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    ‘Bidenomics’ is working – which means Biden and the Democrats may win too | Robert Reich

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    Until recently, I assumed that Joe Biden would get a second term despite worries about his age because most Americans find Trump so loathsome.But I’ve underestimated Bidenomics. It’s turning out to be the most successful set of economic policies the United States has witnessed in a half-century.It may not only give Joe another term but also give Democrats control over both houses of Congress. It may even put the nation on the path to widely shared prosperity for a generation.New economic data last week showed that inflation cooled to 3% in June, down from over 9% last year, and close to the Fed’s goal of 2%.And as inflation has subsided, real wages – that is, what paychecks will buy – have finally risen.Meanwhile, economic growth has accelerated. Consumer spending is solid. Consumers expect the economy to continue to do well.Inflation is coming down without a crash landing, in large part because the Fed’s rate increases – designed to slow the economy, stop wage growth and cause higher unemployment – are being offset by Bidenomics’ massive public investments in infrastructure, semiconductors, wind and solar energy, and manufacturing.This isn’t all. The Biden administration has added three other critical ingredients: the threat (and, in some cases, reality) of tough antitrust enforcement, a pro-labor National Labor Relations Board, and strict limits on Chinese imports.Taken together, these policies are beginning to alter the structure of the American economy in favor of the bottom 90%.In recent decades, the Fed has been in charge of evening out the business cycle, but no one has taken charge of altering the structure of the economy so that the poor and working middle class get a larger share of the gains.This restructuring has been difficult to achieve for the simple reason that the monied interests don’t want it.In Republican circles, the monied interests have preached the snake oil of supply-side economics, which legitimized giant tax cuts going mostly to the rich and large corporations.Those tax cuts – under Reagan, George W Bush and Trump – exploded the federal debt, fueled giant profits in the biggest firms and financial institutions, and stoked a surge in billionaire wealth but did literally nothing for average working people. Nothing trickled down.In Democratic circles, the monied interests have used neoliberalism – which has called for deregulation, privatization, free trade and the domination of finance over the economy.This orthodoxy pervaded the Clinton and Obama administrations. (I won’t bore you with my war stories, but trust me.)The result was similar to that of supply-side economics: wealth surged to the top, but average working people remained stuck in the mud.In contrast to both supply-side economics and neoliberalism, the Biden administration is focused on altering the structure of the economy.Over the past year, manufacturing construction in hi-tech electronics, which the administration has subsidized through Chips and the Inflation Reduction Act, has quadrupled.Tens of billions in infrastructure spending has been funneled to the states for road, water system and internet upgrades.More clean-energy manufacturing facilities have been announced in the last year than in the previous seven combined.Biden understands that these investments must translate into high-paying jobs, which often require unions.“When I think climate, I think jobs … union workers are the best workers in the world,” he said in a recent speech on what he has called Bidenomics.The monied interests don’t want unions, of course. The narrow congressional majority that got these bills passed rolled back some of the labor conditions that originally accompanied the tax credits and grants.Moreover, much of the funding is pouring into so-called “right-to-work” states that make it exceedingly difficult to unionize.But a buoyant economy strengthens the hand of workers, making it easier to unionize – which helps explain the ubiquitous labor action this summer.Voters may not yet understand Bidenomics, but it’s probably not necessary that they do in order for Biden and the Democrats to benefit.If Bidenomics continues to alter the structure of the economy in ways that help the vast majority, voters will give Biden another term and reward Democrats with both houses of Congress.And if Bidenomics is successful, it will make the American economy both stronger and fairer in years to come.I’m betting on it.
    Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com More

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      Pacific trade deal is more useful to Joe Biden than it is to the UK’s economy

