The G Spot

Geoghegan of the Day

By Kathy G.

You want to know why I am positively giddy at the thought of a Congressman Geoghegan? This is why I am positively giddy at the thought of a Congressman Geoghegan. Here's Geoghegan, from an online debate in today's New York Times:

So far as I can tell, in my labor law practice, every year is a recession for working people, even in a boom. In 2007, over 15 million were out of work at some point in the year — typically for three to four months. Over two years, 20 million to 25 million could face such a catastrophe. Over three years, millions more. And that’s when things are good. Economists used to take a cheerful view of this: “It’s just rolling unemployment.” But it’s more like a rolling heart attack. Three months without a paycheck is a near-death experience.

[. . .]

By the time they’re my age in their late 50’s, many have come back from near death in this way three or more times. But this year, it might be for good. Of course people are terrified, especially if they’re sick.

I think here of a client I had the other day: he has cancer. So the loss of his job means the loss of his health insurance, and the loss of his job, at age 61, really could be a death sentence. It’s a long trek from age 61 to Medicare.

He took it calmly. I didn’t.

[. . .]

And there is something reassuring about a recession: we all have these near-death experiences together. After all, a layoff in a recession is less shameful than all the other layoffs in the “good” times. People don’t feel the sense of shame. And think of the people who have already dropped out of the labor market. I think again of so many men and women who are my age, late 50’s or early 60’s, who wonder if they will ever find work again. We can face ourselves in the mirror: “Well, naturally I’m out of work.”

They can’t make us feel ashamed. Aren’t they bailing out the banks?

When was the last time you heard a politician talk like that?

You can donate to Tom Geoghegan's Congressional campaign here; volunteer here; and join the Geoghegan for Congress Facebook group here.

In support of a feminist stimulus*

By Kathy G.

A number of feminists have expressed concern that President-Elect Obama's proposed stimulus package will be of limited help to women because it will disproportionately create jobs in male-dominated industries like construction, while largely ignoring more female-friendly professions such as education, health care, and child care. The well-known feminist economist, Barbara Bergmann, has written a letter to Obama calling for a stimulus package that would do more for women. The text of the letter is as follows:

To President-Elect Obama:

We applaud your intention to establish a sizeable and productive program that will help to stimulate the economy, and that will provide improved infrastructure for the country. However, we are concerned that, unless specific steps are taken, your program will provide jobs almost exclusively for men. Women are 46 percent of the labor force. Their unemployment rate is rising with that of men. Moreover, many millions of women are raising children without a husband or partner, and unemployment for them will mean great deprivation, and possible homelessness, for them and their children.

We suggest three lines of action that will insure that women get a fair share of the benefits from your program:

1. Revive and enforce the Labor Department regulations that require government contractors to institute affirmative action plans that provide a share of the jobs for women and minorities. Closely monitor the contractors for compliance.

2. In connection with the infrastructure projects, institute apprenticeships, and ensure that at least one third of the positions go to women.

3. Add projects in health, child care, education, social service that will both provide jobs to women, and also provide needed services to them.

A number of prominent economists and others have signed this letter. You can add you signature here.

Unions: good for Democrats (and democrats)

By Kathy G.

The crisis in Detroit, and the ensuing debate over whether Uncle Sam should bail out the auto industry, has of late led to a round of union-bashing that, to the best of my recollection, is well-nigh unprecedented.

Over the next couple of days, I'll be responding to the many shameless distortions and lies being cooked up by the bashers (and that includes you, Gary Becker, Richard Posner, and serial offender Mickey Kaus!). But first, I wanted to add something to the pro-union arguments that Kevin Drum and Ezra Klein have already made.

Kevin's and Ezra's arguments focus on what I would call the first-order effects of unions: i.e., that they improve job conditions, increase earnings, and decrease wage inequality.

But their benefits don't stop there. If you care not only about the economic well-being of low- and middle-income Americans, but about the long-term viability of the Democratic Party -- nay, of democracy itself! -- you should be a strong supporter of unions and the American labor movement.

What do I mean by this? First of all, let's look at the impact of unions on the Democratic Party. Unions, of course, provide invaluable aid to the Democratic candidates. As Matt Stoller explains here, unions provide candidates with money, field and GOTV operations, media surrogates, and more. Even though, in numbers and influence, organized labor has declined dramatically over the past couple of decades, it is still, as Stoller has written, "the single most reliable, organized and powerful segment of the Democratic political coalition."

Secondly, and perhaps even more importantly -- unions are, among other things, institutions that more or less create Democrats. This is because union members overwhelmingly tend to vote for the party that, however imperfectly, is more likely to protect their economic interests. This is true even when those union members belong to groups -- such as gun owners, weekly churchgoers, and white, non-college educated males -- which otherwise tend to vote Republican.

Take, for instance, these stunning statistics from the last election, which have not gotten anywhere near the attention they merit:

Fifty-seven percent of white men favored McCain, but 57 percent of white male union members favored Obama. White gun owners cast 68 percent of their votes for McCain, but 54 percent of white gun owners who are also union members preferred Obama. Among white weekly churchgoers, McCain scored a landslide, receiving 70 percent of their votes. But Obama had a slight edge (49 percent to 48 percent) among white weekly churchgoers who were union members. Similarly, 58 percent of white non-college graduates voted for McCain, but 60 percent of white union members who didn't graduate from college tilted to Obama. Overall, 53 percent of white women cast ballots for McCain, but [pollster Guy] Molyneux found that a whopping 72 percent of white women union members favored Obama.

