Sorry, Economists! Governments are not Businesses. They are Nonprofits!

New Orleans       When someone from the very conservative, totally pro-business American Enterprise Institute feels it is necessary to remind people that a simple cost-benefit analysis was not necessarily appropriate when evaluating social programs, we have to wonder whether something is terribly amiss or at the least totally topsy-turvy.  Nonetheless, there it was in the Wall Street Journal of all places with the AEI’s director of economic policy studies, saying, “There are things where a marginal dollar might not have a large return on investment but are extremely important.”

What the frick is going on here?  We recently talked about a couple of curious economic research reports that came to the bizarre conclusion that when looking at the impact of evictions on people who were already poor they concluded that they were only a bit poorer after the eviction, seemingly making the point that it was significant, but not cataclysmic.  Now we’re looking at another group of economists from Harvard reporting on their deep dive into the numbers of 133 different policy initiatives in the US over fifty years.  This time they wanted to apply a standard on which of these social expenditures in things like welfare, food stamps. Medicare, and the like “made the government money, generally in the form of beneficiaries who needed less assistance over time or who became more productive and paid more taxes,” according to the Journal.  Restraining our disgust with the basic proposition for a minute, the topline conclusion from these economists was that the best investments were in children’s programs like education, health, and college, where the government gets back forty-seven cents for every buck, as opposed to the government programs for adults where they argue it costs an extra sixty cents for every dollar the government paid.

This is carrying neoliberal values imposed on public authorities to a disturbing and disgusting levels.  Sure, it’s interesting.  Sure, kids count, so let’s do everything we can there, and in fact let’s double down, but that’s not the point. The very assumptions seem whack.  Governments are not the same as Wall Street moguls.  Governments have responsibilities for their citizens, all their citizens.  Governmental expenditures in serving and providing for its people are in fact categorically NOT INVESTMENTS in the business sense of the word.  Perverting the role of government expenditures in social programs or anything else including defense as relevantly measured by a standard of whether it yields a profit is simply obscene.  In his own elegant way, that seemed to be a gentle reminder even from AEI guy for goodness sakes.

When their results were charted, money losers included housing vouchers, nutrition, welfare payments, adult health like Medicare, where damned if those pesky old people didn’t keep on getting sick and dying, so the government lost money.  At the bottom of the list was unemployment insurance as a big loser, but, hey fellas, workers pay a huge chunk of that as insurance, chump, not as an investment.

All of this was done under the rubric of the Raj Chetty and his Opportunity Insights outfit at Harvard.  According to his profile in The New Yorker, he and his team are hoping all their work influences the 2020 election.

Wow!  I’m starting to hope that is definitely NOT the case.  His earlier study showed the dim prospects of making it anywhere but on the coasts, and concluded that we should pretty much give up on rural areas entirely having any opportunity.  Now this study wants to turn government into business, expenditures into investments, and bring us into some corporatist cost-benefit worldview.

Yikes!  We need to step back and take another look at this project because it might should be named Opportunity Insults rather than Opportunity Insights.


Please enjoy Human Touch by Jackson Browne & Leslie Mendelson.

Thanks to KABF.


Is SEIU Waving the White Flag for Workers?

Little Rock       The Service Employees International Union (SEIU) is a great organization and with almost two-million members, the largest in the United States.  Its membership is diverse and anything but an entitled aristocracy of labor for the most part with somewhere between a third to forty percent of its membership home health care workers for example. SEIU’s role in prioritizing new organizing, higher wages for all workers, immigration reform, and healthcare protection for all have been critical for decades.  I’m biased, I confess.  Our local union was part of SEIU for twenty-five years, and I served on the International union’s executive board for eight of those years and was fortunate to run big organizing campaigns with their banner for public and lower-waged workers, Southern workers, Walmart workers, and hospitality workers along with living wage campaigns with their resources and support.