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      Tory MPs hailed the UK’s entry last week into the Indo-Pacific trading bloc as a major step on the road to re-establishing Britain as a pioneer of free trade.It was a coup for Rishi Sunak, said David Jones, the deputy chairman of the European Research Group of Tory Eurosceptics, who was excited to be aligned with “some of the most dynamic economies in the world”.Trade secretary Kemi Badenoch also used the word “dynamic” to describe the 11 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). She pushed back against criticism that signing a trade deal with a loose collection of countries on the other side of the world would only add 0.08% to the UK’s gross national product, and then only after 10 years of membership. That figure was an estimate by civil servants 10 years ago, she said in an interview with the Daily Mail. The CPTPP is more important these days.And it might be, but not for the trade it facilitates. The significance lies in the geopolitical realignment it promotes and how such pacts could harm future Labour governments.The CPTPP was signed on 8 March 2018. Australia, Brunei, Canada, Japan, Mexico, New Zealand and Singapore were the first to form a bloc before being joined in the five years that followed by Vietnam, Peru, Malaysia and Chile.Former president Barack Obama hoped the US would also be a founder member before coming up against a Republican Congress that disagreed. Later, Donald Trump abandoned the deal altogether.Obama wanted to throw a friendly arm around Pacific countries threatened by China’s increasingly aggressive attitude to its neighbours – or, looked at another way, maintain open markets for US goods and services across south-east Asia in opposition to Xi Jinping’s Belt and Road investment initiative. Joe Biden, despite having control of Congress, refused to consider reopening talks about US membership, paving the way for China to apply in 2021.Thankfully for Biden, Britain’s application preceeded Beijing’s by six months, putting the UK ahead in the queue; quickly it became apparent that Britain’s role could be to help block China’s entry to the CPTPP without the US ever needing to join. For the Americans, the potential loss of trade was a side issue.Brexit was never considered by Washington to be a positive development, but there was a silver lining once it became clear the UK could be deployed more flexibly in a fight with China – a confrontation that Brussels has so far backed away from.The Aukus defence pact between Australia, the UK and US is another example of this anti-China coalition – and of Sunak’s efforts to win back Washington’s approval.The move also plays to a domestic agenda. In the same way that Margaret Thatcher’s sale of state assets – from council housing to essential utilities – denied Labour the means to directly influence the economy without spending hundreds of billions of pounds renationalising those assets, so global trade deals undermine Labour’s promise to use the state to uphold workers’ rights and environmental protections.Secret courts form the foundation stone of most trade deals and allow big corporations to sue governments when laws and regulations change and deny them profits.Badenoch’s civil servants say they are comfortable with the investor-state dispute settlement (ISDS) tribunal system because the UK government has never lost a case.However, a government that wanted to push ahead at a faster pace with environmental protections, carbon taxes, or enhanced worker’s rights might find themselves on the wrong end of a court judgment.The TUC’s general secretary, Paul Nowak, was quickly out of the blocks to voice these fears when the deal was announced on Friday. That is why the EU parliament has forced Brussels to ban ISDS clauses from future trade deals.Sunak, on the other hand, appears comfortable with the prospect of CPTPP countries beginning to dictate how the UK considers basic rights – and how this could become the price of easier trade, and more importantly, foreign policy. More

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      US banks want socialism for themselves – and capitalism for everyone else | Robert Reich

