Chris Dixon, candidate for State Senate District 48, highlights this good economicnews:
“The Asheville Tribune” Touts Benefits of Federal, State, and Local Economic Stimulus
As the Democratic candidate for State Senate District 48 (Buncombe, Henderson, and Polk counties), I have made local job creation my #1 campaign issue. It was the loss of the Volvo plant in Arden in December of 2009 that spurred me to run. So, I was heartened to see the following headline in The Asheville Tribune (Aug. 26-Sept. 1, 2010): “Fletcher company to offer 100 new jobs in expansion plan.”
This is surely good news for a town in the heart of my district, and the page 3 article gives plenty of encouraging details. All told, brake manufacturer Continental Teves will add 388 jobs in “three to four years,” doubling the plant’s workforce to 625 workers. This will more than replace the 250 jobs shed by Volvo—mostly to unionized plants in Pennsylvania.
However, the most interesting commentary in the article follows:
(Kathryn) Blackwell (corporate spokesperson in Auburn Hills, MI) said brake-making has perked up since deciding a year ago to expand the Fletcher facility. “Then we had two major customers (G.M., Chrysler) coming out of bankruptcy, with no sign of light at the end of the tunnel. But at this point, we’re seeing volumes picking up considerably—beyond most experts’ analysis.”
North American auto production is 25 percent above industry projections this year, Blackwell said, with Detroit’s Big Three needing brakes and other parts. “This is the first good news we’ve had in over two years.”
The article goes on to mention that the Fletcher expansion beat out plants in Europe and Mexico thanks to what Blackwell describes as “Fletcher and Henderson County tax incentives and a state grant of up to $2.2 million.”
Hmmm. Let’s see. GM and Chrysler are still in business thanks to a federal intervention. The Wall Street Journal’s Detroit bureau chief declared, “…President Obama’s auto industry initiatives are working and the president is entitled to take a bow, no matter how much that might pain conservatives.” Henderson County’s all-Republican board of county commissioners conspired with the Fletcher town council and the Democratic administration of Gov. Bev Perdue to bestow various economic incentives upon Continental Teves.
How long before we see a Tea Party protest at the plant gate? Surely, they won’t sit idley by as socialism and economic bipartisanship (the horror!) gain a foothold in Fletcher.
Neal Gabler of the Woodrow Wilson Center laments that Wall Street reforms will never outfox human nature — specifically, greed:
If we’ve learned nothing else about investment banking over the last two years, we’ve learned that it operates like a virus. You can devise all sorts of economic antibiotics — from stricter regulation and more oversight to limiting certain institutional arrangements, as Glass-Steagall did — but sooner or later they are all bound to fail because financial instruments keep mutating to escape destruction. Investment bankers reconstitute highly risky, highly profitable schemes such as credit default swaps or unit contingent options or other exotic inventions. That’s why reform never works. It will always be outsmarted.
At least, as long as there is financial reward in outsmarting the system. Gabler notes (anecdotally, at least),
that During the long postwar economic boom, the top marginal rates hovered at 91%, removing a lot of the incentive to game the financial system. There was no point in scheming if you couldn’t profit from it. Still, the country prospered. So did Wall Street.
What changed starting in 1981, according to Gabler, is that the government started rewarding greed. “The Reagan tax cuts were hailed by conservatives as a way to unleash American initiative,” Gabler writes (by dropping the punishing, punishing, punishing, punishing, punishing top marginal tax rates — these people are really sensitive about being punished). We succeeded in unleashing “American avarice” along with it. Gordon Gekko made his Wall Street debut in 1987.
Reward a behavior and you’ll get more of it is an article of faith in certain circles. It reminds me that one of the core beliefs behind our criminal justice system — and a style of parenting popular in certain circle — is that punishment is supposed to deter misbehavior. Crimes of passion excluded, of course, and it would be hard to argue that the creation of derivatives and credit default swaps were crimes of passion, merely of greed.
Incentives, as we have seen, don’t always work the way common sense says they should. But if Gabler’s analysis has any merit (you don’t treat viruses with antibiotics, for example), disincentivizing one of the seven deadly sins again might have a more salutary effect than trying to inoculate against it.
That would be terribly unfair, of course. The full list of deadly sins applies only to people in the lowest tax brackets.