Early childhood education: common ground for liberals and libertarians alike?

By Kathy G.

I've got a new post up at Art of the Possible. It concerns early childhood education programs, and the question of whether liberals and libertarians alike might be able to come together in support of such programs. You can find the post here.

Warmest congrats to Paul Krugman, plus: a challenge to readers

By Kathy G.

Huzzah, kudos, and all hail to this year's Nobel Prize winner in economics, Paul Krugman. Krugman was awarded the prize "for his analysis of trade patterns and location of economic activity." Sayeth the Prize Committee:

This year’s Laureate is awarded the Prize for his research on international trade and economic geography. By having shown the effects of economies of scale on trade patterns and on the location of economic activity, his ideas have given rise to an extensive reorientation of the research on these issues.

To immerse yourself in the wonky details, see this, this, and this. 

This award is extremely gratifying, not only as recognition for the quality of Krugman's scholarship in and of itself, but also because it validates the idea that doing academic work of the highest caliber and being a public (and at times extremely controversial) intellectual are not mutually exclusive endeavors.

I've had the pleasure of meeting Krugman a few times, and I've come away impressed. Blessedly, he doesn't share the affliction common to all too many economists, which is a near-autistic lack of social skills. On the contrary, he was quite personable and down to earth.

Plus, at the Netroots Nation panel he was on this summer, he wore his sandals, which I thought was totally adorable.

Apart from his scholarship, for many of us on the left, Paul Krugman is a hero. Long before George W. Bush's approval rating sunk into the mid-20s, Krugman was virtually alone among mainstream media figures in calling the Bush administration on its bullshit. He took an enormous amount of flack for that, but he never backed down. There can be no doubt that he is a man of courage and integrity.

The declining fortunes of African-Americans under President George W. Bush

By Kathy G.

I've got another post up at Art of the Possible, which you can check out here. It's about how, on an economic level, the Bush years have sucked for pretty much everyone, especially African-Americans.

The election and the courts

By Kathy G.

I have a new post up on Art of the Possible about the election and the courts, which you can read here. It's partly based on Linda Hirshman's recent, and terrific, Washington Post article about what would happen to abortion rights if Roe v. Wade were to overturned. But I also write about the impact of four more years of Republican judicial appointees on civil liberties and economic issues.

Guest blogging at Art of the Possible

By Kathy G.

I wanted to let you all know that, for the next several Saturdays, I'll be guest blogging at Art of the Possible. For those of you who aren't familiar with it, Art of the Possible is a very interesting site that seeks to facilitate dialogue between liberals and libertarians. You can read my first post here -- it concerns the impact of teenage childbirth on the mother's education and economic well-being.

The roots of the current financial crisis

By Kathy G.

Chris Hayes has a very interesting post explaining the roots of the current financial meltdown. He says it has two basic causes: one is too much leverage, i.e., making investments where the amount of borrowed capital far exceeds the amount you have in assets. That seems fairly obvious.

The other explanation he gives is much more counterintuitive: too much capital. He explains:

This insight isn't mine. It comes largely from an episode of This American Life called The Global Pool of Money (an absolute can't miss episode, the best explanation of the whole crisis I've encountered.) This is a strange way to think about the problem, perhaps, but it's illuminating. The entire amount of capital that needs to find a home in the financial markets is roughly $70 trillion (in fixed income securities). But here's the thing, the size of this pool in 2000 was just 36 trillion. As Adam Davidson says in the TAL: "It took several hundreds years to get to 36 trillion and then it took six years to get to another 36 trillion."

Much of what's gone so wacky is simply that there's too much money chasing too few good investment opportunities and that's led to lots of risky schemes. Now, there's a lot of reasons for all this capital suddenly appearing, but at least one thing to consider is that the distribution between labor and capital is totally skewed, and if labor were capturing more of profits, they'd be consuming, and saving in (relatively safe) commercial enterprises. Which is to say, broadly distributed economic growth is more stable and better over the long-run, than sharply unequal growth.

I'm still working on getting up to speed this stuff myself, and I'm not certain that this explanation is correct. But it's intriguing, and it definitely bears looking into.

Must-read of the day: Dean Baker on progressive conditions for a bailout

By Kathy G.

(Update on the bail-out: Paul Krugman says no deal).

As they say, read the whole thing -- it's an important post. There are two points, however, that seem especially critical to me. First, there's this:

The government can set whatever conditions it wants on participating in the reverse auctions. One of the conditions it should set is that executive compensation be severely constrained at any financial firm that participates. For example, it can set an absolute limit of $2 million in total compensation for any executive at any firm that takes parts in the reverse auction.

Since participation in the auction is completely voluntary, this would make the cap voluntary. Furthermore, there need be little fear about losing good talent, because well-managed firms would not have to participate in the reverse auction.

Restraining compensation on Wall Street will be incredibly important in reversing the pattern of inequality that has developed over the last three decades. The exorbitant compensation packages on Wall Street distorted pay structures throughout the economy.

Executives at non-financial companies looked at the pay on Wall Street and used this as a basis for demanding outrageous pay packages for themselves as well. Presidents of universities often get over $1 million a year, and even top executives at private charities can often earn near $1 million a year. These salaries seem low when compared to their counterparts in the corporate world, but they are outrageous when compared to the pay checks of typical workers. If we can bring about voluntary pay restrain on Wall Street with this bailout, it will be a very big step toward reversing the pattern of inequality that has developed over the last three decades.