Friday, May 22, 2015

The landlords are coming; the landlords are coming!


Just another thought from the poor side of town (half the country — at least). We know the old saying: “The landlord reaps what he does not sow.” You may own a business where you improve and improve your customer base and profits and the landlord just keeps raising the storefront rent to absorb all the expanded profitability for himself — classic predicament.

It occurs to me that with housing stock ever shrinking for the bottom 50 percentile — as what exists now, not so gradually turns condo (my Chicago neighborhoods for sure and I hear my old South Bronx neighborhoods too as yuppies take over there and Harlem) and nobody builds any new housing for the underpaid 50 percent — that any income gains the below 50 percentiles may acquire through higher minimum wages or re-unionization could possibly ALL be absorbed by apartment landlords squeezing all the traffic will bear. You have to sleep somewhere.

What to do? ??? (Got to re-unionize to organize any effective response — that’s for sure.)

Wednesday, May 13, 2015

The missing link in macro economics: labor extracting what the market will bear


Glad I watched Stiglitz video to the very end -- to the part where he contradicts the (fading) free market consensus that pursuing LOWER inequality inevitably causes market distortions that lead to a loss of overall efficiency.

A more fundamental understanding than even progressive economists present (the missing link in macro economics if you ask me) for why HIGHER inequality is associated with higher in-efficiency, higher in-stability and lower growth is that the true market distortion results when labor is unable to test -- indirectly -- what the ultimate consumer would have been willing to pay for the combined product of capital and labor -- through collective bargaining with capital.

When labor is priced only in comparison with other labor – what I call a subsistence-plus labor market -- I think that the most serious miscalculation of relative value occurs.

http://economistsview.typepad.com/economistsview/2015/05/video-stiglitz-on-inequality-wealth-and-growth-why-capitalism-is-failing.html


Thursday, May 7, 2015

Labor Unions Trump Luddites


Mere civil penalties -- if you can call reinstatement a penalty -- carry zero deterrent against union busting.  Firing employees who attempt to organize a collective bargaining unit can be overwhelmingly profitable (unlike practicing forms of discrimination).  Firing a few organizers packs the same tactical punch as locking out the entire workforce but with zero economic inconvenience to the boss.  An employer may even feel compelled to bust a union because the firm down the road does so and he wont be able to compete equally.

Labor unions have no chance to ever resume their role as the natural  counterweight to employer interests unless union blocking/busting will be met with serious jail time.

Disappearing organizers deprives them of more than a job: it strips them of -- both -- the economic and political sinews they need to interact effectively against competing interests. Employees may be able to find another job but they cannot find another fair and balanced society (unless they emigrate to Denmark).
 * * * * * * * * * *
Once a state legislature makes union busting a felony, federal and state RICO prosecution will kick in (there are 33 state RICO laws).

A business (which is not the defendant and which can be perfectly legit) fits the case law definition of an ongoing enterprise -- if it has:
(a) a purpose,
(b) a life outside the crime (a bank robbery gang is not an enterprise),
(c) longevity -- which is taken as over a year or substantially over. Longevity however may be considered built in: for example, if a demand is made for $1,000 a month. I imagine union busting action could be taken as having a common sense expectation of longevity -- if not, wait a year, then factor in the common sense expectation and start your prosecution.
 * * * * * * * * * *

The Industrial Revolution replaced fairly paid individual cloth weavers with steam loom operators whose incomes were squeezed below subsistence by the “Iron Law of (unorganized) Labor.” Over the same period, anyone in England who publicly advocated universal suffrage for all males was on his way to jail and then to Australia.  
The Making of the English Working Class (1966) -- E. P. Thompson
http://www.amazon.com/The-Making-English-Working-Class/dp/0394703227
 


How much happier employees would have been to successfully support legislation protecting collective bargaining -- than to burn down looms.  Labor unions trump Luddites.  :-)

