Saturday, August 24, 2019

The Amazon Effect on Jobs

The Amazon Effect on Jobs

Media coverage of the Amazon expansion keeps suggesting their growth comes at the expense of brick and mortar retail stores. The employment data suggests Amazon contributes to a decline in retail jobs that derives from more causes and long term trends.

Back in 1990 the Bureau of Labor Statistics (BLS) reported electronic shopping and electronic auctions employed a monthly average of 40.4 thousand people while 112.5 thousand worked at mail order houses. By 2016 the BLS reported 233.5 thousand employed in electronic shopping and electronic auctions, but mail order houses showed only a small increase to 127.5 thousand jobs.

As Internet access expanded to millions, the difference between the two categories faded as mail order houses doing catalog sales started using the Internet to compete. In response the BLS combined the two series after 2016. Combined employment since 1990 has an annual growth rate of 3.34 percent, more than triple the national average. The monthly average employment for 2018 came to 398.7 thousand jobs.

While the employment totals in retail trade continue to increase, jobs go up so slowly that the share of retail employment in national establishment employment declined year by year since 1990. In 1990 retail was 12.04 percent while in 2018 it was 10.62 percent. It may sound small but if retail employment retained its 1990 share in 2018, retail employment would have 2.114 million more jobs than it does.

Retail sub sectors in motor vehicle and parts dealers, furniture and home furnishing stores, electronic and appliance stores, food and beverage stores, health and personal care stores, gasoline stations, clothing and clothing accessories stores, sporting goods hobby book and music stores, general merchandise stores, office, supplies, stationery and gift stores all have a smaller share of jobs in 2018 than 1990, and smaller shares in 2018 than 2017.

In addition to electronic shopping a few other retail sub sectors have job growth that standout from the general decline. Home centers are a sub sector exception, which has a higher share of establishment employment with annual job growth of 2.89 percent since 1990. The Home Center job increase has come at the expense of job declines at paint-wallpaper stores, and hardware stores.

Employment at used car dealers has increased at nearly five times the annual growth rate for new cars since 1990: new cars .74 percent, used cars 3.59 percent. Jobs at cosmetic and beauty supply stores increased at a growth rate more than 7 times the rate for pharmacy and drug stores: .53 percent compared to 3.72 percent. Stores selling used goods such as thrift stores and consignment stores have the second highest annual rate of job growth in retail, 4.19 percent; only the electronic shopping that includes Amazon has higher job growth. Pet stores also have a high rate of job growth since 1990: 3.53 percent. These jobs combined have only 8.5 percent of 2018 retail employment, and .9 percent of national employment.
The following retail sub sectors all lost jobs from 2017 to 2018: household appliance stores, electronics stores, pharmacy and drug stores, clothing stores, shoe stores, sporting goods stores, hobby toy and game stores, sewing needle work and piece work stores, music instruments and supply stores, book periodical and music stores, department stores, warehouse clubs and super centers, office supply and stationery stores, gift, novelty and souvenir stores.

The electronic shopping total of 398.7 thousand jobs in 2018 represents 2.5 percent of retail trade employment compared to 2010 when 249.8 thousand jobs were 1.6 percent of retail jobs, a mere .9 percent gain for electronic shopping. Since the end of the last recession in early 2010, electronic shopping has added only 148.9 thousand jobs, not many jobs to replace the 2.114 million jobs there would be without such a low, average growth in retail trade. The Amazon effect is a part of the loss of retail jobs, but the expansion of electronic shopping will bring a net loss of jobs in retail and the economy.

Wednesday, August 7, 2019

Planet of the Humans – A Review

Planet of the Humans – A Review
Director Jeff Gibbs; producer Ozzie Zehner

Planet of the Humans is a documentary film just released at the Traverse City Film Festival (TCFF). The film makes two clear points. First it argues and validates the alarming growth of CO2 emissions, which continues while the country does nothing of significance to counter it. Second, the film argues the environmental movement has accepted large sums of money from the energy industry and now panders to them in their obsession with growth and profit.

The film focuses on the development of solar, wind, and bio-mass energy, and the public perception these efforts work well as alternatives to burning coal in the generation of heat and power. Viewers learn quickly these fuels generate a tiny share of power needs in the U.S. and elsewhere. We learn to doubt these alternative fuels can make a significant dent in the growth of CO2 emissions without limiting our use of fossil fuels. As one example, we meet a scientist who explains solar energy needs solar chips made from quartz and coal, requiring great sums of fossil fuel burning heat to produce, and they do not last indefinitely. We see large rectangular spaces filled with solar panels and learn they provide a year’s worth of energy for ten houses. We learn coal-burning energy must continue as a back up to cloudy days.

The filmmakers use much the same method for wind power and bio-mass. For wind we go to Lowell Mountain along the Long Trail in north central Vermont, where the now denuded ridge of the mountain has 450 foot windmill towers lined up in a row. We tend to forget constructing, installing and maintaining these towers uses great quantities of fossil fuel for creating an intermittent and indeterminate power source. Here we meet people distressed at the destruction of the forest and disruption of the solitude the Long Trail should represent.

