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Better Economic Advisors Please

[ 68 ] October 26, 2013 |

I wish the economic advisors of Democratic presidents would improve. Sadly, no.

Here’s some of what Sperling had to say. He led off with the importance of entitlement cuts. (All emphasis is mine):

“Sometimes here [in Washington] we start to think that the end goal of our public policy is to hit a particular budget or spending or revenue metric—as if those are the goals in and of itself. But it’s important to remember that each of these metrics … are means to larger goals. … Right now, I think there is among a lot of people a consensus as to what the ingredients of a pro-growth fiscal policy are. It would be a fiscal policy that—yes—did give more confidence in the long run that we have a path on entitlement spending and revenues that gives confidence in our long-term fiscal position and that we’re not pushing off unbearable burdens to the next generation. That is very important.”

That’s a vague, guarded, jargon-y Washington way of saying, “We’re going to have to accept entitlement cuts—get used to it.” Then came the justification, which was the weakness of the economic recovery:

“You have to think about this as part of an overall pro-growth, pro-jobs strategy. Also, there’s no question that right now we still need to give this recovery more momentum. We cannot possibly be satisfied with the levels of projected growth when we are still coming back from the worst recession since the Great Depression.”

This Day in Labor History: October 26, 1825

[ 14 ] October 26, 2013 |

On October 26, 1825, the Erie Canal opened, eight years after construction commenced. This engineering marvel would have enormous impacts on the future of American work, including spurring ever-greater industrialization, helping cement the Great Lakes states as a center of American industrialization, and ensuring New York would be the long-term center of American commerce. It also came at a cost of over 1000 dead workers.

The engineers who designed the Erie Canal thought of their project as a uniquely American achievement, a sign of the glorious republicanism of the new nation flexing its increasingly powerful muscles. As economic and technical elites would do throughout American history, these engineers and politicians used national rhetoric to hide the very real muscles they relied on to build their marvel. And those workers were treated poorly.

Americans were used to hard work in the 1820s. Farm work was pretty tough and in some ways had much in common with canal digging. Working on either meant you might cut trees, dig ditches, divert streams and labor in cold weather. Most canal workers labored seasonally, but I don’t have to tell you all how cold an upstate New York winter can be so for those who did labor through the winter, the working conditions were awful.

Epidemics were a huge problem and contributed significantly to the dead workers. In 1819, more than 1000 workers got sick from some sort of disease that came from working in a swamp that went on for 30 miles (in our significantly ditched, diked, and drained landscape of the east, it’s hard to imagine such enormous swamps, although they do still exist in some areas). Only a few of these workers died, but most were disabled for long periods of time. Other epidemics were far worse. For workers who did avoid sickness, widespread disease did lead to increased wages, however briefly. One contractor had to raise wages from $12 to between $14 and $17 a month due to an epidemic, about which he complained bitterly.



Building the Erie Canal

The use of gunpowder killed a lot of workers. The care given to explosions was pretty low through the 19th century and workers were blown up all the time or killed by rocks blown through the air. Canal collapses were also common, burying workers. Workers fell to their deaths building the locks and aqueducts. Orrin Harrison was exhausted from too much work. He fell asleep resting against a balance beam on a lock. Dozing, he fell into 8 feet of water where his legs were caught in the lock’s gates and he drowned. The death toll rose daily from these sorts of incidents.

At first, the workers were mostly American-born, but this quickly changed as labor needs increased and the reality of just how brutal this work was became more real. Thus very quickly, the Canal became a prime job site for the nation’s growing numbers of Irish immigrants. We usually associate Irish immigration a couple of decades later with the potato famine, but it had already begun by the late 1810s, with an 1817 famine what was pushing them out. The Irish would take the most difficult and dangerous jobs in the pre-Civil War north and become despised by the nation’s Protestants for it, later leading to the Know-Nothing Party and other anti-immigrant sentiment. By the end of the Erie Canal’s construction, the Irish made up a sizable percentage of the labor force.

