Friday, April 30, 2010

Not All Jobs Are Created Equal: Why Wall Street's Gain Has Been America's Loss

Arianna Huffington

Posted: April 26, 2010 09:11 PM

Jobs -- everybody is in such total agreement that we need more of them that the word is in danger of becoming meaningless, of going from tangible policy to talking point. In Washington, saying you're for jobs has become just another obligatory, perfunctory throat-clearing preamble.
At a fundraiser last week, Joe Biden pledged, "Some time in the next couple of months we're going to be creating between 250,000 jobs a month and 500,000 jobs a month."

That sounds great, if it's true -- a very big "if." But, even if it is true, the vice president didn't say what kind of jobs these are. And make no mistake: not all jobs are created equal.
Since the recession began in late 2007, we've lost 8.4 million jobs. Over 2 million of those were manufacturing jobs, the kind of jobs that have traditionally delivered American families into the middle class -- and kept them there. We lost 1.2 million manufacturing jobs in 2009 alone. And while job numbers go up and down, the loss of these blue-collar jobs has been going on for decades.
In 1950, manufacturing accounted for more than 30 percent of non-farm employment. As of last year, it's down to 10 percent. Indeed, one-third of all our manufacturing jobs have disappeared since 2000. This devastating downward trend has contributed greatly to the erosion of the middle class.
There have been a number of recessions over the last few decades. And our economy rebounded after each one. But each time it has bounced back in a way that made it harder for those in the middle class to stay there -- and even harder for those aspiring to become middle class to get there.
Yet the way that the useful section of our economy is being replaced by the useless section of our economy is rarely talked about in Washington. But the numbers don't lie: the share of our economy devoted to making things of value is shrinking, while the share devoted to valuing made up things (credit swap derivatives, anyone?) is expanding. It's the financialization of our economy, and its symptoms were described by Andrew Ross Sorkin on Charlie Rose last week:
When you think about what a synthetic CDO is -- [as with] so many of these instruments on Wall Street, it's really just a casino, there is no underlying assets, they don't actually own these mortgages, people aren't getting mortgages because of this... What is the social utility of that?
According to Thomas Philippon, professor at NYU's Stern School of Business, in 1947, the financial industry made up 2.5 percent of America's GDP. By 1970, it had grown to 4 percent. By 2006, just before the meltdown, it was 8.3 percent.
The trend is even starker when you look at the financial sector's share of U.S. business profits. As Simon Johnson recounted last year in The Atlantic, between 1973 and 1985, the financial industry's share of domestic corporate profits topped out at 16 percent. In the 1990s it spanned between 21 percent and 30 percent. Just before the financial crisis hit, it stood at 41 percent.
That's right -- over 40 percent of the profits of the entire U.S. corporate sector went to the financial industry. James Kwak explains why this is a problem:
Remember that financial services are an intermediate product -- that is, we don't eat them, or live in them, or put them on in the morning. They are supposed to enable a more efficient allocation of capital, so that the nonfinancial economy is more productive. But what we saw since the 1980s was the unmooring of the financial sector from the rest of the economy.
In other words -- it's supposed to serve our economy, not become our economy.
The expansion of the financial industry has come at a significant cost to the rest of us. And those that have paid the highest price are the members -- and former members -- of America's middle class.
As Paul Krugman put it this weekend: "A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won't make Wall Street happy, but what's bad for Wall Street would be good for America."
One out of every six blue-collar workers has lost his or her job in the latest recession -- a number commensurate to what happened during the Great Depression. According to Professor Andrew Sum, "Our ability to maintain a healthy middle class is very dependent on being able to get a lot of these individuals back into the workplace and back into jobs to keep the rest of the economy going."
