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Article Artículo

The Missing Workforce: It's Worse Than the Post Says

The Post had a good piece noting the large number of people dropping out of the workforce, presumably because they can't find jobs in the weak economy. However the problem is likely worse than the piece indicates.

There are a large number of people who do not respond to the Bureau of Labor Statistics' Current Population Survey (CPS), the standard survey used to measure labor force participation. In recent years the non-response rate overall has been close to 12 percent, as opposed to just 5 percent three decades ago. The non-response rate varies hugely by demographic group. For older white men and women it is 1-2 percent. By contrast, for young African American men it is close to one-third.

The Bureau of Labor Statistics effectively assumes that the people who don't get picked up in the CPS are just like the people who do. This assumption may not be plausible. The people who don't respond may be more transient or may have legal issues that make them less willing to speak to a government survey taker. For these reasons they may be less likely to be employed than the people who do respond to the survey.

My colleague, John Schmitt, examined this issue by looking at the 2000 Census (which has a 99 percent response rate) and comparing the employment rates overall and for different demographic groups in the CPS and the Census for the months when the Census was conducted. He found that the overall employment rate was 1.0 percentage point higher in the CPS. For groups with high non-response rates the gap was larger, with a gap of 8 percentage points for young African American men.

Dean Baker / April 07, 2013

Article Artículo

The Media Again Turn to Surprised Economists as Experts on Job Report

It was easy to see that the economy was not growing rapidly long before Friday's jobs reports. The economy grew at just a 0.4 percent annual rate in the fourth quarter. While this weakness was largely attributable to unusual factors, even averaging in the prior quarter the economy only grew at a 1.7 percent rate in the second half of 2012.

It's not clear what someone would have had to have been smoking to expect a marked upturn from this pace. Did they think the ending of the payroll tax cut would spur growth? Did the fact that new orders for capital goods (excluding aircraft) in February of 2013 were virtually unchanged from February of 2012 lead them to expect an investment boom? Perhaps the fact that job growth over the  5 months from October to February averaged just 40,000 less than in the same months a year ago was the basis for predictions of acceleration?

Yes, housing construction is up. That's good news. Residential construction is 2 percent of GDP. Get out your calculator and figure out how much impact this has.

In short, any serious look at the data would have told people that the economy was weak before the March numbers were released yesterday, nonetheless the Post tells us:

"The economy added a paltry 88,000 jobs last month, less than half the number expected. The healing housing market, resilient consumers and record highs on Wall Street had fueled hope that the recovery was finally taking off. That momentum was seen as essential to helping the economy overcome the drag of automatic government spending cuts known as the sequester over the next few months."

Dean Baker / April 06, 2013

Article Artículo

Brazil

Latin America and the Caribbean

Venezuela

World

The Real Lula Speaks Out

Earlier this week, former president of Brazil Lula da Silva gave a warm and unequivocal endorsement of Nicolás Maduro in Venezuela’s presidential race.  Given that the campaign officially started only two days ago, it would seem that this announcement was well timed for maximum effect.  The video was screened first at the Sao Paulo Forum on Monday at a meeting in Caracas , and it has since been aired as a campaign ad on several television stations.  Lula made a similar video praising Chávez for the Sao Paulo Forum in 2012. 

As many have pointed out, there is a deep irony here.  While Venezuela’s socialist party (PSUV) receives praise from political leaders of the Workers Party in Brazil, Henrique Capriles has lauded Brazil’s policy choices under Lula and his successor, Dilma Rousseff.  Capriles has pointed out gains under both these leftist leaders, and has said that he plans to follow the “Brazilian model” if elected, even saying “I'm 100 percent Lula.” 

Capriles’ basic argument is that Venezuela has been misgoverned under Chávez and needs to undergo a transformation like the one Brazil experienced since 2002, when Lula was elected.  What he does not acknowledge is that while both Venezuela and Brazil have been successful in achieving a more equitable society, in some ways Venezuela has been more successful.  For example, during the period when both Lula and Chávez were in office both inequality (as measured by the Gini coefficient) and poverty rates dropped faster in Venezuela.  Also, it is important to note that these statistics are based on measures that include only household income, which underestimates gains made through public programs like those in education, healthcare and pensions, which were expanded more in Venezuela than in Brazil.

Capriles is trying to tap into the “good left / bad left” dichotomy in which Brazil is praised as a regional political leader (and one with a gigantic economy), while distancing himself from the ALBA countries.  If we look at recent history, though, this arbitrary division doesn’t make sense.  At the last Summit of the Americas, the region united around the issues of (1) ending Cuba’s isolation, (2) finding alternatives to the drug war and (3) ending the occupation of the Falklands/Malvinas Islands.  Further, we can see that the ALBA countries are not a fringe group and have important ties to leftist political parties in the entire region, as well as the governments of Argentina and Brazil.

