The Progressive Ensign

insights and analytics to build an economy that works for all

Building the Economic Power of Youth

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: opportunityinsights.org

Last week a non-profit research and policy organization, Opportunity Insights published a startling map and database linking the success of children in poverty to their neighborhood to climb out of poverty.  A key finding is that children growing up in neighborhoods where there is low income continue to live in poverty as adults.  Though of more interest is that all factors being equal children where there where two parents in the household did significantly better than children in one parent households.  Family structure made a significant difference.

Source: Opportunity Insights – 10/4/18  (areas in blue, children who grew up in low income areas tended to make more money, children in dark red far less)

Certainly, households with just one bread winner, generally automatically means that there  is less income in that household.  Opportunity Insights notes that often single parent communities do not have the same ‘social capital’ as two parent communities.  In terms of parents that can support their children, tutoring after school, going to after school activities and a father who is there to provide support to the mother.  Particularly, for boys having a father in the household seemed to be determinative in future opportunities boys enjoyed in adult life.  Key to forming the right skills for a higher income is an example of a mother or father working a job, focusing on nurturing their children’s skills and being an advocate for the child in the school system.

John Hope Bryant, CEO of Operation Hope, a for purpose non-profit group helping low income people through financial coaching and skills development to build a secure economic future. Bryant notes that 63 % of middle income Americans cannot afford a $500 car repair or $1000 in emergency health care. Without financial independence, people cannot protect themselves from social injustice, economic manipulation and profiling, People need to learn how to build personal ‘capital’ to dig out of the community that keeps them in poverty. He observes growing up in Compton, a California low income community, that children in the neighborhood grew up with no positive aspirations.  They continue to be surrounded by negative roles models: drug dealers, loan sharks, and criminals who have the economic power.  Yet, they don’t have the ‘capital’ or knowledge on how build wealth in a positive way and key relationships.  A person with no hope is a dangerous person, who becomes angry, vengeful and desperate. Bryant says there are three types of issues for children in poverty neighborhoods:  low aspiration and few opportunities for 25 % of the problem, poor role models and a negative family and community environment for another 25 % and finally low confidence and self-esteem for 50 %.

Next Steps:

The Labor Force Participation Rate for  adults ages 24 – 54 is 82.5 % is at a new low, and has been declining since the Great Recession. The opioid crisis, a symptom of the hopelessness that many of our young people feel today is causing millions of otherwise productive people to not join the labor force.  Deutsche Bank completed an analysis of how the opioid epidemic is hurting labor participation in many states.

Sources: OECD, Deutsche Bank Research – 9/10/18

Researchers found that states in the South (overlays the poverty areas in the neighborhoods map above) Alabama, Mississippi, Arkansas and East Central – West Virginia there is a high correlation of opioid prescriptions and labor force rate.

It clear from a moral, ethical and economic standpoint we need as a country to invest in our young people who face increasing challenges in becoming upwardly mobile.  How do we do it?

John Hope Bryant is investing in people in these neighborhoods by providing families and individuals with tutoring to increase credit scores (maps of FICO scores of under 500 map into the above areas too) and how to get low cost loans.  Bryant sees developing entrepreneurial skills in starting new businesses as a way to move economically ahead as well.  More important is learning how high income people became wealthy through building relationships and developing the courage and skills to start a new business.  As he notes, moving from one failure to the next to learn and see trial and error as a necessary part of the path toward creating a product or service of value. The entrepreneurial process builds self-esteem and confidence so crucial in transforming lives and creating opportunities.

Opportunity@Work, a non-profit group originated in the Obama White House, then spun off is tackling the education issue head on with training focused on helping those outside of the economic mainstream to get jobs in the new economy. The group helps candidates get the skills they need in high tech, then making the connection between employers and workers with a non-traditional resume.  In addition, they are pioneering new ways to finance education so that students will not be saddled with thousands of dollars of education debt when they start their careers.  Opportunity@Work is targeting assistance for 1 million people to get hired in the next decade.

We have proposed that a Marshall Plan-like initiative with an entrepreneurial approach be led by the federal government, venture capitalists, corporations, health providers, non-profits and universities to gain a beachhead in many low income communities particularly in rural areas of the Midwest and South. The Heartland Initiative brings key leaders in many fields to focus with high impact on enabling a community and its people to join the economic mainstream from upgrading Internet speeds to providing local access to affordable health care and counseling for mental health issues.  It is a multi-faceted project because there are connected issues, it is one thing to provide a young person with training, but if they are still taking opioids they will fail a drug test by a hiring firm.  Details about the Heartland Initiative are in our post, calling for a new approach to social programs using an entrepreneurial model with seed financing and cooperative groups to spring into action.

