Working Life http://www.workinglife.org Jonathan Tasini's Ruminations on Work, The Economy, and Politics Tue, 22 Jul 2014 13:23:57 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 Tragedy In Detroit http://www.workinglife.org/2014/07/22/tragedy-in-detroit/?utm_source=rss&utm_medium=rss&utm_campaign=tragedy-in-detroit http://www.workinglife.org/2014/07/22/tragedy-in-detroit/#comments Tue, 22 Jul 2014 13:01:46 +0000 http://www.workinglife.org/?p=9369 This is simply a tale of having a gun put to your head: vote “yes” or we screw you even harder.

Tragic:

Coming to terms with what came to be seen as inevitable, this city’s public-sector retirees have voted to lower their expected pension benefits, a crucial step in the city’s plan to emerge from bankruptcy before the end of the year.

The result, announced late Monday night, came after two months of court-required voting.

The balloting revealed a belief by current workers and retirees that the city’s offer — as much as 4.5 percent cuts to some pensions and diminished future cost-of-living increases — would be even worse if this one was rejected. It also reflected a series of deals struck over months with the leaders of unions, retiree groups and pension funds who had, in some cases reluctantly, called on their members to vote yes to cutting their own pensions. Some retirees said they had voted yes because they felt there was no good alternative.

]]> http://www.workinglife.org/2014/07/22/tragedy-in-detroit/feed/ 0 No, Miles, It Does Matter http://www.workinglife.org/2014/07/21/no-miles-it-does-matter/?utm_source=rss&utm_medium=rss&utm_campaign=no-miles-it-does-matter http://www.workinglife.org/2014/07/21/no-miles-it-does-matter/#comments Mon, 21 Jul 2014 13:16:41 +0000 http://www.workinglife.org/?p=9371 Love those CEOs obfuscating the truth. I know, you’re shocked. This little pearl comes in the arena of tax avoidance.

You may recall my previous posts on tax “inversions”, that clever little maneuver companies do to avoid paying taxes in the U.S. by reincorporating abroad (see here). Well, now comes Abbott Labs CEO Miles White who is upset that anyone would see what his company would so as tax avoidance. CTJ has it down pat:

In a July 18 Wall Street Journal op-ed, White suggests that there are no tax benefits to inversion: “Inversion doesn’t change a company’s tax rate. A company pays the same tax rate in the U.S. after inversion as it does before inverting. A company also pays the same tax rates in foreign domiciles before and after inversion,he wrote.

While it is technically true that inverted companies should continue to pay the 35 percent U.S. tax rate on any U.S. profits, the experience of previous inversions tells us that U.S. tax rates will likely become mostly irrelevant to these companies post-inversion because they will move aggressively to make their U.S. profits appear to be foreign.

For example, the manufacturer Ingersoll-Rand, after inverting to become a Bermuda corporation in 2001, immediately went from reporting annual U.S. profits of hundreds of millions to reporting losses or very small profits each year, while it’s reported profits outside the United States expanded dramatically. This did not reflect any actual loss of U.S. customers or business. Rather, the corporation accomplished this by loaning $3 billion to its U.S. subsidiary, which then deducted the interest payments on the debt to effectively wipe out its U.S. income for tax purposes. It seems likely that this practice, called earnings stripping, would be aggressively used by Walgreens, Medtronic, Mylan, and each of the other large U.S. companies that are currently contemplating an inversion.

It’s a scam. It’s legal. But, guys like White have the gall to try to dress it up as something else.

 

 

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The Post Office Could Be Your Bank http://www.workinglife.org/2014/07/18/the-post-office-could-be-your-bank/?utm_source=rss&utm_medium=rss&utm_campaign=the-post-office-could-be-your-bank http://www.workinglife.org/2014/07/18/the-post-office-could-be-your-bank/#comments Fri, 18 Jul 2014 19:40:50 +0000 http://www.workinglife.org/?p=9366 Stumbled on a conversation today at Netroots Nation that is quite intriguing: using the post office as a bank outlet. Guess what? It existed decades ago. It could happen again–but, you’ll never guess who hates the idea? OK, yup.

I’ll write a bit more on this soon. But, the basic idea is simple, as outlined in this paper by Professor Mehrsa Baradaran:

The post office could offer check cashing and payday lending services much like those offered by fringe banks, but at a much lower cost. It could also offer them without all the documentation and formal barriers of banks. There are currently non-banks, other than fringe lenders, starting to offer these products because they do not involve sophisticated credit analysis or any regulatory support, such as FDIC deposit insurance.

This idea is not new but it also has been given a bit of institutional support from the Inspector General of the U.S. Postal Service. In a recent white paper, he wrote:

Millions of Americans do not have a bank account, or use costly services like payday loans and check cashing exchanges just to make ends meet. The entire underserved population comprises more than a quarter of all U.S. households—some 68 million adults. They are an economically diverse mix of working and middle class families, poor and unemployed people hurt by the recent economic crisis, young people, immigrants, and others who are trying to make it paycheck to paycheck. Together, they represent a huge market. In 2012, they spent about $89 billion just on interest and fees for alternative financial services.

The Postal Service is well positioned to provide non-bank financial services to those whose needs are not being met by the traditional financial sector.

Wonder what people would do if they could never have to walk into a Citibank again.

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Inversions Will Continue http://www.workinglife.org/2014/07/17/inversions/?utm_source=rss&utm_medium=rss&utm_campaign=inversions http://www.workinglife.org/2014/07/17/inversions/#comments Thu, 17 Jul 2014 20:37:29 +0000 http://www.workinglife.org/?p=9364 Heh. That’s likely what those corporate legal and accounting minds are thinking: nuttin’ is going to pass that stops that nice little scam allowing corporations to incorporate overseas to avoid paying taxes in the U.S.

