America Has an Employment Problem, Not an Unemployment Problem
by John Lawrence
Wherever you look from air traffic controllers to fruit pickers to caregivers to teachers to police, there are not enough workers. That is why unemployment is so low - at 3.4%. The Health Services, Professional and Business Services, Trade, and Accommodation and Food Services industries have the highest numbers of job openings. The question is why there is a shortage of workers and what to do about it.The pandemic caused a major disruption in America’s labor force—something many have referred to as The Great Resignation. In 2022, more than 50 million workers quit their jobs, many of whom were in search of an improved work-life balance and flexibility, increased compensation, and a strong company culture. But a closer look at what has happened to the labor force can be better described as ‘The Great Reshuffle’ because hiring rates have outpaced quit rates since November of 2020. So, many workers are quitting their jobs—but many are getting re-hired elsewhere. In a game of musical chairs workers are seeking and getting better jobs, leaving high stress professions like nursing and teaching and getting paid more to do other things.
So America basically has a shortage of "essential workers," workers who do necessary work for traditionally low pay. America has developed so many ways to make money doing inessential work at higher pay so why should anyone who doesn't have to work in an essential job? There are two ways. 1) Pay more for essential work and 2) increase legal immigration because increasingly immigrants are doing the work that Americans who have been Americans longer don't want to do. The worker shortage has empowered workers. They are so to speak in the catbird seat. They are demanding more pay, shorter hours, better working conditions. This is all well and good, but, as the pandemic showed, essential work is necessary for people to live while so many other forms of work, while more lucrative, could disappear tomorrow without affecting much most Americans' quality of life. For instance, Facebook had 86,482 full-time employees as of December 2022, up from just 150 people in 2006. If Facebook disappeared tomorrow, nothing essential to life would be lost in my opinion. The same is true for other social media like Tik Tok. In fact considering the effects social media has had on the population, the world might be better off if all social media disappeared tomorrow. Then those workers would be available for more essential jobs.
If the advertising industry disappeared tomorrow, the world might be better off. For instance, I can find anything I might be interested in buying on Amazon. I don't need to be pounded on by TV commercials to be told what I should want or what I should need. In particualar, Facebook makes all its considerable revenues from advertising. It does not manufacture a product essential to life or any product at all. People are getting smart that there are cushier, safer jobs with better work-life balance than essential jobs. Caregivers like Certified Nursing Assistants (CNAs) are low paid but essential jobs. Anyone who has had a loved one in the hospital for any length of time realizes how essential they are. They do the dirty work like changing patients diapers and cleaning up when they haven't got to the patients' bedsides in time to prevent a tragedy. Nurses and teachers are overworked considering the nurse/patient ratio and the teacher/student ratio. Much essential work is done by non college graduates and, therefore, does not merit the esteem that college graduates' jobs garner. Nevertheless, they are more important jobs in an essential sense, than many jobs that require a college education. When you need a plumber, you will not usually be hiring a college graduate.
About half of Americans who lost their job during the pandemic and are still not working say they are not willing to take jobs that do not offer the opportunity for remote work. However, many essential jobs can't be done remotely. They are "hands on." It is about time that America values its essential workers and makes a distinction between what's essential and what is inessential. It's a question, to some extent, of values, of what kinds of work are valued. This is where unions come in. America cannot function without essential workers. Yet the only way they can get the pay and benefits they deserve is to unionize and withdraw their workforce if necessary to get what they deserve. For sure, they won't get a better paying job otherwise unless they quit and go to work for Facebook.
A small financial transactions tax could correct a number of maladies in our economic system, from the federal debt crisis to the widening wealth divide to the rampant financialization of the economy, while eliminating taxes on income and sales.
The debt ceiling crisis has again brought into focus the perennial gap between what the government spends and what it accumulates in taxes, and the virtual impossibility of closing that gap by increasing taxes or negotiating cuts in the budget.
In a 2023 book titled A Tale of Two Economies: A New Financial Operating System for the American Economy, Wall Street veteran Scott Smith shows that we would need to tax everyone at a rate of 40%, without deductions, to balance the budgets of our federal and local governments – an obvious nonstarter. The problem, he argues, is that we are taxing the wrong things – income and physical sales. In fact, we have two economies – the material economy in which goods and services are bought and sold, and the monetary economy involving the trading of financial assets (stocks, bonds, currencies, etc.) – basically “money making money” without producing new goods or services.
Drawing on data from the Bank for International Settlements and the Federal Reserve, Smith shows that the monetary economy is hundreds of times larger than the physical economy. The budget gap could be closed by imposing a tax of a mere 0.1% on financial transactions, while eliminating not just income taxes but every other tax we pay today. For a financial transactions tax (FTT) of 0.25%, we could fund benefits we cannot afford today that would stimulate growth in the real economy, including not just infrastructure and development but free college, a universal basic income, and free healthcare for all. Smith contends we could even pay off the national debt in ten years or less with a 0.25% FTT.
A radical change in the tax structure may seem unlikely any time soon, due to the inertia of Congress and the overweening power of the financial industry. But as economist Michael Hudson and other commentators observe, the U.S. has reached its limits to growth without some sort of debt write down. Federal interest expense as a percent of tax revenues spiked to 32.9% in the first quarter of 2023, and it will spike further as old securities at lower interest rates mature and are replaced with new ones at much higher interest. A financial reset is not only necessary but may be imminent. Promising proposals like Smith’s can lead the way to a much-needed shift from serving “capital” to serving productivity and the broader public interest.
President Biden's original policy in the Ukraine war included the notion that the war would be confined to Ukraine's physical territory and not lead to a wider war. The west would supply Ukraine with weapons, and Ukraine would have a fighting chance of pushing Russia out of their territory. The whole strategy was predicated on the goal of preventing World War III. Now that policy is failing due to the fact that the west has gradually increased the firepower and sophistication of the weapons supplied to Ukraine, and also the fact that Ukraine is starting to attack inside Russia. The war is widening and intensifying. Ukraine, meanwhile, is in no mood to try and negotiate a settlement to the war, and NATO doesn't seem to be in any mood to force them to negotiate. So the war is escalating. Zelensky never misses a chance to demand more and more sophisticated weapons from the west. Biden and other western leaders continue to support his rhetoric that Ukraine can win the war. It's all about winning or losing, not about a negotiated peace.
