Tigers-Marlins

Does it really change the balance of power in the AL Central? Cabrera is tough, I'll grant, and that lineup is scary. But, do we really expect a guy who had an ERA over 5 last year to come to the AL and get significantly better?

Unfortunately, it appears that the Tigers are trying to win now in the same window as the Indians, and the Tribe can't keep up the spending arms race. If that kind of spending starts in the Central, we could be looking at 40 years of White Sox and Tigers. Salary cap, please?

Back from Vegas

. . . .Where I discovered how exactly the big casinos were built. I didn't do too bad, really, but I certainly have yet to go there and come out (financially) ahead.

One of my favorite topics is economic inequality, and while we can probably agree that it's bad, my question is, what do we do about it? Raising taxes on the rich seems like a ham-fisted way of helping the middle class, and one that's likely to do more harm than good. Apparently, I'm not the only person that thinks so.

I'm going to BG this weekend for quiz bowl.

The Cost of Redistribution

This piece by Ezra Klein got me thinking. He argues that the wealthiest among us have "stolen" the productivity gains of the economy is bad and we should do something about it. I have always wondered how proponents of this line of thought propose to get people to pay $7 for a Big Mac because we raised the minimum wage to $11/hour, but that's neither here nor there.

My main question today is, is it not possible that the reason our economy has grown and recessions have gotten gentler over the past thirty years or so is that very inequality? Is it not possible that Paul Krugman's Great Compression is what was holding the economy back? Government redistributions have a cost; $1 in taxes costs the economy more than $1, and I propose that all that money we were spending on bureaucrats instead of people who actually produce something is the difference between the 50's and today. I'd love to see some serious analysis of this idea -- I'm not equipped to do it but it passes the smell test with me.

This blogging thing is hard. . .

I have been writing a lot of questions lately and getting ready for some fake quiz bowl next week, so apologies to the three or so of you who read this blog. You might want to use the RSS feed.

This post from Working Life hits home with me as someone who lost a job a few years ago and was eligible for (but never got; I got a new job first) TAA assistance. I am a little confused by the folks that are so against free trade. I am not sure how they think that their middle-class lifestyles will be maintained if you make the economy less productive than it already is, by closing the door to your customers. The United States is the world's largest consumer market, and every business in the world wants to sell their stuff here, but no government is going to open the doors to U.S. companies if our doors are closed to theirs.

So, I'm not sure how we save middle class jobs if we roll back free trade. If the American market isn't big enough to buy the things you want to sell (at high wages, remember -- prices will have to be raised), then all those great manufacturing jobs that we've created are going to go out of business in a hurry. I don't care how little the CEO makes -- no company that doesn't make money will employ workers at any wage for very long.

In response to the distorting effects of farm subsidies that one commenter brought up, you won't see me defend them. That, and the very interesting post about education that the sociology professor posted, I'll deal with another day.

Krugman steps a bridge too far

The hopes of Cleveland rest on crafty veteran Paul Byrd tonight, as he takes on the vaunted Yankees. Hopefully, they can slap the Yankees' Wang around again.

I always read Paul Krugman; he gets on my nerves but he's smart and hard to argue with. He went a bridge too far today:

People claim to be shocked by Mr. Bush’s general fiscal irresponsibility. But conservative intellectuals, by their own account, abandoned fiscal responsibility 30 years ago. Here’s how Irving Kristol, then the editor of The Public Interest, explained his embrace of supply-side economics in the 1970s: He had a “rather cavalier attitude toward the budget deficit and other monetary or fiscal problems” because “the task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

"People claim to be shocked by the Bush administration’s general incompetence. But disinterest in good government has long been a principle of modern conservatism. In “The Conscience of a Conservative,” published in 1960, Barry Goldwater wrote that “I have little interest in streamlining government or making it more efficient, for I mean to reduce its size.”

Let's review, shall we? Bush is:

1. the heir to a movement that is really uninterested in decreasing the size of government, that is only using that claim as a hammer to win elections


2. the heir to a movement that is not interested in good government, only in decreasing its size

People claim to be shocked at the Bush administration’s attempts to equate dissent with treason.

As opposed to moveon.org equating non-dissent with treason, or an attempt at enforcement of fiscal responsibility as an active preference for keeping children without health care? I don't always the support the tone of the Bush administration, but blaming one side for the political discourse that has been endemic for years, and , indeed, is on display in this very column is disingenuous at best.

Oh, and if you think Iran-Contra was a rogue operation, rather than something done with the full knowledge and approval of people at the top — who were then protected by a careful cover-up, including convenient presidential pardons — I’ve got a letter from Niger you might want to buy.

