President Obama's Feint


Bloomberg last week reported Applebee's

announced on Tuesday that it will install 100,000 tablets nationwide so diners can order food, play video games, and pay the check.

The chain is following on the heels of Chili’s Grill & Bar (EAT), which began installing tablets in its restaurants this year and has said it will have the devices in most of its 1,266 U.S. locations by the first half of 2014. The objectives for each company are the same: They’ve found that tablets cut wait times and lead customers to spend more on appetizers and desserts and to leave bigger tips. 

For now, at least, the computers won’t take over for human employees. Applebee’s says it’s not changing staffing levels in restaurants as the tablets are installed. 

Salon's Mary Elizabeth Williams, while explaining that she adheres to a "no distractions" policy for her family at its table, nevertheless maintains

... all the pearl-clutching over the fear that Applebee’s is single-handedly going to wreck dining out – especially in a manner that has nothing to do with its food – is pretty silly. Here’s the truth – everything is already wrecked. Family-friendly chains already have television sets blaring out of every corner. And should you find yourself in a Chili’s or similar sometime soon, look around the patrons, especially those with kids. The kids are engrossed in their DS systems, and the parents are taking pictures of their spinach dip to post on Instagram. They’re already not paying attention to each other. What’s one more device on the table, one more distraction?

So the cultural implication of the introduction of tablets in chain restaurants probably is overstated.  But not the economic implications.

As tablets become more common in restaurants, there will be fewer jobs for waiters and waitresses, even though Chili and Applebees are understandably reticent to admit it.  As low-wage employment requiring relatively little training, they serve as entry-level jobs for many people, especially of the youthful variety. The loss of even these low-paying jobs is a metaphor for disturbing trends in the economy.

In his recent speech on the economy, President Obama helpfully gave a nod to "empowering our workers. It’s time to ensure our collective bargaining laws function as they’re supposed to -- (applause) -- so unions have a level playing field to organize for a better deal for workers and better wages for the middle class." Nevertheless, he remains wedded to the notion that growing economic inequality in the nation is due primarily to what economists term "skill-based technological change." He assumes "we’re creating more good-paying jobs in education and health care and business services; we know that we’re going to have a greater and greater portion of our people in the service sector."

Ever faithful to the aim of exporting jobs, the President advocated "a trade agenda that grows exports and works for the middle class." He claimed  "It means streamlining regulations that are outdated or unnecessary or too costly.  And it means coming together around a responsible budget -- one that grows our economy faster right now and shrinks our long-term deficits, one that unwinds the harmful sequester cuts that haven't made a lot of sense -- (applause) -- and then frees up resources to invest in things like the scientific research that's always unleashed new innovation and new industries."   While a "responsible budget" (presumably a reduced one) would retard economic growth in the short term and the idea that regulations kill jobs is largely a conservative/neo-liberal nonsense, the President places his faith in employment which would be created in "new industries," especially those spurred by innovation.

But two months ago, well before the President's remarks, Robert Kuttner explained

There are several problems with the skills hypothesis, but here are the main ones. The four-decade transfer of income to the top had little to do with skill and more to do with opportunities for corporations to weaken labor and capture more of the national product. A recent study by the Economic Policy Institute concluded that deregulation of financial markets has allowed elites to extract abnormal profits that are neither checked by market competition nor restrained by rules—super-profits that economists call “rents.” In this case, rents were available thanks to the deliberate opacity of toxic financial products and trading strategies. Consider: Some of the most “skilled” financial engineers on Wall Street were rewarded with billions for costing the economy trillions. Measured against the economic consequences, the value of their skills was negative. A regulated labor market may be imperfect at aligning pay with skill, but a laissez-faire economy can be even worse.

Conversely, other highly skilled people, such as physicians and research scientists, have had fairly flat incomes. The relative premium to college education, the usual proxy for a skilled workforce, has increased more slowly since the 1990s. Further, there are many occupations in which people learn to work with advanced technology but receive no additional compensation. Today’s autoworker has an impressive set of computer skills but earns less than his father.

As the economist Robert Gordon points out, all of the major advanced economies have had essentially the same technological trends but widely differing income distributions. Further, there is no evidence that the economy’s rate of new demand for skills is above its historic trend.

According to a report from the blue-chip business group The Conference Board, jobs for architects and engineers have declined this year by 18,800, and jobs in computers and mathematics have dropped by another 35,500. Meanwhile, jobs have increased in such low-wage service occupations as transportation (by 36,200) and food service (by 18,800).

