Trump and Incompetents on the Fed
Trump keeps telling us how great the economy is doing and how we should all take a bow to his great skill. Well, the economy is doing quite well under the circumstances, for which Federal Reserve Board Chair Jerome Powell and his fellow board members deserve the credit. Trump is just going along for the ride and deserves no credit whatsoever. His abusive comments dashed out on Twitter sound like his usual angry response to anyone who does not follow orders, but the abuse has not deterred Powell from acting in good faith.
By now it is hard to think the Trump base would object to anything he might do after what has already transpired, but if ruining the economy accounts at all, then he might want to question his latest scheme to take over monetary policy. His current nomination for Federal Reserve Board, a women named Judy Shelton, wants to return to a gold standard and eliminate deposit insurance.
As every good capitalist knows the value of money is determined by the supply of it relative to its demand for needed transactions. Obsessives like Ms. Shelton want money to be a supply of something they can pick up and store like gold, but gold is a commodity like cars, clothes and corn flakes, all subject to rising prices.
When money was gold, changes in its price rippled through the economy causing inflation or recession. A gold standard requires giving the public the opportunity to exchange currency for gold at a fixed price making it necessary for the government to stabilize the price of gold by holding large inventories to sell in a shortage, or buy in a surplus. Managing gold inventories was subject to the erratic success or failure of mining ventures and the erratic whim of hoarders and speculators.
If Ms. Shelton would ask herself how the U.S. Treasury could remain ready to exchange gold at a fixed price if the market price of gold goes up, she might notice a problem with a gold standard. If the market price of gold starts to rise there will be speculators to show up at the U.S. Treasury to exchange their currency for an ounce of gold at the fixed price. They will speculate the government will eventually run of gold by having to sell it and have to let the price rise to a new level. Then they can resell their gold at the higher market price.
The need to buy or sell gold to hold the price changes the money supply the same way open market operations change the money supply now, except the buying and selling of gold to keep its price stable cannot be timed to meet the needs of stabilizing the economy.
In 1933, the United States left the gold standard, announcing it would no longer convert dollars to gold at any price. Banks were allowed to designate other assets than gold as reserves, which make it easier to manage the money supply. Other countries followed and in 1971 the gold exchange standard for international payments ended by mutual agreement of the international community.
Using gold as money creates many problems that have to be solved, but has no benefits of any kind. It does not impose discipline because money is always a human decision. Humans decide what it is and how much of it there will be. The Republicans know this, but they are willing to pander to Trump and his conspiratorial base.
A few Republican Senators express worry with a crackpot on the Fed. The Washington Post from February 9, 2020 quoted an insider who says “I don’t think she belongs on the [Fed] Board, but it’s not going to be an apocalypse. She’s not going to change the direction of monetary policy.” Don’t be too sure. Others think Trump is positioning her to be Fed Chair when Powell’s term ends in early 2022.
Republicans have their own agenda and while they are not against a stable well managed economy, it is not first on their agenda for economic policy. Recall the Bush recession of 2008-2010 following the 1999 Banking deregulation, which provided the wealthy and well placed unlimited opportunities for speculation and financial gambling. If the incompetent Trump gets control of monetary policy, it will be much worse than that.
Wednesday, February 19, 2020
Thursday, February 6, 2020
Beaten Down, Worked Up
Steven Greenhouse, Beaten Down, Worked Up: The Past, Present, and Future of American Labor, (NY: Alfred A Knopf, 2019) 340 pages
Journalist Steven Greenhouse has returned with a second book on American labor and the condition of life for the working class. This new book is partly an update of his 2008 book, the Big Squeeze, but there are also five chapters of narrative from American labor history, along with new current and emerging topics.
In the introduction Greenhouse tells readers the decline of labor unions has helped to generate income inequality, wage stagnation, declining mobility, low wage jobs and the skewing of politics to favor the wealthy. In this new book he pledges to focus far more on why so many Americans have been squeezed.