So what went wrong, and how could this war get so out of hand? First, it is undisputed that Russia invaded Ukraine unprovokedly. However, there were negotiations and events leading up to the invasion which might have resolved issues which would have prevented the invasion in the first place. On Dec. 17 2021, Russia presented security demands including that NATO pull back troops and weapons from eastern Europe and bar Ukraine from ever joining. Russia had been upset for years due to the fact that, after the fall of the Soviet Union, NATO had marched resolutely eastward despite assurances to the contrary. I had written earlier:
"NATO expanded during the 1990s largely due to the imprecations of President Bill Clinton's Secretary of State Madeleine Albright even though President Gorbachev had been promised that NATO would not expand "one inch eastward" as part of a deal to reunify Germany after the Cold War.
After explaining why the U.S. wanted the reunited Germany to stay within the framework of NATO, Baker told Gorbachev that "if we maintain a presence in a Germany that is a part of NATO, there would be no extension of NATO's jurisdiction for forces of NATO 1 inch to the east."
"I put the following question to (Gorbachev)," Baker recounted in a letter to German Chancellor Helmut Kohl. "‘Would you prefer to see a united Germany outside of NATO, independent and with no U.S. forces, or would you prefer a unified Germany to be tied to NATO, with assurances that NATO’s jurisdiction would not shift 1 inch eastward from its present position?’"
Those comments, along with similar remarks from Baker’s European allies, like Genscher and Kohl, were part of what researchers at George Washington University’s National Security Archive called a "cascade of assurances" offered to the Soviets.
But Baker and otherofficials involved in the events have denied that the conversation ever turned on expanding NATO to other countries.
So basically Gorbachev was sold a bill of goods that, if he consented to the reunification of Germany and with Germany as a NATO member, that NATO would not expand eastwards. However, "given assurances" is not the same as "legal and binding". Therefore, in July 1997, Poland, Hungary and the Czech Republic (where Albright was born) were formally invited to join NATO."
Ever since Russian Czar Peter the Great attempted to "westernize" Russia, there has been a dicey relationship between Russia and Europe, each eyeing the other warily. Culturally, in terms of literature, dance, music and athletics, Russia is a western nation. Even Putin expressed interest in being part of the west. George Robertson, a former Labour defence secretary who led Nato between 1999 and 2003, said Putin made it clear at their first meeting that he wanted Russia to be part of western Europe. “They wanted to be part of that secure, stable prosperous west that Russia was out of at the time,” he said.
The Labour peer recalled an early meeting with Putin, who became Russian president in 2000. “Putin said: ‘When are you going to invite us to join NATO?’ And [Robertson] said: ‘Well, we don’t invite people to join NATO, they apply to join NATO.’ And he said: ‘Well, we’re not standing in line with a lot of countries that don’t matter.’”
The account chimes with what Putin told the late David Frost in a BBC interview shortly before he was first inaugurated as Russian president more than 21 years ago. Putin told Frost he would not rule out joining NATO “if and when Russia’s views are taken into account as those of an equal partner”.
He told Frost it was hard for him to visualise NATO as an enemy. “Russia is part of the European culture. And I cannot imagine my own country in isolation from Europe and what we often call the civilised world.”
However, Putin was rebuffed. He was further slighted when his demands that Ukraine not be considered for NATO membership before the war were, probably in his mind, disrespected. The whole Ukraine war could have been prevented perhaps by massaging sufficiently Putin's bruised ego - in other words intelligent diplomacy. In his mind it seems he and Russia were not properly respected nor were their interests properly taken into account. With two individuals, one of whom looks down on the other, more often than not a fight can ensue. It's the same between two nations. Mutual respect is important in any negotiation. Clearly, Putin did not feel that that was the case in negotiations before the war.
So now there is cross border fighting between Ukraine and Russia. This is clearly an escalation of the war and diminishes Biden's attempts of containing the war to Ukraine and preventing a larger conflict including perhaps World War III. The introductin of more sophisticated western weapons into Ukraine including offensive capabilities and more bellicose rhetoric on the part of Ukraine, no matter how justified, does not presage a good outcome for this complex situation. Putin and Russia could have perhaps been assuaged before the war by placing Ukraine's NATO membership on hold for a period of years, but Biden's insistence that any nation can apply and get NATO membership clearly was a non-starter for Putin. At this point the only alternative to escalation of the war and possibly a nuclear Armageddon, is a negotiated peace, something that Zelensky is disinclined to do and something that Biden is disinclined from telling him to do.
Biden: The Least Appreciated Great President in American History
by John Lawrence
President Biden has gotten more real work done for the American people than any President with the exception of Franklin D. Roosevelt. So why is his job approval rating so low - just 39%? Chalk it up to the fickleness of the American people. They don't know a great President when they see one. Biden has been able to do so much with much narrower margins in Congress than FDR had in all his terms as President. In fact Roosevelt had Democratic majorities in both the House of Representatives and the Senate from 1933 until his death in 1945, and in those days the filibuster was a speaking filibuster that delayed but didn't terminate legislation and so was of little consequence compared to the fact that today 60 Senators are required to pass any bill.
So what are some of Biden's accomplishments? The Inflation Reduction Act is a historic legislative achievement that lowers costs for families, combats the climate crisis, reduces the deficit, and finally makes the largest corporations pay their fair share. For the first time, Medicare is able to negotiate the price of certain high-cost drugs, a month’s supply of insulin for seniors is capped at $35, Medicare beneficiaries pay $0 out of pocket for recommended adult vaccines, and seniors’ out of pocket expenses at the pharmacy will be capped at $2,000 a year. Historically low unemployment at 3.5%. A manufacturing boom is occurring. Companies have announced nearly $300 billion in manufacturing investments in the United States. These investments are ensuring the technologies of the future are made in America, and bringing back supply chains from overseas. And they are creating good-paying jobs, including union jobs and jobs that don’t require a four-year degree. As part of the bipartisan CHIPS and Science Act, the Department of Commerce is overseeing $50 billion to revitalize the U.S. semiconductor industry, including $39 billion in semiconductor incentives. The first funding opportunity seeks applications for projects to construct, expand, or modernize commercial facilities for the production of leading-edge, current-generation, and mature-node semiconductors. This includes both front-end wafer fabrication and back-end packaging. The Department will also be releasing a funding opportunity for semiconductor materials and equipment facilities in the late spring, and one for research and development facilities in the fall.
