Health care: Score one against the hyenas

N.B. The hyena caricature (right) is from William Belcher’s Address to Humanity, published in 1796. Thanks to Ragged Edge Magazine.

On Monday, the day after passage of the new health reform law, I received a visit from a friend (call him Vic) who’s perpetually broke. He and his wife (Tina) lived with us at one point when their only other alternative was the street. Now they pay $39 a day to stay at a seedy hotel near the Interstate.

They were supposed to have moved on by now, to have a place of their own. Months ago, a man set aside $1,000 for Vic and Tina to pay a deposit and first month’s rent on an apartment or rental. But Vic and Tina haven’t found a place they can afford, at least not one that Tina is willing to move in to. Vic won’t even look in Birmingham, where rents are lower, because they want to be in a good school district. Their 11-year-old daughter lives with Tina’s parents, and they want her back.

It hasn’t occurred to them to get a cheap apartment for the short term in order to save money. Saving is not a realistic prospect to them. In their entire adult life — Vic is 48 — they have only experienced two conditions: not having enough, and having just enough.

Comparative propaganda

The Obama administration needs to convey a message that things are under control. So they commemorated the first anniversary of the Recovery Act with this:

It’s a chart showing the number of jobs lost each month from December 2007 to January 2010, according to the Bureau of Labor Statistics.

Read any unjust economies lately?

We need a literature about being spoiled.… Most people who read in this country are spoiled and boring, yet all they want to read about is struggle and adventure. — William Upski Wimsatt, No More Prisons

To be fair, income inequality must have been much greater in the colonial period than it is today. Income gaps must have been wide up through the Civil War and Reconstruction, and I’ll allow that the 1890s in the USA were even worse than the 1990s.

Still, in the century or so since the United States became a world power, income inequality has never been greater than it is now. Class-defining inequality reached a new high in 2006, when the richest tenth of the population cornered half of all the earnings made in America that year. That surpasses the previous record set in 1928.

The financial crisis has destroyed much of the wealth charted in 2006, but that wealth is being rebuilt. Jobs and affordable housing are not, and so the gap is set to widen further.

And no one much cares.

“If you’re so smart, why ain’t you rich?”

This traditional southern put-down came to mind as a I read Matthew Yglesias’ posts (yesterday and today) on the presumed link between wealth, on the one hand, and competence and innovation, on the other.

• Exhibit A: Big Business may retard technological progress. Alexander J. Field argues that the 1930s were the “most technologically progressive” decade in U.S. economic history. Because the economy was running below capacity for most of this period, the assertion seems unlikely at first. But as Yglesias suggests, government intervention to raise the cost of labor (and avoid deflation) created an incentive to invest and adapt to make labor more productive. Whereas the default position of business, when left to itself, is to resist the risks of innovation and increase profits by suppressing wages and benefits, by shrinking the workforce, and by moving plants to cheaper labor markets, thus treating workers as just another raw material or input.
• Exhibit B: Big Business uses its clout with government to bring about policy measures that fail to look beyond immediate gains. From 1996 to 2006, Congress told the FDIC to stop collecting insurance premiums from banks. Now depositors may not be covered in case of a series of bank failures. Citibank, which owes its continuing existence to injections of public cash, has been plotting to halt reform of our bizarre labor laws — because everyone knows that raising wages is always a Bad Idea™.
• Exhibit C: Big Business changes its core principles whenever these conflict with the pursuit of short-term gain. Milton Friedman’s monetarism has been popular since the Nixon era for counseling that government be generous to business while requiring “austerity” from everyone else. Now that even monetarist orthodoxy calls for government intervention to stimulate the economy, business pundits are abandoning Friedmanism and moving to the fringe — even preferring the flattering fiction of Ayn Rand to the disappointing reality we live in.

By “Big Business” I mean business corporations organized to “internalize profits and externalize costs.” Far from being guided by facts and logic, as one might well assume, business corporations have (as Barbara Ehrenreich observed in Bait and Switch) “a culture addicted to untested habits, paralyzed by conformity, and shot through with magical thinking.”

Also see:

• H-Net hot topics: The economic meltdown
• Ex Post Facto: Making moral sense of the credit crisis

Shopping in a global economy

So I need to replace the lenses in my glasses to match a new prescription from the eye doctor. Thanks to the globalization of lens grinding, I am having to fill the prescription twice.

That’s because in all of metro Birmingham (pop. 975,000), there is not a single optician who makes lenses on the premises. Even the ubiquitous Dr. Schaeffer, with his fashion commercials, his civic prominence (the Crawfish Boil, etc.), and his TV tours of his high-tech facilities and eager-to-please staff — even he sends the lens orders off to parts unknown.

What this means for the customer is that it takes seven to ten business days to fill a prescription. Hope you weren’t in a hurry to see clearly.

If, like me, you want to put new lenses in your old, still serviceable frames, you need a backup pair to wear for a week or more. If you were so abandoned as to donate your old glasses to the Lions Club, then you will now have to order a cheap pair of glasses to wear while you wait for your real glasses to get new lenses. And it will take, of course, a week to ten days for the cheap pair to arrive.