I wrote about this scam not too long ago. And prospects are not good:

On Tuesday, senators are scheduled to conduct a hearing on international corporate taxation that is expected to focus on inversions.

“This inversion loophole must be plugged,” Mr. Wyden said in a statement. “As the speed of inversions increases, this will only fuel bipartisan urgency to stop companies from deserting the U.S. I’m talking with my colleagues and exploring options for addressing this in the near and long term.”

But without a similar effort in the House, no new laws are likely anytime soon. [emphasis added]

It’s all the rage:

In recent months, several big companies have reached deals that will allow them to reincorporate in countries like Ireland and the Netherlands, where corporate taxes are lower. This week alone, two such arrangements appeared sealed, with AbbVie, the drug maker based in Chicago, winning tentative approval from Ireland-based Shire for a $53 billion acquisition; and Mylan, the generic drug maker based outside Pittsburgh, paying $5.3 billion for the European assets of Abbott Laboratories.

The theft continues.

]]> http://www.workinglife.org/2014/07/17/inversions/feed/ 1 Only A Patriot When It Mean Money http://www.workinglife.org/2014/07/15/only-a-patriot-when-it-mean-money/?utm_source=rss&utm_medium=rss&utm_campaign=only-a-patriot-when-it-mean-money http://www.workinglife.org/2014/07/15/only-a-patriot-when-it-mean-money/#comments Tue, 15 Jul 2014 16:30:42 +0000 http://www.workinglife.org/?p=9362 Flag-waving patriots don’t particularly impress me. Too many are the types to want to go to war–but never serve themselves (a la Dick Cheney’s “I had other priorities” during the Vietnam War). Here’s an economic “patriot” who is only as good as profits to her corporation.

A patriot no more:

Heather Bresch grew up around politics. Her father is Joe Manchin, the Democratic senator from West Virginia and a former governor. She has heard him say repeatedly, “We live in the greatest country on Earth,” as he did in countless political advertisements. And it appeared to rub off on her: Ms. Bresch was named a “Patriot of the Year” in 2011 by Esquire magazine for helping to push through the F.D.A. Safety Innovation Act.

Until she was looking to save money:

But on Monday, Ms. Bresch announced plans to renounce her company’s United States citizenship and instead become a company incorporated in the Netherlands, where the tax rates are lower.

America…so yesterday.

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The Jail Cells Remain Empty Of Bankers http://www.workinglife.org/2014/07/14/the-jail-cells-remain-empty-of-bankers/?utm_source=rss&utm_medium=rss&utm_campaign=the-jail-cells-remain-empty-of-bankers http://www.workinglife.org/2014/07/14/the-jail-cells-remain-empty-of-bankers/#comments Mon, 14 Jul 2014 20:14:35 +0000 http://www.workinglife.org/?p=9360 Well, gee, no surprise here. A big CIVIL penalty for a major financial scam but no banker is heading to jail. Yet. Or probably never.

This was via The Wall Street Journal:

The Justice Department on Monday said Citigroup knowingly sold mortgage-backed securities with loans containing “material defects” and concealed that information from investors in what Attorney General Eric Holder described as “egregious” misconduct that helped fuel the 2008 financial crisis.

The settlement, which includes a $4 billion civil penalty, doesn’t absolve Citigroup or its employees from facing any possible criminal charges, Mr. Holder said. He declined to say whether the government was pursuing criminal charges.

Ok, so, what about some pressure on Holder to bring some criminal charges? It has to come from the streets because the White House clearly is not interested in prosecuting these crooks. Look, it even says Citiban “knowingly sold mortgage-backed securities with loans containing “material defects” and concealed that information from investors”!!!

For fuck’s sake.

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When You Hit That Pothole This Weekend, Thank Corporate GREED http://www.workinglife.org/2014/07/03/when-you-hit-that-pothole-this-weekend-thank-corporate-greed/?utm_source=rss&utm_medium=rss&utm_campaign=when-you-hit-that-pothole-this-weekend-thank-corporate-greed http://www.workinglife.org/2014/07/03/when-you-hit-that-pothole-this-weekend-thank-corporate-greed/#comments Thu, 03 Jul 2014 15:57:40 +0000 http://www.workinglife.org/?p=9357 For the millions of people hitting the road at this very hour, and in the hours to come, it’s going to be a bumpy journey, crashing through potholes after pothole, rutted road after rutted road, and creaky bridge after creaky bridge–all thanks to the dismal shape of the  country’s infrastructure (which gets a D+ from the American Society of Civil Engineers). No doubt, drivers will curse a whole list of people–but a small wager that few give up a few choice words for a big culprit: corporate greed.

You may know this, courtesy of Citizens for Tax Justice:

Most federal funding for highways comes from the federal Highway Trust Fund, which will face a shortfall starting in August because Congress has not adjusted the 18.4 cent per-gallon gas tax and 24.4 cent per-gallon diesel tax, which are not indexed for inflation, since 1993. The fact that they have not been increased to keep up with the rising costs of construction or adjusted to account for reduced fuel consumption now means that these taxes no longer raise enough money to fund our infrastructure needs.

Of course, one way to deal with this is to raise the tax of gasoline (we still pay really low prices relative to the rest of the world). But, that ain’t happening with the jokers running the show in Congress.So, instead, CTJ points out:

If lawmakers cannot bring themselves to provide the most obvious solution, an increase in fuel taxes, a second best solution would be to raise revenue by closing corporate tax loopholes. It would be impossible for corporations to profit if the U.S. did not have the roads, bridges and other infrastructure that makes commerce possible, so it’s only reasonable that they pay some taxes to support the federal government and it’s reasonable for Congress to close loopholes allowing corporations to shirk that duty.Two proposals introduced in Congress recently would raise $19.5 billion for the Highway Trust Fund by closing the loopholes that allow corporations to “invert.” In an inversion, an American corporation reincorporates itself abroad and claims to be a foreign company that is mostly not subject to U.S. taxes even if it is still managed from the U.S. and conducts most of its business in the U.S. There are many more corporate tax loopholes that must be closed, and much more Congress needs to do to provide adequate infrastructure funding. But it certainly makes sense to start by stopping the worst corporate citizens from avoiding taxes.

