Friday, August 15, 2014

Automation vs. Employment

The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.” John Maynard Keynes

According to the labor department, 209,000 jobs were added in the month of July. But if the numbers stay true to last year’s overall job numbers, then a whopping 61 percent of jobs created were low wage and 77 percent were part time. To make matters worse, workforce participation is at its lowest point in over thirty years.
Some will blame Obama and the Democrats for the Affordable Care Act for this growing economic trend. Others will blame Republicans for not raising the minimum wage and not passing a comprehensive national jobs bill. Both arguments may have some merit in the short term. However, in the long term the economic situation may be bleaker then most would care to admit.
Greater productivity due to automation is driving down prices of material goods while killing jobs. As pointed out by David M. Kennedy in his book, Freedom From Fear, by 1925 a Ford model T rolled off the assembly line every ten seconds. A decade earlier it took 14 hours to assemble a single car. Before the automation of manufacturing came agriculture. At the dawn of the 20th century, agricultural output had surpassed demand. Million moved from the countryside to the bustling cities to find new employment. Yet that wasn’t enough.  Millions of farmers still looked to the federal government for assistance. Fearful of a farmer’s revolution akin to the French or Russian revolutions, the federal government took unprecedented action to starve off disaster. To this day, farmers are subsidized by the federal government to control prices, wages, and to ensure an adequate food supply. Yet according to a CNN report, there’s still $165 billion in food (40% of the nation’s food supply) lost due to overproduction, distribution mismanagement, or simply individual restaurant or family waste. Agriculture and manufacturing were the first casualties of automation. Many economists added the housing sector the causality list after the Great Recession. Other sectors of the economy are likely to follow.
Former Clinton Treasury Secretary, Larry Summers, recently penned an article in which is asserts that the challenge going forward isn’t scarcity of goods but rather overabundance. Furthermore, Summers states that because productivity is extremely high, producing enough good jobs will be a challenge. Summers isn’t alone in this bleak assessment.
 Former aide to Senator Robert Kennedy and professor at Georgetown University Peter Edelman writes in his book, So Rich, So Poor- Why It’s So Hard To End Poverty In America, “The future may be one not only of more low-wage jobs but also of not enough jobs, period.”  
A report by Oxford Martin School’s titled, Programme on the Impacts of Future Technology, estimates that 45 percent of American jobs are at a high risk of being automated in a couple of decades. To put that in perspective, there were roughly 143 million people employed in 2012. That means over 64 million jobs lost if such a future became reality today. The author of the study stresses that as technological innovation accelerates, workers will have to transition to tasks not susceptible to automation- such as tasks that require creative and social intelligence. How smoothly this technological transition will occur is anyone’s guess. Since most elected officials and policymakers refuse to acknowledge this crisis even exists, the transition could prove to be difficult if not downright disastrous.     
There is much that could be done in the short term to lessen the negative effects of automation. One major step that could be taken is to institute a major WPA-style infrastructure project aimed at bringing United States infrastructure into the 21st century. Investments in traditional infrastructure such as roads and bridges should be coupled with high-tech investments in solar panels and fiber optic cables. With unemployment for millennials accounting for some 40 percent of the total unemployed, there’s more than enough manpower available such an ambitious project. As for the cost of such an investment- all I can say is that it would be better spent then fighting two wars, giving two tax breaks to the wealthy or expanding welfare state. Simply put, while Democrats and Republicans endlessly squabble, jobs are being created at too slow a rate to keep up with a rapidly expanding population. Not to mention that jobs created are not even close to the caliber created in the economic heyday of the 20th century.         
 An open and frank discussion must occur to address automation and employment. Unfortunately, leaders in Washington are too busy with political posturing and grandstanding to focus on any singular issue. The responsibility of facing growing automation will therefore rest with state and local governments. Success with this approach has been found in regards to gay marriage and raising the minimum wage. In short, the nation must adopt new ideas for the 21st century or be trapped searching for a past that will never return.    

