Saturday, September 19, 2015

The inverse of Scott Walker's statement about collective bargaining

Scott Walker, governor of Wisconsin and presidential wannabe, has made an interesting statement on collective bargaining:
Walker told reporters that collective bargaining is "not a right, but is an expensive entitlement" and cited the cost savings in Wisconsin as a benefit to all taxpayers in the state.
That's the quote from CBS News in their article on the public debate on collective bargaining between himself and President Obama. It turns out that most of Walker's notoriety as a candidate comes from his war on collective bargaining and unions in general. He is most famous for the union-busting bill known as Act 10. Act 10 was passed in response to a large state government budget deficit in 2011.

The most significant feature of the law affects who is required to pay dues. Employers would be prohibited from collecting union dues and members of collective bargaining units would not be required to pay dues. This is the "right-to-work" clause that is killing unions in Wisconsin. 

Economist Dean Baker has provide thoughtful analysis of that provision here. In summary, the law allows workers who do not contribute dues to the union to benefit from union contracts. This is, in essence, a violation of the right to collective bargaining. It is, for all intensive purposes, government intervention in the market in favor of business. It is not the free market at work.

If Scott Walker truly believes that collective bargaining is not a right, then the inverse must be true, too. What is the inverse? The inverse of his statement, that collective bargaining is not a right is not what you'd expect. 

An employer, acting as single entity, makes contracts with many employees. He is, in a sense, engaged in collective bargaining. Like a union contract, it is a one to many relationship. A union can have a single contract with many employers. Likewise, a single employer can have a contract with many employees.

Therefore, if collective bargaining is not a right for employees, it is not a right for employers, either. In Scott Walker's world, if employees don't have a right to collective bargaining. Conveniently, he forgets to mention that employers do not have the right to hire many employees to do all the tasks needed to run the business if collective bargaining is not a right. You simply can't have one without the other.

Scott Walker likes to talk about free enterprise and free markets, but he's not willing to admit that Act 10 is nothing more than government intervention in the market on behalf of business.

Monday, September 07, 2015

The stock market doesn't predict the economy

It is interesting to see so much concern in the news over recent losses in measures of the securities markets like the Dow Jones Industrial Average. Since the high of more than 18,000 in May of this year, the Dow has fallen to just a tad over 16,000 today. That's about an 11% drop over 4 months and most of it appears to be over concerns that Chinese stocks are having trouble supporting their bubble prices. Now that the bubble has been partially deflated, most markets are breathing easier.

What I also find interesting is that the day-to-day fluctuations of the securities markets, particularly with stocks, offers the average person almost no clear indicator of how the personal economy is doing. In May of this year the Dow reached an all time high. Who prospered from this event? Was it the average worker among workers? Not really. Most people who do own stocks, have some money parked in an IRA and if they're lucky, they're not going sideways. Their portfolio goes up and down day to day, but the realization of true prosperity is rare and fleeting at best in the IRA. The simple fact is that most of us are not expert investors. Only a tiny fraction of us are high speed traders.

It is also worth noting that the vast majority of stocks are owned by the 1%. What do I mean by the "vast majority"? It's hard to find recent data on stock ownership, but the most recent data I found contain these very interesting nuggets:
The richest 5% of U.S. households owned about 2/3rds of all stock in 2010.
The bottom 60% of U.S. households own a mere 2.5% of outstanding shares of stock.
That data is probably about 5 years old, but given that wages have stagnated since then (while CEO compensation continues to rise), I doubt the numbers have changed even a smidgen. Suffice it to say that for at least 60% of the US population, how the market moves doesn't really affect our day-to-day economics.

The takeaway is that China can no longer support the enormous trade surpluses and 6-8% growth it has enjoyed for so long. As trade slows, the balance of accounts will straighten out between us and them. The world economy will slow. Then it will be up to governments around the world, including the US government, to increase demand by spending money.

America doesn't have to accept a slower economy from China or the stock market. Capital hates labor so equity owners won't hire to grow the economy. That means governments must spend money so that the people they serve may prosper or even maintain their standard of living. There are thousands of infrastructure projects we could pursue all over our country. Bridges are getting older, roads are deteriorating and there is fiber to lay for the networks of the future, if not today. Yet, if we watch the financial networks like CNBC, Fox Business, and Bloomberg, we are led to believe that our fortunes are tied to the securities markets when most of us don't even own enough securities to influence corporate governance in the companies we own stock in.

