The Evil Black Economist

Military job cuts will have a major impact on the economy

2012-02-12T09:07:00.000-08:00

I just read that the US military establishment could be facing a $1 Trillion dollar cut over 10 years rather than just $500 billion. The cuts have been need for a long time. The wars in Iraq and Afghanistan were a poor use of the countries resources. We have NO enemies any more. The were no war-level conflicts around the globe. And the US military is 10 times the size of our closest competitor. So the cuts are long over due.

We fully support the budget cuts of the military. We, here at the EBE, have long derided the military as a make work, jobs creation program for folks with few alternatives. Typical military recruits are high school educated, poor and minority. We could face some serious upheaval if those 100,00 jobs are eliminated.

We just worry about the impact of dumping 100,000 low skilled people on the job market. They better have a plan to create some jobs to replace all the mikitary jobs that get eliminated.

ECB's focus on price stablity is the wrong issue

2012-02-12T07:44:00.000-08:00

I had to go though the European Central Bank (ECB) website for an issue. ECB link is here.

Found what I was looking for, the AWM model, but what I noticed was what was missing. There is nothing on unemployment. Sure they gather country employment, unemployment and population data, but other than some compilation reports, there is no mention of unemployment.

I guess they are happy with their niche.

Mortgage settlement is a joke.

2012-02-12T06:46:00.000-08:00

Help ! Looking for conservative solutions to unemployment

2012-02-11T06:44:00.000-08:00

I am a pretty progressive person with regard to economic philosophy: I define my philosophy has pragmatic progressive. But I do like to balance it out and listen to conservative points of view. Some of their ideas have merit.

So I went looking for conservative solutions to the unemployment crisis. And I kept looking and looking and looking and looking. (We all saw the joke coming). The closest they come to any kind of plan or idea is to propose lowering taxes or cutting government regulations. There is no specific conservative plan to combat high unemployment. Reducing black unemployment is completely beyond their comprehension.

So, if any has any conservative tips, ideas or web links, please pass them along.

French minimum wage: SMIC

2012-02-10T18:32:00.000-08:00

France has an interesting minimum wage policy which is set by employers, worker institutions and the government. It is indexed to inflation and worker productivity. It is currently about $12 dollars US. The minimum wage is not paid to everyone with students and starting employee making less.

Many credit the high minimum wage to France's lower income inequality compared to the United States.

UK Corporate Profits vs Employee Compensation

2012-02-05T10:21:00.000-08:00

Last month we examined corporate profits and employee compensation in the United States. This month we will look at corporate profits (Gross Operating Surplus) and employee compensation (COE) in the United Kingdom: Britain, Scotland, Wales and Northern Ireland.

All of the figures are from the income side of the gross domestic product of the United Kingdom.

The following chart shows the average ratio of employee compensation to corporate profits. The ratio has stayed around 2:1 meaning two thirds of GDP goes to pay salaries and employee benefits and one third goes to corporate profits.

It is interesting to note the ratio for the UK has been relatively stable for the period of the chart. The US chart show a decline in the ratio.

Do not try this at home! UK GDP growth slow to recover

2012-02-04T16:31:00.000-08:00

United Kingdom GDP has been shrinking or flat since Q1 2008.

We like to complain here in the US about the economy. But the recession could have been a lot worse. Take the example of Britain, Wales, Scotland and Northern Ireland: collectively the United Kingdom. Rather than apply some stimulus during the recession, they decided to cut back. The Conservative led government believed cutting the debt would lead to a boost in business confidence and a confidence led recovery. Boy where they wrong.

The British economy has been shrinking or flat since the first quarter of 2008. In one 12 month period their economy shrink by more than -7%. They also had a double dip of negative growth. Currently growth is flat.. That is four straight years of recessionary impact.

This chart shows the current UK recession against the longer term GDP trend from 1955. You can see a severe drop since 2007.

A better example is the quarter to quarter growth since 1997. You can see five quarters of negative growth followed by eight quarters of growth below 0.5%. The most recent quarter estimate was a negative -0.2% in the 3rd quarter of 2011.

Luckily, here in the US we spent $787 on stimulus. China, France, Japan and Germany also had spending increases. It looks like we all made a great policy choice that saved millions of jobs.

Transaction taxes are good

2012-02-03T04:19:00.000-08:00

The idea of a financial transaction tax has been around for about 40 years. It is a good idea right now because financial excess caused the recent recession and governments need the money.

A financial transaction tax is a good idea for a lot of reasons. It will raise revenue, it discourages speculation and short term trading, and it promote invest in non-financial assets like factories. Existing global businesses rarely make a wholesale move like people believe, instead they internally invest based on resources(people), facilities and infrastructure, location, executive accommodation and total taxes. When they want a taxes break they set-up a shell company in Switzerland, Jersey or the Cayman Islands. Innovative businesses ignore taxes all together. They follow universities and innovation clusters. California has some of the highest living costs in the world.

So Tobin taxes are one tool of society's effort to regulate financial corporations.

Jobs as an output. The Arts !!!

2012-02-01T17:47:00.000-08:00

Jobs are an overlooked output in many economic models

Traditional economic models of production may be need to be re-written in a job scarce economy. Most models take the input of labor, capital, land, and technology and produce a unit of goods or service as output. Little or nothing is said about how the goods are produced. Or the mix of inputs to produce items. All input are assumed fungableable and can be traded off.

But it turns out the volume and quality of inputs has a greater impact on the structure of society.

We may want to adapt policies that encourage the use of higer priced labor while reducing inputs such as kapital, land and technology. What would these industries and business look like. They look like museums, universities and arts institutions.

Profit for whom ?

2012-01-30T16:14:00.000-08:00

I just heard someone make a distinction between corporate profits and who benefits from the profits. What if the profits accrued to labor or labor owned the capital, would that increase equity in society. Would such a company be less efficient in the market place.

Corporate profits are high by historical standards

2012-01-16T08:35:00.000-08:00

We are going to look at corporate profits. We want to check the claims made by Occupy Wall Street and others that: 1) corporate profits are at record levels; 2) labor's share of GDP is shrinking and 3) the US is overly dependent on financial profits. The data comes from the US Commerce department's National Income and Product Accounts.

The chart directly below shows corporate profits (CP) as a percent of gross domestic product since 1947. You can clearly see corporate profits are are at a historic high. They have never been higher except once during the 1950s. The trends has been upward since 1980. Corporate profits are at record levels.

Employee compensation as a percent of GDP has fallen since April 1980 from a high of 68% to the current 61%. That's an 11% share drop. Labors share of GDP is dropping.

The third chart displays the ratio of corporate profits to employee compensation. In the 1980s corporate income was about 11% of the size of employee income. In other words, income earned by employees was 9 times larger than corporate profits. Now, in 2011, the ratio of profits to wages is 24%, meaning the amount of income for wages is only 4 times larger. The growth in corporate profits has come largely at the expense of employee compensation.

The next chart graphs the profit / wage ratio during recessions. It is a good check on our logic of declining employee compensation. It shows the profit to wage ratio shrinks during a recession and recovers during growth periods. One must think about short term wages and employment being relatively fixed compared to corporate profits.

Finally, we break corporate profits into non-financial and financial components. You can see profits from financial transactions constitute about 42% of total profits since the 1950s. This trend has been consistent for the past 60 years. They did top 50% during the late 70s and 80s. They also topped 50% in July 2008.

However, "overly" dependent is relative. There is a market for many of these financial products and services. There has been tremendous innovation, job creation and wealth creation in the financial services sector. We cannot yet judge whether this is a net plus or minus for the economy.

Conclusion:

1) We seen evidence of employee compensation and increased profits. Steps must be taken to stabilize the wage part of GDP. We can raise the minimum wage, lowering the cost of education, and establishing a basic right to unemployment compensation and training.

2) Unfortunately, we you add 1.5 billion low wage workers to the global system they are going to depress wages. Until they become net consumers they will continue to drag down wages. We are seeing the effects. Corporate profits are simply a by product of the lower wages.

Note: Additional data come for the St. Louis "FRED" database.

How do governments make better choices ?

2012-01-06T18:25:00.000-08:00

Policy makers need to consider the economic impact of decisions

Many government decisions are made with a complete lack of basic economic understanding. Whether at the local, state and federal government level. Government decisions are hard to make. The special interests are powerful and few people care about the details. We all can see examples for poor decisions everywhere: such as the bridge to no where in Alaska, over spending on the military, under spending on education, our in ability to save at any level (no rainy day funds) and the lack of a jobs problems during the recent recession. I am now almost a complete skeptic on our legislators making the right decisions.

What I would like to see is some basic cost benefit analysis done on our basic legislative investments. Legislators should have the tools

So what are those tools. They are a common set of data and a basic cost benefit tools for analysis(excel) and training on basic economic decision making. The conservative has some things right: the basic principles of business investment should apply to public investment as well. If an expenditure does not generate future benefits, for the public, not the legislator, in increased general happiness and well being greater than the money spent, they should think twice about spending the money.

Time to raise the minumum wage to $11.50

2012-01-04T20:38:00.000-08:00

It is time to raise the minumum wage to at least $11.50. The wage has steadily declined due to inflation since 2004 when it was set at $7.25. The minimum wage is an arbitrary wage which has no relations to any standard. It is below a basic survival wage. No one who makes minimum wage could actually live off that wage alone. Instead, thanks to food stamps(SNAP) and medicaid, many can have a basic life.

It is time give the people a little more. It is time for a general increase in the minimum wage.

The minimum wage is a floor for all labor activities in the US. It sets the standard for the baseline wage for which all ultimately almost all Americans work. The wage portion of GDP is at it's lowest ever, while corporate profits have never been higher.

Raising the minumum wage is an effective way to get money into the pockets of those who need it most. It also rewards work. It also get a little inflation going to help the economy grow.

Many worry that raising the minimum wage will increase unemployment. The minimum wage has been proven to have little effect on employment levels, while greatly increasing the money in the pockets of the poor. Most studies show some small, direct impact on teenage, immigrant and marginal worker employment. Yet the same studies fail to account for the additional jobs from the increased spending of minimum wage earners.

Another reason the minimum wage has little effect on the number of jobs is that most employers pay above the minimum wage. Second, is that employers consider much than the wage rate when hiring. They consider whether they can do the job, how reliable they are, and do we have the demand to support a new position.

Several cities have raised the wage to $10 bucks, the largest being San Francisco, with little effect on the local employment. Now is the time to raise the wage to a decent level, get a little inflation going, and help out the poor.

v3

Government Employment

2011-12-31T10:01:00.000-08:00

Falling government employment is reducing the US GDP growth rate and prolonging the recession. A better idea is to keep level government payrolls while reducing military spending and provided support for workers making the military to civilian transition. I another idea is to time the reduction to when the economy is better.

The chart below shows total government employment for the federal, state and local governments combined.

The next chart show the split between the three types of government employment during the same period: Total, Federal, State and Local

One of the interesting things to note is that the huge decrease in government employment is entirely at the local level. That spending is used for education(teachers), police and fire protection. The federal government employment is flat, the state is down about 100K and local is down 500K. So basically all the job losses have come from state and local governments.

Another note: I have not figured out how to count contractors in government employment.

Mortgage Discrimination Suit Settled for $335 Million

2011-12-30T19:01:00.000-08:00

The US Department of Justice settled a mortgage discrimination lawsuit with Countrywide Financial Corporation (CFC) for $335 million dollars on December 21, 2011. Here. The payment will resolve charges that Countrywide engaged in widespread discriminatory lending practices against Black and Hispanic consumers. The discrimination too place between 2004 and 2008. Countrywide Financial Corporation is now part of Bank of America.

The DOJ alleges that Countrywide would charge non-White consumers, with credit histories equivalent to Whites, higher fees and higher interest rates. It would also "steer" them to risky types of loans such as sub-prime mortgages or balloon payment schemes.

The DOJ stated that 200,000 Black and Hispanic borrowers were affected. "The complaint alleges that borrowers were charged higher fees and interest rates because of their race or national origin rather than their creditworthiness or risk."

You can read the DOJ complaint here.

Black’s slammed hard in November’s positive unemployment report

2011-12-25T10:00:00.000-08:00

Black’s slammed hard in November’s positive unemployment report

The unemployment rate dropped nearly half a percent to 8.6% and 120,000 (140,000 private) jobs were added. However, the civilian labor force decreased by 315,000 on a seasonally adjusted basis (and 405K non adjusted) . So the rate fell as a huge number of people give up on finding work.

The participation rate went down by minus %0.2, meaning the total population grew (+172K) but the labor force was smaller (-315K). So the labor force is adjusting to smaller demand. We don’t talk about how those people are surviving.

Black unemployment rose 0.4% to 15.5% which is scary since 137,000 Black people left the labor force and the population increased by 31,000. Blacks were 44% of the unemployed who left the labor force in November. The employment population ratio fell to 51.7%, so only about half of the Black population is working. For Whites the ratio is 59.5%.

The overall unemployment rate was 8.6%. The White unemployment rate dropped to 7.6% as an additional 267,000 Whites found jobs. The numbers of the White unemployed have decreased by nearly 500K last month because of jobs and labor dropouts. During the same period, the Black unemployment rate moved up to 15.5% and 193,000 Blacks lost jobs.

Retail employment added 50,000 positions (25K in retail clothing), leisure added 22,000 jobs and healthcare added 17,000 spots. Amazingly, non-farm payrolls were revised in September from +158K to +210K, the first time the economy generated over 200,000 jobs since June of 2007.

