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‘Don’t say gay’ bill: Florida senate passes law marginalizing LGBTQ+ peopleGovernor DeSantis is expected to sign the proposal restricting instruction on sexual orientation and gender identity More
Biden’s State of the Union address: a perfect summation of his presidencyMoira DoneganThe US president has good intentions, with only halting, sporadic, uncreative, and trepidatious efforts to actually enact them There’s always something a bit grim about the State of the Union. A setpiece of American political theater, the annual speech by the president to a joint session of Congress is choreographed to eliminate any chance of accidental sincerity. The president speaks in carefully calibrated spin; every word sounds like it has been focus-grouped. Members of the opposition party make a show of their animosity, vamping for the cameras with either staid, dignified displeasure or ravenous hatred, depending on where they are running for re-election. No one’s mind is changed and little new information is delivered. By its nature, the speech is meant to describe the status quo. It is not meant to change it.State of the Union: Joe Biden pledges to make Putin pay for Ukraine invasionRead moreThis year, President Biden had a particularly grim task. After months and months of negotiations with Senator Joe Manchin, of West Virginia, proved fruitless, his sweeping economic agenda, the Build Back Better Plan, appears to be dead. The two voting rights bills that would have helped secure the franchise for Black Americans and protect the integrity of future elections were killed when Manchin and Senator Kyrsten Sinema, of Arizona, declined to support an exemption to the filibuster, meaning that the erosion of voting rights in Republican-controlled states is likely to advance unchallenged. Many economic indicators are strong, but with inflation running rampant, this means little to working families, who see their paychecks covering less and less of what they need. This spring, the US supreme court will hand down opinions that will drastically reshape American government and American lives, including the case from Mississippi, Dobbs v Jackson Women’s Health, that will overturn Roe v Wade. The midterms are coming, and in Europe, a pointless and brutal war of self-aggrandizement has been launched by an erratic and mendacious dictator with a massive stockpile of nuclear weapons.Perhaps it was to be expected, then, that Biden’s speech was wide-ranging in tone, frenziedly ambitious in its agenda, and light on specifics. He opened with the Russian invasion of Ukraine, condemning the murderous ambitions of Vladimir Putin and praising the courage of the unexpectedly resilient Ukrainian military and civilian volunteer forces to rapturous applause. The Ukrainian ambassador to the United States, Oksana Markarova, was in attendance as a guest of the first lady, and she received the night’s first standing ovation, her hand placed over her heart from her balcony seat, as lawmakers below fluttered her country’s blue and yellow flag. Homages to the Ukrainian struggle were everywhere in the House chamber, with a number of women lawmakers dressed in blue and yellow ensembles, men and women alike wearing stickers of the Ukrainian flag on their lapels, and others fielding subtler signals of solidarity: when the camera lingered on Senator Elizabeth Warren, of Massachusetts, she had a cloth sunflower, the Ukrainian national symbol, pinned to her collar.Biden boasted of the devastating impact of western economic sanctions on the Russian economy, reaffirmed his support for Nato, and vowed to deploy the justice department to seize yachts belonging to Putin’s friends. Promisingly, it seems as if concerns over growing Russian aggression might spark a renewed interest in energy independence that could help the US and Europe break their addiction to Russian oil and gas. Speaking of the recent return of significant numbers of American troops to Central Europe for the first time in years, Biden reaffirmed his commitment to preventing a direct military confrontation with Russia, and emphasized that the troops would be there not to attack the Russians, but to protect Nato allies. One suspects that Putin will not appreciate the distinction.When Biden moved on to domestic policy, the crowd quickly became divided. As he touted his American Rescue Plan, last year’s Covid relief package, boos erupted from the Republican side when Biden noted that the 2017 Republican tax cuts had primarily benefitted the very rich. It was a theme he maintained as he turned to his bipartisan infrastructure law, the $1tn legislative achievement that provides funds for the maintenance and repair of the nation’s physical infrastructure – roads, bridges, airports, commuter trains, and internet. Biden touted a series of shovel-ready projects he claims will go into effect this year and emphasized the bill’s ability to encourage the return of the American manufacturing sector.Domestic manufacturing was largely his prescription for fighting inflation, too. Biden introduced his broader economic agenda with a call to make more stuff in the US, and to use the federal government’s purchasing power to support those American-made goods. This segue led into a litany of briefly visited agenda items, such as allowing Medicare to negotiate prescription drug prices; cutting the cost of childcare for working class families so that more women could return to the paid workforce; establishing a 15% minimum corporate tax rate; and supporting the labor-strengthening Pro Act.Many of these proposals seemed less like Biden was putting forward achievable goals for the next year of his presidency and more like he was shifting through the wreckage of his disastrous Build Back Better negotiations with Manchin, searching for some workable leftovers. Most of the items he proposed had already been