The Progressive Ensign – Page 8 – insights and analytics to build an economy that works for all

Disney, Walmart Begin Offering Education Aid

On August 23, 2018

In Corporate Power, Corporate Reform, Education, Wages

(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.)

Source: payactiv.com

Disney announced this week that for 80,000 hourly workers in the U.S. to take online courses beginning this fall. The media and entertainment giant will invest $50 million to kick off the ‘Disney Aspire’ education program with $25 million each year afterward. Disney will provide up front funding for degree programs, high school diploma or learn a new skill. The jump start funding enables workers with little savings to begin taking courses right away. The program will begin with online courses only though classroom course programs may be added later.

Last May, Walmart introduced a tuition assistance program for 1.4 million hourly part-time, full-time and salaried workers to take courses online in business or supply-chain management. Employees will pay just $1 a day to participate in the assistance program. The retail colossus is looking to increase retention rates, and draw more new workers. Drew Holler, VP of Innovation at Walmart U.S. was excited, “We know we’re going to see an influx of applications.”

Other major corporations are feeling the pressure to be competitive in benefits for hourly or retail workers. Starbucks offers a full tuition degree program for baristas at Arizona State University. Chipotle Mexican Grill offers $5,250 in tuition assistance for degree programs.

However, for many hourly workers they have a difficult time committing to education programs due to erratic work schedules. Our Walmart, an employee advocacy group, completed a survey of worker needs finding that 70 % of workers wanted more time scheduled to work full time, and more predictable timing. Hourly workers are busy balancing work time with family commitments, like child care, doctor appointments and caregiving.

We have commented in our posts about the necessary investment corporations and government needs to make in education. Hourly workers in particular have a difficult time getting more education due to random work schedules, little savings and limited study time. Many of these programs begin to address the issue of upfront funding now they need to enable workers to actually go to school while working by offering predictable work schedules and flex time to handle family commitments. We are pleased to see Disney, Walmart and other companies respond to the need for workers to get a better education by investing in their employees’ future and to see the move as good business.

Verizon Shows Its More Interested In Revenue Than Firefighters

By Patrick Hill

On August 22, 2018

In Common Good, Corporate Nation State, Corporate Power, Corporate Reform

Image: theverge.com

During the Mendocino fire in California last month, firefighters using the Verizon service went over their data plan limit. So, instead of helping to alleviate the problem, Verizon made it worse by throttling down their data rate to 1/200^th until they switched to a new higher cost plan. Plus, they made the firefighters do the work to switch plans – doesn’t Verizon get the fact that the firefighters are a little busy saving lives and property?

Santa Clara County Fire Chief, Anthony Bowden explained, “Verizon representatives confirmed the throttling, but rather than restoring us to an essential data transfer speed, they indicated that County Fire would have to switch to a new data plan at more than twice the cost, and they would only remove throttling after we contacted the department that handles billing and switched to the new data plan,” Bowden wrote up the incident to support a law suit filed by 22 state attorney generals to stop the net-neutrality policy from being implemented by the FCC for the major carriers. Bowden noted that Verizon had throttled firefighter data rates in the past when fighting fires. A company spokesman said the throttling was a ‘customer service mistake’, and they would try to respond without throttling in future firefighting crisis situations.

Version is a huge wireless company with over 30 % of the wireless market:

Source: Statista – 2018

By size alone they command significant market power over users. With this market power comes community and public interest responsibility. When Verizon, Comcast, AT&T and others lobbied for a waiver of net neutrality provisions they said they could be trusted to protect the needs of the public and small internet users. Clearly, Verizon can’t be trusted to be a part of the community and put the Common Good over profits.

Next Steps:

First, Verizon needs to make restitution to the Santa Clara County firefighters and any other group involved in fighting the fire, by giving a credit for any increased costs and to make sure there is a hot line in place to an executive who can cut through all the bureaucracy and do the right thing. Verizon has demonstrated they are using people, even at the cost of lives and property to make a profit. Last year, the communications giant announced a $5.4 billion stock buyback program until 2020 to goose their stock price resulting in soaring executive compensation and shareholder returns. They could use some of this stock buyback money and help out all first responders!