President Biden signed the American Rescue Plan to change the course of the pandemic and jump start our economic recovery. The American Rescue Plan funded our successful vaccination campaign, safely re-opened schools for in-person learning, helped 200,000 child care providers keep their doors open, and delivered relief to American families. Biden forged a consensus and got the Bipartisan Infrastructure Law passed – a once-in-a-generation investment in our nation’s infrastructure. We are rebuilding our roads, bridges, ports, and airports, upgrading public transit and rail systems, replacing lead pipes to provide clean water, cleaning up pollution, providing affordable high-speed internet to every family in America, delivering cheaper and cleaner energy to households and businesses, and creating good-paying jobs – including union jobs, and jobs that don’t require a four-year degree.
President Biden signed into law the PACT Act – the most significant expansion of benefits and services for toxic exposed veterans in more than 30 years. This law also enables the Department of Veterans Affairs to move more quickly in the future to determine if illnesses are related to military service, and it offers critical support to survivors who were harmed by exposures. And, the law authorized 31 new clinical sites and provides VA several tools and resources to ensure effective implementation of the law. The Biden Administration announced debt relief of up to $20,000 for Americans earning less than $125,000 per year who had Pell Grants in college, and up to $10,000 for all other borrowers below that income threshold. More than 40 million borrowers stand to benefit from this action, and about 20 million would see their debt entirely wiped out - and nearly 90% of this relief will go to borrowers earning less than $75,000 per year. In early 2023, the Biden-Harris Administration announced a plan to provide millions of borrowers with more affordable monthly student loan payments through changes to income-driven repayment plans.
The U.S. is positioned to achieve our ambitious climate goals of cutting our emissions in half by 2030 and net-zero emissions by 2050. The President has taken executive action and signed legislation to develop clean energy at home, accelerate the adoption of electric vehicles, and reduce pollution that endangers overburdened communities. And, the President is lowering energy costs for families, creating good paying jobs, and ensuring America leads the global clean energy economy. The President also protected more lands and waters in his first year than any President since John F. Kennedy. President Biden took action to lower the cost of health care for millions of Americans. Right now, four out of five people who sign up for health insurance through the Affordable Care Act can find health care coverage for $10 a month or less and millions of Americans on Obamacare are saving an average of $800 a year. Since he took office, there has been a combined 50 percent increase in enrollment in states that use HealthCare.gov and the nation’s uninsured rate is historically low at 8 percent. Over 16 million Americans signed up for quality, affordable health coverage, the highest number ever produced in an open enrollment period.
So what are Biden's most significant achievements? In my opinion infrastructure and climate action lead the way. These areas have been neglected too long, and the Biden initiatives will just barely make amends. In and of themselves, they are probably insufficient, but they are a good start, a start that has been delayed too long. Changing the narrative on taxation, I think, is a major accomplishment. Making it clear that a tax bill does not have to apply to everyone. By not raising taxes on anyone making less than $400,000, an oft repeated phrase, the narrative has been changed from "tax and spend" to "tax the rich and spend on helping the poor and middle class". Deficit reduction doesn't mean necessarily to stop spending on social programs as it means getting more money into government coffers by taxing the rich. Inequality is out of control; taxing the rich ameliorates this situation. What Biden did to get us through the COVID crisis is remarkable. It could have been an economic disaster for everyone; it wasn't. Student debt relief was a great achievement although it is still not clear how that will play out in the courts.
The American people by and large don't appreciate all that Biden has done compared to what any Republican administration would have done. Clearly, Democrats are on the side of rationality and helping the American people. Republicans are on the side of winning at all costs and helping the rich. They don't give a damn about helping the American people especially the middle class and the poor. The Republican mantra of reducing the deficit and the debt would have you believe that it can only be done in one way, that is by reducing spending. No, it can also be done by taxing the rich which would also reduce inequality. But this is all the Republicans have, that and the discredited policy of tax breaks for the rich that have done little to "trickle down" and have greatly contributed to the national debt. Enhancement of Obama's landmark health care legislation is another major achievement although Obama deserves much of the credit. It's a testimony of what the Democratic party is able to achieve for the country. The fact that Biden accomplished so much in a bipartisan way is something few other politicians could have hoped to accomplish especially in the political environment that exists today.
My criticism of Biden has to do with the Ukraine war. On the one hand he has prevented it from becoming a world war as of yet. However, in the negotiations preceding the war, I believe more could have been done to prevent the war in the first place. By not acknowledging or being sensitive to Russia's concerns about the encroachment of NATO on its borders which started during the Clinton administration and was hastened by Secretary of State Madeleine Albright, Biden and other diplomats missed an opportunity to defuse the crisis. Their policy was a de facto attempt to bully Russia into accepting the fact that Ukraine would also become part of NATO. Now the US is entrenched in a policy of Ukraine "winning" and Russia "losing" instead of a policy of a negotiated settlement to end the war, a negotiated settlement which could have been had before the war even started IMHO, for instance, by delaying Ukraine's admission to NATO for a period of time during which Russia's security concerns might have been addressed. In effect Ukraine has become a vassal state of the US instead of its historic situation of being a vassal state of Russia.
With a combination of safe sleeping and safe parking areas and also converting motel rooms into single occupancy units (SROs), San Diego is heading in the right direction for solving the homeless situation. This is combined with an ordinance that prohibits sleeping in public areas including sidewalks. Finally, a workable solution that gets the homeless off the streets, provides them with some amenities including sanitation facilities and makes the streets and city sidewalks safe for pedestrians again. As a tourist destination San Diego can't afford the spectacle of back to back tents crowding city sidewalks, and the provision of amenities in safe sleeping areas or city sponsored SROs makes the homeless at least somewhat better off than they are without any amenities on public sidewalks. The San Diego Union reported:
The properties being considered include three hotels and one apartment building.
One of the hotels is a 62-unit Ramada Inn on Midway Drive, which the Housing Commission agreed to pursue at its May 12 meeting when it unanimously agreed to apply for $18 million in Project Homekey funding. The estimated purchase price would be $11.6 million, equating to about $182,000 a unit, but adding kitchenettes and other upgrades would increase the overall cost to $29.5 million, or $469,000 a unit.