presented to Congress; none of them had been able to get through the obstructionism of the Republican party and the Manchin-Sinema block. These things would substantially improve the lives of Americans, but it was clear he had no plan for how to implement any of them.This was true especially for abortion rights. Though reproductive choice advocates had long urged Biden to say the word “abortion” in public – he has never done so as president – he referred tonight only offhandedly to the importance of reproductive rights. There was no mention of the fact that Roe v Wade has been nullified in the state of Texas for six months, as of Tuesday. There was no mention of the fact that the Reproductive Health Act, an attempt to legislatively secure the federal right to an abortion, failed in the Senate this week. There was no mention of the fact that of the five supreme court justices present at the speech, three of them – John Roberts, Brett Kavanagh, and Amy Coney Barrett – will vote to eliminate that right in a few short months. “We have to protect a woman’s right to choose,” said Biden, not offering any ideas as to just how that right might be protected. The camera cut momentarily to Amy Coney Barrett, who pursed her lips as thin as paper.In this way, the speech was a perfect summation of Biden’s presidency: good intentions, with only halting, sporadic, uncreative, and trepidatious pursuit of actually enacting them. Unlike his predecessor, Biden tends to stay on script, but the State of the Union speech featured several ad libs – a product, some suspected, of the multiple revisions the speech was subjected to at the last minute, as Russia’s invasion of Ukraine placed new demands on the broadcast. The last of these was probably the most apropos: “Go get him,” Biden told the nation. Him who? Get him how? It didn’t make sense, but so little of this does.
Moira Donegan is a Guardian US columnist
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Why the White House stopped telling the truth about inflation and corporate powerRobert ReichStarbucks, McDonald’s, Chipotle, Amazon – all protect profits by making customers pay more. We need the political courage to say they can and should cover rising costs themselves The Biden White House has decided to stop tying inflation to corporate power. That’s a big mistake. I’ll get to the reason for the shift in a moment. First, I want to be clear about the relationship between inflation and corporate power.Share the Profits! Why US business must return to rewarding workers properly | Robert ReichRead moreWhile most of the price increases now affecting the US and global economies have been the result of global supply chain problems, this doesn’t explain why big and hugely profitable corporations are passing these cost increases on to their customers in the form of higher prices.They don’t need to do so. With corporate profits at near record levels, they could easily absorb the cost increases. They’re raising prices because they can – and they can because they don’t face meaningful competition.As the White House National Economic Council put it in a December report: “Businesses that face meaningful competition can’t do that, because they would lose business to a competitor that did not hike its margins.”Starbucks is raising its prices to consumers, blaming the rising costs of supplies. But Starbucks is so profitable it could easily absorb these costs – it just reported a 31% increase in yearly profits. Why didn’t it just swallow the cost increases?Ditto for McDonald’s and Chipotle, whose revenues have soared but who are nonetheless raising prices. And for Procter & Gamble, which continues to rake in record profits but is raising prices. Also for Amazon, Kroger, Costco and Target.All are able to pass cost increases on to consumers in the form of higher prices because they face so little competition. As Chipotle’s chief financial officer said, “Our ultimate goal … is to fully protect our margins.”Worse yet, inflation has given some big corporations cover to increase their prices well above their rising costs.In a recent survey, almost 60% of large retailers say inflation has given them the ability to raise prices beyond what’s required to offset higher costs.Meat prices are soaring because the four giant meat processing corporations that dominate the industry are “using their market power to extract bigger and bigger profit margins for themselves”, according to a recent report from the White House National Economic Council (emphasis added).Not incidentally, that report was dated 10 December. Now, the White House is pulling its punches. Why has the White House stopped explaining this to the public?The Washington Post reports that when the prepared congressional testimony of a senior administration official (Janet Yellen?) was recently circulated inside the White House, it included a passage tying inflation to corporate consolidation and monopoly power. But that language was deleted from the remarks before they were delivered.Apparently, members of the White House Council of Economic Advisers raised objections. I don’t know what their objections were, but some economists argue that since corporations with market power wouldn’t need to wait until the current inflation to raise prices, corporate power can’t be contributing to inflation.This argument ignores the ease by which powerful corporations can pass on their own cost increases to customers in higher prices or use inflation to disguise even higher price increases.It seems likely that the Council of Economic Advisers is being influenced by two Democratic economists from a previous administration. According to the Post, the former Democratic treasury secretary Larry Summers and Jason Furman, a top economist in the Obama administration, have been critical of attempts to link corporate market power to inflation.“Business-bashing is terrible economics and not very good politics in my view,” Summers said in an interview.Wrong. Showing the connections between corporate power and inflation is not “business-bashing”. It’s holding powerful corporations accountable.Whether through antitrust enforcement (or the threat of it), a windfall profits tax or price controls, or all three, it’s important for the administration and Congress to do what they can to prevent hugely profitable monopolistic corporations from raising their prices.Otherwise, responsibility for controlling inflation falls entirely to the Federal Reserve, which has only one weapon at its disposal – higher interest rates. Higher interest rates will slow the economy and likely cause millions of lower-wage workers to lose their jobs and forfeit long-overdue wage increases.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at 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
