It's All About Moving the Middle

There are an awful lot of Americans who view themselves as "middle of the road" folks, the kind of "ordinary people" who operate as much on a "gut feeling" of what's "common sense" as they do on a careful, time consuming analysis of details.

And, in my experience, these people don't tend to have a concrete viewpoint. They listen to what they consider to be "all sides of an issue" and then...split the difference. They have an unstated assumption that "the truth" or "reality" is necessarily 50% of the way between the most extreme views that they hear.

That approach has the advantage of being easy--no need for lots of thought, no need to change your mind once it's made up, no need to spend a whole lot of time reading, discussing, arguing. One side says 20, the other says 44, so it's "reasonable" that the answer should be 32. But if one extreme becomes even more extreme, so does the position of the middle of the roader. Change the competing positions to 20 and 80 and, just like that, the middle of the roader thinks that 50 is a nice, moderate choice. Even though that "moderate" choice is now more extreme than the number, 44, which used to be the extreme.

And these people tend to view themselves as "independents" who "think for themselves." Of course, these independents are the swing vote. Ask any political consultant worth a contract which group is most likely to decide a public election. The independent folks, those common sense-loving, complexity-fearing middle of the roaders.

And guess what? The people who want to manipulate public opinion know that this is how the middle of the roaders think. Which means that the smartest tactic for any group which is outnumbered among the electorate--as the super-rich and mega-corporations always are and always will be--is to move the middle much closer to the extreme end that they favor.

That's really what Fox, the Koch brothers, and others of that ilk have been up to for these past several decades: injecting ever more extreme positions into the public debate, so that the "middle," as computed by the independents, moves ever closer to the extreme positions advocated by the Murdoch, the Kochs, and the billionaires you don't even know.

If the extremes of the debate are that Social Security should be expanded and the benefits increased, at one end, and that Social Security has gone far enough and should be left alone, at the other end, the "split the difference" thinker is likely to decide that Social Security is pretty good, and we could reasonably expand it, but let's not raise the benefits. Change the extreme opposition view, however, to a claim that Social Security is a Communistic device doomed to failure and likely to play a role in the subjugation of the citizenry by a power-mad government, and where is the "middle of the roader" likely to end up?

That's where Fox news has really changed the game far more than most Americans recognize. That is where the mouthpieces--ranging from the rabid like Glenn Beck and Rush Limbaugh, to the pseudo-rational like Neil Cavuto--have really earned their propagandist stripes.

And that's where today's "mainstream" media play into the hands of the monied few and their highly compensated mouthpieces. The knee jerk approach of reporting all claims as plausible means that there is no one in the media, no one in a position of power, to point out that the claims at one extreme are, in fact, not only super extreme, but demonstrably untrue.

It does not matter that income tax rates during the heyday of America's success during the 20th century were far higher than they are today. What matters is that Fox and frauds present the current rates as "Socialistic" or even "communistic." The choice then is between whether we should raise the rates a little bit for people at the top end of the income scale, or whether we should cut the rates considerably for everybody, especially the super-rich. Split the difference and you get....

It's the mindless middle-of-the roader who is going to do us in if something doesn't change, and change quickly.

Ignorance Will Do Us In For Sure

What passes for public debate in America right now is a joke.

What passes for media coverage in America right now is a joke.

What passes for an economy in America right now is a joke.

The common cause of these wonderful facts is ignorance.

You can't, for example, have a serious public debate when a significant chunk of the debaters think the president is a Communistic Muslim who was born in Africa and hates freedom.

You can't, for example, have serious media coverage when the media is owned by commercial interests which are ignorant of the long term need for real information in order to maintain a country where freedom can flourish.

You can't, for example, have a serious economy when the voting public is completely ignorant of the real state of the economy, completely ignorant of the reasons why the economy is in that state, and completely ignorant of the available alternative approaches to "fixing it."

So let's all wring our hands about "the state of things," let's all sorrowfully hope that we can "learn a lesson" from the shootings in Tucson, let's all lament the rhetoric of violence and treason from the right, let's all hope that civility can prevail, let's all hope that things get better.

I'm pretty sure that all this hoping, hand wringing and lamenting served as the sound track for the downward spiral of many, many civilizations before this one.

Home values down, consumer credit up...WAY up

According to a report in Business Week, consumer credit debt--especially revolving credit such as credit card debt--is mushrooming:

Consumers boosted their borrowing more than expected in June, reflecting another hefty jump in credit card debt.
The Federal Reserve reported Tuesday that consumer credit rose at an annual rate of 6.5 percent in June. It marked the second straight sizable gain. Consumer credit rose by an even larger 7.9 percent in May.

The increase was led by an 8.4 percent rate of increase for revolving credit, the category that includes credit card debt. The category that includes auto loans rose at a 5.3 percent rate, the same as in May.

Total consumer credit rose by $13.2 billion in June to a record $2.459 trillion. The increase was double what economists had been expecting.

Consumer credit as measured by the Fed does not include mortgage debt. Analysts said the big rise in consumer credit reflects the slumping housing market and growing troubles in mortgage markets.
...
Homeowners are unable to borrow against their homes so they are turning back to their credit cards," said Mark Zandi, chief economist at Moody's Economy.com.

Zandi predicted this trend would continue for the next year or so until the housing market stabilizes and home prices start rising again.

If the credit card debt continues to rise at anything near these percentages, get ready for a wave of consumer bankruptcies within a year.

Not that this would put a dent in credit card debt, given the recent report that bankrupt consumers still get flooded with offers of more credit:

Credit-card companies target people fresh out of bankruptcy with credit offers, according to a study that found that nearly 100 percent of more than 300 families surveyed had been offered new credit cards within a year after completing Chapter 7 bankruptcy proceedings.

The findings show "how the credit industry seeks to profit from financial distress," said the study's author.

Can David Brooks be Reality-Based?

David Brooks is one of the few people in the world who has the New York Times editorial page for a platform. Why he has it is anybody's guess, but it probably isn't because of his economic acumen, honesty or openness, judging from his latest column A Reality-Based Economy.

Brooks is beating his usual drum here: things are soooo much better than us gloomy naysayers say. In this case, he's nominally taking to task the Democratic presidential candidates:

If you’ve paid attention to the presidential campaign, you’ve heard the neopopulist story line. C.E.O.’s are seeing their incomes skyrocket while the middle class gets squeezed. The tides of globalization work against average Americans while most of the benefits go to the top 1 percent.
This story is not entirely wrong, but it is incredibly simple-minded. To believe it, you have to suppress a whole string of complicating facts.

