Reports from the Economic Front

a blog by Marty Hart-Landsberg

Monthly Archives: April 2010

Cover Wars: Fortune Loses

The editors of Fortune magazine had hired the cartoonist Chris Ware to design the cover of the magazine’s May 2010 issue, which includes its annual listing of the country’s top 500 corporations as ranked by revenue.

They were no doubt hoping to get a cover that resonated with some of the magazine’s past cover glamor–You can see examples of past Fortune magazine covers here.

Well, Ware produced a stunner, but his inclusion of exploited Mexican factory workers, Guantanamo Bay prisoners, and a number of funny hits on corporate greed and federal bailouts was clearly not what the editors had hoped for.  So, they rejected it.

But you can still see it.  You will need to expand its size (by clicking on it to get a larger view and then clicking once again to get an even larger view) by going here.

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Money, Transactions, Communities

Here is an interesting look at the current boundaries of economic communities.


Anger and Confusion

Everyone is angry about the big salaries CEOs have been drawing despite the Great Recession that has left almost everyone else struggling and scared.

The anger is understandable—check out the AFL-CIO’s executive paywatch site.  There you will see the following:

Bank of America Corp.
Thomas Montag
2009 Total Compensation: $29,930,431

JPMorgan Chase & Co.
James Dimon
2009 Total Compensation:
$9,274,494

Citigroup Inc.
John Havens
2009 Total Compensation: $11,276,454

Morgan Stanley
Walid Chammah
2009 Total Compensation: $10,021,969

The Goldman Sachs Group Inc.
Lloyd Blankfein
2009 Total Compensation: $9,862,657

Wells Fargo
John Stumpf
2009 Total Compensation: $21,340,547

It helps to put these compensation numbers in a bit of perspective.  If you were to earn $100,000 a year, it would take you 90 years of work to make $9 million dollars, which is still less than what any of the above made in just one year.

But, to a large extent, our anger at these people and their earnings is all very acceptable to those who profit from the status quo.  That is one reason that the media is willing to give visibility to (or actually encourage) the public anger over the issue.  Lowering executive salaries will do little to change the dynamics of a system that resists labor law reform, promotes free trade agreements, champions war spending, seeks privatization, ignores income inequality, and welcomes cuts in public services, etc.

Yes, we should be mad, but we need to focus our anger at the structures that really shape our lives.  In this regard, it is depressing to read what Andrew Kohut, president of Pew Research Center, has to say about the results of a series of recent Pew surveys.

In short, the surveys show that people are increasingly blaming the government for our problems and viewing a smaller, less interventionist public sector as the answer to our problems.  While existing government programs and policies are far from perfect, this perspective is a recipe for far greater suffering.  Afterall, the smaller the government, the more powerful business becomes.

Here is a sample of what Pew found:

By almost every conceivable measure, Americans are less positive and more critical of their government these days. . . .

As in the past, poor performance is the most persistent criticism of the federal government. But increasingly Americans say that government has the wrong priorities and that has a negative effect on their day-to-day lives. Sixty-two percent say that government policies unfairly benefit some groups, while nearly as many (56%) say that government does not do enough to help average Americans.

There is also growing concern about the size and power of the federal government. The public is now evenly divided over whether federal government programs should be maintained to deal with important problems or cut back greatly to reduce the power of government.

A desire for smaller government is particularly evident since Barack Obama took office. In four surveys over the past year, about half have consistently said they would rather have a smaller government with fewer services, while about 40% have consistently preferred a bigger government providing more services. In October 2008, shortly before the presidential election, the public was evenly split on this question.

The public is now divided over whether it is a good idea for the government to exert more control over the economy than it has in recent years. Just 40% say this is a good idea, while a 51% majority says it is not. Last March, by 54% to 37%, more people said it was a good idea for the government to exert more control over the economy. The exception here is the undiminished support for the government to more strictly regulate the way major financial companies do business. This is favored by a 61% to 31% margin.

We have a lot of work to do.

MAY DAY IS Coming

Make your plans—International Workers’ Day (May Day)  is coming.

SATURDAY, MAY 1st
Portland Oregon May Day March and Rally
Immigrants’ Rights Are Workers’ Rights!

