Paul Krugman | America Needs to Empower Workers Again – The New York Times

Opinion Columnist

Credit…William C. Shrout/The LIFE Picture Collection, via Getty Images

“Labor activists hoped that the unionization vote at Amazon’s Bessemer, Ala., warehouse would be a turning point, a reversal in the decades-long trend of union decline. What the vote showed, instead, was the continuing effectiveness of the tactics employers have repeatedly used to defeat organizing efforts.

But union advocates shouldn’t give up. The political environment that gave anti-union employers a free hand may be changing — the decline of unionization was, above all, political, not a necessary consequence of a changing economy. And America needs a union revival if we’re to have any hope of reversing spiraling inequality.

Let’s start by talking about why union membership declined in the first place, and why it’s still possible to hope for a revival.

America used to have a powerful labor movement. Union membership soared between 1934 and the end of World War II. During the 1950s roughly a third of nonagricultural workers were union members. As late as 1980 unions still represented around a quarter of the work force. And strong unions had a big impact even on nonunion workers, setting pay norms and putting nonunion employers on notice that they had to treat their workers relatively well lest they face an organizing drive.” . . .

David Lindsay Jr.
Hamden, CT | NYT Comment:
My teacher Paul Krugman leaves me unimpressed today. Some unions are desparately needed, but others, especially police unions, and some fire unions, are too strong, and almost criminal in their overreach and protection of bad cops, etc. I remember when Reagan broke up the air traffic controllers strike, and I agreed with Reagan on that call. They had the power to blackmail the public for as much as they could image, and it didn’t seem right. What was to stop them from asking for more every year? The bad unions have given the movement a bad reputation. Ignoring that history, and the ongoing crisis with over powerful police unions, doesn’t help fix the public’s distast for unions. I am with FDR, who apparently said the police and civil service should not be allowed to join unions, because they would grow to strong, and were already on the public’s tab.

 

Paul Krugman | Biden, Yellen and the War on Leprechauns – The New York Times

Opinion Columnist

Credit…Illustration by The New York Times; photograph by Thinkstock, via Getty Images

“In the summer of 2016, Ireland’s Central Statistical Office reported something astonishing: The small nation’s gross domestic product had risen 26 percent in the previous year (a number that would later be revised upward). It would have been an amazing achievement if the growth had actually happened.

But it hadn’t, as government officials acknowledged from the beginning. It was, instead, an illusion created by corporate tax games. At the time, I dubbed it “leprechaun economics,” a coinage that has stuck; luckily, the Irish have a sense of humor about themselves.

What really happened? Ireland is a tax haven, with a very low tax rate on corporate profits. This gives multinational corporations an incentive to create Irish subsidiaries, then use creative accounting to ensure that a large share of their reported global profits accrue to those subsidiaries.

In 2015 a few big companies appear to have gotten even more aggressive about their profit-shifting, which led to a surge in the value of production they reported doing in Ireland — a surge that didn’t correspond to anything real.

To understand the big corporate tax reform proposed by the Biden administration, what you need to know is that it’s all about the leprechauns.

One way to think about the huge corporate tax cut Republicans rammed through in 2017 is that its underlying premise was that the leprechauns were real. That is, the tax cut’s architects insisted that corporations had been moving operations abroad to avoid U.S. taxes, and that slashing those taxes would bring millions of jobs back home.

It didn’t happen. In fact, the tax cut had no visible effect on business investment, probably because it was addressing a fake problem. U.S. corporations hadn’t been moving jobs overseas to avoid taxes; they had just been avoiding taxes.

The true impact — or actually lack of impact — of profit taxes on business decisions becomes obvious if you look at where corporations report big overseas earnings.

If they were truly responding to taxes by making large foreign investments that eliminated American jobs, we’d expect to see a lot of their profits coming from major production centers like Germany or China. Instead, more than half of the profits U.S. corporations report from overseas investments come from tiny tax havens, including places like Bermuda and the Cayman Islands where they have no real business at all.