The existing tax rules prevent an American corporation from simply reincorporating itself in a tax haven and declaring itself “foreign.” But a loophole allows inversions to take place when an American corporation merges with a smaller foreign corporation, even if the management and most of the business of the newly merged company stays in the U.S. In theory, the profits that any corporation (even a “foreign” corporation) earns in the U.S. are taxable in the U.S., but inversions are often followed by earnings stripping, which makes U.S. profits appear to be earned offshore where they won’t be taxed.[emphasis added]

As I wrote recently, Sen. Carl Levin has been trying to stop these “inversions.”Simple formula: holes in the road=corporate greed.

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$10.10-An Hour Minimum Wage Campaign Is A REALLY Bad Idea http://www.workinglife.org/2014/07/02/10-10-an-hour-minimum-wage-campaign-is-a-really-bad-idea/?utm_source=rss&utm_medium=rss&utm_campaign=10-10-an-hour-minimum-wage-campaign-is-a-really-bad-idea http://www.workinglife.org/2014/07/02/10-10-an-hour-minimum-wage-campaign-is-a-really-bad-idea/#comments Wed, 02 Jul 2014 14:13:15 +0000 http://www.workinglife.org/?p=9355 The campaign for a $10.10 federal minimum wage, championed by the president, Democrats in Congress and a whole raft of “liberal/progressive” organizations, is a very bad idea.

To be clear, I’m not arguing it’s too ambitious. The opposite: what we need is a campaign, now, today, for a minimum wage of $20-an-hour. Anything less is a failure to confront poverty in America and a bankrupt economic system.

$10.10-an-hour will not allow people to make a fair living, or challenge the basic, “We-make-profits-thanks-to-poverty” system that underpins today’s real world economy.

Anything short of $20-a-hour is a capitulation to the most narrow politics, particularly on the part of so-called “liberals/progressives” who are, unintentionally, locking into place deep poverty in America and ratifying the basic principle of the so-called “free market”.

And $20-an-hour actually relates to real life after you look at a very complicated idea: simple math.

The Math:

In the past 45 years, productivity has more than doubled. Productivity is a measure of how much value workers add per some unit, usually hours of time worked. In shorthand, it typically means people are working harder than ever and making more stuff faster (a small bit of that is due to technology) and, thus, cheaper (whether this fast rise in productivity is good for the human soul or the planet is a very important topic for another time).

In the old days, (say, the really “ancient history” of the early1970s) productivity translated into wage gains. If the minimum wage today reflected the cumulative productivity increases, computed from four decades ago to 2014, the minimum wage should be $18.30 today and close to $19-an-hour by 2016 when the proposed $10.10-an-hour would kick in, if it became law.

That’s pretty simple math. Grossly, and somewhat imperfectly speaking, the demand for $10.10-an-hour is a demand that would place the minimum wage a shade under half of what it should be if corporations actually paid for workers’ value-producing labor—as opposed to robbing them of their value-producing labor.

Some more basic math: at $10.10 per hour, for a 40-hour-a-week, a full-time worker laboring 52 weeks a year would gross $21,008, with no pension, and no vacation (for the moment, put aside the reality that minimum wage workers often can’t get full-time work).

That would put a worker just above the official poverty line for a family of three, which in 2014, is set at $19,790 (the numbers are published in the Federal Register and are based on the Census Bureau’s official poverty thresholds.

In that world, you are a slave. To make $21,008, you get no time off. None. Zero.

Second, if you happen to live in a family of four or larger, tough luck—you still are in poverty, which, for a family of four, is defined as an income below $23,850.

Third, and really most important, the official poverty levels are too optimistic because they are set using calculations that do not reflect what it really costs to make it day-to-day, week-to-week. I, and many others, have raised for a very long time the issue of the serious shortcomings in using the CPI and Gross Domestic Product as a measure of economic well-being (in short, a lot of stuff can be made, the economy can “expand” and prices can go up…and the people can actually be far worse off…here is one post). The official poverty level is set using the consumer price index, which rose 1.5 percent for the time period used to come up with the 2014 figures.

Raise your hand and dance a few cool steps if you think that on an annual wage of $21,008—whether you are single or in a family of two, three or four—you could meet your rent, pay utilities, pay for food, gas, cable, and a whole host of other expenses—not to mention, god forbid, save a few dollars for your kid’s education. The official price index does not reflect the real struggle to make ends meet in the wage-robbery economy of today.

So, we should be talking about indexing the minimum wage to productivity—how hard people work—as opposed to indexing it to inflation or the CPI (which the Democrats proposal does) because those are very dodgy numbers to use to judge how people actually live. This is an argument advanced for some time by Joel Rogers, a professor of sociology at the University of Wisconsin and one of the country’s foremost thinkers about work and the economy (and, as an aside, the original conceiver of the New Party, the first iteration of what would become the Working Families Party).

I’m guessing that the notion of tying the minimum wage to productivity will have a few worrywarts wringing their hands. They might say that if the minimum wage is indexed to productivity, then, eventually the minimum wage will catch up with the median wage.

Well, it’s worth remembering why that would happen. Wages have been flat for so long that the median wage has barely budged, rising just 0.2 percent annually between 1979 and 2013—while productivity rose almost 65 percent in that period overall.