We need to bring those that have been on the economic sidelines back into the mainstream of our economy if we are to make any progress as a nation on building an economy that works for all.  With mounting national debt in the trillions of dollars, student debt at $1.5 trillion and opioid deaths at epidemic levels we need to see building the economic power of our youth as one solution to our economic challenges.

Workers Exercise Power Through Pensions on Corporate Policies

Photo: commondreams.org

Toys R Us was saddled with billions of dollars of debt by private buyout firms like Kohlberg Kravis Roberts.  Pension funds provide firms like KKR with funds to invest expecting higher returns than stock market rates. When the workers at Toys R Us petitioned the Minnesota Pension Fund that they had been denied a severance the fund suspended making investments with KKR.  About 35 % of all private equity funding comes from public pension investors.

The New Jersey pension fund has listened to its pensioners on issues like not foreclosing on Puerto Rico residents who are recovering from Hurricane Harvey and an investment in a payday lender.  Adam Liebtag, the acting chairman of the New Jersey State Investment Council, told the New York Times,  “They are paying closer attention. They are following the money.”

Pension funds provide about 35 % of all private equity funding. providing a good channel of leverage for activist groups.  The deals that pensions do with private equity firms continues to rise as well.

Source: Prequin Private Equity Spotlight, Value Walk – 10/2014

Sarah Bloom Raskin, a fellow at Duke University and a deputy Treasury secretary in the Obama administration, observed, “Workers don’t want their pension money invested in ways that hurt other workers”.  Workers are waking up to the fact they have financial power to get private equity firms to listen to their concerns that private equity policies are hurting some workers as in the Toys R Us case, heavily loaded with $5 billion in debt from a private buyout.

Next Steps:

We see the pension leverage option on private equity firms as a model to build on.  Why not require pensions to listen to their investor – workers by having a set of investor – workers on their board, participating in the investment decisions the board makes to begin with.  Workers should be constantly polled for their concerns to ensure adherence to investment policies that are moving the lives of workers better in any company where the pension is invested.  Workers are mainly left out of the financial decisions that manage their lives while working for a company, at least after retiring the money they have saved in a pensions fund should speak for them and their concerns in building a better life for all employees.

Resetting the Web’s Balance of Power

Internet pioneer, Tim Berners-Lee has an audacious yet powerful goal for his latest startup Inrupt.  He wants to “reset the balance of power on the web and reignite its true potential.” Building work with other Internet activists at MIT he is developing a decentralized personal web based platform called Solid.  He is introducing a ‘Netscape’ browser front end that gives the user control of all his own content. During a demo he shows a fundamental set of tabs with a To-Do List, Calendar, Chat Address Book and eMail.  Yet, this screen hides from the user one basic difference, all his data is stored in a POD or Personal Online Data store. All the content he creates or uses is stored in a POD, not some corporate server like Google, or Facebook.

Source: Tim Berners-Lee – 9/29/18

Users of the Inrupt browser and applications are given a Solid identity and access key to personalize security. Berners-Lee envisions an Alexa like persona assistant, he calls Charlie where a user can be comfortable accessing health records, financial accounts and personal memos in POD storage not a Amazon cloud server. He sees global web developers writing appls for Solid and Inrupt to take back the Internet, provide the security and safety of personal identity management and reduce the need for government regulation.

We are excited about the opportunity to finally end the corporate control of user created content which we have always believed is the user’s property not the Internet application provider.  Google, Facebook and Apple have the idea that they own our content, can do anything they want with it, including selling it to partners without our permission.

Solid and Inrupt are revolutionary in scope, technology and return the Internet to its original vision – to empower users and link them together on a peer to peer basis.  Not, a corporate behemoth holding all the content power to a weak end user.  Maybe with technology like Solid we can finally get back to a democracy of entrepreneurs, small business and users controlling their content, its use and distribution!

