Category Archives: Economy

Why $15 an Hour Should be the Absolute Minimum Minimum Wage

There are many important issues on the national political table right now, but sometime soon, fixing the federal minimum wage should be there too. Of course, the politics of reform don’t look good, but there is a Congressional election coming next year, and we need to be sure that voters understand that almost every Republican in Congress (some Democrats too), and the self-proclaimed workers’ champion in the White House don’t think people deserve a helping hand to get a living wage. The current federal minimum wage, $7.25 an hour, is a disgrace. Even $10 an hour yields only $20,800 for year-round, full-time work. That’s below the extra-low American poverty line for a family. Even for an individual living alone, it would not be enough in most American cities.

But how high a wage should we push for in the long run?  Of course, $15 an hour is a great starting point and courageous workers and local politicians have succeeded in getting a $15 minimum or something like it in quite a few states and cities. Two years ago, 42% of American workers were earning less than $15 an hour, so movements that are winning a $15 minimum in states and cities are helping millions and millions of workers. But workers in other states and cities need federal help. Getting a $15 national minimum wage would be a tremendous victory. But just the beginning. In the not-so-long run, $15 an hour won’t be enough. That’s because $15, while a huge advance for millions of workers, yields only $31,000 before taxes for a full year of full-time work. And many low-wage workers do not work full-time.[1]

If we are debating with people who think $15 is terribly high, can we defend something higher? What would be an ideal minimum down the road? There are several ways to construct an ideal minimum wage, but two approaches are particularly compelling. One is about minimum living standards and the other is about equality. As to the first, we can ask how much a family needs to live, not in affluence, but in modest comfort. Experts have estimated that a two-parent, two-child family requires $54,500 a year for a modest living standard. (The amounts vary by where the family lives and household size.) If there is only one earner, he or she must work full-time all year and earn $26 an hour to reach $54,500.[2]

Next, if we apply the equality method, it seems a matter of elementary justice that everyone should share increases in the national income. To estimate how much income did not go to the people, we can use per capita income–the total national income divided by the population. Per capita income increased 16 times between 1965 and 2015. But average hourly pay increased only half as much. One reason is that a tiny group of “capitas”–the rich–seized most of the increase in the national income. If the hourly wage of the average rank-and-file worker had increased as much as per capita income, it would be $40 today, not $21. If the federal minimum wage of 1965 had increased by a factor of 16, it would be $20 an hour, not $7.25.[3]

In light of these facts, it is astonishing that many politicians on the national scene are happy with the pathetically low minimum of $7.25. This indifference to the working poor occurs while big bankers and business tycoons take home massive compensation packages of millions and even billions of dollars.

One wonders what the President’s working-class supporters expect of him on the wage front. He likes to visit factories and talks big about job creation, but it tells us something about what he really thinks of the working class that he, his appointees, and Congressional members of his party, are fine with a $7.25 national minimum wage, do not support the $15 movement, and would be horrified if we dared to talk about a minimum wage that started at $20.

By Frank Stricker/Counter Punch

Posted by The NON-Conformist

Trump Proposes $54 Billion Defense Spending Hike

Image: CNN via CBS Philly

President Donald Trump proposed a $54 billion increase in defense spending Thursday as promised, a plan that the White House says will provide the necessary funding to ramp up the fight against ISIS, improve troop readiness and build new ships and planes.

Released as part of Trump’s $1.1 trillion budget outline for 2018, the 10% boost to the military comes at the expense of deep cuts to non-defense spending at the State Department, the Department of Housing and Urban Development, the Environmental Protection Agency and dozens of other federal programs.

More from CBS Philly

Posted by Libergirl

More Guns, Less Medicine: Trump’s Military Spending Binge Would Swamp Savings From Health Care Repeal

THE CONGRESSIONAL BUDGET OFFICE (CBO) released its analysis of the American Health Care Act (AHCA) on Monday, finding that the Trump-backed House Republican bill that seeks to repeal and replace Obamacare would save the federal government $337 billion over 10 years — at the cost of throwing 24 million people off of health insurance coverage by 2026.

But those theoretical savings would be more than wiped out by an also theoretical increase in military spending that President Trump wants Congress to pass.

Shortly after the release of the CBO report, House Speaker Paul Ryan put out a statement embracing its findings, claiming among other things that it found that the AHCA would “dramatically reduce the deficit.”

Yet Ryan has offered no objections to Trump’s request for an additional $54 billion in annual military spending in this coming year. The increase alone amounts to 80 percent of Russia’s current military spending; it would make the United States responsible for almost 40 percent of global military expenditures.

