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Amid haute cuisine and class struggle

12 Feb

oysters-rockefeller-52891-1

Last night I had Oysters Rockefeller. It was accompanied by green beans, a baked tomato and finger potatoes. Preceding that was chicken noodle soup and a salad of baby spinach, walnuts, goat cheese and dried cranberries. Dessert followed. This was dinner at the retirement home – not mine, my father’s.

 

The food was slightly better than usual because it was Birthday Night, the once-a-month event that celebrates all those born in that month. But even on regular nights, the meals are of high quality. Overall, the place is well-maintained, very clean and well-functioning. The staff is attentive and friendly.

 

Sitting in the dining hall, however, I realized my father was unlike nearly all the other people. He was of a different class. Even in old age, maybe especially in old age, this kind of thing comes through.

 

“Hey,” a man who had the look of a retired corporate executive shouted across several tables at my father when he was a newcomer. “You’ve got a hat on. Take off your hat!”

 

My father is bald and wears a hat to keep his head warm. He explained this to the man yelling at him and declined the directive to remove it. I don’t think the two have spoken since.

 

Dad has his friends at the home. All the Italians, plus the open, gregarious people who don’t think too much of themselves. Still, I’m certain few share his background.

 

european-immigrants-disembarking-everett

My father was born to immigrant parents. He worked in factories, served in World War II and afterward took a job with the United States Postal Service. He never made much money but late in life was approved for a 100 percent veterans disability pension (loss of hearing in one ear during the war). This was a boost to his income at a time when his expenses were low. Actually, he never did spend much money, but with this second pension he was able to save even more. He invested mostly in CDs and government bonds when inflation and interest rates were in double digits, and made good money when he sold a house originally purchased for $15,000.

 

So, unlike a lot of working men, this working man was able to afford a berth in a rather nice retirement home. By doing that, he has to put up with the kind of people who may have had servants and commanded a realm.

 

“I wouldn’t sit there,” a thin, small, patrician-looking woman told me on Birthday Night. I was trying to sit down with my father at “her” table. “Mildred will be coming soon and that’s where she sits.”

 

We sat anyway. The hostess had  placed us there, advising that Mildred would be seated at another table, and so the suggestion was ignored.

 

But it did not stop there.

 

When I asked my father what he was going to order, I spoke somewhat loudly into his hearing-aid assisted “good” ear.

 

“Please lower your voice, ,” the woman told me.

 

“I need to speak loud enough for him to hear,” I said.

 

“He can hear you,” she said dismissively. “And Mildred will be coming soon.”

 

When she spoke again of Mildred coming, I was tempted to call her an old bat. Before I could, the hostess came over and said, “If you are uncomfortable here, I can seat you at a different table.”

 

I took her up on that.

Walker

Officially, there are no assigned seats at this particular home.  But so many residents insist on sitting at the same place all the time, and with the same people, that things can get nasty. It could just be that old people are nasty, yet I sense past lives of entitlement influencing the forcefulness of these individuals. Most are dressed fairly well as they push their walkers about. Many women get their hair done regularly and accessorize with jewelry. My father, meanwhile, doesn’t care much about his appearance.

 

Overall, the class distinction here comes down to look and attitude, since there isn’t a lot of spending and few extra possessions. There’s a haughtiness in at least a strong minority of the residents. In some cases, it’s mean arrogance.

 

One night I brought my father back to the home after dinner at my house.

 

“It’s not quite seven,” I said. “You can get in on tonight’s poker game.”

 

He didn’t answer right away, then said, “I’m never going to play poker here again.” His face was full of hurt.

 

“Oh no,” I said. “What happened?”

 

“Four of us were playing in the game room. Nickle and dime. Everything was fine. Then I won four hands in a row and this guy, a very bitter man who always seems to be in a bad mood, says in a loud voice, ‘I’m not going to play with a cheater.’ He was referring to me.”

Minolta DSC

“What?” I had this ridiculous image of arthritic hands trying to deal a second, with cards flying everywhere.

“I thought maybe I didn’t hear him right or that he was kidding. But he repeated it. ‘I’m not playing with cheaters.’ I said something back and then I got up and left. That’s it. I’ll never play again.”

 

It was difficult for me to believe anyone in a retirement home could act this way over a game, but I guess I’m naïve. Anger and unhappiness, and perhaps paranoia, don’t disappear with age. Maybe they get worse.

 

My father’s accuser, whom he pointed out to me on a latter visit, had the appearance of a grumpy man in charge of something important who treats everyone around him poorly. It’s possible he was delusional, and that this was not about class, or feeling superior, or not trusting someone unlike you. Still, while eating dinner in the dining hall and looking over the patrons (they all look so similar), I had an idea.

 

Why not adopt the college model for retirement homes and diversify the population by offering scholarships?

diverse students

Colleges and universities see a homogeneous student population as a detriment to learning and understanding life. By working hard to diversify those who are admitted, higher ed administrators believe they improve the student experience.

 

The retirement home experience sure could use improvement. So why not take some affirmative action and offer elderly scholarships and admit people who otherwise would not even think of applying? It could become a whole new thing. Corporate sponsors could be found. In trying to recruit the residents, personnel from the home could attend retirement parties at factories and other places of blue collar employment. They could even go after people with special talents.

Shuffleboard

For example, a scholarship could be offered to a champion shuffled board player who could be entered in a new retirement home league and bring pride and glory to his particular home. Maybe there’s a bingo player out there who has developed a strategy that goes beyond chance. He or she would be an attractive find. Or, if there are any left, old vaudevillians could be recruited. They could entertain fellow residents in exchange for their scholarships.

 

In the beginning, the scholarship elderly would be looked upon as beneath those who pay full price. But I suspect – and hope – that with time they would be accepted and maybe even be able to sit at the table of their choice. Like at colleges, they would change the atmosphere, attitude and culture of retirement homes, bringing more tolerance and empathy.