Do you really honestly think that if there was any "there" there, Lawrence Walsh wouldn't have found it? How much was spent on that investigation?

You keep that flame of hate alive, Paul.

First Monday

Here come the Supremes -- and as we turn to the month on the calendar where eight (well, nine, until tonight anyway) cities are focused more on other groups of nine contesting the baseball playoffs, the Supreme Court will begin its session today. Many big cases are on tap; for the best coverage anywhere, take a leap past Linda Greenhouse at the NYT and go straight to the recently redesigned SCOTUS blog. If the law is as interesting to you as it is to me, you'll enjoy the read.

Which brings me to my main point for today. I have no brief for the current crop of Republican presidential candidates, except for McCain, who probably won't win. In fact, if it ends up being

Giuliani vs. HRC, there isn't much difference on policy positions and on intangibles I would probably prefer Hillary.

But, I would have to vote for Rudy in that case. The most important difference is that Rudy will appoint justices to the Supreme Court who will respect the Constitution and the other branches of government for the next 20 years. Hillary will appoint justices who will rewrite the constitution to achieve their policy objectives. That is more important than anything else, in my opinion.

Everybody go read this!

It's really, really good stuff on economic misconceptions that plague voters.

(Hat tip to Greg Mankiw.)

They Signed

The UAW and GM have apparently come to agreement on a new contract, ending a day-and-a-half strike. Terms weren't disclosed, but are believed to contain some job security concessions in exchange for the formation of a VEBA.

I am not sure what will become of the VEBA, but it is hard to see that being a good deal for retirees. The only way that this saves GM any money is if it's underfunded -- so, by definition, if it's a savings for GM it's going to run out of money as happened at Caterpillar.

Then again, the VEBA could be funded more or less fully (70% is the figure that's been batted around, which is close to full funding as some of the obligations of the fund haven't actually been incurred yet), which makes it simply a means of removing uncertainty from GM's books, and making Wall Street happy with little effect on the actual size of the obligation.

Watch this space -- as the details come out it'll be interesting to see what happened, and if the contract is ratified.

No Guarantees

Sorry I was gone, I was busy celebrating the 2007 AMERICAN LEAGUE CENTRAL DIVISION CHAMPIONS!!!!!! See you at the Jake for the ALDS!!!!!!!

(Sorry about that, I let my emotions get away with me for a second.)

You may have noticed that the UAW went out yesterday. It seems that one of the more important issues is job security. I'm not sure they're thinking this through all the way. You can't get a guarantee of job security besides producing a product at a price people will pay for it. If you do that, you don't need a guarantee. If you don't, no guarantee will save you.

What's a Louis Vuitton dress worth?

Not as much as it costs, apparently. This is from a few weeks ago, but since I missed it then I hope you'll take a look at it now. It's this kind of thinking that leads people to rail against "excessive" corporate profits. I don't understand this personally; unless they're operating a government-enforced monopoly or are using slave labor, then the transactions by which they made that money were all adjudged by the people who made them to be in their best interests. Do we really want government to be in the business of telling people that, "no, darn it, you shouldn't buy that coat -- it's way overpriced?" Personally, I think advertising on Daily Kos costs too much; they should be forced to lower their rates.

However, that's exactly what some are trying to do with "living-wage" legislation. Now, I understand that the analogy doesn't apply perfectly because employers have much more market power than minimum-wage employees, but, give me a break. Do we really want to really want to open ourselves up to the market-distorting effects of a high minimum wage because we as a society would rather make the decision of what wage to seek on people's behalf?
Can't the argument also be made that sub-"living-wage" wages are what makes middle-class living possible? If the production expenses of the goods we want are increased, they'll cost more and we'll just inflation, not any increase in our standard of living.

Do Unions Add Value?

One of my favorite labor commentary sites is Working Life, where Jonathan Tasini writes on all sorts of topics. I can usually count on him to raise my blood pressure, and get me thinking. Anyway, he took on the auto negotiations yesterday:

You see, there are actually plenty of auto jobs, here and abroad. But, they increasingly are NON-UNION jobs. The auto industry is growing in the U.S.--but it's growing in the South, it's growing non-union and it's growing with wages and benefits far lower than the average wage of a current auto worker.

The ultimate goal, from the corporate end, in the auto negotiations is to survive--and, then, proceed on the merry road the companies have embarked on for some time now: rid themselves of the union and the cost structure that good unions jobs entail. It makes perfect logical, financial sense. That it is a disaster for working Americans is not their concern.

