Tuesday, July 10, 2018

Last Call For That Worker (Pay) Shortage

Unemployment is super low right now and we've actually reached the point where corporate America is grousing about not having enough people to fill jobs.  In a supply-and-demand universe, basic macroeconomics tells us that as demand for labor goes up and the supply of labor decreases, the price of labor that businesses offer to workers goes up.  But we're in Trump's America in 2018, and that's the last thing that's going to happen, as Mike Hiltzik at the LA Times explains.

“America’s labor shortage is approaching epidemic proportions,” reported CNBC, “and it could be employers who end up paying.” Well, yes. That’s how things are supposed to work: Businesses pay more to attract workers in a tighter, more competitive market for labor.

The rhetoric coming out of the employer lobby would leave one to believe that workers are somehow the guilty party in this — they simply won’t accept jobs that pay them less than they’re worth.

The underlying cause of the “labor shortage” is hiding in plain sight. It’s the long-term trend of funneling the gains from labor productivity not to the workforce, but to shareholders. As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest.

But it’s been going on so long that the addicts, that is, corporate CEOs and their mouthpieces, have forgotten how to respond. The CNBC piece observed, as though this is a new discovery, that “employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.” The harvest will be lower corporate earnings, Goldman Sachs has warned.
According to the Wall Street Journal, Goldman’s economists“predict that every percentage-point increase in labor-cost inflation will drag down earnings of companies in the S&P 500 by 0.8%.” That money won’t disappear, of course—it will go into the pockets of workers, and then find its way back into the coffers of corporate America via higher sales.

The narrow attitude that wage growth is bad for business is exemplified by the pummeling that American Airlines suffered from Wall Street a year ago, when it announced healthy wage increases for pilots and flight attendants, even before their union contracts expired. As we reported at the time, the airline's shares lost more than 8% in value over the ensuing two trading sessions, a loss of about $1.9 billion in market value in 48 hours. 
"Labor is being paid first again," Kevin Crissey, an airlines analyst for Citigroup, bellyached to clients after the announcement. “Shareholders get leftovers." Hardly: From 2014 through 2016, American had authorized $9 billion in share buybacks to fatten the shareholders’ take. By contrast, the pay raises will cost American $1 billion over three years.

What a shock.

And of course you'll hear the screams for miles: corporate profits will be "down" and shareholders will be the "big losers".  We'll have all kinds of gnashing of teeth over American workers making more money being a terrible thing.

Expect Trump to get in on the action, and soon. 

The New Guy's Paper Trail

Brett Kavanaugh, Trump's pick to succeed Anthony Kennedy on the US Supreme Court, has a paper trail a mile long and all of it is on the right side of the road. Josh Marshall explains:

We’re hearing a lot about how Kavanaugh thinks presidents should be largely immune from lawsuits, subpoenas and prosecutorial scrutiny while they serve as president. This appears to have been attractive to President Trump, unsurprisingly. These arguments stem mainly from a 2009 Minnesota Law Review article. The publication date was 2009. But it appears to have been first presented at a symposium in late 2008, while President Bush was still President. 
But this wasn’t Kavanaugh’s first take on presidential power. 
Kavanaugh was a young legal gun (early 30s) on one of the most thoroughly corrupt and brazenly partisan investigations in American history, the do-over Independent Counsel investigation which Ken Starr ran for most of the 1990s, investigating almost every aspect of Bill Clinton’s time in office and the decades which preceded his presidency. Kavanaugh, in addition to being part of the investigation, was also a or the principal author of the notorious Starr Report, a voluminous and gratuitous play-by-play narration of the Clinton-Lewinsky Affair and a brief for impeachment. 
In that document, Kavanaugh argued for a comically broad theory of what constituted obstruction of justice and impeachable offenses. He suggested that Clinton’s efforts to delay being interviewed by the Independent Counsel amounted to obstruction of justice and that lying to his staff and the American people were impeachable offenses. Needless to say, by this standard, President Trump commits numerous impeachable offenses every single day. 
Many commentators are now arguing that the youthful Kavanaugh had one view while the more seasoned District Court Judge saw the matter differently a decade later. Please. Kavanaugh showed a judicious flexibility to allow his views to evolve as they were applied to either Democrats or Republicans, to political foes or friends. There is nothing more pressing and relevant in this political moment than the President’s subservience to the rule of law. Kavanaugh has been all over the map on that question, depending on whether the President was a Republican or Democrat. That all needs to be sorted out before he becomes the deciding vote on whether President needs to answer to the law.

