Economic uncertainty requires business to ally with labor

Bill Knight column for Thurs., Fri., or Sat., April 12, 13 or 14, 2018

Stable economies in decent societies rest on a tripod of labor, business and government, with each helping to solidify the standing strength of the whole. It’s doomed if any one leg is damaged or destroyed, whether everyday workers who produce value, business with its commercial or entrepreneurial powers, or government and its moderating and empowering tools.

Other comparisons can also illustrate the concept.

Imagine a band where the horn section insists on dominating the sound, regardless of the composer’s or conductor’s instructions and despite the need for strings or vocals or percussion. Or, consider a baseball team where a selfish showboat won’t throw from the outfield to a cut-off man, doesn’t like completing double plays, or refuses to lay down a sacrifice bunt.

The whole effort suffers.

Today, the federal government as embodied in the Trump administration has undertaken a campaign so harmful to regular working Americans that it not only betrays Trump’s campaign and Inauguration promises (supporting the country’s “forgotten men and women”), but also threatens businesses and therefore the economy, the society and the future. (“But wait! There’s more!! He’s messing with business, too!!!”)

Trump’s treacheries against ordinary workers are familiar but worth recalling: Jobs moving overseas, resulting from taxing profits from U.S. subsidiaries operating abroad at half the rate for domestic profits; overtime pay virtually abolished (in the 1970s more than 60 percent of the nation’s salaried labor force earned it but it’s now received by about 7 percent); employees again permitted to be misclassified as “independent contractors” who receive no benefits, no jobless insurance and must individually pay self-employment taxes; his administration bragging of a 4.1 percent jobless rate for months, as if 6.6 million unemployed people is acceptable; Trump unilaterally imposing a fossil-fuel-friendly 30-percent import tax on solar panels that threatens tens of thousands of solar-industry jobs; signing “tax reform” that permanently enriches the wealthy and corporations for years but tosses bread crumbs to everyone else – for just eight years; killing an executive order to help enforce regulations by checking on federal contract bidders’ compliance; overturning a prohibition on mandated arbitration for disputes, largely removing victims’ option of class-action lawsuits; essentially discarding students swindled by for-profit “schools”; and emasculating the Consumer Financial Protection Bureau to instead focus on “burdensome regulations.”

Again, however, business isn’t immune from the immature and impulsive acts emanating from the Oval Office – acts that lead to the uncertainty that causes caution, fear or retreat by companies large and small: pending tariffs provoke trading partners from Europe and China to respond, menacing manufacturers, consumers and farmers; talks to re-negotiate the North American Free Trade Agreement also threaten supply chains needed by manufacturers, plus consumers and farmers; the agriculture sector is hurt by harsh immigration policies that the Farm Bureau notes jeopardizes harvests, where more than half of farm laborers are undocumented; likewise, the technology sector is hurt by Trump’s travel ban focusing mostly on Muslim-majority nations; with a surly, schoolboy zeal, the President holds grudges and bullies and smears businesspeople or companies with whom he disagrees, like having his Justice Department block a merger of AT&T and Time Warner (owner of CNN, which he ceaselessly criticizes), like calling for lower prices for prescription drugs MINUTES AFTER Merck pharmaceutical exec Kenneth Frazier resigned in protest from Trump’s manufacturing council, like repeatedly disparaging Amazon (whose owner, Jeff Bezos, also owns the Washington Post).

Trump rejects genuine teamwork and the idea that we’re all in this together, instead demanding mindless praise from silent or silly bootlickers.

So when Trump ensures that the nation can’t count on much beyond stupid tweets, knee-jerk reactions and a slavish devotion to “Fox & Friends,” business as well as labor and civil servants must find common ground. The common good does exist, and it’s time for business to join the Resistance for the good of the country.

