Rampant poverty can't be written off as the result of historical accident or a worker's incompetence. It is actively cultivated by bad public policies that direct economic resources into the hands of a wealthy few. The resulting inequality creates unnecessary suffering all over the world, from the humanitarian crisis in Haiti to the alarmingly high poverty rate in the United States.
Systemic poverty in Haiti
The tragedy in Haiti is not only the result of a massive earthquake. As Richard Kim explains for The Nation, Haiti has long been one of the world's poorest nations, and that poverty has prevented the country from protecting itself against natural disasters. As Kim explains:
Haiti's vulnerability to natural disasters, its food shortages, poverty, deforestation and lack of infrastructure, are not accidental. To say that it is the poorest nation in the Western hemisphere is to miss the point; Haiti was made poor-by France, the United States, Great Britain, other Western powers and by the IMF and the World Bank.
Kim details Haiti's struggles under the weight of colonialist debt that dates back to 1804, the year it won its independence from France. Soon after the revolution, the U.S. and France threatened a trade embargo against Haiti unless the nation of former slaves agreed to pay reparations to its former slave-masters in France. Haiti paid off this extortion with loans from U.S. and European banks. The country was still paying those loans back in the 1940s.
In 2003, Haitian President Jean-Bertrand Aristide demanded that France repay Haiti $21 billion of these unjust payments. He was ousted by a military coup for his efforts. Even today, the emergency IMF loans that are ostensibly helping Haiti cope with the disaster are crippled by insane stipulations, such as raising electricity prices for Haiti's poorest citizens.
One-eighth of U.S. population receiving food stamps
The U.S. has been waging a quiet war against its own poor for decades as well. In a blog for Working In These Times, Akito Yoshikane highlights today's record level of poverty: One in four U.S. children are living on food stamps, while one-eighth of the entire nation is receiving them. That's over 38 million people, or more than four times the population of New York City. A poverty epidemic on this scale is a total affront to any concept of economic justice, liberal or conservative.
MLK and economic justice
Just economic policy was a critical concern for Dr. Martin Luther King, Jr. But today's 13.2% U.S. poverty rate is actually higher than when King spoke out against it in 1968, as Rich Benjamin notes for AlterNet. The economic oppression of minorities continues to this day. While the overall U.S. unemployment rate is 10%, among black workers, the rate is an astonishing 16.2%, while Latino and Latina workers face 12.9% unemployment.
10% unemployment vs. multi-million dollar bonuses
It's impossible to tolerate 10% unemployment in any economy. But those high rates are especially cruel considering the multi-million-dollar bonuses being paid to bankers who were bailed out with U.S. citizens' tax dollars. Nomi Prins' fantastic interactive chart at Mother Jones reveals both the obscene executive pay levels and staggering federal bailouts that banks subsequently used to boost profits and banker pay.
Top bank executives scored regal paydays for nearly destroying the economy, and some of them even helped pervert the government into an enabler of banking excess. Need an example? Prins highlights Robert Rubin, who pushed through a host of radical deregulatory laws as Treasury Secretary in the 1990s, then left to take a job at Citigroup, where he reaped over $120 million before his company needed a massive bailout. There's no reason for policymakers to accept a 13.2% poverty rate while subsidizing paychecks for wealthy bankers.
What can be done?
The Financial Crisis Inquiry Commission, a panel convened to uncover the causes of the financial crisis, could play a key role in overturning the injustices embedded within the U.S. financial system. As Ruth Coniff notes for The Progressive, it's not simply that the bailouts saved the banks. It's that the banks are piggybacking on taxpayer-granted perks to score record profits.
Economic arguments are routinely deployed to excuse outrageous social injustices-the most common argument for the U.S. bank bailout claims that things would have been much worse for everyone if we hadn't thrown billions at the banks. There are grains of truth in the argument. If all of the banks had actually failed, the result would have been economic mayhem. But that bailout money should have come with major strings attached. There is no reason why bank CEOs, rather than taxpayers, should be reaping the rewards from profits that taxpayer funds generated.