-Originally Printed in the Philadelphia Inquirer

Eisenhower or Fitzpatrick- who's the moderate?

"Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt. The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt. This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer." Dwight D. Eisenhower

           Time and again, Republican Congressman Mike Fitzpatrick likes to mention Republican President Dwight D. Eisenhower as an example of someone who was a moderate, level-headed leader. Fitzpatrick’s admiration makes sense. Eisenhower accomplished a great deal during his presidency even though he presided over divided government and three recessions.
           In 1956, Eisenhower raised the minimum wage from 75¢ to $1. Factor in inflation, and the 1956 minimum wage would be $8.75 today- $1.50 more than the current national minimum wage. Fitzpatrick will only support an increase in the minimum wage if it’s tied to inflation, reducing taxes, and mandates on businesses.
          Eisenhower and a Democratic Congress passed budget surpluses in 1956, 1957, and 1960. Since then, no other Republican president has passed a balanced budget- much less a surplus. Reaching a balanced budget was accomplished through maintaining tax rates (92% rate for top income tax earners and 50% tax rate for corporations) and spending cuts.
           In 1954, Eisenhower opposed Republicans in Congress who wanted to repeal the 11% increase in personal income taxes instituted during the Korean War. Such a step, Eisenhower reasoned, would needlessly add to the deficit and make pathways to a balanced budget difficult. The budget that year was around $70 billion. There was already a budget deficit of $1.5 billion. Lowering personal income taxes by 11% would add an extra $3 billion to the deficit- something Eisenhower was unwilling to do. He also resisted attempts to lower the corporate tax rate from 52% to 47%.
           Distressingly, Iraq and Afghanistan are the only wars in U.S. history in which taxes weren’t raised or even maintained in order to reach a more balanced budget.
           Eisenhower desired to create a national healthcare system modeled after the Army. It was attacked by those in his own party as “socialized medicine.” So instead, Eisenhower expanded the provisions of the Social Security Act in order to cover an additional 10 million citizens. In a letter to his brother, Eisenhower stated, “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.” Fitzpatrick has voiced support for investing Social Security taxes into private savings accounts. Such alterations to Social Security are both risky and unnecessary.
           Eisenhower cut defense spending by 27% during his presidency. Congressman Fitzpatrick claims to support equal cuts to defense and domestic spending, yet he still voted for Paul Ryan’s “Path to Prosperity” budget. Furthermore, Fitzpatrick remains silent on Lockheed Martin’s $1.5 trillion boondoggle- the F-35 fighter program. Maybe it’s because Fitzpatrick received $6,000 from Lockheed Martin for his 2014 re-election campaign. By the way, Lockheed Martin will be closing its Newtown facility in 2015- thus resulting in the loss of over 2,000 good paying jobs in Bucks County. That being said, should Fitzpatrick keep the $6,000 donation?
           When it comes to infrastructure, Eisenhower is probably best known for the Interstate Highway System. The interstate system spans 46,876 miles, includes 55,512 bridges, and has 14,756 interchanges. The final cost of building the interstate system was about $500 billion by today’s standard. President Obama recently asked Republicans in Congress to support a $302 billion infrastructure bill that would be paid for by closing corporate tax loopholes. Not surprisingly, Congressman Fitzpatrick has remained silent on the issue.
             If it isn’t already clear- Congressman Fitzpatrick is no moderate. For Fitzpatrick to claim such a label is disrespectful to the legacy of President Eisenhower. If Fitzpatrick was truly a moderate, he’d adopt common sense approaches to taxes and spending in order to balance the budget- while at the same time making key investments in the American middle class.

-Originally Printed in the Bucks Courier Times 

Monday, June 30, 2014

Chattanooga vs. Kabletown

 "It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public-service corporations, have supplied one of the principal sources of corruption in our political affairs."  Theodore Roosevelt

            I recently read with great interest about the ultra-high-speed Internet service available in Chattanooga, Tenn. Chattanooga, as it turns out, boasts of the fastest Internet speeds in the Western Hemisphere.

