Monthly Archives: August 2010

Ash defends public-sector benefits

Michael Ash

In a letter to the editor, Michael Ash, UMass Amherst economics professor, defends public-sector employment benefits, including pensions.  The real problem, according to Ash, is “private employers reducing their commitment to their workers while increasing executive salaries and stockholder dividends.”  (The Nation, August 30/September 6)

The Nation
Letters to the Editor

Public Workers—the Gold Standard
Amherst, Mass.

I thank Amy Traub for “War on Public Workers” [July 5]. Isn’t it remarkable that privatization, deregulation and casino capitalism destroy our economy… and public employees are suddenly to blame?

This attack on public employees, their unions and their benefits feels like the final swish down the toilet bowl for the New Deal. Some observations:

(1) Traub notes with disappointment that New York’s Democratic gubernatorial candidate Andrew Cuomo has jumped on the bash-public-employees bandwagon; but he’s not the only Democrat to do so. Massachusetts Governor Deval Patrick has honed the fine art of being seen as a progressive while leading the charge against public workers—reopening contracts and demanding concessions from all state employees, from social workers to librarians to college professors—but not asking for any “shared sacrifice” from the wealthy, and then bragging about it.

(2) Far from being a parasitic drain, public-sector workers provide critical services for everyone—education, public safety, environmental protection—that private enterprise cannot or will not supply.

(3) The public sector sets the standard for quality of employment, and that benchmark serves as a constant reminder of the failure of private corporations to provide adequate compensation and economic security for their workers.

Nowhere is the public benchmark clearer than in the case of pensions, and nowhere has the war been more ferocious. Resentment of public-sector pensions masks the important issue of adequate pensions for all working Americans. There is a pension crisis, but it’s not the overgenerosity of public-sector pensions. The crisis is that the private pension system is collapsing. Companies that still offer traditional defined-benefit pensions—intended to provide a predictable retirement income for life—have underfunded their accounts. Most companies have ceased to offer pensions altogether or provide meager subsidies to roll the dice in the 401(k) casino. The consequences will be ugly. Many “retirees” will never retire. Or they will have to move in with their children, creating deep stresses, which had been eased by the solid pensions of the Greatest Generation.

Reducing public-sector pensions won’t solve that problem. Public- and private-sector workers need to look at each other, recognize friends and demand leveling up, not down. The real problem is not public workers’ pensions but private employers reducing their commitment to their workers while increasing executive salaries and stockholder dividends.

MICHAEL ASH
University of Massachusetts

PERI report, Toxic 100, cited in The New Yorker

Toxic 100 Air Polluters, a Political Economy Research Institute (PERI) report co-authored by Michael Ash and James Boyce, identifies the top U.S. air polluters among the world’s largest corporations.  This report names Koch Industries among the top ten offenders, a fact cited in a report on the Koch brothers which appeared this week in The New Yorker. (The New Yorker, 8/30/10)

Covert Operations
The billionaire brothers who are waging a war against Obama.
by Jane Mayer

The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests. In a study released this spring, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States.

Krugman praises Jayadev-Konczal paper

Arjun Jayadev '05 Ph.D.

Arjun Jayadev ’05 Ph.D. and his colleague at the Roosevelt Institute, Mike Konczal, are co-authors of the working paper, The Boom Not The Slump: The Right Time For Austerity, recently cited in Paul Krugman’s New York Times blog entry, Expansionary Austerity

Jayadev and Konczal’s paper critiques the idea that large-scale deficit reductions are associated with economic expansion which is a conclusion drawn from the Alberto F. Alesina and Silvia Ardagna (2009) paper, “Large Changes in Fiscal Policy: Taxes Versus Spending.”  Alesina & Ardagna’s research has led many popular commentators to suggest that the U.S. can adopt such a policy and grow.

Not likely, according to Jayadev.  In fact, the opposite may be true.  If the U.S. proceeds to take steps to reduce the deficit during this economic slump, we may actually experience a decline in growth.  “When you look at three years after the deficit reduction episodes, quite often growth rates actually slow down compared with three years before.  So, if we were to reduce the deficit immediately there is a distinct possibility that may happen here.  This is especially the case since in the last two months there has been a distinct slowdown in the United States.”

With the U.S. economy still struggling, it is obviously important to question how best to proceed.  The Jayadev-Konczal paper provides an alternative perspective to those advocating  an immediate deficit reduction.  “There is a debate right now and certainly there will be policy decisions made after November.  The economy has not recovered as people had hoped as the stimulus was too small for that to occur (this is not 20-20 hindsight since many people noted it at the time).  Now we are going to have to look at another round of stimulus money or cutting back.  What our paper shows is that there is no historical evidence provided by the advocates of deficit reduction that cutting back in a similar situation that the U.S. is in has ever led to growth and debt reduction.”

Badgett pleased with $40,000 CPPA grant

Lee Badgett

M.V. Lee Badgett, economics professor and director of the Center for Public Policy and Administration (CPPA), is quoted in a press release regarding a $40,000 grant received by the CPPA.