Oh, but it gets worse, as Politico is reporting today.  The fix for Kavanaugh was in from the beginning.

After Justice Anthony Kennedy told President Donald Trump he would relinquish his seat on the Supreme Court, the president emerged from his private meeting with the retiring jurist focused on one candidate to name as his successor: Judge Brett Kavanaugh, Kennedy’s former law clerk. 
Trump, according to confidants and aides close to the White House, has become increasingly convinced that “the judges,” as he puts it, or his administration’s remaking of the federal judiciary in its conservative image, is central to his legacy as president. And he credits Kennedy, who spent more than a decade at the center of power on the court, for helping give him the opportunity.

So even as Trump dispatched his top lawyers to comb though Kavanaugh’s rulings and quizzed allies about whether he was too close to the Bush family, potentially a fatal flaw, the president was always leaning toward accepting Kennedy’s partiality for Kavanaugh while preserving the secret until his formal announcement, sources with knowledge of his thinking told POLITICO. 
Trump, who spent more time with Kavanaugh than the other finalists, was impressed with the judge’s credentials, long judicial record and fidelity to the Constitution, according to administration officials. What was listed as a deal-breaker to some on the right — his long paper trail — was actually the thing that drew Trump to Kavanaugh. 
Administration officials said Trump was taken with Kavanaugh even before his conversation with Kennedy. But Kennedy, in leaving the impression with Trump that Kavanaugh would be a great candidate for the job, helped the president make up his mind.

It's looking more and more like Kennedy made a deal with Trump to name his own successor to the Supreme Court.

Under these circumstances, with Trump under investigation, and with this evidence that there may have been a deal months in the making for Kennedy to retire and name his law clerk as a successor, there is no way Democrats should allow Kavanaugh to be confirmed. 

We'll see what happens.  Dems may not be able to do much of anything, frankly.

But dear God, they have to try.

The Economic Anxiety Experiment

If the key to winning back disaffected Obama voters is to address economic anxiety through Bernie Sanders/Elizabeth Warren-style populism, then the test case is Ohio's Richard Cordray, the Democratic candidate for Governor.  Whether or not he can win in a state Trump won by eight points is another thing entirely.

In early May, Richard Cordray was wrapping up a two-day campaign sprint during which he spoke to crowds of plumbers, pipefitters, ironworkers, teachers, firefighters, furniture workers, and now, as dusk settled over a low-slung Cleveland union hall, a hundred or so food and commercial workers. Cordray, who stepped down as head of the Consumer Financial Protection Bureau last December, was making a last-minute pitch to Ohio Democrats to choose him as their nominee for governor. Ostensibly, he was campaigning to defeat liberal gadfly Dennis Kucinich in the next day’s party primary (which he did, handily). But in a larger sense, Cordray was—is—trying to redeem a Democratic Party blindsided by Donald Trump’s 2016 victory and searching for a path forward.

Trump’s unexpected strength in Midwest swing states such as Ohio, where he trounced Hillary Clinton by eight points, exposed a deep erosion of Democratic support in swaths of the country you have to carry if you want to win the White House. Ohio has voted for the winner in 14 straight presidential elections. That Clinton’s brand of Wall Street-friendly, establishment Democratic politics wasn’t even competitive in this presidential bellwether underscored the scope of the party’s problem.

“Ohio’s not a right-wing state,” Ted Strickland, the former Democratic governor, insists. “Trump came along and captured the zeitgeist of the moment, but I don’t think that’s a permanent thing.”

What’s indisputable is that Ohio revealed a host of shortcomings Democrats must address. While Obama twice won the state with strong minority support, black voter turnout fell sharply in 2016. So did Democratic support in struggling manufacturing hubs such as the Mahoning Valley in Northeast Ohio, where many union members defected to Trump. Meanwhile, suburban voters didn’t turn out in nearly the numbers Democrats needed.

