
Elizabeth Warren To Lead Search For New Consumer Chief, Could ‘Pull A Dick Cheney’ Shahien Nasiripour, Huffington Post. If she allegedly can’t get confirmed because she’s too anti-bank, how can anyone who’d be an effective consumer advocate be confirmed? And if she can’t get confirmed now, how could she be confirmed in a “Dick Cheney” scenario after expected Democratic congressional losses in the mid-terms? This just looks like more spin. And how effective can she be as an acting chief with a nominee for the permanent job expected soon?
Automatic stabilisers and the economic crisis in Europe and the US Mathias Dolls, Clemens Fuest, and Andreas Peichl, VoxEu
China Is Set to Lose 2% of GDP Cleaning Up Decades of Pollution Bloomberg
A Baby Step Toward Rules On Bank Risk Floyd Norris, New York Times
The Tax-Cut Racket Paul Krugman, New York Times
Taking on Trickle-Down Economics: The Public Rejects Conservative Tax Cuts as a Means of Economic Stimulus Firedoglake
US workers’ poverty reaches 50-year high Financial Times
Antidote du jour:
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Off Topic: Here is one for all you long suffering gold bugs
“Greenspan’s Warning on Gold”
Alan Greenspan spoke at the Council on Foreign Relations earlier today, and what was his advice? That central bankers should be doing what these columns, among others, have been rattling on about, namely that they should be paying attention to gold. “Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs.”
“Mr. Greenspan replied that he’d thought a lot about gold prices over the years and decided the supply and demand explanations treating gold like other commodities “simply don’t pan out,” as Mr. Malpass characterized Mr. Greenspan. “He’d concluded that gold is simply different,” Mr. Malpass wrote. At one point Mr. Greenspan spoke of how, during World War II, the Allies going into North Africa found gold was insisted on in the payment of bribes.* Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.””
Uhhh…I think the CBs are paying attention now, Alan!
Remainder of article at… http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/
Re Warren:
Simon Johnson hacked up the same bizarre argument for how things will be better for the mythical Democratic “progressivism” once more Republicans are in.
http://baselinescenario.com/2010/09/16/elizabeth-warren-the-right-appointment-at-the-right-time/
Re public workers earn less even counting benefits:
Given our Enlightenment polity (including the postulates of Chicago economics regarding how rational we all are), I’m sure this new evidence will propagate easily and bring great changes in the political mindset.
Re NYC tornado:
This made me recall how, according to Mike Davis’ Ecology of Fear, there’s been a long-standing conspiracy among the Los Angeles media, going back to the 20s, to suppress reportage of the frequent, and frequently very damaging, tornadoes which afflict the LA region. The word “tornado” was forbidden; euphemisms like “wind” and “waterspout” would be substituted.
So I went and checked the NYT. It looks like they are calling it a tornado. So they must not have as much experience with spinning this stuff as LA does. But climate change will give them plenty of practice.
Off topic, but I couldn’t respond before on the subject “Methinks the Lady Doth Protest too much”.
I think it is extremely important to remember where this quotation comes from, and how it speaks to our minds in ways that we may not necessarily be conscious of…
This quotation comes from “Othello”, and it is IAGO who says it, in not just any situation.
He is attempting to destroy faith between Othello and Desdemona by planting doubt in Othello’s mind. (That he succeeds is the consummate tragedy of the play.)
Destroying faith is the very essence of perversion. (I don’t like psychiatric/psychological jargon on this question.)
WHEN we put Iago’s words into OUR MOUTHS… we are putting on Iago’s… face at the same time. In the minds of the people who hear us.
I really do not think that we want to be.. destroying faith at this time.
We are already well advanced in our collective attempts to destroy faith in our social fabric.
Do we really want to continue on this course of taking the ship down ??
The (mis)quote comes from Hamlet, not Othello.
The quote is actually “The lady protests too much, methinks.”
Thanks for the correction, propertius.
Can you tell me who says this, and where in the play, since you know the quote ? Thanks.
re: public worker pay
Disingenious article.
Historically, greater job security equals lower pay. So after equilibrating salary, time off, pensions and benefits, workers in government, banking, insurance, etc have earned @10% less than equal job private sector. That’s the security premium.
Interesting how folks who deal with risk pricing in the financial sector seem to be unable to do so in this arena.
Thus the authors conclusion that public workers are 2-3 % underpaid in reality means they are 7-8 % OVERPAID. The author has made the case for the opposition.
Well put!
I was going to make the same basic points about earnings vs. risk but after your post it would be redundant.
Talk to people you know who work in the public sector and they’ll often unabashedly tell you that they sacrificed some compensation for greater security. There’s nothing wrong with that, but people doing studies which overlook that point is disingenuous at best.
Interesting the 10% difference.
Does it mean, roughly speaking of course, that for an average worker working 40 years (say from 20 y.o. to 60 y.o.), he or she is expected to be out of work, involuntarily, for about 4 years?
