Posts Tagged ‘jobs’

 

There was a bit of an awkward moment on Tuesday when, during the Wall Street Journal’s interview with Gary Cohn, Director of the National Economic Council and chief economic advisor to Donald Trump, John Bussey asked the assembled CEOs if they plan to increase their company’s capital investments if the GOP’s tax bill passes.

“Why aren’t the other hands up?” Gary Cohn asks.

Well, let me see if I can answer that.

profits-investment

First, corporate profits (the blue line in the chart above) are already at record highs. Second, credit is very cheap and readily available.* Thus, corporate investment (the red line) is greater than profits and also at record highs.

In other words, if the people who run those corporations believed that investing in new factories or equipment that might create more jobs would result in higher profits, they would already be doing it.

That’s why most of the CEOs didn’t raise their hands. They know full well that most of the gains from the proposed corporate tax cuts will just be distributed in the form of higher CEO salaries, increased dividends to stockowners, and more mergers and acquisitions.**

And that certainly won’t create new jobs—which is why most people, when they figure out the real nature of the proposed tax cuts, will be raising their hands in unison with a very different kind of gesture.

 

*As Laurence D. Fink, the founder of BlackRock, the largest money manager in the world overseeing some $6 trillion, said at The New York Times DealBook conference last week,

If you’d asked me a year ago how would you feel, I would’ve told you I’ve got concerns in this region and that region. . .A year-and-a-half ago we were worried about China. A year ago I would’ve said I’m very worried about the eurozone stability. . .And then the other surprise is how robust the U.S. economy is—how strong corporate profits are. I would say that’s my biggest surprise, how robust corporate profitability is, even with a quite dysfunctional Washington.

**Chris Dillow, for his part, gives the lie to the idea that higher inequality leads to higher investment. Thus, in his view, “defenders of inequality must come up with something better.” Cohn and the other Republicans who are peddling the benefits for workers of the current tax plan are going to have to come up with something better, too.

the-amazon-bidding-game-1-1cc the-amazon-bidding-game-2-6c4

the-amazon-bidding-game-3-804 the-amazon-bidding-game-4-a62

Tax Reform

Special mention

PettJ20171027_low  download (1)

EaganT20171026_low

Special mention

Clay Bennett editorial cartoon  MarguJ20171027_low

Special mention

HorseD20171025_low  LopezA20171025_low

MFG

Both Donald Trump and Eduardo Porter would have us believe the U.S. trade deficit is a serious problem—and that, if it can brought back into balance, jobs for American workers will be restored.

Nonsense!

Yes, I know, Trump’s attacks on free trade did in fact resonate among working-class voters. And, as I have argued, there is clear evidence that that a tiny group at the top has captured most of the benefits of trade agreements and other measures that have allowed U.S. corporations to engage in increased international trade, both importing and exporting commodities that have boosted their bottom-line.

It’s possible then to make the case (as I did here) that mainstream economists, in their zeal to push globalization forward, ignored those problems and concerns, thus paving the way for Trump’s victory—and, at the same time, that the solutions for those real issues will not come from reducing the trade deficit and supporting a renewal of the manufacturing sector.

First, we have to understand, the U.S. trade deficit has risen and U.S. manufacturing output has fallen not because of the “blind forces” of international trade. For decades now, U.S. corporations have decided to increase their profits by a combination of shifting production to other countries and automating many of the production processes that remain in the United States. And they’ve left the American working-class behind.

Second, there’s no guarantee that increasing manufacturing output within the United States will be accompanied by an equivalent number of new jobs. Just look at the chart at the top of the post. Since 2009, U.S. manufacturing output has increased by more than 38 percent but jobs in the manufacturing sector have only risen by 8.2 percent.

The U.S. trade balance is thus not the problem. The forces of U.S. capitalism have sacrificed the American working-class on the altar of higher profits. They did so before Trump was elected—and they’ve continued to do so since.

Let’s see Trump and Porter balance that.

PettJ20171013_low

When I read about Scott Pruitt’s trip to Hazard, Kentucky to announce the gutting of Barack Obama’s signature policy to curb greenhouse gas emissions from power plants, I immediately turned to Dwight Billings—a West Virginia native, Professor Emeritus of Sociology at the University of Kentucky, and preeminent scholar of Appalachia—to provide some context. I am pleased to publish this guest post by him. (Interested readers might also want to take a look at Billings’s review of J. D. Vance’s Hillbilly Elegy.)

Scott Pruitt, Administrator of the currently misnamed Environmental Protection Agency, and Senate Majority Leader Mitch McConnell (R-Kentucky) traveled to Hazard, Kentucky in the economically depressed coalfields of Appalachia on 10 October to proclaim that the Democrats’ purported “War on Coal” was over—even though it was a war that was barely ever fought.

They came to announce the rollback of President Obama’s Clean Power Plan, his administration’s effort to reduce the 2030 CO2 emissions of electricity-generating plants by 32 percent compared to 2005 levels, a key plank in the United States’ agreement to the 2016 Paris Accord on Climate Change that Trump has since revoked. The Clean Power Plan was to be achieved by cutting back on coal burning, substituting natural gas and renewable power sources (wind and solar), and encouraging conservation. But the EPA plan was never implemented. since it continues to be held up for review in the D. C. Circuit Court of Appeals. As Attorney General of Oklahoma, Pruitt—climate change denier, advocate of fossil fuels, and now head of the EPA—led the charge by 27 fossil-fuel producing states to challenge the Obama EPA policy in court.