Amazon Raises Minimum Wage to $15@hr While Eliminating Bonuses, Stock

 

Photo: kansascity.com

Amazon announced the $15 pay raise today in response to criticism by progressive politicians like Sen. Bernie Sanders who recently introduced a bill to tax companies like Amazon 100 % for employees on government assistance.  The company plans to hire over 100,000 seasonal workers this holiday season, the raise will apply to all full – time, part-time and seasonal workers beginning November 1st. The pay move by Amazon comes at a time when retailers are finding it hard to hire clerks and warehouse workers for wages generally under $15 @hr.  Amazon’s move is a challenge to retail firms across the country forcing them to raise wages or lose out in hiring to Amazon.  Sen. Sanders congratulated Amazon in a tweet, noting the raise was a ‘shot heard around the world, certainly for all hourly workers worldwide.

Sources: Amazon, The Wall Street Journal – 10/2/18

While  the $15@hr wage increase made the headlines, the firm took away bonuses and stock awards for warehouse workers.  The company said the wage increase more than makes up for the loss of bonuses and stock awards.  What?  Why is Amazon doing this?  To mitigate the cost of raising wages to $15@hr to bottom line profits.  Amazon needs to think through the message they are sending, do they want the ideas and dedication that bonuses and stock recognize or not?

In addition, the company said it would be lobbying in Washington for a raise of the federal minimum wage which has been stuck at $7.25 for ten years.  Amazon uses a highly profitable server business to provide a cash feed to the retail business while building market share to eliminate competitors.  Amazon raising wages makes it even more difficult for competitors to hire workers and retain them.

Next Steps:

We applaud Amazon for waking up and making this sweeping move to raise hourly wages to a baseline of $15 @ hr.  At the same time we are concerned that with giving the wage increase they are taking away bonuses and stock awards – this policy sends  the wrong message to workers. The wage increase is a strategic move as well, putting its weaker competitors back on their heels and in a worse political position.  Are they going to oppose federal legislation that may come from a Democrat led House to raise the federal minimum wage?  In a mid-term election year where non-supervisory workers have experienced stagnating wages since the 2008 recession Amazon competitors will be hard pressed to make their case to consumers. As politics is more in the spotlight for companies and consumers, brick and mortar retailers’ possible stand against raising wages may hurt sales and hiring.

With Amazon making the first move we agree with Sen. Sanders, who called on other major companies to start paying decent wages to their employees so they support their families, buy cars and purchase a home.

The e-retailer behemoth is in the cross hairs of political criticism in terms of work conditions like few bathroom breaks, to uncertainty with plans to add 40,000 robots over the next five years. The firm’s automation plans will have a significant impact on the workplace for non-college educated workers, we need to be working on a public policy recognizing the impact automation has on worker careers.   Should robots be taxed as some have suggested?  If  so, based on what formula?  How would the funding be used to support retraining and safety net needs for the workers displaced? Amazon has been able to amass a dominant retail position by using revenues from its business to business cloud server profits to mitigate the ecommerce business running at a loss and early development of brick and mortar stores.   We stand by our earlier analysis that the server business – Amazon Web Services (AWS) be spun off from the e-retail business to level the market playing field with other retailers.

U.S. Healthcare Spending 41 % More Than OECD Countries

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: consumersunion.org

The United States healthcare system is an expensive healthcare system compared to the OECD countries that spend 41 % less per person as a percent of GDP with a 4 year higher life expectancy rate.

Sources: The Daily Shot, The Wall Street Journal – 10/1/18

As U.S. spending continues to increase life expectancy rates are stagnant, simply not improving.  Note that while OECD spending continues to grow at a much slower pace the life expectancy rate continues to climb. Americans are not getting the health care system performance that our European sister countries are achieving.

Sources: OECD, CMS – US, Moody’s Investors Services, The Daily Shot, The Wall Street Journal – 10/1/18

Even when looking at similar income level countries the cost difference is highly apparent in cost per capita.

What are OECD countries doing that the U.S. is not doing?   For starters they do not have a private health insurance system which adds a profit motive to treatment, triages services to the higher income people and increases drug prices to consumers.   Administrative costs in the U.S. are 8 % of the total healthcare spending versus the OECD countries which range from 1 to 3 %. One reason for the high administrative burden is administrative hiring was 650 % more than hiring of health services workers since 1970. Generalist physician salaries are significantly higher in the U.S. by 50% compared to developed countries. Drugs in America cost twice the average prices in comparable developed countries.  The drug costs are distorted in the U.S. largely due to price controls in European countries so drug manufacturers charge as much as they can to U.S. providers and patients to make up the difference. Finally, another key reason is about 10 % of the U.S. patients are not covered by insurance.  Which means they do not receive care from birth, let medical issues fester and go to emergency rooms for all their care (as U.S. law requires hospitals to serve all who come regardless of insurance). A study of the healthcare delivery system in Philadelphia showed that overall healthcare costs in the city could be reduced by 20 % if patients that needed care had services offered in doctor offices covered by insurance.