PS.  At first I couldn't believe reading that four years ago, California Governor Jerry Brown vetoed card check legislation for farm workers (of all most desperately in need).  Then, further informed that California has the strongest labor law in the country -- 10% cards signed, the union gets the names and addresses of all employees; 50% gets an election within 7 days, no delays.  Also been suggested Brown traded this off for support for his deficit fighting bill -- possibly figuring he wasn't giving away much even if the other side thought he was.  ???  Important revelation for many here is that states may and do pass their own, even stronger than federal, labor legislation.
http://www.huffingtonpost.com/william-bradley/jerry-brown-farm-worker-bill-veto_b_893599.html

[LATE NOTE:  Just came up with this gem -- in Wisconsin it is a crime to force collection of dues for a union:
"Right to work comes with a Class A misdemeanor. Requiring dues payments could mean nine months in jail and/or a $10,000 fine for each violation."
http://labornotes.org/2015/05/wisconsin-test-case-right-work


So when are we going pass state (and eventually federal) rules criminalizing employers thwarting employees exercise of their right to follow the federally prescribed formula to organize a collective bargaining unit by firing them?]

Wednesday, April 29, 2015

I don't get states not grabbing every Medicaid dime they can

 
I don't get states not grabbing every Medicaid dime they can.  Maybe 50% (rough guess) of would-have-been-covered patient care will end up being covered anyway but thru increased private insurance premiums or via alternate government channels.  Today's (pre-expansion) Medicaid pays something like 65% back to states – leaving something like (okay, rough guess) 15% profit missed for no reason.  States send this money to Washington in the first place; don't they want it back?  ???

Patients who don’t get care for diabetes, early cancer diagnosis, mental health/drug treatment, not to mention for simply controlling blood pressure and cholesterol are going to show up at the health system in the long run with much more expensive symptoms to treat for which they wont be turned away.  The Republican fiscal version of kicking the can down the road.

Medicaid expansion under Obamacare will pay 90% of costs (100% at first).  Inexplicably, 16 governors resist this money dump in their states. 
Florida’s governor wont turn on the spigot because he says he doesn’t trust the feds not to turn it back off.  Wonder what crackpot political party would do something like that.
 
States cut businesses billions in tax breaks hoping to attract jobs.  Medicaid wants to shovel states (back) billions of (their own) dollars -- that will create tens of thousands of good paying medical field jobs (where technical training actually pays off).  Am I missing something here?

Saturday, April 25, 2015

The dismal universe?


Recently I watched a physicist on TV say that fish and birds on other planets would look the same as they do here because the physics of movement would be the same — even if the underlying biology might be very different. 

A while back, after watching a show on chemistry — I wondered if God had done an economic “sneaky” by including silver and gold in the table of elements: both naturally precious looking, the more attractive of the two being the more rare. What else could have so perfectly filled the need for a medium of economic exchange in early (pre-plastic) civilizations?
 
Now, it occurs to me that silver and gold is the likely medium of exchange in developing civilizations all over the universe -- perhaps with the same contention over gold versus bimetal standard.  The dismal science is everywhere too!

Time to break up medical monopolies of our own making?

 
Sovaldi, the $84,000 cure (90+%) for Hepatitis C. Early research got along on government grants — until researchers smelled money; then looked for private investment. Success: planned sell for $350 a pill but Gilead Sciences “gambled” and paid Pharmasset $11 billion for it, thinking of $1000 a pill …
… enough to cost $300 billion if all patients get treatment (70% will develop liver symptoms) — as much as all other prescriptions cost combined. Pharmasset would only have charged $100 billion.
Scientists ‘incredibly excited’ by asthma treatment breakthrough http://www.medicalnewstoday.com/articles/292947.php - See more at: http://angrybearblog.com/2015/04/open-thread-april-24-2015.html#comments
Scientists ‘incredibly excited’ by asthma treatment breakthrough http://www.medicalnewstoday.com/articles/292947.php - See more at: http://angrybearblog.com/2015/04/open-thread-april-24-2015.html#comments