Bio-mass advocates justify clear-cutting vast stretches of forested land with the excuse trees regenerate, except the camera gives a panorama of the worst of environmental destruction in the film with vast stretches of barren ground and not a sign of any living thing. In the village of L’Anse in Michigan’s Upper Peninsula we meet a woman distressed at the air pollution their bio-mass plant creates from burning chips made of old car tires. Management claims they need these hotter burning chips. We realize reducing coal consumption does not necessarily clean up the air.

The filmmakers cut back and forth from depressed and depressing locations around the country to corporate public relations events pitching their subsidized alternative fuel projects as the way to end our CO2 emissions worries. Two events covered in the film had outdoor concerts powered with solar panels, except the filmmakers went behind the tents and found the electricians managing the generators; they admitted solar power would not be enough. We attend an event promoting electric cars where General Motors CEO Mary Barra could not confirm savings on CO2 emissions for cars using coal powered electricity; she smiled awkwardly in her failure to do so.

Clips from these events and some separate interviews establish the sell-out of the Sierra Club and other groups we associate with environmental protection. We meet smiling white men - except one black man and Mary Barra – reading canned speeches and announcing dollars of investments in alternative fuels, but they stumble and fumble badly when confronted with conflicting questions. None wanted to address the conflict of environmental destruction their projects cause, or the few jobs they create, or their tiny effect on CO2. Mr. Inconvenient Truth himself, Al Gore, looked especially pathetic evading questions; while he evaded and avoided the film documented corporate payments to him and others as “paid consultants.” Money has transformed Gore into another member of America’s bloated gang of corporate rogues and scoundrels.

The film tells the story from what we see on the screen, as documentary films should do. The film editors cut from one place, and one scene, to another quickly, but sporadically leave a short interval with a blank screen as though we might need a few seconds to rest from their fast pace. Dialogue emphasizes scientists offering science explanations, interviews from on site victims and a sampling of corporate public relations. Viewers will not think filmmakers remain neutral in this debate, but they avoid preaching and stay in the background for the most part. In contrast we find the Koch brother owners of Georgia-Pacific sponsoring a website, an especially cynical move by people with contempt for the intelligence and welfare of the larger society.

The only discussion of data for CO2 emissions comes from the numbers 350 and 416. I learned 350 stands for parts per million of carbon dioxide, a number formerly billed as an upper limit goal for carbon dioxide in the atmosphere. As of now, we learn the number is 416 just in case anyone doubts our collective failure to address global warning. Enough said.

Monday, July 29, 2019

Workers on Arrival - A Review

James William Trotter Jr, Workers on Arrival: Black Labor in the Making of America, (Oakland, CA: University of California Press, 2019)

Workers on Arrival is an unusual book, but that’s not a criticism. Trotter outlines a vast subject-matter in his nine page prologue. He hopes to restore the “broader historical context of African American workers as producers, givers, and assets.” He covers the lives and labor of black workers in the economy and politics “from the transatlantic slave trade to recent times.”

The book has only 183 pages of text, with a 25 page essay on sources and 67 pages of notes carefully documenting sources from the text. Part I has three chapters that covers the colonial period up to the twentieth century; Part II has the last four chapters covering the twentieth century, and finally a brief four page epilogue of the twenty-first century. The three opening chapters describes the work and lives of the black community of the early period, emphasizing their economic contribution, the varied status of free and enslaved blacks, the work they did, their skills and the troubles they encountered in both urban and rural settings. Troubles included the Fugitive Slave Act, colonization movements, urban segregation, mob violence and their chances and a few successes at owning property and becoming entrepreneurs.

The civil war comes and goes in chapter 3. The war gradually liberated four million blacks as many showed up in military camps or forts and northern cities like Washington. D.C. before the war ended. Some joined the northern armies and helped defeat the south, but these were dangerous times as blacks were attacked in draft rioting and pressured by colonization advocates, which black leaders firmly opposed. Trotter covers black efforts to organize protective leagues and join unions during reconstruction and after, but this was also a violent period punctuated with race riots and white efforts to find a substitute for slavery in the search for cheap labor.

Part II moves into the twentieth century. These chapters combine progress in time with topical material. Chapter 4 concentrates on the Great Migration in the early part of the century. Here Trotter takes 32 pages on a vast subject, but concentrates on the lives and work the black community found in manufacturing in northern cities, which was not nirvana. Chapter 5 looks at efforts to create safety and security in labor and social justice organizing.

Chapter 6 takes a 20 page look at Jim Crow as it evolved and changed from the 1940’s through the 1960’s and 1970’s. In these post war years the unemployment rate for blacks exceeded that for whites for the first time while the post war expansion did little for the black community. Here Trotter mentions and gives brief description from episodes of intimidation and violence and black efforts to organize against the prejudice they confront. Readers get a brief look at the Southern Christian Leadership Conference, Congress of Racial Equality, National Negro Labor Council, the Negro American Labor Council, Nation of Islam, the Black Panther Party, Dodge Revolutionary Union Movement, a.k.a. DRUM, and a few more.