Next Steps: 

We have recommended in previous posts that we have one insurance system in the U.S. as other developed countries.  Administered by the Health and Human Services department, a health account would start as soon as a baby was born.  Contributions by individuals, their employer and the government would go into one account.  Private insurance could continue in those years where a worker is on the payroll of a company with benefits.  In the event the worker is between jobs he or she would be covered by the government supported part of the plan.  There would be only one formulary  for drugs, and schedule for treatments and procedures.  The administrative overhead could be cut to the 1 to 3 % range that other countries enjoy.  Staffs in providers offices dealing with insurance idiosyncrasies and byzantine rules could be cut by 75 %.  Drug companies would be prohibited from implementing stock buybacks which would make billions of dollars available to cut prices and innovate new medicines instead of lining the pockets of executives.

Building Economic Independence Can End Hopelessness

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: operationhope.org

The greatest threat to a civil society are people without hope.  They are angry, feel the system is rigged and look for scapegoats as the cause of their poor economic standing. This group left out of the economic mainstreams is located in rural regions where globalizations has taken jobs, and in inner cities where companies have fled to the suburbs. These people that John Hope Bryant calls, The Invisible Class, are off the economic grid, and largely left out of the political mainstream as well except when they demonstrate on the streets when a policy has gone too far.

Economic independence is crucial if we have an economy that works for the 99 % not just the 1 %. To build economic opportunities our governmental policies and programs must ensure a level playing field for all people and support a high quality education for all income levels.

It is about building our society for the common good. It means enabling building enterprises, non-profits and organizations that serve people. Our policies should be about enabling the ability of people to build. We need to rethink our framing of labor from a cost to an asset which it always was. Capital means in the Latin root ‘knowledge in the head’ derived from the capital end of a column at the top in a building.  Poverty is not about money so much as a dearth of relationships and know how to build the skills toward a productive life, where money is a indicator of success.

Somehow the early accountants leading to the Venetians who invented double entry accounting systems with debits and credits called assets money, land and equipment while labor was labeled an expense.  Labor is viewed as an expense to this day because the owner-entrepreneur has to pay employees to work.  Workers have had the ‘cost’ yoke around their necks ever since.  Yet, are employees really a cost?  The staff are the ones doing the work, creating the product or service and solving the problems – money does not create the product or service only people do. CEOs are often heard to say that employees ‘are our key asset’ but then treats them like second class citizens in making policies in the company, gaining a fair share of the profits or enjoying job hours flexibility. Today, Wall Street applauds wages being stagnant for the 80 % while profits go up and wealth accumulates for The Elite.

We need to change our perspective about people and their labor. How do we build an economy that works for all? One way is to focus on enabling, The Invisible Class with economic independence.  Bryant points out that most of these people have credit scores at 550 or below, so they can’t get jobs, buy automobiles, or purchase a home.  In short they can’t participate in the economic mainstream. Bryant’s Operation Hope program teaches those in poverty how to increase their credit scores, start businesses and strategies for accumulating wealth.  By bringing them into the economic mainstream they can begin to feel more confident about their lives and the future. Operation Hope has partnered with Bank of the West who invited Bryant to locate Operation Hope offices inside their branches. Bank of the West in a far reaching vision understands educating prospective customers on the good use of credit and finance will make them better customers and likely to come back for additional services.

We need to learn from programs like Operation Hope, understand its key elements and see how to implement its tenets and power on a major scale like the Marshall Plan if we are to make a dent in the level of poverty in the Heartland or cities.  The only way we are going to increase the size of our economy in a fundamental way is to empower millions of workers who are out of the economic mainstream.  We have more companies going bankrupt then new businesses being started for the first time since WWII. It  is time to recognize we have people who are assets with innovative skills to can build an economy that works for all.

Zinc Air Battery Is Renewables “Game Changer”

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: public.wmo.int

One of the major problems with solar and wind energy is how to store the energy they create for use when it is actually needed.  Patrick Soon-Shiong, a California billionaire, announced a new zinc air battery which is cheaper than lithium-ion batteries, less likely to catch fire and store more electricity for its size. Forecasts for renewable energy demand are soaring.

