There is a report in Saturday’s New York Times, “White House Debates Fight on Economy,” saying the Obama administration is choosing between doing very little about [...]]]> Here is everything you need to know about how to fix the deficits and jobs problems. This is a chart of job creation over the last few years:

There is a report in Saturday’s New York Times, “White House Debates Fight on Economy,” saying the Obama administration is choosing between doing very little about jobs, or doing nothing.

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. … But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view.

So according to the Times the choices being debated are a) do nothing, because the mean Republicans will block it anyway, or b) offer even more tax cuts for businesses. Yikes!

Meanwhile, out in the Real World…

The ailing economy, barely growing at the same pace as the population, has swept all other political issues to the sidelines. Twenty-five million Americans could not find full-time jobs last month. Millions of families cannot afford to live in their homes. … [. . .] A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth.

But, back in the White House?

Mr. Plouffe and Mr. Daley share the view that a focus on deficit reduction is an economic and political imperative, according to people who have spoken with them. Voters believe that paying down the debt will help the economy, and the White House agrees, although it wants to avoid cutting too much spending while the economy remains weak.

They think that taking money out of the economy will put more money into the economy. Great. As I wrote the other day, this is austeridiocy. As England, France and every other country that ever tried to grow an economy by cutting the economy has learned, taking money out of the economy takes money out of the economy.

What Works In The Real World

Here is everything you need to know about how to fix the deficits and jobs problems:

This is a chart of the monthly job losses that were occurring before and after the “stimulus” package.

Before The Stimulus

In this chart, the RED lines on the left side — the ones that keep doing DOWN — show what happened to jobs under the policies of Bush and the Republicans. We were losing lots and lots of jobs every month, and it was getting worse and worse.

During The Stimulus

The BLUE lines — the ones that just go UP — show what happened to jobs when the stimulus was in effect. We stopped losing jobs and started gaining jobs, and it was getting better and better.

The Stimulus Winds Down

The TAIL — the leveling off on the right side of the chart — show what happened as the stimulus started to wind down. Job creation leveled off.

It looks a lot like the stimulus reversed what was going on before the stimulus.

Conclusion: THE STIMULUS WORKED BUT WAS NOT ENOUGH!

Jobs Fix Deficits

When people are working they are paying taxes and are not collecting unemployment. And they are buying things, which means there is demand in the economy again, so businesses will hire people.

Customers Create Jobs

Actually, the rich don’t create jobs, we do. Lots of regular people having money to spend is what creates jobs and businesses. That is the basic idea of demand-side economics and it works. In a consumer-driven economy designed to serve people, regular people with money in their pockets is what keeps everything going. And the equal opportunity of democracy with its reinvestment in infrastructure and education and the other fruits of democracy is fundamental to keeping a demand-side economy functioning.

When all the money goes to a few at the top everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going. Cutting taxes at the top steals from democracy’s ability to continue this reinvestment.

It doesn’t matter how much more money you give to business owners, businesses are not going to hire any more employees until they have a REASON to — and that reason is customers coming in the door.

Businesses Do Not Create Jobs

Businesses do not create jobs. In fact, the way our economy is structured the incentive is for businesses to get rid of as many jobs as they can. It costs money to pay employees, so businesses want to trim down to the minimum number required to get the needed work done.

Many people wrongly think that businesses create jobs. They see that a job is usually at a business, so they think that therefore the business “created” the job. This thinking leads to wrongheaded ideas like the current one that giving tax cuts to businesses will create jobs, because the businesses will have more money. But an efficiently-run business will already have the right number of employees. When a business sees that more people are coming in the door (demand) than there are employees to serve them, they hire people to serve the customers. When a business sees that not enough people are coming in the door and employees are sitting around reading the newspaper, they lay people off. Businesses want customers, not tax cuts.

A job is created when demand for goods or services is greater than the existing ability to provide them. When there is a demand, people will see the need and fill it. Either someone will start filling the demand alone, or form a new business to fill it or an existing provider of the good or service will add employees as needed.