Chapter 7 outlines the decline in the manufacturing sector through the end of the century, its effect on black employment and changes in urban politics as many cities started electing black mayors to cope with the economic problems of a changing economy.

The epilogue characterizes the previous chapters as a “portrait of the black working class, enslaved and later free, changed dramatically during the twentieth century, when the Modern Black Freedom Movement toppled the white supremacist order, expanded the scope of American democracy, and created a new equal opportunity regime.” However, Trotter then concludes the epilogue by suggesting some ominous signs for the future.

I read the book as an invitation for others to develop and pursue research interests in further study. Discussions do not, and cannot, go into great detail given the concise text. Sometimes a topic gets only a sentence or two that serves to whet your appetite for more detail.

The essay on sources provides a thorough assistance for historical research. Brief discussions of a topic, or an era, are followed with names of historian authors, brief synopsis of their work, and sometimes conclusions and views. Chapter footnotes provide more help. Chapters typically have 40 or as many as 80 footnotes often with a list of sources.

As a research aide the book works well either for those who know what era or topic they want to study, or for undergraduate or graduate students looking for an era or a topic. For the latter group it might be useful to start with the essay on sources and then read the book while developing a bibliography.

Otherwise the book is well organized and reads easily, but not so much as narrative history. Sometimes sentences feel like a listing rather than a story. Black history remains an important topic for further study, as Trump reminds us too often, and this book serves that purpose well.

Wednesday, May 15, 2019

Janus v AFSCME

Unions, the Supreme Court and the Ruling in Janus versus AFSCME

After I read and studied the new Janus v AFSCME Supreme Court opinion of June 27, 2018, I thought of a law review article from the Connecticut Law Review by George Schatzki entitled “It’s Simple Judges Just Don’t Like Labor Unions.” [Volume 30, 1998, p 1365-1370] Some believe in reason as the explanatory force of law, but Schatzki finds in his law career that “By their nature, judges in general, and Supreme Court Justices in particular, are elitists, individualists, overachievers, meritocrats and fierce competitors; by their legal training and experience judges have ingrained in them the value of individual rights.”

In the Supreme Court Case of Janus v AFSCME a disgruntled Illinois employee named Mark Janus agreed to be the petitioner in a lawsuit intended to overturn legal doctrine last established 41 years ago in the case of Abood v. Detroit Board of Education [431 U. S. 209]. In the Abood case several public school teachers objected to the requirement in the Detroit Public School's collective bargaining agreement that made non-union members pay an agency fee as a service charge in lieu of union dues. Appellants complained among other things the union engaged in “political and other ideological activities” that deprived them of “freedom of association protected by the First and Fourteenth Amendments.”

Some Background
The labor movement has endured 150 years of free speech attacks; nothing is new in Janus v AFSCME. In the 19th century business owners blamed strikes on outside agitators who would come in and stir up the benevolent owner’s happy and contented employees and cause a strike. Owners responded to unions by refusing to meet or bargain with any union or union representatives; owners felt virtuous by claiming they protected America’s liberty and free speech for his loyal employees who did not want to join a union.

These same employers paid stool pigeons and hired spies to listen for anyone who spoke about unions or attempts to organize a union. Those discovered were immediately fired and put on a “blacklist” of those never to be rehired. During the 1930’s Ford Motor Company employees were not permitted to speak during the few minutes allotted as a lunch period on pain of dismissal. These restrictions on speech did not concern the courts or the Supreme Court.

Following the “Ludlow Massacre” in Colorado in 1913 John D. Rockefeller and his new advisor William Lyon MacKenzie King developed a plan for a company union known as the Employee Representation Plan. Neither business nor the courts worried about the right of free speech when businesses made company union membership and dues checkoff mandatory for all.

Back in 1933 in the first hundred days of Franklin Roosevelt’s New Deal the Congress passed the National Industrial Recovery Act with section 7(a): that employees shall have the right to organize and bargain collectively through representatives of their own choosing. Section 7(a) did not come with even a hint of operational rules, which made it necessary for the government to play a more active role in labor relations. The New Deal friends of FDR brought into government service wrestled with a method to determine appropriate representation. They decided a democratic election of eligible employees would make up a bargaining unit to determine what representative should represent all employees.
Congress accepted this view when it debated and passed the National Labor Relations Act, a.k.a. the Wagner Act, in 1935. Section 9(a) of the National Labor Relations Act of 1935 as amended and administered by the National Labor Relations Board requires the union to represent all employees in the bargaining unit not just members. A majority vote in a democratic certification election administered by the National Labor Relations Board continues as the method to establish exclusive union representation.