The first three chapters are part I – State of the Union - that give a warm up for the discussions to come. In Chapter one, entitled Losing Our Voice, we hear from eight people and their job experiences to show “something is fundamentally broken in the way many employers treat their workers.” After a data review readers get some quotations from corporate America and their self serving justification for what they do and believe, and then finally some news of new labor organizing. Chapter Two continues with this but has longer discussions with people and their work at Burger King, Caterpillar Inc. and General Motors. Chapter Three shifts to one of organized labor’s recent success stories, organizing the Culinary Workers Union and local 226 in Las Vegas.
Part II shifts to five significant episodes from labor history. First, there is the early 1900’s garment industry organizing, mostly in New York and mostly by women. We hear about Clare Lemlich and organizing for the International Ladies Garment Workers Union (ILGWU) and the courage of women to face assault, arrest and jail for picketing and striking. Next, in Chapter 5, we get an account of the deadly 1911 Triangle Shirtwaist fire in New York. This story introduces Francis Perkins, who was a witness to the fire. That story allows a transition to a biography of her career and work in the depression era Franklin Roosevelt administration. Greenhouse writes twelve pages of narrative of her work and life, wanting, I expect, to give her the recognition she deserves but does not usually get. Some of us argue she did more for labor and the working class than Franklin Roosevelt, anyone else.
Chapter 6 continues with the December 31, 1935 General Motors sit-down strike by the United Auto Workers (UAW) that allows an easy transition to Chapter 7 with Walter Reuther and the UAW during WWII and into the 1950’s. Chapter 8 moves on to a narrative of the 1968 Memphis Sanitation strike and the last campaign of Martin Luther King, Jr.
The history discussions in Part II ends in 1968, but Part III – Hard Times for Labor – continues with labor history’s events of the 1980’s. After accounts of the disastrous PATCO strike, and then on to the grimy Phelps-Dodge and Hormel strikes Greenhouse declares “In the 1980’s everything seemed to go wrong for labor.” He is sure right about that; it was a time of manufacturing moving abroad, demands for wage cuts, lockouts and union busting. Readers get short accounts of some of the companies and their union busting talk and tactics: T-Mobile, Menards, Staples, Amazon, and of course Walmart, or really Walmart again, since Greenhouse discussed them in his first book.
The title of chapter 12, Labor’s Self Inflicted Wounds, signals a critical look at labor leadership. This inevitably brings up the honest but opinionated George Meany and the always controversial Jimmy Hoffa and labor racketeering exposed in the 1957-59 McClellan committee hearings. Labor needs solidarity but George Meany refused to endorse the 1963 civil rights march on Washington, which represented a legacy of discrimination in the labor movement going back many decades. Unfortunately Meany was AFL-CIO president a long time: 1955 to 1979.
Greenhouse devotes the last two chapters of Part III to a narrative account of the attack on public sector unions by Wisconsin Governor Scott Walker, his union busting tactics and then a chapter to discuss the declining political influence of labor. In recent years the AFL-CIO has been unable to secure favorable legislation or prevent unfavorable legislation.
Part IV – Labor Today and Tomorrow – devotes seven chapters to current topics and trends in today’s labor. The sweatshops of the 19th and early 20th century have a new name: Gig economy. We hear about the abuses of Uber as a good example of the Gig economy although there are many others. After the Gig discussions we find some successes and a little optimism. There is a chapter devoted to raising the minimum wage. Here readers meet Adriana Alvarez, who tries to support herself and her infant child on $8.50 an hour working at McDonalds. She wants to help organize in the fight for a $15 an hour wage. She found out something legions of the oppressed and mistreated working class have learned before her: the owner of the McDonald’s franchise refused to speak with her. Management refusals to speak continue to be one of the clearest examples of class warfare in America.
Next we learn about some modestly successful farm worker organizing in Florida and the tactics applied to pressure the large vegetable purchasing fast food franchises and then move on to Los Angeles to review similar efforts there. In Los Angeles readers learn about the Los Angeles Alliance for a new economy (LAANE), an organizing group to push for social justice reforms.