Not "entirely wrong." That's an understatement if I ever heard one. What complicating "facts" do I have to suppress in order to think that CEO's are seeing their incomes skyrocket while the middle class gets squeezed? These, essentially:

• After a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years


• Earnings for the poorest fifth of Americans are also on the increase


• Despite years of scare stories, income volatility is probably not trending upward


• Recent rises in inequality have less to do with the grinding unfairness of globalization than with the reality that the market increasingly rewards education and hard work


• Companies are getting more efficient at singling out and rewarding productive workers


• Another reason for rising inequality is that upper income workers are putting in more hours, while lower income workers are putting in less


• It’s "not at all clear that the big winners in this economy are self-dealing corporate greedheads who are bilking shareholders" (he cites a study showing that “the top 25 hedge fund managers combined appear to have earned more than all 500 S.&P. 500 C.E.O.’s combined.”)


• To the extent that C.E.O. pay packets have thickened (and they have), there may be good economic reasons (the bigger a company gets, the more a talented C.E.O. can do to increase earnings)


• We’re in the middle of one of the greatest economic eras ever: global poverty has declined at astounding rates; globalization boosts each American household’s income by about $10,000 a year; thanks to all the growth, tax revenues are at 18.8 percent of G.D.P., higher than the historical average and the deficit is down to about 1.5 percent of G.D.P., below the historical average)

You know, if all that's true....but then how in the world would Brooks or anyone else know that "globalization boosts each American household’s income by about $10,000 a year?" And what do a lot of those things have to do with whether the top is getting rich and the middle is getting squeezed? Does it really matter, for example, whether the people getting the richest the fastest are hedge fund managers or CEOs?

Income volatility is probably not trending upward--meaning it could be, and what the hell is his source?

Then there's the sly little attempt to make you think that real wages are going great guns. I took the time and effort to check that one out, and if that claim is representative of how he arrived at his other "inconvenient facts," then he deliberately misrepresenting at worst and grossly incompetent at best.

Here's the story on real wages. He's right about the 2+ % rise in 2006. But there's a reason he chose 2006, leaving out the several years before it and the performance so far in 2007.

All the following figures are from the BLS Archived News Releases r.e. Real Earnings.

Monthly 2007 changes in real earnings show a significant net loss of purchasing power so far this year:

Jan...............-.3
Feb..............-.3

Mar.............+.1

Apr............. -.5

May.............-.4

June.............+.5

And here are the year-end statements as to changes in real earnings for 1995 through 2006:
Average weekly earnings rose by 4.5 percent, seasonally adjusted, from December 2005 to December 2006. After deflation by the CPI-W, average weekly earnings increased by 2.1 percent.
Average weekly earnings rose by 3.1 percent, seasonally adjusted, from December 2004 to December 2005. After deflation by the CPI-W, average weekly earnings decreased by 0.4 percent.

Average weekly earnings rose by 3.3 percent, seasonally adjusted, from December 2003 to December 2004. After deflation by the CPI-W, average weekly earnings decreased by 0.2 percent.

Average weekly earnings rose by 1.7 percent, seasonally adjusted, from December 2002 to December 2003. After deflation by the CPI-W, average weekly earnings were unchanged.

Average weekly earnings rose by 3.0 percent, seasonally adjusted, from December 2001 to December 2002. After deflation by the CPI-W, average weekly earnings rose by 0.5 percent.

Average weekly earnings rose 4.1 percent, seasonally adjusted, from December 2000 to December 2001. After deflation by the CPI-W, average weekly earnings rose 2.9 percent.

Average weekly earnings rose by 3.0 percent, seasonally adjusted, from December 1999 to December 2000. After deflation by the CPI-W, average weekly earnings fell by 0.4 percent.

Average weekly earnings rose by 3.4 percent, seasonally adjusted, between December of 1998 and 1999. After adjustment for inflation, average weekly earnings grew by 0.6 percent.

Average weekly earnings rose by 3.4 percent between December of 1997 and 1998 as a result of a 3.7 percent increase in average hourly earnings which was partially offset by a 0.3 percent decline in average weekly hours. After adjustment for a 1.6 percent increase in the CPI-W over the same period, real average weekly earnings grew by 1.8 percent.

Real average weekly earnings decreased by 0.6 percent from November to December after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S.Department of Labor. This loss was due to a 0.6 percent drop in average weekly hours and a 0.1 percent rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The decline was partly offset by a 0.1 percent increase in average hourly earnings.

Before seasonal adjustment, average weekly earnings increased by 3.4 percent between December of 1996 and 1997 as a result of a 3.7 percent increase in average hourly earnings and a 0.3 percent loss in average weekly hours. After adjustment for a 1.5 percent gain in the CPI-W over the same period, real average weekly earnings grew by 1.9 percent.

Before seasonal adjustment, average weekly earnings increased by 5.2 percent between December of 1995 and 1996 as a result of a 4.0 percent increase in average hourly earnings and a 1.2 percent increase in average weekly hours. After adjustment for a 3.3 percent gain in the CPI-W over the same period, real average weekly earnings grew by 1.8 percent.

We can compare this to several sources on executive pay. This, for example, from Forbes in:
1. April of 2005: "The heads of America's 500 biggest companies received an aggregate 54% pay raise last year. As a group, their total compensation amounted to $5.1 billion, versus $3.3 billion in fiscal 2003."

2. May of 2007: "The chief executives of America's 500 biggest companies got a collective 38% pay raise last year, to $7.5 billion. That's an average $15.2 million apiece."

Or this, from Lab Manager magazine in April of 2007: "While the median change in CEO total direct compensation (salary, bonus and long-term incentives) was 8.9 percent, corporate net income increased by 14.4 percent, up from 13 percent in 2005, and total shareholder return was 15.1 percent, more than double the 6.8 percent return in 2005."

Then there is this long term chart from Mercer Human Resource Consulting on the year to year percentage change in CEO compensation, exempt employee compensation, corporate profits, and the Consumer Price Index (CPI) covering 1996 to 2005:

Year.............CEO*...........Exempt.employees*.......Corporate.profits........Annual CPI

1996.............5.2%....................4.0%...............................11.0%.......................3.0%

1997............11.7%...................4.2%..............................8.9%.........................2.3%

1998.............5.2%....................4.2%................................5.0%.........................1.6%

1999............11.0%...................4.2%...............................15.1%........................2.2%

2000............10.0%....................4.2%................................8.9%........................3.4%

2001.......minus2.8%.....................4.4%.........................minus17.8% ......................2.8%

2002.............10.0%....................3.8%...............................14.8%.......................1.6%

2003...............7.2%....................3.6% ..............................19.2%........................2.3%

2004..............14.5%...................3.4%...............................23.0%........................2.7%

2005...............7.1%....................3.6%...............................13.0%........................3.4%

(1) Annual compensation comprised of salary + bonus

Brooks closes his column with the statement that "Whoever gets globalization right will have a bright future, and in the long run, the facts matter." The facts matter, alright. It's too bad he gets so many wrong, so many irrelevant, and so many from undisclosed sources.