The city also is submitting a joint $4 million application with Wakeland Housing and Development Corp. to purchase a vacant 13-unit apartment building in Ocean Beach. Purchasing the building would cost $4.5 million, but rehabilitation expenses would increase the cost to $6.8 million, bringing the per-unit cost to $525,000.
The other two properties are a 107-unit Extended Stay America Hotel on Murphy Canyon Road for $40.7 million and a 140-unit Extended Stay America Hotel on Mission Valley Road for $52 million.
Essentially the city is taking the responsibility for providing public housing, something that was abandoned during the Reagan administration. The most dramatic cut in domestic spending during the Reagan years was for low-income housing subsidies. Reagan appointed a housing task force dominated by politically connected developers, landlords and bankers. In 1982 the task force released a report that called for “free and deregulated” markets as an alternative to government assistance – advice Reagan followed. In his first year in office Reagan halved the budget for public housing and Section 8 to about $17.5 billion. And for the next few years he sought to eliminate federal housing assistance to the poor altogether.
Public housing was stigmatized due to failed projects like Cabrini-Green. Cabrini–Green was home to 15,000 people, mostly living in mid- and high-rise apartment buildings. Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. Now cities like San Diego are forced to take up the fallen banner for public housing under the metonym of "housing the homeless". The state of California, however, is providing most of the funding.
Other cities have had no problem in providing low cost rental housing. Take Vienna for example, a city which has largely solved the worldwide crisis of soaring rents:
Experts refer to Vienna’s Gemeindebauten as “social housing,” a phrase that captures how the city’s public housing and other limited-profit housing are a widely shared social benefit: The Gemeindebauten welcome the middle class, not just the poor. In Vienna, a whopping 80 percent of residents qualify for public housing, and once you have a contract, it never expires, even if you get richer. Housing experts believe that this approach leads to greater economic diversity within public housing — and better outcomes for the people living in it.
People living in Vienna's social housing pay as little as 3% of their monthly salaries on rent. To boot the availability of low cost public housing keeps costs in the private housing market down.
In 2015, before they bought an apartment on the private market, the Schachingers were making about 80,000 euros ($87,000) a year, roughly the income of the average U.S. household in 2021. Eva and Klaus-Peter paid 26 percent and 29 percent in income tax, respectively, but just 4 percent of their pretax income was going toward rent, which is about what the average American household spends on meals eaten out and half a percentage point less than what the average American spends on “entertainment.” Even if the Schachingers got a new contract today on their unit, their monthly payments would be an estimated 542 euros, or only 8 percent of their income. Vienna’s generous supply of social housing helps keep costs down for everyone: In 2021, Viennese living in private housing spent 26 percent of their post-tax income on rent and energy costs, on average, which is only slightly more than the figure for social-housing residents overall (22 percent). Meanwhile, 49 percent of American renters — 21.6 million people — are cost-burdened, paying landlords more than 30 percent of their pretax income, and the percentage can be even higher in expensive cities. In New York City, the median renter household spends a staggering 36 percent of its pretax income on rent.
Real estate is a place where money literally grows on tree beams. In the last decade, the typical owner of a single-family home acquired nearly $200,000 in appreciation. “Another word for asset appreciation is inflation,” the academics Lisa Adkins, Melinda Cooper and Martijn Konings write in “The Asset Economy,” “an increase in monetary value without any corresponding change in the nature of the good itself or the conditions of its production that would make it scarcer or justify an increased demand for it.” That inflation is creating a treacherous gulch between the housing haves and have-nots. Harvard’s Joint Center for Housing Studies found that, in 2019, the median net worth of U.S. renters was just 2.5 percent of the median net worth of homeowners: $6,270 versus $254,900. Last year, as higher interest rates slowed home sales and caused prices to plateau (and even soften in some overheated cities), the asking price of the median U.S. rental reached $2,000 a month, a record high, according to Redfin. Inflated rent prices line the pockets of landlords while preventing renters from saving for a down payment and ever getting off the treadmill.
Inflation in asset prices, particularly real estate, is causing more people, especially senior citizens, to fall into homelessness. The recent rise in interest rates which supposedly are aimed at curbing inflation have done nothing to bring the cost of housing down. In San Diego county, real estate is still appreciating in value despite the Fed having raised interest rates to highs not seen in recent years. It has done nothing to stop investors and hedge funds that pay cash. I reported previously:
In a deal with the Conrad Prebys Foundation, Blackstone Group, CEO'd by Steven Schwarzman, is buying 5800 rental units in San Diego. According to the San Diego Union, "The deal makes Blackstone one of the biggest real estate holders in San Diego County. It already owns $4.5 billion in assets here — including Legoland and the Hotel del Coronado. The transaction, which also includes Los Angeles-based investment firm TruAmerica as a partner, is expected to close in the next few weeks. The sale of the apartments was praised by Dan Yates, the president of the Conrad Prebys Foundation, who said the portfolio was assembled by Conrad Prebys — a San Diego developer — himself. Yates said the money from the deal will be used for grants primarily in San Diego."
Investors pay cash t buy up cheap rentals, and, therefore, the rise in interest rates doesn't affect them. They don't pay interest. They then give the tenants a 30 or 60 day notice depending on how long they've lived there. Then they refurbish the apartments and rent them out for twice the previous rent. This is the so-called "gentrification" of San Diego neighborhoods. This is why low cost rental units are disappearing just as all the SROs have disappeared. The policies now taking place by the city and county of San Diego to provide converted hotel housing and safe sleeping and parking areas will counteract this trend of higher and higher rents producing more and more homelessness. It's a policy that needs to be continued and increased. It cannot just be a one-off. Eventually, it will put a damper on the private rental market just as it did in Vienna.