Second, net neutrality provisions need to be restored so that common service providers are required by law to treat all users fairly no matter their size and not use predatory tactics like throttling to force users into upgrading plans. Verizon and and other common carries did not build the Internet, taxpayers did with DARPA (Defense Advanced Research Projects Agency) funds in the 1970s. DARPA built a breakthrough set of communication and HTML linking technologies with a number of universities to establish the Internet channel backbone in the United States. The government built it, it is a public service and we should not be turning control over to private companies that are not serving the public interest.

It is about time huge corporations started solving the major problems we face in protecting the security of people and build the Common Good rather than being a major obstacle when the community is facing a crisis.

Update: August 24, 2018 – Verizon announced that it would not throttle first responders to wildfires on the West Coast including Hawaii. The backlash was so strong from the Mendocino fire the firm had to respond. Too bad management did not take the opportunity to be proactive about supporting the Common Good. We appreciate the late data rate support move by the company.

EPA Relaxes Coal Burning Regulations Endangering People and Economies

By Patrick Hill

On August 21, 2018

In Climate Change, Common Good, Corporate Nation State, Corporate Power, Environment, Families, Health, Public Interest, Renewable Energy

Image: agriland.ie

The day after that EPA announces relaxation of coal burning regulations scientists announced the first time in all recorded history the ‘last ice sea’ north of Greenland has thawed twice! This assumption that ‘last ice sea’ would not thaw due to climate warming is no longer proving to be true. One scientist described the iconic ice thawing discovery as ‘scary’.

Sources: The Polar Science Center, The Guardian – 8/21/18

At the same time, global warming is causing the seas to rise by 8 inches since 1900 of which 3 inches was since 1993. Scientists predict the sea level will rise another 3 to 7 inches by 2030. Today, rising sea levels are sending property values in low tidal areas spiraling down. University of Colorado and Penn State University researchers found that homes within just one foot of being flooded from a sea level rise were selling at a 14.7 % discount compared to homes on higher ground. Analysts have totaled property price losses since 2005 for Charleston at $265 million and Miami- Dade County at $465 million. Of course this is just the tip of the iceberg when considering all the coastal properties in the U.S. – losses are in the billions of dollars.

California has experienced the highest number and most acreage of wildfires in its history. Japan sweltered under hot July summer temperatures making new records. During the summer large areas of heat pressure or heat domes scattered around the hemisphere led to the sweltering temperatures. The Canadian Broadcasting Corporation notes the heat is to blame for at least 54 deaths in southern Quebec, near Montreal, which sweated under record high temperatures. The worldwide list of new high temperatures goes on and on. The chart below shows extremely hot temperatures worldwide in a model at 2 meters above ground.

Sources: University of Maine, The Washington Post – 7/5/18

The relaxation of Obama administration clean air restrictions would possibly kill from 470 to 1,400 people per year the EPA admits. The policy shift would move enforcement responsibility to the states, and allow them to relax regulations on coal burning plants even when installing new equipment. Utilities would be allowed to use old standards when installing new equipment without having to meet higher air quality regulations. The Obama era policies were never enforced because the Supreme Court found in favor of the states who sued to overturn the tighter regulations.

Next Steps:

Enough is enough, the federal government is here to protect American lives not kill more people as a result of policy. The government’s position makes no sense, it’s time we as citizens take a stand.

As we have said in a previous post:

“we may need to look to how to make duty more of a core value in our culture and in particular business culture. As we have observed our country is essentially run by Corporate Nation States, they must change their attitude, behavior and operating practices focused on their duty to all the people not just their executives and customers. Everything a corporation does in some way impacts the Common Good. We are the people these corporations serve, and we should expect nothing less than socially responsible behavior from the executives running these huge Corporate Nation States.”

We would like the executives of these coal companies to think about the people that will get ill or die because they wanted to make more money and be ‘efficient and affordable’. What if their daughter died? How would they feel. It seems that we are back to the point we made in last week’s Common Good post we ‘use people, and love things (money)’. This policy is dead wrong, and should never be implemented. Instead, these corporations should be coming to us with proposals on how to save people’s lives and speed up the process of reducing climate warming. Maybe, these executives need to look themselves in the mirror and ask ‘who am I serving?’. Time is running out, people are being killed in the heat, economies are being destroyed. All these forces will cause civil conflict unless we act now to reverse the course of climate warming, before it is too late.

