Watch Me Discuss the Future of the Economy on The Sam Lesante Show!

Let’s start 2016 by getting up-to-speed on the American economy! Here’s an interview with me, just in time for the holidays, on The Sam Lesante Show, where we cover everything from the federal budget deal to the Federal Reserve rate hike to the lingering problem of inequality:

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You haven’t heard from me for a few months because I’ve been busy doing research on these economic issues. In 2016, I’ll be writing about my findings. I hope you’re as excited as I am for the new year and all the debate it brings!

A Lesson in Power, Courtesy of the Bangladesh Garment Industry

The bodies have been placed in coffins. The mourners have draped themselves in black.

It was one of the deadliest industrial accidents in history. Over 100 people died in that clothing factory.

It made headline news all across the world. Surely you’ve read about it by now.

When they tried to escape, the factory workers found the doors locked. It was standard practice at the sweatshop. The managers didn’t want the workers to take unauthorized breaks.

So they burned alive.

Louis Waldman happened to be nearby when the fire started. He followed the sound of pandemonium until he reached the blazing factory. He told the New York Times what he saw: “Horrified and helpless, the crowds — I among them — looked up at the burning building, saw girl after girl appear at the reddened windows, pause for a terrified moment, and then leap to the pavement below, to land as mangled, bloody pulp. This went on for what seemed a ghastly eternity. Occasionally a girl who had hesitated too long was licked by pursuing flames and, screaming with clothing and hair ablaze, plunged like a living torch to the street.”

You probably think I’m talking about the garment factory in Bangladesh, where 112 people died last weekend. But I’m not.

I’m talking about the Triangle Shirtwaist Factory in Greenwich Village, New York.

The date was March 25, 1911. One hundred forty-six people died that day.

New York City wouldn’t experience another disaster of that magnitude for another ninety years. That date would be September 11, 2001.

It’s hard to believe that such an atrocity happened right here in our own backyard. We’ve become so accustomed to workplace regulations and civil negotiations that we’ve forgotten what factory life was like before the Great Depression.

Back then, labor unions were even rarer than they are today. Most strikes ended at the barrel of a gun. The company would call the governor, and the state militia would send soldiers to force the strikers back to work. It wouldn’t be uncommon for them to kill and imprison dozens who stood in their way.

The history of our great nation is littered with epic labor battles. Hundreds, maybe thousands, of Americans died defending their right to negotiate as one union rather than as helpless individuals.

It doesn’t take a PhD in economics to see that an individual worker doesn’t stand a chance of a fair negotiation with a $237 billion corporation like Wal-Mart, especially when unemployment is high. The corporation has so many applicants to choose from. It has all the power.

It’s that kind of power that allowed the Triangle Shirtwaist Factory to lock the doors and trap its workers.

That sort of thing doesn’t happen in America anymore, but it’s not because corporations had a change of heart. It’s because the Great Depression motivated Congress to stand behind workers who wish to form labor unions. It’s because the federal government stopped sending soldiers and started sending election supervisors. It’s because they investigated factory conditions and created laws to prevent the loss of innocent life.

This is what our government does. It’s what sets us apart from the destitute places of the world, where good, hard-working people have no protection from the warlords and factory bosses.

In the depths of the Great Depression, Americans watched the Congressional investigation of Wall Street with horror, as the wretched abuses of unregulated banks came to light. The great columnist Walter Lippmann summed up the national mood when he wrote, “No set of men, however honorable they may be, and however good their traditions, can be trusted with so much private power.”

Something to remember when the One Percent refuses to pay the taxes they paid in the booming 1990s, or when they blame the demise of the Twinkie on unions who took pay cuts while executive compensation was soaring.

The 99 Percent isn’t asking for a lot. An hourly wage that doesn’t leave their family in poverty would be nice. A guarantee that Social Security and Medicare will still be there when it’s their turn to retire. Maybe a few public schools that aren’t crumbling to the ground.

You know, the things that separate us from the Bangladesh’s of the world.

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This op-ed was published in today’s South Florida Sun-Sentinel.