 

And less grumpiness.

Less grumpy old person

I think this is worth a try. Now who will fund that first scholarship?

 

By Lanny Morgnanesi

The Black Death, a killer of 20 million, had its good points

7 Feb

black-death

Being the progeny of immigrants, I’m sympathetic to their cause. Still, I’m convinced large-scale, legal immigration has hastened the withering of the middle class.

There have been other causes, including changes in tax policy and the global economy. But I was surprised to learn recently how significant an impact immigration had on the downward spiral of wages.

With thousands and thousands of Baby Boomers leaving the work force for retirement, wages should be going up. That’s the simple law of supply and demand. Immigration, however, has provided a counter balance and prevented this. Indeed, opening the borders sometimes seems like a purposeful antidote designed to help labor-intensive corporations. This is mostly likely why the U.S. Chamber of Commerce is a strong advocate of robust immigration.

Congress, perhaps responding to appeals by business, has frequently and consistently raised the level of legal immigration. In 1965 it was at 290,000 annually. Today it is about 1.1 million. This is legal immigration, and it is four times higher than any other country.

how-many-is-too-manyPhilip Cafaro, author of “How Many Is Too Many? The Progressive Argument for Reducing Immigration Into the United States,” gives a thorough accounting of all this in a recent edition of the Chronicle of Higher Education.

Cafaro sites studies by Harvard University economist George J. Borjas, a leading authority on the economic impact of immigration. Borjas found that in the 70s and 80s, a 10 percent increase in the number of workers in a given field decreased wages there by 3.5 percent. A more recent study showed that such an increase reduced wages of African-Americans by 4 percent, lowered their employment rate by 3.5 percent and increased their incarceration rate by almost one percent.

It’s good at least that today there is a great deal of talk about the withering middle class. Even Republicans now recognize it will be a critical issue in the 2016 presidential race. In an attempt to get in front of the issue, candidates like Jeb Bush are already saying they want to reverse the trend, although they provide few details.

If politics were not a factor, a solution could be easily found.

The strong post-war middle class in the U.S. was created primarily by tax policy. This policy was heavily graduated, meaning you paid a lot more if you made more a lot more. That policy no longer exists. Returning to it would easily restore the middle class, but it is unlikely the Republican Congress will choose this route.

Jeb-bushThere is, however, a consensus that a middle class, if one is desired, must be created, otherwise there will only be rich and poor. One was created in Europe during the 14th and 15th centuries. Unfortunately, the creative force was the Black Death — the bubonic plague that may have killed one out of every three Europeans (about 20 million). With the labor force devastated, there was upward pressure on wages and the ability of farmers to earn a much better living. Some reports say farm income increased by 50 percent.

In addition to creating the middle class, the plague often is credited with spawning the cultural rebirth known as the Renaissance.

The Black Death is a high price to pay for a middle class, even if it is accompanied by a renaissance. Changes in the tax and immigration policies might be a better way. But because government move in micro increments, this is unlikely. Any significant change probably will have to come through some unseen, forced hand.

If this is true, let’s hope it’s a kind one.

By Lanny Morgnanesi

Where did everyone go? “Baby Bust” affects both prison population and college enrollment

9 Nov

Prison

Someone once told me if you build a prison, it will fill up. Conversely, if a prison is full, criminals will be let out.

From this it is easy to conclude that a person who normally would be free might get locked up, and a person who normally would be jailed might go free.

Both are frightening thoughts. Neither says much about justice.

Prison pop worldMore frightening is the widely known but often ignored fact that the United States puts more people behind bars than any other nation. That figure is about 2 million.

The U.S. population has increased by about one-third since 1980, but the federal prison population has grown by about 800 percent.

Yet we still call ourselves the land of the free.

So it goes. I wish I understood why. I wish there was someone who could explain these problems and come up with a method to reverse them.

Well, sometimes things reverse themselves.

A recent story that was basically overlooked said that the federal prison population has declined by 4,800 inmates. This is the first decline in a decade. And it turns out that the populations in state and county lockups have been dropping for the past five years.

“Our new projections anticipate that the number of federal inmates will fall by just over 2,000 in the next 12 months — and by almost 10,000 in the year after,” said Attorney General Eric Holder “This is nothing less than historic.”

Fine, but no one explained why.

Prison poulation-WikiIt is doubtful our government has the ability to stop crime. Government can take credit for it, but that doesn’t mean it’s true. After crime dropped years ago, improvements in law enforcement were credited. Later, under the category of Freakanomics, it was determined that the drop in crime occurred about 18 years after the legalization of abortion. This means that there was was less crime because fewer criminals were born.

It was that simple.

Abortion may not be behind these new figures, but fewer criminals being born may be.
A running demographic trend called the “baby bust” has now caused a decline in the number of young adults, the same people who commit most crimes. A bad economy, it seems, affects childbirth, and the economy hasn’t been good for quite some time. It is said that the recession of 2008 alone resulted in a half million fewer births.

I’m familiar with the baby bust because I’ve seen its impact on higher education. With fewer students of college age, enrollments are declining at colleges and universities across the nation.

“They can’t go to college if they haven’t been born,” one educator explained.

Birth ratesIn 1900, Mark Twain looked for some linkage between crime and education and said, “Every time you close a school, you have to build a jail.” While the reserve could be true, new colleges aren’t needed right now because of the enrollment decline. But because of the savings from the decline in prison population – the feds spend $80 billion a year on incarceration — money could be available to help students with tuition.

What a great nation ours would be if, like some others, we made it easy and cheap for young people to get an education. But we still would have the empty prisons and we’ll need to figure out what to do with them.

Maybe we can just let them rot. They can become sad displays of a culture that with a blind eye created and nourished the darker side of humanity. But a demographic bump doesn’t permanently correct a problem. So a better idea might be to turn the prisons into factories, which will improve the economy, which will increase the birth rate, which will create more crime, which will require more prisons. At that point, we can close the factories, open the prisons, and wait for economy to go bad and the birth rate to drop again.