I am not sure that this development is a disaster for working Americans. It's working Americans that buy the cars that will be more affordable if they can be produced for less. If people who buy cars saw value in union-made automobiles, they would pay more for them. If that was the case, the Big 3 wouldn't be in the fix they're in.

In any event, as I posted over there, the UAW (and American workers in general) are like a grocery store owner selling a can of tuna for $2, that you can get down the street for $1. If you want to get paid more, you'd better be selling better tuna. I think it's clear that for a lot of products, producing in America (as opposed to, say, China) is worth the higher cost. Manufacturers in all kinds of industries have proved that over the past ten years. The standard of living enjoyed in America as opposed to other places isn't a birthright -- if we don't continue to add more value than the other guy, we can't expect to get paid more and live better than him.

What's less clear to me is the value that organized labor provides. If you want to get paid more for making cars than your non-union brethren down south, you need to be doing it better or your pay can't be sustained. The marketplace will quickly take care of disparities, and is doing so with a vengeance.

By the way, I think you can make a case that unions do add value to productive enterprises, at least sometimes. Considering how much they use in resources, they'd better be.

Economist 1, Jonathan Chait 0

A little more on the taxation topic, from Free Exchange at the Economist. It's always nice when the data backs you up.

Seriously, though -- I can't think of reasons why anyone would be surprised by this. Making money is hard -- you have to take risk, or do things like work which you would rather not do. Meanwhile, whatever you did to make money helps somebody else because you've produced something that they wanted (that is, unless you work in government.) If you get less reward for whatever you're doing because of higher taxes, then you're less likely to do it. Admittedly, I'm not an economist, but I don't see why this is complicated. You can argue about how much it happens, but I don't see much of an argument that it happens at least somewhat.

Supply-Side Follies

A lot of online ink has been spilled within the last few days regarding Jonathan Chait's new book "exposing" the supply-side thinking of Republicans. I hope he enjoyed burning down the straw man of supply-side because that's all he did.

There are a lot of serious reasons that tax cuts are good -- you don't have to believe that revenue will increase as a result of cutting taxes to believe that tax cuts are good in a given situation. Take a look at this story from the Economist economics blog.

If you want to say that Republicans are uninformed about economics and make stupid arguments, that's not exactly breaking news. I'm sure you can point to examples of Republicans saying any number of stupid things are any number of topics. So are a lot of Democrats -- economic literacy is not a requirement to be in politics. However, it's more useful to engage the legitimate arguments if you want to shed any light on a topic. It's bad argument to say that "This point that your side sometimes makes is wrong, therefore, you're not worth listening to at all."

You're throwing the baby out with the bath water if you ignore the fact that tax cuts can expand the economy, or, for that matter, the moral argument that the money belongs to the people and the government should use it efficiently.

A better way for health care

RIP, Paul Gillmor. A good man and a good Representative. This OH - 5ian will miss you.

For those who are trying to preserve the good of the U.S. health care system and bring more equality, take a look at this story from the Wall Street Journal. (It's on Page 1 today, I believe it's free. If not and you want to see it, let me know.). This seems like an interesting idea. While the U.S. health care system isn't perfect, there's a lot going on that's good, and it would be nice to preserve some it if we're going to monkey with it.

From the strange bedfellows department. . . .

It's not often that the politician I agree with most on a major political issue is John Dingell, but check this out. Now, I realize that it is entirely possible that Dingell is taking an extreme position in order to scotch any reform at all, but a carbon tax is a sound idea and perhaps Dingell's position will get it a wider hearing.

This brings up a larger point. The political blogosphere tends to divide into red and blue, and ne'er the twain shall meet. It's not enough to disagree with people, they must be proven to be inadequate human beings and destroyed. I submit that this has gotten worse on the internet, and hinders good government. Please, people, less calling names, more engaging ideas.

Happy Labor Day!

Respect to all those who provide something that people want to pay for today.

Check this article out -- if economics was better understood by the population at large we'd have a lot fewer Democrats. If the political discourse in the United States focused more on costs and benefits, we could get a lot further.

With that said, this article ignores the externalities caused by carbon usage. If all the costs of an action aren't borne by the people who take it, you'll get more of it than is societally optimal. A carbon tax is one way to restore those costs and make sure that the true costs of energy use are factored into every decision. Greg Mankiw wrote my intermediate macroeconomics textbook, so, I suppose it's only natural that I would follow him into the Pigou Club.

Pandering

Apparently the Republican National Committee is going to ask Larry Craig to resign per CNN.