Within the national framework of republican free men working for oneself as a craftsman or farmer, laboring as canal diggers was the lowest of work. That living conditions were so awful for these workers seemed irrefutable evidence that these workers were morally deficient, for who would live in such conditions? When the Irish then took these jobs, it reinforced the prejudice many New Yorkers had against the Irish, especially since they already saw them as living in filth. Contractors housed their workers in shanties that were frequently compared to barns that stood physically removed from towns and farms, isolating these workers physically and socially. Plus farm workers had warm beds and good food. Canal diggers did not. The work’s seasonality was also far more unpredictable than farming, meaning economic and personal insecurity.

Mostly, the laborers who came to the U.S. to work on the project found their experience disappointing. William Thomas had immigrated from Wales. He wrote back home: “I beg all my old neighbors not to think of coming here as they would spend more coming here than they think. My advice to them is to love their district and stay there.” Thomas considered returning to Wales, although we do not know if he did.

Dangerous and deadly work in the United States would grow and grow in coming decades as the Industrial Revolution transformed the nation. Some of it would be in the kind of grunt work of building a canal (or a railroad soon after). Some would take place in the factories, some in digging or cutting the raw materials for it all. Throughout the 19th and much of the 20th century, the death toll would be of little concern to bosses and certainly not to the capitalists financing this growth. Immigrants would provide much of this labor, as would African-Americans in some areas. Others would advise their families and friends to love their district and stay there too but millions would choose possible death over permanent poverty and come to work in the dangerous trades and unsafe worksites.

I relied on Carol Sheriff’s book, The Artificial River: The Erie Canal and the Paradox of Progress, 1817-1862 to write this post.

This is the 80th post in this series. Previous posts are archived here.

I Guess We Know Where the Giants Got the Money to Pay a Fading Tim Lincecum $35 Million

[ 26 ] October 24, 2013 |

What a surprise that billionaire sports owners would steal from their poorest employees:

Two Major League Baseball clubs–the San Francisco Giants and Miami Marlins—are under investigation by the U.S. Department of Labor for possible federal wage law violations. The investigations come amid wider concern about questionable pay practices throughout professional baseball, according to interviews and records obtained by FairWarning under the Freedom of Information Act.

Labor Department spokesman Jason Surbey confirmed the investigations of the Marlins and Giants, but would not give details. However, emails reviewed by FairWarning show that possible improper use of unpaid interns is a focus of the Giants probe. It is the Labor Department’s second recent investigation of the Giants over pay practices involving lower level employees.

An attorney for the Giants said the team would not comment on the current investigation. A Marlins spokesman said the club does not believe “that any of the Marlins’ current labor practices are improper….We can confirm that the Marlins have been and will continue to cooperate fully with the Department of Labor.” Major League Baseball officials could not be reached.

Officials with the department’s Wage and Hour Division announced in August that the Giants had resolved the prior case by agreeing to pay $544,715 in back wages and damages to 74 employees. Many were clubhouse workers the agency said were paid at a daily rate of $55, but who sometimes worked so many hours that they got less than minimum wage and no overtime. The federal minimum wage is $7.25 per hour.

Ronald Shannon Jackson, RIP

[ 25 ] October 24, 2013 |

The great free jazz drummer has passed. Here’s a clip of him in possibly my favorite jazz band of all-time, Last Exit, with Peter Brotzmann, Bill Laswell, and Sonny Sharrock. This clip really features Jackson’s work.

I know after watching that, everyone is ready for a nice smooth mellow evening, just like after listening to a little Kenny G. I love Last Exit so much because for all the craziness, Jackson still grounds it in a big blues-rock beat that drives the music like a hammer.

Check this out too:

Mr. Jackson was born in Fort Worth on Jan. 12, 1940. His mother, Ella Mae, played piano and organ at a Methodist church and his father, William, was the proprietor of Fort Worth’s only black-owned record store and jukebox supplier. The saxophonists King Curtis and David (Fathead) Newman were relatives; among the musicians who preceded him at I. M. Terrell High School were Mr. Coleman and the saxophonists Dewey Redman and Julius Hemphill. Mr. Jackson played his first public engagement, with the saxophonist James Clay, at age 15, then worked with Ray Charles’s band in Dallas. In 1966 he went to New York, where he enrolled at New York University. That year he made his first recording, with the Charles Tyler Ensemble, and joined Ayler’s band. His work with Ayler is documented on two roughly recorded but urgently played volumes of “Live at Slug’s Saloon.”

