How to Tank an Economy

There is scant data on the U.S.-Korea Free Trade Agreement. The only thing clear is that "free trade" needs to be put in quotation marks, since the first announcements make it clear that the U.S. is interested in imposing trade restrictions upon South Korea in terms of intellectual property rights. The population of South Korea is clearly upset: Workers hold protests against U.S.-South Korea free-trade talks.

Despite the fact that 80,000 people took to the streets, there is very little information out there about these protests, particularly in the L.A. Times which serves the largest Korean-American community in the country. The Korean TV news showed pictures of windows being broken and police riots, but provided little explanation as to why. The protests have been heavier in the poorest areas of the country.

This FTA is definitely going to devastate South Korean agriculture – there is already a plan to provide $119 billion to farmers over 10 years. There should be little doubt that this money will only cover a small part of the damage done. It may also hurt the film industry, which is protected by screen quotas that Hollywood hates. Medical costs are set to soar as well with the price controls on drugs being removed.

Reading through the data provided by the United States Trade Representative, I don't see anything that will actually help South Korea. So, reading between the lines, this is being shoved down the throat of South Korea at the threat of economic violence. The claims that this will increase GDP are easily counterbalanced by the fact that nearly all countries that have entered into "free trade" agreements with the U.S. have seen GDP growth shrink, not grow.

Oh Yeah, You Might Want to be Able to Get There

Another minor oversight in the full-frontal assault on health care for working people here in L.A.: City Considers Transit Changes In Wake Of King-Drew Downsizing. Now that people in South Central no longer have access to a hospital, they have to go to another one that is 11 miles away. But, oops, it is 18 miles and 90 minutes by bus. Minor oversight.

And, continuing to rub salt into the wounds, we have this quote from Councilwoman Janice Hahn: "Many people in South Los Angeles were dying 40 years ago because of the distance they had to travel to access health care. Forty years later, we're back in the same situation." I think Hahn (who is complicit in all this) is trying to point out how good people have it now, because the current plan in the works is to move things back 100 years.

About Inflation Statistics

Wonderful piece from Consumer Reports, Inflation’s sharp pinch on your bottom line. They break down what the CPI means, how it is arrived at, and why it is that it doesn't seem to match up with the reality we face day to day.

The article also mentions the website Shadow Government Statistics, where if you delve into it you can see that these skewed inflation statistics aid in skewing GDP as a useful statistic as well, since it is adjusted for inflation. That is, it makes overall growth of the economy look rosier than it really is.

In the end, these changes to the calculations make useful tools for pushing more sacrifices onto working people. For the economists, though, they turn to more accurate statistics if their real interest is figuring out where the economy is going. But then, most economists don't dare buck the consensus for fear that things might start to appear as bad as they really are.

An Injury to One is an Injury to All

Nice article today about immigration law and the workplace: Latinos walk out amid firings. After 50 workers were fired at the Tar Heel, NC Smithfield pork processing plant on the pretext of immigration violations, a large number of workers (mostly Latino) walked out in protest. But they'd been fighting for some time, so this was just another straw on the camel's back.

There couldn't be a more textbook example of how employers use immigration to divide workers, lower their wages, and intimidate them into being docile. The ability to marginalize any part of the working class allows wages and working conditions to be driven down for every member of the working class. And of course, in the face of blatant firings of union supporters, a company can simply claim that they are complying with federal law. Of course, when it doesn't suit them, they aren't worried about federal law at all – and the lack of enforcement allows that to be the case most of the time.

Horray for Subtlety

I remember in the weeks approaching the election, there were a number of articles and economists talking about the lower gas prices. One thing they strove to point out was that the falling prices were mistakenly seen by laymen as a political maneuver by the oil companies. They offered one explanation or another as to why this was wrong.

Here we are, a week after the election, and sure enough, gas prices have rise by about $0.15 here in Los Angeles. Pure coincidence, I'm sure. Let's see what happens to gas prices in the coming weeks and months.

But for everyone who was afraid to vote for Proposition 87 because it "would raise gas prices," what the analysts and commercials failed to mention, was that gas prices would rise no matter how we voted.

Talking about Jobs ...

Saturday's article, Strong U.S. job growth boosts GOP hopes, brings up the idea that improved job numbers might help the Republicans out in Tuesday's elections. Of course, the reality is that although job growth is getting a little better, it still isn't enough to meet the needs of the population. The article does point out this roughly 35% deficiency.

Another point that the article doesn't mention, though, is that over 50% of the job growth in the recent job numbers have come from government jobs. This is probably typical, though I don't have older numbers to back me up. With elections coming up, incumbent parties hoping to woo a segment of the population, create a few more jobs in September and October. Simple enough election trick, but how long will the jobs last?

Freedom Isn't Free

The group Reporters Without Borders just release their 2006 Press Freedom Index. By their standards, the U.S. has dropped yet again this year, though the usual suspects appear at the bottom of the list.

They ask a series of questions from a number of people, but I don't know if there is any weighting to the responses. It isn't clear what their "index" really means – the scale doesn't seem to have a maximum value. I'd rather see boundary conditions, and I'd like to know that there is some relative weighting, instead of what appears to be a measure of absolute numbers. Can you really compare Cuba, where a large contingent of anti-government forces are entrenched in the United States and receiving heavy financial and political support, to a country where those critical of their government are truly isolated?

