(What’s Left of) Our Economy: Let’s Stop Hiding the Main Facts About Multinationals and Trade

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Since U.S. trade policy is such a hot topic in this year’s presidential election, you’d expect that American leaders and voters and journalists could rely on reasonably good data for judging the claims of office-seekers and other participants. Sadly, when it comes to a crucially important globalization-related subject – the activities of multinational corporations – you’d be wrong. The following media and think tank examples show exactly what I mean.

Last week, Republican presidential candidate Donald Trump last week slammed Ford Motor Company for announcing the move of its U.S. small-car production to Mexico. This week, the firm denied his charges that it was a serial killer of American jobs, and noted that last year, it had moved big truck production from Mexico to American factories.

In the process, it made the plausible point that these sourcing decisions made eminent sense. Low-cost Mexico, Ford noted, was a great place for small-car production because these products are low-margin, Meanwhile, the higher priced United States was a perfectly fine place for building its larger, higher margin vehicles.

Of course, Trump could have countered by asking why truck production had been located in Mexico to begin with, and added that Ford had confirmed one of his previous indictment of such offshoring by stating that most of this new Mexico production would be imported back to the United States – a practice made much easier by the North American Free Trade Agreement (NAFTA).

But this debate – and so many others like it – could be easily resolved with the following information:

>The share of Ford’s total global vehicle and parts production located in the United States the year before NAFTA went into effect (1994), and the share located in Mexico.

>That Ford U.S.-Mexico division of labor today.

>The share of Ford’s Mexico vehicle and parts production sold in the Mexican market, exported to the United States, and sold to third countries pre- and post-NAFTA.

>The same export information for Ford’s U.S. production.

>The Mexican and U.S. shares of Ford’s vehicle content pre- and post-NAFTA.

>A breakdown of all these results by segment.

>A tally of Ford’s domestic exports to and imports from Mexico, and to and from the rest of the world, year-by-year since NAFTA’s signing. A breakdown detailing information for other Ford foreign production sites would be helpful, too.

That seems like pretty basic stuff. It also seems like the kind of information that’s absolutely essential for properly evaluating the impact of NAFTA – and similar trade policy decisions – on the American economy.

But Ford won’t produce it, and Washington doesn’t require such disclosure – agreeing with the company that it’s proprietary information crucial to competitive advantages and ultimate success. But as the press coverage make clear, Ford is free to release any information voluntarily, whether it illustrates the big picture or not, and does so with gusto when it portrays the company in a favorable light. Does that sound like a sound basis for policymaking to you?

The Peterson Institute for International Economics recently provided our second example of this problem. In a September 12 post, Senior Research Fellow Caroline Freund looked at the question, “Multinational Corporations: Friends or Foes of the American Worker?” and more specifically at the charge (leveled in this case by Democratic presidential candidate Hillary Clinton) that “Too many companies lobbied for trade deals so they could sell products abroad but then they instead moved abroad and sold back into the United States.”

She concludes that, although stagnating American wages are indeed a valid concern, “On balance, multinational corporations are very good for the US economy.” And in response to a question she received from a concerned citizens, she used the example of the Colgate-Palmolive Company and its Mexican-made toothpaste.

According to Freund, Colgate merits an American seal of approval because the company makes more of its profits in Latin America than in the United States; because its “future growth prospects are in emerging markets”; because the share of Colgate employees in America is roughly the same as the U.S.’ share of those profits; because low Mexican production costs generate savings for American consumers; and because research ostensibly shows that companies that boost their employment in Mexico tend to increase their American employment, too.

So Freund deserves credit for using company-specific statistics. But many crucial questions remain unanswered. In addition to the production, sourcing, employment, and trade information mentioned above (and for the entire company, not just toothpaste), it would be helpful to know if even those Colgate-specific data provided are typical of multinational companies as a whole. One reason for suspecting they’re not: Colgate makes consumer goods. Many of America’s leading offshoring firms are producers of parts and components and material for finished manufactured products.

Also, I wouldn’t be so sure about the emerging markets as Colgate’s most promising going forward – especially Latin America. The United States’ hemispheric neighbors benefited tremendously over the last decade or so from a boom in the prices of the raw materials on which their economies heavily depend. Unfortunately, few of them used the opportunity to diversify into higher value sectors that are more durable sources of prosperity. Once commodities demand began slowing, so did their growth. And in the case of the region’s giant, Brazil, along with Venezuela, the news looks like a horror story.

In addition, I’d like to know whether Colgate out so much manufacturing in Mexico before or after Latin America began taking off. Finally, as implied above, if the region goes completely into the tank, will the company move those factories to faster-growing places – including the United States, if it qualifies?

The way to fill this globalization-related information vacuum is obvious: Require such disclosures from the multinationals. The response to their concerns about divulging proprietary information is just as obvious: If all companies are required to release such business secrets, no one of them loses on net. And the penalties? Let’s just say, “Enjoy life as a global company without access to the U.S. market.”

Proposing these measures would bring an added bonus, too: Anyone or any company opposing them will stand revealed want to know less, not more, about America’s position in the world economy, and the policies that deserve responsibility.