            The average Internet speed in the United States is 9.8 megabits per second, according to a study by Akamai Technologies. Chattanooga's service can reach speeds of up to 1,000 megabits - or 1 gigabit - per second. With a typical high-speed broadband connection, it could take nearly a half-hour to download a two-hour movie. In Chattanooga, the same download could take less than a minute.

           Ironically, faster Internet service was just a secondary benefit for the city. Chattanooga's network of fiber-optic cables was built primarily to enable a smart grid to manage electricity more effectively, particularly during inclement weather. So instead of taking days to restore electricity to residents following an outage, it takes Chattanooga only a few seconds.

           You might think such impressive technology was provided by one of the major telecommunications companies. You would be wrong.

           The city of Chattanooga has its own publicly run Internet, cable, and telephone service. This has led Comcast to sue the city-owned utility twice. The company has also spent millions on a public-relations blitz to discredit the city's publicly run service.

           Chattanooga's investment in telecommunications infrastructure, meanwhile, has attracted businesses big and small, from around the nation and the world, to the midsize city.

Subsidized skyscrapers

            That raises a question: Why hasn't Philadelphia, Pittsburgh, Reading, Erie, Scranton, or Lancaster followed Chattanooga's lead?

The answer is money and politics.

            Back in 2004, Gov. Ed Rendell signed House Bill 30, which amended the Pennsylvania public utilities code to limit competition from municipalities that wanted to provide telecommunications service to residents. The bill effectively gave companies such as Verizon and Comcast unchallenged authority across the state.

            A year later, construction began on the Comcast Center in downtown Philadelphia. It's important to note that Pennsylvania taxpayers contributed $43 million to building the tower.

            But it's not as if Rendell had close ties to Comcast, right? That would be unethical.

            As it happens, the executive vice president of Comcast, David Cohen, served as Rendell's mayoral chief of staff from 1992 to 1997. Cohen is no partisan, though - at least not when it matters. Last year, he endorsed Gov. Corbett for reelection and hosted an event that raised more than $200,000 for the Republican's campaign.

            Comcast, by the way, is building a second skyscraper in Philadelphia. Not surprisingly, Pennsylvania and Philadelphia taxpayers will once again be subsidizing the construction to the tune of about $40 million.

Why does Comcast's construction need to be subsidized by taxpayers? The company certainly isn't hurting financially. In 2013 alone, it brought in more than $64 billion in revenue.

Illusion of choice

            Don't worry, though. All this is sure to pay off. It's not as if Pennsylvanians are unhappy with the services Comcast provides.

Hold on a second: They are unhappy?

            Of course, whether the issue is customer service, affordability, Internet speeds, or channel customization, you would be hard-pressed to find much love for Comcast in Pennsylvania. But both Democrats and Republicans largely ignore this collective discontent. If elected officials aren't actively working to help Comcast, they're too complacent or too afraid to challenge its dominance. That Pennsylvania ranks fifth among the states in corruption, according to a recent study by researchers at Indiana University and the City University of Hong Kong, suggests it's particularly vulnerable to the influence of powerful special interests.

           Publicly run telecommunications services like those in Chattanooga pose a threat to Comcast's market dominance. But like Chattanooga, I believe Internet service should be a basic public utility, just like water and electricity. Without these things, economic mobility is severely hampered.
I'm a free-market capitalist in the truest sense: I want choices. Choice creates competition, which in turn creates better products for consumers.

           It has become abundantly clear, however, that politicians and corporations have perverted the meaning of free-market capitalism to serve their own interests. They've provided American consumers with the illusion of choice while protecting the wealth and advantages of a select, privileged few. Until that changes, citizens will continue to be cheated.