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The Fed is about to raise interest rates and shaft American workers – againRobert ReichPolicymakers fear a labor shortage is pushing up wages and prices. Wrong. Real wages are down and workers are struggling The January jobs report from the US labor department is heightening fears that a so-called “tight” labor market is fueling inflation, and therefore the Fed must put on the brakes by raising interest rates.This line of reasoning is totally wrong.Trump and his enablers unwittingly offer Democrats the best hope in the midterms | Robert ReichRead moreAmong the biggest job gains in January were workers who are normally temporary and paid low wages: leisure and hospitality, retail, transport and warehousing. In January, employers cut fewer of these workers than in most years because of rising customer demand combined with Omicron’s negative effect on the supply of workers. Due to the Bureau of Labor Statistics’ “seasonal adjustment”, cutting fewer workers than usual for this time of year appears as “adding lots of jobs”.Fed policymakers are poised to raise interest rates at their March meeting and then continue raising them, in order to slow the economy. They fear that a labor shortage is pushing up wages, which in turn are pushing up prices – and that this wage-price spiral could get out of control.It’s a huge mistake. Higher interest rates will harm millions of workers who will be involuntarily drafted into the inflation fight by losing jobs or long-overdue pay raises. There’s no “labor shortage” pushing up wages. There’s a shortage of good jobs paying adequate wages to support working families. Raising interest rates will worsen this shortage.There’s no “wage-price spiral” either, even though Fed chief Jerome Powell has expressed concern about wage hikes pushing up prices. To the contrary, workers’ real wages have dropped because of inflation. Even though overall wages have climbed, they’ve failed to keep up with price increases – making most workers worse off in terms of the purchasing power of their dollars.Wage-price spirals used to be a problem. Remember when John F Kennedy “jawboned” steel executives and the United Steel Workers to keep a lid on wages and prices? But such spirals are no longer a problem. That’s because the typical worker today has little or no bargaining power.Only 6% of private-sector workers are unionized. A half-century ago, more than a third were. Today, corporations can increase output by outsourcing just about anything anywhere because capital is global. A half-century ago, corporations needing more output had to bargain with their own workers to get it.These changes have shifted power from labor to capital – increasing the share of the economic pie going to profits and shrinking the share going to wages. This power shift ended wage-price spirals.Slowing the economy won’t remedy either of the two real causes of today’s inflation – continuing worldwide bottlenecks in the supply of goods and the ease with which big corporations (with record profits) pass these costs to customers in higher prices.Supply bottlenecks are all around us. Just take a look at all the ships with billions of dollars of cargo idling outside the Ports of Los Angeles and Long Beach, through which 40% of all US seaborne imports flow.Big corporations have no incentive to absorb the rising costs of such supplies – even with profit margins at their highest level in 70 years. They have enough market power to pass these costs on to consumers, sometimes using inflation to justify even bigger price hikes.“A little bit of inflation is always good in our business,” the chief executive of Kroger said last June.“What we are very good at is pricing,” the chief executive of Colgate-Palmolive said in October.In fact, the Fed’s plan to slow the economy is the opposite of what’s needed now or in the foreseeable future. Covid is still with us. Even in its wake, we’ll be dealing with its damaging consequences for years: everything from long-term Covid to school children months or years behind.Friday’s jobs report shows that the economy is still 2.9m jobs below what it had in February 2020. Given the growth of the US population, it’s 4.5m short of what it would have by now had there been no pandemic.Consumers are almost tapped out. Not only are real (inflation-adjusted) incomes down but pandemic assistance has ended. Extra jobless benefits are gone. Child tax credits have expired. Rent moratoriums are over. Small wonder consumer spending fell 0.6% in December, the first decrease since last February.Many people are understandably gloomy about the future. The University of Michigan consumer sentiment survey plummeted in January to its lowest level since late 2011, back when the economy was trying to recover from the global financial crisis. The Conference Board’s index of confidence also dropped in January.Given all this, the last thing average working people need is for the Fed to raise interest rates and slow the economy further. The problem most people face isn’t inflation. It’s a lack of good jobs.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at 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
