Political Economy category archive

The United States was happily selling its excess chicken feet (which are pretty much all its chicken feet) to China, until China slapped a duty on them.

Then suddenly last year, it all went awry. China began imposing stiff duties — including a tax of more than 100 percent — on those American chicken parts. The move was in response to a request by Chinese chicken farmers and manufacturers, who claimed the U.S. government was unfairly subsidizing the American poultry industry through low feed prices and then selling the “chicken paws,” as they’re known in industry parlance, into China at below-market cost.

The Chinese move raised an interesting legal question: How can the United States be dumping an item at below cost in China when that item is considered virtually worthless at home?

I haven’t decided a policy opinion on this, but I find the story has a bit of irony, as almost everything in a typical American consumer-goods store is made in somewhere else.

The local rag has a long, detailed story about the proposal to shovel money to a developer to build a hotel adjacent to the Convention Center so as to magically materialize tourists.

It reminds us that, for their previous trick, consultants predicted that the Convention Center itself would magically materialize tourists.

That hasn’t worked out so well:

Like the Pavilion before it, the convention center has never made money. The city spends about $5.8 million a year to operate it and takes in $3.6 million in user fees, leaving an annual city subsidy of about $2.2 million. (The city further pays $15.1 million a year on debt service for the facility, money that comes from the Tourism Investment Program, which is derived primarily from hotel, restaurant and amusement taxes).

Believers in developer magic are doing the same thing that believers in magic tricks have always done, as illustrated by the paragraph that preceded the one I quoted above:

They are listening the magicians’ patter rather than watching their hands.

“The center’s success should be measured by its overall impact on the community,” said Courtney Dyer, convention center manager. “It draws people to the city who wouldn’t otherwise come, it fills hotel rooms during our traditional slow season, and the space is there as a resource for local groups.

“I’d say it’s doing what it’s supposed to do.”

Yes indeedy-do it sure is. It’s filling developers’ top hats with money.

This magic act will be same as the Convention Center and the Pavilion that preceded it: Developer magic will appear another white elephant while disappearing the money.

How touching the faith in developer magic.

This is funny.

In other news, the late night horror show goes primetime.

If this keeps up, it may turn into a trend.

Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 366,000, the Labor Department said. That was the lowest level since May 2008.

The prior week’s claims data was revised up to 385,000 from the previously reported 381,000.

(snip)

The four-week moving average of claims, considered a better measure of labor market trends, fell 6,500 to 387,750 — the lowest since mid-July 2008.

The number of people still receiving benefits under regular state programs after an initial week of aid edged up 4,000 to 3.6 million in the week ended December 3.

Once more, the story does not mention how many persons have fallen off the chart.

Slightly better. According to the story, it’s unclear how much of the decrease can be attributed to seasonal jobs.

Jobless claims dropped by 23,000 to 381,000 in the week ended Dec. 3, the fewest since February, Labor Department figures showed today in Washington. The median forecast of 47 economists in a Bloomberg News survey called for a drop to 395,000. The number of people on unemployment benefit rolls and those getting extended payments also decreased.

(snip)

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 211,600 to 3.31 million in the week ended Nov. 19.

I mentioned developer magic last week in conjunction with the scheme of some in Virginia Beach for the city to fund a developer’s construction of a new hotel.

A refresher on how it works: the city gives money to a developer to pull a rabbit out of a hat, magically making tourists favor Virginia Beach over, for example, Ocean City or Myrtle Beach.

The developer disappears the money and the rabbit stays in the hat.

Meanwhile, the hotel sits half-empty, surviving on the city’s guarantees, until comes another developer to promote another “public-private partnership” (see below) to convert the site to condominiums or retail space or something, promising that, like a weekend in the Bahamas, it will restore the magic. &c.

Here’s the latest in the story.

The resident curmudgeon at the local rag tore into this issue yesterday, and she had facts and figures. Unlike City Council’s numbers, they are based on facts, not on developer’s projections. A snippet:

Sanders is the author of academic articles with titles like “Convention Center Follies,” “Convention Mythology” and “Flawed Forecasts.” But what does Sanders know? He’s just a graduate of Johns Hopkins with a doctorate from Harvard, a member of Phi Beta Kappa and a guest scholar for the Brookings Institution.

“This is not an ideological issue for me,” Sanders told me Tuesday. “I don’t oppose public spending on the stuff that makes sense…. But it’s the same script and the same scenario everywhere.”