Why? Well, we know why: employers have been more interested in pocketing profits for themselves (read: huge CEO pay and benefit packages) than giving workers raises. Those profits come directly from the big productivity gains thanks to the sweat and blood of workers (which is why my blood boils when I hear the bi-partisan praise for the small business “job creators” who power the economic engine seemingly on their own).

Oh, imagine the horror when the minimum wage catches up with the median wage. And if that is what worries people, wouldn’t it make more sense to seize the political agenda, and advocate for a higher minimum wage AND a boost in the median wage—partly by making it easier, not harder, to unionize?

The Politics:

So, that’s the math. Predictably, when you get to the politics, you hear the most unimaginative, uninspiring and lazy, “this is the best we can do. Nothing better will pass.” This view also comes along with another politically exciting view: we, (presumably, this means “Democrats”), will have a real difference to show people in the 2014 elections, with a message: “we care about workers, the Republicans do not.”

Really?

Politics point Number One. According to the Economic Policy Institute: “Raising the federal minimum wage to $10.10 by 2016 would return the federal minimum wage to roughly the same inflation-adjusted value it had in the late 1960s.” [emphasis is mine].

Don’t you love it? The great minds of politics, the people who are the warriors for the working “family” (“family” being another annoying capitulation to “messaging”), the movement builders, are promoting a message that boils down to: “Hey, you, minimum-wage worker, have we got a bargain for you. We care so much about how hard it is for you to live on the minimum wage, elect us so we can bring your pay right up into the modern age…into the 1960s.”

And leave it stuck there for a very long time. The bill indexes the minimum wage to inflation, so that as prices rise in subsequent years, the $10.10 would be, as EPI writes, “automatically be adjusted to preserve its real value.”

But, its real value—the real value of how hard people have sweated and labored—has already been eviscerated. Indexing the $10.10 to inflation (not productivity) is keeping its real value linked to a 1960s standard.

Politics point Number Two: you can almost guarantee that, if someone actually notices, say in five years, that millions of people on the minimum wage are still mired in poverty and argues for a new hike, a bi-partisan echo will follows: “We did the minimum wage already, go away.”

So, in the unlikely event the $10.10 passes, it basically dooms millions of people to a life of poverty. Forever. Though it does offer a great opening for a new, inspiring slogan for the 21st Century: “The (Just Kidding) War On Poverty (Lite Version)”, with perhaps even an opening for a theme song to debut on American Idol.

Politics point Number Three (most obvious): $10.10 isn’t going to pass the Congress. So, it really is just a political exercise and one lacking in any political courage whatsoever.

So, why not be bold?

What Should Be Done:

Twenty. Dollars. An. Hour.

Simple. Easy to remember. And consistent with math that accurately values workers’ contributions to the economy.

Think of it. T-shirts, buttons, bumper stickers, and social media memes everywhere that state simply: $20.

That’s all. $20.

The back of the T-shirt might say, “I Am A Human Being”. Eventually, “$20” would carry with it passion, energy, a vision and a simple idea: everyone should have decent-paying work.

And we should not settle for anything less because to do so is inhuman.

In the 1970s, women, and many men, wore a button that simply said “59¢” to signify what a woman’s pay was compared to a man earning a dollar. Eventually, that button, without needing a single word of explanation, carried with it a whole narrative and political demand.

Liberals/progressives (on this issue, it’s hard to see a difference) will react to $20-an-hour either by saying it’s “crazy” or “too ambitious” or “unrealistic” because the polling doesn’t support such a big hike and, of course, it will never pass.

But, the job of leaders and organizations shouldn’t always be simply to cater to where “the public” is today. Or where organizational funders—either foundations or rich people—happen to be.

Instead, we need to look ahead, try to move the country in a different direction, and, sometimes, dramatically. It’s easy to take for granted, for example, the now growing public majority opinion supporting same-sex marriage and legalization of marijuana but those two issues, very recently, did not command majority support. The shift came because a core of committed people did not accept, and were not trapped by, what public opinion happened to be. And, in their actions, they moved the country.

For sure, it’s hard work. Moving the public dramatically involves a lot more than clicking a petition link, doing a “fly-in, fly-out speech” or, even more seductive, getting an invitation to the White House. You have to actually knock on doors and put in serious shoe leather to move the public.

People in SeaTac proved that, in the face of an onslaught of millions of dollars, it could be done—the community waged the successful ballot initiative to hike the minimum wage of $15-an-hour, a level no one would have imagined possible before the campaign began.

The timidity of a $10.10-an-hour rate is even more perplexing given the topic: inequality and wage robbery.  Occupy Wall Street, strikes against low-paying fast food chains, the unease about the Wal-Martization of the economy, the public’s awareness of corporate greed, the huge gap between rich and poor, and the continued anger that bankers complicit in the financial crisis escaped punishment—all converge to create a rich terrain to be bold, and to dramatically change the conversation.  The hiking of the city minimum wage in Seattle to $15-an-hour and the SeaTac ballot initiative show that you can move the conversation.

And those efforts also bluntly underscore how meek $10.10 is in comparison and, actually, is counter-productive and damaging to tackling deep poverty in the country

At the end of the day, win or lose, we should care about dramatically altering the economy of poverty, not having some phony messaging gambit to influence a particular election cycle.

Twenty. Dollars. An. Hour.

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TPP Ban on Buy American Preferences http://www.workinglife.org/2014/07/01/tpp-ban-on-buy-american-preferences/?utm_source=rss&utm_medium=rss&utm_campaign=tpp-ban-on-buy-american-preferences http://www.workinglife.org/2014/07/01/tpp-ban-on-buy-american-preferences/#comments Tue, 01 Jul 2014 19:31:46 +0000 http://www.workinglife.org/?p=9353 Personally, I have to say I’m a bit queasy about the “Buy American” campaign. Seems to me that the problem is not, ultimately, that people don’t buy American products. It’s that wages are way too low elsewhere — which is what needs to be solved. But, for the record, the Trans Pacific Partnership will obliterate “Buy American”.

