Saturday, December 31, 2016

Ujamaa - Cooperative Economics

I was looking for Kwanzaa resources on the web especially relating to economics.

Fifty years ago, Dr. Maulana Karenga created Kwanzaa as a holiday to build African American culture and community. The secular, cultural holiday has seven days.  We, of course, are interested in the fourth day known as Ujamaa - Cooperative Economics.

According to Dr. Karenga the purpose if Ujamaa is "To build and maintain our own stores, shops and other businesses and to profit from them together."

However, there are few actual sources on the internet related to Black or Kwanzaa cooperative economics.

The official Kwanzaa guide has the best details of the fourth day of Kwanzaa: Ujamaa from the Official Kwanzaa Website

Ajowa Nzinga Ifateyo offers 21 economic proposals that capture the spirit of Ujamaa on the GEO:Grassroots Economic Organizing website.

One United Bank has a Kwanaa Ujamaa promotion

Here is a general guide to Kwanzaa
Kwanzaa Guide

Here are some historical resources related to concepts in Kwanzaa.

Ujamaa - Economic brotherhood. A political and economic program of Julius Nyerere

Harambee - Pull together

Saturday, December 24, 2016

Beth Macy covered the loss of Furniture Jobs in Factory Man

We know the corporate press does a terrible job of covering unemployment and poverty in the Black community.  Sadly, the press has done the same poor job covering economic issues that effect poor and working class people. Regardless of race. Way to go, press.

So it's refreshing to see a reporter, who covers the issues in detail, and still gets ignored.

Beth Macy worked for the Roanoke Times. She has become a noted speaker and writer on the impact of furniture imports on small, rural towns.

In Factory Man, Beth Macy writes about life in the Basset Furniture factory and the effect of the Chinese import shock.

Here is an article from the Roanoke Times about Bassett Furniture.

From 2013, A Factory town with no more Factories.

In 2012, John Bassett, 3rd tries to offer some advice for staying competitive after the furniture industry was crushed. Furniture magnate Bassett offers 5 keys to remaining competitive.

Here is Beth Macy at the Columbia Journalism School discussing why the important story was missed. Dart Center Interview with Beth Macy about Journalism and Trauma.

But even Beth Macy came to the story late.  Here is an opinion piece about TPP in the NY times.

Friday, December 23, 2016

Black Lives Matter announces Black Business Directory. Here are some others.

Backing Black Business

The Black Lives Matter(BLM) movement supports economic justice.  During the election they released a comprehensive economic justice proposal. You can read the BLM economic and political policies at "The Movement for Black Lives: Economic Justice". Now they have released a Black Business Directory called Backing Black Business.

To further support Black economic justice they are launching a Black Business Directory website. You can visit the site at Backing Black Business.  The site is very limited compared to current Black business directories. But it could potentially create a large national Black business list that encourages spending within the Black Community.

It will be interesting to see if the BLM "Brand" has the recognition to drive the business directory forward.

Adweek has a story on BLMs work with J Walter Thompson. The ad and creative industries centered in NY and LA, are notoriously White and non-diverse.  Over the years they have shifted to a higher percentage of female staff.

Here are some existing Black Business Directories.

Name                                                             Home base

Black Mall                                                     Chicago
Black Trade Lines                                          Los Angles
Buying Black                                                 Columbus, OH
National Back Guides                                    Delaware
   Delaware Black Guide                                                             
   Afro Philly Black Guide
I Am Black Business                                    Atlanta
St. Louis Black Business                              St. Louis              
DC, MD and VA Black Business                 DC, Maryland and Virginia
Support Black Owned                                  National               
Black Owned Business                        
Maggie's List                                                Chicago, National
South Florida Black Business Directory      South Florida


Crowd funding websites

BBnomics crowdfunding                         Black crowd funding site


Several of the directories also have apps for mobile Black business directory use.


Tuesday, December 20, 2016

"China Shock" is one of the best economics papers of the year

"China Shock: Learning from Labor Market Adjustment to Large Changes in Trade" is a great economics paper.  The authors develop a model to predict the labor market effect of the large increase in trade with China between 1991 and 2011. They look at the devastating effect of the concentrated loss of good paying manufacturing jobs on communities.

Three well-known economists David Autor(MIT),  David Dorn(U of Zurich) and Gordon Hanson(UCSD), analyzed the effect of Chinese imports at the industry sector and county level in the US. They show that Chinese imports contributed to major and concentrated  drops in employment and income in hard hit areas as whole industries were wiped out.

