The Bernie Sanders Media Network is Doing Well

An encouraging sign that issues of real importance are gaining more attention, especially considering the outsized influence corporate mass media still has in promoting nonsensical trivialities.

The Vermont senator, who’s been comparing corporate television programming to drugs and accusing it of creating a “nation of morons” since at least 1979 — and musing to friends about creating an alternative news outlet for at least as long — has spent the last year and a half building something close to a small network out of his office in the Dirksen Senate Office Building on Capitol Hill.

He understands, but resents, the comparison to the man who’s described the news media as the “enemy of the people.” His take is different, and he has his own plans. “[Am I concerned] that people might see me and Trump saying the same thing? Yes, I am,” Sanders conceded, leaning back in a leather chair in a conference room in his office on a recent Tuesday, as footage of Mark Zuckerberg’s testimony one building over played on TVs throughout his office. Wearing his standard uniform — long tie, jacket in need of a few swipes with a lint roller — he launched into the critique now familiar to anyone who’s watched one of his rallies. “My point of view is a very, very different one. My point of view is the corporate media, by definition, is owned by large multinational corporations: their bottom line is to make as much money as they can. They are part of the Establishment. There are issues, there are conflicts of interest in terms of fossil fuel advertising — how they have been very, very weak, in terms of climate change.” Needless to say, the content he produces is not sponsored by advertisers.

Sanders hosts an interview show (“The Bernie Sanders Show”) that he started streaming over Facebook Live on a semi-regular basis after his staff got the idea in February of 2017 to film the senator chatting with the activist Rev. Dr. William Barber. After they posted that simple clip and it earned hundreds of thousands of views with no promotion, they experimented with more seriously producing Sanders’s conversation days later with Bill Nye.

[…]

Things escalated. Audio recordings of his conversations, repackaged as a podcast, have since occasionally reached near the top of iTunes’ list of popular programs. Sanders’s press staff — three aides, including Armand Aviram, a former producer at NowThis News, and three paid interns — published 550 original short, policy-focused videos on Facebook and Twitter in 2017 alone. And, this year, he has begun experimenting with streaming town-hall-style programs on Facebook. Each of those live events has outdrawn CNN on the night it aired.

“The idea that we can do a town meeting which would get a significantly larger viewing audience than CNN at that time is something I would not have dreamed of in a million years, a few years ago,” Sanders says.

[…]

“Because people turn on the television, and they’re working longer hours for lower wages, they don’t have health care, their kids can’t afford to go to college, and they’re watching TV: ‘Hey! What about me? You know, I don’t care that Trump fired somebody else today, what about my life or my kids’ lives?’ So what we do, is we look at media in a different sense, we try to figure out what are the issues that impact ordinary people, and how can we provide information to them?”

Patents and Copyrights as Plutocratic Tariffs That are Relics of the Medieval Guild System

A useful analysis rarely seen in the debate.

Many pundits have attacked Trump’s focus on steel and manufacturing because they argue, we should be more concerned about protecting US corporations’ patents and copyrights overseas. This doesn’t make sense.

At the most basic level, stronger and longer patent and copyright protection means that people in other countries have to pay more money. These government-granted monopolies often allow companies to raise the price of the protected items by a factor of 10 or even a 100. In this way, they are equivalent to tariffs of several thousand percent.

Just to be clear, this is not a point that can be honestly disputed by economists. If a government barrier raises the price of a good, it doesn’t matter whether we call that barrier a “tariff” or a “patent,” the impact on the market is the same.

This means if Pfizer’s patent protection on a drug allows it to raise the price it charges for a drug in China or some other developing country by a factor of 10 over the free market price, it is equivalent to imposing a tariff of 1000 percent on the drug. The difference is that instead of the tariff revenue going to the government, it goes back to Pfizer as higher profits.

It’s obvious that higher profits for Pfizer are good for its shareholders and top executives, but why should the rest of us be happy about people in developing countries paying more money to Pfizer for its drugs? Many of us care more about poor people being able to get drugs than Pfizer’s profits.