Nor is this the first time Brooks has published really questionable stats that make economists scratch their heads (and wonder why he, of all people, merits space on the Times editorial page). Check out this on AlterNet and this on Brad DeLong's blog.

That White House love of the four Ss: science, spin, and spinning science

July 11, 2007
Surgeon General Sees 4-Year Term as Compromised
By GARDINER HARRIS
WASHINGTON, July 10 — Former Surgeon General Richard H. Carmona told a Congressional panel Tuesday that top Bush administration officials repeatedly tried to weaken or suppress important public health reports because of political considerations.

The administration, Dr. Carmona said, would not allow him to speak or issue reports about stem cells, emergency contraception, sex education, or prison, mental and global health issues. Top officials delayed for years and tried to “water down” a landmark report on secondhand smoke, he said. Released last year, the report concluded that even brief exposure to cigarette smoke could cause immediate harm.

Dr. Carmona said he was ordered to mention President Bush three times on every page of his speeches. He also said he was asked to make speeches to support Republican political candidates and to attend political briefings.

And administration officials even discouraged him from attending the Special Olympics because, he said, of that charitable organization’s longtime ties to a “prominent family” that he refused to name.
...
Dr. Carmona refused to name specific people in the administration who had instructed him to put political considerations over scientific ones. He said, however, that they included assistant secretaries of health and human services as well as top political appointees outside the department of health.

Dr. Carmona did offer to provide the names to the committee in a private meeting.
...
He described attending a meeting of top officials in which the subject of global warming was discussed. The officials concluded that global warming was a liberal cause and dismissed it, he said.

If that doesn't make you sick enough, try this: a White House spokeswoman tried to spin it that Carmona was at fault for not resisting the pressure from...the White House:

Emily Lawrimore, a White House spokeswoman, said the surgeon general “is the leading voice for the health of all Americans.”

“It’s disappointing to us,” Ms. Lawrimore said, “if he failed to use this position to the fullest extent in advocating for policies he thought were in the best interests of the nation.”

Internal Displacement of Iraqis said to be 'Human Tragedy Unprecedented in Iraq's History'

According to the blog Iraq Slogger, a recent report from the Iraqi Red Cresent calls the displacement of Iraqis within the country a "Human Tragedy Unprecedented in Iraq's History."

According to the blog:

• the number of internally displaced people (IDP's) in Iraq has quadrupled since January and is up eight times from a year ago.


• many IDP's take refuge in the house of extended family or a friend, while others squat illegally in abandoned houses, live on the streets or in makeshift mud huts and tin shacks; tens of thousands of others live in tent cities.


• the province with the greatest number of IDP's is Ninevah (Mosul area), with 239,547, followed by Baghdad, with 196,227.

The full report isn't readily available, but can be ordered through the blog.

An apparently different report from Oxfam duscussed on the Associated Content web site adds more grim info:

• 1 in 3 Iraqis are in a desperate humanitarian situation, having trouble meeting their basic humanitarian needs for water, food, sanitation, or shelter


• 4 million Iraqis (15% of the population) regularly can not buy enough to eat


• 70% of Iraqis do not have adequate water supplies


• more than 2 million people have been displaced inside Iraq


• an additional 2 million Iraqis have become refugees predominantly in Syria and Jordan

The full version of that report is available, here

God, secular schools, and religiosity, then and now

A few quotes from recent days and a few from the glory days of Fascism:

1. Evils of public, secular schools:

"Secular schools can never be tolerated because such a school has no religious instruction and a general moral instruction without a religious foundation is built on air; consequently, all character training and religion must be derived from faith.... We need believing people."
-- Adolf Hitler, April 26, 1933

"I hope I live to see the day when, as in the early days of our country, we won’t have any public schools. The churches will have taken them over again and Christians will be running them. What a happy day that will be!"
-- Jerry Falwell

___________________
2. Good guys doing God's work:

“Hence today I believe that I am acting in accordance with the will of the Almighty Creator: - by defending myself against the Jew, I am fighting for the work of the Lord” — Adolph Hitler

"We were convinced that the people needs and requires this faith. We have therefore undertaken the fight against the atheistic movement, and that not merely with a few theoretical declarations: we have stamped it out."
-- Adolf Hitler

"We want to fill our culture again with the Christian spirit … We want to burn out all the recent immoral developments in literature, in the theater, and in the press. . .we want to burn out the poison of immorality which has entered into our whole life and culture as a result of liberal excess."
-- Adolf Hitler

"Get the few liberals out. If you don’t do it, it ain’t gonna be done. You will be doing the Lord’s work, and he will richly bless you for it."–Sen. James Inhofe, R-Oklahoma, describing the goals of the 2004 elections at the Christian Coalition’s Road to Victory Conference, 2002, Washington D.C.

"He [God] is using me, all the time, everywhere, to stand up for a biblical worldview in everything that I do and everywhere I am."
-- House Majority Leader Tom DeLay
________________________
3. Our heaven-sent leaders:

"God gave the savior to the German people. We have faith, deep and unshakeable faith, that he was sent to us by God to save Germany."
--Hermann Goering, speaking of Hitler

"Why is this man in the White House? The majority of Americans did not vote for him. Why is he there? And I tell you this morning that he's in the White House because God put him there for a time such as this."
--Lt Gen William Boykin, speaking of G. W. Bush, New York Times, 17 October 2003

"He [Rumsfeld] leads in a way that the Good Lord tells him is best for our country."
-- Marine General Peter Pace, chairman of the Joint Chiefs of Staff
_________________
4. Bonus quote from the one and only James (Has Anyone Seen My Mind?) Inhofe, in his 1999 official statement on the impeachment of Clinton (his closed-door impeachment statement that was released into the Congressional Record on February 12, 1999):

"I sometimes say one of the few qualifications I have for the U.S. Senate is I am not a lawyer. So that when I read the Constitution, I know what it says; when I read the oath of office, I know what it says; when I read the law, I know what it says. I don't have to clutter up my mind with what the definition of 'is' is. So it makes it a little easier for me.

