Tuesday, June 13, 2017

The economy of mass prosperity

After proposing $1 trillion investment into infrastructure, the Trump administration is harnessing the brainpower of renowned experts to unlock the insoluble problem of how many jobs will be created for each billion dollars of spending. While stressing the obvious, the administration is missing the important point.

The purpose of capitalism is not job creation. The purpose of the capitalist economy is to create wealth. Employment and the subsequent distribution of the spoils of an economy are byproducts of capitalism.

Since its inception, capitalism has been in a perpetual state of evolution, from the Industrial Revolution that ignited an economy of mass production to the economy of mass productivity to, most recently, the economy of mass consumption. Each subsequent phase of capitalism has been associated with innovation, rise of productivity, and the immense creation of wealth.

Our current economic period was fueled by a huge expansion of credit, which temporarily has taken the economy beyond its limits. Through excessive borrowing, consumers have spent far more than they can afford, and the expansion of social programs and futile attempts to stimulate the economy via government spending have left the country with $20 trillion of debt. At this point the consumer is broke, the country is broke, and the economy of mass consumption is on a respirator and cannot be resuscitated by further spending. If not the spending, what then, is the catalyst that will take capitalism to its next phase of evolution?

A host of very significant developments over the past 20 years indicates that we are witnessing the dawn of a new phase in this evolution: the era of mass prosperity.

What distinguishes this phase from the previous ones is that enormous sums of money have been accumulated by corporations and private investment funds. American corporations have amassed trillions of dollars on their balance sheets; Apple alone has more than $200 billion in its accounts. This mass of liquidity looking for markets to invest in has set up an interesting dynamic.

Until recently, only the government could handle projects on the scale of the Hoover Dam and the interstate highway system, but now large corporations and investment funds have sufficient resources to build projects on any scale. Hence, there is no imperative for the government - federal, state or local - to finance and maintain modern infrastructure when private capital is available to do the job.

Privatization of the infrastructure will open a new, multitrillion-dollar frontier for capitalism, and its effect could be massive. It has the potential to create a long-term economic expansion that will dwarf the scale of the Pacific Railroad and National Interstate and Defense Highways acts combined.

The privatization should include selling the existing assets and creating an environment conducive for private enterprises to BOO (build, own and operate) new and existing roads, bridges, tunnels, treatment plants, airports and other facilities. Tolls will be collected to defray operating costs and retire debts. Revenue from the sale of existing assets can be used to reduce the national debt. Privatization would relieve, in large part, federal, state and local governments of the burden of funding, constructing, operating and administering the infrastructure, thereby resulting in smaller governments.

Just as in any field of endeavor, bringing competition into a sector of the economy currently monopolized by the state and local governments will spur innovation and result in greater efficiency in project development and lower tolls and taxes. Government-run projects have no incentive to keep costs down and are notoriously delayed and over budget.

Privatization of the infrastructure is a product of the spontaneous evolution of our economic system and, therefore, is a historical inevitability. Inevitability, however, sometimes requires human intervention.

We should always remember that the government's job is to enforce the law and spend people's money in a manner consistent with the perceived national interest. It cannot produce wealth, employment and the other attributes of a free society. That is the job of capitalism. Hence, we do not need to borrow our way into prosperity; we just have to let capitalism work.



State-by-State Wave of 'Blue Lives Matter' Laws Concern Activists

Activists who regularly come face-to-face with police officers are among those concerned about a new wave of so-called “Blue Lives Matter” laws that have swept through 14 state legislatures.

Alabama could become the next state to enact tough new laws that make attacking first responders a hate crime, and an African-American Democrat could lead the way.

Alabama Rep. John Rogers (D) has introduced legislation that identifies police officers as members of a protected group so that attacks against them become hate crimes.

"If you kill somebody just because they are of a certain race it's a hate crime, so if you kill a police officer because he is a police officer or a fireman, it should be hate crime also," Rogers told WBRC.

Texas was the most recent state to see lawmakers approve a Blue Lives Matter proposal. The legislature sent Gov. Greg Abbott a bill in late May that makes attacking or even threatening police officers or judges hate crimes.