Our So-Called Foreign Policy: An Empty Obama UN Farewell

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National leaders’ speeches to each year’ UN General Assembly – even those by American presidents – are rarely more than meaningless boilerplate or cynical bloviating. But President Obama’s address to the organization yesterday – as with some of its predecessors – is worth examining in detail both because it was his last, and because Mr. Obama clearly views such occasions as opportunities to push U.S. and international public opinion in fundamentally new directions where they urgently need to head.

In yesterday’s case, the president saw his mission as justifying his belief that Americans in particular need to reject temptations to turn inward from the world’s troubles, and more completely embrace forces that inexorably are tightening international integration economically and even in term of national security.

To be fair to Mr. Obama, he sought to offer “broad strokes those areas where I believe we must do better together” rather than “a detailed policy blueprint.” But even given this caveat, what’s most striking is how many of the big, tough questions he (eloquently) dodges.

Here’s the president’s main premise and conclusion:

…I believe that at this moment we all face a choice. We can choose to press forward with a better model of cooperation and integration. Or we can retreat into a world sharply divided, and ultimately in conflict, along age-old lines of nation and tribe and race and religion.

I want to suggest to you today that we must go forward, and not backward. I believe that as imperfect as they are, the principles of open markets and accountable governance, of democracy and human rights and international law that we have forged remain the firmest foundation for human progress in this century.”

This passage makes clear that Mr. Obama doesn’t buy my thesis that the United States is geopolitically secure and economically self-sufficient enough in reality and potential to thrive however chaotic the rest of the world. Nor does he believe the converse – that the security and prosperity the nation has enjoyed throughout its history has first and foremost stemmed from its own location, and from its ability to capitalize on its inherent advantages and strengths, not from cooperating or integrating with the rest of the world.

The president’s contention that “the world is too small for us to simply be able to build a wall and prevent it from affecting our own societies” rings true for most countries – even assuming that he doesn’t really think that this stark choice is the only alternative to complete openness to global developments and commerce and populations and authority, however promising or threatening. But he seems oblivious to America’s “exceptionalism” geopolitically and economically.

Even if I’m wrong, however, and even accepting Mr. Obama’s “broad strokes” objectives, this lengthy presidential address gives national leaders and their citizens almost no useful insights on how countries can achieve his goals. Here are just two examples:

The president recognizes the need to make the global economy “work better for all people and not just for those at the top.” But given the trade deals he himself has sought, how can worker rights be strengthened “so they can organize into independent unions and earn a living wage”? The president insisted again that his Pacific Rim trade deal points the way. But as I’ve noted, the immense scale of factory complexes even in smallish third world countries like Vietnam makes the necessary outside monitoring and enforcement impossible.

Similarly, no one can argue with Mr. Obama’s recommendation to invest “in our people — their skills, their education, their capacity to take an idea and turn it into a business.” But as I documented more than a decade ago in my The Race to the Bottom, governments the world over, including in the very low-wage developing world, recognize the importance of improving their populations’ skill and education levels. In addition, multinational corporations can make workers productive even in these very low-income countries – and continue paying them peanuts compared with wages in more developed countries. Why should anyone expect his recommendation to give workers in America a leg up?

It’s easy to sympathize with the president’s call “to open our hearts and do more to help refugees who are desperate for a home.” Who in principle is opposed to aiding “men and women and children who, through no fault of their own, have had to flee everything that they know, everything that they love,…”?

But as Mr. Obama indirectly admitted, many of these refugees come from a part of the world where “religion leads us to persecute those of another faith…[to] jail or beat people who are gay…[and to] prevent girls from going to school….” He also described the Middle East as a place where too often the “public space” is narrowed “to the mosque.”

It was encouraging to see him recognize the legitimacy – though perhaps not the necessity – of insisting “that refugees who come to our countries have to do more to adapt to the customs and conventions of the communities that are now providing them a home.” But is he blithely assuming success? And it was less encouraging to see him ignore the excruciatingly difficult challenge of adequately vetting migrants from war-torn and chaotic countries.

Finally, on the political side of integration, the president seems to lack the courage of his convictions. For despite his high regard for international law, and support for America “giving up some freedom of action” and “binding ourselves to international rules,” he also specified that these were long-term objectives – presumably with little relevance in the here and now. Indeed, Mr. Obama also argued that, even way down the road, the United States wouldn’t be “giving up our ability to protect ourselves or pursue our core interests….”

So it sounds like he’d relegate even future international law-obeying to situations that really don’t matter. Which is fine. But how that gets us to a more secure world is anyone’s guess.

It’s true that Mr. Obama will be leaving office soon, and that his thoughts no longer matter critically. But at the same time, American leaders have been speaking in these lofty globalist terms for decades. If the president is indeed right about global integration and the future, what a shame that he didn’t make more progress in bringing these ideas down to earth.

(What’s Left of) Our Economy: Still More Evidence of Flagging Manufacturing Productivity

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In April, I reported on the government’s release of detailed, industry-by-industry figures for labor productivity growth (or contraction!) in manufacturing, and noted that “these new 2015 figures show a head-scratching list of out-performers, mediocrities, and laggards. Specifically, the champs include lots of sectors that few would consider ‘high tech’ or “industries of the future’ or ‘knowledge-intensive,’ and the mediocrities include many that would be lumped into those glitzy categories.”