Despite Trump’s promise to Appalachian coal miners that they would be “going back to work” if he were elected, industry analysts suggest that annulling the Clean Coal Plan will actually do little or nothing to increase mining jobs in Central Appalachia, where the rollback was announced and where nearly 12 thousand mining jobs in eastern Kentucky (84 percent) have been lost since 2009. Aging coal-fired generating plants are being shuttered due largely to a combination of market factors—not regulation as Republicans and industry spokespersons claim—including the abundance of cheap natural gas (due to a hydraulic fracturing boom) and the rapidly declining costs of renewables. Domestic and international declines in coal demand since the 2008 depression and the longer-term effects of mechanization and surface mining also account for job loss. Further, as Appalachia’s richest coal seams are mostly depleted, Appalachian coal is becoming harder to recover. Surface mines in Kentucky produce on average only 3 short tons of coal per employee hour compared with the rate of 30 short tons per hour in the vast surface mines of Wyoming, Kentucky’s chief rival, which now account for more than 40 percent of the nation’s coal.

So why would Republicans announce their gutting of the Clean Power Plan in Hazard rather than, for instance, Wright, Wyoming? Several factors are at work.

11-us-wyoming-black-thunder-coal-mine-890

Black Thunder mine, in Wright, Wyoming

Trump has often proclaimed that he “loves” coal miners. Kentucky employs more miners than any other state except West Virginia. The iconic image of Appalachia’s hyper-masculine, hardworking, and self-sacrificing miners, ready to go back to work if only given the chance, better supports his administration’s public relations stunt in Hazard than would pictures of the monstrous earth-moving machines that dig massive amounts of coal with few employees in Wyoming or Appalachia. After all, the promise of jobs always trumps the environment, even when there aren’t any.

002

Mountaintop removal near Hazard

And then there’s Hazard itself. (The irony of its name has not been lost on environmentalists who point out the hazards in the Trump/Pruitt plans to derail efforts to prevent climate change.) Located In the heart of Kentucky’s Appalachian coalfields, Hazard is the county seat of Perry County, eastern Kentucky’s second largest coal producer and once its greatest. Thousands of acres across Perry County have been ravaged by decades of strip mining and mountaintop removal. One fourth of its people live in poverty. Far more of Hazard’s residents are employed in education and healthcare than coal mining, but coal has been the town’s historical lifeline and curse. One of Hazard’s favorite sons is billionaire coal baron Joe Craft, President and CEO of Alliance Resource Partners (ARP), the second largest coal producer in the eastern United States and one of the largest holders of coal reserves in the nation. Craft grew up in Hazard where his father was a coal lawyer and his grandfather, also a coal lawyer, was mayor in the 1920s. Like Pruitt (who also grew up in Kentucky and now lives in Tulsa), Craft is currently a Tulsa, Oklahoma resident (ARP is headquartered there with an office in Kentucky). But he maintains close ties to Hazard and is a major donor to Hazard’s Center of Excellence in Rural Health. Also like Pruitt, Craft is a Republican, a close associate of the Koch brothers, and, through his organizations, a million-dollar contributor to Trump’s presidential campaign. Craft’s hometown may not win any mining jobs from its renewed oath of fealty to King Coal, but its credentials as a foot soldier in Trump’s war on the climate have probably been secured.

mitch

Finally, there is Mitch McConnell. Despite his vast war chest of campaign funds, McConnell is vulnerable. He is on the outs with Trump, and his aura as a Congressional wizard has been tarnished by his failure to bring a legislative end to Obama’s Affordable Care Act. Senators on the Republican right are calling for him to step down from his leadership position in the Senate. And, he is widely despised back home in Kentucky. With an approval rating of only 18 percent there, McConnell is the least popular of any U. S. Senator at home. Currently, only 37 percent of Kentuckians report they would reelect him. Small wonder then that McConnell would jump at the chance to remind Kentucky voters of his role in helping to end the fictive “War on Coal” he had helped to construct.* After all, he did much the same less than three weeks earlier when he toured Kentucky with new Supreme Court Justice Neil Gorsuch whose appointment he had helped to engineer—a trip the Associated Press described as a “home turf victory lap for McConnell.”

Victory laps and theatrical displays of symbolic politics, however, will not bring coal mining jobs back to eastern Kentucky, nor help the region move toward an economic future beyond coal. ** As a Lexington Herald-Leader staff writer asked the day after the Hazard ceremony, “How long will Kentuckians continue to be suckers?”***

 

*Earlier this year, McConnell pushed through Congressional repeal of the Obama Administration’s 2016 “Stream Protection Rule,” which had sought to protect water quality near mountaintop removal mine sites and was eight years in the making.

**Gone now, too, is the Obama Power Plus Plan that would have invested a billion dollars from the Abandoned Mine Lands fund in post-coal redevelopment. Trump has also proposed eliminating funding for the Appalachian Regional Commission which channels federal dollars toward economic diversification and job training in the region.

***Kentucky voters may have been suckered by Trump in the general election, but eastern Kentucky voters in the coal field counties and all West Virginia counties supported Sanders in the presidential primary election, an expression of frustration with politicians’ neglect of rural areas and an indicator of a desire for change.