Alzheimer’s: new ultrasound technique ‘restores memory’ in mice
http://www.medicalnewstoday.com/articles/290801.php
Nanoparticles that ferry dopamine to the brain offer potential Parkinson’s treatment http://www.medicalnewstoday.com/articles/292848.php
Scientists ‘incredibly excited’ by asthma treatment breakthrough
http://www.medicalnewstoday.com/articles/292947.php

Scientists ‘incredibly excited’ by asthma treatment breakthrough http://www.medicalnewstoday.com/articles/292947.php - See more at: http://angrybearblog.com/2015/04/open-thread-april-24-2015.html#comments

Got to read Medical News Today — multiple stories of progress daily — medical knowledge doubles every two years. Will we rejoice if and when these treatments and dozens of others work out — or will these be more causes of anxiety about how we as a nation are supposed to pay the extortionate rates of multiple medical monopolists?   http://www.medicalnewstoday.com/

Antibiotics Against Superbugs
One line of research our non-hero scientists ($440 million personally to the chief scientist who discovered Sovaldi) don’t trouble themselves to pursue is new anti-biotics — seems the bugs develop resistance too fast and then the money dries up too soon. Welcome back to 1935. 

https://thebrowser.com/articles/antibiotics-against-superbugs/

Meanwhile back on the farm, Bloomberg:
“since 2007, the cost of brand name medicines has soared with prices doubling for dozens of established drugs that target everything from multiple sclerosis to cancer, blood pressure and even erectile dysfunction.”

http://www.bloomberg.com/bw/articles/2014-05-08/why-prescription-drug-prices-keep-rising-higher

John D. Rockefeller and Andrew Carnegie could not have invented one monopoly after another to fete themselves on -- temporary, but don't worry, they can invent them faster than they lapse -- and held the nation's health hostage to garner obscene sums.  Time to break up the medical monopolies we are making with our outdated patent system -- don't forget medical device makers and one-and-a-half million insurance bureaucrats (don't care what their profit percentage is) trying not to pay three-quarters of a million doctors?  Time for America to learn to do medicine a different way? 

Played right, the medicine can become America's rust proof, export proof (even to cheaper US locals), recession proof, pollution free, even robot resistan growth industry.  Don't worry; per capita output grows 20% every ten years to pay for it all -- assuming the 1% don't keep scarfing 95% (true figure) of the growth.  

[Late note: "Hepatitis C linked to increased risk of liver cancer, other cancers"  Double the risk of cancers other than liver cancer?
http://www.medicalnewstoday.com/articles/293082.php]


Sovaldi, the $84,000 cure (90+%) for Hepatitis C. Early research got along on government grants — until researchers smelled money; then looked for private investment. Success: planned sell for $350 a pill but Gilead Sciences “gambled” and paid Pharmasset $11 billion for it, thinking of $1000 a pill …
… enough to cost $300 million if all patients get treatment (70% will develop liver symptoms) — as much as all other prescriptions cost combined. Pharmasset would only have charged $100 billion.
Alzheimer’s: new ultrasound technique ‘restores memory’ in mice
http://www.medicalnewstoday.com/articles/290801.php
Nanoparticles that ferry dopamine to the brain offer potential Parkinson’s treatment
http://www.medicalnewstoday.com/articles/292848.php
Got to read Medical News Today — multiple stories of progress daily — medical knowledge doubles every two years. Will we rejoice if and when these treatments and dozens of others work out — or will these be more causes of anxiety about how we as a nation are supposed to pay the extortionate rates of multiple medical monopolists?
Antibiotics Against Superbugs
One line of research our super-overpaid scientists ($440 million personally to the chief scientist who discovered Sovaldi) don’t trouble themselves to pursue is new anti-biotics — seems the bugs develop resistance too fast and then the money dries up too soon. Welcome back to 1935.
http://www.medicalnewstoday.com/articles/292848.php
Meanwhile back on the farm, Bloomberg:
“since 2007, the cost of brand name medicines has soared with prices doubling for dozens of established drugs that target everything from multiple sclerosis to cancer, blood pressure and even erectile dysfunction.”
http://www.bloomberg.com/bw/articles/2014-05-08/why-prescription-drug-prices-keep-rising-higher
Time to break the medical monopolies anyone?
- See more at: http://angrybearblog.com/2015/04/open-thread-april-24-2015.html#comments

Saturday, April 18, 2015

[UNDER DE-STRUCTION?]