Let's break this situation down. Taking the facts as alleged, he wanted to have sex. Distasteful for a married man, certainly. A "crime involving conduct unbecoming a Senator," as Norm Coleman alleged, possibly. But, this is a crime that doesn't impact his fitness as a Senator. Apparently, he's enjoyed having sex with men for years and been OK as a member of the Senate. If a Senator likes having anonymous sex, does that by definition make him unfit to be a Senator? I guess not.

This just about makes me ashamed to be a Republican. Some of the members of our erstwhile party are apparently operating under the assumption that it is necessary to pander to the religious right in order to win elections. How about, I don't know, governing effectively? Maybe lowering taxes, cutting spending, fighting terrorists? You think that might be a good way to spend time. Oh wait, never mind, we have to get those gays! That's a much better idea!

I'm back

Sorry about the lack of posts. . .I've been gone for a while, off to NYC and a little relaxing time. But now, it's time for the real world to restart, with a new semester and new projects.

Big series for the Tribe this week -- they got the job done on this road trip but now they'll have to get the sticks out against Minnesota. Now is not the time to let them back into the race.

The Power of Free Trade

This commentary in today's LA Times (by Nathan Gardels) discusses the foremost power of free trade. The U.S.'s dependence on China has been much in the news recently, with China's discussion of a sell-off of U.S. Treasuries leading to dire prophesies of economic collapse.

Like any other transaction, though, real power accrues to buyers, not sellers.

In the name of sovereignty, China's leaders for a long time have gotten away with suppressing their own citizens while ignoring the get-gloriously-rich-quick corruption that has thrived in the absence of the rule of law. But, thanks to globalization, China's export reliance on the U.S. market has imported the political demands of the U.S. consumer into the equation. Americans won't hesitate to cut the import lifeline and shift away from Chinese products that might poison their children or kill their pets.

The Chinese economy is so dependent on selling to the U.S. market that its masters dare not risk anything that will offend the U.S. consumer. Labor standards, a free press, and the rule of law are all more likely to happen now that the Chinese market depends on countries that value them. An engaged society has an obligation to play by the world's rules. The U.S. consumer has, and is continuing to, use its funds for the betterment of humanity, in a more powerful way than any other means could.

If you don't govern, you can't win

Karl Rove is leaving the White House at the end of the month. He is without question one of the foremost political minds of his generation, but the story of the Bush administration generally and him in particular shows that that isn't enough. It's great to win elections but if you don't use the opportunity you're given, you're still not getting anywhere.

Consider this a call for more policy heft in Republican ranks to go along with the political side. The current crop of candidates has had little of substance to say on the economy or tax system, health care, or other domestic policy questions. There are plenty of Republican intellectuals with strong free-market policy solutions -- let's see some of them.

Steve Skvara said. . .

When LTV filed bankruptcy, my Nana lost her eligibility for medical coverage through a technicality. She was a surviving spouse and not the employee himself. My grandmother was forced to spend her hard-earned savings on additional medical coverage through a private insurer, and the cost of healthcare wiped out most of her savings.

Nobody likes it when things like this happen. The people who are doing it don't like it, either. But, sad to say, the only way for government or anyone else to do anything about it is to create enough wealth in the economy to pay for whatever it is you're going to do. The best way to do that, hands down, is free trade.

After all, if nobody earns it, you can't tax it.

Where do capitalist millions come from?

a) Ripping out of the mouths of the poor
b) Stealing from the workers
c) Fleecing from the government
d) Comedy "providing a good or service people want and will pay for" option

I Hope I Get A Vote, At Least. . .

before this happens. With that said, would that mean that I could accumulate seniority toward a job at Deadspin or, better yet, the AFL-CIO blog? I think I'd fit right in there, and they can't keep me out. That's arbitrary and capricious refusal to let me exercise my rights in a democratic workplace! Once I accumulate seniority I demand a position on the AFL-CIO blog.

Manufacturing Flexibility

The folks at Future of the Union (which is a highly recommended read, by the way) posted an AP story in which a Ford worker was asking the entirely reasonable question, "Why are the auto companies sticking it to us, when labor is only 10% of the cost of a car?" You can read the story here. The simple answer is twofold:

1. It's harder to fix deeper mismanagement issues; reducing labor costs is the easiest way to show immediate progress. Showing immediate progress is a very important part of convincing investors that the Detroit companies can continue as going concerns, which is obviously in everyone's best interests.