So the same Fort Worth high school produced Ornette Coleman, Julius Hemphill, Dewey Redman, and Shannon Jackson. Huh. Whatever was in the water out there was pretty potent.

Layaway

[ 237 ] October 24, 2013 |

Alex Tabarrok’s piece at Marginal Revolution about the bad economics of layaway makes sense on one level. It got all the appropriate and expected twitter hits this morning (Yglesias, Klein, etc). I’m not going to argue against the the post on its merits. Layaway exists as a way to transfer money from people to corporations, it is a bad economic investment for the consumer, etc. Tabarrok can’t figure out why people would agree to do this–stores rarely run out of goods and if they do they are replaced with something else, it’s a big pain to make the payments, etc. And I agree that Consumer Reports probably shouldn’t be calling layaway a good idea.

But like so many ultimately well-meaning articles about the poor I read on the internet, it’s seems to me that Tabarrok doesn’t understand layaway because he’s never been poor (although I don’t actually know). Let’s imagine a situation for layaway. You are 11 years old. It’s July. Your family doesn’t have much money. Getting new school clothes is a big deal because you don’t get very many new clothes in a year and you want to wear them on the first day of school. Your parents are really worried about this. They want to buy you the new clothes. They also know that they will have a really hard time actually saving the money to purchase them all at once. So they put them on layaway at the Target or Walmart and make the payments, hoping to have them all paid off before school starts.

How would I come up with this scenario? Because I was that 10 or 11 year old and my parents used layaway to get me those new clothes I wanted. In fact, in the scenario I am recalling, they actually couldn’t make all the payments and I really wanted those clothes and somehow we talked the store into giving us some of the clothes up front and breaking up the layaway, which probably only worked because I was there and nearly hysterical that I would have to wear old clothes on the first day of school.

In a so-called rational economic world, layaway might not make sense. In the real world that actually people live and operate in it makes a ton of sense, even if it is bad economics. People can’t save money easily. It’s actually a more secure investment to pay some of it up front, which commits the individual to buying the product and makes acquiring it probable, but also gives the buyer some leeway if disaster strikes.

Economists try to understand why people make the decisions they do. The growing field of behavioral economics is mercifully bringing that back into the real world. What has driven the decisions of working-class people in the 20th century more than anything is a desire for security, broadly defined. Whether we are talking about Social Security, Medicare, the union contract that rolled over with few substantial changes except better benefits for 20 years, the ability to own a home after World War II, many of our major policy and labor decisions since the 1930s was driven by the desire for security now mobilized through the American labor movement. The CIO especially centered security as a broad goal and crafted policy to increase working-class security. And it worked, at least for members of the white male working-class, for several decades. Today it has mostly collapsed in an era of contingent labor, union busting, capital mobility, massive debt, and income stagnation.

But I don’t think the desire for security is just a broad policy goal in union offices in Washington, Congress, or the Department of Labor. It also drives people’s daily lives. The struggle to survive and to make ends meet is ultimately a struggle to find some level of security in your life. Sometimes, the desire for security might even drive behavior economists see as irrational. But layaway is a form of security for you to buy your 11 year old his school clothes. So on the fundamental level of seeing your child happy and your home at peace, layaway might be a perfectly rational decision.

What bothers me about articles like this is the lack of understanding of working-class behavior. Tabarrok can’t understand why people would use layaway. But it’s easy to gain that understanding. Ask some poor people why they use it.

Bermudo the Gouty

[ 60 ] October 23, 2013 |

In what is extremely rare medieval history blogging, this list of unfortunately nicknamed medieval kings is pretty great. Below we have Alfonso the Slobberer

And here’s Henry the Impotent

That Sexy Franklin Pierce

[ 63 ] October 23, 2013 |

Another recent old post rediscovered makes me realize why Franklin Pierce went in hard and came out soft. Turns out he ranks pretty high in the presidential sexiness polls.