Families Are the Place to Start Building the Common Good

By Patrick Hill

On August 17, 2018

In Common Good, Consumer Squeeze, Corporate Power, Corporate Reform, Families, Health insurance, Millennials, Public Interest, Stock Buybacks, Wages

Image: sleepingshouldbeeasy.com

We all have a mother and father, and may have brothers and sisters. We come into the world born of our mother with a bonding to her, and if all goes well the father is there to raise us too. We can all agree that families are a priority – when things get tough our families come first.

Bo Lotzoff, philosopher and counselor helping many prisoners and poor people turnaround their lives, observed about American society that we ‘love things and use people’. It should be the other way around, ‘love people and use things’. Think about this insight. When we look objectively at what has happened to family life in the past 30 years, the slice of time devoted to family versus work has progressed in reality to not much time, or invested engagement by the working parent.

In Silicon Valley, the heart of technology innovation world-wide, it is the standard expectation for most workers at top companies to be at work until 8 or 9pm, just leaving barely enough time for fathers or mothers to read a story and tuck their children into bed. Management expects knowledge workers to check for text messages at least 19 hours a day and email before coming into the office, responding to work requests on weekends too. Even, on vacations, if project reviews are planned workers are expected to phone in for the key meetings and ‘stay on top’ of what is happening. When global conference calls are involved, the calls may start at 6am to Germany and continue to 7 or 8 pm to Japan or China. What all this connectedness means is that the company owns the mind and emotions of the worker 24 by 7. At one startup ‘all hands’ meeting just prior to the Christmas holiday the CEO thanked everyone for their hard work over the past year and declared, “have a fun Christmas or holiday rest for a day, then let’s make our numbers!” He made the statement kind of in just but half serious, the workers got his point, see your families and friends but stay connected 24 by 7.

Corporate life is destroying family life and our connectedness as a community. Being totally connected to the corporation is more important if we want to maintain our standard of living is the message. Corporations are using people and loving things (sounds like high tech).

Nourishing, sustaining and building stronger families would do a lot for solving our societal and economic issues. Crime would go down as young men who are left to live on the streets would be learning skills, playing a team sport or having a family supporting his life, and where after school programs were funded and staffed well. Groups like Thread, in Baltimore actually use the family structure with Parents and Grandparent surrogates to support youth in poor parts of the city where there may be only one parent and that parent is not home much of the time working two or three jobs to support the family. Today we are missing millions of our youth to crime, opioids and dead end jobs that could be active productive members of our labor force. Our labor force is declining with the aging of baby boomers, we need all the paycheck workers we can to support our aging population and for young workers to save for their futures.

So, let’s look at the policies of our federal government using the family yardstick which most people right or left, Republican or Democrat agree:

Family Separation – recently we saw that there was consensus that children should be kept with their parents – even immigrant children
Health Insurance – a Pew Research survey showed that 58 % of all Americans believed that every person should have affordable health insurance for which the government is responsible
Childhood Health Insurance Program (CHIP) – most Senator and Congressmen agreed and renewed the CHIP bill to protect children caught between Medicaid and being too poor to afford an individual health insurance plan in this past December’s spending bill.
Flexible Job Definition – more social and family counselors see a need for men and women to have flexible time jobs meaning that when a family emergency comes up like an illness or doctor appointment the worker can take time off and make the appointment without repercussions in job performance, salary or benefits.
Parental Leave – Federal law of 1997 requires private employers to provide maternity leave up to 12 weeks of unpaid job-protected parental leave to bond with a new child within one year of birth, adoption, or foster care placement (parental leave). The US is the only country in the developed world that does not have paid leave for parents.
Wages – real wages (after inflation) for the 80 % of workers in the U.S. have basically been stagnant for the last 30 years. Instead, corporate executives use excess profits to juice their stock prices with stock buybacks instead of raising wages. They are wasting nearly $810 billion that Goldman Sachs estimates is being spent in 2018 on stock buy backs. That $810 billion could go a long way to providing decent wages for workers. Analysts estimate the S & P 500 index is at least 20 % higher from what the prices of company stocks would be without stock buybacks. The reality is that workers and their families suffer having to work two or three jobs because of the greed of executive management.