The story gets even worse. The more money that Pfizer and other US companies collect overseas for their patents and copyrights, the less these people have to spend on other goods and services. In effect, because Pfizer can charge more for its drugs, people in China and other countries have less money to spend on US-made cars and planes. How is this good for most of the people in the United States?

The pushers of stronger and longer patent and copyright protection will undoubtedly claim that higher profits will provide more incentive for research and creative work. This is true, but what are the numbers? If Pfizer gets another $1 billion in profit will they invest one percent of it in research?

That would be an increase, but that means the world would be spending $1 billion in higher drug prices to get an additional $10 million in research. That’s not a very good deal. And, even this research could be largely wasted on developing copycat drugs that are intended to gain a portion of a competitor’s patent earnings by duplicating a successful drug. Again, that could be good for Pfizer, but it is not especially helpful for the rest of us who want to see research focused on developing treatments for conditions where there is not already an effective drug.

To be clear, we do need a mechanism for financing research and creative work, but there is little reason to believe that patent and copyright monopolies are the most effective tool. These are relics of the Medieval guild system. We can do better in the 21st century.

Analysis Finds Only 6% of Corporate Tax Cut Gains Spent on Workers

Tax cuts for the large corporations who wrote the Republican tax scam legislation haven’t even lead to any increase in investment. In January, orders for non-defense capital goods actually fell by about 1.5 percent, and since orders take little time to initiate, they should have increased if the tax cuts were to spur investment. The reality of what a scam this whole ordeal was must be remembered for fighting off the same problem in the future.

While many corporations immediately launched aggressive PR campaigns crediting the tax plan Trump signed in December with new “investments” in employees, a study by the nonprofit group JUST Capital published on Wednesday found that the sensational headlines touting worker bonuses obscured the fact that the vast majority of the law’s benefits have gone straight to the pockets of wealthy shareholders.

“Post-tax cut raises, bonuses, and other worker investments announced by 90 of the largest publicly-traded corporations average just six percent of the total windfall these companies have received from the biggest tax cut in U.S. history,” the group found.

The analysis also showed that 56 percent of these worker investments came in the form of one-time bonuses, not permanent pay raises.

Additionally, the vast majority of companies examined invested none of their windfall into new jobs, while just a few companies said they invested a large percentage—making it appear that all of the companies invested more in jobs than they actually did.

Bolstering JUST Capital’s study was a New York Times analysis published on Monday, which found that rather than investing their tax windfalls, companies are using the extra cash to buy their own shares—a practice that further enriches already wealthy executives and investors but does little to nothing for workers or the overall economy.

“American companies have announced more than $178 billion in planned buybacks—the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm,” notes Matt Phillips of the Times.

That amount dwarfs the relatively small gains workers are seeing from the tax law.

As the economists Rick Wartzman and William Lazonick noted in a recent op-ed for the Washington Post, the “nation’s workers are getting woefully little, at least relatively speaking.”

“Peeking beyond the PR, our analysis finds that major corporations are planning to spend more than 30 times what they are putting in the wallets of employees on buying back their own stock,” Wartzman and Lazonick concluded.

Report Finds Significant Benefits to Canceling All Student Loan Debt

Canceling student debt is a proposal worth supporting, and it isn’t even radical when it’s considered that the student debt shouldn’t have been allowed to accrue anywhere near the depraved level of $1.4 trillion. It’s also not radical when it’s considered that there is enormous U.S. welfare granted to the rich and to major corporations, much more welfare than the amount that goes to poor and middle-income people.

report from a group of economists at the Levy Economics Institute of Bard College finds that there would be huge benefits if the federal government were to forgive all existing student debt. This would ripple out from young people struggling to pay off massive college loans to the economy as a whole, according to the report.