When President Roosevelt signed the National Labor Relations Act (NLRA) into law July 5, 1935, corporate America large and small expected the Supreme Court would declare it an unconstitutional violation of liberty of contract, the method Supreme Court majorities had used for decades to eliminate unions. Justice Charles Evans Hughes wrote the majority opinion in the case of NLRB v Jones & Laughlin Steel Company announced April 12, 1937. Justice Hughes declared the Commerce Clause of the Constitution allowed Congress to regulate relations between business and labor in order to prevent strikes and disruptions to the flow of commerce. He noted “we are dealing with the power of Congress, not with a particular policy or with the extent to which policy should go.” Occasionally judicial voices like Justice Hughes cry out, usually in dissent, that the Supreme Court should not substitute their policy opinions in place of an elected Congress.

Group decisions made by democratic means always have objectors who don’t get their way. The Supreme Court has addressed repeated requests to accommodate disgruntled employees and organized union haters who claim constitutional violations of free speech and free association. Union objectors have always hated that Congress wrote a law that expected them to offer financial support to a union they voted against.

Precedent from 1956 to 2018

In the 1977 case Abood v. Board of Education of Detroit the justices cited two cases as precedent for deciding if an agency shop in a collective bargaining agreement can be constitutionally valid. In the first case of the Railway Employees' Dept. v. Hanson (351 U. S. 225) from 1956 non-union employees of the Union Pacific Railroad brought suit in a Nebraska Court to prevent collecting union dues from non-members as part of a union shop agreement. The union defended their union shop clause by citing 1951 amendments to the Railyway Labor Act that specifically allow it.

A Nebraska trial court issued an injunction to prevent collection of dues as a source of irreparable harm and the Nebraska Supreme Court affirmed by holding that a union shop agreement violates the First Amendment and Fifth Amendment to the Constitution in that it deprives employees their “freedom of conscience, freedom of association, and freedom of thought protected by the Bill of Rights.”

Justice William O. Douglas writing for the court addressed “Wide ranged problems” appellants “tendered under the first amendment.” … “It is argued that, once a man becomes a member of these unions, he is subject to vast disciplinary control, and that, by force of the federal [Railway Labor] Act, unions now can make him conform to their ideology.”
Justice Douglas replied “there is no more an infringement or impairment of First Amendment rights than there would be in the case of a lawyer who, by state law, is required to be a member of an integrated bar. It is argued that compulsory membership will be used to impair freedom of expression.” … “We only hold that the requirement for financial support of the collective bargaining agency by all who receive the benefits of its work is within the power of Congress under the Commerce Clause, and does not violate either the First or the Fifth Amendments.”

In the second case Machinists v. Street (367 U. S. 740) from 1961 the Southern Railway System entered a union shop agreement using authority from the 1951 amendments to the Railway Labor Act exactly as in the Hanson case. Non-union employees brought suit in a Georgia State Court complaining the union used their dues to “finance the campaigns” of people they opposed and “promote the propagation of political and economic doctrines, concepts and ideologies with which [they] disagreed.” The trial judge found the allegations fully proved and issued an injunction to prevent enforcement of the union shop agreement on the grounds the relevant section of the Railway Labor Act violates the First, Fifth, Ninth and Tenth Amendments to the Federal Constitution. The Supreme Court of Georgia affirmed. Appeal was taken that ended in United States Supreme Court

The case of Machinists v. Street raises the identical issues from Hanson, but the justices decided to find a difference that allows them to modify precedent. In Street the justices looked at the Hanson opinion and found no evidence that union dues had forced “ideological conformity” that impaired the “free expression of employees.” Instead the justices concluded Hanson only sustained the relevant sections of the Railway Labor Act as “constitutional in its bare authorization of union shop contracts requiring workers to give ‘financial support’ to unions legally authorized to act as their collective bargaining agents.” . . . “Clearly, [the Hanson court] passed neither upon forced association in any other aspect nor upon the issue of the use of exacted money for political causes which were opposed by the employment.” The justices decided this failure to pass on “forced association” in the Hanson opinion left “questions of utmost gravity” for the Street case then before the Supreme Court.

In the Street case the Supreme Court found that money had been drawn from the union treasury to make political contributions, which they defined as a “forced association.” The Court decided the use of compulsory union dues for political purposes violated the Railway Labor Act, not the Federal Constitution.