In the meantime I’ll amuse myself wondering what exotic parts of the world my glasses will have seen by the time they reach me. Are lenses being made by robots in some vast underground plant in Nevada? Or are opticians being hired in India, like computer programmers, to grind through the night so results can be shipped to the States the next morning? Too bad lenses can’t be sent over the Internet.

So in this case, the globalized economy is costing me both time — two weeks or longer, for an item that used to be ready within a day — and money, namely the cost of an extra pair of glasses. If the lenses have a flaw, or are incorrectly made, I’ll have yet another wait on my hands. The anonymity of the transaction between me and the lens maker tends to reduce the latter’s accountability to me.

Someone remind me again of the benefits of globalization. I keep forgetting.

False promises to the jobless

Looking over Barbara Ehrenreich’s Bait and Switch, a 2005 exposé on the decline of the middle class, I found descriptions of the following three alternatives for the downsized corporate manager.

• Franchising, also known as “buying yourself a job,” is the purchase of the right to operate a local franchise of a major corporation. Most of these businesses fail, apparently at an even higher rate than other small businesses. A 2002 study found that franchisees had a success rate of about 25 percent and an annual income averaging less than $30,000. Those “be your own boss” sales pitches don’t tell the whole story.
• Commission-only sales employs many millions in what are often pyamid marketing schemes — so rewards depend on recruiting new people to fill in the lower reaches of the pyramid. Commercials and promotional literature for these schemes typically imply that you can make $30,000 a month or more without lifting a finger. In fact these jobs offer few or no benefits, with high start-up costs (e.g., purchasing a supply of the product, attending mandatory meetings, or paying fees to an organization). Usually there is no guarantee that your “employer” will not insert competing sales reps into your territory. Five years ago, about half of these direct-sales jobs made less than $10,000 a year, and only 8 percent — the tip of the pyramid — earned $50,000 or more.
• Real estate, the traditional fall-back career, looks less promising than ever with the collapse of the housing market. But even in its salad days, when we all believed home values would rise forever, only about 14 percent of those who obtained a real estate license actually stuck with the profession for more than one year. Of those, only 30 percent made more than $30,000 a year.

What all these jobs have in common is that the employer has successfully shifted the risk of taking on a new hire, along with the expense of health care, insurance, and retirement benefits, to the employee.

Ehrenreich also found that a sizable proportion of unemployed managers and professionals end up in “survival jobs” — temp jobs or entry-level positions at places like Wal-Mart, Best Buy, and Home Depot. These people are not officially classed as “underemployed” as long as they are able to work full time. As far as the Bureau of Labor Statistics is concerned, a move from a corner office to unemployment, and from there to a job grooming dogs at PetSmart, is a successfully concluded job search.

Source: Barbara Ehrenreich, Bait and Switch: The (Futile) Pursuit of the American Dream, New York: Henry Holt & Co., 2005 (ISBN 978-0-8050-8124-4), pp. 181-186, 189-190, 205-210.

Raptor to the rescue?

The 2009 Raptor luxury vehicle

One of the ads in Gmail pleaded with me to “Preserve F-22 Raptor jobs now!” Curious, I followed the link, and after a few minutes I used the site’s tools to send the following letter to the White House.

Dear President Obama,

During the campaign for president, your opponents often attacked you as a “socialist.” I note that now that you are in office, you are being given a prime opportunity to prove them wrong. I don't expect them to get the point, though, because government spending on the military is somehow never “socialist.”

I’m referring to the F-22 Raptor program. You are probably receiving mass mailings right now urging you to release “advance procurement funding” for this “Fifth Generation fighter,” thereby magically protecting American jobs and security.

I urge you not to be stampeded into approving the F-22. The U.S. already has air superiority over the entire world, and ramping up military production is one of the least promising tools you have for stimulating the economy.

I find the arguments advanced at the website preserveraptorjobs.com to be unconvincing, and the claims of economic impact for the program appear skewed. Moreover, I am concerned that the site may be an astoturf operation that advances the narrow interests of aerospace executives. Please view these pleas for Raptor money critically.

Sincerely.

[Signature]

It appears that the email was sent.

I might have added that even Defense Secretary Robert Gates is opposed to the Raptor program, which has been soaking up federal cash for Boeing and other contractors since 1991. As for strategy, it’s a fact that the U.S. fleet of F-15s and F-16s is more than adequate for confronting any potential adversary, even those to whom we have sold F-15s and F-16s. In the Mideast, we’ve seen that the F-16 is more than adequate for blowing up buildings full of “insurgents” and their children.

As for economic impact, the website appears to count every job that is theoretically touched by Raptor money — such as the cashier at the convenience store where the waiter buys gas who works at the lunch counter where a dozen Boeing employees often eat — as if every one of those jobs will be imperiled by the Raptor program’s cancellation.