Government Deficit Spending Is Not the Problem: Lack of Labor and Physical Resources Is
by John Lawrence
Since the US dollar is a sovereign fiat currency, the US can never run out of dollars. The debt ceiling is a totally artificial limit which results in the US hoisting itself on its own pitard. According to Modern Monetary Theory (MMT) as espoused in The Deficit Myth by Stephanie Kelton, the only limit on government spending is inflation, and inflation is concerned with the amount and nature of resources available to soak up the money injected into the economic system by the government. According to this theory it makes sense that a lack of labor resources could lead to inflation. Consider that right now there is a shortage of air traffic controllers, and this is leading to a cancellation of flights. If there were more air traffic controllers available, the number of flights could be increased, and more economic activity would ensue. The constraint on flights available because of the lack of air traffic controllers leads to inflation because the money charged for each available flight can be increased. Essentially there is a bidding war for the available flights. If any resource including natural resources like steel and cement is not sufficient for the demand for those resources, then the price of those resources will increase leading to inflation. Right now in the US labor is becoming a scarce resource especially labor of the type necessary in the essential economy, that is the economy of goods and services necessary for the continuation and enhancement of everyday life. As more labor is developed for essentially useless services like the entertainment and social media industries, plumbers, electricians and carpenters are not available for useful services, and, therefore, the cost of those services increases.
Which brings us to Biden's Inflation Reduction Act which allocates $370 billion to rebuild infrastructure and fight climate change. These are all necessary and vital goals, but the question should be asked are the resources for this amount of spending sufficient or will this spending be inflationary. To put it more succinctly is the blue collar labor sufficient for the job? If not, the price of labor will be bid up and the spending will be inflationary. More and more these days students are encouraged to go to college where they end up after graduation working for Wall Street or hedge funds or in the entertainment/social media industry. They are not encouraged to go to vocational technical schools to become carpenters, plumbers and electricians. So they go into industries which are not essential to the real economy. There are shortages of labor for the real economy everywhere we look. In order to overcome these shortages, it would be necessary to step up legal immigration since immigrants by and large fill the jobs Americans don't want to do, and by and large Americans don't want to perform any kind of the less glamorous and remunerative type of labor necessary for production in the real economy. Also outsourcing has made it unnecessary for Americans to perform labor in the real economy. We rely either on immigrants or foreign workers for that.
The next thing is that all this infrastructure rebuilding is going to contribute to global warming as well as reducing it. Rebuilding all the bridges of America will require large amounts of steel and cement. Steel and cement production produce large amounts of carbon dioxide which is emitted into the atmosphere. The International Energy Agency estimates that direct CO2 emissions due to crude steel production is approximately 1.4 tons of CO2 per ton of steel produced. The cement industry is responsible for about 8% of planet-warming carbon dioxide emissions — far more than global carbon emissions from aviation. If the cement industry were a country, it would be the third-largest emitter of carbon dioxide in the world, after the U.S. and China. So rebuilding America's infrastructure will contribute to global warming while at the same time attempting to reduce global warming. The fact is that alternatives to steel and cement which do not produce greenhouse gasses are not available. Research on these topics needs to be stepped up. But more research in areas like artificial intelligence, of the kind which has no use in the amelioration of global warming, takes place while productive research into materials to replace steel and cement languishes. Also while more electric vehicles are being produced, the electric energy to power these vehicles is coming from power plants that still use fossil fuels to produce it. One form of greenhouse gas production is being traded for another. Nothing is gained unless all energy generating power plants are using renewable and non carbon dioxide producing fuels.
The problem is that limited resources both in terms of labor and physical resources will hamper efforts both in repairing American infrastructure and building infrastructure which reduces the amount of greenhouse gas production. Stephanie Kelton writes: "That's why MMT recommends a different approach to the federal budgeting process, one that integrates inflation risk into the decision making process so that lawmakers are forced to stop and think about whether they have taken the necessary steps to guard against inflation risk before approving any new spending. MMT would make us safer in this respect because it recognizes that the best defense against inflation is a good offense. We don't want to allow excessive spending to cause inflation and then fight inflation after it happens. We want agencies like the CBO helping to evaluate new legislation for potential inflation risk before Congress commits to funding new programs so that the risks can be mitigated preemptively. At its core MMT is about replacing an artificial (revenue) constraint with a real (inflation) restraint." The artificial revenue constraint is the debt ceiling!
In the above passage the words "inflation risk" could also be replaced with "greenhouse gas emission risk." The CBO should evaluate both kinds of risks. So as the economy becomes more electrified in terms of electric cars and buildings, we need to think about the fact that the electricity generated by these increased demands needs to come from non carbon dioxide emitting sources. Also substitutes must be found quickly - in other words research needs to be stepped up - to find substitutes for steel and cement. To boot, non polluting energy sources must be found for ships and planes. Both human and physical natural resources must be taken into account. Have all these things been thought through?
One suggested method is to have the Treasury mint a trillion dollar platinum coin. This is interesting because, although by law the Federal Reserve can only issue paper money, the Treasury by law can mint coins. There is no limit on the value of these coins. This is not a strategy that Biden will use because it is too obviously gimmicky. But there are more arcane strategies that will fill the bill, accomplish the goal, keep the US economy humming and not be that understandable by the general public, and, therefore, harder for Republicans to characterize and demonize. So the next strategy is for the Treasury to issue so-called 'consul' bonds. These bonds bear interest, but have no maturity date, and so raise money without adding to the debt. But there is a better way. The Treasury can buy back bonds that have a low interest rate due to the fact that they were issued before interest rates were raised, and also are worth less because of the fact that currently issued bonds have a higher interest rate. Then the Treasury Department can issue new bonds with the same monetary value as the ones retired raising the debt back to where it was before but not increasing it. The difference in value between the bonds bought back and the bonds sold would generate cash while keeping the overall national debt the same. In other words it wouldn't increase or decrease the national debt. There are other tricks which would involve the Federal Reserve which buys and sells Treasury bonds all the time, but this would be tricky because the Federal Reserve is supposed to be independent of the Treasury Department.