11am: Gather at the SW Park Blocks (SW Park and Salmon)
12pm: Rally
1pm: March

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For more information on the Portland rally and march visit: http://maydaypdx.blogspot.com/

For more information on the history of May Day check out the following sites:

http://www.iww.org/projects/mayday/origins.shtml
http://www.marxists.org/subject/mayday/articles/tracht.html

Sadly, although U.S. workers played a leading role in the origins of International Workers’ Day, little is known in this country about that history.  In brief, in 1866, leftwing and trade union organizations met in London to form the International Workingmen’s Association or First International.  Its aim was to build international solidarity among working people.  The last Congress of the First International was held in 1876.

In 1889,  left and labor activists met in Paris to found the Second International.  At that gathering, delegates heard from workers from the United States about their struggle for the 8 hour day.  In response, the Paris Congress adopted the following resolution:

The Congress decides to organize a great international demonstration, so that in all countries and in all cities on one appointed day the toiling masses shall demand of the state authorities the legal reduction of the working day to eight hours, as well as the carrying out of other decisions of the Paris Congress. Since a similar demonstration has already been decided upon for May 1, 1890, by the American Federation of Labor at its Convention in St. Louis, December, 1888, this day is accepted for the international demonstration. The workers of the various countries must organize this demonstration according to conditions prevailing in each country.

The US government has since done what it can to rewrite the history of May Day.  For example, in 1921 the government declared May 1 to be “Americanization Day”.  In 1958 the government proclaimed it “Loyalty Day”.  Successive US presidents have continued this tradition, offering their own proclamations for the celebration of Loyalty Day.

Happily, despite their best efforts, they have failed to destroy the holiday’s true meaning–which is one of worker solidarity and empowerment rather than obedience to those in power.

Labor Videos

Laborstart.org is a website that provides daily reports on labor struggles throughout the world.  It just concluded its first annual competition to determine the best global labor video.

You can see the list of (and links to) the top five videos (by popular vote) here.

The winning video (from Australia) is below.  Enjoy.

Health Care Reform: We Still Need It

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[click on the above to enlarge it]

The Congress has finally passed and President Obama has signed a health reform bill.  What shall we make of it?  If we can somehow get beyond the screaming and exaggerations, we find that while the bill does include some positive changes, it is far from producing the health care system we need.

Most importantly it leaves in place, or in fact actually strengthens, the central role of private insurance in financing health care in the U.S., which means determining the nature and distribution of health care services in the country.

Here are some of the most problematic parts of the bill as described by the group Healthcare-NOW! (which supports a Medicare for All system):

* About 23 million people will remain uninsured nine years out resulting in an estimated 23,000 unnecessary deaths annually. One-third of these will be undocumented immigrants who will be excluded from purchasing private insurance.

* Millions of people who are not eligible for public health insurance programs Medicaid and Medicare will be pressured to buy commercial health insurance policies costing up to 9.5 percent of their income but covering an average of only 70 percent of their medical expenses, potentially leaving them vulnerable to financial ruin if they become seriously ill. Many will find such policies too expensive to afford or, if they do buy them, too expensive to use because of the high co-pays and deductibles.

* Those remaining uninsured will be fined up to 2.5% of their income.

* Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.

* The bill will drain about $40 billion from Medicare payments to safety-net hospitals, threatening the care of the tens of millions who will remain uninsured.

* People with employer-based coverage will be locked into their plan’s limited network of providers, face ever-rising costs and erosion of their health benefits. As the cost of insurance grows, they will be taxed on their benefits.

* Health care costs will continue to skyrocket, as the experience with the Massachusetts plan (after which this bill is patterned) amply demonstrates. The industry lobbying group, American Health Insurance Plans, came just short of announcing the industry’s next rate increase in its brief statement in response to the bill: “The access expansions are a significant step forward, but this legislation will exacerbate the health care costs crisis facing many working families and small businesses.”

* The much-vaunted insurance regulations – e.g. ending denials on the basis of pre-existing conditions – are riddled with loopholes, thanks to the central role that insurers played in crafting the legislation. Older people can be charged up to three times more than their younger counterparts, and large companies with a predominantly female workforce can be charged higher gender-based rates at least until 2017.

* It allows insurers to expand so-called wellness programs that let insurers penalize subscribers by hundreds—and even thousands—of dollars for not meeting certain ‘wellness targets,’ such as a particular cholesterol number, blood sugar measurement or body-weight target.

* Women’s reproductive rights will be further eroded, due to segregation of insurance funds for abortion from all other medical services.

To learn more about the positive features and severe limitations of the bill I recommend the following two (short) articles:

Diary of a wimpy health care bill

What’s in the health insurance bill, what’s not