The majority opinion in Street included a lengthy history of Congressional debate for the 73rd Congress of 1934 discussing amendments to the Railway Labor Act. In the debate and discussions the justices admit “It was made explicit that the representative selected by a majority of any class or craft of employees should be the exclusive bargaining representative of all the employees of that craft or class.” … Further they wrote, “Performance of these functions entails the expenditure of considerable funds. Moreover, this [Supreme] Court has held that, under the statutory scheme, a union's status as exclusive bargaining representative carries with it the duty fairly and equitably to represent all employees of the craft or class, union and nonunion.” … Unions the justices admitted “advanced as their purpose the elimination of the "free riders" -- those employees who obtained the benefits of the unions' participation in the machinery of the [Railway Labor] Act without financially supporting the unions.” However, they cautioned “One looks in vain for any suggestion that Congress also meant Section Two of the Railway Labor Act to provide the unions with a means for forcing employees, over their objection, to support political causes which they oppose.”
In their Section III of the opinion, safeguarding the rights of dissent, the justices explain how Congress incorporated safeguards to protect dissenters. Here the justices quoted debate from congressional hearings and cited the original proposal to authorize a union shop. Phrasing in the revised law prevents a union shop agreement that would force the discharge of any employee for any cause except non-payment of dues. In the hearings, testimony included worry employees could be discharged from criticizing their union. Organized labor officials then agreed to wording that made it explicit that dues collected from non-union employees in a union shop were to prevent the “free rider” problem, but with the proviso a union contract could not require discharge of an employee for any reason except non-payment of dues.
The discussion and inclusion of a free rider proviso brought a judicial conclusion in Street that “A congressional concern over possible impingements on the interests of individual dissenters from union policies is therefore discernible.” From that decision the justices decided unions do not have “unlimited power to spend exacted money” which requires the justices to “delineate the precise limits of that power in this [Machinists v Street] case.
In their section IV, the appropriate remedy, the justices declare “the union shop agreement itself is not unlawful.” Objectors “remain obliged, as a condition of continued employment, to make the payments to their respective unions called for by the agreement.” . . . Their “grievance stems from the spending of their funds for purposes not authorized by the Act in the face of their objection, not from the enforcement of the union shop agreement by the mere collection of funds.” However, “dissent is not to be presumed -- it must affirmatively be made known to the union by the dissenting employee.” For those who make their dissent as occurred in the Street case, “a remedy would be restitution to each individual employee of that portion of his money which the union expended, despite his notification, for the political causes to which he had advised the union he was opposed.” If funds cannot be traced or come from general funds then “the portion of his money the employee would be entitled to recover would be in the same proportion that the expenditures for political purposes which he had advised the union he disapproved bore to the total union budget.”
And so ended the case of Machinists v. Street on June 19, 1961. Notice the justices interpreted the intentions of Congress to evaluate a statute; they looked in vain to find that Congress intended to allow agency shop fees to go for political support, but they did not find an unconstitutional limit on free speech.
Jump forward to May 23, 1977 and the decision in Abood v Board of Education of Detroit after another group of union objectors made another attack on the union and agency shop, a right specifically granted by a Michigan statute. The U.S. Supreme Court took the case after Abood exhausted appeals in the Michigan Courts without relief. Appellant Abood claimed to the U.S. Supreme Court that collective bargaining in the public sector is inherently “political,” and that to require them to give financial support to it is to require “ideological conformity.” The justices disagreed but wrote “The differences between public and private sector collective bargaining simply do not translate into differences in First Amendment rights.” . . . “We conclude that the Michigan Court of Appeals was correct in viewing this Court's decisions in Hanson and Street as controlling in the present case insofar as the service charges are applied to collective bargaining, contract administration, and grievance adjustment purposes.”
However “We [the justices] do not hold that a union cannot constitutionally spend funds for the expression of political views, on behalf of political candidates, or toward the advancement of other ideological causes not germane to its duties as collective bargaining representative. Rather the Constitution requires only that such expenditures be financed from charges, dues, or assessments paid by employees who do not object to advancing those ideas and who are not coerced into doing so against their will by the threat of loss of governmental employment.”
Like the Hanson case, however, the justices found no evidence to determine appropriate relief as the “complaints were only general ones.” The remanded the case with instructions to use the Street method of determining relief.

For 62 years from 1956 to 2018 different majorities of different Supreme Courts found it constitutional for unions to operate union or agency shops and collect agency fees from non-members under the Railway Labor Act and the National Labor Relations Act. Notice in these Hanson, Street and Abood opinions the justices did not find it necessary to make constitutional claims. They merely ruled the Commerce Clause of the U.S. Constitution allows Congress the necessary authority to make national policy for unions as it did in the Jones and Laughlin case of 1937. They respected the wishes of a democratically elected Congress to create a method for exclusive union representation and eliminate free riders. In 2018 in the case of Janus v. AFSCME five justices voted to wipe that away with broad constitutional claims.

Janus v AFSCME

In Janus v AFSCME the five Supreme Court justices voting to overrule Abood, Street and Hanson were appointed by a Republican President; the four voting to uphold were appointed by a Democrat President. The opening lines of the majority opinion declared the Abood “arrangement violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.” … “We recognize the importance of following precedent unless there are strong reasons for not doing so. But there are very strong reasons in this case.” . . . “Abood was poorly reasoned.”

The majority opinion written by Justice Alito concludes in Section III “In Abood, the Court upheld the constitutionality of an agency-shop arrangement like the one now before us, but in more recent cases we have recognized that this holding is ‘something of an anomaly.’” It can be noted the “recent cases” that make Abood something of an anomaly are Harris v Quinn and Knox v SEIU, both Alito opinions; Alito cites himself as authority for Janus v AFSCME.