That sounds so right it has got to be wrong. But I’m not hearing much better from the experts. Do you think we can put a little pressure on them? Or should we just wait until everything fixes itself? Actually, this seems much more likely.

By Lanny Morgnanesi

With so many in “deep poverty,” mere poverty is almost like the middle class

29 Sep

Philly poverty

If one of us, or many of us, falls behind, way behind, is it the responsibility of those ahead to pull up the less fortunate, the unfortunate and all those whom fortune has woefully forsaken?

Those living in and around Philadelphia should be giving this serious thought. In this city, the name of which means brotherly love, the economy, the culture, the dynamics, the thoughts and the ideals are too weak to sustain the population. What exists there represents gross failure.

A new report says that 12 percent of Philadelphia residents live in something called deep poverty. Sadly, the times have forced us to look beyond mere poverty, which in Philadelphia is 26 percent.

The city, which I live outside of, ranked highest in deep poverty when compared to the nation’s 10 biggest cities. Nearby Camden, across the river in New Jersey, is not among the biggest and wasn’t ranked. But it has a deep poverty rate of 20 percent and a poverty rate of 43 percent.

From my little cloister, that’s difficult to even imagine.

Deep poverty chartAll these figures come from the U.S. Census’ 2013 American Community Survey, which was recently released.

By definition, a family of three is in poverty if it lives on $20,000 a year. In deep poverty, three survive on $10,000 a year.

In terms of sheer numbers, there are 184,000 people in Philadelphia who are clinging to its lowest rung. Alfred Lubrano, a staff writer for the Inquirer, said that’s about the size of cities like Tallahassee, Florida or Salt Lake City, Utah.

It strikes me as being post-apocalyptic.

But I almost never go to the neighborhoods were the 184,000 live. Camden to me is like Mars.

Still, I can’t help feel as if people like me have somehow failed those in deep poverty, even though many have failed themselves.

In any group, on any place in the world, there are people who do well and people who do not. There are those who need no help and there are the helpless. Now and in the past, however, social units like Native-American tribes or New England colonies or even extended families would try to lift up those that some might describe as laggards. They would do so simply because the unit was a unit and felt responsible for its members. To some degree, we do this in America. We have networks of social services, we have churches and synagogues, and we have government.

Lubrano, the Inquirer reporter, interviewed a Philadelphia women in deep poverty. She is 42 years old, separated with three children ages 7 to 17. Born into an Irish-Italian family, she had dropped out of high school and worked as a cashier. According to Lubrano, she fell into depression and was unable to work. So the government provided her with disability payments of $8,880 a year.

This is a nice gesture, but not a solution to the problem.

So what is? With so many types of poverty, there probably would have to be an assortment of solutions, and even then many couldn’t be reached or helped or encouraged. But it’s for certain a studied, intelligent approach would reduce Philadelphia’s Tallahassee-size problem to perhaps a problem the size of Lost Springs, Wyoming, or Bozeman, Montana.

I lack the training, depth and insight of a social engineer, but one thing I’d like to see in every poor neighborhood is a “Factory of Last Resort.” Employment would be open to all those in poverty and deep poverty who are looking for an out. They would manufacture a mundane but useful item, like brooms or soap. These factories probably would operate at a loss, but there would be incentives to keep loses to a minimum and inch toward profitability. Included with the job would be access to health clinics, day care, a dining hall and dorms.

We would be building the equivalent of an urban kibbutz.

After a time, management positions would go to employees who exhibit leadership skills, the ones who have learned and blossomed from the experience. Awakenings often come with restored dignity.

Those of us who are doing well would be encouraged to buy the brooms and soap as a sign of support. It would be a way for all of us to make our cities whole again and to keep humanity human.

And then, should we want to, we can safely and happily visit the once great and now great-again places like Camden, which spawned RCA Records and Campbell Soup. And the City of Brotherly Love can free itself from the embarrassing irony of its name. It can return to its Quaker roots of service, justice, community, self-improvement and independence.

I love a good city. This would give us more of them.

By Lanny Morgnanesi

Hobos, happiness and the Big Rock Candy Mountain

24 Aug


Hobos

I used to think “Big Rock Candy Mountain” was a children’s song. It’s not. It’s a song by and about hobos that someone made into a children’s song.

 

Harry McClintock, a hobo known as Haywire Mac, was the first to record it in 1928. It depicts a hobo’s paradise. You don’t see many hobos today but they were common and plentiful during the Depression.

 

The Coen brothers used the song in the movie, “Oh Brother Where Art Thou?” Recently, I watched the movie again on TV and gave a close listen to the lyrics of the song.

 

Harry-mcclintockIt describes a place where cops have wooden legs so hobos can out run them. The jails are made of tin so hobos can easily escape. On the Big Rock Candy Mountain, boxcars are always empty and lakes are filled with stew and whiskey. There are no short-handled shovels.

 

That’s the hobo’s idea of paradise.

 

After hearing the song, I though that if I were a hobo my paradise would have no cops and no jails. It would be a place where someone down on their luck could crawl out of their hole and make a good living; a place where even a hobo could be somebody.

 

What I failed to understand was that in my hobo paradise, a hobo would cease being a hobo. As I listened to the song again, it became clear that while hobos may want an easier life, they still want to be hobos.

 

Which raises the question: How true is this of other people and their lives?

 

Amidst our general hardship and discomfort, apart from our complaints and dissatisfaction with the small and the large, are we actually … happy?

 

As you think, consider this little story.

 

I once spent the Fourth of July at a country club. The fireworks were fantastic and the food was beyond good. There were hot dogs and hamburgers but also barbecued chicken and ribs, all you could eat. On a table the length of an interstate was an assortment of desserts.