After last year’s summer of discontent, I looked back on America’s response to September 11:
A flood of post-September 11 articles asked how the attacks happened, what we would do next, and why terrorists hate us. One savvy pundit asked, Would America keep its head?
We invaded Iraq on trumped-up intelligence. We conducted illegal surveillance on our own citizens. We imprisoned people without charge, here and abroad. We rendered prisoners for torture and tortured others ourselves in violation of international law. All the while, millions of staunch, law-and-order conservatives supported and defended it, and still do. Vigorously.
Did America keep its head? Uh, no.
After an earlier national tragedy, the 1986 Challenger disaster, the broadcast networks filled air time by bringing on psychologists. How absurd it seemed to have TV psychologists telling us how we should feel about it and explain it to the kids. Today, of course, absurd is the new normal. Today we have the conservative Mighty Wurlitzer going all E. Power Biggs on America, telling us 24/7 not how we should feel but whom we should fear. And week by week it is becoming increasingly hard to keep up with whom the home of the brave is supposed to fear.
Business Insider calls this video “weirdly awesome.” The EconomicPolicyJournal dot com reports the WSJ calling it “too bizarre to believe.” (Who could have seen that coming?) EPJ wrings its hands over what “heavy duty players” must be behind it — unions. (Who could have seen that coming?)
Suppose the U.S. government had posted a budget surplus in 12 of the past 13 years. Suppose not a single major American financial institution had failed or needed a government bailout. Suppose the U.S. economy grew at an annual rate of 6.1 percent in the first quarter of this year, rather than at 2.7 percent.
Canada did, Harrop instructs, explaining that “What Canada had was a civic culture that wanted government to regulate financial activity.”
It’s not exactly apples and apples. Harrop runs down a few of the differences. Canada’s vast mineral wealth. America thinks it’s our job to provide military security for the rest of the world, “a job that other countries are all-too-pleased to give us,” she notes. Kinda runs up our costs (and tax burden). But Canada’s regulatory structures help keep the foxes out of the hen house.
How much are Canada’s businesses suffering? Harrop reports that Toronto’s large cap index has outperformed the S&P 500 so far this year by 27 percent. Anytime new regulations are proposed here, American foxes yelp in Pavlovian fashion about how regulation will make them an endangered species.
No, that’s the American Middle Class.
Harrop observes:
What we have is an elite willing to risk everyone else’s economic security to enable a few hotshots to win big at the casino of recklessness and fraud — while maintaining a variety of taxpayer backstops to reduce their risks. The joint never gets closed, also thanks to the large numbers of ordinary citizens trained to holler “socialism” every time the government tries to set a ground rule.
Yet even the conservative Washington Times will report that Canada’s banking system is “the healthiest banking system in the world.” The World Economic Forum agrees.
The AP reported in June that Canada had already reclaimed three-quarters of the jobs lost during the recession, although some recent gains have been in part-time work not expected to last.
Two very thoughtful opinion pieces in the AC-T today. The first is from Jim Buchanan and features this quote from Glenn Greenwald,
“Does anyone doubt that once a society ceases to be able to afford schools, public transit, paved roads, libraries and streetlights — or once it chooses not to be able to afford those things in pursuit of imperial priorities and the maintenance of a vast Surveillance and National Security State — that a very serious problem has arisen, that things have gone seriously awry, that imperial collapse, by definition, is an imminent inevitability?”
This second piece is from the editorial board, and it recognizes the stark reality of our local economic situation. Click here to read the whole thing. Here’s a trenchant quote:
More affordable housing would be a boon to the regular folk who teach in our schools, fight crime in our neighborhoods, fight fires in the community, care for our sick and elderly in hospitals and nursing homes.
Earlier this week, the Wall Street Journalpondered why “Some Firms Struggle to Hire Despite High Unemployment”:
With a 9.5% jobless rate and some 15 million Americans looking for work, many employers are inundated with applicants. But a surprising number say they are getting an underwhelming response, and many are having trouble filling open positions.
[...]
Employers and economists point to several explanations. Extending jobless benefits to 99 weeks gives the unemployed less incentive to search out new work. Millions of homeowners are unable to move for a job because the real-estate collapse leaves them owing more on their homes than they are worth.
Finding applicants with the right skills in the right area can also be a problem. But elsewhere in the Journal, Michael Fleischer complains that more employers aren’t hiring because government and company employee benefits add a “punishing price” to the already punishing uncertainty of rising health insurance costs and the potential of additional punishing tax burdens.