Per Public Citizen:

Under the TPP, the U.S. government would be required to grant all firms operating in any TPP country the same access as American firms to U.S. government procurement contracts over a set value. The TPP ban on preferential treatment for U.S. firms with respect to obtaining U.S. government contacts could result in the offshoring hundreds of millions in tax dollars now recycled into the U.S. economy under the Buy American procurement program, which started in 1933.

And here’s the table with the data.

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Is There Any Silver Lining In The SCOTUS Knifing of Public Unions? http://www.workinglife.org/2014/06/30/is-there-any-silver-lining-in-the-scotus-knifing-of-public-unions/?utm_source=rss&utm_medium=rss&utm_campaign=is-there-any-silver-lining-in-the-scotus-knifing-of-public-unions http://www.workinglife.org/2014/06/30/is-there-any-silver-lining-in-the-scotus-knifing-of-public-unions/#comments Mon, 30 Jun 2014 12:47:45 +0000 http://www.workinglife.org/?p=9346 It seems more likely than not that, in a short while, the Supreme Court will inflict a deep wound in public union organizing, and, ultimately, the power of organized labor in the workplace and in politics. But, just a small word on what silver lining could be found here–and I know my friends will perhaps violently disagree.

The case, for those who have not followed it, is called Harris v. Quinn. The legalistic explanation via SCOTUSblog:

Issue: (1) Whether a state may, consistent with the First and Fourteenth Amendments to the United States Constitution, compel personal care providers to accept and financially support a private organization as their exclusive representative to petition the state for greater reimbursements from its Medicaid programs; and (2) whether the lower court erred in holding that the claims of providers in the Home Based Support Services Program are not ripe for judicial review.

In English, a ruling for the Harris side–which is represented by the anti-union National Right To Work Committee–could, if it was a broad opinion, essentially say no one working in the public sector is obligated to pay union dues. Right now, every worker has to pay an “agency fee”, whether a union member or not, to pay for the representation that comes when a union, which has won recognition to bargain for state and local workers, does the work that ends up as a collective bargaining agreement. The idea seems simple: you can’t be a “free rider”, getting for free a benefit that others work hard to achieve. It has a long tradition in law going back four decades.

There’s a pretty good summary at SCOTUSblog of the case made in the oral arguments before the court.

So, let’s say the ruling is as bad as feared. It invalidates the agency shop, and eviscerates public unions, at the very least because those unions will lose millions of dollars in income to support collective bargaining and organizing. By extension, it will severely crimp union political power because the drop in financial clout will impinge on the ability to deploy people and write checks, which, in many ways, is the reason this case is the wet-dream for the right wing.

Here is what I would see as a silver lining. If you walk up to many public sector workers in any city and ask them, “what union do you belong to?”, many don’t know. Teachers probably are the most engaged, and, at least in New York City, I’d guess most transport workers in the subway and bus system know they belong to the Transport Workers Union.

But, AFSCME…not so much. There is only a vague understanding of who the union is, and what it does.

That’s been an endemic problem for a very long time. Union members don’t have the same connection to the actual institution that represents them–people don’t see the union hall as a place to gather–accept during contract talks or a strike. Mostly, union reps deal with members only when there is a grievance, conflict–not in the course of daily life.

If the SCOTUS decision obliterates the agency fee, it will mean unions have to go out and sign up a lot more people. The case will have to be made why the union matters–and why people should pay dues.

It’s hard work. And, in an environment of less income, the union will have to figure out how to underwrite a ramped-up effort to touch people. No way to minimize that challenge.

But, at the end of the day, if labor wants to live the rhetoric of changing society and creating a movement that is broad-based–down in the streets, on every block, in every community–this *might* force unions to do some work that was not always pursued.

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The World Cup’s Dark Side: 37 Million People Left In Poverty http://www.workinglife.org/2014/06/27/the-world-cups-dark-side-37-million-people-left-in-poverty/?utm_source=rss&utm_medium=rss&utm_campaign=the-world-cups-dark-side-37-million-people-left-in-poverty http://www.workinglife.org/2014/06/27/the-world-cups-dark-side-37-million-people-left-in-poverty/#comments Fri, 27 Jun 2014 18:14:39 +0000 http://www.workinglife.org/?p=9344 Behind all the hoopla and fervor surrounding the World Cup, an inconvenient fact is forgotten: Brazil handed over a huge amount of money in tax breaks to the Fédération Internationale de Football Association (FIFA), much of it flowing into the pockets of huge multi-national corporations–money that roughly calculated would have lifted 37 million people out of poverty.

This is not to be forgotten, via Citizens For Tax Justice:

According to InspirAction, Christian Aid’s Spanish affiliate, Brazil will give up $530 million in tax revenue to benefit the World Cup’s corporate sponsors such as McDonalds, Budweiser and Johnson & Johnson. The country is allowing corporations to import an array of products from food, medical supplies and promotional materials tax-free, while also exempting seminars, workshops and other cultural activities from taxes.InspirAction and other advocates have said the millions saved by FIFA and its sponsors through these breaks should be used to benefit the poor, not corporations and their shareholders. Foregone World Cup tax revenue could help lift 37 million people out of extreme poverty and help improve basic services. Instead, FIFA, a supposed non-profit organization, is reporting historic profits while leaving the host country to foot the bill.[emphasis added]

The economic loss isn’t unusual in World Cup history:

In 2010, South Africa hosted the World Cup. FIFA reported that it received $3.8 billion tax-free in revenue and that year was “the most profitable in FIFA history”. However, South Africa had a $3.1 billion net loss from hosting the games. The same year, the number of tourists in South Africa dropped by half compared to previous years.