We could add to the list, our point is made, when we have a consensus that families need to be placed as the first priority, not the second or third or thirty-fifth, then our legislative priorities are clear. Other countries seem to make a thriving economy and support of families work. Germany has paid parental leave, a net export economy, good wages, employee councils and at least 4 weeks of paid vacation for most employees. Most German families feel secure. This author asked a co-worker from Germany if he considered working in the U.S., he noted, “I would get sharper, get closer to engineering and innovation, yet, there is no real recognition of families, In Germany, I have paid leave for a new child, four weeks of vacation every year, a good guaranteed retirement program, health insurance and I participate in our employee council…I don’t want to live under constant stress in America.”

Families are the basic economic building block of our country. When corporations take control of our government and run our families into oblivion we all are hurt as a country. In the end corporate executives need to wake up and support family sustaining policies in their company, their management culture, wages and in Washington to build strong families. Otherwise, someday corporations will discover as is beginning to happen today, that young women having the fewest babies ever since WW II, the lowest level of family formations ever and lowest number of millennials buying homes will lead to shrinking markets, falling margins and reduced sales. We need to monitor what is happening to the health of our families to know if our societal values, economic values, government policies and corporate behavior are strengthening or weakening families.

Vocational Programs Match Young Workers with Good Jobs

By Patrick Hill

On August 16, 2018

In Apprenticeship, Education, Jobs, Vocational Training

Photo: simplyhelp.org

Companies like CVS, Tesla, Electric Boat and others are working with local high schools and community colleges to train young workers with job skills that translate into good paying jobs. Direct connections between big corporations and local high schools are taking off. Volkswagen is helping schools in Tennessee modernize their engineering programs; Tesla is partnering with Nevada schools on an advanced manufacturing curriculum; and fisheries in Louisiana have created courses for students to train for jobs in “sustainability.”

There are 6.6 million job openings at the end of June 2018, many requiring specific skills in manufacturing, support, sales or materials management are the highest level in a decade.

Source: OECD, Federal Reserve Bank of St. Louis, Brookings Institute – 6/28/17

There are 3.6 million high school students enrolled in career education programs that provide immediate skills to fill job openings in career fields where there is high demand.

Of interest are programs that provide good paying jobs in industries with careers with a future growing into more responsibility and management. Solar training programs sponsored by the federal government in 2009 worked with 400 local community colleges to try and meet the demand to fill 75,000 solar industry jobs by 2020. Over 30,000 students attended sponsored community college programs funded by the Department of Energy. Funding for the program ended in several years ago however a new program has been implemented called the Solar Training Network. The Solar Training Network supported by a foundation brings together job seekers, trainers and employers in the industry to fill job demands.

In July the GOP Administration announced a $150 million apprenticeship program to help fill 4 million jobs that are in the apprentice sector for candidates without college degrees, women, ex-offenders and workers of color. We applauded the program in a post then, but noted that a 40 % cut was included previously in the 2019 budget to a similar program in the Department of Labor – so staying power is a concern.

We are excited to see all these job training programs begin to get the visibility and funding to move ahead. Though from our perspective with millions left out of the economic mainstream and with millions of jobs to be filled a massive jobs set of programs needs to be carefully designed and funded in the billions of dollars to even begin to come close to meeting the need and having an economic impact.

Household Debt Continues to Mount – Students Staggered by Debt

By Patrick Hill

On August 15, 2018

In Consumer Squeeze, Household Debt, Student Debt

(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.)

Photo: commondreams.org

U.S. household debt is up as families are caught between soaring debt and stagnant wages. We have noted how wages have been wiped out by inflation in the latest Bureau of Labor Statistics report comparing July of 2017 to July of 2018. The Federal Reserve of New York and Equifax have tallied the last figures on household debt in the charts below.