[UNDER DE-STRUCTION:  See "Labor Unions Trump Luddites" above:  http://ontodayspage.blogspot.com/2015/05/working-on-angles-to-make-criminalizing.html ]

There are two RICO prosecutable sides to firing employees for attempting to organize labor.  The side everybody naturally thinks of is the extortionate side – the pain of unemployment.  The side everybody seems to miss is the illegal blocking of participation in the legally prescribed process of assembling a collective bargaining unit – solely for the sake of depriving employees of monies they could win from the employer in true free market negotiating.

Think almost perfect parallel with prolifers sued under RICO for blocking clinics – except that prolifers slipped off the RICO hook because they were not seeking to squeeze clinics for financial gain.
 

Let’s make up a situation which is all blocking -- no firing; no extortion.  Imagine that the federal organizing formula required online application (Obamacare style) and that for some reason the computers needed to be on the work site – and that the employer permanently barred employees from computer access.  If this is RICO/Hobbs prosecutable, then, firing is too.

Firing employees means they no longer have anything to organize -- inherently severs them from the legal prescribed process. 

Deprivation of economic participation for attempting to organize – not to reduce staff or for poor performance -- ought to be RICO/Hobbs prosecutable all by itself.  But the offense has been practiced without prosecution so much for so long (the free market?) that it may be hard for the courts to ever get their heads around the extortionate side of it.

Unions do not have to wait for prosecutors to catch on – should be able to seek injunctions against blocking of the federally prescribed organizing process – or sue after the fact.  Get cases going; watch the perps run for the hills while the cases run their courses (not sure what their liability will be) – we can organize the country out from under them before the rulings come down.

Alternate route: states can make blocking of and/or extortion against union organizing activity a felony punishable by one year – that would meet a requirement for RICO prosecution.  If pro union legislators everywhere attempt to pass such legislation every year – whether successful or not – I can think of no better ed-u-cational process about the criminality of habitually depriving most Americans of their economic and political wherewithal that Americans have gotten so used to tolerating (except maybe if our ed-u-cator-in-chief decides to make it his or her number one topic).

Wednesday, April 15, 2015

SS Trust Fund foie gras?


When FICA income no longer covers SS retirement outgo we will do one of three things: raise the FICA rate, raise the FICA cap or raise the income tax (or expand the deficit) to cash the Trust Fund bonds.

When the TF bonds run out (should keep one year of full replacement, not shortfall coverage -- the statutory definition of solvency) we can easily make a rule that income tax will from then on will cover the FICA shortfall -- easily because that's what we would have been doing for a couple of decades prior.

Politically, cashing the TF bonds may be the most doubtful outcome because that would in effect reverse the cap: the bottom 50% would pay nothing, the top 10% would take the biggest hit.  Most doubtful under today's 1% rule politics anyway.  Which doubtfulness makes today's Trust Fund stuffing remind me of foie gras.  :-)

Monday, April 13, 2015

Dem party seems at best to want to hang on to the paltry past


Dem party seems at best to want to hang on to the paltry past:
Obamacare that leaves tens of millions out -- too expensive for too many;
General support for some kind of minimum wage hike (min now several dollars below 1968 -- double per capita income later!)
Hang on to SS, Medicare, Medicaid;
Hang on to
Dodd-Frank;
Nothing to do about the defining economic -- and political -- pathology of de-unionization.

Nothing to wake voters out of their deep sleep and rouse them to the polls.