...
"as a non-attorney, I have a hard time reconciling the idea that there might be certain permissible exceptions to telling the truth under oath. Maybe you who are attorneys, and have a different background than mine, see it differently. But how can you reconcile this idea that under some conditions--if the subject matter is sex or something else--you can lie under oath? I really have a hard time with this.
.....
"Sometimes when I am not really sure I am right, I consult my best friend. His name is Jesus. And I asked that question. Now I will quote to you the response that is found in Luke: 'From one who has been entrusted with more, much more will be asked.'

"Mr. Chief Justice, I think Jesus is right."

What Consumers See Versus What Wall Street Sees

The Bureau of Labor Statistics recently released their reports on inflation and real wages for May, along with the usual recap of recent trends for those figures.

Real earnings dropped again for May:

Real average weekly earnings fell by 0.2 percent from April to May after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.3 percent increase in both average weekly hours and average hourly earnings was more than offset by a 0.8 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
...
Average weekly earnings rose by 4.1 percent, seasonally adjusted, from May 2006 to May 2007. After deflation by the CPI-W, average weekly earnings increased by 1.4 percent.

So why did real wages go down? Because the cost of energy, especially gasoline, and the cost of food, were up significantly according to the Consumer Price Index release:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in May, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The May level of 207.949 (1982-84=100) was 2.7 percent higher than in May 2006.

...
During the first five months of 2007, the CPI-U rose at a 5.5 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 2.5 percent for all of 2006. The acceleration thus far this year was due to larger increases in the energy and food components. The index for energy advanced at a 36.0 percent
SAAR in the first five months of 2007 compared with 2.9 percent in 2006. Petroleum-based energy costs increased at a 63.9 percent annual rate and charges for energy services rose at a 6.8 percent annual rate. The food index has increased at a 6.2 percent SAAR thus far this year, following a 2.1 percent rise for all of 2006.
Excluding food and energy, the CPI-U advanced at a 2.1 percent SAAR in the first five months, following a 2.6
percent rise for all of 2006.

A more specific breakdown of inflation over the past three months can help pinpoint the areas really seeing high inflation:

Compound annual 3-month rate of change, ending May:

Energy-------------------70.0
Food and beverages----4.2
Housing------------------2.5
Apparel------------------(-)6.6
Transportation----------30.6
Medical care------------3.3
Recreation----------------.9
Education and
communication---------5.3
Other goods and
services------------------3.0

Special Indexes
Energy-----------------71.0
Food-------------------4.2
All Items less
food and energy------1.6

So the highest rate of cost increase is in energy, followed by education/communication, food, and medical care. Try avoiding those goods and services. In contrast, apparel (a relatively avoidable cost if you're really strapped for cash) is down 6.6%, and discretionary recreation rose less than 1%. Does that make you feel good?

Probably not, and for much the same reason that the NY Times reported on Saturday that:

A closely watched survey by the University of Michigan released yesterday found that consumer confidence this month dropped to the lowest level in 10 months. Americans also now expect significantly higher inflation than they expected a few months ago, the survey said.

Wall Street had a very different reaction, according to the NY Times:

Wall Street barreled higher again yesterday after the week’s most anticipated economic reading indicated that inflation excluding the price of gasoline remained tepid last month, easing some concerns that have jolted stock and bond markets in recent sessions.
...
The three major stock indexes finished the week higher, even as yesterday’s Consumer Price Index showed prices rose at the fastest pace in 20 months in May as the cost of gas jumped. Investors were enthusiastic that the core index, which excludes food and energy prices, rose 0.1 percent. The figure, which the inflation-wary Federal Reserve watches closely, was below the 0.2 percent increase Wall Street expected.

I don't know if the difference between the consumer response and the investor response represents a true disconnect or just a disagreement over the likely future rate of inflation. But as I've said in another post, the rising cost of food--which seems much steeper to me than the official figure from the BLS--is actually changing grocery shopping habits in the area where I live, to the benefit of Aldi's, a discount, bring-your-own-bags German grocery.

I don't think inflation of the essentials of food, medical care, and education will be moderating any time soon. I have real doubts that gas prices will moderate in the long term, and I don't think most Americans have any real alternatives to buying gas, given that most public transportation has been dismantled, and almost all retail shopping of any significance is now unreachable on foot.

Where Did All Those Trumpeted New Jobs Go?

According to the monthly reports from the Bureau of Labor Statistics (BLS), the US economy gained a net of almost half a million jobs in the third quarter of 2006. Then BLS issued its aggregate quarterly report earlier this month, titled "BUSINESS EMPLOYMENT DYNAMICS: THIRD QUARTER 2006."

Like magic, most of the new jobs announced in the monthly reports disappeared. Instead of a net gain of almost half a million, BLS says the net gain was 19,000. That's not a type--nineteen thousand. Somewhere around 4% of the previously announced total.

Possibly worse is that the total number of private sector firms dwindled by some 8,000 in the third quarter of 2006--8,000 more businesses dies than were born.

An excerpt of relevant material from the quarterly summary:

Private Sector Establishment-Level Gross Job Gains and Job Losses
Opening and expanding private sector business establishments gained 7.4 million jobs in the third quarter of 2006, a decrease of 397,000 from the previous quarter. Over the third quarter, expanding establishments added 6.0 million jobs, while opening establishments added 1.4 million jobs.

Gross job losses totaled 7.3 million, an increase of 50,000 from the previous quarter. During the quarter, contracting establishments lost 6.0 million jobs, while closing establishments lost 1.3 million jobs. (See tables A, 1, and 3.)

The difference between the number of gross jobs gained and the number of gross jobs lost yielded a net change of 19,000 jobs in the private sector for third quarter 2006.

From June 2006 to September 2006, gross job gains represented 6.5 percent of private sector employment, while gross job losses represented 6.5 percent of private sector employment. (See tables A and 2.) These gross job gain and loss statistics demonstrate that a sizable number of jobs appear and disappear in the relatively short time frame of one quarter.

Number of Establishments Gaining and Losing Employment

Another way to look at the dynamics of business activities is to monitor the number and proportion of business units that are growing and declining. The third quarter of 2006 represented the first quarter where the number of contracting establishments exceeded the number of expanding establishments since the second quarter of 2003. Out of 6.9 million active private-sector establishments, a total of 1,865,000 establishments gained jobs from June 2006 to September 2006. (See table C.) Of these, 1,524,000 were expanding establishments and 341,000 were opening establishments. During the quarter, 1,542,000 establishments contracted and 349,000 establishments closed, resulting in 1,891,000 establishments losing jobs.

