Since I spent yesterday largely throwing cold sewage on the hopes and dreams of my fellow Americans, let's have some more upbeat, anti-establishment frank talk from Dean Baker today, who thinks that despite Thomas Friedman's nay-saying, Trump's mercantilism could perhaps work:
While Trump will not be able to bring back the six million manufacturing jobs we have lost in the last two decades, it is certainly possible that he could bring back 1–2 million manufacturing jobs if he were to get the trade deficit closer to balance. That would be a big deal for lots of workers, especially if the workers who held these jobs were able to form unions to ensure decent wages and benefits.
(emphases added mine, throughout this whole blog entry)
In a separate piece, Baker throws some shade on the concept of "job killing robots":
In spite of all the stories about robots taking all the jobs, we still can't find any evidence in the productivity data. Productivity has averaged just 0.6 percent annually over the last six years, the slowest growth on record.
But now the Wall Street Journal alerts us to a new problem. It tells us that small businesses can't find enough workers in low-skilled occupations. If that sounds to you like the direct opposite of the job-killing robots story, then you're way ahead of many of the pundits who get paid big bucks to say smart things about the economy.
He also puts our current, woeful minimum wage in some context:
In one case it mentions a roofer who is now paying most of his workers over $20 an hour. While this is a better wage than most workers receive, roofing is a physically demanding and dangerous job. If the minimum wage had kept pace with productivity growth since the late 1960s (as it had in the prior three decades), it would be almost $19 an hour today, so crossing $20 an hour hardly seems like especially high pay in 2016. (It's equal to 0.008 percent of what Goldman Sachs pays its speakers.)
He also reminds us how capitalism is supposed to function:
It's certainly possible that many of the business owners who are complaining about a labor shortage would not be able to stay in business if they offered higher wages. But this is the way a market economy works. Businesses that can't afford to pay the prevailing wage go out of business and their workers go into areas where their labor can be more productively employed. This process is the reason that half of the country is no longer working in agriculture.
That's correct; in the free market system, businesses that can't keep pace with competing businesses fail, and that's the way it, in fact, should be.
So, fingers crossed that the Trump economic programme does in fact restore 1-2 million manufacturing jobs; we could use them.
If you prefer a story of graft, however, here's a good one. To summarize we need a brief recap.
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac), which in 2008 owned or controlled about half of the nation's mortgages, were on the threat of the collapse during the financial crisis of the same period. The taxpayers, through the Housing and Economic Recovery Act (HERA), bailed Fannie and Freddie out to the tune of $187.5 billion.
The Federal Government, not unreasonably, in 2012 placed what was known as a "profit sweep" on the agencies, essentially saying, hey, we bailed you out, so if money is being made off of you now, it's ours.
Investors in Fannie and Freddie - you know, the people who were bailed out - cried foul, and sued.
Meanwhile, hedge funds - who do not need to disclose their stakes in Fannie and Freddie stock - have been buying the (deeply depressed) stock in huge quantities. Their end game? Use political connections to the incoming Trump administration to ensure Trump administration privatizes Freddie and Fannie. Before the crisis, Fannie and Freedie stocks were priced at around $60 a pop. If you buying those stocks now at less than $2, and the Trump admin ends the "profit sweep," so that the Federal Government is no longer profiting but the investing hedge funds are - well, that could be quite the payday for the hedge funds assuming the Fannie and Freddie stock goes anywhere close to its pre-crisis price.
Anyways, one thing that is not a corrupt bargain between politics and the financial sector is this new kitten that my wife and I adopted, with which I am going to go play now. AW, KITTENS. See y'all later!