"There are very high multiplier effects from many manufacturing activities," says Sum. "So the loss of jobs spills over into the rest of the economy."
But isn't wringing our hands over the loss of manufacturing jobs the 21st century equivalent of 19th century concerns about America turning from an agrarian society into an industrial one? Isn't America's future to be found in newer, better, more modern service industry jobs?
Actually, no -- for a number of reasons.
For starters, it turns out that manufacturing jobs aren't just more productive and valuable than jobs in the Wall Street casino -- they're also more valuable than service jobs. As economist and author Jeff Madrick points out:
Making goods is on balance -- with exceptions -- more productive than providing services, and rising productivity is the fundamental source of prosperity... a major nation must be able to maintain a balanced current account (and trade balance) over time, and goods are far more tradable than services. Without something to export, a nation will either become over-indebted or forced to reduce its standard of living.
In other words, in the absence of manufacturing, the only way to compete with Third World nations is to become a Third World nation, which is exactly what will happen if we allow our middle class to disappear.
What's more, it's not just manufacturing and lower skilled service jobs that are disappearing. According to the Hackett Group, companies with revenues of $5 billion and over are expected to take an estimated 350,000 jobs offshore in the next two years alone -- nearly half in IT, and the rest in finance, procurement and human resources.
Linda Levine of the Congressional Research Service says that some see "perhaps a total of 3.4 million service sector jobs moving overseas by 2015 in a range of fairly well paid white-collar occupations."
And Booz Allen Hamilton, in a 2006 study, found that white-collar outsourcing is no longer just about call center and credit card transactions. Now "companies are offshoring high-end work that has traditionally been considered 'core' to the business, including chip design, financial and legal research, clinical trials management, and book editing."
Do you hear that? It's Ross Perot's giant sucking sound being cranked up to a deafening roar -- and it's about a lot more than NAFTA.
Accenture now employs more people in India than in America. And IBM is headed in the same direction.
And the horizon looks even darker. A Harvard Business School study found that up to 42 percent of U.S. jobs -- more than 50 million of them -- are vulnerable to being sent offshore.
Even more troubling is the reason so many of these jobs are being sent overseas. It's not just about cost control. "What used to be a tactical labor cost-saving exercise," the Booz Allen Hamilton study says, "is now a strategic imperative of competing for talent globally." In other words, America's talent pool -- especially when it comes to professions like engineers and computer scientists -- is drying up. At the same time the demand for these highly skilled workers is growing, the number of Americans earning Master's degrees and PhDs in engineering has fallen.
We are continuing to feel the sting of our lack of investment in our people -- particularly when it comes to education, the other primary pillar (along with a good job) of a healthy middle class.
This is what happens when a country is willing to spend trillions of dollars fighting unnecessary wars while allowing college tuition to rise out of the reach of so many of its citizens. And it's what happens when a country turns its economy over to the casino of Wall Street.
It's not too late to change course. The financialization of our economy didn't just happen. Decisions were made that made it possible -- and decisions can be unmade. But first we need to decide, as a country, what kind of economy we want to have: one that's good for middle class families or one that's built to enrich Wall Street.
In the Financial Times last week, Martin Wolf wrote about how "the financial sector seems to be a machine to transfer income and wealth from outsiders to insiders, while increasing the fragility of the economy as a whole."
When the chief economics commentator at the Financial Times is sounding like the second coming of Karl Marx, you know things have gotten way out of hand.
It's time to start separating the real economy from the casino economy. And to make sure that with all the talk in Washington about "jobs," we don't let the platitudes become a substitute for urgently needed policies.