The Criminal Element, circa 1859

[ 43 ] October 22, 2013 |

This selection from New York Police Chief George Matsell’s Vocabulum, or the Rogue’s Lexicon, a collection of criminal slang, is amazing. It’s available here in its entirety. Here are some words for you. See if you can work them into conversation tomorrow.

Altitudes: A state of drunkenness; being high.

Ambidexter: One who befriends both sides; a lawyer who takes fees from both parties in a suit.

Bag of nails: Everything in confusion.

Balsam: Money.

Barking-irons: Pistols.

Billy Noodle: A soft fellow that believes the girls are all in love with him.

Blue-plum: A bullet; “Surfeit the bloke with blue-plum,” shoot him.

Bread-bag: The stomach. [Also: Middle-piece; Victualling Office.]

Bun: A fellow that can not be shaken off.

Chatty feeder: A spoon. [Also, Feeders: Silver spoons or forks. “Nap the feeders,” steal the spoons. Smash-feeder: A silver spoon.]

Cutty-eyed: To look out of the corner of the eyes; to look suspicious; to leer; to look askance. “The copper cutty-eyed us,” the officer looked suspicious at us.

Daisyville: The country.

Dry up: Be silent; stop that.

And that’s just A through D of the excerpt.

The Poisoned Candy Scare

[ 111 ] October 22, 2013 |

Another Hail Satan Day Halloween is nearly upon us and Dan Lewis reminds us that the famed Halloween poisoned candy scare is a total media mythology.

What about poison, which, being invisible and generally hard to detect, is the more nefarious way to taint candy? You have little reason to be concerned there either. Landers stated, “many reports” of such terrible acts have occurred, however, they are almost entirely the stuff of myth.

Almost entirely.

For nearly 30 years, University of Delaware sociologist Joel Best has been investigating allegations of strangers poisoning kids’ Halloween candy. As of this writing, he hasn’t identified a single confirmed example of a stranger murdering a child in this fashion.

He found other examples of people accidentally passing out tainted candy or, in one case, passing out ant poison as a gag gift to teenagers (no one was hurt), but the bogeyman of terrible people making trick-or-treating unsafe is a canard. One example of a person trying, explicitly, to poison children via Halloween candy was confirmed. However, the child who died wasn’t a stranger—it was the man’s son.

On Halloween, 1974, an 8-year-old boy named Timothy O’Bryan died. His candy had, indeed, been poisoned. A few days prior, his father, Ronald Clark O’Bryan, took out a $40,000 life insurance policy on Timothy and Timothy’s sister, Elizabeth (then age 5), as an unimaginable way to get out of debt. The only way to collect required that at least one of his children die, so the elder O’Bryan laced some Pixy Stix with cyanide and cajoled his son into eating one before bed.

Pretty nice father there. In any case, while the overall point is fair enough, I do have to push back against the framing of Lewis’ article. He blames the scare on “the media.” But I’m not sure that citing Dear Abby and Ann Landers (Hell, that could just be some old family scare there) exactly equates “the media” here. Now I do remember lots of stories growing up about fears of this and local news reports on where to take your candy to get it scanned (my parents never bothered. And really, if I were their son, I probably wouldn’t have either). So the media scare did exist.

But the 1970s and 1980s were full of this kind of paranoia about the cities, bad people, kidnappings, and other horrible things. Don’t talk to strangers. Some of this is still with us, but in fact it is far safer for children today than 30 years ago. From bicycle helmets to Amber Alerts, we took our mostly misplaced paranoia and created a structure of real safety for our children.* But let’s also be clear, this was misplaced paranoia. When I was a kid, there was a famous case of a mother killing her children in my hometown. She blamed it on a shaggy haired stranger flagging her down and massacring her children (and shooting her in the arm). The police were inundated with calls from citizens saying they saw the same person trying to do the same thing to him. Of course he didn’t exist. The woman killed her kids and shot herself in the arm as an excuse.