Greenhouse devotes a chapter to labor relations at Kaiser-Permanente (KP), the giant, multi-state, health care provider and to the Saint Paul Federation of Teachers (SPFT) efforts to improve area public schools. KP did not always have good labor relations. From the 1970’s into the 1990’s KP had several disruptive walkouts but in the mid 1990’s management decided to work with their many unions in a Labor Management Partnership. Greenhouse reviews the workings of this Labor Management Partnership and its success.
The recent statewide teacher strikes get a whole chapter. Recall the first strike was in West Virginia, which spread to the Oklahoma teachers, to Arizona, to Los Angeles and a few more states not reviewed here. Teachers need college degrees and licensed certification, which makes them hard to replace with scabs and therefore the ideal employees to organize and strike if necessary. They make a good example for other occupations.
Author-Journalist Steven Greenhouse reports labor news for the New York Times and so has a salary, a travel budget and time to get some of the stories from the legions of under paid, over worked and over taxed Americans that slog along in America’s miserable jobs. Too often we cite and accept empirical data to show wage and price effects as a way to measure the changing fortunes of the working class. Interviews do not give a percentage change, but hearing the stories of people and their attempts to cope are empirical and valuable in every sense of the word.
The Beaten Down material in the book comes through clearly, but the Worked Up material points to more positive organizing than his previous book, the Big Squeeze. Too often labor unions start to act like the top down hierarchy of corporate America. Union officials make decisions on behalf of a barely involved rank and file, which has not worked well. The Worked Up material here shows the methods the rank and file can use to make progress organizing from the bottom up.
The last chapter makes a few suggestions for political organizing to change campaign finance laws, the National Labor Relations Act and a few more, but the book remains essentially free of legislative and party politics. It is well organized, reads easily and has detailed footnotes for those wanting to go a little deeper. Lets hope in the next book the Worked Up side will continue to show progress and a decline of the Beaten down; there are still plenty of them.
Journalist Steven Greenhouse has returned with a second book on American labor and the condition of life for the working class. This new book is partly an update of his 2008 book, the Big Squeeze, but there are also five chapters of narrative from American labor history, along with new current and emerging topics.
In the introduction Greenhouse tells readers the decline of labor unions has helped to generate income inequality, wage stagnation, declining mobility, low wage jobs and the skewing of politics to favor the wealthy. In this new book he pledges to focus far more on why so many Americans have been squeezed.
The first three chapters are part I – State of the Union - that give a warm up for the discussions to come. In Chapter one, entitled Losing Our Voice, we hear from eight people and their job experiences to show “something is fundamentally broken in the way many employers treat their workers.” After a data review readers get some quotations from corporate America and their self serving justification for what they do and believe, and then finally some news of new labor organizing. Chapter Two continues with this but has longer discussions with people and their work at Burger King, Caterpillar Inc. and General Motors. Chapter Three shifts to one of organized labor’s recent success stories, organizing the Culinary Workers Union and local 226 in Las Vegas.
Part II shifts to five significant episodes from labor history. First, there is the early 1900’s garment industry organizing, mostly in New York and mostly by women. We hear about Clare Lemlich and organizing for the International Ladies Garment Workers Union (ILGWU) and the courage of women to face assault, arrest and jail for picketing and striking. Next, in Chapter 5, we get an account of the deadly 1911 Triangle Shirtwaist fire in New York. This story introduces Francis Perkins, who was a witness to the fire. That story allows a transition to a biography of her career and work in the depression era Franklin Roosevelt administration. Greenhouse writes twelve pages of narrative of her work and life, wanting, I expect, to give her the recognition she deserves but does not usually get. Some of us argue she did more for labor and the working class than Franklin Roosevelt, anyone else.
Chapter 6 continues with the December 31, 1935 General Motors sit-down strike by the United Auto Workers (UAW) that allows an easy transition to Chapter 7 with Walter Reuther and the UAW during WWII and into the 1950’s. Chapter 8 moves on to a narrative of the 1968 Memphis Sanitation strike and the last campaign of Martin Luther King, Jr.