The issue of the peoples’ money going to underwrite sporting events and the building of stadiums has been out there, most regularly questioned by the good people at the Institute for Local Self-Reliance (see this, as an example)I speak as a big sports fan BUT totally opposed to public money going to subsidize the profits and egos of billionaires and big corporations.

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“A case about fraud and deceit by one of the world’s largest banks”: The Barclays Crooks http://www.workinglife.org/2014/06/26/a-case-about-fraud-and-deceit-by-one-of-the-worlds-largest-banks-the-barclays-crooks/?utm_source=rss&utm_medium=rss&utm_campaign=a-case-about-fraud-and-deceit-by-one-of-the-worlds-largest-banks-the-barclays-crooks http://www.workinglife.org/2014/06/26/a-case-about-fraud-and-deceit-by-one-of-the-worlds-largest-banks-the-barclays-crooks/#comments Thu, 26 Jun 2014 16:59:01 +0000 http://www.workinglife.org/?p=9338 Yesterday, I posted a quick story about the lawsuit filed by NY Attorney General Eric Schneiderman against Barclays alleging. I’ve had a chance to read again and more carefully the complete complaint and there’s a bit more to say about the importance of this suit.

Three big points this case makes:

1. It shows why bankers needed to be jailed in the post-wreckage days of the mortgage meltdown.

2. At a time when people are calling for more transparency in the financial industry, the trend is the opposite: towards less transparency and more lying.

3. The next crisis is just around the corner partly because there is virtually no oversight from the watchdogs–with a few exceptions like Schneiderman (who not only is thankfully my attorney general but, before that, was my state senator–his office was around the corner from me and, when I’d see him in the basement office, I used to toss pebbles at his window, which annoyed the crap out of him).

It shows why bankers needed to be jailed in the post-wreckage days of the mortgage meltdown.

I understand the argument some people make that cases were largely civil cases, not criminal cases, against the misdeeds–but that was partly because of choices prosecutors and the White House and others made not to file criminal cases, using RICO for example, partly for political reasons and partly because those cases can take longer.

You need to remember that Barclays already paid out a fine because it tried to manipulate interest rates in the global LIBOR scandal in which banks were found to be fixing benchmark interest rates. I said, then, the message to these guys is simple: if you do this again, you will not lose your freedom–meaning, go to jail — and you will not even lose your jobs. Indeed, we will help raise your level of mirth, comfort and happiness because, while you sock away more pay and benefits to buy your 3rd or 4th mansion, the SHAREHOLDERS and customers will pay for your misdeeds.

And most, if not all, those cases, never required that the CEO at the top–even if he wasn’t going to go to jail–be forced out of his position, along with the rest of the senior management. That to me was always astonishing.

And, boom, here we go again. It’s deeply felt in the culture. As The Wall Street Journal points out today:

Barclays CEO Antony Jenkins (pictured), who took the helm in August 2012, has been able to pin blame for previous scandals on his predecessors. Not this time. The New York suit alleges that Barclays was still misleading customers about its dark pool well into Mr. Jenkins’s tenure – possibly as recently as spring 2014.

At a time when people are calling for more transparency in the financial industry, the trend is the opposite: towards less transparency and more lying.Reading the complaint brings to mind those kinds of conversations inside these financial institutions that has become all too common: the greed, the arrogance, the lack of ethical behavior.

To wit, from the complaint:

A Vice President responsible for selling the dark pool to clients disputed that explanation, replying to the group that “[m]y point when selling that picture was always:‘here is a snapshot of the participants in[Barclays’ dark pool]as anaccurate view of our pool.’ I was never using it like an ‘illustration’ ” of Barclays capability to monitor the pool. “I had always liked the idea that we were being transparent, but happy to take liberties if we can all agree” (emphasis added)[emphasis in the original]

And, describing a meeting with an unnamed client (referred to as “Institutional Investor”) during which findings would be shown showing that, contrary to Barclays’ claims to its clients, “all client orders were routed to Barclays’ dark pool first”:

In preparation for a meeting with the Institutional Investor to explain these
findings, two senior Directors prepared a PowerPoint presentation that included the results of the trading analysis. Two days before the scheduled meeting, one of those Directors was called into a meeting with senior leadership in the Equities Electronic Trading division, who instructed him not to disclose the findings to the client.According to this Director, “[t]here was no suggestion 24 at that meeting, or at any other point, that the analysis was wrong,” merely that it should not be shared with the client because it reflected poorly on Barclays. Despite the pressure from senior leadership, this Director declined to withhold the findings from Institutional Investor. The next day, and
prior to the scheduled meeting with the Institutional Investor, this Director was fired.

There is much more detail but, basically, there was a pattern of lying and hiding facts–a feature of the culture at Barclays.And, to that bigger point, we all know that one of the real corrosive factors in the mortgage collapse and the broader financial crisis is that banks and trading firms were not transparent, lied, manipulated and mislead investors, regulators and the public.

And it is happening again.

The next crisis is just around the corner partly because there is virtually no oversight from the watchdogs.

And, thus, the final point is: the house is ready to be burned down again. It was never really rebuilt–millions are still out of work, pensions remain devastated and the economy is anemic and sick. But, the boys in the financial industry…it’s as if it never happened.

And they are lighting the matches to burn the house down again.

And, generally speaking, the regulators are way behind, lacking information because the banks are lying and hiding the true nature of “dark pools” and other instruments of financial manipulation, and because the regulators just don’t have the urgency (and, in fairness, the resources, staff-wise and intellectually) needed to take these guys down before it implodes again.