Here is the Alito response to the “poorly reasoned” Abood opinion. Quoting from Alito in Section III he declares the “First Amendment forbids abridgement of freedom of speech.” . . . “Compelling individuals to mouth support for views they find objectionable violates that cardinal constitutional command, and in most contexts, any such effort would be universally condemned. Suppose, for example, that the State of Illinois required all residents to sign a document expressing support for a particular set of positions on controversial public issues—say, the platform of one of the major political parties. No one, we trust, would seriously argue that the First Amendment permits this.”

“Perhaps because such compulsion so plainly violates the Constitution, most of our free speech cases have involved restrictions on what can be said, rather than laws compelling speech. But measures compelling speech are at least as threatening.”

“We have therefore recognized that a ‘significant impingement on First Amendment rights’ occurs when public employees are required to provide financial support for a union that takes many positions during collective bargaining that have powerful political and civic consequences.” . . . “Because compelled subsidization of private speech seriously impinges on First Amendment rights, it cannot be casually allowed.”

Read the phrases again but pare away the surplus verbiage and you will find a tautology, true by its own terms. First, he declares first amendment rights prevents abridging free speech. Second, he defines agency fees as compulsory speech. Then he declares compulsory speech violates first amendment rights. It’s a perfect circle, empty of reasoning, legal or otherwise. Unions have only Alito’s personal decision to define agency fees as a violation of the first amendment.

From here Alito tells readers he “will give standard reasons for agency fees and alternative rationales proffered by respondents and their amici,” but as Justice Kagen complained in her dissent the majority just dismissed them. Alito writes the agency shop is unnecessary because postal workers have exclusive representation, but “employees are not required to pay an agency fee and about 400,000 are union members.” Section 14(b) of the National Labor Relations Act as amended gives the state legislatures authority to eliminate dues check off and hence eliminate the union and agency shop. Many states have done that and so the justices claim “millions of public employees in the 28 States that have laws generally prohibiting agency fees are represented by unions that serve as the exclusive representatives of all the employees.”

The democratically elected legislatures of 28 states have chosen a policy by majority vote to apply section 14(b), but it’s one thing to argue agency fees are unnecessary and another to declare them unconstitutional as no other Supreme Court majority has ever done. The other 22 legislatures made the democratic decision to allow the agency shop, but what’s democracy if judges don’t like unions as George Schatzki warned us.

Union organizing requires a majority vote of a government defined bargaining unit in order to be a union. Not once in any of these majority opinions do I find the justices mention, much less defend, interfering in a democratic election. In the three cases – Hanson, Street, Abood – the justices did not address constitutional questions, which allowed them to avoid interfering with democratic votes. They did not find wording in the law that allowed using dues for political purposes and so filled in a policy they thought consistent with the law passed by Congress. They show respect for a democratically elected Congress to adjust public policy consistent with the constitution and will of the people.

Alito makes no attempt to justify taking up the cause of disgruntled losers angry with the results of a democratic election. Around the country many states and localities require a voter referendum to pass bond funding for public projects like streets and highways. If a majority votes yea, I am unaware disgruntled losers can deduct their share of project costs from their property taxes. I am unaware in democratic votes for bond funding that objectors can claim a violation of free speech. I find no mention of examples of democratic elections where Supreme Court justices protect the losers from the normal process of majority rule.

Alito paid homage to precedent – stare decisis - in his opening lines but it was a patronizing reference. In Janus the majority ignores precedent entirely and responds as politicians to the union hating right wing constituency they were appointed to please and protect. Federal judges take an oath to hear cases without regard to persons, which suggests in Janus v AFSCME five of them in this 5 to 4 ruling violated their oath.

Tuesday, May 7, 2019

Trump and the Federal Reserve

Trump and the Federal Reserve

Trump keeps complaining the economy should do better. [as in “Trump frustrated on Fed, oil as he tries to juice economy” Washington Post, May 3, 2019] He thinks lower interest rates than the already low interest rates would pep up the economy and so he nominates two incompetents for Federal Reserve Board posts.

There are many ironies here. First, presidents do not manage the economy, the Federal Reserve does that. Congress sets government spending and taxes and business creates jobs. Presidents can be cheerleaders but remain on the sidelines to a remarkable degree.

Second, work in applied economics at the Federal Reserve requires more study of macro and monetary economics and more experience in application of these specialties than any other jobs in economics. In truth no one should be nominated for the Federal Reserve Board that does not have prior experience in banking and experience as professional staff before moving up through the ranks at headquarters in Washington or the regional banks.

Third, the economy continues to do extremely well by any standards, but especially so given the inequality of income and the dulling effect of two years of Trump tariffs. An economy is nothing but a flow of transactions and interest rates are a policy tool to help maintain that flow and avoid fluctuations in production, income and employment. Since inflation remains remarkably low at less than two percent with an expanding economy and rising employment, we can easily recognize interest rates are at the perfect rate.

Fourth, the two incompetents withdrew after enough Republicans signaled a NO vote. These same Republicans remain silent on Russian Interference in United States Democracy, but they draw the line at incompetents taking over the economy. It’s good to learn a few Senators will not always slobber on Trump; pandering has limits, even for Republicans.