A large cottage industry of academic economists and policy advocates contends that America’s widening income inequality is primarily a reflection of new technologies and global competition that leave lesser-skilled workers far behind. So the main cure for widening inequality is said to be a better-educated and -trained workforce. The economist’s term for this supposedly inexorable trend is “skill-biased technological change.”rofessionalized Human Services. A related need is a national policy to convert all jobs caring for the old, the sick, and the young into good professional jobs. Nearly all human--service jobs are underwritten or subsidized by government. Public policy has a choice. We can define child-care and pre-kindergarten positions basically as baby-sitters or train and compensate people who work with preschoolers to the standards of schoolteachers.

If after-school and pre-K jobs pay, say, $40,000 a year rather than $8 an hour, our kids will benefit from a child-development--oriented experience instead of merely custodial care. Better-trained and -compensated professionals will produce better-educated students, and the whole society gains.

Nurse’s aide positions in eldercare facilities and hospitals, likewise, can either be minimum-wage jobs with little training and frequent turnover or they can be part of a continuum of well-trained health professionals. Studies of nursing homes have shown that increased training and pay improve patient outcomes and reduce adverse incidents such as falls and bedsores. The problem is that nursing homes rely heavily on Medicaid reimbursements, which are too low to allow decent pay for nurse’s aides. Professionalizing these occupations will require different national priorities.

The President speaks of "good jobs."  But he believes that will come about through the growing domination of the economy by what used to be termed the "new economy"- education, health care, business, and finance and other "new industries." He urged "investments in education" and brags that his Administration "launched a Race to the Top in our schools" and is "pushing for redesigned high schools that graduate more kids with the technical training and apprenticeships, and in-demand high-tech skills that can lead to a good job." "making sure we empower more Americans with the skills and education they need to compete in a highly competitive global economy.

They will compete for vanishing jobs, sent abroad by companies enabled by the President's trade policy. The training touted by the President is ever less likely to the "lead directly to a good job and a middle-class life" he imagines.Researchers Lawrence Mishel, Heidi Shierholz, and John Schmitt  last month noted

Skill-based technological change (SBTC) has been a leading explanation for the rise in wage inequality almost since economists first noticed the increase in wage inequality that began at the end of the 1970s. A recent wave of research, however, has questioned important aspects of the standard version of SBTC models of wage inequality

They argue "Occupational upgrading has occurred in decades with both rising and falling wage inequality and in decades with both rising and falling median wages, indicating that occupational employment patterns, by themselves, cannot explain the salient wage trends."   They explain

The tasks framework suggests that differences in returns to occupations are an increasingly important determinant of wage dispersion. Using the CPS, we do not find this to be the case.  We find that a large and increasing share of the rise in wage inequality in recent decades (as measured by the increase in the variance of wages) occurred within detailed occupations.  Furthermore, using DiNardo, Fortin, and Lemieux’s reweighting procedure, we do not find that occupations consistently explain a rising share of the change in upper tail and lower tail inequality for either men or women.

The policy implications of the myth promulgated by President Obama are enormous. Without addressing Obama, Kuttner recognized

It's important to appreciate the political and ideological function of the emphasis on worker skills. For conservatives seeking to divert attention from the true causes of inequality and low wages, the focus on skills promotes the scapegoating of public schools and places the blame for paltry pay and job insecurity on workers rather than onchanges in the rules of the system. Blaming high overalll unemploymenton skills deficits also gives conservatives a basis for opposing fiscal stimulus.

It gives conservatives a basis for opposing fiscal stimulus- and conservatives and centrists the opportunity to scapegoat public schools through a school "reform" movement exemplified by Obama's boast that his Administration has "raised standards for teaching and learning." Teachers are to be held responsible for the poor performance on standardized tests without regard to the home environment which can have a devastating impact on student performance.  There is a race to close those schools- and dismiss their teachers- while replacing them with charter schools characterized by poorly paid, non-unionized teachers. The Obama-Duncan Race to the Top, increasingly revealed as a failure, is but part of a larger school reform movement which obscures an economy in which jobs are unavailable (table, below), and wage stagnation the norm, not only among restaurant staff but in the high-technology field.

As Williams contends, the restaurant chains substituting technological capital for human capital probably cannot be held responsible for destroying the American dinner table, already in decline.  But failing to resist the gradual removal of jobs for male and female waiters may be a metaphor for the myth that jobs, and good jobs at that, will flow like manna from the sky for young people acquiring those "high-tech skills" the President touts as a panacea.

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Word To Action Unlikely

Paul Krugman is a great economist.  He's also a great optimist.

In his regular New York Times column, on December 5 Krugman commented "Mr. Obama laid out a disturbing- and, unfortunately, all too accurate vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society." He maintained "this isn't entirely new terrain for Mr. Obama" but "what struck me about this speech, however, was what he had to say about the sources of rising inequality."  The President, he noted addressed such critical factors as the minimum wage, labor's bargaining power, the safety net, and fixation on the fiscal deficit.