“The idea of canceling student debt is not just some crazy idea out of left field, but is actually something that could be done, and done in a way that has a moderately positive economic impact,” Marshall Steinbaum, a fellow and research director at the Roosevelt Institute and a coauthor of the report said in an interview.

“The way this and similar polices are often discussed is in a mode of ‘well can we really afford this?’ and the answer is definitely yes,” he added.

The report finds that canceling all student debt would likely lead to an increase in U.S. GDP between $861 billion and $1,083 billion over the course of 10 years. It would also lead to an increase of 1.18 to 1.55 million additional new jobs over the same period — that’s about 50% to 70% more jobs per year compared to an average of recent years.

This new analysis comes at a time when more than 44 million American have a collective $1.3 trillion in student debt — higher than both auto U.S. debt and credit card debt.

[…]

The report also finds that total loan forgiveness would cost the U.S. government approximately $1.4 trillion over the course of 10 years — a number that is almost exactly the same as what the CBO recently projected the Republican’s new tax bill would cost.

But researchers said that the positive impacts of canceling student debt would likely be more broadly felt than those of the tax bill.

“[The GOP tax bill] is going to add 1.5 trillion to deficits over the next 10 years,” Stephanie Kelton, Stony Brook University professor of public policy and economics, said in an interview. Kelton is one of the authors of the report, and recently worked as the chief economists for the Democratic minority on the Senate budget committee.

“What else could we do? Canceling student loan debt was just about perfect because it comes in at about 1.4 trillion and it’s almost six of one, half a dozen of the other in terms of the price tag,” she said.

Kelton emphasized that U.S. government shouldn’t be thinking of how it can spend money to help Americans as a zero sum game. But at the same time, if lawmakers can spend money to provide massive tax cuts for the wealthy and corporations, it can also afford to spend nearly the same amount to cancel student debt and grow the economy simultaneously.

Further Examination of Federal Reserve Reform Proposals

On MLK day, reform of the Federal Reserve should be noted as important to advancing the policy of what’s referred to as full employment, which MLK was very plausibly a strong advocate for. The link contains proposals for that objective, with particular attention being directed towards the malign effects banking interests currently mechanistically have on the Federal Reserve.

The Federal Reserve System has an unusual status as being a mix of public and private entities. The governors are of course explicitly part of the public sector, as presidential appointees subject to congressional approval. However, the 12 regional banks are private, being owned by the member banks in the district, which have substantial control over the district bank’s conduct.

This structure was put in place more than a century ago to fit the politics and the economy of the time. It is inconceivable that anyone constructing a central bank today would use the same framework. The archaic nature of the Fed’s design is perhaps best demonstrated by the distribution of the regional banks. Two are located in the state of Missouri. Meanwhile, the San Francisco region not only includes the whole state of California, but the rest of the west coast, and the states of Alaska, Hawaii, Nevada, Utah, Arizona, and Idaho, in all accounting for more than 20 percent of the nation’s economy.

While there were reasons that a mixed public–private central bank and regulatory system may have made sense at the start of the last century, this is no longer the case today. The United States is the only major economy with this sort of mixed approach. The Bank of England, the Bank of Canada, the Bank of Japan, and the European Central Bank are all purely public entities. It is recognized that the conduct of monetary policy, along with the lender of last resort and regulatory functions of the central bank, are necessarily responsibilities of the government.

[…]

While there does not seem to be much basis for concerns that the Fed will act to support the political party in power, there is a real concern about a structure that gives the financial industry a direct voice in the conduct of monetary and regulatory policy through their control of the regional banks. This is really an extraordinary structure without any obvious parallels in our governmental system.

Both aspects of this relationship make little obvious sense. The financial industry certainly has useful insights on the conduct of monetary policy, but it makes no more sense to give them seats at the table than the manufacturing or tech industry. Monetary policy has an enormous impact on the national economy and affects every sector in it; there is no reason to believe that the perspectives gained from working in the financial industry are uniquely valuable.