At the end of the complaint, there is one thing worth noting. Schneiderman, under the second cause of action charging “Persistent Fraud and Illegality” invokes the Martin Act. It’s a state law with broad powers for the executive. In this analysis of the Martin Act, here’s a key sentence:

Specific intent to defraud is also not required to support a felony conviction under the Martin Act.[emphasis added]

Thuse, there could eventually be criminal charges. But, at least, as the suit demands, on the relief side “Granting such other relief as may be just and proper”, any settlement, if it is civil, should include the removal of the bank’s top management.Until these guys pays for this criminality with their jobs–if not their freedom–and forfeit the huge pay and benefits they pocket at the expense of the public, nothing will change.

At least, one could outcome, tiny for now, can be rung up [WSJ pay wall]:

Major brokers are shutting down their connections to a dark pool run by Barclays following accusations of fraud against the bank in a lawsuit filed Wednesday by the New York Attorney General, according to people familiar with the matter.Broker-dealers including Deutsche Bank, Royal Bank of Canada  and ITG have removed connections to the dark pool, called Barclays LX, from their routing systems, the people said. In some cases, the decision was a precautionary measure after the lawsuit was filed and in others it was the result of requests from large institutional investors, they said.

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Schneiderman Sues Barclays For FRAUD http://www.workinglife.org/2014/06/25/schneiderman-sues-barclays-for-fraud/?utm_source=rss&utm_medium=rss&utm_campaign=schneiderman-sues-barclays-for-fraud http://www.workinglife.org/2014/06/25/schneiderman-sues-barclays-for-fraud/#comments Wed, 25 Jun 2014 20:48:44 +0000 http://www.workinglife.org/?p=9336 This won’t put any of the bankers in jail–a place some of them still belong–because its only a civil suit. But, glad to see this from New York State Attorney General Eric Schneiderman: he’s suing Barclays for fraud.

He just announced this:

The top law enforcer in New York State, Eric T. Schneiderman, announced on Wednesday that he had filed civil fraud charges against Barclays over its private stock trading platform, contending that it favored high frequency traders over other investors.Mr. Schneiderman, the New York State attorney general, is accusing Barclays of falsely representing the concentration of high frequency traders in its private trading platform, known as a dark pool. The attorney general said that the British bank falsified marketing materials and misrepresented a service that purported to protect investors from predatory trading behavior.

From Wall Street Journal web story:

Barclays’ dark pool, LX, was the second largest alternative trading system in the U.S. for the week of June 2, according to data from the Financial Industry Regulatory Authority. LX saw a total of more than 282 million shares traded during the period.The suit is expected to allege that Barclays’ dark pool favors so-called high-frequency traders but has misrepresented the degree to which such traders use the venue, according to a person familiar with the matter. It also will claim that the bank has falsely portrayed how it routes clients’ orders, the person added.

Quick note on “dark pools”, from this longer Wall Street Journal piece[pay wall]:

Introduced in the early 2000s, there are roughly 40 dark pools operating today. These secretive venues handle 13% of all trades. Not to be left out, dark pools overseas are rising. Volume in European dark pools reached a record $10 trillion last year, or about 9.5% of all trades.Unlike the old days when a broker had to make a large order public by taking it to the exchange floor, dark pools offer anonymity. The buyer or seller shows his or her hand to a select group of similarly secretive participants. They could be brokerages, pensions, mutual funds or hedge funds.

This week, two major operators of dark pool trading venues, Goldman Sachs Group Inc. and Credit Suisse Group opened a door into how their respective markets work. They published documents outlining how bids and offers are posted, trades executed and when those trades are made public.

Dark-pool operators are getting defensive and opening up because they’re under scrutiny. Critics such as Michael Lewis, author of “Flash Boys: A Wall Street Revolt,” say that dark pools are used by high-speed traders to gain a speed advantage to essentially front run the public markets. The Financial Industry Regulatory Authority, the brokerage industry’s self-regulatory body, is investigating dark pools and how they might enable unfair trading

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Thank You, Citibank-Goldman Sachs-Crooks: You’ve Moved The Poverty Conversation http://www.workinglife.org/2014/06/20/thank-you-citibank-goldman-sachs-crooks-youve-moved-the-poverty-conversation/?utm_source=rss&utm_medium=rss&utm_campaign=thank-you-citibank-goldman-sachs-crooks-youve-moved-the-poverty-conversation http://www.workinglife.org/2014/06/20/thank-you-citibank-goldman-sachs-crooks-youve-moved-the-poverty-conversation/#comments Fri, 20 Jun 2014 17:56:00 +0000 http://www.workinglife.org/?p=9329 I’ve been looking long and hard, trying to find something, just one thing, to say positive about the crooks on Wall Street and in the banking industry. Maybe it’s the Summer Solstice–but, eureka! Those guys have helped moved the poverty conversation in the right direction.

Here’s a new poll (Wall Street Journal paywall):

Americans’ attitudes toward poverty have shifted dramatically over the last two decades.In 1995, Americans were twice as likely to believe poverty resulted from people not doing enough to help themselves out than to attribute it to external forces, according to a Wall Street Journal/NBC News poll conducted in April that year. That helps explain why the then-new Republican majority in the House made welfare reform a top priority.

Fast forward 19 years, and those views have undergone a significant transformation. The latest Journal poll of 1,000 adults, conducted June 11-15, found Americans are now as likely to blame poverty on circumstances beyond people’s control than they are to believe the poor aren’t doing enough to dig themselves out of it, 46% to 44%.[emphasis added]

With a big huge caveat that this is one poll and, god knows, polls shift back and forth depending on what the rhetoric is (for example, if there was all of a sudden a president who went soft on bankers and fundraised from Wall Street…), I think this is likely–possibly–a direct consequence of the financial crisis and the growing divide between rich and poor.