Budgets and spending: Congress’ never-ending song-and-dance

Bill Knight column for Mon., Tues. or Wed, 4-9, 10 or 11

    Like most parents, I hear the opening of the ’90s “Song That Doesn’t End” and I want to launder Shari Lewis’ sock puppet Lamb Chop at super-high temps. And like many taxpayers, I read approved spending measures and proposed federal budgets and I hope Congressional leaders Paul Ryan and Mitch McConnell BECOME sock puppets.
    On March 23, President Trump signed a $1.3 trillion omnibus spending bill, which grouped together various appropriations bills, for Fiscal Year 2018 to fund the government through Sept. 30
    The spending bill meant the government didn’t shut down and Congress has six months before it has to do it again – just before the November election. However, as Stan Collender warned in Forbes, “the House and Senate (are) not planning to adopt a congressional budget resolution this year, increasingly partisan congressional politics [exist] heading into the election, and [the] president promised never to sign another massive spending bill.”
    Meanwhile, like a zombie Pinocchio, Trump’s proposed budget for FY 2019, released in February, lurches through Capitol Hill hallways, seeking brains or souls. Federal budgets project revenues and expenditures (here, for Oct. 1, 2018 - Sept. 30, 2019) and reflect presidents’ priorities.
    Trump’s budget refrain has the melodic grace of chain saws: $1.7 trillion in cuts to programs helping the middle class and poorer Americans (oddly close to the $1.5 trillion tax-reform handout to the 1 percent he signed in December).
    U.S. Rep. Barbara Lee (D-Calif.) said, “After giving massive tax cuts to billionaires, President Trump’s disgraceful budget slashes Medicaid, Medicare, nutrition assistance, heating assistance and attempts yet again to repeal the Affordable Care Act. This Robin-Hood-in-reverse agenda is the last thing American families need.”
    Here’s a dozen targeted areas. It would: cut $1.5 trillion in “non-defense discretionary” spending over a decade – a 40 percent reduction to government programs outside the Defense Department; cut the Centers for Disease Control $27 billion over 10 years; end student loan forgiveness; cut $21 billion from the Temporary Assistance for Needy Families; cut the EPA by 1/4; privatize the Space Station; take funds from Transportation to start funding infrastructure; reduce food assistance by $214 billion; cut Education by $3 billion (while “finding” $1 billion for private schools); drop home-heating help; abolish the Corporation for Public Broadcasting; and — surprise! — trim Social Security.
    The proposed Social Security decreases include $64 billion from Social Security Disability Insurance, $89 billion (less than 2017) for administrative funding, $500 billion from Medicare, capping benefits for retirees who live with other SSI recipients, and ’changing the structure of Medicaid into either a per-capita cap or block grant” to states, according to Max Richtman of the National Committee to Preserve Social Security & Medicare, “allowing them to impose work requirements.”
    Sound familiar?
    Three years ago this week, I wrote about the Republican-dominated House passing its version of a federal budget, slashing $5.4 trillion in spending, including Social Security. It also would have privatized Medicare; convert Medicaid and food stamps into block grants; cut funds for nursing homes, Head Start and college grants.
    So: What puppets oppose Social Security, which provides critical support for retirees, pays modest benefits, helps people of all ages, and is still needed? According to a 2013 study by Northwestern’s Benjamin Page and Larry Seawright and Princeton’s Larry Bartels, it’s the 1 percent. Economist Jamie Galbraith adds, “Big Money has been gunning for Social Security, Medicare and Medicaid for decades — since the beginning of Social Security. The motives are partly financial: As one scholar once put it to me, the payroll tax is the ‘Mississippi of cash flows.’ Anything that diverts part of it into private funds and insurance premiums is a meal ticket for the elite.”
    To dismantle Social Security, etc., Congressional Republicans have resorted to misleading or false claims such as saying Social Security is bankrupt while its Trust Fund holds $2.8 trillion in assets: legally binding debt from the U.S. Treasury. Another — accusations of fraud — is exaggerated, said author William Greider, commenting, “The Government Accounting Office and the Social Security’s own Inspector General have both found that fraud in this program is less than 1 percent.”
    Nevertheless, 36 months later, Trump, McConnell and Ryan — today’s Lamb Chop, Hush Puppy and Charlie Horse — mouth their obsession: saving money on the backs of regular Americans to enrich campaign contributors and fellow 1 percenters.

The ABCs of Wall Street shows we’ve been schooled

Bill Knight column for Thurs., Fri., or Sat., April 5, 6 or 7, 2018

People appreciate measurements. There’s something comforting and concrete about numbers, whether it’s rain gauges, batting averages, or the Bulletin of Atomic Scientists’ “Doomsday Clock.” But we’ve become flooded with acronyms: WWJD and BTW, FOMO and ICYMI, and other BS.