Today came comparably detailed statistics on multi-factor productivity in manufacturing – a broader measure of efficiency – and the results (for 2014, since multi-factor productivity takes longer to calculate) are at least as puzzling. The reasons are similar, too: They’re arguably strange enough, including over the long term, to warrant rethinking concepts like “advanced manufacturing.”

To recap, labor productivity tracks the amount of goods and services produced for each hour on the job by American workers. Multi-factor productivity looks at that same output-per-hour question, but measures the contribution of many other inputs as well, like capital and energy, and materials.

Because technology is so widely assumed to be the big driver of productivity – and multi-factor productivity in particular, you’d think that the list of 2014’s biggest winners in terms of annual growth would dominated by glitzy, tech-ie, futuristic type stuff. And how wrong you’d be!

Here they are, along with their specific 2014 figures:

magnetic computer drives: +7.4%

audio and video equipment: +7.3%

seafood product preparation & packaging: +7.1%

miscellaneous textile mill products: +6.2%

misc leather products: +5.6%

electric lighting +4.5%

household appliances +4.5%

misc furniture-related products: +4.5%

petroleum & coal products: +4.4%

basic chemicals: +4.1%

soaps/cleaners/toiletries: +3.2%

boilers/tanks/shipping containers: +3.1%;

textile & fabric finishing mills: +3.1%

Even the electronics items don’t scream “Silicon Valley!” It’s more like “computer hardware that mainly went to Asia long ago.” And what were the ten biggest productivity losers of 2013-2014?

tobacco processing: -9.8%

agricultural chemicals: -8.3%

miscellaneous transport equipment: -8.3%

ship & boat-building: -7.2%

apparel knitting mills: -4.9%

resin, rubber & artificial fibers: -4.4%

computer & peripheral equip: -4.3%

grain and oilseed milling: -3.5%

iron & steel mills: -3.1%

dairy products: -3.0%

communications equipment: -2.9%

household & institutional furniture: -2.9%

This list looks a little more as expected. But what’s communications equipment doing on it? That includes all the advanced internet gear. And iron and steel and resin are huge producers of high value goods.

Would looking at longer-term trends yield more comforting results? You be the judge. Here are the top ten performers when it comes to average annual multi-factor productivity growth between 1987 and 2014:

computer & peripheral equipment: +12.8%

semiconductors & electronic components: +9.6%

communications equipment +2.9%

audio & video equipment: +2.7%

magnetic computer drives: +2.1%

household appliances: +1.6%

miscellaneous transport equipment: +1.2%

coating/engraving/heat-treating metals: +1.3%

glass & glass products: +1.1%

electronic instruments +1.1%

tied at 1.0 percent: misc furniture-related products; motor vehicle parts; machine shops/threaded products; iron & steel mills; miscellaneous non-metallic mineral products; agricultural chemicals

It’s certainly good to see communications equipment and semiconductors up there. The rest? Not so sure about them.

The list of ten worse 1987-2014 annual averages seems even more sensible. Or at least much of it:

pharmaceuticals & medicines: -2.2%

cut & sew apparel: -1.9%

accessories/miscellaneous apparel: -1.7%

miscellaneous leather products: -1.1%

apparel knitting mills -1.0%

leather & hide tanning -1.0%

tobacco products: -0.9%

hardware: -0.8%

bakeries/tortilla products: -0.7%

paints, coatings & adhesives: -0.6%

textile finishing mills: -0.5%

footwear: -0.5%

You’re not alone, though, if you were stunned to see pharmaceuticals at the top of this list. That’s about as high-value and research-intensive as you get. And domestic producers face lots of foreign competition. At the same time, as I’ve noted in my posts on industries dependent on government subsidies, pharma benefits from gargantuan levels of public sector support for health care. Could there be some cause-and-effect working here?

Optimists can legitimately point out that these multi-factor productivity numbers are two years old. But overall manufacturing multi-factor productivity fell annually for three of the four years through 2014, and is actually down on net since 2005. Also bearish:  Although it’s often (and not completely unreasonably) claimed that the growth of intangibles-based services industries make economy-wide productivity data suspect, no such complications should be plaguing the manufacturing numbers. Consequently, there’s a heavy burden of proof on bulls who claim that a turnaround on this critical front in the cards soon – much less that it’s already begun.

Making News: New Marketwatch.com Op-Ed on Trump and NAFTA

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I’m pleased to report that my latest op-ed piece has just been published by Marketwatch.com.  Available at this link, it argues that Donald Trump has nailed it regarding what’s really wrong with the North American Free Trade Agreement (NAFTA): Rather than creating meaningful incentives for companies all over the world to manufacture in North America – as its founders intended – the two decade-old free trade zone has foolishly permitted goods from Europe and Asia to keep pouring into the U.S., Canadian, and Mexican economies almost unimpeded.

Keep checking in at RealityChek for the news on upcoming publications and other events!

 

(What’s Left of) Our Economy: Lopsided Trade is Making Financial Crisis 2.0 Likelier

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As RealityChek regulars know, my biggest fear about the U.S. and global economies concerns the likelihood that rebounding, trade-centered current account imbalances around the world will lead to an international financial and economic crisis just as they did in the previous decade. The big difference next time, of course, would be that major central banks would not have already poured trillions of dollars and yen and euros worth into major economies in a vain attempt to promote historically adequate growth.