How about selling:
$15 an hour min wage (45% of workforce gets raise -- only 3.5% shift of GDP);
Push some version of single-payer -- or perhaps just the intention to work out or at least work on some version of single-payer like Obama worked on Ocare (squeezed most out of political lemon: told industries they are either at the table or the meal; promised more business to pay for lower costs);
Face up to core task of re-unionization in concrete way -- how about sicking RICO on union busters: arguable; and while the arguments go on in court, hopefully, the busters will run for the hills, not wanting to pile up anymore liabilities while waiting for rulings to come down, while we organize the country out from under them, too late for them whatever the rulings. Just one idea. Where are the others? Must do in any case: centralized bargaining (one labor contract with different similar firms) the only way to end the race-to-the-bottom, unionized or not.

Need a (non-paltry) party that can actually get our lives back.

Monday, April 6, 2015

Union contracts steer employees and consumers (not employers) towards mutual comfort(/discomfort) zone

 
Imagine a simple market where cloth weavers sell their wares to clothing sewers — many individual sellers, many individual buyers. Prices set at the mutually comfortable level — as in a level at which seller and buyer are equally happy/unhappy. At what other possible level?. Came the steam looms. …

… But wait. I heard a lecture today (by a Hathaway vice-pres yet) which described how investors in steam looms expected to recoup their money in three years and reap the bounty of mechanization for seventeen more. Only to discover of course that the bounty would be reaped instead by consumers — as competition drove prices down. …

… Back to the post-steam loom — separate employees from bargaining directly with the ultimate consumer — labor market. It’s almost too simple to describe. Steam loom operators did not — could not — set the price of their labor at the mutual comfort level with the ultimate consumers — who benefited from the price competition noted above and could surely have afforded to pay a few extra bob. Labor’s price was set instead at bare subsistence level — take it or leave it; we can hire the next starving sod who comes along (not very comfortable). Leaving loom operators families living on oat cakes three times a day because they could not afford wheat bread (forget about meat from my readings).

Unions in centralized bargaining labor markets tend to set labor’s price back at mutual comfort level with the ultimate consumers. There should be plenty of comfort to go around.

Wednesday, April 1, 2015

"Virtual co-ops" [see post below] can clear the American labor market -- and Chicago's drop-dead ghettos


Under "virtual co-ops" [see post below] the market will clear at a higher price for labor then under what I call our current "two-tier" labor market (unorganized) where labor's price is set relative to other labor instead of consumer preference (bring back the steam looms!).

Actually today's American labor market is NOT clearing because the price of labor is too low to clear: e.g., 100,000 out of (I estimate) 200,000 Chicago gang-age males are in street gangs because the minimum wage (to cite one thing) is $3.50 below LBJ's 1968 $10.75 DOUBLE THE PER CAPITA INCOME LATER!
http://www.cbsnews.com/news/gang-wars-at-the-root-of-chicagos-high-murder-rate/

The proportion out of the labor market may be worse. Somebody pointed me to a Forbes article stating half of Ferguson's young African-American males are missing from the census.

"While the problem of missing African American men is especially severe in Ferguson, young black men are absent from most U.S. cities. In the neighboring cities of East St. Louis, IL and St. Louis, about 38% and 24% of African American men age 25 to 34 are absent from their communities, respectively. On average, about 18 percent of young African American men are absent from large cities. (This calculation is based on the combined population of 33 cities with the largest African American populations, home to about one quarter of African Americans in the U.S.) In contrast, outside of large cities only about 4% of young black men are absent from their communities. The challenges posed by an absence of black men in Ferguson are problems faced primarily by larger cities."
http://www.forbes.com/sites/modeledbehavior/2015/03/18/half-of-fergusons-young-african-american-men-are-missing/

Actually, there may be a ray of hope in this for the long run solution to Chicago's seemingly permanent drop-dead ghettos. Fix the American labor market as a whole and the men and women who live there may be very flexible about commuting or even emigrating to where the jobs are. Then, they can bring demand back into the neighborhood -- or send money back like foreign immigrants! Gradually, economically healthy neighborhoods can emerge.