Overall, the number of active private sector establishments decreased by 8,000 during the quarter. This change is the difference between the number of opening establishments and the number of closing establishments.

What in the world could cause such a discrepancy between the monthly and quarterly figures? The report in the NY Times notes:

The figures do not cover exactly the same things, as a small proportion of employers — notably railroads and religious organizations — are not covered by unemployment insurance. And Kirk Mueller, a branch chief in the section of the bureau that deals with current employment statistics, said differing seasonal adjustment factors could affect the results.

Nonetheless, the Times piece also states that "Eventually, the monthly numbers will be revised to reflect the results of the quarterly survey." In other words, the quarterly figures will be treated as the final figures.
Nineteen thousand jobs over three months. Around 4% of the previously announced net gain.

Eight thousand more private sector employers going out of business than entering business.

Anyone want to reconsider the state of the economy?

Economic Mobility Report from Pew

Following up on the earlier post on whether rags to riches tales in America are just myths, note that the Pew Trusts have issued a short report on economic mobility.

Relevant excerpts on the background issues of American attitudes and statistics on the American distribution of wealth:

As the data in Figure 2 indicate, the Congressional Budget Office finds that between 1979 and 2004, the real after-tax income of the poorest one-fifth of Americans rose by 9 percent, that of the richest one-fifth by 69 percent, and that of the top 1 percent by 176 percent. Focusing on the familiar story of rising inequalities between CEOs and their employees yields figures that are perhaps even more striking. Between 1978 and 2005, CEO pay increased from 35 times to nearly 262 times the average worker’s pay.4 Said another way, by 2005, the typical CEO made more in an hour than a minimum-wage worker made in a month.
...
Perhaps driven by widening inequality and a concern about the fairness of the game, there is a tangible and growing sense of pessimism among the American public. In exit polls after the 2006 election, less than one- third of the voters said that they thought life would be better for the next generation.5 In another poll, over half of Americans surveyed thought that the American Dream is no longer attainable for the majority of their fellow citizens.6 Other polls suggest that Americans are increasingly worried that they will be able to maintain the standard of living they currently enjoy.7
...
In a March 2007 Pew Research Center poll, 73 percent of respondents — an 8 percentage increase since 2002 — agreed with the statement, “Today it’s really true that the rich just get richer while the poor just get poorer.”9
...
One thing is clear. A society with little or no absolute mobility is one in which for every winner there is a loser. It’s a zero sum game. And a society with little or no relative mobility is one in which class, family background or inherited wealth loom large. Equal opportunity is a mirage. Recalling the three hypothetical societies, it is easy to envision why, for these reasons, high levels of both absolute and relative mobility are desirable. Society should strive for both. But rates of growth in mature economies are often slower than they are in societies that are still developing, and this fact makes a focus on relative mobility of increasing importance.

The report also includes a graph which compares "The U.S. versus the world." Here are the percentages of people agreeing with statements that:

1. “People get rewarded for intelligence and skill”
US------------------------------------69%

Median response from
25 other countries-----------------39%


2. "People get rewarded for their efforts”

US------------------------------------61%

Median response from
25 other countries-----------------36%


3. Coming from a wealthy family is ‘essential’ or ‘very important’ to getting ahead”

US------------------------------------19%

Median response from
25 other countries-----------------28%

4. “Income differences in this [country] are too large”

US------------------------------------62%

Median response from
25 other countries-----------------85%


5. “It is the responsibility of government to reduce differences in income”

US------------------------------------33%

Median response from
25 other countries-----------------69%


Note however that presenting the "median" from the other countries can be misleading. Looking at the above, you could easily assume that the US opinion was drastically different than ALL the other 25 countries, when in reality some of the 25 countries expressed more extreme views than the US. The ranges of responses from individual countries, for example, ranged from 5%–69% on question 1. On question 2 the range was 5 to 64; on question 3 it was 10 to 61; on question 4 it was 62 to 98; and on question 5 it was 33 to 89.

The Wealth of Nations Revisited; Awareness as the Key

Adam Smith's famous "invisible hand" purportedly led all individuals to follow their own self interest in a way that produced the greatest good for all. Just reading that idea leaves me shocked--shocked that such a counterintuitive idea has come to be so thoroughly accepted by really smart people with really good educations.

On the micro level, the idea doesn't hold up at all. Just imagine living in a relationship with other human beings in one family household. If the husband always acts only for his own self interest, how exactly will that serve the interests of the family? How does the family benefit if dad spends the entire month's food budget on a trip to Las Vegas? The same analysis holds for the wife, and the same holds for each child.

The one way in which Smith's theory might apply to a family is if each member of the family recognizes that part of his/her self interest is the health and survival of the family unit. If Dad recognizes that going to Las Vegas will cause the family hardship, and is sufficiently committed to the family that he views family hardship as contrary to his self interest, he won't take the trip.

It seems to me that need to recognize that the health of the larger unit is part of the self interest of the individual is the key to Smith's theory. Without that recognition, I think Smith's theory turns out to be false in many circumstances. With that recognition, however, Smith's theory holds up much more frequently. But it still suffers from failure to recognize that individuals do not, in fact, follow what is in their self interest, they only follow what they perceive to be in their self interest. If their perception is wrong, if they stink at understanding their own self interest, they will not produce what is good for all of us.

So how in the hell does Adam Smith manage to hold the allegiance of so many smart, educated people? Easy. There are two parts to that answer:

1. Smith's Followers Are Among Those Who Misperceive Their Own Self Interest

Many Smith followers are the very people who cannot understand how their own interests are affected by the interests of others. They are the ones that cannot see how a massive increase in poverty in their own country will be bad for them, even though they have millions upon millions of dollars. They are the ones who think that self interest is measured only in the short term, and only in terms of $$ and power.

2. Smith's Followers Frequently Don't Understand Smith

As JK Galbraith could have told you, many Smith lovers simply find his theory a convenient cover for being as selfishly greedy as they feel like being. They are uninterested in what Smith actually thought, only in how they can act as selfishly as possible and still claim to be doing good for the rest of us.

Smith did not write in a vacuum of time, and Smith did not speak as unqualifiedly as he is portrayed as having spoken.

Here, for example, is one author's summary of the explicit and implicit limits on Smith's theory:

Classical free market economic theory originated with Adam Smith and David Ricardo in the early days of the Industrial Revolution (late 1700s, early 1800s). It was intended to apply under certain conditions and certain conditions only, namely:

(1) All business was small-to-medium sized and entrepreneurial (not corporate). Mostly the people who ran the business owned the business, and financed it with their own capital, or capital raised in partnership with others (1). There were stock exchanges, but corporations (joint stock companies) were rare and required a special act of parliament, so there were few of them listed (2).