So it’s great to see these concerns coming from a new source. As reported by Bloomberg last week, on top of the International Monetary Fund, the U.S. Treasury, and, as I’ve reported, leading academic economists) by a leading analyst from the HSBC bank.

To review quickly, the idea is that the record trade and broader payments shortfalls run by the United States in the “aughts” sent so much foreign capital flooding into the country that most incentives to use these funds prudently vanished. And with years of deregulation and lax regulation freeing American finance companies to concoct ever more reckless schemes to deliver acceptable returns in the face of this yield-depressing glut, much of the economy turned into a gigantic, housing- and consumption-fueled Ponzi Scheme.

I’d add three extra points. First, the offshored U.S. manufacturing production behind so much of the nation’s trade deficits greatly reduced the number of genuinely productive investments that the American financial sector could contemplate. Meanwhile, the burgeoning narrative that manufacturing was increasingly passe for an advanced economy like the United States kneecapped any expectations that adequate productive investment opportunities would return any time soon.

Second, the neglect of productive domestic sectors like manufacturing played a major role in plunging the United States into the secular stagnation trap so cogently described by former Treasury Secretary and Harvard economist Larry Summers. For an economy lacking adequate productive ways to foster growth – and especially a democracy – will be continually and sorely tempted to spur short-term growth by inflating dangerous credit bubbles.

Third, America’s proposed new trade deals, especially the Trans-Pacific Partnership (TPP) are likeliest to boost U.S. trade deficits further. Their most economically dynamic signatories depend heavily on net exporting for growth. Their foreign market-opening measures are either inherently difficult to enforce or subject to dispute-resolution processes stacked in favor of export-dependent defendants. And America’s remaining trade barriers are easy to identify and will be much easier for the other signatories to eviscerate. Indeed, TPP is modeled on the bilateral U.S. trade agreement with Korea, under which the American merchandise deficit has skyrocketed.

The analysis by HSBC’s Janet Henry doesn’t apparently go into this degree of trade policy detail. But it makes two especially disturbing points of its own. First, as made clear by this chart, the global imbalances in toto are back to their bubble-decade levels – and then some.

True, the American shortfall is down since peak bubble bloat. But it’s up since the current economic recovery began. Moreover, the historic sluggishness of the current expansion is undoubtedly keeping the current account and trade gaps down.

Second, the chart shows that the biggest source of resurgent current account surpluses is “Other Asia” – which of course includes Japan and other important TPP members. China’s chronic surplus hasn’t recovered quite as fast, but TPP could change that as well, since its inadequate rules of origin give outside countries a wide open backdoor into the new trade zone.

As strongly suggested by his renewed TPP push, President Obama either doesn’t know about these developments and relationships, or doesn’t care. If he succeeds in a lame duck session of Congress, or if his successor fails to heed the glaringly obvious trade policy lessons, Americans may look back on their current secular stagnation as an economic golden age.

Our So-Called Foreign Policy: Why Robert Gates is a Flawed National Security Guru

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The Wall Street Journal op-ed staff’s decision to publish Robert M. Gates’ article last Friday on how he sizes up the two major presidential candidates’ qualifications for the Oval Office makes sense only by the degraded and often mindless standards of the American political, policy, and media establishments.

Sure, as the tag line ostentatiously noted, Mr. Gates served eight presidents over 50 years, most recently as secretary of defense under Presidents George W. Bush and Barack Obama.” As a result, I’m certainly interested to know his views – and especially that, although Democratic nominee Hillary Clinton has a deeply flawed record, Republican Donald Trump is “beyond repair.” You should be, too. But should anyone regard Gates as the last word? I’m not convinced – nor should you be.

For starters, one of the presidents Gates served was Ronald Reagan – as a big player in that administration’s reckless and downright looney scheme (the so-called Iran-Contra affair) to evade Congress’ ban on supplying anti-communist Nicaraguan rebels with profits made secretly by selling arms to Iran’s terrorism-sponsoring, hostage-taking ayatollahs. Gates also seems to regard George W. Bush’s disastrous foreign policy presidency as standing within the bounds of acceptability. Hello?

At least as unimpressive, though, is Gates’ judgment regarding current foreign policy issues. Here are three examples. First, the former Bush and Obama Secretary of Defense warned that:

Every aspect of our relationship with China is becoming more challenging. In addition to Chinese cyberspying and theft of intellectual property, many American businesses in China are encountering an increasingly hostile environment. China’s nationalist determination unilaterally to assert sovereignty over disputed waters and islands in the East and South China Seas is steadily increasing the risk of military confrontation.

Most worrying, given their historic bad blood, escalation of a confrontation between China and Japan could be very dangerous. As a treaty partner of Japan, we would be obligated to help Tokyo. China intends to challenge the U.S. for regional dominance in East Asia over the long term, but the new president could quickly face a Chinese military challenge over disputed islands and freedom of navigation.”

True indeed. But then he upbraids both Trump and Clinton for opposing President Obama’s Pacific rim trade agreement, a position that he argues (despite presenting no evidence) “would hand China an easy political and economic win.” Indeed, Gates dredges up the know-nothing specter of China responding to Trump-ian tariffs with a trade war against America that it could well win because of all the U.S. debt it holds and because it’s “the largest market for many U.S. companies.”