Similarly, the idea that an industry would be able to pick its own regulator is truly extraordinary. It is understandable that industry groups will try to lobby and in other ways influence the decisions of regulatory bodies. The pharmaceutical industry places pressure on the Food and Drug Administration (FDA) to approve drugs more quickly, the telecommunications industry lobbies the Federal Communications Commission (FCC) for looser standards on universal service, but in neither case are they given a direct role in appointing their regulators. No one would suggest that Pfizer or Merck should be able to appoint a commissioner on the FDA or that Verizon and Comcast should select one of the members of the FCC. The Federal Reserve Board is unique in this way, as the member banks within a district largely have the ability to control the selection of the bank president who plays a direct role in both determining monetary policy and regulation of the banks within the region.[1]

[…]

Inflation has been at relatively steady and low levels for most of the last three decades. In fact, since the Fed officially adopted the 2.0 percent average inflation target in 2012, the core inflation rate has consistently been below this pace. In other words, if we view the 2.0 percent inflation target as a proper goal of monetary policy, the Fed has failed by having too little inflation, not too much.

[…]

This subcommittee is considering a wide range of proposals that would alter the structure of the Fed. Several are quite useful in increasing openness and accountability. However, the ones which aim to give more control of the Fed in the hands of the banking industry, rather than officials appointed through the democratic process seem at odds with recent trends both in the United States and the rest of the world. It is difficult to understand the effort to privatize the conduct of monetary policy and to turn over control of financial regulation to the industry that is being regulated.

 

Government Budget Deficits as Overblown Concerns

Government budget deficits can actually be beneficial if the spending that results in them is in the public interest. This is contrasted with large trade deficits, however, which in wealthy countries have a negative impact on demand in the economy. Both of these truths are important to know for public policy debates.

There are three ways in which deficits or debt can be seen as a problem. First, large deficits can overheat the economy leading to high interest rates or high inflation. Second, a large debt can impose a significant interest burden on the government and implicitly on future taxpayers. The third way is that excessive indebtedness can cause a country to become uncreditworthy, making it difficult or impossible to finance the government. None of these issues plausibly apply to the United States at present.

The first point is the classic story in which large amounts of government borrowing pulls capital away from the private sector. This would be bad news because businesses and state and local governments would have to pay higher interest rates, which would reduce their investment. With less investment, we would see less productivity growth, which would mean that we would be poorer in the future.

There are times when excessive deficits may crowd out investment, but this is clearly not one of them. Interest rates are extraordinarily low. In fact, they are far lower than in the years at the end 1990s when we were running surpluses.

There also is no evidence that excessive spending has led to inflation. The Federal Reserve Board has been struggling for most of the last decade to raise an inflation rate it views as too low.

The second issue is that the debt service — the amount of interest that we pay on the debt each year — will impose a large burden requiring either higher taxes or cuts in other spending or some combination. There also is no basis for this concern at present.

The interest that the government pays on its debt each year comes to around 1.0 percent of GDP, after we subtract the amount that was paid to the Federal Reserve Board and then refunded back to the Treasury. By comparison, the interest burden was more than 3.0 percent of GDP at the start of the 1990s.

It is also worth noting that the much larger interest burden of the 1990s did not prevent us from having a very prosperous decade. In other words, there is a long way to go before we face any serious problem by this measure.

Finally, there is the argument that we could end up in the same situation as Greece was in a few years back, where no one wants to lend money to the U.S. government. There are two major reasons the United States will not end up like Greece.

First, we borrow in our own currency. The U.S. prints dollars; we don’t have to worry about being able to borrow them. By contrast, Greece borrowed in euros, which it did not print.

This brings up the second point; we could print so much money that we face hyperinflation, like Zimbabwe did in the last decade. In principle, that could happen, but the problem in that case would be having a weak economy, not having a large debt. As long as the U.S. economy remains strong and grows at a respectable pace, we will never end up like Zimbabwe.