Speaking of BS, consider Wall Street. NASDAQ sounds like AFLAC’s foreign cousin, right? S&P might refer to some frisky game involving Sadism & Profits. And the ever-present DJIA (Dow Jones Industrial Average), on the news almost constantly? No longer the key indicator of stocks, it’s still vaguely familiar as the supposed symbol of the stock market and economy

However, whether owning individual shares of corporations, a mutual fund, or Individual Retirement Account (IRA) or self-directed 401(k)s, most Americans are mere spectators of Wall Street, more even than Washington – powerless witnesses to capital and the Capitol.

This is important because government and the news media traditionally consider the stock market a benchmark of the nation’s economic performance. But that success is increasingly less meaningful to regular people. Also, a disparity of true involvement in Wall Street magnifies the retirement situation by revealing the existence or health of pensions or other retirement accounts with stock holdings.

Literally, we have little stake in the stock market.

“Despite the fact that 46 percent of households owned stock shares either directly or indirectly through trusts, mutual funds or pension accounts, the richest 10 percent of households accounted for 81 percent of the total value of these stocks, though less than its 91 percent share of directly owned stocks and mutual funds,” New York University economist Edward Wolff wrote in his 2017 paper “Household Wealth Trends in the United States.”

“Housing, liquid assets and pension assets accounted for 87 percent of the total assets of the middle class,” he added. “The remainder was about evenly split among non-home real estate, business equity, and various financial securities and corporate stock. Stocks directly or indirectly owned amounted to only 10 percent of their total assets.”

Besides Wolff, others – including author and former Labor Secretary Robert Reich, and the Gallup organization – say that the top 20 percent of Americans, as defined by total wealth, owns 92 percent of stock (so 80 percent of us share the other 8 percent!)

Breaking it down more, the top 10 percent (whose holdings average $969,000, National Public Radio reported) owns 84 percent of all stocks. The Rest of Us have holdings worth less than $5,000, the New York Times reported.

The Top 1 percent? Alone, they own almost 40 percent.

This all means that the stock market benefits, even indirectly, less than half of Americans, and significant stock-market gains overwhelmingly enrich the wealthiest Americans.

Of the 10 percent of families with the highest income, 92 percent owned stock as of 2013, just above where it had been in 2007. But ownership slipped for people in the bottom half of the income distribution, according to the Federal Reserve Bulletin 10 #4: “Direct and Indirect Holdings of Publicly Traded Stock.”

And the decline in stock ownership in the last decade – about two-thirds of families at least indirectly owned stocks 10 years ago, NPR says – has been more pronounced among middle- and lower-class people. Somewhat cruelly, the value of direct and indirect holdings of corporate equities increased since 2010 although the ownership rate fell.

“Ownership of savings bonds, other bonds, directly held stocks, and pooled investment funds sustained sizable drops in ownership rates between 2010 and 2013, although none of the four types of assets are commonly held, with ownership rates in 2013 varying between 1.4 percent (other bonds) and 13.8 percent (directly held stocks), the Fed reported.

Of course, the rich own more of everything, from land to jewels; the middle class has most of its wealth in homes, as Wolff showed. But why is it acceptable that a sliver of the elite overwhelmingly dominates Wall Street – and therefore Washington?

It’s time to consider other measurements of the economy that go beyond the share prices of publicly traded corporations, an alternative such as the Genuine Progress Indicator (the GPI – a “friendlier” acronym).

Unlike the Dow or the GDP (Gross Domestic Product), the GPI composite seeks to measure economic growth of the country and human well-being by including financial and economic factors PLUS other figures: the poverty rate; the value of volunteerism; the costs of crime, climate change, family breakdown and deterioration of natural resources; water, air and noise pollution; the loss of farmland and wetlands; and the value of parenting and housework, education and infrastructure.

Noticing the ups and downs of the more comprehensive GPI could lead to more awareness, which could lead to policy changes that serve more of the people.

OK?

LOL!