In both global and domestic politics, severe inequality is often accepted as an economic fact, not a problem that must be solved. But the moral outrage prompted by the disaster in Haiti and the U.S. financial bailout is both real and justified. If we want to live in a just society, we cannot continue to subsidize the rich by exploiting the poor.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Two key lawmakers on the House Financial Services Committee, Reps. Alan Grayson (D-FL) and Ron Paul (R-TX), are pushing to authorize a full, comprehensive audit of the Federal Reserve. The plan has sparked fury from both the Fed and the corporate banking industry, but the proposal is so appealing that the controversy is almost laughable.
The Federal Reserve is one of the most powerful economic institutions in the world, but most of its operations are conducted in total secrecy. The Fed's rescue activities have dwarfed the $700 billion Troubled Asset Relief Program, but without any public accounting. Some of these efforts may have been entirely appropriate, but we don't even know who the Fed is helping. That fact is a major barrier to establishing effective and fair economic policy.
"The Fed is a typical Washington institution that operates un-democratically and in virtually total secrecy, and a Congressionally-mandated audit that they (and much of the DC establishment) desperately oppose would be a serious step towards changing the dynamic of how things function. At the very least, it would provide an important template for defeating the interests which, in Washington, almost never lose."
Under the Grayson-Paul plan, which is offered as an amendment to the Financial Stability Improvement Act of 2009, the Government Accountability Office would be given the authority to audit all of the Federal Reserve's activities, just as it can audit other public programs and institutions.
Last week, the House Financial Services Committee approved the audit-the-fed bill, despite opposition from panel Chairman Barney Frank (D-MA), who tried to gut the plan. Even on the Financial Services Committee, where the banks concentrate their campaign contributions, Grayson was able to convince 14 other Democrats to stand up to the financial establishment.
The vote of approval scarcely registered on mainstream media's radar, and even then, the Grayson-Paul legislation was portrayed as an assault on the Fed's "political independence." As Dean Baker notes for Talking Points Memo, it's hard to see how a simple, public accounting can be construed as a political hit on the Fed's policy-making.
By setting interest rates, the Fed has enormous power to do almost anything under the economic sun, from fueling quick growth to destroying jobs. All of these powers have useful functions under the right circumstances, and we really don't want Congress to make decisions about the economy based on the interests of powerful lobby groups. The Grayson-Paul bill wouldn't do anything of the sort. As John Nichols explains for The Nation, audits of sensitive economic policy decisions would be subject to a six-month lag before they could be publicly released. If the Fed needs to act fast, Congress won't be able to get in its way. The public will eventually know how its own money is being spent, however, and learn how a public institution is conducting itself.
"In other words, this is about simple transparency, which everyone should favor," Nichols writes.
The White House and the Congressional Democratic leadership need to support a full and comprehensive audit of the Federal Reserve. It's an issue of basic democratic accountability. There is no good reason why economic policy should be conducted in secret.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
On Friday, we learned that the U.S. unemployment rate officially broke 10% for the first time since the early Reagan years. This is about as bad as it gets for a modern, developed economy. No economic force takes a heavier toll on a society than rampant joblessness, and few personal setbacks take a deeper psychological toll than being out of a job for months on end. If Congress and President Obama don't do something to create jobs fast, both are going to pay a hefty political price when next year's mid-term elections roll around.
So how bad is it? In October, the economy shed 190,000 jobs and the unemployment rate jumped from 9.8% to 10.2%. That percentage is the most optimistic reading of the labor market in Friday's report. If you take people who want full-time jobs but are settling for part-time work, then add those who have simply given up on finding a job, the rate is a massive 17.5%.
The problem is not that either Obama or Congress have failed to act on the problem, but rather that they have not done enough. When Congress was moving on Obama's $787 billion economic stimulus package back in February, we were shedding upwards of 700,000 jobs a month. So the stimulus package has worked-it's probably helped keep unemployment from jumping to 12% or 13%. But this is cold comfort to the nation's 15.7 million unemployed, 5.6 million of whom have been out of a job for more than six months.
As Robert Reich notes for Salon, Obama's economic advisers dramatically underestimated how bad things would get when they crafted the stimulus package. As a result, the package was too small and unemployment has remained high. Obama needs to go back to Congress and demand more economic relief funding. Republicans will continue to whine about government spending to excuse their obstructionism, of course, and conservative Democrats will probably start sweating, too-Sen. Ben Nelson (D-NE) helped cut back the original stimulus bill in February to help boost his "centrist" credentials. This of course had nothing to do with economics or policy. Government spending is what saves the economy in a recession. In a downturn as severe as this one, it takes a lot of spending to turn things around.