Apparently he’s unaware that China’s debt holdings are a small fraction of the outstanding U.S. total, that the PRC remains much more important to American multinational firms as an offshore production platform than a final customer (which explains why the United States runs a huge trade deficit with Beijing), and that without adequate access to the American market, China’s export-focused economy and political stability would face mortal danger.

Worse, as chief of Mr. Obama’s Pentagon, Gates pioneered a relaxation of American export controls that greatly expanded China’s access to America’s best commercially produced defense-related knowhow. Talk about feeding the beast!

Gates’ critique of the Clinton, and especially Trump, Russia stances should inspire no more confidence. According to this supposed national security guru, neither Mrs. Clinton nor Mr. Trump has expressed any views on how they would deal with Mr. Putin (although Mr. Trump’s expressions of admiration for the man and his authoritarian regime are naive and irresponsible).”

As Gates notes, under Putin, “Russia [is] now routinely challenging the U.S. and its allies. How to count the ways. There was the armed seizure of Ukraine’s Crimea; Moscow’s military support of the separatist movement in eastern Ukraine; overt and covert intimidation of the Baltic states; the dispatch of fighter and bomber aircraft to avert the defeat of Syria’s Assad; sales of sophisticated weaponry to Iran.

There is Russia’s luring the U.S. secretary of state into believing that a cease-fire in Syria is just around the corner—if only the U.S. would do more, or less, depending on the issue; the cyberattacks on the U.S., including possible attempts to influence the U.S. presidential election; and covert efforts to aggravate division and weakness with the European Union and inside European countries. And there is the dangerously close buzzing of U.S. Navy ships in the Baltic Sea and close encounters with U.S. military aircraft in international airspace.”

But actually it’s Gates who’s leaving the biggest questions unanswered. Does he now view the targets of Putin’s aggression as vital U.S. interests that merit a defense guarantee that could expose the United States itself to nuclear attack? When exactly did Crimea and Ukraine, which are so close to Russia that they cannot possibly be defended by Western conventional forces, attain this status? Why were American presidents going back to 1945 wrong to take exactly this position (including all of those he served)?

Indeed, what’s changed since Gates himself recognized this reality, and warned former President George W. Bush that the NATO expansion pushed by him and his predecessor, Bill Clinton, would needlessly provoke the kind of Russian push-back now underway? And if Gates hasn’t reversed himself on Russia, why is he so scornful of Trump’s evident interest in cutting a deal with Putin?

Gates is non-partisan, but no better, when it comes to the Middle East. He accuses the two candidates or failing to define “what the broader U.S. strategy should be toward a Middle East in flames….” But his critique of Trump is especially off base. According to Gates, the Republican candidate has “suggested we should walk away from the region and hope for the best. This is a dangerous approach oblivious to the reality that what happens in the Middle East doesn’t stay in the Middle East.”

But he misses the essence of Trump’s position, which is defending America from threats emanating from the region at America’s borders – which are relatively controllable – versus in that terminally dysfunctional, faraway region – which is completely uncontrollable. Gates can legitimately disagree with this approach (which I have repeatedly endorsed), but he can’t legitimately claim that it doesn’t exist.

Gates’ critique extends to several other current flashpoints, but what’s especially revealing to me is how this supposed diplomatic sage completely mis-identifies the biggest foreign policy question facing America’s leaders and the public. It’s not, per his formulation “how [the next president] thinks about the military, the use of military force, the criteria they would apply before sending that force into battle, or broader questions of peace and war.”

As I’ve been writing since the mid-1980s, that kind of thinking puts the cart before the horse. (Here’s a good summary of my first lengthy article on the subject, which unfortunately is not available in full on-line.) America’s main foreign policy challenge is figuring out its principal overseas interests, and basing its decisions on using force on the importance of those goals. Otherwise, debates on going to war and other uses of military power will be conducted in a strategic vacuum – which already too often has been the case.

Given Gates’ wealth of experience, it’s fine for The Wall Street Journal – or any other news organization – to grant him a prominent forum from time to time. How much better it would be, however, for editors and reporters and pundits to ask him, and themselves, if he’s ever displayed any learning curve.

Im-Politic: The Mainstream Media Covers Up Clinton’s Birther Link

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We now have a foolproof test of whether the Mainstream Media deserves even a smidgeon of trust from readers and viewers for coverage of the 2016 presidential campaign: See how a news organization has reported – and whether it starts to report – that one of Hillary Clinton’s closest confidants is now credibly accused of spreading in 2008 the rumor that President Obama was born overseas (and therefore was never eligible according to the U.S. Constitution to serve in the Oval Office).

Before fans of the Democratic presidential nominee and/or haters of her Republican rival Donald Trump become apoplectic at reading this, please keep in mind that posing the above challenge does not mean that I endorse Trump for president, that I think he’s a good person, or that I don’t recognize his own prominent role in pushing the so-called “birther” story. Nor does this position of mine mean that I view as fact the claim about Clinton aide Sidney Blumenthal. (For the record, he has called it “false. Period.”)

What it does mean is that I’m arguing that the country’s leading sources of information about the world’s most important political event – a U.S. presidential election – have now been presented with a claim from an entirely respectable source (one of their own!) that one of the earliest proponents of the birther story (which of course has been denied by the president himself and indignantly by former Secretary Clinton) was a long-time associate of the Democratic nominee. And so far, the verdict is clear: Much of the Mainstream Media has flunked badly.

