Inequality Week, 8/4/18

I have previously written of the perils of Uber, a company I work for, and how they are pushing cab drivers out of business (and even to suicide in six cases this year), while driving down wages across the industry.  Turns out they have allies in the civil rights movement, including Rev. Al Sharpton and the NAACP.   They are opposing efforts by the NY City Council to freeze the number of Uber permits and regulate the industry so drivers can actually make a living.  Seems that Uber drivers are more likely to pick up minority passengers than cabs because they have no choice – you don’t know the race of the rider when you accept a fare.  Rev. Sharpton remarked, “Some yellow cabs won’t even go to uptown or to parts of Brooklyn.  If you’re downtown they won’t stop.”  City Council Speaker Corey Johnson said, “We’re not saying Uber is bad (but) the industry needs to be regulated.”  Amen!   We know Uber will fight this tooth and nail and probably prevail, as they did in a similar attempt in 2015. Make them pay living wages with their billions in profits!

Paul Krugman, in his July 31 op ed, Trump’s Supreme Betrayal, writes that, in addition to big tax cuts for the rich and repeated attempts to strangle the ACA, Trump’s greatest “betrayal” of the American people may be appointing a raft of pro business, anti labor federal judges who will aid and abet rising economic inequality for decades to come. Supreme Court nominee Brett Kavanaugh falls squarely into this mold.  He found Sea World not liable for the death of a staffer by a killer whale on the grounds that “she accepted the risks” of the job when she signed up!  He has declared the Consumer Financial Protection Board unconstitutional and repeatedly upheld the rights of business to suppress labor organizing.  Krugman says this is the opposite of the “phony populism” Trump ran on in favor of pro-business elitism and increased inequality.  Don’t be fooled by attempts to distract with “culture war” issues like abortion and gay rights.  To cite Leonard’s Law, “in the end, it all comes down to money.”  Democrats must seek, “by all means necessary” (Malcolm X) to delay the vote until after the mid-term elections, just as that mendacious prick Mitch McConnell did to Judge Garland in Obama’s last year.  Stand and fight!

Last Friday Apple declared that it had become the first $1 trillion dollar company, eclipsing the gross GDP of all but 16 of the world’s countries!  It is part of the fearsome five tech companies-with Amazon, Google, Facebook and Microsoft – that delivered half the gains to the S&P 500 last year.  Other industries, such as finance, airlines, cable and wireless services are similarly concentrated.   In 1975, 109 companies delivered half the corporate profits; today that’s down to 30.  Economists generally agree that this has led to the rising inequality and declining labor share of income we’ve witnessed in recent decades.  Fewer companies equal reduced competition and unionization and rising political control of the rich over public policy.  These organizations wield monopsony power (more on this in a later post) in the economy, controlling the price of inputs (especially labor) and suppressing wages across the board.  We are in a New Gilded Age and need to check the power of the plutocracy before they enslave us all.

My main column, to follow, will focus on a back door attempt by Treasury Secretary Steve Mnuchin to cut capital gains taxes by regulatory fiat, bypassing the legitimate role of Congress in the process. As if the recent $1.5 trillion, deficit financed tax cut weren’t enough, Republicans are always seeking new ways to funnel ever more dollars into ever few hands in the fraudulent belief it will “trickle down” to the masses eventually.  This must be nipped in the bud.  READ!

 

 

 

 

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A New Day, A New Way

To my handful of loyal readers – thank you!  I have grown dissatisfied with WordPress, in particular it’s limited reach and the fact that many people who I invite to follow swear they never received my emails, while others have and do.  I am exploring other formats that can be accessed and spread more widely, and will include you in that effort when I do.

I like the format Nicholas Kristoff, one of my favorite op ed writers, uses in the NY Times.  He begins with a summary of recent relevant news and then appends his biweekly column to it.  I plan to do that, once a week (since I’m not paid), in two parts.  Look for the weekly summary soon, titled “Inequality Week,” followed by the column, still “Inequality Kills.”