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      Greg Becker, the former CEO of Silicon Valley Bank, sold $3.6m of SBV shares on 27 February, just days before the bank disclosed a large loss that triggered its stock slide and collapse. Over the previous two years, Becker sold nearly $30m of stock.But Becker won’t rake in the most from this mess. Jamie Dimon, chair and CEO of JPMorgan Chase, the biggest Wall Street bank, will probably make much more.That’s because depositors in small- and medium-sized banks are now fleeing to the safety of JPMorgan and other giant banks that have been deemed “too big to fail” because the government bailed them out in 2008.Last Friday afternoon, the deputy treasury secretary, Wally Adeyemo, met with Dimon in New York and asked whether the failure of Silicon Valley Bank could spread to other banks. “There’s a potential,” Dimon responded.Presumably, Dimon knew such contagion would mean vastly more business for JPMorgan. In a note to clients on Monday, bank analyst Mike Mayo wrote that JPMorgan is “battle-tested” in volatile markets and “epitomizes” how the largest US banks have shed risk since the 2008 financial crisis.Recall that the 2008 financial crisis generated a gigantic shift of assets to the biggest Wall Street banks, with the result that JPMorgan and the other giants became far bigger. In the early 1990s, the five largest banks had accounted for only 12% of US bank deposits. After the crisis, they accounted for nearly half.After this week, they’ll be even bigger.Their giant size has already given them a huge but hidden effective federal subsidy estimated to be $83bn annually – a premium that investors and depositors willingly pay to these enormous banks, in the form of higher fees and lower returns, precisely because they’re considered too big to fail.Some of this hidden federal subsidy goes into the pockets of bank executives. Last year alone, Dimon earned $34.5m.Dimon was at the helm in 2008 when JPMorgan received $25bn from the federal government to help stem the financial crisis which had been brought on largely by the careless and fraudulent lending practices of JPMorgan and other big banks. Dimon earned $20m that year.In March 2009 Barack Obama summoned Dimon and other top bank executives to the White House and warned them that “my administration is the only thing between you and the pitchforks”.But the former president never publicly rebuked Dimon or the other big bankers. When asked about the generous pay Dimon and other Wall Street CEOs continued to rake in, Obama defended them as “very savvy businessmen” and said he didn’t “begrudge peoples’ success or wealth. That’s part of the free market system.”What free market system? Taxpayers had just bailed out the banks, and the bank CEOs were still raking in fat paychecks. Yet 8.7 million Americans lost their jobs, causing the unemployment rate to soar to 10%. Total US household net worth dropped by $11.1tn. Housing prices dropped by a third nationwide from their 2006 peak, causing some 10 million people to lose their homes.Rather than defend CEO paychecks, Obama might have demanded, as a condition of getting bailed out, that the banks help underwater homeowners on Main Street.Another sensible proposal would have been to let bankruptcy judges restructure shaky home mortgages so that borrowers didn’t owe as much and could remain in their homes.Yet the big banks, led by Dimon, opposed this. They thought they’d do better by squeezing as much possible out of distressed homeowners, and then collecting as much as they could on foreclosed homes.In April 2008, Dimon and the banks succeeded: the Senate voted down a bill that would have allowed bankruptcy judges to modify mortgages to help distressed homeowners.In the run-up to the 2020 election, Dimon warned against policies that Bernie Sanders and Alexandria Ocasio-Cortez were then advocating, including Medicare for All, paid sick leave and free public higher education. Dimon said they amounted to “socialism”.“Socialism,” he wrote, “inevitably produces stagnation, corruption and often worse – such as authoritarian government officials who often have an increasing ability to interfere with both the economy and individual lives – which they frequently do to maintain power,” adding that socialism would be “a disaster for our country”.Dimon also warned against “over-regulation” of banking, cautioning that in the next financial crisis, big institutions like JPMorgan won’t be able to provide the lending they did during the last crisis.“When the next real downturn begins,” he wrote, “banks will be constrained – both psychologically and by new regulations – from lending freely into the marketplace, as many of us did in 2008 and 2009. New regulations mean that banks will have to maintain more liquidity going into a downturn, be prepared for the impacts of even tougher stress tests and hold more capital.”But, as demonstrated again this past week, American capitalism needs strict guardrails. Otherwise, it is subject to periodic crises that summon bailouts.The result is socialism for the rich while everyone else is subject to harsh penalties: bankers get bailed out and the biggest banks and bankers do even better. Yet average people who cannot pay their mortgages lose their homes.Meanwhile, almost 30 million Americans still lack health insurance, most workers who lose their job aren’t eligible for unemployment insurance, most have no paid sick leave, child labor is on the rise and nearly 51m households can’t afford basic monthly expenses such as housing, food, childcare and transportation.Is it any wonder that many Americans see the system as rigged against them? Is it surprising that some become susceptible to dangerous snake-oil peddled by power-hungry demagogues?
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com More

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      Republicans are threatening to default on the US national debt. Don’t believe them | Robert Reich