Monday, April 26, 2010

Palin's Pinnacle of Hypocrisy

Shannyn Moore

Posted: April 25, 2010 05:26 PM

Sarah Palin took the stand Friday in the trial of Former University of Tennessee student David Kernell. Kernell is charged with hacking Palin's Yahoo! e-mail account while Palin campaigned in the 2008 presidential campaign.
Kernell is facing 50 years in prison over this incident. He would be 72 years old when he gets out of prison. According to the Anchorage Daily News, Palin was asked if she thought the charges against Kernell were excessive:
Palin said, "I don't know, but I do think there should be consequences for bad behavior."
Hmmm...consequences for BAD BEHAVIOR???
This coming from the Quitter Governor of Alaska who:
  • used state resources to relentlessly pursue a family vendetta
  • took per diem as governor while sleeping in her own bed
  • took her kids at state expense on official State of Alaska business trips
  • lashed out at socialized "death panel" health care while her family was covered by socialized "death panel" health care
  • enjoyed socialized health care in Canada when she growing up and needed it
  • has health care provided to her grandson through Indian Health Services
  • advocates abstinence when it never worked for her own family
  • family members ignored subpoenas and were found in contempt
and the list goes on and on and on and on and on and on and on....

But...the pinnacle of Palin's hypocrisy might just be with this trial. "...I do think there should be consequences for bad behavior." Really? What about hers? How about Sarah Palin's hacking into another state employees' computer back in 2004? If hacking into someone's computer is "bad behavior," what were her consequences?
Sarah Palin hacked Randy Ruedrich's computer to find some dirt on him. Here are a few highlights from Richard Mauer's Anchorage Daily News article originally from 2004 but modified in 2008:
Former Oil and Gas Commissioner's Missteps Went Beyond His Partisan Work.
Sarah Palin never thought of herself as an investigator.
Yet there she was, hacking uncomfortably into Randy Ruedrich's computer, looking for evidence that the state Republican Party boss had broken the state ethics law while a member of the Alaska Oil and Gas Conservation Commission.

WHAT? She was HACKING? But that's "bad behavior"! That can get you 50 years in federal prison!
The next week, when Palin went back to work at the AOGCC, she noticed that Ruedrich had removed his pictures from the walls and the personal effects from his desk. But as she and an AOGCC technician worked their way around his computer password at the behest of an assistant attorney general in Fairbanks, they found his cleanup had not extended to his electronic files.

The technician "said it looked like he tried to delete this, but she knew a way to go around and get some of the deleted stuff," Palin said in an interview. "I didn't know what I was looking for, but I was there."

Yep, you sure were. Right there HACKING a computer.
Palin found dozens of e-mail messages and documents stacked up in trash folders, many showing work Ruedrich had been doing for the Republican Party and others showing how closely he worked with at least one company he was supposed to be regulating.

Don't get me wrong, Ruedrich isn't exactly on my list of stellar humans. But neither is Sarah. She was accused of a similar "misuse" of office the same year.
Much later, when Ruedrich settled state ethics charges June 22 by paying a record $12,000 civil fine and admitting wrongdoing, Palin said she finally felt some measure of vindication for bucking Ruedrich and members of her party.

Sarah seemed to justify her "bad behavior" of hacking because she found proof of wrong doing. I don't know Mr. Kernell, but I wonder if he thought he might find something proving wrong doing in Sarah's emails. Maybe Mr. Kernell was "bucking" the Republican party.
She quit the commission in frustration on Jan. 16, months before the state's secret investigation and its formal charges became public.

Quit number 654. (Just guessing)
Even Ruedrich's departure provided little clarity, Palin said. As she began the ethics inquiry, she was under orders from the Department of Law to keep it secret from the AOGCC staff, even as she went through his desk and computer and solicited information from others in the office.

I guess the Department of Law couldn't find someone more qualified to lead an investigation into wrong doing. No wonder it took the Feds to crack the Corrupt Bastard Club Case

"It felt like somebody else should be doing this, because they probably know what to look for," Palin said. "I printed off things that were obvious Republican Party documents, because I figured that's what they meant when they said, 'Get on his computer and send us anything that you believe to be partisan.' "

Sadly, this is not where the hypocrisy ends.