-Originally printed in the Philadelphia Inquirer

Saturday, March 15, 2014

FDR's Economic Bill of Rights- "Necessitous Men" Part III

Necessitous men are not free men.”- FDR 

On January 11, 1944, FDR addressed the nation and presented his Economic Bill of Rights. It’s important to note that the Second World War was far from over when the speech was given. Operation Overlord, or D-Day as it’s commonly known, was still about six months away. Yet FDR saw fit to stress the necessity of an Economic Bill of Rights. Why? Because as FDR put it, the original Bill of Rights provided political and social rights yet, “proved inadequate to assure us equality in the pursuit of happiness.” The economic rights FDR outlined in his speech: full employment, adequate food, clothing and leisure, farmers’ rights to a fair income, freedom from unfair competition and monopolies, proper housing, medical care, social security, and a good education- would be rights that ensured lasting peace. FDR recognized that denying these fundamental rights had caused the needless suffering of millions around the world. 

In a country as wealthy as ours, it’s disheartening to still see a mother who works full time having to stand in line at a food pantry with her two year old daughter or see a homeless person sleeping next to a dumpster behind a business near my home. Yet distressingly, the most extreme Republicans would have us believe the vast majority of welfare recipients are lazy, on drugs, or gaming the system. Essentially, they see only waste in government welfare programs.

Want a real example of waste? According to study reported by CNN in 2012, $165 billion of food (40% of total supply) was wasted in the United States in just one year. To put that in perspective, such an amount could pay for the combined discretionary funding of the Environmental Protection Agency, Housing and Urban Development, the Department of Interior, Justice, Labor, State, Transportation, Treasury and NASA. Simply put, it’s difficult to bash government waste when we as a nation are so ‘efficient’ at it ourselves.

Apparently it’s not enough that we waste billions in food each year. We also consume more calories than any other nation and rank amongst the top in obesity. There you have it- we eat too much and waste a ton of food.

Furthermore, there are over 3.5 million homeless Americans spread across the nation. What makes this completely unacceptable is that there are more than enough homes and apartments to shelter the homeless. Census data puts the number of vacant homes across the United States at around 19 million. 

In 2006, the state of Utah instituted a program in which every single homeless citizen will have shelter by 2015. Utah chose this path because a study found that providing each homeless person with shelter and social worker was cheaper than E.R. visits and jail stays. As a Democrat, I have to give credit where credit is due. The plan to house the homeless was instituted by ex-Republican Governor of Utah, Jon Huntsman.  

I fully realize that such reforms to welfare will do little good without a focus on jobs. Youth Social Security tied to national service is the kind of pro-growth economic policies sorely needed today. Key investments in education, infrastructure, and housing will reverse the economic stagnation which has brought on a marked decline of the middle class. Workforce participation is at its lowest point in nearly 36 years. Underemployment is becoming the norm not the exception. There are three job seekers for every job opening. This downward trend will continue if bold, aggressive steps aren’t taken immediately. 

Even ardent supporters of free market capitalism admit there will be a certain degree of unemployment in the healthiest economic conditions. Many economists agree that to have anything below the natural unemployment rate of 4-6% will most likely trigger a recession. If that’s the case, then government must be prepared to fill the unemployment gap through either welfare programs or public sector jobs modeled after the WPA, PWA and CCC of the New Deal era. I prefer the latter in tackling chronic unemployment.

                I have no allusions that poverty would still remain even if these economic measures were fully adopted. FDR’s Economic Bill of Rights are meant to establish a basic standard of living- a standard of living in which no citizen is fearful of where their next meal will come from or if they’ll be sleeping in the cold. 

Tackling these difficult and complex issues demands bold leadership. Unfortunately, over the past few decades there has been a void in leadership coming not just from Republicans but also Democrats within my own party. Time and again, Democrats ask for our vote but not our active participation. If Democrats believe in a government that works they must challenge the American people to serve; the kind of service that restores community values and the dignity of work. Restoring these principles will remind us why we’re proud to be Americans.  