Sources: Federal Reserve of New York, Equifax, The Wall Street Journal, The Daily Shot – 8/15/18

Student Loan debt continued to increase while credit card, auto and other debt held steady. The reduction of financial support by state and federal government to higher education is appalling. Before the Great Recession public funding for higher education was at 50 % still a drastically less then funding in the 1970s. Now, public funding for higher education is at 35 % leaving universities with no choice but to raise tuition.

Source: kypolicy.org

Public college tuition and fees costs (in 2015 dollars) have almost tripled since 1975, so students needed to borrow money to complete their education.

The student loan predicament is a national disgrace. It exemplifies how poorly we as a society have supported the higher education. Our young people are looking to start families and looking to purchase homes yet, they are not moving ahead. The birth rate is at the lowest level it has ever been in this nations’ history and the number of millennials purchasing homes is a the lowest level it has been since before the Great Recession. Without the younger generation purchasing homes the second stage economy supported by new household formation fades. The markets for appliances, furniture, home repair and remodeling, carpeting and many other household product sales will fall.

Next Steps:

We said in our blog of May 29^th the student debt problem is so great that it is hurting the formation of new households:

“In 2003, 42 % of people under age 35 owned a home now only 35 % own a home. The dream of owning a home is slipping away as our society allows the rich continue to enjoy huge tax reductions in the most recent tax bill, with continuous lack of state funding for colleges and universities and then a paucity of forgiveness programs for graduates.”

Sources: Federal Reserve Bank of New York, US Census Bureau, New York Times – 5/29/18

Further we outlined some recognition of the student debt problem but much more needs to be done.

“As part of the spending bill that Congress passed last month, $350 million was allocated for a fix it forgiveness program for some types of student loans. Senator Elizabeth Warren has been surveying the issue and individuals trying to take advantage of the provisions where she found that it was quite complex, answers were in complete from the Department of Education and work still needed to be done to setup the process. She found many firefighters and teachers having a difficult time getting into the program. Prior to passage of the spending bill Senators Whitehouse and Kaine wrote a bill to setup a student debt forgiveness program and get it funded, their bill set the stage for Democrats to push for provisions of the bill to be included in the omnibus spending bill.

This solution is still not enough compared to the huge issue of $1.49 trillion outstanding placing an anchor of debt on our young people when they need to be investing in starting their families and careers and buying homes. In blog of February 16th in our archives, we review an idea to cancel all student debt. We like the idea moving forward, yet recommend that forgiveness be done in stages, by reducing interest rates, offering Heartland Service, providing a universal national service option and corporate sponsorship of an internship by the student.”

It is unacceptable that our Congress and Executive branch are focused on how to give more money to Corporate Nation States and The Elite, they should be representing us and focusing on how to solve the student loan crisis and create opportunities for our young people and our country.

Wage Increases Evaporate Due To Inflation Again

By Patrick Hill

On August 14, 2018

In Uncategorized

Image: industryweek.com

As we have noted in past posts, worker wage increases have been stagnant for decades and most recently for the 80 % working class since the last recession while 90 % of income increases have gone to the top 10 %.

The Department of Labor announced last week that inflation has completely wiped away any worker wage increases from July 2017 to July 2018.

Sources: Bureau of Labor Statistics, The Wall Street Journal – 8/10/18

Inflation went up during the 12 month period by 2.9 % while wages were up only 2.7 %. Since the Great Recession workers have not left out of the economic recovery. In 2000, the share of corporate sector income going to workers was 82 % now it has slipped to 77 %. The benefits of the Tax Cut, which were supposed to raise worker wages has mostly gone to stock buy backs raising the compensation for executives by juicing the price of their stock holdings. Goldman Sachs estimates that nearly $1 trillion will be spent this year on stock buy backs, and many analysts believe that stock buy backs are holding the U.S. stock markets up in the midst of a worldwide decline in share prices. Stock buybacks mean that necessary capital expenditures in productivity programs, innovation and new plant and equipment are forgone. Economists note that investments in key long term projects are crucial to increasing productivity which has been at an all-time low of 1.7 % over the past ten years. Increased productivity will support raising wages without increasing costs.

