Monday, October 31, 2005

On Economic Growth

from Foreign Affairs
Among the developed countries, the United States has been doing well in the growth sweepstakes -- or so you might assume if you focused exclusively on GDP. GDP statistics, however, can be very misleading. They do not really measure how well the country is doing or how much better off its citizens are becoming.

No one would look at just a firm's revenues to assess how well it was doing. Far more relevant is the balance sheet, which shows assets and liabilities. That is also true for a country. Argentina grew rapidly in the early 1990s, mainly as a result of a huge consumption binge financed by international borrowing. But that growth was not sustainable and was not sustained. Similarly, the United States has been borrowing heavily from abroad, at the rate of $2 billion a day. It would be one thing if this were being spent on high-productivity investment. In fact, it has been used to finance increases in consumption and massive tax cuts for upper-income Americans.

Consider the following thought experiment: If you could choose which country to live in but would be assigned an income randomly from within that country's income distribution, would you choose the country with the highest GDP per capita? No. More relevant to that decision is median income (the income level that 50 percent of the population is below and 50 percent is above). As the income distribution becomes increasingly skewed, with an increasing share of the wealth and income in the hands of those at the top, the median falls further and further below the mean. That is why, even as per capita GDP has been increasing in the United States, U.S. median household income has actually been falling.

There are other reasons why someone might not want to look at just per capita GDP. He might worry about his security. What happens if he gets ill? If he loses his job? What happens when he retires? He might worry about crime. He might worry about the quality of his children's schooling. How do his children fare in competition with those who can afford the best schooling that money can buy or with those in countries such as Singapore that offer a first-rate public education? He might worry about the environment. Are there government regulations prohibiting arsenic in the water?

When viewed through these lenses, the United States does not look as good. There are some dimensions in which it is outpacing others -- for instance, it boasts five to ten times the per capita prison population of other advanced industrialized countries and more working hours per week. It also has less job security, worse unemployment insurance, and fewer people covered by health insurance.

To be sure, the American dream still attracts millions from around the world. But some of that attraction may be based on a lingering myth of upward mobility in the United States and an underappreciation of the difficulties that confront the poor. And although there is still no comparing the U.S. standard of living and that of poor countries, these are not the laurels on which one wants to rest.

Wednesday, October 26, 2005

"Workers Win on Gulf Coast Pay Cuts"

from Working Families e-Activist Network, AFL-CIO
Faced with massive public outrage, President George W. Bush is restoring wages he cut for the construction workers who will rebuild the hurricane-damaged Gulf Coast.

Right after Hurricane Katrina hit, President Bush signed an executive order allowing federal contractors to pay substandard wages to construction workers who will rebuild the Gulf Coast—workers who already had lost so much and were struggling to rebuild their lives and their communities.

But you and other working family activists made the difference. You sent more than 350,000 messages to Congress and the White House—and it worked: 37 House Republicans urged the White House to reverse the suspension, and Rep. George Miller (D-Calif.) led unanimous opposition by Democrats to the president’s suspension.

We won. Gulf Coast workers won. President Bush is lifting his pay cut as of Nov. 8.

Now he must reinstate affirmative action requirements for contractors in the Gulf and end his attempts to slash programs for working families while adding new tax breaks for the rich—we’ll keep working on that and, of course, ask you to do your part.

You are a powerful force for working families. Thank you for restoring decent pay for Gulf Coast workers.
PUP Where We Belong

via LabourStart UK

Tuesday, October 25, 2005

Wal-Mart Proposes Raising the Minimum Wage

from The Wall Street Journal
Wal-Mart Stores Inc. Chief Executive Lee Scott, whose company has become synonymous with low prices and, critics say, low pay, called on Congress to consider raising the minimum wage.

In a speech to Wal-Mart directors and executives, Mr. Scott unveiled a series of initiatives designed to present a kinder, gentler face for the world's biggest retailer, which has come under stepped-up criticism for everything from its wages and benefits to its impact on small businesses.

Mr. Scott also discussed a new health-care package with lower premiums for Wal-Mart workers, and he touted the retailer's efforts to cut pollution.

Whether it is jobs, health care, product sourcing or environmental impact, "it is clear to me that in order to build a 21st century company, we need to view these same issues in a different light," Mr. Scott said in his speech yesterday. He added that he has spent the better part of last year exploring ways to use the company's heft and resources to have a more positive impact on society.