(2) The free market was defined as a market of potentially unlimited numbers of these small/medium sized businesses, competing on a more or less equal footing, in a market which newcomers could freely enter, and in which none could control prices.

(3) The economy was national; capital must not flow freely across national borders or the theory did not hold (Ricardo)(5).

(4) The market had to be supervised by a sovereign government which (a) protected the public interest (b) made sure all businesses played by the rules (c) provided a stable currency, and (d) ran public utilities, which were regarded as not profitable for private enterprise.

Here's a concrete example of limitations in Smith's The Wealth of Nations (emphasis added):

...every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

How many people leave out that FREQUENTLY qualifier? How many people leave out the fact that he talked about ANNUAL REVENUE as an equivalent of the greater good? How many people are aware of Smith's assumption that people prefer support of domestic industry to that of foreign industry?

Probably just as important, how many people realize:

--Smith was deeply religious, and believed that God Himself had endowed human beings with such character that they would produce good simply by following their self interest?

--Smith described a world in which most business, especially domestic business, was not corporate, but sole proprietors, with no distance between ownership and management, and no means of limiting the personal liability of the owner?

--Smith described a world in which it was quite difficult for capital to travel from one nation to another, and barriers of physical distance virtually precluded the import of goods and services which were already available locally?

JK Galbraith realized those things. Milton Friedman....probably not.

Proof of citizenship requirements takes its toll on Oregon health care

The federal mania for ID requirements, manifest as a requirement that you prove US citizenship in order to get state health benefits to which the feds contribute, has apparently taken a bite out of the butt of the group most sane people predicted would be hurt by the new requirement: legal citizens fully eligible for the benefits.

From Oregon Live:

PORTLAND, Ore. (AP) — According to a state report, more than 1,000 Oregonians have been denied access to health services under a new federal law that requires them to prove they are citizens.

State officials say they think almost all of the people affected are citizens. But they, or their parents, were unable or unwilling to round up all the required documents, according to a the recent report from the Oregon Department of Human Services.

The report looked at the experience of nearly 200,000 people in 125,000 Oregon families who had to prove their citizenship to get or retain state health services during the first six months the law was in effect — September 2006 through February 2007.

It found that 99 percent of them eventually were able to qualify, but that 1,011 Oregonians were cut out of state programs. Many of the people cut were children.

The law was designed to save money by ensuring that illegal immigrants do not get free health care on the government's tab. But an earlier Oregon study found that few noncitizens were receiving government-paid health care, and officials say few of the people denied coverage in Oregon under the new law are noncitizens.

Of those turned down for lack of proof, 91 percent came from English-speaking households, the report says. Only three Spanish-speaking adults were unable to document their citizenship.

The state tried to help people by checking Oregon birth certificates via computer for free. It also devoted thousands of hours to retraining employees and spent $44,000 buying certified copies of birth certificates and other documents from other states for applicants who could not afford them.

Do you mean to tell me that the federal lawmakers were unaware that a big chunk of US citizens does not run around with their certified birth certificates, and pretty much lacks the money and the knowledge to go about acquiring those birth certificates?

"Real earnings" fall again

From today's Bureau of Economic Analysis reports on real earnings and on inflation:

[real earnings]
Real average weekly earnings fell by 0.5 percent from March to April after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.3 percent decline in average weekly hours and a 0.5 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) were partially offset by a 0.2 percent rise in average hourly earnings.
...

Average weekly earnings rose by 3.4 percent, seasonally adjusted, from April 2006 to April 2007. After deflation by the CPI-W, average weekly earnings increased by 0.9 percent. Before adjustment for seasonal change and inflation, average weekly earnings were $589.90 in April 2007, compared with $566.81 a year earlier.

[inflation]
During the first four months of 2007, the CPI-U rose at a 4.8 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 2.5 percent for all of 2006. The acceleration thus far this year was due to larger increases in the energy and food components. The index for energy advanced at a 25.3 percent SAAR in the first four months of 2007 compared with 2.9 percent in 2006. Petroleum-based energy costs increased at a 40.0 percent annual rate and charges for energy services rose at a 9.4 percent annual rate. The food index has increased at a 6.7 percent SAAR thus far this year, following a 2.1 percent rise for all of 2006. Excluding food and energy, the CPI-U advanced at a 2.2 percent SAAR in the first four months, following a 2.6 percent rise for all of 2006.
....
Medical care costs rose 0.4 percent in April and are 4.0 percent higher than a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.4 percent, as did the index for medical care services . Within the later group, the index for professional services was virtually unchanged, while the index for hospital and related services increased 0.8 percent.

Try paying college tuition on those wages. Or going on any kind of vacation. OR keeping your health insurance. Or....

Are the rags to riches tales really just myths?

An enduring belief of most Americans is that we have greater mobility than folks in other countries: poor boy makes good, every kid can grow up to be president.......

But a piece in June's The Atlantic magazine, titled "Rags to Rags, Riches to Riches," by Senior Editor Clive Crook (page 23), casts some serious doubt on whether that belief is based on reality. According to him:

Most researchers now give America much lower marks than they used to for intergenerational economic mobility.
...
America stands lower in the ranking of income mobility than most of the countries whose data allow the comparison, scoring worse than Canada, all the Scandinavian countries, and possibly even Germany and Britain (the data are imperfect, and different studies give slightly different results).
...
Strikingly, the research suggests that mobility within America's middle-income bands is similar to that in many other countries. The stickiness is at the top and the bottom.

Crook doesn't cite the data he's talking about, but I found a study by Tom Hertz, of American University, which he conducted for the Center for American Progress. Dated April 26, 2006, this is the study's Summary:

Summary
This report discusses two aspects of economic mobility in the United States. The first is the question of intergenerational mobility, or the degree to which the economic success of children is independent of the economic status of their parents. A higher level of intergenerational mobility is often interpreted as a sign of greater fairness, or equality of opportunity, in a society.

The second aspect is the short-term question of the amount by which family incomes change from year to year. By studying short-term mobility we can determine whether incomes are rising or falling for families at different points in the income distribution. We can also determine whether the size of these income variations, or the level of annual income volatility, is changing over time. Increased volatility is undesirable to the extent that it represents an increase in economic insecurity.

The key findings relating to intergenerational mobility include the following:

• Children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution, versus children of the rich who have about a 22 percent chance.