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      Republicans are threatening to default on the US national debt. Don’t believe themRobert ReichHere’s a dirty secret: both Republicans’ debt hysteria and Biden’s proposed tax hikes are pure theater. Neither will happenPresident Biden is proposing to trim the federal budget deficit by close to $3tn over the next 10 years. He was an FDR-like spender in the first two years of his presidency. Has he now turned into a Calvin Coolidge skinflint?Neither. He’s a cunning political operator.The US central bank is poised to cause untold hardship to millions of Americans | Robert ReichRead moreBiden knows that he – along with his three immediate predecessors (Trump, Obama and George W Bush) – have spent gobs of money. In addition, Bush and Trump cut taxes on the rich and on corporations.Not surprisingly, the national debt has soared. It’s not so much an economic problem as a political one. The huge debt is giving Republicans a big, fat target.House Republicans are planning to stage theater-of-the-absurd pyrotechnics – refusing to raise the debt ceiling. Which means that at some point this summer, Biden’s treasury department will say that the nation is within days (or hours) of defaulting on its bills. A default would be catastrophic.To counter this, Biden is planning his own pyrotechnics.In the budget released this week, he’s proposing a “billionaire minimum tax” that would require wealthy American households worth more than $100m to pay at least 20% of their incomes in taxes (most middle-class Americans pay about 30%). Plus, they’d have to pay 20% a year on unrealized gains in the value of their liquid assets, such as stocks, which can accumulate value for years but are taxed only when they are sold (and not even then, if left to their heirs).Here’s the important thing: the tax would apply only to the top one-100th of 1% of American households. Over half of the revenue would come from those worth more than $1bn.Biden is proposing additional tax hikes on the wealthy: reversing the Trump tax cut by raising the top tax rate to 39.6% from 37%, increasing the corporate tax to 28% from 21%, and raising the tax on stock buybacks from 1% to 4%.All told, Biden’s new tax proposals would amount to an almost $3tn tax increase over a decade – on the richest of the rich. Oh, and did I say? Taxing the rich is enormously popular.Biden also wants to let Medicare officials negotiate with pharmaceutical companies for lower drug prices and cap the costs of drugs for seniors – a proposal that is also hugely popular.But here’s the dirty little secret. Neither of these two theatrical productions – neither the Republicans’ refusal to raise the debt ceiling nor Biden’s big tax hike on the super-rich – will ever happen. They’re both fantasies.A default on the nation’s obligations would bring on an economic calamity that Republicans don’t want to be responsible for. And a giant tax increase on the super-rich would be a miracle, given their political clout.These two productions are being staged for the public – two competing performances, each intended to score political points against the other.Biden’s performance is rational, and the Republicans’ is irrational and unserious, but that doesn’t really matter.They will both end in a dramatic flurry of last-minute negotiations, seemingly death-defying moves and countermoves, and breathtaking cliffhangers.Exciting? Of course. Important? Meh.The denouement? The debt ceiling will be raised. The national debt will be lowered a bit. Social Security and Medicare will be left alone. And Biden and the Democrats will have leeway to do one or two more things before the gravitational pull of the 2024 election pulls them in – perhaps expand childcare or pre-K or enable more students to attend community college.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      This article was amended on 9 March 2023 to correct an editor’s error in the standfirst. Biden has proposed tax hikes for wealthy Americans, not tax cuts.
      TopicsUS politicsOpinionUS CongressJoe BidenBiden administrationEconomic policyDemocratsRepublicanscommentReuse this content More

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      The US central bank is poised to cause untold hardship to millions of Americans | Robert Reich

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      The US central bank is poised to cause untold hardship to millions of AmericansRobert ReichThe Federal Reserve chairman has admitted that at least 2 million people could lose their jobs if interest rates keep risingAs chairman of the Federal Reserve board, Jerome Powell is making his semi-annual policy report to Congress this week. I have an urgent question for Powell that I hope members of Congress will also ask: how can he justify further rate hikes in light of America’s staggering inequality?The US should break up monopolies – not punish working Americans for rising prices | Robert ReichRead morePowell and his colleagues on the Fed’s open market committee are considering pushing interest rates much higher in their quest to get inflation down to their target of 2%. They believe higher interest rates will reduce consumer spending and slow the economy.With all due respect, this is unnecessary – and unjust.Over the past year, the Fed raised interest rates at the fastest pace since the 1980s, from near zero to more than 4.5%. But consumer spending isn’t slowing. It fell slightly in November and December but jumped 1.8% in January, even faster than inflation.As a result, Powell is now saying he may need to lift rates above 5%. A recent paper by a group of academic and Wall Street economists suggests that he will need to raise interest rates as high as 6.5% to meet his 2% target.This would worsen America’s already staggering inequalities.You see, the Americans who are doing most of the spending are not the ones who will be hit hardest by the rate increases. The biggest spenders are in the top fifth of the income ladder. The biggest losers will be in the bottom fifth.Widening inequality has given the richest fifth a lot of room to keep spending. Even before the pandemic, they were doing far better than most other Americans.The top fifth’s savings are still much higher than they were before the pandemic, so they can continue their spending spree almost regardless of how high the Fed yanks up rates.That spending is a big reason Powell and his colleagues at the Fed are having so much difficulty slowing the economy by raising interest rates (in addition to the market power of many big corporations to continue raising prices and profit margins).Those higher rates are flowing back into the top fifth’s savings, on which they’re collecting interest. But yank up rates much more and we’ll impose big sacrifices on lower-income Americans.Powell himself has predicted that at least 2 million people will lose their jobs if he raises interest rates to 4.6% by the end of the year.The study I mentioned a moment ago concludes that “there is no post-1950 precedent for a sizable central-bank-induced disinflation that does not entail substantial economic sacrifice or recession”.Well, there’s also no post-1950 precedent for the degree of income inequality America is now experiencing.Relying on further interest-rate hikes to fight inflation will only worsen the consequence of America’s near-record inequality. The people who will endure the biggest sacrifices as the economy slows will be the first to lose their jobs: mostly, those in the bottom fifth.There’s no reason for further hikes, anyway. Inflation is already slowing.I understand Powell’s concern. What looked like a steady, albeit gradual, slowdown is now looking even more gradual. But so what? It’s the direction that counts.He should abandon the 2% target rate of inflation. There’s nothing sacrosanct about 2%. Why not four? Getting inflation down to 2% is going to cause too much pain for the most vulnerable.And Powell should suggest to Congress that it use other tools to fight inflation, such as barring corporations with more than 30% market share from raising their prices higher than the overall inflation rate – as recently proposed by New York’s attorney general.Mr Powell, if you’re reading, may I be perfectly frank? You weren’t elected to your current post. Nor were your colleagues. That’s understandable. The Fed needs to be insulated from politics. But you at least owe it to America to do your job fairly.It would be terribly unjust to draft into the inflation fight those who are least able.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      TopicsUS politicsOpinionEconomic policyUS economic growth and recessionJerome PowellFederal ReservecommentReuse this content More