 

In addition to bringing me, my host brought an African-American boy, about 12. He was from a Philadelphia neighborhood that was experiencing a rash of random shootings and killings. The little man was brought to the suburbs via a program designed to give poor children a break from the stresses of violence and poverty.

He was the only black person at the affair.

 

As I worked on my second helping of ribs, he sat with his head on the table, almost dozing off.

 

“Tell me,” I said. “Would you rather be here or home?”

 

He paused, apparently not wanting to seem ungrateful, then smiled and said, “Home.”

 

For him, happiness was the familiar, not the strange.

 

The familiar is comfortable and predictable. While I can’t document this, I have heard of a study showing that people, if given the chance to exchange all their problems and ills with the problems and ills of another person, would decline. If true, this is further evidence that no matter who we are, we like our lives.

 

Andy-Capp-Cartoon Pictures (1)It’s been said that England is defined by its class structure, and that people recognize and take pride in their station, be it high or low. They wear cloths and banners proclaiming their class – like the Jeff cap worn by the working-class cartoon character Andy Capp.

 

I don’t think we do that in America, but maybe I’m just blind to it. Either way, listening closely to “Big Rock Candy Mountain” has made me believe that America, for all its problems, is a land of contentment for both the haves and have-nots.

 

It’s so content that most don’t even vote.

 

While a peaceful populace has its advantages, it also has its dangers. Injustices are easily wrought upon the passive. Eventually, they create a destabilizing imbalance that will harm everyone – even their originators.

 

Income inequality is such an imbalance. In nations, stability and economic might are derived from a deep, viable, productive middle class, with a minimum of poverty and want. But when wealth is concentrated among the few, as has occurred in the U.S., the whole system is threatened because the many stop spending.

 

An alarm was sounded recently by Standard and Poor’s, the bond-rating company. It released a study showing that income inequality is responsible for a slowdown in the American economy. A headline on Fortune.com read:

More concentrated wealth means less spending than if money was spread to more people, according to a new report.

 

This realization, and others like it, is putting income inequality on the national agenda. Balance, to some degree, eventually will be restored. But it is because the elite acted, not the complacent.

 

I realize people get set in their ways; that they like routine and follow habits religiously. Still, there comes a point when routine is dispensed with in order to preserve dignity, honor and respect that were compromised by imbalance. At home, this happened in Ferguson, Missouri. Abroad, it happened in Gaza. The wise nation will avoid such flashpoints. More common is that they will act after the fact.

 

The better way, at least in the U.S., is self-action prior to the flashpoints.

 

We all need to get off the Big Rock Candy Mountain and take personal responsibility for our collective fate. Areas of concern are fairness, equal opportunity, equal treatment, social justice and civility. Legislation and tax policy must be designed for large segments of the population rather than small.

 

Key tools: Vocalization and voting.

 

Voting, real voting, is a powerful concept that has gone dormant in the U.S. We should try reviving it, just to keep the system fair and honest. Voting shows we are alive and paying attention.

 

There is nothing wrong with being happy and complacent. Complaisance, however, should never interfere with our ability to stop those who would chip away at our happiness.

 

Human rights, said Alexander Hamilton, are written “by the hand of the divinity itself.” They cannot, he said, “be erased or obscured by mortal power.”

 

By Lanny Morgnanesi

 

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You’re nothing, but suddenly you’ve got what everyone wants

7 Jul

Venezuelan prostitutes

 

 

Without judging, blaming, or saying I wouldn’t do it, the standard model for business is that those who dominate the financial markets rig them in their favor. That’s really not a shocker. The shocker is that once in a great while something occurs in the market place that benefits those of little means.

 

Right now the beneficiaries of fate’s largess are the prostitutes of Puerto Cabello, Venezuela.

 

Not long ago, Venezuela was flush with petro-cash and acted brashly and boldly on the world scene. Under socialist President Hugo Chavez, Venezuela even helped 400,000 poor Americans pay their winter heating bills. Chavez, however, is dead and gone and the Venezuelan economy has all but collapsed. People can no longer find things like cooking oil and flour in their local stores.

 

Spared from this hardship are the prostitutes of Puerto Cabello. This has not so much to do with the sex trade as it does with the currency trade.

 

An article by Anatoly Kurmanaev in Bloomsberg Businessweek explains the scenario.

 

The Venezuelan currency is the bolivar, and it has taken a nosedive. The official exchange rate is 6.3 bolivars per dollar but the going rate on the street is 71 bolivars and climbing. Either way, dollars are very hard to get. The government restricts their circulation.

 

But foreign sailors, the primary customers of prostitutes in Puerto Cabello, a port town, pay in dollars. This means the prostitutes now possess the most sought-after item in the country. Currency traders seek them out and lavish them with bolivars in exchange for their dollars. This enables them to purchase whatever they want on the black market.

 

By the way, the prostitution is legal but the currency trading is not.

 

Sailors are charged a flat rate of $60 an hour. With the new market conditions, one trick is equal to the monthly wage of some people. But the prostitutes also book hotels and taxis for the visiting sailors. They charge them in dollars and pay for the rooms in bolivars. This increases their salary another 50 percent.

 

So here’s to the horizontalists of Puerto Cabello. I think they deserve this unexpected turn of events. No word yet on anyone rushing in to deny them their windfall. That’s noble. I sense in the United States the good times wouldn’t last long. If something the poor had became valuable it would be taken away. If a commodity as unwanted as, say, rat droppings was needed to make a new cancer drug, rich investors would quickly buy up the dropping rights at all the infested slums of major American cities, leaving the tenants unable to benefit from a sad condition turned bright.

 

On this score, the Venezuelan elite seem much better sports than their American counterparts. The extra money earned by the prostitutes, incidentally, goes for things needed by their families. But as a prostitute named Elena points out in the article, she still has to sell her body.