One might argue that spending money on the Raptor will stimulate the economy just like all the other items in the stimulus package. But in fact, Pentagon procurements for military hardware really function as a massive socialist economy in the middle of a relatively open capitalist market. The federal government (with other governments it approves of) is the only lawful consumer of these goods. In other words, spending on military hardware supports a workforce, but produces nothing for the marketplace, and must be funded by tax revenue.

After leaving my contact info at preserveraptorjobs.com, I can’t wait to see what other appeals I am asked to send. I noticed that the site contained no information identifying its creators or their goals, so I suspect it was put up by a Washington PR firm. Their next campaign will no doubt be on behalf of whoever pays. Perhaps a defense of executive pay? Help for our good friends the Saudis? Or a reprise of “drill, baby, drill”?

I can hardly wait.

The case against the dome

The Birmingham-Jefferson County Convention Complex (photo by Dystopos)

André Natta comments at the Terminal about the verbal sniping that marred the latest BJCC board meeting. I agree with André about the need to stop the “internal battle.”

But I don’t support building what we keep calling “the dome.” Here’s why.

(André:) Our convention center needs the space, period. Whether we want to admit that or not, it’s true.

According to whom? The evidence shows that building convention centers is not an effective way to invest in a city’s economy. This 2005 Brookings study points to a steady decline in the market for conventions, even as cities continue to battle one another to offer more convention amenities, including discounted rates and publicly financed hotels. The trend was in place even before 9/11 and rising fuel costs made travel less convenient and more expensive. Now we have an economic crisis that promises to shrink the convention market even faster. So who are we building for?

(André:) Despite the fact that the new facility will never fully recoup its construction or operating costs for itself, it is something that can provide long term jobs and revenue for this region.

So we’re clear that the BJCC will lose money on this deal. But where is the evidence that the regional economy will benefit?

Take jobs, for instance. Most of the employment will be temporary or seasonal, with little prospect for career advancement. The major contractor will be the St. Louis-based multinational HOK, so those profits won’t stay around here. The needs of the expanded center will create fewer professional jobs than equivalent investments in other projects would create.

As for revenue — we have every reason to expect that “if we build it, they won’t come.” We’re in a drastically slowing economy that already has a glut of convention space for a declining market. The cited Brookings report advises:

This analysis should give local leaders pause as they consider calls for ever more public investment into the convention business, while weighing simultaneously where else scarce public funds could be spent to boost the urban economy.

Convention planners will have no compelling reason to try Birmingham’s new facility when so many established ones are going begging. The city’s lack of reliable public transit will be a deal breaker for many, to say nothing of negative publicity attached to the mayor’s indictment on fraud charges and the county’s looming bankruptcy.

This is why I’m convinced that going after the big shows is a sucker’s bet for Birmingham. There are so many ways to invest in the city that promise much better results.

For a start, let’s build a public transit system that local people can rely on and out-of-towners can easily understand. That’s a minimal requirement for getting people to come do business in Birmingham.

Cutbacks at the Alabama Archives

Due to state budget cuts, the Alabama Department of Archives and History has had to lay off staff and limit its operating hours. Beginning February 1, the archives will no longer be open on Saturdays. Six staff members will be laid off, and five more are leaving “through attrition.”

The agency had already stopped new book purchases and canceled its internship program, which hires and trains students from Alabama colleges. Some public events have been postponed or canceled. As is always the case when the state runs out of funds, some cuts are going to cost extra money in the long run.

We get boycotted

The website Boycott Alabama Now, created by a disgruntled UAW retiree, has been a nine hours’ wonder in the Alabama media. Joe Babiasz, already tagged “Joe the Autoworker” by at least one ink-stained wretch, has a grudge against our state because our Sen. Richard Shelby has been the most outspoken critic of a bailout for General Motors, Ford, and Chrysler.

The text on Babiasz’s site is far from persuasive; it’s too wordy and unfocused. Visitors from Alabama have been amused by its way of threatening to punish Alabama’s economy (a hollow threat) while also flattering Alabama’s “great people.” Joe seems like a decent guy who can’t bring himself to be mean to us.

There’s also something poignant about it. Joe Babiasz, like many thousands of others, spent most of his life as a loyal employee of one of America’s landmark companies, GM. Watching it fail now would have to feel like a death in the family. Doing nothing to rescue the company must seem to him like watching a loved one drown instead of throwing out a lifeline. There’s no way to argue with these feelings. It would be vindictive to belittle them.

It’s another sign of the mindless destruction caused by the financial crisis, most of it happening beneath the mass media’s radar. Joe Babiasz chose Richard Shelby as a focus for his rage, the mostly impotent rage that millions are feeling to a greater or lesser degree. His effort to do something — start a boycott, embarrass the heartless senator — springs from this deep well of emotion.

My family is fortunate to be in a relatively recession-proof condition right now. But in less than a year’s time I expect to be entering the academic job market, and it looks a lot less promising than it did only last summer. Still, we have reason to be thankful. Yesterday I found this personal story from fellow historian Elle. When your family is suffering, it’s hard to take a detached view of the policy alternatives available. Your heart tells you something must be done. Anything.