Once again:

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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Ah, [...]]]> Throughout the depths of the recession, there was much to be  said about the disproportionate effect on men’s employment. Women, typically lower paid, and in fields not as hard hit as male-dominated fields like manufacturing and construction, were doing pretty well in comparison. (If  ”doing pretty well” is defined as simply having a job.)

Ah, but times have changed. The unemployment rate has dropped nearly a full percent in just the last three months, manufacturing is at its highest level since 2004; and, right or wrong, government focus is now on budget cuts rather than job creation or economic stimulus.  This puts women in a bad spot.

In fact, since the recovery officially began in June 2009, private employers have added over half a million jobs filled by men; in the same period, women have lost over 140,000 of those jobs. In the public arena, things are looking even more bleak.  Let’s take Wisconsin as an example: Governor Scott Walker’s plans to disenfranchise public workers will hit women hardest, as they continue to make up the majority of that workforce. To drive the point home, keep in mind that the only public employees Walker is exempting are police and firefighters. (Two groups which are almost entirely male.)

Even though women represent just over half of the public workforce, the National Women’s Law Center reports that they account for an astounding 83.8% of public-sector job losses during the so-called recovery. To make matters worse, we are also watching government funding for programs like childcare and social services disappear. These are, of course, fields dominated by women, and upon which many women rely so that they are able to work in the first place.

When I’ve suggested that these attacks on public employees are somehow sexist, I’ve received a fair amount of push-back from readers. But tell me: when was the last time our national debate turned on conservative smears of a group of  ”greedy, lazy” people living much too well at the expense of the taxpayer? “Welfare Queens”, anyone?

Couple this with the virulent, radical anti-choice legislation popping up all over the country; throw in the GOP attacks on funding for things like Planned Parenthood, in the name of deficit reduction; and the conspiracy theorist in me is starting to have a hard time believing this isn’t all some vast, right-wing plot to put women back in the house, barefoot and pregnant.

Update: A reader has pointed me to this piece over at The Political Carnival.

That is why it is no surprise that, buried in his infamous budget, is a direct assault on family planning and Planned Parenthood, in particular.The Cap Times (Madison) gets right to the point: “Walker’s elimination of family planning funds could jeopardize federal dollars, close clinics.” [...]

The plot thickens…

So, here’s a frame. Over at AlterNet, I have a feature up arguing that labor markets only work when workers can bargain collectively. As it stands, [...]]]> Like all progressives, we obsess on the quest for good ‘framing’ quite a bit around here (when I lived in DC, even the cabbies and doormen were reading Lakoff).

So, here’s a frame. Over at AlterNet, I have a feature up arguing that labor markets only work when workers can bargain collectively. As it stands, with private-sector union density in the U.S. hovering at just 7 percent, the wages of many, many workers in this country represent a market failure of significant proportions.

By all means, read the whole thing for some lefty-bomb-throwing goodness, but for our purposes, here is the relevant passage (sorry for the long excerpt):

In economic terms, the wages of many Americans working in the private sector represent a “market failure” of massive proportions. Even the most devout of free-marketeers — economists like Alan Greenspan and the late Milton Friedman — agree that it’s appropriate and necessary for government to intervene in the case of those failures (they believe it’s the only time such “meddling” is appropriate). But the corporate Right, which claims to have an almost religious reverence for the power of “free” and functional markets, has gotten fat off of this particular market failure, and it’s dead-set on continuing to game the system for its own enrichment.

The market does work pretty well for Americans with advanced degrees or specialized skills that allow them to command an income that’s as high as the market for their scarce talents will bear. There are also people with more common skills who have the scratch (and/or connections) and fortitude to establish their own businesses — think George W. Bush or a really great mechanic who owns his or her own shop.

But that leaves a lot of people; about 80 percent of working America are hourly workers, “wage slaves” in the traditional sense. There’s no doubt that their salaries are heavily influenced by the laws of supply and demand. We saw that clearly in the latter half of the 1990s, when, under Bill Clinton, the Fed allowed the economy to grow at a fast clip, unemployment dropped below 4 percent, and for a brief period, a three-decade spiral in inequality was reversed as wages grew for people in every income bracket.