The poor things. (This perhaps explains the yellow “Don’t Tread On Me” banner hanging from the large, well-appointed house on Asheville’s upscale Kimberly Avenue where life is so … punishing.)
The slow-motion economic recovery has left the Democrats in a precarious position heading into Labor Day 2010. Making “jobs, jobs, jobs” anything more than a slogan before November is looking increasingly unlikely. Republicans, at their penurious best, are serving up another helping of warmed over tax and spending cuts to people without jobs or incomes.
The economic stress is palpable and the mood is ugly. Not that you could tell by listening to official Washington.
Writing in Sunday’s New York Times, Frank Rich hammers Treasury secretary, Timothy Geithner, for “his latest happy-days-are-almost-here-again tour.” The Associated Press reported that last week’s jobs report showed unemployment “stuck at 9.5 percent for the second straight month.” For Americans hanging on in the face of an economy beset by continuing stagnation, Rich complains that Geithner offers little but a “thin statistical gruel.”
Let them eat statistics is not exactly a winning strategy in an already tough election year for Democrats. The Rolling Stone‘s Matt Taibbi observes, “If you’re on Wall Street, and you’ve seen the stock markets recover and the banks go from virtual insolvency two years ago back to record profit numbers now,” things are looking up. But not if you are “just some schmuck looking for a job somewhere outside the Beltway and/or lower Manhattan.”
White House economic advisor Larry Summers and Tim Geithner may believe the recession is over, but you cannot fool people who see the lives they’ve spent years building slipping through their fingers. The Washington Post on Sunday had just three words to describe the mood outside the Beltway toward elected officials: frustration, despair, and disgust.
A Sunday editorial in our local paper revisited two over-fifty job seekers who have struggled to find stable work over the last two years with little success. USA Todayreported last year that men and women over 55 are jobless at the highest rates since The Great Depression. Such workers “don’t need our pity,” the editorial concludes. “They need paychecks. Politicians out there running for office don’t deserve their jobs if they don’t get that simple fact.”
At Firedoglake, CarolynC chronicles recent conversations that brought home the intense economic stress eating at many Americans.
A woman in the grocery store — a former personnel manager — tears up while relating her struggle to find full-time work:
She started crying as she told me that her home was being foreclosed on and she and her son had nowhere to go. She then said with cold fury, “No one in Washington cares about what we’re going through. All those politicians should be taken out and shot.”
An unemployed construction worker reports his sister’s Guatemalan fiancé to immigration authorities. Another man, unemployed for eighteen months says bitterly, “There’s really only one job I’d like to do now — stand at the Arizona border and shoot Mexicans when they try to cross into this country.”
It will take something more palliative than laundry lists of legislative achievements and “pocket cards” with talking points to convert sentiments like that into Democratic votes this November — unless the pocket cards are edible.
One of the great things you can say about Asheville is how many people — natives and new residents — are eager to do good for the community. Many are socially conscious investors. If only they could put their money to work doing good in struggling local communities…
On Tuesday, Gov. Beverly Perdue signed North Carolina’s new L3C law that encourages social entrepreneurship. Durham native, political consultant David Gergen, has called social entrepreneurship “the most important movement since the civil rights movement.”
So now I’m eager to hear how I can contribute to one of these social entrepreneurship ventures in our region. I mean, hey, if we aren’t committed enough to attracting manufacturing investment in Buncombe, fine. I’ll take my money to Burke, Catawba or Caldwell Counties and put it to work there.
The bill creates a new type of legal entity known as the “L3C” that is a type of limited liability company designed to attract private foundation money for the revitalization of endangered manufacturing enterprises, thereby providing well-paying jobs in high unemployment areas.
Foundations are required to pay out 5 percent of their net worth annually to maintain their tax-exempt status.
[The bill's principal sponsor, Sen. Jim Jacumin] said the L3C law will help industries such as furniture and textiles to return to North Carolina because the foundation setup will change a manufacturer’s cost structure to allow a company to flourish even with low profits.
From what I’ve heard from Jacumin and others, this is more than a pipe dream. One foundation has something already in the works, but I’m still trying to get details. This report from Americans for Community Development explains how it’s supposed to work:
Neal Gabler of the Woodrow Wilson Center 