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Dignity in a Digital Age review: a congressman takes big tech to taskRo Khanna represents Silicon Valley and the best of Capitol Hill and wants to help. His aims are ambitious, his book necessary Just on the evidence of his new book, Ro Khanna is one of the broadest, brightest and best-educated legislators on Capitol Hill. A graduate of the University of Chicago and Yale Law School who represents Silicon Valley, he is by far the most tech-savvy member of Congress.Silicon Holler: Ro Khanna says big tech can help heal the US heartlandRead moreAt this very dark moment for American democracy, this remarkable son of Indian immigrants writes with the optimism and idealism of a first-generation American who still marvels at the opportunities he has had.Even more remarkable for a congressman whose district includes Apple, Google, Intel and Yahoo, Khanna is one of the few who refuses to take campaign money from political action committees.Once or twice in a “heated basketball game” in high school, he writes, someone may have shouted “go back to India!” But what Khanna mostly remembers about his childhood are neighbors in Pennsylvania’s Bucks county who taught him “to believe that dreams are worth pursuing in America, regardless of one’s name or heritage”.His book is bulging with ideas about how to transform big tech from a huge threat to liberty into a genuine engine of democracy. What he is asking for is almost impossibly ambitious, but he never sounds daunted.“Instead of passively allowing tech royalty and their legions to lead the digital revolution and serve narrow financial ends before all others,” he writes, “we need to put it in service of our broader democratic aspirations. We need to steer the ship [and] call the shots.”The story of tech is emblematic of our time of singular inequality, a handful of big winners on top and a vast population untouched by the riches of the silicon revolution. Khanna begins his book with a barrage of statistics. Ninety percent of “innovation job growth” in recent decades has been in five cities while 50% of digital service jobs are in just 10 major metro centers.Most Americans “are disconnected from the wealth generation of the digital economy”, he writes, “despite having their industries and … lives transformed by it”.A central thesis is that no person should be forced to leave their hometown to find a decent job. There is one big reason for optimism about this huge aspiration: the impact of Covid. Practically overnight, the pandemic “shattered” conventional wisdom “about tech concentration”. Suddenly it was obvious that high-speed broadband allowed “millions of jobs to be done anywhere in the nation”.The willingness of millions of Americans to leave big city life is confirmed by red-hot real estate markets in far flung towns and villages – and a Harris poll that showed nearly 40% of city dwellers were willing to live elsewhere.“The promise is of new jobs without sudden cultural displacement,” Khanna writes.He suggests a range of incentives to spread tech jobs into rural areas, including big federal investment to bring high-speed connections to the millions still without them. This is turn would make it possible to require federal contractors to have at least 10% of their workforces in rural communities.The congressman imagines nothing less than a “recentering” of “human values in a culture that prizes the pursuit of technological progress and market valuations”. A vital step in that direction would be a $5bn investment for laptops for 11 million students who don’t have them.The problems of inequality begin at the tech giants themselves. Almost 20% of computer science graduates are black or Latino but only 10% of employees of big tech companies are. Less than 3% of venture capital lands in the hands of Black or Latino entrepreneurs.If redistributing some of big tech’s gigantic wealth is one way to regain some dignity in the digital age, the other is to rein in some of the industry’s gigantic abuses. Data mining and the promotion of hate for profit are the two biggest problems. Khanna has drafted an Internet Bill of Rights to improve the situation.Throughout his book, he drops bits of evidence to suggest just how urgent it is to find a way to make the biggest companies behave better.“Algorithmic amplification” turns out to be one of the greatest evils of the modern age. After extracting huge amounts of data about users, Facebook and the other big platforms “push sensational and divisive content to susceptible users based on their profiles”.An internal discussion at Facebook revealed that “64% of all extremist group joins are due to our recommendations”. The explosion of the bizarre QAnon is one of Facebook’s most dubious accomplishments. In the three years before it finally banned it in 2020, “QAnon groups developed millions of followers as Facebook’s algorithm encouraged people to join based on their profiles. Twitter also recommended Qanon tweets”. The conspiracy theory was “actively recommended” on YouTube until 2019.And then there is the single greatest big tech crime against humanity. According to Muslim Advocates, a Washington-based civil rights group, the Buddhist junta in Myanmar used Facebook and WhatsApp to plan the mass murder of Rohingya Muslims. The United Nations found that Facebook played a “determining role” in events that led to the murder of at least 25,000 and the displacement of 700,000.The world would indeed be a much better place if it adopted Khanna’s recommendations. But the question Khanna is too optimistic to ask may also be the most important one.Have these companies already purchased too much control of the American government for any fundamental change to be possible?