No. If that was the case then insurance companies couldn’t make money. There’s a big difference between being unemployed for 5.2 weeks every year and being unemployed for one unpredictable 4 yr period over 40 years. The former is a nuisance and the latter a catastrophe.
Indeed, that’s one issue. Another is that while the study attempted to drill down, it didn’t drill down far enough. It compared number of years experience (well, it seems to have used age for a proxy there) and education level, but it does not look at the areas of study of those degrees. Particularly in state government, there is a bloat in the number of administrative positions, which often include people who obtained masters in education or similar fields whose programs of study were funded by the employers (and whose degrees are relatively worthless to other employers). I also note that the study didn’t attempt to look at hours worked or productivity, which would also be good measures of whether one job was better or more poorly compensated than another.
The article on public employee compensation does not reflect what I see here on the ground in California. When I look at the total lifetime compensation divided by total lifetime hours worked of my friends with public sector jobs they come out ahead by a factor of two, even when adjusting for education and age. Remember that public employees are retiring at age 55, sometimes 50, with pensions worth anywhere from 60 to 90 percent of their final year salaries. When the true private market value of their inflation protected defined benefit pension, health benefits, vacation time, leave time, etc.. is factored into their total compensation per hour worked the public-private market wage gap is enormous.
It was not clear in the article how the value of the pensions were calculated. Simply looking at what a state agency reports as the employee/employer contribution to the pension is very misleading as this does not at all reflect the future value of a state guaranteed, inflation protected, defined benefit pension. One should be valuing these pension by comparing them to what a private sector inflation protected annuity would cost of the day of retirement. In California, public employees retiring this year with pensions worth about 6K per month. At age 55 an annuity with that monthly payout, with inflation protection and survivor benefits, would cost me TWO MILLION dollars. I do not know many average private sector workers, even those working for large corporations, who have a 401K worth two million dollars or anywhere near that. So when the authors of this article claim that benefits are roughly equivalent between public and private workers they are simply way off base. And I could go on and add in retiree health benefits which again is not reflected in the public employees benefit compensation as these are largely unfunded liabilities.
The state and local politicians have been completely captured by the public unions. This is very similar in to the capture of national politicians by Wall Street and big business. The end result is the same. A large transfer of wealth from the most productive members of society to the most politically connected.
Indeed, I really wanted to dig into the #s but there aren’t any in the report. Just their final results.
My mother works for the local government. They all seem to make out like bandits while doing little to no work. In my own town they are cutting school programs while many of the school administrators are making $200k+ and employing their family members as $100k secretaries. They’ve all got degrees, but I can’t tell for the life of me what they actually accomplish other then playing politics 24/7. I suppose if you compare that to a wall street bank its not bad, but people trying to support a family on $50k don’t seem to appreciate where their tax dollars are going.
Yes! Waste! Waste! Waste!
[Never mind that the vast, vast, vast majority of your taxes go to everything *except* public sector salaries. Look at a budget sometime. Keep your eye on the ball, not your neighbor’s salary.]
Not true at the state or local level. The majority of the budget goes to salaries and pensions.
The military takes up a big chunk. Since Obama expanded the military budget, still has troops in Iraq, and escalated the war in Afghanistan that is his fault.
The other big parts are SS and Medicare. Programs I will pay into but never receive. I watch SS in action every time I go the the 7/11 down the corner and the seniors from the nearby old folks home are buying $20 scratch offs with my money.
According to Barry Ritholtz over at The Big Picture, the taxpayers dumped $15 trillion into bailing out Wall St and the TBTF banks:
http://www.ritholtz.com/blog/2009/06/bailout-costs-vs-big-historical-events/
The Masters Of the Universe on Wall St have the local government unions beat big time for sucking at the public teat. Plus, the MOTU have wrecked my home value, 401K, and pension. If I have to decide between having local cops, fire fighters, and teachers vs. Wall St, I’ll take the local guys every time.
So Reich does not want to do anything about the exchange rate while at the same time increase US wages. What a genius! What a labor secretary! What a professor of public policy!
Yves, the WBAI show was great!
What is this new public sector vs. private sector article? How many times do we have to put up with these lies?
The lies keep folks from seeing that the rich are the ones behind the curtain pulling the strings.
Let the middle class public sector battle the middle class private sector, and let the middle-middle class hate the upper-middle class…sorry, the rich.
Even if it was true that public sector workers were treated better, it would just be because the private sector treats its workers worse. Rather than take up arms against the government to drag your fellow workers down to your level, why not go after the real villains, your employers? Who after all are the sponsors of all this politics of envy propaganda.
(and how ironic that it’s Republicans who cry about the “politics of envy!” They’re projecting again)
Because the compensation of private sector workers is a function of taxes. Lower taxes mean higher take home pay. Therefore lower public sector wages would mean a pay increase for the private sector.