The authors split the period of analysis into three periods: Pre-WTO (1991-1999, WTO (1999-2007), and Recession (2007-2011). China joined the World Trade Organization in December 2001. The pace of Chinese imports started slow in the pre-WTO period, accelerated after China joined the WTO and peaked during the last recession.


For each manufacturing job lost to import competition in a community, there was also a reduction in wages and incomes and an increase in government support.  The shock is felt through out the supply chain (suppliers) and in local dependent businesses (the coffee shop and auto repair). The authors were able to construct a model showing the effect of import exposure on manufacturing communities. They show the down side effects of trade with China are concentrated and sustained.

The authors estimate that about 10% of the total job losses were due to Chinese imports. That’s about 560,000 jobs from 1999 to 2011. Actual US manufacturing declined by 5.8 million during that period.

However, industries are linked to each other in buyer-supplier relationships.  These upstream suppliers also get hit. So the overall manufacturing job losses direct and in related industries are estimated at 985,000 jobs and 2 million total jobs in the whole economy.

Finally, workers who lose jobs cut their spending and consumption.  Some of those workers may find replacement jobs but at lower wages. So the total jobs losses, direct and indirect, are 2.4 million.

The authors also show that the workers who lost jobs due to imports relied on social security, unemployment and government medical programs for support.  They received little help from TAA – Trade Adjustment Assistance Act.

The October 2016 trade deficit with China was -$29 billion and -$289 billion year to date. It was -$308 billion Y-T-D in 2015. 


The paper is also important for many other reasons. First, the rise of Chinese imports may have shifted key swings states to the Republicans. A common reason people gave for voting for Donald Trump was economic suffering. A separate analysis by the authors shows that the Democrats would have won several key swing states if there were a lower level of Chinese imports. You can read the election paper here:  "The effect of trade exposure on the 2016 presidential election"

Second, it seems like the economics profession is waking up to the idea that trade is not always good. The benefits are diffuse but the costs are concentrated. The authors show that certain US counties lost huge numbers of jobs during the Chinese import period.  The counties then shifted to a large increase in government aid such as such as Social Security, Unemployment Insurance and government medical benefits.

Third, the article refutes some of the basic beliefs about trade: that trade is always good for both parties.  Economists are finally recognizing what everyone else already knew: trade that destroys good paying manufacturing jobs is bad for the United States.

Economic trade theory supports free trade. The theory says the more trade the better for overall society. In economic trade theory, countries specialize in goods and services where they have a comparative advantage. Both trading parties are made better off by exchanging goods. The benefits from a larger number of people being able to afford more lower priced goods exceeds the economic losses from local job cuts and lost corporate income. These principles are summed up in David Ricardo idea of trade and comparative advantage.

For example, everyone has a smart phone and flat screen TV.  But to keep the price low. they might have to work in a hospital for $20.00 an hour instead of a machine shop for $30.00 an hour.  If they kept the machine shop job, the smart phone would cost $1200 and a flat screen $1000. Ricardo said overall we would be better off as a society.

There are a couple big assumptions: 1) No country has an absolute and permanent comparative advantage.  Time will correct the imbalance. 2) Workers can move to other equally well paying jobs. Workers will relocate geographically.  Workers can quick learn new skills. And firms can find other lucrative investments. 3)
Benefits, while diffuse out weigh the costs.

Finally, the authors note, China's comparative advantage in labor cost, technology, and government policy may be coming to an end.  US imports from China are down for the first time in 20 years. This paper may mark the end of the China Shock.

In the end, politicians and government should have done more to counter the effects of Chinese trade with the US.

The authors have also set-up a web site with links to the papers and data sets.

The chart below shows the loss of jobs in the furniture industry around Hickory, NC. Manufacturing employment dropped from 80,000 to 40,000 during 2000-2010.

Recent trade figures with China show a step decrease in 2016 after a huge increase. In 2015, the trade deficit with China was -$367 billion. The 2016 trade deficit is forecasted at -$320-$330 billion.

Monday, December 19, 2016

Kwanzaa Crawl Brooklyn on December 26th, 2016

Kwanzaa Crawl is an event to support Black business and bars in Brooklyn.  The event is December 26th in Fort Greene, Bedford-Stuyvesant and Prospect Heights. Meet at 1pm at Restoration plaza.

For more information visit Kwanzaa Crawl.

Tuesday, December 13, 2016

CNN & Time/Warner face discrimination suits

Two former employees of  CNN and TBS, respectively, have filed a class action discrimination lawsuit against TBS, CNN and holding company Time/Warner.  In the suit they allege a pattern and practice of racial discrimination in evaluations, compensation and promotion.