The rate for Hispanics (11.4%) was little changed but 54,000 Hispanic works left the labor force. The teenage unemployment rate was 23.7% and the Black teenage unemployment rate was 40%.

The number of long-term unemployed was recorded at 5.7 million (long term was 43% of total unemployed). The part-time employed for economic reasons was 8.5 Million and the marginally attached stayed the same at 2.6 Million.

Politically, the house republicans extended the payroll tax cut. The markets reacted to record corporate profits and weekly unemployment claims below 400,000.

Non-Farm Payrolls

In the news from the Establishments, hiring was strong very strong in retail, business services, health and education and leisure. Non farm payrolls increased 120,000 (140,000 private jobs offset by a loss of -20K). The number was above 100K but way below 200K, so the report is rated as “fair”.

Average work week was unchanged at 34.3 hours and wages fell by -$0.05 cents in November following a $0.07 raise in October. The employment diffusion index (a hiring signal) was still positive (55.4) but down 0.2.

As mention earlier, there was some very good news on revisions. September NFP was raised from +158K to +210K and October was increased +80K to 100K.
ADP reported an increase in payrolls of 206,000 positions.

Monster Employment Index moved down to 147 to 151, up 10% compared to last year and down 2% for the month. Monster said the index was slowed by limited retail hiring.

Where do jobs really come from ?

2011-12-15T21:06:00.000-08:00

Henry Bloget, the discraced internet analyst for Merill Lynch, has a great piece about where jobs come from. Here. His premise is that rich people do not create jobs, instead it is middle class spending and business response to that spending that really creates jobs.

A CEO who make 100 times what his workers make does not consume 100 times more. Instead they save the money. Instead, they consume only 3-5 times more than the average middle income family or if they are greedy 10-15 times more. Let's be honest the rich only need one yacht, 3 homes and 6 cars not 100 Hyundai's, 40 homes, 50 apartments and ten trailers. The middle class puts much more money back in the economy than the rich ever do.

Economists will argue the money eventually end up in the system as investments but then we have an over supply of investment capital and a shortage of consumption. However the investment capital is "parked" while a shortage of demand feeds the recession.

This central fact of supporting middle class spending has escaped trickle down, right wing economists for the last 30 years. It took Occupy Wall Street to awaken us to this simple fact. Inequality matters. It matters a lot. Economic theory is behind the curve again. Our models are chasing, not leading, the current reality.

New economic models, where broad happiness is the goal, show us that successful societies seek a balance of incomes and consumption across classes. Income equality and social justice lead to societies with greater happiness, civic participation, equality and happiness. The best societies, in our opinion, have an equal income distributions.

So how do we get there. We must support policies that reduce income inequality like a $10 minimum wage, unions, and progressive taxation. We must support government's responsibility to promote income equality that makes us all better off. But government alone is not he answer. We also have a responsibility to be smarter consumers; to support businesses that pay a decent wage and hire local employees; that innovate; and support social justice. We must demand better of government and ourselves.

Do we really need any more stuff ? (or the end of demand)

2011-12-11T08:00:00.000-08:00

This Christmas, shopping is setting new records. In a slow growth economy, retail sales are off the charts(up 6.7%, on-line up 10%). The fear of a double dip recession is long past. This is the spending shot, the demand, the positive buying spree we are all looking for; so I say thank goodness., but trouble lie ahead. Consumer are buying on debt and not saving.

Unemployment has dropped thanks to a jump (50K [BLS]) in retail hiring in November. On a personal side note, I still can't get quick service at Wal-Mart, Starbucks or my local gas station. I guess this is a good thing. This is the demand we are looking for. All of the current liberal economists say we must increase demand to bring down unemployment. Demand increases both investment and short term consumption, both of which create jobs. But keep you eye on investments, capital and labor hiring, the sure sign of a positive business outlook.

We are out of the woods, but long-term, we may be at the limit of growth through material consumption. We are looking at a new frontier where demand is for services and experiences. The hospitality and entertainment industry are growing and construction is shrinking. We are spending on healthcare, entertainment, comfort and security not bigger homes, cars are TVs. We are materially satisfied.

Right now, even the poorest have a basic level of physical level of comfort. We have a car, TV, refrigrator, stove and clean water. We may not have personal security or quality education but we have a microwave.

We also have a safety net. We have unemployment insurance, TANF, and social security. No longer do the elderly suffer. But we must look ahead and see where the future demand will come from. Then we can position ourselves as Black people and as a country to meet this future demand. It is the only way to bring unemployment down long term.

Manufacturing Employment has bottomed out at 11.5 million

2011-12-05T19:02:00.000-08:00

We are keeping our eye on Manufacturing employment because it means so much to the economy.

Here is the longer term trends from 1939. We peaked around 1980 and things have really tanked since the year 2000.

There is some hope: Since December 2009 the trend has been slightly positive.

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Visit Black Business News for Websites and Links

2011-12-04T17:59:00.001-08:00

Reminder, most of the websites and links are posted on our sister blog: Black Economic and Business News which can be found here.

Links are only rarely posted in the Evil Black Economist Blog anymore.

Newt Gingrich says "Poor people need jobs"

2011-12-03T13:04:00.000-08:00

The story is here. Here.
and here.

Well, maybe Newt did not exactly say the right thing, but he does have a point about work and jobs being part of raising and developing children to be happy, productive citizens.

Actully, Newt, total screwed up a really good point by saying instead, poor people only want illegal jobs and we should abolish child labor laws.

Gingrich is right but also wrong. His is right: Kids should have jobs so they can learn the value of work. In fact everyone who wants to work should have a decent job with good pay. He is also right about jobs in our community should stay in our community. I see lots of people working in our communities: Construction, police, shopkeepers, teachers but none of them live there or look like me. He is wrong about abolishing child labor laws or cutting taxes on the wealthy which would do nothing to fix the cycle of poverty problem. Truth is: Is just playing the race/class card to fire up his crazy base, but at least Newt is interesting.

Police exam bias in NJ

2011-11-29T21:55:00.000-08:00

I was at the local police station reporting my stolen bike, when I spotted an article about reverse discrimination in a correctional officers' magazine. Puh-lease. Out town is 1/2 Black and Spanish yet their are only 3 Black officers on the force.

The article was about reverse discrimination in Teaneck, NJ. In New Jersey, the current list of police officers were denied promotions because the police exam was ruled biased by the US justice department. One Black officer had his promotion delayed, so the article screamed "Reverse Discrimination!" Puh-lease.

The basis for the delay was a ruling by the justice department that the police promotion exam had a "disparate impact," on minorities. Basically, the results of the exam show Whites are favored over Blacks and other minorities. Minorities have long been discriminated against in New Jersey law enforcement.

One of the great things about a blog is you can do original research and make a difference.

To evaluate the claims of bias, we reviewed several exam preparation test books for the police officers and Sargent exams. All the books were obtained from the local library. The prep books give a good idea of what is required to pass the exam for a police officer or promotion.Specifically, used:

Barron's Police Office Exam, Schroeder and Lombardo,2009
McGraw-Hill's Police Officer Exams, Palmiotto and Brown, 2008
Learning Express Police Sergeant Exam, 2009

Based on the content of the books, here is what to expect on the police officers exam:

McGraw-Hill and Barron's
Memorization and memory testing
Map reading, Visualization and Spatial Orientation
Grammar, writing, sentence structure and spelling. Filling out forms and reports.
Reading comprehension
Some basic math
Information processing such as deductive reasoning
Legal definitions and police procedures

The sargent's exam include additional topics:

Management
Legal procedures
Laws and statues

What's missing ? Common sense, real crime prevention strategies and social work. Yes, crime prevention is social work.

We agree with the court that the exams are biased toward testing taking and answer memorization. They do not full reflect true police work. We understand and appreciate the work of the exam creators. They have a difficult job with lots of interest group and cultural pressure. How do you put on a written test questions that distill years of police work (Sargents exam) or basic police skills into a written, multiple choice exam ?

How to you test for aptitude, learning ability, community relations skills, and common sense and social welfare. An almost impossible job. So any test devised is flawed from jump. Yet, like education, we must test. We must have some benchmark for comparison. We do support testing as part of a comprehensive candidate evaluation portfolio. We also support the recognition a point in time test is a flawed measure

Our proposal is for more realistic tests, work evaluations, and observations that de-emphasizes memorization, reading and writing and rewards crime prevention, bravery, community relations and police skills.

Police work is the dark side of social work. They catch all the people who choose not to follow social norms. Police work is also about community building. Police work is about crime prevention. None of those principles are emphasized in the exam.

The exam is about following orders, filling out forms correctly, memorizing the correct answer. There is a large section on geographical navigation.

The real life exam is about applying the principals of constitution law and why the rulings were made, handling difficult situations without resorting to force, community relations, acculturation, [speaking Spanish in a Spanish community], crime victim empathy and preventing crime. Again none of these topics appear on the test.

The tests are a good start, but only a beginning. It is time to consider the limits and biases of the test in considering the results. It is time to revise the test to measure what really matter for police especially police in Black and minority communities.

V3

Census bureau income and poverty data

2011-11-29T18:33:00.000-08:00

The US Census Bureau has realeased it's Small Area Income and Poverty survey. 653 counties saw a significant increase in poverty for children 5 to 17; 8 saw a decrease.

Occupy Wall Street

2011-11-28T18:38:00.000-08:00

The Evil Black Economist support the Occupy Movement !!! Occupy Wall Street, Occupy Oakland, Occupy the Hood and all the other Occupy's.

Occupy has successfully shifted the debate from lowering the debt to inequality in the United States. They have people asking the right question: what sort of society do we want to live in ?

Many of us have no problem with some of the huge inequities in the US. We are used to it. Black memories of racial oppression are still fresh. My dad talks about having to sit in segregated movie theaters in Trenton, NJ as a kid. So we come from a different starting place than many of the young White kids in the occupy movement. But we have a lot in common. Now there is a lot more equality: Equality of misery. Everyone is feeling the Black pain. Which is good for the country and for Black people and other minorities.

I am asked constantly about why there are so few minorities at the occupy rallies. The best answer I have is that it is not our fight or we think it is not our fight. Unemployment and economic problems have been huge in the Black community since Slavery, yet no one cared before. So the average Black person thinks: "Hmmm, it seems like only when white kids are affected is it worth protesting."

Near as I can figure there are a couple of other reasons as well: We have better things to do with our [economic] time, the "vibe" of the protest has not been particularly familiar to Blacks [camping out] and the chances of success look small[you can't fight Mr. Charlie].

Given all that, in our gut we still support what they are trying to do. Black people do support the Occupy movements. We frequently stand on the side of right. It is our nature. And anything that will increase economic and social justice has to be a good thing.

We stand on the side of social justice that the Occupy movements embody. We support Occupy !!!

v3

We support the NYC "Living Wage" bill and increasing the minimum wage

2011-11-23T14:34:00.001-08:00

The Evil Black Economist supports a living wage and the "Fair Wages for New Yorkers Act" (living wage bill) currently being debated by the NY City Council. Living wage bills are an obvious way to put more money in the hands of low wage workers. San Francisco, CA and Santa Fe, NM have enacted living wage bills.

Living wage bills have little proven effect on overall employment level: up or down. Jobs cannot change location easily nor change their experience or education requirements. Pretty much the same condition holds true for people. A skilled carpenter or electrician cannot work remotely. Companies make up the extra cost though small price increases and increased productivity.

New York city has further qualified the wage requirement such that only companies receiving subsidies from the government must pay the wage. So the tax people pay would be used to generate better jobs.

A living wage is also a way to reduce income inequality. Occupy Wall Street has made reducing income inequality a center piece of their agenda.

You can read the website of Livingwagenyc.org to get the latest news.

The good, old Daily News is here.

Supercommittee cuts look OK to me; Obama threaten veto to keep cuts

2011-11-21T17:13:00.000-08:00

This country spends way too much on defense. I know we get alot of jobs and we killed Osama, but there is a better way to spend the money and still get jobs. Rather than waste it on the beltway security consultants, we should be investing in clean energy, education and innovation.

So here is the nice part, if you look at the $1.2 trillion in automatic cuts about $500 million come from national security and military operations. I don't know who put together the cuts, but they knew what they were doing, so it looks "Check!" and "Mate" by the Obama team. Well thank goodness for the country. Now no gloating.

TE: What if everyone had a job that wanted one ?

2011-11-20T08:47:00.000-08:00

TE = Thought Experiment

In economics, we have great difficulty conducting pure experiments. We simply cannot change many important variable. Instead, we have to think about a particular circumstance and try and use our models to describe what the world would look like.

One of my favorite is: What would the US look like if everyone who wanted a job could find one ?

What is this really means is: What if the unemployment rate dropped to the natural turnover rate (about 3%), the economy perfectly matched the skills of the people and the local job market matched the demand for jobs. There is no immigration or migration.

Retail Season Score KPI's

2011-11-20T07:48:00.000-08:00

How to track consumer spending and the retail industry.

1. Increase in Volume, Store visits, website hits
2. Price increases
3. Increase in Revenue
4. High end sales / Low end sales ratio
5. Total US advertising expenditure
6. Store sales / deals / promotion
7. US Personal Consumption Expenditure
8. Conference board's Consumer Confidence index

Favorite Economic Joke of the Week

2011-11-19T09:36:00.000-08:00

From Spike Lee's film "Bamboozled" here is a fake commercial for Tommy Hilfinger, well actually Timmi Hillnigger. Video is Here.