The economy as a teeter-totter, eh?
RE: Reich
Krugman made the point already that if we were to engage in a trade battle with China, result in the mass selling of treasuries, The Fed could be tasked with buying them all up.
We have to do something. Nobody said it was going to be pleasant, but it would be one piece of the puzzle that would make us wealthier as a nation.
Carter reminds everyone what thugs the Kennedys were. Good for him.
I’m a dog -doing what dogs do.
Agreed! it was grreat, Yves. You can listen to it archived at wbai here
Yves,
will you advertise Jon Stewart and Stephen Colbert’s march on Washington?
This is my comment at Salon, where this article by Robert Reich on China is posted.
==
Prof. Reich, I admire your insights in many areas, but I have noticed you do not often mention trade or China when discussing what ails us.
In this article you do explore these topics, and I regret to say you show a lack of knowledge that undermines your opinions.
First you admit that if the Chinese let their currency rise, it would help our trade imbalance. But it’s not the trade imbalance which is critical. It is JOBS. Apologists for ‘free trade’ with China never mention one critical fact: since China joined the WTO, bringing down trade barriers and allowing American manufacturers to outsource jobs, we have lost 40% of our manufacturing jobs.
The blunt truth is, you can’t care about the American middle class or our jobs crisis, and oppose ending our ridiculous tolerance of mercantilism and currency pegs from the Chinese. Trade with China has led to the closing of tens of thousands of American factories nationwide, in just the last nine years.
You say we can’t impose tariffs because they might retaliate: “Remember, China is the biggest foreign investor in U.S. Treasury securities, with holdings of more than $843 billion. If China were to start selling off large amounts, America’s borrowing costs would soar – and we’d end up worse off.”
This is ridiculous! Anyone who follows this issue knows the following two points:
1. The Chinese have already quit buying Treasuries, and it didn’t impact our interest rates at all. In fact, they still going down.
2. The Chinese ‘gun’ (their huge Treasury holdings) is pointed at their own head. If they dump them, the dollar plunges, and their remaining investment plunges in value. They aren’t stupid – that is why they are trying to diversify, by buying yen. That is a recent kerfuffle with the Japanese – who have more spine than we do, because they are now intervening to drive their currency down.
Is it possible you are writing about this topic and you don’t know these points above? I’m astonished.
The factories which leave China will not simply go elsewhere in Asia. China is uniquely advantageous with its infrastructure and large market.
You use the argument that other countries are trying to obtain jobs for their workers with exports – as an argument that we should do nothing! What sense does that make?
Finally, you argue that all we need to do is address our low wages and income inequality and forget about China. But that is nonsense. You don’t create strong economies with unemployment insurance and ‘retraining’. You need a jobs base! If you outsource the jobs base, you outsource the basis of addressing low wages and inequality. I find it hard to imagine that you actually don’t know that the jobs that replace the ones we lose have lower wages. In other words, the policy you advocate – not confronting China about currency and mercantilism – actually is a major cause of the inequality and low wages you decry.
Are you soft on trade and China because you were part of the Clinton Administration, that foisted this ‘free trade’ regime on the American people? It could be, since otherwise your opinions don’t make sense.
A couple more interesting articles:
The Financial Crisis Credit Freeze Never Happened, And TARP Accounting Was A Lie:
http://www.businessinsider.com/the-2008-credit-freeze-never-happened-and-tarp-accounting-was-a-lie-2010-9
What happened to US interbank lending in the financial crisis?
http://www.voxeu.org/index.php?q=node/4941
Once again, bailing out failed companies is a BIG, BIG mistake or Secretary Paulson (assisted by Bernanke) is the ultimate rainmaker for crony capitalism.
I enjoyed seeing these two articles cited together:
New study finds public workers earn less than private sector workers, even factoring in benefits PhysOrg
US workers’ poverty reaches 50-year high Financial Times
The HRP-4 humanoid robot probably can’t play hopscotch, yet.
http://www.youtube.com/watch?v=uoSuETw68zc
I fight against the propaganda of progress, and this propaganda bears the name of never-ending acceleration.
…
Why do animals have eyes on the side? There are very few that have eyes in the front like us. It’s because real danger comes from the side or from behind. Speed flattens the vision, like a screen.
…
Do you see the perversity we live in? It’s not a plot against humanity—it’s more complicated—but the result is the same.
Interview with Paul Virilio by Caroline Dumoucel, translated by Pauline Eiferman
http://www.viceland.com/int/v17n9/htdocs/paul-virilio-506.php?page=1
Here you’ll find a longish podcast (nearly two hours) that includes a very professional reading of Bruce Stirling’s story called “Kiosk” about some guy’s relationship to social and physical technologies in a near future.
http://www.starshipsofa.com/20100113/aural-delights-no-116-bruce-sterling/