Citing improving health care implementation, Obama's second-term focus on his legacy (including shoring up the social safety net), and the President's apparent break with the "fiscal scolds" obsessed with debt and entitlements, Krugman argues Obama is

finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.

So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.

Can, but won't.   In his softball interview for his Hardball tour, on Thursday Chris Matthews asked the President to comment on "a moral responsibility to look out for people who haven`t made it in this country."   Obama responded in part

And, you know, I -- I think Pope Francis is showing himself to be just an extraordinarily thoughtful and soulful messenger of peace and justice. I haven`t had a chance to meet him yet, but everything that I have read, everything that I have seen from him indicates the degree to which he is trying to remind us of those core obligations.

It's far from bold to compliment a pope, particularly for being a "thoughtful and soulful messenger of peace and justice.  (Soulful? Perhaps like the video below.)  But it was only fair and generous; in what was hardly a coincidence of timing, the President gave his speech on December 4.  Pope Francis had issued his Apostolic Exhortation a mere eight days earlier on November 26, declaring "We can no longer trust in the unseen forces and the invisible hand of the market," observing "trickle-down... has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

But while there is every reason to assume the sincerity of Pope Francis, there is little reason to assume the sincerity of Barack Obama. Buzzfeed's McKay Coppins has observed (at approximately 5:50 of the 6:16 video way below) "it's fascinating that five years into Obama's presidency we're still arguing about what he really believes."  The Administration currently is deep into secret negotiations (citation from the Electronic Frontier Foundation via The Economic Populist) for the

Trans-Pacific Partnership (TPP) that could include more than a dozen nations in the Asia-Pacific region including Malaysia, Vietnam, Japan, and South Korea.  Recently, China said that it was studying the possibility of joining the TPP talks.  Many members of the proposed agreement have long histories of currency manipulation, dumping, and other unfair trade practices that have dramatically increased U.S. trade deficits and job losses, and the agreement could sharply curtail the ability of the United States to challenge these practices.  The TPP would significantly increase the threat that rapidly growing trade deficits and job losses in the United States would be locked in if the TPP is completed.

Completion and implementation of the treaty would continue a policy of the last several presidents in destroying good jobs.  The Economic Policy Institute found

U.S. trade with Mexico after the North American Free Trade Agreement (NAFTA) has cost the United States nearly 700,000 jobs through 2010. U.S. trade with China has certainly failed to deliver on the promised benefits of growing exports. Since that country entered the World Trade Organization (WTO) in 2001, the U.S. has lost 2.7 million jobs through 2011 due to growing trade deficits with China. And the Korea-U.S. Free Trade Agreement (KORUS) has also resulted in growing trade deficits with that country and the loss of more than 40,000 U.S. jobs. Most of the trade-related job losses are concentrated in manufacturing, and growing trade deficits are responsible for a large share of the decline in U.S. manufacturing employment over the past fifteen years.

It is fascinating and understandable that insightful, thoughtful individuals still are arguing over what Obama believes.  Probably, though, Obama's speech on economics this past week does reflect a major portion of the thinking of the first black president, community organizer, and law professor.  But as with real Wall Street reform- which has been elusive in this Administration- the President's policies generally reflect his reluctance to step on some very wealthy toes.  After Coppins' remark, host Steve Kornacki added, "that means he's a great politician."

Barack Obama is a great politician, but no Pope Francis.  Paul Krugman's optimism, while inspiring for this Chanukah/Christmas/New Year's ("holiday") season, likely will prove somewhat misplaced.

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Remorseful, He Had To Go

On Friday, November 15, Mediaite wrote at the time, MSNBC's Martin Bashir

played a clip of Palin’s comments from last weekend, in which she told a crowd at Iowa’s Faith and Freedom Coalition event, “Our free stuff today is being paid for by taking money from our children, and borrowing from China. When that note comes due — and this isn’t racist, so try it. Try it anyway. This isn’t racist. But it’s going to be like slavery when that note is due.”

“It will be like slavery,” Bashir repeated. “Given her well-established reputation as a world class idiot, it’s hardly surprising that she should choose to mention slavery in a way that is abominable to anyone who knows anything about its barbaric history.”

“So here’s an example,” Bashir continued. “One of the most comprehensive first-person accounts of slavery comes from the personal diary of a man called Thomas Thistlewood, who kept copious notes for 39 years. Thistlewood was the son of a tenant farmer, who arrived on the island of Jamaica in April 1750, and assumed the position of overseer at a major plantation.”