My favorite economic joke of the week

2011-11-19T08:40:00.000-08:00

Here is my favorite economic or business joke of the week:

"Macy's is having a sale"

or

"Macy's is having a four-day, one day sale"

Black Economic Goals

2011-11-19T08:19:00.000-08:00

Draft v2

I just realized when writing I need some moral standards and guiding principals that we black people, as economic actors, should aspire to achieve. You cannot tell someone: "No, don't do that", without offering an alternative.

The number one goal for black people is the largest amount of happinesss for the most black people. On a personal level this means: above average happiness as measured by indicators. This include health, friends and family, material wealth and human development.

There is also a larger societal goal of contributing to the black community, society, and making society better for others.

Health
Friends and familiy
Material Wealth

Absolute
Safe home or Apartment
Car or Bicycle
TV, Oven, Refridgerator
2 week of clothes

Relative
Black people should be no less than 15% below the average unemployment rate, income and home value.

Human Development

80% post high school education rate (college, trade school)

societal goals
Join one black organization
Attend church
volunteer 10 times a year
Vote or participate in school events

Black Consumer !!! Please try to take it easy on Black Friday

2011-11-19T08:17:00.001-08:00

I am now convinced that the Black Consumer is one of the keys to improving out economic situation. The best way to do that is to hold a little more back, or spend a little more with black businesses. Or not spend at all and go out for a meal with family.

This year, let us resolve to go a little easy on Black Friday and over Christmas. The stores are really pushing sales this year. Christmas advertising is starting the second week in November. Retailers are really pushing sales. Macy's is out of control as usually.

But, when you, take a step back, you realize most of have everything we need. We don't need another jacket (I know some one with over 50) or pair of shoes (again over 150).

If you buy, check the label. Try a get a quality item that is made in the US, versus some cheaper and lower quality item from overseas. Also, try to buy from coutries other than China which sells over 80% of the imported low-value consumer items in teh US. Spread the wealth around to other struggling countries like Haiti.

So, if you are going to shop, shop with a friend and enjoy the experience. Talk a little more and buy a little less. Stop for a bit to eat. But this year go easy.

The October’s report shows slow employment growth but positive details

2011-11-12T07:50:00.000-08:00

The October’s report shows slow employment growth but positive details

The report has a couple of positive highlights: A drop in Black unemployment, some upward revisions of non farm payrolls, hiring in education and temp help sectors and an increase in private employment index. The big news was a near 1% drop Black unemployment rate now 15.1%. The second high light was the major upward revision (plus 50%) for non farm payrolls for August(57,000 to 104,000) and September (103,000 to 158,000).

Non farm payrolls increased 80,000 (104,000 private jobs offset by a loss of -24,000 public jobs). However, 80K is below the new benchmark of 100K jobs, so the report is rates as “poor”.

The rate itself moved down to 9.0%. The rate has been stuck at approximately 9.0% for the whole year. It has bounced around between 8.8% and 9.2% since January, 2011.

Politically, the house republicans continue to block any stimulus measures. The Fed has said it will keep interests rate at zero for the next two years. Banks continue to be reluctant to lend.

The overall unemployment rate was 9.0% and the Black unemployment rate stayed at 15.1%. The rate for Whites (8.0%) and Hispanics (11.4%) was little changed.
The long-term unemployed dropped by 366,000 to 5.9 million (42.4% of total). The part-time employed for economic reasons rose to 8.9 Million and the marginally attached stayed the same at 2.6 Million.

Non farm payroll employment increased by 103,000 jobs with growth in business services, education and transportation and utilities. Health care added only 16,000 jobs. There was good news in two future oriented sectors: education (long-term ) at 11,000 and temp help (short term) added 15,000.

Average work week was unchanged and wages by $0.05 cents in October following a $0.06 raise in September. The employment diffusion index (a hiring signal) was still positive (55.4) but down 0.2.

There was some good news on revisions. August NFP was raised from +57K to +104K and September NFP was raised from 103K to 158K.

ADP reported a 110,000 payroll increase and also revised upward, it’s August to September number to 116,000 payroll jobs.

Monster Employment Index increase to 151, up 11% compared to last year and up 2% for the month. Monster said the index was pushed up by retailers hiring temporary workers for an early Christmas season.

Apple vs. China value added

2011-11-06T09:19:00.000-08:00

Ok, I saw some report of who benefits from Chinese manufacturing. We know it ain't labor. Well it ain't Chinese labor either. The beneficiaries are multi-national corporations.

Here are two research papers on where the value added is captured in the supply chain for apple products. An astounding 60% of the iPhone profits and 30% of iPad profits go to Apple. Potentially 5% of profits and 2% of labor costs go to China. That's about $10 per item for labor cost. The profit margins are insane.

You cannot make this up, you have to read it here. And here is an older paper here. We are talking pharmaceutical profits here !!!

Corporate environmentalism is a hard to take serious

2011-11-06T07:08:00.000-08:00

The actions of big companies are really starting to get annoying. They just blatantly put their own interests above the citizen consumer. Sometimes I forget this basic fact and get a rude reminder.

Today's reminder is my PSEG bill. Every paper bill comes with an additional "paper" reminder to switch to electronic billing to save trees. "Go green" they extort. Save old growth forests. They even print the notice in green ink. Give me a break.

The only one really benefiting is company, which is saving a huge about of money on paper and printing costs. Very little is passed on to the paper company or any environmental group. You think they would lower the price charged to customers for paperless billing and split the cost, but no.

It's the same when hotel's asked us to save the environment by re-using our sheets and towels. Do they lower the price for people who are "green". Hell no, the money goes straight to their bottom line.

Another example is the many companies with environmental programs. These programs are done either to comply with a government regulation, public relations or to save energy. The environment is really secondary. But smart companies have figured out that: "since we spend so much money on the environment, we should get something out of the deal." They are really caring about the environment for the wrong reasons. When you take a close look, the efforts seem fake and un-authentic.

Some companies are active in environmental issues. But again only when it is in their best interests. The classic examples are the outdoor sports companies that import almost everything from China. I am thinking of REI sports, NIKE, New Balance, EMS all of which puts on an environmentally friendly face on their company but ships all their goods from China (40' container = $2500 Shanghai to Long beach, CA). These companies need to look at their total environmental footprint. They should look at weather the environment or money is their core shareholder value.

Our final example is the large number of cups and bags printed with 100% post consumer waste and asking us to recycle. These token effort cheapen the real work of being environmentally friendly and let us off guilt free.

If we really want to help the environment, then we should drive less, use less electricity, fly less, recycle almost everything, use less plastic, turn the heat down, and pay more for oil and carbon fuels.

All really tough stuff to do. But the sad part is a lot of us know what to do.

Here is a related article on Corporate Environmental Rankings in Newsweek.

Here is a site I really like called greenwashing index. Here.

Interbrand, a "brand strategy" and marketing company, has a list of environmentally friendly brands here. The fact that this a "brand" assessment shows self interest is everywhere.

Some thoughts on charity

2011-10-19T22:42:00.000-07:00

I have been thinking a lot about charity lately. I was going to write a "stock" piece on how greedy and selfish Americans of all classes are these days.

The evidence was going to be the selfish, materialistic, "me" first culture that is every where peppered with exampled everyday life (pushing past the old lady getting off the train, wasting food at the all-you-can eat buffet, or driving a huge SUV), pop culture(Jay-Z or Kanye West's latest video), politics(voting or narrow self-interests rather than broad measures), sports (NBA players versus owners) and business (Madoff, Goldman Sach's $10 Billion in compensation, or record corporate profits with record unemployment). A nice easy story, but not quite reality.

I don't personally believe be are less charitable now then 40 years ago when I was growing up. I think they want to help and to give, but they also want to participate and feel appreciated. They just don't know how to do it. People have more now materially and so are more inclined to share what they have. I think instead that there are two reasons why people have grown less charitable over time.

1) Pop and consumer culture have made selfishness and greed more acceptable to sell products. Consumer marketing has made it acceptable to get what you want regardless of how you get it.Campaigns like "your worth it" or "go you deserve it" give approval to selfish behavior. The message is reinforced a 100 times a day. As a consequence,
peoples attitudes have changed. It is more socially acceptable to be less charitable. For example, when I first came to New York more people would give to the homeless, now they look the other way.

2) There is also less need for charity. Most people, materially, have everything they need. We are connected to friends, family and neighbors who are like us. We live in neighborhoods with like minded people where there is little need for charity. Our world ends there and we do not concern ourselves with the larger community. There is less opportunity for individual charity. Also, lots of large, professional charities have replaced personal charity.

When I grew up charity really meant something. It meant giving with out looking down on the people accepting the benefit. It mean empathy for someone who could be you. It meant living a christian life. It meant giving according to Maimonides without regard to others because charity was the right thing to do. It meant giving alms to the poor.

So, I am asking everyone to work harder at being charitable. I am calling for a higher ideal of altruism that truly says I am my brothers keeper. I am asking everyone to look out for the greater good. I can do better. That I can be charitable, speaks to the best and not the worst in society. I am better, I am charitable.

UC Berkeley Affirmative Action Bake Sale

2011-10-18T19:46:00.000-07:00

Opinion

The Berkeley College Republicans mounted an attack on affirmative action based on race and gender. They sold cupcakes for different prices to different group (White Males were $2.00, Hispanics $1.00, Blacks 0.75 and and Native Americans $0.25).

In the view of Evil Black Economist, the sale is a simplistic and superficial publicity stunt on a complicated issue. We are getting kind of tired of this same old attack and the amount of press coverage. While the amount of press accounts exceed the norm, the coverage of the bake sale was slightly negative, no coherent alternative was offered. So we present some alternatives.

The bake sale points out the need to have your arguments ready to support affirmative action! So here is how to counter the argument. At the end, I have also included a freebie: a rational alternative to these arguments.

These attacks on fairness and social justice usually depend on the strict interpretation of some law or principle that has not been followed in the past but should we followed now to the specific benefit of the protester.

[Just for the record, the Evil Black Economist is for social and economic justice. We believe a certain level of guaranteed minimum outcomes is the basic for a happy society. As part of that philosophy, we support affirmative action based on race, gender, national origin and ethnicity for those who continue to suffer the effects of past discrimination. We also strongly support class-based and income based affirmative action.]

Now back to the Bake Sale. What the protesters are really saying is: I am opposed to one policy out of many in the larger society that favors one group in a particular circumstance.

1) Their are several points of attack but the best one is that society is NOT fair: the government, corporations and society and institutions unfairly play favorites all the time: R&D or mortgage subsidies, veterans benefits, hiring a neighbor or a fraternity friend of the VP. These favorites are usually decided by the majority and do not benefit the minority. Many of these favorites, preferences, or subsidies are hard to recognize. They cannot be easily eliminated but serve to disadvantage minorities.

2) A another story you might hear is how some people have succeeded due solely to their own smarts and hard work. They have achieved, you must be able to do the same. However they are ignoring two key facts: 1) the stable, secure and prosperous environment in the US is paid for by the taxes of all; 2) it is extremely rare for a poor individual to make it with absolutely no help. A more honest person would admit their "luck". They would try to create an environment where other might also get "lucky" too. Basically, everyone stands on the shoulders of some one else, but it is never called affirmative action.

3) a third area here the argument is weak is the historical context of the US. The US has a long history of discrimination: Native Americans had their land stolen, Blacks were slaves, and Women could not vote in the 1920s. You can also point out that White men have benefit from "Affirmative Action" in the United States up until recently and have developed a huge institutional advantage they can pass on.

What they are conveniently forgetting: Racism does exist in the US currently, though greatly diminished. However, it's stain (the institutional effects) lives on long after official racism has ended. Poverty and isolation are more prominent among Black, Hispanic and Native Americans than middle class Whites. For reasons of social cohesion and justice, we may want to encourage under represented groups to participate in society's institutions.

4) The argument against affirmative action can also be attacked on moral and social justice grounds. Helping those less fortunate than yourself is a moral activity.

Here is the freebie: When they say affirmative action is based on race then counter by proposing affirmative action based on income.

The discussion of affirmative action is really a larger discussion of how we should allocate societies basic resources ? How do we handle public goods like universities ? Should they benefit just a few or the large community ? What is merit ? What is success ?

Almost everyone has stood on the shoulders of someone else. We should just be honest about it.

v3

The September employment situation was slightly positive

2011-10-15T07:49:00.000-07:00

The September employment situation was slightly positive

The report showed 103,000 jobs were created in September in the US, which eased fears of a double dip recession. The 103K figure is good for post recession job creation number. 100K is now the new “psychological” standard for the “street”, so beating that number is a slight positive. It helps the president politically, but the sustained 9.0% rate is very high by historical standards. Private sector jobs increased by 137,000 while government shrank by -34,000.

Reducing the 9.0% plus unemployment rate without a large increase in consumer spending or government stimulus is all but impossible. The structure of the US economy, the global economy and the US consumer spending have changed. So we will have to live with 8% or 9% for at least five years. This is the new normal.

The overall unemployment rate was 9.1% and the Black unemployment rate stayed at 16%. The rate for White (8.0%) and Hispanics (11.3%) was little changed.

The long-term unemployed were 6.2 million (44.6% of total). The part-employed for economic reasons rose to 9.3 Million and the marginally attached stayed the same at 2.5 Million.

Non farm payroll employment increased by 103,000 jobs with growth in business services, healthcare and construction. Information technology increased by 34,000 as the Verizon strike was settled and the workers returned.