Next steps:

Let’s start with the fundamental reason employees do not receive raises beyond inflation – management has no incentive to raise wages. Wages are accounted for as a cost in the books of the company, executives receive major bonuses to increase profits not costs.

The next major factor is automation. Automation of jobs, and work process activities increases profits reduces salaries, benefits and is easier to manage than staff. Automation has continued to give management the upper hand in any wage negotiation. Most job losses over the past ten years have been due to automation. As robots and computer software become more sophisticated with artificial intelligence even more jobs will be lost. For example, while Amazon announces hiring 100,000 workers over the next ten years, at the same time they are installing 40,000 robots to permanently perform many of the those jobs.

Other factors play a major role, corporate mergers reducing the number of companies in major industries, there are 50 % fewer public companies on the stock exchanges than ten years ago. The gig economy employs almost 33 % of all workers, contracting is cheaper and companies can contain costs with flat fixed based contracts with no benefits. Executive pay is 300 % of the average worker pay, so there is less money to go around for raises. Workers have lost union representation over the past 50 years when 33 % of all workers were in unions in 2015 only 10 % were represented. Finally, job market automation, the Internet has provided employers with a vastly larger pool of candidates which they can play off each other. Sites like LinkedIn were designed for corporate recruiters to look at candidates – not with the needs of candidates in mind. We examine all these factors in more depth in our blog: Wages Are Stuck, Here’s Why and What to Do About It. Here is a summary of our recommendations:

The Action:

Place Workers on Boards– as Germany has so effectively setup, engaging management with required representation of workers on Boards.
End Outsourcing– corporations would pay 50 % tax on each job moved overseas making the move costly, encouraging corporations to move jobs to low cost or inland areas of the US, or innovation economic zones (special tax geographies) and to invest in worker training to receive training tax credits.
End Low Cost H1-B Visas– the practice of importing inexpensive labor to drive down wages in US markets would be ended.
Offer Lower Taxes on Repatriated Funds– only if the profits from overseas are invested in productivity actions, increasing wages of workers (not executives), reducing costs or innovation. Stock buybacks or dividends would be prohibited.
End Stock buybacks– these funds are totally wasted, mislead investors on earnings reports and only serve to increase compensation for executives and shareholders. These funds are better allocated to increase worker wages or increase productivity so workers can receive higher wage increases.
Breakup Oligopolies– breakup market concentrations in key sectors: information technology, banks and financial services, health insurers, airlines, hospitals and clinics, entertainment, media and distribution and others as deemed in the public interest.
Balance Job Market Process– require companies over 100 employees to offer information on their website for contacts, phone numbers, job listings with identified contacts, and to let the candidate know the status of his consideration, and candidate introductions held monthly for F2F communication.
Balance Worker and Executive Pay– tax corporations 25 % surcharge on any corporate income where any executive makes greater than 150 % than any the average worker wage – this would force executives to share their income with workers while not increasing costs. End federal tax deductions on corporate income taxes for executive stock compensation above $1 million. End golden parachute packages by taxing 50 % of every dollar received above $1 million. Severance packages for workers would have to be in proportion to the highest executive package ie, executive receives 10x of monthly salary a worker would receive 10x of his/her monthly salary.
Fund Worker Training and Increase Wages – for each robot employed, the corporation would be required to offer training, skills development for the displaced worker to find a comparable job within the company or outside. Where automation software or technology is deployed 10 % of the realized cost benefit would be used to raise the wages of all workers in the company.

Turkey Tariffs Hurt EM and U.S. Economies

By Patrick Hill

On August 13, 2018

In Protectionism, Tariffs, Trade, Trump Trade War, Turkey

Image: gsiexchange.com

Last Friday, President Trump’s tweet doubling tariffs on aluminum and steel from Turkey caused a major shock to the Turkey stock market and sent the lira spiraling down by 10 %. However, the damage was not contained to just Turkey, emerging country currencies around the world took hits, the U.S. SPX took a .71 % dive. Emerging countries with similar high debt levels like South Africa and Argentina took 2 % or more hits to their currency values. The correlation of the lira with other emerging market currencies hit a new high today, according to Bloomberg.