If we're lucky, we have jobs that pay our bills. If we're really lucky, we enjoy the jobs we have and can still pay our bills. But the demand for those jobs will come from government spending if the wealthy are busy parking their money offshore, waiting for a time to spend that money or just trying to turn a bottom line number into happiness.

In short, the ups and downs of the stock market are just a fantasy for most of us. If there is a steep decline in the markets, it won't have much of bearing on our personal fortunes if at all. Even Forbes will tell you that the stock markets are lousy predictors of the economy. A better predictor of the economy is who is in the White House and Congress. Just ask Forbes. 80 years of analysis has shown that when Democrats are in power, the economy grows.

Shouldn't that be news somewhere? If not, where is the liberal media bias? Isn't it interesting that economy has more to do with our decisions than something else around the world that "just happens"?

Saturday, September 05, 2015

When homicide is treated as a disease

When homicide is reported in the news very little is offered in the way of motive or analysis. All we really hear is what happened after the fact and we are left with the impression that there is little that can be done to prevent it or even predict it. We are left with the impression that people are bad and that the best we can hope for is to stay out of the way. Get a good job, live in a good neighborhood and lay low. We just need to be tough on crime and eventually, the problem will go away.

According to this article on the Tech Insider website, there might be a better solution to dealing with violent crime than what we've been doing so far with deterrence. Tech Insider's article is a story of how scientists and police considered and implemented the idea of treating violent crime as a disease. In the city of Richmond California, researchers found that from an epidemiological perspective, violent crime tends to spread like a disease and that it should be treated as such.

Their results? In the city of Richmond, California, the homicide rate dropped 76% in 7 years. That is a tremendous improvement over past results and proves that when we think beyond the box and become willing to try something different, we can get better results.

We find that the story is actually several layers deep when we click on the links to see the supporting references. The police department used statistics, field reporting, outreach and analysis to determine who would be at risk to be a victim of or a perpetrator of violent crime - they used epidemiology to follow the path of this disease. Then they developed a plan for each situation where they thought someone was about to pop or be popped.

This concept reminds me of the movie, Minority Report. Though our modern day team in Richmond are not quite precogs, in this story we have something rather similar to the concept in the movie. Minority Report is one of my favorite Tom Cruise movies, featuring a very interesting conception of computer user interfaces, transportation ideas and display technologies. Through a combination of databases and "precogs" humans with the ability to sense what people are thinking, Tom Cruise is the director of a division with a mission to predict violent crime. Likewise, the team in Richmond is using science to follow the trail of homicide and head it off to prevent homicides from spreading, and it works.

Most significantly, the Richmond police found that by providing alternative outlets and responses to demands for retribution or respect, they were able to divert the potential energy for violent behavior to something more productive. The program is officially called, Richmond (CA) Comprehensive Homicide Initiative. Here is the one component of their program that stands out the most:
To address the rising number of homicides in the city, the Richmond Police Department began to rethink its strategy toward homicide and violent crime and in the early 1990s started to shift toward a problem-oriented policing philosophy.
In a nutshell, they assist people with solving the problem of homicide. They work with the community with just one goal in mind: reduce the number of homicides in their community. They are helping people to solve problems proactively rather than to be focused on finding the bad guys and putting them in jail before something bad happens. They are treating the disease with problem solving skills.

People break down, act out or commit crimes when they lack the skills to respond to the demands of their environment. The local government of Richmond is working with the people they serve to give them the skills they need to solve the problem of homicide together, to treat the disease of homicide together. I believe that if the skills required to do the right thing are there, the incentives will be there, too. Richmond is proof of that.

I note also that it's not just the community learning new problem solving skills with help from the government that serves them. The members of the police force in Richmond learned new skills that resulted in no fatal police shootings since 2007. That is a remarkable feat considering the current climate in most big American cities. It's an interesting parallel trend to the homicide rate in the same city. Happily, we find that the police department in that fair city has adopted "community policing", where instead of looking for someone to arrest, they are building relationships with the community of people they serve.

Law enforcement in Richmond, California is an example that I hold out as hope for humanity, that we can finally see that we are all one, and that the problems we face during our time on earth are here for us to solve, not to fight over. For as the Beatles once said (in so many words), "Life is very short, and there's no time for fussing and fighting my friend. We can work it out."