2. There's a lot more to the added costs of the UAW than union wages. In fact, just about all the non-union auto plants pay roughly the same costs. Flexibility is the biggest issue; efficient production is impossible if the workforce isn't able to do different jobs. Toyota doesn't make cheaper cars because they pay less; they can do it because their factories are able to respond to changing demand conditions. To the extent that union rules prevent that, it costs a lot more than a few extra dollars an hour would. Hopefully the auto companies will give on wages to gain on flexibility, recognizing where their true costs lie.

Creating Living-Wage jobs

This (from Jonathan Tasini over at workinglife) was in response to an editorial in today's WSJ blaming Mexican immigration on lack of effective job creation.

After NAFTA passed, the peso crashed and millions of people were pushed further into poverty. The problem is not job creation: the problem is having jobs that allow people to put food on the table--which Mexico cannot do as long as a central driving force behind the economy--as is true in other countries hit by so-called "Free trade"--is to push down wages. Mr. "Heart of Darkness" Kurtz-man, if you generate jobs that don't pay a living wage, why do you expect people to stop feeling that economic disaster?

How, exactly, do you create living-wage jobs? The only answer is to enable the employers to make enough money to pay those wages. A company that carries employees that don't create value commensurate with their wages isn't going to be paying any wages, living or otherwise, for very long.

NAFTA, by increasing the market for Mexican goods, can only increase the inflows into Mexico's economy. This cash will benefit the entire economy, making all kinds of jobs possible that weren't possible before. If you're selling to a small market, it will be hard to generate any jobs, much less the living-wage ones, the lack of which Mr. Tasini so laments.

CEO bonuses

All thoughts with the victims and families of the bridge collapse in Minneapolis.

Check out this story arising Northwest's ongoing labor troubles. Of particular interest was the bonus that was paid to the CEO recently. I'm not saying that he didn't deserve it. A successful turnaround would be worth every penny of what he was paid, and then some.

But, what the board apparently didn't think about here was the true cost of giving the CEO that money in a situation where labor dissatisfaction was so high. By giving that bonus, they've riled the situation so much that the workers have apparently decided to try to sabotage the company. This makes it much less likely that the turnaround will ultimately be successful.

I'm not against high CEO pay -- if you want top talent, you need to pay accordingly. But top talent should be willing to wait until the results are in to get paid. Then, there'll be enough to go around.

Capital Costs Money Too

I read with interest the discussions about whether or not GM's and Ford's recent quarterly results announcements will hurt them as they enter negotiations with the UAW and will, no doubt, be looking for conciliatory contracts. (You can see some here.) A couple of comments:

1. A look at the results indicates that North American operations are still loss-making for both Ford and GM. The fact that both companies are making profits overseas is not any kind of argument that their North American cost structures aren't still out of whack.
2. (and more importantly) Hard work deserves to be compensated properly; there's no doubt about that. No company can survive without its workers. But, neither can it survive without capital to enable its expansions and fund its strategy. Just like workers who give their time to the company need to be paid, so do the investors that give their money to the company need to paid. Profits are how that happens, and if they are no profits, there is no capital. No jobs and no wages aren't far behind.
   

A Research Project

I believe that workers don't want a union under normal circumstances. They're expensive, and they create an antagonistic environment in the workplace that nobody wants. They also end up supporting mediocrity because they have to; it's their job. Imagine a steward in a meeting with a foreman, defending a guy who doesn't and never will work hard and do his job. Most of the time, the steward doesn't want that guy there either; but he's bound to defend him through the process.

Furthermore, companies want to be fair. It's just bad business not to be; even without the threat of having to deal with a union, being capricious causes disruption in the workplace that can get expensive in a hurry. Someone brooding about about the wrong you just did to them is hardly likely to put 100% of his focus on the job that day.

The reason they end up supporting unions is that management has so upset them about something that don't see a choice. The question I want to explore is, what are those things that upset workers enough to seek collective bargaining, and how can companies avoid doing those things? If companies can avoid doing those things, management and workers can stay on the same team, and the company can remain an optimally efficient, profit-making enterprise.

Edited to fix typos.

Welcome

Welcome to Attempted Polymathematica, a place for me to share my attempts to grow as a scholar and a writer with the internets. It's private-public for now, I am hoping that by the time people figure out that this is here, I'll have figured out what I'm doing with it. Wish me luck with that!

Topics will include labor relations and management, Asia-Pacific relations, theology, Cleveland sports, and other things of interest to me. I have a fairly wide set of interests, hence the title.

By the way, I am Brian Saxton, I'm getting my MBA at Cleveland State right now. I'm hoping to start a Ph.D. in labor relations in the fall of '08.