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      Joe Biden calls Liz Truss tax cuts a ‘mistake’ as political fallout continues

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      Joe Biden calls Liz Truss tax cuts a ‘mistake’ as political fallout continuesUS president rejects ‘cutting taxes on the super-wealthy’ and says he is not the only world leader critical of abandoned plan00:39Joe Biden has called Liz Truss’s abandoned economic plan that sent financial markets into chaos and caused a sharp drop in the value of the pound a “mistake” as criticism of her approach continued.The US president hinted that other world leaders felt the same way about her disastrous mini-budget, saying he “wasn’t the only one” who had concerns over the lack of “sound policy” in other countries.Biden said it was “predictable” that the new British prime minister was forced on Friday to backtrack on plans to aggressively cut taxes without saying how they would be paid for, after Truss’s proposal caused turmoil in global financial markets.His comments on Sunday to reporters at an ice-cream parlour in Oregon marked a highly unusual intervention by a US president into the domestic policy decisions of one of its closest allies.“I wasn’t the only one that thought it was a mistake,” Biden said. “I think that the idea of cutting taxes on the super-wealthy at a time when … I disagree with the policy, but it’s up to Britain to make that judgment, not me.”Labour leapt on the US president’s remarks. The shadow foreign secretary, David Lammy, said: “As well as crashing the economy, Liz Truss’s humiliating U-turns have made Britain’s economy an international punchline.“President Biden knows the dangerous folly of trickle-down economics. His comments confirm the hit our reputation has taken thanks to the Conservatives.”Biden has repeatedly poured scorn on so-called trickle-down economics and before his first bilateral talks with Truss in New York last month tweeted that he was “sick and tired” of the approach, which he claimed had never worked.Mini-budget went ‘too far, too fast’, says Jeremy HuntRead moreBiden’s comments came after weeks of White House officials declining to criticise Truss’s plans, though they emphasised they were monitoring the economic fallout closely.The US president was speaking during an unannounced campaign stop for the Democratic candidate for governor, Tina Kotek. Democrats face a tough US political environment amid Republican criticism of their handling of the economy.Biden said he was not concerned about the strength of the dollar – it set a new record against sterling in recent weeks, which benefits imports but makes US exports more expensive to the rest of the world.He claimed the US economy was “strong as hell” but added: “I’m concerned about the rest of the world. The problem is the lack of economic growth and sound policy in other countries. It’s worldwide inflation, that’s consequential.”Truss’s own new chancellor, Jeremy Hunt, has said Truss and his predecessor Kwasi Kwarteng’s mini-budget went “too far, too fast” as he effectively signalled the demise of the prime minister’s economic vision.“We have to be honest with people and we are going to have to take some very difficult decisions both on spending and on tax to get debt falling, but at the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people.”Hunt is expected to announce that plans to reduce the basic rate of income tax next April will be pushed back by a year. The cut to 19% will now take effect at the time previously proposed by Rishi Sunak, the former chancellor who was Truss’s main leadership rival.TopicsUS foreign policyJoe BidenLiz TrussEconomic policyUS politicsConservativesnewsReuse this content More