 

By Lanny Morgnanesi

 

(Photo by Vladimir Marcano /Bloomberg)

When the poor stop going to McDonald’s, we’re all in trouble

20 Jun

mcdonalds-meal

Businesses like Wal-Mart and McDonald’s haven’t been doing well.

 

People without a lot of money usually go to these places, but because they now have even less money, they’ve stopped going. When people who work at Wal-Mart and McDonald’s can no longer afford to shop and eat there, it’s a sure sign of a coming, broad-based financial decline.

 

It will affect us all, even the rich, who don’t amount to much if they can’t get the poor to give them money.

 

Reports show that the parade of U.S. customers into Wal-Mart fell 1.4 percent during the first quarter. That followed a decline of 1.8 percent in the prior year.

The discount retailer blamed the bad winter weather but also cited cuts in food stamps, higher payroll taxes and the increased cost of health care.

 

You know things are bad when Wal-Mart relies on the food stamp program to move product.

 

Walm-MartRecent U.S. sales at McDonald’s also have declined, by 1 percent. To lure back low-end customers, the burger behemoth increased its value menu, but that hurt profits even more.

 

What’s happening is the downward pressure on income is leading to downward pressure on sales.

 

Henry Ford used to pay his people well so they could buy cars. If Wal-Mart and McDonald’s have any sense, they and the other minimum-wage shops will copy this strategy. Not doing so will have consequences. It could turn the U.S. into another Japan – the bad one, not the good one.

 

Japan was once the globe’s supreme economic power. It made and sold great products while setting new standards for manufacturing. Flush with cash, Japanese investors bought up billions in prime New York real estate, and nearly everything else. During this period, in the mid-80s, I visited Hawaii, which seemed more like Japan. Japanese tourism and culture were so strong that hippie beach bums peddling sailing lessons had to learn Japanese.

 

Then came the bust, the swoon and massive disinflation. It began around 1990. People in the U.S. don’t understand disinflation. It’s when prices fall and fall and fall and still no one buys anything. The economy becomes comatose. Seems impossible, until you look at Japan, where disinflation has been a cruel fact of life for a couple decades.

 

 

According to Bloomberg Businessweek, one contributor to Japan’s disinflation is falling wages. The recent habit of businesses there, as in the United States, is to avoid hiring full-time workers and instead contract with temporary workers who earn less and have no job security. These temps now make up about 40 percent of the Japanese work force. They are paid about 38 percent less than full-time workers.

 

The financial and social divide between the two kinds of workers has grown and is causing multiple calamities. For example, no one wants to marry a temp. This depresses birthrates and is making Japan a nation of elderly people. Banks won’t give temps mortgages, which doesn’t encourage building. These and other negative trends cascade and the country stagnates.

 

In the current era, U.S. corporations have reaped huge profits from selling to the developing world. But those markets, at least to some degree, are cooling and maturing. The bread-and-butter American markets may have to be revived in order to maintain profits. That could require a higher minimum wage and more opportunity for the middle class. The government and the business community finally are waking up to this.

 

The Great Cure for so much – including crime and falling education standards — is to put money back in the hands of traditional spenders. For a time, greed will blind us to this reality. Then the cash register stops ringing and we see.

 

Wal-Mart and McDonald’s — and all the other places where you can work full-time and not earn a living — now see. Each is probably afraid to take the first big step. Sooner or later someone has to, otherwise that first big step will be involuntary and it will send us over a cliff.

 

Think about the return of the 25-cent McDonald’s hamburger. Think about taking the family out for one on a very special night, maybe once every couple of months. That disinflation, and it will make 15 percent inflation seem like good times.

 

Now, we wait.

 

By Lanny Morgnanesi

Goldman Sachs: Altruism for a profit

27 May

goldman-sachs,jpg

Investment powerhouse Goldman Sachs has made money with schemes that were ingenious, inventive, complex, arcane, morally vacant and, some might say, criminal. Now it hopes to make money by exploiting the dysfunctions of government.

 

Goldman has long mastered the art of generating cash without actually producing a product. Its techniques include:

 

  • Using influence to rig a trading system in its favor.
  • Finding a market where it can buy low and then finding a second market where it can sell high.
  • Identifying gross inefficiencies that are costing someone or something money and offering to fix them.

 

Goldman’s new plan is along the lines of the third. The firm is financing crime reduction measures in Massachusetts in exchange for a percent of what is saved by not having to incarcerate thugs.

 

Ingenious, inventive, complex.

 

New profit center for investors

New profit center for investors

This type of investment carries an extra dividend: It makes Goldman Sachs – a villain in the eyes of the Occupy movement – look like a Good Guy. Indeed, the investment vehicle designed to reduce crime is called a social impact bond, or in Wall Street parlance, an SIB.

 

Some view these investments as a marriage between capitalism and charity, but capitalism is the strong, dominant partner.

 

Bloomberg Businessweek reported on Goldman and the SIBs in early May. Writer Esme E. Deprez cites a prediction by the Rockefeller Foundation that the market for SIBs is growing and by 2015 will reach $500 million.

 

That’s a lot of social impact, enough to give government the idea that it no longer is responsible for maintaining order and structure in society. Or has it already decided that?

 

According to the Businessweek article, Goldman is investing $9 million and betting that crime will go down – or more accurately that young men will spend fewer days in jail.

 

The bonds help fund a program called the Massachusetts Juvenile Justice Pay for Success Initiative. In that program, a non-profit agency called Roca works with young adult males on probation. The agency provides outreach, therapy and training. After two years, participants are supposed to leave, take a steady job and lead a crime-free life.

 

If a graduate stays out of jail for a year, Massachusetts saves $12,400. If the state is able to reduce crime enough to close a 300-person prison, it saves $47,500 per inmate.

 

This is how the SIBs and Goldman get paid off.

 

In this particular case, Goldman has partnered with other investors who financed an additional $12 million in bonds, making the total $21 million.