Sources: The Daily Shot, The Wall Street Journal – 8/13/18

Our President chose to lob an economic bomb at a country already reeling from a 40 % drop in the lira year to date, high inflation at 15.85 %, ten year bond rate of 20 %, and a corporate $210 billion net currency account deficit owed to foreign investors.

Investors are concerned that EU banks holding loans or positions in Turkish banks could be vulnerable to losses. The European Central Bank is concerned with exposure of banks in Spain, Italy and France.

Sources: The Daily Shot, The Wall Street Journal – 8/13/18

U.S. banks do not hold many direct positions in Turkish banks or loans, but they do hold positions in EU banks in the three exposed countries.

The crisis was in the making, when President Erdogan took office in July after 15 years of rule declaring super powers to himself sending the lira into a flash crash. Over the past month Erdogan insisted on keeping interest rates low, allowing inflation to get out of hand, and used foreign investment to build shopping malls and construction projects rather than invest in industry, productivity or critical infrastructure. Today, the lira was falling quickly during the day, until its fall was steadied by Turkish central bank interventions, yet stock markets in U.S. were down with SPX losing .40 %, the Dow off by .50 %, and emerging markets down by 1.62 %. All this financial uncertainty about loans, bank exposure, and foreign capital reserves has caused investors to hit the pause button to wait and see how officials around the world respond to the crisis. The most critical question: can this financial crisis be contained to Turkey, Argentina and South Africa or will developed country markets be hit?

Next Steps:

We see economic bomb throwing via tariffs to gain supposed political advantage to secure the release of a pastor as a major mistake. The added tariff on top of present tariffs on Turkey already in financial straits just exposed other emerging markets to investor and official scrutiny causing alarm and uncertainty. Uncertainty is the big cloud growing stronger as world markets deviate from U.S. markets in the past several months.

Sources: The Daily Shot, The Wall Street Journal – 8/13/18

This divergence won’t continue, either the U.S. market will fall or the emerging markets will rise – with global economies slowing, currency weakness and tariffs it would seem that U.S. markets are likely to fall. Plus, the U.S. dollar strengthening versus emerging country currencies makes U.S. goods more expensive for global customers resulting in a reduction in U.S. sales.

Is this what the President wants; falling emerging markets eventually leading to the U.S. economy going into a recession? One crucial aspect of financial markets is that perception can become reality, just the perception that a country can’t pay its debts, or a bank may fall is enough to cause investors to run for the exits. The President by making an impulsive tweet into a fragile financial system will only lead to more uncertainty, falling markets and economic disaster. Economically damaging a NATO partner like Turkey only plays into the hands of Russia in establishing closer economic and strategic ties. America has a military partnership with Turkey at the Incirlik Air Base, where over 5,000 U.S. airmen are stationed used for monitoring Russian military exercises and staging for operations into Syria and Iraq. Undermining the economy of our NATO partner may create enough civil unrest to force us to leave the base. We need to recognize that our military presence around the world keeps countries safe for us and all companies to conduct business, otherwise markets shrink. The The White House needs to think in terms of what their tariff and protectionist policies are doing to the economies of countries our companies want to sell products to. If offshore prospective customers are in falling economies they won’t have the money to buy U.S. products. So, how will the trade deficit be reduced? These poorly thought out short term trade policies need to be ended and sound long term, trade programs focused on building economies need to be implemented. This Administration needs to follow the trade path of the past 50 years by both Democratic and Republican administrations.

Update: August 14, 2018 – President Erdogan declared the country is in an ‘economic war’ telling citizens to boycott American electronic products, sell dollars and euros to support the lira. This tit for tat retaliation is exactly what we don’t want to see trade relationships spiral into uncontrollably. What if China uses nationalism to drive boycotts of U.S. goods? The deadline for the U.S. imposing new tariffs is August 23rd we will watch the action with great concern. Economic nationalism will cause worldwide recessions and setup conditions for civil unrest. Just in, Bloomberg reports that Turkey has slapped tariffs on U.S. goods including a 50 percent tax on rice, 140 percent tax on spirits, and 120 percent on cars. Tensions continue to escalate out of control.