The history discussions in Part II ends in 1968, but Part III – Hard Times for Labor – continues with labor history’s events of the 1980’s. After accounts of the disastrous PATCO strike, and then on to the grimy Phelps-Dodge and Hormel strikes Greenhouse declares “In the 1980’s everything seemed to go wrong for labor.” He is sure right about that; it was a time of manufacturing moving abroad, demands for wage cuts, lockouts and union busting. Readers get short accounts of some of the companies and their union busting talk and tactics: T-Mobile, Menards, Staples, Amazon, and of course Walmart, or really Walmart again, since Greenhouse discussed them in his first book.
The title of chapter 12, Labor’s Self Inflicted Wounds, signals a critical look at labor leadership. This inevitably brings up the honest but opinionated George Meany and the always controversial Jimmy Hoffa and labor racketeering exposed in the 1957-59 McClellan committee hearings. Labor needs solidarity but George Meany refused to endorse the 1963 civil rights march on Washington, which represented a legacy of discrimination in the labor movement going back many decades. Unfortunately Meany was AFL-CIO president a long time: 1955 to 1979.
Greenhouse devotes the last two chapters of Part III to a narrative account of the attack on public sector unions by Wisconsin Governor Scott Walker, his union busting tactics and then a chapter to discuss the declining political influence of labor. In recent years the AFL-CIO has been unable to secure favorable legislation or prevent unfavorable legislation.
Part IV – Labor Today and Tomorrow – devotes seven chapters to current topics and trends in today’s labor. The sweatshops of the 19th and early 20th century have a new name: Gig economy. We hear about the abuses of Uber as a good example of the Gig economy although there are many others. After the Gig discussions we find some successes and a little optimism. There is a chapter devoted to raising the minimum wage. Here readers meet Adriana Alvarez, who tries to support herself and her infant child on $8.50 an hour working at McDonalds. She wants to help organize in the fight for a $15 an hour wage. She found out something legions of the oppressed and mistreated working class have learned before her: the owner of the McDonald’s franchise refused to speak with her. Management refusals to speak continue to be one of the clearest examples of class warfare in America.
Next we learn about some modestly successful farm worker organizing in Florida and the tactics applied to pressure the large vegetable purchasing fast food franchises and then move on to Los Angeles to review similar efforts there. In Los Angeles readers learn about the Los Angeles Alliance for a new economy (LAANE), an organizing group to push for social justice reforms.
Greenhouse devotes a chapter to labor relations at Kaiser-Permanente (KP), the giant, multi-state, health care provider and to the Saint Paul Federation of Teachers (SPFT) efforts to improve area public schools. KP did not always have good labor relations. From the 1970’s into the 1990’s KP had several disruptive walkouts but in the mid 1990’s management decided to work with their many unions in a Labor Management Partnership. Greenhouse reviews the workings of this Labor Management Partnership and its success.
The recent statewide teacher strikes get a whole chapter. Recall the first strike was in West Virginia, which spread to the Oklahoma teachers, to Arizona, to Los Angeles and a few more states not reviewed here. Teachers need college degrees and licensed certification, which makes them hard to replace with scabs and therefore the ideal employees to organize and strike if necessary. They make a good example for other occupations.
Author-Journalist Steven Greenhouse reports labor news for the New York Times and so has a salary, a travel budget and time to get some of the stories from the legions of under paid, over worked and over taxed Americans that slog along in America’s miserable jobs. Too often we cite and accept empirical data to show wage and price effects as a way to measure the changing fortunes of the working class. Interviews do not give a percentage change, but hearing the stories of people and their attempts to cope are empirical and valuable in every sense of the word.
The Beaten Down material in the book comes through clearly, but the Worked Up material points to more positive organizing than his previous book, the Big Squeeze. Too often labor unions start to act like the top down hierarchy of corporate America. Union officials make decisions on behalf of a barely involved rank and file, which has not worked well. The Worked Up material here shows the methods the rank and file can use to make progress organizing from the bottom up.
The last chapter makes a few suggestions for political organizing to change campaign finance laws, the National Labor Relations Act and a few more, but the book remains essentially free of legislative and party politics. It is well organized, reads easily and has detailed footnotes for those wanting to go a little deeper. Lets hope in the next book the Worked Up side will continue to show progress and a decline of the Beaten down; there are still plenty of them.
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