Fifth, in a digital age with excellent economic information and just in time inventory management recessions do not occur by accident. The natural business cycle resulting from fluctuations in production and spending will continue to be mild and the Federal Reserve can deal with business cycles to keep economic fluctuations mild and barely noticeable as the last decade shows.

The 2008-2010 recession was not part of a natural business cycle. The economy collapsed after the banking industry looted the nation’s loanable funds for gambling in home mortgages. By selling and reselling mortgage loans packed as collaterized debt obligations they built a speculative bubble, which collapsed in a rush. It all happened after Congress and Bill Clinton repealed the regulations of the Glass Steagall Banking Act of 1934, thereby eliminating bank and banker restrictions on the use of loanable funds for their own speculative purposes.

Severe recessions like the one in 2008-2010 only occur because those with the power to make the right decision have their own agenda and choose to make the wrong decision. Given the rogues and scoundrels of 2019 it seems quite possible to occur again.

Saturday, March 30, 2019

Trump’s Medicaid Fraud

Trump’s Medicaid Fraud

The current Medicaid work rules amount to a deliberate attack on the Affordable Care Act, which allowed an expansion of Medicaid for those who could not afford health care but did not qualify for Medicaid under the older and draconian poverty requirements.

Medicaid recipients receive medical benefits like doctor or hospital visits, but not funds they can use to support themselves. Medicaid appropriations go to venders who provide the services. Therefore, Medicaid recipients have no choice but to find work, or to starve.

What state governors call work rules are really just rigmarole designed to trick people or to get recipients ensnarled in a complex labyrinth of regulations and bureaucracy that justify removing them from the rolls. Trump aficionados like Seema Verma, HHS administrator, know that perfectly well as does the Governor of Arkansas, Asa Hutchinson, who patronized the Federal Judge who would not go along with the deception.

States like Arkansas have established elaborate rules that require recipients to report they are already working to government administrative authorities in order to receive benefits. Authorities have not always made clear recipients would be expected to log into the Internet and report their work each month. Those who did not obey, or understand, these requirements find they are removed from the rolls; those who lost one of their low paid jobs and did not meet other rules and regulations can find themselves removed as well.

If ever there were useless regulations these are it. The Washington Post [Amy Goldstein, March 29, 2019] quoted Governor Hutchinson that “I remain fully committed to a work requirement, and we are in this for the long haul because we believe it is the right policy.” Really!

Work requires a transaction where someone gets paid for their time doing specific work. No such transaction takes place for Medicaid recipients that allows a “work requirement.” The Trump Administration Medicaid regulations, and Governors like Asa Hutchinson who apply them, choose to make and enforce a deliberate fraud.

Tuesday, February 19, 2019

Unconstitutional Appropriations – Trump demands the Trifecta

Unconstitutional Appropriations – Trump demands the Trifecta

If you think politicians should observe the written conditions of the U.S. Constitution, then you might agree with me that a second shut down would be better than what’s going on with Trump’s current threats. The compromise appropriation passed by Congress and signed into law by Trump followed the requirements in Article I of the constitution exactly. For Trump to threaten to take appropriated funds for his personal appropriations bluntly and crudely violates one of the simple and plain English restrictions written into the Constitution. The restriction says

“No money shall be drawn from the treasury, but in consequence of appropriations made by law; . . .”

Some constitutional phrases allow or require interpretation; leave room for the creative cloudy thinking judges and politicians love to do. Not here; not with this one. Funds appropriated go into a budget and fund specific departments and agencies of the government. The constitution does not permit taking appropriated funds and spending them on unappropriated projects. Changes require a supplemental appropriation signed into law.

We might suppose members of Congress, House and Senate, would object to having their constitutional authority erased as so much irrelevant nothing. The emergency excuse is irrelevant even with an emergency since federal appropriations already fund emergency response agencies and we have armed forces ready to respond.

I would expect patriotic members of Congress would abandon their partisan politics to make a unanimous vote to end this unconstitutional threat to our institutions and constitution. They only need two-thirds, which neuters those who refuse to agree English words mean what they mean.

Next in the separation of powers we have the third branch of government: the federal courts. I would expect all patriotic members of the federal bench to agree English words mean what they mean. For the courts to fail to stop this unconstitutional nonsense a district court judge, then two of three appeals court justices and five members of the Supreme Court must fail to do the duty they took an oath to do.

For Trump to get his way requires a complete Trifecta of constitutional failure; a breakdown of all three branches of government. We can hope it doesn’t happen, but I hear some nervous tremors from those who say it won’t.

Wednesday, January 23, 2019

Mr. Beutner and the Los Angeles Public Schools

Mr. Beutner and the Los Angeles Public Schools

The Los Angeles Public School teachers left their classrooms in the first teacher strike in thirty years. I read the teachers and their union want class size reduced and support staff restored to previous or even reasonable levels.

The school system’s latest Superintendent, Austin Beutner, has no experience in education. Reports describe him as a former investment banker and non-profit executive brought into the school system by the school board to get the system’s finances in order.