The beauty of having the Treasury Department buy and sell bonds generating cash to pay the government's bills is that it would be hard for Republicans to characterize and demonize. It would be hard for the public to understand what's going on although bills would be getting paid despite the debt limit and Biden can take credit for this. Meanwhile, Kevin McCarthy and his MAGA Republicans will have egg all over their respective faces. Their whole campaign to intimidate and castigate Biden will have come to naught. They will be left twisting in the wind saying, "What tha ...". Marjorie Taylor-Green will hardly understand what hit her. All the debt ceiling negotiations now going on can be seen as just a lot of posturing until they totally fail and yet the economy will keep on humming because the government's bills will still be getting paid via Biden's invoking of the 14th Amendment and manipulations being done in the bond market by the Treasury Department. Janet Yellin dost protest too loudly, methinks, that there will be no unorthodox methods used to circumvent the debt limit. This is just what Biden, cool as a cucumber, wants Republicans to believe. It doesn't mean that Biden and Yellin won't cooperate to keep the government humming once negotiations about the debt limit fail totally and completely. Biden will be the hero of the day when he gets on television and announces that he is invoking the 14th Amendment. He doesn't have to say just how this is going to be accomplished..
In such a situation, it’s natural to consider possible end runs around the debt ceiling that the Biden administration could use to meet U.S. commitments without the cooperation of Congress. Indeed, it would be irresponsible not to consider these possibilities. It would be especially irresponsible to reject them because they sound undignified: Crashing the world economy for fear of looking silly would be unforgivable.
There are two main gimmicks that have been widely discussed: premium bonds and platinum coins. Premium bonds are harder to explain, which may make them a more likely route, simply because the platinum coin offers an easier target for false narratives.
The U.S. government finances itself largely by selling notes and bonds (10 years or less of maturity is a note, more than that a bond). These securities combine a par value — the amount that will be paid when the note or bond matures — with an interest coupon, a sum paid twice a year. Notes and bonds are auctioned off, often for more than their par value, because sometimes market interest rates are lower than the face interest rate — the annual coupon as a percentage of par value — so investors are willing to pay a premium.
Normally this is a small factor, because interest rates on newly issued notes are set close to prevailing market rates. But that doesn’t have to be the case.
So when a $100 10-year note matures, why not issue a new note, also with a par value of $100 — so that officially we aren’t adding to the debt — but with a face interest rate of, say, 10 percent, far above market rates (which are currently 3.37 percent). This new note would sell for much more than its face value, so Treasury would in fact be raising a substantial amount of money, even though it isn’t officially increasing the debt.
And there’s nothing fundamentally wrong with selling debt instruments for more than their par value. Until 2015 part of Britain’s debt consisted of consols, bonds that pay a fixed coupon every year but never mature and therefore have no par value at all.
So there you have it folks. Using some financial legerdemain, the government can continue to function and pay its bills despite the debt limit. This makes the debt limit irrelevant and something that can hopefully be retired to its grave at some point. After all, if the Federal Reserve can use quantitative easing to create money out of thin air, so ought the Treasury Department be able to get creative by wheeling and dealing in the bond market to accomplish its goal which is to pay the government's bills in a timely manner without being held hostage by the Republican party
Biden's Changing The Asylum Law Without Congress' Help
by John Lawrence
The asylum law in effect says that any alien who enters the US legally or illegally may apply for asylum. This incentivizes aliens to enter illegally, and, if caught, to simply request asylum. Since they would have to go before a court to determine if they should get asylum and the court is backed up for years, entering illegally and requesting asylum is a guarantee of at least currently five years in the US during which time they could attempt to remain hidden and not show up at court. The reality is that only about 40% of asylum seekers that show up for their court date actually get asylum. The rest are deported. According to U.S. and international law, a claim of persecution must be made based on one of five “protected grounds”: race, religion, nationality, political opinion, or membership in a particular social group. Poverty, scarce economic opportunities, displacement caused by natural disasters or a desire to reunite with family are not grounds for asylum under U.S. law. Here's the actual law:
Any alien who is physically present in the United States or who arrives in the United States (whether or not at a designated port of arrival and including an alien who is brought to the United States after having been interdicted in international or United States waters), irrespective of such alien’s status, may apply for asylum in accordance with this section or, where applicable, section 1225(b) of this title.
In order to dissuade asylum seekers from just showing up in a disorderly fashion en masse at the southern border, the Biden administration has been setting up a system to encourage people to apply for asylum in an orderly manner. This includes applying at a port of entry or applying from a country in south or central America. Also,they are disincentivized from coming across the border illegally because, if they do, they are ineligible for asylum for 5 years. Here's the new rule:
SUMMARY: The Department of Homeland Security (“DHS”) and the Department of Justice (“DOJ”) are issuing a final rule in anticipation of a potential surge of migration at the southwest border (“SWB”) of the United States following the termination of the Centers for Disease Control and Prevention’s (“CDC”) public health Order. The rule encourages migrants to avail themselves of lawful, safe, and orderly pathways into the United States, or otherwise to seek asylum or other protection in another country through which they travel, thereby reducing reliance on human smuggling networks that exploit migrants for financial gain. The rule does so by introducing a rebuttable presumption of asylum ineligibility for certain noncitizens who neither avail themselves of a lawful, safe, and orderly pathway to the United States nor seek asylum or other protection in a country through which they travel. In the absence of such a measure, which would apply only to those who enter at the southwest land border or adjacent coastal borders during a limited, specified date range, the number of migrants expected to travel without authorization to the United States would be expected to increase significantly, to a level that risks undermining the Departments’ continued ability to safely, effectively, and humanely enforce and administer U.S. immigration law, including the asylum system, in the face of exceptionally challenging circumstances. Coupled with an expansion of lawful, safe, and orderly pathways into the United States, the Departments expect the rule to lead to a reduction in the number of migrants who seek to cross the SWB without authorization to enter, thereby reducing the reliance by migrants on dangerous human smuggling networks, protecting against extreme overcrowding in border facilities, and helping to ensure that the processing of migrants seeking protection in the United States is done in an effective, humane, and efficient manner. In addition, the Departments are requesting comment on whether applicability of the rebuttable presumption should be extended to noncitizens who enter the United States without documents sufficient for lawful admission during the same temporary time period at a maritime border.
DATES: Effective date: This rule is effective on May 11, 2023.
This document is scheduled to be published in the Federal Register on 05/16/2023 and available online at federalregister.gov/d/2023-10146, and on govinfo.gov
The Biden administration is solving the border crisis without the help of Congress in a way that's sure to be challenged in court, but in the way that Congress would actually probably solve it if they were inclined to act and reform immigration laws. Biden should get a lot of credit for going ahead without Congress which is a sewer of conflict, stagnation and malfunction. An orderly process for applying for asylum has been created by the Biden administration which should discourage masses of people showing up at the southern border. For this they deserve much credit.