What was with these fears? I figure it was probably a combination of backlash to civil rights and urban riots, the Manson murders and counterculture more broadly, the economic instability of the time leading to cultural fears, and other broader sociocultural factors that would lead parents to fear irrationally that their neighbors wanted to poison their children through Halloween candy. But while the media certainly fed these fears, it didn’t create them out of whole cloth. People aren’t passive receivers of narratives.

* Not that bicycle helmets aren’t a good thing

Carbon Emissions

[ 16 ] October 22, 2013 |

After a few years of declining carbon emissions in the U.S., emissions are on the rise. The decline led to some headlines about the U.S. actually making real progress despite passing no climate bill. And I don’t want to dismiss the important moves the Obama Administration has made against coal-burning power plants. But the other reasons for the decline were one-time only deals (recession and stagnation, unusual and unsustainable collapse in natural gas prices). If we want to fight climate change in any meaningful way, we are going to need a lot more leadership from the government. Voluntary measures, relying on the market, etc., just flat isn’t going to work.

Our Struggling One Percent

[ 44 ] October 22, 2013 |

Won’t somebody think about the plutocrats?

There are millionaires, there are billionaires, and then there are the people who earn over a billion dollars in a single year. For the first time ever, the financial research firm GMI Ratings has found two CEOs making over $1 billion in annual income, according to the firm’s 2013 CEO Pay Survey.

The highest paid CEO in America last year was Facebook’s Mark Zuckerberg, who raked in nearly $2.3 billion over the course of 2012, according to the survey.

The runner up was Richard Kinder of the energy company Kinder Morgan, who earned a mere $1.1 billion, less than half of Zuckerberg’s income. Sirius XM’s Mel Karmazin came in a distant third, collecting only a little over $255 million.

GMI Ratings surveyed over 2,200 top executives across the country in order to establish its rankings, according to a statement from the firm. Overall, the survey found that base salaries rose 2.9%, while total median compensation increased a healthy 8.47% between 2011 and 2012. Other studies have shown that non-CEO Americans have not seen a commensurate increase in their income over the past year. For example, the U.S. Census’ latest report on income and poverty found that overall household income in 2012 was “not statistically different from the levels in 2011.”

The gap between skyrocketing CEO pay and relatively stagnant compensation for everyone else has been widening for decades. While annual CEO compensation increased by 726.7% between 1978 and 2011, average worker compensation only went up 5.7% during the same time, according to a 2012 study by the Economic Policy Institute.

Let’s repeat that last one.

Changes in compensation, 1978-2011

CEO’s: 726.7%
Workers: 5.7%

Hey, the number behind the decimal point is the same. A fair system after all!

Drought

[ 94 ] October 22, 2013 |

There’s no reason to think that the United States is more drought-immune than ancient societies that were destroyed by it:

More than 3,200 years ago, life was abuzz in and around what is now this modern-day Israeli metropolis on the shimmering Mediterranean shore.

To the north lay the mighty Hittite empire; to the south, Egypt was thriving under the reign of the great Pharaoh Ramses II. Cyprus was a copper emporium. Greece basked in the opulence of its elite Mycenaean culture, and Ugarit was a bustling port city on the Syrian coast. In the land of Canaan, city states like Hazor and Megiddo flourished under Egyptian hegemony. Vibrant trade along the coast of the eastern Mediterranean connected it all.

Yet within 150 years, according to experts, the old world lay in ruins.

Experts have long pondered the cause of the crisis that led to the Late Bronze Age collapse of civilization, and now believe that by studying grains of fossilized pollen they have uncovered the cause.

In a study published Monday in Tel Aviv: Journal of the Institute of Archaeology of Tel Aviv University, researchers say it was drought that led to the collapse in the ancient southern Levant.

Before we talk about our technology and etc., let’s remember that these societies lasted a whole lot longer than the United States has. There’s no reason to think that we are somehow immune from drought-related collapses just because of more advanced technology that can move water around. Not to mention that the intensive engineering of water comes with a whole set of additional problems.