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      American CEOs make 351 times more than workers. In 1965 it was 15 to one | Indigo Olivier

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      OpinionInequalityAmerican CEOs make 351 times more than workers. In 1965 it was 15 to oneIndigo OlivierRather than address stagnant wages for hourly workers and yawning inequality, corporations are blaming a ‘labor shortage’ Tue 17 Aug 2021 06.24 EDTLast modified on Tue 17 Aug 2021 06.25 EDTLast week, the Economic Policy Institute, a nonpartisan thinktank, released a report on the increasing pay gap between chief executives and workers. This research tells a familiar story with updated figures. When taking into account stocks, which now make up more than 80% of the average CEO’s compensation package, the report found that chief-executive pay has risen by an astounding 1,322% since 1978. That’s more than six times more than the top 0.1% of wage earners and more than 73 times higher than the growth of the typical worker’s pay, which grew by only 18% in the same time period. Most remarkable, however, is the 18.9% increase in CEO compensation between 2019 and 2020 alone.Bob Woodward’s third book in Trump trilogy to cover handling of pandemicRead moreCEO compensation outpacing that of the 0.1% is a clear indication that this growth is not the product of a competitive race for skills or increased productivity, the EPI report explains, so much as the “power of CEOs to extract concessions. Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on the economy’s output or on employment,” the report concludes.This report joins a slew of data sounding an alarm on a massive upward transfer of wealth to the top 1% over the course of the pandemic. One estimate by the Institute for Policy Studies puts this figure as high as $4tn, or a 54% increase in fortunes for the world’s 2,365 billionaires.Today in the US, the CEO-to-worker pay gap stands at a staggering 351 to one, an unacceptable increase from 15 to one in 1965. In other words, the average CEO makes nearly nine times what the average person will earn over a lifetime in just one year.It’s worth remembering that the federal minimum wage would be $24 an hour today had it kept pace with worker productivity, rather than $7.25, where it’s been stuck since 2009. Additionally, inflation has resulted in a nearly 2% pay cut over the past year despite modest gains in hourly wages, according to the Bureau of Labor Statistics.This reality is unfolding against a narrative of a “labor shortage,” with small businesses, retail giants and fast-food chains expressing difficulty in filling poorly paid positions – even though there are one million more unemployed workers than there are open jobs. Clearly, something else is going on here.The grim reality is that a huge section of the American labor force – between 25% and 40% – made more on unemployment than they ever have working full-time at a minimum wage job. $7.25 an hour is $290 a week before taxes, compared with the $300 in weekly federal benefits that pandemic unemployment assistance provided. Nor does this account for the additional weekly state benefits that those on unemployment received.In our current milieu, “labor shortage” has become doublespeak for a stubborn reluctance on the part of politicians and businesses to address poverty wages, the remedy for which has been to let pandemic unemployment assistance expire so that workers are desperate enough to go back to the exploitative conditions that billion-dollar companies insist are necessary to keep the economy running.Rather than succumb to mainstream accounts that our “labor shortage” is the consequence of welfare-induced idleness, we should have an honest discussion about how we’ve allowed the essential workers who uphold our standard of living to be abused for so long while the mega-wealthy billionaires whom they work for realize their infantile fantasies of starting colonies in space.The EPI is correct. A wealth tax on the 1% would not hinder the economy nor employment, so much as rein in the excesses of the billionaire space race and luxury doomsday bunkers that stand in stark relief to the floods, fires, famine and pestilence that have currently taken hold.Among the report’s policy recommendations for reversing skyrocketing pay for CEOs are raising the marginal tax rate on the ultra rich to “limit rent-seeking behavior” and penalizing companies with unacceptable CEO-to-worker pay ratios with higher corporate taxes. Let’s examine the feasibility of both under Joe Biden’s administration.When Biden came into office, Trump had cut corporate tax rates from 35% to 21% and lowered rates on the ultra-wealthy to such an extent that the richest 400 people in the US paid a lower tax rate than any other group in the country – including the minimum wage workers who are rightly refusing to return to the same conditions they withstood before the pandemic. Investopedia called Trump’s Tax Cuts and Jobs Act the “largest overhaul of the tax code in three decades”.Biden, seeking to undo some of this pillaging of the public sphere, has proposed raising corporate taxes to 28% – 7% lower than what they had been when Barack Obama left office – and raising the top rates for individuals back to 39.6% from Trump’s 37% as part of the Democrats’ $3.5tn budget proposal (though there was some suggestion that Biden would concede to a 25% corporate tax rate if it would please congressional Republicans). Biden has also stated that he will not increase taxes on those making less than $400,000 – meaning less than the top 2% of wage earners.In other words, popular slogans taking aim at the top 1% have resulted in an administration of corporate Democrats that will attempt to take aim at the 1%, but make clear to their base that the 1% is as far as they’re willing to go.This is a far cry from the popular policies Bernie Sanders proposed during the presidential primaries, such as giving workers an ownership stake in the companies they’re employed by, democratizing corporate boards through employee elections, passing a wealth tax, banning stock buybacks and more. And it falls short of what is by far the cheapest and easiest solution to stimulating the economy and vastly reducing income inequality while steering clear of Republican interference: full student debt cancellation through executive order.With the stroke of a pen, Biden could provide life-changing financial relief for one in eight people living in the US. Each day he chooses not to is further proof that Biden is keeping to his original promise to rich donors on the campaign trail: “… nobody has to be punished. No one’s standard of living will change, nothing would fundamentally change.”
      Indigo Olivier is an investigative reporting fellow at In These Times magazine
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      Strong trade unions are vital to the UK’s economic recovery | Letters