Dignity in a Digital Age: Making Tech Work For All Of Us is published in the US by Simon & Schuster
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Share the profits! Why US businesses must return to rewarding workers properlyRobert ReichThe economy is booming and corporate profits are huge, but American wages still stagnate. History provides the answer According to this week’s release from the commerce department, the US economy has been growing at its fastest pace in almost 40 years. Corporate profits are their highest in 70 years. And the stock market, although gyrating wildly of late, is still scoring record gains.Where egos dare: Manchin and Sinema show how Senate spotlight corrupts | Robert ReichRead moreSo why do most Americans remain gloomy about the economy? Mainly because their real (inflation-adjusted) wages continue to go nowhere.Steeply-rising profits, economic growth and stock market highs – coupled with near-stagnant wages – has been the story of the American economy for decades. Most economic gains have gone to the top.So why not share the profits?Profit-sharing was tried with great success in the early decades of the 20th century but is now all but forgotten. In 1916, Sears, Roebuck & Co, then one of America’s largest corporations with more than 30,000 employees, announced it would begin to share profits with its employees, giving workers shares of stock and thereby making them part-owners.The idea caught on. Other companies that joined the profit-sharing bandwagon included Procter & Gamble, Pillsbury, Kodak and US Steel.The Bureau of Labor Statistics suggested profit-sharing as a means of reducing “frequent and often violent disputes” between employers and workers. Profit-sharing gave workers an incentive to be more productive, since the success of the company meant higher profits would be shared. It also reduced the need for layoffs during recessions because payroll costs dropped as profits did.By the 1950s, Sears workers had accumulated enough stock that they owned a quarter of the company. And by 1968, the typical Sears salesperson could retire with a nest egg worth well over $1m, in today’s dollars.The downside was that when profits went down, workers’ paychecks would shrink. And if a company went bankrupt, workers would lose all their investments in it. The best profit-sharing plans took the form of cash bonuses that employees could invest however they wish, on top of predictable wages.But profit-sharing with regular employees all but disappeared in large US corporations. Ever since the early 1980s when corporate “raiders” (now private-equity managers) began demanding high returns, corporations stopped granting employees shares of stock, presumably because they didn’t want to dilute share prices. Sears phased out its profit-sharing plan in the 1970s.Yet, just as profit-sharing with regular employees disappeared, profit-sharing with top executives took off, as big Wall Street banks, hedge funds, private equity funds and high-tech companies began doling out huge wads of stock and stock options to their MVPs.The result? Share prices and chief executive pay (composed increasingly of shares of stock and options to buy stock) have gone into the stratosphere, while the wages of the typical worker have barely risen.Researchers have found that before the 1980s, almost all the increases in share prices on the US stock market could be accounted for by overall economic growth. But since then, a large portion of the increases have come out of what used to go into wages.Jeff Bezos, who now owns around 10% of Amazon’s shares, is worth $170.4bn. Other top Amazon executives hold hundreds of millions of dollars of shares. But most of Amazon’s employees, such as warehouse workers, haven’t shared in the bounty.Amazon used to give out stock to hundreds of thousands of its employees. But in 2018 it stopped the practice and instead raised its minimum hourly wage to $15. The wage raise got headlines and was good PR – Amazon is still touting it – but the decision to end stock awards was more significant. It hurt employees far more than the increased minimum helped them.Corporate sedition is more damaging to America than the Capitol attack | Robert ReichRead moreIf Amazon’s 1.2 million employees together owned the same proportion of Amazon’s stock as Sears workers did in the 1950s – a quarter of the company – each Amazon worker would now own shares worth an average of more than $350,000.America’s trend toward higher profits, higher share prices, mounting executive pay but near stagnant wages is unsustainable, economically and politically.Profit-sharing is one answer. But how can it be encouraged? Reduce corporate taxes on companies that share profits with all their workers, and increase taxes on those that do not.Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at 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
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