Thanks for following and, as always, feel free to leave likes or comments, so I know someone is paying attention.  A writer writes to be read; otherwise, it’s just intellectual masturbation.

 

 

Let My People Eat – And Live!

Rejoice!  According to a recent report by the President’s Council of Economic Advisers, the War on Poverty is “largely over and a success” – we finally won?!  Yes indeed.  The White House Report, co written by the conservative Heritage Foundation, Expanding Work Requirements in Non Cash Welfare Programs , claims that if you combine government assistance with personal earnings, very few Americans fall below the official poverty line – which most experts agree is a wholly inadequate and outdated measure.

Therefore, it’s time to require able bodied recipients to work at least 20 hours per week or lose their benefits.  After all, it’s for their own good, to “increase self sufficiency” and reduce “dependence on government,” while saving precious taxpayer dollars to boot.  The CEA says less than 50% of this population currently meet this standard and it’s time for those slackers to step up or go hungry.  After all, didn’t John Smith tell the Virginia colonists, following St. Paul, the “those that don’t work won’t eat?”

Needless to say, most liberal groups vociferously disagree with the methodology, conclusions and basic sanity of the report.  The Kaiser Family Foundation  finds that 62% of SNAP (formerly Food Stamps) recipients work full or part time, while the Center for Budget and Policy Priorities says over 75% of beneficiaries are working within a year.  Nearly all agree that the vast majority of program participants are children, elderly and disabled, while other “able bodied” adults may be in poor health, caring for children or older relatives, students or working in low paid jobs with irregular work schedules. They also point out enforcing these requirements would call for a significant increase of new bureaucrats to monitor the program, offsetting much of the projected savings.

Paul Krugman’s recent column, “The GOP’s War on the Poor”, points out the manifest hypocrisy of the proposal.  He notes that in 2014 House Speaker Paul Ryan declared the War on Poverty had failed, so it was time to reduce benefits that weren’t helping lift people out of poverty.  It seems the whole point is to cut benefits, regardless of their effectiveness and level of need.  This is driven more by ideology, politics and a desire to punish the “takers” than any professed desire to help low income people achieve “self sufficiency.”

David Leonhardt, in the New York Times on July 11, noted  that the minimum annual family income of the top 1% of earners recently hit $607,000, a new record.  Meanwhile, the recent Republican tax cut has resulted in a deficit financed $111 billion yearly windfall for the wealthy, who will reap 60% of the benefits.  Since the entire SNAP budget amounts to $68 billion annually, only a small fraction of which goes to the “able bodied” poor, saving money is hardly the top GOP priority.  Rather, punishing the poor and redistributing wealth to the rich remains their lodestar, as it has been since St. Ronald Reagan took office in 1981.

It turns out work requirements are already part of the SNAP program, inserted in the “welfare reform” law of 1996.  The Obama Administration, in 2009, allowed certain high unemployment states to expand eligibility during the Great Recession, from 130% of the official poverty line ($27,000 for a family of 3) to 160% ($33,000).  The Republican proposal would return eligibility to 130% and increase the mandatory work age to 59, from 49 currently.  As in 1996 unemployment hovers around 4%, labor is scarce (though wages have barely budged) and we need to drag more low income people, kicking and screaming, into the workforce.

I worked as an employment adviser in a welfare to work agency in Philadelphia from 1998 – 2001.  I always said my job was “to turn the welfare poor into the working poor.”  We placed recipients in low wage jobs they could have gotten on their own and supervised them for 3 – 6 months.  The primary beneficiaries, as usual, were employees like myself, who earned a decent salary with health benefits and a 401 K.  The workers remained poor, but at least they had Medicaid, food stamps and a child care subsidy.  Do they still?

Cash welfare is now nearly dead.  The level of benefits (around $400 per month for a family of three) hasn’t changed since I started in 1998 (!), while housing, health and child care costs have soared.  Now they’re coming after non cash benefits, lest anyone other than the top 1% ever get any advantage they don’t “deserve.”