From coast to coast, in cities large and small, politicians salivate over inflated visions of convention business. They build magnificent facilities and then chase conventions by slashing their fees and pouring public money into ancillary projects designed to give their centers a competitive edge.

After years of studying the convention industry, Sanders says he’s not surprised to find municipalities that are struggling to balance budgets and pay teachers that can miraculously find money to throw at their convention centers. These exhibit halls inevitably come with overblown promises of stampeding visitors, millions in tax receipts, and hotels packed with conventioneers.

Travelers don’t go to cities to visit hotels.

Travelers go to hotels to visit cities.

All the rage right now.

Here’s how they work:

A legitimate governmental function needs doing, such as, say, an expressway needs to be built. Instead of the building the expressway directly with tax money, the government gives the tax money to a private company, which uses it to pay for executive bonuses and country club memberships.

Years later, a new sidewalk is christened.

With toll booths.

Jay Bookman, while discussing some proposals in Georgia, sums up the underlying methodology.

They (the state–ed.) want to take money out of your pocket and give it to other people who don’t need it as much as you do.

Robert Reich recalls Henry Ford’s decision to pay his employees enough to buy his cars, then remuninates on refusing to learn from the past. A snippet:

In the years leading up to the Great Crash (1929–ed.), most employers forgot Henry Ford’s example. The wages of most American workers remained stagnant. The gains of economic growth went mainly into corporate profits and into the pockets of the very rich. American families maintained their standard of living by going deeper into debt. In 1929, the debt bubble popped.

Sound familiar? It should. The same thing happened in the years leading up to the crash of 2008.

The latest data on corporate profits and wages show we haven’t learned the essential lesson of the two big economic crashes of the last 75 years: When the economy becomes too lopsided – disproportionately benefiting corporate owners and top executives rather than average workers – it tips over.

In other words, we’re in trouble because the basic bargain has been broken.

Mixed, but, for all practical purposes, status quo ante.

Jobless claims climbed by 6,000 to 402,000 in the week ended Nov. 26 that included the Thanksgiving holiday, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg News survey called for a drop to 390,000. The number of people on unemployment benefit rolls and those getting extended payments increased.

(snip)

Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, rose to 395,750 last week from 395,250, which was a seven-month low.

The number of people continuing to receive jobless benefits climbed by 35,000 in the week ended Nov. 19 to 3.74 million.

Via BartCop.

Brave New Films contrasts the defense war industry’s claims about their role in providing employment with economic facts.

Surprising result: It ain’t necessarily so.

For all practical purposes, no change. Reuters tries to present that as something positive:

New claims for unemployment benefits rose slightly last week but held below 400,000 for the third straight week, suggesting the labor market was gaining traction.

Initial claims for state unemployment benefits climbed to a seasonally adjusted 393,000 from an upwardly revised 391,000 in the prior week, the Labor Department said on Wednesday.

(snip)

Initial claims below the 400,000 mark are normally seen as pointing to some healing in the jobs market.

The four-week moving average of claims, considered a better measure of labor market trends, fell 3,250 to 394,250, the lowest since April.

As usual in these stories, there is no mention of how many persons no longer eligible for benefits are still out of work.

But the Dow is over 11,000.

And I do mean rundown.

Once more, no mention of how many persons are no longer eligible for benefits, yet remain unemployed and living in their cars in Walmart parking lots.

Applications for jobless benefits decreased 5,000 in the week ended Nov. 12 to 388,000, the lowest level since April, Labor Department figures showed today in Washington. Economists forecast 395,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls fell to a three-year low.

(snip)

The four-week moving average, a less-volatile measure, dropped to 396,750 from 400,750.

The number of people continuing to collect jobless benefits decreased by 57,000 in the week ended Nov. 5 to 3.61 million, the fewest since September 2008. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments dropped by about 70,400 to 3.46 million in the week ended Oct. 29.

Emphasis added.

The Barnes residence is part of a growing line of new homes marketed to multigenerational families, a category that increased by 30 percent from 2000 to 2010, according to the U.S. Census Bureau. KB Home, Lennar Corp. (LEN) and PulteGroup Inc. are among the builders that offer models with second master bedrooms, kitchenettes and separate entrances.

Those features may help lure buyers at a time when new homes are selling at a record slow pace and more Americans are living with extended families, said Megan McGrath, a homebuilding-industry analyst with MKM Partners LP in Stamford, Connecticut.

One of the things that broke people do is move in with each other.