FDR’s Economic Bill of Rights is a call to action to anyone who believes that if we all pitch in the nation grows stronger. And that if you want to work, the government has an obligation to find you a job with livable wages and benefits so that you can provide for your family. Increasing the welfare state cannot be the mission of government. Nor can it be the continued policy of government to protect Wall Street at a time when Main Street is struggling to survive. Continuing such policies only creates more necessitous citizens.   

Originally Printed in the New Jersey Times

Wednesday, January 15, 2014

FDR's Economic Bill of Rights- "Full Employment" Part II

President Reagan working at Camp David; which was a WPA project.
"The WPA was one of the most productive elements of FDR's alphabet soup of agencies because it put people to work building roads, bridges, and other projects… It gave men and women a chance to make some money along with the satisfaction of knowing they earned it.
Ronald Reagan

In my last article, I explored the idea of Youth Social Security. Many said it was a good idea in theory but would be difficult to pay for. Sure, it would be difficult for us, the average American, to pay for. It’s well known that nearly 70% of income taxes are paid by the wealthiest Americans (keep in mind their rates have also steadily dropped over several decades); while almost half of those currently working don’t pay any income tax. However, has one ever considered that half of the country is too poor to pay? All the while, the shrinking middle class is wondering whether it will end up richer or poorer. 
                 That being said, Youth Social Security affords more people the opportunity to enter the middle class. But hey, if it doesn’t bother you that the wealthiest eighty five people in the world own more wealth than the bottom 50% (3.5 billion people) then by all means disregard everything I write. As of 2014, the top 1% controls $110 trillion out of $241 trillion of the world’s total wealth. This economic trend isn’t abating.     
Youth Social Security’s primary goal is to address student loan debt ($1 trillion and rising), the depressed purchasing power of millennials due to stagnant wages, and the 11.8% unemployment rate among 18-29 year olds. Simply put, these issues won’t disappear by maintaining the status quo.  
FDR’s 1944 State of the Union address laid out a bold goal- full employment. That may not be possible, but it should be every elected official’s singular obsession. In previous articles, I wrote about FDR’s Works Progress Administration. The WPA alone could never hope to fully employ every American- let alone every millennial. However, to encourage full employment, every 18 year old should be given these options: work, go to college or a trade school, join the military, or sign up for the WPA. Anyone who doesn’t do one of those things wouldn’t be eligible to receive the benefits of Youth Social Security. Any idle American between the ages of 18 and 21 not contributing to the general welfare of the nation is making it weaker as a whole. Such a plan echoes the timeless American motto, “united we stand, divided we fall.” 
One of the strongest supporters of the WPA was conservative icon Ronald Reagan. During the Great Depression, Reagan’s father- Jack Reagan, unemployed and seeking work, became an administrator for the WPA in Dixon, Illinois. President Reagan spoke fondly of the work his father and the WPA did in his childhood town.
Silver Lake Park in Bristol, Pennsylvania is a local example of work done by the WPA. The Pennsylvania Turnpike, famously dubbed, “America’s First Superhighway”, was one of the more prominent accomplishments of the WPA. At one point or another, I’m sure nearly every Pennsylvanian had to use the PA Turnpike. For decades, it has faithfully served the general welfare of the commonwealth and nation.
National service and hard work is crucial to the strength and stability of any nation. Time and again, I’ve stressed the importance of the common defense and general welfare. A more coordinated plan of action tied to national service is the necessary remedy to the nation’s economic woes; as opposed to Herbert Hoover’s well-intended “self-government” volunteerism or Ayn Rand’s idiotic Objectivism.      
Look at it this way- Youth Social Security tries to maximize probabilities. Regardless of the individual outcomes, the key to the nation’s success has always been that we never stop being bold, creative, and innovative. Additionally, what’s more important: how one starts out life or how it ends? I would say the former.     
At the end of the day, Youth Social Security is about investing in the future. It’s the sincere hope of this millennial that Americans of every age recognize that truth and act accordingly. In the final analysis, the nation can choose to lift up the youth of America or leave them behind.