Creative economy grant to spur CPPA’s Springfield initiatives
August 19, 2010

Center for Public Policy and Administration (CPPA) has been awarded $40,000 by the UMass President’s Creative Economy Initiative to help create a center dedicated to alleviating poverty and inequality in Springfield and other western Massachusetts cities.

“CPPA is delighted by this award,” according to M.V. Lee Badgett, professor of economics and CPPA director. “It not only provides support for an important CPPA initiative, it signals the President Office’s commitment to developing strong cooperative relationships with the people of Springfield.”

Fred Rose, a lecturer at CPPA whose doctorate from Cornell University is in city and regional planning, developed the proposal that garnered the award. Previously, Rose was a lead organizer for the Pioneer Valley Project, a coalition of labor groups and religious organizations that works for social change in Springfield.

“Springfield is the sixth poorest city in the nation, which obviously hinders its development” notes Rose. “In addition, Springfield lacks the kind of community-based development agencies that have played leading roles in other communities.”

“At the same time,” Rose adds, “Springfield has many assets–including its incredible diversity, reforms promoted by the Finance Control Board, and a renewed commitment at the state level.”

The goal of CPPA’s new center is to “fill gaps in the existing economic development landscape of Springfield,” explains Rose. “UMass has the potential to play a positive role in the city’s revitalization.”

CPPA’s grant will enable it to explore the best strategies for organizing the new center this year, as well as identify other potential funding sources and formulate new projects and research that respond to authentic community needs and opportunities.

Contact: Susan Newton (snewton@pubpol.umass.edu or 413.577.0478)

Badgett interviewed about effects of same-sex marriage in the Netherlands

Lee Badgett

M.V. Lee Badgett, economics and director of the Center for Public Policy and Administration, is interviewed about her book, “When Gay People Get Married: What Happens When Societies Legalize Same-Sex Marriage.” She comments on what she found while researching the book in the Netherlands where same-sex marriage has been legal since 2001. (The Takeaway [NPR], 8/18/10)

Folbre blogs: “Girly jobs” don’t pay well

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes her weekly column in the Economix blog about why what she calls “girly jobs,” teaching, caring for children or elders, social services and many parts of the health care industry, don’t pay as well as more male-oriented jobs. She says part of the problem is that economic outputs of this type of work isn’t easily measured in a market-based economic system and therefore isn’t highly valued. (New York Times, 8/16/10)

Epstein joins Triple Crisis Blog, questions U.S. financial reform

Gerald Epstein

Gerald Epstein, UMass Amherst economics professor and chair, co-director of the Political Economy Research Institute (PERI) and co-coordinator of the Economists’ Committee for “Stable, Accountable, Fair and Efficient Financial Reform” (SAFER), has joined The Triple Crisis Blog as an active contributor.

His recent contribution, “U.S. Financial Reform:  The end of the beginning, or simply the end?” discusses the passage of  the Dodd-Frank Wall Street Reform and Consumer Protection Act, labeled by the media as “the most sweeping financial reform since the Great Depression.”  However, many economists do not feel that enough was done to protect tax payers or, for that matter, to end “too big to fail” banking.  Instead, they are viewing the reform act as round one, contending that round two should continue to push forward the ideas that were blocked or defeated in round one.

Folbre blogs, “The Art of Tax War”

Nancy Folbre

Nancy Folbre, economics professor, writes her weekly column in the New York Times Economix blog about the debate over whether Congress should allow the tax cuts passed under former President George W. Bush to expire, or whether only those on the highest income individuals should be allowed to lapse. Folbre argues that while the debate is heated, it generally isn’t based on facts or sound data but rather on ideological perceptions. She notes that many voters believe President Obama has raised taxes, even though that’s not true, and that more than 60 percent of Tea Party activists believe this. (New York Times, 8/2/10)

August 2, 2010
The Art of Tax War
By NANCY FOLBRE

In my view, Citizens for Tax Justice, which describes itself as an advocacy group that strives “to give ordinary people a greater voice” against the “armies of special interest lobbyists for corporations and the wealthy,” offers the most specific and well-documented analysis of the two competing approaches to the Bush tax cuts, those of President Obama and the Congressional Republicans. Unfortunately, it doesn’t seem to have gotten much attention from the news media.

Another strategic goal of opponents of the tax increase is to split and weaken the coalition favoring it. In this context, it is advantageous to label those receiving public assistance (including unemployment insurance) as slackers and cheats. About 47 percent of Americans owed no federal income tax in 2009, which you might think people opposed to federal income taxes would consider good news. Instead, the conservative radio commentator Rush Limbaugh characterized this as a form of fraud, “worse than anything Bernie Madoff ever thought about doing.”

On the battlefield, in the fog of war, it is often difficult to know exactly what is happening, and why. But those resisting change have the most to gain from fog – or even from blowing smoke – because uncertainty often works in favor of the status quo.

Badgett interviewed about Prop. 8 ruling in CA

M.V. Lee Badgett

M.V. Lee Badgett, economics professor and director of the Center for Public Policy and Administration, is interviewed about this week’s decision by a federal judge in California striking down that state’s voter-approved Prop. 8 which banned same-sex marriage. Badgett testified in the trial on the economic consequences of the ban. (WFCR, Gay and Lesbian Times, 8/6/10; News Office assistance to WFCR)