Average work week increased by 0.1 hours and wages by $0.03 cents. The employment diffusion index (a hiring signal) was still positive (55.4) but down 0.2.

Financial Transactions Tax

2011-10-03T19:07:00.002-07:00

The US should follow Europes led an impose a financial transactions tax.

The root of all evil is: Lack of Demand

2011-09-28T18:19:00.000-07:00

Just about all economists agree that lack of demand is causing the economic slowdown.

The recession has done a small amount of good. It has clarified economic theory for a lot of economists that were on the fence. You don't hear to many efficent market theorist discussing how the economy will correct itself automatically these days. Now, in general, most economist area agree the problem is lack of demand. They also agree the US economy needs some stimulus.

Economic theory also tells us that you can stimulate the economy two ways. You can increase demand though monetary (interest rate and money supply changes) and fiscal (government spending) policy. Fiscal policy is either direct spending or investments or incentives (subsidies and tax policies) to encourage private spending. With interest rates effectively at zero for the next two years (monetary policy) only government spending remains(fiscal).

Let's look more closely at the three places where this lack of demand comes from. One, corporations and the rich are sitting on large piles of cash. They can no longer find investments with returns equal to historic returns. So they are sitting this one out. Second, the poor and middle class consumer is tapped out. The middle class has lost huge amounts of home equity. They nervous about their employment situation. The fear of unemployment has led consumers to cut spending in favor of paying down debts and savings. And the third source of low demand is steadily job cuts in government.

So basically, the poor and middle class, the engines of the consumer economy, have cut spending. The Obama stimulus helped for a bit, but was not enough. You can see the temporary spike on the chart below.

An obvious solution is to take the money from the people or companies who have more money than they need. They are not spending or investing. They are sitting on it. The money could be given to the government or people who do need it and will spend it.

Here is a quick graph of government employment.

Obama Debt plan in 30 Seconds

2011-09-23T18:21:00.000-07:00

On Monday, September 19th, president Obama released a proposal to reduce the United States federal government debt.

President Obama proposed a $3 trillion dollar deficit reduction package over 10-years. The plan included $1.5 Trillion in new taxes. It would reduce the Medicare and Medicaid spending by $600 billion over the same time period. And it would save $1 Trillion by withdrawing troops from Iraq and Afghanistan. The debt reduction would be used to fund his $450 billion dollar jobs plan.

The meat of the presidents proposal is to let the Bush tax cuts expire for the wealthy, limit deductions by upper income tax payers, and end corporate tax loopholes and tax breaks.

The plan include $400 billion in savings from reduce interest payments on debt.

Roland Fryer wins MacArthur Foundation Grant

2011-09-21T18:51:00.000-07:00

Roland Fryer, a Black economist at Harvard, has won a $500,000 MacArthur Foundation grant. His research is focused on studying the Black White education achievement gap.

Dr. Fryer is written a large number of papers and was the youngest Black person to receive tenure at Harvard. He and Steven Levitt researched the discriminatory effects of Black sounding names.

Canada quietly moved ahead. Service Canada Portal

2011-09-10T08:11:00.000-07:00

Canada quietly moves ahead.

If you really want to see what a 21st century country looks like check out Canada. Everything seems to be going well for the Canadians (not the Habs).

If you want to see what a reasonably well run country and government look like, then check out Canada. They seem to be doing everything right these days. No banking crisis, universal healthcare, excellent schools(PISA rankings), reasonably good government and even rap-stars like Drake.

There portal is amazing and easy to understand. Here.

I think it is time for Americans to eat some humble pie and look north.

Obama proposes $450 billion stimulus plan to generate jobs

2011-09-08T16:48:00.000-07:00

A summary of President Obama's speech on Jobs and the Economy

President Obama proposed a nearly $447 billion dollar jobs plan split evenly between tax cuts and additional government spending. He challenged the house Republicans to pass the legislation to create jobs. His strongest line was to call congress a circus.

The proposed tax cuts include:

1) incentives for hiring new workers, raising wages or hiring veterans,
2) continued accelerated depreciation for small business investments in 2012,
3) payroll tax cuts for small businesses and employees,
4) infrastructure investments in transportation to increase construction spending,
5) summer jobs programs for low-income youth,
6) and extends unemployment insurance for an additional year

He did not saying anything about home mortgage relief.

The president asked the deficit reduction taskforce to reduce spending by an additional $450 billion to complete pay for the program. The president will release a deficit reduction plan to cover the cost of the jobs bill.

v2

Romney's plan is a conservative grab bag

2011-09-07T18:26:00.000-07:00

Mitt Romney's economic plan is a collection of standard middle ground Republican proposal. Not much new but definitely nothing too right-wing either.

1) Reduce the corporate income tax to 25%
2) Sign free trade agreements with Columbia, Panama and South Korea
3) Expanding US energy production and off shore drilling
4) Cut domestic and non-security spending
5) Try to stop Obama's health care legislation
6) Sanction China for unfair trading practices.

Only the proposal to go after China is new or interesting. The Evil Black Economist is a proponent of "fair" trade not free trade.

August job report shows NO new jobs; slow growth continues

2011-09-05T18:20:00.000-07:00

August unemployment report shows zero new jobs. Black unemployment rises to 16.7%; National rate 9.1%

The August unemployment report was the worst this year. No new jobs were created. There was wide spread weakness across many industrial sectors. Only healthcare showed positive growth. The numbers were also reduced by -48,000 by the Verizon strike. Many economists and media watchers are concerned about a double dip recession. The last period of negative job growth occurred in July, 2010.

Below is a chart of the Major Category changes in employment.

A further review of the minor job creation categories shows the effect of the Verizon strike.

The national unemployment rate stayed to 9.1% and the Black unemployment rate rose to 16.7%. Economists routinely predict 80,000 to 100,000 new jobs. The stock market fell in a predictable fashion.

Private non farm payroll increased +17,000 which was off set by a drop of -17,000 government workers. Employment increased in business services by +28,000 while healthcare went up by +34,000. Manufacturing lost -3,000. Construction also lost -5K. The biggest drop was in local government jobs which fell by -17,000.

Black Unemployment Up Again

Black unemployment increased 1/2 a percentage point to 16.7%. The last time the Black Rate was was that high was in Jan 1984. That is 25 years ago. In Jan 2007, the rate was 7.9 percent. However, the rate was driven up by an additional 348,000 Black people joining the labor force.

About 2.99 million Black people remained unemployed in August, 2011. There was some good news, the Black labor force participation rate increased to 61.5%. The number of Blacks holding jobs grew by 155,000.

The long-term unemployed (out of work for more than 26 weeks) stood at 6.03 million. The long term unemployed are 42.9% of the total unemployed.

The number of part-time workers for economic reasons was 8.8 Million. These are people who would like full-time work but cannot find it. Marginally attached workers stayed around 2.6 million. These are people who have looked for work in the past 12 month but are not counted as part of the labor force.

The number of discouraged workers dropped year-to-year. Last June there were 1.6 million. Currently there are 977,000 discouraged. Discouraged workers have stopped looking for work because they believe no work is available for their skills.

Establishment Data

Non farm Payrolls showed no new jobs. The private sector added only 17,000 jobs which were offset by a -17,000 drop in government jobs Retail trade stores drop 7800 jobs business and professional services added 28,000. Health care and education services added +34,000 and manufacturing shrank by -3,000.

In other bad news, Temporary Help Services(THS) increased by 4700 jobs. THS is a closely watched, bell-weather category. Temp help is a quick, but expensive way, for employers to add staff. When the economy is grow temp help shrinks as workers are converted to permanent employees.

Construction was down -5,000 jobs. Construction employment is also closely watched as an economic indicator. Construction employment has been depressed since the collapse of the housing “bubble” in 2007.

And finally some downward revisions of prior month payrolls. The June new job creation number was revised down from +46,000 to *20,000 and July dropped from *117,000 to +85,000.

ADP reported 91,000 new jobs were added, a very low number for ADP.

The monster help wanted index was at 146 , the highest level of demand since October 2008.

The weekly initial unemployment claims was at 427,00 for the week ending July 7th, 2011, still above 400,000 below which the US economy is considered to be adding jobs.

v3

Jobs will return by 2017!

2011-09-04T17:11:00.000-07:00

The United States will return to pre-recession jobs levels around 2017 at the current growth rate.

When will the jobs lost during the great recession return to their December 2007 peak ? Basic forecasting techniques (line-fitting) tell us the answer: between 2016 and 2018 based on current Non Farm Payroll (NFP) growth statistics.

The simplified analysis was based on data from the bottom of the recession (Dec 2009) to the current jobs report (Aug 2011). We add approximately 80 thousands jobs on average each month.

At that current rate, we would reach 2007 job levels around 2017. Merry Christmas.

Where does the US rank among International high school students ?

2011-09-03T18:53:00.000-07:00

The Organization for Economic Cooperation and Development (the preeminent european development organization) has released it's international student assessment results in education. They looked at reading, math and science. Here. The United States is fairly middle of the pack: Above average in reading, in the middle in math and below average in science.

However, I must say the quality of publication, reseach, writing and statistical analysis is outstanding. If you really want to understand the drivers of student performance you have to read some of this stuff. It also show how difficult it is to make changes in education.

The upshot for the US is they should recruit and encourage better quality personnel to become teachers.

The Presidents Job's Speech on jobs: What we want to hear !!!

2011-09-03T05:53:00.000-07:00

Next Thursday, September 8th, 2011 president Obama will give one of the most important speeches of his tenure: a national speech on economic issues. The focus is on jobs. We have all felt the effect: We may out of work, stuck in a bad job or know a close friend or relative who is unemployed. We all know the stats: Black unemployment is 16.7%(20% for Black men); national unemployment is 9.1%, inflation adjusted median wages have been stagnant for 20 years.

There are some small to medium sized problems. However making it all worse, for the president, is a group of people who are willing to exploit the tough times for their own ideological or political benefit.

This is the environment the President faces when he gives his speech.

So I give you three views: The speech we would like to hear, the speech we will probably here and a third speech called what actually makes sense.

1) "Today, as your president, I am announcing, with congressional support, a major fiscal policy imitative to put people back to work. When, we have a national underemployment rate of greater than 15% and a minority unemployment higher than 20% in some areas, it is time to act. American cannot waste it most value resource: the potential of it's people.

The initiative will fund short and long-term employment, training and skills development in four critical areas of our economy: improving infrastructure, fixing residential real estate, improving schools and reducing the cost of healthcare. We are going to get the poor and under employed working to build this country.

Coupled with this we are proposing additional revenue increase on upper income individual; a fairer tax system which eliminates corporate tax loop holes and does not reward financial speculation; and reduces spending on the military, social security and medicare. 'Everyone is going to have to pay a little more and get a little less, but the most vulnerable will be protected.' Thank you and God bless america."

2) "Today, my fellow citizens, the US has a little bit of a problem creating jobs. But it is nothing really to worry about. So, we are asking congress to fix the tax code, fund the infrastructure bank, let the bush tax cuts expire, and make the payroll tax cut permanent. We can get through this together but no one has to give anything up. Thank you and God bless america. "

3) "Today, my fellow citizens, the USA faces some small but important and difficult policy choices about our long-term society. Many of the issues are complex and will affect subsequent generations. However, the issues have been faced before, so we have some guide as to how to handle the job crisis.

A) Additional Fiscal stimulus: Fiscal policy does work. Basic economic theory tells us that cutting fiscal policy at the time of recession extends the recession. Now is the time for fiscal stimulus. Government money is not wasted on jobs (wage, benefits, skill development) unless the discounted return is less than the investment. And that is purely the financial view, it does not count important non financial returns (defense, law enforcement, education, R&D). We must spend money on the most job creating areas.

B) Investment: Now is also the time to borrow money for long-term national investments. The world is willing to lend the US money at near zero rates. So any national investment that pays above 0% return is a good deal. One the list would be fixing the residential real estate market, promoting energy efficiency / green energy; transportation spending; education; health-care cost reduction and national R&D.

C) Taxes: A simplified tax code that rewards value added activities like manufacturing, R&D and not financial manipulation and tax avoidance.

D) Government Spending: When the jobs crisis is over the US must look at the huge amount of defense spending, total health care costs and public retirement benefits.

E) Changing the model: My fellow Americans, this one is the most difficult areas to discuss. In order to develop the society we want, we must make some small changes to our economic model to compete in the 21st century. We must return to a time when the US led the world in innovation, made things and paid good wages. We must shift from society based on material consumption to a society based on innovation and service consumption. We must shift from a winner take all model built on financial gamesmanship to model where prosperity is more broadly based. It boils down to how can we make a society that is happy, harmonious, and relative fair for as many people as possible.

I call on the wisdom, intelligence and generosity of the American people to lead this fight. Thank you and God bless america."

v2.

Before the Evil Black Economist the blog name was...

2011-08-28T10:55:00.000-07:00

I was looking for a spreadsheet and found these old list of possible Blog names. They are kind of interesting.

Possible Blog Names

Black Econ
Black Economics
Black Economics 101
Introduction to Black Economics
The evil black economist
Economics for Black People
Black Money
Dollar Bill Y’All
All about the Paper
The root of all evil
Money, Money, Money
Black Crunch bar
Economically Challenged
Black Millionaires
Black Manna

Bad jobs report in July is good news

2011-08-19T18:07:00.000-07:00

July Bureau of Labor Statistics unemployment data reported that 117,000 non farm payroll jobs were added to the economy. Black unemployment is 15.9%; National rate 9.1%

The July unemployment report was some good news when everyone was expecting bad news. You can hear the Whitehouse going "Whew!" Total private employment increased by 154,000 jobs but the number was offset by -37,000 drop in government employment. The other big story was the continuing fall in employment population ratio (58.1%) and the labor force participation rate (63.9%). Both are at record lows. People are leaving the labor market in huge numbers.