“What is most shocking about Thistlewood’s diary is not simply the fact that he assumes the right to own and possess other human beings, but is the sheer cruelty and brutality of his regime,” Bashir added. “In 1756, he records that a slave named Darby ‘catched eating kanes had him well flogged and pickled, then made Hector, another slave, s-h-i-t in his mouth.’”

“This became known as ‘Darby’s Dose,’ a punishment invented by Thistlewood that spoke only of inhumanity. And he mentions a similar incident in 1756, his time in relation to a man he refers to as Punch. ‘Flogged punch well, and then washed and rubbed salt pickle, lime juice and bird pepper, made Negro Joe piss in his eyes and mouth,’” Bashir recited.

“I could go on, but you get the point,” Bashir said, concluding “When Mrs. Palin invokes slavery, she doesn’t just prove her rank ignorance. She confirms if anyone truly qualified for a dose of discipline from Thomas Thistlewood, she would be the outstanding candidate.”

Bashir's remarks were rather loathsome, even though comparing anything to slavery (as Palin did) is bad behavior itself.  (The video below is of the Young Turks' Cenk Uygur, dismissed from MSNBC in mid-2011, though because he was not averse to criticizing Barack Obama.) The following Monday, Bashir did something extraordinary. He issued an "unreserved apology"- not to the classic 'anyone who might have been offended' but to the ex-governor's friends and family, her supporters, and MSNBC viewers.  His words, he conceded, were "wholly unacceptable," inaccurate, unfair, and "unworthy of anyone who would claim to have an interest in politics." "They brought shame upon my friends and colleagues at this network" and, Bashir, added, no one but he was responsible for the remarks

He requested a vacation and this week issued a statement explaining

Upon further reflection, and after meeting with the President of MSNBC, I have tendered my resignation. It is my sincere hope that all of my colleagues, at this special network, will be allowed to focus on the issues that matter without the distraction of myself or my ill-judged comments.

I deeply regret what was said, will endeavor to work hard at making constructive contributions in the future and will always have a deep appreciation for our viewers – who are the smartest, most compassionate and discerning of all television audiences. I would also wish to express deepest gratitude to my immediate colleagues, and our contributors, all of whom have given so much of themselves to our broadcast.

Forthright, contrite,and repentant, Bashir had to go. Once a public figure has admitted that he alone is responsible for his transgression and it is completely unjustified and unjustifiable, he is cooked.

That only encouraged Karl Rove.   Appearing on "The O'Reilly Factor" on GOP TV

Rove acknowledged that “everybody does make mistakes” while in the heat of the moment and on air, but he said Bashir “prepared” his attack against Palin calling it “more than just sort of a misstatement.”

“This was a deliberate attempt to engage in the most foul and disgusting kind of commentary on a political opponent,” Rove said.

Rove also slammed the network, which he said “made it appear like he resigned on his own, which was a mistake.”

Outrageous statements by individuals in the public eye are not uncommon, such as the one made in 2010 by the chairman and co-founder of the Blackstone Group, one of the world's largest private-equity firms. The New York Post at the time reported

Stephen Schwarzman—the leading John McCain supporter in a firm that, in 2008, gave more money to Obama—was addressing board members of a nonprofit organization when he let loose. “It’s a war,” Schwarzman said of the struggle with the administration over increasing taxes on private-equity firms. “It’s like when Hitler invaded Poland in 1939.”

Attendees at the board meeting (who provided details on condition that they and the organization not be identified) were shocked. “War? Hitler? Poland? A little over the top for a proposal to make hedge-fund managers pay their fair share in taxes,” one attendee says about the comments.

Blackstone is still president and CEO of the Blackstone Group, perhaps because unlike Bashir, he followed an apology with a "however."

Rove was silent about Blackstone. Nor has he criticized the talk show host who has said: “Have you ever noticed how all composite pictures of wanted criminals resemble Jesse Jackson?”; "Look, let me put it to you this way: the NFL all too often looks like a game between the Bloods and the Crips without any weapons. There, I said it;"  and to an African-American female caller “take that bone out of your nose and call me back.”  Calling Senator Obama a "halfrican American" has been followed by equally reprehensible remarks about President Obama.  Rove is still silent.

MSNBC, though it pushed Bashir out the door, nevertheless did so while allowing the host to retain some dignity.  That's how it's done in most public, private, and non-profit organizations, in which humiliation of the employee is generally avoided because it's unnecessary.   Rove, however, complains "They let him go off and have his pre-arranged holiday. Then they came back and then let him sound like it was his idea and express their regret at his departure."

Sarah Palin, uncharacteristically, reacted with near-class, responding in part "My role is to accept his apology and be humble enough to accept it and move on."  Karl Rove could not even clear the bar set by Sarah Palin- behavior far more outrageous than anything attributed to Martin Bashir.







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