In a blog on her Facebook page Palin called for Obama to boycott the climate conference in Copenhagen. Why? Specifically, the "ClimateGate" email incident. Yes it's been debunked, but she clung to the emails obtained when hackers broke into the accounts of prominent climate scientists. Charges against David Kernell were filed October 8, 2008. More than a year later, November 17, 2009, the University of East Anglia's Climatic Research Unit discovered thousands of emails and documents had been hacked through their server.
Palin didn't blog about the "invasivey, privacy" aspects for the scientists. She wanted the emails of "ClimateGate" investigated, but not the way the feds had reacted to her Yahoo account breach. She wanted proof for her "Rapture-Will-Fix-It" Environmental policy and praised climate change denier Sen. James Inhofe for his grandstanding. Senator Barbara Boxer said during a committee meeting, "You call it 'Climategate'; I call it 'E-mail-theft-gate'." Sarah and Bristol have both testified to the horrors of hackery. For Scientists? Crickets.
So...another "do as I say, not as I do" moment in the continuing nauseating saga that is Sarah Palin.
Cross posted at 

Friday, April 23, 2010

Guns vs. Butter 2010

Arianna Huffington

Posted: April 22, 2010 07:26 PM

See if you can identify the bleeding heart liberal who said this:
"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children."
Noam Chomsky? Michael Moore? Bernie Sanders?
Nope, it was that unrepentant lefty, five-star general Dwight Eisenhower, in 1953, just a few months after taking office -- a time when the economy was booming and unemployment was 2.7 percent.
Yet today, while America's economy sputters down the road to recovery and the middle class struggles to make ends meet -- with over 26 million people unemployed or underemployed and record numbers of homes being lost to foreclosure -- the "guns vs. butter" argument isn't even part of the national debate. Of course, today, the argument might be more accurately framed as "ICBM nukes, Predator drones, and missile defense shields vs. jobs, affordable college, decent schools, foreclosure prevention, and fixing the gaping holes in our social safety net."
We hear endless talk in Washington about belt-tightening and deficit reduction, but hardly a word about whether the $161 billion being spent this year to fight unnecessary wars of choice in Afghanistan and Iraq might be better spent helping embattled Americans here at home.
Indeed, during his State of the Union speech in January, President Obama proposed freezing all discretionary government spending for three years -- but exempted military spending, even though the defense budget has ballooned over the last ten years. According to defense analyst Lawrence Korb, who served as Assistant Secretary of Defense in the Reagan administration, the baseline defense budget has increased by 50 percent since 2000. Over that same period, non-defense discretionary spending increased less than half that much.
In fact, the president is on track to spend more on defense, in real dollars, than any other president has in one term of office since WWII. In that time we've had Korea, Vietnam, the massive military buildup under Reagan, and Bush's funded-by-tax-cuts invasions of Afghanistan and Iraq, but in the most trying economic times since the Depression, Obama's out-gunning them all.
This is not about ignoring the threats to our national security. And it's certainly not about pacifism. To quote the president's 2002 speech: "I don't oppose all wars. What I am opposed to is a dumb war." Iraq was never about making us safer. And the original rationale for going to war in Afghanistan -- taking on al Qaeda -- has been accomplished, with less than 100members of the terrorist group still there. As former Bush State Department official Richard Haas has said, "If Afghanistan were a war of necessity, it would justify any level of effort. It is not and does not." In fact, by helping destabilize Pakistan and stretching our military to its limits, our presence in Afghanistan is actually making us less safe. The irrationality of continuing to spend precious resources on wars we shouldn't be fighting is all the more galling when juxtaposed with our urgent and growing needs at home.
The LA Times' Doyle McManus offers an eye-opening example of just how far our mission in Afghanistan has "creeped." His on-the-ground report on the military's upcoming push in Kandahar (cost: $33 billion) -- a surge the military considers as important as securing Baghdad was to Iraq -- doesn't include a single mention of taking on al Qaeda. Instead, McManus describes Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, telling an Afghan leader that the goals of the surge, as well as defeating the Taliban, include "reducing corruption, making local government work and, eventually, providing jobs."
