Friday, December 15, 2017
The flood of Chinese imports into the U.S. does not just cost jobs. It shuts down factories and businesses altogether, with devastating consequences for the communities where they are located.
After years of denial, it is now widely known that the opening of the U.S. market to Chinese imports was devastating, inflicting deep and lasting damage to many areas in the U.S. Regions most exposed to competition from China not only lost manufacturing jobs, they saw overall employment decline and never recovered. Areas with higher exposure have also been shown to have more people relying on food stamps and disability payments, more people addicted to opioids, lower rates of marriage, higher rates of political polarization, and higher rates of incarceration.
New research suggests that one of the main reasons the damage has been so deep and lasting is that the jobs lost from Chinese imports were not just from companies downsizing or becoming more efficient but from closing manufacturing plants altogether. The paper by four economists — Brian Asquith of the National Bureau of Economic Research and University of California at Irvine’s Sajana Goswami, David Neumark, and Antonio Rodriguez-Lopez — finds that the so-called “China shock” operated mainly through “deaths of establishments.”
This makes the job losses from the China shock fundamentally different from other adverse shocks, such as recessions, that can hit the U.S. labor market. In those situations, job losses are primarily from contractions of the number of people employed at a plant, rather than the outright closing of a plant.
“From a local-labor markets point of view, regional economies are likely to suffer more from deaths than from contractions (which tend to be one-off events or cyclical) because closed establishments can more permanently reduce local employment,” the authors write.
The economists say that many of the workers thrown out of work because of “establishment deaths” are later “reabsorbed” into the “nontradeable” sector, mainly through the births of new establishments. What is not explored in the paper is that many of these nontradeable sector jobs, however, a likely to be lower-paying service sector jobs.
Sunday, December 10, 2017
“America Has a Monopoly Problem — and It’s Huge,” ran a headline in The Nation recently. The piece by Nobel Prize-winning economist Joseph Stiglitz lamented that “If we don’t like our Internet company or our cable TV we either have no place to turn, or the alternative is no better.”
If you spend any time with left-of-center commentary these days (and everyone should — especially people on the right), you’ll find this is a common theme of late. The New Republic writes about “How Democrats Can Wage a War on Monopolies — and Win.” In The Week, Jeff Spross tells us “What Beer Reveals About Monopoly Power.” (Cliff’s Notes version: nothing good!) At The Huffington Post, Zach Carter and Paul Blumenthal consider the proposed merger of AT&T and Time Warner “intolerable. ... No single entity should have that much power.”
In recent months Massachusetts Sen. Elizabeth Warren has warned repeatedly about how “a handful of corporations” have “seized power in this country” through economic consolidation. Her colleague Al Franken wants to know “How did big tech come to control so many aspects of our lives?”
Proponents of net neutrality warn that “in a future without net neutrality, instead of being able to watch whatever is being produced by anyone, you’ll either just have to submit to whatever the local monopoly is willing to provide, or pay through the nose for universal service.” Editors at Talking Points Memo discuss “Our Problem With Monopolies.” The New York Times asks, “Is Google a Harmful Monopoly?” And so on.
You could argue that this concern over monopolies, real or alleged, is overwrought. The “gales of creative destruction,” as Joseph Schumpeter called them, do not discriminate: Today’s economic colossus is tomorrow’s kitschy relic (see: Philco radios, Pullman railway cars).
As Mark Perry of the American Enterprise Institute pointed out not long ago, only 60 of the companies listed on the Fortune 500 in 1955 remain on the list today. The rest went bankrupt, were acquired by or merged with another company, or have been outrun by other firms.
But let’s assume the monopoly alarmists are right: that more consumer choice is better, that the concentration of power is bad, that gaining market share though non-market (and especially political) means is inherently suspect, and that allowing large, impersonal, unaccountable institutions to control the smallest details of our lives is simply wrong. Those points do seem reasonable enough, after all.
Why, then, are so many progressives so enamored of the worst monopolist of all — government?
Take Warren. In one breath, she condemns the lack of consumer options. In the next, she blasts Education Secretary Betsy DeVos for supporting school choice. “Your history of support for policies that would drain valuable taxpayer resources from our public schools and funnel those funds to unaccountable private and for-profit education operators may well disqualify you from such a central role in public education,” she wrote back when DeVos was first nominated.
(Warren wasn’t always opposed to school choice, incidentally. Before running for office, she supported vouchers as a means to produce “schools that offer a variety of programs that parents want for their children, regardless of the geographic boundaries.”)