Republican Presidents Have Been Mainly Responsible for Increases in the National Debt
by John Lawrence
The Reagan, George W Bush and Trump tax cuts are responsible for most of the US national debt. During the Trump administration, the debt increased by roughly $7.8 trillion, and The George W. Bush administration enacted sweeping tax cuts that will have cost more than $8 trillion by the end of fiscal year 2023. The nation’s fiscal pictured changed in 1981 when President Ronald Reagan enacted the largest tax cut in U.S. history, reducing revenues by the equivalent of $19 trillion over a decade in today’s terms. Although Congress raised taxes in many of the subsequent years of the Reagan administration to claw back close to half the revenue loss, the equivalent of $10 trillion of the president’s 1981 tax cut remained. Donald Trump Built a National Debt So Big (Even Before the Pandemic) that it’ll weigh down the economy for years.
A series of massive, permanent tax cuts have created large federal budget primary shortfalls and continue to exert upward pressure on the debt ratio. In other words, the current fiscal gap—the growing debt as a percentage of the economy—stems from legislation that cut taxes, disproportionately for the very rich. While it is true that the Great Recession and legislation to fight it, along with the costs of responding to the health and economic effects of COVID-19, pushed the level of debt higher, these costs were temporary and did not change the trajectory of the debt ratio. If Congress wants to decrease deficits, it should look first toward reversing tax cuts that largely benefited the wealthy, which were responsible for the United States’ current fiscal outlook.
Therefore, taxes on the rich should increase while spending on the poor and middle class should also increase. Americans want both: social programs and reduced taxes. However, the gross inequality that exists between rich and poor begs the question: why raise taxes on everyone? Shouldn't the rich have their taxes increased while the poor and lower middle class have their taxes reduced? Of course, that 's the ideal solution. However, Republicans represent the interests of the rich so they would never agree to this proposal. They will continue to argue for increasing taxes on the poor while cutting spending that mostly benefits the poor and lower middle class. That's the American situation, writ large, folks. That's all you need to know to understand American politics. It's a struggle between rich and poor. The rich think they deserve all their money even if it runs to billions of dollars while the poor are only trying to get a foothold in the American Dream. The rich think the poor deserve their lot in life because they didn't work hard enough to overcome their poverty. The rich also believe in a meritocracy where they themselves are the winners who made all the right moves and worked the hardest. What's wrong with this picture?
San Diego County Supervisor Jim Desmond had tough words about the planned purchase of three extended-stay hotels to house homeless people, contending they were too expensive and didn’t address what he said is the main cause of homelessness.
“We just keep throwing more and more dollars at this problem without really getting to the root cause of mental health or alcohol abuse or drug abuse,” he said April 28 on “Fox & Friends.”
Desmond considered the proposal to spend about $157.8 million — which amounts to more than $383,000 per unit — not just too much, but counterproductive. That cost, along with the price of other housing for homeless people, has come under considerable scrutiny.
“Spending all this $157 million on more rooms, doing the same thing, causing the same problem, is fruitless,” he said.
There’s a lot to unpack here.
For one thing, that housing will include services to help people with the very kind of behavioral issues Desmond was talking about.
The specifics of this situation aside, Desmond, a Republican, is expressing widespread, bipartisan frustration at the lack of progress on reducing homelessness at the state and local levels.
Billions of dollars have been aimed at the problem in California, yet the homeless population keeps growing.
He also touched on concerns that people in all walks of life, including many who are homeless, have mental illness and substance abuse problems and need help.
But his attack on the plan by the San Diego Housing Commission, which was reprised in the New York Post, misses a few important things.
The county, which Desmond helps oversee, has agreed to provide social services for residents of these hotels when they are turned into apartments. That includes getting people assistance for various problems, including mental illness and substance abuse.
The county is a partner with the commission and the city of San Diego on the hotel conversions and was involved in negotiations over their selection from a longer list of properties.
Desmond didn’t mention that on Fox, or perhaps he didn’t know. His spokesperson said the supervisor would be unavailable to comment.
“Services specifically target the people he is talking about,” Ryan Clumpner, vice chair of the housing commission, said in an interview. “The county piece of this is what he’s criticizing.”
The root cause of homelessness, as plenty of research has shown, is the lack of housing or the high cost of housing. During his appearance on Fox, Desmond didn’t talk about the need for more housing or shelter space for people living on the street.
Further, growing efforts by Democrats and Republicans to pursue rules prohibiting public camping are hampered if there is no shelter space available. The law in many cases prohibits authorities from citing or arresting homeless people unless there are beds open.
This is not to say mental illness and substance abuse don’t contribute to homelessness, along with poverty and other economic factors.
“That’s what people really need to get into, is treatment, not just the hotel room where they can continue to use and continue in the bad habit that got them homeless in the first place,” Desmond said.
The county, which Desmond helps oversee, has agreed to provide social services for residents of these hotels when they are turned into apartments. That includes getting people assistance for various problems, including mental illness and substance abuse.
The county is a partner with the commission and the city of San Diego on the hotel conversions and was involved in negotiations over their selection from a longer list of properties.
Desmond didn’t mention that on Fox, or perhaps he didn’t know. His spokesperson said the supervisor would be unavailable to comment.
“Services specifically target the people he is talking about,” Ryan Clumpner, vice chair of the housing commission, said in an interview. “The county piece of this is what he’s criticizing.”
The root cause of homelessness, as plenty of research has shown, is the lack of housing or the high cost of housing. During his appearance on Fox, Desmond didn’t talk about the need for more housing or shelter space for people living on the street.
Further, growing efforts by Democrats and Republicans to pursue rules prohibiting public camping are hampered if there is no shelter space available. The law in many cases prohibits authorities from citing or arresting homeless people unless there are beds open.
This is not to say mental illness and substance abuse don’t contribute to homelessness, along with poverty and other economic factors.
“That’s what people really need to get into, is treatment, not just the hotel room where they can continue to use and continue in the bad habit that got them homeless in the first place,” Desmond said.
That’s an inaccurate description of what this housing is designed to do, which is provide more than just a room.