But as Reich notes, Nelson and his cohorts will have a lot more to worry about in the 2010 elections if the economy doesn't actually improve over the next year. And few economists think it will. The Congressional Budget Office, which is run by a conservative economist named Douglas Elmendorf, projects an average unemployment rate of over 10% in 2010. That's worse than this year. Democrats from swing districts need to support economic relief packages. Continued economic malaise will severely hurt them at the polls.
Congress finally took some action on joblessness on Thursday, voting to extend unemployment benefits for an additional 14 weeks. If we want the economy to recover, we need people to spend money, but if people aren't working, they don't have any money to spend. So the government cuts people checks to help them get by and stimulate a demand for goods and services. Even most conservative economists thinks this is a good idea.
But as Kevin Drum notes for Mother Jones, the soundness of the policy did nothing to prevent Republicans from fighting the effort to extend benefits tooth-and-nail. The bill had to overcome three-that's right, three-filibusters in the Senate from Republicans, who held up the bill for weeks for no apparent reason. In a blog post for The Washington Monthly, Steve Benen explains the economic cost of this obstructionism: In the weeks of delay, 200,000 people looking for work stopped receiving benefits.
But extending unemployment benefits will not solve our economic woes. The total program is just $2.4 billion, a drop in the bucket compared to the trillions of dollars the government put up to salvage Wall Street. $2.4 billion is not enough to reverse the unemployment trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive, we need an economic policy that actually puts people back to work. We've known for months that the stimulus was too small and watched the labor market continue to deteriorate. We need more than tweaks at the economic margins, we need a robust job creation plan.
As Stephen Franklin notes for Working In These Times, we already know that the recession has created a significant jump in the nation's poverty rate. According to official government statistics, the rate climbed from 12.5% to 13.2% in 2008, the largest increase since 1991. But the National Academy of Science thinks the government statistics are misleading, as they account for rising costs associated with medical care, transportation, child care and different regional living standards, as Franklin notes. Taking these factors into account, the National Academy of Sciences calculates the actual poverty rate to be 15.8%. That's an additional 7 million people living in poverty, for a total of over 47 million. That's more than the entire population of the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas combined. What's worse, we don't have poverty statistics for this year, when the most severe economic damage was been dealt.
Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga details Latvia's economic turmoil. Just like the US, overexcited bankers in Latvia inflated a massive real estate bubble that took down the entire economy when it burst. But with the bubble burst, much of the country is now out of a job and stuck with a mortgage worth far less than what they paid for it. It's almost exactly the same story we've seen at home.
No domestic economic problem is more pressing than our epic levels of unemployment. We need another round of stimulus to get people working again. If not, we'll see the same public unrest here as in Eastern Europe.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
This is part 2 of a two-part diary on two new articles that provide insight into the newly visible weakness of Obama's politics. Although I have serious disagreements with some of their content, their main thrusts are both accurate, they complement one another, and though they reinforce arguments from the left, they both primarily grounded in pragmatist arguments. In part one, I examined "The Character of Barack Obama", by David Bromwich, which was really more about the process side of Obama's politics. In this part, I turn to Michael Lind's critique of Obama's cult-like faith in neoliberalim, asking, "Can Obama be deprogrammed?".
The main thrust of Lind's piece is unassailable: New Deal liberalism worked. Neoliberalism does not. New Deal liberalism produced the broadest prosperity, the largest and most affluent middle class in the history of humanity. Neoliberalism produced a bubble economy in the 1990s that briefly balanced our federal budget, but utterly failed to stop the erosion of our manufacturing base and our rising trade imbalances.
By neoliberalism I mean the ideology that replaced New Deal liberalism as the dominant force in the Democratic Party between the Carter and Clinton presidencies. In the Clinton years, this was called the "Third Way." The term was misleading, because New Deal liberalism between 1932 and 1968 and its equivalents in social democratic Europe were considered the original "third way" between democratic socialism and libertarian capitalism, whose failure had caused the Depression. According to New Deal liberals, the United States was not a "capitalist society" or a "market democracy" but rather a democratic republic with a "mixed economy," in which the state provided both social insurance and infrastructure like electric grids, hydropower and highways, while the private sector engaged in mass production....