Speaking of consumer freedom, shouldn’t consumers be able to choose their own health insurance — and even no insurance at all? Apparently not: Warren supports Obamacare, with its individual mandate forcing people to buy coverage regardless of whether they actually want it. What’s more, she has pledged to support Bernie Sanders’ single-payer proposal — under which a single government agency would control health care financing for everybody.
Let that marinate for a minute. If Aetna were to gain monopoly control of the health insurance market by merging with its rivals — or even simply by winning over their customers — Warren would find this abhorrent. But she wants the federal government to do precisely the same thing by edict.
Like Warren, Franken also opposes school vouchers and supports single-payer health care. While generalizations are risky, it’s probably a good bet that many progressives with similar views on corporate monopoly power are perfectly fine with government monopoly power.
Many Democratic politicians are concerned about the power of Facebook and other tech companies to control what political viewpoints people can hear. And yet they rail against the Citizens United decision, in which the Supreme Court said government may not control what political viewpoints people can hear. (For those with dusty memories, the case concerned whether the government could ban distribution of a movie about Hillary Clinton during the closing days of an election.)
In a speech about the dangers of monopoly power, Warren said: “Giant corporations crush competition. They shut out small rivals and they kill young startups. ... Giant corporations jack up prices and cut corners on quality. ... Many giant corporations don’t win in the marketplace because they’re better. They win because they are big.”
For all the power corporations have, though, even the biggest lack a monopoly exercised by government: the monopoly over the legitimate use of force. Facebook can’t compel you to join its social network — but the federal government has the power to make you join the Army. Apple can’t force you buy an iPod at the point of a gun, but governments oblige you to purchase services you don’t want all the time. Strange, isn’t it, that Warren and others who rail about the danger of monopoly are so eager to wield the power of the biggest monopoly of all?
Saturday, December 2, 2017
The Senate passed the Tax Cuts and Jobs Act on Saturday, which serves as one of the final steps for Congress to pass historic tax legislation.So the corporatists have been given one more chance to spread the wealth to the American workers. When this fails to yield a prosperous Middle Class, perhaps we'll get back to the original Trumpian idea. Eliminate corporate privileges and return to Small Business equitable playing field, where over-capitalized firms can no longer afford "robot" workers.
The Senate passed the Tax Cuts and Jobs Act 51-49, almost entirely along party lines, with Vice President Mike Pence presiding over the vote. Sen. Bob Corker (R-TN) voted against the bill, and 48 Democrats voted against the tax reform legislation as well.
Reluctant Republican senators such as Susan Collins (R-ME) and Jeff Flake (R-AZ) voted for the bill after last-minute changes were made. Flake received a commitment from Republican leadership and the White House that they would pursue a permanent solution for the Deferred Action for Childhood Arrivals (DACA) illegal aliens, while Collins received a provision that would keep the deduction for state and local taxes (SALT).
The Senate agreed earlier this month to move forward on the motion, 52-48, to proceed on the Tax Cuts and Jobs Act. The Senate Budget Committee passed tax reform legislation on Tuesday, even after Sen. Bob Corker (R-TN) and Sen. Ron Johnson (R-WI) expressed skepticism about the bill’s current form. Corker reported that he was reassured about the Senate bill including a “fiscal trigger” that will dial back the tax cuts should the tax bill fall short of revenue projections.
The Senate bill retains the current income tax system’s seven brackets, while the House version collapses the seven brackets into four. The wealthiest Americans would have their income tax fall to 38.5 percent, while the lowest tax bracket will fall to ten percent. Similar to the House tax bill, the Senate version will double the standard deduction for individuals to $12,000, and $24,000 for married couples. The Senate bill also raises the child tax credit from $1,000 per child to $1,650.
Unlike the House draft, the Senate tax bill eliminates Obamacare’s individual mandate to purchase health insurance.
The House passed their version of the Tax Cuts and Jobs Act earlier in November.
Now that the Senate passed their version of the tax reform legislation, the House and Senate will have to convene a conference committee to reconcile the differences between the two bills. Once the two chambers of Congress draft a unified bill, the House and Senate will have to pass the same bill to send the Tax Cuts and Jobs Act to President Donald Trump’s desk to sign the bill into law.
Senate Majority Leader Mitch McConnell (R-KY) is desperate to pass tax reform legislation after failing on multiple occasions to repeal Obamacare. Breitbart News reported that Mitch McConnell’s future rides on passing tax reform in the face of a populist-nationalist uprising in the 2018 midterm elections.
President Donald Trump said that passing the tax reform bill would ensure a “Merry Christmas” for the country.
Trump declared, “This week’s vote can be the beginning of the next great chapter for the American worker.”