The national unemployment rate slid down to 9.1% and the Black unemployment rate dropped to 15.9%. Economists had predicted 100,000 new jobs and the actual number was higher. However, it is below the rate of population growth.

Private non farm payroll increased +154,000. Employment increased in business services by +34,000 while healthcare went up by +37,000. Manufacturing added 24,000(durable +23K, non durable 1K). Construction gained 8K. The biggest drop was in local government jobs which fell by -37,000 primarily due to the public workers strike in Wisconsin.

Black unemployment down slightly

Black unemployment was reported at 15.9%, roughly twice the rate for Whites and 50% more than Hispanics. It was 15.3% in Feb. 2011. About 2.80 million Black people remained unemployed in July, 2011 about the same number as June. The Black labor force participation rate tumbled again to 60.4%. In February 2010, it was 62.7. The number of Blacks holding jobs shrank by -69,000. An additional -151,000 Blacks dropped out of the labor force in June. And finally, the employment / population ratio for Blacks shrank to 50.8%. It would be astounding if less that half of the Black people in the US were employed.

Employment to Population Ratio: People are dropping out of the labor force

2011-08-17T17:39:00.000-07:00

The July unemployment report was no news. Which is good news because a bad report would have really hit the market and the Obama administration really hard. I have to believe the president get some sort of briefing before the numbers are released.

However, there is one interesting story: the big drop in the number of people in the labor force and employed since the recession began. Both measures have be hit hard.

The drop in the employment to total poluation ratio and the labor force to population ratio has been dramatic. People are dropping out of the labor force left and right.

You can see the employment ratio is four percentage points lower since the recession started. And the civilian labor force has drop by 2%.

I have not been on vacation, I been working overtime.

2011-08-17T14:45:00.000-07:00

Sorry, I have not posting in a while. I have started a new job and I am lowest person in the pecking order. So, while I have not been on vacation, other people have, and I have to cover for them. Two have returned, so I am free to write again.

Thanks

Chris

Breaking news: S&P lowers credit rating !!! Yawn.

2011-08-06T09:20:00.000-07:00

Yawn. Zzzzzz. Such none news just confuses people. Does anyone really see the US not paying their debts. Institutions, people(rich people with lots of cash), and other governments are begging for US debt. The real story is the market rate on 30 year T-Bill currently 3.82%. The figure is low by historic standards and falling. Like I said yawn.

Editors Note: In a further blow to it's credibility, S&P has admitted a calculation error in the downgrade. First, the mortgage and banking crisis and now this. Clearly another case where the private sector cannot regulate itself.

Black/Hispanic vs. Wealth Gap Takes Huge Jump - 300%

2011-07-31T16:13:00.000-07:00

The Pew Research Center has publish a report that show the asset ratio between Whites as compared to Blacks and Hispanics has has jumped from 7:1 in 1995 to 20:1 in 2010. An increase of nearly 300%. The primary reason is the increase in Black unemployment and the number of sub-prime foreclosures.

The summary is here and the full study is here.

Unfortunately, the heart of the problem is that the assets were reported at paper value not a the risk adjusted price. So Black and Hispanic asset values (houses) were overstated. We the housing bubble popped you got a more realistic view which coupled with the recession explains the wide gap. Things have not really changed.

Everyone should be unemployed for a short-time

2011-07-31T11:00:00.000-07:00

Certain things you cannot fully understand until you experience them. Love, raising kids, racism & sexism, travel, prison, and sex. Another experience I wish more people shred is nemployment. Until you have experienced the frustration and idleness; you cannot fully understand.

So, here is wishing you a little bit of unemployment.

Discrimination against the long term unemployed

2011-07-31T07:21:00.000-07:00

The New York Times had a story about discrimination in web job postings. The ads were asking for applicants that were currently working or had been recently laid off. They admitted that did not want the long-term unemployed to apply.

The story is here in the New York Times, July 26th, 2011 edition.

There are three things going on here:

Discrimination is here and real and wrong. Here is a clear, documented example of discrimination.

This discrimination shows some one of the effects of long-term unemployment. The unemployed may have their skills degrade. Employers and the public believe the long term unemployed are less qualified or may not want to work. And for the long-term unemployed there is a stigma is attached to being unemployed.

Finally, it is so rare to get a news story covering discrimination and unemployment, in the same story. I am glad some has the interest and guts to cover this story.

"The white man ice is cooler ?"

2011-07-26T20:34:00.000-07:00

When I first heeard that quote, "The white man ice is cooler ?," I bursted out laughing. I think I was a high school kid and my dad was talking about where people bought their cars. Then I stopped laughing and then I said, "Hey wait a minute".

Everyday US Black consumers spend over 2 billion dollars. We are some of the world's best consumers. We are gifited with incredible wealth. And with that wealth comes power. Our weakness is our aspirational spending on material goods.

We have a spending inferiority complex. We spend like we are trying to prove our worth and our value. We want respect. We want to spend rich. We want to spend white. All major consumer product companies are only to happy to oblige. A great example is the slimy salesmen our lack of self-esteem against us with the classic BS comment: "You can't afford it."

Sadly, this fundamental flaw in our character causes a lot of Black unemployment. Why do we lag in jobs, assets, entrepreneurship. Because we are short sighted about long term happiness. We are short-sighted about were we spend our money.

We spend too much on short term happiness from products and under invest in long term happiness from friends, family, schools and stable neighborhoods. "I going to get mine" is a familiar saying. So you got it, what then ? Many of us "got ours," what do we do next ? Well we spend some more. We don't know how rich we really are. We even gave our retirement money to the bankers who ruined the economy.

So, ask you self this this question: "Could me or my kid work there, if I need a job ?" Carefully, look at the place where you spend your money ? Could your kid work there if he needed a job ? Do you see anyone who looks like you? Did their advertisements include people like you ?

And, as you all know, we never write a post with proposing some solutions. Here are some suggestions:

Spend wisely:

Again, let me repeat my rule of thumb: Am I spending money at a place that would me or my kids ? It is as simple as that.

1) Spend money at places that employ Black people. So that is Walmart, CVS, safeway, Ford and Chrysler, McDonald's, American Airlines. Not subway, anbercromise and fitch, coach or american apparel.

2) Buy your car or house from a Black salesperson. Or best yet a Black car dealer. I know sales people are nice, but nice doesn't cut it. They work on commission. And the level of service is the same. All the sales reps have access to multiple listing service, ebay, yahoo or carfax.

3) Eat out at places that employ Black people. There is nothing wrong with TGIF Fridays, Burger King or White Castle. Think twice about McDonalds or 7-11 when no one looks like you. I am not saying don't go, just look for an alternative. Or eat healthy at home.

4) Get competitive bids: For every major purchase greater than $1000 consider getting three bids including a Black business or business person. It takes work but you can go to sleep knowing you tried.

5) Look for Black sales people when you shop. Business that pay sales people commission are commodities (houses, cars, appliances) and count on sales people to make a difference. You will probably never see a them again, so make you purchase count.

5)Complain. Let Black business know when something is wrong, but then go back and make sure it is corrected. We will give the benefit of the doubt to everyone but our own people.

6) Hustle. Start a business yourself. A business is an education for free. Business truly understands their consumers. The off the books economy pays for itself.

Summary: Until Black people consider how every purchase help you community, our community will suffer. Always ask yourself this question, "Could my kid work here if he needs a job ?"

v4

Our Black Year: One couple buys only from Black Businesses for a Year

2011-07-25T18:51:00.000-07:00

One couple has decided to buy from only Black Owned business for a whole year. There website is here.

Teachers: Pay More, Demand More

2011-07-24T13:59:00.000-07:00

We at the Evil Black Economist are definite pro-teacher. But we aren't stupid either. Most of all we a pro-value added. Meaning a teacher must deliver in value more than they earn in salary. We are also for a individualized, child specific educational system.

Basically, teacher salary, effort and quality are one of the few things that can be changed in the education system in the medium term.

We believe in paying teachers more and asking them to do more. We are fully in favor of testing and rewarding good test scores. But we are also in favor of teachers as social workers, substitutes parent and life guidance counselors. We favor internet monitoring and 24 hour access along with a reduced paperwork burden.

Dropouts: The high cost to society of dropping out

2011-07-24T13:48:00.000-07:00

NPR is about to start a series on people who drop out of high school. Dropouts have an enormous total cost on society. The series is here. Mr. Sanchez explores the true cost to society of the lost potential of dropouts.

The issue is a perfect microcosm for US society and it's growing inequality. You can just as easily switch "dropout" with poor person or Black or Hispanic person. I must congradulate Claudio Sanchez for finding a way to discuss what the majority do not want to discuss: The growing US underclass. The unwritten theme is what do we owe our fellow citizens ?

We love this new focus on education. Education is the one workable lever in the US for reducing inequality in society. The GOP has stopped all others. Everyone is pulling on the lever: Obama, Bill Gates, Congress, Bloomberg, Jeffery Canada. But no one knows what to do.

Brazil as a 6.2% unemployment rate

2011-07-19T16:34:00.000-07:00

Just in case you wanted to know where your job was.

It's right here.

The is the Brazilian Government's statistical service web site. They are gloating over a 6.2% unemployment rate and 3 million new (reported and taxable) jobs. Who knows how many off the books jobs were created. bem feito o Brasil!

How to create jobs

2011-07-18T17:26:00.000-07:00

The consulting firm Mckinsey & Company and the Atlantic Magazine have assembled some commentators to write about creating jobs. Here is the Link. Most of the comments are great ideas but difficult to implement. Some are self-serving and short sighted. Some are just warm and fuzzy like improve education or "invest in American Brain Power."

The two best ideas are job credits for hiring the long term unemployed and increase the inflation rate by a small percentage. The jobs subsidy might work if it was disguised as a tax-cut.

It is nice to know other people are struggling with this difficult issue.

By the way the Evil Black Economist also has a list of of unworkable proposals for creating jobs. We believe the way to increase jobs is a national infrastructure program, import limits(or more nationalistic consumption), import labor substitution, slightly higher inflation targets at the fed, job subsidies for hiring the unemployed, redirecting big business subsidies to small business, stricter anti-monopoly enforcement, create additional education jobs, and national healthcare. Just so we are on the record.

June unemployment report is worse than May. Black unemployment rises to 16.2%; National rate 9.2%

2011-07-16T19:36:00.000-07:00

June unemployment report is worse than May. Black unemployment rises to 16.2%; National rate 9.2%

The June unemployment report was flat out bad. You have to wonder how much bad news is enough and when will something be done about unemployment. Only 18,000 net new jobs were created. That is the lowest since September 2010 when the economy was still losing jobs. The national unemployment rate rose to 9.2% and the Black unemployment rate rose to 16.2%. Economists had predicted over 100,000 new jobs. The lower than expected number has caused a stock market drop. You have to ask if anyone really cares about the unemployed.

Private non farm payroll increased +57,000 which was off set by a drop of -39,000 government workers. Employment increased in business services by just +12,000 while healthcare went up by +17,000. Manufacturing added +6K(durable +15K, non durable -9K). Construction also lost -9K. The biggest drop was in local government jobs which fell by 28,000.

Black Unemployment Up Again

Black unemployment increased again to 16.2%. It was 15.3% in Feb. 2011. The 16.2% was close to the BU peak of 16.5% in Mar/Apr 2010. In Jan 2007, the rate was 7.9 percent. About 2.88 million Black people remained unemployed in June, 2011 about the same number as May. The Black labor force participation rate was reported at 61.0%. In February 2010, it was 62.7. The number of Blacks holding jobs shrank by 15,000. An additional 47,000 Blacks dropped out of the labor force in June.

In other bad news, the long-term unemployed (out of work for more than 26 weeks) increased to 89,000 to 6.29 million. The long term unemployed are 44.4% of the total unemployed.

The number of part-time workers for economic reasons was 8.6 Million. These are people who would like full-time work but cannot find it. Marginally attached workers stayed around 2.7 million. These are people who have looked for work in the past 12 month but are not counted as part of the labor force. If they were included in the labor force, unemployment rate it would be 1.4% higher: 10.6%.

The number of discouraged workers dropped year-to-year. Last June there were 1.2 million. Currently there are 922,000 discouraged workers, a 18% drop. Discouraged workers have stopped looking for work because they believe no work is available for their skills.

Establishment Data

Non farm Payrolls recorded a token increase of 18,000. The private sector added only 57,000 jobs which were offset by a -39,000 drop in government jobs Retail trade stores added +5,000 and business and professional services added a meager 12,000. Health care added 17,000 and manufacturing added 6,000.

In other bad news, Temporary Help Services(THS) shrank by -12,000 jobs. THS is a closely watched, bell-weather category. Traditionally, it has grown during recessions as employers are unwilling to make the investment of hiring long term employees, then when the economy picks-up, the demand for temporary help drops. Lately, as employers’ use of “temps” has changed, temporary help has stayed strong.
The drop in THS coupled with a slow economic growth singnals a widespread lack of job opportunities across the economy. “Even temps can’t find jobs!”