Source: EIA – 2017

Renewable energy will continue to grow from the present rate of about 7 % to about 14 % of total energy sources by 2050.  Thus, technologies like the zinc air battery could make a significant impact on how quickly  development and availability of electricity from renewables can be realized.   The zinc air batteries have been deployed at villages in Africa and Asia and cell towers in the U.S. without backup from the electric grid.

“It could change and create completely new economies using purely the power of the sun, wind and air,” Dr. Soon-Shiong told the New York Times last week. Dr. Soon-Shiong’s company, NantEnergy has deployed micro grids in Africa and Asia in arrays of zinc air batteries and solar arrays to 110 villages not connected to an electrical grid system.  The technology can bring down the cost of electricity below $100 per kilowatt hour.  At this level the zinc air batteries become cost effective to deploy in a fully electric grid that is carbon free.  Nant Energy plans to expand the product line into telecommunications, and home storage use in California and New York soon.

We are excited to see this technology come on board, just as California sets a goal for a carbon free energy system by 2045.  The key now is to get our politics aligned with what we need to do to mitigate the climate change crisis.  We need to give complete and full support to the Paris Climate accord, take leadership with other countries in developing renewable energy sources and wind down our use of fossil fuels.

High Tech Behemoths Run State and Local Politics

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: youtube.com

Recently the high technology power houses like Google, Facebook, Uber and Amazon have appeared in the news related to national issues privacy, Russia hacking, driver contractors and conservative viewpoint censorship.  There is an even more troubling trend; major high tech corporations are controlling key decisions, policies and direction of development for many major American cities and states. Amazon is throwing its weight around the U.S. in search of a 2nd corporate headquarters.

Source: LA Times – 1/19/18

Amazon has already received millions of dollars in tax subsidies and compensation  for locating warehouses in some regions. The Governor of Maryland has offered a $5 billion package of transportation and tax breaks to the company to locate in Maryland, while Newark and New Jersey have offered a $7 billion package of subsidies.  Amazon has been adept at Seattle politics as well, when the city unanimously passed a $275 per employee tax on businesses to pay for homeless shelters and affordable housing. Amazon along with local businesses pushed back and the measure was repealed.

Apple purchased a site previously owned by Hewlett – Packard for its Apple Park spaceship headquarters.  The Cupertino city council was delighted with the plan to put 14,000 employees on the site, doubling the number of workers at the large parcel.  After the headquarters building was built the local council realized that the traffic congestion around the site and the city was going to be a major problem. The city then proposed a per employee tax to gain revenue of $10 million versus the present tax structure based on square footage would have netted only $800, 000. The proposed funding would have been allocated to buses, road widening, express lanes and other traffic flow enhancements. Apple and other businesses protested so the proposal was tabled until the 2020 election.

Uber has gone into cities all over the country from its base in San Francisco without authorization, creating major competition to local taxi companies.  Cab companies in most cities purchase a medallion from the city at great expense, some in the hundreds of thousands of dollars to license them to provide ride services in the city.  Uber has run into opposition in some major cities like New York, where the number of cars is capped.

Google has quietly purchased hundreds of acres of land in downtown San Jose, until newspaper stories began to spot light the land purchases.  The high tech behemoth plans on deploying up to 20,000 employees around the city hub and train station.  Planning for a huge employee center near public transportation makes sense, but local businesses and housing near purchased lots are under pressure to sell to make room for the corporate plan.  Local housing groups are concerned about the availability of affordable housing and small business.

Next steps

Our concern is that major corporations, their planning departments and executives have so much power that local elected leaders have little clout to push back on building or development that may not be in the interest of the local community.  As local government struggles to gain revenues lost to an Internet based economy, and stiff opposition from local citizens to raising taxes causes local city government power to decline.

Local leaders will need to rethink their base of power in the city, seeking alliances with local businesses while building a base of economic support for city services.  Cities and states often interested in luring businesses to their local regions spending hundreds of millions of dollars in the process maybe missing the point of their charter.  Building necessary infrastructure, affordable housing, fast transportation systems, healthcare for those not covered and safe streets are their mandate from local citizens. It is a challenging time for local and state governments, yet they need to take up the mantle and assert the policies and programs they were elected to implement.  Plus, corporations need to take responsibility for their actions and how they affect building the common good of the community.