Is that why we are still fighting a war there nine years later, spending American blood and treasure -- to provide jobs for the people of Kandahar? It's like a very bad joke: "The good news is, the Obama administration is ramping up a multi-billion program that will create a host of new jobs. The bad news is, you have to move to Kandahar to apply."
The Bush-era rationale for these overseas misadventures was always: We'll fight 'em over there, so we don't have to fight 'em over here. Today, it seems, we're fighting to create jobs for 'em over there, while we don't have enough jobs for our people over here.
At a time when so many hardworking middle class families are reeling from the economic crisis -- and our country is facing the harsh one-two punch of more people in need at the exact moment social services are being slashed to the bone -- that seems like the most perverted of priorities.
"Civilizations," argued historian Arnold Toyenbee, "die from suicide, not by murder." That is, our future is dependent on the choices we make and the things we decide to value.
In a video put together by Robert Greenwald's Rethink Afghanistan campaign, Berkeley professor Ananya Roy defines the troubled state of America not so much as a fiscal crisis as "a crisis of priorities."
And Barney Frank, who has been one of the few in Washington arguing for the need to cut military spending, says that our military over-commitments have "devastated our ability to improve our quality of life through government programs." Looking at the money we've spent on Iraq and Afghanistan, Frank says: "We would have had $1 trillion now to help fix the economy and do the things for our people that they deserve."
The National Priorities Project (NPP) offers a cool online tool that brings this budget trade-off to life by showing -- specifically -- all the things that could have been done with the money spent on Afghanistan and Iraq. It allows you to break the numbers down by your state, Congressional district, or town and to focus on the kinds of opportunity costs that most interest you, including education, public safety, affordable housing, and health care for kids.
For example, according to the NPP, since 2003, Americans have spent over $747 billion in Iraq. Of that, taxpayers living in California have forked over $94.7 billion. That could haveprovided 35 million children with health care for a year -- or 11 million places in a Head Start program. Or funding for over 1.6 million public safety officers. Or 283,378 affordable housing units. Or 1.3 million elementary school teachers. Or 11.3 million college scholarships. This in a state that has laid off more than 23,000 teachers, and has seen tuition rates at public universities skyrocket -- putting higher education beyond the reach of the very students these universities were created for. And those that are able to go are leaving in debt -- the average college student graduates carrying a debt of over $23,000.
Education has always been the path middle class Americans took to attain the American Dream. But those Americans are increasingly finding that path -- and that dream -- blocked.
Again, we are not talking about lessening America's national security. We are talking about eliminating or cutting back outdated and redundant military defense programs.
Barney Frank points to pricey relics of the Cold War such as the F-22 fighter, the Osprey transport helicopter, and missile defense programs in Eastern Europe as examples of wasted resources. He also suggests doing away with one prong of America's hugely expensive nuclear triad -- bombers, submarines, and intercontinental ballistic missiles -- designed to annihilate a Soviet empire that no longer exists. "My radical proposal," Frank told HuffPost's Ryan Grim, "is that we say to the Pentagon that they can pick two of the three, and let us abolish one."
Lawrence Korb offers his own laundry list of ways to trim the defense budget by billions without impacting national security. Even after cutting billions, he points out, the defense budget would remain significantly higher, in real dollars, than it was at the height of the Reagan build-up. A build-up that is often credited with leading to the collapse of the Soviet Union, which, in an effort to keep up with America, raised its defense spending to 27 percent of its GDP while freezing the production of civilian goods.
Increased military spending has been a hallmark of nations in decline since the fall of the Roman Empire -- including the Soviets trying to match America nuclear warhead for nuclear warhead and North Korea joining the nuclear club while its people starve.
If we don't come to our senses and get our deeply misguided priorities back in order, America engaging in nation building wars in Iraq and Afghanistan could easily join that ignominious list. A superpower turned Third World nation -- dead from our own hand.