For interest and relevance, primary gets a mixed review

Bill Knight column for Monday, Tuesday or Wednesday, April 2, 3 or 4

If Illinois’ March primary election was a movie, it might be “Avengers: Infinity Wars” or “The Endless,” given the vindictive, combative ads and the sense that the preliminaries to November lasted forever.

Therefore, voters might wonder whether a deeper dive into the results is entertaining and relevant.

Entertaining, somewhat; relevant, not so much.

It’s entertaining that the challenger for Republicans’ nomination for governor, State Rep. Jeanne Ives of Wheaton, won 35 Illinois counties. However: So?

The state’s total popular vote is what counts, not the number of counties that candidates rack up. We don’t have a Prairie State Electoral College giving greater weight to counties based on their number of State Representatives or other criteria (Interstates? Casinos? Churches?) County boundaries don’t matter. It’s about who registers to vote and which ones cast ballots.

Generally, voting patterns “downstate,” in a Congressional District, or in a zip code may be meaningful to consultants planning ways to persuade voters in neighborhoods that previously showed a party preference to stick with it or change. However, it’s otherwise almost as fruitless as saying that people who are blood type O, left-handed or Bears fans can be accurately predicted to behave (and vote) any certain way.

Election results aren’t census data on households’ ages, sizes, incomes, etc. Voting is a single act, ballots cast by a certain percentage of registered voters.

(Incidentally, campaigns from Democrats and Republicans alike in recent years have assembled profiles in order to place ads, refine messages, and target various potential voters through various media, but it is new to have someone apparently improperly acquire data through a third party like Facebook.)

Like most post-mortem (postpartum?) snapshots, there are some takeaways from the March 20 vote:

* The race between social conservative Ives and incumbent Bruce Rauner – who she accused of betraying conservatives on issues such as protecting immigrants, transgender people and abortion rights – was closer than projected, as he finished with 51.4 percent to her 48.6 percent.

* The race for governor is sure to be costly, too. In 2014, Rauner spent more than $65 million to defeat former Gov. Pat Quinn by just 4 percent, and he’s plowed an additional $50 million into his reelection bid (which also benefited from another $20 million from multi-millionaire Ken Griffin). Billionaire Democrat J.B. Pritzker contributed $69 million into his primary campaign for governor, so between now and the fall, Illinois’ gubernatorial race could set records.

* For incumbents in governors’ races, elections are usually popularity contests on their records, but it’s difficult for Republicans to win a statewide contest in a Democratic-leaning state like Illinois, and support from President Donald Trump probably won’t be a factor since the Oval Office Occupant is unpopular here. Further, in the days after the primary, Rauner returned to his favorite campaign target, House Speaker Mike Madigan, and acknowledged he must unify the GOP, yet said, “For those of you around the state of Illinois who wanted to send me a message, let me be clear: I have heard you.” (One wonders if Rauner’s supporters thought, “Hey! What about us?”)

* Chicago-area businessman Chris Kennedy and State Sen. Daniel Biss of Evanston (both relatively progressive) together received more votes for the Democratic nomination for governor (50.9 percent) than Establishment pal Pritzker, who won with 45.2 percent.

* In the 18th Congressional District, incumbent Darin LaHood got a whopping 78.9 percent of primary votes in winning the nomination over challenger Donald Rients, and on the Democratic side 2016 candidate Junius Rodriguez won, but only by 2.2 percent over Brian Deters, making the third Democratic candidate, former nominee Darrel Miller, a spoiler of sorts since his and Deters’ votes together were 58.3 percent to Rodriguez’ 41.7 percent.

* State Sen. Kwame Raoul (D-Chicago) narrowly defeated Quinn for Democrats’ nominee for Attorney General, and the rest of the crowded field of eight received 40 percent of the vote – more than either Raoul or Quinn.

* In Illinois’ 3rd Congressional District, incumbent conservative Democrat Dan Lipinski outdistanced his progressive challenger, newcomer Marie Newsman, but only by 2.4 percent. On the Republican side there, Holocaust denier Arthur Jones was unchallenged, so he’ll be the GOP nominee this fall.

* Both major political parties reminded Illinois that their interest is in winning elections, not governing.

As actress Bette Davis said in the 1950 movie “All About Eve,” “Fasten your seatbelts, it’s going to be a bumpy night.”