Construction was down -9,000 jobs.. Construction employment is also closely watched as an economic indicator. Construction employment has been depressed since the collapse of the housing “bubble” in 2007.

And finally some downward revisions of prior month payrolls. The April new job creation number was revised down from +232,000 to +217,000 and May was revised down from +54K to +25K.

ADP reported 157,000 new jobs were added.

The monster help wanted index was at 146 , the highest level of demand since October 2008.

The weekly initial unemployment claims was at 427,00 for the week ending July 7th, 2011, still above 400,000 below which the US economy is considered to be adding jobs.

v2

Build national bike lanes for jobs, environment and health

2011-07-16T07:35:00.000-07:00

Intra-city and inter-state bike lanes are the answer

Every now and then you here an idea that is win, win, win. And idea that can improve the quality of life for everyone. National bike lanes are exactly that. We, Evil Black Economist Blog, propose creating and inter-city bike lanes to create jobs, reduce pollution, and improve public health and well being.

The project address three key areas. It puts people to work, it improves the economy and reduces energy consumption and it improves the health of the nation.

The country needs a labor intensive public works project to boost the economy. We have enough roads already. High speed rail and big energy have a very low job intensity. We need projects that have a very high labor component. National bike paths are that type of project.

The type of bike paths we propose are the high quality, high volume, commuter bike path found in some places in Germany, Scandanavia and the Netherlands.

The path are almost as wide as road(they are roads actually), well paved and drained and completely separate from vehicle traffic. The have separate signs and signaling.
The paths require construction and on-going maintenance.

A second huge benefit is improved quality of life: reduced pollution, congestion and environmental damage. Energy and gas consumption would also be reduced.

The biggest benefit would be in the improved health of our citizens. The US could reverse the trend in obesity.

So how do they work in practice.

Certain low traffic streets in each city would turned in to bike lanes(truck deliveries permitted during certain hours). Higher volume streets would have separate, partitioned bike lanes. Separate bridges or bridge lanes would be constructed. Separate inter-city bike paths would be constructed along highways.

How would bike projects be financed? We are asking for no changes in the existing subsidies for roads, rails, air-ports and mass transit. Existing program would remain fixed at there current levels. We are calling for an end to gas, road and airport subsidies. Let the prices of these services rise to their natural level. Then use the extra revenue to fund bicycle projects.

There is a lot of work ahead to change the "car" first mentality, but the benefits could be huge.

The real debate in Washington and John Rawls

2011-07-16T07:30:00.000-07:00

The "real" debate in Washington is not about the debt limit. The real debate is not even about the size of the government and which social programs. The debate is about government itself, especially the federal government, and whether it has a role in our lives. The republicans seems dead set against any form of government what so ever other than police, fire and the military.

They seems to dream of a lassiez-faire, winner take all society, where the "best" people do well and everyone else is on their own.

I would just ask that everyone at least consider John Rawls, veil of ignorance thought experiments. His experiment is brilliant.

Rawls basically asks what kind of society would you set-up if you did NOT know before hand what you position would be. He believes that people would chose a society with liberty and a certain level of equality. Also that society help the disadvantaged.

Here is a link to justice as fairness.

Monster Employment Index: MEI

2011-07-12T19:41:00.000-07:00

Monster, a job search internet web site, has an employment index called the Monster Employment Index. The MEI tracks the number of on-line ads places on monster websites. You can read the press release for the site here.

The index seems like an electronic version of the old help wanted index from the news paper days.

The conference board publishes a Help Wanted Online Index here. The news paper based help wanted index was discontinued in October of 2008.

v2

Jobs=Happiness

2011-07-11T18:44:00.000-07:00

One of the main points of this Blog is that Western, Democratic Capitalism (WDC) could produce more jobs and thus increase the overall happiness of society. We believe the unemployment rate at the point of maximum profit is above the unemployment of maximum happiness in post industrial societies. The US economy is run to maximize profits not create jobs. Many people believe that profit maximization in the most efficient way to run a corporation. It may be the "best" way to run a corporation, but not necessarily a society.

Our economy runs an below the full happiness level because businesses want to operation at the profit maximization level not a full happiness level.

We believe WDC culturally support work. It is part of our heritiage. We also assume a society is happiest when everyone who wants to work can do so at a living wage.

The current economic theory looks at jobs as cost or profit makers, not as a object unto itself with value. Jobs, themselves, have intrinsic value. Jobs have value for a wide range of reasons: self esteem in a society that values work, the opportunity to train and learn a new skill, to meet and network with people and to earn income.

The value of a job needs to be considered when we discuss the cost of creating jobs by the government.

Debt crisis was caused by tax cuts, two wars and additional domestic spending

2011-07-10T19:35:00.000-07:00

Basically, the current debt crisis was caused by several huge tax cuts (2 large by Bush and 1 medium sized by Obama), additional spending on two wars and the military, and additional prescription drug coverage.

The Washington Post does a really nice job of summarizing the facts: here.

Visit out Black Economic News Blog. Now Updated Daily

2011-07-06T16:56:00.000-07:00

All the latest interesting and important Black Business and Economic news stories.

Black Business and Economic News.

Scholars we follow

2011-07-06T16:42:00.000-07:00

Dr. William A Darity, professor of African American Studies and Economics, Duke University
Homepage.

Dr. Boyce Watkins, Syracuse University,
Homepage.

US firms hiring abroad

2011-06-30T16:31:00.001-07:00

U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization's effect on the U.S. economy.

The companies cut their work forces in the U.S. by 2.9 million during the 2000 to 2009 while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That's a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad.

In all, U.S. multinationals employed 21.1 million people at home in 2009 and 10.3 million abroad.

You can read more from the Wall Street Journal Article here.

Pepper Miller BIO

2011-06-27T22:18:00.000-07:00

Pepper Miller

Pepper Miller is a long time marketing research, focus groups and advertising executive who has spent her career helping fortune 500 companies market their products to African-Americans. She has been outspoken with regard to Blacks as a separate target audience. Much of her research is on marketing to Blacks as a separate cultural group. Her strength has been the complex world of marketing research and focus group analysis.

Marketing research is the process of applying statistical methods to analyze qualitative data from consumer to better market products.

She encourages Blacks to consider marketing research as a career choice. She also has a scholarship to sponsor Blacks interested in marketing research.

She founded the Chicago based, Hunter-Miller group in 1985. Here is a link to Hunter-Millers website.

Her clients have included: American Airlines, GM, Ford, Johnson & Johnson and Proctor and Gamble. You can read the complete list on the website.

She has worked on the Radio One / Yankelvich study of the Black Consumer Market called the Black America today: 2008, a market segmentation study.

In 2005, She co-authored a book, with Herb Kemp, called “What’s Black about ? Insights to increase your share of a changing African American Market”
Here is an interview she gave in 2006.

Here is a nice piece from rolling out magazine and website. Here.

Here is some info on a more advertising oriented competitor, Carol Williams, Here.

We are absolutley against ATT buying T-Mobile

2011-06-20T16:58:00.000-07:00

We are 110% opposed to the ATT / T-Mobile merger because the merger will hurt Black consumers by rewarding poor customer service and high prices. It will also reduce employment in a sector of the economy with above average wages and growth. Finally, it will reduce competition and innovation in the wireless marketplace.

The merger would:
1. Reduce employment
2. Raise prices
3. Reduce competition
3. Increase corporate bonuses
5. Allow the control of 80 percent of the cell phone market by two companies: ATT & Verizon
6. Stifle innovation

We also review many of the individual and institutional comment posted on the FCC website. The comments broke down into three categories: Individual Comsumers (Opposed to the merger), Institutions (For the merger) and public interest groups (generally opposed or conditional support)

All of the reviewed, individual comments criticized ATT for poor service and/or high prices. Many mentioned be “locked” into a long-term contract.

Institutions typically cited the benefits of ATT in their jurisdiction such as the jobs ATT generates or the taxes it pays.

Public interest groups provided the most comprehensive opposition to the merger. Many filed well reasoned briefs with detail on the impact of the merger on different groups such as low-income or rural.

All three groups claimed to speak for the consumer.

The justice department is also looking into the anti-competitive aspects of the merger.

Conjure: Ludacris's Cognac

2011-06-19T17:30:00.000-07:00

Today, we want to look a little closer at Conjure Cognac which was co-developed and marketed by Christopher “Ludacris” Bridges. Conjure is Cognac or Brandy from the Cognac region of France. Brandy is a spirit distilled from wine and contains about 45% to 60% alcohol. It is considered a “luxury” or high end after dinner drink.
Conjure was launched in 2 markets in 2009 and has since expanded to 30 markets in the US. Currently it is available in 40 markets.

Cognac Expert gave Conjure the top new Cognac of 2011. It has also won several industry awards. Ludacris was actively involved in selecting the distilled grape varities, fruits and spices blendes into Conjure. He spent time in France working with the master blender at Birkedal Hartmann to develop the taste.

Ludacris is part owner of the Cognac venture. He has sold 100,000 in the 12-month period ending March 31st, 2011. He would like to sell 200,000 cases by 1st quarter 2012.

Christopher Bridges is known to be a relentless promoter of Conjure Cognac. He features it in all his video appearances (DJ Khalid, “I all I do is win”, Time: 0.42, “Luda Yak”), public appearances and concerts. He is hardly without a bottle. Ludacris even has a rap song called Conjure (“a hustler’s spirit”).

Conjure has done well in the US and Norway. The newly appointed management team is expected to focus on European expansion. The goal of the company is make Cognac appealing to a young market in club and parties rather old folks with cigars.

On May 10, 2011, Conjure announce a management reorganization. The company appointed Kim Birkedal Hartmann and Jeff Dixon as Chief Operating Officers in April 2011. They are replacing Hans Holst and Paul-Andre Petersen of Birkedal Hartmann and Dr. Harry Kohlmann and Chris Mehringer of Park Street Advisors.

Park Street Advisors’s affiliate Park Street Imports is the exclusive importer into the US.

ABK6 is supposed to have a Dr. Dre cognac in the pipeline.

Celebrity Alcohol Endorsements

2011-06-19T06:27:00.000-07:00

Here is a list of Celebrity Alcohol endorsements:

Snoop Dogg -- Calvin Brodus - Colt 45 Blast
Ludacris -- Christopher Bridges - Conjure Cognac
Jay-Z Armand de Brignac (Ace of spades) champagnes
Big Boi - Crown Royal

Are the Republican's sabotaging the economy ?

2011-06-13T17:39:00.000-07:00

Lately you have to wonder if the Republicans are operating against the country's best interests. They have refused to compromise on deficit reduction. They have refused to raise the debt ceiling. And they have opposed almost every important economic and governmental appointment from the Obama administration. They seem to be bent on choking off the national government by denying the best talent the ability to serve.

Recently they successfully blocked Peter Diamond, a nobel prizing winning economist specializing in unemployment, from the Federal Reserve Bank Board of Governors. They blocked John Bryson from the US Department of Commerce. They have also preempted the best candidate to head the Consumer Financial Protection Bureau, Elizabeth Warren.
She actually helped write the legislation setting up the CFPB.

They have also been quite open discussing how a poor economy benefits Republican candidates.

Now they are negotiating to stop a rise in the debt limit. The deadline is August 2nd, 2011 but the markets are "herd" oriented, so the stampede would start in mid July. The stampede might catch everyone off guard by crushing public sentiment and raising interest rates and triggering a double dip.

Sadly, I see the Republican antics triggering a second dip of the recession either by cutting spending too fast or by threatening to cap the debt limit. It is very painful to watch this play out as they attempt to make a point. The costs are way to high for such selfishness.

v3

What's the best earning college degree

2011-06-12T15:15:00.000-07:00

Georgetown University's Center on Education and the Workforce released a study of the earning's power of different college degrees. The study called "What's it worth ? The economic value of College Majors," demonstrate how critical the choice of a college major is linked to median earnings.

The authors find that for every major, college has a positive return, even when factoring in college costs and lost earnings. [Note: The EBE disputes this claim. We believes that certain majors, such as Education, at expensive private colleges are are "underwater" and currently do not have a positive return].

Second, the report notes that what subject you major in has a large impact on future earnings. For example, at the median wage, an Engineering Major's can earn $1,090,000 over their lifetime versus $241,000 for Education Major. That is a difference of $849,000 dollars or 450% more.

Second, they find that the lifetime earnings gap at the median wage levels a in every college major

The report analyzes 171 majors in 15 categories. The report finds that majors are highly segregated by race, ethnicity and gender. Men are concentrated in the highest paying majors and women in the lowest paying majors.

Here is a graph of the highest earning college fields of study(Majors)

And here are the lowest earning fields of study(Majors)

v2

May unemployment may signal big problems: Black unemployment rises to 16.1%; National rate at 9.1%

2011-06-04T06:16:00.000-07:00

The May unemployment report was close to shocking. Only 54,000 net new jobs were created. The national unemployment rate rose to 9.1% and the Black unemployment rate rose to 16.1%. Economists has predicted between 125, 000 and 175,000 for the month. The national GDP grew only 1.8% on an annual basis foreshadowing the poor report.

Private non farm payroll increased 83,000 just one-third of 251,000 new jobs added in April. Employment increased in business services by 44,000 and healthcare by 17,000. Manufacturing lost 5,000 jobs and Construction added 2,000. The biggest drop was in local government jobs which fell by -28,000.

The US economy has lost about 7 million jobs since the beginning of the recession in December 2007.