Assuming that the Trump administration set the new amount as a baseline going forward, over 10 years it would amount to $540 billion in additional spending. This eclipses the $337 billion that would ostensibly be saved were the AHCA to pass in its current form and remain in place.

And the CBO also finds that the vast majority of savings from the law will come after 2020, when the Medicaid expansion is rolled back. In fact, it wold add $56 billion to the deficit in its first three years:

CBO2-1489445969

Congressional Budget Office

The reason the AHCA doesn’t save more is because it also includes a $600 billion tax cut, most of it aimed at benefiting wealthier taxpayers, by paring back taxes used to support the Affordable Care Act.

AHCA’s impact on the federal budget deficit is hardly the whole picture, of course. The CBO estimates that 14 million people would lose health insurance coverage in its first year. The cost of health insurance premiums would go up for many. The CBO notes, for example, that someone 64 years old earning $26,500 a year would see their net premiums increase from $1,700 annually to $14,600:

CBO-1489441955

Congressional Budget Office

President Trump can offer any number of justifications for hiking military spending while embracing a health care bill that would throw tens of millions off of health insurance. But he just can’t claim to care about the deficit.

By Zaid Jilani/TheIntercept

Posted by The NON-Conformist

The Dance of Death

The ruling corporate elites no longer seek to build. They seek to destroy. They are agents of death. They crave the unimpeded power to cannibalize the country and pollute and degrade the ecosystem to feed an insatiable lust for wealth, power and hedonism. Wars and military “virtues” are celebrated. Intelligence, empathy and the common good are banished. Culture is degraded to patriotic kitsch. Education is designed only to instill technical proficiency to serve the poisonous engine of corporate capitalism. Historical amnesia shuts us off from the past, the present and the future. Those branded as unproductive or redundant are discarded and left to struggle in poverty or locked away in cages. State repression is indiscriminate and brutal. And, presiding over the tawdry Grand Guignol is a deranged ringmaster tweeting absurdities from the White House.

The graveyard of world empires—Sumerian, Egyptian, Greek, Roman, Mayan, Khmer, Ottoman and Austro-Hungarian—followed the same trajectory of moral and physical collapse. Those who rule at the end of empire are psychopaths, imbeciles, narcissists and deviants, the equivalents of the depraved Roman emperors Caligula, Nero, Tiberius and Commodus. The ecosystem that sustains the empire is degraded and exhausted. Economic growth, concentrated in the hands of corrupt elites, is dependent on a crippling debt peonage imposed on the population. The bloated ruling class of oligarchs, priests, courtiers, mandarins, eunuchs, professional warriors, financial speculators and corporate managers sucks the marrow out of society.

The elites’ myopic response to the looming collapse of the natural world and the civilization is to make subservient populations work harder for less, squander capital in grandiose projects such as pyramids, palaces, border walls and fracking, and wage war. President Trump’s decision to increase military spending by $54 billion and take the needed funds out of the flesh of domestic programs typifies the behavior of terminally ill civilizations. When the Roman Empire fell, it was trying to sustain an army of half a million soldiers that had become a parasitic drain on state resources.

The complex bureaucratic mechanisms that are created by all civilizations ultimately doom them. The difference now, as Joseph Tainter points out in “The Collapse of Complex Societies,” is that “collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole.”

Civilizations in decline, despite the palpable signs of decay around them, remain fixated on restoring their “greatness.” Their illusions condemn them. They cannot see that the forces that gave rise to modern civilization, namely technology, industrial violence and fossil fuels, are the same forces that are extinguishing it. Their leaders are trained only to serve the system, slavishly worshipping the old gods long after these gods begin to demand millions of sacrificial victims.

“Hope drives us to invent new fixes for old messes, which in turn create even more dangerous messes,” Ronald Wright writes in “A Short History of Progress.” “Hope elects the politician with the biggest empty promise; and as any stockbroker or lottery seller knows, most of us will take a slim hope over prudent and predictable frugality. Hope, like greed, fuels the engine of capitalism.”

The Trump appointees—Steve Bannon, Jeff Sessions, Rex Tillerson, Steve Mnuchin, Betsy DeVos, Wilbur Ross, Rick Perry, Alex Acosta and others—do not advocate innovation or reform. They are Pavlovian dogs that salivate before piles of money. They are hard-wired to steal from the poor and loot federal budgets. Their single-minded obsession with personal enrichment drives them to dismantle any institution or abolish any law or regulation that gets in the way of their greed. Capitalism, Karl Marx wrote, is “a machine for demolishing limits.” There is no internal sense of proportion or scale. Once all external impediments are lifted, global capitalism ruthlessly commodifies human beings and the natural world to extract profit until exhaustion or collapse. And when the last moments of a civilization arrive, the degenerate edifices of power appear to crumble overnight.