If we need proof of this fact, we need only look at Japan. The country has a debt that is two-and-a-half times as large as the U.S. debt relative to the size of its economy. Nonetheless, it can borrow long-term at a near zero interest rate. Its inflation rate has also been near zero as the government has been desperately trying to increase inflation for the last two decades.

In short, the country has many real problems. Tens of millions of young people struggle to pay for college. Young parents struggle to pay for quality child care and tens of millions of people have inadequate health care insurance.

These are all issues that deserve our attention. The federal debt is just a huge distraction.

Economic Policy Institute Head Steps Down

Working with Jared Bernstein, Larry Mishel is the originator of the famous graph that shows the split between productivity and wages. Mishel is also notable for helping some important and good economists early in their careers. He’s therefore one of the people I am willing to give a tribute to on this site.

WHEN LAWRENCE MISHEL came to Washington during the height of the Reagan revolution, the options for a young leftist economist looking to make a difference were nearly non-existent.

“The liberal position was represented by the Brookings Institution,” Mishel told The Intercept, “which at the time was very free trade uber alles, hostile to industrial policy, not interested in workers and unions. The debate was between Brookings on the left, and [the American Enterprise Institute] and the Heritage Foundation on the right.”

And then there was the Economic Policy Institute, a new think tank designed to fill the ideological gap and shift America’s economic debate to the left. In 1987, Mishel joined EPI as a research director, later becoming vice president and eventually president in 2002. As his thirtieth year at EPI winds down, Mishel gets to see the Democratic Party finally move closer to the positions the think tank has always had. Now, he is stepping aside.

“The hallmark has been to center that an economy is only working if it’s working for the benefit of the vast majority,” Mishel said. “We hammered that every day.”

[…]

From the beginning, EPI elevated the daily struggle of those on the economy’s margins. Starting in 1988, Mishel and colleagues produced a biennial report, The State of Working America, with comprehensive data on wages, incomes, jobs, and wealth. The reports found a discordant trend in the economy: wage stagnation amid increasing productivity. Prior to the late 1970s, these two measures followed one another: as workers produced more goods, they made more money. When that changed, others made excuses for this bifurcation while EPI insisted that conscious policy choices shortchanged workers and funneled the gains to the very top, as evidenced by rising CEO compensation and the erosion of living wages. In other words, EPI argued, natural forces didn’t lead workers to their plight — those in power pushed them there.

If these themes of rising income inequality sound familiar today, they were practically a foreign concept at the outset. In 1994, Mishel and Jared Bernstein created a now-famous chart showing the split between productivity and the median hourly wage.

productivity

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Much of EPI’s work under Mishel served to reject pernicious myths about the economy, hardened into perceived wisdom by self-interested forces. EPI’s research found that social and economic disadvantage, not failing teachers or schools, depressed student achievement. It refuted that high school graduation rates were collapsing, an alternative fact used to push vouchers or charter schools. It proved that automation played little role in inequality. It laughed off the idea that CEOs were paid nearly 300 times more than the average worker based on a competitive race for talent.

[…]

As Mishel steps aside, he believes America needs a broad set of policies to rebuild worker power, things like raising the minimum wage to $15 an hour, empowering union organizing, ending worker misclassification in the “gig economy” to deny benefits and overtime pay, preventing arbitration agreements that limit worker options in a dispute, and banning non-compete clauses that stop workers from moving to similarly situated employers. These moves to strengthen worker bargaining power, collectively and individually, cut a path to robust wage growth for the 99 percent. “It will take bold proposals,” Mishel said. “If not, we won’t have a vibrant middle class, or a democracy.”

Mishel’s mission in 30 years at EPI was not only to identify the economy’s problems, but to demonstrate how to fix it. And he consistently brought complex insights down to a level of popular understanding, striving to reach the ordinary worker rather than the academy. The way he talked about the economy mirrored who he fought for. A garrulous man with a shock of white hair, Mishel cherishes that EPI has become a fixture in Washington, and that the poles of the economic debate have finally trended in his direction.