I always get disgusted with everyone who thinks anyone with a history of financial success automatically qualifies for all other jobs including education. So many show their contempt for education by expressing such views. I do not hear the reverse that teachers are professionals qualified to take over an investment banking firm, but they would have to do exactly what Mr. Beutner has to do: start fresh and learn something new.

Newspaper accounts quoted Mr. Beutner: “If we agreed to [union] demands, the district would be come immediately bankrupt and would be taken over by the state that same day.” Even if its true, it takes no financial skill to determine that, which is irrelevant to what’s important anyway.

I read one quote from a striking teacher that makes clear what’s relevant to the strike “We have a charter school on campus that is eating away at our spaces, our resources.” Now we know the real financial problem: charter school students get a bigger share of the budget than their share of students; get amounts out of proportion to their numbers.

If that assertion is false it takes no financial genius to prove it false. Now – January 23, 2019 - the union and Mr. Beutner have reached a tentative settlement that will give teachers a raise, reduce class size and hire more support staff; certainly a good thing. However, it does not answer the question Mr. Beutner was hired to evade. It does not justify the percentage of the total financial budget going to the public schools compared to that going to the charter schools. Those who believe in education should demand an answer.

Wednesday, January 2, 2019

The George Herbert Walker Bush Tax Cuts

The George Herbert Walker Bush Tax Cuts

Many of us remember George Herbert Walker Bush for his famous declaration: “Read my lips; no new taxes.” Being a man of financial prudence he decided his own federal budget deficits forced him to renege. He raised taxes and then lost his bid for reelection in the 1992 elections.

The ideological part of the Republican party would never forgive him, although the Ross Perot third party bid probably cost him more votes than angry Republicans. It did after all give them an alternative to Democrats. What I would like to examine though is how much of a tax cut really occurred and also the timing of the cuts. Remember Mr. Bush did not take office until January 1989 and left office in January 1993. Before Mr. Bush took office President Reagan succeeded in getting substantial tax cuts.

Suppose we invent a hypothetical rich couple earning $900,000 in wages and salaries and $100,000 of capital gains and look at their federal personal income taxes for a joint return and a standard deduction each year in 1986, 1987, 1988 and 1991.

Taxes in 1986 had 15 different tax rates that started at 11 percent for the first $3,670 of taxable income for married couples filing a joint return and went up by 1 to 4 percent increments until it reached 50 percent for taxable income of $175,250 or more. The 1986 taxes for our hypothetical couple came to $514,876.00. Only 40 percent of reported capital gains was taxed in that year.

Their 1987 federal taxes were before George HW Bush became president where tax cuts by Congress and President Reagan left 4 different tax rates that started at 11 percent for the first $3,000 of taxable income for married couples filing a joint return. Rates went up by 4 to 13 percent income increments until it reached 38.5 percent for taxable income of $90,000 or more. Now with the Reagan tax cuts the 1987 their tax drops to $361,529.41, a savings of $153,448.59. That is a 29.7 percent reduction in taxes.

In 1988, again during the Reagan presidential years, the top tax rate dropped again. This time from 38.5 percent to 33 percent on the first $149,250 of taxable income. Therefore not only is the rate lower but also the lower rate applies to more income. Now with the Reagan tax cuts in 1988 our hypothetical couple would pay $278,600 in federal income taxes, a savings of $82,929.41. That is 22.9 percent reduction over 1987 taxes and a 45.9 percent reduction over taxes in 1986.

Compare federal income taxes for a couple filing a joint return on the median household income in 1986, which was $24,897. Assuming the $24,897 was wage income this lower income couple paid $2,202.76 in federal taxes. After the tax cut for the rich the working class couple with the same $24,897 income in 1987 paid $2,480.55, a tax increase of $277.79. That is a 12.6 percent increase in taxes. It was called a rich persons tax cut with good reason.

In 1991 the top tax rate dropped from 33 percent to 31 percent for taxable income over $82,150, but the 1990 exemption amount of $4,100 for a married couple filing a joint return was suddenly subjected to a means test. For couples earning over $157,900 started losing the exemption deduction until it became negative and had to be added to taxable income. Beginning in 1991 during George Bush’s presidency our hypothetical couple had to pay $306,079.91 in taxes, an increase from $278,474.00 in 1990, or $27,605.91 more tax in 1991. The 1991 increase was 9.9 percent over 1990, but still 40.6 percent below the taxes from 1986.

If the taxes of 1986 had remained the same from 1987 through 1992 our hypothetical couple would have paid $1,279,952.43 more in taxes that they did. I did not adjust for interest earnings or it would have been more. The Reagan-Bush tax cuts from 1987 to 1992 cut taxes for our hypothetical rich couple by 41.4 percent.

It’s always good to quantify the arrogance of the idle rich, but gee poor ol’Herbert Walker lost his job. The new President Bill Clinton and the Democrats had the Trifecta for two years: control of the White House and both houses of Congress. The Democrats raised 1993 taxes although they remained well below 1986. Our hypothetical rich couple saved $145,793.88 in 1993 taxes over taxes for 1986.