 

The bonds earn 5 percent no matter what, but pay nothing else until the men in the program manage to spend 22 percent fewer days in jail. There’s a sliding scale for payment, with a maximum of $27 million being paid to bond holders if jail time is reduced by 70 percent.

 

It’s a risk, like a junk bond, but $27 million for a $21 million investment is pretty good money (28 percent profit) and worthy of the risk.

 

Roca had been working with 375 men. With the SIB money, it can handle 550.

 

A skeptic might look at all this and ask:

 

  • Why doesn’t Massachusetts put up the $21 million itself and forego the $6 million payout to investors?

 

  • Why doesn’t society as a whole recognize that employed people from stable families commit fewer crimes?

 

  • Why does the nation exclude million of people from an otherwise viable system of commerce, education and opportunity and allow the existence of acres and acres of urban decay that breed crime and insanity?

 

There are clear answers to these questions. I won’t go into them because our preference is to ignore them, deny them and maintain a monstrous blind spot in spite of religious teachings, well-intended laws and glorious, inclusive rhetoric.

 

But as a culture, we have reached an all-time low when we allow things to get so bad

that Goldman Sachs can make money off our failures. The promise of money, more so than altruism or mere brotherhood, does seem to get things done. Perhaps we can turn the VA hospitals over to Goldman. With all those returning vets, there’s got to be a profit in there somewhere.

 

By Lanny Morgnanesi

 

I never ate there, but I always expected a line

30 Mar

7_13_500x362

I once dated a woman who knew Philadelphia much better than I. On the few occasions when we passed Broad and Belfield Avenue, she’d say, “There’s always a line at the Shrimp Corner.”

And there always was.

My friend spoke these words as if they were a cliché, something that had been repeated a thousand times by a thousand people. But I had never heard the expression and I didn’t know the Shrimp Corner.

For me, it had escaped the notoriety of, say, Pat’s King of Steaks on Passyunk Avenue in South Philadelphia. I knew there was always a line at Pat’s. I’d waited in it at 3 a.m. Pat’s was in an Italian neighborhood and I felt comfortable there. People went there after Phillies games. The very different Shrimp Corner is in North Philadelphia, a poor, high-crime area. I’m sure it is considered home to many, but to those in the suburbs, sadly, it was simply a place to avoid.

On Yelp someone advises that before going to the Shrimp Corner one should “practice standing around and looking tough so no one messes with you.”

philly-360-creative-ambassador-brandon-pankey-spot-check-sid-booker-s-shrimp.582.345.cFormally known as Sid Booker’s Shrimp Corner, the takeout eatery opened in 1966. As the name suggests, it juts out on a block that forms an acute angle. To order, you walk up to a window made of bulletproof glass. The food is not cheap. A dozen batter-fried shrimp with fries costs about $20. The rest of the building, painted pink, houses Sid Booker’s Stinger Lounge.

Because of the Shrimp Corner, I thought about my old girlfriend this month. As circumstance would have it, I drove by Broad and Belfield three times in the last four weeks. Each time, there was no line at the Shrimp Corner.

What changed?

When I first saw the Shrimp Corner more than a couple decades ago, North Philadelphia may have been at its lowest. It was in great deterioration. I know so little of these neighborhoods, but I do recall how the homes and small business were sinfully neglected. Some were actually falling down. On Broad Street, the main thoroughfare, there wasn’t a fresh coat of paint to be seen. I doubt a nickel had been invested in the place.

7_15_800x600Then, about the time when real estate prices took off and business loans were easier to get, new shopping centers went up. Franchises like CVS settled in, as did more fast food restaurants. The regional transportation authority, SEPTA, even brought in new buses.

Meanwhile, a so-so college in the heart of North Philadelphia was expanding. An incredible number of well-designed, multi-story buildings appeared on Broad Street — for miles. Temple University, once a commuter college for the working class, had become a residential college that was attracting a new generation of students seeking an urban experience.

Houses were fixed up and rented to students. New housing was constructed.

If a Temple student was stupid enough to start selling drugs, he might get busted up in his nice apartment and have his stash and cash stolen. There would be episodes like when three neighborhood girls went around smashing bricks in the faces of female students. But overall, things really seemed to improve.

Today you can drive portions of Broad Street and it looks commercially alive. Some developer even wants to build a $700 million French-themed hotel-casino complex – The Provence – on Broad just south of Vine. He said it will be “one of the most dynamic entertainment destinations on the East Coast”

So why isn’t there a line at the Shrimp Corner?

I don’t know, but I do have a suggestion.

Recently there have been a series of Flash Mobs at old, nearly forgotten, Eleanor Rigby/Father McKenzie type cathedrals. Calling themselves “Mass” Mobs, Catholics are trying to revive these still elegant structures by using social media to fill pews.

If its true that the Shrimp Corner is not the draw it once was, wouldn’t it be fun to organize a Flash Mob – call it a “Flash Fry” — and send the line at the window down the block and all the way to Temple? Sid sure would go for the idea. Maybe he could donate some of the profits to fix up North Philly’s Uptown Theater, which has been trying and trying and trying to come back but can’t.

I have no deep emotional connection to any of this, so it’s not for me to organize an event. Still, I’d love to see North Philadelphia attract more investment and make Broad Street once again a great and grand boulevard.

If not this, then I’d at least  like– for old times sake – to be able to drive by and be correct when I say to a fellow passenger, “There’s always a line at the Shrimp Corner.”

By Lanny Morgnanesi

How long before the great income grab is reversed? Not long.

9 Mar

cbpp income inequality 2011

The first real understanding of my value as a worker came during a company Christmas party.

I was a young reporter for a family-owned media company. My fellow employees and I had already received the gift of a free turkey, and now there was this party, grand and lavish.

It was a time when newspaper margins were around 40 percent. Printing a newspaper was like printing money.

The party was held in a big banquet hall. Hundreds attended. There was a generous buffet, music, dancing and an open bar for the entire evening.