Regardless, Desmond made a troubling broad statement, suggesting mental illness is the direct result of a “bad habit.” Maybe he was thinking more about substance abuse, which can stem from personal decisions. But often there’s more to it than that.
In talking about the need to get people treatment, Desmond didn’t point out there’s an acute shortage of facilities, programs and qualified people to run them. He also could have mentioned the county is trying to do something about that, for which he and other supervisors can take credit.
The county has increased spending on behavioral health treatment by tens of millions of dollars in recent years. Looking ahead, the supervisors on Tuesday unanimously approved a groundbreaking, long-range program to train new mental health professionals and retain existing ones, according to Paul Sisson of The San Diego Union-Tribune.
Desmond bemoaned the inability of authorities to put troubled individuals into treatment if they don’t want to go.
“We have to force people, or involuntarily get them into the programs they need,” he said on Fox.
He’s not the only one who thinks that way. Last year, the Democratic-controlled Legislature passed Gov. Gavin Newsom’s plan to create CARE Courts aimed at compelling people to get treatment.
Amid considerable opposition, lawmakers also are trying to change the state conservatorship law to make it easier to put people into programs when they are unable to care for themselves or may be a threat to themselves and others. San Diego Mayor Todd Gloria has been a leading advocate for those changes.
There appears to be consensus that new approaches toward homelessness are needed, because what has been done isn’t working. Beyond that, there’s no broad agreement about what direction to go in.
There are arguments for permanent housing and less expensive big tent shelters, safe tent campsites, trailers and tiny houses. The housing commission has, among other things, pursued converting extended-stay hotels, where units have kitchenettes and more apartment-like layouts.
Those buildings also tend to meet regulations by the U.S. Department of Housing and Urban Development for this type of housing. Importantly, they can be turnkey projects converted quickly. The three San Diego hotels, which are near public transportation and grocery stores, could be occupied by the end of the year, according to the housing commission.
Building from scratch could take years to put together financing, gain approvals and complete construction. And that costs more than converting hotels, according to Clumpner.
“These homes are 30-40 percent cheaper than new & include social services,” he said on Twitter. “They’re coming from housing tourists to housing San Diegans with special needs.”
Gary Warth of the Union-Tribune reported that the $383,000 per-unit cost of the three hotels is greater than the cost of the two hotels purchased in 2020 and similar projects, but less than newly constructed affordable housing projects.
One of the more expensive projects is the 96-unit Amanecer Apartments in Linda Vista, which opened at a cost of $51.1 million, or $538,000 a unit.
Just as George W Bush characterized himself as 'the Decider', Donald Bush might well characterize himself as The Dominator. He dominates the other candidates or would be candidates in the Republican party. They are all afraid to criticize him. In the 2016 debates Jeb Bush, a decent guy, was destroyed by him.
“Jeb is having some kind of a breakdown,” he told CNN’s Wolf Blitzer. ”He’s an embarrassment to his family. He has to bring his mother out and walk his mother around at 90 years old. I think it’s a very sad situation that’s taking place.”
“Frankly, he’s a stiff,” Trump said. “He’s not a guy who can be president. He doesn’t have what it takes to be president.”
Ron DeSantis is walking on egg shells and is hesitant even to declare his candidacy. The Republican base, many of whom have a military background, want a Dominator as their candidate. That is indeed the military tradition. Recruits are dominated by their drill sergeant who gets in their face and barks orders. Ironic then that, although Trump never served in the military, he exemplifies the military mind set. Most active duty military as well as most people in the military industrial complex vote Republican because Republicans. especially Donald Trump, exemplify their values. These are the same values that are part and parcel of the animal world where the dominant male gets to mate with all the females. So Trump characterizes himself as so dominant that he can act like a dominant male and grab 'em by the pussy or shoot someone in the middle of Fifth Avenue and get away with it. Just as other species do, a certain percentage of the Republican base respects and admires a Dominator like Trump. When Trump says this kind of domination has been going on for "millions of years, unfortunately or fortunately," he is referring to the fact that this kind of behavior is the norm in the animal world, and we humans are, after all, not really all that different.
The Denominators of history are of course Fascists. In 1922 Benito Mussolini led a coalition of fascist leaders to Rome and forced the king to yield the government. Mussolini was appointed prime minister. By 1925 he had dismantled Italy's democratic government and, acting as a dictator, declared himself Il Duce ("The Leader"). Hitler dominated the tired old men of the Weimar Republic who were cajoled into appointing him Chancellor. Fascism is a top down political structure similar to the military's top down rank structure. No wonder then that Republican voters, many of whom have a military background, are quite comfortable with a top down structure of political dominance with Trump at the apex. No wonder that Trump is leading all the polls even though he is under several criminal indictments. Friedrich Nietsche was the philosopher of fascism, one who argued for a repudiation of Christian values to be replaced with the values of domination. "A good war hallowith every cause". Just as the dominant male in the animal kingdom passes on his superior DNA to his harem of females, Fascist values insist that dominant men are the ones to eugenically pass on superioor genes to their offspring, and they should be valued and looked up to. All other men should be submissive to them. There is no separation form the animal world. Homo Sapiens represents a continuation of the values that assert that the best and strongest genes of the Dominators should take priority.
Trump's followers in fact give him a pass on Christian values for the very reason that, as Nietzsche asserts, Christian values are the values of the weak. The values of the strong and vital are the values of top down authoritarianism for which the strong man or the dominator should rule the day. As Trump said, this has been going on for millions of years, fortunately or unfortunately. This gives a pass to misogyny as Nietzsche also stated, "The family is the smallest unit of domination." The father is dominant; the wife and children should be submissive. The ethos of dominance and submission should prevail. Christian morals, the morals of tolerance and equality, according to Nietsche, are the exact opposite of the morals that lead to the betterment of the species. Let the cream rise to the top, and, unfortunately or fortunately, the weak must inevitably fall by the wayside. "Devil take the hindermost" is an imprecation that everyone should look after their own interests, leaving those who cannot cope to whatever fate befalls them. The leader of the most dominant nation on the face of the earth should be the most dominant male, i.e. Donald Trump, the Dominator. Utter selfishness should prevail. Cooperation is a feminine value. Love is a feminine value. Getting along is a feminine value. Diplomacy is a feminine value. Male dominance is what the US populace wants in a leader.
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