By the way, this isn’t just an American problem. The International Monetary Fund estimates that about 40 percent of the world’s foreign direct investment — basically corporate cross-border investment, as opposed to “portfolio” purchases of stocks and bonds — is “phantom” investment, accounting fictions set up to avoid taxes. That’s why on paper Luxembourg, with just 600,000 people, hosts more foreign investment than the United States does.

So the real problem with U.S. corporate tax policy isn’t loss of jobs, it’s loss of revenue — and the Trump tax cut made that problem worse.

For the most part the Biden administration’s Made in America Tax Plan is an effort to reclaim the revenue lost both as a result of profit-shifting and as a result of the Trump tax cut, in order to help pay for large-scale public investment.”   . . .

Paul Krugman | Embracing the Softer Side of Infrastructure – The New York Times

“. . . The idea that investment isn’t real if it doesn’t involve steel and concrete would come as news to the private sector. True, back in the 1950s around 90 percent of business investment spending was on equipment and structures. But these days more than a third of business investment is spending on “intellectual property,” mainly R&D and purchases of software.

Businesses, then, believe that they can achieve real results by investing in technology — a view ratified by the stock market, which now puts a high value on companies with relatively few tangible assets. Can the government do the same thing? Yes, it can. In fact, the Obama administration did.

Investment in technology, especially in renewable energy, was only a small fraction of the Obama stimulus, but it’s the piece that got the worst rap. Remember how Republicans harped endlessly on how loan guarantees for the solar-power company Solyndra went bad?

The thing is, if your technology strategy produces only winners, you’re not taking enough risks. Private investors don’t expect every bet to succeed; three out of four start-ups backed by venture capital fail. The question is whether there are enough successes to justify the strategy.

And the Obama investment in green technology produced many successes. You’ve probably heard about Solyndra; have you heard about the crucial role played by a $465 million loan to a company named Tesla?

More broadly, the years since 2009 have been marked by spectacular progress in renewable energy, with solar and wind power in many cases now cheaper than electricity from fossil fuels. There are still people who seem to imagine that green energy is flaky hippie stuff, but the reality is that it’s the wave of the future.” . . .

Paul Krugman | Bidenomics Is as American as Apple Pie – The New York Times

“. . . The Biden administration infrastructure fact sheet alludes to part of that history, declaring that the plan “will invest in America in a way we have not invested since we built the interstate highways and won the space race.” Indeed, one way to think about the Biden program is that it’s an attempt to bring back the Dwight stuff — that is, in fiscal terms it would represent a partial return to the Eisenhower era, when we had much higher government investment as a share of gross domestic product than we do now, and also much higher tax rates on both high-income individuals and corporations.

The era of big government investment and high taxes on the rich coincided, not incidentally, with the U.S. economy’s greatest generation — the postwar decades of rapidly rising living standards.

But the story of public investment and progressive taxation in America goes back much further than the ’50s.

We’ve relied on government infrastructure investment to jump-start economic growth ever since the construction of the Erie Canal between 1818 and 1825. Unlike the privately owned canals that had proliferated in 18th-century Britain, the Erie Canal was built by the government of New York State, at a cost of $7 million. This may not sound like a lot, but the economy was vastly smaller then, and prices much lower too. As a share of state G.D.P., the canal was probably the equivalent of a $1 trillion national project today.

And a big public role in infrastructure continued down the generations. Land grants were used to promote railway construction and higher education. Teddy Roosevelt built the Panama Canal. F.D.R. brought electricity to rural areas. Eisenhower built the highway network.

So when Republicans denounce the American Jobs Plan as an “out-of-control socialist spending spree,” remember, large-scale public investment is the American way.

We can say much the same thing about Biden’s tax proposals.

Actually, given extremely low borrowing costs it’s not obvious that we would even need a tax hike if infrastructure spending were the end of the story. But we will need more revenue to pay for the whole Biden program, which everyone expects will eventually include another round of spending targeted on families. So it makes sense to tie tax hikes to the jobs plan; polling suggests that paying for public investment with taxes on corporations and the rich increases support for an infrastructure plan, and that something along the lines of the Biden proposals will command very high public approval.

Republicans will no doubt denounce the idea of taxing the rich as un-American class warfare. In reality, however, such taxation is another long tradition in this country. As Thomas Piketty, the inequality scholar, likes to put it, America basically invented progressive taxation.” . . .