But a common fallacy is that wages are determined by market forces. They’re not, for a variety of reasons that require more explanation than space permits. I’ll focus on two: what economists call “information asymmetries” and coercion. Both are anathema to a functional free market, and both exist today, in abundance, in the American workplace.

To understand these failures of the free market, one has to go back, briefly, to basic economic theory. In order for a free market transaction to work, both the buyer and the seller need to have a good grasp of what the product being sold — in this case, people’s sweat — is worth elsewhere, who else is buying and selling, etc. In other words, they have to have more or less equal access to information. There can be no misrepresentation by either the buyer or the seller in a free market transaction. And both parties have to enter into the transaction freely, without being coerced; neither side can exercise power or undue influence over the other, whether implicitly or explicitly, through threats or other means.

Now let’s look at how that theoretical construct plays out in the real world of the American workplace. When an individual worker negotiates a price for his time, effort and dedication with any business bigger than a mom-and-pop operation, there’s quite a bit of explicit coercion (much of it in violation of our labor laws), which I’ll get to shortly. But there’s always an element of inherent coercion when an individual negotiates with a company alone, because of the power differential: a company that’s shorthanded by one person will continue to function, while a person without a job is up a creek with no paddle, unable to put a roof over her head or food on the table.

The “information asymmetries” in such a negotiation are immense — they’re actually more like process asymmetries. Companies spend millions of dollars on human resource experts, consultants, labor lawyers, etc., and they know both the conditions of the market and the ins and outs of the labor laws in intimate detail. While working people with rarified skills are often members of trade associations or guilds, read trade journals and have a pretty good sense of what the market will bear, many low- and semi-skilled workers don’t know their rights under the labor laws, don’t know how to assert them and (rightfully) fear reprisals when they do. They often have little knowledge of the financial health — or illness, as the case may be — of the company to which they’re applying for a job, how profitable it is, how much similar workers in other regions or firms earn, etc.

For the majority of Americans who lack scarce talents or a high level of education, negotiating a price for one’s time with a firm on an individual basis is anything but a free market transaction. That’s where collective bargaining comes in — when workers bargain as a group, they do so on a level playing field with employers, and the resulting wages (and benefits) are as high as the market can bear, but no higher.

Unions, like corporations, have a great deal of information about the market. They know how a firm is doing, how profitable it is and where it is relative to the larger industry in which it operates. They know what deals workers at other plants have negotiated. They have attorneys who are just as familiar with the American labor laws as their counterparts in management.

And while an individual has very little leverage in negotiations — again, most companies can do with one less worker — collectively, an entire work force has the ability to shut down or at least slow down a company’s operations if management chooses not to negotiate in good faith (as is often the case).

It’s not difficult to quantify the difference between what most hourly employees take home and what the free market would dictate. Economists Lawrence Mishel and Matthew Walters estimate the “union wage premium” — the amount of additional pay a unionized worker receives compared with a similar worker who isn’t a member of a union — at around 20 percent (that’s in keeping with other studies, using different methodologies, which put the premium in a range between 15 and 25 percent). If one includes benefits — health care, paid vacations, etc. — union members make almost 30 percent more than their nonunion counterparts.

Another way of looking at it is this: Millions of American families are scraping by on below-market wages, and if that weren’t the case, there wouldn’t be such a large group of American families among the “working poor.” In economic theory, it’s a given that a producer can’t sell his or her wares below the cost of production. The equivalent to the cost of producing a gizmo, when we’re talking about the sale of someone’s working hours, is the cost of providing basic necessities — nutritious food, safe housing and decent medical care. These are out of reach for the almost three million American families who work full-time and live beneath the poverty level. According to the Working Poor Families Project, half of the working poor have no health insurance.

So, I’m turning the free market argument around and using it against the union-busters. What do you think?