Quote of the Day: Richard Schiff

I am not an Obama fanatic. I did not favor a surge in Afghanistan; didn’t support the nature of the financials bailouts; wanted universal health coverage; wanted proper prosecution of the thieves of Wall Street, believe the war on drugs must end yesterday.

But here, now, just shy of four years later I can look back and I can have respect for this man. He said he was going to bail out Detroit and he did; he said he was going to pass the stimulus package to stave off loss of jobs and rebuild infrastructure and he did; he said he was going to surge in Afghanistan to facilitate a later winding down of that war and he did; he said he was going to end the inane war in Iraq and he did. He passed Obamacare like he said he would. He reversed the loss of job growth trend like he said he would. He extended unemployment benefits and helped folks keep their homes like he said he would. And on and on it goes.

— Richard Schiff

The World That Mitt Romney Wants to Build…for the One Percent

“A gaffe is when a politician tells the truth — some obvious truth he isn’t supposed to say.” — Michael Kinsley

Mitt Romney really stepped in it this time. His only saving grace is that no one noticed…yet.

In a recent interview with Fortune magazine, Romney indicated that, under his tax plan, “high-income people would continue to pay the same share of the tax burden that they do today.”

This quote doesn’t sound like a gaffe until you put it together with the rest of Romney’s promises. Under his tax plan, those “high-income people” would face much lower tax rates.

This seemed odd to me. The same tax burden with lower rates? Wouldn’t that mean they’d have to earn a heck of a lot more money before taxes?

As it turns out, yes. Yes, they would.

If Romney gets his way, the top 1 percent will pay an average federal tax rate of 22.5 percent, down from the 28.3 percent rate they paid in 2007. The average federal tax rate for the nation as a whole will fall from 19.9 percent to 17.4 percent. (This is assuming Romney doesn’t eliminate a bunch of deductions and credits, in which case most people’s tax rate would actually go up and the number I’m about to report would be worse. I’m giving Romney the benefit of the doubt here.)

In 2007, the top 1 percent paid 26.2 percent of the nation’s taxes. In order to maintain that share of the tax burden, as Romney suggested in his interview, the top 1 percent would have to earn 33.9 percent of the nation’s pretax income.

33.9 percent. One in three dollars of our nation’s output will go into the pockets of the richest 1 percent. To put that into context, in 2007, the top 1 percent pocketed 18.7 percent of pretax income. In 1979, they earned 8.9 percent.

Let’s take Romney at his word. Let’s try to imagine what the world will look like if the top 1 percent earns 33.9 percent of pretax income.

In order to earn that much income, CEO compensation will soar. The financial sector will probably double its share of corporate profits. Leveraged buyouts and other short-term gimmicks will become more prevalent, and many more manufacturing jobs will disappear, replaced by low-wage, no-benefit service jobsif they’re replaced at all. Wages for the average worker will decline relative to inflation. Most households will have to work more hours just to maintain their standard of living, but even that won’t be enough. Households will sink deeper in debt just to stay afloat. As a result, financial crises will become more frequent and more prolonged. Wall Street will thrive, creating ever more complex financial securities that prey on ever more naïve borrowers.

That’s another thing: Lack of education. Well, you can expect poverty to go up, and therefore students’ test scores will go down. But don’t expect the government to pick up the slack with more funding because the top 1 percent is no friend to high public education spendingor food stamps or Medicaid or pretty much anything that would help poor kids.

And in a world where they’re earning one-third of the nation’s income, the top 1 percent is going to have twice the influence they currently have in Congress. So you can expect plenty of corporate subsidies, especially for Big Oil. Forget about clean energy. We’ll import all that stuff from China. You see, the 1 percent doesn’t like to nurture new industries when they threaten the old monopolies.

Of course, not everyone in the 1 percent thinks or acts the same. They’re a diverse and brilliant and, in many ways, admirable bunch. But 1 percent of the population should not control one-third of the economy, no matter how impressive they may be.

You may think I’m an alarmist. Surely the future won’t be that bad.

Well, guess what: Everything I just described has been happening for the past three decades. And it all happened while the 1 percent doubled its share of pretax income.

Welcome to the future. How do you like it so far?

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This op-ed was published in today’s South Florida Sun-Sentinel.