In general, the company did well by its employees. The founder was a tough, bull-headed union-buster, but when I worked there raises were given four times a year, the food in the cafeteria was subsidized and supervisors were honored at an annual dinner.

Upon the death of the old man, his four grown children took over. By chance, I was sitting with one at the Christmas party. She was somewhat shy but sincere when she said to our table, “All of you are responsible for making this company what it is. It would be nothing without you. My family owes everything to you. Our success is your success.”

Prior to that, I had seen myself as an expendable, replaceable cog.

But this co-owner, this daughter of an entrepreneurial risk-taker, was shifting my view. I hadn’t recognized it yet, but she knew that without workers a hundred printing presses could not produce a single paper.

Still, she was neither ready nor willing to change the rules and divide the profits among workers. That’s a different ideology, one totally alien to our system, one that threatens and offends.

Then I went to New York City and found out it wasn’t.

I was still learning the way of the world and on this visit to see friends I discovered how lawyers became partners.

My friends were a former reporter and her boyfriend lawyer. He didn’t go to dinner with us that Saturday night because he was working on an investment banking deal. He was trying to make partner.

When we met up later at a bar, he was in good spirits and had no complaints. As an explanation for missing dinner, he told me a joke: “Why do investment bankers love Friday? Because it is only two more work days until Monday.”

I envied his chance to become a partner. Now that I think of it, he probably was the first person I knew who was capable of using hard work to earn equity ownership in a company.

Why was law different from other professions? To begin with, there is no huge investment needed to start up, nothing like a printing press. Also, lawyers tend to see themselves as professional equals. And there probably is some precedent, a near-ancient tradition, of taking on partners rather than employees.

What’s more, it is easy for the good ones – those who bring in big clients — to leave and hang up their own shingles.

A factory worker doesn’t have that kind of leverage.

But if there exists a universal law of fairness, a standard morality for the value and worth of labor, then leverage shouldn’t be a factor.

Of course, there is no morality in the marketplace. If people will work for substandard wages, that is what you pay them. And so unions came to be.

Unions got their start in ancient Rome

Unions got their start in ancient Rome

We think of unions as a modern concept but the idea and practice go way back. The founders of Rome, in 753 B.C., may be partially to blame. As Rome grew and incorporated other provinces, the new citizens didn’t integrate. They stayed in their towns, kept their habits and traditions and failed to adopt a Roman identify. So an edict was issued requiring people to relocate to districts organized around trades. If you were a carpenter, you lived among all carpenters.

Ethnic differences faded.

Naturally, trade associations formed. It was a new unifier.

In time, these associations became quite powerful.

Even the kings of France had to contend with them. In an age when candles were the chief source of lighting and a significant expense in a large palace, money could be saved by letting them burn to the end.  Practical, but the guild in charge of candles wouldn’t allow it. It required that candles be replaced when half burned.

Unions in the modern era continue to be associated with self-serving, costly inefficiencies. Unlike the lawyers who must enrich their firms in order to become partners, unions too often weaken their companies, making workers liabilities rather than assets.

And companies today are quick to get rid of liabilities.

What unions are good at, however, is their ability to show management the true value of labor. By unifying the powerless, power is created. In speaking with one voice – “no we won’t work for poverty wages” – unions effectively alter the marketplace. They grant the common folk a degree of dignity and allow them to pursue happiness.

But with global competition so fierce, it has become impractical and unwise for unions to advocate uncompetitive practices. What they should advocate is efficiency, innovation, profit and partnership – true equity partnership. Unions gave us the weekend but if the incentive of partnership is applied (making Friday two work days until Monday) companies could get them back.

Would companies actually make their worker’s partners? Under the current climate, no. Even discussing the idea seems ridiculous and beyond farfetched.

But why?

In the golden age of unions – after resistance that included shooting strikers — companies decided there was enough growth and profit to meet the demands of organized labor. With profit in mind, there was a willingness to share. Henry Ford would benefit if he could keep cars rolling off the assembly line and meet the heavy demand.

And besides, workers with money buy things – like cars.

Walter Reuther knew the middle class fueled the economy.

Walter Reuther knew the middle class fueled the economy.

(There’s a great story about Walter Reuther, leader of the United Auto Workers, being shown an automated assembly line.  In a competitive dig, Henry Ford II asked him, “How are you going to get those robots to pay union dues?” Reuther retorted, “Henry, how are you going to get them to buy cars?”)

For the most part, the willingness to share is gone.

According to the Center for Budget and Policy Priorities and many other sources, a significant income gap between classes existed from the 1940s into the 1970s, but it did not grow. But after the early 70s and up to today, income concentration at the top increased dramatically. The last time the disparity was this great was prior to the Depression.

Various sources, including University of California at Santa Cruz Professor G. William Domhoff, in his blog “Who Rules America?,” report that in 2010 about 1percent of the U.S. population possessed 35 percent of the wealth. The top 20 percent had 89 percent, leaving the bottom 80 percent with 11 percent.

Also reported in various places, including the Los Angeles Times, is that from 1993 to 2012, income of the 1 percent rose 86.1 percent while income of the other 99 percent rose 6.6 percent.

As wealth became concentrated at the upper tier, billions in cash was stockpiled by American corporations.

In March, Forbes set the total at $1.45 trillion and listed the top 10 holders of cash, including:

Apple: $137 billion.

Microsoft: $68.3 billion.

Google $48.1 billion.

Pfizer $46.9 billion.

What changed?

For one, the labor market.

When Apple is ready to roll out a new iPhone, poor farmers in Katmandu drop their plows and fly to factories in Malaysia. This is not a rhetorical sentence.

Journalist Cam Simpson documents Apple’s labor supply chain in an incredible piece of investigative reporting for Bloomberg Businessweek.  His story tells how labor brokers fan out to the poor countries of Asia when Apple launches a new product. The people they find pay them for jobs and keep paying as the process continues. Often, they pay with borrowed money and go deeply in debt.