• Children born to the middle quintile of parental family income ($42,000 to $54,300) had about the same chance of ending up in a lower quintile than their parents (39.5 percent) as they did of moving to a higher quintile (36.5 percent). Their chances of attaining the top five percentiles of the income distribution were just 1.8 percent.


• Education, race, health and state of residence are four key channels by which economic status is transmitted from parent to child.


• African American children who are born in the bottom quartile are nearly twice as likely to remain there as adults than are white children whose parents had identical incomes, and are four times less likely to attain the top quartile.


• The difference in mobility for blacks and whites persists even after controlling for a host of parental background factors, children’s education and health, as well as whether the household was female-headed or receiving public assistance.


• After controlling for a host of parental background variables, upward mobility varied by region of origin, and is highest (in percentage terms) for those who grew up in the South Atlantic and East South Central regions, and lowest for those raised in the West South Central and Mountain regions.


• By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.

Key findings relating to short-run, year-to-year income movements include the following:

• The overall volatility of household income increased significantly between 1990-91 and 1997-98 and again in 2003-04.


• Since 1990-91, there has been an increase in the share of households who experienced significant downward short-term mobility. The share that saw their incomes decline by $20,000 or more (in real terms) rose from 13.0 percent in 1990-91 to 14.8 percent in 1997-98 to 16.6 percent in 2003-04.


• The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile ($122,880 and up) saw a reduction in the frequency of large negative income shocks.


• For the middle class, an increase in income volatility has led to an increase in the frequency of large negative income shocks, which may be expected to translate to an increase in financial distress.


• The median household was no more upwardly mobile in 2003-04, a year when GDP grew strongly, than it was it was during the recession of 1990-91.


• Upward short-term mobility for those in the bottom quintile has improved since 1990-91, with no significant offsetting increase in downward short-term mobility.


• Households whose adult members all worked more than 40 hours per week for two years in a row were more upwardly mobile in 1990-91 and 1997-98 than households who worked fewer hours. Yet this was not true in 2003-04, suggesting that people who work long hours on a consistent basis no longer appear to be able to generate much upward mobility for their families.

Those year-to-year income movements findings are as grim as the intergenerational findings; "overall volatility of household income increased significantly between 1990-91 and 1997-98 and again in 2003-04" indeed.

It's unfortunately difficult to make these mobility measurements with any precision, of course, and there are many different aspects of "income mobility" that could be measured. A study titled "The Many Facets of Economic Mobility," by Gary S. Fields of Cornell University, published in July, 2005 is a good source for anyone wanting to get into more detail. But Crook's article and the Center for American Progress study don't bode well for our self image as Americans.

Now the Pew Trusts is investing more than $2 million, to fund a joint study of the ability of Americans to improve their economic status both during their lifetimes, and from generation to generation. The study is to be performed by four Washington think tanks: The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute.

On the Pew web site, the project is described as follows:

For the first time, data related to economic mobility in the United States will be consolidated and presented in terms the American public and policymakers can understand, debate and discuss. How do my children’s opportunities for economic advancement compare to mine, to those of my parents? Is mobility thriving in other countries while waning here in the U.S.? How much economic mobility is there for people in poverty? To what extent is mobility affected by inherited wealth? How is mobility impacted by gender, race, and level of education?

Sounds like it will be worth reading. Assuming that representatives of those four think tanks can actually agree on the state of things, which is asking a lot given today's state of partisan warfare, how inflammatory the study would be if it confirms Crook's feeling that mobility is greatly exaggerated, and the types of folks who fund the two conservative think shops.

Tax rebels insist it's freedom or body bags

In New Hampshire, there is a a virtual standoff now between the federal government and a NH couple in their 60s who have been convicted of tax evasion and sentenced to to serve 63-month federal prison terms.

The Manchester Union Leader reports that:

Elaine Brown and her husband, Edward, have said they will remain in their hilltop home and will resist any attempt to arrest them with force.

"It's good against evil and we're standing with God and we know, no matter what happens, that we are righteous," Elaine Brown told "Your Turn" host Terri Dudley of WTSL 1400 AM in Hanover. "We have committed absolutely no crime."

A dentist, Elaine Brown graduated from Tufts University Dental School in Boston and ran a private dental practice in Lebanon.

A jury found them guilty of plotting to avoid paying taxes on the $1.9 million that Elaine Brown earned from 1996 through 2003.

It seems the pair are religious fundamentalists (quoted as saying "The only law book we now recognize is the Bible. The only way we're coming out of our home is either as free man and free woman or in body bags").

It also appears they are believers of the theory that the US income tax is unconstitutional. An earlier Union Leader story story reported that the couple "assert that there is no law that requires citizens of the United States of America to pay a direct tax on their wages." This theory has been advocated by a series of tax protesters, and is the basis for a movie, America: From Freedom to Fascism, currently being shown around the country by various tax protester and other civic groups. According to Wikipedia, the movie:

covers many subjects regarding tax protester arguments including: the Internal Revenue Service (IRS), income tax, the Federal Reserve System, national ID cards (REAL ID Act), human-implanted RFID tags (Spychips), Diebold electronic voting machines,[2] globalization, the possibility of America becoming a police state, Big Brother, and the alleged use of terrorism by government as a means to diminish the citizens' rights.

Some of the premises of the film include:

• Federal income taxes are unconstitutional or otherwise legally invalid.


• The Federal Reserve banking system is unconstitutional and has maxed out the national debt and bankrupted the United States government.


• Federal income taxes were imposed in response to, or as part of, the plan implementing the Federal Reserve System.

To my mind, the NH couple, the relative popularity of the movie, and the far right political attack on both income and estate taxes are all signs of the disintegration of the national fabric. Whether the enemy be viewed as the government as a whole, the IRS, the Alcohol, Tobacco and Firearms Bureau, "tax and spend" Democrats, or the "lazy" poor, there is now a sizable segment of the population that fears government and taxes more than they fear the incredibly wealthy and powerful.

Not good. Especially given the tendency of this group to resort to violence to preserve what they perceive as "freedom."

Consumer spending and the housing market

Recent days have produced a flurry of info on the housing market's effect on the overall economy, and, most importantly, on consumer spending.

The Federal reserve web site posted a research paper by Alan Greenspan and James Kennedy on the effect that cashouts, refinancings, etc. of home equity have had on consumer spending. It is a very dense paper, but the highlights as reported by Bloomberg are that extraction of home equity financed 2.9% of overall consumer spending from 2001-05 compared with 1.1% from 1991-2000.

Already there is talk by industry types that the current housing weakness is having an impact on spending in the economy of both the U.S. and foreign countries where remittences from the U.S. play a big economic role (like Mexico).

