Sunday, February 8, 2015

News & Notes: It's the Economy, Stupid.

There were a couple of really interesting articles in this morning's Times.  Hope your weekend is going well.

Stream of Foreign Wealth Flows to Elite New York Real Estate (NY Times)
"Behind the dark glass towers of the Time Warner Center looming over Central Park, a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names. By piercing the secrecy of more than 200 shell companies, The New York Times documented a decade of ownership in this iconic Manhattan way station for global money transforming the city’s real estate market.

Many of the owners represent a cross-section of American wealth: chief executives and celebrities, doctors and lawyers, technology entrepreneurs and Wall Street traders.

But The Times also found a growing proportion of wealthy foreigners, at least 16 of whom have been the subject of government inquiries around the world, either personally or as heads of companies. The cases range from housing and environmental violations to financial fraud. Four owners have been arrested, and another four have been the subject of fines or penalties for illegal activities."

They like the money, so nobody asks questions.  That's fine.  Certainly it's brought its share of benefits to New York, even as it makes living in the City harder for everybody else.  It's unfortunate if it brings with it an inherent willingness to ignore corruption, but I think that may well have been present beforehand.

Economic Plan Is a Quandary for Hillary Clinton’s Campaign (NY Times)
"With advice from more than 200 policy experts, Hillary Rodham Clinton is trying to answer what has emerged as a central question of her early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy...

Behind many of these proposals is a philosophy, endorsed by Mrs. Clinton’s closest economic advisers and often referred to as inclusive capitalism, that contends that a majority of Americans do not want to punish the rich; they just want to feel that they, too, have a chance to succeed. It also calls for corporations to put less emphasis on short-term profits that increase shareholder value and to invest more in employees, the environment and communities...

The debate is extending beyond the Democratic Party as Republicans wade into the issues. “If Americans are working harder than ever, earning less than they once did, our government and our leaders should step up, offer a plan, fix what’s wrong,” former Gov. Jeb Bush of Florida said in a speech in Detroit last week as he laid the groundwork for his potential 2016 candidacy."

Clinton can hardly afford to punish the rich.  With the Koch brothers having announced the intention of spending nearly a billion dollars on the coming campaign, Mrs. Clinton needs as many of her own rich donors as she can find.  She knows it and has been giving $200K/plate dinner speeches because of it.  Whatever happens therefore won't be as simple as tax reform, whoever wins next year.


This does not strike me as news.


I hope we can do a little better than that.


It's going to take time for real, quality jobs to come back.  We went through a very long period of outsourcing that addicted a certain percentage of the American economy to near slave-labor level wages.

For example, you can buy a pair of pants for $10 because they were made overseas in a factory that pays textile workers peanuts.  If you want to make pants in the US, you must therefore offer them in such a way that they can compete with extremely cheap pants made elsewhere.  This is true in many sectors in the economy.  Saying that wages need to rise is like saying that prices need to rise.  It's a tough sell.

With that said, we may--finally--be entering a stretch where employment levels will actually stress employers, forcing them to pay a little more to retain their most valuable workers.  For example, Ford recently raised wages by $19K for their entry-level staff.  Clearly they are tired of turnover at the bottom of their roster.  This is the kind of thing that America needs to grow the parts of the economy that are not owned and controlled by the Upper Class.  However, its costs are liable to trickle back up to consumers.


Let's stop there.  Nowhere to go but up, right?

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