Paul Krugman | Why Can’t Republicans Be Populists? – The New York Times

https://www.nytimes.com/2021/03/29/opinion/republicans-populism.html?action=click&module=Opinion&pgtype=Homepage

Opinion Columnist

Credit…Daniel Acker for The New York Times

President Biden’s American Rescue Plan is incredibly popular, even among Republican voters. We don’t have details yet on the next big Democratic initiative, but we can expect it to poll well, because we know that it will combine major infrastructure spending with tax hikes on corporations and the rich — which are all popular things.

But like the rescue plan, the next plan probably won’t get a single Republican vote in Congress. Why are elected Republicans still so committed to right-wing economic policies that help the rich while shortchanging the working class?

Fair warning: I’m not going to offer a good answer to this question. The point of today’s article is, instead, to argue for the question’s importance.

I ask why Republicans are “still” committed to right-wing economics because in the past there wasn’t any puzzle about their position.

Paul Krugman | How Not to Panic About Inflation – The New York Times

Opinion Columnist

Credit…Spencer Lowell/Trunk Archive

“Do you remember the great inflation scare of 2010-2011? It’s an episode worth revisiting, because there’s a good chance that we’ll see a replay over the next year or so.

After the 2008 financial crisis plunged America into a deep recession, both the new Obama administration and the Federal Reserve tried to stimulate the economy, spending hundreds of billions on a variety of programs while buying trillions in bonds. There is now consensus among economists that these efforts were helpful, but it’s also widely believed that they were inadequate (as some of us strenuously argued at the time).

On the right, however, it’s an article of faith that activist government is always bad, even in a crisis. So there were many dire warnings that these efforts to rescue the economy would cause runaway inflation. By mid-2010 there was a palpable sense of frustration among some conservatives that the predicted inflation had failed to materialize.

Then came a few months when inflation seemed to be rising after all. Consumer price inflation reached almost 4 percent; wholesale inflation went into double digits; the average price of commodities like oil and soybeans rose almost 40 percent in a year. Soon Republicans were haranguing Ben Bernanke, the Fed chairman, suggesting that his efforts might “debase the currency.” “

Paul Krugman | Ending the End of Welfare as We Knew It – The New York Times

     Opinion Columnist

“The era of “the era of big government is over” is over.

The relief bill President Biden just signed is breathtaking in its scope. Yet conservative opposition was remarkably limp. While not a single Republican voted for the legislation, the rhetorical onslaught from right-wing politicians and media was notably low energy, perhaps because the Biden plan is incredibly popular. Even as Democrats moved to disburse $1.9 trillion in government aid, their opponents mainly seemed to be talking about Dr. Seuss and Mr. Potato Head.

What makes this lack of energy especially striking is that the American Rescue Plan doesn’t just spend a lot of money. It also embodies some big changes in the philosophy of public policy, a turn away from the conservative ideology that has dominated U.S. politics for four decades.

In particular, there is a sense — a strictly limited sense, as I’ll explain, but real nonetheless — in which the legislation, in addition to reviving the notion of government as the solution, not the problem, also ends the “end of welfare as we know it.”

Once upon a time there was a program called Aid to Families With Dependent Children — the program people usually had in mind when they talked about “welfare.” It was originally intended to support white widows while they raised their children, and it was effectively denied to both Black and unwed mothers. Over time, however, these restrictions were eroded, and the program rapidly expanded from the early 1960s to the early 1970s.” . . .

Excellent column and comments.

Paul Krugman | Will Stagnation Follow the Biden Boom? – The New York Times

“. . . What markets are telling us, in effect, is that after the boom they expect a return to stagnation — which would, again, be a bad place to be. How can we avoid it?

The answer is actually obvious: a large program of public investment, paid for largely with borrowing, although with a case for new taxes, too, if it’s really big. Such a program would do double duty. Macroeconomics aside, we need to spend a lot to rebuild our crumbling infrastructure, fight climate change, and more. And public investment can also be a major source of jobs and growth, helping to pull us out of the stagnation trap.

The good news is that the Biden administration’s economists understand all of this perfectly well, and by all accounts they’re already in the process of putting together a very ambitious infrastructure plan.