Kathy Fisher, policy director of the Greater Philadelphia Coalition Against Hunger, estimates 92,000 Pennsylvanians, including 45,000 Philadelphia residents, would lose benefits under the new rules.  The Center for Budget and Policy Priorities extends that figure nationally to over 2 million Americans.  Recently a federal judge struck down Kentucky’s effort to impose work requirements on Medicaid recipients on the sensible grounds that it doesn’t advance the program’s core mission – to extend health care to the poor.  Sounds reasonable, no?

Food and health care are not luxury goods to be reserved as a reward for the “deserving.”  They are core aspects of the basic right to life Republicans rhetorically champion.  These are enshrined in the 1948 UN Declaration of Human Rights and over a century of Catholic Social Teaching.  How about, instead of forcing the poor into low wage work, we ensured that anyone willing and able to work could find a full time job at a living wage, with health care?  Then they wouldn’t rely on government and our miserly charity to survive in the first place.  Let my people eat – and live!

Too Damn Big Fails Us

Last week a federal court approved the $85.4 billion merger of AT&T and Time Warner over the objection of the US Justice Department which, in President Trump’s words, opposed the deal “because it’s too much concentration of power in the hands of too few.”  (New York Times, 6/13/18).  District Court Justice Richard Leon dismissed the government’s case out of hand, arguing they failed to prove the consolidation would result in reduced choices or increased prices for consumers; he also warned that an appeal would be fruitless and recommended against it.  Immediately following the decision Comcast launched a $65 billion challenge to take over 21st Century Fox, topping Disney’s previous offer.  Analysts believe a wave of consolidations will surely follow, further entrenching power and profit at the top of the corporate pyramid.

Judge Leon’s consumer benefit theory of antitrust, originally hatched by conservative  scholar and failed Supreme Court nominee Robert Bork, is legally and morally suspect.  First, it’s hard to know what the effects on choice and price to the consumer will be before the deal is consummated, and probably not for many years to come.  Is anyone happy with their cable bill?  Second, many economists believe that corporate consolidation, excess profits and power are a key cause of stagnant wage growth and rising economic inequality in recent decades, as well as loss of political power of ordinary voters v. highly funded special interests.  Hence, even if consumer choices remain plentiful and prices reasonable (a big IF), workers are hurt by their loss of bargaining power and voters by their reduced influence at the ballot box.  This should be cause for concern among all of us.

A recent article in The Economist (no liberal rag) entitled “Profits Too High: America Needs a Giant Dose of Competition confirms these facts.  It reports American Airlines, nearly bankrupt a decade ago, earned $24 billion in profits last year – the same as Google! – following consolidation of the airline industry into four major players.  A similar pattern exists in other major industries.  US companies have engaged in $trillions of mergers over the past decade, with many more expected to follow, as they sit on over $800 billion in idle cash before the recent tax cut bonanza.

The article concludes that US company profits are too high, that most firms “are more adept at siphoning off cash than creating wealth, and that this deepens inequality by dampening wages and raising consumer prices above a competitive level.  Concentrated economic power also stifles innovation and retards the growth and formation of small businesses.  According to David Leonhardt of the New York Times (6/18/18) large companies now employ the majority of US workers, reversing historical trends.  As a result, over 2/3 of Americans, across the political spectrum, believe the economy is “rigged” (remember that word?) in favor of huge corporations and against them.  Similar or greater numbers doubtless exist for the U.S. political system, hence the dueling populisms and strange outcome of the 2016 election.

Americans are feeling an increasing sense of powerlessness and insecurity over their personal lives, which produces anxiety, anger and the search for a strongman to restore order and a lost, largely mythical “golden age.”  We have been through this before, in the Populist, Progressive and New Deal periods.  We have been able to increase democracy and dampen inequality through a combination of political and economic reforms that are still within our grasp, should we resolutely reach for them.  Higher progressive taxes, especially on huge individual fortunes and concentrated industries, jobs and training programs and income supports for lower paid workers are the obvious place to start.