The reaction

The unexpectedly low number of new jobs worried the financial community (DJIA dropped 100 pts) and some in the political community. Read Austan Goolsbee here. He is head of the council of economic advisers to the President.

Media coverage was light. Google trends report a 1.66 index for the term "Unemployment" as compared to 6.97 for "President Obama" and 24 for the term "Kardashian".

Black Unemployment Up Again

Black unemployment (BU) increased again to 16.1%. It was 15.3% in Feb. 2011. The 16.1% was close to the BU peak of 16.5% in Mar/Apr 2010. As recently as Jan 2007, the BU rate was 7.9 percent. That is an astounding 100% increase in four years. Sadly, the "Real" Black unemployment rate which is the the "Black U6" was still 23%. Basically, 23% of the Black labor force wanted work and could not find it.

Black U6 is an approximation computed from adding the difference between US national U3 and U6 plus the Black unemployment rate. The assumption is the difference between the US population for U3 and U6 would be the same for the Black populations U3-U6. Truth is: Black U6 is probably higher. The chart below provides a graphic explanation.

The unemployment rate for Black men (20+) was 17.5 and Black women 13.4%. 7.8 million Black women are employed vs. 6.6 million Black men. In other words, more than 1.2 million Black women work than Black men. One million more Black women are in the labor force that Black Men (about 9 million vs. 8 million men)

2.88 million Black people were unemployed in May, 2011 about the same number as April. The Black labor force participation rate was reported at 61.1%. In February 2010, it was 62.7. The number of Blacks holding jobs shrank by 178,000. An additional 621.000 Blacks have dropped out of the labor force. The
In other bad news, the long-term unemployed (out of work for more than 26 weeks) increased to 361,000 to 6.2 million. The long term unemployed are 45% of the total unemployed.

Part-Time, Long-term and Discouraged Workers

The number of part-time workers for economic reasons was unchanged at 8.5 Million. These are people who would like full-time work but cannot find it. Marginally attached workers stayed around 2.2 million. These are people who have looked for work in the past 12 month but are not counted as part of the labor force.

The number of discouraged workers dropped year-to-year. Last May there were 1.1 million. Currently there are 822,000 discouraged workers, a 24% drop. Discouraged workers have stopped looking for work because they believe no work is available for their skills.

Establishment Data

Non farm Payrolls increased by 54, 000. The private sector added only 83,000 jobs which were reduced by government reductions. Retail trade stores added lost -8,500 jobs, business and professional services added 44,000, and health care added 17,000 and manufacturing lost -5,000.

Here is the overall NFP view of the new jobs. Increases in private hiring were offset by the loss of local government jobs.

Here is a breakdown of non farm payroll by category. You can see the growth came from healthcare and the drag was local government layoffs.

Temporary help is a closely watched, bell-weather category. It grows during a recession as employers are unwilling to make the investment of hiring long term employees. When the economy picks-up, the demand for temporary help drops. Lately, as employers use of “temps” has changed, temporary help has stayed strong.
Temporary help was flat meaning that employers were hiring rather than using temporary help services.

Construction added 2,000 jobs. Construction related jobs are a key part of the economy.

March NFP was revised down 221,000 to 194,000 and Aprils number was reduced from 244,00 to 232,000

On Thursday, the DOL released weekly unemployment claims figure as 422,000. Still above 400K and well above 250K which is the full employment base figure. ADP reported 38,000 new jobs were added.

v4

The words "Poor People"

2011-05-30T11:57:00.000-07:00

This Blog uses and will continue to use the words "Poor People", because that's what they are. In our society and around the world the poor are relatively poor and getting poorer. They are economically poor. They do not have equal income, resources, information, and most important opportunity. Their beliefs and behaviors are little different from the rich yet their total happiness is much less. We in the press cannot hiding behind such phrases as "the working poor", income challanged, underprivileged, under resourced, 3rd world, and developing world. We need to use "poor" appropriately.

Unfortunately, many right wings folks imply that poor also means poor values. Or poor intelligence. They have turned "poor" into lesser than or inferior. You can hear they them say, "If only they behaved like White people, everything would be fine." The reality is that the poor often behave more like the rich than the rich themselves. I find the rich and the Republicans lack of responsibility for poor peoples plight completely self centered and short-sighted.

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Big-up to Vermont for Single Payer Health Insurance

2011-05-30T10:59:00.000-07:00

We want to give a shout-out to Vermont for enacting single payer health insurance on Thursday. Gov. Shumlin signed the legislation on Thursday, May 26rd, 2011. The bill will create by 2017, 2014 with waiver from the feds, a single health plan managed by the government for the states 620,000 citizens.

Vermont plan was created by Dr. William Hsiao of the Harvard School of public health. Dr. Hsiao estimated that the single payer system would be 25% cheaper than most other options.

Vermont's health care costs have been rising faster than the national average. The rise maybe be due to a requirement that insurance companies cannot deny anyone coverage. Currently about 8% of Vermonters do not have health insurance.

Physcians are concerned about re-imbursement rates. Some have threaten to flee to Massachusetts or Connecticut, but most will stay.

There is no free lunch, Vermont will lose some jobs that come from increased efficiency of single payer. Proponents argue that reduce health costs will freeup money for investment and jobs. However, I believe it will be a net job loss.

A natural experiment

One interesting thing is that with republican New Hampshire next door ("Live free or die") you have a natural experiment. So if vermonter's start living to 100 and NH resident starting dropping like files we will have imperical proof of better health care.

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US Black Income figure in 2009 $625 Billion (2009)

2011-05-28T08:05:00.000-07:00

I localed some figures for total Black income in the US for 2009.

The American Community Survey (Table B19025B - Aggregate household income - Black)

The ACS (5-year estimate 2005-2009) reports a 2009 income of $620 Billion (620,072,093,600 dollars). The margin of error is $2.4 billion or a 1/3 of a percent.

The ACS i-year estimate for 2009 reports $626 billion (625,837,077,100 dollars) with an error of $3.5 billion or 1/2 a percent.

Wal-Mart buys land on the South Side of Chicago

2011-05-25T19:16:00.000-07:00

Wal-Mart has purchased a 13.5 acre parcel on the South Side of Chicago in Chatham. The location, is on 83rd Street to 85th street and South Holland road in Chicago. Wal-Mart plans to build a 155,000 square foot super-center including a grocery. It will be the first of six stores wal-mart plans to build inside the Chicago city limits.

The site is next to the exist Chatham Market Shopping Center which features a Lowes home improvement store and a Aldi Market.

I will write every day

2011-05-24T22:17:00.001-07:00

My new resolution is to write everyday for a week and see if that works. Evil Black Economist.

I apologize in advance for but....

2011-05-24T21:42:00.000-07:00

I apologize in advance but...

Economics has really missed it's mark. We can explain a lot of small. everyday stuff that affects us all. We cannot a explain anything important to society. So I wonder why the average person should care at all about economics. For example, Many economists cannot answer the following basic questions about life:

What is love ??
Do decisions at the firm level really matter at the macro level ?
What make a company good at innovation vs. dumb luck ?
Are Blacks less ambitious than whites ?

Thanks goodness for behavioral and happiness economics

The two fields, closely related, hold great promise for explaining how the real world works. I wish them both well.

Did mom over consume ?

2011-05-23T19:48:00.000-07:00

My mom passed away recently. I'll miss her a lot. But boy did she have a lot of stuff. I mean she had 5 closets full of clothes. She had bags of clothes, shoes and purses. I was trying to figure out how much money she spent on clothes. And then being and economist, whether it was too much, too little or just right.
Just like a stupid economist, I am always look for a optimum.

When we were growing up we never went hungry and we always had bikes to ride and books to read. But my mom may have been a hoarder. She used to say, she was a child of the depression and ate "grass" biscuits for dinner when times were really tough. I never believed the grass biscuit part but my eyes would get pretty wide at that part of the story. They lived on a farm so I know they had something to eat during even the worst times this country has ever faced.

Now that we are relatively prosperous, I was trying to guess how much money she spent on all those clothes, shoes and bags. First, I will calculate the amount of money, then discuss whether is was a good use of the funds.

Note: All figures are current dollars. However, I know, thanks to Chinese manufacturing and American corporations, clothing prices have dropped by 50% in the past 20 years.

I estimate we gathered up 25 good bags (purses and the like), so I am going to put her down for 50 bags at a price of 25 dollars a piece. This whole calculation depends on on inflation and chinese manufacturing. So, I will assume the inflation adjusted bag of the 1970 costs the same as the fancy bag of the 1990, adjusted.

50 Bag @ 25 Dollars = 1250 Dollars

Next, there were about 50 pairs of shoes so I will assume about 150 over the shoe buting lifetime of 40 years. The shoe's average cost is going to be 20 dollars. So thats $3000 dollars.

150 EA @ 20 Dollars = 3000 Dollars

Next is coats: She had about 100 or more coats. Coats are expensive. They will be priced at 75 dollars. So that's $7500 in coats. I took some to the salvation army, but she would not let me take the rest.

100 Coats @ 75 dollars = $7500

Now for the hard one: Outfits(skirts, pants, blouse, shirts) I would estimate at more than three hundred. And I forgot another 100 in the attic. Each outfit I would guess costs, on average, 20 dollars. So thats 500 x 20 or $10,000.

500 items @ 20 Dollars = $10,000

The total is about $22,000 ($21,750);

When I total it all up, it is not really that much money. And what else would she have done with it. But did she really need all of that stuff to be happy?

Well to some extent yes. Consumption is ingrained in us when we are kids here in the US. Some people argue that material acquisition is genetic.

I also know, later in life, when they had nothing to do they would go shopping. Shopping definitely makes you feel good. My mom also like to look good especially next to her contemporaries. So she got some happiness there also. And then satisfy here desire for clothes though shopping also earned some happiness.

So, she may have over-consumed, but I would say it brought some happiness. The question is could she have reached the same level of happiness without consuming so much. Could she have given the money to charity or relatives.

For that, we have to turn to friends and family. We are all looking for a much less consumption oriented path to happiness. (See related post)

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What sources and links do we use?

2011-05-15T08:48:00.000-07:00

I am frequently asked where we get our stories from. Here is my list of current sources.

The main ones get checked daily via google. Google news search term " African-American","Black","Economic","unemployment","Black business" and "African-American Business". I also check several Blogs, read Paul Krugman and Julian Malveaux. Finally, I also google blogs for the same terms.

Black News and websites
The network journal
NewsOne
http://blackbiz.meetup.com/
http://www.blacktv247news.com/
http://colorofchange.org/
http://www.blackvoices.com/
http://www.amsterdamnews.com/
The Root

News Sources and Links

http://www.nytimes.com/
http://www.washingtonpost.com/
http://www.wnyc.org/
Wall Street Journal
http://www.npr.org/
http://www.huffingtonpost.com/
Star-Ledger
http://www.miamiherald.com/
http://www.latimes.com/
www.politico.com

Cities with large Black populations

Star Ledger
Philly Inquirer
Baltimore Sun
Atlanta Journal Constitution
Miami Herald
Houston Chronicle
LA Timed

NY Newpapers
http://www.nydailynews.com

Finance and Business
http://www.bloomberg.com/
http://www.marketwatch.com/
www.wsj.com
http://seekingalpha.com

International
http://www.guardian.co.uk/
http://www.economist.com/
http://www.liberation.fr/

Carribean
http://jamaica-gleaner.com/

Mexico & Canada
http://www.eluniversal.com.mx/noticias.html
http://www.theglobeandmail.com/

Government Organizations

http://www.bls.gov/
http://www.bea.gov/
Federal reserve
Congressional Budget Office
Congressional Research Office

Think Tanks – Left
http://www.epi.org/

Think Tanks – Right

Economic Research
http://www.nber.org/

Black Organizations
http://www.naacp.org/content/main/
http://www.nul.org/
http://www.urban.org/

Black Scholars

Black Blogs

Good Blogs
http://economix.blogs.nytimes.com/
http://economistsview.typepad.com/economistsview/
Matthew Ygelsias
Ezra Klein

Academic
http://www.northwestern.edu/ipr/index.html

Europe
http://www.voxeu.org/
http://www.iza.org

Conservative

Other
http://en.wikipedia.org/wiki/Wikipedia:WikiProject_Economics
http://www.cis.org/
http://www.nfib.com/
http://usaspending.gov/
http://blackbiz.meetup.com/

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April's Unemployment Report is Positive but Black and National Rates Rise

2011-05-14T18:21:00.000-07:00

April unemployment rises: Black unemployment up 4%; National rate 9%

The unemployment report was pretty positive with a couple of bad areas. The number of non-farm payroll jobs increased by 224,000 with growth in the service industries and manufacturing. The bad news was the Black unemployment increased by 4% from 2.77 million to 2.88 on a seasonally adjusted basis. The figure was a 2% increase on a non-adjusted basis. The national rate also increased to 0.1% to 9.0% as more people started looking for jobs.

There was also good news on the long-term unemployed (out of work for more than 26 weeks). Their numbers dropped by 283,000 to 5.8 Million. Long term unemployed are 43% of the total unemployed.

The number of part-time workers for economic reasons was unchanged at 8.6 Million. These are people who would like full-time work but cannot find it. Marginally attached workers stayed around 2.5 million. These are people who have looked for work in the past 12 month but are not counted as part of the labor force. If they were included in the labor force, unemployment rate it would be 1.4% higher: 10.4%. A pretty sneaky way of hiding some of the unemployed.
The number of discouraged worked dropped significantly year-to-year. Last April there were 1.2 million. Currently there are 989,000 discouraged workers, a 17% drop. Discouraged workers have stopped looking for work because they believe no work is available for their skills.