The Texas legislation was a response to the 2016 ambush attack that killed six Dallas police officers and a 2015 attack on a district judge outside her home.

“At a time when law enforcement officers increasingly come under assault simply because of the job they hold, Texas must send a resolute message that the state will stand by the men and women who serve and protect our communities,” Gov. Abbott said.

Along with Texas, state legislatures in Arizona, Arkansas, Georgia, Kansas, Kentucky, Mississippi, Missouri, Nevada, North Dakota, Oklahoma, Tennessee, Utah and West Virginia have already added crimes against police, firefighters and EMTs to their list of hate crimes.

But maybe the Blue Lives Matter wave won’t have to go state-by-state. The movement could sweep across the U.S. from Congress.

U.S. Rep. Ken Buck (R-Colo.) filed H.R. 4760 earlier this year to make attacks on police officers the same as hate crimes nationwide.

“I was looking for something that could send a very strong message that the federal government stands by police officers,” the Denver Post reported Buck said.

Sonia Bill Hernandez of the NAACP Legal Defense and Education Fund warned of a Blue Lives Matter backlash.

She told the AP that so-called “Blue Lives Matter” laws that strengthen criminal penalties against people who attack police officers only “deepen divisions between law enforcement and communities with no tangible benefit to law enforcement.”

Jens Ohlin, a criminal law professor at Cornell University Law School in New York, told the AP the Blue Lives Matter laws all “reek of political pressure to do something symbolic as a way of expressing solidarity with police officers.”

But to a community activist like Zaki Baruti in St. Louis County, Mo., Blue Lives Matter laws are nothing but a way to cut the legs out from under the Black Lives Matter movement.

“This is another form of heightened repression of activists,” Baruti told the Associated Press. “It sends a message to protesters that we better not look at police cross-eyed.”

Other critics of Blue Lives Matter legislation contend attacking a cop is bad, killing a cop is worse, but laws making attacks on police the same as hate crimes go too far.

“We believe that being a police officer is not an innate part of a person’s identity. You’re not born a police officer,” wrote the Denver Post editorial board.

“Further, police are provided many protections already. We arm them and grant them great leeway in use of deadly force,” the Denver Post editorial continued. “We protect them with body armor and other gear. Rarely do juries or review panels charge officers who kill alleged offenders, but the justice system comes down extra hard when one of its own meets with harm.”

The heated argument over the movements apparently boiled over in Alabama.

Four men face assault charges after allegedly attacking a high school student who posted pro-police, Blue Lives Matter comments online.

Seventeen-year-old Brian Ogle was hospitalized with serious head injuries after being found bleeding on the ground after a homecoming game. His mother, Brandi Allen, told Fox News that Brian responded with a Blue Lives Matter argument when he was confronted by four former students who were wearing Black Lives Matter t-shirts.

Police said the attack on Ogle, who is white, may have been racially motivated.

"Instead of us planning for his 18th birthday, we're here. Why? Because he made a statement that he backs the blue?” Allen told Fox News in the hospital as her son recovered from his injuries. “I'm still trying to understand how someone, no matter the color of their skin, can do this to another human being.”



Sorry, class warriors. Unions aren't coming back

by Jeff Jacoby

HERE IS A TALE of two socioeconomic trends and one seductive myth.

Trend No. 1: There was a time when the wealthiest households in America — the top 1 percent — earned about 11 percent of the nation's income, even as the great majority of income, more than two-thirds, went to the bottom 90 percent. That was in the mid-1940s, in the wake of the Great Depression and World War II. Income inequality in the United States was relatively low, and it stayed that way for the next three decades.

Seventy years later, the distribution of income is much less equal. According to Berkeley economist Emmanuel Saez, the top 1 percent of US households today account for 22.5 percent of all pretax income, while the bottom 90 percent collect less than half.

Trend No. 2 occurred over the same period: As incomes in America grew less equal, membership in unions grew less common.