Let’s leave out opinion columns and unsigned editorials, since they’re not supposed to be objective accounts of events. Let’s even leave out so-called “news analyses” – which although they tend to appear in the news sections of publications and websites, are at least labeled as something other than supposedly straight reporting. And let’s quickly review what we know for sure.

Yesterday on Twitter, a former head of the McClatchy newspaper chain’s Washington, D.C. Bureau stated that Blumenthal had told him “in person” during the 2008 Democratic primaries that Mr. Obama was born in Kenya. Then-Senator Clinton was the future president’s opponent for that year’s Democratic nomination in the White House race. McClatchy is a national newspaper chain that publishes major dailies in cities including Miami, Florida; Charlotte, North Carolina; Dallas, Texas; and Kansas City, Missouri.

As for Blumenthal, this lengthy account, among others, should make clear that his intimate association with both Clintons stretches back several decades. Indeed, Hillary Clinton intended to name him as one of her senior aides at the State Department. And even though the new Obama administration quickly scotched the idea, the new Secretary and Blumenthal stayed in continual touch during her tenure – as so many hundred of her released emails show. His access, in fact, was so good that 24 of them contained information that was classified at the time as confidential or secret – and still is. (See the previous linked item.)

So the contention by former McClatchy newsman Jim Asher was undeniably important. In a subsequent email to his former colleagues, he elaborated:

Mr. Blumenthal and I met together in my office and he strongly urged me to investigate the exact place of President Obama’s birth, which he suggested was in Kenya. We assigned a reporter to go to Kenya, and that reporter determined that the allegation was false.

At the time of Mr. Blumenthal’s conversation with me, there had been a few news articles published in various outlets reporting on rumors about Obama’s birthplace. While Mr. Blumenthal offered no concrete proof of Obama’s Kenyan birth, I felt that, as journalists, we had a responsibility to determine whether or not those rumors were true. They were not.”

So how did The New York Times, which has long fancied itself the world’s “newspaper of record,” deal with this development? It didn’t. The paper’s main article about the latest birther-related developments contained no mention of the Blumenthal. And the only reference to the 2008 Clinton campaign was this brief paragraph:

During the 2008 Democratic contest, a senior strategist for Mrs. Clinton at one point pondered, in an internal memo that was later leaked, the ways in which Mr. Obama’s personal background differed from those of many Americans.”

(Just FYI, the senior strategist in question – pollster Mark Penn – was really senior, and also a leading Clinton adviser for many years.)

The Washington Post‘s main news story also ignored Blumenthal’s reported actions, though it did mention the Penn memo – which it said was written in 2007 (i.e., incredibly early in the 2008 campaign). In addition, the Post quoted by name a then-top Clinton campaign official’s for-attribution claim that a volunteer in Iowa was let go for a similar suggestion.

The newspaper Politico doesn’t have the national reach of The Times or the Post, but it is considered must-reading by the intertwined political-media-and policy establishments in Washington. Sometimes it’s hard to tell with this publication where hard news ends and that murky news analysis category begins. But three of its posts on the alleged Clinton campaign role in fostering birtherism omitted any mention of the Blumenthal-related charges, too. They’re found here, here, and here.

And in case you’re wondering – because the newsmagazines have clearly lost influence in recent decades – both TIME and Newsweek whiffed on this story, too.

Moreover, here’s what could be more disturbing: the apparent failure of any Mainstream Media types to investigate Asher’s charger further, rather than simply include Blumenthal’s denial in the accounts that do mention him, and leave the impression that we’re left with an intriguing but ultimately unresolvable “He said, he said” situation.

For Blumenthal is well known throughout the national political press corps, and it’s very difficult to believe that McClatchy was the only news organization to which he attempted to sell his own birther insinuation. Indeed, it’s almost as difficult as believing that Blumenthal acted in 2008 without Clinton’s knowledge.

As a result, the major news organizations still have a chance to redeem themselves. First, their reporters could directly ask Clinton about Blumenthal’s actions. Second, they could ask each other whether or not they were contacted by Blumenthal. I’ll certainly be watching to see if the press is interested in improving its so-far failing grade. If you’re really interested in the health of our democracy, whatever your political leanings, you should be, too.

(What’s Left of) Our Economy: The Encouraging U.S. Wage Story Remains Intact

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The new government figures that came out this morning teach a good lesson about the dangers of seizing on one month’s worth of data to identify a trend. It’s true that they show that after-inflation American wages fell month-on-month in August for the third time in the last five months – which seems to contradict my (tentative!) conclusion that paychecks in this country might finally be getting fatter on a sustainable basis for the first time in this economic recovery.

At the same time, looking back over a longer, and more revealing, time period keeps the wage improvement story pretty well intact.

The new Bureau of Labor Statistics findings show that inflation-adjusted wages for the private sector overall dropped by 0.09 percent in August over July’s levels. The year-on-year results failed to impress either. At 1.32 percent, they were weaker than the 2.13 percent gain registered for the previous Augusts, and they were the second worst such figure since January.

But 2016’s year-on-year numbers are thrown off some by the lousy wage performance of 2014 – especially its first three quarters. So any strength in 2015 would have looked especially robust thanks to the “easy comps” effect well known to investors. (Think of the logic behind the phrase “no place to go but up.”) And it’s that much harder to keep up such momentum.