Clinton’s loss raised a host of thorny questions the party has been debating ever since: Was the problem Clinton, or is it broader than that? Should Democrats make more explicit appeals around race and gender to activate disaffected voters? Or should they embrace the full-throated economic populism of Bernie Sanders and Elizabeth Warren?

Cordray’s race will offer some interesting clues—he’s as pure an exponent of Warren-style populism as anyone on this year’s ballot. Because he lacks a Trump-like persona or a desire to litigate the president’s misdeeds, Cordray is embarking on what amounts to a laboratory experiment in the power of progressive economic populism to win back lost voters. Trump showed that hard-right populism can resonate in Ohio; what’s as yet unclear is whether that message can resonate from the left, when shorn of its anti-immigrant, anti-Clinton attacks and dialed back from Trumpian bombast to Cordray’s scout-leader calm.

Recruited by Warren herself to the CFPB after a stint as Ohio’s attorney general, Cordray has turned the agency’s mission of protecting consumers from Wall Street predations into a campaign message. “My job at the CFPB, as President Obama told me when he interviewed me, was to stand on the side of people in the financial marketplace and see that they were treated fairly,” Cordray told a group of Cincinnati firefighters. “We did that—and got back $12 billion for 30 million Americans who had been cheated or mistreated by large financial institutions.” Cordray also touted his role as Ohio’s financial avenger after the 2008 crisis. “We recognized that our pension system had been abused—a pension system that supports our police, firefighters, and public servants,” he continued. “We got back $2 billion from Wall Street that never should have been taken from them and put it back into Ohio taxpayers’ pockets.” 
His Robin Hood record notwithstanding, Cordray, 59, is about the furthest thing from the tub-thumping populists of yore. Tall and sandy-haired, he has a hangdog visage and the soft-spoken demeanor of the late PBS kids’ show host Mr. Rogers. “It makes me mad to see people in government serving themselves at our expense,” Cordray, sounding not the least bit mad, told a union crowd in Lima earlier that day.

While he rarely puts a charge in his audience, Cordray drove Republicans in Washington to fits, quickly emerging as Public Enemy No. 2 (behind Warren) for his aggressiveness in clawing back those billions of dollars for consumers. Conservatives viewed him as the embodiment of rapacious government overreach and made him the target of furious criticism throughout his CFPB tenure. “For conducting unlawful activities, abusing his authority, denying market participants due process, Richard Cordray should be dismissed by our president,” Jeb Hensarling, the Republican chairman of the House Financial Services Committee, declared last year, as part of an unsuccessful campaign to pressure Trump to fire him.

Cordray’s challenge now is to get Ohio voters half as fired up as Republicans like Hensarling. His backers suggest, somewhat hopefully, that his low-wattage personal style will contrast favorably with Trump’s exhausting, nonstop fusillade. “His personality is not like Elizabeth’s or Bernie’s, but his economic policy chops sure are,” says Sandy Theis, former executive director of the liberal nonprofit ProgressOhio. “If you’re looking for a candidate who’ll give you clickbait and headlines, that’s not Rich,” echoes Matt Alter, president of the Cincinnati Firefighters Union, IAFF Local 48. “But he’ll run the state and get things done.” Cordray is fortunate that his Republican opponent, former U.S. Senator and current Ohio Attorney General Mike DeWine, is no more endowed with charisma than he is. As one labor official quipped, the race could turn out to be “the Battle of the Blands.”

If the heartland now wants safe, boring, stable white Democrats like Cordray (and Andy Beshear here in neighboring Kentucky) to bring sanity back, he should have no trouble.  DeWine on the other hand has a long list of extremist positions and is second only to Kansas's Kris Kobach in the voter suppression department.

Personally I think Cordray is a pretty solid guy who can get the job done, but whether or not that's enough to get him elected in the era of Trump, I don't know.  We'll see.

I do know that if Cordray loses, Democrats might want to, you know, pay attention to their actual base and who they are rather than who they want that base to be.

Just saying.


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