Needless to say, it won’t be easy or quick.  The sheer bigness of business and their stranglehold on our politics (corporate spending on lobbying has doubled over the past decade, but only represents a tiny fraction of their profits) complicates but doesn’t negate the task.   Remember it took a century after the Civil War for African Americans, who helped win it, to gain legal equality.  Hopefully it won’t take as long for a just, sane, equitable, human economy to emerge from the ashes of late 20th and 21st century plutocratic capitalism.  With faith, determination, solidarity and persistence, perhaps we too shall overcome our current predicament.

 

 

 

All the Money in the World…

I’ve been away on vacation for the past week plus in Minneapolis and Lake Superior, at Isle Royale National Park and Apostle Islands National Seashore.  I commend this trip to everyone, especially in the summertime.  While away I missed a post I wanted to share, but better late than never.

On June 13, before I left, an article appeared in the back pages of the Philadelphia Inquirer entitled “Seattle Quietly Repeals Amazon-Opposed Tax.”  It seems less than a month after passing a $275 per head annual tax on large corporations, like Amazon and Starbucks, the Seattle City Council was forced to withdraw it due to the furious opposition of local businesses led by Amazon.  The tax was to fund $50 million in affordable housing and homeless services for the 12,000 plus residents who can’t afford a place to live in the booming local housing market.

The business community donated around $280,000 ($25,000 from Amazon) to hire paid collectors to garner 45,000 signatures, more than three times the amount needed, to put a repeal question on November’s municipal ballot.  Fortunately, in PA we don’t trust “the people” with such “democratic” input – and  now I see why!  Rival labor union SEIU, who supported the tax, was able to raise only $70,000 in a vain attempt to keep the measure. City Councilman Mike O’Brien (not the Northeast Philly Democrat!), who sponsored the original legislation, was forced to yield to superior force, along with most of his colleagues.  They were, in the words of the Hamilton musical, “outgunned, outmanned, outnumbered, out-planned!” by the big business community.  “With enough money you can put anything on the ballot,” O’Brien sighed.

He said the Council couldn’t afford an expensive, months long, negative campaign before the November election, which might put their precious incumbency in jeopardy.  The 7-2 repeal vote took place in a raucous meeting, without prior announcement, debate or public hearings.  “The city doesn’t have a revenue problem, it has a spending efficiency problem,” Amazon VP Drew Herdener predictably opined.  Of course he offered no alternative cuts or revenue enhancements to make housing the poor “efficient” or even possible.  These human needs obviously paled in priority to a couple of cents off the share price of the world’s largest company.  Shame on both the corporation and council.

San Francisco and other West Coast cities are exploring similar taxes on large tech companies to deal with homelessness, affordable housing, mass transit and crumbling public infrastructure.  After the debacle in Seattle last week, followed by a similar failure to tax Uber in 2014, those cities will think twice before they try to “punish the successful,” no matter how much unjust enrichment sits lodged at the top of the income and wealth ladders.

A week or so earlier the papers reported that Jeff Bezos, Amazon’s CEO, had become the world’s richest man, with over $105 billion in personal wealth.  You could look it up, but I believe that exceeds the total GDP of at least half the world’s nations.  He could easily pay the $50 million per year housing tax out of his own personal funds without noticing the difference.  Instead, Amazon (not Bazos personally) spent a measly $25,000 to get the tax repealed, so they could pile up ever more money to heap on executives, shareholders, mergers, acquisitions and other anti-competitive practices.

This naked greed, unhinged from any notion of sanity, sufficiency or the common good, is sickening to behold.  Just as shocking and demoralizing is the paltry price for which our politicians can be bought and silenced.  Less than $300,000 – a drop in the bucket of Amazon’s profits, let alone the entire Seattle business community – was more than enough to scatter them mice at a rattlesnake roundup.  Again, shame on them both, but more on Amazon, which committed the greater sin.