The transition from New Deal liberalism to neoliberalism began with Carter, but it was not complete until the Clinton years. Clinton, like Carter, ran as a populist and was elected on the basis of his New Deal-ish "Putting People First" program, which emphasized public investment and a tough policy toward Japanese industrial mercantilism. But early in the first term, the Clinton administration was captured by neoliberals, of whom the most important was Treasury Secretary Robert Rubin. Under Rubin's influence, Clinton sacrificed public investment to the misguided goal of balancing the budget, a dubious accomplishment made possible only by the short-lived tech bubble. And Rubin helped to wreck American manufacturing, by pursuing a strong dollar policy that helped Wall Street but hurt American exporters and encouraged American companies to transfer production for the U.S. domestic market to China and other Asian countries that deliberately undervalued their currencies to help their exports.
Lind is also very astute in capturing how Obama's agenda seeks to elide the deeper economic problems that neoliberalism is not prepared to tackle, and how it seeks to rationalize doing so:
Instead of the updated Rooseveltonomics that America needs, Obama's team offers warmed-over Rubinomics from the 1990s. Consider the priorities of the Obama administration: the environment, healthcare and education. Why these priorities, as opposed to others, like employment, high wages and manufacturing? The answer is that these three goals co-opt the activist left while fitting neatly into a neoliberal narrative that could as easily have been told in 1999 as in 2009. The story is this: New Dealers and Keynesians are wrong to think that industrial capitalism is permanently and inherently prone to self-destruction, if left to itself. Except in hundred-year disasters, the market economy is basically sound and self-correcting. Government can, however, help the market indirectly, by providing these three public goods, which, thanks to "market failures," the private sector will not provide.
But there is another layer that Lind gets wrong-a layer dealing with race from the New Deal forward on the one hand, and the nature of post-50s progressive politics on the other. I'll first review what Lind gets right, and why it's important to advance this perspective, then I'll look at what he gets wrong, and what its significance is.
Now is a time for economic populist specifics -- let's see if we hear any of that from Obama -- but, even more so, 'radical' economic thinking. One thing that needs to take place is a re-examination of the basic thrust of an at-present failed profession, economics ('the pro-deregulation ideology'), and its result, present-day economic policy. Here's some, from a couple of discussions last year at tpmcafe (and no, imho, the upside-down and 'one-side of a phone conversation' aspects don't compromise the understandability):
Neo-classical engineering would believe that the perfect bridge is one built under gravity-free conditions. Engineers would strive, always and foremost, to persuade policymakers to move the real world closer to that perfect, gravity-free world.
And what's wrong with that?! (snark)
Posted at June 1, 2007 10:07 AM in response to The Methodology or The People
Or we need to accept -- based on the overwhelming predominance of an oligopolistic economic real world -- that everyone will not play fair, and then regulate the resultant oligopolies intelligently.
To "make sure everyone plays fair" should not be the purpose of government. Instead, governments should regulate the economy in order to produce the best economic outcomes based on the values expressed by the people who elect those governments.
For example, economic security is often associated with economies that are predominantly oligopolies/oligopsonies well-regulated to ameliorate some of the counter-productive features of such economic arrangements. If economic security is a high priority for the citizenry, and I think it is, then economic policy should favor less competitively 'cut-throat' economic arrangements in favor of smartly regulated oligopolies/oligopsonies.
Posted at June 1, 2007 9:59 AM in response to The Methodology or The People
I wrote my diary "'Obama And Elitism' In George CostanzaLand" as an antidote/analysis of the ridiculous spin we're seeing about Obama's elitism from other hyper-elitists. But beneath all the spin, there are serious issues, as Robert Oak reminded me:
the meme
Obama is wrong, very wrong and so are many people on the blogs. Calling rural America gun toting fundamentalist, protectionist, isolationist, racist xenophobes is not how to win friends and influence people.
This theme of either you are for open borders or you are a racist xenophobe has been going on for a long time and yes this isn't the first time I've seen this sort of rhetoric and framing coming from Obama.