Sigmund Freud wrote that societies, along with individuals, are driven by two primary instincts. One is the instinct for life, Eros, the quest to love, nurture, protect and preserve. The second is the death instinct. The death instinct, called Thanatos by post-Freudians, is driven by fear, hatred and violence. It seeks the dissolution of all living things, including our own beings. One of these two forces, Freud wrote, is always ascendant. Societies in decline enthusiastically embrace the death instinct, as Freud observed in “Civilization and Its Discontents,” written on the eve of the rise of European fascism and World War II.

“It is in sadism, where the death instinct twists the erotic aim in its own sense and yet at the same time fully satisfies the erotic urge, that we succeed in obtaining the clearest insight into its nature and its relation to Eros,” Freud wrote. “But even where it emerges without any sexual purpose, in the blindest fury of destructiveness, we cannot fail to recognize that the satisfaction of the instinct is accompanied by an extraordinary high degree of narcissistic enjoyment, owing to its presenting the ego with a fulfillment of the latter’s old wishes for omnipotence.”

The lust for death, as Freud understood, is not, at first, morbid. It is exciting and seductive. I saw this in the wars I covered. A god-like power and adrenaline-driven fury, even euphoria, sweep over armed units and ethnic or religious groups given the license to destroy anything and anyone around them. Ernst Juenger captured this “monstrous desire for annihilation” in his World War I memoir, “Storm of Steel.”

A population alienated and beset by despair and hopelessness finds empowerment and pleasure in an orgy of annihilation that soon morphs into self-annihilation. It has no interest in nurturing a world that has betrayed it and thwarted its dreams. It seeks to eradicate this world and replace it with a mythical landscape. It turns against institutions, as well as ethnic and religious groups, that are scapegoated for its misery. It plunders diminishing natural resources with abandon. It is seduced by the fantastic promises of demagogues and the magical solutions characteristic of the Christian right or what anthropologists call “crisis cults.”

Norman Cohn, in “The Pursuit of the Millennium: Revolutionary Messianism in Medieval and Reformation Europe and Its Bearing on Modern Totalitarian Movements,” draws a link between that turbulent period and our own. Millennial movements are a peculiar, collective psychological response to profound societal despair. They recur throughout human history. We are not immune.

“These movements have varied in tone from the most violent aggressiveness to the mildest pacifism and in aim from the most ethereal spirituality to the most earth-bound materialism; there is no counting the possible ways of imagining the Millennium and the route to it,” Cohen wrote. “But similarities can present themselves as well as differences; and the more carefully one compares the outbreaks of militant social chiliasm during the later Middle Ages with modern totalitarian movements the more remarkable the similarities appear. The old symbols and the old slogans have indeed disappeared, to be replaced by new ones; but the structure of the basic phantasies seems to have changed scarcely at all.”

These movements, Cohen wrote, offered “a coherent social myth which was capable of taking entire possession of those who believed in it. It explained their suffering, it promised them recompense, it held their anxieties at bay, it gave them an illusion of security—even while it drove them, held together by a common enthusiasm, on a quest which was always vain and often suicidal.

“So it came about that multitudes of people acted out with fierce energy a shared phantasy which though delusional yet brought them such intense emotional relief that they could live only through it and were perfectly willing to die for it. It is a phenomenon which was to recur many times between the eleventh century and the sixteenth century, now in one area, now in another, and which, despite the obvious differences in cultural context and in scale, is not irrelevant to the growth of totalitarian movements, with their messianic leaders, their millennial mirages and their demon-scapegoats, in the present century.”

The severance of a society from reality, as ours has been severed from collective recognition of the severity of climate change and the fatal consequences of empire and deindustrialization, leaves it without the intellectual and institutional mechanisms to confront its impending mortality. It exists in a state of self-induced hypnosis and self-delusion. It seeks momentary euphoria and meaning in tawdry entertainment and acts of violence and destruction, including against people who are demonized and blamed for society’s demise. It hastens its self-immolation while holding up the supposed inevitability of a glorious national resurgence. Idiots and charlatans, the handmaidens of death, lure us into the abyss.

By Chris Hedges/Truthdig

Posted by The NON-Conformist

The US spends more on its military than the next 8 countries combined

According to 2015 estimates gathered by the Stockholm International Peace Research Institute, the United States was responsible for 36% of the entire world’s military spending. Even so, President Trump is calling for a $54 billion increase in US military spending which he says is needed to “rebuild the military.” In order to pay for this, Trump is also calling for a $54 billion cut in other parts of the federal budget.