Thursday, September 03, 2015

The quandary that is Donald J. Trump

Racist, misogynist, plutocrat, Democrat. Oh, wait. Did I say, "Democrat"? Strike that. Those three remaining words are what come to mind when I want to summarize all that I know about Trump.

After watching one of the debates and reading many articles on Trump, it seems to me that Trump is a reflection of the party he represents. This is what we'd expect. The person who most closely represents the views of his constituents in the party should win the nomination.

Yet, there are some detractors who say that if Trump were to win the nomination, he'd destroy the Republican Party. The first that comes to mind is Lindsey Graham:
"If Donald Trump is the nominee, that’s the end of the Republican Party."
Graham is entitled to his amusing assessment of the state of the GOP, but I think that his claim might be exaggerated. It would seem that Graham would much prefer to hide attributes about the GOP rather than see Trump win the nomination. Graham probably would rather not see Trump become the new face of the GOP, as a racist, misogynist plutocrat.

Do a search for "Trump kkk" on any search engine, and you'll see that former KKK Grand Wizard David Duke endorses Trump for president. Of course, Trump promptly rejected the endorsement and disowned any potential racism to be found in his immigration policy proposals. Who would bother to notice that on the same day, Trump ejected a respected Latino reporter from the Univision Latino broadcasting network for asking a question, you know, while doing his job? Racists appear to be flocking to Trump in support of his style of leadership.

Never mind that Trump affiliated companies have sought to import more than 1,100 immigrants to work here on temporary visas in recent years. And don't forget his campaign promises on jobs and immigration:
“I will be the greatest jobs president that God ever created,” he said during his campaign launch speech on June 16. “I will bring back our jobs from China, Mexico and other places. I will bring back jobs and our money.”
Perhaps that is what Graham would rather not reveal about the Republican Party. Tough on immigration until it comes to filling American jobs with immigrants willing to work for less. Much less.

During the debate co-hosted by Megan Kelly, Trump was at times harsh and difficult with her while answering questions for the debate. The exchange between them has gone viral on the internet and that same exchange seems to have bumped up the polling for Trump. It's also worth noting that during that debate, Megan Kelly asked Trump a direct question: When did you actually become a Republican?

While many have noted that Trump is at least being up front about his sexism, few have noted that the rest of the field have worked hard to enact their vision of male superiority as law. So to Graham, it's OK to enact that vision as law, but we shouldn't be talking about that so openly in nationally televised debates.

Then there is Trump's murky loyalties. Up until recently, he has given more money to Democrats than Republicans, but now the contributions are solidly in favor of the GOP. In his defense, Trump said, “I give money to everybody.” He complained about Washington politics and said he gives money to everybody because he’s a businessman and that’s just how it works.

And finally, Trump has admitted to being willing to raise taxes on people like himself. This is in stark contrast to a field of candidates leaning the other way. Most of them have signed the famous Grover Norquist Pledge not to raise taxes. Trump hasn't signed yet according to Norquist. For those not familiar with Grover Norquist, he is founder and president of Americans for Tax Reform. The no new taxes pledge has come to be an important litmus test for proof positive conservatives in elective office.

Nevertheless Trump is leading in the polls according to The Hill, which finds him polling at 35% of support from voters. There are some who place him at 40%, but there is evidence that number could be overstated. In a field of more than 10 candidates, 35% support for Trump is significant.

It may well be that Trump's appeal lies in his willingness to differential himself from the others in his policy proposals, however vague they may be. Some have voiced skepticism that Trump is a true Republican. For example, Rep. Carlos Curbelo (R-FL), has this to say about Trump:
"I think there's a small possibility that this gentleman is a phantom candidate," Curbelo said, as quoted by The Miami Herald. "Mr. Trump has a close friendship with Bill and Hillary Clinton. They were at his last wedding. He has contributed to the Clintons' foundation. He has contributed to Mrs. Clinton's Senate campaigns. All of this is very suspicious."
Maybe, maybe not. Perhaps Mr. Curbelo has confused populism with being a Democrat. It does seem that the two presidential candidates leading each party in the polls are populists. In that sense, one could easily have the sense that two Democrats will win the nomination, one for the Republicans, one for the Democrats.