They also charge CNN and TBS with having a "glass ceiling," where African Americans were blocked from promotions and a "glass wall," where Blacks were discouraged from working in certain divisions. has a story by Paul Meara here.

Dominic Pattern writes on about the suit. Deadline also has the actual court document for the suit that was filled with the norther district of Georgia on their website.

Hollywood Reporter has a story on the suit by Ashley Cullins.

Friday, December 9, 2016

November Unemployment Report: Unemployment drops to 4.6%. Wages Sink 3 cents

In November, the BLS reported that the unemployment rate declined to 4.6% as 178,000 new jobs were created.  Wages dropped $0.03 cents. The number of unemployed person dropped -387,000 to 7.4 million people.  There were large increases in payrolls in the industry categories of business services, healthcare, leisure and construction.

The labor force participation rate stayed at 62.7% and the employment to population ratio was 59.7%. Both rates have leveled off and are largely unchanged in the past two years. LFP measures how many people participate in the job market.  It has dropped significantly since the recession. 

There were  a couple of positive long-term trends. The long term unemployed (out of work for more than 26 weeks) decreased to 1.856,000. The level is well below 2 million. The number of people working part time for economic reasons also dropped -220,000 to 5.67 million workers.

The Big Story

The big story is the continuing lack of wage growth for workers.  If the economy is near full employment, there should be wage growth and wage inflation.  There is none. So the US economy has failed to deliver good paying jobs to its citizens. 

The chart below shows the national unemployment rate.

In November, 178,000 jobs were added by US business establishments. The 4 month moving average has dropped to 170K during the fall slowdown in job creation.   

The Black unemployment rate dropped to 8.1% from 8.6% last month as 154,000 more people reported working. The unemployment rate for Black men, 20 and order, was 7.7% while Black women in the same age group were unemployed at a rate of 7.1%.  Black men participate in the labor market at a 67.5% rate while the participation rate for Black women is 62.6%. Black teenage unemployment was calculated at 26%. 

The real Black unemployment rate was pegged at 12.6% in November. Both the Black unemployment rate and the US U-6 rate declined during the period.   U-6 is the broadest measure of unemployment. U-6 is basically anyone who wants to work and has looked for a job in the past 12 months.

 Blacks has an unemployment rate of 8.1%, the White rate was 4.4% and the Hispanic/Latino rate was 5.7%.

The business survey showed the usually job growth categories: Business Services, Healthcare and Leisure.  Manufacturing lost -4,000 jobs.

There were big gains in business services, health care and leisure. Construction added 19,000 jobs.

 The united states continues to move toward a service economy.  Only 19% of new jobs produce goods (15% if you include government as a service).

Hourly wages declined by $-0.03 cent in November to $25.89.  Hourly wages are up about 2.5% (1.2% when adjusted for inflation) in the past year.

The average growth in wages has been below 1% after inflation between 2006 to 2016.

ADP reported 216,000 non farm payroll jobs were created.  The jobs were split among small businesses (+37K), medium sized businesses (+89K) and large businesses (+90K).  According to ADP goods producing business shed -11K jobs while services hired 228K workers. Manufacturing lsot -10K jobs.

Paychex small business jobs index was flat at 100.38; a completely neutral value.

Thursday, December 1, 2016

Donald Trump wins the presidency. What's his economic plan ?

Donald Trump won the US presidential election. Donald ran on a platform of economic populism. He ran a wild campaign of slogans and untruths that attacked the economic establishment.  And he won.

He is in the unique position of owning very little to the existing economic order: Democratic or Republican. He does owe a great debt to working class Whites in key states that voted for Trump in larger than expected numbers.

He will try to focus his economic programs on their needs.  However, short of a government jobs program, no one is quite sure how to help working class Whites.

Let's look at some of Donald Trumps economic policies:

Likely to Pass Quickly

Two to three trillion dollar federal tax cut. Higher deductions and lower rates for the middle class.
$500 billion to $1 trillion in Infrastructure spending tax credits over 10 year
Reduced funding for regulatory agencies
Cut government spending 1% for non-defense

Likely to Pass Longer Term

Child care tax credits
Business can repatriate off shore profits at 10%
Energy Policy changes
ACA (Obamacare) replacement

More difficult to pass

$25 Billion dollar wall with mexico
Trade agreement changes
Tax changes beyond tax cuts
Changes in immigration policy

Election Year Promises only

Renegotiate NAFTA
Limit cuts to safety net
Eliminate corporate subsidies except for R&D
Eliminate carried interest


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