One was Bibek Dhong from Nepal. He paid a single broker the equivalent of six-months wages. The fee secured him a job in Malaysia with Flextronics, one of Apple’s chief suppliers. Before he could pay off his loans, production shifted to another country (better performance) and he lost his position.

His passport was held and he could not get home. He feared he would be arrested. Before he received help from Flextronics, he ran out of money and nearly starved.

Not exactly a union shop.

But as China has realized, when companies get richer, when commerce thrives, when corrupt leaders and their families amass great, visible wealth, expectations rise and workers lose their complacency. They demand more and often get it, until the factories move to a more accommodating country.

Sooner or later, corporations are going to run out of countries.

Sooner or later, a floor will form under the global labor market.  From there, workers will stand.

That’s when corporations are going to need a new plan.

And that’s why I’m suggesting one now.

In the U.S., people are finally waking up to the subtle yet systematic dismantling of the middle class, which has been occurring for decades. With less spending power, average families find it difficult or impossible to send their children to college – once the gateway to upward mobility. Those who do make it to college find it hard to get jobs when they graduate.

The bleakness and lack of opportunity, the malaise of our times, is truly settling in.

Books are being written with titles such as, “The War on the Middle Class,” “Screwed: The Undeclared War on the Middle Class,” and “The Betrayal of the American Dream.”

Income equality has become a topic in columns, blogs and editorial cartoons. The issue, once ignored, is now discussed by the president of the United States and the Pope. Billionaire Warren Buffett said that if class warfare truly exists, his class in winning. Even so, there are defections. One is global billionaire David Sainsbury, who calls for fairer wealth distribution through something called “progressive capitalism.”

To see inside this looming class crisis, look toward Seattle, the home of Boeing.

Timothy Egan, a Pulitzer Prize winning journalist and winner of the National Book Award, wrote an opinion piece in the New York Times Nov. 14 called, “Under My Thumb.” The title refers to Seattle’s position vis-a-vis Boeing.

Like many big corporations, Boeing hold jobs hostage as it demands and gets hefty tax breaks. As Egan points out, when anyone or anything shows resistance, companies like Boeing threaten to leave town.

Boeing is seeking concessions in exchange for keeping assembly of the new 777X jet in Washington State. For its part, the state of Washington provided a incentive package that included an $8.7 billion tax break, which Egan called the largest single state-tax giveaway in the nation’s history.

But Boeing also requires that workers accept cuts in pensions and health care benefits.

Unlike Washington, the workers said no.

Refusing to allow the “Walmartization of aerospace,” the machinists who would build the 777X turned down the offer by a 2-1 vote.

“I’m tired of being slapped in the face,” said John Gilman, who has worked at Boeing for nearly 40 years. “Building airplanes — it takes years of training and skill. The people who run this company used to understand that.”

In reaction to Egan’s piece, one reader commented, “This is just the beginning before Americans ‘storm’ any number of figurative ‘Bastilles.’ ”

Jump now, if you will, to the town of Richmond, California.

In Richmond, like most of the U.S., people were talked into taking home mortgages they couldn’t afford. When the housing bubble burst, they ended up owing more on their mortgages than their homes were worth.

Nothing unusual there.

What is unusual is the protective reaction, possibly unprecedented, taken by the town fathers on behalf of residents. Basically, they told the banks holding the bad mortgages to renegotiate the terms or Richmond would confiscate the properties through eminent domain.

Under this plan, the banks would receive 80 percent of each home’s current worth – much less than the original purchase price –and the town would reform the mortgages so owners can afford them.

Meanwhile, all across the country fast food workers are trying to nearly double their hourly wage to $15.

Not too long ago, the Occupy movement surprised everyone when it surfaced to protest almost everything. It stayed around much longer than anyone expected and started widespread discussion of the 1 percent and vast income disparities.

What else is out there waiting to bubble up? I sense there is a lot.

Nature and the human spirit, in time, tend to correct imbalances. I believe this correction has begun. When there is too much of one thing, the other thing comes.

And when the other thing comes, I hope we are ready for it. We might prepare by realizing that we all have a stake in each other’s well being, that each plays a role in the ultimate success of our society and that respect and dignity should be afforded to all. We are a tribe – we humans — and members of a tribe should look out for each other.

Right now we don’t.

I say, let’s act more like partners. Let’s all rise together.

That means valuing each other properly and recognizing that all roles are important, that we’d be in big trouble if one day no one wanted to pick up the trash.

Providing an equity interest to all workers – even a thin, thin sliver – is progressive and revolutionary. It may even be moral, wise and an effective business strategy. But for it to happen, something cataclysmic must occur, or the vision of something cataclysmic must appear.

In the meantime, it is likely that agendas will slowly change (perhaps preventing any cataclysm). This fall, for example, Bill de Blasio was elected mayor of New York after saying he would trim the gap between rich and poor.

Other politicians, in a discovering of new voting blocs, may decide to do the same and relieve the working poor of its distress, better balance wealth and create a more secure, just and – I think – more prosperous society.

A person with disposable income, after all, fuels the economy and is less of a burden on government.

Tax policy, a major cause of the wealth shift, also will have to change. An almost whimsical proposal comes from Robert Shiller, who on Dec. 8 received the Nobel prize in economics. To stop inequality from rising, he suggests raising taxes on the rich whenever their share of income starts to grow.

Should any of this actually happen, it won’t come solely out of true enlightenment. As always, it will come mostly as a way to preserve and protect – through concessions – the self-interests of the powerful. This is OK. It will come through changing market forces resulting from a shift in culture, attitudes, expectations and action. Those forces, nearly invisible now, seem to be coalescing. I don’t think they can be stopped.

When there is too much of one thing, the other thing comes. That’s the natural law.

Lanny Morgnanesi

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