Jesus said, “No man can serve two masters.  Either he will hate one and love the other, or he will be devoted to one and despise the other.  You cannot serve both God and money.” (Matthew 6: 24)  The future of our democracy depends on placing the common good over individual selfishness.  Both big business and individual citizens are guilty of neglecting this duty and we are reaping the bitter harvest of growing inequality, declining social mobility and partisan gridlock under the most divisive and least qualified president ever to occupy the Oval Office.

Only a united citizens’ movement to restore democracy (1 person/vote; influence over policy, not just elections) and equality (broad opportunity without gross excess) can save us from our current slide into plutocracy and creeping authoritarianism.  I’m ready to join the band and lead a section, if necessary.  Anyone willing to join me?  By the way, where do we find the band and where to march to?  We are sorely lacking in leadership, character and solidarity.

Trump and Puerto Rico

Remember when Donald Trump visited Puerto Rico last fall, a week or two after the devastation of Hurricane Maria?  He threw paper towels to the crowd, boasted of the size (why is he always so obsessed about size?)  of the recovery effort and bragged that the island had “only” experienced 14 deaths, compared to the 2500 plus from Hurricane Katrina.  Later he criticized residents for not doing enough to help themselves and got into a Twitter spat with San Juan’s mayor – sad!

Well, the stats are in and once again our president is exposed for peddling falsehoods, whether intentional or not.  In an article in the New England Journal of Medicine, the Harvard School of Public Health and others updated the figures through December 31, 2017.  Using a survey of 3299 households (why not 3300?), they concluded the actual death toll was 4645, or 70 times the Puerto Rican government’s official total of 64.  Comparing figures with 2016, this represented a 62% increase in mortality on the island that year.

At least 1/3 of increased deaths were attributed to delayed/denied medical care.  It’s not clear, from reading the report, what the other 2/3 were caused by.  The average household went 84 days without electricity, 68 days without running water and 41 days without cell phone coverage.   The further you were from a major population center, the longer you waited.  Today, nine months later, over 30,000 residents still lack electricity.

I traveled to Puerto Rico between Christmas and New Years of last year, seeking warmth but also interested in assessing the damage.  I stayed in San Juan (most of the outlying hotels were still damaged) but spent three days driving around the countryside, sacrificing beach time and a killer tan!  Some observations: the island is small but densely populated, with 3.5 million souls spread throughout.  The map from my rental car agency showed many small towns and cities with large green areas in between.  I assumed these would be fields and forests – not so.  Instead, I drove up and down winding roads over endless mountains with houses perched, continuously and precariously, on the side.  Outside of a few parks, very little land was unsettled.

This would present a logistical challenge in the best of times, which this obviously wasn’t.  Power and water lines would need to be stretched foot by foot across the whole island.  Worse, the power grid was on the verge of collapse before the storm, as was the government, with over $85 billion in unpayable debts.  Bureaucratic snafus worsened the problem.  A FEMA contractor staying at my hotel said the main problem was the lack of supplies, particularly power lines.  Later they discovered many thousands of miles of power lines sitting unused in warehouses in Florida, waiting for authorization to ship.

The ocean, too, became a problem.  Puerto Rico is a large island 200+ miles off the mainland, not a compact geographical zone around Houston, Texas.  With these logistical challenges and less than half the per capita GDP as the mainland US, Puerto Ricans were at a distinct disadvantage in “helping themselves.”  Add political impotence to the equation.  The island is a “commonwealth,” or territory, not a state.  They have no Congressman or Senators and they don’t vote for President.  Nor do, I suspect, many residents contribute large sums of money to US campaigns to buy “access” to favored politicians.  They were, in a word, screwed.

I’m not sure exactly what should have been done but the answer, obviously, is much more.  Let’s start with something near and dear to Trump’s cold heart.  He signed and helped push through an increase in the Defense (a misnomer) budget to over $700 billion for a country with no natural enemies or fear of foreign invasion.  What’s it all for?  Why not take a small portion of that money and use it for civilian reconstruction, especially since the Army and its marvelous Corps of Engineers are the only federal agency with the organizational capacity, resources, knowledge and skill to handle such a mammoth task?