A NATION of VIRTUAL co-ops


Sure as the pricking of my thumbs something unraveling inequality this way comes. 

Apply RICO and the Hobbs Act to the practice and (in the case of consultants) profession of union-busting -- firing workers who try to carry out the federally prescribed steps to establish collective bargaining with their employer -- and when the prosecutions begin all the busters may head for the hills waiting (how ever many years it takes) for the cases to reach a conclusion in the higher courts. 

Meantime we can unionize the country right out from under them -- be too late to do anything about no matter how the rulings come down (could work).

Be nice if every firm were a co-operative -- where labor squeezed the consumer as hard as ownership? Combine ACROSS THE BOARD UNIONIZATION -- with -- CENTRALIZED BARGAINING (all similar jobs under one contract with different employers) and you have the equivalent of A NATION OF CO-OPS. 

Ask Germany; ask Denmark. Remember, unions are the average persons only political counterweight -- which should make right-to-work legislation allowing free riding employees a serious (devastating) First Amendment infringement on the mass of employees.

Tuesday, March 31, 2015

Big Pharma more market distorting than John D Rockerfeller?


We have to start looking at these drug monopolies as if they were John D. Rockefeller land. They may be temporary monopolies but when 5 million Hep C patients can use a new drug that costs $84,000 a treatment that adds up to $400 billion+ for one treatment of one ailment.

Steven Brill reports the government paid for the initial research on the med but when the researchers smelled money they switched to private funding. Brill says 1/10 the price would be reasonable. The endocrinologist at the heart of the research made $440 million for himself.

If you can go to India and stay 12 weeks you can do the same course of treatment for $1,000 (maybe you can sneak the pills back; don't know if that'd be legal -- why not?). Wouldn't it make the point if Medicare did something outlandish (I wont say crazy) like approving payment for the Indian trip to save tens of thousands of dollars (I've seen an estimate of $54,000)?

Sunday, March 29, 2015

Planting progressive feet on labor market terra-firma


The big thing -- and it is a very big thing -- that progressive economists (I could understand if it were CATO) perpetually leave out of minimum wage/employment discussions is any acknowledgement of the tradeoff between the proportion of the wage gain and the proportion of the possible job losses.  Simply, if we double the min wage and some of the jobs are automated out (in Australia the customer may operate her own order on the key pad) the workers are way (way!) ahead.  This should be at the center of every discussion or we are leaving out what could be -- literally -- the most important factor.

Another huge factor -- which I don't expect individual store owners to grok (they might)-- but which should be the alpha and omega of progressive economists' thinking, is how the income shift of, say, 45% of employees getting an $8,000 average raise ($15 min) will affect the demand at the businesses those employees work in (and don't forget the businesses/employees whose wages get pushed up as a secondary result).

Toughest case: fast-food?  Doubt it.  The 25% increase in prices (33% labor costs) may not even be noticed by the 65% of customers coming through Ronald's drive-thrus if they don't listen hard before they pop the plastic -- what are they going to do, bring peanut butter sandwiches?  When Illinois raised its min wage pretty quickly from $5.15 to $8, I and retired teacher who were regulars in the Ronald's across the street from me noticed a pickup in what we might call the third-world end of the business, mostly Mexican.  Now the new owners across the street have just raised prices on many items 20-25% seemly because they think they can get away with it -- didn't seem to worry them.

The 35% coming through the doors will have more money to spend -- which wont cost the consumers of businesses they work in very much -- SORT OF A "MAKE-BELIEVE" MULTIPLIER.  Un-toughest example: Walmart.  $15 min wage raises Walmart prices 4% (7% labor costs).  Wonder how many jobs lost at Walmart -- unless their newly flush low income buyers decide to move upscale -- Walmart can always move their merch upscale.

When people argue whether the economics profession knows what it is doing on macro-micro theory -- way above my (NY-Chi-SF cab driver) pay grade.  But when economists perpetually leave out the most important labor market factors (to people actually in the labor market!) I wish they would plant their feet more solidly on terra firma.