Like this:

While the richest Americans have generally recouped their losses from the recession and gained considerable new wealth during the recovery, the situation is bleaker for the poor and for low-wage workers than it was in 2007.As work dried up and wages stagnated, tens of millions of Americans took jobs with lower pay and fewer hours, many of them turning to the federal government for additional support to help make ends meet.

The number of people receiving food stamps under the Supplemental Nutrition Assistance Program soared to 47.6 million in 2013 from 26.3 million in 2007. Incomes for the typical middle-income family have slipped, and the nation’s poverty rate remains above its prerecession level.[emphasis added]

All of a sudden a lot of people realized, well, hell, it is the damn corrupt system, the so-called “free market”, that robs people and drives them into poverty, not because people don’t want to work or earn a decent living. Clearly, this is a culmination of a trend that has taken place over 2-3 decades (longer…), robbing people of fair wage increases and giving the country the highest poverty rate–46.2 million people in 2012–since that data began to be collected.Something to ponder.

So, thank you, Goldman Sachs, Citibank (especially, Bill Clinton’s best bud, Robert Rubin) and the rest of you guys: you may, through your greed and avarice, given a solid footing on which to cement a better broad understanding of poverty.

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The Internet Doesn’t Need Tax Breaks http://www.workinglife.org/2014/06/18/the-internet-doesnt-need-tax-breaks/?utm_source=rss&utm_medium=rss&utm_campaign=the-internet-doesnt-need-tax-breaks http://www.workinglife.org/2014/06/18/the-internet-doesnt-need-tax-breaks/#comments Wed, 18 Jun 2014 19:41:40 +0000 http://www.workinglife.org/?p=9333 Every company and every industry runs around yelling, like a little child, “I’m special” and, so, don’t tax me. And Congress just falls all over itself to pass one dumb tax break after another. Here’s the dumb one regarding the Internet.

It’s nothing new: in 1998, Congress passed the “Internet Tax Freedom Act” which basically said the Internet was a new thing so let’s exempt it from sales tax. It was dumb, then, and it’s even dumber now–the dopes in Congress want to extend this tax break again.

As Citizens for Tax Justice points out, bad idea:

If the “infant industry” argument was highly questionable in 1998, it’s utterly absurd now. From books to airline tickets, virtually everything consumers purchased in “brick and mortar” stores in 1998 is now available online. Internet access, while not yet omnipresent is widely accessible. Many traditional retailers are going under due to competition from companies such as Amazon.com. Sixteen years later, the infant of 1998 now has the car keys to the American economy.

Nonetheless, Sens. John Thune and Ron Wyden have cosponsored the “Internet Tax Freedom Forever” act, which would turn the moratorium into a permanent ban on Internet access taxes. A glowing Wyden press release claims the bill will “giv[e] online innovators and entrepreneurs the stability they need to grow their businesses.”

While other tax bills have deadlocked Congress, the Internet Tax Freedom Forever act has garnered 50 co-sponsors in the U.S. Senate. The most likely reason is Congress is playing with other people’s money. The fiscal impact of ITFA in 2014, as in 1998, falls entirely on state and local governments. So Wyden and Thune can breezily pre-empt an entire economic sector from tax without hurting the federal budget’s bottom line. But for state and local governments, the bill would represent a real hit on their ability to balance budgets in the long term.

No kidding. A hit on budgets, money in the pockets of the king’s of the economy.

 

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Giving Away The Store http://www.workinglife.org/2014/06/17/giving-away-the-store/?utm_source=rss&utm_medium=rss&utm_campaign=giving-away-the-store http://www.workinglife.org/2014/06/17/giving-away-the-store/#comments Tue, 17 Jun 2014 13:56:11 +0000 http://www.workinglife.org/?p=9327 There really has been a war going on–one of those wars that doesn’t get written about much. It’s the war between the states…oh, the other one–to give away the economic store to businesses without much thinking about the consequences.

I’ve written a lot about this over the years (here is one from 2006). I was reminded of the issue via a piece today in The Wall Street Journal entitled “Companies Cash In on Tax-Credit Arms Race“:

U.S. states are digging deeper into their pockets, offering businesses lucrative tax credits for everything from brewing beer to renovating buildings, in an effort to spur economic growth and create jobs.

Companies are finding the new state tax credits especially alluring because many of their biggest federal tax breaks expired at the end of last year. What’s more, an increasing number of the state credits are refundable or transferable, meaning they can guarantee a company cash regardless of the size of its state tax bill.

Some 46 states now offer such tax credits through more than 200 different programs, compared with only a handful of states a decade ago, and exchanges are popping up to help businesses trade them.

Unfortunately, the piece is pretty weak in criticism, leaving a sort of bizarre, if predictable, alternative:

Still, some critics worry the states may be spending too much on tax credits. Transferable credits decrease tax revenues, while refundable credits can take money directly out of state coffers. And, because the credits can be sold, they may wind up in the hands of businesses that don’t need government help.

Missouri, for example, handed out a record $629 million in tax credits in 2012, about 10 times as much as allocated for public-safety spending last year. An audit of its three largest tax credits in March found the programs were inefficient, sometimes channeling only about half the funds to desired projects.

“There’s a raging debate in the business community as to whether we shouldn’t give any tax credits and just lower the [corporate tax] rate,” said Missouri’s state auditor Tom Schweich. Mr. Schweich says more of the state’s credits should be refundable to make them more attractive and effective.

Counter-posing tax credits and lowering the corporate tax rate sort of misses the point: most of these businesses are paying taxes that are too low to support a viable economy. Draining state coffers, either via tax credits or lower taxes, means, for example, money can’t be found to pave roads and fix infrastructure–things businesses need to be competitive.

 

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