Even so, here are the trends for all the Augusts since the current economic recovery began:

2009-10: +0.58%

2010-11: -1.73%

2011-12: +0.20%

2012-13: +0.78%

2013-14: +0.49%

2014-15: +2.13%

2015-16: +1.32%

They should make clear that, however uneven, the last two years have been qualitatively better than preceding five. Another little positive note. Although the 0.37 percent monthly improvement originally recorded for July remained unchanged, the June monthly 0.19 percent slippage was revised up to only -0.09 percent.

Similar trends are evident in manufacturing. August real wages dipped on month by 0.18 percent. But July’s monthly results were upgraded from a 0.18 percent gain to 0.28 percent. June’s 0.46 percent decrease was unchanged.

August’s year-on-year advance of 1.31 percent was also the second weakest since January, and well below the previous August’s 1.91 percent. But once again, a dreadful 2014 (complicates matters) – and puts the latest annual improvement in a better light. If you’re skeptical, check out manufacturing’s August-to-August real wage performance during the current recovery:

2009-10: +0.19%

2010-11: -2.51%

2011-12: -0.76%

2012-13: +0.67%

2013-14: +0.19%

2014-15: +1.91%

2015-16: +1.31%

Again, the most recent two readings are orders of magnitude stronger than the previous five.

Not that anyone should be popping champagne corks yet. According to the new data, the typical American worker in the private sector has seen his or her real wages rise by 3.88 percent during the current recovery – which is now more than seven years old. The typical inflation-adjusted manufacturing wage is up 1.03 percent. Complacency is still harder to justify when it comes to U.S. wage trends than alarmism.

Im-Politic: A Common Sense Approach to the National Anthem

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Ever since pro football player Colin Kaepernick of the San Francisco 49ers decided to protest racial injustice in America by kneeling during the national anthem, I’ve been asking myself why I’ve found his (and similar recent) actions so unimpressive, while remaining moved by the political actions of black athletes in the 1960s. And I’ve come to conclude that it’s not because I’m a fogeyish baby boomer who by definition believes everything was better back in the day.

I say this for two related reasons. But first, let me express agreement with those who have noted that Kaepernick’s gesture is completely protected by the First Amendment. Also, I’ve heard some arguments to the effect that athletes and other employees in many other industries routinely sign contracts holding them for public relations reasons to certain standards of behavior both on the job and off, and that as a result, the quarterback (voluntarily) surrendered some of his freedom of speech.

But both the 49ers and the National Football League deny that this has been the case.  And although I’m not a lawyer (and don’t even play one on TV!), I doubt that it’s constitutional for employers to deny or even curb the free speech rights of their employees unless exercising them can be shown to either interfere significantly with carrying out their responsibilities, or significantly harm the company’s image. 

Let’s get another matter out of the way, too. Although Kaepernick can’t be legitimately criticized for this, he and other football players pros who made national anthem protests can be knocked for timing last Sunday. I mean – on September 11? Seriously? The merits of the case aside, what could be likelier to forfeit public sympathy, especially among those not already with them?

But I would have been put off by the protests regardless of date – in contrast to my admiration for, say, Muhammad Ali and the two sprinters who bowed their heads and gave black power salutes when awarded medals at the 1968 Olympics.

The first reason has to do with the context. In the late 1960s, the involvement of athletes in politics was brand new, and taking non-mainstream stances was virtually unprecedented, especially for high profile performers. In fact, genuine courage was required – as made clear in Ali’s case when he was fined and  suspended from pro boxing simply for conscientiously objecting to military service during the Vietnam War. Olympians Tommie Smith and John Carlos had no opportunities to cash in on their triumph in Mexico City by running track professionally, but they paid significant personal prices, too.

Although Kaepernick et al have caught non-negligible flack, athlete and broader celebrity involvement in political and social issues has now become so routine that many causes use their Congressional testimony as core elements of their strategy. Even better, athletes and celebrities who take left-of-center positions can count on strong support from the country’s media and entertainment establishments.

My second reason for disquiet with the current generation of athletic and celebrity activists concerns the targeting of the national anthem. Actually, I have some sympathy for the view that patriotic displays have no place at sporting events, and that however traditional playing the anthem has become, the fabric of American life would remain fundamentally unchanged if the practice was ditched.

But here’s what matters more, as I see it. National anthem-like protests had more merit decades ago, when channels of protest, even for prominent individuals, were much fewer and further between simply because the media universe was so small. You had the three major commercial broadcast networks, along second-tier operations like Metromedia (essentially the ancestor of Fox). You had three national newspapers, three weekly newsmagazines, a few publications like Life and Look that didn’t deal with hard news controversies and opinion quite so consistently, and that was it. National syndicates did offer commentaries from the likes of Walter Lippman and Drew Pearson and the team of Evans and Novak. But the op-ed page didn’t exist until 1970. So if you hoped to reach broad audiences, and weren’t already world or nationally famous, you were for all intents and purposes out of luck. And this was also true if your renown came from a career not associated with journalism or public affairs.

Need I explicitly mention you that we’ve come an awfully long way since then? Indeed, we’ve come so long that unless you’re actively seeking to avoid them, there’s almost no escape from commentaries about political issues, and about controversial social and cultural issues. And in this environment, it seems reasonable to me to view an event like the playing of the national anthem as a valuable and constructive opportunity. It’s a chance to capitalize, on occasions when large numbers of us gather together in person, to affirm our common American identity in ways diametrically unlike the current smash-mouth style of most current politics and opinionizing.