So, in the spirit of bad statistics, here's some additional numbers. We are told that "freedom isn't free." This would imply that the higher a country's GDP, the more they can afford freedoms such as the press. The index doesn't scale well to do a straight ratio, so subtract the ratio from 100 (North Korea adjusted to 99.9 to fit the scale). Then divide this modified RWB index by the GDP (from CIA data) of each nation.

The results ... The United States is one of the worst in the world. They rank only after China and North Korea. At the other end of the scale, countries like Tonga and the Comoros are doing quite well, given that they just don't have any money to begin with. If we only look at countries with fairly good GDP, Finland, Ireland, and New Zealand still end up at the top of the list.

What's hinted at here is that countries like Finland and Ireland are getting pretty good bang for the buck. Those of us here in the U.S., however, are getting ripped off. Americans are used to it though, they get the worst return on their dollar for health care, too.

California Election, November 2006

Finally had a chance to read through all the voter information this weekend. Here's a rundown.

My Vote — Proposition — Reasoning

• No — 1A — The State government has already borrowed money from the 2003-05 budgets. At the current schedule, they have to pay that loan off within a 2007-09 time frame. This proposition, if it passes, allows them to not pay the money back until June 30, 2016. Sorry, but pay the money back now like you are supposed to.


• No — 1B — Only a small portion of this money is going to public transit. In L.A., that's where the money really needs to be spent, so I cannot back any transportation bill that doesn't focus on this.


• Yes — 1C — This looks like development for people who actually need it, and in the areas that need it.


• No — 1D — I'm all for education, but this one would lift earthquake-safety regulations for community colleges. No thanks, I'd like everyone to survive an earthquake, even the people who cannot afford high-end educations.


• No — 1E — The costs here just seem too high and misallocated. I have this sinking feeling that agribusiness should be footing most of this bill, not us.


• No — 83 — I'm confused as to why this is a constitutional amendment. Shouldn't these things be covered by law already? These are the kinds of laws that politicians jump at so they can put it on their record. If they haven't passed it themselves, there is a reason. Most importantly for me, though, is the fact that this proposition openly throws the idea of reform out the window. Once you have committed a crime, you must always pay for it?


• Yes — 84 — This is a hesitant Yes. It seems broader in scope than 1E, and most of it sounds good. My one concern: the exemption for emergency water. Why?


• No — 85 — This is anti-woman, plain and simple. Only the most backwards of societies allow men to force women on this decision.


• Yes — 86 — How can a tax on tobacco be bad thing? It may not be the best place to put the money, but experience has shown us that if we don't pre-allocate the money, it will be misappropriated.


• Yes — 87 — How can a tax on oil companies be a bad thing? Sure, they've been lowering gas prices for a couple of months to make use think they are swell guys, but no one is fooled by that.


• No — 88 — I hate regressive taxes, and this is one. It disproportionately affects small property owners more.


• No — 89 — The problem isn't with how campaigns are funded, and fiddling with this a little more isn't going to make any serious kind of difference. At best, this proposition shifts a little more money to one group of warmongers over another. None of these parties have proposals that aren't fundamentally anti-worker.


• No — 90 — We don't need restrictions on eminent domain, especially if it makes it harder to get more parks and public transit. Reality is that the government usually only seizes property from poorer folks, and this wouldn't change that at all.

Yet Another Giveaway

Wonderful bit of information enclosed in the two paragraph article, Panel Endorses Plan to Simplify Business Taxes. The City of Los Angeles is planning to cut business taxes by 4% next year. They also plan to adjust the business tax system, which will likely lead to more tax cuts for businesses in the affected categories.

And what is the reason for this change? Because revenue projections have been met.

There are a couple issues here. First of all, this is the primary basis of the supposed budget issues of the last half decade. In the face of higher income, cities and counties cut business taxes in the 90s and then took a hit when business income dropped because of the dot-bomb. I don't remember hearing that those taxes were increased as a result of the changing economic situation. Instead, the cumulative effect over time is to shift more and more of the tax burden onto tax sources that derive more disproportionately from working people. It also becomes an excuse to cut more and more public services from the very people who are bearing more of the taxes.

The other thing is that there is no shortage of needs. Instead of cutting taxes (which no legitimate economist has shown actually increases jobs – usually the opposite) it would make sense to either save it somehow or spend it on important projects. The Mayor has played up public transit a lot, that needs money. Public health has taken a hit, that needs money. Public schools, that always needs money. The City Councils actions speak louder than words.

First to be Sacrificed

Two years on, the Workers' Comp dismantling has had some profound effects, as outlined in Workers' Comp Gains Haven't Eased the Pain of Tough Cases.

For businesses and insurance companies, the "reform" has been a great success. Insurance companies have cut medical care and disability payments by 37% over the past two years. They are raking in $0.69 on the dollar from premiums, a significant change from their former claims of paying out more than they were taking in (a number you cannot trust without actually opening their books to public examination). Businesses are raving about their savings and the governor who consistently stands by their side.

Of course, while there is plenty of analysis of the business gains, there is no data yet on how much damage it has done to workers nor any enthusiasm to collect such data. The anecdotal evidence is pointing toward incredible increases in delays and denials of claims. Workers face delays in the order of years on their claims. The article points out a wonderful example of a woman who received shoulder surgery but then only received two weeks of physical therapy – for those unaware, thorough therapy is essential for recovery from these kinds of surgery, and it can easily take months to see real progress and recovery.

Schwarzenegger made it clear up front: "The most important thing for us was putting workers first." In case you misunderstood this statement, he meant that it is important to put workers first in line for sacrifice to profits. More grist for the capitalist mill.