Establishment Data
Non farm Payrolls increased by 244, 000. The private sector added 268,000 jobs which were reduced by government reductions. Retail trade stores added 57,000, business and professional services added 51,000, health care added 37,000 and manufacturing added 29,000.

Temporary help is a closely watched, bell-weather category. It grows during a recession as employers are unwilling to make the investment of hiring long term employees. When the economy picks-up, the demand for temporary help drops. Lately, as employers use of “temps” has changed, temporary help has stayed strong.
Temporary help was flat meaning that employers were hiring rather than using temporary help services.

Construction was also unchanged. Construction employment is also closely watched as an economic indicator. Construction employment has been depressed since the collapse of the housing “bubble” in 2007.

And finally some upward revision for past non farm payroll reports. The February new job creation was revised up from 194,000 to 235,000 and March was revised up from 216,000 to 221,000.

ADP reported 179,000 new jobs were added.

Everyday economics: Today's topic Teacher Salaries

2011-05-01T21:31:00.000-07:00

Got in to an arguement with a teenagers about teachers salaries and tenure. Actually college students studying teaching, but they looked like teenagers to this old man. I tried to explain the purpose of tenure: to give teacher the freedom to explore and innovate.

I mentioned how under paid teachers were comapred to the rest of the professional class. And the NYT article on teacher salaries. Here.

We discussed the problem of teaching to the test. But all the simple questions quickly end up with philosophical and moral choices. What should we teacher our kids ?? What kind of society do we want ?? What is a teachers role in society ?? How should we reward teacher, cops, firemen, prison guards ?

I got deaf ears. They insisted tenure was bad and teachers were lazy. However, it is mice to see people focused on the teaching profession even as they were set against it. At least they care and are willing to consider a different point of view.

But then they went back to the usual: "the current system is not working." But for a few moments they were thinking.

Note: Anyone who wants an advanced credit topic can look up service process R&D and innovation in teaching methods. Service process R&D is very difficult.

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The Answer: How to create jobs

2011-04-24T08:51:00.000-07:00

Yes, we have an answer to long term structural unemployment. In the academic world, We are finally starting to see what looks like the broad outline of of a job creation policy. The centerpieces are strong anti-monopolization regulation, support for small businesses, and education and training for the workforce. Conservatives would also all support for wage and geographic labor market flexibility.

Below is an important piece on corporate consolidation.

Here.

But then, as a rational thinking economist want-a-be, you then say what institution, private or public, if any could handle the task. During the 70's and 80's we trusted government regulator's to operate in the countries best interest. But conservatives has discredited any good government could do, so there is no one left fill the void. and encourage competition.

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Food Nationalism: Develop a local food and gourmet industry

2011-04-16T07:34:00.000-07:00

Developmental ideas that work local and globally

A key development idea is import substitution: Replacing imports with locally made products. This is true for 2700 Atlantic ave., Fort Greene, Brooklyn, Atlanta or Barbados. You always want to consumer products made within you local confines while being a net exporter outside your boundary.

The local food sector is a great target for import substitution. Food production provides lot of jobs, especially in the developing world. They may not pay very much but the large number of jobs helps.

One way to do this is to exploit local taste or create them. Almost every country and region has some sort of food nationalism. All countries have there own specifc recipies that they take pride in cooking. Some countries like Japan and France, have specific laws limiting the number and quality of imports. And almost all countries practice discrimination against some foreign foods. France is well-known example of food bigotry but almost every country has examples.

Conversely, many poor countries have very weak food nationalism cultures. They like imported goods and their status. I have been in two countries where gleaming supermarkets competed with local fresh fruit vendors. The street vendor sold mostly locally produced products. The stores sold the similar products for twice the price. Don't you know people nearly kill themselves getting into the supermarket. They were buying way more than just fruit.

Multinational companies work against such food nationalism for economic reasons. They try to sell the "American" or "European" lifestyle to developing countries. The promotion has have disastrous effects for local farmers and food producers.

Developing communities must promote their own products to keep more money in the local economy. Promotion through word of mouth and cell phone chatter would break though the usual market hype. It turns that "Local" is almost always best when it comes to food.

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National rate drops to 8.8%; Black Unemployment Rate rises in March

2011-04-15T17:57:00.000-07:00

The national rate dropped 0.1% to 8.8% of the counted workforce. There was a 216,000 increase in private sector jobs. Jobs increased in the following sectors: professional and business services, healthcare and leisure.

The Black Unemployment rate rose to 15.5% from 15.3%. The increase was small but the direction was worrisome. We also have concerns over the source of the increase: Black Male and Teen unemployment increases. The white unemployment rate is 8.0%.

The unemployment rate for Black men over 20 years old stood at 16.8% and the rate for women, 20-years and old was 12.5%. The Black teenage unemployment figure was 42% nearly double the white teenage rate of 22%.

The long term unemployed, 27-weeks or longer, increased from 43.9 to 45.5. The labor force participation rate stayed at 64.2. Part-time workers who want full-time work was fixed at 8.4 million.

Budget battle represents a discussion of core american values

2011-04-15T16:07:00.000-07:00

The heat and smoke from the "Budget Battle" has crowded out any discussion of unemployment or Black Economics. So we have to talk the issue. First, is there even a budget issue. Short-term: No. Inflation is in check. Interest rates are zero. There is excess capacity in the manufacturing and labor markets. The real short term problem remains which is unemployment: long-term, structural, and class based.

In the medium and long-term there is a real problem but of a smaller magnitude than is covered in the news. Yes, we spend more than we collect but it is easily corrected by reducing our spending on the military, health care and tax relief.

The real issues is the conservatives using the debt as an excuse to limit the size and especially the role of government in programs they don't like. They are willing to cut education, health and retirement account but not the military, fire & police or business tax incentives. It is really just a battle over fore beliefs disguised as a "Debt / Budget" battle.

At last the American public is starting to understand the issues. I hope we can have a deeper understanding of the issues.

Pay your fair shre

2011-04-07T18:34:00.000-07:00

Well, it looks like the tax issue is finally getting a fair discussion. For too long, large corporations and super-rich individuals have paid little or no taxes. They do it quietly and legally by following the letter of the law and not the spirit of the law. They use lobbyist to bend the rules to fit their own circumstance. Now many of the tactics are coming to light.

The New York Times reported that GE paid no taxes. Here. An Joseph Stigliz reported that the top 400 richest people in the US have an effective tax rate of 17%. Here.

These abuses have a common theme of doing whatever they can get away with. Of the rugged individual beating the "system" against the odds. Of David beating Goliath. Nothing could be further from the truth.

The little guy is actually the IRS, who collects money for the government to pay for teachers, pensions, healthcare and military spending. And Goliath is the 975 person tax department of GE. Or the slew of tax lawyers and tax accounants available to the rich.

Luckily, news websites are running stories about tax abuse by the wealthy.

There are also people fighting for tax justice such as the "Tax Justice Network". Here.

Why aren't the rich feeling the heat ?

2011-04-04T18:52:00.000-07:00

I am having trouble understanding why here in the US there is not more pressure on the rich to share some of their wealth. Either though taxes or compensation limits. The top 1% of the countries wealth has grown by 30% over the past 30 years while the median income has barely moved.

My theory is that the large middle class majority is happy with the status quo because:

1) they personally have not felt the pinch. The great masses of people have not really felt the sting. Materialistically, they live a very good life compared to the rest of the world and they know it. They can see others on TV. They are not starving. They can buy any basic necessity they require. They still eat out on fridays and buy new pick-up trucks.

2) Materially, they have just about everything they need. In the US, even the poorest among us has some material luxuries. We all have cellphones, cable tv, and decent clothes. No one is starving. Many receive unemployment benefits.

3) Long-term problems like health-care, education, retirement and college tuition are far into the future.

4) They believe they are rich or might some day be rich.

5) They don't understand how much money the rich actually have and receive from the economy.

So, what If they do want more Black Owned Businesses in St. Thomas

2011-03-31T10:12:00.000-07:00

Well the answer is complex and multi-faceted.

So what's the solution ?? The answer is always the same: a complex combination of long-term capital formation and government policy. It takes a complex, cross functional solution led by government for about a generation(30 years). And it takes playing favorites: like using affirmative action for traditional disenfranchised groups, subsidies for very small business, and workforce skill development.

All of which is opposed by the entrenched business interest.

1) The best and cheapest capital is human capital (education, training and workforce development)

2) Monetary capital formation. Real-estate and home ownership continues to be the number one way to raise business capital. You must own you own home or apartment. It is your savings account.

3) Government policy to support small and native businesses. Government should support those traditional shut out of the banking sector.

4) Business training and development activities to graduate small, subsistence business to the next level as employment generators.

To push such a program forward takes political will and support of the people who say the current situation is bad but we can do some thing about it.

Hey, I did not say it would be easy.

The rich are different from you an me...

2011-03-28T19:08:00.000-07:00

They have more money.

Today I walked near $200 million dollars in maga-yachts docked in St. Thomas at while coming back from Pueblo Supermarket where I saved $2.50 on some Ginger Beer. These guys cruise around the caribbean on the mega-ultra luxury yacht so they can drink a crona at different bars around the the region.

Is there some thing more constructive they could do than burn gas sailing around the islands helping the cayman island government steal tax revenue. In fact there is something unsettling about a country like the Cayman islands that has to basic help the rich and criminal class avoid taxes, launder money and avoid international standards for boating.

Apparently, while many yachts sale under the Cayman islands "flag of convenience" they still register with the US coast guard when they are in port in case any real trouble happens. I say let them call the Cayman Island Coast Guard. Or let them pay their fair share of real taxes.

Shopping with the Evil Black Economist

2011-03-28T18:35:00.000-07:00

Where I spend my hard earned money, here is what I consider:

1) Black Owned Business (Sylvia's resturant)
2) Black Managed (MacDonalds, Burger King, Starbucks)
3) Black Employer (Wal-Mart, JC Penny, foot). Especially young Black mem
4) Provides quality services in Black Neighborhoods (Pathmark, Kroger, Safeway, Food lion, Winn Dixie)

What does not matter as much:
1) They treat me nicely when they take my money
2) They are conveniently located down the block.
3) Reasonable price. I am willing to pay about a 2-5% more because it helps the community.

On vacation in the Carribean and looking for Black Businesses

2011-03-28T17:46:00.000-07:00

Well, I got a cheap package for vacation for a couple days, so I am here in St. Thomas. The population 50,000 and a small island economy(SIE). The unemployment rate is 8.5% according to the VI department of labor. The US national unemployment rate is 8.9%. Interesting place.

So everything seems good in paradise right ?

Well not quite. Few of the private jobs pay more than $7.25, the minimum wage. Blacks have done well in politics, civil service and education. They also make up many of the front line workers in all sorts of food, hotel and tourism businesses. But they are getting creamed when it come to ownership. Like almost all caribbean SIE's Blacks are struggling to own businesses.

The large hotels are chains and employee many Black workers and managers. For example, Marriott's Frenchmen's reef employs about 500 people. However, the small hotels are family owned and white owned. They employee some low-level Black workers but any major management job is reserved for family.

The jewelery and retail stores are owned by people from the Middle East, Jewish and Indians. Furniture and hardware stores are also family controlled by whites of mid-easterners. Whites also control the yacht tendering and maintenance business, major construction and real estate development companies. All of these business are kept in the family,so there is little chance for Black ownership.

Blacks do run the government and the transportation industry. They handle the majority of low-end retail, non management jobs.

However, the level of opportunity "feels" less than in the states. Many Blacks and educated Virgin Islanders leave for the mainland to go to school and never return. Actually, any one with ambition generally leaves; white, Black, young or old, immigrant or native. People from the USVI do well in the US, just like any other immigrant person.

Is the lopsided business situation really that bad ? Are people happy ?

Well, if you really want to change something you have to have a certain dissatisfication with the existing order of things. People have to want to change the status quo enough to make some sort of sacrifice. And that does not seems happening. People, across the board, are quite happy here in the USVI. They also have better health and a longer life span than the average US continental. They have a close network of family and friends to keep them going. Finally, they have basic jobs and government jobs that provide productive activity and a basic wage. All of which combined give a better life than those in the states.

So, I guess we shouldn't rock the boat.

Black owned businesses grew by 60% between 2002 and 2007

2011-03-20T18:18:00.000-07:00

The US census bureau released the 2007 survey of business owners(SBO)on February 8th, 2011. Here.

The report showed that Black Owned businesses increased by 60% between 2002 and 2007. The survey is conducted every five years. New business formation increased by only 18% in the general population, 60% in the African-American community. The number of Black owned business increased to 1.9 Million (2007) from 1.2 Million(2002). However, 1.8 million of the businesses had no employees.

It is important to note that the results were collected right before the largest recession since 1932 hit the US economy.

The rate of Black new business creation was greatest in the south from Louisiana to Virginia. However, the largest number of Black owned businesses remained in the largest cities such as New York City (Brooklyn)(204,000), Cook County (Southside Chicago)(83,000) and LA county (60,000).

Of the 1.9 million businesses only 106,000 had paid employees. These businesses employed 921,000 people with a total payroll of $23.9 billion.

The report is the result of a survey of US business owners conducted every five years. The survey covers type of business (NAICS code), race, gender, ethnicity, revenues, number of employee and geographic location.

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