In the decade that followed World War II, the percentage of American workers belonging to a union rose to nearly 35 percent. That high level of union density lasted for almost three decades, but by the 1970s unions were in decline. According to the Bureau of Labor Statistics, only 10.7 percent of US wage earners today are union members — and nearly half of them work for the government. In the private economy, just 6.4 percent of employees are unionized.

In short, income inequality rose as union membership plunged.

So the way to reduce inequality is to reinvigorate labor unions? Not a chance.

One can make a plausible case that falling union density paved the way for the rich to grow richer. In a 2012 paper for the liberal Economic Policy Institute, labor economist Lawrence Mishel concluded that "deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007." Two International Monetary Fund economists made a similar argument in a 2015 study. "The decline in unionization in recent decades has fed the rise in incomes at the top," they wrote.

Not surprisingly, those who view income inequality as a terrible social malady seize on research like this to prescribe more union power as the remedy.

Senator Bernie Sanders hailed the IMF study as "a call to arms" — evidence not just that unions should be "revitalized and renewed" but that doing so "needs to be one of the major undertakings of our time."

From former Labor Secretary Robert Reich comes an even more impassioned exhortation. "We must strengthen labor unions!" he declares in a video for MoveOn. Reich wants new laws making it easier for organizers to form new unions. In particular, he wants all state right-to-work laws — which protect the right of employees not to join a union — overturned.

But unions didn't decline because laws are stacked against them or because employers have too much power. They declined because in the eyes of most workers they grew obsolete and irrelevant. And no amount of class-warfare drum-banging is going to bring them back.

As it happens, I belong to a private-sector union, and have been paying union dues for more than 20 years. I think private-sector workers should be perfectly free to bargain collectively — and just as free to shun unions. (Government unions, on the other hand, should be banned.)

I don't share the left's obsession with the wealth of "the billionaire class," to use a favorite Sanders expression. Like most Americans, I have more important things to worry about than whether Warren Buffet or George Soros get richer. But even if I did lie awake at night fretting over income inequality, I wouldn't count on a union revival to do anything about it.

Unions rose to power before globalization and automation had transformed economic reality. Before the internet utterly reshaped American commerce. Before the explosion of temps, part-timers, freelancers, and independent contractors who now constitute such a huge swath of the workforce. Before it became abnormal to stay with a single employer for a whole career. Before traditional workplaces — physical spaces with rank upon rank of workers — began to vanish.

In the early 1950s, manufacturing and mining accounted for one-third of all the jobs in America. Today? Barely 10 percent.

"In mining ... there are perhaps 80,000 jobs today compared to over a half million — almost all of which were unionized — in the late 1940s and early 1950s," writes Rich Yeselson for the progressive political website Talking Points Memo. "Coal provided close to 2/3rds of our energy then — making the imperious president of the United Mine Workers, John L. Lewis, one of the most powerful people in the country."

Much the same is true of the steel industry, which now employs 70 percent fewer workers than it did in 1959. That was the year that 500,000 members of the United Steelworkers of America went on strike — the largest strike in the nation's history.

Manufacturing is still enormously important to the US economy. It accounts for a larger share of GDP than ever. But it takes far, far fewer people to do so, making unions a far, far less important player in American life than they once were.

Private-sector unionism isn't a sleeping giant waiting for a wakeup call. It's more like a once-mighty prizefighter shuffling into oblivion. In its heyday, it was a force to be reckoned with. No longer.



For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated),  a Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

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1 comment:

Anonymous said...

Unions have only one chance of recovering from their decline, oddly enough it's the one thing they fight hardest against too. Right to work laws are necessary to maintain Union health because Unions that can automatically assume workers belong to it will not be striving as hard to prove they can provide value for the worker.

Forcing the unions to show value for the dues they charge keeps the unions competing to get workers to join, closed shop states allow unions to be lazy and corrupt. Union leaders of course prefer closed shop laws because that brings in a lot more member dues which they can work with to siphon into their own pockets and they don't have to work nearly as hard to recruit new members in a perfect breeding ground for contempt and corruption.