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      Martin Kettle’s review of Joe Biden’s approach to economic regeneration (In the US, Joe Biden is backing the unions. Britain can only look on in envy, 7 April) was welcome, but we question whether it went far enough in its endorsement or reach. The success of Franklin D Roosevelt’s original New Deal owed much to the positive role offered by a confident and expanded union movement in governance of the project.Furthermore, there is little doubt that, both in the US and UK, at times of national emergency during two world wars, trade unions made significant contributions to the war effort, politically and on the manufacturing shop floor. After the second world war, it was British unions that encouraged the introduction of worker directors and the co-determination system, which provided the means for reviving the German economy – a system still operating in that country and across Europe, to the benefit of employees and employers.The case for supporting union revival becomes even clearer as we confront not just the consequences of the pandemic but also the emerging climate emergency. There is little doubt that while British industry has done regrettably little in confronting environmental despoliation, trade unions have been actively engaging with other partners in developing the green new deals that will be essential for securing sustainable economic development. These deals can offer tripartite supervision of the economy to oversee progress toward the 2015 Paris accord and the UN’s sustainable development goals; partnership agreements between unions and employers to ensure just transitions to green and secure jobs; and progress towards reducing the growing inequality that blights the UK.Jeff Hyman Professor emeritus, University of AberdeenChris Baldry Professor emeritus, Stirling University Martin Kettle is right that Joe Biden’s decision to promote decent conditions and respect at work, and to tie this into the collective organisation of trade unions, is something that is much-needed in Britain. Ten years of a Tory government should be sufficient reminder that in the present day only a Labour government will do anything on this agenda.However, that is the first, not the last, word. Kettle thinks some unions are stuck in the past, but then criticises those leaders who are critical of Keir Starmer, as if himself wanting a return to the days when unions sometimes represented not so much the interests of their members as the perspectives of the leaders and their desire for political careers.Certainly, many trade unions and trade unionists would hope and work for a Labour government. They’d also expect to shape and influence its policies in relevant areas. That is surely what US unions have successfully done with Biden.Keith FlettTottenham, London More

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      A $15 minimum wage isn't just about justice. It's good economics | Steven Greenhouse