By Emmanuel Ocbazghi/BusinessInsider

Posted by The NON-Conformist

Donald Trump’s Executive Order Will Let Private Equity Funds Drain Your 401(k)

DONALD TRUMP’S FEBRUARY 3 executive order enabling financial advisers to continue ripping off their clients could prove a lifeline for a surprising beneficiary: the private equity industry.

The Department of Labor’s fiduciary rule would have forced investment advisers in workplace retirement plans like 401(k)s to operate in their clients’ best interests, rather than recommending high-cost, high-risk products that offer the advisers kickbacks and perks.

The Obama White House estimated in a 2015 report that conflicts of interest cost retirement savers $17 billion annually, though that figure has been challenged.

The fiduciary rule, finalized last year, was to go into effect in April. But the new order directs the Labor Department to review the rule, which is expected to initiate the process of rescinding it.

As Gary Cohn, former Goldman Sachs president and director of the National Economic Council, put it, the fiduciary rule “is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”

Why Trump thinks individual workers must have the freedom to choose poison for their retirement funds is unclear. But one reason could be that his friends in private equity have long sought to add their particular form of junk food to that menu.

And to break into the 401(k) market — especially with financial products that are high-risk, high-cost, and often make their money from ripping established companies apart and selling the pieces — private equity funds would need a lot of help from the advisers who guide ordinary investors in the process. And that would require the ability to offer those advisers considerable perks and kickbacks.

On the same day that he issued his fiduciary rule executive order, Trump met with his White House jobs panel, headed by Steven Schwarzman, CEO of the world’s largest private equity firm, Blackstone.

“We’re getting rid of your regulations,” Trump told Schwarzman and his colleagues on Friday.

Late last month, Schwarzman stressed his craving for Blackstone to get into the 401(k) market. “In life you have to have a dream,” Schwarzman said on an analyst call, “and one of our dreams is our desire and the market’s need to have more access at retail to alternative asset products.”

Traditional pension funds invest heavily in private equity; this makes up about one-quarter of total private equity capital. But defined contribution plans like 401(k)s have traditionally not invested in the asset class. Because 401(k) holders choose how to invest their money and can move in and out of funds quickly, they don’t fit mechanically with private equity, which locks in investors over several years. Also, private equity usually asks for large minimum investments, not less than $5 million, to open their funds to investors.

But with pension plans now a rarity compared to defined contributions retirement plans, private equity wants to crack the 401(k) market to unlock trillions of dollars in potential capital. Americans hold $6.8 trillion in individual retirement plans like 401(k)s. The Wall Street Journal describes this as “something of a Holy Grail quest” for the industry.

Large firms like Carlyle, Blackstone, Partners Group, and Kohlberg Kravitz Roberts (KKR) have developed a series of 401(k)-friendly products over the past couple years. Most enable plan advisers to offer private equity stakes to investors as part of a “target fund,” in a diversified portfolio with other investments. “That’s where we believe private equity should go,” said Kevin Albert, global head of business development for Pantheon Ventures, on a Wall Street Journal podcast.

If plan advisers take this up, it would flood more money into private equity. “Five percent of the estimated $6.8 trillion and growing in 401(k)s is $340 billion — a nice chunk of change,” said Eileen Applebaum, senior economist at the Center for Economic and Policy Research and author of Private Equity at Work.

But these investments are far riskier than most 401(k) offerings. Contrary to popular belief, private equity firms do not outperform the market. Fees are also often opaque and much larger than those in passive funds, usually extracting 1 to 2 percent of the total capital invested and 20 percent of the profits. A 2014 SEC study found that over half of the private equity firms examined shifted costs to benefit themselves, like billing investors for legal and compliance costs without their knowledge, or forcing investors to pay for “consultants” who are actually former employees of the companies. Giant fees guarantee private equity profits regardless of the performance of their portfolio.

Last week, Pantheon introduced a new performance-based offering to plan advisers, with Pantheon only benefiting if they outperform the benchmark S&P 500. Albert claimed this would relieve the threat of class-action lawsuits over high fees. Pantheon will also partner with KKR and other firms to ensure they have sufficient funds to invest in companies, regardless of whether 401(k) investors pull their money out on a moment’s notice.

But private equity has been accused of deliberately reporting exaggerated returns to harvest fees. And even if the returns were legitimate, this would still throw millions of retirement dollars into an industry that has been sharply criticized for its predatory version of capitalism.