Corporations Have A Responsibility for The Common Good

By Patrick Hill

On August 10, 2018

In Common Good, Corporate Power, Corporate Reform, Social Responsibility, Wages

Image: Your Little Planet

Corporations provide the economic foundation for the common good in supporting a community. Air, water, and land need to be kept in good stewardship by companies using these natural resources and returning them as they found them. Yet, there is an economic responsibility too – good jobs for fair pay while keeping the social contract with the worker.

The New York Times returned to the Carrier site in Indianapolis that 20 months ago President Trump ‘saved’ from being moved to Mexico. Today, the furnace plant is plagued by absenteeism and concerns that the plant will be shut down when the political light is gone. Management has not helped when the CEO of the Pratt and Whitney that owns Carrier said that there would be lost jobs and automation would help to reduce costs. Unfortunately, the Carrier situation is true for many blue collar workers in America, always looking over their back, with a cloud hanging over their job future. There isn’t a cloud hanging over executives careers.

How can workers make commitments, to their families, pay mortgages, make car payments are send children to college when there is economic uncertainty hanging over them.

It used to be that corporate management was concerned with the future of their workers in a deep and personal way, which was reflected in their policies. All too pervasive in executives suites throughout America is the focus on profits, stock price and how to make more money – with worker security and careers taking a second place or not at all in the financial plan. Certainly corporations have extreme competitive pressures worldwide, government regulations and personnel laws to adhere to. Yet, when companies announce automation plans, they seem to forget the people losing jobs to robots are unlikely to get another job that pays as well.

Automation is a social concern, damaging the common good that workers can’t be just flung out of work while all the executives left make more money. There is something intrinsically unfair with this model.

People are the most important resource in our economy, we need to be thinking of how we treat people when economic storms come. When companies automate workers out of job they need to take the social responsibility for ensuring the worker thrown out of work and still progress positively in their economic life. While, a capitalist democracy supports corporations as private property and run entity, with the onslaught of automation corporations can’t just run the other way after giving the laid off worker a small severance check and say ‘good luck’ That approach is just not enough, the corporation profits the worker loses. We need to end the spiral down for workers, they need to be guaranteed a productive economic life just the same way an executive who is left with the benefits of an automated factory.

Washington AG Increases Job Mobility for Fast Food Workers

By Patrick Hill

On August 9, 2018

In Jobs, Labor, Low Income Finance, Wages

Photo: blogs.reuters.com

Washington Attorney General, Bob Ferguson negotiated with seven major fast food franchises including; McDonalds, Arby’s, Carl’s Jr., and Jimmy Johns to delete franchise agreements with parent companies which include a no poach clause. The no poach clause provided a way for individual franchisee’s to keep managers from other same brand franchisees from hiring their workers. Two Princeton professors, Krueger and Ashenfelter published a study last year that estimated that no poach clauses affected about 70,000 individual restaurants in the U.S. or about 25 % of all fast food outlets. The professors noted that the clauses were primarily to keep turnover down, limit competition and job mobility with other same brand franchises. As a result workers had limited options to negotiate higher wages, work schedules or conditions.

Turnover in the fast food industry ranges from 60 – 70% in up-scale dining restaurants to over 120 % in fast food franchises. Franchisees are faced with constant pressure to raise wages in a low wage industry but face tight profit margins of 3 %:

Source: The Heritage Foundation – 9/4/14

With only 3 % margin to work with it is difficult for a franchise owner to raise wages. Workers also mention in surveys the need to have more scheduled hours with more notice on the hours they work. With the no poach clauses gone from contracts workers can move to a same brand restaurant and negotiate for better hours and schedules.

We are pleased to see Attorney General Ferguson successfully negotiate with major fast food chains to delete the no poach clause to give workers more negotiating power and flexibility in their job situations. It seems to us that major chains should have figured out that at least keeping the worker in the same chain was a plus, and the deleting the clause may force owners to treat workers better in order to reduce turnover. Better managed franchises would rise to the top and have lower turnover rates. Now on to raising low wages, increasing wages to a livable level is a complex issue that will require all involved; the owners, corporate franchise executives and workers to come up with a plan that will give workers the wages they deserve.