To give you an idea of how much spending has been financed by home equity, consider that consumer spending was pegged at $7,057.60 (in billions) for Q3 of 2001 by the Bureau of Economic Analysis. 3% of that would b more than $220 billion.

And keep in mind that home equity can also indirectly finance consumer spending. While some homeowners may draw down their equity to get cash, other simply run up credit cards or other debt, knowing they have their home equity in reserve to help pay off the bill.

Existing homes sales report "was very disappointing"

USA Today's piece on March, 2007 sales of existing homes being down 8.4% from February was described by the chief economist for the National Association of Realtors, David Lereah, as being "very disappointing." Lereah revised his previous estimate that the housing market had bottomed out last September--he now thinks that the market won't recover until the third quarter of 2007.

But the paper also points out that others are "less optimistic," including Patrick Newport, chief U.S. economist for Global Insight, who thinks it will be the first half of 2008 before the housing market "recovers."

Of course, you have to put some thought into what "recovers" actually means. Not to mention the need to be very precise about what it is that is recovering. Are we talking about prices? Units? Both? Would you consider it a recovery if sales picked back up a bit, but the backlog of homes for sale remained high?

The ultimate reality is that the many measures of health in the housing market pretty much all look bad right now. And that's without taking into account the fiasco in the subprime mortgage industry where, by the way, the extent of the losses incurred by investors is still unknown. The company's that bought mortgage-backed securities simply don't have to write down the face value of the investment as long as they keep the investment on the books.

All pretty bad news for an economy that most economists recognize has been propped up for some time by rising housing values.

Want to See What Privatization Means? Check Florida and Jeb Bush

Privatization appears to follow governing members of the Bush family around like a low level infection. Texas has had its share of governing fiascoes that can be traced to privatization of functions that have historically been performed by government, but Florida may surpass even Texas.

Take for example Florida's efforts to privatize both prisons and care of juvenile offenders/delinquents and the like. The Palm Beach Post has done several pieces on the problems (as have other Florida papers), recently focusing on the juvenile justice aspect. Check out this quote from a couple of weeks ago:

When the state shut down its failed prison for teenage girls in suburban West Palm Beach, it moved inmates to a new program that soon had many of the same problems....The state shut that program down, too, only 17 months after opening it.
...
The 18 state-run residential programs, which pay youth-care workers thousands more a year on average than private companies, were less likely to be cited for incidents such as abuse and excessive force, according to rankings in the Department of Juvenile Justice's 2006 Residential Program Report Cards.

Among the many problems, apart physical abuse of the adults and children held in custody by order of the state, is the fact that the private prisons and youth facilities sign contracts specifying how many employees the private firms will maintain to do their jobs. They are paid based on the expectation that they will, in fact, hire those people.

You saw this one coming, right? Why hire all those people when you can skimp by with fewer workers and make more money (while doing a less than stellar job).

The source linked above also offers up this:

Florida Department of Juvenile Justice inspectors also found that the academy's for-profit management company, Diversified Behavioral Health Solutions Inc., had failed to fill dozens of positions required in its $5.4 million annual contract.
...
A monitor calculated in March 2006 that the state was paying at least $689,761 a year for positions the company had not filled.

Not all under staffing is deliberate--the for-profit facilities simply have a hell of a turnover problem and you don't have to be a genius to figure out why:

In 2005, private for-profit programs paid workers a median wage of $17,906 a year, compared with $19,881 at programs for teens managed by nonprofit contractors, the study found. State workers in comparable state-run residential programs made a median of $22,762 that year.

I'm guessing that benefits, including retirement, would also we way better for the state employees.


In another piece a week later, the same newspaper explicitly urged Make public the ripoffs from taking state private. That piece revealed that the state's contracts with private firms for such services as running prisons were so poorly written that the state often has no recourse when the private firm fails to live up to its obligations.

Did I mention that the privatization efforts have been undertaken largely under Jeb Bush's reign as Florida's Governor? Did I mention that?

The March Grim Reaper--Mass Layoffs

Yesterday, the Bureau of Labor Statistics published its Mass Layoff report for March, 2007. Amid all the media happiness about our supposed low unemployment rate, here are the highlights of what the BLS had to say:

MASS LAYOFFS IN MARCH 2007
In March, employers took 1,276 mass layoff actions, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Each action involved at least 50 persons from a single establishment; the number of workers involved totaled 130,687, on a seasonally adjusted basis. The number of mass layoff events decreased by 4 from the prior month, and the number of associated initial claims fell by 13,290. During March, 420 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 54,441 initial claims. Compared with the prior month, mass layoff events in manufacturing remained about the same and initial claims decreased by 9,631. (See table 1.)
....
The 10 industries reporting the highest number of mass layoff initial claims, not seasonally adjusted, accounted for 36 percent of the total initial claims in March. The industry with the highest number of initial claims was temporary help services with 9,217, followed by food service contractors with 7,636, and automobile manufacturing with 5,746. Together, these three industries accounted for 18 percent of all initial claims due to mass layoffs during the month.
...
The manufacturing sector accounted for 34 percent of all mass layoff events and 40 percent of all related initial claims filed in March; a year earlier, manufacturing made up 31 percent of events and 40 percent of initial claims. In March 2007, the number of manufacturing claimants was highest in transportation equipment manufacturing (19,397, largely automobile manufacturing), followed by food manufacturing (6,087) and wood product manufacturing (2,674).
....
On a not seasonally adjusted basis, the number of mass layoff events in March at 1,082, was up by 161 from a year earlier, and the number of associated initial claims increased by 12,136 to 123,974.

Consumer debt still piling up...and up

The Federal Reserve issued its G.19 release a week or so ago, detailing the state of consumer debt in the U.S.:

G.19 CONSUMER CREDIT For release at 3 p.m. (Eastern Time)
February 2007 April 6, 2007

Consumer credit increased at an annual rate of 1-1/2 percent in February. Revolving credit rose at an annual rate of 3-1/2 percent, and nonrevolving credit rose at an annual rate of 1/2 percent.

The 2002 through Feb of 2007 stats on outstanding consumer credit, Seasonally adjusted, in billions of dollars:

2002----------------1,984.1
2003----------------2,087.8
2004----------------2,201.8
2005----------------2,295.0
2006----------------2,400.1
2007 (Feb)----------2,409.7

In other words, consumer debt outstanding increased more than 20% from 2002 through Feb. of 2007, a bit over 4 years. That's a rate of increase that puts the real earnings numbers in the prior post to shame...unfortunately.