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      There’s one important aspect of the fight for a $15 minimum wage that is little understood: the fight isn’t so much about raising pay for a few million workers. Rather it’s about the far more ambitious goal of putting the US economy on a higher road, on a different track from being a low-wage economy. In Europe, many people scoff at the US as a country of low-wage McJobs with paltry benefits – often no paid sick days, no paid vacation and no health insurance. In Denmark, a McDonald’s hamburger flipper averages $22 an hour (with six weeks’ paid vacation), while in the US, fast-food jobs pay half that on average.You might wonder: how can the United States, the world’s wealthiest nation, be a low-wage economy? Of the 37 nations in the Organization for Economic Cooperation and Development, the unofficial club of rich and near-rich nations, the US has the third-highest percentage of low-wage workers, with nearly one in four workers defined as low-wage. Only Latvia and Romania are worse. (That study defines low-wage as earning less than two-thirds of a nation’s median wage.) In another study, Brookings found that 53 million Americans hold low-wage jobs, with a median pay of $10.22 an hour and median annual earnings of $17,950.The US also has the lowest minimum wage among the G7 industrial nations in terms of purchasing power. America’s $7.25-an-hour federal minimum is 38% lower than Germany’s and 30% lower than Britain’s, Canada’s and France’s. This helps explain why the US has among the worst income inequality of the 37 OECD nations – only Mexico, Chile, Costa Rica and Bulgaria have greater inequality. And the US has the third highest poverty rate; only Hungary and Costa Rica are worse.The US didn’t always have a low-road economy. In the 1950s, 1960s and 1970s, it had a high-road economy: labor unions were at their strongest, American businesses were booming (for the most part), and corporations shared their profits and prosperity with their workers as never before, helping build the world’s largest and richest middle class. But beginning in the 1980s, many corporations pushed the US economy and American workers on to a lower road, as corporate America felt the sting of global competition, as Wall Street pushed companies ever harder to maximize profits, as labor unions grew weaker and as President Reagan and other Republicans weakened worker protections and did little to raise the minimum wage.The US also has the lowest minimum wage among the G7 industrial nations in terms of purchasing powerBecause of persistent Republican opposition, the federal minimum wage hasn’t increased since July 2009 – the longest stretch without an increase since Congress first enacted a minimum wage in 1938. Franklin Roosevelt signed the minimum wage into law during the Great Depression because he thought workers had far too little bargaining power and consumers far too little purchasing power. Roosevelt urged companies to pay fair wages, saying, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”Today’s federal minimum wage is just $7.25 an hour –  try maintaining a decent living at that pay level. The minimum wage is down 18% since it was last raised in 2009, after factoring in inflation, and down over 30%, after inflation, since 1968, during Lyndon Johnson’s Great Society years.America’s business community has staunchly opposed any minimum wage increases, warning that they would push up prices and force some companies out of business. Those leading the charge against a higher minimum – corporate executives and well-paid lobbyists and thinktank fellows – repeatedly say that raising the wage floor would be a job killer. They note that the Congressional Budget Office (CBO) recently estimated that increasing the minimum to $15 by 2025 would reduce employment by 1.4 million, although the treasury secretary, Janet Yellen, echoing many economic studies, said a $15 minimum’s effect on jobs would be “very minimal, if anything”. The CBO also predicted that increasing the minimum to $15 would raise the pay of 27 million workers nationwide and increase worker pay overall by $333bn – a step that would stimulate the struggling economy.Corporations, along with their Republican allies, overwhelmingly oppose a $15 minimum; in doing so, however, they ignore the will of the vast majority of Americans. According to a Pew poll, Americans favor a $15 minimum by 67% to 33%. While low-wage workers would be most vulnerable to any job losses caused by a higher minimum, lower-income Americans shows even greater support for a $15 minimum. Pew found that 74% of Americans making under $40,000 a year support a $15 minimum wage, as do 56% of Republicans making under $40,000. Last November, Floridians – even as their state went for Trump – voted 61% to 39% in favor of raising their state’s minimum to $15, joining eight other states that have approved a $15 minimum.Despite such strong public backing for a $15 minimum, it looks doubtful that even one Republican senator – even though the Republican party now describes itself as the party of workers – will vote for a $15 minimum. President Biden has championed a $15 minimum: “No matter where you work in America, if you work full time or 40 hours a week, you should not live in poverty,” he has said. “A $15 minimum wage accomplishes that.” A full-time worker making $7.25 an hour earns $15,080 a year; in contrast, a full-time worker earning $15 will make $31,200. In the face of opposition from Republicans and some congressional Democrats, however, Biden has hinted he might compromise on a lower number.The Economic Policy Institute, a progressive research group, predicts that if the minimum rises to $15, nearly one-third (31%) of African Americans and one-quarter (26%) of Latinos will receive a pay increase. Those pushing for a $15 minimum are carrying on a fight that Martin Luther King Jr, championed: the fight for decent pay and dignity at work. In 1967, the year before he died while fighting for higher wages for sanitation workers in Memphis, King wrote, “There is nothing but a lack of social vision to prevent us from paying an adequate wage to every American whether he [or she] is a hospital worker, laundry worker, maid or day laborer.”Millions of low-wage workers are still waiting for America to heed King’s social vision. More