The bad news is that getting such a plan enacted will be very hard politically — probably even harder than getting to yes on short-term economic rescue.” . . .

Great column and comments, including the following:

Bruce Rozenblit
Kansas City, MO   March 8

I think predicting the shape of the American economy two years out is a bit of a stretch. The Biden plan hasn’t even been signed into law yet. Let the stimulus work. Let the economy have a chance to rev up on its own. If we can get to 7% growth before the 2022 elections, that would generate tremendous support for Democrats at the ballet box. The GOP will of course scream that this is the end of the world, but high growth and the prosperity it brings will drown out that false flag. People will listen to the money in their pockets. The filibuster is getting closer to being tamed each day that passes. It appears that Joe Manchin is open to modifying it after he makes a full effort to gain Republican participation. Of course, his effort will fail. But he will have created political cover for himself and other moderate Democrats. The primary stumbling block to all of this is passing HR-1. Once voting rights have been secured, greater majorities in both Houses can be established. Then passing infrastructure will be much easier. But the first step is voting rights. That’s why the filibuster in its current form must fall.

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Paul Krugman | Too Much Choice Is Hurting America – The New York Times

Opinion Columnist

Credit…Peter van Agtmael/Magnum Photos

“Dan Patrick, the lieutenant governor of Texas, is clearly what my father would have called a piece of work.

Early in the pandemic he made headlines by saying that older Americans should be willing to risk death so that younger people could “get back to work.” More recently, he suggested that Texans who found themselves with $17,000 electricity bills after the February freeze had only themselves to blame, because they didn’t “read the fine print.”

Funny, isn’t it, how politicians who denounce liberal elitists sneer when ordinary Americans get into trouble?

But something else struck me about Patrick’s take on supersize power bills: How did we become a country where families can face ruin unless they carefully study something as mundane, as normally routine, as their electricity contract?

And electricity isn’t a unique example.

As The Times’s Margot Sanger-Katz has documented, many people end up with heavy financial burdens because they chose the wrong health insurance plan — yet even experts have a very hard time figuring out which plan is best. Using an out-of-network health care provider can also lead to huge medical bills.

Wait, there’s more. One cause of the 2008 financial crisis was the proliferation of novel financial arrangements, like interest-only loans, that looked like good deals but exposed borrowers to huge risks.

What these stories have in common is that they’re snapshots of a country in which many of us are actually offered too many choices, in ways that can do a lot of harm.” . . .

Paul Krugman Opinion Column | The Plot to Help America’spo Children – The New York Times

Opinion Columnist

“Democrats seem ready to enact major economic relief legislation. The package will be big, with a price tag probably close to the Biden administration’s proposed $1.9 trillion. But the bulk of this spending will clearly be temporary. Americans won’t be getting $1,400 checks every year, unemployment benefits won’t always be this generous, we won’t constantly be mobilizing for emergency vaccination programs (or at least we hope not).

There is, however, one piece of the package many progressives hope will become permanent: enhanced aid to families with children. Indeed, there’s an overwhelming economic and social case for providing such aid, in addition to the moral case.

Yet most conservatives seem to be opposed, even though they’re having a notably hard time explaining why. And the fact that they’re against helping children despite their lack of good arguments tells you a lot about why they really oppose aid to those in need.”

David Lindsay Jr.
Hamden, CT | NYT Comment:
It all sounds good, but will it incentivize having more and more children? What the country and world need is zero, or even better, negative population growth. So I would like to know how this will effect the choice of the number of children American people will have. It might be good for the environment to put a cap on the credit/income payment for just two children, and not some unlimited number. We are living during the 6th extinction in the Anthropocene, which means that non human species are going extinct at an unusual and unsustainable rate, perhaps hundreds a week. We lost the Great White African Rhinoceros this winter. Just one of probably thousands of species lost. Someday, it would be useful if politically possible, to have the credit/subsidy for the first two children, and universal and subsidized family planning as part of health care.
David Lindsay Jr. is the author of “The Tay Son Rebellion, Historical Fiction of Eighteenth Century Vietnam” and blogs at InconvenientNews.Net.