Hurricane season is upon us again.  Let’s hope and pray that Puerto Rico is spared any major storms in this and coming years.  It is a lovely island with warm, beautiful people whose major downfall is to have been made, in effect, a “colony” (not a state) of the USA in 1898.  Nevertheless, they are US citizens, hence our brothers and sisters (hermanos y hermanas).  Let’s treat them that way now and in any future hour of need.

Death by Uber

Last Sunday morning I opened my Philadelphia Inquirer to find a front page story titled “In Cabs or Ride-Sharing Vehicles, Drivers Struggle to Scrape By.”  It described the plight of one Bangladeshi immigrant taxi driver, Shah Golamkader, who has seen his income plunge by over one third since Uber and Lyft entered the Philadelphia market in 2014, even though he’s driving more hours than ever.  He switched to Uber for a time, then returned to the cab company after finding he made no more money and had to sacrifice his personal vehicle in the process.  Either way, he concluded, “If you’re driving a taxi cab or Uber, you have no money.”

On the way up to New York City with my daughter a few hours later, I heard that the body of a taxi driver, Burmese immigrant Yu Mein Chow, was found in the East River.  He was the fifth New York taxi driver to commit suicide in as many months.  Mr. Chow purchased a taxi medallion in 2011 for $700,00, a good deal at the time.  Today it is worth less than $100,000, but he still has to make payments on the existing loan, a task now impossible since his income was cut in half by Uber.  A day before his death he tried to make a loan payment but his credit card was rejected.  The next day he jumped off a bridge into the East River, leaving behind a daughter in college and wife battling cancer.

I confess a personal interest in this story, since I have been doing some Uber driving since January.  The money’s okay for a part time gig but you can’t live on it.  The fares are so low (and the company takes 20% for booking them) that you only make money at peak times during “surge” prices, when they raise rates to cover increased demand.  Unfortunately, but predictably, this leads drivers to “flood the zone,” resulting in less rides per driver. Since they pay no salary, benefits, gas or vehicle maintenance, Uber has every incentive to sign up as many drivers as possible to maximize coverage and customer satisfaction.  On the way home I heard a radio ad and saw a billboard touting the great benefits of Uber driving. I sadly shook my head and thought of P.T. Barnum’s phrase, “There’s a sucker born every minute.”

The bottom line is, in exchange for your cheap ride and my driver’s pittance, Uber (and to a lesser extent Lyft) have ruined the taxi business.  Rides and revenue in Philadelphia have declined nearly 50% since 2014, and similarly in New York and other cities.  This has crushed the livelihoods and spirits of tens of thousands of hard working people, many of them immigrants, who work 12-14 hour days, 6 days a week, and still can’t make a living.  They are precisely analogous to the millions of “forgotten” men and women who lost their good paying factory jobs and voted for Trump in 2016. They worked hard, played by the rules and got screwed through no fault of their own. They need and deserve our help.

State and local governments should immediately impose a tax of at least $1 per ride on Uber, Lyft and their ilk, to “level the field” in terms of fares.  They should use it to help taxi companies and public transportation adjust and retool their services, as well as to repair roads which increased congestion has damaged.  Uber and Lyft are predatory competitors who take advantage of their “independent contractors” to destroy family sustaining jobs.  The only ones who truly benefit are the “mafia” and their minions in Silicon Valley, who take a cut on every transaction.  As for you, do you really need to save those few bucks to get to the airport or go crosstown?  You might ask a friend to drive you or take public transportation if the fare actually represented the true cost, socially speaking.

“The drivers are the sorry losers in it,” says David King of Arizona State U, who has studied the industry.  “That’s kind of the larger narrative about deregulation and the technology enabled gig economy.”  Think about that the next time you click the Uber or Lyft apps.  Think it doesn’t apply to you?  Who knows what automation and artificial intelligence will do to your job in the near future?  If compassion and solidarity isn’t enough to move you, consider this: “Whatsoever you do (or don’t) to least of my children, that you do unto me.” (Matthew 25: 40)  The life you save may be your own.