SEIU believes in welding politics to organizing.  It’s been a key to many of their greatest organizing victories.  SEIU’s president’s remarks were recently reported on the benchmarks they were outlining for candidates to receive their support.  When Mary Kay Henry speaks, it’s worth paying attention, and I listen carefully.  The article reported,

The Service Employees International Union says to win its endorsement, Democrats must pass a “litmus test” that includes supporting industry-wide bargaining and ending the National Labor Relations Act’s preemption of local and state laws. The union also says it will only back a candidate who includes collective bargaining rights in any major economic proposals and ensure that every job funded by a federal contract or grant provides a $15 minimum wage and union rights.

Affixing collective bargaining rights to “major economic proposals” and mandating – and funding – a $15 per hour minimum wage on federal contracts and grants:  right on!  Sign us up!!

Ending preemption of the NLRA of local and state laws?  What’s up with that?  On just the practical level, that seems a mountain to climb not only for the union but for any candidates.  It would mean amending the constitution, which is near the top of the current list of impossible political acts.

Article 6, Paragraph 2 of the U.S. Constitution states that the laws of the United Statesfederal laws — are the supreme law of the land and judges in every state are bound by them regardless of conflicting state laws.

So, no worries, this isn’t going to happen, so we shouldn’t lose sleep over it perhaps.  But, why is SEIU demanding this?

Sadly, I think it is a huge flashing neon light that SEIU, despite being the nation’s largest union, has decided at a fundamental level NOT to be a national union.  At the turn of this century, its ambition was not to be bicoastal, with the bulk of its membership clustered around the East and West Coasts and a pocket around the Great Lakes, but instead to organize broadly. This new stance seems to signal that it has resigned itself to hunkering down where it still has some power, especially political power, and can push through more favorable labor laws in places like California, New York, and a couple of other states, and let the tens of millions of workers elsewhere fend for themselves.  The number of states under hard-right Republican control, especially, in the South would seize the end of preemption like the Holy Grail and institute a regime for workers and everyone else the likes of which we have not seen since the Reconstruction.  And, not just the South as we know from rollbacks of workers’ rights in Wisconsin, Michigan, and Ohio.  A call for an end to preemption is not simply SEIU raising a white flag in the fight for all workers, but fundamentally throwing in the towel.

The other sign of SEIU drawing its wagons in a tight circle around the members it wants to protect, rather than all the workers it once sought to represent, is also the call for industry-wide bargaining.  In and of itself that’s not a bad thing.  It guarantees all workers a better deal by narrowing the gap between the unionized and non-unionized by establishing minimum standards.  In some ways though its an organizing paradox.  It might be good for workers, but bad for their unions, because in bringing the bottom up, it also lowers some of the incentives and benefits of unionization for the members, justifying the risks.  There are good cases in Scandinavian countries where the social contract to some degree still exists and unions have been institutionalized in various triparty agreements including business and government, but union density in some of the European countries, or even Quebec where this is possible, is not necessarily greater.  It settles the fight, more than it delivers justice and reward.  Again, this seems to be a survival strategy for SEIU and not an organizing strategy.  SEIU seems to be signaling that it wants to make a deal while it still has some strength in some industrial pockets and attempt to leverage something industry-wide.  In other sectors, like healthcare, where it has a lot of members in some markets, but fewer in others, SEIU seems to be saying it doesn’t believe it can organize the industry and therefore hold on to its position without industry-wide bargaining and agreements that put concrete on the floor with governmental guarantees.

SEIU is not the canary in the American organizing coal mine, it’s the Big Bad John of labor to take the refrain from the old song and “a mountain of a man.”  If this is the litmus test its issuing to politicians about the state of labor at the top, it’s also a bulletin expressing the fears of all institutional labor.

Unions are membership organizations.  They have a responsibility to protect these members.  No argument there, but we may be hearing in SEIU’s message the end of their belief that they can either organize the unorganized or will continue to seek to represent and advocate for all workers.  If so, we’re all on our own, and the devil will take the hindmost.


Please enjoy  Milky Way from Neil Young.

Thanks to KABF.