Dotcom Crash Déjà Vu

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: investopedia.com

The present euphoria about the U.S. being able t0 win a trade war with China is fueling the stock market to new highs.  While, consumers reading the tariff headlines are beginning to pull up purchases scheduled for a later time.  This author talked with a consumer who heard that tariffs were going up 25 % in January, 2019 so she wanted to move her purchase of a refrigerator up to now just in case.  She didn’t know if refrigerators were even going to be taxed or if the tariffs were going to happen for sure.  The tariffs are creating a buying contagion.  This buying fever is catching on with businesses too, as the West Coast ports report 4 times the normal amount of freight volume being offloaded last month.

This urgent pulling forward of  buying has happened before on a large scale in the U.S. in 1999.  The year 2000 fear that software would not be able to handle the switch from 1999 to 2000 due to program limitations triggered both corporate buyers and consumers to purchase new hardware and software that would fix the bug.  Sales were pulled forward into 1998 and 1999 then in 2000, sales dropped fast ‘like the lights were turned out’ the CEO of HP, Carly Fiorina  said.

Source: Statista, 9/23/18

Computer software and hardware sales in stores fell 20 % by 2000 and another 19 % the following year.  Computer and software companies laid off workers, companies with high levels of debt defaulted and a recession ensued. Note that even as sales began to come back up by 2008 another recession hit slowing sales progress until reaching par level with 1998 in 2011.

Consumers and businesses are hit by the tariffs in several ways: first, they see prices go up due to contagion buying from fear of prices going up, second there is a lack of merchandise as suppliers run out of product and finally when tariffs kick in the buyers are hit with another rising price wave.

Next Steps:

We have outlined in earlier posts the disastrous effects of broad trade tariffs with no clear goal in mind hurting consumers and businesses alike with high prices, loss of contracts and reduction in jobs. The latest round of tariffs on $200 billion in Chinese goods is ratcheting up the war to a new level with China retaliating with $60 billion in tariffs against U.S. goods.  Plus, many businesses report non-tariff barriers being thrown up by the Chinese; slowing approval of shipments, asking for more paper work, requiring more inspections and delays in communication.  Farmers in the Midwest are losing soybean contracts to Russia and Brazil as the Chinese switch suppliers. The consequential damages to the U.S. economy are mounting while the GOP Administration thinks a trade war can be won.  Corporations and consumers are accelerating purchases to beat tariff dates which will create a mirage that the tariff policies are working until January 2019 arrives and sales spiral down due to all the advance purchasing.

We appeal to the White House to end the trade war, focus on the use of WTO offices, work with our allies and come up with a negotiated agreement with that is a win-win for all.  If China slips into a recession from this trade war or incurs a damaged economy it will not help U.S. businesses who are looking to China as a new high growth opportunity – the Chinese will have limited cash to buy any of our goods or services. ­­­

Phoenix Gyms Backed By Koch Brothers Help Addicts Become Sober

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: npr.org

The opioid crisis is continuing to grow worse with deaths from fatal drug overdoses up 10 % this past year reports the U.S. Centers for Disease Control.  The opioid crisis targets mostly young people in city centers and many rural regions across the country.  The wave of addictions through our working age people is damaging our ability to grow our work force to support a robust economy.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/19/18

The Koch Brothers, known for their backing conservative candidates and policy programs have a foundation arm called Stand Together which has invested $2 million to $3 million in “The Phoenix” gyms of Denver.  Recovering addicts can come to the gym free, to work out, receive coaching and support during their recovery.  Peter Thanos, an addiction researcher at the University of Buffalo, told the Wall Street Journal that persistent exercise has shown to be effective in drug rehabilitation. Drugs hijack the reward system in the brain, Thanos observed. Physical exercise can re direct that reward system.  He commented ‘in theory, you should be able to have an effect on drug-seeking” through exercise.

The political advocacy arm of the Koch network, Americans for Prosperity, is working to cut the funding for Medicaid in Utah and Nebraska.  Yet, Medicaid is the main source of mental health services funding in the U.S.

We applaud the support of the Koch brothers through their foundation of this innovative effort to attack the opioid crisis.  It seems that they need to look at what their advocacy group is doing to undermine the work of the foundation.  Does it not make sense to invest in returning thousands of our young people to become sober, taking jobs, raising families, buying houses and buying or using Koch brothers company products?  Let’s think about the opioid crisis from a long range point of view by investing in addicted people, bringing them back to productive lives.  It does not make sense to hurt this effort, instead we should all be working together to solve all facets of this problem resulting in a higher quality of life and a thriving economy.  We need all the workers we can get to be productive in the declining labor force 25- 55 year age group, otherwise we shall go deeper into debt to support our seniors.

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