As a result, although no one is legally obligated to stand or sing, those who decide to kneel or otherwise demonstrate at that moment strike me as at the very best off-putting, and at worst not so much unpatriotic as unreasonably hostile to acknowledging anything positive about the nation’s history and achievements. And I’d like to think that I’d take this stance even if the protest supported a cause I favored.

So here’s my plea to Kaepernick and other athletes moved to continue national anthem protests, for whatever reason: Given all the other powerful platforms you have to make your points, could you keep at least this particular ceremony a haven from the constant din of our ubiquitous public conversation? Americans today are anything but short of ways and means of expressing our disagreements and divisions, genuine and concocted. Questions of constitutional liberties aside, how about preserving at least one occasion for expressing our common bonds?

(What’s Left of) Our Economy: An Awful August Helped Drag U.S. Manufacturing Back into Recession

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The Federal Reserve’s new industrial production data showed that the August monthly sequential real manufacturing production fall-off (0.43 percent), the worst since wintry January, 2014’s (1.13 percent), plunged American factories back into its latest technical recession. Revisions going back to April were all negative, and major downward net automotive revisions helped drag the durable goods super-sector back into technical recession territory, too – where it joined non-durables.

As a result, America’s after-inflation manufacturing production is now 4.45 percent below the level it hit when the last recession began more than eight years ago. That is, the manufacturing slump triggered by the Great Recession still hasn’t ended.

Here are the manufacturing highlights of the Federal Reserve’s new release on August industrial production:

>Inflation-adjusted manufacturing output in August fell by 0.43 percent month-to-month – the worst such decrease since wintry January, 2014 (1.13 percent), and enough to bring domestic industry back into its latest technical recession.

>After rebounding during early in the current U.S. economic recovery, real manufacturing output is now down on net since November, 2014 (by 0.53 percent).

>Aggravating manufacturing’s troubles were negative monthly output revisions going back to April.

>July’s previously reported monthly increase of 0.55 percent – which would have been the best such improvement since last July’s 0.68 percent – is now pegged at 0.39 percent.

>The June after-inflation manufacturing production rise, already downgraded, was cut from 0.32 percent to 0.24 percent. May’s upwardly revised real output decline of 0.21 percent is now judged to be a 0.23 percent decrease. And April’s upwardly revised 0.11 percent sequential production increase was revised down to 0.09 percent on month.

>The automotive revisions were especially large – and negative on net.

>The constant dollar July monthly output increase for vehicles and parts combined was cut nearly in half – from1.91 percent to 1.01 percent.

>Auto parts production for the month was actually upgrade significantly – from 2.30 percent real sequential growth to 3.57 percent.

>But a vehicles production gain of 1.76 percent in real terms is now estimated as a 0.94 percent decrease from June’s level.

>Nonetheless, July total automotive inflation-adjusted production and parts output would still have been record levels as of last month, and combined vehicles and parts production hit a new after-inflation all-time high in August.

>Year-on-year real output in manufacturing overall fell by 0.24 percent in August – its first such decline since last December. Between August, 2014 and August, 2015, inflation-adjusted manufacturing production rose by 1.15 percent.

>Manufacturing’s constant-dollar June and July output increases were also downgraded, though both remained improvements.

>August’s on-month manufacturing downturn and the negative revisions mean that the sector’s overall output is now 4.45 percent below its levels when the last recession officially began – more than eight years ago, in December, 2007. That is, by this measure, the Great Recession has still not ended for domestic manufacturing.

>In the durable goods super-sector, which accounts for more than half of domestic manufacturing, real production shrank sequentially by 0.61 percent. That’s the biggest such decrease since March’s 0.73 percent.

>July’s monthly durable goods production increase was downgraded from 0.57 percent to 0.43 percent. The upgraded June advance of 0.73 percent was increased again. But May’s upgraded 0.47 percent inflation-adjusted monthly production dip was downgraded back to a 0.49 percent decrease.

>Durable goods’ yearly real production dipped by 0.12 percent in August. Between the previous Augusts, it inched up by 0.51 percent.

>July’s previously reported annual durables production gain of 0.57 percent was cut in half – to 0.28 percent. But June’s downgraded 0.32 percent was doubled – to 0.64 percent.

>Real durable goods production is now up only 0.85 percent since its pre-recession peak at the end of 2007.

>The non-durable goods super-sector remained in technical recession, in part because its inflation-adjusted output slipped by 0.22 percent sequentially in August. Real output is now down on net since March, 2015.

>July’s monthly real non-durables output gain was downwardly revised from 0.45 percent to 0.34 percent. The downgraded June figure of 0.32 percent is now judged to have been a 0.47 percent drop.

>Non-durable goods’ real output fell annually in August by 0.40 percent. From August, 2014 to August, 2015, this production increased by 1.92 percent.

>July’s previously reported inflation-adjusted annual output increase of 0.21 percent is now pegged at a 0.01 percent decline, and June’s downgraded 0.32 percent advance was cut again, to 0.21 percent.

>Since its pre-recession peak, in July, 2007, real output of non-durable goods is now down 10.73 percent.