CEPR and Stephan Lefebvre / April 04, 2013

Article Artículo

They Didn't Think Anyone Was Watching

Erskine Bowles, who served as President Clinton’s chief of staff and president of the University of North Carolina, has made several million dollars serving on the boards of companies whose stock prices have plummeted. He was a director at General Motors at the time it went bankrupt and at Morgan Stanley when it was bailed out by the government. He was also a director of Facebook during the period when the value of its stock fell by close to 50 percent. 

This is not supposed to happen. While top executives can expect to be well-compensated when their actions substantially boost stock prices, they should not get large paychecks when they have failed. It is the job of directors on corporate boards to prevent this sort of fleecing of shareholders.

But they aren’t doing their job. They don’t think anyone is watching. Well, we are. 

The Huffington Post has agreed to partner with CEPR to host a new website called Director Watch. Director Watch will bring to light the names of directors who get large paychecks even as the companies they oversee are going down the tubes. 

CEPR and Dawn Lobell / April 04, 2013

Article Artículo

Robert Samuelson Calls Me Nobody

In his column today Robert Samuelson talks about the euro zone crisis and its latest manifestation in Cyprus in the context of the new book, The Alchemists, by his Washington Post colleague Neil Irwin. At one point he tells readers:

"The constant goal, as Irwin shows, has been to prevent a collapse of the global financial system, which could plunge the world economy into a genuine depression. Everyone embraces the goal..." (emphasis added)

Well not everyone shares the goal of preventing a financial collapse at all costs. That's in part because some of us know that there is no reason that such a collapse would plunge the world into a genuine depression.

The world has the tools to reverse the impact of a financial collapse and restore the economy back to a normal growth path. This was demonstrated a decade ago by Argentina. It defaulted on its debt and broke with the dollar in December of 2001. This led to a full-fledged financial collapse, which was followed by a sharp plunge in output in the first quarter of 2002.

By the second quarter its economy had stabilized. By the second half of 2002 its economy was growing rapidly and by the summer of 2003 it had made up all the ground lost from the financial collapse. It continued to growth rapidly until the world recession brought Argentina's economy to a standstill in 2009.

Source: International Monetary Fund.

Dean Baker / April 04, 2013

Article Artículo

Latin America and the Caribbean

Venezuela

World

So-Called ‘Civil Society’ in Post-Chávez Venezuela

There is a powerfully dangerous and condescending myth circulating about so-called ‘civil society’ in Venezuela, which goes something like this: as Daniel Levine put it on a recent radio program, “there’s just not independent groups as we conceive of civil society” in Venezuela. Focusing above all on the Communal Council phenomenon, Levine portrays these directly democratic institutions not as the radically participatory experiment they claim to be, but instead as little more than a cynical ruse by the late Hugo Chávez and his movement to enforce political objectives from above.

I can trace my interest in moving to Venezuela to this very question of civil society. As a young Ph.D student, I clearly remember reading a number of academic articles which attempted to clumsily impose the pre-established conceptual framework of civil society onto the development of participatory institutions in Venezuela. First with the nascent Bolivarian Circles and later with the Communal Councils formally established in 2006, U.S. academics have held up the template of civil society, scratched their heads as to why it doesn’t fit, and then concluded that since it does not, something must be wrong with Venezuela and not with their own concept. The Circles and the Councils, it was and continues to be argued, are not truly independent of the state, and therefore cannot be civil society “as we conceive.”

Firstly, the concept of civil society as we conceive it emerged and was cemented in struggles against dictatorship in the Southern Cone and against Soviet bureaucracy in Eastern Europe, displacing the far more critical variant associated with Gramsci. This new version privileges autonomy from the state as the criterion, systematically obscuring other crucial forces from which organizations might want to remain autonomous: imperial powers, the capitalist market, etc.

As a result, many accept as nominally ‘independent’ many forces that are nothing of the sort: private economic interests, NGOs with powerful funders, and foreign-backed political parties. Such forces constituted the bulk of the organized Venezuelan opposition, whose ‘civil’ credentials are questioned by few. Some have therefore described the 2002 coup against Chávez (which was reversed after 48 hours) as a “civil society coup,” and rightly so. It was this appropriation of an uncritical concept of civil society more than anything else that led many Venezuelan Chavistas to abandon the language of civil society at the same time that the anti-Chavistas seized upon it: this concept doesn’t describe what we’re doing, so let them have it.

CEPR and George Ciccariello-Maher (guest post) / April 03, 2013