Private equity firms buy out companies and load them with unsustainable debt, forcing severe cost-cutting to maintain survival. Because private equity serves as manager and investor, they favor short-term gain over a company’s health, whether through using bankruptcy, favorable tax strategies, or monetizing assets. Workers often get left behind, with lower wages, lost jobs, or restructured union contracts.

The destruction of the Mervyn’s department store chain provides a salient example. Once a major retailer with 30,000 employees, Mervyn’s was bought out in 2004 by a consortium of private equity firms, who split off the company’s real estate assets and forced stores to pay exorbitant rent to service $800 million in debt. Within four years, Mervyn’s liquidated the entire operation in bankruptcy. The private equity managers, however, earned profits through the real estate deals and came out ahead.

Individual investors would therefore be using retirement dollars to fund an industry that terrorizes workers and sucks value from their employers.

How does sidelining the fiduciary rule facilitate this? Plan advisers would not be required to act in the best interest of their clients when promoting target funds, enabling them to include private equity, regardless of the fee structure or threat of losses.

“It could put retirement income at risk and may be more costly than the individual investor recognizes,” said Eileen Applebaum. “The financial adviser will know, but they’re now under no obligation to divulge.”

Advisers could also receive hidden kickbacks for including these investments in the target funds. There’s already a large cottage industry of perks for financial advisers, most of them obscure to individual 401(k) subscribers. Few would be able to outbid wealthy private equity firms for the privilege of peddling complex financial products to ordinary investors.

According to a study from researchers at Indiana University, the University of Texas and the Federal Reserve last October, plan advisers routinely present limited choices to 401(k) investors, to steer them into unnecessary or risky options. This favoritism benefits affiliated funds, and with private equity perks in the waiting, advisers would have yet another incentive to tout their products.

By David Dayen

Posted by The NON-Conformist

Israel approves permits for 566 settler homes

Building plan in East Jerusalem approved by local council after being held up until Donald Trump took office in the US.

Israeli authorities have approved building permits for 566 settler homes in occupied East Jerusalem, according to local officials, a move that has drawn condemnation from Palestinian leaders.

The approval of the building plan on Sunday came two days after the inauguration of Donald Trump in the United States, with Israeli official saying the permits had been held up until the end of Barack Obama’s administration, which had been critical of Israeli settlement activity.

“The rules of the game have changed with Donald Trump’s arrival as president,” Meir Turgeman, Jerusalem’s deputy mayor, told AFP news agency.

“We no longer have our hands tied as in the time of Barack Obama. Now we can finally build.”

Turgeman said that city officials approved the plans that had been previously postponed at Prime Minister Benjamin Netanyahu’s request following a UN Security Council resolution in December against Israeli settlement building.

The new permits are for homes in the settlement neighbourhoods of Pisgat Zeev, Ramot and Ramat Shlomo, according to Turgeman, who also heads the planning committee that approved them.

Turgeman said plans for about 11,000 other homes were also in process in East Jerusalem, though he did not say when they could proceed.

‘State above law’

Israeli settlements in the occupied West Bank are considered illegal under international law and have been major stumbling blocks in negotiations between Palestinians and Israelis.

Between 2009 and 2014, Israeli settlements expanded by 23 percent in the West Bank, including East Jerusalem.

Nabil Abu Rudeineh, a spokesman for Palestinian President Mahmoud Abbas, condemned the building plans and called on the United Nations to take action, particularly given the recent Security Council resolution.

“It is time to stop dealing with Israel as a state above the law,” he said.

Al Jazeera’s Imran Khan, reporting from West Jerusalem, said that with Trump now in the White House the Israeli government feels it can build illegal settlements on Palestinian land without facing much criticism.

“They think that this is a retooling of the relationship with the US,” Khan said. “Under President Trump the Israelis feel that they will have a lot more leeway to build on Palestinian land,” he added.

“And this is a message to the world that they can build wherever they want, including on the land of a future Palestinian state.”

Netanyahu-Trump talks

Netanyahu said on Sunday that he was to speak with Trump later in the day, their first conversation since the billionaire businessman took office.

Trump has pledged strong support for Israel and vowed during his campaign to recognise Jerusalem as the country’s capital despite the city’s contested status.

READ MORE: Abbas warns Trump not to move US embassy to Jerusalem

Israel clashed frequently with Obama over construction in areas it conquered in 1967.

But Trump’s appointed ambassador to Israel has close ties to Jewish West Bank settlements, as does the foundation run by the family of Trump’s son-in-law, Jared Kushner.

From Al Jazeera and news agencies

Posted by The NON-conformist