Somehow, people thinks it's perfectly ok to name call like this on the left and frankly it's not.
It's also not what is happening on the ground, in small town jobs and factories, in manufacturing jobs. Jobs are being offshore outsourced, China is a major economic and also a military threat and yes we have a biased trade treaty with China to move jobs offshore. Just look at the trade deficit to see the facts.
Look at the costs of illegal immigration and just how much wages have dropped in a series of occupational areas (meatpacking, construction, landscaping).
These economic issues are real. Worker displacement is real.
I get the feeling people who are blogging all have trust funds or somehow identify with affluence and have never even driven through the rust belt, or gone to Detroit or even talked to local workers as they go about their errands never mind have ever lived in a blue collar area or in rural America.
The issue isn't bitter, or frustrated, the issue is Obama does not have any policy positions that will truly rebuild our manufacturing base, stop the flow of illegal labor, not endorse the corporate controlled global migration agenda, take on China both in trade and military agenda and truly support and raise up the American people.
Take for example NAFTA. Obama does not have any policy to really renegotiate trade agreements. Worker and Environmental standards will not
stop labor arbitrage through these trade agreements. The tariff schedule from China alone ensures that. Adding insult to injury by name calling these people just solidifies some philosophy that all
of these very real issues, with real statistics, real data proving they are real, Obama is going to ignore because somehow it goes against some personal philosophy....the facts that is.
What I find amazing is how so many people are so out of touch, they cannot even realize what the insult in those statements is.
Close your computers and open your eyes. Volunteer for Barry Welsh (IN-6th) and get out there and talk to people in an area that has truly been decimating by much of their complaints. Listen to these people and realize what they are saying is valid. The complaints from rural America are real, these are real economic issues and has nothing to do with some sort of perceived cultural identity as is being assumed.
They don't trust the candidates because Candidates are not offering solutions which address these issues and put US workers first, simple as that.
I thought Robert was missing something in the dynamic of the moment, which was important for the point I was trying to make in the diary. But ultimately, the whole point of the sort of analysis I was doing was to fight systematic obscurantism, and, ultimately, to refocus attention on things that actually matter. And since Robert's comment did precisely that... well, why not make that the subject of a diary?
While the choices for President slim down to next to none, one might evaluate positions instead of joining the various cheer leading camps. Who, overall has the best trade, economic positions to stop this global train wreck?
Firstly any group name calling someone protectionist because they acknowledge the obviously massive ~5.6% GDP trade deficit, is obviously not basing their economics on anything remotely resembling reality. The reason I link to this Pro Obama group is because they want more bad trade agreements. They assessed Obama as more of a corporate free trader than Hillary. Below are some statements from the two for easy comparison contrast.
With the Democratic Senate seemingly hell-bent on granting retroactive immunity to telcos that helped Bushco spy on Americans without a warrant, Chris Dodd stepped up to try and bring a halt to the madness by announcing a hold on the bill after it passed a committee vote. Then, Thursday afternoon, at Firedoglake, Jane wrote:
Well this is quite shocking:
Tim Starks of Congressional Quarterly reports that Senate Majority Leader Harry Reid (D-NV) plans to bring the Senate's surveillance bill up for floor debate in mid-November. That's despite the hold that Sen. Chris Dodd (D-CT) plans to place on the measure - something first reported by Election Central's Greg Sargent.
I'm a bit confused here. This just doesn't happen. So I chatted with someone I know with extensive Hill experience, who said:
"I can't think of one time when Harry Reid went around his own. It's just not normal for a leader to do that to his own side. Sometimes you'll go around Republicans, sometimes they'll use holds to be "spoilers," but that happens to the other guy. You just don't do it to one of your own."
Consider what happened when Chris Dodd introduced the Emmet Till cold case bill, which called for more money for unsolved civil rights crimes. Tom Coburn put a hold on the bill - and Reid just let it go. The bill died.
Strange set of priorities you've got there, Senator Reid.
I hope Dodd fights this one like hell.
Outrageous as this is, it's a perfect illustration of a point I didn't quite make as emphatically as I had hoped to with a diary series [links below] I did two weekends ago: that Democrats are as bad on political process as Republicans are on policy in cognitively similar ways. And so I return to that task on the flip.