The proposal to lift minimum wage is particularly likely to raise eyebrows. Though Wal-Mart pays above the current $5.15 an hour minimum wage -- the average hourly wage among its 1.3 million U.S. workers is just under $10 an hour -- some of its smaller competitors don't pay as much. As a result, a boost in the minimum wage could pressure the profitability of Wal-Mart competitors.

"This makes it look like they're doing something for labor, but with little cost to themselves," says Lawrence Katz, professor of economics at Harvard University, Cambridge, Mass.

But Mr. Scott, noting that minimum wage hasn't changed in almost a decade, described Wal-Mart's core customer base as finding it increasingly difficult to afford basic necessities between paychecks.

"We simply believe it is time for Congress to take a look at the minimum wage and other legislation that can help working families," he said.

Mr. Scott delivered his speech on the eve of the company's annual two-day conference for analysts at its Bentonville, Ark., headquarters. Analysts likely will want to know how the company plans to achieve some of these goals while containing costs and jump- starting sales.

In energy-saving moves that will save Wal-Mart money, Mr. Scott said the company plans to increase the fuel efficiency of its truck fleet -- among the largest in the country -- by 25% in the next three years. It also will invest a total of $500 million annually exploring technological advances to reduce greenhouse gases 20% during the next seven years and sharing its findings with others, including competitors.

In addition, Wal-Mart said it will show preference to factories in China that participate in a "green company program" it is helping to design and to suppliers who address their own contribution to global warming.

"Wal-Mart now sees the need to raise environmental standards and that is promising, but will they adapt tough voluntary standards and press suppliers to do the same?" said Fred Krupp, president of the New York-based Environmental Defense, a large environmental group active in global-warming issues.

Mr. Krupp added: "If they do, it could be very big."

Critics also have taken Wal-Mart to task for its health benefits; less than half its workers are enrolled in a company-offered health plan, partially because of the cost of the premiums.

Mr. Scott elaborated on a new health-plan option for financially strapped workers. It costs approximately $23 a month for an individual, about $17 less than the cheapest previous plan. But workers will be covered for three visits to the doctor and three generic prescriptions under the new plan before a $1,000 deductible kicks in.

The previous plan required the deductible payment to be met first.

"They are simply repackaging an old bad policy and calling it a fairer plan," said Paul Blank, campaign director of, an activist campaign run by the United Food and Commercial Workers.

Sunday, October 23, 2005

Philly transit strike: Don't ignore union's argument

After reading many concerned letters to the Metro regarding a possible strike by SEPTA workers, it occurred to me that I was basically ignorant of the union's position on the matter. So I went to their website, located at According to the union's president, Jeffery Brooks--and contrary to SEPTA claims--his members have paid for health care all along, not only in terms of copays for hospital, doctor, and prescription privileges, but also by accepting reduced salary compensation (and numerous other concessions) in exchange for a strong health care plan. This paints a very different picture than the one commonly held of greedy bus drivers holding the city hostage because they think they are "better" than everyone else--a caricature that can be maintained only when we ignore their side of argument.

Tuesday, October 11, 2005

There is a dimension to the pro-life position which seems attractive to people because it puts them in a position of judgment over others, as if this alone is a solution.

Wednesday, October 05, 2005

One Party Removed from Totalitarianism

from A Tiny Revolution
I used to joke that the Soviet Union collapsed because they only had one communist party. They'd still be around if they'd been smart enough to have two communist parties that were exactly alike on every issue except abortion.
Pentagon Leaders Express Doubt over Iraq Occupation

from The Wall Street Journal
In a major shift, many American civilian and military leaders have concluded that the insurgency can only be defeated politically. The best way to take some steam out of the insurgency and boost the growth of a credible home-grown government is to begin withdrawing troops, these officials argue. To be sure, they don't want a precipitous withdrawal, but they think a lower profile over time would ease some problems.

The large American military presence in Iraq "feeds the notion of occupation" and "extends the amount of time that it will take for Iraqi security forces to become self-reliant," Gen. George Casey, the top U.S. commander in Iraq, told Congress last week. Gen. John Abizaid, a fluent speaker of Arabic and the top American commander in the Middle East, said at the same hearing that it was vital for the U.S. to gradually "reduce our military footprint" in the region. "We must make clear to the people of the region that we have no designs on their territory and resources," he added.